Title: Sy v Local Government of QC

GR No. 202690
Date: June 5, 2013
Ponente: Perlas-Bernabe, J.
Parties:
petitioner: Henry L. Sy
respondent: Local Government of Quezon City
Facts:
November 7, 1996, the City through then Mayor Ismael Mathay, filed a complaint for expropriation with the RTC in order to acquire a
1,000 sq. m. parcel of land, owned and registered under the name of Henry Sy, which was intended to be used as a site for several
government activities.
March 18,1997, pursuant to Section 19 of the Local Government Code of 1991 (LGC), the City deposited the amount pf P241,090
with the Office of the Clerk of Court, representing 15% of the fair market value of the subject property based on its tax declaration.
Sy did not question the right to expropriate the property but only the amount of just compensation. The RTC tasked 3 commissioners
to determine the proper amount of just compensation. It was decided by 2 of them that it should be P5, 500 per sq. m. to be
computed from the date of the filing of the expropriation complaint (November 7, 1996). On the other hand, 1 said that the amount
should be P13,500 per sq. m.
The RTC ruled that just compensation should be P5, 500 per sq. m. It also didnt award damages and back rentals in favor of Sy.
For equity considerations, 6% legal interest was awarded computed from the date of the filing of the expropriation until full payment
of just compensation. The CA affirmed the RTCs ruling with the modification that the City should pay Sy the amount of P200, 000 as
exemplary damages (because the City took the property without even initiating expropriation proceedings) and attorneys fees
equivalent to 1% of the total amount due. Sy was denied payment for back rentals and damages for shelved plans of utilization.
Both Sy and the Citys motion for reconsiderations were denied. Hence, this petition.
Issue:
WON the CA erred in upholding the amount of just compensation, its grant of 6% legal interest, exemplary damages and attorneys
fees-PARTLY
Ratio:
Rate of legal interest and time of accrual:
The correct legal interest is 12% owing to the nature of the Citys obligation as an effective forbearance. It was held in Republic v.
CA that the debt incurred by the government on account of the taking of the property subject of an expropriation constitutes and
effective forbearance which therefore, warrants the application of the 12% legal interest. Also, legal interest should accrue from the
time of the taking of the property in 1986 (when the property was already used as a Barangay day care and office) and not from
the filing of the complaint for expropriation on November 7, 1996. The lack of proper authorization, i.e. resolution to effect
expropriation, did not affect the character of the Citys taking of the subject property in 1986. There is taking when the owner is
actually deprived of the use of his property thus, the legal character of the Citys action as one of taking did not change.
Because of such irregularity in the actual taking and filing of the expropriation proceedings, exemplary damages and attorneys
fees should be awarded to the landowner for equity purposes. MIAA v. Rodriguez states that these are wanton and irresponsible
acts which should be suppressed and corrected. Hence the award of exemplary damages and attorneys fees is in order.
With regard to the amount of just compensation, the P5, 500 per sq. m. cannot be sustained. This was derived from documents that
were issued in 1996. Valuation should be based as of the time of the taking which was in 1986. Thus, the case should be remanded
to the RTC for proper assessment.
WHEREFORE, the petition is PARTLY GRANTED. The CA decision is SET ASIDE and the case is REMANDED to the RTC.