Republic v. Ng
REITERATIONFacts
The Antecedents: The Republic of the Philippines, represented by the DPWH, filed a complaint for expropriation against Belly H. Ng to acquire lots totaling 1,671 sq. m. and improvements thereon totaling 2,121.7 sq. m. for the Mindanao Avenue Extension Project. The Republic offered ₱4,000.00/sq. m. for the lots and ₱11,138,362.74 for the improvements. Respondent contended the offer was low and sought ₱25,000.00/sq. m. for the lots and ₱22,276,724.00 for the improvements. Procedural History: The Republic was granted a Writ of Possession after paying 100% of the zonal value (₱17,822,362.74). The RTC appointed commissioners who recommended ₱7,000.00/sq. m. for the lots and ₱12,000.00/sq. m. for the improvements, with 6% legal interest. Respondent objected to the lot valuation, citing a nearby expropriation case valued at ₱15,000.00/sq. m., and insisted on 12% interest. The RTC fixed just compensation at ₱15,000.00/sq. m. for the lots and ₱12,000.00/sq. m. for the improvements, with 12% interest, consequential damages, and attorney's fees. The CA affirmed the RTC's valuation for lots and improvements but deleted consequential damages and reduced legal interest to 6% p.a. from the RTC Decision until full satisfaction. The Petition: The Republic filed a petition for review on certiorari assailing the CA's affirmation of the replacement cost for improvements and the award of attorney's fees.
Issue(s)
Whether the CA committed reversible error in affirming the replacement cost for the improvements fixed by the RTC. Whether the CA committed reversible error in affirming the award of attorney's fees.
Ruling
The petition is partly meritorious. The Decision of the CA is affirmed regarding the just compensation for the lots at ₱15,000.00/sq. m. However, the valuation of ₱12,000.00/sq. m. for the improvements is set aside, and the case is remanded to the RTC for reception of evidence on the just compensation for the improvements in accordance with RA 8974 and its IRR. Legal interest is imposed at 12% p.a. from April 10, 2013, to June 30, 2013, and 6% p.a. thereafter until full payment. The award of attorney's fees is deleted.
Ratio Decidendi
On the valuation of improvements: The Court held that the valuation of improvements under Section 10 of RA 8974's IRR requires the use of the replacement cost method, which considers current market prices for materials, equipment, labor, contractor's profit and overhead, and attendant costs for an acceptable substitute. The RTC and CA's reliance on factors like location, classification, owner's declared value, and zonal valuation of the land, without competent evidence of prevailing construction costs and attendant costs, was insufficient. The Court emphasized that while courts may relax the formula's application, they must clearly explain the reasons for deviation, which was absent here. Therefore, the valuation of ₱12,000.00/sq. m. for the improvements was set aside, and the case was remanded for proper determination. On the award of attorney's fees: The Court found the award of attorney's fees improper. It distinguished the present case from Republic v. CA, where the petitioner took possession without expropriation proceedings and over the landowner's objection. In this case, the Republic acquired possession only after paying 100% of the zonal valuation. The Court noted that even when a claimant incurs expenses to protect rights, attorney's fees may be withheld if there is no sufficient showing of bad faith, and a party's persistence in a suit may stem from an erroneous conviction of the righteousness of their cause.
Main Doctrine
The valuation of improvements in expropriation cases under RA 8974 must consider prevailing construction costs and attendant costs associated with acquiring and installing a substitute, not merely location, classification, owner's declared value, or zonal valuation of the land. The RTC may relax the formula's application but must clearly explain the deviation. Legal interest on unpaid just compensation is 12% p.a. from taking until June 30, 2013, and 6% p.a. thereafter.