Tag: Eminent Domain

Liability for Commissioners’ Fees: Land Bank’s Exemption in Agrarian Reform Proceedings

The Supreme Court clarified that Land Bank of the Philippines (LBP), when performing governmental functions in agrarian reform proceedings, is exempt from paying commissioners’ fees. These fees are part of the costs of the suit. The Court ruled that while landowners who contest the Department of Agrarian Reform’s (DAR) valuation are generally liable for these fees, LBP’s role in ensuring just compensation exempts it from this obligation. This decision reinforces LBP’s mandate to protect public funds while upholding agrarian reform laws, impacting landowners and the government in land valuation disputes.

Who Pays the Piper? Land Valuation Disputes and the Burden of Commissioners’ Fees

This case, Land Bank of the Philippines vs. Orlando R. Baldoza and Heirs of Spouses Jaime R. Baldoza and Violeta Baldoza, arose from a disagreement over the just compensation for land acquired under the Comprehensive Agrarian Reform Program (CARP). Orlando Baldoza and the Heirs of Baldoza (respondents) voluntarily offered their land for sale to the DAR. Dissatisfied with the initial valuation set by Land Bank of the Philippines (LBP), they sought a higher valuation before the DAR Adjudication Board (DARAB), and later, the Regional Trial Court-Special Agrarian Court (RTC-SAC). The RTC-SAC, relying on the findings of appointed commissioners, increased the valuation and imposed a 12% interest. The Court of Appeals (CA) reversed this decision, leading to the present appeal before the Supreme Court.

At the heart of the matter is the question of who should bear the cost of the commissioners’ fees—essentially, the compensation for the individuals tasked with assessing the land’s value. The Supreme Court addressed whether LBP, as an entity performing a governmental function, should be liable for these fees. The Court began by defining “fees” as charges fixed by law for certain privileges or services. Commissioners’ fees, under Section 16, Rule 141 of the Rules of Court, are compensation for the commissioners’ time and effort in performing their duties. In eminent domain proceedings under the Rules of Court, the appointment of commissioners is mandatory. However, in agrarian expropriation proceedings under Republic Act (R.A.) No. 6657, the appointment of commissioners is discretionary.

In both instances, these fees are considered part of the costs of the proceedings. While the Rules of Court explicitly identify the responsible party, R.A. No. 6657 remains silent on this matter. Section 57 of R.A. No. 6657 bridges this gap by providing that the Rules of Court shall apply suppletorily in agrarian reform proceedings, including the exercise of the State’s eminent domain power. Section 12 of Rule 67 of the Rules of Court provides clarity:

SEC. 12. Costs, by whom paid. — The fees of the commissioners shall be taxed as a part of the costs of the proceedings. All costs, except those of rival claimants litigating their claims, shall be paid by the plaintiff, unless an appeal is taken by the owner of the property and the judgment is affirmed, in which event the costs of the appeal shall be paid by the owner.

In expropriation cases initiated by the government, the Republic of the Philippines is considered the “plaintiff” and is responsible for the fees. However, in agrarian expropriation cases where landowners voluntarily offer their land for sale, the dynamic shifts. The Court emphasized that the “plaintiff” is the landowner who contests the DAR’s valuation, not the Republic. Nevertheless, considering the Rules of Court’s suppletory application to SAC proceedings, the respondents, as landowners who initiated the case for just compensation, would typically be liable for the commissioners’ fees.

Building on this principle, the Court then addressed LBP’s potential exemption from these fees. The Supreme Court cited the 2013 case of Land Bank of the Philippines v. Atty. Gonzales, highlighting LBP’s crucial role in the CARP, extending beyond a mere ministerial duty. LBP is primarily responsible for land valuation and just compensation determination, possessing the discretion to approve or reject valuations. This unique role, the Court emphasized, places LBP in a position where it must challenge valuations it deems inappropriate, reinforcing its governmental function.

It is clear from the above discussions that since LBP is performing a governmental function in agrarian reform proceeding, it is exempt from the payment of costs of suit as provided under Rule 142, Section 1 of the Rules of Court.

The Court underscored that Section 1, Rule 142 of the Rules of Court exempts LBP, as an entity performing a governmental function, from paying costs of suit, including commissioners’ fees. While acknowledging prior cases that ordered LBP to pay these fees, the Court clarified that those cases did not delve into the propriety of LBP’s liability. Cases like Apo Fruits Corporation v. The Hon. Court of Appeals and Yared v. Land Bank of the Philippines either concerned the correctness of the adjudged amount or did not raise the issue at all. The CA’s reliance on Land Bank of the Philippines v. Nable was also deemed misplaced, as that case centered on the amount of the commissioners’ fees, not the liability itself. Therefore, the Court disagreed with the CA’s ruling that both parties should share the costs.

This ruling, however, does not negate the respondents’ responsibility to pay these fees, nor does it preclude the proper computation of said fees. The Court affirmed the CA’s decision to remand the case to the RTC-SAC for the determination of commissioners’ fees in accordance with Section 12, Rule 67, and Section 16, Rule 141 of the Rules of Court.

In summary, the Supreme Court’s decision in Land Bank of the Philippines vs. Orlando R. Baldoza clarifies the responsibility for commissioners’ fees in agrarian reform cases. While landowners who contest land valuations are generally liable, LBP, in its governmental function, is exempt. This ruling harmonizes the application of the Rules of Court and R.A. No. 6657, ensuring fairness and consistency in agrarian reform proceedings.

FAQs

What was the key issue in this case?	The central issue was whether Land Bank of the Philippines (LBP), performing a governmental function in agrarian reform, is liable to pay commissioners’ fees in an expropriation proceeding.
Who are considered the respondents in this case?	The respondents are Orlando R. Baldoza and the Heirs of Spouses Jaime R. Baldoza and Violeta Baldoza, who contested the initial valuation of their land offered under the CARP.
What are commissioners’ fees?	Commissioners’ fees are the compensation paid to individuals appointed by the court to assess and investigate facts relevant to a dispute, including the valuation of properties.
What is the role of the Land Bank of the Philippines (LBP) in agrarian reform?	LBP is primarily responsible for the valuation and determination of just compensation for private lands placed under the Comprehensive Agrarian Reform Program (CARP). They also have a duty to challenge valuations.
Under what law are the Rules of Court applied in agrarian reform cases?	Section 57 of R.A. No. 6657 states that the Rules of Court shall apply suppletorily in agrarian reform proceedings, including the exercise of the State’s eminent domain power.
Who typically pays the commissioners’ fees in expropriation cases?	In general expropriation cases, the plaintiff, which is usually the Republic of the Philippines, pays the commissioners’ fees.
Why is LBP exempt from paying commissioners’ fees in this case?	LBP is exempt because it is performing a governmental function in the agrarian reform proceeding and is therefore exempt from payment of costs of suit under Rule 142, Section 1 of the Rules of Court.
What was the final decision of the Supreme Court?	The Supreme Court reversed the Court of Appeals’ decision regarding LBP’s liability for commissioners’ fees, ruling that the respondents are liable to pay them. The case was remanded to the RTC-SAC for proper computation.

The Supreme Court’s decision provides crucial guidance on the financial responsibilities within agrarian reform disputes, particularly concerning the Land Bank of the Philippines. This ruling reinforces LBP’s role as a protector of public funds and clarifies that landowners contesting land valuations generally bear the costs of litigation. Moving forward, this should lead to a more equitable application of agrarian reform laws, ensuring that government resources are used efficiently while upholding the rights of landowners.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: LAND BANK OF THE PHILIPPINES VS. ORLANDO R. BALDOZA, G.R. No. 221571, July 29, 2019

July 29, 2019

Just Compensation: Balancing Zonal Value and Fair Market Value in Expropriation

The Supreme Court held that just compensation in expropriation cases cannot be solely based on the Bureau of Internal Revenue (BIR) zonal valuation. While zonal valuation is a factor, courts must consider other relevant factors to determine the fair market value of the property at the time of taking. This decision ensures that property owners receive fair compensation reflecting the actual value of their land, not just a standardized rate, when the government exercises its power of eminent domain.

Eminent Domain and Equitable Value: How Far Should Compensation Reach?

This case revolves around the Republic of the Philippines’ expropriation of land owned by Gilda A. Barcelon, Harold A. Barcelon, and Hazel A. Barcelon for the C-5 Northern Link Road Project. The central legal question is whether the government’s compensation offer, based primarily on zonal valuation, adequately reflects the ‘just compensation’ mandated by the Constitution. The respondents argued for a higher valuation, considering the property’s commercial potential and prevailing market rates. This dispute highlights the tension between the government’s need for infrastructure development and the constitutional right of property owners to receive fair compensation for their taken land.

The concept of just compensation is paramount in expropriation cases. It is defined as the full and fair equivalent of the property taken by the expropriator. This means that the landowner should be placed in as good a position financially as they would have been had the property not been taken. The Supreme Court has consistently held that determining just compensation is a judicial function, requiring a comprehensive assessment of various factors. The role of the court is to ensure a fair and just valuation, balancing the interests of the public and the private landowner.

