FIRST DIVISION
[G.R. No. 235904. July 6, 2022.]
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS [DPWH], petitioner,vs. SPOUSES CATALINO FLORES, JR. AND MARILYN IMPERIAL, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedJuly 6, 2022which reads as follows:
"G.R. No. 235904 (Republic of the Philippines, represented by the Department of Public Works and Highways [DPWH], v. Spouses Catalino Flores, Jr. and Marilyn Imperial). — This petition for review on certiorari (petition) 1 filed under Rule 45 of the Rules of Court seeks to reverse and set aside the Decision 2 dated 09 March 2017 and the Resolution 3 dated 29 November 2017 of the Court of Appeals (CA) in CA-G.R. CV No. 104340, modifying the Decision dated 29 September 2014 of Branch 270, Regional Trial Court of Valenzuela City (RTC), in Civil Case No. 178-V-11 for expropriation.
Antecedents
Respondents Spouses Catalino Flores, Jr. and Marilyn Imperial 4 (respondents) are the registered owners of a 176-square meter parcel of land covered by Transfer Certificate of Title (TCT) No. T-146428 and located at Barangay Parada, Valenzuela City. 5 The subject property was included in the C-5 Northern Link Road Project traversing the North Luzon Expressway up to McArthur Highway, Valenzuela City. 6
On 03 August 2011, the Department of Public Works and Highways (DPWH) offered to purchase the property from respondents for the total price of P1,025,907.59, but the latter declined. 7 Hence, petitioner Republic of the Philippines (petitioner), represented by the DPWH, filed a complaint for expropriation on 24 October 2011. 8
Petitioner claimed that just compensation should be fixed at P2,000.00 per square meter, which is based on the Bureau of Internal Revenue's (BIR) zonal valuation. 9 The DPWH also assessed the affected improvements to have a total replacement cost of P675,907.59. 10 Thus, according to petitioner, the amount of P1,025,907.59 as just compensation is fair and reasonable. 11
In lieu of an answer, respondents filed a Manifestation with Urgent Omnibus Motion, praying that the provisional amount of P1,025,907.59 be paid and the Board of Commissioners be immediately convened to determine the proper amount of just compensation. 12
Subsequently, petitioner deposited two checks in the total amount of P1,025,907.59, equivalent to the alleged value of the lot based on the BIR zonal valuation and the total replacement cost of the affected improvements. 13 In the hearing conducted on 11 March 2013, the RTC released the checks to respondents. On the same day, the Board of Commissioners was likewise constituted, and a writ of possession was issued. Pursuant to the writ, the property was turned over to petitioner on 10 May 2013. 14
On 10 June 2013, the Board of Commissioners submitted a report, suggesting that the amount of just compensation be fixed as follows: (a) P4,000.00 per square meter for the subject lot; and (b) P12,000.00 per square meter for the improvements. 15 On the other hand, respondents submitted a market value appraisal conducted by Intech Property Appraisal, Inc., concluding that the market value of the subject property should be at P7,000.00 per square meter. 16
Ruling of the RTC
In a Decision dated 29 September 2014, the RTC directed petitioner to pay respondent just compensation in the total amount of P1,826,955.00 and damages, as follows: CAIHTE
WHEREFORE, with the foregoing, judgment is hereby rendered:
1. Condemning the property, subject of the instant case, free from all liens and encumbrances whatsoever, for public use and for the public purpose herein set forth;
2. The defendants are hereby directed to turn-over to the plaintiff the corresponding owner's duplicate certificate of title of the subject parcel of land;
3. Ordering the plaintiff to pay defendants Marlyn Imperial Flores, Nelson I. Flores, Reynald I. Flores, Maribeth F. Magno, and Fernando I. Flores the total amount of Php1,826,955.00 as fair, equitable and just compensation with legal interest at 6% per annum from the taking of the possession of the property and after deducting the provisional deposit of Php1,025,907.59 subject to the payment of all unpaid real property taxes and other relevant taxes, if there by any, to wit:
a) Six Thousand Five Hundred Pesos (Php6,500.00) per square meter or the total amount of One Million One Hundred Forty-Four Thousand Pesos (Php1,144,000.00) for the 176 sq. m. lot; and
b) Six Thousand Five Hundred Pesos (Php6,500.00) per square meter or the total amount of Six Hundred Eighty-Two Thousand Pesos Nine Hundred Fifty-Five Pesos (Php682,955.00) as replacement costs for the affected area consisting of 105.07 sq. m.
