CASE BRIEF NO. 2019-0078


“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.


CASE: Republic of the Philippines, represented by the DPWH  vs. Sps. Aurora Silvestre and Rogelio Sivestre, and Naticidad Gozo [G.R. No. 237324, February 06, 2019]

PONENTE: Justice Diosdado M. Peralta

SUBJECT:
A.       CONSTITUTIONAL LAW:
          a.   Expropriation
          b.   Just Compensation
                   i. Factors to consider in determining just compensation

B.       CIVIL LAW:
          a.   Legal Interest

FACTS:
Republic of the Philippines, represented by DPWH, filed an action for expropriation under Republic Act (R.A.) No. 8974. DPWH sought to expropriate a 3,856-square meter lot located in Valenzuela City which will be used for the construction of the C-5 Northern Link Project.

Spouses Aurora and Rogelio Silvestre, and Natividad Gozo (Silvestre, et al.), filed a Manifestation alleging that 4,367 square meters of their lot was affected by the expropriation. Thus, they prayed 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). On the other hand, the DPWH argued that the area affected has a zonal value of P1,200.00 per square meter or a total zonal value of P3,654,000.00 only, which the DPWH had already deposited in favor of Silvestre, et. al.

Since there was a dispute as to the amount of just compensation. The RTC proceeded with the second stage of the expropriation and directed the appointed Board of Commissioners (BOC) to submit a report on just compensation.

On September 30, 2014, the BOC recommended the amount of P5,000.00 per square meter as the reasonable, just, and fair market value of the 4,367-square meter portion owned by Silvestre, et al. It relied on a Certification dated August 15, 2012 issued by Project Director Patrick Gatan finding that the project would affect 4,367 square meters of Silvestre, et al.’s property. Moreover, in arriving at the recommended amount, the BOC took into consideration the following:

The size, location, accessibility, the BIR Zonal Valuation, the previously decided expropriation case of DPWH v. Mapalad Serrano, where the fair market value was fixed at Php5,000.00 per square meter x x x; the Opinion Value conducted by the Assessor’s Office personnel on February 21, 2007, in the properties within the vicinity of the property of defendants where 10 disinterested persons [were] interviewed as to the fair market value of the property within the vicinity which yielded a weighted average fair market value at Php5,150 per square meter x x x; the Deed of Absolute [S]ale executed by and between PBCOM FINANCE CORPORATION and FRANCISCO ERWIN & IMELDA F. BERNARDO over the property situated at Ge. T. De Leon, Valenzuela City where the fair market value of the property was pegged at Php8,484.85 per square meter; the pictures of the existing subdivision within the vicinity of the property x x x; the pictures of Foton Motor Philippines, an industrial corporation involved in the manufacture of motor vehicles.

The DPWH filed a Comment, assailing the recommendation of the BOC, arguing, among others, that since the zonal value of the property is P1,200.00 per square meter, it cannot command a price higher than said value.

The RTC adopted the recommendation of the BOC and pegged the just compensation at P5,000.00 per square meter. The fallo of the Decision reads:

WHEREFORE, judgment is hereby rendered fixing the just compensation of the total area of 3,045 square meters lot (TCT No. T- 799470) at Php15,225,000.00 (3,045 square meters x Php5,000.00) and authorizing the payment thereof by the plaintiff to the defendants for the property condemned deducting the provisional deposits of Php3,654,000.00 previously made xxxx.

The plaintiff is directed to pay interest at the rate of 12% per annum in the unpaid balance of just compensation of Php11,571,000.00 (Php15,225,000.00 – Php3,654,000.00) computed from the time of the filing of the complaint until the plaintiff pays the balance.

xxxx SO ORDERED.

The CA affirmed, partially granted the RTC ruling, and disposed of the case as follows:

WHEREFORE, premises considered, the appeal is PARTIALLY GRANTED insofar as the legal interest imposed on the amount of just compensation. The assailed 30 April 2014 Decision of the Regional Trial Court in Civil Case No. 153-V-10 is AFFIRMED with MODIFICATION as regards interest which shall accrue as follows:

(a)      The difference between the principal amount of just compensation (Php15,225,000.00) and the provisional deposit of Php3,654,000.00, shall earn legal interest of 12% per annum from the date of taking of the property until June 30, 2013; and    

(b)     The difference between the principal amount of just compensation (Php15,225,000.00) and the provisional deposit of Php3,654,000.00, shall earn legal interest of 6% per annum from July 1, 2013, until the finality of this Court’s decision;

The sum of the above-mentioned amounts and the unpaid balance of just compensation of Php11,571,000.00 (Php15,225,000.00 less Php3,654,000.00) shall earn legal interest of 6% per annum from the finality of the Court’s ruling until full payment.

xxxx SO ORDERED.

Aggrieved, the DPWH filed before the Supreme court (the Court) a Petition for Review on Certiorari under Rule 45 of the Rules of Court.

In its petition, the DPWH submits, among others, that because of several factors that diminish the value of the subject lot, the just compensation for the same must be pegged only between P600.00 and P1,200.00 per square meter and not at P5,000.00 as held by the courts a quo. It also argued that the tax declaration covering the subject lot states that it is classified as a residential lot and carries a unit value of only P600.00 per square meter or a total market value of P3,977,400.00. Thus, such amount should be controlling for in the ordinary scheme of things, tax declarations carry a high evidentiary value, being, as to the tax declaring respondents, in the nature of admissions against self-interest. The DPWH asserts that the current and relevant zonal valuation of the Bureau of Internal Revenue (BIR) for the subject lot is only P1,200.00 per square meter. The just compensation, therefore, should not exceed this amount since it has been held that the BIR Zonal Value is reflective of the fair market value of the real property within a given area.


