EMINENT DOMAIN: 17 Recent Rulings & 3 Bar Q & A’s

No private property shall be taken for public use without just compensation; ideally, just compensation should be immediately paid to the property owner so that he may derive income from this compensation, in the same manner that he would have derived income from his property; if full compensation is not paid, the State must make up for the shortfall in the earning potential immediately lost due to the taking; interest on the unpaid compensation becomes due not only as compliance with the constitutional mandate on eminent domain but also as a basic measure of fairness. (Rebadulla vs. Rep. of the Phils., G.R. No. 222159, Jan. 31, 2018)

The ultimate right of the sovereign power to appropriate, not only the public but the private property of all citizens within the territorial sovereignty, its public purpose. (Apo Fruits Corp. vs. Land Bank of the Phils., G.R. Nos. 217985-86, March 21, 2018)

There are two mandatory requirements before the government may exercise such right, namely:

1) that it is for a particular public purpose; and

(2) that just compensation be paid to the property owner; in agrarian reform cases, the taking of private property for distribution to landless farmers is considered to be one for public use. (Apo Fruits Corp. vs. Land Bank of the Phils., G.R. Nos. 217985-86, March 21, 2018)

Just compensation –– Commissioners must be appointed by the trial court to initially ascertain the just compensation, failing which the trial court’s valuation will be ineffectual; when there is no action for expropriation and the case involves only a complaint for damages or just compensation, the provisions of the Rules of Court on ascertainment of just compensation (i.e., provisions of Rule 67) are no longer applicable, and a trial before commissioners is dispensable. (Rebadulla vs. Rep. of the Phils., G.R. No. 222159, Jan. 31, 2018)

Defined as the full and fair equivalent of the property taken from its owner by the expropriator; the measure is not the taker’s gain, but the owner’s loss; the word ‘just’ is used to qualify the meaning of the word ‘compensation’ and to convey thereby the idea that the amount to be tendered for the property to be taken shall be real, substantial, full and ample. (Apo Fruits Corp. vs. Land Bank of the Phils., G.R. Nos. 217985-86, March 21, 2018)

Embraces not only the correct determination of the amount to be paid to the owners of the land, but also payment within a reasonable time from its taking; without prompt payment, compensation cannot be considered just inasmuch as the property owner is made to suffer the consequences of being immediately deprived of his land while being made to wait for a decade or more before actually receiving the amount necessary to cope with his loss. (Apo Fruits Corp. vs. Land Bank of the Phils., G.R. Nos. 217985-86, March 21, 2018)

Landowner’s remedies when his property is taken by the government for public use: he may recover his property if its return is still feasible or, if it is not, he may demand payment of just compensation for the land taken. (Rebadulla vs. Rep. of the Phils., G.R. No. 222159, Jan. 31, 2018)

The award of interest is intended to compensate the property owner for the income it would have made had it been properly compensated for its property at the time of the taking; the need for prompt payment and the necessity of the payment of interest is to compensate for any delay in the payment of compensation for property already taken. (Apo Fruits Corp. vs. Land Bank of the Phils., G.R. Nos. 217985-86, March 21, 2018)

The delay in the payment of just compensation amounts to an effective forbearance of money, entitling the landowner to interest on the difference in the amount between the final amount as adjudged by the court and the initial payment made by the government. (Rep. of the Phils. vs. Macabagdal, G.R. No. 227215, Jan. 10, 2018)

The just compensation due to the property owner is effectively a forbearance of money. (Rebadulla vs. Rep. of the Phils., G.R. No. 222159, Jan. 31, 2018)

The purpose of just compensation is not to reward the owner for the property taken, but to compensate him for the loss thereof; the true measure of the property is the market value at the time of the taking, when the loss resulted; the State is not obliged to pay premium to the property owner for appropriating the latter’s property; it is only bound to make good the loss sustained by the landowner, with due consideration to the circumstances availing at the time the property was taken. (Rep. of the Phils. vs. Macabagdal, G.R. No. 227215, Jan. 10, 2018)

The sum equivalent of the market value of the property, broadly described as the price fixed in open market by the seller in the usual and ordinary course of legal action or competition, or the fair value of the property as between one who receives and who desires to sell it, fixed at the time of the actual taking by the government. (Rebadulla vs. Rep. of the Phils., G.R. No. 222159, Jan. 31, 2018)

