Republic vs. Philippine National Bank

Where taking coincides with or follows the filing of the expropriation complaint, just compensation is determined as of the date of filing, at fair market value proved by comparable sales and capped by the owner's admission, free from encumbrance, with interest only on the unpaid balance.

The Republic of the Philippines undertook construction of Commonwealth Avenue in Barrio Culiat, Quezon City, requiring expropriation of fifty-four lots. The parcel in issue was Lot 795-B-3-A, with an area of 14,026 square meters, forming part of Lot 795-B-3 owned by Vicente J. Francisco. Said larger lot was mortgaged for P60,000 to the Philippine Bank of Communications.

Francisco owned Lot 795-B-3 in Culiat, Quezon City, with an area of 42,844 square meters, mortgaged for P60,000 to the Philippine Bank of Communications. On January 16, 1950, the Republic commenced expropriation for Commonwealth Avenue, initially seeking 13,110 square meters from said lot. By amended complaint filed January 9, 1952, the portion sought was increased to 14,026 square meters, designated Lot 795-B-3-A.

Thereafter, by order dated January 17, 1952, the trial court admitted the amended complaint and authorized the Republic to take possession upon deposit of P7,013.00 as provisional value fixed in the pleading. On February 17, 1952, Francisco was allowed to withdraw said deposit. Possession was actually taken on March 26, 1952, the Republic's right to expropriate being in effect conceded.

To prove market value, aside from Francisco's testimony, deeds of sale of nearby lots were introduced. The adjoining lots and other vicinity sales showed P0.05 per square meter on March 30, 1948, P1.28 on July 15, 1948, P3.14 on March 2, 1949, P3.20 on March 18, 1949, and P3.36 on July 6, 1949. In the interim, House Bill No. 2003 making Quezon City the Capital and permanent seat of government was approved July 17, 1948 as Republic Act No. 333. In his answer to the original complaint Francisco alleged actual market value of not less than P5.00 per square meter, and in his answer dated February 17, 1952 to the amended complaint alleged P10.00 per square meter, while at trial he opined P18.00 to P20.00 per square meter.

Francisco also claimed P10,000 for a destroyed barbed-wire fence with wooden posts and P1,000 for fruit-bearing trees. According to him, the fence was destroyed upon government taking and the trees, located on the untaken portion, were destroyed by grazing animals after loss of the fence. The posts found on the land were of bamboo, which he attributed to replacement by neighbors after taking wooden posts, and the remaining property of 28,818 square meters thereby gained access to the highway from Commonwealth Avenue.

The commissioners divided, Lacson recommending P18.00 per square meter plus P10,000 consequential damages and Padilla and Romero recommending no more than P6.00 per square meter. The trial court fixed compensation at P10.00 per square meter.

• Valuation Date: Plaintiff maintained that value should be fixed as of January 16, 1950, when the case was instituted, pursuant to Rule 69, section 5 of the Rules of Court providing that just compensation be determined as of the date of filing of the complaint.
• Mortgage Cancellation: Plaintiff claimed that defendant should be required to cause the mortgage on the expropriated land to be cancelled.
• Interest: Plaintiff argued that interest should not accrue on the P7,013.00 already collected by defendant in 1952 upon taking, and should be charged only on the difference between aggregate compensation and said sum.

• Valuation Date: Defendant contended that value should be determined as of March 26, 1952, when possession was taken, invoking Provincial Government of Rizal vs. Caro de Araullo and Republic of the Philippines vs. Lara.
• Market Value: Defendant maintained that the value of his land was from P18.00 to P20.00 per square meter, based on his own opinion.
• Consequential Damages: Defendant claimed P10,000 for the fence on his land and P1,000 for fruit-bearing trees thereon, destroyed in connection with the taking.

