GR 179334; (July, 2013) (Digest)
G.R. No. 179334; July 1, 2013
SECRETARY OF THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS and DISTRICT ENGINEER CELESTINO R. CONTRERAS, Petitioners, vs. SPOUSES HERACLEO and RAMONA TECSON, Respondents.
FACTS
Respondent spouses Tecson are co-owners of a parcel of land in Bulacan. In 1940, the government took this property without consent or expropriation proceedings to construct the MacArthur Highway. In 1994, the Tecsons demanded payment of fair market value. The District Engineer offered compensation at ₱0.70 per square meter based on a 1940 appraisal. Dissatisfied, the Tecsons filed a complaint for recovery of possession with damages in 1995. The RTC initially dismissed the case based on state immunity from suit. The Court of Appeals reversed, ruling the suit was not against the state as it was essentially an action to compel payment of just compensation for a taking, and remanded the case for determination of compensation.
Upon remand, the Provincial Appraisal Committee recommended compensation at ₱1,500 per square meter, which the RTC adopted. The CA affirmed but modified the decision by ordering the payment of interest. The petitioners (DPWH) appealed to the Supreme Court, arguing the Tecsons’ ownership was dubious and that compensation, if any, should be based on the 1940 value, not the current fair market value.
ISSUE
Whether the Court of Appeals erred in awarding just compensation based on the current fair market value of the property and in ordering the payment of interest.
RULING
The Supreme Court denied the petition and affirmed the CA decision. On the issue of valuation, the Court held that while just compensation is generally the value at the time of taking, an exception applies when there is a considerable delay in payment caused by the government. To grant only the 1940 value (₱0.70/sq m) decades after the taking would be grossly inequitable. Therefore, the compensation must be based on the current fair market value to ensure the property owner is made whole. The valuation of ₱1,500 per square meter, as determined by the Provincial Appraisal Committee, was upheld.
Regarding interest, the Court ruled it is a necessary component of just compensation when payment is delayed. The interest serves to compensate the owner for the income foregone from the property between the taking and the actual payment. The Court affirmed the imposition of interest at the legal rate of six percent (6%) per annum, but clarified it should be computed from the time of taking in 1940, not from the filing of the complaint in 1995, until full payment is made. This correction ensures full and fair compensation for the prolonged deprivation of property.