III. Eminent Domain

A. Definition

Eminent domain is the power to take private property for public use by the state, municipalities, and private persons or corporations authorized to exercise functions of public character. (Housing Authority of Cherokee National of Oklahoma vs. Langley, Okl., 555 P.2d 1025, 1028)

The right of eminent domain is the right of the state, through its regular organization, to reassert, either temporarily or permanently, its dominion over any portion of the soil of the state on account of public exigency and for the public good. Eminent domain is the highest and most exact idea of property remaining in the government or in the aggregate body of the people in their sovereign capacity. It gives a right to resume the possession of the property in the manner directed by the Constitution and the laws of the State, whenever the public interest requires it. (Black’s law Dictionary, 6th Edition, 523)

The term “expropriation” is practically synonymous with the term “eminent domain.” (Tennessee Gas Transmission Co. vs. Violet Trapping Co., La. App. 200 So.2d. 428, 433)

Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands intended for public use upon payment of just compensation to the owner. Obviously, there is no need to expropriate where the owner is willing to sell under terms also acceptable to the purchaser, in which case an ordinary deed of sale may be agreed upon by the parties. (Noble v. City of Manila, 67 Phil. 1) It is only where the owner is unwilling to sell, or cannot accept the price or other conditions offered by the vendee, that the power of eminent domain will come into play to assert the paramount authority of the State over the interests of the property owner. Private rights must then yield to the irresistible demands of the public interest on the time-honored justification, as in the case of the police power, that the welfare of the people is the supreme law. (Association of Small Landowners in the Philippines Inc. vs. Secretary of Agrarian Reform [GR 78741, 14 July 1989])

B. Who exercises the power?

Expropriation may be initiated by court action or by legislation. (Republic v. De Knecht, 182 SCRA 142 [1990]). The power of eminent domain is lodged primarily in the national legislature, but its exercise may validly delegated to other government entities and even to quasi-public corporations serving essential public needs or operating public utilities. The utility of the proposed improvement, the extent of the public necessity for its construction, the expediency of constructing it, the suitableness of the location selected and the consequent necessity of taking the land selected for its site, are questions which are essentially political and which are to be exclusively determined by the legislature, and are usually not subject to judicial review.

The following exercise the power of expropriation:

1. The Congress

2. The President of the Philippines

3. The various local legislative bodies

4. Certain public corporations

5. Quasi-public corporations (Example, quasi-public corporation: PEZA)

Section 23 (Eminent Domain) of Presidential Decree 66, provides that:

For the acquisition of rights of way, or of any property for the establishment of export processing zones, or of low-cost housing projects for the employees working in such zones, or for the protection of watershed areas, or for the construction of dams, reservoirs, wharves, piers, docks, quays, warehouses and other terminal facilities, structures and approaches thereto, the Authority shall have the right and power to acquire the same by purchase, by negotiation, or by condemnation proceedings. Should the authority elect to exercise the right of eminent domain, condemnation proceedings shall be maintained by and in the name of the Authority and it may proceed in the manner provided for by law.

!!! Case(s)

15. City of Manila vs. Chinese Cemetery of Manila, 40 Phil 349 (1919)

16. Moday v. Court of Appeals, 268 SCRA 368 (1997)

C. Constitutional limitation

Art. III, Sec. 9

Section 9. Private property shall not be taken for public use without just compensation.

The exercise of the right of eminent domain, whether directly by the State, or by its authorized agents, is necessary in derogation of private rights, and the rule in that case is that the authority must be strictly construed. No species of property is held by individuals with greater tenacity, and none is guarded by the Constitution and laws more sedulously, than the right to the freehold of inhabitants. When the legislature interferes with that right and, for greater public purposes, appropriates the land of an individual without his consent, the plain meaning of the law should not be enlarged by doubtful interpretation. (Bensley vs. Mountainlake Water Co., 13 Cal. 306, and cases cited 73 Am. Dec., 576)

The power of eminent domain does not depend for its existence on a specific grant in the constitution. It is inherent in sovereignty and exists in a sovereign state without any recognition of it in the constitution. The provisions found in most of the state constitutions relating to the taking of property for the public use do not by implication grant the power to the government of the state, but limit a power which would otherwise be without limit. (Visayan Refining Co. v. Camus [40 Phil. 550]). The constitutional restraints are public use and just compensation.

D. Distinguished from destruction due to necessity

The destruction of the property does not come under the right of eminent domain, but under the right of necessity, of self-preservation. The right of necessity arises under the laws of society or society itself. It is the right of self-defense, of self-preservation, whether applied to persons or to property. It is a private right vested in every individual, and with which the right of the state or state necessity has nothing to do (American Print Works vs. Lawrence, 23 N.J.L. 590). Destruction from necessity may be validly undertaken even by private individuals. Such is not allowed in the case of eminent domain. Further, destruction from necessity cannot require the conversion of the property taken to public use, nor is there any need for the payment of compensation.