• Valuation Date: Whether fair market value should be determined as of January 16, 1950, date of filing, or March 26, 1952, date of taking.
• Fair Market Value: Whether the fair market value was P10.00 per square meter as fixed below, P18.00 to P20.00 as claimed by defendant, or P6.00 as recommended by the majority of commissioners.
• Consequential Damages: Whether defendant is entitled to P10,000 for the fence and P1,000 for fruit-bearing trees.
• Mortgage Cancellation: Whether defendant must cause the mortgage on the expropriated property to be cancelled.
• Interest: Whether interest should be paid on the aggregate compensation or only on the balance after deducting the P7,013.00 provisional deposit withdrawn.

• Valuation Date: Yes. Value was determinable as of January 16, 1950, filing having preceded taking, pursuant to Rule 69, section 5.
• Fair Market Value: No to P10.00 and P18.00 to P20.00. Compensation was fixed at P6.00 per square meter, supported by comparable sales, defendant's admissions, and the compromise rate for the adjoining Recto lot.
• Consequential Damages: No. The fence claim was unproven and the tree loss unattributable to plaintiff, with remaining-land benefits in any event offsetting alleged injury.
• Mortgage Cancellation: Yes. The government was entitled to acquire the property free from encumbrance at defendant's expense.
• Interest: Partly. Interest was due only on P77,143.00, the difference between P84,156.00 and the P7,013.00 already received, from March 26, 1952.

• Valuation Date: The Rule 69, section 5 date-of-filing standard governs normal circumstances where complaint coincides with or precedes taking, with court order and provisional deposit required before possession over objection. The Caro and Lara exception fixing value as of taking applies only where plaintiff takes possession before institution, with landowner consent, to avoid compensating enhancement from the public purpose, depreciation from entry, or general economic increase. Because possession here on March 26, 1952 was subsequent to the January 16, 1950 filing, the latter date controlled, consistent with Republic of the Philippines vs. Narciso, et al. valuing property at the beginning of expropriation.
• Fair Market Value: Comparable deeds showed P0.05 on March 30, 1948 rising to P1.28 on July 15, 1948 after the capital-city bill, then P3.14 on March 2, 1949, P3.20 on March 18, 1949, and P3.36 on July 6, 1949, with a slowing daily increase of less than P0.0015 that would yield under P3.75 about eight months later and only P4.85 even by March 26, 1952. Defendant's P5.00 allegation in his original answer was thus already liberal and, as an admission by owner, set a ceiling that compensation should not exceed, while his P18.00 to P20.00 opinion was incompetent without expert qualification, premised on the wrong valuation date, and contradicted by his P10.00 amended-answer allegation. Fairness supported the majority commissioners' P6.00 rate, matching the compromise expropriation rate for Claro M. Recto's adjoining Lot 795-B-2-B-1.
• Consequential Damages: The barbed-wire-with-wooden-posts claim failed because only bamboo posts were found and the theory that plunderers replaced wooden with bamboo posts was incredible and mere assertion, with any loss from neighbors' acts before government possession not chargeable to plaintiff. The fruit trees stood on the untaken portion and their alleged destruction by grazing animals was attributed to neighbors' predatory acts before possession, not to the taking. Moreover, the 28,818-square-meter remainder gained highway access from Commonwealth Avenue with values claimed to have risen to P18.00 to P20.00, so consequential benefits more than offset claimed damages.
• Mortgage Cancellation: Acquisition free from encumbrance was required under Republic of the Philippines vs. Deleste, so cancellation of the mortgage on Lot 795-B-3-A had to be effected at defendant's expense before or after payment through measures fixed by the lower court.
• Interest: Interest from actual taking on March 26, 1952 was proper under Philippine Railway Co. vs. Solon and Republic vs. Gonzales, et al., but accrual on the full award would unjustly compensate for the P7,013.00 already withdrawn in 1952. Accordingly, interest attached only to the unpaid balance.

