G.R. No. 197743 - Separate Opinion

G.R. No. 197743, October 18, 2022,
♦ Decision, Dimaampao, [J]
♦ Separate Opinion, Caguioa, [J]
♦ Concurring and Dissenting Opinion, Gaerlan, [J]
♦ Separate Opinion, Gesmundo, [CJ]
♦ Concurring and Dissenting Opinion, Lazaro-Javier, [J]
♦ Separate Opinion, Leonen, [J]

HEIRS OF JOSE MARIANO AND HELEN S. MARIANO, REPRESENTED BY DANILO DAVID S. MARIANO, MARY THERESE IRENE S. MARIANO, MA. CATALINA SOPHIA S. MARIANO, JOSE MARIO S. MARIANO, MA. LENOR S. MARIANO, MACARIO S. MARIANO AND HEIRS OF ERLINDA MARIANO VILLANUEVA, REPRESENTED IN THIS ACT BY IRENE LOURDES M. VILLANUEVA THROUGH HER ATTORNEY-IN-FACT EDITHA S. SANTUYO AND BENJAMIN B. SANTUYO, PETITIONERS, VS. CITY OF NAGA, RESPONDENT.

I agree with the conclusion that the Petition should be granted. However, I disagree with the application of the pro hac vice consideration. Moreover, I propose further considerations in the imposition of legal interest.

At the center of the dispute is a five-hectare parcel of land located in City Heights Subdivision, Naga City and owned by Macario Mariano (Mariano) and Jose A. Gimenez (Gimenez). The subject property has been utilized by the City Government of Naga since 1954 by virtue of a Deed of Donation executed by Mariano and Gimenez and the City Mayor.1

In February 2004, the heirs of Mariano filed a Complaint for Unlawful Detainer against the City of Naga before the Municipal Trial Court of Naga City.2 On February 14, 2005, the Municipal Trial Court dismissed the complaint for lack of jurisdiction.3 On the City's appeal, the Regional Trial Court set aside the Municipal Trial Court's dismissal and ordered the City of Naga to immediately vacate the subject properties and pay the registered owners reasonable compensation for the use and occupancy of the property, reckoned from November 30, 2003 until the City of Naga have actually vacated the subject property.4 The ruling of the Regional Trial Court was reversed by the Court of Appeals, only to be reinstated by this Court's First Division in its March 12,2018 Decision5 and July 23, 2018 Resolution.6

In the First Division's Decision and Resolution, the Deed of Donation from which the City claims its right over the property was found to neither have been registered with the Registry of Deeds nor annotated in the Transfer Certificate Title of the subject property. In addition, the Deed of Donation had defects, which ultimately made it void. Accordingly, the First Division declared that the registered owners of the property, Macario and Gimenez, now represented by their heirs, have the better right of possession over the property. It also ordered the City of Naga to immediately vacate and surrender said property to the former.7

Thus, the City of Naga filed a second Motion for Reconsideration8 before this Court, insisting on its right to the subject property where its city hall and other arms of government stand.1âшphi1

I agree with the ponencia that the second Motion for Reconsideration merits this Court's attention. While it is a general rule that a second motion for reconsideration is a prohibited pleading as embodied in Rule 52, Section 2 of the Rules of Court, this Court has laid down instances when a second motion for reconsideration may be entertained: when the assailed decision is legally erroneous, patently unjust, and capable of causing unwanted injuries to the parties.9 In Cristobal v. Philippine Airlines,10 this Court held that "[w]here a tribunal renders a decision substantially reversing itself on a matter, a motion for reconsideration seeking reconsideration of this reversal, for the first time, is not a prohibited second motion for reconsideration."11 This applies to the present case.

In the assailed Decision and Resolution of the First Division, the Court failed to take into consideration previous rulings regarding the State's power of eminent domain and the corollary remedies afforded to private citizens. The most glaring mistake was the First Division's finding that jurisprudence on eminent domain were inapplicable because the case was not for expropriation. It was likewise an error to declare that just compensation was inappropriate given that the property was donated to respondent. Consequently, its fallo which ordered respondent to immediately vacate the premises and surrender it to its rightful owners, herein petitioners, was likewise erroneous.

In Republic v. Vda. de Castellvi,12 this Court laid down the circumstances present in taking of private property for purposes of eminent domain: (1) the expropriator must enter a private property; (2) entrance into the private property must be for more than a momentary period; (3) entry into the property should be under warrant or color of legal authority; (4) the property must be devoted to a public use or otherwise informally appropriated or injuriously affected; and (5) the utilization of the property for public use must be in such a way to oust the owner and deprive him of all beneficial enjoyment of the property.13 Such elements, which have been often repeated in our jurisprudence, were ignored in the assailed Decision and Resolution of the First Division.

