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~upreme QJ:ourt
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SECOND DIVISION

HENRYL. SY, G.R. No. 202690

Petitioner,
Present:
BRION, J, Acting Chairperson,*
-versus- DEL CASTILLO,
PEREZ,
PERLAS-BERNABE, and
LOCAL GOVERNMENT OF LEONEN,** JJ
QUEZON CITY,
Respondent. Promulgated:

. JUN 0 5 2013 ~~~

x----------------------------------------------------------------------------------~--(S--x
DECISION

PERLAS-BERNABE, J:

Assailed in· this petition for review on certiorari 1 are the January 20,
2012 Decision 2 and July 16, 2012 Resolution 3 of the Court of Appeals (CA)
in CA-G.R. CV No. 91964 which affirmed with modification the August 22,
2008 Order4 of the Regional Trial Court of Quezon City, Branch 80 (RTC)
in Civil Case No. Q-96-29352, ordering respondent Local Government of
Quezon City (the City) to pay petitioner Henry L. Sy (Sy) just compensation
set at P5,500.00 per square meter (sq. m.), including P200,000.00 as
exemplary damages and attorney's fees equivalent to one percent (1 %) of
the total amount due.

Designated Acting Chairperson in lieu of Justice Antonio T. Carpio per Special Order No. 1460 dated
May 2<), 2013.
Designated Acting Member per Special Order No. 1461 dated May 29, 2013.
Rollo, pp. 9-23.
ld. at 24-44. Penned. by Associate Justic,e Romeo F. Barza, with Associate Justices Noel G. Tijam and
Edwin D. Sorongon, concurring.
Id. at 45-47.
CA rolla, pp. 19-24. Penned by Presiding Judge Charito B. Gonzales.
Decision 2 G.R. No. 202690

The Facts

On November 7, 1996, the City, through then Mayor Ismael Mathay,

Jr., 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 Sy
(subject property), 5 which was intended to be used as a site for a multi-
purpose barangay hall, day-care center, playground and community activity
center for the benefit of the residents of Barangay Balingasa, Balintawak,
Quezon City. 6 The requisite ordinance to undertake the aforesaid
expropriation namely, Ordinance No. Sp-181, s-94, was enacted on April 12,
1994.7

On March 18, 1997, pursuant to Section 198 of Republic Act No.

7160 (RA 7160), otherwise known as the “Local Government Code of
1991,” the City deposited the amount of P241,090.00 with the Office of the
Clerk of Court, representing 15% of the fair market value of the subject
property based on its tax declaration.9

During the preliminary conference on November 8, 2006, Sy did not

question the City’s right to expropriate the subject property. Thus, only the
amount of just compensation remained at issue.10

On July 6, 2006, the RTC appointed Edgardo Ostaco (Commissioner

Ostaco), Engr. Victor Salinas (Commissioner Salinas) and Atty. Carlo
Alcantara (Commissioner Alcantara) as commissioners to determine the
proper amount of just compensation to be paid by the City for the subject
property. Subsequently, Commissioners Ostaco and Alcantara, in a Report
dated February 11, 2008, recommended the payment of P5,500.00 per
sq. m., to be computed from the date of the filing of the expropriation
complaint, or on November 7, 1996. On the other hand, Commissioner

5
Rollo, p. 25. The subject property is covered by two (2) titles, namely, Transfer Certificate of Title
(TCT) No. 113193, with an area of 649 sq. m., and TCT No. 113194, with an area of 905 sq. m. (See
also CA rollo, p. 19).
6
Id.
7
Id. at 36.
8
SEC. 19. Eminent Domain. - A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose or welfare
for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the
provisions of the Constitution and pertinent laws: Provided, however, That the power of eminent
domain may not be exercised unless a valid and definite offer has been previously made to the owner,
and such offer was not accepted: Provided, further, That the local government unit may
immediately take possession of the property upon the filing of the expropriation proceedings and
upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market
value of the property based on the current tax declaration of the property to be expropriated:
Provided, finally, That, the amount to be paid for the expropriated property shall be determined by the
proper court, based on the fair market value at the time of the taking of the property. (Emphasis
supplied)
9
Rollo, pp. 25-26.
10
Id. at 26.
Decision 3 G.R. No. 202690

