EN BANC

[ G.R. No. 210669. August 01, 2017 ]

HI-LON MANUFACTURING, INC., PETITIONER, VS. COMMISSION ON AUDIT,

RESPONDENT.

DECISION

PERALTA, J.:

This Petition for Certiorari under Rule 64, in relation to Rule 65 of the 1997 Rules of Civil
Procedure, seeks to annul and set aside the Commission on Audit (COA) Decision No. 2011-003[1] dated
January 20, 2011, which denied HI-LON Manufacturing, Inc.'s (HI-LON) petition for review, and
affirmed with modification the Notice of Disallowance (ND) No. 2004-032 dated January 29, 2004 of
COA's Legal and Adjudication Office-National Legal and Adjudication Section (LAO-N). The LAO-N
disallowed the amount of P9,937,596.20, representing the difference between the partial payment of
P10,461,338.00 by the Department of Public Works and Highways (DPWH) and the auditor's valuation
of P523/741.80, as just compensation for the 29,690-square-meter road right-of-way taken by the
government in 1978 from the subject property with a total area of 89,070 sq. m. supposedly owned by
HI-LON. The dispositive portion of the assailed COA Decision No. 2011-003 reads:

WHEREFORE, premises considered, the instant petition for review is hereby DENIED for lack of
merit. Accordingly, ND No. 2004-32 dated January 29, 2004 amounting to P9,937,596.20 is
hereby AFFIRMED with modification on the reason thereof that the claimant is not entitled thereto.

On the other hand, the Special Audit Team constituted under COA Office Order No. 2009-494 dated
July 16, 2009 is hereby instructed to issue a ND for the P523,741.80 payment to Hi-Lon not covered by
ND No. 2004-032 without prejudice to the other findings to be embodied in the special audit report.[2]

This Petition likewise assails COA's Decision[3] No. 2013-212 dated December 3, 2013 which denied
HI-LON's motion for reconsideration, affirmed with finality COA Decision No. 2011-003, and required
it to refund payment made by DPWH in the amount of P10,461,338.00. The dispositive portion of the
assailed COA Decision No. 2013-212 reads:

WHEREFORE, the instant Motion for Reconsideration is hereby DENIED for lack of merit.
Accordingly, Commission on Audit Decision No. 2011-003 dated January 20, 2011 is
hereby AFFIRMED WITH FINALITY. Hi-Lon Manufacturing Co., Inc. is hereby required to refund
the payment made by the Department of Public Works and Highways in the amount of P10,461,338.00.
[4]

The antecedent facts are as follows:

Sometime in 1978, the government, through the then Ministry of Public Works and Highways
(now DPWH), converted to a road right-of-way (RROW) a 29,690 sq. m. portion of the 89,070 sq. m.
parcel of land (subject property) located in Mayapa, Calamba, Laguna, for the Manila South Expressway
Extension Project. The subject property was registered in the name of Commercial and Industrial Real
Estate Corporation (CIREC) under Transfer Certificate of Title (TCT) No. T-40999.

Later on, Philippine Polymide Industrial Corporation (PPIC) acquired the subject property, which led to
the cancellation of TCT No. T-40999 and the issuance of TCT No. T-120988 under its name. PPIC then
mortgaged the subject property with the Development Bank of the Philippines (DBP), a government
financing institution, which later acquired the property in a foreclosure proceeding on September 6,
1985. TCT No. T-120988, under PPIC's name, was then cancelled, and TCT No. T-151837 was issued
in favor of DBP.

Despite the use of the 29,690 sq. m. portion of the property as RROW, the government neither annotated
its claim or lien on the titles of CIREC, PPIC and DBP nor initiated expropriation proceedings, much
less paid just compensation to the registered owners.

Upon issuance of Administrative Order No. 14 dated February 3, 1987, entitled "Approving the
Identification of and Transfer to the National Government of Certain Assets and Liabilities of the
Development Bank of the Philippines and the Philippine National Bank," the DBP submitted all its
acquired assets, including the subject property, to the Asset Privatization Trust (APT) for disposal,
pursuant to Proclamation No. 50 dated 8 December 1986.

On June 30, 1987, APT disposed of a portion of the subject property in a public bidding. The Abstract of
Bids[5] indicated that Fibertex Corporation (Fibertex), through Ester H. Tanco, submitted a
P154,000,000.00 bid for the asset formerly belonging to PPIC located in Calamba, Laguna, i.e., "Land
(5.9 hectares) TCT 4099, buildings & improvements, whole mill," while TNC Philippines, Inc. and P.
Lim Investment, Inc. submitted a bid of P106,666,000.00 and P138,000,000.00, respectively. With
respect to the former assets of Texfiber Corporation (Texfiber) in Taytay, Rizal i.e., "Land (214,062 sq.
m. TCT (493917) 506665, buildings & improvements, whole mill"), only Fibertex submitted a bid of
P210,000,000.00.

In a Certification[6] dated July 1, 1987, APT certified that Fibertex was the highest bidder of PPIC and
Texfiber assets for P370,000,000.00, and recommended to the Committee on Privatization to award said
assets to Fibertex. In a Letter [7] dated November 10, 1988, APT certified that Fibertex paid APT
P370,000,000.00 for the purchase of the said assets formerly belonging to PPIC and Texfiber.

Meanwhile, Fibertex allegedly requested APT to exclude separate deeds of sale for the parcel of land
and for improvements under the subject property covered by TCT No. 151837 in the name of DBP.
Having been paid the full bid amount, APT supposedly agreed with Fibertex that the land would be
registered in the name of TG Property, Inc. (TGPI) and the improvements to Fibertex. Thus, APT
executed two (2) separate Deeds of Sale with TGPI and Fibertex with regard to the property, namely:

a. Deed of Sale between APT and TGPI executed on October 29, 1987 for the sale of a parcel
of land covered by TCT No. T-151837 for a consideration of P2,222,967.00.
 b. Deed of Sale between APT and Fibertex executed on 19 August 1987 for the sale of
improvements (machinery, equipment and other properties) on the same property for a consideration of
P154,315,615.39.

Upon complete submission of the required documents and proof of tax payments on December 9,
1987, the Register of Deeds of Calamba, Laguna, cancelled DBP's TCT No. 151837 and issued TCT No.
T-158786 in the name of TGPI, covering the entire 89,070 sq. m. subject property, including the 29,690
sq. m. RROW. From 1987 to 1996, TGPI had paid real property taxes for the entire 89,070 sq. m.
property, as shown by the Tax Declarations and the Official Receipt issued by the City Assessor's Office
and Office of the City Treasurer of Calamba, Laguna, respectively.

On April 16, 1995, TGPI executed a Deed of Absolute Sale in favor of HI-LON over the entire 89,070
sq. m. subject property for a consideration of P44,535,000.00. HI-LON registered the Deed with the
Register of Deeds of Calamba, Laguna, which issued in its name TCT No. 383819.

Sometime in 1998, Rupert P. Quijano, Attorney-in-Fact of HI-LON, requested assistance from the
Urban Road Project Office (URPO) DPWH for payment of just compensation for the 29,690 sq. m.
portion of the subject property converted to a RROW. The DPWH created an Ad Hoc Committee which
valued the RROW at P2,500/sq. m. based on the 1999 Bureau of/ Internal Revenue (BIR) zonal
valuation.

On December 21, 2001, a Deed of Sale was executed between HI-LON and the Republic of the
Philippines, represented by Lope S. Adriano, URPO-PMO Director, by authority of
the DPWH Secretary, covering the 29,690 sq. m. parcel of land converted to RROW for a total
consideration of P67,492,500.00. On January 23, 2002, the Republic, through the DPWH, made the first
partial payment to HI-LON in the amount of P10,461,338.00.

On post audit, the Supervising Auditor of the DPWH issued Audit Observation Memorandum No. NGS
VIII-A-03-001 dated April 2, 2003 which noted that the use of the 1999 zonal valuation of P2,500.00/sq.
m. as basis for the determination of just compensation was unrealistic, considering that as of said year,
the value of the subject property had already been "glossed over by the consequential benefits" it has
obtained from the years of having been used as RROW. The auditor pointed out that the
just compensation should be based on the value of said property at the time of its actual taking in 1978.
Taking into account the average value between the 1978 and 1980 Tax Declarations covering the subject
land, the Auditor arrived at the amount of P19.40/sq. m. as reasonable compensation and, thus,
recommended the recovery of excess payments.

Upon review of the auditor's observations, the Director of the LAO-N issued on January 29, 2004 ND
No. 2004-32 in the amount of P9,937,596.20, representing the difference between the partial payment of
P10,461,338.00 to HI-LON and the amount of P532.741.80, which should have been paid as
just compensation for the conversion of the RROW.

Acting on the request of Dir. Lope S. Adriano, Project Director (URPO-PMO) for the lifting of ND No.
2004-032 dated January 29, 2004, the LAO-N rendered Decision No. 2004-172 dated May 12, 2004,
affirming the same ND, and stating the value of the property must be computed from the time of the
actual taking.

Resolving (1) the motions for reconsideration and request for exclusion from liability of
former DPWH Secretary Gregorio R. Vigilar, et al. (2) the request for lifting, of Notice of Disallowance
No. 2004-032 of OIC Director Leonora J. Cuenca; (3) the motion to lift the disallowance and/or
exclusion as person liable of Ms. Teresita S. de Vera, Head, Accounting Unit, DPWH; and (4) the
appeal from ND No. 2004-032 of former Assistant Secretary Joel C. Altea and of Mr. Rupert P. Quijano,
Attorney-in-Fact of HI-LON, the LAO-N issued Decision No. 2008-172-A dated June 25, 2008, which
denied the appeal and affirmed the same ND with modification that payment of interest is appropriate
under the circumstances.

Aggrieved, HI-LON filed a petition for review before the COA. In its regular meeting on June 9, 2009,
the COA deferred the resolution of the petition, and instructed its Legal Service Section to create a
Special Audit Team from the Fraud Audit and Investigation Office to investigate and validate HI-LON's
claim.

In its assailed Decision No. 2011-003 dated January 20, 2011, the COA denied for lack of merit HI-
LON's petition for review of the LAO-N Decision No. 2008-172-A, and affirmed ND No. 2004-032
dated July 29, 2004 with modification declaring the claimant not entitled to just compensation. The
COA also instructed the Special Audit Team to issue an ND for the P523,741.80 payment to HI-LON
not covered by ND No. 2004-032, without prejudice to the other findings embodied by the special audit
report.

On the issue of whether or not HI-LON is entitled to just compensation for the 29,690 sq. m. portion of
the subject property, the COA found that the evidence gathered by the Special Audit Team are fatal to
the claim for such compensation.

First, the COA noted that the transfer of the subject property in favor of TGPI, the parent corporation of
HI-LON, was tainted with anomalies because records show that TGPI did not participate in the public
bidding held on June 30, 1987, as only three (3) bidders participated, namely: Fibertex Corporation,
TNC Philippines, Inc., and P. Lim Investment, Inc.

Second, the COA pointed out that the Deed of Sale between APT and Fibertex has a disclosure that "The
subject of this Deed of Absolute Sale, therefore, as fully disclosed in the APT Asset Catalogue, is the
total useable area of 59,380 sq. m.,"[8] excluding for the purpose the 29,690 sq. m. converted to RROW.
The COA added that such exclusion was corroborated by the Abstract of Bids duly signed by the then
APT Executive Assistant and Associate Executive Trustee, showing that the land covered by TCT No.
T-151387 was offered to the public bidding for its useable portion of 5.9 hectares only, excluding the
subject 29,690 sq. m. converted to RROW.

Third, the COA observed that HI-LON is a mere subsidiary corporation which cannot acquire better title
than its parent corporation TGPI. The COA stressed that for more than (7) seven years that the subject
property was under the name of TGPI from its registration on December 9, 1987 until it was transferred
to HI-LON on April 16, 1995, TGPI did not attempt to file a claim for just compensation because it was
estopped to do so as the Deed of Sale executed between APT and TGPI clearly stated that the 29,690 sq.
m. RROW was excluded from the sale and remains a government property. Applying the principle of
piercing the veil of corporate fiction since TGPI owns 99.9% of HI-LON, the COA ruled that HI-LON
cannot claim ignorance that the 29,690 sq. m. RROW was excluded from the public auction.

Having determined that HI-LON or its predecessor-in-interest TGPI does not own the RROW in
question, as it has been the property of the Republic of the Philippines since its acquisition by the DBP
up to the present, the COA concluded that the proper valuation of the claim for just compensation is
irrelevant as HI-LON is not entitled thereto in the first place.

Dissatisfied, HI-LON filed a Motion for Reconsideration of COA Decision No. 2011-003 and a
Supplement thereto.

On December 3, 2013, the COA issued the assailed Decision No. 2013-212 denying HI-LON's motion,
for reconsideration, affirming with finality its assailed Decision No. 2011-003, and requiring HI-LON to
refund the payment made by DPWH in the amount of P10,461,338.00.

In this Petition for Certiorari, HI-LON argues that the COA committed grave abuse of discretion,
amounting to lack or excess of jurisdiction when it held (1) that there was no property owned by HI-
LON that was taken by the government for public use; (2) that the 89,070-sq. m. subject parcel of land,
including the 29,690 sq. m. portion used as RROW by the government, had been the property of the
Republic of the Philippines; (3) that HI-LON is not entitled to payment of just compensation; and (4)
that it collaterally attacked HI-LON's ownership of the subject land, including the RROW. [9]

The Office of the Solicitor General (OSG) counters that the COA acted within its jurisdiction when it
evaluated and eventually disallowed what it found to be an irregular, anomalous and unnecessary
disbursement of public funds. The OSG agrees with the COA that HI-LON is not entitled to payment of
just compensation because the 29,690 sq. m. portion used as RROW is already owned by the Republic
since 1987 when DBP transferred the entire 89,070 sq. m. subject property to APT, pursuant to
Administrative Order No. 14. The OSG emphasizes that the Deed of Absolute Sale dated October 29,
1987 between the Republic (through APT) and TGPI clearly stated that the subject thereof, as fully
disclosed in the APT Asset Specific Catalogue, is the total useable area of 59,380 sq. m., hence, the
29,690 sq. m. portion used as RROW was expressly excluded from the sale. Besides, the OSG notes that
the COA aptly found that there were only three bidders who participated in APT's public bidding of the
subject property and TGPI was not one of the bidders. There being an anomaly in the transfer of the
property from APT to TGPI, the OSG posits that HI-LON, as TGPI's successor-in-interest, is not
entitled to just compensation.

Stating that the intention of Proclamation No. 50 was to transfer the non-performing assets of DBP to
the national government, the OSG maintains that APT has no authority to offer for sale the said portion
because it is a performing asset, having been used by the government as RROW for the Manila South
Expressway since 1978. Considering that the said 29,690 sq. m. portion was not sold and transferred by
APT to TGPI, the OSG submits that TGPI cannot also transfer the same portion to its subsidiary, HI-
LON. The OSG concludes that HI-LON is not entitled to payment of just compensation as it is not the
owner of the said portion, and that the COA properly ordered full disallowance of the P10,461,338.00
paid to HI-LON.

HI-LON's Petition for HI-LON is devoid of merit.

In support of its claim of entitlement to just compensation, HI-LON relies on the Deed of Sale dated
October 29, 1987, and insists that its predecessor-in-interest (TGPI) acquired from the national
government, through APT, the entire 89,070 sq. m. property, which was previously registered in the
name of DBP under TCT No. 151837. HI-LON asserts that the 29,690 sq. m. RROW was not excluded
from the sale because: (1) APT referred to the entire property in the Whereas Clauses as one of the
subject of the sale; (2) APT made an express warranty in the said Deed that the properties sold are clear
of liens and encumbrances, which discounts the need to investigate on the real status of the subject
property; and (3) the title registered in the name of DBP, as well as the titles of the previous owners,
CIREC and PPIC, contains no annotation as regards any government's claim over the RROW.

HI-LON's assertions are contradicted by the clear and unequivocal terms of the Deed of Sale [10] dated 29
October 1987 between APT and TGPI, which state that the subject thereof is the total usable area of
59,380 sq. m. of the subject property. Contrary to HI-LON's claim, nothing in the Whereas Clauses of
the Deed indicates that the object of the sale is the entire 89,070 sq. m. property, considering that the
29,690 sq. m. portion thereof had been used as road right-of-way (RROW) for the South Expressway, to
wit:
x x x x

WHEREAS, the Development Bank of the Philippines (DBP) was the mortgagee of a parcel of land
(hereafter to be referred to as the "PROPERTY") covered by Transfer Certificate of Title No. T-151837
of the Registry of Deeds for the Province of Laguna (Calamba Branch), more particularly described as
follows:

A parcel of land (Lot 2-D-I-J of the subd. Plan Psd-39402, being a portion-of Lot 2-D-l, described
on plan Psd-18888, LRC (GLRO Rec:No. 9933, situated in the Bo. of Mayapa & San Cristobal,
Municipality of Calamba, Province of Laguna. Bounded on the N.E. by Lot No. 2-D-1-1; of the subd.
Plan; on the S., by the Provincial Road; on the SW., by Lot 2-D-l-K of the subd. plan and on the NW.,
by Lot No. 2-B of plan Psd-925. Beginning at a point marked "1" on plan, being S. 62 deg. 03'W.,
1946.22 from L.M. 5, Calamba Estate; Thence — N. 64 deg. 35'E., 200.27 m. to point 2; S.21 deg. 03'E.
166.82 m. to point 3; S. 12 deg. 30'E, 141.01 m. to point 4; S. 10 deg. 25'E, 168.29 m. to point 5; N. 84
deg. 47'W, 215.01 m. to point 6; N. 13 deg. 44'W., 150.99 m. Thence — to point 7; N. 13 deg. 45'W.,
27.66 m. to the point of beginning; containing an area of EIGHTY-NINE THOUSAND SEVENTY
(89,070) SQUARE METERS, more or less. All points referred to are indicated on the plan and are
marked on the ground by PLS. cyl. cone. mons. bearings true detloop deg. 03'E., date of original survey
Jan. 1906 - Jan. 1908 and Sept. 1913 and that of subd. survey, Aug. 23-25, 1953.

[As per Tax Declaration No. 9114, an area of 29,690 sq. m. had been used (road-right-of-way) for the
South Expressway. The subject of this Deed of Absolute Sale, therefore, as fully disclosed in the APT
Asset Specific Catalogue, is the total useable area of 59,380 sq. m.][11]

WHEREAS, the PROPERTY was subsequently acquired by DBP at public auction in a foreclosure
sale as evidenced by a Sheriff's Certificate of Sale dated September 6, 1985 issued by Mr. Godofredo E.
Quiling, Deputy Provincial Sheriff, Office of the Provincial Sheriff of Laguna, Philippines. x x x

WHEREAS, pursuant to Administrative Order No. 14 issued on February 3, 1987 [Approving the
Identification of and Transfer to the National Government of Certain Assets and Liabilities of the
Development Bank of the Philippines and the Philippine National Bank], DBP's ownership and interest
over the PROPERTY were transferred to the National Government through the ASSET
PRIVATIZATION TRUST (APT), a public trust created under Proclamation No. 50 dated December 8,
1986.

WHEREAS, in the public bidding conducted by the APT on June 30, 1987, the VENDEE [TGPI] made
the highest cash bid for the PROPERTY and was declared the winning bidder.

WHEREAS, the sale of the PROPERTY has been authorized by the COMMITTEE ON
PRIVATIZATION under Notice of Approval dated July 21, 1987 of the APT;

WHEREAS, the VENDEE [TGPI] has fully paid the VENDOR [Government of the Republic of the
Philippines, through APT] the purchase price of the PROPERTY in the amount of PESOS: TWO
MILLION TWO HUNDRED TWENTY-TWO THOUSAND NINE HUNDRED SIXTY-SEVEN
(P2,222,967.00).

NOW, THEREFORE, for and in consideration of the above premises and for the sum of PESOS: TWO
MILLION TWO HUNDRED TWENTY-TWO THOUSAND NINE HUNDRED SIXTY-SEVEN
(P2,222,967.00), Philippine Currency, paid by the VENDEE to the VENDOR, the VENDOR does by
these presents sell, transfer and convey the PROPERTY hereinabove described unto the VENDEE, its
successors and assigns, subject to the following conditions:

1. The VENDOR hereby warrant that the PROPERTIES shall be sold and transferred free and clear
of liens and encumbrances accruing before August 18, 1987, and that all taxes or charges accruing or
becoming due on the PROPERTIES before said date have or shall be fully paid by the VENDOR;

2. Documentary Stamp Taxes, Transfer Taxes. Registration fees, and all other expenses arising out of or
relating to the execution and delivery of this Deed shall be for the account of and paid by the VENDEE;

3. Capital gains tax, if any, payable on or in respect of the transfer of the PROPERTY to the VENDEE
shall be for the account of and paid by the VENDOR.

IN WITNESS WHEREOF, the parties hereto have caused these presents to be signed at Makati,
Metro Manila this [29th] day of [October], 1987.[12]
 As the Deed of Sale dated October 29, 1987 is very specific that the object of the sale is the 59,380.
sq. m. portion of the subject property, HI-LON cannot insist to have acquired more than what its
predecessor-in-interest (TGPI) acquired from APT. Article 1370 of the New Civil Code provides that if
the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the
literal meaning of its stipulations shall control. Every contracting party is presumed to know the contents
of the contract before signing and delivering it, [13] and that the words used therein embody the will of the
parties. Where the terms of the contract are simple and clearly appears.to have been executed with all
the solemnities of the law, clear and convincing evidence is required to impugn it. [14] Perforce, HI-LON's
bare allegation that the object of the Deed of Sale is the entire 89,070 sq. m. area of the subject property,
is self-serving and deserves short shrift.

The Court thus agrees with the COA in rejecting HI-LON's claim of ownership over the 29,690 sq. m.
RROW portion of the subject property in this wise:

x x x x

As clearly shown in the Abstract of Bids, the subject of the bidding was 59,380 sq. m. only. The Deed of
Sale expressly states that -

[As per Tax Declaration No. 9114, an area of 29,690 sq. m. had been used (road-right-of-way) for
the South Expressway. The subject of this Deed of Absolute Sale, therefore, as fully disclosed in the
APT Asset Specific Catalogue, is the total useable area of 59,380 sq. m.]

The government cannot enter into a contract with the highest bidder and incorporate substantial
provisions beneficial to the latter which are not included or contemplated in the terms and specifications
upon which the bids were solicited. It is contrary to the very concept of public bidding to permit an
inconsistency between the terms and conditions under which the bids were solicited and those under
which the bids were solicited and those under which proposals are submitted and accepted. Moreover,
the substantive amendment of the terms and conditions of the contract bid out, after the bidding process
had been concluded, is violative of the principles in public bidding and will render the government
vulnerable to the complaints from the losing bidders.

Thus, since the area of [29,690 sq. m. which later became] 26,997 sq. m. covered by the ROW was not
subject of the public bidding, Hi-Lon cannot validly acquire and own the same. The owner of this
property is still the Republic of the Philippines.

x x x x[15]

Citing Bagatsing v. Committee on Privatization[16] where it was held that Proclamation No. 50 does
not prohibit APT from selling and disposing other kinds of assets whether they are performing or non-
performing, necessary or appropriate, HI-LON contends that regardless of whether or not the RROW is
a performing or non-performing asset, it could not have been excluded in the sale of the entire 89,070
sq. m. property pursuant to the said Proclamation.

Concededly, the 29,690 sq. m. portion of the subject property is not just an ordinary asset, but is being
used as a RROW for the Manila South Expressway Extension Project, a road devoted for a public use
since it was taken in 1978. Under the Philippine Highway Act of 1953, "right-of-way" is defined as the
land secured and reserved to the public for highway purposes, whereas "highway" includes rights-of-
way, bridges, ferries, drainage structures, signs, guard rails, and protective structures in connection with
highways.[17] Article 420 of the New Civil Code considers as property of public dominion those intended
for public use, such as roads, canals, torrents, ports and bridges constructed by the state, banks, shores,
roadsteads, and others of similar character.

Being of similar character as roads for public use, a road right-of-way (RROW) can be considered as a
property of public dominion, which is outside the commerce of man, and cannot be leased, donated,
sold, or be the object of a contract, [18] except insofar as they may be the object of repairs or
improvements and other incidental matters. However, this RROW must be differentiated from the
concept of easement of right of way under Article 649[19] of the same Code, which merely gives the
holder of the easement an incorporeal interest on the property but grants no title thereto, [20] inasmuch as
the owner of the servient estate retains ownership of the portion on which the easement is established,
and may use the same in such a manner as not to affect the exercise of the easement. [21]

As a property of public dominion akin to a public thoroughfare, a RROW cannot be registered in the
name of private persons under the Land Registration Law and be the subject of a Torrens Title; and if
erroneously included in a Torrens Title, the land involved remains as such a property of public
dominion.[22] In Manila International Airport Authority v. Court of Appeals,[23] the Court declared that
properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition
through public or private sale. "Any encumbrance, levy on execution or auction sale of any property of
public dominion is void for being contrary to public policy. Essential public services will stop if
properties of public dominion are subject to encumbrances, foreclosures and auction sale." [24]

It is, therefore, inconceivable that the government, through APT, would even sell in a public bidding the
29,690 sq. m. portion of the subject property, as long as the RROW remains as property for public use.
Hence, HI-LON's contention that the RROW is included in the Deed of Absolute Sale dated 29 October
1987, regardless whether the property is a performing or non-performing asset, has no legal basis.

Neither can HI-LON harp on the express warranty in the Deed of Sale that the subject property is clear
from any encumbrance, and the lack of annotation of the government's claim of RROW on the TCTs of
CIREC, PPIC and DBP covering the subject property, to bolster its claim of having acquired ownership
of such property in good faith.

There is no dispute as to the finding of COA Commissioner Juanito G. Espino and DPWH Officer-in-
Charge Manuel M. Bonoan based on the examination of land titles of the subject property that the entire
89,070 sq. m. area thereof was never reduced in the process of seven (7) transfers of ownership from
Emerito Banatin, et al., in 1971 to HI-LON in 1996, nor was there an annotation of a RROW
encumbrance on the TCTs of CIREC, PPIC, DBP and TGPI. Be that as it may, HI-LON cannot overlook
the fact that the RROW was taken upon the directive of the Ministry of Public Works and Highways in
1978 for the construction of the Manila South Expressway Extension project. Such public highway
constitutes as a statutory lien on the said TCTs, pursuant to Section 39 of the Land Registration Act (Act
No. 496) and Section 44 of the Property Registration Decree (Presidential Decree No. 1529):

Section 39. Every applicant receiving a certificate of title in pursuance of a decree of registration,
and every subsequent purchaser of registered land who takes a certificate of title for value in good faith,
shall hold the same free of all encumbrance except those noted on said certificate, and any of the
following encumbrances which may be subsisting, namely:

First. Liens, claims, or rights arising or existing under the laws or Constitution of the United States or of
the Philippine Islands which the statutes of the Philippine Islands cannot require to appear of record in
the registry.