ISSUES:
A.       Whether issues pertaining to the value of the property expropriated are questions of fact or of law?
B.       Whether the BOC findings as to the just compensation is baseless.
          a)       Define just compensation.
          b)       What are the factors to consider in determining just compensation?
C.       Whether DPWH is correct in arguing that just compensation must be based on the zonal value of the property.
D.      What should be the proper legal interest?


RULING:
A.      
At the outset, the Court notes that only questions of law should be raised in a petition for review on certiorari under Rule 45. Factual findings of the lower courts will generally not be disturbed. Thus, the issues pertaining to the value of the property expropriated are questions of fact which are generally beyond the scope of the judicial review of this Court under Rule 45 [Evergreen Manufacturing Corporation v. Republic, G.R. Nos. 218628 and 218631, September 6, 2017].  Here, in claiming that the courts a quo should have pegged the just compensation between P600.00 and P1,200.00 per square meter and not at P5,000.00, the DPWH is asking the Court to recalibrate and weigh anew the evidence already passed upon by the courts below. But unfortunately for the DPWH, it has not alleged, much less proven, the presence of any of the exceptional circumstances that would warrant a deviation from the rule that the Court is not a trier of facts. On this ground alone, the denial of the petition is warranted.


B.      
Just compensation, in expropriation cases, is defined as the full and fair equivalent of the loss of the property taken from its owner by the expropriator. Its true measure is not the taker’s gain, but the owner’s loss. The word “just” is used to modify the meaning of the word “compensation” to convey the idea that the equivalent to be given for the property to be taken shall be real, substantial, full and ample. It has been consistently held, moreover, that though the determination of just compensation in expropriation proceedings is essentially a judicial prerogative, the appointment of commissioners to ascertain just compensation for the property sought to be taken is a mandatory requirement nonetheless. Thus, while it is true that the findings of commissioners may be disregarded and the trial court may substitute its own estimate of the value, it may only do so for valid reasons; that is, where the commissioners have applied illegal principles to the evidence submitted to them, where they have disregarded a clear preponderance of evidence, or where the amount allowed is either grossly inadequate or excessive.

Here, it was precisely the findings of the BOC that the courts below adopted. In its assailed Decision, the CA affirmed the RTC ruling when it held that the BOC properly took into consideration the relevant factors in arriving at its recommendation of just compensation. In fact, these relevant factors were based not on mere conjectures and plain guesswork of the BOC, but on the statutory guidelines set forth in Section 5 of R.A. No. 8974, to wit:

Section 5. Standards for the Assessment of the Value of the Land Subject of Expropriation Proceedings or Negotiated Sale. — In order to facilitate the determination of just compensation, the court may consider, among other well-established factors, the following relevant standards:

(a)      The classification and use for which the property is suited;

(b)     The developmental costs for improving the land;

(c)      The value declared by the owners;

(d)     The current selling price of similar lands in the vicinity;

(e)      The reasonable disturbance compensation for the removal and/or demolition of certain improvement on the land and for the value of improvements thereon;

(f)      [The] size, shape or location, tax declaration and zonal valuation of the land;

(g)     The price of the land as manifested in the ocular findings, oral as well as documentary evidence presented; and

(h)     Such facts and events as to enable the affected property owners to have sufficient funds to acquire similarly-situated lands of approximate areas as those required from them by the government, and thereby rehabilitate themselves as early as possible.

In view of the foregoing, the Court finds no error on the part of the courts below in finding that there was nothing arbitrary about the pegged amount of P5,000.00 per square meter, recommended by the BOC, as it was reached in consideration of the property’s size, location, accessibility, as well as the BIR zonal valuation, among other things.


C.
As for the contention of the DPWH that it is the value indicated in the property’s tax declaration, as well as its zonal valuation that must govern, the Court adopts the findings of the BOC, the RTC, and the CA in ruling that the same 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 [Evergreen Manufacturing Corporation v. Republic, G.R. Nos. 218628 and 218631, September 6, 2017].


D.
Indeed, the delay in the payment of just compensation is a forbearance of money and, as such, is necessarily entitled to earn interest. Thus, the difference in the amount between the final amount as adjudged by the Court, which in this case is P15,225,000.00, and the initial payment made by the government, in the amount of P3,654,000.00 — which is part and parcel of the just compensation due to the property owner — should earn legal interest as a forbearance of money. Moreover, with respect to the amount of interest on this difference between the initial payment and the final amount of just compensation, as adjudged by the Court, 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 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 DPWH following its ability and readiness to pay 100% of the property’s zonal value. 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.

Related Case Brief:
a.       Evergreen Manufacturing Corporation v. Republic, G.R. Nos. 218628 and 218631, September 6, 2017
————————————————-

THINGS DECIDED:

A.       Issues pertaining to the value of the property expropriated are questions of fact which are generally beyond the scope of the judicial review of this Court under Rule 45

B.       Just compensation, in expropriation cases, is defined as the full and fair equivalent of the loss of the property taken from its owner by the expropriator. Its true measure is not the taker’s gain, but the owner’s loss. The word “just” is used to modify the meaning of the word “compensation” to convey the idea that the equivalent to be given for the property to be taken shall be real, substantial, full and ample.

C.       It has been consistently held, moreover, that though the determination of just compensation in expropriation proceedings is essentially a judicial prerogative, the appointment of commissioners to ascertain just compensation for the property sought to be taken is a mandatory requirement nonetheless. Thus, while it is true that the findings of commissioners may be disregarded and the trial court may substitute its own estimate of the value, it may only do so for valid reasons; that is, where the commissioners have applied illegal principles to the evidence submitted to them, where they have disregarded a clear preponderance of evidence, or where the amount allowed is either grossly inadequate or excessive.

D.      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.


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