G.R. No. 237324 , February 6, 2019
Republic of the Philippines, represented by the Department of Public Works and Highways, Petitioner vs. Spouses Aurora Silvestre and Rogelio Silvestre, and Natividad Gozo, Respondents

FACTS

The petitioner, Republic-DPWH, filed an expropriation case for a lot needed for the C-5 Northern Link Project. The original owner was unknown. After obtaining a writ of possession, the Republic-DPWH amended its complaint to implead various owners, including the respondents, Spouses Silvestre and Natividad Gozo. A dispute arose regarding the actual area of the respondents’ property affected by the project and the amount of just compensation. The Republic-DPWH claimed only 3,045 square meters were taken, with a zonal value of ₱1,200/sq.m. The respondents, however, presented a certification indicating 4,367 square meters were affected.
The Regional Trial Court (RTC) appointed a Board of Commissioners (BOC) to determine just compensation. The BOC recommended a fair market value of ₱5,000 per square meter for 4,367 square meters, totaling ₱21,835,000. The RTC adopted this recommendation but, based on evidence of the actual area used, computed compensation for only 3,045 square meters at ₱5,000/sq.m., amounting to ₱15,225,000. The Court of Appeals affirmed the RTC’s valuation but modified the interest computations. The Republic-DPWH elevated the case, contesting the valuation and the awarded interest.

ISSUE

The core issues were: (1) whether the just compensation of ₱5,000 per square meter was proper, and (2) whether the awarded legal interest was correct.

RULING

The Supreme Court denied the petition and affirmed the CA decision with modification on the interest. On just compensation, the Court upheld the ₱5,000/sq.m. valuation. It ruled that the determination of just compensation is a judicial function, and courts are not bound by zonal valuation alone, which is merely one of the factors under Section 5 of Republic Act No. 8974 . The RTC and CA correctly relied on the BOC’s recommendation, which was based on a thorough consideration of various factors including comparable sales, opinion surveys, the property’s location, and its highest and best use. The BOC’s findings, adopted by the trial court, were accorded respect.
On the issue of interest, the Court applied the rules on expropriation where the government takes property before payment. Legal interest is imposed to compensate the owner for the income foregone from the property. The Court sustained the imposition of interest but clarified the proper rates in line with prevailing jurisprudence. It ruled that interest should be computed on the unpaid balance of the just compensation. The rate is 12% per annum from the date of taking (May 5, 2008) until June 30, 2013, and 6% per annum from July 1, 2013, until full payment. This ensures the respondents receive the full equivalent value of their property at the time of taking.