G.R. No. 227960 - Republic vs. Spouses Darlucio

Case Summary (G.R. No. 227960)

Complaint for Expropriation and Initial Proceedings

The Republic of the Philippines, through the DPWH, filed a complaint for expropriation against "John Doe GGGGG" for a 527-square meter residential property located in Barangay Ugong, Valenzuela City. The property was intended for use in the construction of the C-5 Northern Link Road Project, Segment 8.1, connecting Mindanao Avenue, Quezon City to the North Luzon Expressway. The Republic alleged that the land was unoccupied, unimproved, and its owners could not initially be located. The land's zonal valuation was P3,450.00 per square meter, and the Republic sought to expropriate 413 square meters. The trial court issued an order of expropriation in 2008, requiring the Republic to deposit the full zonal valuation of P1,424,850.00.

Respondents’ Answer and Demand for Market Value

Subsequently, Spouses Lorenzana and Cosme Darlucio were identified as the owners and joined the case. They agreed to the expropriation for public purpose but contested the amount of just compensation. They accepted the zonal value but insisted that just compensation should be based on prevailing market value in the industrially classified area, which they claimed ranged from P10,000.00 to P15,000.00 per square meter.

Board of Commissioners’ Recommendation and Parties’ Opposition

A Board of Commissioners was constituted to determine just compensation. After reviewing evidence, the Board recommended P15,000.00 per square meter, relying heavily on a precedent involving properties in Hobart Village, which is adjacent to the respondents’ land. The Republic opposed this, arguing that the Board’s recommendation ignored the land’s specific classification, condition, and prior lower valuations (such as a previous expropriation of part of the property at P2,000.00 per square meter). The Republic also alleged the presence of informal settlers near the site, which it claimed would reduce value. The respondents affirmed the Board’s recommendation.

Trial Court’s Decision

The trial court fixed just compensation at P15,000.00 per square meter, totaling P6,195,000.00 for the 413 square meters. The court ordered the Republic to pay the balance after deducting initial deposits, accompanied by 12% per annum interest on both the deposit and unpaid balance. It also awarded attorney’s fees and damages to the respondents, and detailed the tax responsibilities regarding the property transfer. The court found no evidence rebutting the fair market value based on Hobart, and noted the Republic’s failure to prove the presence of informal settlers on the respondents’ property.

Court of Appeals’ Affirmation with Modification

On appeal, the Court of Appeals affirmed the just compensation at P15,000.00 per square meter but modified the interest awards:

Interest on unpaid balance: 12% per annum from taking until June 30, 2013, then 6% until finality and full payment
Deletion of attorney’s fees and interest on the deposit prior to its court deposit date

The appellate court emphasized that the zonal valuation was outdated and that the Republic failed to prove informal settlers’ presence on the respondents' land. The Court also supported the use of the Hobart case as a valid precedent for the fair market value.

The Republic’s Petition and Respondents’ Opposition

The Republic petitioned the Supreme Court, arguing that the Hobart valuation was inapplicable due to differences in circumstances, presence of informal settlers, and that the zonal valuation should carry more weight. The respondents maintained the correctness of the P15,000.00 valuation, arguing the residential nature of the property and proximity to Hobart Village, where land prices reached P40,000.00 per square meter. They noted the Board had already moderated this to P15,000.00.

Supreme Court’s Legal Analysis: Discretionary Review and Factual Findings

The Supreme Court held that under the 1987 Constitution, it could review only questions of law under Rule 45 of the Rules of Court, not factual findings. The Court deferred to the trial court and Court of Appeals as to the matters of fact unless there was grave abuse of discretion, which was absent here. The determination of just compensation involves considering multiple factors, and the courts below had applied these judiciously.