E. Objects of Expropriation

Anything that can come under the dominion of man is subject to expropriation. This include real and personal, tangible and intangible properties. Even property already devoted to public use is still subject to expropriation, provided this is done directly by the national legislature or under a specific grant of authority to delegate. The only exceptions to this rule are money and choses in action. Expropriation of money is futile inasmuch as payment of just compensation is also money. A chose in action is essentially conjectural as to its validity and its value.

A chose in action is the right of proceeding in a court of law to procure payment of sum of money, or right to recover a personal chattel or a sum of money by action (Gregory vs. Colvin, 235 Ark. 1007, 363 S.W.2d 539, 540); or is the right to receive or recover a debt, demand, or damages on a cause of action ex contractu or for a tort or omission of a duty (Moran vs. Adkerson, 168 Tenn. 372, 79 S.W.2d 44, 45)

Normally, the power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated property; but no cogent reason appears why said power may not be availed of to impose only a burden upon the owner of condemned property, without loss of title and possession. Real property may, through expropriation, be subjected to an easement of right of way.

Property subject of expropriation must be by its nature or condition wholesome, as it is intended to be devoted to a public use.

!!! Case(s)

17. RP. v. PLDT, 26 SCRA 620 (1969)

F. Where Expropriation Suit is Filed

An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls within the jurisdiction of the regional trial courts, regardless of the value of the subject property. (Barangay San Roque v. Heirs of Pastor [GR 138896, 20 June 2000])

See Rule 67 of the Rules of Court.

!!! Case(s)

18. Barangay San Roque v. Heirs of Pastor, GR 138896 June 20, 2000

G. Taking

Definition and Scope

Common. A physical dispossession of the owner, as when he is ousted from his land or relieved of his personal property, and is thus deprived of all beneficial use and enjoyment of his property.

Legal. To take is to lay hold of, to gain or receive in possession, to seize, to deprive one of the use or possession of, or to assume ownership (Black’s Law Dictionary, 6th Edition, 1453). There is taking of property when government action directly interferes with or substantially disturbs the owner’s use and enjoyment of the property (Brothers vs. US., C.A.Or., 594 F.2d 740, 741). To constitute a “taking,” within constitutional limitation, it is not essential that there be physical seizure or appropriation, and any actual or material interference with private property rights constitutes a taking (Board of Com’rs of Lake County vs. Mentor Lagoons Inc., Com.Pl., 6 Ohio Msc. 126, 216 N.E.2d 643, 646). Also, taking of property is affected if application of zoning law denies property owner of economically viable use of his land, which can consist of preventing best use of land or extinguishing fundamental attribute of ownership (Vari-Build Inc. vs. Reno, D.C.Nev., 596 F. Supp. 673, 679).

The general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. (Pennsylvania Coal Co. v. Mahon, 260 US 393)

1. Taking under police power and power of eminent domain distinguished

Taking under police power and taking under the power of eminent domain, however, should be distinguished. The power being exercised was eminent domain when the property involved was wholesome and intended for a public use. Property condemned under the police power is noxious or intended for a noxious purpose, such as a building on the verge of collapse, which should be demolished for the public safety, or obscene materials, which should be destroyed in the interest of public morals. The confiscation of such property is not compensable, unlike the taking of property under the power of expropriation, which requires the payment of just compensation to the owner. (City of Baguio v. NAWASA, 106 Phil. 144)

A. Taking under police power

If an owner is deprived of his property outright under the State’s police power, the property is generally not taken for public use but is urgently and summarily destroyed in order to promote the general welfare.

Every restriction upon the use of property imposed in the exercise of the police power deprives the owner of some right theretofore enjoyed, and is, in that sense, an abridgment by the State of rights in property without making compensation. But restriction imposed to protect the public health, safety or morals from dangers threatened is not a taking. The restriction is merely the prohibition of a noxious use. The property so restricted remains in the possession of its owner. The state does not appropriate it or make any use of it. The state merely prevents the owner from making a use which interferes with paramount rights of the public. Whenever the use prohibited ceases to be noxious — as it may because of further changes in local or social conditions — the restriction will have to be removed and the owner will again be free to enjoy his property as heretofore.