4. Plaintiff is likewise ordered to pay the defendants who were forced to transfer the subject property by reason of the instant expropriation consequential damages which shall include the corresponding value of the transfer tax necessary for the transfer of the subject property from the name of the defendants to that of the plaintiff and attorney's fees in the amount of 10% of defendant's total claim for just compensation but not less than Php300,000.00;
5. The Office of the Register of Deeds of Valenzuela City, Metro Manila is directed to annotate this Decision on the Transfer Certificate of Title No. T-146428 registered under the name of Catalino Flores, Jr. married to Marlyn Imperial.
Let a certified true copy of this decision be recorded in the Registry of Deeds of Valenzuela City.
SO ORDERED. 17
Petitioner moved for reconsideration, claiming that the awarded compensation is excessive and unsupported by law and the evidence on record. 18 However, the RTC denied petitioner's motion in an Order dated 15 December 2014. 19
Ruling of the CA
In the assailed Decision 20 dated 09 March 2017, the CA partly granted petitioner's appeal and modified the RTC Decision, thus:
WHEREFORE, the Decision dated September 29, 2014 of the Regional Trial Court of Valenzuela City, Branch 270 in Civil Case No. 178-V-11 is MODIFIED in that the proper amount of just compensation for the subject property expropriated is fixed at Php5,000.00 per square meter (or the total amount of Php880,000.00) while the amount for the improvements is Php625,907.59. Hence, the plaintiff-appellant is liable to pay defendants-appellees the total amount of Php1,505,907.59. The awards of consequential damages and attorney's fees are hereby deleted for lack of substantial basis. The total award of Php1,505,907.59 less the provisional deposit of Php1,025,907.59 shall earn interest at the rate of 6% per annum from the time of actual taking up to the time of actual payment. 21
The CA held that both the RTC and the Board of Commissioners determined the amount of just compensation for the lot and improvements without expounding on the basis therefor. 22 Thus, the CA opted to further scrutinize the records to fix the proper amount of compensation. 23
In arriving at such amount, the CA considered three factors: (a) the market value declared by the owners (P7,000.00 per square meter); (b) the current selling price of similar lands in the vicinity (ranging from P6,000.00 to P8,000.00 per square meter); and (c) the BIR zonal valuation (P2,000.00 per square meter). 24 The CA averaged the three values and used the highest selling price of P8,000.00, yielding P5,666.66 per square meter. 25 Taking into consideration the records and the parties' respective positions, the CA held that the amount of P5,000.00 per square meter is the proper amount of just compensation, it being the average between the highest selling price of similar properties and the BIR zonal valuation. 26
The CA further held that the amount of P625,907.59 prayed for by petitioner is proper as it is backed by a clear computation. 27 Likewise, respondents failed to present controverting evidence on the value of the improvements. 28 The awards of consequential damages and attorney's fees were deleted for lack of legal and factual basis. 29
Petitioner moved for reconsideration, but this was denied in a Resolution 30 dated 29 November 2017. DETACa
Hence, this petition.
Issues
The issues for the Court's resolution are: (1) whether the CA erred in not fixing the amount of just compensation for the subject lot at P2,000.00 per square meter, equivalent to the land's BIR zonal value; and (2) whether legal interest at six percent (6%) per annum should be imposed on the unpaid balance of the just compensation.
The necessity of expropriation and the DPWH's authority to do so were not contested and adjudicated in the proceedings a quo. Hence, the Court shall no longer pass upon these matters. The disputed issues solely pertain to the issue of just compensation.
Ruling of the Court
The petition lacks merit.