Second. Taxes within two years after the same have become due and payable.

Third. Any public highway, way, or private way established by law, where the certificate of title does
not state that the boundaries of such highway or way have been determined. But if there are
easements or other rights appurtenant to a parcel of registered land which for any reason have failed to
be registered, such easements or rights shall remain so appurtenant notwithstanding such failure, and
shall be held to pass with the land until cut off or extinguished by the registration of the servient estate,
or in any other manner.

x x x x

SECTION 44. Statutory Liens Affecting Title. — Every registered owner receiving a certificate of title in
pursuance of a decree of registration, and every subsequent purchaser of registered land taking a
certificate of title for value and in good faith, shall hold the same free from all encumbrances except
those noted in said certificate and any of the following encumbrances which maybe subsisting, namely:

First. Liens, claims or rights arising or existing under the laws and Constitution of the Philippines which
are not by law required to appear of record in the Registry of Deeds in order to be valid against
subsequent purchasers or encumbrancers of record.

Second. Unpaid real estate taxes levied and assessed within two years immediately preceding the
acquisition of any right over the land by an innocent purchaser for value, without prejudice to
the right of the government to collect taxes payable before that period from the delinquent taxpayer
alone.

Third. Any public highway or private way established or recognized by law, or any government
irrigation canal or lateral thereof, if the certificate of title does not state that the boundaries of such
highway or irrigation canal or lateral thereof have been determined.

Fourth. Any disposition of the property or limitation on the use thereof by virtue of, or pursuant to,
Presidential Decree No. 27 or any other law or regulations on agrarian reform.[25]
 Section 39 of Act No. 496 and Section 44 of P.D. No. 1529 provide for statutory liens which subsist
and bind the whole world, even without the benefit of registration under the Torrens System. Thus, even
if the TCTs of CIREC, PPIC, DBP and TGPI contain no annotation of such encumbrance, HI-LON can
hardly feign lack of notice of the government's claim of ownership over the public highway built along
the RROW, and claim to be an innocent purchaser for value of the entire 89,070 sq. m. subject property
because such highway prompts actual notice of a possible claim of the government on the RROW.

Given that prospective buyers dealing with registered lands are normally not required by law to inquire
further than what appears on the face of the TCTs on file with the Register of Deeds, it is equally settled
that purchasers cannot close their eyes to known facts that should have put a reasonable person on guard.
[26]
Their mere refusal to face up to that possibility will not make them innocent purchasers for value, if it
later becomes apparent that the title was defective, and that they would have discovered the fact, had
they acted with the measure of precaution required of a prudent person in a like situation. [27] Having
actual notice of a public highway built on the RROW portion of the subject property, HI-LON cannot
afford to ignore the possible claim of encumbrance thereon by the government, much less fail to inquire
into the status of such property.

Invoking the principle of estoppel by laches, HI-LON posits that the government's failure to assert
its right of ownership over the RROW by registering its claim on the titles of CIREC, PPIC, and DBP
since the 29,690 sq. m. portion of the property was converted to a RROW way back in 1978 until the
purported sale of the entire 89,070 sq. m. property to TGPI in 1987, bars it from claiming ownership of
the RROW because it slept over its rights for almost nine (9) years. HI-LON states that if it were true
that the government was convinced that it acquired the RROW, it would have lost no time in registering
its claim before the Register of Deeds, instead of surrendering to TGPI the owner's duplicate of TCT No.
151837 in the name of DBP, to facilitate the issuance of a new title over the entire 89,070 sq. m.
property, which includes the 29,690 sq. m. RROW. HI-LON further claims that the government is
estopped from claiming its alleged right of ownership of the RROW because the DPWH itself offered to
buy and, in fact, executed a Deed of Sale, thereby acknowledging that the RROW is a private property
owned by HI-LON.

The failure of the government to register its claim of RROW on the titles of CIREC, PPIC, DBP and
TGPI is not fatal to its cause. Registration is the ministerial act by which a deed, contract, or instrument
is inscribed in the records of the Office of the Register of Deeds and annotated on the back of the TCT
covering the land subject of the deed, contract, or instrument. [28] It creates a constructive notice to the
whole world and binds third persons.[29] Nevertheless, HI-LON cannot invoke lack of notice of the
government's claim over the 29,690 sq. m. RROW simply because it has actual notice of the public
highway built thereon, which constitutes as a statutory lien on its title even if it is not inscribed on the
titles of its predecessors-in-interest, CIREC, PPIC, DBP, and TGPI. Indeed, actual notice is equivalent
to registration, because to hold otherwise would be to tolerate fraud and the Torrens System cannot be
used to shield fraud.[30]

Meanwhile, the mistake of the government officials in offering to buy the 29,690 sq. m. RROW does not
bind the State, let alone vest ownership of the property to HI-LON. As a rule, the State, as represented
by the government, is not estopped by the mistakes or errors of its officials or agents, especially true
when the government's actions are sovereign in nature. [31] Even as this rule admits of exceptions in the
interest of justice and fair play, none was shown to obtain in this case. Considering that only 59,380 sq.
m. of the subject property was expressly conveyed and sold by the government (through APT) to HI-
LON's predecessor-in-interest (TGPI), HI-LON has no legal right to claim ownership over the entire
89,070 sq. m. property, which includes the 29,690 sq. m. RROW taken and devoted for public use since
1978.

In arguing that the government had no legal title over the RROW, HI-LON points out that the
government acquired title thereto only in 2001 when a Deed of Sale was executed between HI-LON and
the DPWH. HI-LON claims that when the government used the 29,690 sq. m. portion of the subject
property as RROW in 1978, it never acquired legal title because it did not institute
any expropriation proceeding, let alone pay the registered owner just compensation for the use thereof.

HI-LON's claim of ownership over the said RROW has been duly rejected by the COA in this manner:

x x x x

By virtue of Administrative Order No. 14, s. 1987, pursuant to Section 23 of Proclamation No. 50, the
89,070 sq. m. subject parcel of land, including the 29,690 sq. m. which had been used as ROW by the
Government, was transferred to and owned by the National Government. TG Property, Inc. cannot
acquire a portion of the parcel of land without authority and consent of the Philippine Government,
being the owner and seller of the said property. Hi-Lon cannot even claim ownership on the portion of
the subject land without the said deed of sale executed by the Government in favor of TG Property, Inc.
The facts would show that the ROW has been the property of the Republic of the Philippines since
its transfer from DBP in 1987.

x x x[32]

It bears emphasis that the right to claim just compensation for the 29,690 sq. m. portion which was
not exercised by CIREC or PPIC, ceased to exist when DBP acquired the entire 89,070 sq. m. property
in a foreclosure sale and later transferred it to the national government (through APT) in 1987, pursuant
to Proclamation No. 50. Having consolidated its title over the entire property, there is no more need for
the government to initiate an action to determine just compensation for such private property which it
previously took for public use sans expropriation proceedings.

Citing Section 48 of P.D. 1529 which bars collateral attack to certificates of title, HI-LON asserts that
COA erred in ruling that there was no property owned by HI-LON that was taken by the government for
public use, despite the fact that: (a) the ownership of the subject property was not raised before the
Commission Proper of the COA; and (b) COA has no jurisdiction over issues of ownership and
entitlement to just compensation. HI-LON stresses that the titles issued to TGPI and HI-LON
conclusively show that they are the registered owners of the entire 89,070 sq. m. property in Calamba,
Laguna, including the 29,690 sq. m. RROW. Absent any proceeding directly assailing the said titles, the
ownership of the said property by HI-LON and TGPI is beyond dispute. HI-LON further states
that Leoncio Lee Tek Sheng v. Court of Appeal[33] cited by the OSG is inapplicable because a notice of lis
pendens was annotated on the title subject of the case, unlike the titles of TGPI and HI-LON which
contain no annotation of claims of ownership by the Republic.

Suffice it to state that there is no merit in HI-LON's argument that the TCTs issued in its name and that
of its predecessor-in-interest (TGPI) have become incontrovertible and indefeasible, and can no longer
be altered, cancelled or modified or subject to any collateral attack after the expiration of one (1) year
from the date of entry of the decree of registration, pursuant to Section 32 of P.D. No. 1529. In Heirs of
Clemente Ermac v. Heirs of Vicente Ermac,[34] the Court clarified the foregoing principle, viz.:

x x x While it is true that Section 32 of PD 1529 provides that the decree of registration becomes
incontrovertible after a year, it does not altogether deprive an aggrieved party of a remedy in law. The
acceptability of the Torrens System would be impaired, if it is utilized to perpetuate fraud against the
real owners.

Furthermore, ownership is not the same as a certificate of title. Registering a piece of land under the
Torrens System does not create or vest title, because registration is not a mode of acquiring ownership.
A certificate of title is merely an evidence of ownership or title over the particular property described
therein. Its issuance in favor of a particular person does not foreclose the possibility that the real
property may be co-owned with persons not named in the certificate, or that it may be held in trust for
another person by the registered owner.[35]

In Lacbayan v. Samoy, Jr.,[36] the Court noted that what cannot be collaterally attacked is the
certificate of title, and not the title itself:

x x x The certificate referred to is that document issued by the Register of Deeds known as the TCT.
In contrast, the title referred to by law means ownership which is, more often than not, represented by
that document. x x x Title as a concept of ownership should not be confused with the certificate of title
as evidence of such ownership although both are interchangeably used.

In Mallilin, Jr. v. Castillo,[37] the Court defined collateral attack on the title, as follows:

x x x When is an action an attack' on a title? It is when the object of the action or proceeding is to
nullify the title, and thus challenge the judgment pursuant to which the title was decreed. The attack is
direct when the object of an action or proceeding is to annul or set aside such judgment, or enjoin its
enforcement. On the other hand, the attack is indirect or collateral when, in an action to obtain a
different relief, an attack on the judgment is nevertheless made as an incident thereof. [38]

In this case, what is being assailed by the COA when it sustained the Notice of Disallowance for
payment of just compensation is HI-LON's claim of ownership over the 29,690 sq. m. portion of the
property, and not the TCT of TGPI from which HI-LON derived its title. Granted that there is an error in
the registration of the entire 89,070 sq. m. subject property previously in the name of TGPI under TCT
No. 156786[39] and currently in the name of HI-LON under TCT No. T-383819 [40] because the 29,690 sq.
m. RROW portion belonging to the government was mistakenly included, a judicial pronouncement is
still necessary in order to have said portion excluded from the Torrens title. [41]

HI-LON's assertion that the titles issued to TGPI and HI-LON conclusively show that they are the
registered owners of the entire 89,070 sq. m. property in Calamba, Laguna, including the 29,690 sq. m.
RROW is anathema to the purpose of the Torrens System, which is intended to guarantee the integrity
and conclusiveness of the certificate of registration, but cannot be used for the perpetration of fraud
against the real owner of the registered land. [42] On point is the case of Balangcad v. Court of
Appeals[43] where it was held that "the system merely confirms ownership and does not create it.
Certainly, it cannot be used to divest the lawful owner of his title for the purpose of transferring it to
another who has not acquired it by any of the modes allowed or recognized by law. Where such an
erroneous transfer is made, as in this case, the law presumes that no registration has been made and so
retains title in the real owner of the land."

It is also not amiss to cite Ledesma v. Municipality of Iloilo[44] where it was ruled that "if a person
obtains title, under the Torrens system, which includes, by mistake or oversight, lands which cannot be
registered under the Torrens system, he does not, by virtue of said certificate alone, become the owner of
the land illegally included." Inasmuch as the inclusion of public highways in the certificate of title under
the Torrens system does not thereby give to the holder of such certificate said public highways, [45] the
same holds true with respect to RROWs which are of similar character as roads for public use.

Assuming arguendo that collateral attack of said titles are allowed, HI-LON claims that its right of
ownership of the subject RROW can no longer be assailed by the COA because it never questioned
such right until after it denied the petition for review. HI-LON notes that ND No. 2004-032 was issued
and it was denied payment of just compensation for the RROW solely on the ground that
such compensation should be based on the value of the lot at the time of the actual taking by the
government in 1978. HI-LON avers that it was surprised to find out that in the Decision dated 20
January 2011, the COA Commission Proper assailed for the first time TGPI's and HI-LON's right of
ownership over the RROW, instead of merely finding whether or not the valuation of the property
should be based on the value at the time of the taking in 1978 or the value of the P2,500.00/sq. m.

HI-LON's arguments fail to persuade.

COA may delve into the question of ownership although this was not an original ground for the issuance
of the Notice of Disallowance, but only the proper valuation of the just compensation based on the date
of actual taking of the property. In Yap v. Commission on Audit,[46] the Court ruled that "COA is not
required to limit its review only to the grounds relied upon by a government agency's auditor with
respect to disallowing certain disbursements of public funds. In consonance with its general audit power,
respondent COA is not merely legally permitted, but is also duty-bound to make its own assessment of
the merits of the disallowed disbursement and not simply restrict itself to reviewing the validity of the
ground relied upon by the auditor of the government agency concerned. To hold otherwise would render
the COA's vital constitutional power unduly limited and thereby useless and ineffective." Tasked to be
vigilant and conscientious in safeguarding the proper use of the government's, and ultimately the
people's property, the COA is endowed with enough latitude to determine, prevent, and disallow
irregular, unnecessary, excessive, extravagant or unconscionable expenditures of government funds. [47]

It is the policy of the Court to sustain the decisions of administrative authorities, especially one that was
constitutionally created like herein respondent COA, not only on the basis of the doctrine of separation
of powers, but also of their presumed expertise in the laws they are entrusted to enforce. [48] Considering
that findings of administrative agencies are accorded not only respect but also finality when the decision
and order are not tainted with unfairness or arbitrariness amounting to grave abuse of discretion, it is
only when the COA acted with such abuse of discretion that the Court entertains a petition
for certiorari under Rule 65 of the Rules of Court. [49]

Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent
to lack of jurisdiction or, in other words, the exercise of the power in an arbitrary manner by reason of
passion, prejudice, or personal hostility;[50] and it must be so patent or gross as to amount to an evasion
of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of
law.[51] No grave abuse of discretion can be imputed against the COA when it affirmed the Notice of
Disallowance issued by the LAO-N in line with its constitutional authority [52] and jurisdiction over cases
involving "disallowance of expenditures or uses of government funds and properties found to be illegal,
irregular, unnecessary, excessive, extravagant or unconscionable." [53] Having determined that HI-LON
does, not own the disputed RROW, the COA correctly ruled that HI-LON is not entitled to payment of
just compensation and must accordingly refund the partial payment made by the DPWH in the amount
of P10,461,338.00. To stress, even if HI-LON is the registered owner of the subject property under TCT
No. T-383819 with an area of 89,070 sq. m., the Deed of Absolute Sale dated 29 October 1987 clearly
shows that only the 59,380 sq. m. portion of the subject property, and not 29,690 sq. m. portion used as
RROW, was sold and conveyed by the government (through APT) to HI-LON's immediate predecessor-
in-interest (TGPI).

In light of the foregoing disquisition, HI-LON's prayer for issuance of Temporary Restraining Order
and/or Writ of Injunction must necessarily be denied for lack of clear and unmistakable right over the
disputed 29,690 sq. m. portion of the subject property.

Lastly, from the finality of the Court's decision until full payment, the total amount to be refunded by
HI-LON shall earn legal interest at the rate of six percent (6%) per annum, pursuant to Bangko Sentral
ng Pilipinas Monetary Board Circular No. 799, Series of 2013, because such interest is imposed by
reason of the Court's decision and takes the nature of a judicial debt. [54]

WHEREFORE, premises considered, the Petition for Certiorari is DENIED for lack of merit, and the
Commission on Audit Decision No. 2011-003 dated January 20, 2011 and Decision No. 2013-212 dated
December 3, 2013 are AFFIRMED with MODIFICATION that a legal interest of six percent
(6%) per annum from the finality of this Decision until fully paid, is imposed on the amount of
P10,461,338.00 that HI-LON Manufacturing Co., Inc. is required to refund to the Department of Public
Works and Highways.

SO ORDERED.
 SECOND DIVISION

[ G.R. No. 214310, February 24, 2020 ]

REPUBLIC OF THE PHILIPPINES REPRESENTED BY THE DEPARTMENT OF PUBLIC

WORKS AND HIGHWAYS (DPWH), PETITIONER, VS. ESTATE OF JUAN MARIA
POSADAS III, MARIA ELENA POSADAS, AND ESTELA MARFORI DE POSADAS,
RESPONDENTS.

DECISION

REYES, A., JR., J.:

When the State appropriates private property for public use, it must compensate the owner of the
property so taken. For compensation to be just, the government must not only reimburse the owner with
the property's fair value, it must also do so in a timely manner.

This is a petition for review on certiorari1 filed by the Republic of the Philippines (Republic),
represented by the Department of Public Works and Highways (DPWH), through the Office of the
Solicitor General (OSG), assailing the February 19, 2014 Decision2 and the September 15, 2014
Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 94901. Through the challenged decision
and resolution, the appellate court affirm ed the Order4 of Branch 61 of the Regional Trial Court (RTC)
of Makati City dismissing the Republic's complaint for expropriation thereat, docketed as Civil Case No.
90-1777.

The Factual Antecedents

On July 4, 1990, the Republic flied a complaint5 for expropriation before the RTC of Makati against
181 individual s and corporations owning land situated along Sucat Road in Parañaque. The properties
were earmarked by the DPWH for a road-widening project. However, out of all the named defendants,
only Alfonso Cruz and the respondents, namely: Estela Marfori Posadas, Maria Elena Posadas, and the
Estate of Juan Maria Posadas III (respondents), appeared to oppose the complaint.6

In the complaint, it was stated that the DPWH needed 15,554 square meters of the respondents' land for
the project. The Republic alleged that the property had an appraised value of P18,664,800.00,7 but the
Estate of Juan Maria Posadas III contested such valuation in its answer,8 arguing that the land was worth
much more.9

On January 8, 1991, pursuant to Section 710 of Executive Order No. 1035, the Republic deposited with
the Escolta Branch of the Philippine National Bank the amount of P1,866,480.00, representing 10% of
the value of the property. It then filed a motion for the issuance of a writ of possession so that it could
take possession of the land.11 The record, however, does not show the exact date of the Republic's entry
into the property.

The respondents contested neither the public purpose behind the taking of their property nor the
propriety of the deposit. Accordingly, on July 16, 1993, they filed a joint motion to withdraw
deposit,12 concurrently reserving their right to substantiate their claim that the expropriated property
had a fair market value that was higher than what the Republic alleged.13
Through an Order14 dated July 26, 1993, the RTC all owed the respondents to withdraw the amount of
P1,866,480.00, ruling that there was indeed no issue as to public purpose of the taking. Nonetheless,
since the respondents were contesting the property's value, the trial court ruled that the final amount of
just compensation was still subject to the outcome of the case.15

On August 6, 1993, the respondents filed another Joint Motion to Withdraw Deposit,16 this time praying
for the payment of P16,798,320.00, representing the balance of the property's provisional value.
However, despite the grant of the motion and subsequent orders directing the disbursement of the
balance, the Republic never paid.17

Thereafter, through a letter18 dated November 3, 1998, DPWH Secretary Gregorio Vigilar informed the
OSG that the government was no longer interested in pursuing the road-widening project, viz.:

This has reference to your letter of 28 August 1998 seeking the official position of the DPWH whether it
will pursue the above expropriation case in view of the construction of the Skyway Project along the
South Expressway.

In this regard, we wish to inform you that the Department will no longer pursue the implementation of
the loop road in that vicinity, considering that this will already be part of the ramps in the Skyway
Project. We will, therefore, no longer pursue said expropriation case.

Thank you for extending to us your invaluable assistance on the matter.19

Thus, on July 11, 2005, the Estate of Juan Maria Posadas III filed a manifestation with motion20 praying
for the dismissal of the action, arguing that the Republic had abandoned the case. The estate likewise
prayed that it be allowed to present evidence on the damages it suffered because of the suit.21

In the interim, on March 27, 2005, Acting DPWH Secretary Hermogenes Edbane, Jr. wrote a
letter22 informing the OSG that the Republic had once again changed its mind, and that this time it has
finally resolved to expropriate the respondents' property. He also stated that the government needed to
acquire more of the respondents' land, viz.:

We wish to inform you of our change in position on the above subject case.

Briefly, on 3 November, 1998, then Secretary Gregorio R. Vigilar wrote Hon. Maria Aurora P. Cortes,
Asst. Solicitor General of the Department's decision to no longer pursue the above expropriation case
(Annex A).

However, due to changes in in the infrastructure needs in the vicinity, there is a need to pursue the case
and acquire more real properties contiguous to the area being expropriated that may also belong to the
defendants in this case.

May we therefore seek your assistance on the matter and require the services of ASG Renan Ramos and
Sol. Ismael G. Miaral to represent the department in this case as they are always in close coordination
with the Legal Services of this department in numerous other cases.

Your usual and prompt attention on the matter will be highly appreciated.23

The Republic thus opposed24 the motion to dismiss filed by the Estate of Juan Maria Posadas III. Citing
the letter of Acting Secretary Ebdane, it prayed for the conduct of further proceedings.25
In response to the Republic's vacillation, the Estate of Juan Maria Posadas III filed on July 1, 2007 a
motion for the payment of just compensation and for the inclusion in the complaint of all property
affected by the expropriation.26 The estate manifested that a road had already been constructed on the
land subject of the case.27 Moreover, it averred that the DPWH's original plan was substantially altered
and that other properties belonging to the respondents had been condemned. The estate thus reiterated its
prayer for the payment of the uncontested balance of the property's provisional value, while also asking
for an order directing the Republic to amend its complaint to reflect the new area affected by the road-
widening project.28

In another letter,29 the DPWH confirmed that it would indeed be occupying a different portion of the
respondents' property for the project, which it sought to pursue under a different plan.

Accordingly, in a Resolution30 dated March 11, 2008, the RTC ordered the submission of an amended
complaint to reflect the new area used by the road-widening project.31

The order, however, went unheeded.

Thus, on March 26, 2008, the RTC again directed the Republic, through the OSG, to submit an amended
complaint. The Republic was given 30 days, or until April 25, 2008, to comply.32

Instead of amending its complaint, the Republic filed a manifestation and motion33 stating that
respondent Maria Elena Posadas had died on December 10, 2007.34 Accordingly, it prayed for the
suspension of the period to file its amended complaint, contending that it could not make the required
amendments without the name of her substitute. Hence, the Republic prayed for the disclosure of the
name and address of said substitute, as well as for the deferment of the amended complaint's filing.35

In an Order36 dated May 23, 2008, the RTC, while refusing to altogether suspend the deadline for the
amendment of the complaint, gave the Republic until August 20, 2008 to comply. In the same order, the
trial court directed the respondents' counsel to inform the court of the substitute for the late Maria Elena
Posadas.37

It appears, however, that a substitute was never named by the deceased's counsel.

On August 27, 2008, the Republic filed a motion seeking an extension of time to amend its
complaint.38 Citing the tedious and time-consuming process of securing funds for just compensation, it
asked the RTC to give it until September 29, 2008 to file the pleading.39

The motion was granted by the RTC through a Resolution40 dated September 2, 2008. Notably, the
RTC stated that the extended period would not be subject to further extension.41

However, on September 26, 2008, the Republic filed another motion for extension of time,42 stating that
it could not immediately disburse the amount due as just compensation. It prayed for a sufficient period
of time to secure such funds and to prepare its amended complaint. It likewise prayed that, in the
meantime, proceedings before the trial court be suspended.43

Noting the difficulty in securing the funds for just compensation, the RTC, in an Order44 dated
December 19, 2008, reset the case for the presentation of the Republic's evidence.45

The OSG, however, failed to appear on the scheduled date. Thus, in an Order46 dated May 12, 2009, the
RTC reset the case anew. The RTC also ordered the OSG to explain why it should not be cited in
contempt for: (1) repeatedly failing to attend the hearings of the case; and (2) failing to file its amended
complaint pursuant to the trial court's order, which dated as far back as March 11, 2008.47

In response,48 the OSG informed the RTC that the state solicitor assigned to the case, Atty. Andrew S.
Ibarra, was unable to attend the hearings due to his prolonged travel time caused by the construction of
the Skyway extension from Alabang to Bicutan.49

At this juncture, it bears noting that the Republic had yet to file its amended complaint.

For that reason, on December 7, 2009, the respondents orally moved for the dismissal of the case in
open court. They maintained that the Republic had no justification for failing to comply with the RTC's
order directing the amendment of the complaint.50

Ruling of the RTC

Agreeing with the respondents, the RTC issued an Order51 dismissing the case for failure to comply
with an order of the court, viz.:

Upon motion of the subject defendant and finding the said motion to be meritorious, the instant case is
hereby DISMISSED in accordance with Section 3, Rule 17 of the Revised Rules of Court.

The counsel for the defendant Estate of Juan Ma. Posadas III is notified of this Order in open court.

Serve a copy of this Order to the Republic of the Philippines, through the Office of the Solicitor General.

SO ORDERED.52

On December 28, 2009, the Republic filed a motion for reconsideration.53 It alleged that the assigned
state solicitor's absence was due to an illness as shown by an attached Medical Certificate dated
December 7, 2009.54

The RTC denied the foregoing motion through a Resolution55 dated February 3, 2010. The RTC held
that the OSG should have designated another lawyer to take the place of the assigned state solicitor; and
that the Republic was bound by the negligence of its counsel.56

The Republic thus appealed to the CA.

Ruling of the CA

On February 19, 2014, the CA rendered the herein assailed Decision57 holding that the RTC did not
commit any reversible error in dismissing the case. The appellate court ruled that the delays caused by
the OSG were the very abuses that the constitutional tenets on just compensation sought to guard
against; that the government's vacillation between its decisions to expropriate and not to expropriate the
property meant that the order of condemnation never became final.58 Thus, the CA decreed as follows -

WHEREFORE, the instant appeal is DISMISSED. The December 7, 2009 Order and February 3, 2010
Resolution of the Regional Trial Court, Branch 61, Makati City in Civil Case No. 90-1777 are
hereby AFFIRMED.

