Sy v. Local Government of Quezon City
REITERATIONFacts
The Antecedents: The Local Government of Quezon City (City) filed a complaint for expropriation to acquire a 1,000 sq. m. parcel of land owned by Henry L. Sy (Sy) for a multi-purpose barangay hall, day-care center, playground, and community activity center. The City deposited 15% of the property's fair market value based on its tax declaration. Sy did not question the City's right to expropriate, leaving only the issue of just compensation. Procedural History: Commissioners were appointed to determine just compensation. Two commissioners recommended ₱5,500.00 per sq. m., while another recommended ₱13,500.00 per sq. m. The Regional Trial Court (RTC) adopted the lower recommendation and awarded 6% legal interest from the filing of the complaint. The Court of Appeals (CA) affirmed the RTC's valuation but modified the award to include ₱200,000.00 in exemplary damages and 1% attorney's fees, citing the City's taking of the property without initiating expropriation proceedings. Sy's motion for reconsideration was filed a day late and dismissed by the CA. The City's motion for reconsideration was also denied. The Petition: Sy filed a petition for review on certiorari, assailing the CA's dismissal of his motion for reconsideration and its rulings on just compensation, legal interest, and damages.
Issue(s)
Whether the CA correctly dismissed Sy's motion for reconsideration for being filed out of time and whether the CA correctly upheld the amount of just compensation. Whether the CA correctly upheld the grant of six percent (6%) legal interest and when the legal interest should accrue. Whether the CA correctly awarded exemplary damages and attorney's fees.
Ruling
The petition is partly meritorious. The Court set aside the CA's decision and resolution, remanding the case to the trial court for the proper determination of just compensation as of the time of actual taking. The City is ordered to pay exemplary damages of ₱200,000.00 and attorney's fees equivalent to one percent (1%) of the amount due after final determination of just compensation.
Ratio Decidendi
On the dismissal of Sy's motion for reconsideration and the amount of just compensation: The Court found that Sy's motion for reconsideration was indeed filed out of time, one day late, but relaxed procedural rules due to excusable negligence and the interest of justice. The Court also found the amount of ₱5,500.00 per sq. m. as just compensation to be unsustainable because it was based on valuations from 1996, not from the time of actual taking in 1986. The case was remanded to the RTC for the proper determination of the amount of just compensation as of 1986. On the rate of legal interest and time of accrual: The Court held that the correct rate of legal interest is twelve percent (12%) per annum, not six percent (6%), because the government's obligation constitutes an effective forbearance. Legal interest should accrue from the time of the actual taking of the property in 1986, not from the filing of the expropriation complaint in 1996. On the award of exemplary damages and attorney's fees: The Court affirmed the CA's award of exemplary damages and attorney's fees, citing Manila International Airport Authority v. Rodriguez and City of Iloilo v. Judge Lolita Contreras-Besana. These damages are awarded when the government takes possession of property for a prolonged period without properly initiating expropriation proceedings. The City's prolonged occupation of the property without proper authorization justified the award.
Main Doctrine
The Court relaxed procedural rules to allow resolution of substantive issues concerning just compensation, legal interest, and damages, despite a one-day delay in filing a motion for reconsideration. Legal interest on just compensation accrues at 12% per annum from the date of actual taking, not from the filing of the expropriation complaint. The amount of just compensation must be determined as of the time of actual taking, necessitating remand to the trial court.