In determining just compensation, the Regional Trial Court (RTC) constituted a Board of Commissioners to assess the property. The petitioner, the Republic of the Philippines, anchored its argument on the property’s zonal valuation of P2,750.00 per square meter. They also pointed to the alleged presence of informal settlers and poor living conditions in the area to justify a lower valuation. In contrast, the respondents argued that the just compensation should be between P10,000.00 and P15,000.00 per square meter, considering the prevailing market value and its location in a commercial zone.

The Board of Commissioners recommended P10,000.00 per square meter as just compensation, citing valuations in nearby expropriation cases, specifically Hobart Realty and Spouses Serrano. The RTC, however, fixed the amount at P9,000.00 per square meter, considering the Board’s recommendation, the BIR zonal valuation, the property’s proximity to commercial lots, its residential classification, and the selling price of properties in the vicinity. The Court of Appeals (CA) affirmed the RTC’s decision, emphasizing that zonal valuation is just one of the factors to consider.

The Supreme Court affirmed the CA’s decision, holding that the lower courts had appropriately considered various factors in determining just compensation. The Court rejected the petitioner’s argument that just compensation should be solely based on zonal valuation. The Court emphasized that this method should not be the exclusive basis for establishing fair market value. The decision underscores that just compensation requires a holistic assessment, considering all relevant factors affecting the property’s value at the time of taking. The court pointed to Sec. 5 of Republic Act (R.A.) No. 8974:

Sec. 5. Standards for the Assessment of the Value of the Land Subject of Expropriation Proceedings or Negotiated Sale. – In order to facilitate the determination of just compensation, the court may consider, among other well-established factors, the following relevant standards:

(a) The classification and use for which the property is suited; (b) The developmental costs for improving the land; (c) The value declared by the owners; (d) The current selling price of similar lands in the vicinity; (e) The reasonable disturbance compensation for the removal and/or demolition of certain improvement on the land and for the value of improvements thereon; (f) This size, shape or location, tax declaration and zonal valuation of the land; (g) The price of the land as manifested in the ocular findings, oral as well as documentary evidence presented; and (h) Such facts and events as to enable the affected property owners to have sufficient funds to acquire similarly-situated lands of approximate areas as those required from them by the government, and thereby rehabilitate themselves as early as possible.

Building on this principle, the Court also addressed the issue of legal interest on the compensation. It clarified that interest should be reckoned from the date of taking, which is the issuance of the writ of possession, not from the filing of the complaint. The Court reasoned that the property owner is entitled to full compensation only upon the actual taking of the property. Therefore, the delay in payment of the remaining balance warrants the imposition of legal interest. The legal interest serves as a form of damages to compensate the landowner for the delay in receiving the full value of their property.

The Supreme Court corrected the CA’s imposition of legal interest on the initial payment, noting that the initial payment was a legal requirement for the issuance of the writ of possession and did not constitute a delay. The Court also modified the interest calculation for the remaining balance. The interest should be at 12% per annum from the date of the writ of possession (December 2, 2008) until June 30, 2013, and 6% per annum from July 1, 2013, until the finality of the decision. After the decision becomes final, the total amount of just compensation will earn legal interest of 6% per annum until full payment. The Court balanced the rights of the property owner to just compensation with the obligations of the government to undertake public projects.

This case reinforces the principle that just compensation in expropriation cases must be determined on a case-by-case basis, considering all relevant factors. The court cannot rely solely on zonal valuation, which is merely one of the indices of fair market value. The decision provides valuable guidance to lower courts in determining just compensation, ensuring that property owners receive fair treatment when their property is taken for public use.

FAQs

What was the key issue in this case?	The key issue was whether the just compensation for the expropriated property was fairly determined, considering the constitutional right to just compensation and the various factors influencing property valuation. The court needed to decide if the government’s reliance on zonal valuation alone was sufficient.
What is zonal valuation?	Zonal valuation is the value of real properties as determined by the Bureau of Internal Revenue (BIR) for tax purposes. It is one of the factors that may be considered in determining just compensation but is not the sole basis.
What does ‘just compensation’ mean in expropriation cases?	‘Just compensation’ refers to the full and fair equivalent of the property taken from its owner by the government. It aims to place the landowner in as good a financial position as they would have been had the property not been taken.
What factors should be considered when determining just compensation?	Factors to consider include the property’s classification and use, developmental costs, value declared by the owner, current selling price of similar lands in the vicinity, and zonal valuation. All factors that can have an impact on the price.
When does the legal interest on just compensation begin to accrue?	The legal interest on the unpaid balance of just compensation begins to accrue from the date of taking, which is typically the date the government takes possession of the property, often marked by the issuance of a writ of possession.
What was the rate of legal interest applied in this case?	The legal interest rate was 12% per annum from the taking until June 30, 2013, and 6% per annum from July 1, 2013, until the finality of the decision. Post-judgment, the total amount earns 6% per annum until full payment.
Why was interest imposed on the unpaid balance?	Interest was imposed to compensate the landowner for the delay in receiving the full value of the property. It acknowledges that the landowner was deprived of the use and benefit of their property during the period of delay.
What was the significance of the Board of Commissioners in this case?	The Board of Commissioners was tasked with determining and recommending the amount of just compensation. Its report, while not binding on the court, provided valuable input and was considered alongside other evidence.
How did the Supreme Court modify the Court of Appeals’ decision?	The Supreme Court deleted the legal interest imposed on the initial payment. It also clarified that the 12% legal interest on the balance should be reckoned from the date of the issuance of the writ of possession, and not from the filing of the complaint.

This case provides a clear framework for determining just compensation in expropriation cases. It emphasizes the importance of considering multiple factors beyond zonal valuation to ensure fairness and equity for property owners. The decision underscores the judiciary’s role in safeguarding constitutional rights and ensuring that the government’s power of eminent domain is exercised responsibly and justly.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Republic of the Philippines v. Barcelon, G.R. No. 226021, July 24, 2019

July 24, 2019

Fair Price or Land Grab? Determining ‘Just Compensation’ in Philippine Expropriation Law

In the Philippines, when the government takes private land for public projects, it must pay ‘just compensation’ to the owner. This case clarifies how courts should determine that fair price. The Supreme Court affirmed that just compensation must be based on the property’s fair market value at the time of taking, considering factors like location, use, and comparable sales. This ruling ensures landowners receive a real, substantial, and full equivalent for their expropriated property, preventing the government from undervaluing land and ensuring equitable treatment under the law.

Road to Fairness: How the Government’s Highway Project Led to a Landmark Property Valuation Dispute

This case, Republic of the Philippines v. Spouses Lorenzana Juan Darlucio and Cosme Darlucio, revolves around the government’s expropriation of land for the C-5 Northern Link Road Project in Valenzuela City. The central legal question is whether the Court of Appeals erred in affirming the trial court’s decision to fix the amount of just compensation at P15,000.00 per square meter for the property owned by the Spouses Darlucio. The Republic argued that this valuation was too high, while the Spouses Darlucio contended it was fair, considering the property’s location and market value.

The Republic, represented by the Department of Public Works and Highways (DPWH), initiated expropriation proceedings in 2007. Initially, the Republic alleged that the land was unoccupied and sought to expropriate 413 square meters of a 527-square-meter parcel. After the Spouses Darlucio were identified as the owners, they agreed to the expropriation but disputed the amount of just compensation offered by the government. The Spouses Darlucio argued that the zonal value of P3,450.00 per square meter was insufficient, demanding compensation based on the prevailing market value of similarly situated properties, which they claimed ranged from P10,000.00 to P15,000.00 per square meter.

The trial court constituted a Board of Commissioners to determine the appropriate amount of just compensation. The Board recommended P15,000.00 per square meter, relying on a previous case involving expropriated properties within the nearby Hobart Village. The Republic opposed this recommendation, arguing that it disregarded the property’s actual use, classification, size, and condition. The Republic further claimed that the property was exclusively residential and that informal settlers occupied the surrounding areas. In contrast, the Spouses Darlucio supported the Board’s recommendation, asserting that acquiring another property of similar size in the same area would be difficult.

Ultimately, the trial court fixed the just compensation at P15,000.00 per square meter. The trial court highlighted that the Republic failed to refute this fair market value with any convincing evidence. The Republic then appealed to the Court of Appeals, which affirmed the trial court’s decision with slight modifications. The Court of Appeals emphasized that the property’s location near Hobart Village and the final judicial determination of just compensation in the Hobart case were material in determining the amount of just compensation in this case.

The Court of Appeals also pointed out that the Republic’s offer of the 2003 zonal valuation did not reflect the fair market value of the land as of November 2007, when the expropriation complaint was filed. Furthermore, the Republic failed to prove the presence of informal settlers on the land itself. Thus, the Republic elevated the matter to the Supreme Court, arguing that the Court of Appeals erred in affirming the amount of P15,000.00 per square meter as just compensation.

