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G.R. No.

175493, 25 March 2015

The provisional value that must be paid under Section 4 of Republic Act No.
8974 should not be confused with the payment of just compensation required by
the Constitution39 in the exercise of the power of eminent domain.

The payment of the provisional value under Section 4 of Republic Act No. 8974
is different from the payment of just compensation.

In Capitol Steel Corporation v. PHIVIDEC Industrial Authority:40

Upon compliance with the requirements, a petitioner


in an expropriation case is entitled to a writ of
possession as a matter of right and it becomes the
ministerial duty of the trial court to forthwith issue the
writ of possession. No hearing is required and the
court neither exercises its discretion or judgment in
determining the amount of the provisional value of the
properties to be expropriated as the legislature has
fixed the amount under Section 4 of R.A. 8974.

To clarify, the payment of the provisional value as a


prerequisite to the issuance of a writ of
possession differs from the payment of just
compensation for the expropriated property. While the
provisional value is based on the current relevant
zonal valuation, just compensation is based on the
prevailing fair market value of the property. As the
appellate court explained:

The first refers to the preliminary or provisional


determination of the value of the property. It serves a
double-purpose of pre-payment if the property is fully
expropriated, and of an indemnity for damages if the
proceedings are dismissed. It is not a
final determination of just compensation and may not
necessarily be equivalent to the prevailing fair market
value of the property. Of course, it may be a factor to
be considered in the determination of list
compensation.

Just compensation, on the other hand, is


the final determination of the fair market value of the
property. It has been described as "the just and
complete equivalent of the loss which the owner of the
thing expropriated has to suffer by reason of the
expropriation." Market values, has also been described
in a variety of ways as the "price fixed by the buyer
and seller in the open market in the usual and
ordinary course of legal trade and competition; the
price and value of the article established as shown by
sale, public or private, in the ordinary way of business;
the fair value of the property between one who desires
to purchase and one who desires to sell; the current
price; the general or ordinary price for which property
may be sold in that locality.

There is no need for the determination with reasonable


certainty of the final amount of just compensation
before the writ of possession may be
issued.41 (Emphasis and underscoring in the original)

Any payment made by the Republic as to the expropriated property's


provisional value is not equivalent to the payment of the present fair market
value of the property. It only serves- as a pre-payment so that the government
may take possession of the property. Moreover, the value need not be judicially
determined; rather, the value has already been set by the current relevant zonal
value of the area as classified by the Bureau of Internal Revenue.
This pre-payment must also be paid immediately to the owner of the property
before a Writ of Possession may be issued. In Republic v. Gingoyon:42

Rep. Act No. 8974 represents a significant change from


previous expropriation laws such as Rule 67, or even
Section 19 of the Local Government Code. Rule 67 and the
Local Government Code merely provided that the
Government deposit the initial amounts antecedent to
acquiring possession of the property with, respectively,
an authorized Government depositary or the proper
court. In both cases, the private owner does not receive
compensation prior to the deprivation of property. On the
other hand, Rep. Act No. 8974 mandates immediate
payment of the initial just compensation prior to the
issuance of the writ of possession in favor of the
Government.

Rep. Act No. 8974 is plainly clear in imposing the


requirement of immediate prepayment, and no amount of
statutory deconstruction can evade such requisite. It
enshrines a new approach towards eminent domain that
reconciles the inherent unease attending expropriation
proceedings with a position of fundamental equity. While
expropriation proceedings have always demanded just
compensation in exchange for private property, the
previous deposit requirement impeded immediate
compensation to the private owner, especially in cases
wherein the determination of the final amount of
compensation would prove highly disputed. Under the
new modality prescribed by Rep. Act No. 8974, the
private owner sees immediate monetary recompense with
the same degree of speed as the taking of his/her
property.43 (Emphasis supplied)

xxx xxx xxx


The case records show that the parties presented as evidence two different sets
of the Bureau of Internal Revenue zonal valuations covering Barangay Tuyo,
Balanga, Bataan.

The relevant zonal value of the properties in Balanga, Bataan at the time of the
filing of the expropriation case was covered by Bureau of Internal Revenue
Department Order No. 92-96. This Department Order was effective from
December 30, 1996 to December 27, 2002.
xxx xxx xxx
The photocopies presented by the Republic and respondents Heirs of Fernandez
are almost identical computer-encoded copies. However, typewritten
annotations on the Republic's photocopy, specifically of "riceland," "unirr.
riceland," and "pastureland" under "Vicinity" and the corresponding amounts of
"20.00" corresponding to "unirr. riceland" and "15.00" corresponding to
"pastureland," are present.