SO ORDERED.59
The Republic moved for reconsideration, but this was denied by the CA through a Resolution60 dated
September 15, 2014.

Hence, the instant Petition.

The Issue

The lone issue here is whether the RTC acted correctly in ordering the dismissal of this case, which was
based on the Republic's failure to file an amended complaint.

The Republic admits that it never filed an amended complaint.61 However, it maintains that such
omission was justified. It points to the fact that the counsel of record for the late Maria Elena Posadas
did not inform the trial court of her substitute, and that this was a legal impediment which effectively
prevented it from am ending its complaint.62

Thus, the question presented to the Court is:

Whether or not the absence of a substitute for the late Maria Elena Posadas justified the Republic's
failure to amend its complaint.63

The Court's Ruling

The answer is in the negative.

At the outset, it bears noting that the RTC based its order of dismissal on Section 3, Rule 17 of the Rules
of Court, which provides:

Section 3. Dismissal due to fault of plaintiff. - If, for no justifiable cause, the plaintiff fails to appear on
the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an
unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may
be dismissed upon motion of the defendant or upon the court's own motion, without prejudice to the
right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal
shall have the effect of an adjudication upon the merits, unless otherwise declared by the court.

The provision contemplates certain instances where the complaint may be dismissed due to the plaintiff's
fault: (1) if he or she fails to appear during a scheduled hearing, especially on the date for the
presentation of his or her evidence in chief; (2) if he or she fails to prosecute his or her action for an
unreasonable length of time; (3) if he or she fails to comply with the rules; or (4) if he or she fails to
comply with any order of the court.64 Thus, failure on the part of the plaintiff, without any justifiable
cause, to comply with any order of the court may result in the dismissal of the complaint either motu
proprio or on motion by the defendant.65

Here, the trial court dismissed the case after Atty. Luis M. Posadas, counsel for the Estate of Juan M.
Posadas III, orally moved for dismissal on the ground that the Republic had failed to comply with the
order directing the filing of an amended complaint.

As elsewhere noted, the Republic contends that it was unable to amend its complaint because it was
never informed of the substitute for the late Maria Elena Posadas.66

The contention is without merit.

Section 16, Rule 3 of the Rules of Court lays down the procedure for the substitution of a party-litigant
who dies during the pendency of a case, viz.:

Section 16. Death of party; duty of counsel. - Whenever a party to a pending action dies, and the claim is
not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days
after such death of the fact thereof, and to give the name and address of his legal representative or
representatives. Failure of counsel to comply with his duty shall be a ground for disciplinary action.

xxxx

The court shall forthwith order said legal representative or representatives to appear and be substituted
within a period of thirty (30) days from notice.

If no legal representative is named by the counsel for the deceased party, or if the one so named shall
fail to appear within the specified period, the court may order the opposing party, within a specified time
to procure the appointment of an executor or administrator for the estate of the deceased and the latter
shall immediately appear for and on behalf of the deceased. x x x.

As can be gleaned from the above provision, when a party to a case dies, his or her counsel is charged
with the duty of informing the trial court of, first, the fact of the litigant's death and, second, the name
and address of the litigant's representative. The court must then issue an order requiring the said
representative to appear and formally be substituted. However, if no representative is so named or if he
or she does not appear, the court may direct the adverse party to procure an executor or administrator,
who will be tasked to represent the deceased party until the case is terminated.67

In this case, the trial court issued an order directing Atty. Antonio Pesigan (Atty. Pesigan), Maria Elena
Posadas's counsel of record, to name his client's substitute. It appears, however, that a representative was
never named in the proceedings a quo. In accordance with the rules, it thus became incumbent on the
trial court to direct the Republic to procure an executor or administrator for the estate of the deceased
litigant. Yet, this was never done. The Republic capitalized on this circumstance, ascribing its failure to
file an amended complaint to the fact that a representative was never named.

Atty. Pesigan's failure to name a substitute did not justify the nonsubmission of the amended complaint.
The order directing the designation of a substitute and the order directing the amendment of the
complaint were completely independent of each other. The first was solely between the trial court and
Atty. Pesigan, while the second was directed exclusively to the Republic, which cannot simply shift the
blame to the respondents.

For the sake of emphasis, the RTC directed the amendment of the complaint so that the records of the
case would accurately reflect the area expropriated under the DPWH's new plan. It goes without saying
that the Republic did not need the name of Maria Elena Posadas's representative to show the trial court
the new land area it was going to condemn.

Further, more than a year had elapsed between the issuance of the trial court's initial order directing the
submission of an amended complaint and the dismissal of the case. This was definitely more than
enough time to make the amendments required by the trial court. Oddly enough, however, within this
period, the Republic instead asked for the postponement of numerous hearings, resulting in prolonged
and inordinate delays. Worse, it had the audacity to ask for the suspension of the proceedings altogether.
These delays only exacerbated the lengthy setback brought about by the Republic's earlier hesitation to
pursue the road-widening project. Be it recalled that the Republic decided to discontinue the project in
1998, only to change its mind seven years later.

The delays attendant in this case undoubtedly prejudiced the respondents.

Not only did the Republic engage in egregious dilatory tactics, it ultimately failed to file its amended
complaint. Hence, it must be precluded from setting up its own neglect as an excuse for its failure to
comply with the trial court's order.

It has been held that procedural rules are in place to ensure the orderly, just, and speedy dispensation of
cases.68 They are tools designed to facilitate, not hinder, the attainment of justice. Thus, technicality,
when it deserts its proper office as an aid to justice, warrants scant consideration.69 Therefore, litigants
deserve no sympathy when they exploit the rules and resort to technicalities in order to justify wanton
disregard for the orders of a court.

For this reason, the instant petition must fail.

More than that, the Republic raised the issue on substitution for the first time before the Court. The
record is without any indication that the failure to designate a representative was questioned in the RTC
or even in the CA.

Section 15, Rule 44 of the Rules of Court provides:

Section 15. Questions that may be raised on appeal. - Whether or not the appellant has filed a motion for
new trial in the court below, he may include in his assignment of errors any question of law or fact that
has been raised in the court below and which is within the issues framed by the parties. (Emphasis
supplied)

It is hornbook law that issues and arguments not presented before the trial court cannot be raised for the
first time on appeal.70 An issue that was neither averred in the complaint nor raised during the trial
cannot be raised for the first time on appeal, for to do so would be offensive to the basic rules of fair
play, justice, and due process.71

Since it was the RTC itself that ordered the substitution of the deceased respondent Maria Elena
Posadas, the Republic clearly had the opportunity to raise the issue during the proceedings a quo. For
certain inexplicable reasons, however at the trial and, later, on appeal, it never questioned the absence of
a substitute. The Republic only raised the issue as a mere afterthought in the instant petition for review.

Therefore, the Court cannot now address this question without transgressing the Rules of Court and the
pertinent jurisprudence on the matter. To rule on the issue would go against the tenets of fair play and
equity.72

The power of eminent domain has been described as "the ultimate right of the sovereign power to
appropriate, not only the public but the private property of all citizens within the territorial sovereignty,
to public purpose."73 It is an inherent power of the state, not granted but merely limited by
constitutional fiat, viz.:

Section 9. Private property shall not be taken for public use without just compensation.74
The provision places two express limitations on the power of eminent domain: first, the condemned
property must be used for a public purpose, and second, the exercising authority must pay the property
owner just compensation. Correlatively, expropriation cases are divided into two stages. The first is
concerned with the propriety of condemning the property, while the second involves the determination
of just compensation. The first phase begins with the filing of the complaint before the trial court, which
is then tasked to ascertain the purpose of the taking. If it finds that the property is being taken for a
public purpose, it shall issue an order condemning the property,75 otherwise it must dismiss the case. If
the court issues an order of condemnation, it must then proceed to the second phase-the determination of
just compensation.76 For this purpose, the rules direct the trial court to appoint commissioners, who will
be assigned to aid it in ascertaining the fair value of the expropriated property. The trial court will then
set the amount of just compensation, order the plaintiff to pay such amount to the defendant, and
proceed to completely dispose of the case.

Here, the proceedings a quo never reached the second phase. The trial court immediately allowed the
Republic to take possession of the subject property because the respondents never questioned the public
purpose behind its taking; the parties agreed that the road-widening project met this criterion.
Nevertheless, the record reveals that just compensation was neither determined nor paid. As stated
above, the trial court dismissed the case because the Republic failed to file an amended complaint. The
order of dismissal therefore effectively divested the respondents of their property without imposing on
the Republic the concomitant constitutional obligation to pay just compensation.

The record shows a road now traverses the respondents' expropriated land. The payment of just
compensation must therefore follow as a matter of course. However, the records do not show exactly
how much of the property was taken. Likewise, the time of taking by the government does not appear.
Thus, the Court is left with no other alternative but to remand the case to the trial court for a proper
determination of: first, how much of the respondents' property had in fact been taken second, when was
the property so taken; and finally, the amount of just compensation due and owed to the respondents.
The RTC must be guided by the pronouncements set forth hereunder, which shall form the law of the
case.

To begin with, the ascertainment of exactly how much property was taken is necessary to determine the
full amount of just compensation. In expropriation cases involving land, just compensation is generally
set on a per square meter basis.77 Thus, without knowing the precise area taken by the State, there is no
way of definitively setting the amount payable to the respondents.

This problem was brought about by the Republic's failure to amend its complaint. As may be recalled,
the DPWH initially sought to expropriate 15,554 square meters of the respondents' land. Thereafter, it
vacillated on its decision to condemn the property, deciding later to finally push through with the road-
widening project under a different area plan. Therefore, it does not come as a surprise that the records
fail to reveal exactly how much of the subject lot was indeed expropriated. In fact, it appears that the
parties have conflicting claims as to the extent of the property taken. This should have been remedied by
the amendment of the complaint, which was ordered precisely because the area of land used for the
project was unclear. Unfortunately, the Republic never complied, leaving the Court to engage in
guesswork as to how much of the respondent's land was expropriated.

In addition, there is a need to determine how much of the respondents' property was expropriated so that
they can be reimbursed only for what cannot be returned to them. Jurisprudence clearly provides for the
remedies available to a landowner when his land is taken by the government for public use. The owner
may recover his or her property if its return is feasible, or, if it is not, he or she may demand payment of
just compensation.78 Accordingly, upon remand, the trial court must first and foremost determine how
much of respondent's property had actually been taken.

In the seminal case of Rep. of the Phils. v. Vda. de Castellvi,79 the Court laid down several
circumstances that constitute the taking of private property in expropriation proceedings. These
circumstances, adopted by subsequent case law, are summed up as follows:

(1) the expropriator must enter private property; (2) the entrance in to private property must be for more
than a momentary period; (3) the entry into the property should be under warrant or color of legal
authority; (4) the property must be devoted to a public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for public use must be in such a way as to
oust the owner and deprive him of all beneficial enjoyment of the property.80

Taking therefore occurs when the government actually deprives or dispossesses the proprietor of his or
her property.81 So too, when there is "an intrusion so immediate and direct as to subtract from the
owner's full enjoyment of the property and to limit his exploitation of it," the said property is deemed
taken.82

Hence, on remand, the trial court must initially determine the precise area or extent of the prope1ty that
had actually been taken from the respondents. In regard to the portion of property not so taken, if any,
the trial court must order its return. On the other hand, with respect to the area actually expropriated, the
trial court must proceed to determine when its taking occurred.

The determination of the time of taking is necessary for two reasons. First, interest, which is imposed as
damages for delaying the payment of just compensation,83 begins to run from the time the property is
taken from its owner.84 Second, the nature of the deposit required pending the determination of just
compensation will depend on whether the property was taken before or after the date of effectivity of
Republic Act (R.A.) No. 8974, which governs expropriation proceedings relative to national government
infrastructure projects.85

Interest, as will be discussed in detail below, is imposed to ensure prompt payment by the government.
Its imposition is justified only when the delay in payment has been sufficiently established,86 as is the
case here. However, as mentioned earlier, since the records do not show the specific date of taking,
remand is necessary so that the proper amount of interest may be determined.

Likewise, the date of taking will have an effect on the amount clue as a deposit for the property's
expropriation. The road-widening project subject of the case at bar is properly categorized as a national
government infrastructure project within the purview of R.A. No. 8974. The law directs the government
agency implementing the project to immediately pay the owner 100% of the value of the property based
on the current relevant zonal valuation, as determined by the Bureau of Internal Revenue, plus the value
of the improvements and structures erected thereon.87 Since R.A. No. 8974 took effect on November
26, 200088 without a retroactivity clause,89 the government's obligation to deposit such an amount will
arise only with regard to property taken on or after that date. Alternatively, if the property was taken
before then, the provisions of Rule 67 of the Rules of Court apply. The rules provide that the
expropriating agency must deposit with an authorized government depositary an amount equivalent to
the property's assessed value for taxation purposes.90 Simply put, if the property was taken on or after
November 26, 2000, the Republic must immediately pay the respondents the amount provided under
R.A. No. 8974. On the other hand, if the property was taken before said date, the trial court must order
the Republic to comply with the provisions of Rule 67, particularly the requirement of depositing the
property's assessed value with the appropriate government depositary.
Note that R.A. No. 8974 has been repealed by R.A. No. 10752. This, however, did not affect the
Republic's obligation to deposit the land's zonal value plus the value of the improvements situated
thereon. The latter law substantially retained the deposit requirement, viz.:

SEC. 6. Guidelines for Expropriation Proceedings. - Whenever it is necessary to acquire real property
for the right-of-way site or location for any national government infrastructure through expropriation,
the appropriate implementing agency, through the Office of the Solicitor General, the Office of the
Government Corporate Counsel, or their deputized government or private legal counsel, shall
immediately initiate the expropriation proceedings before the proper court under the following
guidelines:

(a) Upon the filing of the complaint or at any time thereafter, and after due notice to the defendant, the
implementing agency shall immediately deposit to the court in favor of the owner the amount equivalent
to the sum of:

(1) One hundred percent (100%) of the value of the land based on the current relevant zonal valuation of
the Bureau of Internal Revenue (BIR) issued not more than three (3) years prior to the filing of the
expropriation complaint subject to sub paragraph (c) of this section (2) The replacement cost at current
market value of the improvements and structures as determined by:

(i) The implementing agency;

(ii) A government financial institution with adequate experience in property appraisal; and

(iii) An independent property appraiser accredited by the BSP.

(3) The current market value of crops and trees located within the property as determined by a
government financial institution or an independent property appraiser to be selected as indicated in
subparagraph (a) of Section 5 hereof.91 (Emphasis supplied)

In fine, the trial court must take into account the possibility of various takings occurring on different
dates. It is conceivable that there were portions of the respondent's property that were taken prior to the
effectivity of R.A. No. 8974, while there were others taken thereafter. In the event of such a finding, the
trial court must direct the government to comply with the requirements of Rule 67 with respect to the
segment or segments taken before November 26, 2000 and, with respect to those taken on or after that
date, the trial court must order the immediate payment of the sum provided under R.A. No. 8974 and
R.A. No. 10752.

For clarity's sake, the Court reiterates its pronouncement that the deposit requirement differs from the
obligation to pay just compensation.92 In his Dissenting Opinion in Sec. of the Dep't. of Public Works
and Highways, et al. v. Sps. Tecson,93 Justice Presbitero J. Velasco, Jr., speaking of an analogous
deposit requirement found in the Local Government Code, elaborated in this wise:

A similar requirement of posting a deposit is likewise demanded under Sec. 19 of the Local Government
Code, with respect to the exercise of a local government unit's power of eminent domain. The purpose of
the deposit is explained in City of Manila v. Alegar Corporation, thusly:

But the advance deposit required under Section 19 of the Local Government Code constitutes an
advance payment only in the event the expropriation prospers. Such deposit also has a dual purpose; as
pre-payment if the expropriation succeeds and as indemnity for damages if it is dismissed. This advance
payment, a prerequisite for the issuance of a writ of possession, should not be confused with payment of
just compensation for the taking of property even if it could be a factor in eventually determining just
compensation. If the proceedings fail, the money could be used to indemnify the owner for
damages.94 (Citation s omitted and emphasis supplied)

On the other hand, just compensation is defined as the fair and full equivalent of the loss suffered by the
owner, whose property has been taken pursuant to the state's power of eminent domain.95 It has been
more completely described as:

[T]he 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.96

It has been consistently held that the property's fair market value is the just compensation to which the
owner of condemned property is entitled.97 Market value is the price agreed on by a willing buyer and
willing seller, both of whom are not compelled to enter into the transaction.98 It has also been described
as the amount fixed in the open market in the usual and ordinary course of legal trade and
competition.99

But from what point in time must the property's fair market value be reckoned?

Section 4, Rule 67 of the Rules of Court succinctly provides the answer, viz.:

Section 4. Order of expropriation. - If the objections to and the defenses against the right of the plaintiff
to expropriate the property are overruled, or when no party appears to defend as required by this Rule,
the court may issue an order of expropriation declaring that the plaintiff has a lawful right to take the
property sought to be expropriated, for the public use or purpose described in the complaint, upon the
payment of just compensation to be determined as of the date of the taking of the property or the filing
of the complaint, whichever came first. (Emphasis supplied)

In this regard, the Court, in National Power Corp. v. Ibrahim,100 ruled:

Normally, the time of the taking coincides with the filing of the complaint for expropriation.
Hence, many rulings of this Court have equated just compensation with the value of the property as of
the time of filing of the complaint consistent with the above provision of the Rules. So too, where the
institution of the action precedes entry to the property, the just compensation is to be ascertained as of
the time of the filing of the complaint.101 (Emphasis supplied and citations omitted)

In other words, just compensation is, as a general rule, based on the price or value of the property at the
time the complaint for expropriation was filed.102 By way of exception, National Transmission
Corporation v. Oroville Development Corporation103 instructs that when the government takes the
property before initiating the expropriation case, the property's value at the time of the prior taking must
be used as the basis for determining just compensation.

To be sure, this is in consonance with the Court's ruling in Ansaldo v. Tantuico, Jr.,104 where the Court
held:

Normally, of course, where the institution of an expropriation action precedes the taking of the property
subject thereof, the just compensation is fixed as of the time of the filing of the complaint. This is so
provided by the Rules of Court, the assumption of possession by the expropriator ordinarily being
conditioned on its deposit with the National or Provincial Treasurer of the value of the property as
provisionally ascertained by the court having jurisdiction of the proceedings.

There are instances, however, where the expropriating agency takes over the property prior to the
expropriation suit, as in this case although, to repeat, the case at bar is quite extraordinary in that
possession was taken by the expropriator more than 40 years prior to suit. In these instances, this Court
has ruled that the just compensation shall be determined as of the time of taking, not as of the time of
filing of the action of eminent domain.105 (Citations omitted and emphasis supplied)

In this case, since the Republic initiated expropriation proceedings before taking the subject property, it
follows that the land's value at the time of the filing of the complaint, i.e., June 25, 1990, should be used
as the basis for just compensation.

Necessarily, just compensation cannot be arrived at arbitrarily. It must be determined only after an
evaluation of several factors. The assessment of these factors is addressed to the sound discretion of the
trial judge, who must enlist commissioners tasked to receive and appraise evidence on the property's
value.

It has been held in a long line of cases that the determination of just compensation is a judicial function,
one that is best addressed to the discretion of the trial court.106 In this respect, the Court, in Alfonso v.
Land Bank of the Philippines, et al.,107 elaborated, thus:

Section 1, Article VIII of the 1987 Constitution provides that "judicial power includes the duty of the
courts of justice to settle actual controversies involving rights which are legally demandable and
enforceable."

The right of a landowner to just compensation for the taking of his or her private property is a legally
demandable and enforceable right guaranteed by no less than the Bill of Rights, under Section 9, Article
III of the Constitution. The determination of just compensation in cases of eminent domain is thus an
actual controversy that calls for the exercise of judicial power by the courts. x x x.

The trial court, however, should not be without aid in the ascertainment of what constitutes just
compensation. For this purpose and as alluded to earlier, the rules direct the court to appoint not more
than three competent and disinterested persons as commissioners to ascertain and report to it the value of
the property sought to be taken.108 The commissioners may then determine just compensation based on
the evidence presented before them, and, for the same purpose, they are also authorized to enter and
inspect the property and its surroundings.109 Finally, after the reception and scrutiny of the evidence,
the commissioners have the responsibility of reporting their findings to the trial court.110

It has been held that trial with the aid of the commissioners is a substantial right.111 Therefore, the
appointment of commissioners to ascertain just compensation for the property sought to be taken is a
mandatory requirement in expropriation cases.112

However, this does not mean that the commissioners' determination of just compensation is final and
binding on the parties. Because such determination is ultimately a judicial function, the trial court is
given the discretion to either accept or reject the commissioners' findings in whole or in part. If the court
rejects their report, it may require them to render a supplemental report on facts yet to be taken up, or it
may appoint another set of commissioners to provide it with an entirely new report.113 The trial court is
also allowed to disregard the findings of the commissioners and use its own estimate of the property's
value. However, it may only do so for valid reasons, such as when the commissioners apply illegal
principles to the evidence, when they disregard a clear preponderance of evidence, or when the amount
allowed is either grossly inadequate or excessive.114 Once the trial court is satisfied with the amount of
just compensation, it may render judgment ordering payment thereof to the property owner.

Lastly, there is one more circumstance that must be addressed before the remand of the instant case to
the trial court. This litigation has been dragging on for almost three decades. The complaint for
expropriation was filed in 1990, and, as of today, the respondents have not yet been paid the fair value of
their property. In eminent domain cases, just compensation entails not only the determination of the
proper amount to be paid to the owners of the property, but also the payment of such amount within a
reasonable time.115

Verily, it is the Republic that must be blamed for the lethargic pace of this case. It vacillated on its
decision to expropriate the property, finally deciding to condemn the same more than fifteen years after
the complaint was initially filed. More, the record also discloses that the Republic caused the
postponement and resetting of numerous hearings, either due to the absence of the assigned state
solicitor or because of the unavailability of the funds representing just compensation. These delays
prejudiced the respondents' rights over their property, and cannot be without consequence.

In National Power Corporation v. Manalastas (Manalastas),116 the Court held that the just
compensation payable to the property owner amounts to an effective forbearance on the part of the
government-a proper subject of interest, viz.:

[I]f properly is taken for public use before compensation is deposited with the court having jurisdiction
over the case, the final compensation must include interest[s] on its just value to be computed from the
time the property is taken to the time when compensation is actually paid or deposited with the court. In
fine, bet ween the taking of the property and the actual payment, legal interest[s] accrue in order to place
the owner in a position as good as (but not better than) the position he was in before the taking
occurred. (Italics in the original)117

In that case, the Court awarded interest at the rate of 12% per annum from the time of taking up to June
30, 2013 and, thereafter, 6% per annum from July 1, 2013 until full satisfaction, pursuant to Section 1
of Bangko Sentral ng Pilipinas - Monetary Board Circular No. 799, Series of 20l3.118

As mentioned earlier, the record of the instant case does not disclose the exact time of taking. Without
this date, there is no way to determine the proper amount of interest due on the condemned property.
Hence, before the trial court calculates interest, the date of entry must be established by competent
evidence. Only then will the trial court be able to reckon the proper sum of interest in accordance with
the Court's ruling in Manalastas.

Taking the foregoing into account and to encapsulate the Court's pronouncements, upon the remand of
the instant case, the trial court shall designate not more than three commissioners to aid it in determining
the fair market value of the respondents' property back when the complaint was filed in 1990. Then,
after it satisfies itself of the amount of just compensation, it shall ascertain the exact date of entry into
the property. It shall then impose legal interest on the property's value at the rate of 12% per
annum from the time of taking up to June 30, 2013 and, thereafter, six percent per annum from July 1,
2013 until complete payment. Lastly, the trial court shall subtract P1,866,480.00 from the sum awarded,
since the Republic had previously paid this amount.
WHEREFORE, the February 19, 2014 Decision and the September 15, 2014 Resolution of the Court of
Appeals in CA-G.R. CV No. 94901 are SET ASIDE. The case is REMANDED to Branch 61 of the
Regional Trial Court of Makati City, which is hereby directed to:

-1 ORDER the appointment of a substitute or representative for deceased respondent Maria Elena
Posadas, or an executor or administrator for her estate;

-2 DETERMINE the just compensation due on respondents' property in accordance with the principles
laid down in this Decision;

-3 Pending the determination of the amount provided in the next preceding number, IMMEDIATELY
ORDER the Republic to deposit:

a. The assessed value of those portions of respondents' property taken before November 26, 2000, in
accordance with Section 2 of Rule 67 of the Rules of Court; and

b. 100% of the current relevant zonal valuation of those portions taken on or after November 26, 2000,
plus the current market value of the structures erected thereon, in accordance with Section 4 of Republic
Act No. 8974 and Section 6 of Republic Act No. 10752;

-4 IMPOSE legal interest on the amount arrived at as just compensation, less the amount of
P1,866,480.00 representing the prior deposit made by the Republic and any amount that will actually be
paid by the Republic as initial deposit/provisional value pursuant to the net preceding number, at the rate
of 12% percent per annum from the time of taking up to June 30, 2013 and, thereafter, 6% per
annum from July 1, 2013 until finality of this decision;

-5 AWARD to the respondents the total amount of just compensation inclusive of interest, which shall
earn legal interest at the rate or 6% per annum from finality of the Decision until full satisfaction; and

-6 Lastly, anent the portions of the property included in the Republic's original complaint for which
return is feasible, REVEST title thereto in the name of the respondents.

The trial court is also directed to conduct the proceedings in this case with utmost dispatch and to submit
to the Court a report on its findings and recommended conclusions within sixty (60) days from notice of
this Decision.

SO ORDERED.
 SECOND DIVISION
[ G.R. No. 211508, July 01, 2015 ]
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC
WORKS AND HIGHWAYS (DPWH) V. OLAS DEL MAR, INC.

Sirs/Mesdames:

Please take notice that the Court, Second Division, issued a Resolution dated 01 July 2015 which reads as
follows:

"(G.R. No. 211508 - Republic of the Philippines, represented by the Department of Public Works and
Highways (DPWH) v. Olas Del Mar, Inc.

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the December 2, 2013
Decision[1] and the February 26, 2014 Resolution[2] of the Court of Appeals (CA), in CA-G.R. SP No. 122947
which affirmed the November 4, 2011 Order [3] of the Regional Trial Court, Branch 15, Naic, Cavite (RTC),
involving the issue of conflicting claimants in an expropriation case filed by the Department of Public Works and
Highways (DPWH), representing the Republic of the Philippines (Republic).