When property is taken, full compensation of its value must be immediately paid to achieve a fair exchange for the property and the potential income lost; the value of the landholdings should be equivalent to the principal sum of the just compensation due, and interest is due and should be paid to compensate for the unpaid balance of this principal sum after taking has been completed; this shall comprise the real, substantial, full and ample value of the expropriated property and constitutes due compliance with the constitutional mandate of just compensation in eminent domain. (Rep. of the Phils. vs. Macabagdal, G.R. No. 227215, Jan. 10, 2018)

Constitutional requirements — Eminent domain is an indispensable attribute of sovereignty and inherent in government; it is circumscribed by two constitutional requirements: “first, that there must be just compensation, and second, that no person shall be deprived of life, liberty or property without due process of law”; the DARAB’s decision is null and void; effects. (Dept. of Agrarian Reform vs. Galle, G.R. No. 171836, Oct. 02, 2017)

Just compensation — As a rule, just compensation, to which the owner of the property to be expropriated is entitled, is equivalent to the market value; the rule is modified where only a part of a certain property is expropriated; in such a case, the owner is not restricted to compensation for the portion actually taken, he is also entitled to recover the consequential damages, if any, to the remaining part of the property. (Nat’l. Power Corp. vs. Marasigan, G.R. No. 220367, Nov. 20, 2017)

Beginning July 1, 2013, until fully paid, the just compensation due respondent shall earn interest at the rate of six percent (6%) p.a., in line with the amendment introduced by BSP-MB Circular No. 799, Series of 2013. (Rep. of the Phils. vs. Ng, G.R. No. 229335, Nov. 29, 2017)

Courts enjoy sufficient judicial discretion to determine the classification of lands, because such classification is one of the relevant standards for the assessment of the value of lands subject of expropriation proceedings; the court’s discretion in classifying the expropriated land is only for the purpose of determining just compensation and is not meant to substitute that of the local government’s power to reclassify and convert lands through local ordinance. (Nat’l. Power Corp. vs. Marasigan, G.R. No. 220367, Nov. 20, 2017)

Determination of just compensation in expropriation cases is a function addressed to the discretion of the courts owing to the constitutional mandate that no private property shall be taken for public use without payment of just compensation; legislative enactments, as well as executive issuances, fixing or providing for the method of computing just compensation are tantamount to impermissible encroachment on judicial prerogatives; they are not binding on courts and are treated as mere guidelines in ascertaining the amount of just compensation. (Nat’l. Power Corp. vs. Marasigan, G.R. No. 220367, Nov. 20, 2017)

In determining just compensation, the courts must consider and apply the parameters set by the law and its implementing rules and regulations in order to ensure that they do not arbitrarily fix an amount as just compensation that is contradictory to the objectives of the law; the courts may, in the exercise of their discretion, relax the formula’s application, subject to the jurisprudential limitation that the factual situation calls for it and the courts clearly explain the reason for such deviation. (Rep. of the Phils. vs. Ng, G.R. No. 229335, Nov. 29, 2017)

In using the replacement cost method to ascertain the value of improvements, the courts may also consider the relevant standards provided under Sec. 5 of RA 8974, as well as equity consistent with the principle that eminent domain is a concept of equity and fairness that attempts to make the landowner whole; it is not the amount of the owner’s investment, but the value of the interest in land taken by eminent domain, that is guaranteed to the owner. (Rep. of the Phils. vs. Ng, G.R. No. 229335, Nov. 29, 2017)

Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator; the word “just” is used to intensify the meaning of the word “compensation” and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full, and ample. (Nat’l. Transmission Corp. vs. Oroville Dev’t. Corp., G.R. No. 223366, Aug. 01, 2017)

R.A. No. 8974 applies only prospectively; it provides payment of the amount equivalent to 100% of the current zonal value of the property. (Rep. of the Phils. vs. Larrazabal, Sr., G.R. No. 204530, July 26, 2017)

