Sec of DPWH vs. Spouses Tecson

2/10/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 700
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.
Civil Law; Laches; Laches is principally a doctrine of equity

which is applied to avoid recognizing a right when to do so would
result in a clearly inequitable situation or in an injustice.—Laches
is principally a doctrine of equity which is applied to avoid
recognizing a right when to do so would result in a clearly
inequitable situation or in an injustice. This doctrine finds no
application in this case, since there is nothing inequitable in
giving due course to respondents’ claim. Both equity and the law
direct that a property owner should be compensated if his
property is taken for public use. Neither shall prescription bar
respondents’ claim following the long-standing rule “that 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.”
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* THIRD DIVISION.
244
244 SUPREME COURT REPORTS ANNOTATED
Secretary of the Department of Public Works and Highways vs.

Tecson
Same; Expropriation; Just Compensation; The owner may

recover his property if its return is feasible or, if it is not, the
aggrieved owner may demand payment of just compensation for
the land taken. For failure of respondents to question the lack of
expropriation proceedings for a long period of time, they are
deemed to have waived and are estopped from assailing the power
of the government to expropriate or the public use for which the
http://www.central.com.ph/sfsreader/session/00000168d59de4376824d1da003600fb002c009e/t/?o=False 1/35
power was exercised.—When a property is taken by the

government for public use, jurisprudence clearly provides for the
remedies available to a landowner. The owner may recover his
property if its return is feasible or, if it is not, the aggrieved owner
may demand payment of just compensation for the land taken.
For failure of respondents to question the lack of expropriation
proceedings for a long period of time, they are deemed to have
waived and are estopped from assailing the power of the
government to expropriate or the public use for which the power
was exercised. What is left to respondents is the right of
compensation. The trial and appellate courts found that
respondents are entitled to compensation. The only issue left for
determination is the propriety of the amount awarded to
respondents.
Same; Same; Same; Words and Phrases; Just compensation is
“the fair value of the property as between one who receives, and one
who desires to sell, fixed at the time of the actual taking by the
government.”—Just compensation is “the fair value of the
property as between one who receives, and one who desires to sell,
x x x fixed at the time of the actual taking by the
government.” This rule holds true when the property is taken
before the filing of an expropriation suit, and even if it is the
property owner who brings the action for compensation.
Same; Same; Same; Compensation must be just not only to the
property owner, but also to the public which ultimately bears the
cost of expropriation.—Both the RTC and the CA recognized that
the fair market value of the subject property in 1940 was P0.70/sq
m. Hence, it should, therefore, be used in determining the amount
due respondents instead of the higher value which is P1,500.00.
While disparity in the above amounts is obvious and may appear
inequitable to respondents as they would be receiving such
outdated valuation after a very long period, it is equally true that
they too are remiss in guarding against the cruel effects of belated
claim. The concept of just compensation does not imply fairness to
the property owner
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Tecson
alone. Compensation must be just not only to the property owner,

but also to the public which ultimately bears the cost of
expropriation.
VELASCO, JR., J., Dissenting and Concurring Opinion:
Civil Law; Land Titles; Torrens Titles; Collateral Attack; View

that a Torrens title cannot be attacked collaterally, and the issue
on its validity can be raised only in an action expressly instituted
for that purpose.—As the liability to respondents had been
determined with finality in a prior proceeding, this Court could no
longer entertain questions on ownership of the subject property so
as to release the DPWH from its liability to respondents.
Otherwise, this would require us to reopen and review the final
decision in CA-G.R. CV No. 51454. Also, respondents’ ownership
may not be questioned in this proceeding. It is settled that a
Torrens title cannot be attacked collaterally, and the issue on its
validity can be raised only in an action expressly instituted for
that purpose. Sec. 48 of Presidential Decree No. 1529, also known
as the Property Registration Decree, expressly provides: Section
48. Certificate not subject to collateral attack.—A certificate of
title shall not be subject to collateral attack. It cannot be altered,
modified, or cancelled except in a direct proceeding in accordance
with law. Accordingly, the Torrens title of respondents (TCT T-
43006) speaks for itself and is conclusive proof of ownership of the
subject property.
Remedial Law; Expropriation; Words and Phrases; View that
expropriation is an exercise of the government’s power of eminent
domain. As an inherent attribute of the government, this power is
fundamentally limitless if not restrained by the Bill of Rights.—
Expropriation is an exercise of the government’s power of eminent
domain. As an inherent attribute of the government, this power is
fundamentally limitless if not restrained by the Bill of Rights.
Without the limitations thus imposed, the exercise of the power of
eminent domain can become repressive. Thus, the Bill of Rights
should always be a measure and guarantee of protecting certain
areas of a person’s life, liberty, and property against the
government’s abuse of power. In the instant case, it is not
disputed that DPWH illegally took the subject lot without the
consent of respondents and the necessary expropriation
proceedings. To make matters worse, almost 55 years have
already passed from the time of taking, yet DPWH still
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Tecson
failed to institute condemnation proceedings. This is clearly

indicative of DPWH’s lack of intention to formally expropriate the
subject property and consequently deny respondents of the
elementary due process of law. Thus, when respondents were

constrained to file a complaint before the trial court, they were
the ones who, in effect, commenced the inverse condemnation
proceedings, which, to my mind, is ironic. The prevalence of the
taking of a subject property without the owner’s consent and the
necessary expropriation proceedings does not, and should not,
cure its illegality.
Same; Same; Just Compensation; View that while the
Supreme Court has previously ruled, in a number of cases, that the
value of the property at the time of the taking which is controlling
in the determination of the value of just compensation, it is my
submission that an exception to the foregoing ruling must be made
in cases where no condemnation proceedings were instituted after
a substantial period of time from the time of illegal taking.—If the
Court is to peg the reckoning value of the just compensation to
PhP 0.70, it would, in effect, be condoning the wrongful act of
DPWH in taking the subject property in utter disregard of
respondents’ property rights and violation of the due process of
laws. Thus, while this Court has previously ruled, in a number of
cases, that the value of the property at the time of the taking
which is controlling in the determination of the value of just
compensation, it is my submission that an exception to the
foregoing ruling must be made in cases where no condemnation
proceedings were instituted after a substantial period of
time from the time of illegal taking. Pertinently, there is
“illegal taking” when there is taking of a property without the
benefit of expropriation proceedings and without payment of just
compensation, as in the instant case. When the illegal taking is
compounded with the failure of the condemnor to institute
condemnation proceedings after a substantial period of time, i.e.,
55 years from the time of taking, then it is not really hard to
grasp why pegging the basis for valuation of just compensation at
the time of illegal taking is erroneous, if not utterly reprehensible.
Same; Same; Same; View that the Supreme Court cannot
reluctantly close its eyes to the likelihood that the invariable
application of the determination of just compensation at the time
of the actual taking, as in the cases cited in the ponencia, will
grant government agencies and instrumentalities the license to
disregard the property
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Tecson
rights of landowners, violate the Constitution’s proviso on due

