The DPWH sought to expropriate a 3, 856-square meter lot located in Barangay Ugong, Valenzuela City, to be used for the construction of its C-5 Northern Link Project.

Spouses Silvestre et. al. claimed that a portion of their land was part of the expropriated land, and hence, they demand for just compensation. They prayed in their answer to the complaint for expropriation filed in the Regional Trial Court (RTC) that the DPWH be directed to pay them P9,389,050.00 (computed as follows: 4,367 square meters x P2,150.00 zonal value). DPWH did not agree with the computation. It argued that the area affected by the sought expropriation covered only 3,045 square meters of their property with zonal value of P1,200.00 per square meter or a total zonal value of P3,654,000.00.

The (RTC) directed the appointed Board of Commissioners (BOC) to submit its report. In its report, the Board recommended the amount of P5, 000.00 per square meter as the reasonable fair market value of the affected portion of the land owned by Silvestre et. al. The same was adopted by the RTC and CA.

In its petition with the Supreme Court, DPWH submits, among others, that under Tax Declaration NO. –C-018-28698, the subject lost is classified as residential lot and carries a unit value of only P600.00 per square meter or a total market value of P3, 977, 400.00.

Issue: What is the proper basis of just compensation?

RULING: DPWH is wrong in contending that it is the value indicated in the property’s tax declaration, as well as its zonal valuation that must govern. Tax declarations and zonal valuations are not truly reflective of the value of the subject property, but is just one of the several factors to be considered under Section 5 of R.A. No. 8974. Time and again, the Court has held that zonal valuation, although one of the indices of the fair market value of real estate, cannot, by itself, be the sole basis of just compensation in expropriation cases.

NOTE: (For purposes of the Bar) In computing the legal interest, please take note of the date, July 1, 2013,

SC: With respect to the amount of interest, we have upheld, in recent pronouncements, the imposition of 12% interest rate from the time of taking, when the property owner was deprived of the property, until July 1, 2013, when the legal interest on loans and forbearance of money was reduced from 12% to 6% per annum by Bangko Sentral ng Pilipinas Circular No. 799. Accordingly, from July 1, 2013 onwards, the legal interest on the difference between the final amount and initial payment is 6% per annum. Here, the Republic-DPWH filed the expropriation complaint on October 11, 2007. But it was able to take possession of the property on May 5, 2008, when the RTC issued the writ of possession prayed for by the Republic-DPWH. Thus, a legal interest of 12% per annum shall accrue from May 5, 2008 until June 30, 2013 on the difference between the final amount adjudged by the Court and the initial payment made. From July 1, 2013 until the finality of the Decision of the Court, the difference between the initial payment and the final amount adjudged by the Court shall earn interest at the rate of 6% per annum. Thereafter, the total amount of just compensation shall earn legal interest of 6% per annum from the finality of this Decision until full payment thereof.