The Constitution uniformly treats the payment of just compensation as a limitation to the State’s exercise of eminent domain; just compensation likewise bears the consistent and settled meaning as the full and fair equivalent of the property taken from its owner by the expropriator, the measure is not the taker’s gain, but the owner’s loss. (Nat’l. Power Corp. vs. Marasigan, G.R. No. 220367, Nov. 20, 2017)

The Court agrees that just compensation for respondent’s land should be computed based on the formula provided under DAR-LBP Joint Memorandum Circular No. 11, series of 2003; JMC No. 11 (2003) provides for several valuation procedures and formulas, explained; the award shall earn legal interest. (LBP vs. Dalauta, G.R. No. 190004, Aug. 08, 2017)

— The Court agrees with the CA findings on the matter of attorney’s fees; modified to be realistic, reasonable, commensurate, and just under the circumstances; the recommendation for the imposition of interest is also well taken; discussed. (Dept. of Agrarian Reform vs. Galle, G.R. No. 171836, Oct. 02, 2017)

The Court is not unaware of the rulings in National Power Corporation v. Heirs of Macabangkit Sangkay and National Power Corporation v. Spouses Saludares wherein it was held that just compensation should be reckoned from the time the property owners initiated inverse condemnation proceedings notwithstanding that the taking of the properties occurred earlier; these rulings, however, are exceptions to the general rule that just compensation must be reckoned from the time of taking or filing of the complaint, whichever came first. (Nat’l. Transmission Corp. vs. Oroville Dev’t. Corp., G.R. No. 223366, Aug. 01, 2017)

— The delay in the payment of just compensation is a forbearance of money; this is necessarily entitled to earn interest; the difference in the amount between the final amount as adjudged by the court and the initial payment made by the government, which is part and parcel of the just compensation due to the property owner, should earn legal interest as a forbearance of money. (Evergreen Mfg. Corp. vs. Rep. of the Phils., G.R. No. 218628, Sept. 06, 2017)

The owner’s loss is not only his property but also its income-generating potential; thus, when property is taken, full compensation of its value must immediately be paid to achieve a fair exchange for the property and the potential income lost; rationale; respondent corporation is entitled to twelve percent (12%) interest per annum which is the prevailing rate during such period pursuant to Central Bank Circular No. 905, effective from Dec. 22, 1982 to June 30, 2013 and is also awarded additional compensation by way of exemplary damages and attorney’s fees. (Nat’l. Transmission Corp. vs. Oroville Dev’t. Corp., G.R. No. 223366, Aug. 01, 2017)

The property owner is entitled to compensation only for what he actually loses, and what he loses is only the actual value of the property at the time of the taking. (Rep. of the Phils. vs. Ng, G.R. No. 229335, Nov. 29, 2017)

The replacement cost method is premised on the principle of substitution, which means that all things being equal, a rational, informed purchaser would pay no more for a property than the cost of building an acceptable substitute with like utility. (Rep. of the Phils. vs. Ng, G.R. No. 229335, Nov. 29, 2017)

The settled principle is that just compensation shall be determined as of the time of taking; the Court finds the CA’s computation of just compensation to be proper and in order, having based the same on property values and comparative sales/values of properties within the Patalon, Talisayan, and Sinubung areas in 1993, when respondent’s properties were taken, that is, when the Zamboanga City Registry of Deeds cancelled respondent’s titles and transferred the entire property to the State. (Dept. of Agrarian Reform vs. Galle, G.R. No. 171836, Oct. 02, 2017)

— The value at the time of the filing of the complaint should be the basis for the determination of the value when the taking of the property involved coincides with or is subsequent to the commencement of the proceedings. (Nat’l. Power Corp. vs. Marasigan, G.R. No. 220367, Nov. 20, 2017)

— The value of the property at the time of taking must be taken into account in determining just compensation. (Evergreen Mfg. Corp. vs. Rep. of the Phils., G.R. No. 218628, Sept. 06, 2017)

— The veracity of the facts and figures which the parties used in their respective computations involves the resolution of questions of fact which is, as a rule, improper in a petition for review on certiorari since the Court is not a trier of facts; a remand of this case for reception of further evidence is necessary in order for the RTC to determine just compensation for the subject improvements in accordance with the guidelines set under R.A. No. 8974 and its IRR. (Rep. of the Phils. vs. Ng, G.R. No. 229335, Nov. 29, 2017)

