Section 9.

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

Who can exercise the power of eminent domain:

1) The national government

a) Congress
b) Executive, pursuant to legislation enacted by Congress

2) Local government units, pursuant to an ordinance enacted by their

respective legislative bodies (under LGC)

3) Public utilities, as may be delegated by law.

When is the exercise of the power of eminent domain necessary?

It is only necessary when the owner does not want or opposes the sale of his
property. Thus, if a valid contract exists between the government and the owner,
the government cannot exercise the power of eminent domain as a substitute to the
enforcement of the contract.

Elements of the power of eminent domain

i. There is a TAKING of private property

ii. Taking is for PUBLIC USE

iii. Payment of JUST COMPENSATION

“TAKING”

A. Elements:

1) The expropriator enters the property

2) The entrance must not be for a momentary period, i.e., it must be
permanent
3) Entry is made under warrant or color of legal authority
4) Property is devoted to public use
5) Utilization of the property must be in such a way as to oust the owner and
deprive him of the beneficial enjoyment of his property.

B. Compensable taking does not need to involve all the property interests
which form part of the right of ownership. When one or more of the
property rights are appropriated and applied to a public purpose, there is
already a compensable taking, even if bare title still remains with the owner.

“PUBLIC USE”
 Public use, for purposes of expropriation, is synonymous with public welfare as
the latter term is used in the concept of police power.

Examples of public use include land reform and socialized housing.

“JUST COMPENSATION”

Compensation is just if the owner receives a sum equivalent to the market value of
his property. Market value is generally defined as the fair value of the property as
between one who desires to purchase and one who desires to sell.

The point of reference use in determining fair value is the value at the time the
property was taken. Thus, future potential use of the land is not considered in
computing just compensation.

Judicial review of the exercise of the power of eminent domain

1) To determine the adequacy of the compensation

2) To determine the necessity of the taking
3) To determine the “public use” character of the taking. However, if the
expropriation is pursuant to a specific law passed by Congress, the courts
cannot question the public use character of the taking.

When municipal property is taken by the State:

Compensation is required if the property is a patrimonial property, that is,

property acquired by the municipality with its private funds in its corporate or
private capacity. However, if it is any other property such a public buildings or
legua comunal held by the municipality for the State in trust for the inhabitants,
the State is free to dispose of it at will.

Point of reference for valuating a piece of property:

General rule: The value must be that as of the time of the filing of the complaint
for expropriation.

Exception: When the filing of the case comes later than the time of taking and
meanwhile the value of the property has increased because of the use to which the
expropriator has put it, the value is that of the time of the earlier taking. BUT if
the value increased independently of what the expropriator did, then the value is
that of the latter filing of the case.

CASES:

- Republic vs. Gingoyon, December 19, 2005- Rule 67 outlines the

procedure under which eminent domain may be exercised by the
Government. Yet by no means does it serve at present as the solitary
guideline through which the State may expropriate private property. For
example, Section 19 of the Local Government Code governs as to the
 exercise by local government units of the power of eminent domain through
an enabling ordinance. And then there is Rep. Act No. 8974, which covers
expropriation proceedings intended for national government infrastructure
projects.

- Rep. Act No. 8974, which provides for a procedure eminently more
favorable to the property owner than Rule 67, inescapably applies in
instances when the national government expropriates property “for national
government infrastructure projects”.

- Republic vs. Holy Trinity Realty Development Corp., 551 SCRA 303-
There are at least two crucial differences between the respective procedure
under RA No. 8974 and Rule 67. Under the statute, the government is
required to make immediate payment to the property owner upon the filing
of the complaint to be entitled to a writ of possession, whereas Rule 67, the
government is required only to make an initial deposit with an authorized
government depositary, and Rule 67 prescribes that the initial deposit be
equivalent to the assessed value of the property for purpose of taxation,
unlike RA 8974 which provides, as the relevant standard for initial
compensation, the market value of the property as stated in the tax
declaration or the current relevant zonal value of the BIR, whichever is
higher, and the value of the improvements and/or structures using the
replacement cost method.

- LBP vs. Honeycomb Farms Corp., GR No. 169903, February 29, 2012-
When the State exercises the power of eminent domain in the
implementation of its agrarian program, the constitutional provision which
governs is Section 4 Article XIII of the constitution which provides that the
State shall, by law, undertake an agrarian reform program founded on the
right of the farmers and regular farm workers who are landless, to own
directly or collectively the lands they till or, in the case of other farm
workers, to receive a just share of the fruits thereof. Notably, the provision
also imposes upon the State the obligation of paying landowner
compensation for the land taken, even if it is for the government’s agrarian
reform purposes. It pertains to the fair and full price if the taken property.