B. Taking under the power of eminent domain

“Taking” under the power of eminent domain may be defined generally as entering upon private property for more than a momentary period, and, under the warrant or color of legal authority, devoting it to a public use, or otherwise informally appropriating or injuriously affecting it in such a way as substantially to oust the owner and deprive him of all beneficial enjoyment thereof. (Penn. vs. Carolina Virginia Coastal Corporation, 57 SE 2d 817)

In the context of the State’s inherent power of eminent domain, there is a “taking” when the owner is actually deprived or dispossessed of his property; when there is a practical destruction or a material impairment of the value of his property or when he is deprived of the ordinary use thereof. (U.S. v. Causby, 382 U.S. 256, cited in Municipality of La Carlota v. NAWASA, 12 SCRA 164.) 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 (Republic v. Vda. de Castelvi, 58 SCRA 336 [1974]). For ownership, after all, “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 taking within the Constitutional sense.” (Municipality of La Carlota v. NAWASA, 12 SCRA 164)

2. Stages

The expropriation of lands consists of two stages. The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action, “of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint.” The second phase of the eminent domain action is concerned with the determination by the court of the just compensation for the property sought to be taken.” This is done by the court with the assistance of not more than three (3) commissioners. (Municipality of Biñan v. Garcia, 180 SCRA 576, 583-584 [1989]) It is only upon the completion of these two stages that expropriation is said to have been completed. Moreover, it is only upon payment of just compensation that title over the property passes to the government. (Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, 175 SCRA 343 [1989]). Therefore, until the action for expropriation has been completed and terminated, ownership over the property being expropriated remains with the

registered owner. Consequently, the latter can exercise all rights pertaining to an owner, including the right to dispose of his property, subject to the power of the State ultimately to acquire it through expropriation.

Requisites

1. The expropriator must enter a private property.

2. The entry must be for more than a momentary period.

3. The entry must be under warrant or color of legal authority.

4. The property must be devoted to public use or otherwise informally appropriated or injuriously affected.

5. The utilization of the property for public use must be in such a way as to oust the owner and deprive him of beneficial enjoyment of the property.

!!! Case(s)

19. Republic vs. Castelvi, 58 SCRA 336 (1974)

20. City Govt. of Quezon City vs. Ericta, 122 SCRA 759 (1983)

Deprivation of Use

1. In General

Easement, if permanent and not merely temporary, normally would be the equivalent of a fee interest. It would be a definite exercise of complete dominion and control over the surface of the land. (United States vs. Causby [328 US 256, 27 May 1946])

2. Local Government Units

An ordinance which permanently so restricts the use of property that it can not be used for any reasonable purpose goes, it is plain, beyond regulation and must be recognized as a taking of the property. The only substantial difference, in such case, between restriction and actual taking, is that the restriction leaves the owner subject to the burden of payment of taxation, while outright confiscation would relieve him of that burden. (Arverne Bay Constr. Co. vs. Thatcher (N.Y.) 117 ALR. 1110, 1116). A regulation which substantially deprives an owner of all beneficial use of his property is confiscation and is a deprivation within the meaning of the 14th Amendment. (Sundlum vs. Zoning Bd., 145 Atl. 451; also Eaton vs. Sweeny, 177 NE 412; Taylor vs. Jacksonville, 133 So. 114). Specifically, while property may be regulated in the interest of the general welfare such as to regard the beautification of neighborhoods as conducive to the comfort and happiness of residents), and in its pursuit, the State may prohibit structures offensive to the sight, the State may not, under the guise of police power, permanently divest owners of the beneficial use of their property and practically confiscate them solely to preserve or assure the aesthetic appearance of the community. (People vs. Fajardo [GR L-12172, 29 August 1958])

Zoning which admittedly limits property to a use which can not reasonably be made of it cannot be said to set aside such property to a use but constitutes the taking of such property without just compensation. Use of property is an element of ownership therein. Regardless of the opinion of zealots that property may properly, by zoning, be utterly destroyed without compensation, such principle finds no support in the genius of our government nor in the principles of justice as we known them. Such a doctrine shocks the sense of justice. If it be of public benefit that property remain open and unused, then certainly the public, and not the private individuals, should bear the cost of

reasonable compensation for such property under the rules of law governing the condemnation of private property for public use. (Tews vs. Woolhiser (1933) 352 111. 212, 185 N.E. 827)

!!! Case(s)

21. Republic vs. Fajardo , 104 Phil.443 (1958)

22. Napocor vs. Gutierrez, 193 SCRA 1 (1991)

23. U.S. v. Causby, 328 U.S. 256 (1946)

Priority in Expropriation

1. Urban Land Reform

The governing law that deals with the subject of expropriation for purposes of urban land reform and housing is Republic Act No. 7279 (Urban Development and Housing Act of 1992) and Sections 9 and 10 of which specifically provide as follows:

Section 9. Priorities in the acquisition of Land. — Lands for socialized housing shall be acquired in the following order:

a. Those owned by the Government or any of its sub-divisions, instrumentalities, or agencies, including government-owned or -controlled corporations and their subsidiaries;

b. Alienable lands of the public domain;

c. Unregistered or abandoned and idle lands;

d. Those within the declared Areas for Priority Development, Zonal Improvement sites, and Slum Improvement and Resettlement Program sites which have not yet been acquired;

e. Bagong Lipunan Improvement of Sites and Services or BLISS sites which have not yet been acquired; and

f. Privately-owned lands.

