Commissioner of Public Highways vs Burgos (Civil Law)

COMMISSIONER OF PUBLIC HIGHWAYS
vs.
HON. FRANCISCO P. BURGOS (Judge of the CFI Cebu City, Branch 11) and Victoria Amigable

--- The taking by the Gov’t of private property thru its power of eminent domain does not give rise to a contractual obligation. Art. 1250 only applies in instances where there was a contract, and not where the obligation to pay arises from law.

G.R. No. L-36706 March 31, 1980

DE CASTRO, J.:

FACTS: Victoria Amigable is the owner of parcel of land situated in Cebu City with an area of 6,167 square meters. Sometime in 1924, the Government took this land for road-right-of-way purpose. The land had since become streets known as Mango Avenue and Gorordo Avenue in Cebu City.

In 1959, Victoria Amigable filed in the CFI Cebu a complaint to recover ownership and possession of the land, and for damages in the sum of P50k for the alleged illegal occupation of the land by the Government, moral damages in the sum of P25k and attorney's fees in the sum of P5k plus costs of suit.

In its answer, ² the Republic alleged that the land was either donated or sold by its owners to the province of Cebu to enhance its value, and that in any case, the right of the owner, if any, to recover the value of said property was already barred by estoppel and the statute of limitations, defendants also invoking the non-suability of the Government.

In a decision rendered on July 29, 1959 by Judge Amador E. Gomez, the complaint was dismissed on the grounds relied upon by the defendants therein. The plaintiff appealed to the SC which reversed the decision, remanded the case to the court of origin for the determination of the compensation to be paid the plaintiff-appellant as owner of the land, including attorney's fees. The Supreme Court decision (1972 decision) also directed that to determine just compensation for the land, the basis should be the price or value thereof at the time of the taking.

In the hearing, the Government proved the value of the property at the time of the taking thereof in 1924 with certified copies, issued by the Bureau of Records Management, of deeds of conveyance executed in 1924 or thereabouts, of several parcels of land in the Banilad Friar Lands in which the property in question is located, showing the price to be at P2.37 per square meter. For her part, Victoria Amigable presented newspaper clippings of the Manila Times showing the value of the peso to the dollar obtaining about the middle of 1972, which was P6.775 to a dollar.

Thereafter, the court which is now the public respondent in the instant petition, rendered judgment on January 9, 1973 directing the Republic of the Philippines to pay Victoria Amigable the sum of P49,459.34 as the value of the property taken, plus P145,410.44 representing interest at 6% on the principal amount of P49,459.34 from the year 1924 up to the date of the decision, plus attorney's fees of 10% of the total amount due to Victoria Amigable, or a grand total of P214,356.75.

SolGen filed a petrev by certiorari to the SC.

ISSUE:

WON Art. 1250 (exchange rate in case of extraordinary inflation) instead of the price or value of the land at the time of the taking (as ordered by the SC when it remanded the case to the CFI) should apply as basis in determining the amount of compensation to Amigable

HELD: NO, price at the time of the taking should be the basis.

Article 1250 of the New Civil Code seems to be the only provision in our statutes, which provides for payment of an obligation in an amount different from what has been agreed upon by the parties because of the supervention of extra-ordinary inflation or deflation.

ART. 1250. In case extra-ordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary.

It is clear that the foregoing provision applies only to cases where a contract or agreement is involved. It does not apply where the obligation to pay arises from law, independent of contract. The taking of private property by the Government in the exercise of its power of eminent domain does not give rise to a contractual obligation.

Moreover, the law as quoted, clearly provides that the value of the currency at the time of the establishment of the obligation shall be the basis of payment which, in cases of expropriation, would be the value of the peso at the time of the taking of the property when the obligation of the Government to pay arises. It is only when there is an "agreement to the contrary" that the extraordinary inflation will make the value of the currency at the time of payment, not at the time of the establishment of the obligation, the basis for payment. In other words, an agreement is needed for the effects of an extraordinary inflation to be taken into account to alter the value of the currency at the time of the establishment of the obligation which, as a rule, is always the determinative element, to be varied by agreement that would find reason only in the supervention of extraordinary inflation or deflation.

Obviously, there can be no "agreement to the contrary" to speak of because the obligation of the Government sought to be enforced in the present action does not originate from contract, but from law which, generally is not subject to the will of the parties.

In the present case, the unusually long delay of private respondent in bringing the present action-period of almost 25 years which a stricter application of the law on estoppel and the statute of limitations and prescription may have divested her of the rights she seeks on this action over the property in question, is an added circumstance militating against payment to her of an amount bigger, which may be three-fold more than the value of the property as should have been paid at the time of the taking. For conformably to the rule that one should take good care of his own concern, private respondent should have commenced proper action soon after she had been deprived of her right of ownership and possession over the land, a deprivation she knew was permanent in character, for the land was intended for, and had become, avenues in the City of Cebu. A penalty is always visited upon one for his inaction, neglect or laches in the assertion of his rights allegedly withheld from him, or otherwise transgressed upon by another.

As to the Sol Gen’s contention that the legal interest on the price of the land should be counted from the time a claim for compensation was filed and not from the time of taking as the SC held in its 1972 Decision, the matter has become the “law of the case” since there was no MR filed before the decision became final. Accordingly, the interest to be paid private respondent, Victoria Amigable, shall commence from 1924, when the taking of the property took place, computed on the basis of P14,615.79, the value of the land when taken in said year 1924.