process of laws, and render nugatory statutory and procedural
laws on expropriation proceedings of private properties for public
use.—The Court cannot reluctantly close its eyes to the likelihood
that the invariable application of the determination of just
compensation at the time of the actual taking, as in the cases
cited in the ponencia, will grant government agencies and
instrumentalities the license to disregard the property rights of
landowners, violate the Constitution’s proviso on due process of
laws, and render nugatory statutory and procedural laws on
expropriation proceedings of private properties for public use.
Both the RTC of Malolos City and the CA were, therefore, correct
in granting just compensation to respondents in the amount of
PhP 1,500 per square meter, as recommended by the PAC. This
way, government agencies and instrumentalities would think
twice before taking any unwarranted short cuts in condemning
private properties that violate the owners’ right to due process of
laws as enshrined in the Bill of Rights.
LEONEN, J., Separate Opinion:
Remedial Law; Expropriation; Just Compensation; View 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; I am of the opinion that the proper way to resolve
this would be to use the economic concept of present value. This
concept is usually summarized this way: Money received today is
more valuable than the same amount of money received tomorrow.
—I also agree with Justice Velasco 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. Should
the value of the property been awarded to the owners at the time
of the taking, they would have used it for other profitable uses.
Hence, the failure of the State to have paid at the proper time
deprives the owners of the true value of the property that they
had. I am of the opinion that the proper way to resolve this would
be to use the economic concept of present value. This concept is
usually summarized this way: Money received today is more
valuable than the same amount of money tomorrow. By applying
this concept, we are able to capture just compensation in a more
holistic manner. We take into consideration the potential of
money to increase (or decrease) in value across time. If the parties
in an expropriation case would have perfect foresight,
248
Tecson
they would have known the amount of “fair market value at the
time of taking.” If this amount of money was deposited in a bank
pending expropriation proceedings, by the time proceedings are
over, the property owner would be able to withdraw the principal
(fair market value at the time of taking) and the interest earnings
it has accumulated over the time of the proceedings. Economists
have devised a simple method to compute for the value of money
in consideration of this future interest earnings.
PETITION for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.
Office of the Solicitor General for petitioners.
Ma. Elenita R. Quintana for respondents.
PERALTA, J.:
This is a petition for review on certiorari under Rule 45
of the Rules of Court, assailing the Court of Appeals (CA)
Decision1 dated July 31, 2007 in CA-G.R. CV No. 77997.
The assailed decision affirmed with modification the
Regional Trial Court (RTC)2 Decision3 dated March 22,
2002 in Civil Case No. 208-M-95.
The case stemmed from the following factual and
procedural antecedents:
Respondent spouses Heracleo and Ramona Tecson
(respondents) are co-owners of a parcel of land with an area
of 7,268 square meters located in San Pablo, Malolos,
Bulacan and
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1 Penned by Associate Justice Lucas P. Bersamin (now a member of
this Court), with Associate Justices Portia Aliño-Hormachuelos and Estela
M. Perlas-Bernabe (now a member of this Court), concurring; Rollo, pp.
124-137.
2 Branch 80, Malolos, Bulacan.
3 Penned by Judge Caesar A. Casanova; Rollo, pp. 165-167.
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Secretary of the Department of Public Works and Highways
vs. Tecson
covered by Transfer Certificate of Title (TCT) No. T-

430064 of the Register of Deeds of Bulacan. Said parcel of
land was among the properties taken by the government
sometime in 1940 without the owners’ consent and without

the necessary expropriation proceedings and used for the
construction of the MacArthur Highway.5
In a letter6 dated December 15, 1994, respondents
demanded the payment of the fair market value of the
subject parcel of land. Petitioner Celestino R. Contreras
(petitioner Contreras), then District Engineer of the First
Bulacan Engineering District of petitioner Department of
Public Works and Highways (DPWH), offered to pay the
subject land at the rate of P0.70 per square meter per
Resolution of the Provincial Appraisal Committee (PAC) of
Bulacan.7 Unsatisfied with the offer, respondents
demanded for the return of their property or the payment
of compensation at the current fair market value.8
As their demand remained unheeded, respondents filed
a Complaint9 for recovery of possession with damages
against petitioners, praying that they be restored to the
possession of the subject parcel of land and that they be
paid attorney’s fees.10 Respondents claimed that the subject
parcel of land was assessed at P2,543,800.00.11
Instead of filing their Answer, petitioners moved for the
dismissal of the complaint on the following grounds: (1)
that the suit is against the State which may not be sued
without its consent; (2) that the case has already
prescribed; (3) that respondents have no cause of action for
failure to exhaust
_______________
4 Records, p. 5.
5 Rollo, p. 125.
6 Records, p. 6.
7 Id., at p. 7.
8 Rollo, p. 125.
9 Records, pp. 1-4.
10 Id., at p. 3.
11 Id., at p. 2.
250

vs. Tecson
administrative remedies; and (4) if respondents are entitled

to compensation, they should be paid only the value of the
property in 1940 or 1941.12
On June 28, 1995, the RTC issued an Order13 granting

respondents’ motion to dismiss based on the doctrine of
state immunity from suit. As respondents’ claim includes
the recovery of damages, there is no doubt that the suit is
against the State for which prior waiver of immunity is
required. When elevated to the CA,14 the appellate court
did not agree with the RTC and found instead that the
doctrine of state immunity from suit is not applicable,
because the recovery of compensation is the only relief
available to the landowner. To deny such relief would
undeniably cause injustice to the landowner. Besides,
petitioner Contreras, in fact, had earlier offered the
payment of compensation although at a lower rate. Thus,
the CA reversed and set aside the dismissal of the
complaint and, consequently, remanded the case to the
trial court for the purpose of determining the just
compensation to which respondents are entitled to recover
from the government.15 With the finality of the aforesaid
decision, trial proceeded in the RTC.
The Branch Clerk of Court was initially appointed as the
Commissioner and designated as the Chairman of the
Committee that would determine just compensation,16 but
the case was later referred to the PAC for the submission of
a recommendation report on the value of the subject
property.17 In
_______________
12 Id., at pp. 17-19.
13 Id., at pp. 29-30.
14 The case was docketed as CA-G.R. CV No. 51454.
15 Embodied in a Decision dated February 11, 1999, penned by
Associate Justice Artemon D. Luna, with Associate Justices Delilah
Vidallon-Magtolis and Rodrigo V. Cosico, concurring; records, pp. 56-62.
16 Records, p. 104.
17 Id., at p. 116.
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vs. Tecson
PAC Resolution No. 99-007,18 the PAC recommended the

amount of P1,500.00 per square meter as the just
compensation for the subject property.
On March 22, 2002, the RTC rendered a Decision,19 the
dispositive portion of which reads:
WHEREFORE, premises considered, the Department of

Public Works and Highways or its duly assigned agencies
are hereby directed to pay said Complainants/
Appellants the amount of One Thousand Five Hundred
Pesos (P1,500.00) per square meter for the lot subject
matter of this case in accordance with the Resolution of the
Provincial Appraisal Committee dated December 19, 2001.
SO ORDERED.20
On appeal, the CA affirmed the above decision with the

modification that the just compensation stated above
should earn interest of six percent (6%) per annum
computed from the filing of the action on March 17, 1995
until full payment.21
In its appeal before the CA, petitioners raised the issues
of prescription and laches, which the CA brushed aside on
two grounds: first, that the issue had already been raised
by petitioners when the case was elevated before the CA in
CA-G.R. CV No. 51454. Although it was not squarely ruled
upon by the appellate court as it did not find any reason to
delve further on such issues, petitioners did not assail said
decision barring them now from raising exactly the same
issues; and second, the issues proper for resolution had
been laid down in the pre-trial order which did not include
the issues of prescription and laches. Thus, the same can
no longer be further consid-
_______________
18 Id., at p. 122.
19 Id., at pp. 150-152.
20 Id., at p. 152.
21 Supra note 1.
252

vs. Tecson
ered. As to the propriety of the property’s valuation as

determined by the PAC and adopted by the RTC, while
recognizing the rule that the just compensation should be
the reasonable value at the time of taking which is 1940,
the CA found it necessary to deviate from the general rule.
It opined that it would be obviously unjust and inequitable
if respondents would be compensated based on the value of
the property in 1940 which is P0.70 per sq m, but the
compensation would be paid only today. Thus, the
appellate court found it just to award compensation based

