G.R. No. 108222 - Sia vs. Court of Appeals

Case Digest (G.R. No. 108222)
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Facts:

Background and Initiation of Expropriation

On December 7, 2007, the Republic of the Philippines, represented by the Department of Public Works and Highways (DPWH), filed a verified complaint for the expropriation of portions of three parcels of land in Brgy. Ugong, Valenzuela City.
The subject properties were identified by their Transfer Certificate of Title numbers (e.g., TCT Nos. V-70921 [now V-94768], V-68375 [now V-97473], and V-68373 [now V-947772]) and were described in terms of area, affected area, and proposed zonal valuations.

Rationale for Expropriation and Offered Compensation

The DPWH initiated the expropriation to implement the C-5 Northern Link Road Project, Segment 8.1, connecting Mindanao Avenue in Quezon City to the North Luzon Expressway in Valenzuela City.
The petitioner initially offered to pay a provisional compensation of ₱495,200.07, based on the Bureau of Internal Revenue (BIR) zonal valuation of ₱2,750.00 per square meter.

Respondents’ Position and Counter-Valuation

Spouses Luis J. Dela Cruz and Imelda Reyes, the original owners, admitted ownership and supported the project but sought a higher just compensation based on fair market value.
They asserted that the fair market value of similar properties in the area ranged from ₱8,000.00 to ₱10,000.00 per square meter, arguing that the industrialized nature of the area warranted a higher rate than the BIR’s zonal valuation.

Expropriation Process and Determination of Just Compensation at the RTC

On November 12, 2008, with no objection to the petitioner’s eminent domain right, the RTC issued the order of expropriation and a writ of possession.
After the provisional deposit and transfer of possession, the RTC convened a Board of Commissioners (BOC) for the second stage—determining the just compensation.
In February 2014, the BOC opined on a market value of ₱15,000.00 per square meter based on a “sales comparison and cost approach,” considering factors such as location, property characteristics, and precedent from the Hobart case.
Respondents were represented by their heirs, as the original owners had died earlier in 2005 and 2007.

RTC and Subsequent CA Determinations

The RTC rendered a Decision on September 18, 2014, setting the just compensation at ₱9,000.00 per square meter (after deducting the provisional deposit) and awarding legal interest on the unpaid balance at 12% per annum.
The Court of Appeals (CA) in its Decision dated June 28, 2018, affirmed the RTC’s ruling with a modification only regarding the payment of legal interest.
The CA explained that while the BIR zonal valuation of ₱2,750.00 per square meter was an important reference, it could not be the sole basis for determining just compensation. Other factors such as the owner’s declared value, the BOC’s recommendation (based on the Hobart case), and evidentiary findings on the property’s characteristics were duly considered.

Petition for Review on Certiorari and Arguments of the Petitioner

The petitioner (Republic of the Philippines) filed a Petition for Review on Certiorari challenging the just compensation award at ₱9,000.00 per square meter.
The petitioner argued that:

The approved rate was excessive compared to the BIR zonal valuation.
The CA’s Decision was not properly supported by law and jurisprudence.
The court overlooked evidence regarding the actual use, classification, size, and condition of the properties.

Conversely, respondents maintained that the RTC and CA had duly considered all relevant factors under Section 5 of RA 8974 and that the additional evidence or assertions raised by petitioner did not warrant an increase of the just compensation to ₱15,000.00 per square meter, especially since respondents did not properly appeal the earlier decisions.

Issues on Payment of Legal Interest

The CA modified the award of legal interest by ordering it to run not from the date of filing of the expropriation complaint but from the date of taking (November 12, 2008).
The interest was fixed at 12% per annum until June 30, 2013, and at 6% per annum thereafter until full payment, aligning with the BSP Circular No. 799.

Issues:

Whether the CA erred in affirming the RTC’s determination of just compensation at ₱9,000.00 per square meter despite the conflicting valuation indices (i.e., the lower BIR zonal value versus the higher market-based estimates and the BOC recommendation).

The petitioner contended that the valuation should have relied solely on the BIR zonal values, which were developed through a meticulous process.
Respondents, however, argued that multiple factors, including the property’s location, classification, and comparable market evidence, warranted an adjustment from the BIR valuation.

Whether the proper legal basis and applicable standards under Section 5 of RA 8974 were correctly applied by the lower courts in arriving at their determination of just compensation.

The petitioner asserted that the RTC improperly reduced the BOC’s recommended valuation.
The proper role of the BIR zonal valuation versus market evidence in determining the full and fair equivalent of the property was also contested.

Whether the award of legal interest, especially the starting point for interest accrual (from the time of taking versus the time of filing) is consistent with the provisions of RA 8974 and Rule 67 of the Rules of Court.

Ruling:

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Ratio:

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Doctrine:

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