The Factual Antecedents

On June 3, 2009, DPWH filed five (5) separate complaints before the RTC, docketed as Civil Case Nos.
NC-2009-1905, NC-2009-1906, NC-2009-1907, NC-2009-1911, and NC-2009-1912,
seeking expropriation of several parcels of land owned by respondent Olas Del Mar, Inc. (ODMI) for the
construction and improvement of the Temate-Nasugbu Road to provide faster and comfortable travel to
the motoring public.

Although the subject properties were registered in the name of ODMI, the Office of the Solicitor
General (OSG), counsel for DPWH, manifested that the said properties were the subjects of litigation
in Republic of the Philippines v. Enriquez (Civil Case No. 0014), a case for reconveyance, reversion,
accounting, restitution, and damages filed by the Presidential Commission on Good Government
(PCGG) before the Sandiganbayan on July 23, 1987. The Sandiganbayan later dismissed the complaint
against several defendant corporations, including ODMI. Civil Case No. 0014 then became the subject
of two petitions before the Court, docketed as G.R. No. 154560 and G.R. No. 181458 both filed by the
OSG, as counsel for PCGG.

In G.R. No. 154560, the Court, in its September 8, 2010 Resolution, decided with finality that it was not
necessary to implead ODMI in Civil Case No. 0014 and lifted the sequestration orders against its
properties. It stated that impleading the corporations, which were alleged to have been capitalized with
ill-gotten wealth, was unnecessary because judgment could be rendered against the individual
defendants, divesting them of their shares of stocks. The Court, however, stressed that such
pronouncement was without prejudice to the final resolution and outcome of the original action for
reconveyance, reversion, accounting, restitution, and damages. In G.R. No. 181458, the Court, through
Chief Justice Sereno, reinstated Civil Case No. 0014, after the Sandiganbayan ordered its dismissal for
failure of PCGG's special counsel to appear despite due notice. The Court held that the circumstances in
the said case indicated that PCGG never lacked interest in prosecuting the same considering that its
counsel had actively participated in the case for two decades, and filed a timely motion for
reconsideration.

Meanwhile, in the present case of expropriation before the RTC, the OSG, as counsel for DPWH, filed
its motion for issuance of writs of possession in Civil Case Nos. NC-2009-1905, NC-2009-1906 and
NC-2009-1907, as it was ready, willing and able to deposit or pay the amount equivalent to 100% of the
zonal values of the subject properties. ODMI filed its Answer to the complaints and its opposition
to DPWH's motion for issuance of writs of possession.

In its Order,[4] dated October 5, 2009, the RTC granted DPWH's motion for issuance of writs of
possession. Subsequently, DPWH deposited with the RTC the total amount of P10,192,440.00 for the
provisional value of ODMI's affected properties in Civil Case Nos. NC-2009-1905, NC-2009-1906 and
NC-2009-1907. On October 20, 2009, the RTC issued the writs of possession.

ODMI then filed its motion to Withdraw Deposits Ad Cautelam, dated June 16, 2010, seeking the
release of the initial deposits of DPWH in all five expropriation cases amounting to P10,192,440.00.

DPWH filed its Comment/Opposition, dated July 19, 2010, to which ODMI filed a Reply, dated August
3, 2010.

In its Order,[5] dated August 27, 2010, the RTC granted the motion and ordered the release of the initial
deposits as provisional payments but only in the three of the five cases, Civil Case Nos. NC-2009-1905,
NC-2009-1906 and NC-2009-1907.

Consequently, ODMI filed its Manifestation and Urgent Ex-parte Motion for Immediate Release of
Deposits and its Ex-Parte motion for Clarification Ad Cautelam. On the other hand, the OSG filed a
motion for reconsideration of the August 27, 2010 Order to which ODMI filed an opposition.

In its Order,[6] dated September 28, 2010, the RTC stated that its August 27, 2010 Order was
immediately executory in accordance with the express mandate of Republic Act (R.A.) No. 8974 (An
Act to Facilitate the Acquisition of Right-of-Way, site or Location for National Government
Infrastructure Projects and for Other Purposes), requiring the implementing agency to immediately pay
the owner of the affected property 100% of the value thereof.

The DPWH then filed a motion for reconsideration of the September 28, 2010 RTC Order, which ODMI
opposed.

After more than ten months and upon the filing of a motion to resolve by OSG, the RTC issued its
Order, dated November 4, 2011, denied DPWH's motion for reconsideration and ruled that its August
27, 2010 Order remained in effect.

CA Ruling

Aggrieved, DPWH elevated the matter to the CA via petition for certiorari under Rule 65 of the Rules
of Court, ascribing grave abuse of discretion on the part of the RTC. DPWH claimed that there existed a
situation of conflicting claims over the subject properties in view of the pending Civil Case No. 0014
before the Sandiganbayan where the PCGG had been seeking to recover alleged ill-gotten wealth,
including the subject properties. By reason of these conflicting claims, DPWH insisted that the
provisional payments should not be released.

In its assailed Decision, dated December 2, 2013, the CA dismissed the petition and affirmed the
November 4, 2011 Order of the RTC, disposing as follows:

WHEREFORE, premises considered, the petition is hereby DISMISSED and the ORDER dated 04 November
2011 of the Regional Trial Court, Branch 15 of Naic, Cavite AFFIRMED in TOTO.
SO ORDERED.[7]

The CA stated that the RTC did not commit grave abuse of discretion when it ordered the immediate
release of the initial deposits to ODMI. It explained that the RTC Order was in accordance with the
provisions of R.A. No. 8974 which required the implementing agency of the government to immediately
pay the owner of the property the amount equivalent to the sum of 100% of the value of the property
based on the current relevant zonal valuation of the Bureau of Internal Revenue.

The CA added that DPWH could not collaterally attack ODMI's Torrens title of its properties in
an expropriation proceeding, as it was not a direct action to attack a landowner's ownership and title over
its properties.

The OSG filed a motion for reconsideration, but it was denied by the CA in its assailed February 26,
2014 Resolution.

Hence, this petition.

ISSUE

WHETHER OR NOT THE DECISION DATED 02 DECEMBER 2013, AND RESOLUTION DATED 26
FEBRUARY 2014, OF THE COURT OF APPEALS AFFIRMING THE ORDERS OF THE TRIAL
COURT DIRECTING THE IMMEDIATE RELEASE OF THE 100% ZONAL VALUATION OF THE
PROPERTIES SUBECT OF CIVIL CASE NOS. NC-2009-1905, NC-2009-1906 AND NC-2009-1907,
DESPITE THE EXISTENCE OF CONFLICTING CLAIMS OVER SAID PROPERTIES, ARE IN
ACCORDANCE WITH LAW AND APPLICABLE JURISPRUDENCE.[8]

DPWH asserts that because there are conflicting claims over the subject properties, it is erroneous for
the RTC to order the release of the provisional payment to ODMI. Instead, the RTC should merely order
the deposit of the provisional payment pending the resolution of the issue of ownership in Civil Case
No. 0014, pursuant to Section 9, Rule 61 of the Rules of Court.

In its petition, DPWH cited the case of Philippine Veterans Bank v. Bases Conversion Development
Authority,[9] where the Court explained that the above-mentioned rule empowered a court to order
payment to itself of the proceeds of the expropriation whenever questions of ownership were yet to be
settled.

In their Comment,[10] dated September 15, 2014, ODMI posited that the CA correctly affirmed the RTC
order directing the immediate release of the expropriation deposits, pursuant to R.A. No. 8974. It
claimed that the properties subject of the expropriation complaints were indubitably titled in the name of
ODMI under Transfer Certificate of Title (TCT) Nos. 101674, 101679, 101680, 101681, 101683 and
101684. As the Torrens titles and ownership over the expropriated properties were duly covered and
evidenced by such TCTs, the same could not be collaterally attacked in an expropriation proceeding.
ODMI asserted that to assail its Torrens titles, there must be a separate and direct action for that purpose.
It claimed that Civil Case No. 0014 before the Sandiganbayan did not involve the issue of ownership of
ODMI over its titled properties. On the contrary, the said case involved the issue of whether therein
individual defendants' sequestered corporate shares, not ODMI's titled properties, were ill-gotten.

In its Reply,[11] dated February 13, 2015, the Republic stood firm in its assertion that the pendency of
Civil Case No. 0014 was in the nature of a conflicting claim over the subject properties. It argued that its
claim, through the PCGG, posed as a conflicting claim which brought to fore the applicability of Section
9, Rule 67 of the Rules of Court. It is, therefore, imperative that the deposit remain with the RTC
pending the determination of the issue on whether or not the subject properties were ill gotten.

The Court's Ruling

The petition is bereft of merit.

The RTC and the CA did not commit any error when they ordered the immediate release of the initial
deposits to ODMI because the latter is the registered owner of the subject properties, pursuant to the
mandate of R.A. No. 8974. Section 4, par. 4 of the said law provides:

(a) Upon the filing of the complaint, and after due notice to the defendant, the implementing
agency shall immediately pay the owner of the property the amount equivalent to the sum of (l) one
hundred percent (100%) of the value of the property based on the current relevant zonal valuation of the
Bureau of Internal Revenue (BIR); and (2) the value of the improvements and/or structures as
determined under Section 7 hereof;

In the case of Republic v. Gingoyon,[12] the Court made it clear that the plain intent of R.A. No. 8974 was
to supersede the system of deposit under Rule 67 with the scheme of "immediate payment" in cases
involving national government infrastructure projects.

Only if the ownership of the property is being contested by opposing claimants that the compensation is
not immediately paid to an owner. It should be paid to the clerk of court who would later on turn it over
to the claimant who would be finally adjudged as the owner. The situation is governed by Section 9,
Rule 67 of the Rules of Court which reads:

SEC. 9. Uncertain ownership. Conflicting claims. — If the ownership of the property taken is uncertain,
or there are conflicting claims to any part thereof, the court may order any sum or sums awarded
as compensation for the property to be paid to the clerk of court for the benefit of the persons adjudged
in the same proceeding to be entitled thereto. But the judgment shall require the payment of the sum or
sums awarded to either the defendant or the clerk before the plaintiff can enter upon the property, or
retain it for the public use or purpose if entry has already been made.

The pendency of Civil Case No. 0014 before the Sandiganbayan is not the situation contemplated under
the Rules. The aforecited provision contemplates a situation where the expropriated property is being
claimed by two or more parties invoking ownership thereof. The claimants must be parties in the case.
In this case, the PCGG, although also represented by the OSG, is not a party in the case.

The PCGG should have properly intervened pursuant to Section 1, Rule 19 of the Rules of Court which
reads:

Section 1. Who may intervene. - A person who has legal interest in the matter in litigation, or in the success of
either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or
other disposition of property in the custody of the court or of an officer thereof may, with leave of court, be
allowed to intervene in the action... xxx

The PCGG can intervene in the expropriation case because there is no other pending case between it and
ODMI. There can be no case of forum shopping. As aforestated, in G.R. No. 154560, the Court let stay
the order of the Sandiganbayan dropping ODMI as a party in Civil Case No. 0014 before the
Sandiganbayan.
Although the OSG is the counsel of DPWH and PCGG, it only represents the interest of DPWH in
the expropriation cases before the RTC. PCGG is not a party here and it cannot be represented by the
OSG unless it intervenes. Perforce, it would be improper to allow DPWH to restrain the immediate
release of the initial deposits despite PCGG's inaction and lack of intervention to assert its right over the
subject properties.

DPWH cannot seek refuge in the case of Philippine Veterans Bank v. Bases Conversion Development
Authority.[13] In the said case, the conflicting claimants were parties in an expropriation proceeding.
Thus, their conflicting interests constituted a proper case of conflicting claims. Initially, the Philippine
Veterans Bank, a government bank, was not a party thereto. It, however, actively asserted its claim over
the property subject of expropriation and filed a motion for intervention in the expropriation proceeding,
alleging that the ownership of the said property is under litigation before the Department of Agrarian
Reform Adjudication Board.

WHEREFORE, the petition is DENIED. (Leonen, J., on official leave, Jardeleza, J., designated
Acting Member, per Special Order No. 2056, dated June 10, 2015)

SO ORDERED."
 FIRST DIVISION
[ G.R. No. 252968, January 12, 2021 ]
REPUBLIC OF THE PHILIPPINES REPRESENTED BY THE DEPARTMENT OF PUBLIC
WORKS AND HIGHWAYS [DPWH] V. DARWIN Z. REGIO

Sirs and Mesdames:

Please take notice that the Court, First Division, issued a Resolution dated January 12, 2021 which reads as
follows:

"G.R. No. 252968 (Republic of the Philippines represented by the Department of Public Works and Highways
[DPWH] v. Darwin Z. Regio). - This is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court
assailing the Decision[2] dated June 17, 2020 of the Court of Appeals (CA) in CA-G.R. CV No. 109537 which
affirmed with modification the Order [3] dated June 22, 2017 of the Regional Trial Court (RTC) of Quezon City,
Branch 87.

Facts of the Case

On July 17, 2012, the Republic of the Philippines, represented by the Department of Public Works and
Highways (DPWH), filed a complaint for expropriation against Darwin Z. Regio (Regio) and Spouses
Arturo Macapinlac, Jr. and Rafaela S. Macapinlac. The parcel of land sought to be expropriated was the
subject of a Deed of Absolute Sale between Regio (as the buyer) and the Spouses Macapinlac (as
sellers) wherein the land title and tax declaration both remain in the names of the latter at that time.
The DPWH needed the same to be used as right-of-way for the construction of a fly-over for the C-5
Extension Project. The subject property - located at Tandang Sora Avenue, Old Balara, Quezon City -
has an area of 45.875 square meters and is a part of the land covered by TCT No. RT-10796 (235736) of
the Registry of Deeds of Quezon City. The current zonal valuation of the property is P10,000.00 per
square meter (sq. m). The DPWH offered to acquire the subject property for P458,750.00 but Regio
declined and argued that: (1) the DPWH unilaterally arrived at this valuation and the improvements'
replacement cost was not included in their offer; (2) he should be compensated for the fair market value
of the property; and (3) the complaint failed to indicate the value of the improvements. [4]

In an Order dated August 23, 2012, the RTC directed the DPWH to immediately pay the owner(s) of the
subject property the amount equivalent to 100% of the value of the property based on the Bureau of
Internal Revenue's (BIR) current relevant zonal valuation including the value of the improvements, or to
deposit the payment with the RTC if the defendants refused to receive the same. In compliance
therewith, the DPWH deposited the amount of P458,750.00 under Savings Account No. 0671-0633-41
in favor of Regio which the latter withdrew on November 6, 2013. Mediation and Judicial Dispute
Resolution proceedings between the DPWH and Regio both failed.[5]

The DPWH's Ex-Parte Motion for Issuance of Writ of Possession was granted in an Order dated April 7,
2014. The RTC also granted the DPWH 's Motion to Convene Board of Commissioners in an Order
dated September 3, 2014 and the following were appointed as Commissioners: (I) Rodolfo M. Ordanes
(Ordanes), City Assessor of Quezon City, as Chairman; (2) Atty. Manuel P. Leonardo, City Registrar of
Deeds of Quezon City, as Member; and (3) Atty. Perlita Vitan-Ele, Clerk of Court of the Regional Trial
Court of Quezon City, as Member.[6]

In a Letter dated February 5, 2015, Local Assessment Operations Officer II Wilfreda M. De Guzman
(De Guzman) was appointed as the duly authorized representative of Ordanes. In an Order dated May
27, 2016, the RTC directed (1) Atty. Elbert Quilala (Atty. Quilala)- the newly designated Register of
Deeds of Quezon City- and (2) Atty. Gregorio C. Tallud (Atty. Tallud) - the Officer- in-Charge of the
Office of the Clerk of Court of Quezon City - to replace Attys. Leonardo and Ele respectively on
account of their transfer and retirement. [7]

The Commissioner's Report filed on January 13, 2017 recommended just compensation at P17,893.33
based on the following factors : (1) the BIR zonal valuation is P14,000.00 per sq. m.; (2) the average
recorded sales of real property in the area is P14,490. 75 per sq. m.; and (3) the highest recorded sale in
the area is P25,190.00 per sq. m.[8]

In their respective Comments, Regio contended that the just compensation of the subject property should
be pegged at P25,000.00 while the Office of the Solicitor General (OSG), appearing on behalf of
the DPWH, argued that the Commissioner's recommendation should be disregarded for lack of basis.[9]

Ruling of the Regional Trial Court

In an Order[10] dated June 22, 2017, the RTC resolved to set aside the Commissioner's Report since the
latter's recommendation to set just compensation at P17,893.33 per sq. m. was not substantiated by
documentary evidence. The RTC arrived at the amount of P12,000.00 per sq. m. after considering the
following: (1) the land to be expropriated is classified as residential property; (2) the BIR zonal
valuation at the time of the filing of the expropriation complaint is P10,000.00 per sq. m.; (3) the fair
market value stated on the tax declaration at the time o f the filing of the expropriation complaint is
P91.75 per sq. m.; (4) The acquisition cost stated in the Deed of Absolute Sale dated June 22, 2012 is P8
,718.40 per sq.m.; and (4) Regio is entitled to consequential damages for impairment since only a
portion of the property was expropriated. [11]

The RTC ordered the DPWH to pay Regio the amount of P91,750.00 representing the balance of the
just compensation due the latter after deducting the amount deposited pursuant to the Order dated
August 23, 2012. The DPWH was likewise directed to deduct the amount due to the Republic for unpaid
real estate taxes, if any, as well as taxes for the transfer of ownership over the subject property. [12]

Aggrieved, Regio appealed the RTC's Order with the CA.

Ruling of the Court of Appeals

In a Decision[13] dated June 17, 2020, the CA disagreed with the RTC's ruling that just compensation is
P12,000.00 per sq.m. The CA opined that it was error on the latter's part to fix just compensation upon
the zonal value of the subject property since zonal valuation, by itself, cannot be the sole basis of
just compensation in expropriation cases. For the CA, the RTC should have considered: (1) the valuation
of nearby properties as fixed by the former in CA-G.R. CV No. 100485 and affirmed by this Court
in Republic v. Decena[14] (Decena); and (2) the documentary evidence relied upon by the commissioners
in their Report.[15]

In Decena, the BOC submitted its report on May 14, 2012 and recommended an amount of P17,893.33
per sq.m. as just compensation by considering: (1) the BIR zonal valuation of P14,000.00; (2) the
average recorded sales of properties within the vicinity of P14,490.00 which were based on Records
from the year 2011-2012; and (3) the highest recorded sale for adjacent properties, which was
P25,190.00. However, the RTC ordered the BOC to review its valuation when the former noticed that
one year had already lapsed between the filing of the complaints and the actual valuation made by the
BOC. In a supplemental report dated June 26, 2012, the BOC affirmed its valuation of P17,893.33 per
sq. m., finding that there was no significant change in the value of the properties over the course of 12
months.[16]
The CA explained that the lots in Decena and the present case were: (a) located in the same area (Old
Balara, Quezon City); (b) proximate to each other; and (c) similarly affected by the implementation of
the C-5 Extension Project Road Widening of Old Balara, Quezon City. The amount of
just compensation in this case was fixed at P25,000.00 per sq. m. [17]

After considering the evidence presented, the CA deemed it just to rely on the Commissioner's Report
and fixed the just compensation of the subject property at P17,893.33 per sq. m. Accordingly, the CA
modified the RTC Order dated June 22, 2017 insofar as: (1) the amount of just compensation is declared
at P820,856.81 (45.875 x P17,893.33 per sq. m.) for Regio's property; (2) the DPWH is ordered to pay
Regio the sum of P362,106.51 (representing the balance of the just compensation); (3) the DPWH is
further ordered to pay Regio: (a) legal interest at the rate of 12 % per annum on just compensation of
P820,856.81 from July 17, 2012 to November 7, 2012; (b) legal interest of 12% per annum on the
unpaid balance of P 362 ,106.51 from November 8, 2012 to June 30, 2013; and (c) legal interest of
6% per annum on the unpaid balance of P362,106.51 from July 1, 2013 to the finality of the Decision of
the CA. Lastly, the monetary award shall earn legal interest at the rate of 6% per annum from the date of
the finality of the Decision of the CA until fully paid. [18]

Dissatisfied, the DPWH, through the OSG, filed the instant Petition for Review on Certiorari under
Rule 45 of the Rules of Court.

Issue: Whether the CA erred in modifying the just compensation fixed by the RTC and instead relied on
the valuation arrived at in the Commissioner's Report

Ruling of the Court

Factual issues pertaining to the value o f the property expropriated are questions of fact which are
beyond the scope of the judicial review of this Court under Rule 45. [19] "Although jurisprudence has
provided several exceptions to these rules, exceptions must be alleged, substantiated, and proved by the
parties so this court may evaluate and review the facts of the case. In any event, even in such cases, this
Court retains full discretion on whether to review the factual findings of the [CA]." [20]

Petitioner alleges that the CA gravely erred when it: (a) modified the just compensation fixed by the
RTC despite absence of any finding of arbitrariness in the RTC 's valuation; and (b) relied on the
valuation of the commissioners.[21]

"The determination of just compensation in expropriation proceedings is essentially a judicial

prerogative. This determination of just compensation, which remains to be a judicial function performed
by the court, is usually aided by the appointed commissioners." [22]

In Evergreen Manufacturing Corp. v. Republic,[23] We stated that "while documentary evidence is indeed
important to support the finding of the value of the expropriated property, the commissioners are given
leeway to consider other factors to determine just compensation for the property to be expropriated." [24]

We agree with the CA's observation that it was not shown that the commissioners disregarded evidence
and caused disadvantage to the Republic when they determined just compensation for the subject
property.

While We are cognizant that the commissioners' recommendation may be disregarded and the trial court
may substitute its own valuation, "it may only do so for valid reasons; that is, where the commissioners
have applied illegal principles to the evidence submitted to them, where they have disregarded a clear
preponderance of evidence, or where the amount allowed is either grossly inadequate or excessive. As
such, 'trial with the aid of the commissioners is a substantial right that may not be done away with
capriciously or for no reason at all.' Evidently, the recommendations of the BOC carry with it great
weight and value insofar as the determination of just compensation is concerned."[25]

WHEREFORE, the petition is DENIED. The Decision dated June 17, 2020 of the Court of Appeals in CA-G.R.
CV No. 109537 is AFFIRMED.

The Office of the Solicitor General's manifestation stating that it paid the Sheriff's Trust Fund fee on October 5,
2020, in compliance with the Resolution dated September 28, 2020, is NOTED.

SO ORDERED."
 THIRD DIVISION

[ G.R. No. 245988. June 16, 2021 ]

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC

WORKS AND HIGHWAYS (DPWH), PETITIONER, VS. HEIRS OF SPOUSES LUIS J. DELA
CRUZ AND IMELDA REYES, RESPONDENTS.

DECISION

INTING, J.:

This is a Petition for Review on Certiorari[1] of the Decision[2] dated June 28, 2018 and the
Resolution[3] dated March 5, 2019 of the Court of Appeals (CA) in CA-G.R. CV No. 103874. The CA
affirmed with modification only as to the payment of legal interest the Decision [4] dated September 18,
2014 of Branch 172, Regional Trial Court (RTC), Valenzuela City in Civil Case No. 248-V-07.

The Antecedents

On December 7, 2007, the Republic of the Philippines (petitioner) filed a verified Complaint [5] for
the expropriation of portions of the three parcels of land (subject properties) located at Brgy. Ugong,
Valenzuela City allegedly owned by spouses Luis J. Dela Cruz (Luis) and Imelda Reyes (Imelda)
(collectively, Spouses Dela Cruz). The subject properties were described as follows:[6]
TCT No. Area (sq.m.) Area Affected (sq.m.)
Zonal Value Per sq.m.
Total Zonal Value
V-70921 92 23 P2,750.00 P63,250.00
(now V-94768)
V-68375 137 68 P2,750.00 P187,000.00
(now V-97473)
V-68373 58 P2,750.00 P24,750.00[7]
(now V-947772)
Petitioner alleged in the complaint the purpose of the expropriation, to wit:
Pursuant to Sec. 7 of E.O. 1035, the DPWH is implementing the construction of C-5 Northern Link
Road Project, Segment 8.1 from Mindanao Avenue in Quezon City to the Northern Luzon Expressway,
Valenzuela City, to provide faster and comfortable travel to the motoring public going to, or coming
from. Northern Luzon, thru Metro Manila.[8]
Petitioner manifested its willingness to pay the amount of P495,200.07 as just compensation for the
affected areas based on the zonal value of the subject lots at P2,750.00 per square meter, as certified by
the Bureau of Internal Revenue (BIR).[9]

In their Answer,[10] Spouses Dela Cruz admitted ownership of the subject properties to be expropriated
and manifested support for the C-5 subject properties to be expropriated and manifested support for the
C-5 Northern Link Road Project. However, while they conceded in the BIR's setting of the zonal value
of the subject properties, they prayed that petitioner should pay them the fair market value instead of the
zonal value considering that the subject properties "are already situated in the industrial site apart from
the fact that some nearby lots have been devoted to good business ventures such as construction of
warehouses."[11]

Spouses Dela Cruz further alleged that the prevailing market value of similar properties within the same
location ranges from P8,000.00 to P10,000.00 per square meter. [12] Thus, they reserved their right to
recover the fair market value of the subject properties before duly appointed commissioners pursuant to
Rule 67 of the Rules of Court.[13]

On November 12, 2008, absent any objection to petitioner's right of eminent domain, the RTC issued the
order of expropriation and writ of possession.[14]

The deposit of P495,200.07 and transfer of possession of the subject properties were successfully made.
[15]

After ordering the expropriation of the subject properties, the RTC proceeded to the second stage of an
action for expropriation, i.e., the determination of just compensation for the property sought to be taken.
It then constituted a Board of Commissioners (BOC) for that purpose. [16]

In the meantime, Spouses Dela Cruz were substituted by their heirs (respondents) as parties to the case
after the deaths of Imelda and Luis on July 10, 2005 and July 19, 2007, respectively. [17]

On February 21, 2014, the BOC opined that the estimated value of the land was P15,000.00 per square
meter.[18] It explained that it could no longer conduct an ocular inspection of the C-5 Northern Link Road
Expressway, Valenzuela City because the project already commenced; thus it used other bases for
appraising the subject properties.[19] The BOC explained:
Since we are no longer conducted [sic] an ocular inspection, we have considered the physical, functional
and external value influences of the neighborhood, and have noted and considered an approach of value
and analysis, taking into accounts [sic] the public use and the value of allowable damages or
enhancements to any remaining property for determination of just compensation, if any. Also, taking
into account other properties previously subject of expropriation within the immediate vicinity, which
can be used as a precedent for this particular case.[20]
The BOC further explained that in determining just compensation, it took into consideration the "sales
comparison and cost approach" which is founded on the principle of substitution where the value of a
property is indicative of the value of other similar properties. [21] The BOC then based its appraisal on the
following factors: (a) the highest and best use of the property in relation to the prevailing usage of the
neighborhood and immediate use at the time of taking, i.e., mixed residential and industrial; (b) the BIR
zonal valuation, i.e., P2,750.00 per square meter; (c) consequential benefits which the owner may derive
from the remainder of the expropriated property; and (d) the analysis made in the Hobart case under
Civil Case No. 15-V-08-an expropriation case involving properties within the same vicinity which was
previously settled with finality and which was determined as the one most similar to the instant case
because they involve properties near each other. [22]

After the parties filed their respective Comments,[23] the RTC rendered a Decision.

