Eusebio v. Luis
REITERATIONFacts
The Antecedents: Respondents are the registered owners of a parcel of land (1,586 sq. meters) covered by TCT Nos. 53591 and 53589. The City of Pasig took possession of this land in 1980 for use as a municipal road, now known as A. Sandoval Avenue. In 1993, the Sanggunian authorized payment, but the Appraisal Committee assessed the land at ₱150.00 per square meter. Respondents requested ₱2,000.00 per square meter. One respondent noted that a similar property in the area was paid ₱2,000.00 per square meter when expropriated in 1994. Respondents' counsel later demanded ₱5,000.00 per square meter, or ₱7,930,000.00, as just compensation. Procedural History: On October 8, 1996, respondents filed a Complaint for Reconveyance and/or Damages against petitioners before the RTC of Pasig City, seeking return of the property with rental payments or, alternatively, just compensation of ₱7,930,000.00 plus rentals. The RTC ruled in favor of the respondents, declaring the taking illegal and ordering the return of the property or payment of ₱5,000.00 per square meter, plus rentals and attorney's fees. The Court of Appeals affirmed the RTC decision. Petitioners' motion for reconsideration was denied. The Petition: Petitioners filed a Petition for Review on Certiorari, alleging that the CA erred in upholding the RTC ruling despite the claim of prescription, in fixing the compensation at ₱5,000.00 per square meter, in awarding rentals, and in awarding attorney's fees.
Issue(s)
Whether the respondents' claim for just compensation is barred by prescription. Whether respondents are entitled to recover possession of the property. How should just compensation be determined, including the valuation and the time of taking. Whether the award of rentals is proper. Whether the award of attorney's fees and exemplary damages is proper. Whether the individual petitioners are jointly liable with the City of Pasig.
Ruling
The petition is PARTIALLY GRANTED. The CA Decision is MODIFIED. The City of Pasig is directed to institute expropriation proceedings for the proper determination of just compensation, with interest at 6% per annum from the time of taking. The City is also ordered to pay respondents ₱200,000.00 as exemplary damages and ₱200,000.00 as attorney's fees. The individual petitioners are absolved from personal liability.
Ratio Decidendi
On the issue of prescription and recovery of possession: The Court reiterated the ruling in Republic of the Philippines v. Court of Appeals that an action to recover property taken by the government for public use without prior expropriation or negotiated sale does not prescribe. However, applying Forfom Development Corporation v. Philippine National Railways, the Court found that respondents, by failing to question the taking for a long period and by negotiating for compensation, are estopped from recovering possession of the land. Their right is limited to claiming just compensation. On the issue of prescription and recovery of possession: The Court reiterated the ruling in Republic of the Philippines v. Court of Appeals that an action to recover property taken by the government for public use without prior expropriation or negotiated sale does not prescribe. However, applying Forfom Development Corporation v. Philippine National Railways, the Court found that respondents, by failing to question the taking for a long period and by negotiating for compensation, are estopped from recovering possession of the land. Their right is limited to claiming just compensation. On the determination of just compensation: The Court struck down the RTC's valuation, holding that the determination of just compensation is a judicial prerogative that requires adherence to the procedure in Rule 67 of the Rules of Civil Procedure, specifically the appointment of commissioners. The trial court erred in making its own valuation without appointing commissioners. Furthermore, the Court emphasized that just compensation must be fixed at the value of the property at the time of taking, which in this case was in 1980. The RTC's reliance on the 1994 valuation of other properties was erroneous. On the award of rentals: The Court ruled that the award of back rentals is unwarranted. Citing Manila International Airport Authority v. Rodriguez and Republic v. Garcellano, the Court held that when property is taken without expropriation, the landowner is entitled to legal interest on the value of the property from the time of taking until full payment. This interest compensates for the loss incurred, making the award of rentals inconsistent and redundant. On exemplary damages and attorney's fees: The Court found that the City of Pasig acted in utter disregard of respondents' proprietary rights by taking the property without expropriation and just compensation. Such conduct warrants damages. Citing Manila International Airport Authority v. Rodriguez, the Court affirmed the award of exemplary damages and attorney's fees, though it reduced the amounts to ₱200,000.00 each, considering the wanton and irresponsible acts of the city government. On the liability of individual petitioners: The Court absolved petitioners Vicente P. Eusebio, Lorna A. Bernardo, and Victor Endriga from personal liability. It found a dearth of evidence showing their involvement in the illegal taking of the property in 1980, as they may not have been city officials at that time. Therefore, any liability is solely that of the City of Pasig.
Main Doctrine
The owner's action to recover property taken by the government for public use without prior expropriation or negotiated sale does not prescribe. However, if the landowner fails to question the taking for a long period and negotiates for compensation, they are estopped from recovering possession but are entitled to just compensation. The determination of just compensation requires the appointment of commissioners as per Rule 67 of the Rules of Civil Procedure, and the valuation should be based on the time of taking.