on the value of the property at the time of payment. It,
therefore, adopted the RTC’s determination of just
compensation of P1,500.00 per sq m as recommended by
the PAC. The CA further ordered the payment of interest
at the rate of six percent (6%) per annum reckoned from
the time of taking, which is the filing of the complaint on
March 17, 1995.
Aggrieved, petitioners come before the Court assailing
the CA decision based on the following grounds:
I.
THE COURT OF APPEALS GRAVELY ERRED IN GRANTING
JUST COMPENSATION TO RESPONDENTS CONSIDERING
THE HIGHLY DUBIOUS AND QUESTIONABLE
CIRCUMSTANCES OF THEIR ALLEGED OWNERSHIP OF
THE SUBJECT PROPERTY.
II.
THE COURT OF APPEALS GRAVELY ERRED IN AWARDING
JUST COMPENSATION TO RESPONDENTS BECAUSE THEIR
COMPLAINT FOR RECOVERY OF POSSESSION AND
DAMAGES IS ALREADY BARRED BY PRESCRIPTION AND
LACHES.
III.
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING
THE TRIAL COURT’S DECISION ORDERING THE PAYMENT
OF
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Tecson
JUST COMPENSATION BASED ON THE CURRENT MARKET

VALUE OF THE ALLEGED PROPERTY OF RESPONDENTS.22
Petitioners insist that the action is barred by

prescription having been filed fifty-four (54) years after the
accrual of the action in 1940. They explain that the court
can motu proprio dismiss the complaint if it shows on its
face that the action had already prescribed. Petitioners
likewise aver that respondents slept on their rights for
more than fifty years; hence, they are guilty of laches.
Lastly, petitioners claim that the just compensation should
be based on the value of the property at the time of taking
in 1940 and not at the time of payment.23
The petition is partly meritorious.
The instant case stemmed from an action for recovery of

possession with damages filed by respondents against
petitioners. It, however, revolves around the taking of the
subject lot by petitioners for the construction of the
MacArthur Highway. There is taking when the
expropriator enters private property not only for a
momentary period but for a permanent duration, or for the
purpose of devoting the property to public use in such a
manner as to oust the owner and deprive him of all
beneficial enjoyment thereof.24
It is undisputed that the subject property was taken by
petitioners without the benefit of expropriation proceedings
for the construction of the MacArthur Highway. After the
lapse of more than fifty years, the property owners sought
recovery of the possession of their property. Is the action
barred by prescription or laches? If not, are the property
owners entitled to recover possession or just compensation?
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22 Rollo, p. 108.
23 Id., at pp. 24-32.
24 Manila International Airport Authority v. Rodriguez, 518 Phil. 750,
757; 483 SCRA 619, 626-627 (2006).
254

vs. Tecson
As aptly noted by the CA, the issues of prescription and

laches are not proper issues for resolution as they were not
included in the pre-trial order. We quote with approval the
CA’s ratiocination in this wise:
Procedurally, too, prescription and laches are no longer

proper issues in this appeal. In the pre-trial order issued on
May 17, 2001, the RTC summarized the issues raised by the
defendants, to wit: (a) whether or not the plaintiffs were
entitled to just compensation; (b) 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;
and (c) whether or not the plaintiffs were entitled to
damages. Nowhere did the pre-trial order indicate that
prescription and laches were to be considered in the
adjudication of the RTC.25
To be sure, the pre-trial order explicitly defines and

limits the issues to be tried and controls the subsequent
course of the action unless modified before trial to prevent
manifest injustice.26
Even if we squarely deal with the issues of laches and
prescription, the same must still fail. Laches is principally
a doctrine of equity which is applied to avoid recognizing a
right when to do so would result in a clearly inequitable
situation or in an injustice.27 This doctrine finds no
application in this case, since there is nothing inequitable
in giving due course to respondents’ claim. Both equity and
the law direct that a property owner should be
compensated if his property is taken for public use.28
Neither shall prescription bar respondents’ claim following
the long-standing rule “that where private property is
taken by the Government for public use
_______________
25 Rollo, p. 133.
26 Rules of Court, Rule 18, Sec. 7.
27 Republic v. Court of Appeals, G.R. No. 147245, March 31, 2005, 454
SCRA 516, 527.
28 Id.
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vs. Tecson
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.”29
When a property is taken by the government for public
use, jurisprudence clearly provides for the remedies
available to a landowner. The owner may recover his
property if its return is feasible or, if it is not, the aggrieved
owner may demand payment of just compensation for the
land taken.30 For failure of respondents to question the
lack of expropriation proceedings for a long period of time,
they are deemed to have waived and are estopped from
assailing the power of the government to expropriate or the
public use for which the power was exercised. What is left
to respondents is the right of compensation.31 The trial and
appellate courts found that respondents are entitled to
compensation. The only issue left for determination is the
propriety of the amount awarded to respondents.
Just compensation is “the fair value of the property as

between one who receives, and one who desires to sell, x x x
fixed at the time of the actual taking by the government.”
This rule holds true when the property is taken before the
filing of an expropriation suit, and even if it is the property
owner who brings the action for compensation.32
The issue in this case is not novel.
In Forfom Development Corporation [Forfom] v.
Philippine National Railways [PNR],33 PNR entered the
property of Forfom in January 1973 for public use, that is,
for railroad
_______________
29 Eusebio v. Luis, G.R. No. 162474, October 13, 2009, 603 SCRA 576,
583; Republic v. Court of Appeals, supra note 27, at p. 528.
30 Republic v. Court of Appeals, supra note 27, at p. 532.
31 Eusebio v. Luis, supra note 29, at p. 584; Forfom Development
Corporation v. Philippine National Railways, G.R. No. 124795, December
10, 2008, 573 SCRA 350, 366-367.
32 Republic v. Court of Appeals, supra note 27, at p. 534. (Emphasis
supplied.)
33 Supra note 31.
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vs. Tecson
tracks, facilities and appurtenances for use of the

Carmona Commuter Service without initiating
34
expropriation proceedings. In 1990, Forfom filed a
complaint for recovery of possession of real property and/or
damages against PNR. In Eusebio v. Luis,35 respondent’s
parcel of land was taken in 1980 by the City of Pasig and
used as a municipal road now known as A. Sandoval
Avenue in Pasig City without the appropriate
expropriation proceedings. In 1994, respondent demanded
payment of the value of the property, but they could not
agree on its valuation prompting respondent to file a
complaint for reconveyance and/or damages against the
city government and the mayor. In Manila International
Airport Authority v. Rodriguez,36 in the early 1970s,
petitioner implemented expansion programs for its runway
necessitating the acquisition and occupation of some of the
properties surrounding its premises. As to respondent’s
property, no expropriation proceedings were initiated. In
1997, respondent demanded the payment of the value of

the property, but the demand remained unheeded
prompting him to institute a case for accion reivindicatoria
with damages against petitioner. In Republic v. Sarabia,37
sometime in 1956, the Air Transportation Office (ATO) took
possession and control of a portion of a lot situated in
Aklan, registered in the name of respondent, without
initiating expropriation proceedings. Several structures
were erected thereon including the control tower, the
Kalibo crash fire rescue station, the Kalibo airport terminal
and the headquarters of the PNP Aviation Security Group.
In 1995, several stores and restaurants were constructed
on the remaining portion of the lot. In 1997, respondent
filed a complaint for recovery of possession with damages
against the storeowners
_______________
34 Forfom Development Corporation v. Philippine National Railways,
supra note 31, at p. 366.
35 Supra note 29.
36 Supra note 24.
37 G.R. No. 157847, August 25, 2005, 468 SCRA 142.
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vs. Tecson
where ATO intervened claiming that the storeowners were

