Philippine Supreme Court Resolutions > Year 2012 > February 2012 Resolutions > [G. R. No. 197830 : February 15, 2012] PHILIPPINE NATIONAL BANK v. REPUBLIC OF THE PHILIPPINES, THROUGH THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, REGION XI :

Please take notice that the Court, Second Division, issued a Resolution dated 15 February 2012 which reads as follows:cralaw

G. R. No. 197830 (Philippine National Bank v. Republic of the Philippines, through the Department of Public Works and Highways, Region XI) � Before this Court is a Petition for Review assailing the 23 June 2010 Decision and 11 July, 2011 Resolution of the Court of Appeals (CA) modifying the award of just compensation handed down by the trial court and denying the subsequent Motion for Reconsideration filed by petitioner Philippine National Bank (PNB).

In Philippine National Oil Company (PNOC) v. Maglasang (570 SCRA 560, G.R. No. 155407, 11 November 2008), this Court held thus: 

In the context of the State's inherent power of eminent domain, there is "taking" where the owner is actually deprived or dispossessed of his property; where there is a practical destruction or a material impairment of the value of his property; or when he is deprived of the ordinary use thereof.

Applying PNOC to the case at bar, it appears that there was actual taking in the context of the exercise of eminent domain in 1979, when respondent Department of Public Works and Highways (DPWH) actually occupied the property owned by PNB to commence the construction of the Quezon Boulevard-Bolton-Matina-Times Beach Road (the Project). Therefore, just compensation must be reckoned from 1979.

The trial court and the CA differ, however, as to the applicable rate of just compensation. The ruling of the trial court, in effect, construed the 31 May 1976 letter of Engineer Jose Sayson (Engr. Sayson), City Engineer of DPWH, Davao City, as a binding agreement to peg the rate of just compensation at whatever appraisal value the City Assessor may recommend, which later on turned out to be P100/sq. m. On the other hand, the CA ruled that the rate was iniquitous, as the appraisal was not based on the current and fair market value prevailing at the time of taking, but on the 1992 rates, or 16 years thereafter. Thus, since the Project had already been constructed at that time, the valuation of the property was affected by the resulting increase in its fair market value.

The 31 March 1976 letter of Engr. Sayson partly reads: 

[W]e are again requesting your good office to allow us to enter the subject property, with the assurance that whatever be the price that the City Assessor may determine, our Office must have to abide.

A reading of the report of the Joint Appraisal Committee reveals that PNB is correct in its contention that the committee based its recommendation on the 1974-1980 schedule of market values. However, the CA was also correct in its finding that the recommended valuation erroneously took into consideration the construction of the Project, viz: 

A plain examination of the said Joint Appraisal Report dated 23 November 1992, which the court a quo obviously used as its basis in awarding the One Hundred Pesos (Php100.00) per sq. meter, shows that such valuation was recommended by the Joint Appraisal Committee due to the fact that the proposed "Quezon Boulevard-Bolton-Matina-Times Beach Road["] was already constructed over PNB's Lot B-3. The Joint Appraisal Report submitted by the Joint Appraisal Committee on 23 November 1992, partly reads:

"In view hereof, considering the potential use and general vicinity of the above-mentioned real properties which was affected by the road right of way from Bolton Bridge, Matina to Quezon Boulevard, this City, the market value of ONE HUNDRED (P100.00) PESOS, plus legal interest is deemed fair and reasonable compensation for the 11,507 sq. m."

Obviously, at the time the appraisal was made for the purpose of arriving at and securing the fair market value in 1992, or Sixteen (16) years after the "Quezon Boulevard-Bolton-Matina-Times Beach Road" was laid out or constructed over PNB's Lot B-3, the fair market value of the same had considerably been increased and enhanced. 

Thus, We rule, in consonance with the prevailing jurisprudence that the Davao City Assessor's Appraisal No. 70 (76) dated 20 February 1975, which at that time pegged the fair market value of PNB's Lot B-3 at Forty Pesos (Php40.00) and subsequently, at Sixty Pesos (Php60.00) per sq. meter per its letter advice to PNB on 27 June 1975, was more fair and reasonable than the value stated in the Joint Appraisal Report submitted by the Joint Appraisal Committee on 23 November 1992 which put the fair market value of PNB's Lot B-3 at One Hundred Pesos (Php100.00). Moreover, the appraised fair market value of Sixty Pesos (Php60.00) was similar and parallel to the appraised fair market value of the adjacent real property owned by C. M Soriano and Sons, Incorporated which was also affected by the "Quezon Boulevard-Bolton-Matina-Times Beach Road." To allow PNB to recover more than the reasonable and just fair market value of Sixty Pesos (Php60.00) would be to permit it to recoup more than the true and reasonable value of its (PNB) Lot B-3. It is well to reiterate at this point that the land owner affected by the taking is to be compensated for "what he actually loses; it is not intended that his compensation shall extend beyond his loss or injury. And what he loses (sic) is only the actual value of his property at the time it is taken. This is the only way the compensation to be paid can be truly just; i.e. "just" not only to the individual whose property is taken, but to the public, which is to pay for it." (Emphasis supplied).

Going back to this Court's pronouncement in PNOC, it must be remembered that "the value of the land and its character at the time it was taken by the government are the criteria for determining just compensation."

In the present case, DPWH occupied the subject property in 1979 when it commenced the construction of the Project. Therefore, the CA was correct in ruling that, for purposes of determining just compensation, the value and character of the land at that time, should naturally be estimated without taking into account the increase in its value resulting from the Project.cralaw

WHEREFORE, the Petition for Review is DENIED. The 23 June 2010 Decision and 11 July 2011 Resolution of the Court of Appeals are hereby AFFIRMED with FINALITY. No further pleadings shall be allowed. (J. Brion, on leave; J. Villarama, Jr., designated additional member per S.O. No. 1195 dated 15 February 2012).

Very truly yours, 

(Sgd.) TERESITA AQUINO TUAZON
Deputy Division Clerk of Court