Salinas filed a separate Report dated March 7, 2008, recommending the

higher amount of P13,500.00 per sq. m. as just compensation.11

The RTC Ruling

In the Order dated August 22, 2008,12 the RTC, citing the principle
that just compensation must be fair not only to the owner but to the
expropriator as well, adopted the findings of Commissioners Ostaco and
Alcantara and thus, held that the just compensation for the subject property
should be set at P5,500.00 per sq. m.13 Further, it found no basis for the
award of damages and back rentals in favor of Sy. 14 Finally, while legal
interest was not claimed, for equity considerations, it awarded six percent
(6%) legal interest, computed from November 7, 1996 until full payment of
just compensation.15

Dissatisfied, Sy filed an appeal with the CA.16

The CA Ruling

In the Decision dated January 20, 2012,17 the CA affirmed the RTC’s
ruling but modified the same, ordering the City to pay Sy the amount of
P200,000.00 as exemplary damages and attorney’s fees equivalent to one
percent (1%) of the total amount due.

It found the appraisal of Commissioners Ostaco and Alcantara for the

subject property to be more believable than the P13,000.00 per sq. m.
valuation made by independent appraisers Cuervo and Asian Appraisers in
1995 and 1996, respectively, considering that it was arrived at after taking
into account: (a) the fair market value of the subject property in the amount
of P4,000.00 per sq. m. based on the September 4, 1996 recommendation of
the City Appraisal Committee;18 (b) the market value of the subject lot in the
amount of P2,000.00 per sq. m. based on several sworn statements made by
Sy himself;19 and (c) Sy’s own tax declaration for 1996,20 stating that the
subject property has a total market value of P2,272,050.00. Accordingly, it
held that the fair market value of P5,500.00 per sq. m., or P5,500,000.00 in

11
Id. at 26-27. See also CA rollo, pp. 20-21.
12
CA rollo, pp. 19-24.
13
Id. at 23.
14
Id.
15
Id.
16
Id. at 25-26.
17
Rollo, pp. 24-44.
18
Id. at 37-38.
19
Id. at 38.
20
Id. Covered under Tax Declaration Nos. D-01200698 and D-01200214, with market values of
P778,800.00 and P1,493,250.00, respectively, or P2,272,050.00 in total.
Decision 4 G.R. No. 202690

total, for the 1,000 sq. m. subject property arrived at by Commissioners

Ostaco and Alcantara was more than fair and reasonable.21

The CA also denied Sy’s assertion that he should be entitled to

damages on account of the purported shelving of his housing project, finding
no sufficient evidence to support the same. Likewise, it observed that the
expropriation would not leave the rest of Sy’s properties useless as they
would still be accessible through a certain Lot 8 based on the Property
Identification Map.22

Nonetheless, citing the case of Manila International Airport Authority

v. Rodriguez (MIAA), 23 it awarded exemplary damages in the amount of
P200,000.00 and attorney’s fees equivalent to one percent (1%) of the
amount due because of the City’s taking of the subject property without even
initiating expropriation proceedings. 24 It, however, denied Sy’s claim of
back rentals considering that the RTC had already granted legal interest in
his favor.25

Aggrieved, Sy moved for reconsideration which was denied in the

Resolution dated July 16, 201226 for being filed out of time.27 The City also
filed a motion for reconsideration which was equally denied for lack of
merit.28

Hence, this petition.

Issues Before The Court

The present controversy revolves around the issue of whether the CA

correctly: (a) dismissed Sy’s motion for reconsideration for being filed out
of time; (b) upheld the amount of just compensation as determined by the
RTC as well as its grant of six percent (6%) legal interest; and (c) awarded
exemplary damages and attorney’s fees.

The Court’s Ruling

The petition is partly meritorious.

21
Id.
22
Id. at 38-40.
23
G.R. No. 161836, February 28, 2006, 483 SCRA 619, 633.
24
Rollo, pp. 42-43.
25
Id. at 42.
26
Id. at 45-47.
27
Id. at 46.
28
Id. at 47.
Decision 5 G.R. No. 202690

A. Failure to seasonably move for

reconsideration; excusable
negligence; relaxation of procedural
rules

At the outset, the Court observes that Sy’s motion for reconsideration
was filed out of time and thus, was properly dismissed by the CA. Records
show that, as per the Postmaster’s Certification, the CA’s January 20, 2012
Decision was received by Sy on January 26, 2012 and as such, any motion
for reconsideration therefrom should have been filed not later than fifteen
(15) days from receipt,29 or on February 10, 2012.30 However, Sy filed his
motion for reconsideration (subject motion) a day late, or on February 13,
2012,31 which thus, renders the CA decision final and executory.32

In this regard, it is apt to mention that Sy’s counsel, Atty. Tranquilino

F. Meris (Atty. Meris), claims that his secretary’s inadvertent placing of the
date January 27, 2012, instead of January 26, 2012, on the Notice of
Decision33 constitutes excusable negligence which should therefore, justify a
relaxation of the rules.