its lessees.
The Court in the above-mentioned cases was confronted
with common factual circumstances where the government
took control and possession of the subject properties for
public use without initiating expropriation proceedings and
without payment of just compensation, while the
landowners failed for a long period of time to question such
government act and later instituted actions for recovery of
possession with damages. The Court thus determined the
landowners’ right to the payment of just compensation and,
more importantly, the amount of just compensation. The
Court has uniformly ruled that just compensation is
the value of the property at the time of taking that is
controlling for purposes of compensation. In Forfom,
the payment of just compensation was reckoned from the
time of taking in 1973; in Eusebio, the Court fixed the just
compensation by determining the value of the property at
the time of taking in 1980; in MIAA, the value of the lot at

the time of taking in 1972 served as basis for the award of
compensation to the owner; and in Republic, the Court was
convinced that the taking occurred in 1956 and was thus
the basis in fixing just compensation. As in said cases, just
compensation due respondents in this case should,
therefore, be fixed not as of the time of payment but at the
time of taking, that is, in 1940.
The reason for the rule has been clearly explained in
Republic v. Lara, et al.,38 and repeatedly held by the Court
in recent cases, thus:
x x x “[T]he value of the property should be fixed as of the

date when it was taken and not the date of the filing of the
proceedings.” For where property is taken ahead of the
filing of the condemnation proceedings, the value thereof
may be enhanced by the public purpose for which
_______________
38 96 Phil. 170 (1954).
258

Tecson
it is taken; the entry by the plaintiff upon the property may

have depreciated its value thereby; or, there may have been
a natural increase in the value of the property from the
time it is taken to the time the complaint is filed, due to
general economic conditions. The owner of private property
should be compensated only for what he actually loses; it is
not intended that his compensation shall extend beyond his
loss or injury. And what he loses is only the actual value of
his property at the time it is taken x x x.39
Both the RTC and the CA recognized that the fair

market value of the subject property in 1940 was P0.70/sq
m.40 Hence, it should, therefore, be used in determining the
amount due respondents instead of the higher value which
is P1,500.00. While disparity in the above amounts is
obvious and may appear inequitable to respondents as they
would be receiving such outdated valuation after a very
long period, it is equally true that they too are remiss in
guarding against the cruel effects of belated claim. The
concept of just compensation does not imply fairness to the
property owner alone. Compensation must be just not only
to the property owner, but also to the public which

ultimately bears the cost of expropriation.41
Clearly, petitioners had been occupying the subject
property for more than fifty years without the benefit of
expropriation proceedings. In taking respondents’ property
without the benefit of expropriation proceedings and
without payment of just compensation, petitioners clearly
acted in utter disregard of respondents’ proprietary rights
which cannot be countenanced by the Court.42 For said
illegal taking, respondents are entitled to adequate
compensation in the form of actual or compensatory
damages which in this case should be the legal interest of
six percent (6%) per annum on the value of the
_______________
39 Republic v. Lara, et al., supra, at pp. 177-178.
40 Rollo, p. 44.
41 Republic v. Court of Appeals, supra note 27, at p. 536.
42 Eusebio v. Luis, supra note 29, at p. 587.
259
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vs. Tecson
land at the time of taking in 1940 until full payment.43 This

is based on the principle that interest runs as a matter of
law and follows from the right of the landowner to be
placed in as good position as money can accomplish, as of
the date of taking.44
WHEREFORE, premises considered, the petition is
PARTIALLY GRANTED. The Court of Appeals Decision
dated July 31, 2007 in CA-G.R. CV No. 77997 is
MODIFIED, in that the valuation of the subject property
owned by respondents shall be P0.70 instead of P1,500.00
per square meter, with interest at six percent (6%) per
annum from the date of taking in 1940 instead of March
17, 1995, until full payment.
SO ORDERED.
Abad and Mendoza, JJ., concur.

Velasco, Jr., J., See Dissenting and Concurring
Opinion.
Leonen, J., See Separate Opinion.
DISSENTING AND CONCURRING OPINION

VELASCO, JR., J.:
When the circumstances obtaining distinctly call for a

deviation from the general rule laid down by jurisprudence,
the Court should give due consideration to the same, lest
oppression and injustice ensue.
_______________
43 Id., at pp. 587-588; Forfom Development Corporation v. Philippine
National Railways, supra note 31, at p. 373; Manila International Airport
Authority v. Rodriguez, supra note 24, at p. 761. (Citations omitted).
44 Manila International Airport Authority v. Rodriguez, supra note 24,
at p. 761; p. 631. (Citation omitted).
260

vs. Tecson
The Case
Before the Court is a Petition for Review on Certiorari
under Rule 45 assailing the July 31, 2007 Decision1 of the
Court of Appeals (CA) in CA-G.R. CV No. 77997, affirming
with modification the March 22, 2002 Decision2 of the
Regional Trial Court (RTC) of Malolos City, Bulacan.
The Facts
Respondent spouses Heracleo and Ramona Tecson
(respondents) are the co-owners of a 7,268-square meter lot
located in San Pablo, Malolos, Bulacan, and covered by
Transfer Certificate of Title (TCT) No. T-43006.3 This
parcel of land is among the private properties traversed by
the MacArthur Highway, a government project undertaken
sometime in 1940. The taking appears to have been made
absent the requisite expropriation proceedings and without
respondents’ consent.4
After the lapse of more than forty (40) years,
respondents, in a Letter5 dated December 15, 1994,
demanded payment equivalent to the fair market value of
the subject property from the Department of Public Works
and Highways (DPWH). Petitioner Celestino R. Contreras
(petitioner Contreras), then District Engineer of the First
Bulacan Engineering District of DPWH, responded with an
offer to pay just compensation at the rate of PhP 0.70 per
square meter based on Resolution No. XII dated January
15, 1950 of the Provin-
_______________
1 Rollo, pp. 37-50. Penned by Associate Justice (now a member of this

Court) Lucas P. Bersamin and concurred in by Associate Justices Portia
Aliño Hormachuelos and Estela M. Perlas-Bernabe (also now a member of
this Court).
2 Id., at pp. 78-80.
3 Id., at pp. 37-38.
4 Id., at p. 38.
5 Records, p. 6.
261
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vs. Tecson
cial Appraisal Committee (PAC) of Bulacan.6 Respondents

made a counter-offer that the government either return the
subject property or pay just compensation based on the
current fair market value.7
As the parties failed to reach any agreement on the
price, respondents filed a suit for recovery of possession
with damages against DPWH and petitioner Contreras
(collectively referred to as “petitioners”) on March 17,
1995.8 In their Complaint,9 docketed as Civil Case No. 208-
M-95 and raffled to Branch 80 of the RTC of Malolos City,
respondents claimed that the subject property was assessed
at PhP 2,543,800.10
Subsequently, petitioners filed a Motion to Dismiss11
dated May 16, 1995, invoking (1) immunity from suit; (2)
prescription; (3) lack of cause of action; and (4) different
valuation for payment of just compensation.
In its Order12 dated June 28, 1995, the RTC of Malolos
City granted petitioners’ motion to dismiss for lack of
jurisdiction over the subject matter based on the doctrine of
state immunity from suit. Therefrom, respondents filed an
appeal, docketed as CA-G.R. CV No. 51454, before the CA,
which reversed the RTC of Malolos and held that the
doctrine of state immunity from suit should not apply to
cause injustice.13 Consequently, the RTC of Malolos City
was directed to hear the Complaint “for the purpose of
determining the just compensation to which [respondents]
are entitled to recover from the government.”14 The
Decision15 in CA-G.R. CV No. 51454
_______________
6 Rollo, p. 38.
7 Id., at p. 38.
8 Id., at pp. 37-38.

