G.R. No. L-5080 November 29, 1954
REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. ENRIQUE LARA, ET AL., defendants-appellants.

FACTS

The Republic of the Philippines filed a complaint for expropriation in the Court of First Instance of Batangas to acquire 187 parcels of land in Lipa City, upon which the Fernando Air Base was constructed and operated by the Armed Forces of the Philippines. The land was occupied and converted into an airfield by Japanese forces in 1943, resulting in the destruction of houses, fruit trees, orchards, and sugar crops, and the construction of concrete airstrips, taxi-ways, ramps, and other facilities. After liberation, the United States Army took possession and handed over the air base to the Armed Forces of the Philippines on July 4, 1946. The government attempted to purchase the land through negotiations, but these failed with most owners, leading to the expropriation complaint filed on July 9, 1949. The lower court appointed commissioners who recommended compensation based on classification of the lands as residential or agricultural, with specific values per square meter or hectare, plus interest, consequential damages, and indemnity for fruit trees. Both the Republic and the defendants appealed the lower court’s decision, which largely adopted the commissioners’ recommendations but rejected payment for the Japanese-built concrete structures, indemnity for fruit trees, and subdivision expenses.

ISSUE

The primary issue is the determination of just compensation for the expropriated lands, including: (1) the correct classification of the lands (residential or agricultural) and their valuation; (2) the proper date for reckoning the value of the lands; (3) the propriety of awarding consequential damages, interest, and other claims such as compensation for improvements made by the Japanese, rentals, and consideration of the landowners being rendered landless.

RULING

The Supreme Court modified the lower court’s decision. It held that: (1) The classification of some parcels as residential was proper, as the determination is based on the use before the war and the potential use thereafter, not on the condition at the time of taking. (2) The just compensation must be fixed as of the date of actual taking by the plaintiff in July 1946, not the date of the filing of the complaint in 1949, because the taking preceded the judicial proceedings. The value should be based on the market value at the time of taking, considering bona fide sales of nearby parcels at coeval times. (3) The defendants are entitled to legal interest on the compensation awarded from the time of actual possession in July 1946, but the provisional deposit made in 1949 stops the running of interest on the amount deposited. (4) The defendants are not entitled to compensation for the concrete airstrips and other improvements built by the Japanese forces, as these were not owned by the landowners. (5) The claim for rentals from 1946 to 1949 is inconsistent with the award of legal interest from the time of taking. (6) The fact that the lands are adapted for airfield purposes, or that the owners were rendered landless, are not proper considerations in fixing just compensation. The Court also reclassified specific lot numbers as Group-A agricultural lands for valuation purposes. The judgment was affirmed with these modifications.