The Republic's photocopy was certified as a true photocopy by "Marciano P.


Felipe, Jr., Group Supervisor, Chief, Assessment Br." His name and designation
were also typewritten. The document stamps were affixed on February 2, 2002.

Respondents Heirs of Fernandez's photocopy, on the other hand, was certified


as a true photocopy by Epifania A. Recana, signing on behalf of Beatriz S.
Pelino, Assistant Division Chief of the Asset Valuation Board, and verified by
Mirasol Z. Tolentino on June 2, 2001. It does not contain the typewritten
annotations.

Since there was a discrepancy as to the two certifications, reference must be


made to the zonal values posted by the Bureau of Internal Revenue on their
website, which are accessible to the general public.51The zonal values of the
Bureau of Internal Revenue for Barangay Tuyo, Balanga, Bataan do not reflect
the same typewritten annotations as that of the Republic's photocopy. What
appears in the Bureau of Internal Revenue's records, in fact, is the same
document presented by respondents Heirs of Fernandez:
xxx xxx xxx
Even assuming that the Republic's' photocopy were valid, the zonal value of
respondents Heirs of Fernandez's property at P15.00 per square meter,
corresponding to "pastureland," would still be incorrect. According to the tax
declaration of Gabriel Q. Fernandez submitted by the Republic before the trial
court, the property was classified as "Veg. land."54 In the Bureau of Internal
Revenue Department Order No. 92-96, the classification legend of vegetable
land was "A7" while the classification legend for pastureland was "A9." The
Republic would have to pay the zonal value corresponding to "A7," not "A9."

As it stands, the Bureau of Internal Revenue Department Order No. 92-96 only
classified the area of respondents Heirs of Fernandez's property as "A1," valued
at P50.00 per square meter. The proper zonal value of the property, therefore, is
P50.00 per square meter. The incorrect amount paid by petitioner Republic
cannot be considered as sufficient pre-payment since it was less than the amount
required by Section 4 of Republic Act No. 8974. The Court of Appeals correctly
set aside the Writ of Possession in view of petitioner Republic's failure to pay
the correct provisional value.
xxx xxx xxx
Contrary to the Republic's argument, the setting aside of a Writ of Possession
is not an injunction.

Section 4 of Republic Act No. 8974 mandates that:chanroblesvirtuallawlibrary


[u]pon 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. (Emphasis supplied)

Thus, the court cannot issue a Writ of Possession if the guidelines were not
complied with. There is also nothing that prevents a court from setting aside a
Writ of Possession on appeal when it is found that the guidelines were not
complied with.
Xxx xxx xxx
For the Republic to be able to take possession of the property, the law mandates
that it must first pay to the landowner 100% of the value of the property based
on the current relevant zonal valuation of the property by the Bureau of Internal
Revenue. The payment of less than the amount required by law cannot be
considered substantial compliance.