9 Id., at pp. 51-54.
10 Records, p. 5.
11 Rollo, pp. 56-58.
12 Id., at pp. 60-61.
13 Id., at pp. 38-39.
14 Id., at p. 68.
15 Id., at pp. 62-68.
262

vs. Tecson
attained finality on March 6, 1999.16

The RTC of Malolos City conducted further proceedings.
Upon respondents’ motion, the Branch Clerk of Court was
authorized to serve as commissioner for the purpose of
determining just compensation.17 However, upon the
Branch Clerk of Court’s recommendation, the RTC of
Malolos City referred the case to the PAC of Bulacan for
proper action.18
In its Resolution No. 99-007, the PAC recommended the
amount of PhP 1,500 per square meter as the basis for the
valuation of just compensation for the subject property.19
As stated in said Resolution:
PRESENTED were the Decision of the Court of Appeals

re Civil Case No. 208-M-95, the Commissioner’s Report and
the report of the subcommittee on appraisal;
WHEREAS, Civil Case No. 208-M-95 is about a parcel of
land situated at San Pablo, Malolos, Bulacan, which was
allegedly taken by the government in 1940 during the
construction of MacArthur Highway without the consent of
the owner nor expropriation proceedings;
WHEREAS, a Resolution No. XII dated January 15, 1950
promulgated the price of Seventy Centavos (P0.70) per
square meter as the price of the lots affected by the
aforesaid project;
WHEREAS, a suit was filed by the owner to the Court of
Appeals, condemning the aforesaid market value as unfair;
WHEREAS, upon the instruction of the Chairman of the
Provincial Appraisal Committee, the sub-committee
conducted a thorough inspection and field investigation;
_______________
16 Id., at p. 39.
17 Id., at p. 39.
18 Id., at p. 39.
19 Id., at p. 40.
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Tecson
WHEREAS, taking into consideration the price during

the time of the taking which is P0.70 per square meter and
the price prevailing nowadays which is P10,000.00 per
square meter, the members motioned and seconded by the
Chairman that the reasonable and just compensation is One
Thousand Five Hundred Pesos (P1,500.00) per square
meter.
NOW THEREFORE, be it resolved as it is now resolved
that the just compensation of One Thousand Five Hundred
Pesos (P1,500.00) per square meter is hereby submitted for
consideration of the authorities concerned.
UNANIMOUSLY RESOLVED.20
On the basis of PAC’s recommendation, the RTC of

Malolos City rendered on March 22, 2002 a Decision.21 The
dispositive portion of said decision reads:
WHEREFORE, premises considered, the Department of

Public Works and Highways or its duly assigned agencies
are hereby directed to pay said Complainants/Appellants
the amount of One Thousand Five Hundred Pesos
(P1,500.00) per square meter for the lot subject matter of
this case in accordance with the Resolution of the Provincial
Appraisal Committee dated December 19, 2001.
SO ORDERED.22
On appeal by petitioners, the CA affirmed with

modification the above-mentioned RTC Decision.
Particularly, the dispositive portion of the CA Decision
reads:
WHEREFORE, the DECISION DATED MARCH 22,

2002 is AFFIRMED, subject to the MODIFICATION that
the just compensation shall earn interest of
_______________
20 Id., at p. 40.
21 Id., at pp. 78-80.
22 Id., at p. 80.
264

Tecson
6% per annum computed from the time of the filing of this

action on March 17, 1995 until full payment.
SO ORDERED.23
Aggrieved, petitioners filed the instant petition.

Issues
I
THE CA GRAVELY ERRED IN GRANTING JUST
COMPENSATION TO RESPONDENTS CONSIDERING THE
HIGHLY DUBIOUS AND QUESTIONABLE CIRCUMSTANCES
OF THEIR ALLEGED OWNERSHIP OF THE SUBJECT
PROPERTY.
II
THE CA GRAVELY ERRED IN AWARDING JUST
COMPENSATION TO RESPONDENTS BECAUSE THEIR
COMPLAINT FOR RECOVERY OF POSSESSION AND
DAMAGES IS ALREADY BARRED BY PRESCRIPTION AND
LACHES.
III
THE CA GRAVELY ERRED IN AFFIRMING THE TRIAL
COURT’S DECISION ORDERING THE PAYMENT OF JUST
COMPENSATION BASED ON THE CURRENT MARKET
VALUE OF THE ALLEGED PROPERTY OF RESPONDENTS.
Essentially, the issues raised in the instant petition

revolve around the following: (1) ownership of the subject
property; (2) prescription and laches; and (3) amount of just
compensation.
I submit that the petition should be denied.
_______________
23 Id., at p. 49.
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vs. Tecson
Ownership of the subject property
Petitioners claim that respondents’ ownership of the

subject property is highly dubious and questionable, thus,
the CA allegedly erred in awarding just compensation to
respondents.24 Petitioners’ contention is misplaced.
Respondents’ right to recover just compensation for the
expropriation of the subject property has already been
settled by the CA in its Decision25 dated February 11, 1999
in CA-G.R. CV No. 51454. When the CA remanded the case
to the RTC of Malolos City, further proceedings were
intended “for the purpose of determining the just
compensation to which [respondents] are entitled to recover
from the government.”26 Said CA Decision in CA-G.R. CV
No. 51454 has already become final.
The ruling in CA-G.R. CV No. 51454 on respondents’
right to recover just compensation was the law of the case.
In Strategic Alliance Development Corporation v. Radstock
Securities Limited,27 the Court explained the law of the
case doctrine, as follows:
Law of the case is defined as the opinion delivered on a

former appeal. More specifically, it means that whatever is
once irrevocably established as the controlling legal rule
between the same parties in the same case continues to be
the law of the case, whether correct on general principles or
not, so long as the facts on which such decision was
predicated continue to be facts of the case before the court,
notwithstanding that the rule laid down may have been
reversed in other cases. Indeed, after the appellate
court has issued a pronouncement on a point
presented to it with a full opportunity to be heard
having been accorded to the
_______________
24 Id., at p. 22.
25 Id., at pp. 62-68.
26 Id., at p. 68.
27 G.R. Nos. 178158 & 180428, December 4, 2009, 607 SCRA 413.
266

Tecson
parties, that pronouncement should be regarded as

the law of the case and should not be reopened on a
remand of the case. (Emphasis supplied.)
As the liability to respondents had been determined

with finality in a prior proceeding, this Court could no
longer entertain questions on ownership of the subject
property so as to release the DPWH from its liability to
respondents. Otherwise, this would require us to reopen
and review the final decision in CA-G.R. CV No. 51454.
Also, respondents’ ownership may not be questioned in
this proceeding. It is settled that a Torrens title cannot be
attacked collaterally, and the issue on its validity can be
raised only in an action expressly instituted for that
purpose.28 Sec. 48 of Presidential Decree No. 1529, also
known as the Property Registration Decree, expressly
provides:
Section 48. Certificate not subject to collateral attack.—

A certificate of title shall not be subject to collateral attack.
It cannot be altered, modified, or cancelled except in a direct
proceeding in accordance with law.
Accordingly, the Torrens title of respondents (TCT T-

