The Department of Public Works and Highways (DPWH) needed private land in Valenzuela City for the construction of the C-5 Northern Link Project.
Among the affected properties was a parcel of land owned by the spouses Aurora and Rogelio Silvestre and Natividad Gozo. Before taking possession of the property, the government deposited an amount equivalent to the property’s BIR zonal value—about ₱1,200.00 per square meter.
The landowners disagreed.
According to them, their property was worth much more than its zonal valuation. They pointed out that the property was located near subdivisions, schools, churches, banks, gasoline stations, commercial establishments, and industrial developments. They argued that the government’s offer fell far short of the property’s true market value.
A Board of Commissioners was appointed by the trial court to determine the proper amount of just compensation.
After inspecting the property and reviewing the evidence, the Board concluded that the fair value of the land was ₱5,000.00 per square meter, more than four times the property’s zonal value. The trial court adopted the recommendation, and the Court of Appeals affirmed.
The government elevated the case to the Supreme Court.
It argued that the courts had overvalued the property.
According to DPWH, the property’s tax declaration reflected a value of only ₱600.00 per square meter, while its BIR zonal value was only ₱1,200.00 per square meter. The government also argued that the presence of thousands of informal settlers in the area substantially reduced the property’s value.
Was the government correct?
The Supreme Court said no.
The Court explained that the Constitution requires the payment of just compensation, which means the full and fair equivalent of the property taken by the government. The measure of just compensation is not the government’s gain, but the property owner’s loss.
The Court further held that the BIR zonal value is not the sole basis for determining just compensation.
Under Republic Act No. 8974, courts must consider numerous factors, including the property’s classification, location, size, accessibility, current selling prices of similar properties, tax declarations, zonal valuation, and other circumstances that affect its market value. The BIR zonal value is merely one factor among many.
In this case, the Board of Commissioners carefully evaluated the property’s surroundings. It considered the presence of nearby schools, churches, banks, commercial establishments, subdivisions, and industrial developments. It likewise examined comparable sales of neighboring properties and even another finalized expropriation case involving similarly situated land affected by the same infrastructure project.
The Supreme Court found nothing arbitrary about the Board’s recommendation of ₱5,000.00 per square meter. On the contrary, the valuation was supported by substantial evidence and by the standards prescribed by law.
The Court likewise rejected the government’s argument that the tax declaration and BIR zonal valuation should control. According to the Court, while these are relevant considerations, they do not necessarily reflect the property’s true market value and cannot, by themselves, determine just compensation.
Finally, the Supreme Court held that because the government had already taken possession of the property before paying its full value, the unpaid balance of the just compensation should earn legal interest until fully paid.
Accordingly, the Supreme Court affirmed the award of ₱5,000.00 per square meter as just compensation, together with the corresponding legal interest on the unpaid balance.
Republic of the Philippines v. Spouses Silvestre. G.R. No. 237324, February 06, 2019