G.R. No. 162474 - Eusebio vs. Luis

Case Summary (G.R. No. 162474)

Procedural History

Respondents requested compensation administratively (letters dated November 25, 1994 and June 26, 1995) and sent a demand letter on August 26, 1996. After the City maintained it could not exceed the Appraisal Committee valuation, respondents filed Civil Case No. 65937 (Complaint for Reconveyance and/or Damages) in the RTC of Pasig City, Branch 155, on October 8, 1996. The RTC rendered judgment on January 2, 2001 in favor of respondents. The Court of Appeals affirmed on November 28, 2003; reconsideration denied February 27, 2004. Petition for Review under Rule 45 was brought to the Supreme Court.

Relevant Dates and Appraisals

Taking: sometime in 1980. Sanggunian Resolution No. 15 (authorizing payments): February 1, 1993. City Appraisal Committee Resolution No. 93-13 (assessed value): October 19, 1993, valuing land at P150.00 per square meter (the petition mentions P160 in argument). Respondents requested P2,000.00/m² (June 26, 1995) and later demanded P5,000.00/m² (August 26, 1996). Another comparable parcel was paid at P2,000.00/m² in 1994.

Claims and Relief Sought by Respondents

Respondents sought (1) reconveyance of the property or, if return impossible, just compensation; (2) reasonable rental for sixteen years at P500.00/m² (total P793,000.00); (3) alternatively, just compensation at P5,000.00/m² (total P7,930,000.00); (4) legal interest (RTC judgment awarded at 6% per annum) from filing until full payment; and (5) moral and exemplary damages, attorney’s fees and costs.

RTC Judgment

The RTC declared the City’s taking illegal and unjust for failing to follow expropriation procedures. It ordered either reconveyance or, if reconveyance impossible, payment of P5,000.00/m² (total P7,930,000.00) plus rental (P793,000.00), both with legal interest at 6% per annum from filing, and awarded attorney’s fees of P200,000.00. No costs were awarded.

Issues Raised in the Petition to the Supreme Court

Petitioners argued: (1) respondents’ claim for just compensation had prescribed; (2) the trial court erred in fixing just compensation at P5,000.00/m² when the Appraisal Committee valued the land at P150–P160.00/m² at the time of taking; (3) the award of P793,000.00 as reasonable rental was improper because the taking was for public use and respondents did not immediately protest; and (4) the P200,000.00 attorney’s fees award was unwarranted absent negligence or inaction by petitioners.

Prescription and Right to Recovery

The Supreme Court rejected the prescription argument, citing Republic v. Court of Appeals: where private property is taken by the Government for public use without expropriation or negotiated sale, the owner’s action to recover the land or its value does not prescribe. The Court emphasized the constitutional protection that private property shall not be taken for public use without just compensation.

Possession vs. Compensation — Application of Forfom v. PNR

Relying on Forfom Development Corporation v. Philippine National Railways, the Court held that because respondents delayed in contesting the taking (from 1980 into the early 1990s) and engaged in negotiations with city officials for compensation, they are estopped from recovering possession of the land. The Court therefore denied reconveyance as a remedy in light of public policy and the need for continuity of public facilities. Respondents’ remaining remedy is to obtain just compensation.

Determination of Just Compensation — Procedural Requirements

The Supreme Court found error in the RTC’s valuation procedure. It reiterated that even absent expropriation proceedings, determination of just compensation by the trial court must follow Section 5, Rule 67 of the 1997 Rules of Civil Procedure, which mandates appointment of not more than three competent and disinterested commissioners to ascertain and report just compensation. Judicial valuation without such commissioners is ineffectual, and the court may only disregard or substitute commissioners’ findings where commissioners applied illegal principles, disregarded a clear preponderance of evidence, or arrived at a grossly inadequate or excessive amount.

Time of Valuation and Evidentiary Basis

The Court reiterated the rule that where property was taken without expropriation and the owner files an action prior to commencement of expropriation proceedings, the controlling valuation date is the time of taking. The rationale is to avoid compensating for value enhancements attributable to the public purpose, the possessor’s acts, or later market appreciation. Here, the trial court erred by relying on post-taking (1994) prices and comparable transactions to fix compensation; the record lacked evidence of the property’s value in 1980.