43006) speaks for itself and is conclusive proof of ownership
of the subject property.
Prescription and laches
On the issues of prescription and laches, I agree with
the ponencia that these are also not proper issues for
resolution since they were not included in the pre-trial
order, where the issues for resolution were limited to the
following: (1) whether respondents are entitled to just
compensation; (2) whether the valuation would be based on
the corresponding value at the
_______________
28 Cimafranca v. Intermediate Appellate Court, G.R. No. 68687,
January 31, 1987, 147 SCRA 611.
267
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vs. Tecson
time of the taking or at the time of the filing of the action;

and (3) whether respondents were entitled to damages.29
And even if the issues of laches and prescription are to
be dealt with substantively, still, these grounds have no leg
to stand on. As aptly pointed out in the ponencia, laches
“finds no application in this case, since there is nothing
inequitable in giving due course to respondents’ claim.”
Contrarily, it would be the height of injustice if

respondents would be deprived of just compensation for
their property, which was taken for public use and without
their consent, based on this equitable doctrine. Also,
prescription will not bar respondents’ claim since, as stated
in the ponencia, the owner’s action to recover the land or
the value thereof does not prescribe where private property
is taken for public use by the government without first
acquiring title thereto.30
Accordingly, the only issue left for determination is the
amount of just compensation which respondents are
entitled to receive from the government for the taking of
their subject property.
Basis in determining the amount
of just compensation
Both the RTC of Malolos and the CA found and granted
just compensation to respondents in the amount of PhP
1,500 per square meter, as recommended by the PAC.
Additionally, the CA granted 6% interest on the total just
compensation, reckoned from the time of the filing of the
Complaint until fully paid.
Petitioners, however, insist that respondents’
entitlement to just compensation, if indeed they are
entitled, should be
_______________
29 Rollo, p. 46.
30 Eusebio v. Luis, G.R. No. 162474, October 13, 2009, 603 SCRA 576,
583; Republic v. Court of Appeals, G.R. No. 147245, March 31, 2005, 454
SCRA 516, 528.
268

vs. Tecson
based only on the fair market value at the time of taking,

that is, at PhP 0.70 per square meter.
On this point, the majority agrees with petitioners, I am
of a different mind and accordingly register this dissent.
In justifying its ruling that just compensation of the
subject property should be based on 1940 values, that is,
PhP 0.70 per square meter, the ponencia noted that “[t]he
Court has uniformly ruled that just compensation is the
value of the property at the time of the taking that is
controlling for the purposes of compensation.”31 It cited in
this regard the 1954 case of Republic v. Lara,32 where the

Court held:
x x x [T]he value of the property should be fixed as of the

date when it was taken and not the date of the filing of the
proceedings.” For where property is taken ahead of the
filing of the condemnation proceedings, the value thereof
may be enhanced by the public purpose for which it is
taken; the entry by the plaintiff upon the property may
have depreciated its value thereby; or, there may have been
a natural increase in the value of the property from the
time it is taken to the time the complaint is filed, due to
general economic conditions. The owner of private property
should be compensated only for what he actually loses; it is
not intended that his compensation shall extend beyond his
loss or injury. And what he loses is only the actual value of
his property at the time it is taken x x x.33
Indeed, in a number of cases,34 the Court has ruled that

the reckoning point for the determination of just
compensation
_______________
31 Ponencia, p. 9.
32 96 Phil. 170 (1954).
33 Id., at pp. 177-178; ponencia, p. 10.
34 Forfom Development Corporation v. Philippine National Railways,
G.R. No. 124795, December 10, 2008, 573 SCRA 350; Eusebio v. Luis, G.R.
No. 162474, October 13, 2009, 603 SCRA 576; Manila International
Airport Authority v. Rodriguez, G.R. No.

269
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vs. Tecson
is the time of taking. Nonetheless, I respectfully submit

that there is a necessity to deviate from such general rule
in view of the attendant inequity and prejudice such
application entails.
For one, DPWH violated respondents’ constitutional
right to procedural due process when it deprived
respondents of the subject property without their consent
and the requisite expropriation proceedings.35 It has been
my position that since expropriation is essentially a forced
taking of private property by the state or its agencies, the

private owner being compelled to give up his property for
the common weal, then the mandatory requirement of due
process should be strictly followed.36
Expropriation is an exercise of the government’s power
of eminent domain. As an inherent attribute of the
government, this power is fundamentally limitless if not
restrained by the Bill of Rights. Without the limitations
thus imposed, the exercise of the power of eminent domain
can become repressive. Thus, the Bill of Rights should
always be a measure and guarantee of protecting certain
areas of a person’s life, liberty, and property against the
government’s abuse of power.37
In the instant case, it is not disputed that DPWH
illegally took the subject lot without the consent of
respondents and the necessary expropriation proceedings.
To make matters worse, almost 55 years have already
passed from the time of taking, yet DPWH still failed to
institute condemnation proceedings. This is clearly
indicative of DPWH’s lack of intention to formally
expropriate the subject property and consequently deny
respondents of the elementary due process of
_______________
161836, February 28, 2006, 483 SCRA 619; Republic v. Sarabia, G.R.
No. 157847, August 25, 2005, 468 SCRA 142.
35 See National Power Corporation v. Heirs of Macabangkit Sangkay,
G.R. No. 165828, August 24, 2011, 656 SCRA 60.
36 Concurring Opinion of Justice Presbitero J. Velasco, Jr. in Mactan-
Cebu International Airport v. Tudtud, G.R. No. 174012, November 14,
2008, 571 SCRA 165.
37 Id.
270

vs. Tecson
law. Thus, when respondents were constrained to file a

complaint before the trial court, they were the ones who, in
effect, commenced the inverse condemnation proceedings,
which, to my mind, is ironic. The prevalence of the taking
of a subject property without the owner’s consent and the
necessary expropriation proceedings does not, and should
not, cure its illegality.
Verily, the government’s action in the instant case, done

as it were without observing procedural due process, is
illegal and invalid. As such, the condemnation of the
subject property ought to be reversed and respondents
restored to its possession. However, considering that the
subject property had already been put to public use —
forming part of the MacArthur Highway — respondents
can no longer be restored to the possession of the subject
property. As pointed out by the CA, the only remedy
available to respondents is the recovery of just
compensation.
But if the Court is to peg the reckoning value of the just
compensation to PhP 0.70, it would, in effect, be condoning
the wrongful act of DPWH in taking the subject property in
utter disregard of respondents’ property rights and
violation of the due process of laws.
Thus, while this Court has previously ruled, in a
number of cases, that the value of the property at the time
of the taking which is controlling in the determination of
the value of just compensation, it is my submission that an
exception to the foregoing ruling must be made in cases
where no condemnation proceedings were instituted
after a substantial period of time from the time of
illegal taking.
Pertinently, there is “illegal taking” when there is
taking of a property without the benefit of expropriation
proceedings and without payment of just compensation,38
as in the instant case. When the illegal taking is
compounded with the failure
_______________
38 Eusebio v. Luis, G.R. No. 162474, October 13, 2009, 603 SCRA 576.
271
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vs. Tecson
of the condemnor to institute condemnation proceedings

after a substantial period of time, i.e., 55 years from the
time of taking, then it is not really hard to grasp why
pegging the basis for valuation of just compensation at the
time of illegal taking is erroneous, if not utterly
reprehensible.
The Court cannot reluctantly close its eyes to the
likelihood that the invariable application of the
determination of just compensation at the time of the

actual taking, as in the cases cited in the ponencia, will
grant government agencies and instrumentalities the
license to disregard the property rights of landowners,
violate the Constitution’s proviso on due process of laws,
and render nugatory statutory and procedural laws on
expropriation proceedings of private properties for public
use. Both the RTC of Malolos City and the CA were,
therefore, correct in granting just compensation to
respondents in the amount of PhP 1,500 per square meter,
as recommended by the PAC. This way, government
agencies and instrumentalities would think twice before
taking any unwarranted shortcuts in condemning private
properties that violate the owners’ right to due process of
laws as enshrined in the Bill of Rights.
For another, the basis for determining the amount of
just compensation as awarded by the RTC of Malolos City
and the CA at PhP 1,500, as recommended by the PAC, is
but just and proper given the attendant circumstances.
It should be noted that at the time the case was referred
to PAC for its recommendation on the value of the just
compensation, the prevailing value of the subject property
is already at PhP 10,000 per square meter. As indicated in
PAC’s Resolution No. 99-007:
WHEREAS, taking into consideration the price during

the time of the taking which is P0.70 per square meter and
the price prevailing nowadays which is P10,000.00
per square meter, the members motioned and seconded by
the Chairman that the reasonable and
272

