SECOND DIVISION

G.R. No. 226021, July 24, 2019

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF

PUBLIC WORKS AND HIGHWAYS, PETITIONER, v. GILDA* A. BARCELON,
HAROLD A. BARCELON, AND HAZEL A. BARCELON, RESPONDENTS.

DECISION

J. REYES, JR., J.:

This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, assailing
the Decision2 dated December 17, 2015, and Resolution3 dated July 21, 2016 of the
Court of Appeals (CA) in CA-G.R. CV No. 102216. 

The Facts

On February 8, 2008, the Republic of the Philippines (petitioner), through the

Department of Public Works and Highways, filed a complaint for expropriation before
the Regional Trial Court (RTC) of Valenzuela, Branch 172 for the acquisition of a parcel
of land with its improvements thereon belonging to Gilda A. Barcelon, Harold A.
Barcelon, and Hazel A. Barcelon (respondents) for the construction of the C-5 Northern
Link Road Project (Segment 8.1) from Mindanao Avenue in Quezon City to the North
Luzon Expressway. The subject property is located in Barangay Ugong, Valenzuela City,
covered by Transfer Certificate of Title No. V-75179 with an area of 52 square meters,
zonal value of P2,750.00 per square meter, with a one-storey residential house
improvement valued at P288,418.54.4

Upon deposit of a Development Bank of the Philippines (DBP) manager's check dated
November 20, 2008, amounting to P413,418.54, which was received by respondents on
November 21, 2008, the RTC issued a writ of possession dated December 2, 2008. Said
amount, however, was found to be lacking P18,000.00 to complete the 100% zonal
value of the property, required under the rules for the immediate possession thereof.
Upon respondents' motion, the RTC ordered the release of the said balance to the
respondents in an Order dated March 9, 2010.5

Pursuant to Section 5, Rule 67 of the Rules of Court, the RTC constituted a Board of
Commissioners composed of Osita F. De Guzman, RTC, Branch 172, Branch Clerk of
Court; Atty. Ard Henry Binwag, City Assessor; and Atty. Engr. Pilar Morales, to
determine and recommend the amount of just compensation for the subject property. 6

Before the Board of Commissioners, petitioner harped on the zonal valuation of the
subject property at P2,750.00 per square meter; and alleged that the area is infested
with informal settlers with poor living conditions, has no proper drainage, and has no
distinct pathway for motor vehicles, to support its argument that the amount of the just
compensation should not be higher than the zonal value.7
Respondents, on the other hand, argue that the amount of just compensation should be
within the range of P10,000.00 to P15,000.00 per square meter considering the
prevailing market value of the subject property and the location thereof within a high-
intensity commercial zone.8

After hearing and submission of the parties' respective position papers, the Board of
Commissioners submitted its report dated July 9, 2013, recommending the amount of
P10,000.00 per square meter as just compensation. It was also recommended that the
amount of P288,418.54 is the just, fair, and reasonable compensation for the
improvement on the lot.9

In arriving at its valuation, the Board of Commissioners considered, among others, the
valuation arrived at by the trial court, which was affirmed by this Court, in the case of
Hobart Realty Development Corporation (Hobart Realty), as well as that of the Spouses
Mapalad Serrano (Spouses Serrano), whose expropriated properties for the same
government project are nearby and actually within the area of respondents' property
subject of this expropriation suit.10

The Ruling of the RTC

In its Decision dated December 12, 2013, the RTC fixed the amount of just
compensation at P9,000.00 per square meter, disposing as follows: cralawred

WHEREFORE, judgment is hereby rendered fixing the just compensation of the 52

square meters lot (TCT No. V-75179) at Php468,000.00 (52 sq meters x Php9,000.00)
and authorizing the payment thereof by the [petitioner] to the [respondents] for the
property condemned deducting the provisional deposit of Php143,000.00 previously
made and subject to the payment of all unpaid real property taxes and other relevant
taxes by the [respondents], if there be any. 

The [petitioner] is directed to pay interest at the rate of 12% per annum on the amount
of deposit of Php 143,000.00 from the time of the filing of the complaint on February 8,
2008, up to the time that the said amount was deposited in court by the [petitioner] on
November 20, 2008 and to pay the interest rate of 12% per annum on the unpaid
balance of just compensation of Php325,000.00 (Php468,000.00 – Php143,000.00)
computed from the time of the filing of the complaint until the [petitioner] fully paid the
balance. 