Definition and Standards for Just Compensation

Just compensation was defined as the full and fair equivalent of the property taken, measured by the owner’s loss, not the taker’s gain. The Court cited Section 5 of Republic Act No. 8974, which outlines standards for assessing just compensation, including:

Property classification and use
Developmental costs and improvements
Owner’s declared value
Selling price of similar properties nearby
Physical characteristics such as size, shape, location, and zoning
Documentary and oral evidence, including ocular inspection
Compensation that enables owners to acquire similarly-situated properties

The trial court’s decision showed a thorough application of these criteria.

Trial Court’s Consideration of Key Factors

The trial court considered the property’s classification as residential, physical characteristics (size, generally flat, “L”-shaped), proximity to Hobart Village, and the fact that the C-5 Northern Link Project had been completed. It rejected the Republic’s assertion about informal settlers due to lack of evidence that respondents’ property was occupied or near such settlers. This meticulous evaluation was affirmed by the Court of Appeals.

Legitimacy of the Hobart Precedent

The Hobart valuation at P15,000.00 per square meter was deemed relevant and binding since the respondents’ property was similarly situated nearby. The Court underscored that the Republic itself had acknowledged this proximity, and the Hobart case was a recent, final decision from 2010. Additionally, a later case, Republic v. Ng (2017), reaffirmed Hobart’s applicability in Barangay Ugong expropriations.

Rejection of Zonal Valuation as Sole Basis and Obsolete Previous Valuations

The Court clarified that zonal valuation alone does not determine just compensation, as it may be obsolete or understate actual value. The

Case Syllabus (G.R. No. 227960)

Antecedents and Nature of the Case

The Republic of the Philippines, through the Department of Public Works and Highways (DPWH), filed a complaint for expropriation on November 23, 2007, against "John Doe GGGGG" for a parcel of land measuring 527 square meters located in Barangay Ugong, Valenzuela City.
The land is covered by Transfer Certificate of Title (TCT) No. B-26619 and was sought for the construction of 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 Republic alleged the land was unoccupied, unimproved, and that the owner could not be located despite diligent efforts.
The Republic sought to expropriate 413 square meters out of the total 527 square meters, valuing the land initially at a zonal valuation of Php3,450.00 per square meter.

Order of Expropriation and Initial Proceedings

On September 9, 2008, the trial court issued an order of expropriation, directing the petitioner to deposit Php1,424,850.00 (100% of the zonal valuation) with the Office of the Clerk of Court, which the petitioner complied with.
Subsequently, respondents Spouses Lorenzana Juan Darlucio and Cosme Darlucio were named as owners in the case.

Respondents’ Position and Board of Commissioners’ Recommendation

The Spouses Darlucio agreed to the expropriation for public use but contested the amount of just compensation.
They admitted the zonal value of Php3,450.00/sqm but argued the just compensation should reflect prevailing market values, ranging from Php10,000.00 to Php15,000.00 per square meter given the area’s industrial classification.
The trial court constituted a Board of Commissioners to determine just compensation.
The Board, after considering parties’ evidence and conducting its research, recommended Php15,000.00 per square meter as just compensation.
The Board relied heavily on a prior case involving Hobart Village, where similarly situated properties were valued at Php15,000.00 per square meter.
The Republic opposed this recommendation, citing disregard for evidence concerning actual land use, classification, size, conditions, and prior expropriation at Php2,000.00 per square meter for part of the property.
It also cited informal settler presence nearby as a devaluation factor.
Respondents accepted the Board’s recommendation, emphasizing difficulty in acquiring comparable property if an amount lower than Php15,000.00 were awarded.

Trial Court Decision

On May 16, 2014, the trial court fixed just compensation at Php15,000.00 per square meter for the 413 square meters, amounting to Php6,195,000.00.
The court directed the Republic to pay this amount minus the previous deposit, along with 12% interest on the deposit and unpaid balance until full payment.
It awarded Php3,000.00 each in commissioners’ fees, Php502,500.00 in consequential damages, and Php50,000.00 in attorney’s fees.
The costs for capital gains tax on title transfer were to be borne by respondents; transfer tax and related fees were to be paid by the petitioner.
The decision considered the Php15,000.00 per