At the outset, We note that only questions of law should be raised in a petition for review on certiorari under Rule 45. Issues pertaining to the value of the property expropriated and the ascertainment of just compensation are questions of fact generally beyond the scope of a Rule 45 petition. 31
In any event, the arguments raised by petitioner are substantially similar, if not identical, to those asserted in a string of petitions involving the same project. 32 In these cases, the Court rebuffed petitioner's arguments on the propriety of using the BIR zonal value in fixing just compensation, as well as the supposedly erroneous imposition of legal interest. Applying the same legal principles to this case, We find that petitioner's assertions do not warrant a reversal of the CA Decision and Resolution.
The property's zonal or tax-declared
Just compensation refers to the "just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation." 33 The measure "is not the taker's gain but the owner's loss." 34
Section 5 of Republic Act No. (RA) 8974, the law applicable to this case, enumerates the standards that the court may consider in fixing just compensation:
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.
The determination of just compensation is essentially a judicial prerogative. 35 Thus, the standards enumerated in Section 5 of RA 8974 are merely permissive. 36 This is further evinced by the wording of the provision and its use of the word "may," which confers discretion. 37 As such, "[i]t is still the court that renders judgment as to what amount should be awarded and how to arrive at such an amount." 38 Absent abuse, arbitrariness, or serious error, the exercise of such discretion shall not be disturbed. 39
Here, We find no reason to interfere with the CA's findings on the proper amount of just compensation. As mentioned, the CA considered three factors: (a) the market value declared by the owners; (b) the current asking or selling price of similar lands in the vicinity; and (c) the BIR zonal valuation. 40 Finding that these amounts, taken singly, are incomplete indications of the compensation due, the CA used the values as guideposts and fixed the compensation at P5,000.00 per square meter. This value represents a fair middle ground between and among the competing amounts. Clearly, then, the computed amount took into consideration several statutory standards, and was arrived at in the exercise of the CA's reasonable judgment. aDSIHc
The Court has previously upheld using means or averages as useful tools in fixing just compensation. 41 This manner of computation merely reflects the truism that just compensation is a product of several factors. Indeed, the determination of just compensation would cease to be judicial if courts were to simply base just compensation on one standard — the BIR zonal value. In that case, "[a]ll the court has to do is adopt the zonal value of the property in its decision, a purely mechanical act which totally negates the exercise of judicial discretion." 42
In this regard, petitioner's insistence on pegging just compensation at the zonal value of P2,000.00 per square meter must necessarily fail. 43 It is well-settled that, zonal valuation, although one of the indices of the fair market value of real estate, cannot be the sole basis of just compensation in expropriation cases. 44 The zonal value may not be truly reflective of the property's real value. 45 The same is true for the value indicated in the property's tax declaration. 46 Thus, any amount that exceeds the zonal or tax-declared value is not necessarily exorbitant. 47
Relatedly, the Court notes that the zonal value used in this case belongs to the same valuation schedule referred to in Republic v. Spouses Darlucio (Darlucio), 48i.e., that embodied in Department of Finance Department Order No. 22-03 for revision period 2003 to 2015. 49 In Darlucio, the Court relied on and upheld the findings of the CA, including the latter's observation that the BIR zonal valuation used "is obsolete and does not reflect the value of the property at the time of the filing of the expropriation proceedings" in 2007 because the zonal value was determined in 2003.
The same holds true here. The expropriation complaint was filed in 2011. Meanwhile, the zonal values of real properties in Valenzuela City had not been revised and updated since 2003. 50 This lapse of time highlights the unreliability of the BIR zonal value.
Petitioner further argues that the CA erred in relying on market data indicating the asking or selling prices for properties in the same vicinity. 51 Based on Leca Realty Corporation v. Republic, 52 petitioner claims that these prices are subject to further negotiations where a buyer may ask for a lower price, and it is customary for the owner to raise the price offer. 53 These arguments are without merit.
While it is true that selling prices may not accurately capture the property's value, any possible decrease in the post-negotiation price had been factored in by the CA through the inclusion of the BIR zonal value in the equation. To recall, the CA did not simply fix just compensation at the asking or selling price of similar properties within the vicinity. Rather, the CA took the average between the highest selling price of similar properties and the BIR zonal value. 54 The resulting value represents a fair compromise between a possibly bloated selling price and an outdated BIR zonal value.