RTC Ruling

In the Decision[24] dated September 18, 2014, the RTC ordered petitioner to pay Spouses Dela Cruz
just compensation fixed at P9,000.00 per square meter, less the provisional deposit the petitioner
previously made. The RTC also awarded in favor of Spouses Dela Cruz interest on the unpaid balance of
just compensation at the rate of 12% per annum from the time of filing of the complaint until fully paid
by petitioner.[25]

The dispositive portion of the Decision provides:

WHEREFORE, Judgment is hereby rendered condemning the following lots of the defendants:
TCT NO. AREA AFFECTED (SQ.M.)
V-70921 (now V-94768)23
V-68375 (now V-97473)(undecipherable)
V-68373 (now V-947772)
all located at Barangay Ugong, Valenzuela City, free from all liens and encumbrances whatsoever, for
the construction of C-5 Northern Link Road Project Segment 8.1 from Mindanao Avenue in Quezon
City to the North Luzon Expressway, Valenzuela City, a public purpose, in favor of the plaintiff,
Republic of the Philippines, upon payment of just compensation which is fixed at Php9,000.00/square
meter or in the total amount of Php9,000.00 (sic) (NINE HUNDRED THOUSAND PESOS) (100 sq. m.
x Php9,000.00) deducting the provisional deposit of P275,000.00 previously made and subject to the
payment of all unpaid taxes and other relevant taxes by the defendants up to the filing of the complaint,
if there be any.

The plaintiff is ordered to pay interest at the rate of 12% per annum on the unpaid balance of
just compensation of Php625,000.00 (SIX HUNDRED TWENTY-FIVE THOUSAND)
(Php900,000.00-Php275,000.00) computed from the time of the filing of the complaint until plaintiff
fully pays the balance.

No additional amount for the improvement of lot covered by TCT No. 68373 is awarded as the court
considers the amount of Php220,200.07 already paid by plaintiff to the defendants as enough
just compensation for the improvement.

Let a certified true copy of this decision be forwarded to the Office of the Register of Deeds of
Valenzuela City for the latter to annotate this decision in the Transfer Certificate of Title Nos. V-70921
(now V-94768); V-68375 (now V-97473); and V-68373 (now V-947772) of the Registry of Deeds of
Valenzuela City.

SO ORDERED.[26]
Aggrieved, petitioner, through the Office of the Solicitor General (OSG), appealed the RTC Decision to
the CA.[27]

CA Ruling

In the Decision[28] dated June 28, 2018, the CA denied the appeal and affirmed the ruling of the RTC
with modification only as to the payment of interest. [29]

The CA first noted that the directive of the RTC for the government to deposit the amount equivalent to
the zonal value of the subject properties and the value of the improvements therein before the Acting
Branch Clerk of Court runs counter to Republic Act No. (RA) 8974. [30] It explained that the Court,
looking into the Senate deliberations, construed that the intent of RA 8974 was to supersede the system
of deposit under Rule 67 of the Rules of Court with the scheme of immediate payment in cases
involving national government infrastructure projects.[31]

As to the determination of just compensation, the CA ruled that the RTC validly lowered the BOC's
recommended market value of P15,000.00 to P9,000.00.[32]

The CA refused to set the just compensation at P2,750.00 per square meter. It explained that zonal value
could not be the lone basis for the determination of just compensation as it is only one of the factors
which should be considered in computing just compensation under RA 8974.[33]

The CA further ruled that courts are not strictly bound to mechanically follow each of the standards in
Section 5 of RA 8974 as the factors have been held to be recommendatory in nature. Nevertheless,
contrary to the OSG's claim, the RTC referred to several factors enumerated in RA 8974 for the
assessment of the value of the land subject of expropriation proceedings. The CA specifically explained
that based on the records, the RTC used the following relevant factors: (a) the BIR zonal valuation; (b)
the value declared by Spouses Dela Cruz, as owners, in their Answer before the RTC; (c) the
recommended value of the BOC which was ultimately based on the value of the Hobart property which
is a land in the same general vicinity also expropriated for the similar purpose; and (d) evidence
describing the location, shape, and classification of the subject properties. The CA further explained that
while the RTC did not assign values based on the location, shape, and classification of the subject
properties, the factors were nonetheless considered by both the BIR zonal value and the BOC
recommended value.[34]

In affirming the RTC's determination of just compensation of P9,000.00 per square meter, the CA
emphasized the rule under Section 4, Rule 67 of the Rules of Court that just compensation should be
based on the value of the property at the time of taking or filing of the complaint, whichever came first.
As in the case, the CA found that both the zonal and the recommended values were pegged at, or near
the time of the filing of the complaint for expropriation in 2007 which preceded the taking of the subject
properties in 2008. The CA then considered the following: (1) the zonal value of P2,750.00 per square
meter which was based on the schedule of zonal values issued by the Department of Finance in Order
No. 22-2003 that was certified by the BIR as applicable for the year 2007; and (2) the BOC
recommended value of P15,000.00 per square meter based on the Hobart case that was decided wit
finality in 2010. Applying by analogy the mode of computation by the Court in Evergreen
Manufacturing Corp. v. Rep. of the Phils.[35] (Evergreen), the CA ruled that the mean of the zonal value
and the BOC recommended value will qualify as a full and fair equivalent of the subject properties. The
CA then determined the mean of the two values at P8,875.00, which is approximately the same value
determined by the RTC and within the range of the owner's declared value at P8,000.00 to P10,000.00.
[36]

Thus, the CA found petitioner liable to pay respondents the remaining balance of P625,000.00 as
just compensation which shall earn interest at: (1) 12% per annum from the time of filing of the
complaint until June 30, 2013; and(2) 6% per annum from July 1, 2013 until full payment of the
remaining balance, in accordance with Bangko Sentral ng Pilipinas (BSP) Circular No. 799. [37]

The dispositive portion of the Decision provides:

WHEREFORE, premises considered, the appeal of plaintiff-appellant Republic of the Philippines is
DENIED.

The Decision dated September 18, 2014 of the Regional Trial Court of Valenzuela City, Branch 172,
National Capital Judicial Region in Civil Case No. 248-V-07 is AFFIRMED with MODIFICATION on
the payment of interest.

Plaintiff-Appellant Republic of the Philippines is ordered to pay interest at the rate of: (1) twelve per
centum (12%) per annum on the unpaid balance of Six Hundred Twenty Five Thousand Pesos
(P625,000.00) from the date of filing of the instant complaint until June 30, 2013; and (2) six per
centum (6%) per annum from July 1, 2013 until full payment of said unpaid balance.

SO ORDERED.[38]
Petitioner filed a Motion for Reconsideration, [39] but the CA denied it in its Resolution dated March 5,
2019.[40] The CA ruled: (1) that the conduct of an ocular inspection is not mandatory before the BOC can
make a recommendation as it is merely a factor to guide the commissioners in arriving at a just value for
the expropriated property; (2) that the OSG is correct in stating that the BOC should not use the
valuation awarded in previous expropriation cases considering the valuation awarded in previous
expropnat1on cases considering the differences in the nature and condition of the properties involved;
thus the RTC, for that reason, precisely reduced the BOC's recommended value, being well aware that
there are other factors which affect the proper valuation of the expropriated properties other than the
value of similarly situated properties; (3) that the alleged presence of informal settlers near or within the
vicinity of the subject properties could not have reduced the RTC's determination of
just compensation, i.e., P9,000.00 because of the fact that the area was also devoted to commercial and
industrial uses; and (4) that zonal value cannot be the sole basis in determining just compensation, but
the RTC nevertheless considered zonal value as one of the factors in determining the fair and full
equivalent of the subject properties.[41]

Hence, this Petition for Review on Certiorari.

The Petition

Petitioner argues that: (1) the CA erred in affirming the RTCs determination of the
just compensation award at P9,000.00 per square meter as it is excessive; (2) the CA Decision is not
supported by applicable laws and jurisprudence; and (3) the CA Decision is contrary to the evidence
presented.[42]

Specifically, petitioner asserts that the CA accorded respect to the RTC Decision without due
ascertainment of the requirements set forth under Section 5 of RA 8974. It maintains that the BIR zonal
valuation is reflective of the fair market value of real properties within a given area; thus, given the
significant process of arriving at the values indicated in the BIR Zonal valuation, it should not be taken
lightly and it would be highly suspicious if the recommended just compensation is more than double the
BIR valuation.[43]

Petitioner further argues that the RTC did not take into consideration its evidence showing the actual use
of the subject properties as undisputably residential and the classification, size, area, and condition of the
subject property; that the BOC did not conduct an ocular inspection of the subject properties, thereby
gravely limiting their knowledge on the actual use, classification, size, area, and condition of the subject
property; and on the contrary, it was able to present witnesses who were able to accurately testify as to
the actual condition of the properties, i.e., the depressed and substandard state of the area which was
near or within the vicinity of the areas with colonies of informal settler families. [44]

Petitioner furthermore maintains that the RTC purportedly erred in relying on the recommendation of
the BOC considering that the latter's valuation took into consideration as one of its factors the value of
the properties involved in the other expropriation cases; and that the value of the other properties may
have appreciated through the years instead of its character and price at the time of taking. [45]

In their Comment to the Petition,[46] respondents argue that the CA duly considered the factors
enumerated in Section 5 of RA 8974 in determining the just compensation for the subject properties;
[47]
that petitioner failed to present evidence that the subject properties are found in the location where
the informal settlers are located; [48] and that the appraisal of respondents' expropriated lots is not limited
to the zonal value by the BIR, but also on the location, accessibility, selling prices of comparable
properties, the amenities present, and other factors which were duly considered by the BOC and the
RTC.[49] However, they pray that because the petition is intended for delay, the just compensation for the
subject properties should be valued at P15,000.00 per square meter. [50]
Petitioner then manifested that it will no longer file a Reply as it had already exhaustively discussed all
issues and arguments in support of its position.[51]

The Issue

The main issue to be resolved in this case is whether the CA erred in affirming the
just compensation award of the RTC at P9,000.00 per square meter.

The Court's Ruling

No modification of judgment can be granted to respondents

who did not appeal the RTC Decision as affirmed by the
CA.

At the outset, the Court cannot entertain respondents' contention and prayer in their Comment that the
payment of just compensation should be increased from P9,000.00 to P15,000.00. This is consistent with
the well settled procedural rule that no modification of judgment can be granted to a party who did not
appeal.[52] Without a doubt, respondents are seeking a modification not only of the CA Decision, but also
of the RTC Decision without filing the proper appeal.

The Court explained in Yano v. Sanchez:[53]

The entrenched procedural rule in this jurisdiction is that a party who did not appeal cannot assign such
errors as are designed to have the judgment modified. All that said appellee can do is to make a
counter-assignment of errors or to argue on issues raised at the trial only for the purpose of sustaining
the judgment in his favor, even on grounds not included in the decision of the court a quo or raised in
the appellant's assignment of errors or arguments.

This tenet is enshrined as one of the basic principles in our rules of procedure, specifically to avoid
ambiguity in the presentation of issues, facilitate the setting forth of arguments by the parties, and aid
the court in making its determinations. A party who fails to acquire complete relief from a decision of
the court has various remedies to correct an omission by the court. He may move for a correction or
clarification of judgment, or even seek its modification through ordinary appeal. There is thus no basis
for the Court to skip the rule and excuse herein respondents for failure to properly avail themselves of
the remedies in the face of the parties' contentions that have remained disputed. [54] (Italics supplied.)
Admittedly, the rule is subject to exceptions. However, the established exceptions to this rule such as
"(1) errors affecting the lower court's jurisdiction over the subject matter, (2) plain errors not specified,
and (3) clerical errors" are not present in the case. [55]

Thus, in the absence of any of the exceptions which would warrant a relaxation of the rule, the Court
cannot address respondent's prayer to increase the valuation of the subject properties to P15,000.00 per
square meter.

The Court now resolves the petition.

The Court affirms the award of just compensation for the

taking of the subject properties valued at P9,000.00 per
square meter.

The well settled rule is that only questions of law should be raised in a petition for review
on certiorari under Rule 45 of the Rules of Court. [56] The Court is not a trier of facts and it is not the
Court's function to examine, review, or evaluate evidence all over again. [57] Thus, as
in expropriation cases, the Court may not delve into factual issues pertaining to the value of the property
expropriated.[58] Further, the factual findings of the trial court, when affirmed by the CA, are final and
conclusive and cannot be reviewed by the Court. [59]

While the Court has recognized exceptions [60] to this rule, the Court finds none which would warrant the
Court's deviation from the findings of fact of the RTC and the CA.

The Court finds that the only legal issues presented by petitioner are: (1) whether the RTC's
determination of just compensation is in accordance with Section 5 of RA 8974; and (2) whether the
RTC should have given weight to the BIR zonal value in determining just compensation.[61]

The Court has defined just compensation in this wise:

Constitutionally, "just compensation" is the sum equivalent to the market value of the property, broadly
described as the price fixed by the seller in open market in the usual and ordinary course of legal action
and competition, or the fair value of the property as between the one who receives and the one who
desires to sell, it being fixed at the time of the actual taking by the government. Just compensation is
defined as the full and fair equivalent of the property taken from its owner by the propriator. It has been
repeatedly stressed by this Court that the true measure is not the taker's gain but the owner's loss. The
word "just" is used to modify the meaning of the word "compensation" to convey the idea that the
equivalent to be given for the property to be taken shall be real, substantial, full and ample. [62] (Emphasis
omitted.)
Section 5 of RA 8974 provides for the standards that may be considered by the courts in determining
just compensation, viz.:
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) This 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.
It must be emphasized however that the determination of just compensation in eminent domain cases is a
judicial function. As such, legislative enactments, as well as executive issuances, which fix or provide
for the method of computing just compensation are tantamount to impermissible encroachment on
judicial prerogatives.[63] Hence, any valuation for just compensation provided in statutes may serve only
as a guiding principle but may not supplant the court's own determination as to the amount that should
be awarded and how to arrive at such amount. [64]

Consistent with the aforesaid principle, the CA aptly discussed that the courts are not strictly bound to
mechanically follow each of the standards enumerated in Section 5 of RA 8974 as the factors have been
held to be merely recommendatory in nature. [65]

Specifically, in Rep. of the Phils. v. Heirs of Sps. Pedro Bautista and Valentina Malabanan,[66] the Court
ruled that the courts are not bound to consider the standards under Section 5 of RA 8974 considering the
exact wording of the provision, i.e., "in order to facilitate the determination of just compensation, the
courts may consider" them. The Court explained that the use of the word "may" in the provision is
construed as permissive and operating to confer discretion. [67]

Nevertheless, contrary to petitioner's assertion, and as aptly observed by the CA, the RTC considered the
factors enumerated in Section 5 of RA 8974 in arriving at the just compensation to be paid to
respondents. Notably, the RTC, while giving weight to the findings of the BOC, adjusted the latter's
recommended valuation and lowered the amount from P15,000.00 per square meter to P9,000.00 per
square meter.

The RTC's consideration of the factors in Section 5 of RA 8974 is evident in its Decision dated
September 18, 2014, thus:
There is no dispute that the subject lots were classified as residential by the Bureau of Internal Revenue
(BIR). The lots are located at Barangay Ugong, Valenzuela City. All the lots are irregular in shape. They
are however, located in high intensity commercial zone. The place where the lots are located has
amenities like water, electricity, transportation and communication. Per BIR zonal valuation, the lots
have a zonal valuation of Php2,750.00 per square meter.

The subject property is 442.14 meters more or less away from the property (residential) of Hobart Realty
Development Corporation, which was expropriated by the plaintiff and in which the
just compensation was pegged by this court in the amount of Php15.000.00/sq.m. The Hobart property is
located near Mindanao Avenue, Quezon City. The expropriation case involving Hobart Realty
Development Corporation had long become final and executory. The property subject of expropriation is
considered within high intensity commercial zone as it is located near the industrial and commercial
zone in Valenzuela City were several business establishments and warehouses had increased
considerably by virtue of its proximity to C-5 Road, North Luzon Expressway and Mindanao Ave.,
Quezon City.

Plaintiff tried to lower the value of the subject property by claiming that the subject property is near or
within the vicinity of the areas with colonies of informal settlers, which were relocated. Plaintiff,
however, failed to prove that the properties of the defendants were occupied by squatters or near the
vicinity occupied by the alleged squatters.

x x x x

Taking the average [of] the BIR zonal valuation recommended as appearing in the complaint of
P2,750.00 per square meter, the value declared by the defendants in their answer in the amount between
Php8,000.00-Php10,000.00 per square meter, the recommendation of the Board of Commissioners and
this court's observations on the location, the shape, the classification of the lots, the Court rules that the
just compensation for the defendants' lots sought to be taken in this case is fixed at Php9,000.00 per
square meter.

The construction of C-5 Northern Link Road Project, Segment 8.1 from Mindanao Avenue in Quezon
City to the North Luzon Expressway, Valenzuela City could not be said to have benefited the defendants
for it is common knowledge that expressways are being fenced, so that inhabitants could not just cross
over the highway to go to the other side or to utilize the said highway as pedestrian, as the highway was
made precisely for the motoring public who has to pass through the toll gates. In short, defendants were
actually isolated because of the fence made on the sides of the highways.[68] (citations omitted)
Evidently, in pegging the just compensation that should be awarded to respondents at P9,000.00 per
square meter, the RTC considered the following factors: (a) the BIR zonal valuation; (b) the value
declared by Spouses Dela Cruz, as owners, in their Answer before the trial court; (c) the recommended
value of the BOC which was ultimately based on the value of the Hobart property, a land in the same
general vicinity also expropriated for the similar purpose; [69] and (d) evidence describing the location,
shape, and classification of the subject properties. Specifically, the RTC noted that the subject properties
were irregular in shape and were classified as residential, but were located in a high-intensity
commercial zone.[70]

As to the absence of an ocular inspection, there is nothing anomalous in the process by which the BOC
and subsequently, the RTC adjusted the BOC's recommendation and arrived at the full and fair
equivalent of the subject properties. Ocular inspection is only one of the means in the ascertainment of
just compensation. The BOC and the courts are not precluded from relying on other evidence to arrive at
a full and fair value of the property subject of expropriation proceedings.

Further, it must be emphasized that RA 8974, in relation to Rule 67 of the Rules of Court, creates a
possible scenario wherein the government has already taken possession of the property and commenced
works on it even before the commissioners were appointed and allowed to conduct an ocular inspection
of the property sought to be taken. Specifically, under Section 4 [71] of RA 8974, the court shall issue to
the implementing agency of the government an order to take possession of the property and start the
implementation of the project upon the filing of the complaint with due notice to the defendant and
payment of 100% of the value of the property based on the current relevant BIR zonal valuation. At this
stage, the government may already commence works on the property even if there is yet no appointment
of commissioners under Section 5, Rule 67 of the Rules of Court.

Here, as explained by the BOC, they had no opportunity to inspect the subject properties considering
that at the time of the appointment of the commissioners, the C-5 Northern Link Road Project, Segment
8.1 from Mindanao Avenue in Quezon City to the North Luzon Expressway Valenzuela City Project had
already commenced. Thus, as already discussed, the BOC and thereafter, the RTC, considered other
factors in determining the full and fair equivalent of the subject properties.

On the other hand, the issue of whether the subject properties are near, or within the vicinity of the areas
occupied by informal settlers is factual in nature. Notably, petitioner explained that it presented evidence
as to the actual condition of the subject properties and that it presented Ms. Fe Pesebere and Ms. Zenaida
Galvez, both of the National Housing Authority (NHA) to prove that: (1) based on the NHA's census
and tagging operations from November 2006 to January 2007, informal settlers were found in scattered
areas of Brgy. Ugong and in concentrated areas in Brgy. Gen. T. de Leon; and (2) from November 29,
2007 to February 16, 2010, the NHA relocated all the informal settlers located in the areas affected by
the C-5 Northern Link Road Project, Segment 8.1, including those found in Brgy. Ugong and Brgy. Gen.
T. de Leon.[72] However, this is not sufficient to contravene the RTC's finding that petitioner failed to
prove its allegation that the subject properties were occupied or near the vicinity occupied by the alleged
informal settlers. Nevertheless, the Court finds that petitioner failed to provide a compelling reason for
the Court to deviate from the CA's conclusion that even if the alleged presence of informal settlers is
factored in, it cannot reduce the RTC's recommended valuation. To reiterate, the CA considered that the
area is also devoted to commercial and industrial uses. Notably, the valuation at P9,000.00 per square
meter for the subject properties is substantially lower than the recommended value of the BOC at
P15,000.00 per square meter.
Petitioner submits that the BIR zonal valuation reflects the fair market value of real property within a
given area and must not be taken lightly given the tedious process by which the government determines
it and that it is highly suspicious if the recommended just compensation is more than double the BIR
valuation.

Petitioner's contention is without merit.

It is well settled in jurisprudence that the zonal valuation is just one of the indices of the fair market
value of real estate.[73] It cannot be the sole basis of just compensation in expropriation cases since the
standard is not the taker's gain but the owner's loss. [74]

Also, the courts are not to be limited by a certain numerical threshold relative to the BIR zonal value in
the determination of just compensation. Ultimately, in arriving at the full and fair equivalent of the
property subject of expropriation, the courts are guided by certain standards for valuation such as those
mentioned in Section 5 of RA 8974. Thus, the Court will sustain the lower courts determination of
just compensation even if it is higher than, or more specifically, as in this case, double the BIR zonal
value as long as such determination is justified as the full and fair equivalent of the property.

As in the case, the Court finds as reasonable the RTC's determination of just compensation that was
affirmed by the CA. This is considering that as already discussed, the RTC referred to several factors in
Section 5 of RA 8974 in making such determination.

The award of legal interest on

just compensation must be modified such that
legal interest must accrue from the time the
Government took possession of the property.

The Court deems it proper to modify the award of interest by the CA. To recall, the CA modified the
RTC's award of interest in favor of respondents and ordered petitioner to pay interest "at the rate of (1)
twelve per centum (12%) per annum on the unpaid balance of P625,000.00 from the date of filing of the
instant complaint until June 30, 2013; and (2) six per centum (6%) per annum from July 1, 2013 until
full payment of said unpaid balance." [75]

It must be emphasized that expropriation proceedings for national infrastructure projects are governed
by Rule 67 of the Rules of Court and RA 8974. [76] Particularly, Section 10, Rule 67 provides that the
legal interest on the just compensation shall run from the time of taking of possession of the property.
Section 10, Rule 67 provides:
Section 10. Rights of plaintiff after judgment and payment. - Upon payment by the plaintiff to the
defendant of the compensation fixed by the judgment, with legal interest thereon from the taking of the
possession of the property, or after tender to him of the amount so fixed and payment of the costs, the
plaintiff shall have the right to enter upon the property expropriated and to appropriate it for the public
use or purpose defined in the judgment, or to retain it should he have taken immediate possession
thereof under the provisions of section 2 hereof. If the defendant and his counsel absent themselves from
the court, or decline to receive the amount tendered, the same shall be ordered to be deposited in court
and such deposit shall have the same effect as actual payment thereof to the defendant or the person
ultimately adjudged entitled thereto. (Italics supplied.)
In Evergreen, the Court explained that just compensation should be made at the time of taking; and the
rationale for imposing interest on just compensation is to compensate the property owners for the
income that they would have made if they had been properly compensated, i.e., they had been paid the
full amount of just compensation, at the time of taking when they were deprived of their property. [77]
Thus, premised on the facts in Evergreen, the Court ruled that while the just compensation shall be
appraised as of the date of filing of the expropriation complaint as it preceded the actual taking of the
property, the legal interest shall run from the time that the government took possession of the property
and not from the time of filing of the expropriation complaint.[78]

It also bears emphasis that the Court had already recognized that the just compensation due to the
landowners for their expropriated property amounts to an effective forbearance. [79] Thus, pursuant to the
Court's pronouncement in Eastern Shipping Lines, Inc. v. Court of Appeals,[80] the imposable interest on
the difference between the final amount adjudged by the Court and the initial payment made shall be
12% per annum from the time of taking of the property. However, consistent with the Court's ruling
in Nacar v. Gallery Frames, et al.,[81] such interest rate shall apply only until June 30, 2013 in view of
BSP Circular No. 799 which took effect on July 1, 2013 and which reduced the legal interest on loans
and forbearance of money from 12% to 6% per annum. Thus, from July 1, 2013 onwards, the legal
interest on the difference between the final amount adjudged by the Court and the initial payment made
shall be 6% per annum.[82]

As in the case, the date of taking of the subject properties is November 12, 2008 when the RTC issued a
writ of possession in favor of petitioner. [83] Thus, a legal interest of 12% per annum on the difference
between the final amount adjudged by the Court and the initial payment made shall accrue from
November 12, 2008 until June 30, 2013. From July 1, 2013 until the finality of the Decision of the
Court, the difference between the final amount adjudged by the Court and the initial payment made shall
earn interest at the rate of 6% per annum. Thereafter, the total amount of just compensation shall earn
legal interest at the rate of 6% per annum from the finality of this Decision until full payment.

WHEREFORE, the petition is DENIED The Decision dated June 28, 2018 and the Resolution dated
March 5, 2019 of the Court of Appeals in CA-G.R. CV No. 103874
are AFFIRMED with MODIFICATION only as to the reckoning period of the payment of legal
interest.

Petitioner Republic of the Philippines is ordered to pay interest at the rate of: (1) 12% per annum on the
unpaid balance of P625,000.00 from November 12, 2008, the date of taking of the properties until June
30, 2013; and (2) 6% per annum from July 1, 2013 until full payment of the unpaid balance.