In its decision, the Supreme Court emphasized that it is not a trier of facts and will generally not review factual issues already passed upon by lower courts, especially when the findings are concurrent. The Court reiterated the definition of just compensation as the full and fair equivalent of the property taken from its owner, emphasizing that the measure is not the taker’s gain but the owner’s loss. The Supreme Court also cited Section 5 of Republic Act 8974 (RA 8974), which enumerates relevant standards for determining just compensation, including:

Section 5. Standards for the Assessment of the Value of the Land Subject of Expropriation Proceedings or Negotiated Sale. – In order to facilitate the determination of just compensation, the court may consider, among other well-established factors, the following relevant standards:

(a)

The classification and use for which the property is suited;

(b)

The developmental costs for improving the land;

(c)

The value declared by the owners;

(d)

The current selling price of similar lands in the vicinity;

(e)

The reasonable disturbance compensation for the removal and/or demolition of certain improvement on the land and for the value of improvements thereon;

(f)

[The] size, shape or location, tax declaration and zonal valuation of the land;

(g)

The price of the land as manifested in the ocular findings, oral as well as documentary evidence presented; and

(h)

Such facts and events as to enable the affected property owners to have sufficient funds to acquire similarly-situated lands of approximate areas as those required from them by the government, and thereby rehabilitate themselves as early as possible.

The Court affirmed that the trial court had considered these relevant standards in determining just compensation. The Supreme Court noted that the trial court had considered land capabilities, use, shape, classification, surroundings, improvements, adjacent properties, final decisions in similar expropriation cases of adjacent properties, and the presence or absence of informal settlers. The Court of Appeals also accurately noted the meticulous process by which the trial court determined the amount of just compensation.

The Supreme Court highlighted that the Republic’s persistent plea for a remarkably reduced amount of just compensation was unfounded. The Court emphasized that the amount of P2,000.00 per square meter from 1997 was no longer just or fair in 2007, as just compensation must reflect the property’s value at the time of taking. Moreover, the Court clarified that zonal value alone does not equate to just compensation, as this would negate the judicial discretion required in determining a fair price. The Supreme Court also upheld the application of the Hobart case as a binding precedent, given the property’s proximity and similar circumstances.

The Court also found that the Republic failed to prove the presence of informal settlers on the property or its immediate vicinity, further undermining its argument for a lower valuation. The Court reinforced its stance by quoting Republic v. C.C. Unson Company, Inc., which articulates the extent of the Court’s discretionary appellate jurisdiction over cases brought before it via Rule 45.

This Court, however, is not a trier of facts; and petitions brought under Rule 45 may only raise questions of law. This rule applies in expropriation cases as well. In Republic v. Spouses Bautista, the Court explained the reason therefor:

This Court is not a trier of facts. Questions of fact may not be raised in a petition brought under Rule 45, as such petition may only raise questions of law. This rule applies in expropriation cases. Moreover, factual findings of the trial court, when affirmed by the CA, are generally binding on this Court. An evaluation of the case and the issues presented leads the Court to the conclusion that it is unnecessary to deviate from the findings of fact of the trial and appellate courts.

Under Section 8 of Rule 67 of the Rules of Court, the trial court sitting as an expropriation court may, after hearing, accept the commissioners’ report and render judgment in accordance therewith. This is what the trial court did in this case. The CA affirmed the trial court’s pronouncement in toto. Given these facts, the trial court and the CA’s identical findings of fact concerning the issue of just compensation should be accorded the greatest respect, and are binding on the Court absent proof that they committed error in establishing the facts and in drawing conclusions from them. There being no showing that the trial court and the CA committed any error, we thus accord due respect to their findings.

The only legal question raised by the petitioner relates to the commissioners’ and the trial court’s alleged failure to take into consideration, in arriving at the amount of just compensation, Section 5 of RA 8974 enumerating the standards for assessing the value of expropriated land taken for national government infrastructure projects. What escapes petitioner, however, is that the courts are not bound to consider these standards; the exact wording of the said provision is that “in order to facilitate the determination of just compensation, the courts may consider” them. The use of the word “may” in the provision is construed as permissive and operating to confer discretion. In the absence of a finding of abuse, the exercise of such discretion may not be interfered with. For this case, the Court finds no such abuse of discretion. (Emphasis supplied)

Ultimately, the Supreme Court found no reversible error in the Court of Appeals’ decision and affirmed the amount of P15,000.00 per square meter as just compensation for the expropriated land.

FAQs

What was the key issue in this case?	The key issue was whether the Court of Appeals erred in affirming the trial court’s valuation of just compensation for expropriated land at P15,000.00 per square meter. The Republic argued for a lower valuation, while the landowners contended that the affirmed amount was fair and just.
What is ‘just compensation’ in expropriation cases?	‘Just compensation’ refers to the full and fair equivalent of the property being taken, ensuring the landowner is adequately compensated for their loss. It is not based on the government’s gain but on the landowner’s loss, aiming to make the owner whole again.
What factors are considered when determining just compensation?	Factors considered include the property’s classification, use, developmental costs, owner-declared value, current selling prices of similar lands in the vicinity, and zonal valuation. The courts also assess the size, shape, location, and any other relevant evidence presented.
Why was the ‘Hobart’ case relevant in this decision?	The ‘Hobart’ case involved expropriation of land in the same vicinity, Hobart Village, and established a fair market value of P15,000.00 per square meter. Because the Spouses Darlucio’s property was similarly situated, the ‘Hobart’ valuation served as a relevant benchmark.
Can the government solely rely on zonal valuation to determine just compensation?	No, the Supreme Court clarified that zonal valuation alone is insufficient to determine just compensation. Courts must consider all relevant factors and exercise judicial discretion to ensure a fair and equitable valuation.
What is the significance of the ‘time of taking’ in determining just compensation?	The ‘time of taking’ refers to the date when the government takes possession of the property, and it is the crucial point for valuing the property. Just compensation must reflect the fair market value of the property at this specific time, not earlier or later.
What was the Republic’s main argument for a lower valuation?	The Republic primarily argued that the zonal valuation of P3,450.00 per square meter was appropriate and that the presence of informal settlers in the area should lower the property’s value. They also questioned the relevance of the ‘Hobart’ case.
How did the Supreme Court view the presence of informal settlers in the area?	The Supreme Court noted that the Republic failed to prove the presence of informal settlers on the Spouses Darlucio’s property or its immediate vicinity. This lack of evidence weakened the Republic’s argument for a lower valuation.
What is the role of the Board of Commissioners in expropriation cases?	The Board of Commissioners is constituted by the trial court to assess the value of the expropriated property and recommend an amount for just compensation. Their report is considered by the court, but the court ultimately makes the final determination.

This case reinforces the principle that just compensation in expropriation cases must be fair, substantial, and determined based on the property’s value at the time of taking. It prevents the government from relying solely on outdated zonal valuations and ensures that landowners receive equitable treatment when their property is taken for public use.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Republic v. Spouses Darlucio, G.R. No. 227960, July 24, 2019

July 24, 2019

Onerous Donations: When Failure to Fulfill Conditions Leads to Revocation

In a significant ruling, the Supreme Court affirmed the revocation of a donation due to the donee’s failure to comply with the conditions stipulated in the Deed of Donation. The Court emphasized that when a donation is coupled with specific obligations, such as the construction of infrastructure, the donee’s non-compliance constitutes a substantial breach. This breach entitles the donor to revoke the donation, reclaiming ownership of the property, especially when the donee transfers the property to another party without fulfilling the original conditions. This decision reinforces the principle that donors have legal recourse when the intended purpose of their generosity is not honored.

Conditional Promises and Broken Ground: Can a Donation Be Revoked?

The case of Municipality of Dasmariñas vs. Dr. Paulo C. Campos and National Housing Authority vs. Dr. Paulo C. Campos (G.R. Nos. 232675 and 233078) revolves around a Deed of Donation executed in 1976 by Dr. Paulo C. Campos in favor of the National Housing Authority (NHA). The donation involved a parcel of land intended for the construction of a 36-meter-wide access road. However, the NHA only built a 20-meter-wide road and later donated the property to the Municipality of Dasmariñas. This prompted Dr. Campos to file an action for revocation of the donation, claiming non-compliance with the stipulated condition. The central legal question is whether the NHA’s failure to construct the road as agreed upon and its subsequent donation of the property justified the revocation of the original donation.

The petitioners, the Municipality of Dasmariñas and the NHA, argued that the action to revoke the Deed of Donation had prescribed under Article 1144 of the Civil Code, which requires actions upon a written contract to be brought within ten years from the accrual of the right of action. They contended that the prescriptive period should be reckoned from the time Dr. Campos discovered that the NHA had only constructed a 20-meter-wide road. The NHA also alleged that Dr. Campos was guilty of laches, having waited 25 years before filing the action for revocation. They further claimed that the NHA had substantially complied with the condition by constructing a portion of the road and reserving the remaining area for future widening. The petitioners emphasized that the unpaved portion of the donated property remained part of the access road and had not been used for any other purpose. They also cited a clause in the Deed of Donation allowing the donor to use the property if development was delayed.

The respondents-heirs, on the other hand, argued that their right of action accrued in 1993 when the NHA donated the subject property to the Municipality of Dasmariñas. They maintained that the NHA’s failure to build the agreed-upon 36-meter-wide road constituted a substantial breach of the Deed of Donation, warranting its revocation. They emphasized that the subsequent donation of the property meant that the missing 16 meters would never be devoted to the intended purpose. The respondents-heirs also contended that the subsequent donation contravened the provision in the initial Deed of Donation that allowed the donor to use the property until the donee was in a position to use it.