Where on-site development is found more practicable and advantageous to the beneficiaries, the priorities mentioned in this section shall not apply. The local government units shall give budgetary priority to on-site development of government lands.

Section 10. Modes of Land Acquisition. — The modes of acquiring lands for purposes of this Act shall include, among others, community mortgage, land swapping, land assembly or consolidation, land banking, donation to the Government, joint-venture agreement, negotiated purchase, and expropriation: Provided, however, That expropriation shall be resorted to only when other modes of acquisition have been exhausted: Provided further, That where expropriation is resorted to, parcels of land owned by small property owners shall be exempted for purposes of this Act: Provided, finally, That abandoned property, as herein defined, shall be reverted and escheated to the State in a proceeding analogous to the procedure laid down in Rule 91 of the Rules of Court.

For the purpose of socialized housing, government-owned and foreclosed properties shall be acquired by the local government units, or by the National Housing Authority primarily through negotiated purchase: Provided, That qualified beneficiaries who are actual occupants of the land shall be given the right of first refusal.

!!! Case(s)

24. Filstream International v. CA, 284 SCRA 716 (1998)

25. Estate or Heirs of Reyes vs. City of Manila, G.R. No. 132431, February 13, 2004

26. City of Mandaluyong v. Francisco, G.R. No. 137152, January 29, 2001

H. Public use

Over many years and in a multitude of cases the courts have vainly attempted to define comprehensively the concept of a public use and to formulate a universal test. They have found here as elsewhere that to formulate anything ultimate, even though it were possible, would, in an inevitably changing world, be unwise if not futile. (Matter of New York City Housing Authority v. Muller, 1 NE 2d 153)

Public Use, as traditionally understood, means any use directly available to the general public as a matter of right and not merely of forbearance or accommodation. (Justice Cruz, Constitutional Law, 2000 edition, 74)

Public Use is “the constitutional and statutory basis for taking property by eminent domain. For condemnation purposes, ‘public use’ is one which confers some benefit or advantage to the public; it is not confined to actual use by public. It is measured in terms of right of public to use proposed facilities for which condemnation is sought and, as long as public has right of use, whether exercised by one or many members of public, a ‘public advantage’ or ‘public benefit’ accrues sufficient to constitute a public use.” (Montana Power Co. vs. Bokma, Mont. 457 P.2d 769, 772, 773.)

Public use, in constitutional provisions restricting the exercise of the right to take private property in virtue of eminent domain, means a use concerning the whole community as distinguished from particular individuals. But each and every member of society need not be equally interested in such use, or be personally and directly affected by it; if the object is to satisfy a great public want or exigency, that is sufficient. (Rindge Co. vs. Los Angeles County, 262 U.S. 700, 43 S.Ct. 689, 692, 67 L.Ed. 1186). The term may be said to mean public usefulness, utility, or advantage, or what is productive of general benefit. It may be limited to the inhabitants of a small or restricted locality, but must be in common, and not for a particular individual. The use must be a needful one for the public, which cannot be surrendered without obvious general loss and inconvenience. A ‘public use’ for which land may be taken defies absolute definition for it changes with varying conditions of society, new appliances in the sciences, changing conceptions of scope and functions of government, and other differing circumstances brought about by an increase in population and new modes of communication and transportation. (Katz v. Brandon, 156 Conn., 521, 245 A.2d 579,586.)

The taking to be valid must be for public use. There was a time when it was felt that a literal meaning should be attached to such a requirement. Whatever project is undertaken must be for the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It is not any more. As long as the purpose of the taking is public, then the power of eminent domain comes into play. The constitution in at least two cases determines what is public use. One is the expropriation of lands to be subdivided into small lots for resale at cost to individuals. The other is in the transfer, through the exercise of this power, of utilities and other private enterprise to the government. It is accurate to state then that at present whatever may be beneficially employed for the general welfare satisfies the requirement of public use. (Fernando, The Constitution of the Philippines, 2nd ed., pp. 523-524)

!!! Case(s)

27. Heirs of Juancho Ardona vs. Reyes, 125 SCRA 220 (1983)

28. Sumulong vs. Guerrero, 154 SCRA 461 (1987)

29. Province of Camarines Sur vs. CA, 222 SCRA 170 (1993)

30. http://lawnotes.berneguerrero.com/constitutional-law-ii-book-2005-manosca-vs-court-of-appeals-gr-106440-29-january-1996/”>Manosca v. Court of Appeals, 252 SCRA 412 (1996)

31. Estate of Jimenez v. PEZA, G.R. No. 137285, January 16, 2001

I. Genuine Necessity

In the exercise of eminent domain, only as much land can be taken as is necessary for the legitimate purpose of the condemnation. The term “necessary”, in this connection, does not mean absolutely indispensable but requires only a reasonable necessity of the taking for the stated purpose, growth and future needs of the enterprise. (Manila Railroad Co. v. Mitchel, 50 Phil 832, 837-838 [1927]).