Under the circumstances, it would be more just to consider the selling prices of similar properties in the area. After all, one of the standards that may be considered in fixing just compensation is "[s]uch 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." 55 Thus, it would be more equitable to fix an amount that approaches the range of selling prices of similar lands in the vicinity, i.e., from P6,000.00 to P8,000.00 per square meter. This way, respondents would be able to afford a replacement lot and make themselves whole again.
In sum, We hold that the CA did not err in judiciously considering the various standards under Section 5 of RA 8974, particularly Section 5 (c), (d), and (f) thereof and, thereafter, fixing just compensation at P5,000.00 per square meter.
The difference between the final
Petitioner claims that respondents are not entitled to receive legal interest on the unpaid balance in the absence of delay on petitioner's part. 56 Petitioner asserts that there was no delay since it promptly deposited the amount representing the BIR zonal value of the lot and the replacement cost of the improvements. 57 These arguments are specious.
Just compensation contemplates prompt payment in full of the amount due as finally determined by the courts. 58 It therefore follows that interest on the unpaid balance "runs as a matter of law and follows as a matter of course from the right of the landowner to be placed in as good a position as money can accomplish, as of the date of taking." 59
The government's initial deposit does not excuse petitioner from paying the difference of the amount finally adjudged and the interest thereon. 60 The delay in the full payment of just compensation is a forbearance of money that earns legal interest. 61 Thus, even if petitioner made an initial deposit, legal interest shall still accrue on the unpaid balance. ETHIDa
Nonetheless, We modify the rate of legal interest imposed by the CA. The CA's failure to apply the correct rate is a plain error which the Court may rectify on appeal, even if unspecified or unassigned. 62 In keeping with prevailing jurisprudence, 63 the unpaid compensation should earn legal interest at twelve percent (12%) per annum from the time of actual taking on 10 May 2013 until 30 June 2013. Thereafter, legal interest at six percent (6%) per annum shall be imposed from 01 July 2013 until finality of this Resolution. The total outstanding amount shall earn legal interest at six percent (6%) per annum from finality of this Resolution until fully paid.
Another plain error that the Court rectifies is the CA's use of P625,907.59 as replacement cost, when the amount should be P675,907.59. This is clearly a typographical error because the CA merely upheld the amount prayed for by petitioner, 64 and such amount is P675,907.59. 65 Even petitioner concedes that the variance is a plain error. 66 Thus, using the correct amount of P675,907.59 as replacement cost for the affected improvements, the total amount of just compensation is P1,555,907.59, and not P1,505,907.59 as stated in the CA Decision. 67
WHEREFORE, the petition is DENIED. The Decision dated 09 March 2017 and the Resolution dated 29 November 2017 of the Court of Appeals in CA-G.R. CV No. 104340 are AFFIRMED with MODIFICATION, in that:
(1) The just compensation for the 176-square meter expropriated property is fixed at P5,000 per square meter, or a total of P880,000.00, while the replacement cost for the affected improvements is fixed at P675,907.59, or a total amount of P1,555,907.59;
(2) Petitioner is ordered to pay respondents P530,000.00, representing the difference between the final amount of just compensation of P1,555,907.59 and the initial deposit of P1,025,907.59, with legal interest of twelve percent (12%) per annum from 10 May 2013 unti1 30 June 2013, and legal interest of six percent (6%) per annum from 01 July 2013 until finality of this Resolution;
(3) The total Outstanding amount in item (2) shall earn legal interest of six percent (6%) per annum from finality of this Resolution until fully paid.
SO ORDERED."
By authority of the Court:
(SGD.) LIBRADA C. BUENADivision Clerk of Court
By:
MARIA TERESA B. SIBULODeputy Division Clerk of Court
Footnotes
1. Rollo, pp. 10-40 (sans annexes).
2. Id. at 41-52; penned by Associate Justice Henri Jean Paul B. Inting (now a Member of this Court) and concurred in by Associate Justices Marlene B. Gonzales-Sison and Ramon A. Cruz.
