PEZA VS PULIDO

PEZA VS PULIDO

FACTS:

In this appeal, we heed the plea of the owner of expropriated property for the much-delayed payment of just compensation by affirming the decision ²whereby the Court of Appeals upheld the decision  of RTC.

The controversy has its genesis in the action for the expropriation of three parcels of irrigated riceland situated in Rosario, Cavite that the petitioner commenced on May 15, 1981 in the Court of First Instance of Cavite against the several individual owners.

The parcels of Riceland were: (a) Lot 1408, with an area of 31,426 square meters and covered by Transfer Certificate of Title (TCT) No. T-2908 of the Registry of Deeds of Cavite in the names of Jose Pulido and Vicenta Panganiban; (b) Lot 1409-B-2, with an area of 32,907 square meters and covered by TCT No. T-70724 of the Registry of Deeds of Cavite co-owned by Francisco Prodigalidad and Medardo Prodigalidad; and (c) Lot 1406, with an area of 26,008 square meters and covered by TCT No. T-113498 registered in the name of Salud Jimenez.

During the pendency of the case, Lot 1406 was subdivided into Lot 1406-A (with an area of 12,890 square meters) and 1406-B (with an area of 13,118 square meters).

On July 11, 1991, the RTC sustained the right of the petitioner to expropriate the three parcels of riceland, but later partly reconsidered and released Lot 1406-A from expropriation.

The petitioner appealed to the CA.

On January 4, 1993, the petitioner and the Estate of Salud Jimenez (due to Salud Jimenez having meanwhile died on October 30, 1984) entered into a Compromise Agreement, stipulating essentially as follows:

(a) That the petitioner "agrees to withdraw its appeal from the Order of the Honorable Court dated October 25, 1991 which released lot 1406-A from the expropriation proceedings" and the Estate of Jimenez, in turn, "agrees to waive, quitclaim and forfeit its claim for damages and loss of income which it sustained by reason of the possession of [Lot 1406-A] by [EPZA] from 1981 up to the present";

(b) The parties agree that the Estate of Salud Jimenez would transfer Lot 1406-B to the petitioner in exchange for "lot 434 with an area of 14,167 square meters and covered by Transfer Certificate of Title No. 14772 of the Registry of Deeds of Cavite";

(c) The swap arrangement "recognizes the fact that the lot 1406-B xxx is considered expropriated in favor of the government" and the payment for which being Lot 434; and

(d) The parties "agree that they will abide by the terms of the foregoing agreement in good faith and the Decision to be rendered based on this Compromise Agreement is immediately final and executory."

In due time, the CA remanded the case to the RTC and the RTC approved the Compromise Agreement.

Contrary to its express undertaking under the Compromise Agreement, the petitioner failed to transfer the title of Lot 434 to the Estate of Salud Jimenez because the registered owner was Progressive Realty Estate, Inc., not the petitioner.

RTC annulled the Compromise Agreement and directed the petitioner to peacefully return Lot 1406-B to the Estate of Salud Jimenez. The petitioner went to the CA which partially granted the petition for certiorari and prohibition; set aside the order of the RTC on the return of Lot 1406-B to the Estate of Salud Jimenez; and directed that the RTC determine the just compensation for Lot 1406-B.

Estate of Salud Jimenez appealed to the Court. The Court promulgated its decision:  the instant petition is hereby denied. The Regional Trial Court of Cavite City is hereby ordered to proceed with the hearing of the expropriation proceedings, docketed as Civil Case No. N-4029, regarding the determination of just compensation for Lot 1406-B. The Court explained and that the provisions of the Compromise Agreement had consequently related only to the form or mode of payment of the just compensation for Lot 1406-B, that is, in lieu of cash, another lot (Lot 434) was to be delivered as just compensation to the Estate of Salud Jimenez.

Considering that the decision in G.R. No.137285 became final and executory, the RTC conducted proceedings to determine the just compensation for Lot 1406-B. During the trial, however, the petitioner raised the issue of whether the just compensation should be based on the value or assessment rate prevailing in 1981 or in 1993, insisting that the just compensation for Lot 1406-B should be equivalent to its fair market value in 1981, the time of the filing of its expropriation complaint, which was the time of the taking. The Estate of Salud Jimenez contended, in contrast, that the just compensation should be reckoned as of August 4, 1997, when the Compromise Agreement was annulled and set aside.

