Department of Public Works v. Tecson
REITERATIONFacts
1. The Antecedents: The respondents, Spouses Heracleo and Ramona Tecson, are the co-owners of a parcel of land in Malolos, Bulacan. This land, along with others, was taken by the government in 1940 for the construction of the MacArthur Highway without the owners' consent and without proper expropriation proceedings. Decades later, the respondents demanded compensation for their property. 2. Procedural History: After the respondents' demand for compensation was met with an offer of P0.70 per square meter, they filed a complaint for recovery of possession with damages. The Regional Trial Court (RTC) initially dismissed the case based on state immunity, but the Court of Appeals (CA) reversed this, remanding the case for determination of just compensation. The RTC, following a recommendation from the Provincial Appraisal Committee (PAC), ordered the Department of Public Works and Highways (DPWH) to pay P1,500.00 per square meter. The CA affirmed this decision with modification, adding interest at 6% per annum from the filing of the action. 3. The Petition: The petitioners, the Secretary of DPWH and its District Engineer, filed a petition for review on certiorari under Rule 45 of the Rules of Court. They argue that the CA erred in granting compensation due to questionable ownership, that the claim is barred by prescription and laches, and that compensation should be based on the value at the time of taking (1940), not the current market value. The petitioners contend that the just compensation should be P0.70 per square meter, the value in 1940, plus legal interest from that date.
Issue(s)
Whether the action for recovery of possession with damages is barred by prescription and laches. Whether respondents are entitled to just compensation for the property taken by the government. Whether just compensation should be based on the value at the time of taking or at the time of payment. Whether the award of interest is proper and from what date it should be reckoned.
Ruling
The petition is PARTIALLY GRANTED. The Court of Appeals Decision dated July 31, 2007 is MODIFIED. The valuation of the subject property shall be ₱0.70 per square meter, with legal interest at six percent (6%) per annum from the date of taking in 1940 until full payment.
Ratio Decidendi
On the issue of prescription and laches: The Court held that prescription and laches are not proper issues in this appeal as they were not included in the pre-trial order. Even if considered, the claim for compensation does not prescribe when private property is taken by the government for public use without expropriation proceedings. Laches does not apply as it would be inequitable to deny compensation for property taken for public use. The long-standing rule is that an action to recover the land or its value does not prescribe if taken without proper proceedings. On the entitlement to just compensation: The Court affirmed that when private property is taken by the government for public use without expropriation proceedings, the owner is entitled to compensation. While respondents failed to question the lack of expropriation for a long period, they are deemed to have waived the right to assail the government's power to expropriate or the public use. Their remaining right is compensation. Both the RTC and CA found respondents entitled to compensation. On the valuation of just compensation: The Court reiterated the established rule that just compensation is the fair value of the property fixed at the time of the actual taking by the government. This rule applies even if the property owner initiates the action for compensation. Citing previous cases like Forfom Development Corporation v. Philippine National Railways, Eusebio v. Luis, Manila International Airport Authority v. Rodriguez, and Republic v. Sarabia, the Court emphasized that the value at the time of taking is controlling. Therefore, the valuation should be based on the 1940 value of ₱0.70 per square meter, not the ₱1,500.00 per square meter determined by the PAC and adopted by the lower courts. On the award of interest: The Court ruled that petitioners acted in utter disregard of respondents' proprietary rights by occupying the property for over fifty years without expropriation proceedings and just compensation. For this illegal taking, respondents are entitled to adequate compensation in the form of legal interest at six percent (6%) per annum on the value of the land at the time of taking in 1940 until full payment. This interest accrues as a matter of law to place the landowner in as good a position as money can accomplish as of the date of taking.
Main Doctrine
Where private property is taken by the Government for public use without first acquiring title thereto either through expropriation or negotiated sale, the owner's action to recover the land or the value thereof does not prescribe. However, just compensation must be fixed at the time of taking, not at the time of payment, and the owner is entitled to legal interest on the value of the land at the time of taking until full payment.