The Legislature may directly determine the necessity for appropriating private property for a particular improvement for public use, and it may select the exact location of the improvement. In such a case, it is well-settled that the utility of the proposed improvement, the existence of the public necessity for its construction, the expediency of constructing it, the suitableness of the location selected, are all questions exclusively for the legislature to determine, and the courts have no power to interfere or to substitute their own views for those of the representatives of the people. In the absence of some constitutional or statutory provision to the contrary, the necessity and expediency of exercising the right of eminent domain are questions essentially political and not judicial in their character. (City of Manila v. Chinese Community of Manila, 40 Phil 349 [1919])

!!! Case(s)

32. Mun. of Meycayauan vs. IAC, 157 SCRA 640 (1988)

33. De Knecht vs. Bautista, 100 SCRA 660 (1980)

34. Republic vs. De Knecht, G.R. 87351, February 12, 1990

35. PPI v. Comelec, 244 SCRA 272 (1995)

36. NHA v. Heirs of Isidro Guivelondo, G.R. No. 154411. June 19, 2003

J. Just Compensation

Defined

Just compensation means the value of the property at the time of the taking. It means a fair and full equivalent for the loss sustained. All the facts as to the condition of the property and its surroundings, its improvements and capabilities, should be considered. (Export Processing Zone Authority vs. Dulay [GR L-59603, 29 April 1987])

Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator (Manila Railroad Co. v. Velasques, 32 Phil. 286). It has been repeatedly stressed by this Court that the measure is not the taker’s gain but the owner’s loss. (Province of Tayabas v. Perez, 66 Phil. 467) The word “just” is used to intensify the meaning of the word “compensation” to convey the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full, ample (City of Manila v. Estrada, 25 Phil. 208).

Just compensation means not only the correct amount to be paid to the owner of the land but also the payment of the land within a reasonable time from its taking. Without prompt payment, compensation cannot be considered “just” for then the property owner is made to suffer the consequence 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. (Eslaban vs. Vda. de Onorio [GR 146062, 28 June 2001])

!!! Case(s)

37. Eslaban v. De Onorio, G.R. No. 146062, June 28, 2001

38. RP vs. IAC, et al., G.R. No. 71176, May 21, 1990

39. City of Cebu v. Spouses Dedamo, G.R. No. 142 971, May 07, 2002

Determination of Just Compensation

A. In General

The determination of just compensation is a function addressed to the courts of justice and may not be usurped by any other branch or official of the government. (Export Processing Zone Authority vs. Dulay [GR L-59603, 29 April 1987])

Upon the rendition of the order of expropriation, the court shall appoint not more than three (3) competent and disinterested persons as commissioners to ascertain and report to the court the just compensation for the property sought to be taken. The order of appointment shall designate the time and place of the first session of the hearing to be held by the commissioners and specify the time within which their report shall be submitted to the court. (Section 5, Rule 67, 1997 Rules of Civil Procedure) The commissioners shall assess the consequential damages to the property not taken and deduct from such consequential damages the consequential benefits to be derived by the owner from the public use or purpose of the property taken, the operation of its franchise by the corporation or the carrying on of the business of the corporation or person taking the property. But in no case shall the consequential benefits assessed exceed the consequential damages assessed, or the owner be deprived of the actual value of his property so taken. (Section 6, Rule 67, 1997 Rules of Civil Procedure)

Still, according to section 8 of Rule 67, the court is not bound by the commissioners’ report. It may make such order or render such judgment as shall secure to the plaintiff the property essential to the exercise of his right of condemnation, and to the defendant just compensation for the property expropriated. This Court may substitute its own estimate of the value as gathered from the record (Manila Railroad Company v. Velasquez, 32 Phil. 286).

B. Local Government Units

Section 19, Republic Act 7160. Eminent Domain. – A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted: Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided finally, That, the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property.

