HENRY L. SY vs.

LOCAL GOVERNMENT OF QUEZON CITY

G.R. No. 202690, June 5, 2013

FACTS: November 7, 1996, the City through then Mayor Ismael Mathay, 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 Henry Sy, which was intended to be used as a site for several government
activities.

March 18,1997, pursuant to Section 19 of the Local Government Code of 1991 (LGC), the City
deposited the amount pf P241,090 with the Office of the Clerk of Court, representing 15% of the
fair market value of the subject property based on its tax declaration. Sy did not question the right
to expropriate the property but only the amount of just compensation. The RTC tasked 3
commissioners to determine the proper amount of just compensation. It was decided by 2 of them
that it should be P5, 500 per sq. m. to be computed from the date of the filing of the expropriation
complaint (November 7, 1996). On the other hand, 1 said that the amount should be P13,500 per
sq. m. The RTC ruled that just compensation should be P5, 500 per sq. m. It also didn’t award
damages and back rentals in favor of Sy. For equity considerations, 6% legal interest was awarded
computed from the date of the filing of the expropriation until full payment of just compensation.
The CA affirmed the RTC’s ruling with the modification that the City should pay Sy the amount
of P200, 000 as exemplary damages (because the City took the property without even initiating
expropriation proceedings) and attorney’s fees equivalent to 1% of the total amount due. Sy was
denied payment for back rentals and damages for shelved plans of utilization.

Both Sy and the City’s motion for reconsiderations were denied. Hence, this petition.

ISSUE: WON the CA erred in upholding the amount of just compensation, its grant of 6% legal
interest, exemplary damages and attorney’s fees?

HELD: The correct legal interest is 12% owing to the nature of the City’s obligation as an effective
forbearance. It was held in Republic v. CA that “the debt incurred by the government on account
of the taking of the property subject of an expropriation constitutes and effective forbearance which
therefore, warrants the application of the 12% legal interest.” Also, legal interest should accrue
from the time of the “taking” of the property in 1986 (when the property was already used as a
Barangay day care and office) and not from the filing of the complaint for expropriation on
November 7, 1996. The lack of proper authorization, i.e. resolution to effect expropriation, did not
affect the character of the City’s taking of the subject property in 1986. There is “taking’ when the
owner is actually deprived of the use of his property thus, the legal character of the City’s action
as one of “taking” did not change.

Because of such irregularity in the actual “taking” and filing of the expropriation proceedings,
exemplary damages and attorney’s fees should be awarded to the landowner for equity purposes.
MIAA v. Rodriguez states that “these are wanton and irresponsible acts which should be
suppressed and corrected. Hence the award of exemplary damages and attorney’s fees is in order.”

With regard to the amount of just compensation, the P5, 500 per sq. m. cannot be sustained. This
was derived from documents that were issued in 1996. Valuation should be based as of the time
of the taking which was in 1986. Thus, the case should be remanded to the RTC for proper
assessment.

WHEREFORE, the petition is PARTLY GRANTED. The CA decision is SET ASIDE and the
case is REMANDED to the RTC.