REPUBLIC OF THE PHILIPPINES, PLAINTIFF AND APPELLANT, VS. PHILIPPINE NATIONAL BANK, ET AL., DEFENDANTS. VICENTE J. FRANCISCO, DEFENDANT AND APPELLANT.

Proceedings, begun on January 16, 1950, for the expropriation of fifty-four
(54) lots needed for the construction, by the National Government, of the
Commonwealth Avenue, in the Barrio of Culiat, Quezon City. This appeal refers to
one of said lots, namely, Lot 795-B-3-A, with an area of 14,026 square meters,
which is part of Lot 795-B-3, with an area of 42,844 square meters, belonging to
defendant Vicente J. Francisco, hereinafter referred to as the defendant, and
mortgaged for P60,000 to the Philippine Bank of Communications, which has,
accordingly, been included, also, as one of the defendants.

In an amended complaint, filed on January 9, 1952, the portion sought to be
taken from said Lot 795-B-3 was increased, from 13,110 square meters, as its
area was under the original complaint, to 14,026 square meters. By an order
dated January 17, 1952, the Court of First Instance of Rizal admitted the
amended complaint and authorized plaintiff to take possession of said land, upon
deposit of the sum of P7,013.00 as the provisional value set forth in said
pleading and fixed by the court. On motion of the defendant, filed on February
17, 1952, he was allowed to withdraw said amount. Plaintiff’s right to
expropriate being, in effect, conceded, Catalino Lacson, Jose Padilla and Moises
Romero were appointed commissioners to ascertain and report on the amount of the
compensation due to said defendant. After appropriate proceedings, commissioner
Lacson recommended payment to him at the rate of P18.00 per square meter, aside
from P10,000 as consequential damages. Commissioners Padilla and Romero,
however, recommended payment of no more than P6.00 per square meter. In due
course, the lower court rendered a decision, the dispositive part of which
reads:

“IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, judgment is hereby rendered in
this case fixing the just compensation and reasonable value of the property of
Vicente J. Francisco which was expropriated by the Government at the rate of
P10.00 per square meter and the plaintiff Republic of the Philippine is hereby
directed to pay the defendant Vicente J. Francisco, the said amount of P10.00
for every square meter of the latter’s land taken by the former or the total
amount of P149,420.00 with interest thereon at the rate of 6% per annum from
March 26, 1952, the date the property was actually taken by the plaintiff, until
the same is fully paid (re interest, See case of Philippine Railway Co.
vs. Solon, 13 Phil., 34; Republic vs. Gonzales et al., 50 Off.
Gaz, No. 6, 2641 [1954]). Prom this amount must, however, be deducted the amount
of P7,013.00 which was deposited by the plaintiff as the provisional value of
the property and which amount was delivered to the defendant Vicente J.
Francisco.
“Without special pronouncement as to costs.”

The case is now before us.on appeal taken by both parties, the amount claimed
by the defendant being in. excess of P200,000.00, exclusive of interest and
costs. The questions for determination are: (1) What is the fair market value of
the property taken? (2) Is the defendant entitled to consequential damages? (3)
Must the defendant be required to cause the mortgage on the property in question
to be cancelled? (4) Should interest be paid on the aggregate compensation due
the defendant?

With respect to the value of the land taken by the Government, two (2) issues
Lave been raised, namely: (a) as of what time should it be determined?
(b) What was its fair market value as of that time?

With respect to the first issue, plaintiff maintains that said value should
be fixed as of January 16, 1950 when this case was instituted, for Rule 69,
section 5, of the Rules of Court provides:

“When such a motion is overruled or when any party fails to defend as
required by this rule, the court may enter an order of condemnation declaring
that the plaintiff has a lawful right to take the property sought to be
condemned, for the public use described in the complaint, upon the payment of
just compensation, to be determined as of the date of the filing of the
complaint. After the entry of such an order no objection to the exercise of
the right of condemnation shall be filed or heard and the plaintiff shall not be
permitted to dismiss or discontinue the proceeding except on. such terms as the
court fixes.” (Italics supplied.)