!!! Case(s)

40. EPZA vs. Dulay, 149 SCRA 305 (1987)

When Determined

A. When

Where the institution of an expropriation action precedes the taking of the property subject thereof, the just compensation is fixed as of the time of the filing of the complaint. This is so provided by the Rules of Court, the assumption of possession by the expropriator ordinarily being conditioned on its deposits with the National or Provincial Treasurer of the value of the property as provisionally ascertained by the court having jurisdiction of the proceedings. There are instances, however, where the expropriating agency takes over the property prior to the expropriation suit. In these instances, the just compensation shall be determined as of the time of taking, not as of the time of filing of the action of eminent domain. (Ansaldo vs. Tantuico [GR 50147, 3 August 1990])

When plaintiff takes possession before the institution of the condemnation proceedings, the value should be fixed as of the time of the taking of said possession, not of filing of the complaint and the latter 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. Indeed, otherwise, the provision of Rule 69, Section 3, directing that compensation ‘be determined as of the date of the filing of the complaint’ would never be operative. (Republic v. Philippine National Bank, 1 SCRA 957 [1961])

B. Why

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 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. This is the only way that compensation to be paid can be truly just; i.e., ”just not only to the individual whose property is taken,” “but to the public, which is to pay for it.” (Republic v. Lara, 50 O.G. 5778 [1954])

!!! Case(s)

41. Ansaldo vs. Tantuico, G.R. 50147 August 3, 1990

42. NPC v. CA, 254 SCRA 577 (1996)

Manner of Payment

A. Manner

1. Traditional

Although it may be said that “where the State itself is the expropriator, it is not necessary for it to make a deposit upon its taking possession of the condemned property, as ‘the compensation is a public charge, the good faith of the public is pledged for its payment, and all the resources of taxation may be employed in raising the amount.’” (Lewis, Law of Eminent Domain, 3rd Edition, pp. 1166-1167); the method of expropriation adopted in Philippine jurisdiction is such as to afford absolute reassurance that no piece of land can be finally and irrevocably taken from an unwilling owner until compensation is paid. (Visayan Refining Co. v. Camus and Paredes, 40 Phil. 550) Further, the Rules provide that “upon the filing of the complaint or at any time thereafter and after due notice to the defendant, the plaintiff shall have the right to take or enter upon the possession of the real property involved if he deposits with the authorized government depositary an amount equivalent to the assessed value of the property for purposes of taxation to be held by such bank subject to the orders of the court. Such deposit shall be in money, unless in lieu thereof the court authorizes the deposit of a certificate of deposit of a government bank of the Republic of the Philippines payable on demand to the authorized government depositary. If personal property is involved, its

value shall be provisionally ascertained and the amount to be deposited shall be promptly fixed by the court. xxx” (Section 2, Rule 67, 1997 Rules of Civil Procedure)

2. Revolutionary

Section 16(e) of the CARP Law provides that “Upon receipt by the landowner of the corresponding payment or, in case of rejection or no response from the landowner, upon the deposit with an accessible bank designated by the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter proceed with the redistribution of the land to the qualified beneficiaries.” (Association of Small Landowners in the Philippines Inc. vs. Secretary of Agrarian Reform [GR 78741, 14 July 1989])

B. Medium

1. Traditional

The fundamental rule in expropriation matters is that the owner of the property expropriated is entitled to a just compensation, which should be neither more nor less, whenever it is possible to make the assessment, than the money equivalent of said property. Just compensation has always been understood to be the just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation. (Manila Railroad Co. v. Velasquez, 32 Phil. 286)

Just compensation means the equivalent for the value of the property at the time of its taking. Anything beyond that is more, and anything short of that is less, than just compensation. It means a fair and full equivalent for the loss sustained, which is the measure of the indemnity, not whatever gain would accrue to the expropriating entity. The market value of the land taken is the just compensation to which the owner of condemned property is entitled, the market value being that sum of money which a person desirous, but not compelled to buy, and an owner, willing, but not compelled to sell, would agree on as a price to be given and received for such property. (J.M. Tuazon Co. v. Land Tenure Administration, 31 SCRA 413)

The medium of payment of compensation is ready money or cash. The condemnor cannot compel the owner to accept anything but money, nor can the owner compel or require the condemnor to pay him on any other basis than the value of the property in money at the time and in the manner prescribed by the Constitution and the statutes. When the power of eminent domain is resorted to, there must be a standard medium of payment, binding upon both parties, and the law has fixed that standard as money in cash. (Mandl v. City of Phoenix, 18 p 2d 273.)

Part cash and deferred payments are not and cannot, in the nature of things, be regarded as a reliable and constant standard of compensation. (Sacremento Southern R. Co. v. Heilbron, 156 Cal. 408, 104 pp. 979, 980.)