SO ORDERED.
 THIRD DIVISION

[ G.R. No. 224687, September 26, 2018 ]

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC

WORKS AND HIGHWAYS [DPWH] V. SPOUSES RODOLFO B. DEL MUNDO AND AUREA
A. DEL MUNDO

Sirs/Mesdames:

Please take notice that the Court, Third Division, issued a Resolution dated September 26, 2018, which
reads as follows:

"G.R. No. 224687 (Republic of the Philippines, represented by the Department of Public Works and
Highways [DPWH] v. Spouses Rodolfo B. Del Mundo and Aurea A. Del Mundo) - This appeal
by certiorari filed by the Republic of the Philippines (petitioner), represented by the Department of
Public Works and Highways, seeks to reverse the December 18, 2015 Decision [1] and the May 13, 2016
Resolution[2] of the Court of Appeals (CA) in CA-G.R. CV No. 103390. The said Decision affirmed with
modification the June 9, 2014 Decision[3] of the Regional Trial Court of Valenzuela City, Branch 172
(RTC) on the verified complaint for expropriation, docketed as Civil Case No. 216-V-07, filed by
petitioner to acquire a 58-square meter portion of the 301-square meter lot owned by the spouses
Rodolfo B. Del Mundo and Aurea A. Del Mundo (respondents), located in Barangay Ugong, Valenzuela
City.

The Antecedents

Petitioner sought to acquire the 58-square meter portion of the lot owned by respondents for the
construction of Segment 8.1 of the C-5 Northern Link Road Project traversing Quezon City and
Valenzuela City. Petitioner offered to pay respondents P2,300.00 per square meter based on the lot's
current Bureau of Internal Revenue (BIR) zonal valuation in exchange for its conveyance. Respondents
refused to accept the offer, hence, petitioner filed a verified complaint for expropriation on December 7,
2007 with a prayer for the issuance of a writ of possession, before the RTC. Petitioner later deposited
two (2) manager's checks with the RTC representing a total of P476,131.28, which covers the
replacement costs amounting to P342,731.28 for the two residential structures erected on the portion of
the lot and the price of P133,400.00 for the lot itself.

While respondents did not assail the purpose of the expropriation, they refused to settle for a payment
based on the BIR zonal valuation and insisted that payment should be pegged at the fair market
value (FMV) of the property. They also asked for payment of the FMV of the two residential structures
on the lot. In the interim, respondents asked the RTC for the release of the manager's checks amounting
to P476,131.38, without prejudice to their right to recover based on the properties' FMVs as determined
by three commissioners appointed in accordance with Sections 5 to 8, Rule 67 of the Rules of Court.
They also asked that twelve percent (12%) interest per annum be imposed on the proper amount of
just compensation, as damages, if there would be delay in the payment.

On September 18, 2008, respondents received the manager's check for the payment for the portion of the
lot subject of expropriation.[4] A Board of Commissioners (Board) composed of three commissioners
was also appointed by the RTC.[5] It conducted hearings and received position papers and testimonies of
witnesses for the parties. On December 2, 2008, the Order of Expropriation and Writ of Possession in
petitioner's favor were issued.[6] On April 23, 2009, the manager's check covering the replacement costs
of the affected residential structures amounting to P342,731.28 was also released to respondents. [7]

In their February 13, 2014 Commissioners' Report,[8] the Board submitted the following findings:

II. SCOPE OF ANALYSIS

In undertaking the valuation of the property, undersigned commissioners have no opportunity to inspect
the subject properties because at the time they were appointed as members of the Board the C-5
Northern Link Road Project (Segment 8.1), from Mindanao Avenue in Quezon City to the North Luzon
Expressway (NLEX), Valenzuela City project already materialized. Nonetheless, we have taken into
consideration the documentary evidence submitted by the parties before the Court and before the Board
of Commissioner [sic]. Also, taking into consideration the electronic data gathered by the Board. The
Board reviewed the records of the case and other relevant public documents. This report summarizes
pertinent information necessary to arrive at our estimation.

The valuation technique used is Sales Comparison Approach.

Since we can no longer conducted [sic] an ocular inspection, we have considered the physical,
functional and external value influences of the neighborhood, and have noted and considered an
approach of value and analysis, taking into accounts the public use and the value of allowable damages
or enhancements to any remaining property for ; determination of just compensation, if any. Also, taking
into account other properties previously subject of expropriation within the immediate vicinity, which
can be used as a precedent for this particular case.

III. PROPERTY DESCRIPTION

xxxx

The land basically is a rectangular shape with generally flat terrain. At the time of taking as basis for the
date of determination of the amount of just compensation is around 07 December 2007, at the time of
filing of the instant case the subject property as residential, and within immediate vicinity of residential
and industrial properties.

IV. APPRAISAL ASSIGNMENT

xxxx
 The highest and best use of the property upon the prevailing usage of neighborhood and immediate use
at the time of taking is mixed residential and industrial, whether the property is vacant or improved as
seen from the actual use of the property.

Since the undersigned did not conduct any ocular inspection of the subject properties, the documents
submitted such as the Entry of Judgment for Civil Case No. 288-V-99 dated 15 July 2001, Branch 75,
Regional Trial Court of Valenzuela City another expropriation case filed within [B]arangay Ugong,
market value in open sale through internet access, computation submitted by representative DPWH of
the plaintiff, and the zonal valuation of Bureau of Internal Revenue.

The following are previously expropriated by the plaintiff which were used in determining the fair
market value of the subject property:

1. Mapalad Case under Civil Case No.52-V-08

2. Hobart Case under Civil Case No.

3. Garcia Case under Civil Case No. 287-V-99

4. Liao Chin Guat Balisbis and Edna Lim Case under Civil Case No. 288-V-99

The indication of value used is sales comparison approach taking into consideration the Zonal Valuation
provided for by the Bureau of Internal Revenue which is equivalent to PESOS: TWO THOUSAND
SEVEN HUNDRED FIFTY [sic] AND 00/100 (P2,300.00) for the location of the subject property as
alleged in the position paper of the plaintiff. Part of the consideration is the Replacement Cost New as
computed that forms part of the respective position papers of the parties.

V. VALUATION OF THE SUBJECT MATTER

Property rights appraised herein include all benefits to which fee simple ownership is entitled as of the
date of value. "Fee Simple" is defined as - Absolute ownership subject to limitations imposed by the
country; subject only to the limitations of eminent domain, escheat, police power and taxation. In this
case the limitation is eminent domain. Considering the classification, use and location of the property,
and consequential benefits that may be derived by the defendants after the purpose for
the expropriation is achieved.

The commissioners have relied upon Sales Comparison to estimate the market value of the fee simple
interest in the subject properties. All the facts and observations contained herein are consistent with the
information available as of the date of valuation. The standard approaches to estimate value include the
sales comparison (market data).

The sales comparison and cost approach was used to estimate the value is founded on the principle of
substitution; that the value of one property is indicative of the value of other similar properties.

x xxx
While we took cognizance of the zonal valuation, an offer submitted by the plaintiff, the Commissioners
cannot derive just compensation solely on that offer as fair market value of the subject property. A zonal
schedule of fair market values on real property used by the Bureau of Internal Revenue is one of the
bases for the computation of internal revenue taxes. As such, this is only one of the considerations to be
used in determining just compensation.

xxxx

The undersigned cannot discredit the Entry of Judgments previously ruled because of the
just compensation stipulated therein, which became final and executory, and the following were
considered for this report:

xxxx

The distance of Hobart to Garcia case is 351.74 meters, more or less, while the distance of Hobart to
Sps. Liao Chin Guat Balisbis and Edna Lim is 361.66 [meters] more or less.

The distance of the subject property from Hobart case is 9.79 meters, more or less, while its distance
from Mapalad case is 2,093 meters, more or less. Distance between the Hobart Case, being the nearest,
is a factor considered, attached herein is an image showing the distance hereto marked and made an
integral part hereof as Annex "A," also a depiction of the actual use of the subject property pursuant to
sometime March 2007, more or less. The size, shape, topography and utility are all adequate for any
development.

After an exhaustive deliberation and considering the foregoing, particularly that of the property location,
desirability, neighborhood, size and time element involved in making the proper appraisal, it is our
honest opinion, by the majority of the commissioners that the value estimate of the property for the land
is PESOS: FIFTEEN THOUSAND AND 00/100 or P15,000.00 per square meter as the reasonable
and fair just compensation for the subject properties in this expropriation proceeding.

The opinion as stipulated in the Commissioners' Report is limited only to the appraisal of land for
determination of just compensation. We maintain the appraisal of the buildings built on the land of the
property submitted by the plaintiff, as the undersigned are not in the position to make valuable opinion
of the replacement cost new of the improvement as the same was never inspected.

xxxx.[9]
Respondents accepted the Board's recommendation as fair and reasonable. On the other hand, petitioner
countered that the report should be disregarded because it was not based on evidence and was
unsupported by law and jurisprudence. It specifically argued that the manner used to value the
respondents' lot, viz. determination of the distance of respondents' property from the expropriated lots
previously owned by Hobart Realty and Development Corporation[10] and Mapalad Serrano, and the
comparison of the just compensations for the Hobart and Mapalad Serrano lots, is arbitrary and
excessive. Petitioner further argued that the Board failed to consider its evidence showing the actual use,
classification, size, area and actual condition of respondents' property. It surmised that the BIR zonal
valuation reflects the FMV of lots located in a certain area, and that the lot's classification and use belie
any development that could increase the lot's value. It claimed that the presence of informal settlers in
the lot's vicinity actually devalues the lot in open market.

The RTC Ruling

The RTC fixed the just compensation of the subject property at P870,000.00, or P15,000.00 per square
meter and ordered petitioner to pay interest at the rate of twelve percent (12%) per annum on the
deposited amount of P133,400.00 from December 7, 2007 up to the time the amount was deposited with
the RTC, and on the unpaid balance of the just compensation amounting to P736,600.00 from December
7, 2007 until full payment.

The RTC adopted the manner of evaluation utilized by the Board when it compared the
just compensation of the previously expropriated Hobart and Mapalad Serrano lots and their distances
from respondents' lot. It dismissed for lack of evidence petitioner's allegation concerning the presence of
informal settlers. It further disagreed with petitioner's position that the zonal value of the lot is enough
payment for the taking. The RTC reasoned that zonal valuation is but a provisional determination of the
property's value. It is not the final amount for just compensation and may not necessarily be equivalent
to the prevailing FMV of the property, although it may be a factor in determining just compensation.
The RTC also found that respondents failed to produce evidence to support its claim for additional 50%
for the useful improvements on the lot.

The relevant part of the dispositive portion of the RTC Decision reads:

WHEREFORE, judgment is hereby rendered fixing the just compensation of the 58 square meters lot
(TCT No. V-73968) at Php 870,000.00 (58 sq meters x Php 15,000.00) and authorizing the payment
thereof by the plaintiff to the defendants for the property condemned deducting the provisional deposit
of Php133,400.00 previously made and subject to the payment of all unpaid real property taxes and other
relevant taxes by the defendants, if there be any, up to the time the property was taken by the plaintiff.

The plaintiff is directed to pay interest at the rate 12% per annum on the amount of deposit of Php
133,400.00 from the time of the filing of the complaint on December 7, 2007 up to the time that the said
amount was deposited in court by the plaintiff on September 18, 2008 and to pay the interest rate of
12% per annum on the unpaid balance of just compensation of Php 736,600.00 (Php 870,000.00 - Php
133,400.00) computed from the time of the filing of the complaint until the plaintiff fully pays the
balance.

The plaintiff is also directed to pay the members of the Board as commissioner's fee the amount of Php
3,000.00 each and attorney's fees in the amount of Php 50,000.00.

xxxx

SO ORDERED.[11]
The CA Ruling

On appeal, petitioner claimed that the RTC erred in fixing the just compensation of the subject property
at P15,000.00 per square meter because such amount was excessive and contrary to law and evidence; in
imposing a twelve percent (12%) per annum interest rate instead of six percent (6%) mandated by
the Bangko Sentral ng Pilipinas (BSP) Circular No. 799, series of 2013; and in awarding attorney's fees.

Petitioner averred that the RTC must be prudent in determining just compensation as it involved
expenditure of public funds. The RTC allegedly failed to evaluate the different factors in determining
just compensation and merely relied on the supposed distance of respondents' lot from Hobart's.
Petitioner maintained that respondents' lot was an ordinary residential lot while the Hobart lot is located
in a residential subdivision, thus, the marked difference in the market value of the properties. It
maintained that the BIR zonal valuation was reflective of a real property's FMV. Legal interest on the
just compensation should also be set at six percent (6%) per annum per BSP Circular No. 799. The
award of attorney's fees was also unwarranted because no basis was laid down for it in the RTC's
Decision.

Respondents countered that there was nothing wrong with the RTC applying the doctrine of stare decisis
when it considered the FMV in the Hobart and other expropriation cases, which already attained finality.
They posited that, although there was no identity of parties in the present case and in the Hobart case,
both lots were located exactly in the same area of the road project. The requirement of competent
evidentiary substantiation in an appropriate judicial proceeding was also met because the Board applied
the standards set in Sec. 5 of R.A. No. 8974[12] in arriving at the FMV. They also insisted on the
imposition of a twelve percent (12%) per annum interest rate on the just compensation as damages for
delay in payment. Attorney's fees and costs of suit should also be paid because petitioner's unjustified
refusal to recognize that FMV was not the same as zonal value prompted them to litigate.

In its Decision, the CA affirmed the RTC Decision with modification only as to the interest rate to be
applied on the unpaid portion of the just compensation. It ratiocinated that:

The main issue in the instant case is the determination of the amount of just compensation for the
expropriated property of Spouses Del Mundo.

Appellant avers that the values arrived at in the Commissioners['] Report and the trial court's Decision
are not supported by sufficient evidence.

We rule in the negative.

The Commissioners^] Report fully explained the basis for payment of just compensation at fifteen
thousand pesos (PI5,000.00) per square meter. It cited cases already decided by the Supreme Court
pertinent to lots situated in the same area, to wit:

xxxx
Although there is no identity as to the parties, it must be pointed out that the lots involved in the said
cases are located in exactly the same area and will be used for the same purpose. Considering that the
subject lot is only a few steps away from the Hobart property, the trial court correctly applied the
doctrine of stare decisis based on the fixed market value in the said cases that have already achieved
finality, and the owners of the expropriated lots therein have already been paid the corresponding
awarded fair market value. Under the doctrine of finality of judgment or immutability of judgment, a
decision that has acquired finality becomes immutable and unalterable, and may no longer be modified
in any respect, even if the modification is meant to correct erroneous conclusions of fact and law, and
whether it be made by the court that rendered it or by the Highest Court of the land. Appellant contends
that Hobart's lot is situated in a subdivision and therefore it has a higher valuation compared to Spouses
Del Mundo's lot. That is true. That's why the Commissioners' assessment considered this fact. Instead of
awarding thirty thousand pesos (P30,000.00) just like in Hobart's case, they reduced the recommended
amount to fifteen thousand pesos per square meter, as they took into consideration the Liao Chin Guat
Balisbis, Edna Lim and Garcia cases, which lots are similar and adjacent to the subject lot.

As to appellant's claim that the zonal value of the property must be followed as it is reflective of the fair
market value of a real property within the area, the general rule is that just compensation to which the
owner of the property is entitled is the market value. Market value is that sum of money of which a
person desirous but not compelled to buy, and an owner willing but not compelled to sell, would agree
on as a price to be paid by the buyer and received by the seller. The general rule, however, is modified
where only a part of a certain property is expropriated.

To reiterate, the trial court judiciously determined the fair market value of the subject lot. It considered
the cases decided by the Supreme Court relative to lots situated in the same area and were expropriated
by the government for the same purpose as in the case at bar.

As to the award of legal interest, this Court agrees that the legal interest imposed by the trial court
should be set at six percent (6%) per annum, as per Bangko Sentral ng Pilipinas (BSP) Circular No. 799.

Article 2208(2) of the Civil Code allows the award of attorney's fees when the defendant's act or
omission has compelled the appellant to litigate with third persons or to incur expenses to protect his
interest. Since Spouses Del Mundo were compelled to secure the services of a lawyer in order to protect
their rights, the award of attorney's fee is but proper.

WHEREFORE, the appeal is DISMISSED. The Decision appealed from is

hereby AFFIRMED with MODIFICATION. Appellant is directed to pay the interest rate of 6% per
annum on the unpaid balance of just compensation of P736,600.00 (P870,000.00-P133,400.00),
computed from the time of the filing of the complaint until appellant pays the balance.

SO ORDERED.[13]

Petitioner's Motion for Reconsideration was denied by the CA. Hence, the present appeal.
 The Present Appeal

Petitioner now submits the following arguments in support of its appeal:

I. The Honorable Court of Appeals has no legal basis to affirm the conclusion of the trial court that
respondents are entitled to Php15,000.00 per square meter just compensation for the expropriated
property.

II. The Honorable Court of Appeals erred in awarding attorney's fees to respondents.[14]

As to the first argument, petitioner contends that the valuation of the Hobart lot should not be followed
as an established precedent because a number of factors must first be considered in determining the
amount of just compensation. The nature and character of the land at the time of taking cannot be
disregarded in determining compensation. Petitioner points out that although the lot in question is
residential in character, the surrounding area, while also residential, is depressed. Proper appraisal
should, thus, consider the "pulling down" effect of depression. Petitioner insists that the BIR zonal
valuation of P2,300.00 cannot be ignored. It also reasoned that just compensation cannot stray much
from said amount since BIR zonal valuations are derived after an extensive technical process and must
therefore be accorded great weight.

As to the second argument, petitioner avers that the CA's statement that respondents were forced to
secure the services of counsel is not in consonance with jurisprudence because premium is given on the
Republic's right to litigate expropriation cases. Award of attorney's fees in expropriation cases is also
improper unless there is compelling justification for it.

In its Comment to the Petition,[15] respondents agreed with the CA's affirmance of the RTC's ruling on
the amount of just compensation and the award of attorney's fees.

First, they maintained that the RTC properly applied R.A No. 8974 and the formula to fix the lot's FMV
at P15,000.00 per square meter. It claimed that the FMV is not excessive and arbitrary, nor unsupported
by evidence, law and jurisprudence. There is also nothing wrong with the market data approach utilized
by the Board and in using as reference settled expropriation cases that fixed the FMV for nearby
expropriated lots, specifically the Hobart lot. Respondents also point out that petitioner's allegation of
distinctions between the evidence in the Hobart and present cases are not accurate and baseless. They
further cite several of this Court's rulings upholding the Judiciary's prerogative to determine
just compensation in expropriation cases and the true measure of just compensation. In addition,
respondents claim that petitioner is mistaken in insisting that zonal value and FMV are exactly the same.

Secondly, as to the purported error in the award of attorney's fees, respondents maintain that petitioner's
insistence on the similarity of zonal value and FMV forced them to litigate and warrants the award of
attorney's fees.

In its Reply,[16] petitioner reiterates that the use of the Hobart lot's valuation as reference for the
valuation of respondents' lot is improper because the former lot is classified as industrial while the latter
lot is reported as used for residential purpose. It again points out the glaring disparity between the BIR
zonal value and the award given by the RTC. Failure to evaluate BIR zonal valuation in a meaningful
way also renders the award dubious. Again, that respondents were forced to get a lawyer for
the expropriation case is not compelling justification warranting the award of attorney's fees.

The Court's Ruling

The petition is without merit.

The Court is guided by the long settled principle that just compensation should be "the full and fair
equivalent of the property taken from its owner by the expropriator" and the use of "just" to modify
"compensation" hammers in the idea that the payment for the property taken should be "real, substantial,
full and ample."[17] Several factors must be considered in determining just compensation, such as, but not
limited to, acquisition cost, current market value of like properties, tax value of the condemned property,
its size, shape, and location.[18]

We glean from the present petition that petitioner is mainly assailing the P15,000.00 per square meter
just compensation fixed by the RTC for the 58-square meter portion of respondents' lot.

We can further break down this main issue into two points of contention.

First, despite petitioner not assailing in general the factual findings reached by the RTC, it repeatedly
insists that (1) there are informal settlers in the area; and (2) the lot is clearly used for residential
purposes and there is no basis to say that it is being used for a commercial or industrial purpose. To
settle these matters would require the Court to inquire into facts and evidence submitted to the courts a
quo, a move not proper under a Rule 45 petition except under certain grounds.[19]

Even a review of the RTC's Decision shows that it already categorically said that no evidence of the
presence of informal settlers was submitted by petitioner at any stage of the expropriation proceedings:
Plaintiff tried to lower the value of the subject property by proving that in several portions of C-5
Northern [L]ink Road Project, Segment 8.1, Valenzuela City, there were informal settlers in Barangay
Ugong where the property of the defendants is located. Plaintiff, however, failed to categorically prove
that the lot of the defendant was occupied by squatters or near the vicinity of the alleged squatters. [20]

While petitioner offered for the Board's consideration the testimony of the officer of the National
Housing Authority who conducted the census and tagging operations for the road project, [21] in order to
prove, among others, that there are informal settler families in scattered areas of Barangay Ugong, the
testimony, however, did not show that the presence of informal settlers specifically and significantly
decreases the value of respondents' lot.

Regarding petitioner's insistence that the property is used for residential purposes, the Court finds the
same bereft of merit. There is no argument that respondents' lot is indeed used for residential purposes.
What petitioner appears to be assailing is the observation made by the RTC on the activity in the lot's
vicinity when the latter stated that "[t]he property subject of expropriation is also considered within high
intensity commercial zone in Valenzuela City and very near the junction of Mindanao Avenue, Quezon
City."[22] This is but a description of the business utility potential of the lot in light of its location. This
cannot be taken as a definitive classification of the lot as within a commercial or industrial zone in the
language of real property classification for assessment purposes. The RTC's pronouncement cannot
possibly be construed as a reclassification of the respondents' lot as commercial because it is not the
courts but only the concerned Sangguniang Panlungsod or Sangguniang Bayan which can exercise such
power under the Local Government Code of 1991. Also, petitioner's argument that it is improper to refer
to the Hobart lot in valuating the respondents' lot because the latter lot is residential while the Hobart lot
is not was already precluded by petitioner's judicial admission of the residential nature of the lot before
the CA. The Court notes that petitioner already declared before the CA that the Hobart lot is a residential
lot inside a subdivision while respondents' lot is not. [23]

Second, petitioner wants this Court to strike down the ruling on the amount of just compensation by
holding that the RTC reached the wrong valuation when it (1) relied on the Board's report which, in turn,
relied on settled decisions that fixed the just compensations for nearby lots also expropriated for the
same road project; and (2) disregarded the nature and character of the lot.

The Court cannot agree with such suppositions. Reference to such settled valuations is allowed.
[24]
Further, the Court observed that while the amounts of just compensation derived for the nearby lots
previously expropriated for the same project were appreciated as guideposts by the Board in determining
just compensation for the respondents' lot, these were not the only bases relied upon in its examination.
This can be gleaned in the quoted part of the RTC's Decision below:

The court takes judicial notice of the fact that the project, C-5 Northern Link Road Project Segment 8.1
from Mindanao Avenue in Quezon City to the North Luzon Expressway, Valenzuela City, which is the
basis for the expropriation of the property of the defendant, has already been completed and has long
been utilized by the motoring public.

There is no dispute that the 58-square meter subject lot, rectangular in shape, was classified as
residential by the Bureau of Internal Revenue (BIR) and the same has a zonal valuation of Php
2,300.00/square meter. The property subject of expropriation is a portion of the 301 square meter lot
covered by TCT No. V-73968 registered in the name of the defendants-spouses. The property is about
9.79 meters more or less away from that of the property Hobart Realty Development Corporation which
was expropriated by the plaintiff and in which the just compensation was pegged by this court in the
amount of Php 15,000/sq.m. While its distance from Mapalad property is 2,093 meter[sic], more or less,
which just compensation was pegged by this court at Php 5,000/sq.m.

The subject place is accessible and amenities like water, electricity, transportation and communication
are available in the area. The property subject of expropriation is also considered within high intensity
commercial zone in Valenzuela City and very near the junction of Mindanao Avenue, Quezon City. [25]

From the foregoing, it is obvious that the RTC found it proper to award P15,000.00 per square meter as
just compensation after an overall evaluation of the size, nature, physical characteristics, and strategic
location of the lot and its immediate environs, including the existing amenities and utilities already
available. It did not rely solely on previous court decisions on the valuation of the nearby properties but
rightfully made an independent evaluation that weighed the attributes unique to the respondents' lot.

Further still, while there is truth to petitioner's claim that the lot's BIR zonal valuation should be
accorded great weight, it must be noted that such a valuation is just one of the factors considered in the
determination of just compensation under R.A. No. 8974. Tax values can serve as guides but cannot be
absolute substitutes for just compensation.[26] Verily, fixing just compensation at an amount way beyond
a property's BIR zonal valuation is not erroneous as long as the trial court based its conclusion on a
holistic evaluation of the affected property. Zonal valuation is just one of the indices of the fair market
value of real estate.[27] It does not necessarily reflect in full the true value of a piece of land. It would be
unjust to peg the just compensation of a piece of land equal or in close proximity to its BIR zonal
valuation if the overall characteristic of a property warrants a much higher amount, as was shown here.

As to the award of attorney's fees, however, the Court is convinced to disagree with the award made by
the RTC and affirmed by the CA. Petitioner is correct that the award of attorney's fees
in expropriation cases is allowed only when a compelling reason calls for it, such as when a government
agency illegally occupied an owner's property that resulted to pecuniary loss to the owner [28] or when the
government fails to initiate expropriation proceedings to the landowner's prejudice.[29] In this case, no
compelling reason was even mentioned by the RTC or CA to justify such an award. Also, that
respondents were constrained to respond to the reasonable and bona fides petitions made by petitioner to
higher courts does not qualify as such a compelling reason. [30]

Since record shows that no appeal was made as to the ruling on the valuations of the residential
structures in respondents' lot, the issue is deemed settled. As to the interest rate imposed by the CA,
however, the Court makes the following modifications in consonance with earlier rulings on the proper
interest rates in just compensation pursuant to BSP Circular No. 799 that took effect on July 1, 2013 and
the reckoning point when interest should run, which is the time petitioner actually took possession of the
lot:[31]

(1) No interest shall be imposed on the P133,400.00 deposited by petitioner with the RTC, which
represented one hundred percent (100%) of the lot's value based on its BIR current relevant zonal
valuation, since its receipt by respondents oh September 18, 2008 preceded the RTC's issuance of
the writ of possession and order of expropriation on December 2, 2008;

(2) Twelve percent (12%) per annum interest shall be imposed on the P736,600.00 unpaid balance of
the adjudged P870,000.00 just compensation for the expropriated lot portion, from the December 2,
2008 to June 30, 2013;

(3) Six percent (6%) per annum interest shall be imposed on the P736,600.00 unpaid balance, from
July 1, 2013 to the date of finality of judgment;

(4) Twelve percent (12%) per annum interest shall be imposed on the P342,731.28 payment covering
the replacement costs of the residential structures on the lot, from December2, 2008 to April 22,
2009, the day before respondents received the P342,731.28 payment; and
(5) Six percent (6%) per annum interest shall be imposed on the total amount of just compensation
from the date of finality of judgment until full payment.