Upon the other hand, defendant contends that the cases of Provincial
Government of Rizal vs. Caro de Araullo (53 Phil., 308) and Republic of
the Philippines vs. Lara (96 Phil., 170; 50 Off. Gaz., 5778) support the
view that said value should be determined as of March 26, 1952, when possession
of his property was taken by plaintiff.

The first case involved a land taken by the government in 1927, or prior to
the condemnation proceedings, initiated in 1928. Explaining why the value should
be fixed as of 1927, not 1928, this Court said:

“As clearly appears from the evidence of record, the value of the property
in question was greatly enhanced between the time when the extension of the
street was laid out and the date when the condemnation proceedings were
filed, because of the fact that one of the widest and most important streets
in the City of Manila was to be extended through the municipality of Pasay,
thereby making the land affected practically a part of the City of Manila and
giving it a frontage on one of the city’s principal boulevards. The property
had further increased in value when the commissioners held hearings a year and a
half after these proceedings were fled. In other words, the value of the
property was enhanced by the purpose for which it was taken. In our opinion the
owners of the land have no right to recover damages for this unearned increment
resulting from the construction of the public improvement for which tiie land
was taken. To permit them to do so would be to allow them to recover more than
the value of the land at the time when it was taken, which is the true measure
of the damages, or just compensation, and would discourage the construction of
important public improvements.” (Italics ours.)

In the second case, plaintiff, likewise, took possession before the filing of
the complaint, and the compensation was similarly ascertained (as of the time of
the taking), for:

“Plaintiff-appellant’s second argument that the value of the lands ‘
expropriated must be reckoned as of the time of the actual possession by it in
1946, and not as of the time of the filing of this complaint in 1949 is,
however, well taken. We believe the Court below erred in holding that because
section 5 of Rule 69 now provides that the payment of just compensation must be
determined as of the date of the filing of the complaint, our ruling in the case
of Provincial Government vs. Caro, 58 Phil., 308, is deemed superseded.
Ordinarily, inquiry is limited to actual market value at the time of the
institution of the condemnation proceedings because, under normal circumstances,
the filing of the complaint coincides or even precedes the taking of the
property by the plaintiff; and Rule 69 simply fixes this convenient d,Qite for
the valuation of property sought to be expropriated. Where, however, the actual
taking or occupation by tha plaintiff, with the consent of the landowner, long
precedes the filing of the complaint for expropriation, the rule to oe followed
must still be that enunciated by us in Provincial Government of Rizal vs. Caro,
supra, that the value of the property should be fixed as of the date, when it
was taken and not the1 date of the filing of the proceedings. For where property
is ta&en fthead of the filing of the condemnation proceedings, the value
-thereof may be enhanced by the public purpose for which it is taken; the entry
by the plaintiff upon the property may have depreciated its value thereby; or
there may have been a natural increase in the value of the property from the
time it is taken to the time the complaint is filed, due to general economic
conditions. The owner of private property” should be compensated only for what
he actually loses; it is not intended that his compensation shall extend
beyond his loss or injury. And what he loses 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, whieh is to pay for it.” (Italics
ours.)

It is apparent from the foregoing that, when plaintiff takes possession
before the institution of the condemnation proceedings, the value should
be fixed as of the time of the taking of said possession, not of filing
of the complaint, and that the latter should be the basis for the
determination of the value, when the taking of the property involved coincides
with, or is subsequent to, the commencement of the proceedings. Indeed,
otherwise, the provision of Rule 69, section 5, directing that compensation “be
determined as of the date of the filing of the complaint”, ‘would never be
operative. As intimated in Republic vs. Lara (supra), said
provision contemplates “normal circumstances”, under which “the complaint
coincides or even precedes the taking of the property by the plaintiff”. In
fact, the complaint, normally, precedes, and does not coincide with, such taking
of the property, for “upon the filing of the complaint or at any time
thereafter” plaintiff can not, over defendant’s objection—and the institution of
the proceedings generally indicates an issue between the parties—take possession
of said property without an order of the court fixing provisionally its value
and without depositing the same (Rule 69, section 3, Rules of Court). Thus, in
the case of Republic of the Philippines vs. Narciso, et al. (L-6594, May
18, 1956), which was commenced sometime before the plaintiff had taken
possession of defendant’s property, this Court, speaking through Justice
Bengzon, held that “the prices to be considered are those at the
beginning of the expropriation”, and not, accordingly, at the time of the
taking of said property.

