CASE 2015-0006: REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, PETITIONERS, -VERSUS – ARLENE R. SORIANO, RESPONDENT (G.R. NO. 211666, 25 FEBRUARY 2015, PERALTA, J.) SUBJECTS: EXPROPRIATION; INTEREST RATE; CAPITAL GAINS TAX; DOCUMENTARY STAMP TAX; CONSEQUENTIAL DAMAGES (BRIEF TITLE: REPUBLIC VS. SORIANO)
DISPOSITIVE:
“WHEREFORE, premises considered, the instant pet1t10n 1s PARTIALLY GRANTED. The Decision and Order, dated November 15, 2013 and March 10, 2014, respectively, of the Regional Trial Court, Valenzuela City, Branch 270, in Civil Case No. 140-V-10 are hereby MODIFIED, in that the imposition of interest on the payment of just compensation as well as the award of consequential damages are deleted. In addition, respondent Arlene R. Soriano is ORDERED to pay for the capital gains tax due on the transfer of the expropriated property, while the documentary stamp tax, transfer tax, and registration fee shall be for the account of petitioner.
SO ORDERED.”
SUBJECTS/DOCTRINES/DIGEST:
PETITIONER CONTENDS THAT THE PAYMENT TO RESPONDENT IS NOT FOREBEARANCE OF MONEY OR CREDIT BUT PAYMENT OF JUST COMPENSATION FOR EXPROPRIATED PROPERTY. THEREFORE THE IMPOSITION OF 12% INTEREST HAS NO BASIS. RATHER ART. 2209 OF THE CIVIL CODE APPLIES WHICH FIXES THE INTEREST AT 6% PER ANNUM. IS THIS CONTENTION CORRECT?
NO.
THE RULING ON NATIONAL POWER CORPORATION V. ANGAS HAS ALREADY BEEN OVERTURNED BY THE RULING IN REPUBLIC V. COURT OF APPEALS, WHEREIN THE SUPREME COURT HELD THAT THE PAYMENT OF JUST COMPENSATION FOR THE EXPROPRIATED PROPERTY AMOUNTS TO AN EFFECTIVE FORBEARANCE ON THE PART OF THE STATE.
IF PAYMENT OF JUST COMPENSATION IS FORBEARANCE WHAT IS THE APPLICABLE INTEREST?
6% PER ANNUM.
IN LINE WITH THE RECENT CIRCULAR OF THE MONETARY BOARD OF THE BANGKO SENTRAL NG PILIPINAS (BSP-MB) NO. 799, SERIES OF 2013, EFFECTIVE JULY 1, 2013, THE PREVAILING RATE OF INTEREST FOR LOANS OR FORBEARANCE OF MONEY IS SIX PERCENT (6%) PER ANNUM, IN THE ABSENCE OF AN EXPRESS CONTRACT AS TO SUCH RATE OF INTEREST.”
IS THE IMPOSITION OF INTEREST WARRANTED IN THIS CASE?
NO BECAUSE PETITIONER INCURRED NO DELAY IN THE PAYMENT OF JUST COMPENSATION.
AS EVIDENCED BY THE ACKNOWLEDGMENT RECEIPT SIGNED BY THE BRANCH CLERK OF COURT, PETITIONER WAS ABLE TO DEPOSIT WITH THE TRIAL COURT THE AMOUNT REPRESENTING THE ZONAL VALUE OF THE PROPERTY BEFORE ITS TAKING.
ARE CONSEQUENTIAL DAMAGES PROPER IN THIS CASE?
NO BECAUSE THE ENTIRE AREA OF THE SUBJECT PROPERTY AND NOT ONLY A PORTION THEREOF IS EXPROPRIATED.
CONSEQUENTIAL DAMAGES ARE AWARDED IF AS A RESULT OF THE EXPROPRIATION, THE REMAINING PROPERTY OF THE OWNER SUFFERS FROM AN IMPAIRMENT OR DECREASE IN VALUE.
PETITIONER CONTENDS THAT IT IS THE PROPERTY OWNER THAT IS LIABLE FOR CAPITAL GAINS TAX AND DOCUMENTARY STAMP TAX. IS THIS CONTENTION CORRECT.
RESPONDENT LAND OWNER IS LIABLE FOR CAPITAL GAINS TAX BECAUSE IT HAS BEEN HELD THAT SINCE CAPITAL GAINS IS A TAX ON PASSIVE INCOME, IT IS THE SELLER, NOT THE BUYER, WHO GENERALLY WOULD SHOULDER THE TAX. ALSO, THE BIR, IN ITS BIR RULING NO. 476-2013, DATED DECEMBER 18, 2013, CONSTITUTED THE DPWH AS A WITHHOLDING AGENT TO WITHHOLD THE SIX PERCENT (6%) FINAL WITHHOLDING TAX IN THE EXPROPRIATION OF REAL PROPERTY FOR INFRASTRUCTURE PROJECTS.
BUT PETITIONER IS LIABLE FOR FOR DOCUMENTARY STAMP TAX. UNDER THE NIRC BOTH BUYER AND SELLER ARE HELD LIABLE UNLESS THERE IS AN AGREEMENT. BUT ACCORDING TO PETITIONER’S CITIZEN’S CHARTER,28 WHICH FUNCTIONS AS A GUIDE FOR THE PROCEDURE TO BE TAKEN BY THE DPWH IN ACQUIRING REAL PROPERTY THROUGH EXPROPRIATION UNDER RA 8974 ISSUED BY PETITIONER DPWH ITSELF ON DECEMBER 4, 2013, EXPLICITLY PROVIDES THAT THE DOCUMENTARY STAMP TAX, TRANSFER TAX, AND REGISTRATION FEE DUE ON THE TRANSFER OF THE TITLE OF LAND IN THE NAME OF THE REPUBLIC SHALL BE SHOULDERED BY THE IMPLEMENTING AGENCY OF THE DPWH.
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SCD-2015-0006-FEB-2015-SORIANO
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