Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=30517:g-r-no-71176-may-21,-1990-republic-of-the-phil-v-intermediate-appellate-court,-et-al&amp;catid=1263&amp;Itemid=566
Timestamp: 2019-04-22 02:49:52+00:00

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REPUBLIC OF THE PHILIPPINES (Ministry of Education and Culture), Petitioner, v. INTERMEDIATE APPELLATE COURT and AMEREX ELECTRONICS, PHILS. CORPORATION, Respondents.
Siguion Reyna, Montecillo and Ongsioko for Private Respondents.
The government, in the exercise of its power of eminent domain, expropriated property owned by Amerex Electronics, Phils. Corporation. The amount of just compensation for such property is now the subject of this petition for review on certiorari.
Inasmuch as the alleged negotiation did not materialize, on June 3, 1974, Avegon, Inc. sold the property and its improvements to Amerex Electronics, Phils. Corporation (Amerex for brevity) for P1,800,000. Thereafter, Transfer Certificates of Title Nos. 115571, 115572, 115573 and 115574 were issued in favor of Amerex.
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 (PNB) in Escolta, Manila on September 30, 1975.
Consequently, on October 9, 1975, the court issued an order directing the sheriff to place the plaintiff in possession of the property. The plaintiff took actual possession thereof on October 13, 1975.
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. It therefore prayed that in consonance with P.D. No. 794, the 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 reasoning that while indeed the market value as determined by the assessor was lower than that declared by Amerex, the plaintiff intended to present evidence of a much lower market value.
Alleging that its motion to dismiss merely sought a clarification on the just compensation for the property, Amerex filed a motion to withdraw the plaintiff’s deposit of P1,303,470 with the PNB without prejudice to its entitlement to the amount of P1,128,572, the balance of the just compensation of P2,432,042 insisted upon. The plaintiff interposed no objection to the motion provided that an order of condemnation be issued by the court and that the plaintiff be allowed to present its evidence on the matter of just compensation.
On December 3, 1975, the lower court issued an order vesting the plaintiff with the lawful right to take the property upon payment of just compensation as provided by law. On December 19, 1975, after the parties had submitted the names of their respective recommendees to the appraisal committee, the lower court appointed Atty. Narciso Pena, Aurelio V. Aquino and Atty. Higinio Sunico as commissioners.
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.
Amerex, however, opposed the motion for leave to amend the complaint contending that the plaintiff was insisting on a valuation given by neither the owner nor the assessor as mandated by P.D. No. 794 but by another person in August 1973 when the peso value was much higher.
The lower court denied the motion to amend the complaint; but after the plaintiff had filed a motion for reconsideration, the lower court admitted the amended complaint on April 27, 1976. In the meantime, Amerex submitted to the court "audited financial statements" consisting of an account stating that the cost of its land and buildings was P2,107,479.48, and another account stating that it incurred total expenses of P150,539 for their maintenance. 3 These statements yielded the amount of P2,258,018.48 as the total value of the property.
"Under the provision of Presidential Decree No. 464, as amended by Presidential Decree No. 794, abovequoted, we could have safely adopted the valuation of the City Assessor in the sum of P2,432,042.00, this being lower than that declared by the owner in the sum of P2,435,000.00, although by actual appraisal of the undersigned Commissioners the property could command a fair market value of P2,763,400.00 as of the date of our ocular inspection.
Both parties objected to the report of the commissioners. The plaintiff contended that the commissioners’ conclusion that the fair market value of the property was P2,763,400 was unsupported by evidence and that their recommended just compensation of P2,258,018.57 was excessive. It reiterated its stand that the just compensation should only be P1,800,000 it being the price had the sale between the city school board and Avegon, Inc. materialized and also the actual price of the sale between Avegon, Inc. and Amerex. On the other hand, Amerex averred that the recommended just compensation was unjustified in view of the commissioners’ finding that the fair market value of the property was P2,763,400.