Considering that [respondents] failed to substantiate their claim as to the replacement

costs of the one-storey residential house, no additional amount for the replacement
costs of the improvements erected on the lot owned by the [respondents] is awarded.
The amount [of Php288,418.54] for the value of improvement is considered just, fair
and reasonable just compensation. 

The [petitioner] is also directed to pay the members of the Board of commissioners the
amount of Php3,000.00 each as Commissioner's fees.11
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Questioning the amount fixed as just compensation, as well as the interest imposed by
the RTC, petitioner appealed to the CA. 

The Ruling of the CA

The CA found that the RTC judiciously determined the fair market value of the subject
property in the amount of P9,000.00 per square meter. It found no error on the part of
the RTC when it took into consideration the Board of Commissioners' findings, which
were hinged upon the court's evaluation in the cases of Hobart Realty and Spouses
Serrano to an extent. Specifically, the CA considered the distance of the subject
property to those of Hobart Realty's and Spouses Serrano's, which are within a high-
density commercial area, and as such, the valuation of P9,000.00 per square meter is,
according to the CA, acceptable.12

The CA did not accept petitioner's claim that the subject property was within an area
infested with informal settlers as no evidence was presented to prove such claim.
According to the CA, the testimonies of petitioner's witnesses were, at most, only able
to prove that tagging and relocation were conducted in some areas of Barangays Ugong
and Gen. T. De Leon.13

The CA also rejected petitioner's contention that the just compensation should be based
on the zonal value of the property. It ruled that zonal valuation is just one of the
indices of the fair market value of a property.14

In all, the CA upheld the amount of just compensation fixed by the RTC at P9,000.00
per square meter but modified the interest imposed thereon in accordance with the
prevailing jurisprudence, thus: cralawred

WHEREFORE, the appeal is PARTLY GRANTED. The legal interest rate of 12% per
annum shall be paid on the amount of deposit of Php143,000.00 from the time of the
filing of the complaint on February 8, 2008, up to the time the said amount was
deposited in court by [petitioner] on November 20, 2008. The balance in the amount of
Php325,000.00 shall carry an interest rate of 12% per annum from the time of the filing
of the complaint until June 30, 2013. Beginning July 1, 2013, until fully paid, the
amount of Php325,000.00 shall earn interest at the new legal rate of 6% per annum. All
other aspects of the decision are AFFIRMED. 

SO ORDERED.15
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Petitioner's motion for reconsideration was denied in the CA's July 21, 2016 Resolution,
the dispositive thereof reads:cralawred

WHEREFORE, the Motion for Reconsideration is DENIED. The Decision dated

December 17, 2015 STANDS. 

SO ORDERED.16
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Hence, this petition. 

Petitioner questions the amount of just compensation fixed by the RTC and affirmed by
the CA. Essentially, it argues that the manner of determining the just compensation
award is arbitrary as the courts a quo only considered the distance of the subject
property from the Hobart Realty and Spouses Serrano properties, and did not take into
consideration the actual use, classification, size, area, and actual condition of the
subject property.17 Petitioner insists that at the time of taking of the subject property,
the same is within an area proximate to properties inhabited by informal settlers.
Hence, petitioner maintains that the amount of the just compensation for the
expropriation of said property cannot be more than the zonal value. 

The Issue

Did the CA err in sustaining the amount of just compensation fixed by the RTC? 

The Ruling of the Court

We rule in the negative. 

Jurisprudence defines just compensation "as the full and fair equivalent of the property
taken from its owner by the expropriator."18 It 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. 19

The determination of just compensation is a judicial function because what is sought to

be determined is a full, just, and fair value due to the owner of a condemned property
with an equally-important consideration that the payment of the same entails the
expenditure of public funds, and this can only be attained by reception of evidence
consisting of reliable and actual data, and the circumspect evaluation thereof. Thus,
issues pertaining to the value of the property expropriated are questions of fact. 20

This Court is not a trier of facts and questions of fact are beyond the scope of the
judicial review of this Court under Rule 45. 21 Moreover, factual findings of the trial
court, when affirmed by the CA, are conclusive upon this Court. While this Court has
recognized several exceptions22 to this rule, we do not find any of those present in this
case. 