The assertion is untenable.

A claim of excusable negligence does not loosely warrant a relaxation

of the rules. Verily, the party invoking such should be able to show that the
procedural oversight or lapse is attended by a genuine miscalculation or
unforeseen fortuitousness which ordinary prudence could not have
guarded against so as to justify the relief sought.34 The standard of care
required is that which an ordinarily prudent man bestows upon his important
business.35 In this accord, the duty rests on every counsel to see to adopt and
strictly maintain a system that will efficiently take into account all court
notices sent to him.36

29
See Section 1, Rule 37 of the Rules of Court.
30
Rollo, p. 46.
31
February 11 and 12, 2012 fall on a Saturday and Sunday, respectively.
32
Section 2, Rule 36 of the Rules of Court partly provides:
SEC. 2. Entry of judgments and final orders. — If no appeal or motion for new trial or
reconsideration is filed within the time provided in these Rules, the judgment or final
order shall forthwith be entered by the clerk in the book of entries of judgments. The
date of finality of the judgment or final order shall be deemed to be the date of its entry.
The record shall contain the dispositive part of the judgment or final order and shall be
signed by the clerk, within a certificate that such judgment or final order has become final
and executory. (2a, 10, R51)
33
Rollo, p. 10.
34
See Fernandez v. Tan Tiong Tick, 111 Phil. 773, 779 (1961).
35
Id., citing Gaylord v. Berry, 169 N.C. 733, 86 S.E. 623.
36
Colcol v. Philippine Bank of Commerce, 129 Phil. 117-119 (1967), citing Mendoza v. Bulanadi, 108
Phil. 11 (1967).
Decision 6 G.R. No. 202690

Applying these principles, the Court cannot excuse Atty. Meris’

misstep based on his proffered reasons. Evidently, the erroneous stamping of
the Notice of Decision could have been averted if only he had instituted a
credible filing system in his office to account for oversights such as that
committed by his secretary. Indeed, ordinary prudence could have prevented
such mistake.

Be that as it may, procedural rules may, nonetheless, be relaxed for

the most persuasive of reasons in order to relieve a litigant of an injustice not
commensurate with the degree of his thoughtlessness in not complying with
the procedure prescribed. 37 Corollarily, the rule, which states that the
mistakes of counsel bind the client, may not be strictly followed where
observance of it would result in the outright deprivation of the client’s
liberty or property, or where the interest of justice so requires.38

As applied in this case, the Court finds that the procedural

consequence of the above-discussed one-day delay in the filing of the
subject motion – which, as a matter of course, should render the CA’s
January 20, 2012 Decision already final and executory and hence, bar the
instant petition – is incommensurate to the injustice which Sy may suffer.
This is in line with the Court’s observation that the amount of just
compensation, the rate of legal interest, as well as the time of its accrual,
were incorrectly adjudged by both the RTC and the CA, contrary to existing
jurisprudence. In this respect, the Court deems it proper to relax the rules of
procedure and thus, proceed to resolve these substantive issues.

B. Rate of legal interest and time

of accrual

Based on a judicious review of the records and application of

jurisprudential rulings, the Court holds that the correct rate of legal interest
to be applied is twelve percent (12%) and not six percent (6%) per annum,
owing to the nature of the City’s obligation as an effective forbearance.

In the case of Republic v. CA,39 the Court ruled that the debt incurred
by the government on account of the taking of the property subject of an
expropriation constitutes an effective forbearance which therefore, warrants
the application of the 12% legal interest rate, viz:

The constitutional limitation of “just compensation” is considered

to be the sum equivalent to the market value of the property, broadly

37
Lazaro v. CA, 386 Phil. 412, 417 (2000). (Citations omitted)
38
CMTC International Marketing Corporation v. Bhagis International Trading Corporation, G.R. No.
170488, December 10, 2012, 687 SCRA 469, 476, citing Villanueva v. People, G.R. No. 188630,
February 23, 2011, 644 SCRA 358, 368.
39
433 Phil. 107, 122-123 (2002). (Citations omitted)
Decision 7 G.R. No. 202690

described to be the price fixed by the seller in open market in the usual
and ordinary course of legal action and competition or the fair value of the
property as between one who receives, and one who desires to sell, it fixed
at the time of the actual taking by the government. Thus, if property is
taken for public use before compensation is deposited with the court
having jurisdiction over the case, the final compensation must include
interests on its just value to be computed from the time the property is
taken to the time when compensation is actually paid or deposited with the
court. In fine, between the taking of the property and the actual payment,
legal interests accrue in order to place the owner in a position as good as
(but not better than) the position he was in before the taking occurred.

