G.R. No. 181218 ; January 28, 2013
Republic of the Philippines, represented by the Department of Public Works and Highways, Petitioner, vs. Heirs of Spouses Pedro Bautista and Valentina Malabanan, Respondents.

FACTS

The Republic, through the DPWH, sought to expropriate a 1,155-square meter portion of land owned by the respondents for a tollway interchange project. The property was part of a larger lot, a 36-square meter portion of which the DPWH had previously acquired from the owners via negotiated sale in 2000 for ₱1,300.00 per square meter. For the expropriation, the petitioner offered compensation based on the BIR zonal valuation of ₱100.00 per square meter. The respondents rejected this, arguing just compensation should consider the prior sale at ₱1,300.00 per square meter and the property’s current market value, which they claimed exceeded ₱3,000.00 per square meter. The trial court constituted a panel of commissioners to determine just compensation.
The commissioners’ reports diverged. The joint report by the Lipa City Assessor and Registrar of Deeds considered the property’s characteristics, its proximity to commercial establishments and high-value subdivisions, and most critically, the prior sale at ₱1,300.00 and other DPWH purchases in the vicinity averaging ₱1,960.00 per square meter. They recommended compensation between ₱1,960.00 and ₱2,500.00 per square meter. The third commissioner, a DPWH agent, recommended only ₱100.00 per square meter, relying solely on the tax declaration and zonal valuation. The trial court adopted the lower figure from the DPWH commissioner’s report.

ISSUE

Whether the trial court erred in fixing just compensation at ₱100.00 per square meter, disregarding the findings of the two other commissioners and the evidence of the property’s fair market value.

RULING

Yes. The Supreme Court reversed the trial court and set just compensation at ₱1,300.00 per square meter. The Court emphasized that just compensation is the full and fair equivalent of the property taken, equivalent to its fair market value. Market value is the price agreed upon by a willing buyer and a willing seller, neither being compelled to enter into the transaction. The Court found the trial court’s reliance on the report of the DPWH-appointed commissioner, which was based merely on the tax declaration and zonal valuation, to be a grave abuse of discretion. These are only indices of the property’s value and are not conclusive.
The Court gave paramount weight to the actual sales data of comparable properties, which is the most concrete evidence of market value. The prior negotiated sale in 2000 of a portion of the very same property at ₱1,300.00 per square meter between the same parties was deemed the most relevant and persuasive indicator of the property’s fair market value at the time of taking. This arm’s-length transaction objectively reflected what a willing buyer (the State) and a willing seller (the owners) had previously agreed upon. The joint commissioners’ report, which detailed this sale and other comparable transactions, provided a factual and legal basis that the trial court unjustifiably ignored.