Tecson
just compensation is One Thousand Five Hundred

Pesos (P1,500.00) per square meter.
NOW THEREFORE, be it resolved as it is now resolved
that the just compensation of One Thousand Five Hundred
Pesos (P1,500.00) per square meter is hereby submitted for
consideration of the authorities concerned.
UNANIMOUSLY RESOLVED.39 (Emphasis supplied.)
Undeniably, the valuation of PhP 10,000 is already

enhanced by the public purpose for which the subject
property is taken, as well as the natural increase in value
of the property due its general conditions and consequent
developments. However, by pegging the basis in

determining just compensation at PhP 1,500, the RTC of
Malolos City and the CA, as recommended by the PAC,
reasonably fixed the basis for the award of just
compensation. As between PhP 0.70 and PhP 10,000, the
valuation of PhP 1,500 is but just and proper given the
present circumstances.
And for a third, it is highly unjust and inequitable, as
aptly observed by the CA, to pay respondents just
compensation at the rate of PhP 0.70 per square meter,
which was then the value of the subject property in 1940
when the illegal taking was committed. This injustice and
inequity is emphasized by the measly award respondents
will receive now, as the ponencia so rules, after having
been deprived of their right to procedural due process for
55 years with the DPWH disregarding and violating
practically all constitutional, statutory and procedural
rules relative to the condemnation of the subject lot for
public use. In effect, despite what respondents have been
through, they are still penalized by the government
considering that after 72 years from the time of the illegal
taking of their property, they will only receive a measly
amount of just compensation.
_______________
39 Rollo, p. 40; CA Decision, p. 4.
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vs. Tecson
Given the foregoing perspective, the proper reckoning

value for the determination of just compensation in the
instant case — as aptly held and granted by the RTC of
Malolos City and the CA — is PhP 1,500 per square meter.
For a better appreciation of the differing bases for the
award of just compensation, the comparative figures are as
follows:
Land (Awarded in (Awarded by the

Area of ponencia) Court of
Subject 1940 Appeals) 1995
Property value per value per square
square meter at meter at
PhP 0.70 PhP 1,500
Just 7,268 PhP 5,087.60 PhP10,902,000.00

Compensation square
meters
6% Interest PhP21,978.432
(72 yrs: from
1940-2012)
6% Interest PhP11,120,040.00
(17 yrs: from
1995-2012)
Total PhP27,066.032 PhP22,022,040.00
Award,
as of 2012
The ponencia, thus, awards the measly total of PhP

27,066.032 as just compensation to be paid by DPWH to
respondents — the amount, except for the 6% interest from
the time of taking, essentially offered by DPWH to
respondents in early 1995 when respondents demanded
payment for the illegal taking of the subject lot in
December 1994.
Instead of being accorded justice and equity,
respondents are, thus, penalized again by being awarded a
mere pittance. The Court should not countenance DPWH’s
illegal act and penalize respondents by awarding them
with a miserable
274

vs. Tecson
amount of just compensation after going through the

arduous process of vindicating their constitutional and
property rights.
In view of the foregoing, I humbly submit that the
assailed CA Decision is the appropriate ruling as this
would give respondents the just and proper award for
recovery of just compensation of the subject property
illegally taken by DPWH some 72 years ago.
Accordingly, I vote to deny the petition and affirm the
appealed July 31, 2007 Decision of the Court of Appeals.
SEPARATE OPINION
LEONEN, J.:
I agree with the ponencia of Justice Peralta in so far as
the fair market value of a property subjected to
expropriation must be the value of the property at the time
of the actual taking by the government, at the moment that

the owner is unable to have beneficial use (see Republic v.
Vda. de Castellvi).1
However, I also agree with Justice Velasco 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. Should the value of the
property been awarded to the owners at the time of the
taking, they would have used it for other profitable uses.
Hence, the failure of the State to have paid at the proper
time deprives the owners of the true value of the property
that they had.
I am of the opinion that the proper way to resolve this
would be to use the economic concept of present value.2
This concept is usually summarized this way: Money
received
_______________
1 G.R. No. L-20620, August 15, 1974, 58 SCRA 336, 352.
2 Present value (of an asset) is defined as “the value for an asset that
yields a stream of income over time.” PAUL A. SAMUELSON AND WILLIAM D.
NORDHAUS, ECONOMICS, p. 748 (Eighteenth Edition).
275
VOL. 700, JULY 1, 2013 275

vs. Tecson
today is more valuable than the same amount of money

received tomorrow.3 By applying this concept, we are able
to capture just compensation in a more holistic manner. We
take into consideration the potential of money to increase
(or decrease) in value across time.
If the parties in an expropriation case would have
perfect foresight, they would have known the amount of
“fair market value at the time of taking.” If this amount of
money was deposited in a bank pending expropriation
proceedings, by the time proceedings are over, the property
owner would be able to withdraw the principal (fair market
value at the time of taking) and the interest earnings it has
accumulated over the time of the proceedings. Economists
have devised a simple method to compute for the value of
money in consideration of this future interest earnings.
For purposes of explaining this method, consider
property owner AA who owns a piece of land. The
government took his property at Year 0. Let us assume
that his property had a fair market value of P100 at the
time of taking. In our ideal situation, the government

should have paid him P100 at Year 0. By then, AA could
have put the money in the bank so it could earn interest.
Let us peg the interest rate at 5% per annum (or in decimal
form, 0.05).4
If the expropriation proceedings took just one year
(again, another ideal situation), AA could only be paid after
that
_______________
3 N. GREGORY MANKIW, ESSENTIALS OF ECONOMICS, p. 414 (2007 Edition).
4 Interest rates are dependent on risk, inflation and tax treatment. See
PAUL A. SAMUELSON AND WILLIAM D. NORDHAUS, ECONOMICS, p. 269
(Eighteenth Edition). Actual interest rate to be applied should be
computed reasonably according to historical epochs in our political
economy. For example, during the war, we have experienced
extraordinary inflation. This extraordinary inflation influenced adversely
interest rates of financial investments. The period of martial law is
another example of a historical epoch that influenced interest rates.
276

vs. Tecson
year. The value of the P100 would have appreciated

already. We have to take into consideration the fact that in
Year 1, AA could have earned an additional P5 in interest
if he had been paid in Year 0.
In order to compute the present value of P100, we have
to consider this formula:

Present Value in Year 1 = Value at the Time of Taking +

(Interest Earned of the Value at the Time of Taking)
In formula5 terms, it will look like this:

PV1 = V + (V*r)
PV1 = V*(1+r)
PV1 = present value in Year 1
V = value at the time of taking
r = interest rate
So in the event that AA gets paid in Year 1, then:

PV1 = V*(1+r)
PV1 = P100 (1 + 0.05)
PV1 = P105
So if AA were to be paid in Year 1 instead of in Year 0, it

is only just that he be paid P105 to take into account the
interest earnings he has foregone due to the expropriation
proceedings. If he were to be paid in Year 2, we should take
into consideration not only the interest earned of the
principal, but the fact that the interest earned in Year 1
will also be subject to interest earnings in Year 2. This
concept is referred to as compounding interest rates. So our
formula becomes:
_______________
5 N. GREGORY MANKIW, ESSENTIALS OF ECONOMICS, pp. 414-415 (2007
Edition).
277
VOL. 700, JULY 1, 2013 277

vs. Tecson
Present Value in Year 2 = [Present Value in Year 1] +

[Interest Earned of Present Value in Year 1]
Recall that in formula terms, Present Value in Year 1

was expressed as:
PV1 = [V*(1+r)]
Hence, in Year 2, the formula will be:

PV2 = PV1*(1+r) or
PV2 = [V*(1+r)]*(1+r)

Seeing that the term (1+r) is repeated, it can be further
simplified as:
PV2 = V*(1+r)2
PV2 = P100 * (1+0.05)2
PV2 = P100 * 1.1025
PV2 = P110.25
This is the same as if we multiply the present value in
Year 1 of P105 by 1.05 (our multiplier with the interest
rate).
If proceedings go on until Year 3, then the formula
would be:
PV3 = PV2*(1+r)
PV3 = {[V*(1+r)]*(1+r)}*(1+r)
Again, (1+r) is repeated three times, the same number
as the number of years; hence, simplifying the formula
would yield:
PV3 = V*(1+r)3
278

vs. Tecson
Due to compounding interests, the formula for present

value at any given year becomes:
PVt = V*(1+r)t
PV stands for the present value of the property. In order
to calculate the present value of the property, the
corresponding formula is used. V stands for the value of the
property at the time of the taking, taking in all the
considerations that the court may use in order to arrive at
the fair market value in accordance with law.
This is multiplied to (1 + r) where r equals the implied
rate of return (average year-to-year interest rate) and
raised to the exponent t. The exponent t refers to the time
period or the number of years for which the value of the
money would have changed. It is treated as an exponent
because it is the number of times you have to multiply (1+r)
to capture the effect of compounding interest rates.
So if AA were to be paid seventy-three (73) years from
the time of taking, the present value of the amount he
should have been paid at the time of taking would be:
PVt = V*(1+r)t
PV73 = P100 * (1+0.05)73
PV73 = P100 * (35.2224)
PV73 = P3,522.24
As applied in this case, the property which is the subject
of the current controversy is worth P0.70/sq.m. in 1940, but
it is actually worth more than P0.70/sq. m. by 2013. There
is a period of 73 years between the actual taking and the
time payment is to be made. The value of the cash to be
paid to the owner at this time is definitely more because of
changes in the interest rate.
279
VOL. 700, JULY 1, 2013 279

vs. Tecson
Computing for present value would only reflect the cost

of the property today. It should be separate from the six
percent (6%) per annum computed on a compounded basis
awarded as actual or compensatory damages.
Thus, applying the formula, assuming the average

interest rate is at:
4%, the property will be worth P 12.26 per sq. m.;
5%, the property will be worth P 24.66 per sq. m.;
6%, the property will be worth P 49.25 per sq. m.
Using the established concept of present value
incorporates the discipline of economics into our
jurisprudence on takings. Valuation is indeed an inexact
science and economics also has its own assumptions.
However, in my reckoning, this is infinitely better than
leaving it up to the trial court judge.
I submit that this proposal is a happy middle ground. It
meets the need for doctrinal precision urged by Justice
Peralta and the thirst for substantial justice in Justice
Velasco’s separate opinion. After all, I am sure that we all
share in each other’s goals.
I vote to GRANT the petition and to REMAND the case
to the court of origin for proper valuation according to the
formula discussed.
Petition partially granted, judgment modified.
Notes.—The illegal act of an expropriator in taking

property without the benefit of expropriation proceedings
and without payment of just compensation entitles the
landowner to damages. (Eusebio vs. Luis, 603 SCRA 576
[2009])
As a rule, an objection over subject-matter jurisdiction
may be raised at any time of the proceedings, but the
existence of laches will prevent a party from raising the
court’s lack of jurisdiction. (Lamsis vs. Dong-e, 634 SCRA
154 [2010])
——o0o——
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2/10/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 700

G.R. No. 179334. July 1, 2013.*

SECRETARY OF THE DEPARTMENT OF PUBLIC

Civil Law; Laches; Laches is principally a doctrine of equity

244 SUPREME COURT REPORTS ANNOTATED

Secretary of the Department of Public Works and Highways vs.

Same; Expropriation; Just Compensation; The owner may

power was exercised.—When a property is taken by the

VOL. 700, JULY 1, 2013 245

Secretary of the Department of Public Works and Highways vs.

alone. Compensation must be just not only to the property owner,

Civil Law; Land Titles; Torrens Titles; Collateral Attack; View

246 SUPREME COURT REPORTS ANNOTATED

Secretary of the Department of Public Works and Highways vs.

failed to institute condemnation proceedings. This is clearly

elementary due process of law. Thus, when respondents were

VOL. 700, JULY 1, 2013 247

Secretary of the Department of Public Works and Highways vs.

rights of landowners, violate the Constitution’s proviso on due

248 SUPREME COURT REPORTS ANNOTATED

Secretary of the Department of Public Works and Highways vs.

PETITION for review on certiorari of a decision of the

VOL. 700, JULY 1, 2013 249

covered by Transfer Certificate of Title (TCT) No. T-

sometime in 1940 without the owners’ consent and without

250 SUPREME COURT REPORTS ANNOTATED

administrative remedies; and (4) if respondents are entitled

On June 28, 1995, the RTC issued an Order13 granting

VOL. 700, JULY 1, 2013 251

PAC Resolution No. 99-007,18 the PAC recommended the

WHEREFORE, premises considered, the Department of

On appeal, the CA affirmed the above decision with the

252 SUPREME COURT REPORTS ANNOTATED

ered. As to the propriety of the property’s valuation as

appellate court found it just to award compensation based

VOL. 700, JULY 1, 2013 243

JUST COMPENSATION BASED ON THE CURRENT MARKET

Petitioners insist that the action is barred by

The instant case stemmed from an action for recovery of

254 SUPREME COURT REPORTS ANNOTATED

As aptly noted by the CA, the issues of prescription and

Procedurally, too, prescription and laches are no longer

To be sure, the pre-trial order explicitly defines and

VOL. 700, JULY 1, 2013 255

without first acquiring title thereto either through

Just compensation is “the fair value of the property as

256 SUPREME COURT REPORTS ANNOTATED

tracks, facilities and appurtenances for use of the

1997, respondent demanded the payment of the value of

VOL. 700, JULY 1, 2013 257

where ATO intervened claiming that the storeowners were

the time of taking in 1980; in MIAA, the value of the lot at

x x x “[T]he value of the property should be fixed as of the

258 SUPREME COURT REPORTS ANNOTATED

it is taken; the entry by the plaintiff upon the property may

Both the RTC and the CA recognized that the fair

to the property owner, but also to the public which

VOL. 700, JULY 1, 2013 259

land at the time of taking in 1940 until full payment.43 This

Abad and Mendoza, JJ., concur.