• Valuation date in eminent domain — Where the government takes before filing with the owner's consent, value is fixed as of taking to measure only actual loss and exclude enhancement from the public purpose; where filing coincides with or precedes taking, Rule 69 fixes valuation as of filing, the convenient date contemplating normal expropriation procedure requiring court order and provisional deposit for possession. Applied to fix January 16, 1950, not March 26, 1952, as the valuation date.
• Owner's admission as ceiling on compensation — An owner's pleaded valuation, while not binding on government or court, is evidence of the highest order and sets a ceiling so condemned property should not be priced higher than demanded, per Republic of the Philippines vs. Narciso, et al. Applied to treat Francisco's P5.00 allegation as a liberal ceiling negating P10.00 to P20.00 claims.
• Competency of owner opinion on value — An owner's bare opinion without qualification as real estate expert is not competent evidence, especially when premised on an erroneous valuation date and contradicted by his own pleadings. Applied to reject Francisco's P18.00 to P20.00 opinion.
• Government acquisition free from encumbrance — It is but right for the government to acquire expropriated property free from encumbrance. Applied to require Francisco to cause cancellation of the mortgage on the taken lot at his expense.
• Interest on just compensation and consequential benefits — Interest runs from actual taking on the unpaid balance only, not on provisional amounts already withdrawn; consequential benefits to the remainder may offset consequential damages. Applied to allow interest from March 26, 1952 only on P77,143.00 and to deny fence and tree damages where the remainder gained highway access and increased value.

• "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 procedes the taking of the property by the plaintiff;" — States the normal valuation rule under Rule 69 and why filing date is the convenient statutory baseline.
• "Where, however, the actual taking or occupation by the plaintiff, with the consent of the landowner, long precedes the filing of the complaint for appropriation, the rule to be 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" — Defines the limited exception to filing-date valuation for prior taking.
• "The price of the condemned Property should not be higher than what the owner demanded" — Formulates the ceiling effect of the owner's admission in expropriation, drawn from Republic of the Philippines vs. Narciso, et al.
• "it is but right for the government to acquire the property free from encumbrance" — States the canonical justification for requiring cancellation of liens on expropriated land.

• Provincial Government of Rizal vs. Caro de Araullo, 58 Phil. 308 — Followed as enunciating that property taken before proceedings is valued as of taking to exclude unearned enhancement from the public improvement; distinguished as inapplicable where taking followed filing.
• Republic of the Philippines vs. Lara, 50 Off. Gas. 5778 — Followed for the same prior-taking exception and for explaining Rule 69 as fixing a convenient date for normal cases; distinguished on timing.
• Republic of the Philippines vs. Narciso, et al., L-6594, May 18, 1956 — Followed for valuing property at the beginning of expropriation where suit preceded possession and for treating defendants' pleaded price as admission setting a ceiling.
• Philippine Railway Co. vs. Solon, 13 Phil. 34; Republic vs. Gonzales, et al., 50 O.G. No. 6, 2641 [1954] — Cited by the lower court and retained in principle as basis for interest from actual taking on March 26, 1952.
• Republic of the Philippines vs. Deleste, L-7208, May 23, 1956 — Followed as authority requiring acquisition free from encumbrance.

• Section 5, Rule 69, Rules of Court — Provides just compensation be determined as of date of filing of complaint and bars objections after condemnation order; applied to fix valuation as of January 16, 1950 where taking was subsequent to filing.
• Section 3, Rule 69, Rules of Court — Requires court order fixing provisional value and deposit before plaintiff may take possession upon or after filing over objection; invoked to show filing normally precedes taking and to sustain the P7,013.00 deposit procedure.
• Republic Act No. 333, approving House Bill No. 2003 — Made Quezon City the Capital and permanent seat of government on July 17, 1948; used to explain the sharp rise in vicinity land prices between March and July 1948.

Bengzon, C.J., Padilla, Bautista Angelo, Reyes, J.B.L., Barrera and Dizon, JJ., concur. Labrador, J., took no part.