Eminent Domain: Prioritizing Public Use and Due Process in Expropriation

The Supreme Court emphasizes that while the government has the power of eminent domain for public use, it must strictly adhere to due process and exhaust all other land acquisition options before resorting to expropriation of private property. This ensures fair treatment and just compensation for property owners.

G.R. No. 125218 & G.R. No. 128077. JANUARY 23, 1998.

Introduction

Imagine a community facing a severe housing shortage, and the local government decides to expropriate private land to build affordable housing. While the intention is noble, the process must be fair and just to the property owners. This case highlights the crucial balance between the state’s power of eminent domain and the constitutional rights of private property owners in the Philippines.

Filstream International Inc. owned several parcels of land occupied by informal settlers. The City of Manila sought to expropriate this land for its urban land reform program. The Supreme Court addressed whether the city followed the proper legal procedures in exercising its power of eminent domain, particularly concerning due process and the order of priority in land acquisition.

Legal Context: Eminent Domain and Urban Land Reform

Eminent domain, or expropriation, is the inherent power of the state to take private property for public use upon payment of just compensation. This power is enshrined in the Philippine Constitution and further defined by statutes like the Local Government Code and the Urban Development and Housing Act (UDHA).

Section 9, Article III of the 1987 Constitution states, “Private property shall not be taken for public use without just compensation.” This provision ensures that property owners are fairly compensated when their land is taken for public benefit.

The 1991 Local Government Code (Section 19) empowers local government units to exercise eminent domain for public use, purpose, or welfare, especially for the benefit of the poor and landless. However, this power is not absolute and must adhere to constitutional provisions and relevant laws.

Republic Act No. 7279, the Urban Development and Housing Act of 1992 (UDHA), provides specific guidelines for land acquisition for urban land reform and housing. Sections 9 and 10 of UDHA outline the priorities in land acquisition and the modes of acquiring land, emphasizing that expropriation should be the last resort.

Specifically, Section 9 of RA 7279 states:
“Sec. 9. Priorities in the acquisition of Land – Lands for socialized housing shall be acquired in the following order: (f) Privately-owned lands.”

Section 10 of RA 7279 states:
“Sec. 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.”

Case Breakdown: Filstream International Inc. vs. Court of Appeals

The case unfolded through a series of legal battles between Filstream International Inc., the City of Manila, and the informal settlers occupying the land.

Here’s a breakdown of the key events:

• Ejectment Suit: Filstream filed an ejectment suit against the occupants for termination of lease and non-payment of rentals, winning in the Metropolitan Trial Court (MTC), Regional Trial Court (RTC), and Court of Appeals (CA).
• Expropriation Proceedings: While the ejectment case was ongoing, the City of Manila initiated expropriation proceedings to acquire Filstream’s land for its land-for-the-landless program.
• Motion to Dismiss: Filstream challenged the expropriation, arguing it lacked public purpose, violated constitutional rights, and offered inadequate compensation.
• Court of Appeals Dismissal: The CA initially dismissed Filstream’s petition for certiorari due to technical deficiencies in the submitted documents.
• Injunction Against Ejectment: The CA later issued a temporary restraining order (TRO) and preliminary injunction, preventing the execution of the ejectment order, leading to Filstream’s petition to the Supreme Court.

The Supreme Court emphasized the importance of following due process in expropriation cases. The Court quoted:

“Even Section 19 of the 1991 Local Government Code is very explicit that it must comply with the provisions of the Constitution and pertinent laws…”

The Court further stated:

“Compliance with these conditions must be deemed mandatory because these are the only safeguards in securing the right of owners of private property to due process when their property is expropriated for public use.”

The Supreme Court ultimately ruled in favor of Filstream, finding that the City of Manila failed to comply with the requirements of RA 7279. The city did not demonstrate that it had exhausted other land acquisition options before resorting to expropriation.

Practical Implications: Protecting Property Rights

This case serves as a reminder to local government units that the power of eminent domain is not a blank check. They must adhere to the legal requirements, particularly those outlined in RA 7279, to ensure that property owners’ rights are protected.

Key Lessons:

• Exhaust Other Options: Local governments must explore all other land acquisition methods (community mortgage, land swapping, negotiated purchase, etc.) before resorting to expropriation.
• Prioritize Land Acquisition: Adhere to the order of priority for land acquisition outlined in RA 7279, giving preference to government-owned lands and other alternatives before private lands.
• Due Process: Ensure that property owners are given proper notice, an opportunity to be heard, and just compensation for their property.

Frequently Asked Questions

Q: What is eminent domain?

A: Eminent domain is the power of the state to take private property for public use upon payment of just compensation.

Q: What is just compensation?

A: Just compensation is the fair market value of the property at the time of taking, plus any consequential damages, less any consequential benefits.

Q: What is the order of priority for land acquisition under RA 7279?

A: The order is: (a) Government-owned lands; (b) Alienable lands of the public domain; (c) Unregistered or abandoned lands; (d) Lands within declared priority development areas; (e) BLISS sites; and (f) Privately-owned lands.

Q: Can the government immediately take possession of the property in an expropriation case?

A: Yes, the local government unit may immediately take possession of the property upon filing the expropriation proceedings and depositing at least 15% of the fair market value based on the current tax declaration.

Q: What can a property owner do if they believe the government is not offering just compensation?

A: The property owner can contest the valuation in court and present evidence to support a higher valuation.

Q: What happens if the government fails to comply with the requirements of RA 7279?

A: The expropriation proceedings may be declared invalid, and the property owner may be able to recover possession of their property.

ASG Law specializes in property law and eminent domain cases. Contact us or email hello@asglawpartners.com to schedule a consultation.