- LBP vs. Eusebio, July 2, 2014- LBP, in this case, opened a trust account to
provisionally pay Eusebio for the property taken. In Land Bank of the
Philippines v. Honeycomb Farms Corporation, we struck down as void the
DAR administrative circular that provided for the opening of the trust
accounts in lieu of the deposit in cash or in bonds contemplated in Section
16(e) of R.A. No. 6657. We pointedly declared that the explicit words of
Section 16(e) did not include "trust accounts," but only cash or bonds, as
valid modes of satisfying the government’s payment of just compensation.

INTEREST PAYMENT

Apo Fruits Corp vs. LBP, October 12, 2010- In the process, the Court
determined that the legal interest should be 12% after recognizing that the
just compensation due was effectively a forbearance on the part of the
 government. Had the finality of the judgment been the critical factor, then
the 12% interest should have been imposed from the time the RTC decision
fixing just compensation became final. Instead, the 12% interest was
imposed from the time that the Republic commenced condemnation
proceedings and took the property.

LBP vs. Heirs of Alsua, GR No. 211351, February 4, 2015- the Court has
allowed the grant of legal interest in expropriation cases where there is
delay in the payment since the just compensation due to the landowners was
deemed to be an effective forbearance on the part of the State. Legal interest
shall be pegged at the rate of 12% interest p.a. from the time of taking until
June 30, 2013 only. Thereafter, or beginning July 1, 2013 until fully paid,
interest shall be at 6% p.a..

Republic vs. Soriano, GR No. 211666, February 25, 2015- As often ruled
by this Court, the award of interest is imposed in the nature of damages for
delay in payment which, in effect, makes the obligation on the part of the
government one of forbearance to ensure prompt payment of the value of
the land and limit the opportunity loss of the owner. However, when there
is no delay in the payment of just compensation, the Supreme Court has not
hesitated in deleting the imposition of interest thereon for the same is
justified only in cases where delay has been sufficiently established.

RP v. Macabagdal January 10, 2018- The purpose of just compensation

is not to reward the owner for the property taken, but to compensate him for
the loss thereof. As such, the true measure of the property, as upheld in a
plethora of cases, is the market value at the time of the taking, when the loss
resulted. Indeed, the State is not obliged to pay premium to the property
owner for appropriating the latter's property; it is only bound to make good
the loss sustained by the landowner, with due consideration to the
circumstances availing at the time the property was taken.

- In addition, the Court also recognizes that the owner's loss is not only his
property, but also its income-generating potential. Thus, when property is
taken, full compensation of its value must be immediately paid to achieve a
fair exchange for the property and the potential income lost. The value of
the landholdings should be equivalent to the principal sum of the just
compensation due, and interest is due and should be paid to compensate for
the unpaid balance of this principal sum after taking has been completed.
This shall comprise the real, substantial, full, and ample value of the
expropriated property, and constitutes due compliance with the
constitutional mandate of just compensation in eminent domain.

- Thus, this left an unpaid balance of the "principal sum of the just
compensation," warranting the imposition of interest. It is settled that the
delay in the payment of just compensation amounts to an effective
forbearance of money, entitling the landowner to interest on the difference
in the amount between the final amount as adjudged by the court and the
initial payment made by the government.
- However, as aptly pointed out by petitioner, the twelve percent (12%) p.a.
rate of legal interest is only applicable until June 30, 2013. Thereafter, legal
interest shall be at six percent (6%) p.a. in line with BSP-MB Circular No.
799, Series of 2013. Prevailing jurisprudence has upheld the applicability of
BSP-MB Circular No. 799, Series of 2013 to forbearances of money in
expropriation cases, contrary to respondent's contention. The cases of Sy v.
Local Government of Quezon nd Land Bank of the Philippines v. Wycoco,
cited by respondent are both inapplicable because they were all decided
prior to the effectivity of BSP-MB Circular No. 799, Series of 2013 on July
1, 2013.

- Nonetheless, it bears to clarify that legal interest shall run not from the date
of the filing of the complaint but from the date of the issuance of the Writ of
Possession on May 5, 2008, since it is from this date that the fact of the
deprivation of property can be established. As such, it is only proper that
accrual of legal interest should begin from this date. Accordingly, the Court
deems it proper to correct the award of legal interest to be imposed on the
unpaid balance of the just compensation for the subject lot, which shall be
computed at the rate of twelve percent (12%) p.a. from the date of the taking
on May 5, 2008 until June 30, 2013. Thereafter, or beginning July 1, 2013,
until fully paid, the just compensation due respondent shall earn legal
interest at the rate of six percent (6%) p.a.