"The court believes that the findings of the commissioners are supported by the evidence adduced during the hearings and that their recommendation is reasonable. The property was originally owned by Avegon, Inc. and was assessed at P1,079,370.00 by the City of Manila for the year 1974 (Exh. A-4). Avegon, Inc. offered to sell it to the City School Board on July 21, 1973 at P2,300,000.00 but it accepted the counter-offer of P1,800,000. The negotiations, however, fell through when the city failed to act (Exhs. C, C-1, C-2, C-3 and C-4). The property was appraised on February 15, 1974 at P2,100,000.00 at the instance of Commonwealth Insurance Company, an affiliate of Warner, Barnes & Co., Inc. (Exh. G). The defendant company introduced improvements on the property in the middle part of 1974 worth P260,690.50 (Exhs. 4, 4-A to 4-J; 11, 13, 14 to 19). After the renovation, the property was again appraised at the instance of the defendant at P2,300,000.00 on November 15, 1974 (Exh. 2). Due to the world-wide recession, there followed a slump in the demand for electronic products. On June 4, 1975, the Traders Commodities Corporation offered to buy the property at P2,750,000.00 with a deposit of P50,000.00 as earnest money. The offer was formally made by the law firm Salonga, Ordoñez, Yap, Africano and Associates (Exh. 6). The offer was accepted on June 9, 1975 (Exhs. 7 and 8). The sale was not consummated, however, when the government notified the defendant in a conference held in Malacañang on June 15, 1975 that it wanted to buy the property for the use of the Manuel de la Fuente High School (Exh. 9). Because of the failure of the parties to agree on the price and other conditions of the purchase, the government filed this action on August 2, 1975.
"1.	Whether or not respondent Court erred in not disqualifying Commissioner Aurelio B. Aquino from membership in the Committee of Appraisal.
2.	Whether or not respondent Court erred in not totally disregarding the ‘audited statement by the defendant’, which is hearsay in nature and was not formally offered in evidence.
Hence, it hardly matters that one of the three commissioners had a preconceived and biased valuation of the condemned property. The veracity or exactitude of the estimate arrived at by the commissioners may not be adversely affected thereby. In fact, the report of only two commissioners may suffice if the third commissioner dissents from the former’s valuation. 10 Indeed, the participation of an allegedly biased commissioner may not result in the total disregard of an appraisal report in the absence of proof that the two other commissioners were unduly influenced by their allegedly partial colleague.
We hold that the courts below made an erroneous determination of just compensation in this case.
"We have checked the details of the transactions indicated in the foregoing schedule of Land and Building Account as at January 31, 1976 with the books and records of Amerex Electronics (Philippines) Corporation which were presented to us for examination and have found the details to be in accordance therewith. We have not made an audit of the books of accounts of Amerex Electronics (Philippines) Corporation.
January 23, 1976 Makati, Rizal"
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. 16 While the word "audit" is sometimes restricted to a mere mathematical process, it generally includes investigation, the weighing of evidence, and deciding whether items should or should not be included in the account. 17 Audit involves the exercise of discretion; it is a quasi-judicial function. 18 The accuracy of the "audited" statements herein is therefore suspect.
WHEREFORE, the just compensation of the property expropriated for the use of the Manuel de la Fuente High School (Don Mariano Marcos Memorial High School) is hereby fixed at Two Million Four Hundred Thousand Pesos (P2,400,000.00). After deducting the amount of P1,303,470.00 therefrom, the petitioner shall pay the balance with legal interest from October 13, 1975.
Feliciano and Cortes, JJ., concur.
Gutierrez, Jr. and Bidin, JJ., took no part.
1.	Original Record on Appeal, p. 3.
2.	Real Property Tax Code.
3.	Original Record on Appeal, p. 47-A.
7.	Original Record on Appeal, pp. 82-83.
8.	Judge Jose C. Colayco, presiding.
9.	Municipality of Daet v. Court of Appeals, L-35861, October 18, 1979, 93 SCRA 503.
10.	See: Republic v. Garcellano, 103 Phil. 231.
11.	Republic v. Santos, G.R. No. 57564, January 8, 1986, 141 SCRA 30 citing Manila Railroad Company v. Velasquez, 32 Phil. 286.
12.	City Government of Toledo City v. Fernandos, L-45144, April 15, 1988, 160 SCRA 285.
13.	Municipality of Daet v. Court of Appeals, supra.
14.	Original Record on Appeal, p. 47-B.
16.	Moreno’s Philippine Law Dictionary, 3rd ed., citing Ynchausti & Co. v. Wright, 47 Phil. 885.
17.	4A Words and Phrases 578 citing Travelers’ Ins. Co. v. Pierce Engine Co., 123 N.W. 643, 644, 141 Wis. 103.
18.	Mabuhay v. Serina, L-28636, June 29, 1982, 114 SCRA 642.
19.	See: Republic of the Philippines v. Urtula, 110 Phil. 263.
20.	Export Processing Zone Authority v. Dulay, G.R. No. 59603, April 29, 1987, 149 SCRA 305.
21.	Manotok v. National Housing Authority, G.R. No. 55166, May 21, 1987, 150 SCRA 89.
23.	Benguet Consolidated, Inc. Republic of the Philippines, G.R. No. 71412, August 15, 1986, 143 SCRA 466.

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