“Just compensation” for property taken by condemnation means a fair equivalent in money, which must be paid at least within a reasonable time after the taking, and it is not within the power of the Legislature to substitute for such payment future obligations, bonds, or other valuable advantage. (City of Waterbury v. Platt Bros. & Co., 56 A 856, 76 Conn, 435 citing Butler v. Ravine Road Sewer Com’rs, 39 N.J.L. 665; Bloodgood v. Mohawk v. H.R.R. Co., N.Y. 18 Wend. 9 35, 31 Am. Dec. 313; Sanborn v. Helden, 51 Cal 266; Burlington & C.R. Co. v. Schweikart, 14 p. 329, 10 Colo, 178; 23 Words and Phrases, pl. 460.)

2. Revolutionary

The records of the Constitutional Commission do not provide any categorical agreement among the members regarding the meaning to be given the concept of just compensation as applied to the comprehensive agrarian reform program being contemplated. There was the suggestion to “fine tune” the requirement to suit the demands of the project even as it was also felt that they should “leave it to Congress” to determine how payment should be made to

the landowner and reimbursement required from the farmer-beneficiaries. Such innovations as “progressive compensation” and “State-subsidized compensation” were also proposed. In the end, however, no special definition of the just compensation for the lands to be expropriated was reached by the Commission. (Record of the Constitutional Commission, Vol. 2, pp. 647, 704; Vol. 3, pp. 16-20, 243-247.)

The expropriation in Comprehensive Agrarian Reform affects all private agricultural lands whenever found and of whatever kind as long as they are in excess of the maximum retention limits allowed their owners. This kind of expropriation is intended for the benefit not only of a particular community or of a small segment of the population but of the entire Filipino nation, from all levels of our society, from the impoverished farmer to the land-glutted owner. Its purpose does not cover only the whole territory of this country but goes beyond in time to the foreseeable future, which it hopes to secure and edify with the vision and the sacrifice of the present generation of Filipinos. Such a program will involve not mere millions of pesos but hundreds of billions of pesos, far more indeed than the amount of P50 billion initially appropriated. Such amount is in fact not even fully available at this time. Since there is nothing in the records either that militates against the assumptions the Court is making of the general sentiments and intention of the members on the content and manner of the payment to be made to the landowner in the light of the magnitude of the expenditure and the limitations of the expropriator, the Court declared that the content and manner of the just compensation provided for in Section 18 of the CARP Law is not violative of the Constitution. The invalidation of Section 18 will result in the nullification of the entire program, killing the farmer’s hopes even as they approach realization and resurrecting the spectre of discontent and dissent in the restless countryside. That is not the intention of the Constitution.

SEC. 18. Valuation and Mode of Compensation. — The LBP shall compensate the landowner in such amount as may be agreed upon by the landowner and the DAR and the LBP, in accordance with the criteria provided for in Sections 16 and 17, and other pertinent provisions hereof, or as may be finally determined by the court, as the just compensation for the land.

The compensation shall be paid in one of the following modes, at the option of the landowner:

1. Cash payment, under the following terms and conditions:

a. For lands above fifty (50) hectares, insofar as the excess hectarage is concerned — Twenty-five percent (25%) cash, the balance to be paid in government financial instruments negotiable at any time.

b. For lands above twenty-four (24) hectares and up to fifty (50) hectares — Thirty percent (30%) cash, the balance to be paid in government financial instruments negotiable at any time.

c. For lands twenty-four (24) hectares and below — Thirty-five percent (35%) cash, the balance to be paid in government financial instruments negotiable at any time.

2. Shares of stock in government-owned or controlled corporations, LBP preferred shares, physical assets or other qualified investments in accordance with guidelines set by the PARC;

3. Tax credits which can be used against any tax liability;

4. LBP bonds, which shall have the following features:

a. Market interest rates aligned with 91-day treasury bill rates. Ten percent (10%) of the face value of the bonds shall mature every year from the date of issuance until the tenth (10th) year: Provided, That should the landowner choose to forego the cash portion, whether in full or in part, he shall be paid correspondingly in LBP bonds;

b. Transferability and negotiability. Such LBP bonds may be used by the landowner, his successors-in-interest or his assigns, up to the amount of their face value, for any of the following:

i. Acquisition of land or other real properties of the government, including assets under the Asset Privatization Program and other assets foreclosed by government financial institutions in the same province or region where the lands for which the bonds were paid are situated;

ii. Acquisition of shares of stock of government owned or controlled corporations or shares of stock owned by the government in private corporations;

iii. Substitution for surety or bail bonds for the provisional release of accused persons, or for performance bonds;

iv. Security for loans with any government financial institution, provided the proceeds of the loans shall be invested in an economic enterprise, preferably in a small and medium-scale industry, in the same province or region as the land for which the bonds are paid;

v. Payment for various taxes and fees to government: Provided, That the use of these bonds for these purposes will be limited to a certain percentage of the outstanding balance of the financial instruments; Provided, further, That the PARC shall determine the percentages mentioned above;

vi. Payment for tuition fees of the immediate family of the original bondholder in government universities, colleges, trade schools, and other institutions;

vii. Payment for fees of the immediate family of the original bondholder in government hospital; and

viii. Such other uses as the PARC may from time to time allow.

