G.R. No. 188995 ; August 24, 2011
EXPORT PROCESSING ZONE AUTHORITY (NOW PHILIPPINE EXPORT ZONE AUTHORITY), Petitioner, vs. JOSE PULIDO, VICENTA PANGANIBAN, RURAL BANK OF SALINAS, INC., FRANCISCA M. PRODIGALIDAD, ABELARDO PRODIGALIDAD, CARMEN PRECIOSA TABLANTE, CARMENCITA M. PRODIGALIDAD, MELVIN J. BOUCHER, MARY LOU M. PRODIGALIDAD, SALVADOR MENES, JR., DELILAH M. PRODIGALIDAD, NANNETTE M. PRODIGALIDAD, ANSELMO M. PRODIGALIDAD III, GREGORIO M. PRODIGALIDAD, AND ESTATE OF SALUD JIMENEZ, Respondents.

FACTS

On May 15, 1981, the Export Processing Zone Authority (EPZA, now PEZA) filed an action to expropriate three parcels of irrigated riceland in Rosario, Cavite, including Lot 1406 registered in the name of Salud Jimenez. During the pendency, Lot 1406 was subdivided into Lot 1406-A and Lot 1406-B. On July 11, 1991, the RTC sustained EPZA’s right to expropriate but later released Lot 1406-A. On January 4, 1993, EPZA and the Estate of Salud Jimenez (Jimenez having died in 1984) entered into a Compromise Agreement whereby: (a) EPZA would withdraw its appeal regarding Lot 1406-A and the Estate would waive claims for damages; and (b) the Estate would transfer Lot 1406-B to EPZA in exchange for Lot 434, owned by Progressive Realty Estate, Inc., not EPZA. The RTC approved the agreement on August 23, 1993. EPZA failed to transfer Lot 434. Consequently, on March 13, 1997, the Estate moved to partially annul the 1993 Order. On August 4, 1997, the RTC annulled the Compromise Agreement and ordered EPZA to return Lot 1406-B to the Estate. EPZA petitioned the CA, which on March 25, 1998, set aside the order for return and directed the RTC to determine just compensation for Lot 1406-B. The Estate appealed to the Supreme Court ( G.R. No. 137285 ). On January 16, 2001, the Supreme Court denied the petition, ordered the RTC to proceed with hearing the determination of just compensation for Lot 1406-B, and held that the Estate, having acknowledged the propriety of expropriation via the Compromise Agreement, could demand payment but not the return of Lot 1406-B. The RTC then conducted proceedings. EPZA insisted just compensation should be based on the 1981 value at the time of taking, while the Estate contended it should be based on the 1993 value when the Compromise Agreement was entered, or alternatively, the 1997 value when the agreement was annulled. The RTC ruled that just compensation should be based on the 1993 value, set at ₱6,200.00 per square meter, with legal interest from August 23, 1993. The CA affirmed the RTC decision. EPZA appealed to the Supreme Court, arguing just compensation should only be ₱41,610.00 (the 1981 zonal valuation) to avoid unjust enrichment.

ISSUE

What is the proper basis for determining the just compensation for the expropriated Lot 1406-B, and from what date should interest accrue?

RULING

The Supreme Court DENIED the petition and AFFIRMED the decision of the Court of Appeals. The proper basis for just compensation is the fair market value at the time of payment, not at the time of the filing of the expropriation complaint. The Court upheld the RTC’s determination that the value should be reckoned as of 1993, the time the parties agreed on the mode of payment via the Compromise Agreement. The valuation of ₱6,200.00 per square meter was substantiated by competent evidence, including a 1994 deed of sale of adjacent Lot 1406-A at ₱6,395.00 per square meter, the 1998 zonal valuation, an independent 1997 appraisal report valuing adjacent properties at ₱7,500.00 per square meter, and other documents of payments by PEZA to owners of nearby properties. The Court also affirmed the imposition of legal interest at 12% per annum from August 23, 1993 (the date of the RTC order approving the Compromise Agreement) until June 30, 2013, and thereafter at 6% per annum until full payment, as compensation for the delay in payment from the time the property was effectively taken. The Court rejected EPZA’s claim of unjust enrichment, stating that the owner is entitled to the full market value of the property at the time of payment, and any increase in value accruing during the delay benefits the owner, not the expropriator.