Ansaldo vs. Tantuico

Where the expropriating agency takes possession of private property prior to the institution of expropriation proceedings, just compensation must be determined as of the time of taking, not as of the filing of the condemnation complaint. The owner should be compensated only for what he actually loses — the actual value of the property at the time it is taken — and the value so fixed shall earn interest at the legal rate until full payment is made.

Jose Ma. Ansaldo and Maria Angela Ansaldo are the registered owners of two lots covered by Transfer Certificate of Title No. 4884 of the Registry of Deeds for Rizal, with an aggregate area of 1,041 square meters. The property was taken by the Department of Public Works, Transportation and Communication in 1947 and made part of what was then Sta. Mesa Street, now Ramon Magsaysay Avenue, in San Juan, Metro Manila. The taking occurred without the institution of formal expropriation proceedings and without protest from the owners. The legal framework at the time the owners belatedly sought compensation included Presidential Decree No. 76, which prescribed that just compensation be based on the current and fair market value as declared by the owner or determined by the assessor, whichever was lower — a provision later declared unconstitutional in Export Processing Zone Authority vs. Dulay (1988).

Jose Ma. Ansaldo and Maria Angela Ansaldo are the registered owners of two lots covered by Transfer Certificate of Title No. 4884 of the Registry of Deeds for Rizal, with an aggregate area of 1,041 square meters. In 1947, the Department of Public Works, Transportation and Communication took possession of these lots and converted them into part of what was then Sta. Mesa Street, now Ramon Magsaysay Avenue, in San Juan, Metro Manila. The taking was effected without the institution of any expropriation proceedings and without any agreement with the owners. Notwithstanding the absence of formal condemnation, the Ansaldos raised no objection and remained entirely silent for more than two decades.

Twenty-six years later, on January 22, 1973, the Ansaldos finally wrote to claim compensation for their property. Their claim was referred to the Secretary of Justice, who on February 22, 1973 rendered an opinion that just compensation should be paid in accordance with Presidential Decree No. 76, which had taken effect on December 6, 1972. PD 76 provided that the basis for just compensation should be the current and fair market value of the property as declared by the owner or administrator, or as determined by the assessor, whichever was lower. The Secretary of Justice accordingly advised that the appropriate expropriation suit be forthwith instituted to fix the compensation due to the Ansaldos.

Pursuant to this opinion, the Commissioner of Public Highways requested the Provincial Assessor of Rizal to redetermine the market value of the Ansaldos' property under PD 76. After the new valuation was made, the Auditor of the Bureau of Public Highways forwarded the claim to the Auditor General with the recommendation that payment be based on the current and fair market value, and not on the fair market value at the time of taking. The Commission on Audit, however, declined to adopt this recommendation. On September 26, 1973, the Acting Chairman ruled that the compensation should be determined as of the time of the taking of the lots, i.e., 1947. This ruling was reiterated on September 8, 1978, and again on January 25, 1979, when the Commission denied the Ansaldos' motion for reconsideration. The Ansaldos thereafter appealed the Commission on Audit's rulings to the Supreme Court.

• Time of Compensation: Petitioners maintained that just compensation should be fixed not as of the time of actual taking but only after conveyance of title to the expropriator pursuant to expropriation proceedings duly instituted, since it is only at such a time that the constitutional requirements of due process, aside from those of just compensation, may be fully met.

• Time of Just Compensation: Whether just compensation should be determined as of the time of actual taking of the property by the expropriating entity, or as of the time of filing of the expropriation proceedings.

• Time of Just Compensation: Yes, compensation must be fixed as of the time of taking. Where property is taken prior to the institution of condemnation proceedings, the value should be fixed as of the date of taking, not the filing of the complaint, and the owner is entitled to interest at the legal rate from the time of taking until full payment.

• Time of Just Compensation: Under normal circumstances where expropriation proceedings precede the taking, Rule 67 of the Rules of Court provides that just compensation is fixed as of the time of the filing of the complaint. However, where the expropriating agency takes possession before filing suit — as occurred here, where possession was taken more than forty years before any action was commenced — the Court has consistently ruled that just compensation must be determined as of the time of taking. A "taking" in the constitutional sense occurs when the owner is actually deprived or dispossessed of his property, or when there is practical destruction or material impairment of the value of his property, or when he is deprived of the ordinary use thereof. The Government's entry upon the Ansaldos' property in 1947, its conversion of the land into a public thoroughfare, and the consequent ouster of the owners from all beneficial enjoyment constituted such a taking. The rationale, as articulated in Republic vs. Lara, is that where property is taken ahead of the condemnation proceedings, the value may be enhanced by the public purpose for which it is taken, or the entry may have depreciated its value, or there may have been a natural increase due to general economic conditions. The owner should be compensated only for what he actually loses — the actual value of the property at the time it is taken — and no more, as compensation must be just not only to the individual but also to the public that pays. The value, once fixed as of 1947, shall earn interest at the legal rate of six percent per annum until full payment is made.