— To be ascertained as of the time of the taking, which usually coincides with the commencement of the expropriation proceedings; where the institution of the action precedes entry into the property, the just compensation is to be ascertained as of the time of the filing of the complaint; factors such as acquisition cost, current market value of like properties, tax value of the properties of respondents, and the sizes, shapes, and locations of the properties, should have been considered. (Rep. of the Phils. vs. Larrazabal, Sr., G.R. No. 204530, July 26, 2017)

— To be determined as of the date of the taking of the property or the filing of the complaint, whichever came first. (Nat’l. Power Corp. vs. Marasigan, G.R. No. 220367, Nov. 20, 2017)

Petition for determination of just compensation –– Since the determination of just compensation is a judicial function, the Court must abandon its ruling in Veterans Bank, Martinez and Soriano that a petition for determination of just compensation before the SAC shall be proscribed and adjudged dismissible if not filed within the 15-day period prescribed under the DARAB Rules; in Sec. 57 of R.A. No. 6657, Congress expressly granted the RTC, acting as SAC, the original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners. (LBP vs. Dalauta, G.R. No. 190004, Aug. 08, 2017)

–– There may be situations where a landowner, who has a pending administrative case before the DAR for determination of just compensation, still files a petition before the SAC for the same objective; such recourse is not strictly a case of forum shopping, the administrative determination being not res judicata binding on the SAC; this was allowed by the Court in LBP v. Celada and other several cases; nevertheless, the practice should be discouraged; discussed. (LBP vs. Dalauta, G.R. No. 190004, Aug. 08, 2017)

–– While R.A. No. 6657 itself does not provide for a period within which a landowner can file a petition for the determination of just compensation before the SAC, it cannot be imprescriptible because the parties cannot be placed in limbo indefinitely; considering that the payment of just compensation is an obligation created by law, it should only be ten (10) years from the time the landowner received the notice of coverage; under Art. 1144, such actions must be brought within ten (10) years from the time the right of action accrues. (LBP vs. Dalauta, G.R. No. 190004, Aug. 08, 2017)

Power of — An expropriation case is not the proper venue to contest the reclassification of properties. (Nat’l. Power Corp. vs. Marasigan, G.R. No. 220367, Nov. 20, 2017)

— If the expropriation resulted in benefits to the remaining lot, such consequential benefits may be deducted from the consequential damages or from the value of the expropriated property; however, such consequential benefits refer to the actual benefits derived by the landowner which are the direct and proximate results of the improvements as a consequence of the expropriation and not to the general benefits which the landowner may receive in common with the community. (Nat’l. Power Corp. vs. Marasigan, G.R. No. 220367, Nov. 20, 2017)

— Requisites: 1. the expropriator must enter a private property; 2. the entrance into private property must be for more than a momentary period; 3. the property must be devoted to a public use or otherwise informally appropriated or injuriously affected; 4. the utilization of the property for public use must be in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property. (Nat’l. Power Corp. vs. Marasigan, G.R. No. 220367, Nov. 20, 2017)

–– The award of interest is imposed in the nature of damages for delay in payment which, in effect, makes the obligation on the part of the government one of forbearance to ensure prompt payment of the value of the land and limit the opportunity loss of the owner; the imposition of interest is justified only in cases where delay has been sufficiently established. (Nat’l. Power Corp. vs. Marasigan, G.R. No. 220367, Nov. 20, 2017)

Requirements –– Eminent domain is the right or power of a sovereign state to appropriate private property to particular uses to promote public welfare; two mandatory requirements should underlie the Government’s exercise of this power: (1) that it is for a particular public purpose; and (2) that just compensation be paid to the property owner. (Nat’l. Transmission Corp. vs. Oroville Dev’t. Corp., G.R. No. 223366, Aug. 01, 2017)

–– The landmark case of Republic v. Vda. De Castellvi provides an enlightening discourse on the requisites of taking: first, the expropriator must enter a private property; second, the entrance into private property must be for more than a momentary period; third, the entry into the property should be under warrant or color of legal authority; fourth, the property must be devoted to a public use or otherwise informally appropriated or injuriously affected; and fifth, the utilization of the property for public use must be in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property. (Nat’l. Transmission Corp. vs. Oroville Dev’t. Corp., G.R. No. 223366, Aug. 01, 2017)

