MIAA vs. Joaquin Rodriguez

CASE DIGEST: G.R. No. 161836, February 28, 2006

Constitutional Law, Expropriation

FACTS:

Petitioner Manila International Airport Authority (MIAA), a GOCC operating the Ninoy Aquino International Airport Complex, implemented expansion programs for its runway in the 70’s. So it bought and occupied some of the properties surrounding the area through expropriation. In 1996, respondent lot owner proposed to sell to MIAA at P2,350.00 per square meter one of the lots already occupied by the expanded runway. No deal was made. So respondent Rodriguez bought the bigger lot, a portion of which was occupied by the runway, as well as all the rights to claim reasonable rents and damages for the occupation, from its owner then, Buck Estate, Inc., for P4 million.

Rodriguez demanded from the MIAA full payment for the property and back rentals for 27 years, amounting to P468.8 million. Failing to reach an agreement with MIAA, Rodriguez filed a case for accion reinvindicatoria with damages. Finding that the MIAA had illegally taken possession of the property, the trial court ruled respondent’s favor. The Court of Appeals modified the trial court’s decision, holding that Rodriguez is entitled to back rentals only from the time he became the registered owner of the property in 1996.

ISSUES:

1. Whether or not Rodriguez was a buyer in bad faith, for having purchased the subject lot in a highly speculative and scheming manner, and in anticipation of a grossly disproportionate amount of profit at the expense of the Government?

2. Whether or not Rodriguez is entitled to exemplary damages and attorney’s fees?

HELD:

The petition is partly meritorious.

There is “taking” when the expropriator enters private property not only for a momentary period but for a more permanent duration, or for the purpose of devoting the property to a public use in such a manner as to oust the owner and deprive him of all beneficial enjoyment thereof. In this context, there was taking when the MIAA occupied a portion thereof for its expanded runway. Where actual taking was made without the benefit of expropriation proceedings, and the owner sought recovery of the possession of the property prior to the filing of expropriation proceedings, the Court has invariably ruled that it is the value of the property at the time of taking that is controlling for purposes of compensation.

Thus, in Commissioner of Public Highways v. Burgos, wherein it took the owner of a parcel of land thirty-five (35) years before she filed a case for recovery of possession taken by the local government unit for a road-right-of-way purpose, this Court held:

…there being no other legal provision cited which would justify a departure from the rule that just compensation is determined on the basis of the value of the property at the time of the taking thereof in expropriation by the Government, not the increased value resulting from the passage of time which invariably brings unearned increment to landed properties, represents the true value to be paid as just compensation for the property taken.

The reason for the rule, as pointed out in Republic v. Lara, is that —

". . . (W)here property is taken ahead of the filing of the condemnation proceedings, the value thereof may be enhanced by the public purpose for which it is taken; the entry by the plaintiff upon the property may have depreciated its value thereby; or, there may have been a natural increase in the value of the property from the time the complaint is filed, due to general economic conditions. The owner of private property should be compensated only for what he actually loses.

The subject lot was occupied as a runway of the MIAA starting in 1972. Thus, the value of the lot in 1972 should serve as the basis for the award of compensation to the owner.

On actual damages for the occupation of the subject lot, undeniably, the MIAA’s illegal occupation for more than 20 years has resulted in pecuniary loss to Rodriguez and his predecessors-in-interest. 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. Case laws ruled that the indemnity for rentals is inconsistent with a property owner’s right to be paid legal interest on the value of the property, for if the condemnor is to pay the compensation due to the owners from the time of the actual taking of their property, the payment of such compensation is deemed to retroact to the actual taking of the property, and hence, there is no basis for claiming rentals from the time of actual taking.

On buyer in bad faith, the point is irrelevant. Regardless of whether or not Rodriguez acted in bad faith, all that he will be entitled to is the value of the property at the time of the taking, with legal interest thereon from that point until full payment of the compensation by the MIAA. There is nothing wrongful or dishonest in expecting to profit from one’s investment. However, Rodriguez can fault but only himself for taking an obvious risk in purchasing property already being used for a public purpose. 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.