At any rate, the instant petition fails to provide us a cogent reason to deviate from the
findings and conclusions of the CA. As correctly ruled by the CA, the RTC's
determination of the amount of just compensation in this case is well-taken. 

Petitioner, however, insists that the CA merely agreed with the findings of the RTC
which failed to consider all relevant factors in the determination of the just
compensation. Petitioner maintains that the RTC, merely considered the Board of
Commissioners' report, which allegedly relied only on the distance of the subject
property from the Hobart Realty and Spouses Serrano properties. 
A careful reading of the Board of Commissioners' report, the RTC, as well as the CA's
Decisions, negate this contention. As can be gleaned from said report and decisions, the
proximity of the subject property's location to that of Hobart Realty's and Spouses
Serrano's, respectively, was merely one of the factors considered by the RTC and the
CA in their judicial valuation of the property. 

The Board of Commissioners reported as follows: cralawred

After the careful consideration of the location, the land usage and the distance
of the property of the [respondents] to that of Hobart Realty Development
Corporation and Sps. Mapalad Serrano, et al., where this Honorable Court in its
Decision dated March 16, 2010 and August 12, 2012 rendered the aforesaid cases
pegged the fair market value at Php15,000.00 and Php5,000.00, respectively, the
undersigned commissioners unanimously recommended the amount of Php10,000.00
per square meter as the just, fair and reasonable fair market value of the property of
the [respondents] subject of the appropriation proceedings in this case. 

The undersigned did not recommend any additional replacement cost for the
improvement erected on the lot of the property owned by the [respondents] although
the [respondents] through their counsel asked that the same be increased to at least
50% on the basis of the initial payment they already received in the amount of Php
288,418.54. However, absence of any evidence to support such claim, the undersigned
have ruled that the amount already received by the [respondents] is considered as just,
fair and reasonable compensation of the improvement. 23 (Emphasis supplied) 

The RTC also took into consideration several established factors before it came up with
a notably lower amount of just compensation compared to the Board of Commissioners'
recommendation. Relevant portions of its Decision read: cralawred

Considering the recommendation of the Board of Commissioners dated July 9,

2013[,] in the amount of Php10,000.00; the BIR zonal valuation of Php 2,750 per
square meter which is certainly higher than the other zonal valuation of other
lots subjected to [petitioner's] expropriation and the value declared by the
[respondents] in the amount of Php15,000.00 per square meter in their
Memorandum; this court's observation on the location of the two properties
which is 669.90 meters away from Hobart Realty Development Corporation, a
commercial lot, the value of the property was pegged by this court at
Php15,000.00/sq.meter in a decision dated March 16, 2010 in Civil Case No. 15-V-08
which decision was affirmed by the Court of Appeals and Supreme Court, the
classification of the lot, which is for residential usage, and within the high
intensity commercial zone, and the selling price of the property within the
vicinity, the amenities present like water, electricity, transportation and
communication, the Court rules that the just compensation for the [respondents']
property sought to be taken in this case is fixed at Php 9,000.00 per square
meter.24(Emphases supplied) 

On appeal, as can be gleaned from the CA's assailed Decision, the appellate court was
guided by the standards for the assessment of the value of condemned properties
under Section 525 of Republic Act (R.A.) No. 8974,26 which is the same provision being
invoked by petitioner in the case at bar. It includes consideration of relevant factors
such as the classification and use for which the property is suited; value declared by the
owners; the current selling price of similar lands in the vicinity; the size, shape or
location, tax declaration and zonal valuation of the land; and the price of the land as
manifested in the ocular findings, oral as well as documentary evidence presented,
among others.27

Notably, the CA found the Board of Commissioners' report, which was submitted to, and
considered by the RTC, to be supported by attachments or documentary evidence,
while petitioner's allegations about the subject property, i.e., the area was infested with
informal settlers, were unsupported by any evidence except certain testimonies, which
at most, only prove that tagging and relocation were conducted in the area. 28

This Court is also one with the CA in rejecting petitioner's argument that the amount of
just compensation cannot be more than the zonal valuation of the property. As stated
above, there are several well-established and relevant factors to be considered in
determining the value of condemned properties. We have consistently held that zonal
valuation is just one of the indices of the fair market value of real estate. It cannot be
the sole basis of just compensation in expropriation cases. 29

Clearly from the foregoing, thus, the RTC did not merely rely on the distance of the
subject property from the Hobart Realty and Spouses Serrano properties, contrary to
petitioner's contention. The determination of the amount of just compensation by the
RTC was even affirmed by the CA, which had the opportunity to examine the facts
anew. Hence, the Court finds no reason to deviate from the court a quo's findings and
conclusion. 