• Doctrine of Time of Taking in Eminent Domain — Where the expropriating agency takes possession of private property prior to the institution of expropriation proceedings, just compensation must be determined as of the time of taking, not as of the filing of the condemnation complaint. The owner should be compensated only for what he actually loses: the actual value of the property at the time it is taken. The rationale is that the property's value may have been enhanced by the public purpose for which it was taken, or depreciated by the expropriator's entry, or naturally increased due to general economic conditions between the time of taking and the filing of suit. Fixing compensation at the time of taking ensures that compensation is just to both the individual owner and the public that must pay. The Court applied this doctrine to fix the Ansaldos' compensation as of 1947, when the Government actually possessed and converted their property into a public road.

• Definition of "Taking" in Eminent Domain — A "taking" in the constitutional sense occurs when the owner is actually deprived or dispossessed of his property; when there is practical destruction or material impairment of the value of his property; or when he is deprived of the ordinary use thereof. A taking exists when the expropriator enters private property not merely for a momentary period but for a more permanent duration, 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. Ownership is nothing without the inherent rights of possession, control, and enjoyment; where the owner is deprived of the ordinary and beneficial use of his property or of its value by its being diverted to public use, there is a taking within the constitutional sense. The Court found that the Government's 1947 possession and conversion of the Ansaldos' land into a thoroughfare satisfied this definition.

• "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." — This passage articulates the core rationale for fixing just compensation at the time of taking: the measure of recovery is the owner's actual loss, not any subsequent increase or decrease in value, ensuring fairness to both owner and public.

• "There is a 'taking' in this sense when the expropriator enters private property not only for a momentary period but for a more permanent duration, for the purpose of devoting the property to a public use in such a manner as to oust the owner and deprive him of all beneficial enjoyment thereof." — This defines the constitutional concept of "taking" in eminent domain, distinguishing a compensable taking from a temporary or incidental entry, and is frequently cited in Philippine expropriation jurisprudence.

• "Clearly, then, the value of the Ansaldos' property must be ascertained as of the year 1947, when it was actually taken, and not at the time of the filing of the expropriation suit, which, by the way, still has to be done." — This sentence crystallizes the Court's application of the time-of-taking rule to the unusual facts of the case, where the Government possessed the property over four decades before any condemnation suit was filed.

• Export Processing Zone Authority vs. Dulay, 149 SCRA 305 (1988) — Cited as the decision that struck down as unconstitutional the provisions of PD 76 and its successor decrees (PD 464, 794, and 1533), which prescribed that just compensation be based on the value declared by the owner or determined by the assessor, whichever was lower. The Court held that this mode constituted an impermissible encroachment on the judicial prerogative to determine just compensation, rendering those decrees inapplicable to the case.

• Republic vs. Philippine National Bank, 1 SCRA 957 (1961) — Cited as controlling authority for the rule that where the plaintiff takes possession before institution of condemnation proceedings, the value should be fixed as of the time of taking, not the filing of the complaint.

• Republic vs. Lara, 50 O.G. 5778 (1954) — Cited for the rationale underlying the time-of-taking rule: that property taken ahead of condemnation proceedings may have its value affected by the public purpose, the expropriator's entry, or general economic conditions, and that the owner should be compensated only for his actual loss.

• Republic vs. Vda. de Castelvi, 58 SCRA 336 (1974) — Cited for the definition of "taking" as the expropriator's entry upon private property for a permanent duration to devote it to public use, ousting the owner from beneficial enjoyment.

• Municipality of La Carlota vs. NAWASA, 12 SCRA 164 — Cited for the principle that ownership is nothing without the inherent rights of possession, control, and enjoyment, and that deprivation of the ordinary and beneficial use of property constitutes a taking in the constitutional sense.

• Section 2, Rule 67, Rules of Court — Provides that just compensation is determined as of the time of the filing of the complaint in expropriation proceedings. The Court noted that this provision contemplates normal circumstances where the complaint coincides with or precedes the taking, and does not govern cases where possession is taken before the suit is filed.

• Presidential Decree No. 76 (effective December 6, 1972) — Provided that the basis for just compensation should be the current and fair market value as declared by the owner or determined by the assessor, whichever was lower. The Court noted that this decree and its successor decrees (PD 464, 794, and 1533) had been declared unconstitutional in Export Processing Zone Authority vs. Dulay and no longer determined just compensation.

Cruz, Gancayco, Griño-Aquino, and Medialdea, JJ., concurred.