2014 Case Digest: Republic v. Asia Pacific Integrated Steel Corporation

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH), Petitioner,

vs.

ASIA PACIFIC INTEGRATED STEEL CORPORATION, Respondent.

G.R. No. 192100               March 12, 2014

TOPIC: basis of just compensation, expropriation

PONENTE: Villarama

FACTS:

Respondent is the registered owner of a 17,175-square meter property situated in San Simon, Pampanga. On March 1, 2002, the Republic through the Toll Regulatory Board (TRB) instituted expropriation proceedings against the respondent over a portion of their property to be used for the NLEX project.

During the pre-trial conference, the parties agreed on TRB’s authority to expropriate the subject property but disagreed as to the amount of just compensation. Petitioner offered to pay P607,200.00 for the portion taken but respondent made a counter-offer of P1,821,600.00. The parties eventually agreed to submit the issue of just compensation to three Commissioners composed of the Municipal Assessor of San Simon as Chairman, and the RTC Branch Clerk of Court and the Register of Deeds for the Province of Pampanga as Members.

In the absence of bona fide sales transaction in the area, the Assessor’s Office being aware of the actual conditions of subject property decided to use opinion values stated by real estate brokers and banks in the determination of the current and fair market value for the purpose of payment of just compensation. The amount of P1,000.00 to P1,500.00 was arrived at by the commissioners due to the conversion of the subject property from agricultural to industrial use.

Although there was no documentary evidence attached to substantiate the opinions of the banks and the realtors indicated in the Commissioners’ Report, the Court finds the commissioners’ recommendation of the valuation of industrial lands at P1,000.00 to P1,500.00 to be fair, and the Republic’s offer of P300 per square meter to be very low.

CA upheld RTC’s decision.

ISSUE:

Whether or not the Court judiciously determined the fair market value of the subject property.

HELD: NO

The Court held 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.

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.

Nonetheless, the Court did not subscribe to petitioner’s argument that just compensation for the subject property should not exceed the zonal valuation (P300.00 per square meter). 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.