There is no question that respondent's occupation of the subject lots was an exercise of its power of eminent domain. Respondent occupied the subject lots owned by petitioners in pursuit of its purpose and objectives through a defective and void Deed of Donation. The area occupied was used by the Land Transportation Office, the National Bureau of Investigation, the Department of Labor and Employment, the Philippine Postal Corporation, the Fire Department, and other government agencies and instrumentalities since 1954.14 This undeniably made it impossible for petitioners to use their own properties.

Having established respondent's exercise of eminent domain and recognizing its failure to file for expropriation proceedings, it is necessary to examine the remedies afforded the private citizens and registered owners of the affected land. Again, the available remedies were ignored by the First Division in their assailed Decision and Resolution.

In this case, respondent took possession of the subject lots without initiating an expropriation proceeding and relied solely on the defective Deed of Donation to defend its claim. While the First Division was correct in deeming this as an invalid action of a state instrumentality, it was incorrect in finding that such was not an exercise of eminent domain. Furthermore, it erred in ordering respondent to vacate the property and surrender possession of the same to petitioners, and pay back rentals instead of just compensation. Such findings directly opposed current jurisprudence.

In Secretary of the Department of Public Works and Highways v. Spouses Tecson,15 this Court stated the remedies for an aggrieved private party when its property is taken by the government for public use, more so, when the aggrieved party is deprived of their property without the benefit of just compensation:

When a property is taken by the government for public use, jurisprudence clearly provides for the remedies available to a landowner. The owner may recover his property if its return is feasible or, if it is not, the aggrieved owner may demand payment of just compensation for the land taken. For failure of respondents to question the lack of expropriation proceedings for a long period of time, they are deemed to have waived and are estopped from assailing the power of the government to expropriate or the public use for which the power was exercised. What is left to respondents is the right of compensation. The trial and appellate courts found that respondents are entitled to compensation. The only issue left for determination is the propriety of the amount awarded to respondents.16 (Emphasis supplied, citations omitted)

Forfom Development Corporation v. Philippine National Railways17 is likewise illustrative:

Similar to Forfom Development Corporation, there was a taking of the property without payment of any just compensation and it is no longer feasible to return the property to petitioners. Respondents currently and continuously occupy the subject lots. Moreover, the improvements found on the landform are vital to its regular operations. Verily, ordering them to vacate the properties at this point would prove tedious and impractical. As such, what can only be given now is the payment of just compensation plus interest for the unjust delay.

I agree with the ponencia that instead of monthly rentals, the petitioners must be awarded just compensation. I further agree that this Court must ensure that a reasonable and just amount is awarded the petitioners.

In Secretary of the Department of Public Works and Highways v. Spouses Tecson, this Court defined just compensation as the fair value of the property fixed at the time of the actual taking by the government. It expounded:

The controlling doctrine is that when there is actual taking by the government without expropriation proceedings, the owner of the property is entitled to just compensation which is pegged at the value of the property at the time of taking.20 Such parameter is deemed a reasonable and equitable compensation to the property owner. However, this would only be fair if payment of just compensation is made promptly. Failure to pay the property owners' appropriate compensation is not only tantamount to robbing them of their property, but has the effect of taking away their potential earnings or income if they were able to utilize their property. In Apo Fruits Corporation v. Land Bank of the Philippines,21 this Court held:

Here, respondent has been using petitioner's property since 1954 without instituting expropriation proceedings for the property owners' benefit. Just compensation was never determined nor paid. To base the value of the property at the time of taking over seven decades ago would be unjust as it does not contemplate the opportunities lost nor does it acknowledge the extreme delay in payment. Accordingly, the value of just compensation awarded to petitioners should consider not only the fair market value of the property upon taking, but also the opportunity loss petitioners suffered due to respondent's use of the property without payment.

I concur with the ponente's application of the formula for calculating just compensation in Republic v. Spouses Nocom.23 The present value of the property's fair market value at the time of acquisition is considered, allowing private citizens to recover what they have lost and ensuring justice and equity.

In economics, the definition of present value is the value for an asset that yields a stream of income over time.24 It recognizes that the value of money is not static and that a certain amount of money may be worth more in the future due to a variety of factors,25 such as interest and inflation. It demonstrates that receiving the same amount in the future would not have the same value as receiving it today.

For example, PHP 5,000 which will be received three years from now will be worth less than PHP 5,000 received today. This is because given a specified rate of return, PHP 5,000 invested for three years would yield earnings. At the same time, waiting three years before investing the same amount of money results in three years' worth of lost interest, thereby diminishing the future value of the same amount of money.