We hold, therefore, that the value of the property of defendant herein should
be determined as of January 16, 1950.

The evidence thereon, aside from defendant’s testimony, consists of deeds of
sale (Exhibit F to J) of lots situated in the vicinity of his property. In fact,
the lots involved in Exhibits I and J adjoin defendant’s lot. The transactions
evidenced by said Exhibits F to J are, chronologically shown in tabulated form,
as follows:

________________________________________________________________________________
Exhibits	Lot No. Indicated			Date of Sale	Price per
	in Exh. “A”				sq. meter
________________________________________________________________________________
“H”		12-A & 12-B		Mar. 30, 1948	P0.05
“G”		40-A & 40-B		July 15, 1948	1.28
“F”		2-E, Psd-17462		Mar. 2, 1949	3.14
“I”		795-B-2-A		Mar. 18, 1949	3.20
“J”		795-B-2		July 6, 1949	3.26

We note that the price of lands in the area covered by this proceedings was
only P0.05 a square meter on March 30, 1948 and that three (3) months and a half
later, or on July 15, 1948, it rose to P1.28 a square meter, or an increase of
P.23 per square meter. The reason, therefore, is not difficult to sunrise.
Meanwhile, House Bill No. 2003, making Quezon City “the Capital of the
Philippines and the Permanent Seat of the National Government”, had been passed.
On July 17, 1948, the bill was approved and became Eepublic Act No. 333. From
July 15, 1948 to March 2, 1949, or a period of seven and a half months, the
value went up to P3.14 a square meter, or an increase of P1.86 per square meter.
But, thereafter, the price appears to have stabilized and the rate of increase
became gradual. Thus, from March 2 to March 18, 1949, or after sixteen (16)
days, it rose P0.06 a square meter, or less than P0.004 a day per square, meter,
and from March 18 to July 6, 1949, or a period of 108 days, it went up to P0.16
a square meter, or an increase of less than P0.0015 daily. In other words, the
rate of increase became slower, as time progressed. In any event, at said rate
of increase of P0.0015 per square meter daily, the market value on March 16,
1960, or a little over eight (8) months later, when defendant filed his answer
to the original complaint, would have been less than P3.75 per square meter.
Thus, it is understandable that he alleged, in hia aforementioned answer, that
the actual market value of his land is “not less than P5.00 a square meter”. As
stated by this Court, in Republic of the Philippines vs. Narciso, et al.
(supra):

“The defendants themselves in their answers and pleadings asked P2,000 per
hectare. This is evidence of the highest order: Admission by the owners.
(See Am. Jur. p. 993). Their valuation of the property may not in law be binding
on the Government or the Court; but it should at least set a ceiling price for
the compensation to be awarded. The price of the condemned property should
not be higher than what the owner demanded.” (Italics
supplied.)

Upon the other hand, the only evidence in support of de fendant’s claim that
the value of his land is from P18 to P20 per square meter consisted of his own
opinion, which is not competent evidence, for he has not qualified as real
estate expert. Furthermore, his opinion was predicated upon the false premise
that said value should be determined as of the date of the taking by the
Government, on March 26, 1952, aside from the fact that it is contradicted by
the allegation in his answer, dated February 17, 1952, to the amended complaint,
to the effect that the “actual market value” of said land “is P10.00 per square
meter.” Again, even if determined as of March 26, 1952, the value of the
property theii taken, at the aforementioned rate of daily increase of P0.0015,
would be only P4.85 per square meter.