3. Id. at 53-55.
4. Referred to as "Marlyn Imperial" in some parts of the rollo (see rollo, pp. 43-44).
5. Rollo, p. 44.
6. Id. at 13 and 44.
7. Id. at 44.
8. Id.
9. Id. at 13.
10. Id.
11. Id. at 44.
12. Id. at 13-14 and 44.
13. Id. at 14.
14. Id. at 44.
15. Id. at 44-45.
16. Id. at 45 and 48.
17. Id. at 42-43.
18. Id. at 17.
19. Id. at 17-18.
20. Id. at 41-52; penned by Associate Justice Henri Jean Paul B. Inting (now a member of this Court) and concurred in by Associate Justices Marlene B. Gonzales-Sison and Ramon A. Cruz.
21. Id. at 51.
22. Id. at 46.
23. Id.
24. Id. at 48-49.
25. Id. at 49.
26. Id.
27. Id.
28. Id.
29. Id. at 49-50.
30. Id. at 53-55.
31. Evergreen Manufacturing Corp. v. Republic, 817 Phil. 1048, 1057 (2017); Republic v. Heirs of Bonifacio, G.R. No. 226734, 10 May 2021.
32. Republic v. Spouses Darlucio, G.R. No. 227960, 24 July 2019; Republic v. Spouses Goloyuco, G.R. No. 222551, 19 June 2019; Republic v. Spouses Silvestre, G.R. No. 237324, 06 February 2019; Republic v. Heirs of Bonifacio, G.R. No. 226734, 10 May 2021.
33. Philippine Veterans Bank v. Bases Conversion and Development Authority, G.R. No. 217492, 04 October 2021.
34. Id.
35. Evergreen Manufacturing Corp. v. Republic, supra.
36. Republic v. Heirs of Bonifacio, G.R. No. 226734, 10 May 2021.
37. Republic v. Decena, 837 Phil. 314, 333 (2018).
38. Id.
39. Id.
40. Rollo, pp. 48-49.
41. See Republic v. Decena, 837 Phil. 314, 328-329 (2018); See also Evergreen Manufacturing Corp. v. Republic, 817 Phil. 1048, 1059 (2017).
42. Republic v. Spouses Darlucio, G.R. No. 227960, 24 July 2019.
43. See Rollo, pp. 23-25.
44. Republic v. Spouses Goloyuco, G.R. No. 222551, 19 June 2019.
45. Republic v. Spouses Silvestre, G.R. No. 237324, 06 February 2019; Republic v. Spouses Goloyuco, G.R. No. 222551, 19 June 2019.
46. Republic v. Spouses Silvestre, G.R. No. 237324, 06 February 2019.
47. See Leca Realty Corp. v. Republic, 534 Phil. 692, 708-709 (2006).
48. G.R. No. 227960, 24 July 2019.
49. Entitled "Implementation of the Revised Zonal Values of Real Properties in the City of Valenzuela under the Jurisdiction of Revenue District Office No. 24 (Valenzuela City), Revenue Region No. 5 (Valenzuela City) for Internal Revenue Tax Purposes.
50. Id.
51. Rollo, p. 21.
52. 534 Phil. 692 (2006).
53. Rollo, p. 21.
54. Id. at 49.
55. Republic Act No. 8974, Sec. 5 (h).
56. Rollo, p. 31.
57. Id. at 32.
58. Evergreen Manufacturing Corp. v. Republic, 817 Phil. 1048, 1064 (2017).
59. Id.citing Republic v. Mupas, 769 Phil. 21 (2015).
60. Id.
61. Id.
62. C.F. Sharp & Co., Inc. v. Northwest Airlines, Inc., 431 Phil. 10, 21 (2002).
63. See Nacar v. Gallery Frames, 716 Phil. 267, 281-283 (2013); Philippine Veterans Bank v. Bases Conversion and Development Authority, G.R. No. 217492, 04 October 2021.
64. Rollo, p. 49.
65. Id. at 13.
66. Id. at 29.
67. Id. at 51.