Additionally, the passage of three years will diminish purchasing power. Given current prices, PHP 5,000 could purchase more items today, whereas three years from now, prices of basic commodities will have increased due to inflation. Consequently, the concept of present value considers the interest income a property owner could earn if compensation was received when the property was seized.26 In addition, it considers the potential depreciation of the amount due to the passage of time between the taking of the property and the payment of just compensation.

I reiterate the formula set forth in Secretary of the Department of Public Works and Highways v. Spouses Tecson:

To further clarify the concept of present value before this Court, I offered the expanded formula below:28

In applying the formula, just compensation will reflect not only on the value of the property during the time of the taking, but also the cost of the property today.

Given that the subject property in the current controversy did not undergo just compensation proceedings, this Court does not hold any data as to how much the property was worth during the time of the taking. Verily, this Court is unable to compute for just compensation. Accordingly, I concur with the majority that the case must be remanded to the Regional Trial Court for the determination of the appropriate amount of just compensation using the present value formula.

The initial complaint for unlawful detention was filed before the Municipal Trial Court of Naga City and was later elevated to the Regional Trial Court on appeal. The majority believes a pro hac vice ruling is necessary for the remand of this case to the Regional Trial Court of Naga City, it not being the court of origin. I disagree.

Pro hac vice means "on this particular occasion" in Latin. It is used when the facts of a case are so exceptional that the court's decision applies only to those facts and not to other situations. It avoids setting a precedent and may lead to duplicative litigation. However, to put the issue at rest, that is, whether this Court may remand to the Regional Trial Court the determination of just compensation, our decision in this case should not only bind the parties in this case, but also future parties in similar situations.30

Moreover, the pro hac vice application goes against the principle of judicial economy. Judicial economy refers to the effectiveness of the court system and its operations.31 It stipulates that cases must be resolved at the lowest possible cost to the parties and to the courts' time, effort, and resources.32 Here, the only issue remaining is the determination of just compensation. Given the dearth of information on the subject property's valuation, this Court is constrained to remand the case for the determination of just compensation which is well within the jurisdiction of the Regional Trial Court. To require the parties to file an entirely new case to once again and go through the process of trial would deplete the resources of both the litigants and the courts.1âшphi1

As a final point, while just compensation should ideally be provided in full to the property owner upon taking, this is rarely the case. In numerous cases, like the one at hand, the taking by the government occurs well before the filing of lawsuits for appropriate compensation. Thus, determining just compensation based on the date of the taking is insufficient to recompense the property owner for the loss suffered. Consequently, the remedy for this delay has been the application of interest to the amount of just compensation.

In the present case, the majority ordered respondents to pay petitioners just compensation with legal interest of 6% per annum on the value of the property at the time of taking or August 16, 1954, until full payment is made. Nevertheless, the imposition of interest in expropriation or inverse condemnation must be clarified further.

In Lara's Gifts & Decors, Inc. v. Midtown Industrial Sales, Inc.33 this Court identified two kinds of interest: conventional interest and compensatory interest. These are conceptually distinct. Conventional interest refers to the compensation paid by a bo1Tower for the "cost of the use of money[.]"34 This is due only if expressly stipulated in writing.35 Compensatory interest, on the other hand, is a penalty or indemnity on monetary judgments that is demandable when the bo1Tower incurs delay.36 These two must be distinguished from the compounded interest used to calculate present value. The compounded interest rates are made "part of the value of the property itself and not merely the interest given by two parties entering into a loan or an interest rate given together with a monetary judgment."37

In Secretary of the Department of Public Works and Highways v. Spouses Tecson,38 this Court discussed how interest has been imposed m expropriation cases:

Depending on the applicable Central Bank circular, the legal interest rate is either 6% or 12%. Yet, these Central Bank circulars impose rates without any explanation and exist merely to prevent the imposition of unduly high interest rates. The calculation of present value, meanwhile, depends on the average annual interest rate over time.40 Considering the current situation does not involve a loan or forbearance for which a conventional interest rate is acceptable, it is recommended that the present value method be utilized, as it is more compatible with the notion of equitable and fair compensation.

As for compensatory interest, its application was succinctly illustrated in Lara's Gifts & Decors41 as follows:

In view of the foregoing and to properly compensate petitioners for respondent's almost seven-decade long possession of the subject lots without compensation, petitioners are entitled to payment of just compensation reflecting the present value of the amount of money owed to the property owners, and the payment of compensatory legal interest at the rate of 6% per annum from the finality of the Decision until its full payment.43