We, however, find it proper to correct the award of legal interest imposed by the CA. 

Section 4 of R.A. No. 897430 provides in part: cralawred

Sec, 4. Guidelines for Expropriation Proceedings. - Whenever it is necessary to acquire

real property for the right-of-way, site or location for any national government
infrastructure project through expropriation, the appropriate implementing agency shall
initiate the expropriation proceedings before the proper court under the following
guidelines:cralawred

(a) Upon the filing of the complaint, and after due notice to the defendant, the
implementing agency shall immediately pay the owner of the property the amount
equivalent to the sum of (1) one hundred percent (100%) of the value of the property
based on the current relevant zonal valuation of the Bureau of Internal Revenue (BIR);
and (2) the value of the improvements and/or structures as determined under Section
7 hereof; 

xxxx

Upon 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. 

In the event that the owner of the property contests the implementing agency's
proffered value, the court shall determine the just compensation to be paid the owner
within sixty (60) days from the date of filing of the expropriation case. When the
decision of the court becomes final and executory, the implementing agency shall pay
the owner the difference between the amount already paid and the just compensation
as determined by the court. 

Just compensation should be made at the time of the taking, and the amount of
payment should be the fair and equivalent value of the property. The law above-cited,
however, allows the government to take possession of the property even before the
court's determination of the amount of just compensation by giving an initial payment
equivalent to 100% of the value of the property based on the BIR zonal valuation. This
initial payment, however, is not the full fair and equivalent value of the property as the
same, at this stage, is still for the court's determination. As stated above, when the
decision of the court as to the proper amount of just compensation becomes final and
executory, the implementing agency shall pay the owner the difference between the
amount already paid and the just compensation as determined by the court. The
difference between the final and initial payments forms part of the just compensation
that the property owner is entitled from the date of the taking of the property.31 Thus,
as the owners were already deprived of their property before receipt of the full just
compensation, there was already a delay in the payment of the remaining balance. The
remaining balance should, therefore, earn legal interest as a forbearance of money. 32

In this case, the CA erred in imposing legal interest on the initial payment made by the
petitioner considering that there was no delay with regard to the said payment. In fact,
petitioner's initial payment was in compliance with the law as a pre-requisite for the
issuance of the writ of possession. The interest imposed thereon should, therefore, be
deleted. 

With regard to the remaining balance, while the CA correctly imposed the legal interest
thereon, said interest should be reckoned from the taking of the property, i.e., from the
issuance of the writ of possession, not from the filing of the complaint as the owners of
the condemned property are entitled to the full just compensation only upon the taking
of the property. In fine, petitioner's delay begins only upon the taking of the
property not from filing of the complaint since it is from the date of the taking that the
fact of deprivation of property can be established. 

In sum, while petitioner filed the expropriation complaint on February 8, 2008, no

interest yet shall accrue as it did not take possession of the subject property until the
issuance of the writ of possession on December 2, 2008. 33 The remaining balance of the
full just compensation as determined by the court shall then earn legal interest at the
rate of 12% per annum from the date of the issuance of the writ of possession up to
June 30, 2013 and, 6% per annum from July 1, 2013 until finality of this Decision.
Thereafter, the total amount of the foregoing shall earn legal interest of 6% per annum
from the finality of the Decision until full payment thereof. 
WHEREFORE, premises considered, the Decision dated December 17, 2015 and
Resolution dated July 21, 2016 of the Court of Appeals in CA-G.R. CV No. 102216 are
hereby AFFIRMED WITH MODIFICATION in that: (a) the legal interest imposed on
the deposit amounting to P143,000.00 is DELETED; and (b) the 12% per annum legal
interest imposed on the balance amounting to P325,000.00 is to be reckoned from
December 2, 2008, up to June 30, 2013, and thereafter, or from July 1, 2013, the legal
interest at the rate of 6% per annum shall be imposed thereon until the finality of this
Decision; (c) the total amount of just compensation shall earn legal interest of 6% per
annum from the finality of this Decision until full payment thereof. 

SO ORDERED.