The Supreme Court sided with the respondents-heirs, holding that the action for revocation was filed within the allowable time under the law. The Court emphasized that the donation was of an onerous nature, as it contained the stipulation to build the 36-meter-wide access road. Citing jurisprudence, the Court affirmed that donations of an onerous type are governed by the law on contracts, not by the law on donations. Article 1144 of the New Civil Code stipulates that actions upon a written contract must be brought within ten years from the accrual of the right of action. The Court reasoned that the respondents-heirs’ right of action accrued only when the NHA donated the property to the Municipality of Dasmariñas, as this transfer effectively removed the NHA’s ability to complete the access road and precluded any move to compel the transferee to finish it.

The Court also rejected the assertion that the doctrine of laches applied. The Court cited established requisites for laches, including conduct by the defendant giving rise to the situation, delay in asserting the complainant’s right, lack of knowledge by the defendant that the complainant would assert the right, and injury or prejudice to the defendant if relief were granted to the complainant. In this case, the Court found that Dr. Campos had shown patience in allowing the NHA time to fulfill its obligation and filed the case only when it became clear that the NHA could no longer do so. The fact that the case was filed within the prescriptive period of ten years also removed it from the scope of laches.

On the substantive issue of the revocation of the Deed of Donation, the Court affirmed the findings of the lower courts that the NHA had committed a substantial breach that justified the partial revocation of the donation. The Court noted that the object of the agreement was clearly the construction of a 36-meter-wide access road, reiterated multiple times in the Deed of Donation. The failure to construct the access road with the expressly mentioned specifications was undeniably a breach. The Court rejected the petitioners’ contention that the condition had been complied with because the unpaved 16-meter portion was still reserved for completion. The Court stated that the stipulation required actual construction of the entire 36-meter property and that non-usage of even a portion would constitute a contravention of the Deed of Donation. In accordance with the law and jurisprudence, the Court emphasized that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control.

Moreover, the Court determined that the NHA’s subsequent donation of the subject property to the Municipality of Dasmariñas was not required by law, particularly Section 31 of Presidential Decree (P.D.) No. 957. This provision applies to subdivisions or condominium projects, which the Dasmariñas Resettlement Project was not. The Court also noted the bad faith exhibited by both petitioners: the NHA by donating the property without substantially complying with the condition and the Municipality of Dasmariñas by introducing structures and developing the land despite knowledge of the pending appeal and the rulings of the lower courts. A critical aspect of the case was that the second deed between the NHA and the Municipality of Dasmariñas did not state the condition for the 36 meter wide road. This resulted in no legal obligation on the part of the Municipality of Dasmariñas to complete the road, nor a way for the NHA to compel the same.

The Court acknowledged the supervening events, including the construction of buildings and infrastructure projects, but stressed that any dire effects of the revocation of the donation were solely on the account of the petitioners due to their bad faith. The Court suggested that the petitioners could exercise the power of eminent domain to keep the subject property and continue their infrastructure improvements but would not provide an easy way out given their actions. It is crucial to recognize that, as reiterated in Republic of the Phils. v. Silim, 408 Phil. 69, 77 (2001), donations of an onerous type are governed by the law on contracts.

FAQs

What was the key issue in this case?	The key issue was whether the NHA’s failure to comply with the condition in the Deed of Donation, specifically the construction of a 36-meter-wide access road, justified the revocation of the donation. The subsequent donation to the Municipality of Dasmariñas heightened the breach.
What type of donation was involved?	The donation was considered an onerous donation because it involved a condition—the construction of the access road—that the donee (NHA) had to fulfill. This meant it was governed by contract law, not donation law.
When did the prescriptive period for filing the revocation action begin?	The prescriptive period began when the NHA donated the property to the Municipality of Dasmariñas, as this act made it impossible for the NHA to fulfill the original condition. This triggered the donor’s right to seek revocation.
What does the doctrine of laches entail?	The doctrine of laches concerns unreasonable delay in asserting a right, leading to prejudice for the opposing party. The Court ruled it did not apply here as Dr. Campos did not unreasonably delay his action.
What constituted the substantial breach of contract?	The NHA’s failure to build the access road to the stipulated width (36 meters) was considered a substantial breach. This non-compliance defeated the core purpose of the donation agreement.
Was the donation to the Municipality of Dasmariñas legally justified?	No, the Court found the donation unjustified, as it did not fall under the provisions of P.D. No. 957, which pertains to subdivisions and condominium projects. The Dasmariñas Resettlement Project was not classified as either.
What remedy does the Municipality of Dasmariñas have?	The Municipality can exercise its power of eminent domain to acquire the property from Dr. Campos’ heirs. This would allow them to continue with their infrastructure projects while providing just compensation to the landowners.
What was the main reason the SC denied the consolidation petition?	The SC denied the petitions because the NHA exhibited bad faith, by donating the property to Municipality of Dasmariñas without fulfilling the promise. Also, the Municipality of Dasmariñas also showed bad faith, because even with the pending appeal and ruling in favor of the appeal, it still continued on the land’s construction.

This case underscores the importance of fulfilling conditions attached to donations, especially those of an onerous nature. The Supreme Court’s decision serves as a reminder that donors have legal avenues to reclaim their property when donees fail to uphold their end of the agreement. The ruling also highlights the necessity for government entities to act in good faith and respect contractual obligations, fostering transparency and accountability in land transactions.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Municipality of Dasmariñas vs. Dr. Paulo C. Campos, G.R. Nos. 232675 and 233078, July 17, 2019

July 17, 2019

Just Compensation Under CARP: Adherence to DAR Formulas in Land Valuation

The Supreme Court has affirmed that in determining just compensation for land covered by the Comprehensive Agrarian Reform Program (CARP), courts must generally adhere to the formulas prescribed by the Department of Agrarian Reform (DAR). These formulas, outlined in administrative orders, provide a uniform framework to prevent arbitrary or absurd valuations. While courts may deviate from these formulas, they must clearly explain their reasons for doing so, based on the evidence presented. This ruling underscores the importance of following established guidelines in agrarian reform cases, ensuring fair compensation for landowners while upholding the objectives of CARP.

From Sugarcane Fields to Courtrooms: Determining Fair Value in Agrarian Reform

This case revolves around a dispute between JMA Agricultural Development Corporation and Land Bank of the Philippines (LBP) over the just compensation for a 106-hectare parcel of land in Negros Occidental, which was voluntarily offered for coverage under CARP. The central legal question is whether the Special Agrarian Court (SAC) correctly determined the amount to be paid to JMA as just compensation, or whether it should have strictly adhered to the DAR’s valuation formulas.

JMA Agricultural Development Corporation owned a 106-hectare property, offering it for CARP coverage. The government, through DAR, initially took 97.1232 hectares. LBP offered P17,500,914.92 as compensation, which JMA rejected as too low. The DAR Adjudication Board (DARAB) then fixed the compensation at P21,584,218.06. Eventually, an additional 6.3480 hectares were acquired, bringing the total area taken to 103.4712 hectares. JMA then filed a petition before the SAC for determination and payment of just compensation, seeking P26,213,791.26. LBP argued that it complied with the applicable valuation guidelines, using the formula: Land Value (LV) = [Capitalized Net Income (CNI) x 0.90] + [Market Value per Tax Declaration (MV) x 0.10].

The SAC ruled in favor of JMA, fixing just compensation at P26,213,791.26, citing Land Bank of the Philippines v. Chico. The SAC reasoned that the valuation should be based on the property’s value when title was transferred to the government, not at the time of inspection. However, the Court of Appeals (CA) reversed the SAC’s decision, agreeing with LBP’s valuation of P17,776,182.33. The CA held that the SAC erred in applying Chico and should have used the formula under DAR AO No. 5, which specifies using data from the time of field inspection and receipt of the claim folder. This discrepancy in valuation methods led to the Supreme Court review.

The Supreme Court’s analysis centered on Section 17 of RA 6657, which outlines factors for determining just compensation, including the land’s cost of acquisition, current value, nature, actual use, and income. These factors are translated into a basic formula in DAR AO No. 5, issued under the DAR’s rule-making power. The Court emphasized that the SAC could not disregard this formula, which was designed to implement Section 17. The Supreme Court acknowledged that the SAC may relax the application of the DAR formulas, but only with a clear explanation for doing so.

The Supreme Court disagreed with the SAC’s explanation for deviating from the DAR formula. The SAC had relied on the Chico case, but the Supreme Court found that the circumstances in Chico were unique and not applicable here. The Court highlighted that in subsequent cases, it had continued to uphold the application of the DAR formulas. It emphasized the importance of adhering to the specified timeframes for data collection, as outlined in DAR AO No. 5. Specifically, it noted that the selling price (SP) for computing the Capitalized Net Income (CNI) must be the average of the latest available 12-months selling prices prior to the date of receipt of the claim folder by LBP.

In the case of Land Bank of the Philippines v. Department of Agrarian Reform, the Court explicitly stated that the SP for purposes of computing the CNI, must be the *average of the latest available 12-months selling prices prior to the date of receipt of the claim folder by LBP, to be secured from the DA, Bureau of Agricultural Statistics or other appropriate regulatory bodies*. Further, it explained the reasoning behind the use of average price rather than real time values in Land Bank of the Philippines v. Celada, stating that, It can be safely presumed that the fluctuations in the selling price of palay were already taken into consideration since only the average of these available prices within the 12 months prior to the receipt of the CF, will be used in computing the CNI.