Damages, Interest, and Rentals

The Court held that in cases of unlawful occupation without compensation,

Case Syllabus (G.R. No. 162474)

Procedural History

Petition for Review on Certiorari under Rule 45 filed in the Supreme Court from the Court of Appeals (CA) Decision dated November 28, 2003, which affirmed the Regional Trial Court (RTC) judgment; petitioners’ motion for reconsideration before the CA was denied per Resolution dated February 27, 2004.
Original complaint: Complaint for Reconveyance and/or Damages filed by respondents on October 8, 1996 before the RTC of Pasig City, Branch 155 (Civil Case No. 65937).
RTC rendered Decision on January 2, 2001 in favor of plaintiffs/respondents; CA affirmed on November 28, 2003; petition for review filed in the Supreme Court (G.R. No. 162474), decision promulgated October 13, 2009.
Supreme Court partially granted the petition and modified the CA decision; final disposition ordered expropriation proceedings and specific monetary awards.

Factual Background

Respondents are registered owners of a parcel of land covered by Transfer Certificate of Title Nos. 53591 and 53589, with an area of 1,586 square meters.
The parcel was taken by the City of Pasig sometime in 1980 and used as a municipal road now known as A. Sandoval Avenue, Barangay Palatiw, Pasig City.
Sanggunian of Pasig City passed Resolution No. 15 on February 1, 1993 authorizing payments to respondents for the parcel.
Appraisal Committee of the City of Pasig, in Resolution No. 93-13 dated October 19, 1993, assessed the value of the land at P150.00 per square meter (source also later quoted petitioners as referring to a peg of PHP160.00 per square meter).
Correspondence and demands:
- Letter dated November 25, 1994 from one respondent to Mayor Vicente P. Eusebio noting that a property in the same area had been paid at P2,000.00 per square meter when expropriated in 1994.
- Respondents’ letter dated June 26, 1995 requesting the Appraisal Committee to consider P2,000.00 per square meter as the value of their land.
- Respondents’ counsel sent a demand letter dated August 26, 1996 to Mayor Eusebio demanding P5,000.00 per square meter or a total of P7,930,000.00 as just compensation.
- Mayor Eusebio replied on September 9, 1996 stating the City could not pay more than the amount set by the Appraisal Committee.

Relief Sought by Respondents in the Complaint

Reconveyance of property to respondents with payment of reasonable rental for sixteen years of use at P500.00 per square meter (P793,000.00), with legal interest of 12% per annum from the date of filing of the complaint until full payment.
Alternatively, if the property could not be returned, just compensation in the amount of P7,930,000.00 (P5,000.00 per sq. m. × 1,586 sq. m.) and rental for sixteen years at P500.00 per sq. m. (P793,000.00), both with legal interest of 12% per annum from the date of filing until full payment.
Prayer for moral and exemplary damages, attorney’s fees, and costs.

RTC Decision (January 2, 2001) — Dispositive Portion (as rendered)

Declared defendants’ taking of plaintiffs’ properties illegal and unjust for being without consent and without expropriation proceedings required by law.
Ordered defendants to jointly return the properties to plaintiffs with payment of reasonable rental for use in the amount of P793,000.00 with legal interest at the rate of 6% per annum from filing of the Complaint until full payment.
Alternatively, if properties could not be returned because used as public road, ordered defendants to jointly pay fair and reasonable value at P5,000.00 per square meter or a total of P7,930,000.00, with payment of reasonable rental for use in the amount of P793,000.00; both with legal interest at 6% per annum from filing of the Complaint until full payment.
Ordered defendants to jointly pay plaintiffs attorney’s fees in the amount of P200,000.00.
No pronouncement as to costs.

Court of Appeals and Subsequent Procedural Posture

Court of Appeals affirmed the RTC judgment in its Decision dated November 28, 2003.
Petitioners’ motion for reconsideration before the CA denied by Resolution dated February 27, 2004.
Petitioners elevated the case to the Supreme Court via Rule 45 petition, advancing specific assignments of error.

Issues Raised by Petitioners in the Rule 45 Petition

Whether respondents’ action for recovery of property or just compensation is barred by prescription.
Whether CA erred in fixing fair and reasonable compensation at P5,000.00 per square meter despite Appraisal Committee valuation at P150.00 (petitioners also refer to a peg of PHP160.00) at the time of taking in 1980.
Whether CA erred in affirming award of P793,000.00 as reasonable rental for use despite alleged absence of protest at the time of taking and the taking benefitting the public at large, not petitioners personally.
Whether CA erred in affirming award of P200,000.00 for attorney’s fees despite alleged absence of negligence or inaction by petitioners relative to the claim for just compensation.

Supreme Court’s Ruling on Prescription and Right to Recover

The Court rejected petitioners’ prescription argument, citing Republic of the Philippines v. Court of Appeals: where government takes private property for public use without first acquiring title through expropriation or negotiated sale, the owner’s action to recover land