Secretary of the Department of Public Works and Highways vs. Tecson

G.R. No. 179334. April 21, 2015

FACTS

In 1940, the Department of Public Works and Highways (DPWH) took respondents movants’ subject property without the benefit of expropriation proceedings for the construction  of the MacArthur Highway. In 1994, respondents-movants demanded the payment of the fair  market value of the subject parcel of land. DPWH, offered to pay for the subject land at the rate  of Seventy Centavos (P0.70) per square meter. Unsatisfied with the offer, respondents-movants  demanded the return of their property, or the payment of compensation at the current fair  market value. Hence, the complaint for recovery of possession with damages filed by  respondents-movants. 

Regional Trial Court (RTC) and the Court of Appeals (CA), decided in favor of  respondents-movants that the subject property shall be valued at One Thousand Five Hundred  Pesos (P1,500.00) per square meter, with interest at six percent (6%) per annum. 

Petitioners thus elevated the matter to this Court in a petition for review on certiorari. However, did not agree with both courts and ruled instead that just compensation should be  based on the value of the property at the time of taking in 1940, which is Seventy Centavos  (P0.70) per square meter and interest of six percent (6%) per annum from 1940 until full  payment. 

Aggrieved, respondents-movants hereby move for the reconsideration and insist that  gross injustice will result if the amount that will be awarded today will be based simply on the  value of the property at the time of the actual taking.

ISSUE

Whether or not the valuation would be based on the corresponding value at the time of the  taking or at the time of the filing of the action. 

HELD 

The Court ruled that just compensation due respondents-movants in this case should, therefore,  be fixed not as of the time of payment but at the time of taking in 1940 which is Seventy Centavos  (P0.70) per square meter, and not One Thousand Five Hundred Pesos (P1,500.00) per square  meter. It should be noted that the purpose of just compensation is not to reward the owner for  the property taken but to compensate him for the loss thereof. The owner’s loss is not only his property but also its income-generating potential. The just  compensation due to the landowners amounts to an effective forbearance on the part of the State  — a proper subject of interest computed from the time the property was taken until the full  amount of just compensation is paid — in order to eradicate the issue of the constant variability  of the value of the currency over time. Thus, adding the interest computed to the market value of the property at the time of taking signifies the real, substantial, full and ample value of the  property. The interest rate applicable to loans and forbearance of money are as follows:  It is important to note, however, that interest shall be compounded at the time judicial demand is made pursuant to Article 2212 of the Civil Code of the Philippines, Considering that  respondents-movants only resorted to judicial demand for the payment of the fair market value  of the land on March 17, 1995, it is only then that the interest earned shall itself earn interest. 

In addition to the foregoing interest, additional compensation shall be awarded to respondents movants by way of exemplary damages and attorney’s fees in view of the government’s taking  without the benefit of expropriation proceedings. 

Respondents-movants are entitled to interest in the amount of One Million Seven Hundred  Eighteen Thousand Eight Hundred Forty-Eight Pesos and Thirty-Two Centavos (P1,718,848.32)

DISPOSITIVE PORTION

WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit. 

DOCTRINE

Just compensation is defined as the full and fair equivalent of the property taken from its owner  by the expropriator.