Republic v. DPWH G.R. No. 192100 2014

Section 5 of R.A. 8974 enumerates the standards for assessing the value of expropriated land taken for national government infrastructure
projects, thus:
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 improvements on the land and for the
value of the 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.
In this case, the trial court considered only (a) and (d): (1) the classification of the subject property which is located in an area with mixed land
use (commercial, residential and industrial) and the property’s conversion from agricultural to industrial land, and (2) the current selling price
of similar lands in the vicinity – the only factors which the commissioners included in their Report. It also found the commissioners’
recommended valuation of P1,000.00 to P1,500.00 per square to be fair and just despite the absence of documentary substantiation as said
prices were based merely on the opinions of bankers and realtors.
In National Power Corporation v. Manubay Agro-Industrial Development Corporation, 21 the recommended price of the city assessor was
rejected by this Court. The opinions of the banks and the realtors as reflected in the computation of the market value of the property and in
the Commissioners’ Report, were not substantiated by any documentary evidence.
Similarly, in National Power Corporation v. Diato-Bernal, 22 this Court rejected the valuation recommended by court-appointed commissioners
whose conclusions were devoid of any actual and reliable basis. The market values of the subject property’s neighboring lots were found to
be mere estimates and unsupported by any corroborative documents, such as sworn declarations of realtors in the area concerned, tax
declarations or zonal valuation from the BIR for the contiguous residential dwellings and commercial establishments. Thus, we ruled that a
commissioners’ report of land prices which is not based on any documentary evidence is manifestly hearsay and should be disregarded by
the court.
We find that the trial court did not judiciously determine the fair market value of the subject property as it failed to consider other relevant
factors such as the zonal valuation, tax declarations and current selling price supported by documentary evidence. Indeed, just compensation
must not be arrived at arbitrarily, but determined after an evaluation of different factors.23
Just compensation is 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. Such "just"-ness of the compensation
can only be attained by using reliable and actual data as bases in fixing the value of the condemned property. 24 Trial courts are required to be
more circumspect in its evaluation of just compensation due the property owner, considering that eminent domain cases involve the
expenditure of public funds.25
We agree with the trial court that it was not bound by the assessment report of the commissioners and that it had the discretion to reject the
same and substitute its own judgment on its value as gathered from the record, or it may accept the report/recommendation of the
commissioners in toto and base its judgment thereon. However, the decision of the court must be based on all established rules, upon correct
legal principles and competent evidence.26The court is proscribed from basing its judgment on speculations and surmises.
Nonetheless, we cannot subscribe to petitioner’s argument that just compensation for the subject property should not exceed the zonal
valuation (P300.00 per square meter).
In Republic v. Court of Appeals,27 we held that --
The constitutional limitation of "just compensation" is considered to be the sum equivalent to the market value of the property, broadly
described to be 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 one who receives, and one who desires to sell, it fixed at the time of the actual taking by the government. x x x
Zonal valuation is just one of the indices of the fair market value of real estate. By itself, this index cannot be the sole basis of "just
compensation" in expropriation cases.28 As this Court ruled in Leca Realty Corporation v. Rep. of the Phils.29:
The Republic is incorrect, however, in alleging that the values were exorbitant, merely because they exceeded the maximum zonal value of
real properties in the same location where the subject properties were located. The zonal value may be one, but not necessarily the sole,
index of the value of a realty. National Power Corporation v. Manubay Agro-Industrial held thus:
"x x x [Market value] is not limited to the assessed value of the property or to the schedule of market values determined by the provincial or
city appraisal committee. However, these values may serve as factors to be considered in the judicial valuation of the property."
The above ruling finds support in EPZA v. Dulay in this wise:
"Various factors can come into play in the valuation of specific properties singled out for expropriation. The values given by provincial
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assessors are usually uniform for very wide areas covering several barrios or even an entire town with the exception of the poblacion.
Individual differences are never taken into account. The value of land is based on such generalities as its possible cultivation for rice, com,
coconuts or other crops. Very often land described as 'cogonal' has been cultivated for generations. Buildings are described in terms of only
two or three classes of building materials and estimates of areas are more often inaccurate than correct. Tax values can serve as guides but
cannot be absolute substitutes for just compensation." (Emphasis supplied.)
Among the factors to be considered in arriving at the fair market value of the property are the cost of acquisition, the current value of like
properties, its actual or potential uses, and in the particular case of lands, their size, shape, location, and the tax declarations thereon. The
measure is not the taker's gain but the owner's loss.30 To be just, the compensation must be fair not only to the owner but also to the taker.31
It is settled that the final conclusions on the proper amount of just compensation can only be made after due ascertainment of the
requirements set forth under R.A. 8974 and not merely based on the declarations of the parties. 32 Since these requirements were not
satisfactorily complied with, and in the absence of reliable and actual data as bases in fixing the value of the condemned property, remand of
this case to the trial court is in order.
WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated July 21, 2009 and Resolution dated April 28, 2010 of the
Court of Appeals in CA-G.R. CV No. 90539 are hereby SET ASIDE.
This case is remanded to the trial court for the proper determination of just compensation, in conformity with this Decision.
SO ORDERED.

GR 211666 2015 – interest on payment of just compensation.

At the outset, it must be noted that the RTC’s reliance on National Power Corporation v. Angasis misplaced for the same has already been

overturned by our more recent ruling in Republic v. Court of Appeals,16 wherein we held that the payment of just compensation for the
expropriated property amounts to an effective forbearance on the part of the State.