G.R. No. 222159 & G.R. No. 222171. January 31, 2018.
PAZ E. REBADULLA, ET AL., PETITIONERS, V. REPUBLIC OF THE PHILIPPINES, ET AL., RESPONDENTS. (Consolidated Cases)

FACTS

The Department of Public Works and Highways (DPWH) took possession of the Rebadulla family’s land in Northern Samar in March 1997 for a public project without initiating formal expropriation proceedings. The owners rejected the DPWH’s offer of P2.50 per square meter based on a 1994 Provincial Appraisal Committee (PAC) valuation. Subsequent requests for reappraisal were denied by the PAC. In 2002, after a final demand for payment at P200.00 per square meter went unheeded, the Rebadullas filed a complaint for mandamus and damages before the Regional Trial Court (RTC) to compel payment of just compensation.
The RTC, treating the action as one for recovery of just compensation, set the value at P7.00 per square meter based on BIR zonal valuation and ordered payment with legal interest from the filing of the complaint. Both parties appealed. The Court of Appeals affirmed the RTC’s characterization of the case and the use of BIR zonal valuation but modified the interest to run from the 1997 date of taking. The Rebadullas and the Republic both elevated the case to the Supreme Court via petitions for review.

ISSUE

The core issue was whether the Court of Appeals correctly affirmed the RTC’s decision awarding just compensation based on BIR zonal valuation and the proper reckoning point for the payment of legal interest.

RULING

The Supreme Court denied both petitions and affirmed the Court of Appeals’ decision with modification on the interest rate. The Court held that where the government takes property without expropriation proceedings, the owner’s recourse is an action for the recovery of just compensation, not mandamus for specific performance. The RTC correctly treated it as such. On valuation, the Court upheld the use of the BIR zonal valuation of P7.00 per square meter. Both parties failed to substantiate their proposed values with competent evidence. The Rebadullas’ appraiser did not present comparable sales data, while the government’s PAC valuation was unexplained and dated. In the absence of reliable evidence, BIR zonal valuation can serve as an acceptable guide.
Regarding interest, the Court ruled that legal interest is due from the time of taking, as compensation is considered delayed from the moment the property is appropriated without payment. However, it clarified that the interest rate should be twelve percent (12%) per annum from March 17, 1997, until June 30, 2013, and six percent (6%) per annum from July 1, 2013, until full payment, following established jurisprudence. The award of attorney’s fees was deleted for lack of factual and legal basis.