NATIONAL IRRIGATION ADMINISTRATION, REPRESENTED BY ENGR. CARLOS S. SALAZAR, PROJECT MANAGER, PLAINTIFF-APPELLANT, VS. HORACIO J. AZURA, ET AL.[€], CONSORCIA J. ASUNCION AND MARI…

National Irrigation Administration versus Azura

The Case

This is an expropriation case. The National Irrigation Administration, a government owned and controlled corporation with the power of eminent domain, filed three complaints to take three parcels of land in Barangay Aupagan, Butuan City, needed for the Aupagan Pumping Station Regulatory Pond and Access Road of its Lower Agusan Development Project. The registered owners, the Azura family, Consorcia Asuncion, and Maria Jasmin Azura, resisted the valuation. The case matters because it gathers in one decision the whole law of just compensation: the standards for assessment, the advisory character of the commissioners' report, the judicial nature of the valuation, the treatment of a right-of-way reservation, and the correct legal interest.

Procedural History

The National Irrigation Administration filed three separate complaints for eminent domain before the Regional Trial Court of Butuan City, which consolidated them. After the prescribed deposit was made, the trial court issued an omnibus writ of possession. The parties stipulated at pre-trial that the owners own the lots, that expropriation is necessary for the project, and that the project is for a public purpose. They agreed to constitute a Board of Commissioners, which received evidence and submitted a report recommending 166 pesos and 2 centavos per square meter as just compensation. The trial court adopted the report in full and rendered judgment on September 21, 2004, awarding compensation at that rate plus 6 percent legal interest. The Solicitor General's motions for reconsideration were denied. The National Irrigation Administration then appealed to the Supreme Court.

Facts

The National Irrigation Administration implemented the Lower Agusan Development Project, Irrigation Component, in Barangay Aupagan, Butuan City. The project required the construction of the Aupagan Pumping Station Regulatory Pond and Access Road on three portions of Lot 5135: Lot 5135-B-1, with an area of 9,847 square meters, registered in the names of the Azuras; Lot 5135-E-1, with an area of 2,446 square meters, registered to Consorcia Asuncion; and Lot 5135-A-1, with an area of 13,826 square meters, registered to Maria Jasmin Azura.

In July 1999, the National Irrigation Administration sued to expropriate the lots. It alleged that it had first tried negotiated sale, offering the valuations of the City Appraisal Committee of Butuan, which the owners declined. The owners answered that those valuations did not reflect the true value of their lands, that other adjacent lots could have been taken instead, and that the fair market value should be no less than 174 pesos and 29 centavos per square meter. They also claimed moral damages and attorney's fees for what they called patent discrimination.

The Board of Commissioners classified the lots as industrial because they lie within the 500-meter strip from the bank of the Agusan River, because of the zoning ordinance of Butuan City, and because of zoning certifications from the Housing and Land Use Regulatory Board. Finding no zonal valuation for industrial land in Aupagan, the Board used the industrial zonal values of the nearest barangays, Mahay at 200 pesos per square meter and Bit-os at 125 pesos per square meter, and took their average, 166 pesos and 2 centavos per square meter, as just compensation. The trial court adopted the report in full.

Issues

• Whether or not the valuation of 166 pesos and 2 centavos per square meter, as fixed by the Board of Commissioners and adopted by the trial court, constitutes just compensation for the subject lots.
• Whether or not Commissioner Noel Anthony Libres should have inhibited himself for alleged partiality.
• Whether or not the portion of the lots covered by a right-of-way reservation in favor of the government should be excluded from the computation of just compensation.
• Whether or not the trial court's decision is void for failing to state the facts and the law on which it is based.
• Whether or not the legal interest imposed on the just compensation was correctly fixed.

Applicable Provisions

Section 5 of Republic Act Number 8974 enumerates the standards for assessing the value of land taken for national government infrastructure projects:

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.

These standards guided the Board in classifying the lots and in choosing the comparable zonal values.

Article 2209 of the Civil Code fixes the legal interest:

Article 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum.

This provision supplied the rate of interest on the unpaid just compensation.

Ruling

On the first issue, the Court held that the valuation is valid. Just compensation is the full and fair equivalent of the property taken; the measure is not the taker's gain but the owner's loss, and the equivalent must be real, substantial, full, and ample. The determination of just compensation is a judicial function, and statutory valuations merely guide the court. Under Rule 67, the commissioners' report is advisory and recommendatory, and the trial court may accept it, reject it, or accept it in part. Here the report, with its annexes, was supported by evidence: the location of the lots, the zoning ordinance, the zoning certifications, the owners' declarations, and the Department of Finance guidelines directing the use of zonal values of adjacent barangays of similar conditions where none is prescribed. The Board's averaging of the Mahay and Bit-os values was therefore sustained.

On the second issue, the Court held that the charge of partiality was speculative. He who alleges must prove, and the presumption of regularity protects the official performance of duty. It was not shown that the commissioner had influenced the trial court beyond the discharge of his duties, and he was not yet counsel of the other defendants when appointed.

On the third issue, the Court held that the right-of-way reservation does not reduce the compensation. The owners were deprived of ownership entirely, unlike landowners affected by transmission lines who retain their property and receive only an easement fee. With more reason, they are entitled to compensation for every inch taken, for no less than the Constitution proscribes the taking of private property without just compensation.

On the fourth issue, the Court held that the decision is not void. The requirement that a decision state clearly and distinctly the facts and the law serves to inform the parties of the reasons and to assure them that the judge reasoned through the case. That function was served, since the National Irrigation Administration was able to point out in its motion for reconsideration the findings and rulings it disputed.

On the fifth issue, the Court modified the interest. The 6 percent per annum under Article 2209 applies, reckoned from the filing of the complaints until full payment, with the initial payments already made deducted from the total.

Doctrine

Just compensation is the full and fair equivalent of the property taken, measured by the owner's loss and not the taker's gain, and its determination is a judicial function to which statutory valuations are only guides. The commissioners' report in expropriation is merely advisory; the trial court may adopt it in whole or in part or set it aside. Where no zonal valuation exists for a classification in a barangay, the zonal values of adjacent barangays of similar conditions may be used. A right-of-way reservation in a title does not diminish the compensation of owners who are wholly deprived of their land. The legal interest on just compensation is 6 percent per annum under Article 2209, running from the filing of the complaint until full payment.

Disposition

The appeal was denied and the trial court's decision was affirmed with modification, fixing the legal interest at 6 percent per annum from the filing of the expropriation cases until full payment, with the initial payments deducted.

Remember This

Memorize the line that the measure of just compensation is not the taker's gain but the owner's loss. Examiners use this case on the advisory character of the commissioners' report, the judicial function of fixing compensation, and the 6 percent interest running from filing.