Moreover, the Court emphasized the importance of adhering to the established DAR formula, referencing Alfonso v. Land Bank of the Philippines, which stated, Until and unless declared invalid in a proper case, the DAR formulas partake of the nature of statutes, which under the 2009 amendment became law itself, and thus have in their favor the presumption of legality, such that courts shall consider, and not disregard, these formulas in the determination of just compensation for properties covered by the CARP.

Ultimately, the Supreme Court sided with the Court of Appeals and emphasized the importance of following the established DAR formula for calculating just compensation. This ensures a standardized approach to agrarian land valuation. Furthermore, the Supreme Court clarified that a legal interest of 12% per annum must be imposed on the just compensation due to the petitioner from the time of taking, or on July 31, 2002. Beginning July 1, 2013, the interest imposed shall be 6% per annum until fully paid.

FAQs

What is the main issue in this case?	The central issue is whether the Special Agrarian Court (SAC) correctly determined the just compensation for land covered by CARP or whether it should have strictly adhered to the valuation formulas prescribed by the Department of Agrarian Reform (DAR).
What did the Supreme Court rule?	The Supreme Court ruled that courts must generally adhere to the DAR’s valuation formulas when determining just compensation under CARP, unless there is a clear and justified reason to deviate, based on the evidence presented.
What is the significance of DAR AO No. 5?	DAR AO No. 5 provides the basic formula for calculating land value, translating the factors outlined in Section 17 of RA 6657 into a practical method for determining just compensation. It ensures a uniform and standardized approach to land valuation under CARP.
When is it acceptable to deviate from the DAR formulas?	Courts may relax the application of DAR formulas if they clearly explain their reasons for doing so in their decision, based on the specific factual circumstances and evidence presented in the case.
What data should be used for calculating Annual Gross Production (AGP) and Selling Price (SP)?	According to DAR AO No. 5, AGP should correspond to the latest available 12-months’ gross production immediately preceding the date of field investigation, and SP should be the average of the latest available 12-months’ selling prices prior to the date of receipt of the claim folder by LBP.
What was the Court’s basis for applying a legal interest?	The Court applied a legal interest of 12% per annum on the just compensation from the time of taking (July 31, 2002), and 6% per annum from July 1, 2013, until fully paid, in accordance with established jurisprudence.
What was the SAC’s error in this case?	The SAC erred by not conforming with the data provided in DAR AO No. 5, effectively deviating from the formula without providing sufficient justification, and incorrectly assuming that the DAR did not consider fluctuations in sugar prices when creating the formula.
What is the implication of this ruling for landowners?	This ruling reinforces the importance of understanding and complying with DAR’s valuation guidelines in CARP cases. Landowners should ensure that their claims are supported by accurate data and evidence that aligns with the established formulas.

The Supreme Court’s decision in this case clarifies the importance of adhering to established guidelines in agrarian reform cases. By emphasizing the use of DAR formulas for determining just compensation, the Court aims to ensure fairness and consistency in land valuation under CARP. This ruling provides a clear framework for future cases involving land valuation disputes, promoting a more predictable and equitable application of agrarian reform laws.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: JMA Agricultural Development Corporation v. Land Bank of the Philippines, G.R. No. 206026, July 10, 2019

July 10, 2019

Eminent Domain: Strict Compliance Required for Expropriation of Private Lands for Socialized Housing

The Supreme Court has affirmed that local government units must strictly comply with all legal requirements when exercising their power of eminent domain to expropriate private lands for socialized housing. This decision reinforces the protection of private property rights against unwarranted government intervention, emphasizing the need for local governments to exhaust all other land acquisition options and to provide concrete evidence justifying the necessity and legality of expropriation.

Can Manila Take Private Land for the Landless? When Eminent Domain Needs Proof

The City of Manila sought to expropriate parcels of land owned by Alejandro Roces Prieto and others for its Land-For-The-Landless Program, authorized by Ordinance No. 8070. After negotiations failed, the City filed a complaint with the Regional Trial Court (RTC) to exercise its power of eminent domain. The RTC initially denied the issuance of a writ of possession but eventually granted the expropriation, concluding that all requisites for the local government’s exercise of eminent domain had been met. The Court of Appeals (CA) reversed this decision, emphasizing the need for strict compliance with constitutional and statutory limitations when exercising eminent domain. The CA found that the City failed to demonstrate that an on-site development program was the most practical option, did not exhaust other modes of land acquisition, and did not prove that the intended beneficiaries were truly “underprivileged and homeless.” The Supreme Court upheld the CA’s decision, reinforcing that local governments must adhere strictly to the conditions and restrictions set forth in the Constitution and pertinent laws when exercising the power of eminent domain.

The Supreme Court began its analysis by underscoring the fundamental nature of property rights and the stringent scrutiny required when exercising the power of eminent domain. Citing previous jurisprudence, the Court reiterated that this power, which allows the government to take private property for public use, is a derogation of a fundamental right. The Supreme Court in Lagcao v. Judge Labra held:

“The exercise of the power of eminent domain drastically affects a landowner’s right to private property, which is as much a constitutionally-protected right necessary for the preservation and enhancement of personal dignity and intimately connected with the rights to life and liberty.”

This principle is particularly relevant when the power is exercised by a local government, which only possesses a delegated power of eminent domain. The Court emphasized that the delegated power is not absolute and must conform to the limits imposed by the national legislature.

Section 19 of the Local Government Code (LGC) outlines the conditions under which a local government unit (LGU) can exercise eminent domain. These include:

An ordinance authorizing the local chief executive to exercise the power.
The power is exercised for public use, purpose, or welfare, or for the benefit of the poor and landless.
Payment of just compensation.
A valid and definite offer has been previously made to the owner, and such offer was not accepted.

In addition to the LGC, Republic Act (R.A.) No. 7279, also known as the Urban Development Housing Act of 1992, provides further guidelines for expropriating properties for urban land reform and housing. The Supreme Court highlighted Sections 9 and 10 of R.A. No. 7279, which establish priorities in land acquisition and modes of land acquisition, respectively. These provisions read:

SEC 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 subdivisions, 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 or Priority Development, Zonal Improvement Program 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.

Section 10 emphasizes that expropriation should only be a last resort.

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

The Court found that the RTC had taken a simplistic approach, failing to scrutinize whether the City had complied with these requirements. The RTC’s conclusion that the expropriation was for a public purpose based solely on the City’s land-for-the-landless program was deemed insufficient. The Supreme Court emphasized that courts must judiciously examine whether a local government’s exercise of eminent domain aligns with the delegating law. General assertions are inadequate, especially given the significant impact on constitutionally protected rights.

The Court also relied on its decision in Estate or Heirs of the Late Ex-Justice Jose B.L. Reyes v. City of Manila, to emphasize that the limitations under R.A. No. 7279 are strict and compliance is mandatory. The Supreme Court in Estate or Heirs of the Late Ex-Justice Jose B.L. Reyes v. City of Manila held:

Compliance with these conditions is mandatory because these are the only safeguards of oftentimes helpless owners of private property against what may be a tyrannical violation of due process when their property is forcibly taken from them allegedly for public use.

The Court found no evidence in the records that the City of Manila had complied with Section 19 of the LGC or Sections 9 and 10 of R.A. No. 7279. While the City claimed it had conducted a study and observed the order of priority in land acquisition, it presented no concrete evidence to support this. There was no showing that the City had attempted to acquire government-owned lands or other prioritized lands before resorting to expropriation. Furthermore, the City failed to demonstrate that the subject properties met the criteria for on-site development, which involves upgrading blighted areas. The Court emphasized that unsupported generalizations do not suffice.

The Court also noted the lack of evidence showing that the prospective beneficiaries were truly “underprivileged and homeless,” as required by Section 8 of R.A. No. 7279. Testimony indicated that these beneficiaries had the financial means to purchase the properties themselves, further undermining the justification for expropriation. Even more, the Supreme Court stated:

Condemnation of private lands in an irrational or piecemeal fashion or the random expropriation of small lots to accommodate no more than a few tenants or squatters is certainly not the condemnation for public use contemplated by the Constitution. Such act would clearly deprive a citizen of his or her property for the convenience of a few without perceptible benefit to the public.

Finally, the Court found that the City failed to exhaust other modes of land acquisition under Section 10 of R.A. No. 7279, particularly negotiated purchase. After the landowners rejected the City’s initial offer, the City immediately filed the expropriation suit without attempting to renegotiate. The Court emphasized that the government must make reasonable efforts to reach an agreement with the property owner before resorting to expropriation. As the Supreme Court held in City of Manila v. Alegar Corporation:

The government must exhaust all reasonable efforts to obtain by agreement the land it desires. Its failure to comply will warrant the dismissal of the complaint.

