G.R. No. 202690 ; June 5, 2013
HENRY L. SY, Petitioner, vs. LOCAL GOVERNMENT OF QUEZON CITY, Respondent.

FACTS

On November 7, 1996, respondent Local Government of Quezon City filed a complaint for expropriation to acquire a 1,000 sq. m. parcel of land owned by petitioner Henry L. Sy, intended for a barangay multi-purpose hall and community facilities. The City deposited ₱241,090.00, representing 15% of the property’s fair market value based on its tax declaration. During proceedings, only the amount of just compensation was at issue. Commissioners appointed by the RTC submitted differing recommendations: two commissioners recommended ₱5,500.00 per sq. m., while a third recommended ₱13,500.00 per sq. m. The RTC, in an Order dated August 22, 2008, adopted the ₱5,500.00 per sq. m. valuation, awarded 6% legal interest from November 7, 1996, but found no basis for damages or back rentals. On appeal, the CA affirmed the just compensation amount but modified the order, awarding Sy ₱200,000.00 as exemplary damages and attorney’s fees equivalent to 1% of the total amount due, citing the City’s taking of the property without initiating expropriation proceedings. Sy’s motion for reconsideration was denied by the CA for being filed one day late. Sy elevated the case to the Supreme Court.

ISSUE

1. Whether the CA correctly dismissed Sy’s motion for reconsideration for being filed out of time.
2. Whether the CA correctly upheld the amount of just compensation as determined by the RTC and its grant of six percent (6%) legal interest.
3. Whether the CA correctly awarded exemplary damages and attorney’s fees.

RULING

1. On the procedural issue: The Supreme Court found that Sy’s motion for reconsideration was indeed filed one day late, which ordinarily renders the CA decision final and executory. The Court did not find the proffered excuse of counsel’s secretary’s inadvertence as constituting excusable negligence. However, the Court relaxed the procedural rules, as the injustice from strict application (outright deprivation of property) was incommensurate with the one-day delay, especially given the substantive errors in the adjudication of just compensation and interest.
2. On just compensation and legal interest: The Supreme Court upheld the CA’s affirmation of the just compensation at ₱5,500.00 per sq. m., finding the commissioners’ report based on the City Appraisal Committee recommendation, Sy’s own sworn statements, and his tax declaration to be credible and reasonable. However, the Court modified the rate and accrual of legal interest. Citing Republic v. CA, the Court ruled that the government’s obligation arising from expropriation constitutes an effective forbearance of money, warranting an interest rate of twelve percent (12%) per annum, not six percent (6%). This interest should be computed from the date of taking, which is November 7, 1996 (the filing date of the expropriation complaint), until full payment.
3. On exemplary damages and attorney’s fees: The Supreme Court deleted the awards of exemplary damages and attorney’s fees. The Court held that the City’s act of taking possession of the property upon filing the complaint and depositing the provisional amount was authorized under Section 19 of the Local Government Code (RA 7160). This did not constitute a “taking without initiating expropriation proceedings,” as an ordinance (Ordinance No. Sp-181) had been duly enacted prior to the filing. Therefore, the basis for the awards—the Manila International Airport Authority v. Rodriguez case—was inapplicable. The City’s actions were in accordance with law, and no bad faith was demonstrated to justify exemplary damages. Consequently, the award of attorney’s fees, being dependent on the award of exemplary damages, was also unwarranted.
DISPOSITIVE: The petition was partly granted. The awards of exemplary damages and attorney’s fees were deleted. The just compensation was affirmed at ₱5,500.00 per sq. m. The legal interest was modified to twelve percent (12%) per annum, computed from November 7, 1996, until full payment.