Upon the foregoing evidence, it would appear that the sum of P5.00 per square
meter stated in defendant’s answer to the original complaint, constitutes a
liberal estimate, in his favor, of the ceiling of the fair market value of his
property. Considering, however, that Lot No. 795-B-2-B-1, belonging to Claro M.
Recto, which adjoins that of the defendant on the Northeast, was expropriated at
the rate of P6.00 per square meter, in pursuance of a compromise agreement, it
would be but fair and just that defendant herein be compensated at the same rate
of P6.00 per square meter, as recommended by the majority of the commissioners
on appraisal.

Defendant claims by way of damages, P10,000 for the fence on his land and
P1,000 for the fruit-bearing trees thereon. Defendant maintains that he had a
barbed wire fence with wooden posts, which was destroyed when the Government
took possession of his land. The evidence on such fence is, however, far from
satisfactory. In fact, the few posts then found in Ms land were of bamboo.
Defendant would have us believe that the oeocle living in the vicinity took the
wooden posts and replaced them with bamboos. It is, however, incredible that
persons guiJtv of the plundering imputed to them would take the trouble of
making said replacement. Moreover, it is obvious that this was a mere surmise of
the defendant. Again, the value of such improvements, if any, has no longer
existed, due to the alleged rapacity of his neighbors, when possession was taken
by the Government, should not be borne by the latter.

As regards the fruit-bearing trees, it appears that the same were in the
portions of defendant’s land not taken by the Government. He alleges,
however, that said trees were destroyed by animals that grazed in his land upon
the destruction of its fence. This, however, appears to be a consequence of the
predatory acts of defendant’s neighbors, before the possession was taken by the
plaintiff, so that it cannot be held liable therefor. At any rate, considering
that prior thereto, the land in question had no access to the highway, which it
now has, due to the construction of the Commonwealth Avenue, and that the value
of the lands in that place has risen, according to the defendant, to from P18 to
P20 a square meter, it is apparent that the consequential benefits derived by
his remaining property, with an area of 28,818 square meters, more than offset
the consequential damages he claims to have suffered.

Plaintiff’s claim to the effect that defendant should be required to cause
the mortgage on the expropriated land to be cancelled is clearly well taken, for
“it is but right for the government to acquire the property free from
encumbrance.” (Republic of the Philippines vs. Deleste, L-7208, May 23,
1956.)

The decision appealed from sentences the plaintiff to pay interest on the
full amount of the compensation awarded to the defendant. We agree with the
plaintiff that interest should not accrue to the sum of P7,013.00 collected by
the defendant way back in 1952, as soon as plaintiff took possession of the land
in question, and that it should be charged only on the difference between the
aggregrate compensation adjusted to defendant herein and said sum of
P7,013.00.0

Wherefore, the decision appealed from should be, as it is hereby modified,
and judgment shall be entered, as follows:

1. Plaintiff shall pay defendant Vicente J. Francisco the sum of Six Pesos
   (P6.00) per square meter, or the aggregate sum of Eighty Four Thousand One
   Hundred Fifty Six Pesos (P84,156.00), for 14,026 square meters, with interest,
   at the rate of 6% per annum, from March 26, 1952, on the sum of Seventy Seven
   Thousand One Hundred Forty-Three Pesos (P77,143.00), representing the difference
   between said sum of P84,156.00 and the sum of P7,013.00 already received by the
   defendant; and
2. Defendant Vicente J. Francisco shall, within a reasonable period of time to
   be fixed by the lower court, cause the encumbrance on the expropriated property,
   or Lot No. 795-B-3-A, to be cancelled before the above-mentioned compensation is
   paid to him, or if he has already collected it, the lower court shall take such
   measures as may be necessary or convenient in order that said encumbrance be
   cancelled at defendant’s expense.

Without special pronouncement as to costs. It is so ordered.

Bengzon,
Acting C.J., Padilla, Bautista Angelo, Reyes, J.B.L., Barrera, and Dizon,
JJ., concur.