FAQs

What was the key issue in this case?	The key issue was whether the City of Manila complied with all legal requirements when exercising its power of eminent domain to expropriate private lands for its Land-For-The-Landless Program. The Supreme Court ultimately ruled that the City did not meet these requirements.
What is eminent domain?	Eminent domain is the right of the government to take private property for public use, even if the owner does not want to sell it. This power is subject to constitutional limitations, including the payment of just compensation.
What is R.A. No. 7279?	R.A. No. 7279, also known as the Urban Development Housing Act of 1992, governs the local expropriation of properties for purposes of urban land reform and housing. It sets forth specific priorities and procedures that local government units must follow.
What priorities does R.A. No. 7279 establish for land acquisition?	R.A. No. 7279 prioritizes government-owned lands, alienable lands of the public domain, unregistered or abandoned lands, and other specified sites before allowing the acquisition of privately-owned lands. It emphasizes that expropriation should be a last resort.
What does “just compensation” mean in the context of eminent domain?	Just compensation refers to the full and fair equivalent of the property taken from a private owner. It aims to place the owner in as good a position financially as they would have been had the property not been taken.
Why did the Supreme Court rule against the City of Manila in this case?	The Court ruled against the City because it found that the City failed to comply with several requirements under the Local Government Code and R.A. No. 7279. Specifically, the City did not adequately demonstrate that other land acquisition options were exhausted, failed to prove that the beneficiaries were truly underprivileged, and did not show that the properties were suitable for on-site development.
What is the significance of this ruling?	This ruling reinforces the protection of private property rights and clarifies the limitations on local governments’ power of eminent domain. It emphasizes the need for strict compliance with all legal requirements to prevent abuse of this power.
What should a local government do before resorting to expropriation?	A local government should first explore all other modes of land acquisition, such as negotiated purchase, land swapping, and community mortgage. It should also conduct thorough studies to ensure that the project meets the requirements of public use and that the beneficiaries are qualified under relevant laws.

In conclusion, while the Supreme Court recognizes the importance of socialized housing and the power of local governments to address housing problems, it emphasizes that this power is not unlimited. The decision serves as a reminder that the exercise of eminent domain must be balanced with the protection of private property rights and strict adherence to legal requirements, ensuring fairness and due process for all parties involved.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: CITY OF MANILA VS. ALEJANDRO ROCES PRIETO, G.R. No. 221366, July 08, 2019

July 8, 2019

Just Compensation Beyond Zonal Value: Protecting Property Rights in Expropriation

In Republic of the Philippines vs. Spouses Goloyuco, the Supreme Court affirmed that just compensation in expropriation cases must reflect the property’s fair market value, not merely its zonal valuation. This ruling protects property owners by ensuring they receive adequate compensation that considers various factors affecting the land’s true worth, promoting fairness in government takings.

Expropriation and Fair Value: How Much is Enough?

This case arose from the Republic of the Philippines’ (through the DPWH) expropriation of a 50-square-meter parcel of land owned by Spouses Pedro and Zenaida Goloyuco in Valenzuela City for the C-5 Northern Link Road Project. The central issue revolved around determining the just compensation for the property. The government argued that the compensation should be based on the Bureau of Internal Revenue (BIR) zonal valuation of P2,750.00 per square meter. The spouses Goloyuco, however, contended that the fair market value was significantly higher, considering the property’s location and comparable sales in the area. The Regional Trial Court (RTC) fixed the just compensation at P8,300.00 per square meter, a decision that was affirmed with modification by the Court of Appeals (CA). This ultimately led to the Supreme Court (SC) settling the dispute.

The Supreme Court emphasized that just compensation must be the “full and fair equivalent of the property taken from its owner by the expropriator.” The Court underscored that the determination of just compensation is a factual issue, and the findings of lower courts are generally respected unless there is a showing of grave error. The Court referenced Section 5 of Republic Act (R.A.) No. 8974, which lays out the standards for assessing the value of land subject to expropriation. These standards include the property’s classification and use, developmental costs, the current selling price of similar lands in the vicinity, and the size, shape, location, and zonal valuation of the land.

The Court acknowledged that while zonal valuation is a factor to consider, it cannot be the sole basis for determining just compensation. Other relevant factors must be taken into account to ensure that the property owner receives a fair price. As the Supreme Court has previously stated, zonal valuation, although one of the indices of the fair market value of real estate, cannot, by itself, be the sole basis of just compensation in expropriation cases. The CA correctly affirmed the RTC’s valuation, noting that the trial court did not rely solely on the Commissioners’ Report but made an independent assessment, considering various factors.

The Court referenced Capitol Steel Corporation v. PHIVIDEC Industrial Authority, clarifying the difference between the provisional value paid for the issuance of a writ of possession and the final just compensation. The provisional value is based on the zonal valuation, while just compensation is based on the prevailing fair market value. According to the Supreme Court:

The first refers to the preliminary or provisional determination of the value of the property. It serves a double-purpose of pre-payment if the property is fully expropriated, and of an indemnity for damages if the proceedings are dismissed. It is not a final determination of just compensation and may not necessarily be equivalent to the prevailing fair market value of the property.

The determination of just compensation in expropriation cases necessitates considering the specific characteristics of the expropriated property and the surrounding environment. Fair market value considers various factors, including location, potential use, and comparable sales. The ruling safeguards property owners from receiving inadequate compensation based solely on outdated or arbitrary valuation methods. This ensures that the government pays a fair price when exercising its power of eminent domain.

The Supreme Court also addressed the issue of interest on the unpaid balance of just compensation. Recognizing that the delay in payment constitutes a forbearance of money, the Court ordered the payment of interest. From the time of taking (September 24, 2008) until June 30, 2013, a 12% per annum interest rate was imposed. From July 1, 2013, onwards, the interest rate was reduced to 6% per annum, in accordance with Bangko Sentral ng Pilipinas (BSP) Circular No. 799. The Court further clarified that the total amount of just compensation would earn legal interest of 6% per annum from the finality of the decision until full payment.

FAQs

What is just compensation in expropriation cases?	Just compensation is the full and fair equivalent of the property taken, aiming to cover the owner’s loss, not the taker’s gain, ensuring a real, substantial, full, and ample equivalent.
Can zonal valuation be the sole basis for just compensation?	No, while zonal valuation is a factor, it cannot be the sole basis. Other factors like the property’s use, location, and comparable sales must also be considered to determine fair market value.
What factors determine just compensation?	Factors include property classification and use, developmental costs, owner-declared value, current selling price of similar lands, disturbance compensation, size, shape, location, tax declaration, and zonal valuation.
What is the difference between provisional value and just compensation?	Provisional value is a preliminary estimate based on zonal valuation, serving as a pre-payment or indemnity, while just compensation is the final determination of the fair market value of the property.
What interest rates apply to unpaid just compensation?	A 12% per annum interest rate applies from the time of taking until June 30, 2013. From July 1, 2013, onwards, the interest rate is 6% per annum until finality of the decision, with a continuing 6% until full payment.
What was the outcome of the Goloyuco case?	The Supreme Court affirmed the Court of Appeals’ decision, fixing just compensation at P8,300.00 per square meter, ensuring the spouses Goloyuco received fair compensation for their expropriated property.
Why is location important in determining just compensation?	Location significantly impacts the property’s value due to accessibility, proximity to commercial areas, and potential for development, making it a key factor in determining fair market value.
How does this case affect property owners facing expropriation?	It reinforces their right to receive just compensation based on fair market value, not just zonal valuation, ensuring they are adequately compensated for their loss.

The Supreme Court’s decision in Republic of the Philippines vs. Spouses Goloyuco reinforces the importance of protecting property rights in expropriation cases. By mandating that just compensation be based on the fair market value of the property, the Court ensures that landowners receive adequate compensation when the government exercises its power of eminent domain. This decision serves as a reminder that zonal valuation is only one factor to be considered, and that other relevant factors must be taken into account to determine the true value of the property.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Republic of the Philippines, AS REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, vs. SPOUSES PEDRO GOLOYUCO AND ZENAIDA GOLOYUCO, G.R. No. 222551, June 19, 2019

June 19, 2019

Just Compensation: Determining Fair Market Value in Expropriation Cases

In expropriation cases, the Supreme Court held that just compensation should be the full and fair equivalent of the property expropriated, not limited to zonal valuation alone. This decision underscores the importance of considering various factors to ensure property owners receive real, substantial, full, and ample compensation for their loss, safeguarding their constitutional right to just compensation.

Expropriation Crossroads: Balancing Public Need and Private Property Rights

This case arose from the Republic of the Philippines’ effort to expropriate a 50-square-meter parcel of land owned by Spouses Pedro and Zenaida Goloyuco for the C-5 Northern Link Road Project. The petitioner, through the Department of Public Works and Highways (DPWH), initiated the expropriation proceedings, leading to a dispute over the just compensation to be paid to the respondents. The central legal question was whether the government’s valuation based on zonal value was sufficient or if other factors should be considered to determine the fair market value of the property.

The Republic, as represented by the DPWH, argued that the zonal valuation of P2,750.00 per square meter should be the basis for just compensation. The Republic contended that relying on a higher valuation would result in unjust enrichment for the landowners, as they would be receiving more than what they declared for tax purposes. The spouses Goloyuco, on the other hand, asserted that the fair market value should be determined based on the prevailing selling prices of comparable properties in the vicinity. They argued that commercial lands along McArthur Highway and Quirino Highway in Valenzuela City had significantly higher values, ranging from P20,000.00 to P40,000.00 per square meter.

The Regional Trial Court (RTC) fixed the just compensation at P8,300.00 per square meter, taking into account the BIR zonal valuation, reports from court-appointed commissioners, and the valuation of previously expropriated properties involving the same project. The Court of Appeals (CA) affirmed the RTC’s ruling, emphasizing that the trial court had made an independent assessment of the property’s value, considering various factors beyond the zonal valuation. The CA also modified the imposition of legal interest on the just compensation, specifying the reckoning periods for the 12% and 6% per annum rates, in accordance with Bangko Sentral ng Pilipinas (BSP) Circular No. 799.