Valuation of property –– Sec. 9, Art. III of the 1987 Constitution provides that “[p]rivate property shall not be taken for public use without just compensation”; in Export Processing Zone Authority v. Dulay, the Court ruled that the valuation of property in eminent domain is essentially a judicial function which cannot be vested in administrative agencies. (LBP vs. Dalauta, G.R. No. 190004, Aug. 08, 2017)

Just compensation — “Highest and best use” is defined as the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value; the factors to be considered in arriving at the fair market value of a property is its potential use; it has been held that a property’s potential use, or its adaptability for conversion in the future, may be considered in cases where there is a great improvement in the general vicinity of the expropriated property, although it should never control the determination of just compensation. (Rep. of the Phils. vs. Heirs of Santiago, G.R. No. 193828, Mar. 27, 2017)

— Inexpropriation proceedings, just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator; the word “just” is used to intensify the meaning of the word compensation and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full and ample. (Rep. of the Phils. vs. Cebuan, G.R. No. 206702, June 07, 2017)

— It has been settled that the payment of just compensation for the expropriated property amounts to an effective forbearance on the part of the state, in the instant case, the interest is to be imposed only on the balance of the final just compensation, i.e., just compensation as computed by the RTC (sans the award for unrealized income) less the amount of the provisional compensation. (Rep. of the Phils. vs. Cebuan, G.R. No. 206702, June 07, 2017)

— Just compensation is defined as the full and fair equivalent of the property sought to be expropriated; the measure is not the taker’s gain but the owner’s loss; how determined. (Rep. of the Phils. vs. Sps. Salvador, G.R. No. 205428, June 07, 2017)

— The determination of just compensation in eminent domain cases is a judicial function and that any valuation for just compensation laid down in the statutes may serve only as a guiding principle or one of the factors in determining just compensation but it may not substitute the court’s own judgment as to what amount should be awarded and how to arrive at such amount. (Rep. of the Phils. vs. Heirs of Santiago, G.R. No. 193828, Mar. 27, 2017)

— The determination of just compensation in expropriation cases is a function addressed to the discretion of the courts owing to the constitutional mandate that no private property shall be taken for public use without payment of just compensation; legislative enactments, as well as executive issuances, fixing or providing for the method of computing just compensation are tantamount to impermissible encroachment on judicial prerogatives; effect. (Rep. of the Phils. vs. Cebuan, G.R. No. 206702, June 07, 2017)

— The just compensation due to an owner should be the “fair and full price of the taken property,” whether for land taken pursuant to the State’s agrarian reform program or for property taken for purposes other than agrarian reform. (Land Bank of the Philippines vs. Heirs Marcos, Sr., G.R. No. 175726, Mar. 22, 2017)

— While as a general rule, just compensation, to which the owner of the property to be expropriated is entitled, is equivalent to the market value,the rule is modified where only a part of a certain property is expropriated; discussed. (Rep. of the Phils. vs. Cebuan, G.R. No. 206702, June 07, 2017)

— While it is fundamentally a function of the courts, the factors provided by law and the formula outlined in DAR A.O. No. 5, Series of 1998 should be applied. (Land Bank of the Philippines vs. Heirs Marcos, Sr., G.R. No. 175726, Mar. 22, 2017)

2016 BAR EXAM

The Government, through Secretary Toogoody of the Department of Transportation (DOTr), filed a complaint for eminent domain to acquire a 1,000-hectare property in Bulacan, owned by Baldomero. The court granted the expropriation, fixed the amount of just compensation, and installed the Government in full possession of the property.

(A) If the Government does not immediately pay the amount fixed by the court as just compensation, can Baldomero successfully demand the return of the property to him? Explain your answer. (2.5%)

(B) If the Government paid full compensation but after two years it abandoned its plan to build an airport on the property, can Baldomero compel the Government to re-sell the property back to him? Explain your answer. (2.5%)

PINAY JURIST

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EMINENT DOMAIN: 17 Recent Rulings & 3 Bar Q & A’s

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