WHEREFORE, premises considered, the petition is DENIED. The December 18, 2015 Decision and
the May 13, 2016 Resolution of the Court of Appeals in CA-G.R. CV No. 103390, affirming with
modification the June 9, 2014 Decision of the Regional Trial Court of Valenzuela City, Branch 172,
is AFFIRMED with the following modifications:

(1) No interest shall be imposed on the P133,400.00 deposited with the RTC of Valenzuela City,
Branch 172 by petitioner Republic of the Philippines for the expropriated 58-square meter lot
portion owned by the respondent spouses Rodolfo B. Del Mundo and Aurea A. Del Mundo, since
the receipt of payment by respondents on September 18,2008 preceded the RTC's issuance of the
writ of possession and order of expropriation on December 2, 2008;

(2) Twelve percent (12%) per annum interest shall be imposed on the P736,600.00 unpaid balance of
the P870,000.00 total just compensation for the expropriated lot portion, from December 2, 2008 to
June 30, 2013;

(3) Six percent (6%) per annum interest shall be imposed on the P736,600.00 unpaid balance, from
July 1, 2013 to the date of finality of judgment;

(4) Twelve percent (12%) per annum interest shall be imposed on the P342,731.28 payment covering
the replacement costs of the residential structures on the expropriated lot, from December 2, 2008
to April 22, 2009;

(5) Six percent (6%) per annum interest shall be imposed on the total amount of just compensation
from the date of finality of judgment until its full payment; and

(6) The award of attorney's fees is deleted for lack of any compelling justification for such an
award. (Leonen, J., on official leave; Reyes, Jr., A.B., J., on leave.)

SO ORDERED."

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.

DECISION

INTING, J.:
Before the Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court which
seeks to reverse and set aside the Decision [2] dated December 18, 2017 of the Court of Appeals (CA) in
CA-G.R. CEB CV No. 05070. The CA affirmed with modification the Decision [3] dated November 13,
2012 and the Order[4] 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 Resolution[6] 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 P35,448,599.55 [8] located in Barangays Balabago and
Buhang, Jara, Iloilo City.[9] The properties are more particularly described as follows:
REGISTERED TOTAL LAND AFFECTED
AREA AREA (in
LOT NO. TCT NO.
OWNER (sq.m.) 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 Diana2379-B T-18737 5,254 3,653
Pacific Rehouse Corp.
Block 19 (Excluded Area) PortionT-141526 10,375 9,283
of the Cons. of Lot 2378)
Philippine Estates
Road Lot 1 Portion of the Cons. T-141505
of 5,407 2,853
Corp. Lot 2378
Pacific Rehouse Corp.
Block 20 (Excluded Area) PortionT-141523 14,241 13,925
of the Cons. of Lot 2378
Pacific Rehouse Corp.
2350 T-134216 25,245 19,786
Pacific Rehouse Corp.
2208-A T-132335 8,282 1,396[10]
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 Order[12] 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' Report [17] recommending the amount of
P1,920,374,374.00[18] as just compensation.[19]

The Republic filed a Manifestation and Motion [20] 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 Report [23] 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)
8974[25] 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
3,278 Php 5,600.00 Php 18,356,800.00
(Phase 6)
Central Commercial
7,597 Php 5,600.00 Php 42,453,976.00
Development (Phase 9-A)
High-end Residential (Phase
408
10) 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 152,676,300.00[30]
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 Decision[35] 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.

xxxx

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

xxxx

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.

xxxx

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 denied [38] 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 affirmed[39] 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 denied[44] 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.
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.
 [ G.R. No. 244115. February 03, 2021 ]

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC

WORKS AND HIGHWAYS, PETITIONER, VS. HEIRS OF ANDRES FRANCISCO,
RESPONDENTS.

DECISION

Before the Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision[2] dated June 13, 2018 and the Resolution[3] dated January 10, 2019 of
the Court of Appeals (CA) in CA-G.R. CV No. 108050. The CA partially granted the Decision [4] dated
February 22, 2016 and the Order[5] dated September 1, 2016 of the Regional Trial Court (RTC) of
Valenzuela City, Branch 172, in Civil Case No. 169-V-12. It remanded the case to the RTC for the
proper determination of the just compensation and deleted the award of consequential damages and
attorney's fees for lack of adequate factual and legal bases.

Essentially, the Republic of the Philippines, represented by the Department of Public Works and
Highways (DPWH; petitioner), is questioning the CA's imposition of the interest rate of 12% per annum
from the time of taking until June 30, 2013 considering that the subject lots were taken after the payment
of the just compensation.

The Facts

On October 19, 2012, petitioner filed a complaint for expropriation against Andres Francisco and
Socorro Luna (spouses Francisco) for the acquisition of the 970.50-square meter (sq. m.) portion of Lot
No. 962-D-3-C-3[6] and the 290-sq. m. portion of Lot No. 962-D-3-B,[7] residential lots located
in Barangay General T. De Leon, Valenzuela City, for the construction of the C-5 Northern Link Road
Project Phase 2 (Segment 9) from North Luzon Expressway to MacArthur Highway, Valenzuela City.[8]

Upon their death, the spouses Francisco were substituted by their children Alejandro Francisco and
Sonia Francisco Soriano (respondents).[9]

On November 23, 2012, petitioner deposited with the RTC Land Bank of the Philippines (LBP)
Manager's Check No. 698188 in the amount of P1,559,560.62, representing the equivalent of 100% of
the cost of the improvements found in the subject lots. On December 13, 2012, it also deposited with the
RTC LBP Manager's Check No. 1185752 in the amount of P2,647,050.00, representing the equivalent of
100% of the Bureau of Internal Revenue (BIR) zonal value of the subject lots.[10]

On February 8, 2013, the RTC issued a Writ of Possession in favor of petitioner.[11]

On April 17, 2013, the RTC ordered the replacement of the LBP manager's checks after they became
stale while in the trial court's custody.[12]On August 29, 2013 and February 21, 2014, petitioner issued
the replacement checks[13] and deposited the same with the trial court. On June 20, 2013, the parties
agreed to execute a compromise agreement to determine the valuation of the subject properties. [14]

On February 3, 2014, respondents declared that they are no longer amenable to enter into a compromise
agreement.[15] On August 7, 2014, the parties manifested that they would dispense with the referral of the
case to the Board of Commissioners for the determination of the just compensation and thereafter
submitted their respective position papers.[16]

In their position paper, respondents claimed that they should be paid the just compensation computed at
P7,500.00 per sq. m. and P1,000,000.00 as consequential damages. But petitioner countered that the
just compensation should be fixed at P400.00 per sq. m. and P2,100.00 per sq. m. Petitioner likewise
prayed that the amount of P1,559,560.62 representing the replacement cost of the subject improvements
be considered as the full settlement of the just compensation thereon.[17]

The Ruling of the RTC

On February 22, 2016, the RTC rendered a Decision[18] with the dispositive portion as follows:
WHEREFORE, judgment is hereby rendered fixing the just compensation of the total subject of
1,260.50 square meters lot of the defendants in the amount of SEVEN THOUSAND FIVE HUNDRED
PESOS (Php7,500.00) per square meter or in the total amount of NINE MILLION FOUR HUNDRED
FIFTY-THREE THOUSAND SEVEN HUNDRED FIFTY PESOS (Php9,453,750.00), and authorizing
the payment thereof by the plaintiff to the defendants for the property condemned, deducting the
provisional deposit previously, made and subject to the payment of all unpaid property taxes and other
relevant taxes, by the defendant up to the filing of the complaint, if there be any. The plaintiff is also
directed to pay defendants the amount of ONE MILLION PESOS (Php 1,000,000.00) by way of
consequential damages and ONE HUNDRED THOUSAND PESOS (Php100,000.00) as attorney's fees.
The plaintiff is ordered to pay interest at the rate of 12% per annum on the unpaid balance of
just compensation on the lot, as well as the damages, computed from the time of the taking of the
property until July 1, 2013 and thereafter the rate of 6% per annum shall apply until the same shall have
been paid in full, as per BSP Circular No. 799.

SO ORDERED.[19]
The RTC pegged the amount of just compensation at P7,500.00 per sq. m. taking into account its
decisions in similar expropriation cases involving residential properties in Gen. T. De Leon, Valenzuela
City. In 2007 and 2008, the RTC fixed the just compensation in condemnation proceedings between
P3,000.00 to P5,000.00 per sq. m. It opined that petitioner's valuation at P400.00 and P2,100.00 per sq.
m. for the subject lots cannot be applied in a complaint for expropriation filed in 2012.[20] Petitioner filed
a Motion for Reconsideration, but the same was denied in an Order[21] dated September 1, 2016.

The Ruling of the CA

On June 13, 2018, the CA rendered a Decision, the fallo of which reads:
WHEREFORE, the present appeal is PARTIALLY GRANTED. The February 22, 2016 Decision and its
subsequent September 1, 2016 Order in Civil Case No. 169-V-12, is hereby MODIFIED as follows:

a. This case is REMANDED to the Regional Trial Court (RTC) of Valenzuela City, Branch 172, for the
proper determination of just compensation in conformity with this Decision. To forestall any farther
delay in the resolution of the case, the trial court is ordered to make the determination within six (6)
months from receipt of this Decision and afterwards to report to this Court its compliance thereon.

b. From the date of taking of the property on February 8, 2013 until June 30, 2013, the unpaid balance of
the just compensation to be determined by the trial court shall earn interest at 12% per annum. From
July 1, 2013 until the finality of the decision fixing the just compensation, the legal interest shall be
6% per annum. The total amount due shall earn a straight 6% per annum interest from the finality of the
decision fixing the just compensation until full payment.

c. The trial court's award of consequential damages and attorney's fees are hereby DELETED for lack of
adequate factual and legal bases.

SO ORDERED.[22]
The CA remanded the case to the RTC because of the absence of reliable and actual data as bases in
fixing the value of the condemned properties. It declared that the RTC seemed to have overlooked that
the classification and use for which the properties are suited are not the only criteria for the
determination of the just compensation.

The CA upheld the 12% interest imposed by the RTC on the unpaid balance of the
just compensation clarifying that it should be reckoned from the time of taking, which is on February 8,
2013. The 12% per annum interest rate applies until June 30, 2013 and, thereafter, the interest rate shall
be at 6% per annum.[23] The CA deleted the award of consequential damages for failure of respondents to
present substantive evidence that the remaining unaffected properties had suffered an impairment
amounting to P1,000.000.00. Further, the award of attorney's fees is deleted because of the lack of proof
of malice or bad faith to justify its imposition.[24] Petitioner moved for the reconsideration of the June 13,
2018 CA Decision, but the same was denied in a Resolution[25] dated January 10, 2019.

The Arguments of the Parties

Petitioner argues that the subject lots were taken after the payment of the just compensation. Since there
was no delay in the payment of the value of the condemned properties, it asserts that the CA erred in
holding it liable to pay interest at the rate of 12% per annum on the unpaid balance of the
just compensation computed from the time of taking until July 1, 2013, and thereafter, at the rate of 6%
per annum. It invokes the Court's ruling in the case of Republic v. Soriano[26] that the payment of legal
interest in expropriation cases only applies when the property was taken prior to the deposit of payment
with the court and only to the extent that there is delay in payment. It further maintains that assuming,
without conceding, that respondents are entitled to the payment of legal interest, the same should only be
at the rate of 6% per annum in accordance with Article 2209[27] of the Civil Code.

Respondents, on the other hand, counter that the just compensation in expropriation cases earns interest
and that petitioner is liable therefor. Citing Evergreen Manufacturing Corp. v. Republic,[28] they contend
that that interest on the unpaid compensation becomes due if there is no full compensation for the
expropriated property, as in this case where only the initial payment has been made.

The Issue

Whether or not the award of interest on the unpaid compensation is proper.

The Court's Ruling

The petition is denied.

The power of eminent domain of the State is enshrined in Section 9, Article III of the 1987 Constitution
which provides that "no private property shall be taken for public use without just compensation." While
the power is inherent in nature and deeply ingrained in the exercise of sovereignty, limitations still exist
to cushion the blow to an individual's right to property. Thus, no less than the Constitution requires that
the purpose of taking must be for public use and that just compensation must be given to the owner of
the private property.[29] Clearly, the exercise of the right to reassert dominion over a private property
pivots on the recognition of the State's authority to expropriate or condemn said property and the
determination of the amount and the payment of just compensation, the latter being the crux of the
instant petition. Jurisprudence defines just compensation as the full and fair equivalent of the property
subject of expropriation. It is ascertained based on the owner's loss and not the taker's gain. Hence, to
recoup the loss suffered by the owner of the private property, it is essential that the compensation be just
such that the equivalent to be given for the property to be taken shall be real, substantial, full, and ample.
[30]
Simply put, the just compensation in condemnation proceedings envisages timely or prompt
payment in full of the just compensation as finally determined by the courts.[31] In Republic v. Judge
Mupas,[32] the Court explained that prompt payment must be made to the property owner so that he may
derive income from both the condemned property and its income-generating potential. This is because
the property owner suffers the immediate deprivation of both his land and its fruits or income.

As to the manner of payment of the just compensation, Section 4 of Republic Act (R.A.) No.
8974[33] instructs:
SEC. 4. Guidelines for Expropriation Proceedings. – Whenever it is necessary to acquire real property
for the right-of-way or location for any national government infrastructure project
through expropriation, the appropriate implementing agency shall initiate the expropriation proceedings
before the proper court under the following guidelines:

(a) Upon the filing of the complaint, and after due notice to the defendant, the implementing agency
shall immediately pay the owner of the property the amount equivalent to the sum of (1) one
hundred percent (100%) of the value of the property based on the current relevant zonal
valuation of the Bureau of Internal Revenue (BIR); and (2) the value of the improvements and/or
structures as determined under Section 7 hereof;

(b) In provinces, cities, municipalities and other areas where there is no zonal valuation, the BIR is
hereby mandated within the period of sixty (60) days from the date of the expropriation case, to come up
with a zonal valuation for said area; and

(c) In case the completion of a government infrastructure project is of utmost urgency and importance,
and there is no existing valuation of the area concerned, the implementing agency shall immediately pay
the owner of the property its proffered value taking into consideration the standards prescribed in
Section 5 hereof.

Upon compliance with the guidelines [abovementioned], the court shall immediately issue to the
implementing agency an order to take possession of the property and start the implementation of
the project.

Before the court can issue a Writ of Possession, the implementing agency shall present to the court a
certificate of availability of funds from the proper official concerned.

In the event that the owner of the property contests the implementing agency's proffered value, the court
shall determine the just compensation to be paid the owner within sixty (60) days from the date of filing
of the expropriation case. When the decision of the court becomes final and executory, the
implementing agency shall pay the owner the difference between the amount already paid and the
just compensation as determined by the court. (Emphases and underscoring supplied)
In Evergreen Manufacturing Corp. v. Republic,[34] the Court noted that the
just compensation contemplated in R.A. No. 8974 contemplates the completion of two payments to the
property owner, to wit: (1) the initial payment of the amount equivalent to the sum of 100% of the value
of the property based on the current relevant BIR zonal valuation and the value of the improvements
and/or structures thereon, which is made upon the filing of the complaint; and (2) the payment of the
difference between the amount already paid and the just compensation as determined by the court, which
is made after the trial court's decision becomes final and executory. Upon initial payment of the so-
called provisional value of the condemned property, the court shall issue a writ of possession in order to
provide the government the "flexibility to immediately take the property pending the court's final
determination of just compensation"[35] and commence the implementation of the infrastructure project.

In the present case, the findings of the RTC and the CA showed that after the filing of
the expropriation complaint, petitioner deposited the amounts of P1,559,560.62 and P2,647,050.00
which correspond to 100% of the cost of the improvements found on the subject lots and 100% of the
value of the subject lots based on its BIR zonal valuation, respectively Thereafter, a writ of possession
was issued in favor of petitioner. At this juncture, the full and fair equivalent of the properties have yet
to be determined with finality by the court. On February 22, 2016, the RTC pegged the amount of
just compensation at P7,500.00 per sq. m. or in the total amount of P9,453,750.00, exclusive of the
amount of P1,000,000.00 as consequential damages which petitioner was directed to pay. Obviously, the
amount of petitioner's initial deposit is much less than that adjudged by the RTC. Hence, petitioner must
pay the difference between the final amount as fixed by the RTC and the initial payment made by
petitioner coupled with legal interest as a forbearance of money, in line with Evergreen Manufacturing.
Incidentally, the CA did not agree with the amounts fixed by the RTC as just compensation and ordered
that the case be remanded for the proper determination of just compensation vis-à-vis all the standards
for the assessment of the value of properties as provided in Section 5 [36] of R.A. No. 8974. Even so,
petitioner must still pay the legal interest on the difference between the initial payment and the final
amount of just compensation, to be adjudged by the RTC anew. The reason is not hard to discern. The
variance between the final amount as fixed by the court and the initial payment is part and parcel of the
just compensation that the property owner is entitled from the date of taking of the properties.

The Court enunciated in Republic v. Judge Mupas:[37]

Ideally, just compensation should be immediately made available to the property owner so that he may
derive income from this compensation, in the same manner that he would have derived income from his
expropriated property. However, if full compensation is not paid for the property taken, then the State
must pay for the shortfall in the earning potential immediately lost due to the taking, and the absence of
replacement property from which income can be derived. Interest on the
unpaid compensation becomes due as compliance with the constitutional mandate on eminent
domain and as a basic measure of fairness. Thus, interest in eminent domain cases "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." (Emphasis supplied)
We echoed the above pronouncement in Apo Fruits Corporation v. Land Bank of the Philippines,
[38]
where we expounded on the raison d'etre for the imposition of legal interest in the payment of
just compensation:
The award of interest is intended to compensate the property owner for the income it would have
made had it been properly compensated for its property at the time of the taking. "The need for
prompt payment and the necessity of the payment of interest is to compensate for any delay in the
payment of compensation for property already taken." "The award of interest is imposed in the
nature of damages for delay in payment which, in effect, makes the obligation on the part of the
government one of forbearance to ensure prompt payment of the value of the land and limit the
opportunity loss of the owner." (Emphases and underscoring supplied)
To excuse itself from the payment of interest, petitioner insists that there was no delay in the payment of
the value of the expropriated properties because of its initial deposit with the RTC. We do not agree. It
cannot be overemphasized that the initial payment made by petitioner only represents the provisional
value of the subject properties which "serves the double-purpose of (a) pre-payment if the property is
fully expropriated, and (b) indemnity for damages if the proceedings are dismissed. [39] It does not, in
anyway, constitute the full and fair equivalent of the expropriated properties for it is the court which can
judicially determine the same. Here, it is crystal clear that when the RTC adjudged the amount of
just compensation, petitioner has already taken the condemned properties and respondents have already
been deprived of the income that their properties would have made. There was already a delay in fully
satisfying the payment of the just compensation. "Without prompt payment, compensation cannot be
considered 'just' inasmuch as the property owner is made to suffer the consequences of being
immediately deprived of his land while being made to wait for a decade or more before actually
receiving the amount necessary to cope with his loss."[40] Accordingly, the difference between the final
amount to be adjudged by the RTC and the initial payment made by petitioner should earn interest.
Petitioner anchors its argument on the case of Republic v. Soriano[41]where the Court deleted the RTC's
imposition of interest at 12% per annum for being unjustified. A plain reading of Soriano will readily
show that it is not on all fours with the present dispute. The Court explicitly stated therein that the
Republic "did not delay in its payment of just compensation as it had deposited the pertinent amount in
full due to respondent on January 24, 2011 or four months before the taking thereof x x x." The Republic
deposited the amount of P420,000.00 as initial payment and took possession of the property.
Subsequently, the RTC pegged the just compensation at P2,100.00 per sq. m. or in the total amount of
P420,000.00 for the 200-sq. m. expropriated property. There being no unpaid balance of the
just compensation, the Court ruled that the RTC's award of legal interest at 12% per annum is
unwarranted. Undoubtedly, petitioner's reliance on Soriano is misplaced. In ascertaining the proper legal
interest to be imposed, we are guided by the Court's declaration in Republic v. Spouses Silvestre:[42]
[T]he delay in the payment of just compensation is a forbearance of money and, as such, is necessarily
entitled to earn interest. Thus, the difference in the amount between the final amount as adjudged by the
Court, which in this case is P15,225,000.00, and the initial payment made by the government, in the
amount of P3,654,000.00 — which is part and parcel of the just compensation due to the property owner
— should earn legal interest as a forbearance of money. Moreover, with respect to the amount of interest
on this difference between the initial payment and the final amount of just compensation, as adjudged by
the Court, we have upheld, in recent pronouncements, the imposition of 12% interest rate from the time
of taking, when the property owner was deprived of the property, until July 1, 2013, when the legal
interest on loans and forbearance of money was reduced from 12% to 6% per annum by Bangko Sentral
ng Pilipinas Circular No. 799. Accordingly, from July 1, 2013 onwards, the legal interest on the
difference between the final amount and initial payment is 6% per annum. (Underscoring supplied)
Petitioner instituted the complaint for expropriation on October 19, 2012 and was issued the writ of
possession on February 8, 2013. The just compensation shall be appraised as of October 19, 2012 as it
preceded the actual taking of the properties. The legal interest at 12% per annum on the difference
between the final amount to be adjudged by the RTC and the initial payment made shall accrue from
February 8, 2013 until June 30, 2013. From July 1, 2013 until the finality of the RTC Decision, the
difference between the initial payment and the final amount to be adjudged by the RTC shall earn
interest at the rate of 6% per annum. Thereafter, the total amount of just compensation shall earn legal
interest of 6% per annum from the finality of this Decision until full payment thereof.[43]

WHEREFORE, in view of the foregoing reasons, the Court DISMISSES the Petition for Review
on Certiorari of the Republic of the Philippines, represented by the Department of Public Works and
Highways (DPWH) and AFFIRMS the Decision dated June 13, 2018 and the Resolution dated January
10, 2019 of the Court of Appeals in CA-G.R. CV No. 108050. From the date of taking of the property
on February 8, 2013 until June 30, 2013, the unpaid balance of the just compensation to be determined
by the trial court shall earn interest at 12 % per annum. From July 1, 2013 until the finality of the
Decision fixing the just compensation, the legal interest shall be 6% per annum. The total amount due
shall earn a straight 6% per annum interest from the finality of the Decision fixing the
just compensation until full payment.

SO ORDERED. Leonen, (Chairperson), Hernando, Inting, and J. Lopez, JJ., concur.

SECOND DIVISION

[ G.R. No. 216723. March 09, 2022 ]

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC

WORKS AND HIGHWAYS (DPWH), PETITIONER, VS. PACITA VILLAO AND
CARMIENETT** JAVIER, RESPONDENTS.

DECISION

ROSARIO, J.:=
 The Court resolves this Petition for Review on Certiorari1 under Rule 45 of the Rules of Court,
assailing the Decision2 dated July 31, 2014 and the Resolution3 dated February 4, 2015 of the Court of
Appeals (CA) in CA-G.R. CV No. 98304.

Factual Antecedents

On March 18, 2004, petitioner Republic of the Philippines, through the Department of Public Works
and Highways (DPWH), filed a Complaint4 for expropriation of a 550-square meter parcel of land
(subject property) located at Barrio Binakayan, Municipality of Kawit, Province of Cavite, covered by
Transfer Certificate of Title No. T-35696, registered under the name of Pacita Villao (Villao), in
connection with the Manila-Cavite Tollways Expressway Project (MCTEP), R-1 Extension Expressway,
Segment 4. Subsequently, petitioner sought leave of court to file an Amended Complaint5 impleading as
defendant Carmienett Javier (Javier) as owner of the improvements constructed over the subject
property.6

Petitioner deposited with Land Bank of the Philippines (LBP), South Harbor Branch, the following
amounts as initial payment: P1,045,000.00 for the land, based on the Bureau of Internal Revenue zonal
valuation of P1,900.00 per square meter; P81,868.50 for the one-storey semi-concrete house, and
P186,343.307 for the one-storey wooden house built on the land.8

The Regional Trial Court (RTC) of Imus, Cavite granted petitioner's Motion for Issuance of a Writ
of Possession9 in an Order10 dated November 25, 2004, and ordered the Writ to be enforced against
Villao 's property. In the same Order, the RTC also granted petitioner's Motion for Leave of Court to
Amend Complaint.11 Hence, the RTC admitted the Amended Complaint impleading Javier as
defendant, and caused the service of summons upon her.

In another Order dated June 23, 2005, the RTC granted respondents' Motion to Withdraw Deposit
and directed LBP, South Harbor Branch, to release the amounts of P1,045,000.00 to Villao, and
P81,868.50 and P186,343.30 to Javier.12

Thereafter, in an Order13 dated April 1, 2008, the RTC resolved to create a Board of Commissioners
(BOC)14 tasked to determine the proper amount of just compensation. On August 15, 2011, the
Commissioners submitted their Report15 recommending the amount of 9,000.00 per square meter as the
most reasonable and fair market value of the subject property:

WHEREFORE, IN VIEW OF THE FOREGOING, we the members of the [BOC], hereby

recommend to the Honorable Court that the amount of NINE THOUSAND PESOS ([P] 9,000.00) PER
SQUARE METER as the most reasonable and "fair market value" to be paid for the affected lot.

Respectfully submitted.16

In arriving at said valuation, the Commissioners' Report considered the following factors: location
and identification; neighborhood and classification; utilities, amenities; physical characteristics;
occupancy and usage; and highest and best use. Using the market data approach which is based on the
assumption "that no prudent purchaser will buy more than what it will cost him to acquire an equally
desirable substitute site,"17 the BOC found that based on inquiries, the price of mixed commercial-
residential lots in the vicinity ranged from P12,000.00 to P14,000.00 per square meter. In addition, the
Board noted that a listing of comparable properties showed that an 11,000-square meter vacant lot
located along CEPZA Road, Kawit, Cavite was being sold at around P60,500.00, while a 706-square
meter idle fishpond located along Covelandia Road, Kawit, Cavite was being sold at around P14,200.00.
Despite the foregoing considerations, the Commissioners' Report heavily relied upon the
Decision18 dated April 21, 2008 of the RTC of Dasmariñas, Cavite, Branch 90 in Civil Case No. 0009-
04 (Republic v. Tapawan; for brevity, Tapawan). Considering that the subject property is of similar
nature and within the immediate vicinity of the condemned property in Tapawan, the BOC concluded to
fix the just compensation at the valuation arrived at in Tapawan, i.e., P9,000.00 per square meter.