The Supreme Court, in affirming the CA’s decision, reiterated the principle that just compensation is the full and fair equivalent of the property taken from its owner. The Court emphasized that the determination of just compensation should not be solely based on the taker’s gain but rather on the owner’s loss. The standards for determining just compensation are outlined in Section 5 of Republic Act (R.A.) No. 8974, which include the classification and use for which the property is suited, developmental costs, the current selling price of similar lands in the vicinity, and the size, shape, location, tax declaration, and zonal valuation of the land.

SEC. 5. Standards/or the Assessment of the Value of the Land Subject of Expropriation Proceedings or Negotiated Sale. – In order to facilitate the determination of just compensation, the court may consider, among other well-established factors, the following relevant standards:

(f) The size, shape or location, tax declaration and zonal valuation of the land;
(g) The price of the land as manifested in the ocular findings, oral as well as documentary evidence presented; and
(h) Such facts and events as to enable the affected property owners to have sufficient funds to acquire similarly-situated lands of approximate areas as those required from them by the government, and thereby rehabilitate themselves as early as possible.

The Supreme Court underscored that zonal valuation, while being one of the factors, should not be the sole basis for determining just compensation. Citing Capitol Steel Corporation v. PHIVIDEC Industrial Authority, the Court clarified the difference between the provisional value paid for the issuance of a writ of possession and the just compensation for the expropriated property. The provisional value is based on the current relevant zonal valuation, while just compensation is based on the prevailing fair market value of the property. This distinction ensures that property owners are adequately compensated for their loss.

Furthermore, the Court addressed the issue of interest on the delayed payment of just compensation. The Court acknowledged that the delay in payment constitutes a forbearance of money, entitling the property owner to earn interest. The interest rate was set at 12% per annum from the time of taking until July 1, 2013, when BSP Circular No. 799 reduced the legal interest rate to 6% per annum. From July 1, 2013, onwards, the legal interest on the difference between the final amount and the initial payment is 6% per annum.

In this case, the Supreme Court affirmed that a legal interest of 12% per annum would accrue from September 24, 2008 (the date the RTC issued the writ of possession) until June 30, 2013, on the difference between the final amount adjudged by the Court and the initial payment made. From July 1, 2013, until the finality of the Decision, the difference between the initial payment and the final amount adjudged by the Court shall earn interest at the rate of 6% per annum. Subsequently, the total amount of just compensation shall earn legal interest of 6% per annum from the finality of the Decision until full payment thereof.

In summary, the decision highlights the factors to be considered when determining just compensation. It emphasizes that while zonal valuation is a relevant factor, it is not the sole determinant of the fair market value of the expropriated property. Other factors, such as the property’s classification and use, developmental costs, current selling prices of similar lands, and the property’s size, shape, and location, must also be taken into account.

The standards outlined in Section 5 of R.A. No. 8974 provide a framework for courts to assess the value of expropriated land fairly. This framework ensures that property owners receive adequate compensation that enables them to acquire similarly situated lands and rehabilitate themselves. The ruling also underscores the importance of timely payment of just compensation, with appropriate interest to account for any delays.

FAQs

What is just compensation in expropriation cases?	Just compensation is the full and fair equivalent of the property taken from its owner, ensuring the owner is neither enriched nor impoverished by the expropriation. This involves considering all relevant factors to determine the fair market value.
Can zonal valuation be the sole basis for just compensation?	No, zonal valuation is just one factor. Courts must also consider the property’s use, location, selling price of similar lands, and other relevant factors to determine fair market value.
What factors are considered in determining just compensation?	Factors include the property’s classification and use, developmental costs, current selling price of similar lands, size, shape, location, tax declaration, and zonal valuation. These are outlined in Section 5 of R.A. No. 8974.
What is the significance of R.A. No. 8974 in expropriation cases?	R.A. No. 8974 provides the standards for assessing the value of land in expropriation proceedings, ensuring that property owners receive just compensation. It also mandates the consideration of various factors beyond zonal valuation.
How is interest calculated on delayed payments of just compensation?	Interest is calculated from the time of taking until full payment. The rate was 12% per annum until July 1, 2013, and 6% per annum thereafter, as per BSP Circular No. 799.
What is the difference between provisional value and just compensation?	Provisional value, based on zonal valuation, is a preliminary payment for the writ of possession. Just compensation is the final determination of the fair market value, considering all relevant factors.
What happens if the government delays the payment of just compensation?	The government is required to pay legal interest on the delayed amount as it constitutes a forbearance of money. The interest rates are set to ensure the property owner is adequately compensated for the delay.
How do courts determine the fair market value of a property in expropriation cases?	Courts rely on various evidence, including reports from court-appointed commissioners, the property’s characteristics, selling prices of comparable properties, and other relevant factors. This comprehensive approach ensures fair valuation.

This case provides a clear framework for determining just compensation in expropriation cases, emphasizing the need to consider multiple factors beyond zonal valuation. By adhering to these standards, courts can ensure that property owners receive fair and adequate compensation for their losses, upholding their constitutional rights.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: REPUBLIC OF THE PHILIPPINES vs. SPOUSES PEDRO GOLOYUCO, G.R. No. 222551, June 19, 2019

June 19, 2019

Just Compensation and Agrarian Reform: Valuing Land Under RA 6657

When determining just compensation for land acquired under agrarian reform, courts must consider factors outlined in Section 17 of Republic Act No. 6657, as amended, and translated into a formula by the Department of Agrarian Reform (DAR). This case clarifies that even when land acquisition began under Presidential Decree No. 27, if the valuation is still under dispute when RA 6657 took effect, the latter law’s provisions, including the DAR’s valuation formulas, must be applied. The Supreme Court emphasized that courts should only deviate from these formulas with reasoned explanations based on evidence.

From Fields to Formulas: Ensuring Fair Value in Land Reform

This case involves a dispute over just compensation for a 21.8005-hectare agricultural land in Davao City, part of which was expropriated by the government under Presidential Decree No. 27. Lina Navarro, co-owner of the property, contested the initial valuation offered by Land Bank of the Philippines (LBP), arguing it was far below market value. The legal question at the heart of the case is whether the just compensation should be determined based on PD 27’s valuation formula or under Republic Act No. 6657, which was enacted while the compensation issue was still unresolved.

The central issue revolved around which law should govern the determination of just compensation. LBP initially argued that PD 27, the law in effect at the time of the taking, should apply. However, the Supreme Court affirmed the Court of Appeals’ ruling that RA 6657, as amended by RA 9700, should govern because the valuation was still under challenge when RA 6657 took effect. Section 5 of RA 9700 mandates that all previously acquired lands where valuation is subject to challenge by landowners shall be completed and finally resolved pursuant to Section 17 of RA 6657, as amended.

The Court emphasized that Section 17 of RA 6657 provides specific factors for determining just compensation, including the cost of acquisition, the value of standing crops, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, tax declarations, government assessments, and 70% of the Bureau of Internal Revenue (BIR) zonal valuation. These factors are translated into a basic formula by the DAR, as outlined in various administrative orders. The Court referenced the case of Alfonso v. Land Bank of the Philippines, underscoring the mandatory character of applying Section 17 and the DAR formula.

Out of regard for the DAR’s expertise as the concerned implementing agency, courts should henceforth consider the factors stated in Section 17 of RA 6657, as amended, as translated into the applicable DAR formulas in their determination of just compensation for the properties covered by the said law. If, in the exercise of their judicial discretion, courts find that a strict application of said formulas is not warranted under the specific circumstances of the case before them, they may deviate or depart therefrom, provided that this departure or deviation is supported by a reasoned explanation grounded on the evidence on record.

However, the Court found that the SAC failed to properly apply these factors and instead relied on a “market value approach,” which it deemed a “fairer gauge.” The Supreme Court rejected this approach, holding that the SAC and CA erred by not adhering to the statutory guidelines for fixing just compensation. Because the record lacked sufficient data to determine the property’s valuation accurately, the Court remanded the case to the SAC for recomputation of just compensation, directing the trial court to strictly follow the ruling and guidelines in Alfonso v. Land Bank of the Philippines.

Another key issue concerned the area of land for which Lina Navarro was entitled to compensation. LBP argued that Navarro should only be compensated for 3.824975 hectares, while Navarro claimed entitlement to 5.4725 hectares. The disagreement stemmed from a stipulation of facts entered into by the parties during pre-trial. The Court sided with Navarro, upholding the CA’s finding that her compensable area was 5.4501 hectares (adjusted from the initial stipulation due to a correction in the total area covered by agrarian reform).

The Court clarified that the stipulation of facts, which stated that Lina’s 25% share was equivalent to 5.4725 hectares, did not mean that a specific or definite portion was determined ahead of the property’s actual partition. Instead, it merely provided for the undivided interest of Lina. The Court rejected LBP’s argument that a co-owner cannot validly transfer land without partitioning the property first. Article 493 of the Civil Code allows a co-owner to alienate, assign, or mortgage their undivided share, even to the extent of substituting a third person in its enjoyment.