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43. Assoc. of Small Landowners v. DAR, 175 SCRA 343 (1989)

44. DAR v. CA, 249 SCRA 149 (1995)

Trial with Commissioners

In an expropriation case where the principal issue is the determination of just compensation, a trial before the Commissioners is indispensable to allow the parties to present evidence on the issue of just compensation. Trial with the aid of the commissioners is a substantial right that may not be done away with capriciously or for no reason at all. (Manila Electric Company (MERALCO) vs. Pineda [GR 59791, 13 February 1992])

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45. Meralco v. Pineda, 206 SCRA 196 (1992)

46. NPC v. Henson, G.R. No. 129998, December 29, 1998

Legal Interest for Expropriation Cases

Article 2209 of the Civil Code, which provides that “If the obligation consists in the payment of a sum of money, and the debtor incurs a delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is 6% per annum.” Central Bank Circular 416 does not apply as it only applies to loan or forbearance of money, goods or credits and to judgments involving such loan or forbearance of money, goods or credits. (National Power Corporation vs. Angas [GR 60225-26, 8 May 1992])

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47. NPC v. Angas, 208 SCRA 542 (1992)

48. Republic v. Salem Investment Corp., G.R. 137569 23 June 2000

Writ of Possession

1. Issuance of writ of possession

A writ of execution may be issued by a court upon the filing by the government of a complaint for expropriation sufficient in form and substance and upon deposit made by the government of the amount equivalent to the assessed value of the property subject to expropriation. Upon compliance with these requirements, the issuance of the writ of possession becomes ministerial. (Biglang-awa v. Bacalla, GR 139927 and 139936, 22 November 2000.)

It is imperative that before a writ of possession is issued by the Court in expropriation proceedings, the following requisites must be met: (1) There must be a Complaint for expropriation sufficient inform and in substance; (2) A provisional determination of just compensation for the properties sought to be expropriated must be made by the trial court on the basis of judicial (not legislative or executive) discretion; and (3) The deposit requirement under Section 2, Rule 67 must be complied with. (Ignacio v. Guerrero [GR L-49088, 29 May 1987])

2. Remedy for party assailing validity of writ of possession

A petition for review could not have been resorted to inasmuch as the order of the trial court granting a writ of possession was merely interlocutory from which no appeal could be taken. Rule 45, §1 of the 1997 Rules of Civil Procedure applies only to final judgments or orders of the Court of Appeals, the Sandiganbayan, and the Regional Trial Court. A petition for certiorari is the suitable remedy in view of Rule 65, §1 which provides “When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.”

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49. City of Manila v. Oscar Serrano, G.R. No. 142304, June 20, 2001

K. Expropriation of Utilities, Landed Estates and Municipal Property

Art. XII, Sec. 18

Section 18. The State may, in the interest of national welfare or defense, establish and operate vital industries and, upon payment of just compensation, transfer to public ownership utilities and other private enterprises to be operated by the Government.

Art. XIII, Sec. 4

Section 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the right of small landowners. The State shall further provide incentives for voluntary land-sharing.

Art. XIII, Sec. 9

Section 9. The State shall, by law, and for the common good, undertake, in cooperation with the private sector, a continuing program of urban land reform and housing which will make available at affordable cost, decent housing and basic services to under-privileged and homeless citizens in urban centers and resettlement areas. It shall also promote adequate employment opportunities to such citizens. In the implementation of such program the State shall respect the rights of small property owners.

Property held by a municipal corporation in its private capacity is not subject to the unrestricted control of the legislature, and the municipality cannot be deprived of such property against its will, except by the exercise of eminent domain with payment of full compensation.” (McQuillin Municipal Corporation, 2nd Ed., Vol. I, pp. 670-681).

In its private capacity a municipal corporation is wholly different. The people of a compact community usually require certain conveniences which cannot be furnished without a franchise from the State and which are either unnecessary in the rural districts, such as a system of sewers, or parks and open spaces, or which on account of the expenses it would be financially impossible to supply except where the population is reasonably dense, such as water or gas. But in so far as the municipality is thus authorized to exercise the functions of a private corporation, it is clothed with the capacities of a private corporation and may claim its rights and immunities, even as against the sovereign, and is subject to the liabilities of such a corporation, even as against third parties. (19 R.C.L. p. 698)