The Bulacan trial court, in its 1979 decision, was correct in

imposing interests on the zonal value of the property to be computed from
the time petitioner instituted condemnation proceedings and “took” the
property in September 1969. This allowance of interest on the amount
found to be the value of the property as of the time of the taking
computed, being an effective forbearance, at 12% per annum should
help eliminate the issue of the constant fluctuation and inflation of the
value of the currency over time. x x x (Emphasis and underscoring
supplied)

In similar regard, the Court, in Land Bank of the Philippines v.

Rivera,40 pronounced that:

In many cases decided by this Court,41 it has been repeated time

and again that the award of 12% interest is imposed in the nature of
damages for delay in payment which in effect makes the obligation on
the part of the government one of forbearance. This is to ensure prompt
payment of the value of the land and limit the opportunity loss of the
owner that can drag from days to decades. (Emphasis and underscoring
supplied)

As to the reckoning point on which the legal interest should accrue,

the same should be computed from the time of the taking of the subject
property in 1986 and not from the filing of the complaint for expropriation
on November 7, 1996.

Records show that the City itself admitted in its Appellee’s Brief filed
before the CA that as early as 1986, “a burden was already imposed upon
the owner of the [subject] property x x x, considering that the expropriated
property was already being used as Barangay day care and office.”42 Thus,
the property was actually taken during that time and from thereon, legal
interest should have already accrued. In this light, the Court has held that: 43

40
G.R. No. 182431, February 27, 2013.
41
Land Bank of the Philippines v. Celada, 515 Phil. 467, 484 (2006) citing Land Bank of the Philippines
v. Wycoco, G.R. No. 140160, 13 January 2004, 419 SCRA 67, 80 further citing Reyes v. National
Housing Authority, G.R. No. 147511, 20 January 2003, 395 SCRA 494.
42
CA rollo, p. 103
43
Republic v. CA, supra note 39.
Decision 8 G.R. No. 202690

x x x [T]he final compensation must include interests on its just

value to be computed from the time the property is taken to the time
when compensation is actually paid or deposited with the court[.] x x x
(Emphasis supplied)

This is based on the principle that interest “runs as a matter of law and
follows from the right of the landowner to be placed in as good position as
money can accomplish, as of the date of the taking.” 44

Notably, the lack of proper authorization, i.e., resolution to effect

expropriation, 45 did not affect the character of the City’s taking of the
subject property in 1986 as the CA, in its January 20, 2012 Decision,
suggests. Case law dictates that there is "taking" when the owner is actually
deprived or dispossessed of his property; when there is a practical
destruction or a material impairment of the value of his property or when he
is deprived of the ordinary use thereof.46 Therefore, notwithstanding the lack
of proper authorization, the legal character of the City’s action as one of
“taking” did not change. In this relation, the CA noted that the City enacted
Ordinance No. Sp-181, s-94, only on April 12, 1994 and filed its
expropriation complaint on November 7, 1996. However, as it previously
admitted, it already commenced with the taking of the subject property as
early as 1986. Accordingly, interest must run from such time.

This irregularity does not, however, proceed without any

consequence. As correctly observed by the CA, citing as basis the MIAA
case, exemplary damages and attorney’s fees should be awarded to the
landowner if the government takes possession of the property for a
prolonged period of time without properly initiating expropriation
proceedings. The MIAA ruling was applied in the more recent case of City of
Iloilo v. Judge Lolita Contreras-Besana ,47 wherein the Court said:

44
MIAA v. Rodriguez, supra note 23, at 631, citing Urtula v. Republic, No. L-22061, 31 January 1968, 22
SCRA 477, 480.
45
Batas Pambansa Bilang 337 was the law applicable at the time of the subject property’s taking in 1986
as RA 7160 took effect only in January 1, 1992. Under Section 9, Book 1, Title 1, Chapter 2 of the
former law, a resolution was the proper authorization to institute condemnation proceedings, thus:
SEC. 9. Eminent Domain. – A local government unit may, through its head and acting
pursuant to a resolution of its head and acting pursuant to a resolution of its sanggunian,
exercise the right of eminent domain and institute condemnation proceedings for public
use or purpose. (Emphasis supplied)
Meanwhile, under Section 19 of RA 7160, an ordinance is required:
SEC. 19. Eminent Domain. - A local government unit may, through its chief executive
and acting pursuant to an ordinance, exercise the power of eminent domain for public
use, or purpose or welfare for the benefit of the poor and the landless, upon payment of
just compensation, pursuant to the provisions of the Constitution and pertinent laws
x x x x (Emphasis supplied)
46
Municipality of La Carlota v. NAWASA, G.R. No. L-20232, September 30, 1964, 12 SCRA 164, citing
U.S. v. Causby, 382 U.S. 256.
47
G.R. No. 168967, February 12, 2010, 612 SCRA 459, 470-471, citing MIAA v. Rodriguez, supra note
23, at 630-632.
Decision 9 G.R. No. 202690