RTC- The just compensation for Lot 1406-B should be based on the value or assessment rate prevalent in 1993, the year the parties entered into the Compromise Agreement and thereby agreed that the just compensation for Lot 1406-B was Lot 434; The total compensation to be paid should bear interest at the legal rate reckoned from August 23, 1993.

ISSUE:

W/N the value of expropriation would reckon from the time of the taking or the time of compromise agreement.

RULING:

The petition for review lacks merit. Just compensation for Lot 1406-B must be based on value of property prevailing in 1993

To reiterate, in G.R. No. 137285, the Court upheld the annulment of the Compromise Agreement and recognized that the agreed upon mode of payment of the just compensation for Lot 1406-B with Lot 434 was cancelled. It is notable that the Court mentioned nothing therein about the invalidation of the amount of just compensation corresponding to the mode of payment, which was the value of Lot 434 at the time, which silence was the Court’s acknowledgment that the parties understood and accepted, by entering into the Compromise Agreement in 1993, that the just compensation for Lot 1406-B was Lot 434 (or the value of Lot 434, which at the time of the swap in 1993 was definitely much higher than Lot 434’s value in 1981).

Accordingly, we completely agree with the RTC’s observation that "when the parties signed the compromise agreement and the same was approved, they had in fact settled between themselves the question of what is just compensation and that both of them had intended that defendant would be compensated on the basis of prevailing values at the time of the agreement."¹⁷ We further completely agree with the CA’s conclusion that "by agreeing to a land swap in 1993 in the ill-fated compromise agreement, [PEZA] had impliedly agreed to paying just compensation using the market values in 1993."¹⁸

With the annulment of the Compromise Agreement, the payment of just compensation for Lot 1406-B now has to be made in cash. In that regard, the order of the Court to remand to the RTC for the determination of just compensation was indubitably for the sole objective of ascertaining the equivalent monetary value in 1993 of Lot 1406-B or Lot 434.

In due course, the RTC found that just compensation of Lot 1406-B was P6,200.00/square meter. Such finding, which the CA upheld, took into due consideration the clear and convincing evidence proving the fair valuation of properties similar and adjacent to Lot 1406-B at or near 1993.

Thus, in addition, the owner is entitled to legal interest from the time of the taking of the property until the actual payment 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.²⁰

It is undeniable that just compensation was not promptly made to the Estate of Salud Jimenez for the taking of Lot 1406-B by the petitionerThe move to compensate through the swap arrangement under the Compromise Agreement was aborted or amounted to nothing through no fault of the Estate of Salud Jimenez. The petitioner, which should have known about the inefficacy of the swapping of Lot 434 for Lot 1406-B, could even be said to have resorted to the swapping for the purpose of delaying the payment. Thus, it was solely responsible for the delay. In fact, the Estate of Salud Jimenez was compelled to seek the rescission of the Compromise Agreement, a process that prolonged even more the delay in the payment of just compensation. . In view of this, the CA’s fixing of legal interest at only 6% per annum cannot be upheld and must be corrected, for that rate would not ensure that compensation was just in the face of the long delay in payment.

Accordingly, we hereby impose 12% interest per annum on the unpaid gross value of P81,331,600.00 for Lot 1406-B (i.e., 13,118 square meters x P6,200.00/square meter) from August 23, 1993, the date of the approval of the failed Compromise Agreement, until the full amount of the just compensation is paid, as a way of making the compensation just. This accords with a long line of pertinent jurisprudence,²³ whereby the Court has imposed interest at 12% per annum in eminent domain whenever the expropriator has not immediately delivered the just compensation.

WHEREFORE, we DENY the petition for review on certiorari filed by Philippine Export Zone Authority, and AFFIRM the decision promulgated by the Court of Appeals on April 20, 2009, subject to the MODIFICATION that the legal interest chargeable on the unpaid just compensation for Lot 1406-B is 12% per annum reckoned from August 23, 1993 on the unpaid gross value of P81,331,600.00 for Lot 1406-B.