G.R. No. 169453 - Capitol Steel Corp. vs. Phividec Industrial Authority

Capitol Steel Corporation, a domestic corporation owning 65 parcels with a total land area of 337,733 square meters located in Tagoloan, Misamis Oriental, is the petitioner challenging the expropriation process.
Phividec Industrial Authority (PHIVIDEC), a government-controlled entity vested with the power of eminent domain under Presidential Decree No. 538, is the respondent seeking to acquire the properties for the Mindanao International Container Terminal Project (MICTP).

PHIVIDEC initiated its first expropriation case on August 24, 1999, which resulted in a writ of possession issued on September 1, 1999, later dismissed due to the unauthorized engagement of a private lawyer.
In response, Capitol Steel requested a revaluation of its properties through the Technical Committee on Real Property Valuation (TCRPV) in March 2001, resulting in a resolution (Resolution No. 36-2001) fixing the zonal valuation at P700 per square meter in December 2001.

PHIVIDEC re-filed the expropriation case on November 24, 2003, accompanied by a deposit of P116,563,500 (split between Landbank of the Philippines and the Development Bank of the Philippines), representing 100% of the value based on its interpretation of the zonal valuation under Department Order No. 40-97.
The matter saw conflicting valuations: Capitol Steel maintained that the TCRPV’s revaluation at P700 per square meter was applicable, whereas PHIVIDEC resorted to the values prescribed by D.O. 40-97 (P300 and P500 per square meter for different areas).

On February 3, 2004, the Regional Trial Court (RTC) denied PHIVIDEC’s motion for issuance of a writ of possession, citing the “seemingly inadequate” deposit and the need for a judicial determination of the fair market value through the presentation of evidence by both parties.
Evidence included testimony by the BIR’s assistant officer explaining the use of D.O. 40-97 valuations and by a TCRPV appraiser who detailed the process behind the revaluation at P700 per square meter, including comparisons with similar properties and reliance on private appraisals.
Subsequent motions and orders saw the RTC directing PHIVIDEC to deposit the required amount for a writ of possession, while Capitol Steel contested the variation from the TCRPV valuation.

PHIVIDEC filed a petition for certiorari before the Court of Appeals challenging the RTC’s decisions, contending that the trial court acted beyond its jurisdiction and that the provisional valuation should be based on the zonal values in the expropriation mandate of R.A. 8974.
The appellate court eventually ruled in favor of PHIVIDEC—upholding the usage of the D.O. 40-97 zonal valuations and ordering the issuance of the writ of possession—despite procedural challenges regarding the submission of all relevant documents.
Capitol Steel, in its subsequent petition for review, argued that the RTC correctly adopted the proper statutory valuation and that the established provisional payment mechanism should not have been subjected to a revaluation or judicial modification.

Whether the RTC and the appellate court had the authority to vary the zonal valuation originally set under Department Order No. 40-97 in favor of the TCRPV’s revaluation at P700 per square meter.
Whether such a variation falls within the ambit of expropriation proceedings under Republic Act No. 8974.

Whether PHIVIDEC’s expropriation proceedings conformed to the mandatory guidelines of R.A. 8974 requiring payment of 100% of the “current relevant zonal valuation” and the presentation of a certificate of availability of funds before issuance of a writ of possession.
Whether the distinction between the provisional payment (to secure possession) and the eventual just compensation was properly maintained by the trial court.

Whether the TCRPV’s revaluation, conducted on a case-to-case basis under Revenue Delegation of Authority Order No. 4-2001, should be considered binding in the context of expropriation.
Whether the omission of certain documents by PHIVIDEC in its appellate petition unjustly prejudiced Capitol Steel’s ability to challenge the provisional valuation methodology.

How conflicting zonal valuations might delay public infrastructure projects and whether the expropriation process should prioritize administrative expediency over recalculating fair market values.