G.R. No. 240957

Manila

SECOND DIVISION

[ G.R. No. 240957. February 14, 2022 ]

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH), PETITIONER, VS. ALATHEA H. SINENSE, FLORENTINO DIANA, PACIFIC REHOUSE CORPORATION AND PHILIPPINE ESTATES CORPORATION, RESPONDENTS.

D E C I S I O N

INTING, J.:

Before the Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court which seeks to reverse and set aside the Decision2 dated December 18, 2017 of the Court of Appeals (CA) in CA-G.R. CEB CV No. 05070. The CA affirmed with modification the Decision3 dated November 13, 2012 and the Order4 dated May 22, 2013 of Branch 24, Regional Trial Court (RTC), Iloilo City in Civil Case No. 06-29100 in that the CA imposed interest at the rate of 12% per annum on the amount of just compensation from the time of taking of the subject properties until June 30,5 2013 and thereafter, the legal interest at the rate of 6% per annum from July 1, 2013 until full payment. Also assailed is the CA Resolution6 dated July 23, 2018 denying the parties' respective motions for reconsideration.

The Antecedents

The case emanated from an amended complaint for expropriation filed by the Republic of the Philippines (Republic), represented by the Department of Public Works and Highways (DPWH), on December 8, 2006.7 The Republic sought to expropriate 11 parcels of land covering an area of 84,925 square meters with improvements amounting to P35,448,599.558 located in Barangays Balabago and Buhang, Jara, Iloilo City.9 The properties are more particularly described as follows:
1a⍵⍴h!1

REGISTERED OWNER LOT NO. TCT NO. TOTAL LAND AREA (sq.m.) AFFECTED AREA (in sq.m.)

Pacific Rehouse Corp. 2376-B-4 T-121299 10,000 9,848

Alathea H. Sinense 2376-B-3-A T-124388 4,400 2,715

Pacific Rehouse Corp. 2376-B-5 T-121300 10,000 7,965

Pacific Rehouse Corp. 2376-B-6 T-121301 9,999 5,574

Pacific Rehouse Corp. Block 21 (Cons. of Lot 2378) T-141525 16,664 7,927

Florentino Diana 2379-B T-18737 5,254 3,653

Pacific Rehouse Corp. Block 19 (Excluded Area) Portion of the Cons. of Lot 2378) T-141526 10,375 9,283

Philippine Estates Corp. Road Lot 1 Portion of the Cons. of Lot 2378 T-141505 5,407 2,853

Pacific Rehouse Corp. Block 20 (Excluded Area) Portion of the Cons. of Lot 2378 T-141523 14,241 13,925

Pacific Rehouse Corp. 2350 T-134216 25,245 19,786

Pacific Rehouse Corp. 2208-A T-132335 8,282 1,39610

The Republic initiated the complaint for expropriation because the affected areas (subject properties) would be traversed by the construction of the Iloilo Flood Control Project II (Project). Specifically, the Project covered the establishment of the Jaro Floodway that aimed to address the serious flooding in Iloilo City, create a more suitable urban community, and provide a safer and more pleasant living condition for the people concerned.11

In its Order12 dated January 24, 2007, the RTC issued a Writ of Possession after the Republic deposited P188,313,599.55 representing the Bureau of Internal Revenue (BIR) zonal valuation of the subject properties and the provisional value of the improvements affected by the expropriation.13

Subsequently, the RTC constituted a Board of Commissioners (BOC) for the determination of just compensation of the subject properties. It was composed of the following: Engineer Jerry A. Rapista, Officer-in-Charge, Division Chief of the Appraisal Division, Iloilo Provincial Assessor's Office; Jose Monis (Monis), Certified Public Accountant and Auditor at Sycip, Gorres, Velayo and Co., Metro Manila; and Atty. Mateo Hachuela, RTC Branch Clerk of Court and Court-Appointed Commissioner.14 Later, Atty. Aristeo Cruz substituted Monis due to the latter's untimely demise.15

On May 9, 2007, the BOC, along with the representatives from the Office of the Solicitor General, respondents' attorney-in-fact, DPWH Assistant Project Manager, Engineer Al Fruto and his team, conducted an ocular inspection on the subject properties.16

On August 29, 2007, the BOC submitted their Commissioners' Report17 recommending the amount of P1,920,374,374.0018 as just compensation.19

The Republic filed a Manifestation and Motion20 praying that it be allowed to present additional evidence. The RTC granted the motion on October 12, 2007 stating that it generously granted the motion even if the Republic earlier failed to submit additional exhibits and position paper, despite the additional period of time granted for it to do so.21

Subsequently, the parties presented their respective resource persons at the reopened proceedings of the BOC.22 On April 19, 2011, the BOC submitted its revised Report23 but nonetheless recommended the payment of the same amount (P1,920,374,374.00) indicated in its Report dated August 29, 2007. In the revised Report, the BOC highlighted the following matters:

First, Pacific Rehouse Corporation (PRC) and Philippine Estate Corporation (PEC), which were real estate developers, purchased the subject properties for their residential, commercial or industrial development as they formed part of the Jaro Grand Estates. Moreover, it "is common practice in the field of realty business that [the] development of a certain area as residential, commercial, or industrial is done phase by phase, as testified to by an experienced realtor and appraiser in the person of Herbert Buot."24

Second, to ascertain the just compensation and the consequential damages that PRC and PEC were entitled to receive, the BOC conducted hearings, summoned expert witnesses, held several interviews and deliberations on the fair market value guided by the provisions of Republic Act No. (RA) 897425 and the Rules of Court.26 The BOC, thus, stated:

x x x In several interviews conducted, the commission found out that the commercial lots in a nearby subdivision, Metropolis, has a price pegged at Php5,600.00 per square meter. The lots along the Jaro-Leganes Highway cost Php8,000.00 per square meter. Further interviews conducted with several realty brokers/agents would reveal that the price of the lots at Smallville, along B. Aquino Ave[n]ue, Mandurriao, Iloilo City, is Php20,000.00 per square meter and its fishpond areas (undeveloped) has a selling price of Php8,000.00. With this information, the commission deems it best to reduce the [claim] of the defendants x x x and adopt the selling price of Metropolis in the amount of Php5,600.00. Considering that the selling price per square of the lots of Chateaux Geneva is Php4,500.00 as supported by the documents of sale between the defendants and their lot-buyers, the commission grants the same to defendants.27

Third, the subject properties were very accessible and situated in between two major highways – the Jaro-Leganes Highway and the Coastal Road. Public transportation regularly plied in the area and was available on a 24-hour basis. The properties were also near religious, educational, and commercial centers; their physical and technical description proved that the highest and best uses of the properties were residential and commercial. The topography of the properties further showed that they were within an accessible distance from commercial, trading, educational, medical center, and other city services.28

Fourth, the Project would cause consequential damages to the existing improvements affected and/or damaged by the Project. It would cut the Jaro Grand Estates into two halves and traverse a major road which provided the Jaro Grand Estates direct access to the Jaro-Leganes Highway and the Coastal Road causing consequential damages on the following properties:29

Area (sq.m) Value/sq.m Amount

Dinagyang Plaza & Commercial (Phase 6) 3,278 Php 5,600.00 Php 18,356,800.00

Central Commercial Development (Phase 9-A) 7,597 Php 5,600.00 Php 42,453,976.00

High-end Residential (Phase 10) 408 Php 5,600.00 Php 2,284,800.00

Chateaux Geneva (affected) 12,321 Php 4,500.00 Php 55,444,500.00

Chateaux Geneva (traversed) 7,566 Php 4,500.00 Php 34,047,000.00

Total 31,170 Php 152,676,300.0030

The Republic objected to the amount of just compensation. It maintained that the BIR zonal value of P1,800.00 per square meter was the true and correct compensation for the subject properties.31

For their part, respondents PRC and PEC, which were sister companies engaged in land acquisition and development,32 insisted that the amount of P2,598,661,687.00 was the just compensation due them.33

Meanwhile, the RTC declared that Alathea H. Sinense and Florentino Diana already sold their properties affected by the Project to PRC and PEC and that they no longer filed an answer to the complaint.34

Ruling of the RTC

On November 13, 2012, the RTC rendered a Decision35 adopting the findings of the BOC, the dispositive portion of the Decision reads:

Wherefore, above premises considered, the court accepts the Commissioner[s]' Report and Judgment is hereby rendered in accordance therewith directing the plaintiff Republic of the Philippines to pay the amount of PHP 1,920,374,373.00 as just compensation to defendants Pacific Rehouse Corp. and Philippine Estate Corp[.]

SO ORDERED.36

The RTC noted that: (1) the subject properties formed part of the Jaro Grand Estates, a 100-hectare township community with business facilities and amenities; (2) two high-end subdivisions, namely, Chateaux Geneva and Costa Villas, were already existing alongside several other improvements in the affected areas; and (3) the Project would cut the Jaro Grand Estates project into two parts. The RTC also pointed out that it adopted the recommendation of the BOC as it was anchored on the testimonies of experts in the realty business. The pertinent portions of the RTC decision state:

By its vicinity plan[,] the floodway route appears to be a simple task to execute. But to be noted, it cut through the Jaro-Leganes Highway, a road from the Municipality of Leganes towards Jaro District. It hit the main entrance of Chateau Geneva, a high-end residential subdivision being managed by the defendants going inward to an adjacent residential subdivision named Costa Villa, likewise manages by the defendants. The Report states that there were houses constructed thereon and defendants['] record show they have already many lot buyers.

To the plain view of the plaintiff[,] the subdivision may appear cogonal and [with] bushes, yet it did take into consideration that the land[s] were already plotted into parcels of land for residential purposes, adding therein the street drainage and electrical plans of the subdivision. Defendants clai[m] that these two subdivision[s] are part of Jaro Grand Estates with an area of 100 hectares with a planned development into a township community, complete with business facilities and amenities.

x x x x

Chateau Geneva, Costa Villas and all its main amenities are among the 15 or more residential subdivisions existing along the Jaro-Leganes Highway[. It] was properly planned way back beginning 1996 x x x. This land area of the defendant[s] to be traversed by the floodway canal is merely a part of the intended Jaro Grand Estate. x x x

x x x x

The facts obtaining on this case is that there is an established residential subdivision, a part of the consolidated plan to create a township community, finally created with parcilliary plots, a drainage system, a well secured and fenced subdivision.

x x x x

The Commissioner's Report is founded on the bases of so many testimonies of experts on the field of realty business, hence the court finds no cogent reason to set aside the same and deems to render judgment in accordance therewith (Sec.8[,] Rule 67) but except those conditions and demands x x x that do not pertain to valuation within the purview of this expropriation case[.]37

On May 22, 2013, the RTC denied38 the motions for reconsideration but, nevertheless, modified the Decision of November 13, 2012 by deleting therefrom the payment of value-added tax.

Undaunted, the Republic, on the one hand, and PRC and PEC, on the other hand, filed their separate appeals before the CA.

Ruling of the CA

On December 18, 2017, the CA affirmed39 the RTC Decision with modification in that interest at the rate of 12% per annum was imposed on the amount of just compensation from the time of the taking of the subject properties until June 30, 2013 and thereafter, the legal interest of 6% per annum from July 1, 2013 until full payment.

It ruled as follows:

The RTC considered all the parameters under RA 8974 when it adopted the BOC's findings that extensively discussed the bases for the just compensation. While the RTC is not bound by the recommendation of the BOC, there is no rule which prevents the RTC from adopting the BOC's recommendation when the latter's valuation is pursuant to the parameters under the law. The RTC did not solely rely on the BOC's Report but made its own factual findings, conducted its own hearings, heard the testimonies of experts in the field of realty business, analyzed the parties' evidence and applied the standards under RA 8974.40

The Republic failed to show its own detailed computation and the factors it considered in arriving at the just compensation; and that the provisional payment it made based on the BIR zonal valuation was only necessary to obtain a writ of possession and did not represent the full amount of just compensation. The zonal valuation by itself cannot be the only basis of just compensation in expropriation cases.41

The award of consequential damages was in order. It was beyond dispute that the Project cut through the middle portion and divided in half the Jaro Grand Estates. Accordingly, the Project affected adversely the plan to develop the properties into a township community as some of their parts were rendered inaccessible and uneconomical. The Project dugged out from the ground such that it posed a threat to the residents and future occupants of the subdivisions managed by PRC and PEC.42

Finally, to conform to the Bangko Sentral ng Pilipinas (BSP) Circular No. 799, Series of 2013, the legal interest at the rate of 12% per annum from the taking of the subject properties until June 30, 2013, and thereafter, the interest rate of 6% per annum shall be imposed on the just compensation until full payment.43

On July 23, 2018, the CA denied44 the parties' respective motions for reconsideration.

Thus the Republic filed the petition raising this sole issue:

Issue

Whether or not the Court of Appeals erred when it pegged the following amounts: (i) SEVEN HUNDRED NINETY-ONE MILLION SIX HUNDRED EIGHTY-NINE THOUSAND NINE HUNDRED FORTY-SEVEN PESOS (PhP791,689,947.00) as just compensation for the 99,866 square meters of land, and (ii) ONE BILLION ONE HUNDRED TWENTY-EIGHT MILLION SIX HUNDRED EIGHTY-FOUR THOUSAND FOUR HUNDRED TWENTY-SIX PESOS (PhP1,128,684,426.00) as just compensation for the purported improvements thereon, opportunity losses, value added tax (VAT) and other consequential damages, or a total amount of ONE BILLION NINE HUNDRED TWENTY MILLION THREE HUNDRED SEVENTY-FOUR THOUSAND THREE HUNDRED SEVENTY-THREE PESOS (PhP1,920,374,373.00), to be paid to the respondents.45

Our Ruling

Primarily, the Republic contends that the just compensation for the subject properties should only be fixed at P1,800.00 per square meter. It asserts that the RTC and the CA failed to consider the relevant factors for the determination of just compensation. It further argues that the RTC and the CA adopted the BOC's Report on the sole ground that it was allegedly founded on testimonies of experts in the realty business. In fine, it posits that the BOC's Report is purely speculative and based on unsubstantiated evidence and is contrary to law and jurisprudence.46

Such contentions are without merit.

The issues pertaining to the just compensation for the expropriated properties involve factual matters which are beyond the scope of a petition under Rule 45 of the Rules of Court. The Court is not a trier of facts and only questions of law may be raised in a petition for review on certiorari. In the absence of allegations and proof that this case falls within the exception to such rule, the view of the Republic that the just compensation should only be pegged at P1,800.00 per square meter is untenable. Further, given the uniform factual findings of the RTC and the CA, we accord respect and consider them binding upon the Court especially so in the absence of showing that the RTC and CA erred in adopting the BOC's recommended just compensation.47

Even if the petition is deemed as a proper recourse, the Court still finds no reason to overturn the CA decision affirming the RTC ruling with the only modification as to the rate of interest to be imposed on the just compensation.

Enshrined under Section 9, Article III of the Constitution is the State's power of eminent domain which states that "no private property shall be taken for public use without just compensation." Notably, the power of eminent domain is an inherent power of the State. Its exercise is, however, limited by the constitutional requirement that the reason for the taking must be for a public purpose and that just compensation must be given to the owner of the private property taken.48

By just compensation, we refer to the "full and fair equivalent of the property taken from its owner by the expropriator. The measure is not the taker's gain, but the owner's loss. The word 'just' is used to intensify the meaning of the word 'compensation' and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full and ample."49

While the ascertainment of just compensation is essentially within the court's power, the appointment of commissioners for the determination of just compensation is a mandatory requirement. The BOC's findings may, however, be set aside and the court may substitute its own finding, provided that there are valid grounds to do so, i.e., where the commissioners "have applied illegal principles to the evidence submitted to them [or] have disregarded a clear preponderance of evidence, [or] the amount allowed is either grossly inadequate or excessive."50 To be sure, trial proceedings with the aid of the BOC is a substantial right which may not be set aside arbitrarily and the BOC's recommendation carries great weight in the determination of just compensation.51

Here the CA properly sustained the RTC ruling adopting the recommendation of the BOC. Such is the case as the BOC's Report is pursuant to the relevant factors set forth under Section 5 of RA 8974 as follows:

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.1âшphi1

That the BOC's recommended just compensation is in accord with the foregoing criteria is shown by the fact that it took into account the value of similar properties as well as the use, location and even the accessibility of the subject properties. On this, the Court quotes with approval the following observations of the CA:

[The Board of Commissioners] conducted several hearings, heard the testimonies of the parties' respective witnesses, examined supporting documents, and conducted an ocular inspection on the subject properties. The Board of Commissioners took note of the fact that the properties are presently used for residential purposes and are intended to be used for commercial and industrial purposes following defendants-appellants' plans to turn the place into a township community, which would include residential subdivisions, retail and commercial areas, a cyberpark and central business district, hotel developments, sports and recreational facilities and amenities. Also, they took into account the value of similar properties within the vicinity, which properties were also used for residential and commercial purposes. They found out that the area where the subject properties is located is teeming with residential and commercial developments. Likewise, the Board of Commissioners considered the size and location of the proposed floodway project of the government and its adverse effects on defendants-appellants' properties and its improvements.52

It cannot, thus, be denied that the adoption by the RTC and the CA of the BOC's recommendation was not arbitrary but is supported by evidence and upon consideration of relevant factors for the determination of just compensation. It also bears stressing that the BOC exerted serious efforts in ascertaining the just compensation because it did not only conduct ocular inspection, it interviewed numerous experts in the realty business and took extra efforts as it even issued a revised Report to fully and comprehensively justify the just compensation for the subject properties.

Furthermore, contrary to the view of the Republic, the zonal valuation of the properties subject of expropriation is but just one of the several factors to be considered in determining just compensation. Indeed, "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."53

Overall, the petition failed to show any sufficient reason for the Court to reverse the ruling of the CA which affirmed the amount of just compensation arrived at by the RTC. Moreover, the Court affirms the imposition of legal interest as determined by the CA, for being in accord with applicable law and jurisprudence.

Let it be underscored that the payment of just compensation must be timely and fully paid for the property owner "to derive income from both the condemned property and its income-generating potential."54 Definitely, the property owner sustains the immediate deprivation of both his or her property as well as its fruits or income. If the full compensation is not promptly paid, the State must pay for the shortfall in the earning potential immediately lost by reason of the taking of the property. Interest on the unpaid compensation becomes due in observance of the constitutional requirement of a prompt and full payment of just compensation and as a measure of fairness.55

Thus, as noted by the CA, the delay in the payment of just compensation amounts to a forbearance of money. As such, the just compensation shall earn legal interest at the rate of 12% per annum from the taking of the properties until June 30, 2013, and 6% per annum starting July 1, 2013 until the finality of the Decision, pursuant to BSP Circular No. 799, Series of 2013. In addition, the Court finds that an interest at the rate of 6% per annum must be imposed on the total amount due from the finality of the Decision until paid in full, in conformity to prevailing jurisprudence.56

WHEREFORE, the petition is DENIED. The Decision dated December 18, 2017 and the Resolution dated July 23, 2018 of the Court of Appeals in CA-G.R. CEB CV No. 05070 are AFFIRMED with MODIFICATION in that an interest at the rate of 6% per annum shall be imposed on the total amount due from the finality of the Decision until full payment.

Accordingly, the Court finds in order the just compensation for the subject properties in the total amount of P1,920,374,374.00 with legal interest at the rate of 12% per annum from the taking of the properties until June 30, 2013, and 6% per annum from July 1, 2013 until the finality of the Decision. As above stated, the total amount due shall also earn legal interest at the rate of 6% per annum from the finality of the Decision until full payment.

SO ORDERED.

Perlas-Bernabe, S.A.J., (Chairperson), Hernando, Gaerlan, and Dimaampao, JJ., concur.

Footnotes

1 Rollo, pp. 12-69.

2 Id. at 75-92; penned by Associate Justice Louis P. Acosta with Associate Justices Marilyn B. Lagura-Yap and Edward B. Contreras, concurring.

3 Id. at 574-625; penned by Judge Danilo P. Galvez.

4 Id. at 666-670.

5 Id. at 94.

6 Id. at 93-95.

7 Id. at 952.

8 As culled from the Comment of Pacific Rehouse Corporation and Philippine Estates Corporation, id.

9 Id. at 98-99 and 464.

10 As culled from the original complaint for expropriation dated November 7, 2006, id. at 98-99.

11 Id. at 15 and 98.

12 Id. at 105-107.

13 Id. at 105.

14 Id. at 109 and 156-158.

15 Id. at 362.

16 Id. at 121.

17 Id. at 120-163.

18 There has been a discrepancy on the amount of just compensation provided in the Commissioners' Report (P1,920,374,374.00) and the fallo of the Decision dated November 13, 2012 of Branch 24, Regional Trial Court (RTC), Iloilo City (P1,920,374,373.00).

19 Id. at 155.

20 Id. at 164-171.

21 Id. at 577.

22 Id. at 363.

23 Id. at 361-400.

24 Id. at 370.

25 Entitled, "An Act to Facilitate the Acquisition of Right-of-Way, Site or Location for National Government Infrastructure Projects and for other Purposes," approved on November 7, 2000.

26 Rollo, p. 371.

27 Id. at 383.

28 Id. at 373.

29 Id. at 384 and 387-388.

30 Id. at 387.

31 Id. at 77.

32 Id. at 574.

33 Id. at 77.

34 Id. at 575.

35 Id. at 574-625.

36 Id. at 625.

37 Id. at 621-625.

38 See Order dated May 22, 2013 of Branch 24, RTC, Iloilo City, id. at 666-670.

39 Id. at 75-92.

40 Id. at 82-83.

41 Id. at 83 and 86.

42 Id. at 88.

43 Id. at 91.

44 Id. at 93-95.

45 Id. at 31.

46 Id. at 31-32 and 40-41.

47 Republic v. Heirs of Sps. Pedro Bautista and Valentina Malabanan, 702 Phil. 284, 298 (2013).

48 See Republic v. Estate of Posadas III, G.R. No. 214310, February 24, 2020.

49 Id., citing National Transmission Corporation v. Oroville Development Corporation, 815 Phil. 91, 105 (2017).

50 Republic v. Spouses Silvestre, G.R. No. 237324, February 6, 2019.

51 Id.

52 Rollo, p. 82.

53 Republic v. Spouses Silvestre, supra note 50, citing Evergreen Manufacturing Corporation v. Republic, 817 Phil. 1048 (2017).

54 Republic v. Heirs of Francisco, G.R. No. 244115, February 3, 2021.

55 Id., citing Republic v. Judge Mupas, 769 Phil. 21, 197 (2015).

56 Id.

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