GR 162779; (June, 2007) (Digest)
G.R. No. 162779 ; June 15, 2007
HEIRS OF MATEO PIDACAN AND ROMANA EIGO, Petitioners, vs. AIR TRANSPORTATION OFFICE (ATO), Respondent.
FACTS
The petitioners are the heirs of spouses Mateo Pidacan and Romana Eigo, who acquired a 22-hectare parcel of land in San Jose, Occidental Mindoro, via a homestead patent in 1935. In 1948, the respondent Air Transportation Office (ATO), then the Civil Aeronautics Administration, began using a portion of this property as an airport without the owners’ consent. The ATO later expanded its use by constructing a perimeter fence, a terminal building, and improving the runway. After the spouses died in 1974, the heirs demanded payment for the land’s value and accrued rentals. The ATO refused, claiming a prior purchase at a minimal price, though no title was ever transferred to it. The heirs secured a new transfer certificate of title and filed a complaint for payment.
The Regional Trial Court (RTC) ordered expropriation and payment of just compensation plus back rentals. The Court of Appeals reversed, ruling that just compensation must be valued as of the time of taking in 1948 and remanded the case. Upon remand, the RTC set compensation at the 2001 market value. The Court of Appeals again reversed, insisting on the 1948 valuation. The petitioners elevated the case to the Supreme Court.
ISSUE
Whether just compensation for the property taken for public use should be determined as of the time of taking in 1948 or at the time of payment.
RULING
The Supreme Court ruled in favor of the petitioners, holding that just compensation must be based on the property’s value at the time of payment, not at the time of taking. The legal logic is anchored on the constitutional guarantee that private property shall not be taken for public use without just compensation. The Court emphasized that “just compensation” means the full and fair equivalent of the property, and its determination seeks to make the owner whole. When the government’s taking precedes formal expropriation proceedings, as in this case where possession began in 1948, valuing the property at the time of taking would be grossly inequitable. The owner would be deprived of the property’s potential increase in value over decades due to government use and general market trends. Therefore, to be “just,” compensation must reflect the current market value at the time the government formally institutes expropriation or is ordered by the court to pay. The Court modified the RTC decision, affirming the expropriation but adjusting the total compensation and setting the legal interest at six percent per annum from the date of the RTC decision until full payment.