We stress, however, that the City of Iloilo should be held liable for
damages for taking private respondent’s property without payment of just
compensation. In Manila International Airport Authority v.
Rodriguez, the Court held that a government agency’s prolonged
occupation of private property without the benefit of expropriation
proceedings undoubtedly entitled the landowner to damages:

Such pecuniary loss entitles him to adequate

compensation in the form of actual or compensatory
damages, which in this case should be the legal interest
(6%) on the value of the land at the time of taking, from
said point up to full payment by the MIAA. This is based
on the principle that interest "runs as a matter of law and
follows from the right of the landowner to be placed in as
good position as money can accomplish, as of the date of
the taking x x x.

xxxx

For more than twenty (20) years, the MIAA

occupied the subject lot without the benefit of expropriation
proceedings and without the MIAA exerting efforts to
ascertain ownership of the lot and negotiating with any of
the owners of the property. To our mind, these are wanton
and irresponsible acts which should be suppressed and
corrected. Hence, the award of exemplary damages and
attorneys fees is in order. x x x. (Emphasis and
underscoring supplied; citations omitted)

All told, the Court finds the grant of exemplary damages in the
amount of P200,000.00 as well as attorney’s fees equivalent to 1% of the
total amount due amply justified, square as it is with existing jurisprudence.

C. Amount of just compensation

Finally, the Court cannot sustain the amount of P5,500.00/sq. m. as

just compensation which was set by the RTC and upheld by the CA. The
said valuation was actually arrived at after considering: (a) the September 4,
1996 recommendation of the City Appraisal Committee; (b) several sworn
statements made by Sy himself; and (c) Sy’s own tax declaration for 1996.48
It is well-settled that the amount of just compensation is to be ascertained
as of the time of the taking.49 However, the above-stated documents do not
reflect the value of the subject property at the time of its taking in 1986 but
rather, its valuation in 1996. Consequently, the case must be remanded to the
RTC in order to properly determine the amount of just compensation during
such time the subject property was actually taken.

48
Rollo, pp. 37-38.
49
See City of Iloilo v. Judge Lolita Contreras-Besana, supra note 47, at 468-469, citing B.H.
Berkenkotter & Co. v. CA, G.R. No. 89980, December 14, 1992, 216 SCRA 584, 587.
 Decision 10 G.R. No. 202690

WHEREFORE, the petition is PARTLY GRANTED. The January

20, 2012 Decision and July 16, 2012 Resolution of the Court of Appeals in
CA-G.R. CV No. 91964 are hereby SET ASIDE. Accordingly, the case is
REMANDED to the trial court for the proper determination of the amount
of just compensation in accordance with this Decision. To forestall any
further delay in the resolution of this case, the trial court is hereby ordered to
fix the just comp~nsation for petitioner Henry L. Sy's property with dispatch
and report to the Court its compliance. Finally, respondent Local
Government of Quezon City is ordered to PAY exemplary damages in the
amount vf P200,000.00 and attorney's fees equivalent to one percent ( 1%) of
the amount due, after final determination of the amount of JUSt
compensation.

SO ORDERED.

ESTELA J.fEh~BERNABE
Associate Justice

WE CONCUR:

•
~fit~
. Associate Justice
1
Acting Chairperson

~~~<
~C. DEL CASTILLO JO
Associate Justice

'

Associate Justice
Decision 11 G.R. No. 202690

ATTESTATION

I attest thafthe conclusions in the above Decision had been reached in

consultation before the case was assigned to the writer of the opinion of the
Court's Division.

a~tt~
ARTURO D. BRION
Associate Justice
Acting Chairperson, Second Division

CERTIFICATION

•
Pursuant to Section 13, Article VIII of the Constitution, and the
Division Acting Chairperson's _Attestation, I certify that the conclusions in
the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice