REPUBLIC OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS. CELESTINO C. JUAN AND ANA TANSECO JUAN, DEFENDANTS-APPELLANTS.

Appeal by defendants-appellants from the decision dated September 28, 1964 of the Court of
First Instance of La Union in Civil Case No. 1835 for the expropriation of
338.7480 hectares of land owned by spouses Celestino
C. Juan and Ana Tanseco as the site for the La Union
Regional Agricultural School, directing the plaintiff
Republic of the Philippines
to

“x x x pay the
legal owners Celestino C. Juan and Ana Tanseco the amount of P190,000.00 which is the just and
reasonable compensation that the Court rules in this case in favor of the
defendants; and it appearing that on May 7, 1963, P100,000.00 had already been
paid, it is therefore ordered that upon this decision becoming final the
balance of P90,000.00 plus interest of 6% from May 4, 1963 shall be paid to
defendants Celestino C. Juan and Ana Tanseco,” aside from the costs of the suit.

Defendants-appellants are the registered owners of two (2)
adjoining parcels of land located at Barrio Sapilang,
Bacnotan, La Union with an aggregate area of
3,387,480 square meters or 338.7480 hectares, more or less, and covered by
Original Certificate of Title No. 0-420 issued on April 14, 1959 (pp. 9-14,
46-47, ROA; Vol. I, rec.).

Pursuant to the authorization issued on March 15, 1963 by the
President of the Philippines through the Executive Secretary (p. 15, ROA), the
Solicitor General filed on April 8, 1963 the complaint for expropriation of the
aforesaid parcels of land to be used as the site of the La Union Agricultural
School, which was to be established by authority of Republic Act 2692
(pp. 9-20, 43, ROA, Vol. I, rec.).

Before the institution of the expropriation proceedings Victor
Luis, who was appointed principal of the proposed school, recommended the
property of defendants as the school site. 
Thereafter, together with Mrs. Avelina L. Osias, he negotiated with the defendants for the purchase
of their property (pp. 85-87, ROA, Vol. I, rec.).  On January
25, 1963, he wrote a letter to defendant Celestino
Juan, thus:

“x x x
Feelers have come to you to inquire about the price that you would be willing
to sell your land.  Mrs. Pacita Gonzales and the undersigned came to you personally
and you informed us verbally your least price of P170,000.00 which you
explained to us is very reasonable.

“May I request your kindness to confirm the above price in
writing, as your offer as the selling price of your above-mentioned land in
order that there will be an official record or basis in negotiating with
authorities concerned in the purchase of your land as school site.” (pp.
43-44, ROA, Vol. I, rec.).

Defendant Celestino
Juan replied on January 28, 1963

“x x x
that the selling price of my land is P170,000.00 net to me exclusive of the
amount of my obligation to the China Banking Corporation where the property is
mortgaged.

“The condition of the sale is at least P90,000.00 down and the
balance within a period of one (1) year. 
Title to the property will be transferred to you immediately provided
that an annotation of the remaining balance of the price be accordingly made in
the new title.

“I wish, however, to tell you that presently there are no less
than 23 tenants in the land and they are harvesting or about to harvest their
tobacco crops.  In justice to them, they
should be allowed to finish harvesting their crops before they are finally
ejected.

“It is with deep regret that I cannot part with the land at a
lesser price.  There are 3 parties at
least aside from you who are interested to buy the land.  One of them is ready to sign the contract for
a price of P200,000.00 payable in cash or at least a period of ten (10)
days.  This party, through an
understanding with a certain bank can mortgage the property for
P350,000.00.  As you see, if the primary
consideration is money alone, then, if I am a smart, I should mortgage the land
myself.  It should be noted, and I have
all the records with me, that I have applied for a loan with the Development
Bank of the Philippines
in the amount of P4,102,000.00 principally to establish a dairy farm and
mortgaging only as collateral the said land. 
From the conversation with said bank, it seems to me that the same would
be favorably considered if not for P4,000,000.00 at least P1,000,000.00.

“Kindly confirm your acceptance of the terms of this letter as
I can only hold the land for a period of ten (10) days.” (pp. 382-384,
ROA).

After receipt of the aforequoted
letter, Mr. Luis consulted his office in Manila
(p. 86, ROA, Vol. I, rec.) as well as the provincial officials of La Union and
the municipal officials of Bacnotan (pp. 86, 174,
ROA, Vol. I, rec.).

In an order dated April
15, 1963, the trial court authorized the Government to enter and
take immediate possession of the property after depositing the amount of
P90,793.70 with the provincial treasurer of La Union as provisional value (p.
20, ROA, Vol. I, rec.).

Defendants on April 24, 1963 filed their “Urgent Motion for
Reconsideration and/or to Lift Writ of Possession” questioning among
others, the propriety and correctness of Resolution No. 13, series of 1962, of
the Provincial Appraisal Committee and pointing out that “the fair and
reasonable market value x x x
should be at least fifty centavos (P0.50) per square meter or P5,000.00 per
hectare” and prayed that the complaint for expropriation be dismissed for
lack of jurisdiction; to set aside the order dated April 15, 1963 and instead
order plaintiff to deposit the amount of P300,000.00 as provisional value;
and to set aside the writ of possession dated April 16, 1963 until the court
has decided the issue of jurisdiction and/or until plaintiff has de­posited the
amount of P300,000.00 as provisional value of the property (pp. 22-32, ROA,
Vol. I, rec.).  On the same date, the
lower court lifted the writ of possession until further orders.

Acting on the aforesaid motion on April 26, 1963, the lower court
found the expropriation proceedings in order and the provisional value made by
the Provincial Appraisal Committee inadequate and ordered the plain­tiff
Republic of the Philippines to deposit the amount of P100,000.00 as provisional
value until the true valuation of the lots can be determined in accordance with
law and further directed “that for the best interest of the defendants
whose improvements may be vandalized for lack of protection, let the writ be
effected without prejudice to the final determination of the true value of the
property to be determined in due course” and forthwith ordered the
issuance of the writ of possession after the deposit by plaintiff of the amount
of P100,000.00 is made (p. 45, ROA, Vol. I, rec.).

On May 4, 1963,
plaintiff Republic
of the Philip­pines
took possession and occupied the lots under expropriation (p. 86, ROA, Vol. I,
rec.) and deposited on May 7, 1963
the amount of P100,000.00, which the appellants withdrew that same day.

On May 7, 1963,
defendants filed two simultaneous pleadings: 
motion for reconsideration of the provisional value on the ground that
the value fixed by the court is still inadequate; and a motion to dismiss which
likewise embodied defendants’ answer to the complaint for expropriation (pp.
46-66, ROA, Vol. I, rec.).

In an order dated June
13, 1963, the court denied the motion to dismiss of defendants for
lack of merit (p. 66, ROA, Vol. I, rec.).

In an order dated January
8, 1964, the trial court directed the condemnation of the property,

“it appearing that the plaintiff has already deposited the
amount of P100,000.00 the provisional value of the property sought to be
condemned, which amount has already been withdrawn by the defendants  and the property accordingly turned over to
the Republic of the Philippines for the use of the La Union Agricultural School,
x x x” (pp. 66-67,
ROA, underlining supplied).

and appointed as commissioners of
appraisal (1) Atty. Rogelio Balagot, for the lower
court and as chairman; (2) Atty. Eufemio Molina, for
the plaintiff; and (3) Atty. Pablito M. Rojas, for
the defendants (pp. 4, 67-68, ROA, Vol. I, rec.).

For a period of three days, these commissioners in the presence
of the parties, conducted an extensive ocular inspection and physical
investigation of the property, after which they held protracted hearings until June 2, 1964, wherein both parties
were given full opportunity to present their respective positions with
voluminous documentary and oral evidence (p. 4, ROA, Vol. I, rec.).

On June 29, 1964,
Atty. Eufemio Molina, commissioner for plaintiff,
filed his report dated June 25, 1964
(pp. 69-78, ROA, Vol. I, rec.) recom­mending

“x x x
that the value of the land of defendants to be taken as the site of the La
Union Agricultural School at Sapilang, Bacnotan, La Union, be fixed at P135,000.00, which amount
is the meeting point between the government’s offer of P100,000.00 and the
defendants’ price of P170,000.00.”

Atty. Pablito M. Rojas, commissioner
for the de­fendants, in his report of July
13, 1964, recommended

“x x x as
the price of the land to be paid by the plaintiff to the defendants the amount
of P1,407,856.00, the same to bear interest at the legal rate from the date of
possession by the plaintiff to the date the amount is actually paid.”

Commissioner Rogelio F. Balagot for the
court and chairman recommended:

“x x x
that the just compensation to be paid the defendants landowners be the
following:

Value of the Land . . . . . . .	P1,044,163.70
Value of Improvements  . .	1,712.60
Total Amount  .	P1,045,876.30

“That the balance of P945,876.30 (deducting P100,000.00, the
amount paid as provisional value) earn legal interest (6%) until fully
paid.”

Defendants-appellants filed their objection to the reports of
Commissioners Rojas, Balagot and Molina, claiming
that the true value of the land is P1,736,208.32 or P1,693,740.00 (pp. 284,
374, ROA, Vol. I, rec.).

On September 4, 1964,
defendants filed a petition entitled “Petition to Submit Case for
Decision” without any hearing on the reports (p. 378, ROA, Vol. I, rec.).

On September 28, 1964,
the lower court rendered its decision (pp. 380-426, ROA, Vol. I, rec.).

A motion for reconsideration was filed by defendants on October 26, 1964 (pp. 426-508, ROA,
Vol. I, rec.), but the same was denied by the Court in an order dated May 10, 1965 (pp. 509-514, ROA,
Vol. I, rec.).

I

Under their first assignment of error, appellants contend that
the propriety of the expropriation and the manner in which it was conducted
were in dispute throughout the proceedings in the trial court and that they
never waived their objections thereto; that the conditions precedent as
provided for by Executive Order No. 132, series of 1937, as amended, were not
complied with, for no proper and valid negotiation to purchase the lots or to
have it donated to the Government was undertaken by the State before the
institution of the expropriation case in court; and that the resolution of the
Appraisal Committee which was the basis of the amount alleged in the complaint
as the fair market value of the lots to be expropriated was null and void, having
been adopted contrary to legal requirements (pp. 24-46, Appellants’ Brief; p.
11, Vol. II, rec.).  The same points were
raised by the appellants in their motion for reconsideration of the lower
court’s main decision and the trial court in its order of May 10, 1965 correctly overruled them, stating
that:

“Movants start by bringing to the
front the alleged lack of negotiations between plaintiff and defendants for the
acquisition of the 338 hectares belonging to the latter.  Non-compliance with Executive Order No. 132
is mentioned repeatedly by the defendants as vitiating this case.  It is even hinted that the best resolution
for this case would be to dismiss it because plaintiff failed to comply with
said Executive Order dictated in pre-war days. 
Plaintiff delivered to defendants through this Court P100,000.00 as part
of the fair and just compensation that the defendants are entitled.  On May
7, 1963, such amount was received by defendants and plaintiff
started developing the area and constructing the buildings needed for the La
Union Agricultural School.  This school
is now in operation; and it would certainly be the most disturbing step for the
regularity of the functions of the Government to dismiss the case, compelling
the plaintiff to remove all buildings in the land that once belonged to the
defendants and return the property to them. 
Besides, interpreting with fair liberality the pre-war Executive Order
No. 132, the court shall now state that for the purpose of negotiations with
the land owners the letter of January
5, 1963 received by the defendants and the latter’s reply of January 28, 1963 are clear and
sufficient compliance with the tenor and spirit of said Executive Order.  The court, therefore, re­jects any request
that this case having been filed without sufficient compliance with said
administrative procedures the whole proceeding shall have to be dismissed.  This cannot be done.” (pp. 511-512, ROA,
Vol. I, rec.).

To begin with, it must be emphasized that plaintiff-appellee in this instant case is the Republic of the Philippines
which is exercising its right of eminent domain inherent in it as a body
sovereign.  In the exercise of this
sovereign right, the State is not subject to any limitation other than those
imposed by the Constitution which are: 
first, the taking must be for a public use; secondly, the payment of
just compensation must be made; and thirdly, due process must be observed in
the taking.  Beyond these conditions, the
exercise by the State of its right of eminent domain is subject to no
restraint.  Section 64(h) of the Revised
Administrative Code confers upon the Chief Executive the power to determine
when it is necessary or advantageous to exercise the power of eminent domain in
behalf of the Republic of the Philippines
and to direct the Solicitor General to cause the filing of the appropriate
condemnation proceedings in court.  By
this grant, the executive authorities may then decide whether the power will be
invoked and to what extent (see pp. 87-89, Political Law of the Philippines, Tañada and Carreon, 1962 ed.,
citing Visayan Refining Co. v. Camus,
40 Phil. 550).

Appellants in making their first assignment of error are under
the wrong impression that the provisions of Executive Order No. 132 are
conditions precedent to the valid exercise of the State of its right of eminent
domain.  As a whole, Executive Order No.
132 is purely an administrative procedure confined within the executive
department of the government designed merely to govern and regulate the taking
of private properties for public use which may either be by voluntary sale or
by donation in favor of the government. 
Nothing is provided in said executive order expressly or impliedly
making the procedures therein enumerated as conditions precedent to the valid
exercise by the government of the right of eminent domain by filing the proper
action in court.  As stated, Executive
Order No. 132 was intended merely to govern the taking of private property
short of judicial action either by purchase or donation.  Being so, the same cannot limit or
circumscribe the sovereign and inherent right of the State to expropriate
private property through the Courts.

Moreover, there has been substantial compliance with the
requirements of Executive Order No. 132; because negotiations for the purchase
of the parcels were conducted between Victor Luis, the principal of the
proposed agricultural school, and Mrs. Avelina L. Osias on one hand, and the defendants-appellants on the
other, which did not result in a voluntary sale by the defendants-appellants
for lack of agreement on the just compensation for the parcels.

Paragraph (a) of Executive Order No. 132 provides that
negotiations shall be conducted by the “Director of Public works, city or
district engineer, or other officials concerned x x x“.  The last
term can comprehend the principal of the proposed agricultural institution.

Furthermore, the unqualified withdrawal by appellants of the
amount of P100,000.00 deposited in court by the plaintiff as provisional value
of the lots subject of expropriation, constituted recognition on their part of
the right of the government to expropriate the lots (Republic v. Pasicolan, May 31, 1961, 2 SCRA 626).

If the unconditional withdrawal of the amount deposited as
provisional value precludes the defendants-appellants from questioning the
right of the plaintiff to expropriate, it must necessarily follow that said
withdrawal also estops defendants-appellants from
raising any objection to the manner and propriety of the exercise by the
plaintiff of the right of expropriation (18 American Jurisprudence 634-635;
Francisco’s The Revised Rules of Court in the Philippines, Vol. IV-B, pp.
411-412).

There can be no debate that due process was observed in the
instant case.  Likewise, education is
public use or public purpose.  Republic
Act No. 2692 expressly authorizes the establishment of the La Union Regional
Agricultural School within the Province
of La Union and the acquisition of
a suitable site therefor.  The inadvertent omission of the term Regional
in the complaint for expropriation could not nullify the expro­priation of the
lands of defendants-appellants.  Such
error in the complaint does not amend the law and can easily be corrected
without affecting the validity of the proceedings.

II

The valuation of the lots must be fair and just, not only to the
owner but also to the taxpayers who are to pay for it.  Appellants are entitled to receive only the
value of what they have been deprived of, and no more; because to award them
less, would be unjust to them, and to award them more, would be unjust to the
public (27 Am. Jur., 2nd s 266, footnote 17 pp.
52-53).

The three commissioners appointed by the trial court to determine
the fair market value of the lots did not reach a consensus as to the classification
of the land, the allocation of areas as to each class, and the fair
market value of each class of land.

Commissioner Rogelio F. Balagot found
and recommended as follows:

Classification	Area ha.	Unit Price		Amount
1.  Irrigated Riceland	70	P8,500.00		P   595,000.00
2.  Upland Rice	66	3,500.00		231,000.00
3.  Orchard Land	52.0785	1,200.00		50,494.20
4.  Pasture Land	90.6695	1,000.00		90,669.50
5.  Forestland	70	1,100.00		77,000.00
TOTAL	338.7480 has.s			P1,044,163.70

and, after adding to the above amount the
sum of P1,712.00, representing improvements, finally recommended the amount of
P1,045,876.30, less P100,000.00 earlier withdrawn by appellants, to earn legal
interest until fully paid (pp. 271-282, ROA, Vol. I, rec.).

Commissioner Pablito M. Rojas appraised
the lands as follows:

“Land Classification	Total Hectares	Market Value sq. meter	Total Market Value
1.  Irrigated Palay Land	65.0000	P1.00	P   650,000.00
2.  Upland Palay	66.0000	0.30	198,000.00
3.  Orchard	38.0785	.25	95,200.00
4.  Pasture Land	95.6695	.10	95,669.50
5.  Forestry Compound	5.0000	.30	15,000.00
6.  Forest Land	65.0000	.15	97,500.00
7.  Barrio Compound	4.0000	.50	20,000.00
TOTAL	338.7480		P1,171,369.50″

and after considering
some factors, like the fact that the lots are titled, said commissioner finally
recommended “the amount of P1,407,856.00, the same to bear interest at the
legal rate from the date of possession by the plaintiff to the date the amount
is actually paid” (pp. 160-166, ROA, Vol. I, rec.).

Commissioner Eufemio Molina adopted the
following classification and allocation:

“(a)
With respect to Lot No. 1(Exh. ‘B’), into —

1. 
Unirrigated riceland
with an area of 120,000 meters.

2. 
Upland rice with an area of 85,000 sq. meters.

3. 
Pasture land with area of 2,801,695 sq. meters.

“(b)
With respect to Lot No. 2(Exh. ‘B-1’), into —

1. 
Unirrigated riceland
with an area of 120,000 sq. meters.

2. 
Upland rice with an area of 85,000 sq. meters.

3. 
Pasture land with an area of 175,785 sq. meters.”

and, making a mass valuation of the
entire two lots, recommended the amount of P135,000.00 by taking into
consideration the amount which to him is the price the government is willing to
pay:  P100,000.00 (actually the
provisional value deposited by the government to take possession of the lots);
P170,000.00 which according to him is the amount for which the defendants are
willing to part with their lots (actually P190,000.00 including the bank mortgage
liability of the land) and also the fact that the lots in question were
acquired by the defendants in 1957 for the amount of only P50,000.00 from
Felipe Nebrija and his children (pp. 71-78, ROA, Vol.
I, rec.).

Before the filing of the complaint, a Provincial Appraisal
Committee composed of Provincial Assessor Ramon Zandueta
as chairman, and as members, Provincial Highway District Engineer Oscar Data
and Provincial Auditor Gabino Ferrer,
was constituted.  On November 16, 1962, this committee conducted an
ocular inspection of the property, and on the same day, submitted its
Resolution No. 13, Exhibit A, which classified defendants’ property as follows:

“60 hectares riceland at P800.00 per hectare	– P48,000.00
278.7480 hectares pasture land at P150.00 per hectare	–    41,812.20
TOTAL	– P89,812.20″

(p. 135, ROA, Vol. I, rec.).  The aforesaid resolution was rejected as
having been done in haste (pp. 135-136, ROA, Vol. I, rec.).

According to Provincial Assessor Zandueta,
the amount of P89,812.20 is the assessed value of the property, which assessed
value is the appraised value in expropriation cases (p. 141, ROA, Vol. I,
rec.).

La Union agriculturist Pio A. Tadina was requested by Provincial Assessor Ramon Zandueta to appraise the property.  Pursuant to said request, Mr. Tadina went to the property thrice and thereafter submitted
his classification and valuation, as follows:

“1.  40 hectares riceland	P60,000.00	P200,000.00
2.   20 hectares riceland	20,000.00	60,000.00
3.   80 hectares pasture land	40,000.00	80,000.00
4.   120 hectares fruit trees	60,000.00	120,000.00
5.   72 hectares 2nd growth forest	78,000.00	156 000.00
TOTAL	P258,000.00	P616,000.00″

(p. 145, ROA, Vol. I, rec.).

When the complaint was filed, the improvements on the property
consisted of the following:

“20 mango (bearing) @ P30 ea. – – – – –	P800.00
21 coconut (bearing) @ P5 ea.  – – – – –	105.00
4 coconut (non-bearing) @ P2 ea. – – –	8.00
4 caimito (star apple) @ P8 ea. – – – – –	32.00
2 Chesa @ P5 ea. – – – – – – – – – – – – – –	10.00
4 Kasuy @ P2 ea. – – – – – – – – – – – – – –	8.00
12 bamboos (heavy) @ P0.30 ea. – – –	3.60
1 bamboo (light) @ P0.10 ea. – – – – – –	.10
1 breadfruit @ P5 ea. – – – – – – – – – – – –	5.00
1 jackfruit @ P4 ea.  – – – – – – – – – – – – –	4.00
1 guayabano @ P1 ea. – – – – – – – – – – –	1.00
6 orange (non-bearing) @ P1 ea. – – – –	6.00″	P982.70

 (pp. 16-17, ROA, Vol. I, rec.)

Mr. Luis Victor, principal of the La Union Regional Agricultural
School, testified that there were around 30 fruit-bearing mango trees, some
coconut fruit-bearing trees, a few star apple trees, some cashew fruit-bearing
trees and banana plants (p. 139, ROA, Vol. I, rec.).

Both Attys. Pablito M. Rojas and
Rogelio Balagot, commissioners representing
respectively the defendants-appellants and the trial court, agreed that the
value of the improvements on the property was then P1,712.60 (pp. 163, 280-281,
ROA, Vol. I, rec.).

According to Commissioner Eufemio R.
Molina for the plaintiff,

x x x Starting
from the town proper of Bacnotan, one can reach the
property by passing through the barrios of Cabaroan,
Say-oan, Salincob, Casiaman
and finally Sapilang. 
The place is about 2.5 kilometers north of the Poblacion
along the National Highway
up to the so-called Cabaroan junction.  From this junction is about a 2-kilometer
feeder road going eastward.  And from
this lateral road is an unsurfaced road of
approximately 1.5 kilometers leading to the site of the Agricultural
School.  However, before the school took possession of
the land on May 4, 1963, the
place was not accessible at all by any motor vehicles, and that the only means
was to hike over rice paddies, trails and creeks.

“Topographically, the property of defendants is situated on a
high elevation.  It consists of mountains
and hills forming a semi-circle, and sloping on the sides towards an elongated
portion or valley like depression which is level and developed into ricefields.  Because
of its high elevation or location, the climate of the place is healthful,
temperate and especially invigorating when one is near or within the vicinity
of the waterfall or spring.  The climate
is of the kind which the Weather Bureau would call the Type I climate; that is,
the place has two distinct seasons, a dry season from December to June, when
there are light rains or no rain at all and wet season, from June to December,
when rains are abundant, heavy and frequent. 
The soil of the place is good.  It
has a luxuriant vegetation.

“The property as per Original Certificate of Title No. 0-420 (Exh. ‘9-f’) is divided into 2 lots; Lot No. 1 has an area
of 3,006,695 square meters and covered by Tax Declaration No. 33043 (Exh. ‘b’); and Lot No. 2 which is under Tax Declaration No.
33043 (Exh. ‘B-1’) has an area of 380,785 square
meters, making a total land area of 338.7480 hectares, with an assessed value
of P42,120.00.

“Aside from the waterfall or spring within the property, there
are also fruit trees, scattered bamboo groves, banana trees in patches, forest
area, upland and pasture land.  The
bamboo and banana lands, however, cannot properly be considered as such because
the land upon which they grow is not planted principally for such growth.  The improvements on the forestry area have
been introduced by the government, notably the Reforestation Administration of
the Department of Agriculture and Natural Resources.  (Exh. ‘D’ and Exh. ‘I’).  The other
improvements on the land have been itemized in the complaint filed before the
Court.” (pp. 69-71, ROA, Vol. I, rec.).

The foregoing findings do not appear to
be disputed.

Defendant-appellant Celestino Juan
himself, stated in his letter of January
28, 1963 that his property is worth P190,000.00 (including his bank
loan), which he later increased to P300,000.00 in his motion for
reconsideration filed on April 24,
1963.  It should be recalled
that over three months earlier, appellant Celestino
Juan, in his letter dated January 2, 1963 to the Provincial Appraisal
Committee, evaluated his property at approximately P329,374.00, stating that he
spent P15,000.00 for survey, P5,000.00 for registration and P20,000.00 for
bulldozing and levelling; that 60 hectares are first
class which should be worth P3,000.00 per hectare; and that the remaining
portion of 278.748 hectares should command at least P500.00 per hectare (pp.
35-37, ROA, Vol. I, rec.).

The last evaluation in the amount of P300,000.00 judicially given
by the defendants-appellants is a declaration and admission binding on them
(Sec. 22, Rule 130, Revised Rules of Court), there being no showing that they
were laboring under an error of fact.  No
compelling reason has been advanced to justify their being relieved from the
binding effects of such admission.  As We
ruled in the Republic of the Philippines
versus Narciso [99 Phil. 1031 (1956)], “the
owners’ valuation of the property may not be binding on the Government or the
Court, but it should at least set a ceiling price for the compensation
to be awarded.  Moreover, the prices to
be considered are those at the beginning of the expropriation, not the
increased values brought about by the improvements and actuations of the
Government after occupying the premises” (Re-affirmed in RP v. PNB, April
12, 1961, 1 SCRA 957-963).

When the defendants-appellants withdrew in 1963 the P100,000.00
deposited by the government, they already obtained a clear profit of P10,000.00
on their alleged investment of P90,000.00 consisting of P50,000.00, the price
they allegedly paid for the property in 1957, and P40,000.00 allegedly
representing expenses for levelling, surveying and
securing their Torrens title of the property from 1957 to 1959.  The balance of P392,000.00 – consisting of
P200,000.00 and interest of P192,000.00 at 6% annually for 16 years from May 4, 1963 to 1979 – is all profit,
even during times of inflation.  From
1957 until May 4, 1963, when the government took possession of the property,
the defendants-appellants paid realty taxes on the basis of their tax
assessment of only P42,120.00 (P89,812.20 according to Provincial Assessor Zandueta [p. 141, ROA, Vol. I, rec.]).  Atty. Pablito M. Roxas and Atty. Rogelio Balagot,
appraisal commissioners respectively for appellants and the trial court,
conceded that the value of the improvements was only P1,712.00 in 1963.  To give them more than a million pesos –
about P1,111,360.00 – on the basis of the appraisal of P616,000.00 by
provincial agriculturist Pio Tadina,
including interest for 16 years at 6% per annum, would be to mulct the
tax-paying public, as the said amount is over ten times or over 1000% on their
alleged original investment of P90,000.00 from 1957 to 1959.  Precisely, in their reply dated January 28, 1963, their selling price
was only P170,000.00 net to them, exclusive of their bank debt of P20,000.00.

The appraisal of Provincial Agriculturist Pio
Tadina, Chief Agricultural Appraiser Rafael T. David
of the DBP, Commissioner Balagot and Commissioner
Rojas, respectively, in the amount of P616,000.00, P1,006,400.00,
P1,044,163.70, and P1,171,369.50, is patently extravagant, considering that the
property was bought in 1957 (1956 as claimed by appellants [pp. 112, 126,
Appellants’ Brief]) for P50,000.00 only and the value of the improvements did
not exceed P1,712.60 as of May 4, 1963, when the government took
possession.  It is doubtful that the property
would increase in value over 6 times or over 10 times or by over 600% or over
1,000% in six years, from 1957 to 1963, with the expenses for surveying,
securing the Torrens title over and bulldozing said property amounting to not
more than P40,000.00, already included in the computation (p. 36, ROA, Vol. I,
rec.).

It should be emphasized that the property is about 6 kilometers
from the poblacion of Bacnotan;
that on May 4, 1963, when the government took possession of the same, it was
not accessible at all by any motor vehicle and can only be reached by hiking
through rice paddies, trails and creeks; that it was not fully developed; and
that it was then assessed at P42,120.00 (P89,812.20 according to Provincial
Assessor Zandueta), although it has a waterfall or
spring.

According to Commissioner Molina, the property has 24 hectares of
unirrigated rice land and 17 hectares dedicated to
upland rice with the greater portion of 297.748 hectares as pasture land (pp.
71-72, ROA, Vol. I, rec.).  Pio Tadina reported that 60
hectares are riceland, 80 hectares pasture land, 120
hectares with fruit trees and 78 hectares second growth forest (p. 146, ROA,
Vol. I, rec.).  According to Rafael T.
David, who was requested by appellant Juan to make an appraisal (p. 145, ROA,
Vol. I, rec.), 70 hectares are riceland, 66 hectares
for upland rice, 38.0785 hectares for orchard, 90.6695 hectares pasture land, 5
hectares forestry compound, 65 hectares forest land and 4 hectares barrio
compound (p. 150, ROA, Vol. I, rec.).

Even under the classification of Commissioners Balagot and Rojas, as aforestated,
about 50% of the property is not improved by man nor dedicated to agriculture,
for about 95 hectares are pasture land and 70 hectares are forest land.

The sales of farm lots in the vicinity of the property in
question from April, 1959 to May 14,
1962 (pp. 74-75, 152-153, 156-157, ROA, Vol. I, rec.), do not
provide an adequate basis for appraisal of the property of
defendants-appellants; because such sales involved very small developed areas
of less than a hectare each, which small lots usually command better prices
within the reach of the ordinary buyer. 
The instant case involves the condemnation of over 338 hectares.

III

It is argued that appellants’ judicial admission of P300,000.00
as the provisional value of their lots, should not bind them, because said
admission refers only to the provisional value of the said lots and not
as an admission of the actual – fair and just – value of the lots.  The provisional value fixed by the Court
pursuant to Section 2 of Rule 67 of the Rules of Court, is the provisional
value that does not bind the land­owner. 
But when the landowner himself fixes the provisional value, he should
abide thereby in obedience to the rule that admissions in pleadings bind the
party making them.

Section 2 of Rule 67, New Rules of Court reads:

“Entry of plaintiff upon depositing value with the National or
Provincial Treasurer – Upon the filing of the complaint or at any time
thereafter the plaintiff shall have the right to take or enter upon
the possession of the real or personal property involved if he deposits
with the National or Provincial Treasurer its value, as provisionally and
promptly ascertained and fixed by the Court having jurisdiction of the
proceedings, to be held by such treasurer subject to the orders and final
disposition of the court.  x x x.”

Rule 69, Section 3 of the Old Rules of Court under which the
present case was filed contained a similar provision.  (See also Visayan
Refining Co. v. Camus, 40 Phil. 550-556 [1919] and
Manila Railroad Co. V. Paredes (31 Phil. 118-142
[1915]).

For emphasis, We repeat that the price of P300,000.00 was the
provisional value fixed not by the trial court, but by the
defendants-appellants as owners in their motion for reconsideration filed on April 24, 1963.  The provisional value fixed by the trial
court in its order of April 15, 1963,
was only P90,793.70, the reconsideration of which the owners sought from the
trial court.  In its order of April 26, 1963, the trial court fixed
the provisional value at P100,000.00. 
The trial court, in its challenged decision of September 28, 1964, finally fixed the value at
P190,000.00, which is still more than double the alleged capital investment of
P90,000.00 allegedly paid by the owners for the purchase of the property, levelling and expenses for survey and titling of the
property from 1957 to 1959.  In his own
letter of January 28, 1963,
where he fixed his selling price at P170,000.00 net to him (plus P20,000.00
bank mortgage on the property), defendant-appellant Celestino
Juan stated that the best offer he had for the property was only P200,000.00.

While it may be true that the value provisionally fixed by
the trial court “x x x
does not necessarily represent the true and correct value of the land x x“, it is equally true that the said amount
provisionally fixed may yet turn out to be the true and correct value of the
lots approximating the “just compensation” requirement of the
Constitution.  In fact, the same may also
turn out to be more than the true and correct value of the property condemned
by the government (see 27 AM JUR 2d 111, footnote 16).

Furthermore, it can be justifiably inferred that when appellants
themselves proposed on April 24, 1963 the amount of P300,000.00 as the
provisional value of their lots, they were referring actually to the highest
value their lots could command at that time, notwithstanding their very
speculative and extravagant claim in the same pleading (where they made the
P300,000.00 proposal) that the “fair market value of (the) property should
at least be fifty centavos x x per square meter or
P5,000.00 per hectare.”

Consider the following circumstances:

1.  In his reply dated January 28, 1963 to the
letter of Mr. Victor Luis, appellant Juan stated that the selling price of his
land was “P170,000.00 net to me exclusive of  the amount of my obligation to the China
Banking Corporation where the property is mortgaged”, or P190,000.00
including the mortgage debt of P20,000.00 (pp. 382384, ROA).

2.  Appellants-spouses acquired the lots in 1956
(as claimed by appellants) or 1957 (as stated in the decision of the trial
court) from Felipe Nebrija and his children for only
P50,000.00.

3.  The lots in question were taxed on the basis
of an assessment of only P42,120.00.

4.  In his letter dated January 2, 1963 to the Provincial Appraisal
Committee, appellant Celestino Juan evaluated his
lots at approximately P319,374.00.

As a matter of fact, appellant should be bound by his P190,000.00
admission.  In the light of the
above-mentioned circumstances, the said amount of P190,000.00 is already just
and reasonable.

Appellants’ claim that they were forced to make the P190,000.00
offer because they were then under a pressing need for money to defray expenses
in connection with certain criminal cases involving appellant Ana to settle
said cases, can hardly invite belief; because (1) appellant Celestino
Juan did not aver this alleged urgent need for money in his letter of January
28, 1963, and (2) notwithstanding appellant Juan’s claim in that same letter of
January 28, 1963 that an interested buyer of the said lots was “ready to
sign the contract for a price of P200,000.00 payable in cash or at least a
period of ten (10) days”, appellant did not dispose of the same to said
interested buyer, despite the lapse of ten days – during which he could have
had the money – from the receipt by Victor Luis of said letter.  Moreover, the same letter belies his alleged
dire need for money to settle the alleged criminal cases against his wife for he
stated therein that he had then a pending DBP loan application for
P4,102,000.00 for a dairy farm, and that by reason of his connection with DBP
officials, his application would be favorably considered for P1,000,000.00 with
the expropriated property as collateral together with the dairy farm equipment,
facilities and stock.

Being a lawyer, appellant Celestino
Juan, knew that the reputation of his wife and for that matter his family would
be better protected and preserved by her acquittal after trial than by
settlement of the case (see pp. 107-108, Appellants’ brief).  Compromise of a criminal case, other than a
private offense, does not remove the criminal liability and the concomitant
stigma.  Settlement of a criminal case,
unlike acquittal, will not stop the people from talking about the guilt of the
accused therein.

Of course “judicial or non-judicial admissions made by condemnees as to the value of their properties that are to
be expropriated should not be deemed conclusive if such admitted value be
unjust, because the Constitution imperatively requires the payment of ‘just
compensation’”.  But in the instant
case, it could hardly be said that the amount of P300,000.00 is unjust to the
appellants.  The delay in the payment is
compensated by the liability for 6% interest per annum, covering sixteen (16)
years – from 1963 to 1979 – on the balance of P200,000.00 (on May 7, 1963,
appellants withdrew the P100,000.00 deposit) amounting to P192,000.00.  The total balance due appellants would be
P392,000.00.  The total payment to them
then would be P492,000.00.  Beyond this
price, the value would be excessive and unjust to the State and the taxpayer
(27 Am. Jur. 2d 52-53 § 266, footnote 17).

It must be pointed out that the most reliable pieces of evidence
in the records relative to the just compensation to be paid herein appellants
are those hereinbefore enumerated, namely, appellants’ own evaluation in 1963,
the acquisition cost and the tax assessment. 
This is so because the Committee failed to arrive at an acceptable
valuation, not to mention the fact that the individual reports of the
commissioners of the Appraisal Committee did not undergo the indispensable
requirement of hearing before the trial court. 
It must be herein stressed that almost all the evidence enumerated
earlier are in the nature of admissions by the owner, which kind of evidence
under existing jurisprudence occupies a preferred position in the realm of
proof of just compensation and valuation in eminent domain.

Even the purchase price of P50,000.00 paid in 1956 or 1957 by
appellants for the lots sought to be condemned in 1963 is generally held
admissible as evidence of the lots’ fair market value, unless such purchase is
too remote in point of time from the condemnation proceedings or some special consideration
induced the sale at less than the true market value (29-A C.J.S. 1203-04).

Similarly, the assessed valuation of land made by tax assessors
when required by the law, and the owner’s own valuation may be considered
together with other proofs in the determination of the just value of the lots
condemned (29-A, C.J.S. 1201-1202).

As aforestated, appellants paid realty
taxes on the property on the basis of an assessed valuation of only P42,120.00,
with improvements worth only P1,712.00. 
On January 28, 1963,
appellants’ offer was P190,000.00, then P300,000.00 on April 24, 1963, as provisional value, after
extravagantly claiming that the property is worth the fantabulous price of at
least P5,000.00 per hectare or a total of P1,693,040.00.  Not even the irrigated rice lands along the
national highway in Nueva Ecija,
the home province of appellants, could command that price of P5,000.00 per
hectare in 1963.  And the lands in the
case at bar are in La Union, hilly, and away from the national highway without
direct access to any feeder road.

In our jurisdiction, the statement of the value of his property
by the owner in the tax declaration shall, since 1940 under CA. No. 530,
constitute prima facie evidence of the real value of the property
in expropriation proceedings by the Government and its instrumentalities.

In short, it could therefore be said – taking into consideration
the acquisition cost of P50,000.00 in 1956 or 1957 of the lots subject
matter of the case, the alleged cost of P40,000.00 for levelling,
surveying and titling thereof from 1957 to 1959, the assessed value as well
as the tax declarations of the appellants with respect to these lots of
only P42,120.00, the improvements worth P1,712.00 in 1963, and the several
admissions or estimates made by the appellants with respect to the value of
the lots ranging from P190,000.00 to P319,374.00 to P300,000.00 to
P1,693,040.00 (P5,000.00 per hectare) – that the amount of P300,000.00 is just
to appellants, not to mention that in addition to said amount a considerable
interest of P192,000.00 for 16 years (1963-1979) would be paid on the unpaid
balance of P200,000.00 from May 4, 1963 by the Government, or a grand total of
P492,000.00, which is over five (5) times or over 500% their capital investment
of P90,000.00 from 1956 to 1959. 
Anything beyond this amount is grossly excessive and patently unjust to
the government and the tax-paying public (29 Am. Jur.
2d 52-53 § 266, footnote 17).

It cannot be seriously claimed by appellants that the
declarations of value of the lots in Exhibits B and B-1 were not made by them
(pp. 346­-347, ROA), considering that said tax declarations were made only
after the title over the lots was obtained by appellants.  Exhibits B and B-1 clearly indicate that
appellants and no one else made the said declarations (p. 182, ROA).

Likewise, the valuation of Agriculturist Tadina
should not be accorded too much weight for the following reasons:

1.  His valuation report is based purely on his
own estimate and opinion; hence in his letter to Atty. Ramon Zandueta which embodied his evaluation, he therein stated
that “x x You will note hereunder the technical
analysis of the undersigned with regards to the area under consideration as
a personal opinion x x x.”

2.  The factors he considered in evaluating the
lots in question could hardly justify this valuation in the amount of
P616,000.00.  Hence: “The 80
hectares of pasture land if properly grazed and managed is capable of
maintaining no less than 400 heads of cattle. 
The 120 hectares of fruit trees is suitably adapted to cacao, coffee,
bananas, mangoes, pineapple, citrus, avocado, rambutan,
lanzones, etc. 
The 78 second growth forest if only planted to ‘alnos
Mirando‘ a Japanese kind of forest tree will also
increase the volume of spring water for irrigation purposes.  x x x The second growth forest land has been evaluated higher
than the pasture and fruit tree lands because forest lands do not only conserve
soil erosion and soil fertility but also provide organic matter for the
irrigated riceland. 
It will also conserve and promote the development of spring besides the
value of the trees and other forest by-products which are now available as
sources of income” (pp. 39-42, ROA).

3.  Tadina is not
“an experienced and competent appraiser” in the field of eminent
domain or expropriation cases.  When
cross-examined by the Fiscal of the Province of La Union, he declared that the
appraisal he made for the property in Damortis, La
Union, and that in Aringay was only with respect to
its adaptability and suitability for agriculture and not for purposes of
determining the fair and reasonable value (tsn,
pp. 505-506, pp. 201, 202, ROA; see also pp. 108-109, ROA).  His appointment as Chairman of the Appraisal
Committee for public lands in La Union did not qualify him as an
“experienced and competent appraiser” in expropriation cases; because
lands involved therein are public lands and the appraisal or determination of
the fair market value of said lots are not for purposes of expropriation cases
(p. 202, ROA).  Neither would his
participation in the Poro Point expropriation add to
his qualifications as an appraiser in expropriation cases, because he was
merely therein consulted (p. 202, ROA).

4.  His classifications were made by estimates
and not by actual measure­ments (tsn, p. 514; p. 204,
ROA).

That the land “had potential for conversion into
subdivision” should not be considered in the valuation of the lots in
question; because (1) the records of the case do not show conclusive evidence
as to the subdivision potentiality of the lots; and (2) as held in Manila
Electric Co. v. Tuason, “agri­cultural land
should be appraised as such and not as potential building site” (60 Phil.
663 [1934], reiterated in the case of The Municipal Government of Sagay v. Jison, et al., 104 Phil.
1026, 1033 [1958]).

Republic vs. Castelvi lends no support
to appellants’ position; because in the Castelvi
case, there was a finding by this Court that “x x
x the lands in question had ceased to be devoted to
the production of agricultural crops, that they had become adaptable for
residential purposes, and that the appellees had
actually taken steps to convert their lands into residential subdivisions even
before the Republic filed the complaint for eminent domain (p. 355, 58 SCRA).

As already noted above, the individual valuations made by the
three commissioners are of little value, if at all; because the same were
irregularly prepared, not to mention the fact that the same were not subjected
to the indispensable hearing requirement before the trial court – wherein the
commissioners could have been cross-examined on their respective reports, the
bases thereof, how they reached their conclusions, and their qualifications,
and related matters – vital to the credibility, or lack of it, of their valuations.

It is urged that, because the value of the peso at the time of
the taking in 1963 by the government of the lots of appellants and the value of
the peso today when the just compensation to be awarded to appellants is to be
paid, are no longer the same, this factor should be considered in the
determination of the final award to be given; and that even if WE consider
appellants as having judicially admitted the amount of P300,000.00 as the price
of their property, the doubling of this sum at this time is justified.

Actually, under this proposition, the amount to be doubled should
only be the balance of P200,000.00, for appellants had withdrawn and made use
of the P100,000.00 deposited by the government at the inception of this case.

It is of course true that the value of the peso in 1963 and at
present is no longer the same.  But this
does not justify US in considering that factor nor in doubling the amount
judicially admitted by appellants; because such contingency is already
well-taken care of by the interest to be awarded to appellants.  For that is the true role or nature of
interest in expropriation cases; because said interest is not contractual in
nature nor based on delict or quasi-delict but one that “runs as a matter of law and
follows as a matter of course from the right of the landowner to be placed in
as good a position as money can accomplish, as of the date of the taking”
(30 CJS 230).  Stated otherwise:
“Where the payment of compensation does not accompany the taking of
property for public use but is postponed to a later date, the owner of the
property is ordinarily entitled to the award of an additional sum which will
compensate for delay (cases cited) or which will, in other words, produce the
full equivalent of the value of the property paid contemporaneously with the
taking” (29-A CJS 762).  Under this
view, the interest awarded is deemed part of the just compensation required to
be paid to the owner (27 Am. Jur. 112).  This appears to be the prevailing view in the
United States.  As aptly and clearly explained in one
American case:

“Article 1 § 18 of the Constitution of the State of Oregon,
provides in part as follows: ‘Private Property shall not be taken for public
use x x x without just
compensation.’ The Fifth Amendment to the Constitution of the United
States contains substantially the same
provision, ‘nor shall private property be taken for public use, without just
compensation.’ In construing this identical language of the Federal
Constitution the Supreme Court of the United
States holds as follows: ‘It is settled by
the decision of this court that just compensation is the value of the property
taken at the time of the taking (citing cases). 
And, if the taking precedes the payment of compensation, the owner is
entitled to such addition to the value at the time of the taking as will
produce the full equivalent of such value paid contemporaneously.  Interest at a proper rate is a good
measure of the amount to be added‘ (numerous cases cited omitted).  In these cases and others, the proper rate
of interest is held to be the legal rate of interest prevailing in
the jurisdiction where the land is located. 
The Supreme Court of West Virginia holds on the authority of these
decisions and also of Dohany vs. Rogers, 281, U.S.
362, 50 SCt. 299. 74 L.Ed.
904, 68 ALR434, that denial of the right of interest would be a violation of
the fourteenth Amendment to the Federal Constitution, Simons v. Dillon, 119
W.VA 284, 193 S.E. 331, 113 A.L.R. 787. 
The following texts are authority for the allowance of such interest as
part of the damages sustained by the owner of the land.  Nichols on Eminent Domain 653, § 216 (3d
ed.); Lewis, Eminent Domain (3d ed.) 1320, §742; 18 AM JUR., Eminent Domain,
§272″ [State vs. Deal, 233 P 2d 242, 251-252, underscoring supplied).

This view is also well-discussed by JAHR in his book, Eminent
Domain – Valuation and Procedure (1953 ed.), Chapter XXVIII – Payment of
Compensation, pp. 286-301; and by ORGEL in his book, Valuation Under Eminent
Domain, Vol. I (1953 ed.) on the subject of interest as part of just
compensation and as a penalty for delay in payment (Sec. 5, pp. 19-33).

In this jurisdiction, a study of the cases decided by this Court
with respect to the award of interest to the condemnee
where there is a gap of time between the taking and the payment, shows that We
tend to follow the view just discussed. 
The first case – it would appear – where the question of interest arose
in this jurisdiction was the Philippine Railway Co. vs. Solon, February 20, 1909, 13 Phil. 35-45.  The two issues taken there in connection with
interest were:  (1) From what time should
interest be reckoned, from time of the taking possession of the property by the
government or from judgment of the trial court; and (2) whether on appeal,
appellant-condemnee is entitled to interest during
the pendency of the appeal.  In disposing of the issues, the Court,
relying heavily on American jurisprudence, appears to treat interest as part of
just compensation and as an additional amount sufficient to place the owner
“in as good a position as money can accomplish, as of the date of the
taking”.  Thus, the Court declared:

“It remains to consider what interest the defendant is
entitled to from the last named date.  It
appears from the record that the company opposed the confirmation of the
award.  Its objections were so far
successful that the court reduced the amount awarded by the commissioners.  The owner was compelled to appeal and in
his appeal has been so far successful as to reverse the action of the court
below.  Under these circumstances we
think he is entitled to interest on the award until the final determination of
this proceeding.  What the result
would be if he had failed in his appeal, we do not decide.  The interest thus allowed will be interest
upon the amount awarded by the commissioners from the 2d day of February, 1907,
until payment” (13 Phil. 40-44, underscoring supplied).

The Solon case thereafter became the basis of award of interest
on expropriation cases like Philippine Railway v. Duran, 33 Phil. 159 [1916];
Manila Railroad Co. v. Alano, 36 Phil. 501 [1917];
Manila Railroad Co. v. Attorney General, 41 Phil. 177 [1920]; Alejo v. Provincial Government of Cavite,
54 Phil. 304 [1930]; Tayabas v. Perez, 66 Phil. 470
[1938]; Republic v. Gonzales, 94 Phil. 957 [1954]; Republic v. Lara, 96 Phil.
172 [1954]; Phil. Executive Commission v. Estacio, 98
Phil. 219 [1956]; Republic of the Philippines. v. Deleste,
46 al., 99 Phil. 1035 [1956]; Republic v. Garcellano,
103 Phil. 237 [1958]; Yaptinchay, 108 Phil. 1053
[1960]; Republic v. Tayengco, 19 SCRA 900 [1967], and
many others, until the matter of payment of interest became an established part
of every case where taking and payment were not contemporaneously made.

And finally, We confirmed our adherence to the prevailing view in
the United States when in the case of Urtula vs.
Republic, January 31, 1968, 222 SCRA 477, 480), We declared, through Mr.
Justice J.B.L. Reyes, that:

“x x x
Said interest is not contractual, nor based on delict
or quasi-delict, but one that —

‘runs as a matter of law and follows as a
matter of course from the right of the landowner to be placed in as good a
position as money can accomplish, as of the date of the taking” (C.J.S.
230; see also Castelvi case, supra, and Republic v. Nable-Lichauco, 14 SCRA 682).

In this connection, it must be pointed out that the judicial
notice taken by this Court in the Castelvi case
(supra, 363) “x x x of
the fact that the value of the Philippine peso has considerably gone down since
the year 1959″, was premised not on the par value of the peso to the
dollar, but on the dollar-peso exchange rates at the time of the taking of the
lots and at the time of the payment thereof.

In the case of Manuel & Co. vs. CB (38 SCRA, 533-542 [1971]),
We distinguished between par value of the peso and the dollar-peso
exchange rate.  The par value of the
peso to the dollar – two pesos to one dollar – is fixed by law and remains
intact (see 48, R.A. 265, 1948; Sec. 6, CA No. 699, 1945).  Hence, while there was a change of the
exchange rate, the par value of the peso as established by law remains
unchanged.

Such par value can only be altered by the President of the Philippines
upon proposal of the Monetary Board with five members concurring and approved by
Congress (Sec. 49[3] RA No. 265).

On the other hand, the rate of exchange or exchange
rate is the “price, or the indication of the price, at which one can
sell or buy with one’s own domestic currency a foreign currency unit.  Normally, the rate is determined by the law
of supply and demand for a particular currency” (38 SCRA 533-542).

It is submitted that the Castelvi
doctrine on the value of our peso is of doubtful legality, considered in the
context of the Central Bank case, above discussed.  In effect, the Castelvi
ruling has devalued our peso; a case of devaluation by judicial fiat.

In the light of the foregoing, the de facto
devaluation of our peso should not be taken into account in the final
determination of the value of the lots, subject matter of the case.

In the 1970 case of Dizon-Rivera v. Dizon (33 SCRA 554-557 [1970]), WE ruled against appellants
and held that the decrease in the purchasing value of the Philippine peso
provides no legal basis or justification for completing their legitime with real properties of the estate instead of
being paid in cash, reasoning thus:

“Neither may the appellants legally insist on their legitime being completed with real properties of the estate
instead of being paid in cash, per the approved project of partition.  The properties are not available for the
purpose, as the testatrix had specifically partitioned and distributed them to
her heirs, and the heirs are called upon, as far as feasible to comply with and
give effect to the intention of the testatrix as solemnized in her will, by
implementing her manifest wish of transmitting the real properties intact to
her named beneficiaries, principally the executrix-appellee.  The appraisal report of the properties of the
estate as filed by the commissioner appointed by the lower court was approved in
toto upon joint petition of the parties, and
hence, there cannot be said to be any question – and none is presented – as to
fairness of the valuation thereof or that the legitime
of the heirs in terms of cash has been understated.  The plaint of oppositors
that the purchasing value of the Philippine peso has greatly declined since the
testatrix’ death in January, 1961 provides no legal basis or justification for
overturning the wishes and intent of the testatrix.  The transmission of rights to the succession
are transmitted from the moment of death of the decedent (Article 777, Civil
Code) and accordingly, the value thereof must be reckoned as of then, as
otherwise, estates would never be settled if there were to be a revaluation
with every subsequent fluctuation in the values of the currency and properties
of the estate.  There is evidence in the
record that prior to November 25, 1964, one of the oppositors,
Bernardita, accepted the sum of P50,000.00 on account
of her inheritance, which, per the parties’ manifestation, ‘does not in any way
affect the adjudication made to her in the projects of partition.’ The payment
in cash by way of making the proper adjustments in order to meet the
requirements of the law on non-impairment of legitimes
as well as to give effect to the last will of the testatrix has invariably been
availed of and sanctioned (see Articles 955, 1080 and 1104, Civil Code).  That her co-oppositors
would receive their cash differentials only now when the value of the currency
has declined further, whereas they could have received them earlier, like Bernardita at the time of approval of the project of
partition and when the peso’s purchasing value was higher, is due to their own
decision of pursuing the present appeal” (underscoring supplied).

Additional distinction between the present case and the Castelvi case:

The proceedings before the commissioners and before the trial
court in the Castelvi case were all in accordance
with the provisions of the rules, while this is not so in the present case;
because the commissioners herein did not turn out a valid report, as the
commissioners made their own and separate reports and no consensus was reached
by them on the classification of the lots, allocation of areas to each class,
and the fair market value of each class and the lots as a whole.  Furthermore, no hearing on the reports of the
commissioners was made by the trial court in the case at bar, because of the
motion of the herein appellants to submit the same without any (hearing).