Petitioner claimed that the Commissioners' recommendation was exorbitant, highly speculative, and
had no strong factual moorings. Villao and Javier (respondents), on the other hand, interposed no
objection but prayed for the imposition of legal interest on the amount of the just compensation to be
determined.

RTC Ruling

The RTC ordered the condemnation of the subject property and the payment of just compensation to
respondents in a Decision19 dated October 24, 2011. The RTC adopted the BOC's recommended
valuation of P9,000.00 per square meter, finding that it has satisfied the standards set forth under
Republic Act (R.A.) No. 897420 since many of the factors under Section 521 of the law were already
included and considered by the BOC. Thus, the amount of just compensation was pegged at
P4,950,000.00 for the 550-square meter subject lot. Considering that petitioner already deposited the
amount of P1,045,000.00 when it applied for the issuance of a writ of possession, it was ordered to pay
an additional P3,905,000.00, with legal interest reckoned from the taking of the subject property until
full satisfaction,22 viz.:

Wherefore, premises considered, judgment is hereby rendered as follows, viz:

1. CONDEMNING in favor of [petitioner] the Five Hundred Fifty square meters (550 sq.m.)
property located at Barrio Binakayan, Municipality of Kawit, Province of Cavite, covered by Transfer
Certificate of Title No. T-35696 registered under the name of [respondent] [Villao] as part of the
Manila-Cavite Tollways Expressway Project (MCTEP), R-1 Extension Expressway, Segment 4;

2. DIRECTING [petitioner] to PAY [respondent] [Villao], thru her Attorney-in-Fact ARVIN

BROAS RISOS under and by virtue of the Irrevocable Special Power of Attorney executed by
[respondent] [Villao] in favour of the latter the sum of Three Million Nine Hundred Five Thousand
Pesos ([P]3,905,000.00) with legal interest in the rate of six percent (6%) reckoned from the taking of
the property until fully paid representing just compensation for the taking of the Five Hundred Fifty
Square (550 sq.m.) parcel of land covered by Transfer Certificate of Title No. T-35696 registered in the
name of name (sic) of aforesaid [respondent];

3. ORDERING the Register of Deeds for the Province of Cavite to annotate a copy of this Decision
in Transfer Certificate of Title No. T-35696; and

4. DIRECTING the [respondents] to pay each of members (sic) of the Board of Commissioners TEN
THOUSAND PESOS ([P]10,000.00) as reasonable compensation for services rendered.

SO ORDERED.23

Petitioner filed an appeal24 before the CA.

CA Ruling
 In its assailed Decision,25 the CA denied petitioner's appeal and affirmed in toto the RTC Decision.
It found that the observations in the Commissioners' Report were satisfactorily supported with evidence
because aside from referring to pertinent documents, the Commissioners made personal verification with
the appropriate offices, conducted several ocular inspections of the subject property, and considered the
surrounding properties, the character, location, identification of the neighborhood, facilities and utilities
therein, and varying developments in the immediate vicinity of the subject property.26

Petitioner's Motion for Reconsideration27 was denied by the CA in a Resolution28 dated February
4, 2015, hence, the present Petition assailing the CA Decision and Resolution for not being in accord
with law and applicable jurisprudence, on the following grounds:

I. IN AFFIRMING THE DECISION OF THE TRIAL COURT, THE [CA] RELIED ENTIRELY
ON THE COMMISSIONER'S REPORT WHICH IS MANIFESTLY HEARSAY.

A. THE COMMISSIONER'S REPORT IS BEREFT OF ANY DOCUMENTARY SUPPORT. IT

CONSTITUTES HEARSAY AND SHOULD BE DISREGARDED PURSUANT TO THE
PRONOUNCEMENTS OF THE HONORABLE COURT IN NPC V. YCLA SUGAR
DEVELOPMENT CORPORATION AND NAPOCOR V. DIATO-BERNAL.

B. THERE WAS NO BONA FIDE VALUATION OF THE EXPROPRIATED PROPERTY. THE

COMMISSIONER'S REPORT HINGED COMPLETELY ON THE VALUATION OF THE BOC
IN TAPAWAN. THE JUST COMPENSATION PRONOUNCED IN TAPAWAN WAS NOT
INTENDED TO BECOME A PRECEDENT, MUCH LESS, AN AUTHORITY TO BE APPLIED
INVARIABLY IN OTHER EXPROPRIATION CASES. THE JUST COMPENSATION AWARDED
THEREIN WAS A RESULT OF THE DELIBERATION OF THE BOC IN THAT CASE PURSUANT
TO THE EVIDENCE PRESENTED BY THE PARTIES.

II. THE AMOUNT OF JUST COMPENSATION RECOMMENDED BY THE [BOC] IS BASED

ON THE PURPORTED "CURRENT MARKET OFFERING" AND NOT THE PRICE OF THE
PROPERTY IN JUNE 2004 OR AT THE TIME THE COMPLAINT WAS FILED AS REQUIRED BY
LAW AND JURISPRUDENCE.29

In their Comment,30 respondents pray for the denial of the Petition, arguing that the Commissioners'
Report is not hearsay but in fact substantiated by evidence. They point out that the records reveal that
the Commissioners not only relied on documentary evidence but conducted ocular inspection of the
subject property and made verifications with the proper offices. Furthermore, they claim that the CA
correctly held that the Commissioners had considered the surrounding properties, the character, location,
identification of the neighborhood, facilities and utilities therein, and varying developments in the
immediate vicinity of the subject property.

The Court's Ruling

The Court finds the Petition meritorious.

In finding for respondents, both the RTC and the CA held that the Commissioners' Report was
supported by evidence and in accordance with the factors set forth in Section 531 of R.A. No. 8974,
which was the law in effect at the time the expropriation proceedings was commenced.32 While the
current selling price of similar lands in the vicinity is one of the factors that may be considered under
said provision, the Court finds that the amount of P9,000.00 per square meter as just compensation for
the subject property is not in accord with law and applicable jurisprudence.
 The Constitution provides that "[p]rivate property shall not be taken for public use without just
compensation."33 Jurisprudence has defined just compensation in the following manner:

Just compensation has been defined as 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.34

Rule 67 of the Rules of Court and R.A. No. 8974 govern expropriation proceedings for national
infrastructure projects.35 Section 4 of Rule 67 provides that the just compensation to be paid shall be
determined as of the date of the taking of the property or of the filing of the complaint, whichever came
first.36 In this case, just compensation must be reckoned from the date of filing of the complaint on
March 18, 2004,37 since there is no indication that there was an actual taking before such date. Gleaned
from the Commissioner's Report, however, the recommended valuation of P9,000.00 per square meter
adopted by the RTC does not represent the fair market value of the subject property as of such date of
filing of the complaint for expropriation.

The Commissioner's Report considered the subject property's location and identification,
neighborhood and land classification, available utilities and amenities in the area, the land's physical
characteristics, its occupancy and usage, as well as its highest and best use. In arriving at its
recommended valuation for the subject property, it listed the prices of comparable properties, and
eventually arrived at the amount of P9,000.00 per square meter primarily on the basis of the RTC
Decision in Tapawan, to wit:

It is noted that the properties of defendants Zenaida Tapawan is located in the immediate vicinity
from [respondents'] properties which are likewise the subject expropriatio1 proceedings relative to the
construction of the Manila-Cavite Toll Expressway, the properties both as to classification and/or
location which effectively undersigned Commissioners have adopted the amount of [P]9,000.00 per
square meter, as determined by the Honorable Court.

The Pacita Villao property is residential in nature and are [sic] located in the immediate vicinity
from the above captioned cases properties [sic].

It is the consensus of the Board of Commissioners that the just compensation for the lot is pegged at
[P]9,000.00 per square meter based on the Court Decision of Civil Case No. 0009-04 RP-DPWH vs.
Zenaida Tapawan on the basis that the same lot is located in the same vicinity.

WHEREFORE, IN VIEW OF THE FOREGOING, we the members of the [BOC], hereby

recommend to the Honorable Court that the amount of NINE THOUSAND PESOS ([P]9,000.00) PER
SQUARE METER as the most reasonable and "fair market value" to be paid for the affected lot.

Respectfully submitted.38

Although the property subject of Tapawan was alleged to be residential in nature, is within the
vicinity of the subject property, and was likewise affected by the MCTEP, a reading of the RTC
Decision in Tapawan shows that there is no clear mention of the date of the filing of the complaint for
expropriation or when actual taking of the property took place. Hence, it was erroneous to adopt
the Tapawan ruling in its entirety without qualification.
 Likewise, there is no clear indication that the prices of mixed commercial-residential lots in the
vicinity of the subject property and the listing of comparable properties referred to in the
Commissioners' Report are representative of the market values in 2004 of similar or comparable lots.
Notably, the Commissioners' Report adopted by the RTC failed to indicate the date of "current market
offerings." Hence, such data cannot be considered as an accurate gauge of the fair market value of the
subject property in 2004.

Petitioner's reliance on National Power Corporation v. Diato-Bernal (Diato-Bernal)39 and National

Power Corporation v. YCLA Sugar Development Corporation (YCLA Sugar Development
Corporation)40 is well-taken. In both cases, the Court reversed and set aside the lower courts'
determination of just compensation for lack of sufficient legal basis. Aside from the fact that the
commissioners' reports in said cases were found to be unsupported by documentary evidence, the Court
found that the market values of the properties used to determine just compensation were not gauged as
of the time of the filing of the complaint. In Diato-Bernal, the market value in 1999 was used although
the complaint was filed in 1997. In YCLA Sugar Development Corporation, the two commissioners'
reports used the market value prevailing in 2001 and 2003, respectively, although the complaint was
filed in 1997.

On the basis of the foregoing, We find that a remand of this case to the RTC for proper
determination of just compensation is in order. It must be emphasized that just compensation must be
reckoned as of the filing of the original complaint on March 18, 2004.41 Furthermore, legal interest
shall be imposed on the unpaid balance of the just compensation to be determined by the
RTC.42 In Republic v. Macabagdal,43 the Court held that legal interest shall run "not from the date of
the filing of the complaint but from the date of the issuance of the Writ of Possession, since it is from
this date that the fact of the deprivation of property can be established."44 Hence, the unpaid balance of
the just compensation in this case (that is, the difference between the total amount to be determined by
the RTC and the government's initial payment of P1,045,000.00) shall earn legal interest at the rate of
12% per annum from November 25, 2004, when the RTC granted petitioner's Motion for Issuance of a
Writ of Possession, until June 30, 2013; and beginning July 1, 2013, at the rate of 6% per annum until
finality of the decision fixing the just compensation. Thereafter, the total amount of just compensation
shall earn legal interest of 6% per annum from the finality of the decision fixing the just compensation
until full payment thereof.45

WHEREFORE, the petition is GRANTED. The Decision dated July 31, 2014 and the Resolution
dated February 4, 2015 of the Court of Appeals in CA-G.R. CV No. 98304 are hereby REVERSED.
The case is remanded to the Regional Trial Court, Fourth Judicial Region, Imus, Cavite, Branch 20, for
the proper detem1ination of just compensation, in accordance with the principles discussed in this
Decision. SO ORDERED.

SECOND DIVISION

[ G.R. No. 216723. March 09, 2022 ]

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF

PUBLIC WORKS AND HIGHWAYS (DPWH), PETITIONER, VS. PACITA VILLAO AND
CARMIENETT** JAVIER, RESPONDENTS.

DECISION
ROSARIO, J.:

The Court resolves this Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court,
assailing the Decision[2] dated July 31, 2014 and the Resolution [3] dated February 4, 2015 of the Court of
Appeals (CA) in CA-G.R. CV No. 98304.

Factual Antecedents

On March 18, 2004, petitioner Republic of the Philippines, through the Department of Public Works and
Highways (DPWH), filed a Complaint[4] for expropriation of a 550-square meter parcel of land (subject
property) located at Barrio Binakayan, Municipality of Kawit, Province of Cavite, covered by Transfer
Certificate of Title No. T-35696, registered under the name of Pacita Villao (Villao), in connection with
the Manila-Cavite Tollways Expressway Project (MCTEP), R-1 Extension Expressway, Segment 4.
Subsequently, petitioner sought leave of court to file an Amended Complaint [5] impleading as defendant
Carmienett Javier (Javier) as owner of the improvements constructed over the subject property. [6]

Petitioner deposited with Land Bank of the Philippines (LBP), South Harbor Branch, the following
amounts as initial payment: P1,045,000.00 for the land, based on the Bureau of Internal Revenue zonal
valuation of P1,900.00 per square meter; P81,868.50 for the one-storey semi-concrete house, and
P186,343.30[7] for the one-storey wooden house built on the land. [8]

The Regional Trial Court (RTC) of Imus, Cavite granted petitioner's Motion for Issuance of a Writ of
Possession[9] in an Order[10] dated November 25, 2004, and ordered the Writ to be enforced against
Villao 's property. In the same Order, the RTC also granted petitioner's Motion for Leave of Court to
Amend Complaint.[11] Hence, the RTC admitted the Amended Complaint impleading Javier as
defendant, and caused the service of summons upon her.

In another Order dated June 23, 2005, the RTC granted respondents' Motion to Withdraw Deposit and
directed LBP, South Harbor Branch, to release the amounts of P1,045,000.00 to Villao, and P81,868.50
and P186,343.30 to Javier.[12]

Thereafter, in an Order[13] dated April 1, 2008, the RTC resolved to create a Board of Commissioners
(BOC)[14] tasked to determine the proper amount of just compensation. On August 15, 2011, the
Commissioners submitted their Report[15] recommending the amount of 9,000.00 per square meter as the
most reasonable and fair market value of the subject property:
WHEREFORE, IN VIEW OF THE FOREGOING, we the members of the [BOC], hereby
recommend to the Honorable Court that the amount of NINE THOUSAND PESOS ([P] 9,000.00) PER
SQUARE METER as the most reasonable and "fair market value" to be paid for the affected lot.

Respectfully submitted.[16]
In arriving at said valuation, the Commissioners' Report considered the following factors: location
and identification; neighborhood and classification; utilities, amenities; physical characteristics;
occupancy and usage; and highest and best use. Using the market data approach which is based on the
assumption "that no prudent purchaser will buy more than what it will cost him to acquire an equally
desirable substitute site,"[17] the BOC found that based on inquiries, the price of mixed commercial-
residential lots in the vicinity ranged from P12,000.00 to P14,000.00 per square meter. In addition, the
Board noted that a listing of comparable properties showed that an 11,000-square meter vacant lot
located along CEPZA Road, Kawit, Cavite was being sold at around P60,500.00, while a 706-square
meter idle fishpond located along Covelandia Road, Kawit, Cavite was being sold at around P14,200.00.
Despite the foregoing considerations, the Commissioners' Report heavily relied upon the
Decision[18] dated April 21, 2008 of the RTC of Dasmariñas, Cavite, Branch 90 in Civil Case No. 0009-
04 (Republic v. Tapawan; for brevity, Tapawan). Considering that the subject property is of similar
nature and within the immediate vicinity of the condemned property in Tapawan, the BOC concluded to
fix the just compensation at the valuation arrived at in Tapawan, i.e., P9,000.00 per square meter.

Petitioner claimed that the Commissioners' recommendation was exorbitant, highly speculative, and had
no strong factual moorings. Villao and Javier (respondents), on the other hand, interposed no objection
but prayed for the imposition of legal interest on the amount of the just compensation to be determined.

RTC Ruling

The RTC ordered the condemnation of the subject property and the payment of just compensation to
respondents in a Decision[19] dated October 24, 2011. The RTC adopted the BOC's recommended
valuation of P9,000.00 per square meter, finding that it has satisfied the standards set forth under
Republic Act (R.A.) No. 8974[20] since many of the factors under Section 5 [21] of the law were already
included and considered by the BOC. Thus, the amount of just compensation was pegged at
P4,950,000.00 for the 550-square meter subject lot. Considering that petitioner already deposited the
amount of P1,045,000.00 when it applied for the issuance of a writ of possession, it was ordered to pay
an additional P3,905,000.00, with legal interest reckoned from the taking of the subject property until
full satisfaction,[22] viz.:
Wherefore, premises considered, judgment is hereby rendered as follows, viz:

1. CONDEMNING in favor of [petitioner] the Five Hundred Fifty square meters (550 sq.m.) property
located at Barrio Binakayan, Municipality of Kawit, Province of Cavite, covered by Transfer Certificate
of Title No. T-35696 registered under the name of [respondent] [Villao] as part of the Manila-Cavite
Tollways Expressway Project (MCTEP), R-1 Extension Expressway, Segment 4;

2. DIRECTING [petitioner] to PAY [respondent] [Villao], thru her Attorney-in-Fact ARVIN BROAS
RISOS under and by virtue of the Irrevocable Special Power of Attorney executed by [respondent]
[Villao] in favour of the latter the sum of Three Million Nine Hundred Five Thousand Pesos
([P]3,905,000.00) with legal interest in the rate of six percent (6%) reckoned from the taking of the
property until fully paid representing just compensation for the taking of the Five Hundred Fifty Square
(550 sq.m.) parcel of land covered by Transfer Certificate of Title No. T-35696 registered in the name of
name (sic) of aforesaid [respondent];

3. ORDERING the Register of Deeds for the Province of Cavite to annotate a copy of this Decision in
Transfer Certificate of Title No. T-35696; and

4. DIRECTING the [respondents] to pay each of members (sic) of the Board of Commissioners TEN
THOUSAND PESOS ([P]10,000.00) as reasonable compensation for services rendered.

SO ORDERED.[23]
Petitioner filed an appeal[24] before the CA.

CA Ruling

In its assailed Decision,[25] the CA denied petitioner's appeal and affirmed in toto the RTC Decision. It
found that the observations in the Commissioners' Report were satisfactorily supported with evidence
because aside from referring to pertinent documents, the Commissioners made personal verification with
the appropriate offices, conducted several ocular inspections of the subject property, and considered the
surrounding properties, the character, location, identification of the neighborhood, facilities and utilities
therein, and varying developments in the immediate vicinity of the subject property. [26]

Petitioner's Motion for Reconsideration[27] was denied by the CA in a Resolution [28] dated February 4,
2015, hence, the present Petition assailing the CA Decision and Resolution for not being in accord with
law and applicable jurisprudence, on the following grounds:
I. IN AFFIRMING THE DECISION OF THE TRIAL COURT, THE [CA] RELIED ENTIRELY
ON THE COMMISSIONER'S REPORT WHICH IS MANIFESTLY HEARSAY.
A. THE COMMISSIONER'S REPORT IS BEREFT OF ANY DOCUMENTARY SUPPORT. IT
CONSTITUTES HEARSAY AND SHOULD BE DISREGARDED PURSUANT TO THE
PRONOUNCEMENTS OF THE HONORABLE COURT IN NPC V. YCLA SUGAR DEVELOPMENT
CORPORATION AND NAPOCOR V. DIATO-BERNAL.

B. THERE WAS NO BONA FIDE VALUATION OF THE EXPROPRIATED PROPERTY. THE

COMMISSIONER'S REPORT HINGED COMPLETELY ON THE VALUATION OF THE BOC
IN TAPAWAN. THE JUST COMPENSATION PRONOUNCED IN TAPAWAN WAS NOT
INTENDED TO BECOME A PRECEDENT, MUCH LESS, AN AUTHORITY TO BE APPLIED
INVARIABLY IN OTHER EXPROPRIATION CASES. THE JUST COMPENSATION AWARDED
THEREIN WAS A RESULT OF THE DELIBERATION OF THE BOC IN THAT CASE PURSUANT
TO THE EVIDENCE PRESENTED BY THE PARTIES.
II. THE AMOUNT OF JUST COMPENSATION RECOMMENDED BY THE [BOC] IS BASED
ON THE PURPORTED "CURRENT MARKET OFFERING" AND NOT THE PRICE OF THE
PROPERTY IN JUNE 2004 OR AT THE TIME THE COMPLAINT WAS FILED AS REQUIRED BY
LAW AND JURISPRUDENCE.[29]
In their Comment,[30] respondents pray for the denial of the Petition, arguing that the Commissioners'
Report is not hearsay but in fact substantiated by evidence. They point out that the records reveal that
the Commissioners not only relied on documentary evidence but conducted ocular inspection of the
subject property and made verifications with the proper offices. Furthermore, they claim that the CA
correctly held that the Commissioners had considered the surrounding properties, the character, location,
identification of the neighborhood, facilities and utilities therein, and varying developments in the
immediate vicinity of the subject property.

The Court's Ruling

The Court finds the Petition meritorious.

In finding for respondents, both the RTC and the CA held that the Commissioners' Report was supported
by evidence and in accordance with the factors set forth in Section 5[31] of R.A. No. 8974, which was the
law in effect at the time the expropriation proceedings was commenced.[32] While the current selling
price of similar lands in the vicinity is one of the factors that may be considered under said provision,
the Court finds that the amount of P9,000.00 per square meter as just compensation for the subject
property is not in accord with law and applicable jurisprudence.

The Constitution provides that "[p]rivate property shall not be taken for public use without
just compensation."[33] Jurisprudence has defined just compensation in the following manner:
Just compensation has been defined as 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. [34]
 Rule 67 of the Rules of Court and R.A. No. 8974 govern expropriation proceedings for national
infrastructure projects.[35] Section 4 of Rule 67 provides that the just compensation to be paid shall be
determined as of the date of the taking of the property or of the filing of the complaint, whichever came
first.[36] In this case, just compensation must be reckoned from the date of filing of the complaint on
March 18, 2004,[37] since there is no indication that there was an actual taking before such date. Gleaned
from the Commissioner's Report, however, the recommended valuation of P9,000.00 per square meter
adopted by the RTC does not represent the fair market value of the subject property as of such date of
filing of the complaint for expropriation.

The Commissioner's Report considered the subject property's location and identification, neighborhood
and land classification, available utilities and amenities in the area, the land's physical characteristics, its
occupancy and usage, as well as its highest and best use. In arriving at its recommended valuation for
the subject property, it listed the prices of comparable properties, and eventually arrived at the amount of
P9,000.00 per square meter primarily on the basis of the RTC Decision in Tapawan, to wit:
It is noted that the properties of defendants Zenaida Tapawan is located in the immediate vicinity
from [respondents'] properties which are likewise the subject expropriatio1 proceedings relative to the
construction of the Manila-Cavite Toll Expressway, the properties both as to classification and/or
location which effectively undersigned Commissioners have adopted the amount of [P]9,000.00 per
square meter, as determined by the Honorable Court.

The Pacita Villao property is residential in nature and are [sic] located in the immediate vicinity from
the above captioned cases properties [sic].

It is the consensus of the Board of Commissioners that the just compensation for the lot is pegged at
[P]9,000.00 per square meter based on the Court Decision of Civil Case No. 0009-04 RP-DPWH vs.
Zenaida Tapawan on the basis that the same lot is located in the same vicinity.

WHEREFORE, IN VIEW OF THE FOREGOING, we the members of the [BOC], hereby recommend
to the Honorable Court that the amount of NINE THOUSAND PESOS ([P]9,000.00) PER SQUARE
METER as the most reasonable and "fair market value" to be paid for the affected lot.

Respectfully submitted.[38]
Although the property subject of Tapawan was alleged to be residential in nature, is within the
vicinity of the subject property, and was likewise affected by the MCTEP, a reading of the RTC
Decision in Tapawan shows that there is no clear mention of the date of the filing of the complaint
for expropriation or when actual taking of the property took place. Hence, it was erroneous to adopt
the Tapawan ruling in its entirety without qualification.

Likewise, there is no clear indication that the prices of mixed commercial-residential lots in the vicinity
of the subject property and the listing of comparable properties referred to in the Commissioners' Report
are representative of the market values in 2004 of similar or comparable lots. Notably, the
Commissioners' Report adopted by the RTC failed to indicate the date of "current market offerings."
Hence, such data cannot be considered as an accurate gauge of the fair market value of the subject
property in 2004.

Petitioner's reliance on National Power Corporation v. Diato-Bernal (Diato-Bernal)[39] and National

Power Corporation v. YCLA Sugar Development Corporation (YCLA Sugar Development Corporation)
[40]
is well-taken. In both cases, the Court reversed and set aside the lower courts' determination of
just compensation for lack of sufficient legal basis. Aside from the fact that the commissioners' reports
in said cases were found to be unsupported by documentary evidence, the Court found that the market
values of the properties used to determine just compensation were not gauged as of the time of the filing
of the complaint. In Diato-Bernal, the market value in 1999 was used although the complaint was filed
in 1997. In YCLA Sugar Development Corporation, the two commissioners' reports used the market
value prevailing in 2001 and 2003, respectively, although the complaint was filed in 1997.

On the basis of the foregoing, We find that a remand of this case to the RTC for proper determination of
just compensation is in order. It must be emphasized that just compensation must be reckoned as of the
filing of the original complaint on March 18, 2004.[41] Furthermore, legal interest shall be imposed on the
unpaid balance of the just compensation to be determined by the RTC.[42] In Republic v. Macabagdal,
[43]
the Court held that legal interest shall run "not from the date of the filing of the complaint but from
the date of the issuance of the Writ of Possession, since it is from this date that the fact of the
deprivation of property can be established."[44] Hence, the unpaid balance of the just compensation in
this case (that is, the difference between the total amount to be determined by the RTC and the
government's initial payment of P1,045,000.00) shall earn legal interest at the rate of 12%
per annum from November 25, 2004, when the RTC granted petitioner's Motion for Issuance of a Writ
of Possession, until June 30, 2013; and beginning July 1, 2013, at the rate of 6% per annum until finality
of the decision fixing the just compensation. Thereafter, the total amount of just compensation shall earn
legal interest of 6% per annum from the finality of the decision fixing the just compensation until full
payment thereof.[45]

WHEREFORE, the petition is GRANTED. The Decision dated July 31, 2014 and the Resolution dated
February 4, 2015 of the Court of Appeals in CA-G.R. CV No. 98304 are hereby REVERSED. The case
is remanded to the Regional Trial Court, Fourth Judicial Region, Imus, Cavite, Branch 20, for the proper
detem1ination of just compensation, in accordance with the principles discussed in this Decision.

SO ORDERED.