RP vs. IAC, et al., G.R. No. 71176, May 21, 1990

Fact:   The property involved consists of four parcels of land located on Dr. Manuel L. Carreon Street, Manila. The Solicitor General filed for the Department of Education and Culture (DEC) a complaint against Amerex for the expropriation of said property before the Court of First Instance of Manila The complaint stated that the property was needed by the government as a permanent site for the a High School Building. That the fair market value of the property had been declared by Amerex as P2,435,000, and that the assessor had determined its market value as P2,432,042 and assessed it for taxation purposes in the amount of P1,303,470. In a motion praying that the plaintiff be authorized to take immediate possession of the property, the then Acting Solicitor General Hugo E. Gutierrez, Jr., invoking Presidential Decree No. 42, informed the court that said assessed value of the property for taxation purposes had been deposited with the Philippine National Bank. Consequently, the court issued an order directing the sheriff to place the plaintiff in possession of the property. The plaintiff took actual possession while Amerex filed a motion to dismiss the complaint stating that while it was not contesting the merits of the complaint, the same failed to categorically state the amount of just compensation for the property and therefore prayed for just compensation be fixed at P2,432,042, the market value of the property determined by the assessor which was lower than Amerex’s own declaration. The motion to dismiss was opposed by the plaintiff, the lower court issued an order vesting the plaintiff with the lawful light to take the property upon payment of just compensation as provided by law. Thereafter, the lower court ordered Amerex to submit an audited financial statement on the acquisition cost of the property including expenses for its improvement. Amerex was also allowed by the court, after it had filed a second motion therefor, to withdraw the P1,303,470 deposit with the PNB.  the plaintiff filed a motion for leave of court to amend which was0 admitted. In the meantime, Amerex submitted to the court “audited financial statements’ yielded the amount of P2,258,018.48 as the total value of the property.


The plaintiff elevated the case to the then Intermediate Appellate Court (IAC) for review. On October 29, 1984, it affirmed the appealed decision with the modification that the plaintiff Republic of the Philippines be exempted from the payment of the commissioners’ fees, the P500.00 granted each of them for the preparation of the report and the costs.


Issue: Whether respondent Court erred in determining the petitioner’s just compensation?


Held:   Yes, the courts below made an erroneous determination of just compensation in this case. The just compensation prescribed herein is based on the commissioners’ recommendation which in turn is founded on the “audited” statements of Amerex that the property is worth P2,258,018.57. As earlier pointed out, while the court may accept the commissioners’ report and render judgment in accordance therewith, it may not do so without considering whether the report is supported by evidence. The court is also duty-bound to determine whether the commissioners had discharged the trust reposed in them according to well-established rules and formed their judgment upon correct legal principles for they are not supposed to act ad libitum. It is clear from these certifications that the accounting firm which issued them merely compared the figures in the schedules or “audited” statements with those of the records and books of accounts of Amerex. As no investigation was made as to the veracity of the figures in the account, there was no audit in the real sense of the term. To audit is to examine an account, compare it with the vouchers, adjust the same, and to state the balance, by persons legally authorized for the purpose.


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