The finding of the trial court, which was sustained by this
Court, that the lots involved in the Castelvi case
were residential, was supported by and based on the factual findings of the
commissioners, who were unanimous thereon, and the Provincial Appraisal
Committee of Pampanga (58 SCRA 356-359); while in the
present case no one among the commissioners classified the lots or any portion
thereof as residential or one with residential/subdivision potentiality.  With respect to Provincial Board Resolution
No. 13 on the report of the Provincial Appraisal Committee of La Union, the
same was disregarded for having been passed in haste.

In the present case, commissioner Balagot
classified the two lots into irrigated riceland,
upland riceland, orchard land, pasture land and
forest land; Commissioner Rojas similarly classified the lands as above, but
adding thereto forestry compound and barrio compound; while Commissioner Molina
classified the lots into unirrigated riceland, upland riceland and
pasture land.  It cannot be seriously
claimed that the lots involved in the present case is suitable as, or have
potentials for conversion into, a residential subdivision simply because a
4-hectare area of the same was considered by a member of the provincial appraisal
committee as residential.  In fact, said
4-hectare area was reflected in the Provincial Appraisal Committee Report,
Resolution 13 (Exh. A) as grazing land, not as a
residential one (see pp. 138, 173, ROA; pp. 67, 143, Appellants’ Brief).  Furthermore, none among the commissioners
believed the testimony of the said member on that point as no one among them
classified the lots or any portion thereof as residential.  The fact that the tenants of appellants
previously occupied the said area and constructed houses thereon, does not
convert the whole area or the portion thus occupied into a residential
one.  The residential nature of the lot
is not determined alone by the presence or absence of houses thereon (Republic
v. Garcia, 91 Phil. 46 [1952]).  The determination
of the true nature of a lot must take into consideration, among other things,
the location, topography, kind of soil, fertility or
productivity, and surroundings of the lot (Manila Railroad Co. v. Caligsihan, 40 Phil. 326 [1919]; Republic v. Garcia, supra;
Republic v. Lara, 50 O.G. 5778 [1954]). 
Indeed, the evidence relied upon by this Court in concluding that the
lots involved in the Castelvi case are residential,
and not agricultural, shows that:

“x x x Castelvi broached the idea of subdividing her land into
residential lots as early as July 11, 1956 in her letter to the Chief of Staff
of the Armed Forces of the Philippines (Exh.
5-Castelvi).  As a matter of fact, the layout
of the subdivision plan was tentatively approved by the National Planning
Commission on September 7, 1956.  (Exh.
8-Castelvi).  The land
of Castelvi
had not been devoted to agriculture since 1947 when it was leased to the
Philippine Army.  In 1957 said
land was classified as residential, and taxes based on its classification as
residential had been paid since then (Exh.
13-Castelvi).  The location of the Castelvi land justifies its suitability for a residential
subdivision.  As found by the trial
court, ‘It is at the left side of the entrance of the Basa
Air Base and bounded on two sides by roads (Exh.
13-Castelvi; paragraphs 1 and 2, Exh. 12-Castelvi), the
poblacion (of Floridablanca),
the municipal building, and the Pampanga Sugar
Mills are close by.  The barrio
schoolhouse and chapel are also near (Tsn., Nov.
23, 1960, p. 68).

“The lands of Toledo-Gozun
(Lot 1-B and Lot 3) are practically of the same
condition as the land
of Castelvi.  The lands of Toledo-Gozun
adjoin the land of Castelvi.  They are also contiguous to the Basa Air Base, and are along the road.  These lands are near the barrio school
house, the barrio chapel, the Pampanga Sugar Mills,
and the Poblacion of Floridablanca
(Exhs. 1, 3 and 4-Toledo-Gozun).  As a matter of fact, regarding Lot
1-B, it had already been surveyed and subdivided, and its conversion into a
residential subdivision was tentatively approved by the National Planning
Commission on July 8, 1959
(Exhs. 5 and 6-Toledo-Gozun).  As early as June, 1958, no less than 32
men connected with the Philippine Air Force among them commissioned officers,
non-commissioned officers, and enlisted men had requested Mr. and Mrs.
Joaquin D. Gozun to open a subdivision on their lands
in question (Exhs. 8, 8-A to
8-ZZ-Toledo-Gozun)” /58 SCRA 357, underscoring supplied).

In the present case, there is no evidence in the record
warranting a conclusion that the parcels involved have potentials for
conversion into a residential sub­division. 
On the contrary, the location, topography and the use to which the lots
involved were devoted at the time of the filing of expropriation proceedings in
the lower court, indicate that they have none. 
In his report, Commissioner Molina described the location and topography
of the lots as follows:

“x x x
Starting from the town proper of Bacnotan, one can
reach the property by passing through the barrios of Cabaroan,
Say-oan, Salincob, Casianan
and finally Sapilang. 
The place is about 2.5 kilometers north of the Poblacion
along the National Highway
up to the so-called Cabaroan junction.  From this junction is about a 2 kilometer
feeder road going eastward.  And from
this lateral road is an unsurfaced road of
approximately 1.5 kilometers leading to the site of the Agricultural
School.  However, before the school took possession of
the land on May 4, 1963,
the place was not accessible at all by any motor vehicles, and that the only
means was to hike over paddies, trails and creeks.

“Topographically, the property of defendants is situated on
a high elevation.  It consists of
mountains and hills forming a semi-circle, and sloping on the sides towards an
elongated portion or valley-like depression which is level and developed into ricefields. 
Because of its high elevation or location, the climate of the place is
healthful, temperate and especially invigorating when one is near or within the
vicinity of the waterfall or spring.  The
climate is of the kind which the Weather Bureau would call the Type I climate;
that is, the place has two distinct seasons, a dry season from December to
June, when there are light rains or no rains at all, and wet season, from June
to December, when rains are abundant, heavy and frequent.  The soil of the place is good.  It has a luxuriant vegetation” (pp.
69-70, ROA, underscoring supplied).

The presence of the houses of twenty-three (23) tenants in a
4-hectare area at the time the government took possession of the lots herein
involved, is not sufficient proof of that portion’s potentiality for conversion
into a residential subdivision, much less of the whole parcel of about 338 hectares.  There was no evidence that the houses of the
tenants were there constructed because of its residential nature.  In all likelihood, the tenants were forced by
necessity to construct their houses therein to be close to their respective
tobacco farms.  The fact that under the
leasehold system of land tenure, a tenant is allotted a portion for his
dwelling does not render the entire landholding no longer agricultural and
thereby convert the same into a residential land.

WHEREFORE, THE JUDGMENT APPEALED FROM IS HEREBY MODIFIED
AND THE PLAINTIFF-APPELLEE REPUBLIC OF THE PHILIPPINES IS HEREBY DIRECTED TO
PAY THE DEFENDANTS-APPELLANTS CELESTINO C. JUAN AND ANA TANSECO THE SUM OF TWO
HUNDRED THOUSAND (P200,000.00) PESOS, WITH INTEREST AT THE LEGAL RATE OF SIX PERCENT
(6%) PER ANNUM FROM MAY 4, 1963.  NO COSTS.

Fernandez, Guerrero, Abad Santos, De
Castro, and Melencio-Herrera,
JJ., concur.

Fernando, C.J., concurs in the
opinion of J. Makasiar.

Teehankee, J., concurs in separate opinion.

Barredo, J., reserves his votes.

Antonio, J., dissents in a
separate opinion.

Aquino, J., dissents.

Concepcion, Jr. and Santos,
JJ., no part.