Finally, the Court addressed the issue of legal interest on the compensation awarded to Navarro. LBP argued that there was no delay on its part because Navarro refused to accept the initial payment. The Court disagreed, noting that the property was taken for public use without payment of just compensation. Given the delay in offering payment, the Court upheld the imposition of interest on the final amount of just compensation. However, it modified the rate of legal interest to 12% per annum from the time of taking on June 13, 1988, until June 30, 2013, and 6% per annum from July 1, 2013, until full payment, in accordance with Nacar v. Gallery Frames and Bangko Sentral ng Pilipinas Monetary Board Circular No. 799.

This decision highlights the importance of adhering to the statutory guidelines and DAR formulas when determining just compensation in agrarian reform cases. It also clarifies the rights of co-owners to alienate their undivided shares of property and confirms the government’s obligation to pay legal interest for delays in compensating landowners for expropriated property. This case ensures that landowners receive fair and just compensation in accordance with current laws, reflecting the true value of their property at the time of taking.

FAQs

What was the key issue in this case?	The main issue was determining which law (PD 27 or RA 6657) should govern the valuation of just compensation for land acquired under agrarian reform, where the valuation was still under dispute when RA 6657 took effect.
What is just compensation in agrarian reform?	Just compensation refers to the fair and equivalent value of the land at the time of taking, ensuring that landowners are adequately compensated for the property expropriated for public use, as mandated by the Constitution.
What factors does RA 6657 consider in determining just compensation?	RA 6657 considers the cost of acquisition, value of standing crops, current value of like properties, nature, actual use, income, owner’s valuation, tax declarations, government assessments, and zonal valuation by the BIR, translated into a basic formula by the DAR.
What is the significance of the DAR formula?	The DAR formula, derived from Section 17 of RA 6657, provides a standardized method for calculating just compensation, ensuring uniformity and fairness in land valuation across different cases. Courts must generally adhere to this formula unless specific circumstances warrant a deviation with reasoned explanation.
How does this case affect landowners whose properties were taken under PD 27?	If the issue of just compensation was not yet resolved when RA 6657 took effect, landowners are entitled to have their compensation determined under the provisions of RA 6657, which often results in a higher valuation than under the older PD 27.
What is the legal interest rate applicable in this case?	The legal interest rate is 12% per annum from the time of taking (June 13, 1988) until June 30, 2013, and 6% per annum from July 1, 2013, until full payment, in accordance with prevailing jurisprudence.
Can a co-owner sell their share of a property without partition?	Yes, a co-owner can alienate, assign, or mortgage their undivided share of a co-owned property without prior partition, as per Article 493 of the Civil Code, allowing them to transfer their interest to another party.
What happens if the government delays in paying just compensation?	The government is liable to pay legal interest on the just compensation amount, calculated from the time of taking until the final payment, to compensate the landowner for the delay and loss of opportunity.

In conclusion, this case underscores the judiciary’s role in ensuring that just compensation for land acquired under agrarian reform is determined fairly, transparently, and in accordance with the law. By remanding the case for recomputation of just compensation, the Supreme Court reaffirmed its commitment to protecting landowners’ rights while advancing the goals of agrarian reform.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Land Bank of the Philippines v. Navarro, G.R. No. 196264, June 06, 2019

June 6, 2019

Eminent Domain vs. Ejectment: Protecting Public Service Continuity

In a landmark decision, the Supreme Court ruled that a landowner cannot file an ejectment suit against a public utility corporation that occupies their land for public service without prior expropriation. Instead, the landowner’s remedy lies in seeking just compensation for the land. This ruling underscores the paramount importance of uninterrupted public services and clarifies the legal recourse available to landowners affected by such occupations.

When Public Use Trumps Private Property: The TransCo-Bermuda Dispute

The case revolves around a dispute between National Transmission Corporation (TransCo) and Bermuda Development Corporation (BDC). TransCo, responsible for electrical transmission, occupied BDC’s land to erect a transmission line. BDC filed an unlawful detainer case against TransCo, seeking to evict the corporation from the property. The Municipal Trial Court (MTC) ruled in favor of BDC, ordering TransCo to vacate the land and pay rentals. TransCo appealed, and subsequently filed an expropriation case to legally acquire the land. However, the Regional Trial Court (RTC) dismissed TransCo’s appeal in the unlawful detainer case, deeming it moot due to the expropriation proceedings.

The Court of Appeals (CA) affirmed the RTC’s decision, but the Supreme Court reversed these rulings, holding that the MTC should have dismissed the unlawful detainer case from the outset, recognizing TransCo’s power of eminent domain and the public interest served by the transmission line. The Supreme Court emphasized the principle that when a public utility corporation occupies land for public use, the landowner’s recourse is not eviction but just compensation. The Court anchored its decision on established jurisprudence, particularly the case of Forfom Development Corporation v. Philippine National Railways, which underscored the precedence of public policy considerations over private property rights in such scenarios.

Building on this principle, the Supreme Court highlighted that allowing ejectment actions against public utilities would disrupt essential services to the public. The court cited Manila Railroad Co. v. Paredes, a case dating back to 1915, which established that ejectment or injunction will not lie against a railroad company, but only an action for damages, that is, recovery of the value of the land taken, and the consequential damages, if any.

From the afore-cited cases, it is clear that recovery of possession of the property by the landowner can no longer be allowed on the grounds of estoppel and, more importantly, of public policy which imposes upon the public utility the obligation to continue its services to the public. The non-filing of the case for expropriation will not necessarily lead to the return of the property to the landowner. What is left to the landowner is the right of compensation.

The Court acknowledged TransCo’s authority under Republic Act No. 9136, the Electric Power Industry Reform Act of 2001, which grants it the power of eminent domain. This power, however, is subject to the constitutional requirement of just compensation to the landowner. The Supreme Court, therefore, clarified the procedural lapse: the MTC erred in proceeding with the unlawful detainer case instead of recognizing TransCo’s eminent domain authority and dismissing the case without prejudice to BDC’s claim for just compensation.

Furthermore, the Supreme Court addressed the issue of rental arrears awarded by the MTC. The Court clarified that the award of rental in arrears was improper because BDC’s entitlement is limited to the just compensation for the subject land and consequential damages, as determined under Rule 67 of the Rules of Court. The proper remedy is an expropriation case where just compensation is determined. This provides a fair valuation of the property at the time of taking, ensuring the landowner is justly compensated for the use of their property by the public utility.

In effect, this ruling harmonizes the exercise of eminent domain with the protection of private property rights. It confirms that public interest prevails when a public utility occupies private land, but also ensures the landowner is not left without recourse. The landowner is entitled to just compensation, which must be determined through proper expropriation proceedings. This ruling reinforces the importance of balancing public needs with private rights in infrastructure development and the provision of essential services.

FAQs

What was the key issue in this case?	The central issue was whether a landowner could file an ejectment suit against a public utility corporation occupying their land for public service without prior expropriation.
What did the Supreme Court decide?	The Supreme Court ruled that ejectment is not the proper remedy. The landowner’s recourse is to seek just compensation for the land through an expropriation case.
Why was the ejectment case dismissed?	The ejectment case was dismissed because the public utility corporation has the power of eminent domain and occupies the land for public service. Ejectment would disrupt essential services to the public.
What is eminent domain?	Eminent domain is the right of the government to expropriate private property for public use, with payment of just compensation. This power is often delegated to public utility corporations.
What is just compensation?	Just compensation refers to the fair market value of the property at the time of taking, plus any consequential damages. It aims to put the landowner in as good a position as they would have been had the property not been taken.
What is the proper legal procedure in these situations?	The public utility should initiate expropriation proceedings to legally acquire the land and determine just compensation. If they fail to do so, the landowner can file an action for just compensation.
What happens to rental arrears awarded by lower courts?	The Supreme Court ruled that awarding rental arrears in an unlawful detainer case is improper. The landowner is only entitled to just compensation and consequential damages determined in expropriation proceedings.
What law grants TransCo the power of eminent domain?	Republic Act No. 9136, the Electric Power Industry Reform Act of 2001, grants the National Transmission Corporation (TransCo) the power of eminent domain.
Can a landowner prevent a public utility from using their land?	Generally, no. However, the landowner is entitled to just compensation. Refusal to allow entry may lead to expropriation proceedings.

This decision clarifies the legal landscape surrounding land use by public utility corporations and the rights of affected landowners. It underscores the importance of procedural compliance in exercising eminent domain and ensuring that landowners receive just compensation for the use of their property in the service of public needs.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: NATIONAL TRANSMISSION CORPORATION vs. BERMUDA DEVELOPMENT CORPORATION, G.R. No. 214782, April 03, 2019

April 3, 2019

(a)	The classification and use for which the property is suited;
(b)	The developmental costs for improving the land;
(c)	The value declared by the owners;
(d)	The current selling price of similar lands in the vicinity;
(e)	The reasonable disturbance compensation for the removal and/or demolition of certain improvement on the land and for the value of improvements thereon;
(f)	[The] size, shape or location, tax declaration and zonal valuation of the land;
(g)	The price of the land as manifested in the ocular findings, oral as well as documentary evidence presented; and
(h)	Such facts and events as to enable the affected property owners to have sufficient funds to acquire similarly-situated lands of approximate areas as those required from them by the government, and thereby rehabilitate themselves as early as possible.