G.R. No. 235904 (Notice), July 6, 2022
SC ruled that the property’s zonal or tax-declared value is not determinative of just compensation.
Facts:
Respondents, Spouses Catalino Flores, Jr. and Marilyn Imperial, own a 176-square meter land in Valenzuela City which the Department of Public Works and Highways (DPWH) aimed to acquire for the C-5 Northern Link Road Project. DPWH offered to buy the land for P1,025,907.59, but the owners declined. The Republic of the Philippines (petitioner) filed an expropriation case seeking the same, proposing just compensation at P2,000.00 per square meter based on Bureau of Internal Revenue (BIR) valuation and P675,907.59 for affected improvements.
Upon refusal, respondents requested provisional payment and the convening of a Board of Commissioners to determine fair compensation. Petitioner deposited P1,025,907.59, equivalent to its proposed value. The Regional Trial Court (RTC) released the sum to respondents, while the Board of Commissioners was established, and a writ of possession issued. The property was handed to petitioner per the writ.
The Board recommended compensation at P4,000.00 per square meter for the land and P12,000.00 per square meter for the improvements. Respondents’ appraisal suggested P7,000.00 per square meter. The RTC ruled for petitioner, setting just compensation at P1,826,955.00, including damages and legal interest.
Petitioner sought reconsideration, but the RTC denied it. The Court of Appeals (CA) granted petitioner’s appeal in part, determining compensation at P5,000.00 per square meter for the land and upholding P625,907.59 for improvements. The CA averaged values from respondents’ appraisal, comparable land sales, and BIR valuation. It removed awards of consequential damages and attorney’s fees for lack of basis.
Petitioner’s motion for reconsideration was also denied by the CA.
Issue:
Whether the CA erred in not fixing the amount of just compensation for the subject lot equivalent to the land’s BIR zonal value
Ruling:
No, the CA did not err in not fixing the just compensation based on BIR zonal value.
The case centers on the determination of just compensation in an expropriation scenario. The concept of just compensation is defined as the fair equivalent of the loss suffered by the owner due to the expropriation, with a focus on the owner’s loss rather than the taker’s gain. The applicable law is Republic Act No. 8974 (RA 8974), and Section 5 of this law lists the criteria courts can consider in fixing just compensation. These standards include the property’s classification, developmental costs, declared value, selling prices of similar lands, disturbance compensation, property size and shape, tax declaration, zonal valuation, ocular findings, and events that aid affected property owners’ recovery.
The determination of just compensation is essentially a judicial matter, and the standards in RA 8974 are suggestive, not mandatory. The court retains the authority to decide on the awarded amount as long as it’s reasonable and not arbitrary.
The Court of Appeals (CA) assessed three factors: owners’ declared market value, selling prices of similar properties, and BIR zonal valuation. Considering these as incomplete individually, the CA settled on P5,000.00 per square meter as fair compensation, deriving a balanced middle point from the competing amounts. The CA’s calculation accounted for statutory standards and demonstrated rational judgment.
The practice of using averages or means in calculating just compensation has been previously upheld by the Court. Using multiple factors acknowledges the complexity of determining compensation. Relying solely on BIR zonal value could undermine the court’s role in the process. In this case, the insistence on P2,000.00 per square meter based solely on the zonal value is unfounded. Zonal valuation, though relevant, is not the sole basis for just compensation, as it might not truly reflect the property’s actual worth.
Moreover, the zonal value used here was outdated, belonging to a valuation schedule from 2003-2015, even though the expropriation case was initiated in 2011. The lapse of time rendered the zonal value unreliable. While selling prices might be influenced by negotiations, the CA considered a balanced approach by averaging the highest selling price and the BIR zonal value, which resulted in P5,000.00 per square meter.
In conclusion, the CA acted appropriately in considering various standards under RA 8974 and establishing just compensation at P5,000.00 per square meter.
Real LexEcon 