- Secretary of DPWH vs. Heracleo, GR 179334 Apr 21 2015- The

government’s failure to initiate the necessary expropriation proceedings
prior to actual taking cannot simply invalidate the State’s exercise of its
eminent domain power, given that the property subject of expropriation is
indubitably devoted for public use, and public policy imposes upon the
public utility the obligation to continue its services to the public. To hastily
nullify said expropriation in the guise of lack of due process would certainly
diminish or weaken one of the State’s inherent powers, the ultimate
objective of which is to serve the greater good. Thus, 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.

- While it may appear inequitable to the private owners to receive an outdated

valuation, the long-established rule is that the fair equivalent of a property
should be computed not at the time of payment, but at the time of taking.
This is because the purpose of ‘just compensation’ is not to reward the
owner for the property taken but to compensate him for the loss thereof. The
owner should be compensated only for what he actually loses, and what he
loses is the actual value of the property at the time it is taken.

- The Court must adhere to the doctrine that its first and fundamental duty is
the application of the law according to its express terms, interpretation being
called for only when such literal application is impossible. To entertain
other formula for computing just compensation, contrary to those
established by law and jurisprudence, would open varying interpretation of
economic policies – a matter which this Court has no competence to take
 cognizance of. Equity and equitable principles only come into full play
when a gap exists in the law and jurisprudence.

- For purposes of “just” compensation, the value of the land should be

determined from the time the property owners filed the initiatory complaint,
earning interest therefrom. To hold otherwise would validate the State’s act
as one of expropriation in spite of procedural infirmities which, in turn,
would amount to unjust enrichment on its part. To continue condoning such
acts would be licensing the government to continue dispensing with
constitutional requirements in taking private property.

- Discretionary execution of judgments pending appeal under Sec. 2(a) of

Rule 39 simply does not apply to eminent domain proceedings. Since PPAs
monies, facilities and assets are government properties, they are exempt
from execution whether by virtue of a final judgment or pending appeal.

- It is a universal rule that where the State gives its consent to be sued by
private parties either by general or special law, it may limit the claimant’s
action only up to the completion of proceedings anterior to the stage of
execution and that the power of the Courts ends when the judgment is
rendered, since government funds and properties may not be seized under
writs of execution or garnishment to satisfy such judgments. This is based
on obvious considerations of public policy. Disbursements of public funds
must be covered by the corresponding appropriation as required by law. The
functions and public services rendered by the State cannot be allowed to be
paralyzed or disrupted by the diversion of public funds from their legitimate
and specific objects, as appropriated by law. (Commissioner of Public
Highways vs San Diego, 1970).

- The appropriate standard of just compensation inclusive of the manner of

payment thereof and the initial compensation to the lot owners is a
substantive, not merely a procedural, matter. This is because the right of the
owner to receive just compensation prior to acquisition of possession by the
State of the property is a proprietary right. RA 8974, which specifically
prescribes the new standards in determining the amount of just
compensation in expropriation cases relating to national government
infrastructure projects, as well as the payment of the provisional value as a
prerequisite to the issuance of a writ of possession, is a substantive law.
Further, there is nothing in RA No. 8974 which expressly provides that it
should have retroactive effect. Neither is retroactivity necessarily implied
from RA No. 8974 or in any of its provisions. Hence, it cannot be applied
retroactively in relation to this case.

- RA 8974 amended Rule 67 effective November 26, 2000, but only with
regard to the expropriation of right-of-way sites and locations for national
government infrastructure projects. On the other hand, in all other
expropriation cases outside of right-of-way sites or locations for national
government infrastructure projects, the provisions of Rule 67 of the Rules of
Court shall still govern.
- DPWH vs. Ng, November 9, 2017- Just compensation: involves the
implementation of a national infrastructure project. Thus, for purposes of
determining the just compensation, RA 8974 and its implementing rules and
regulations (IRR), which were effective at the time of the filing of the
complaint, shall govern.

- The replacement cost method is premised on the principle of substitution,

which means that "all things being equal, a rational, informed purchaser
would pay no more for a property than the cost of building an acceptable
substitute with like utility."

- Accordingly, the Implementing Agency should consider: (a) construction

costs or the current market price of materials, equipment, labor, as well as
the contractor's profit and overhead; and (b) attendant costs or the cost
associated with the acquisition and installation of an acceptable substitute in
place of the affected improvements/structures. In addition, the case of
Republic v. Mupas instructs that in using the replacement cost method to
ascertain the value of improvements, the courts may also consider the
relevant standards provided under Section 5 of RA 8974, as well as equity
consistent with the principle that eminent domain is a concept of equity and
fairness that attempts to make the landowner whole. Thus, it is not the
amount of the owner's investment, but the "value of the interest" in land
taken by eminent domain, that is guaranteed to the owner.

- While there are various methods of appraising a property using the cost
approach, among them, the reproduction cost, the replacement cost new, and
the depreciated replacement cost, Mupas declared that the use of the
depreciated replacement cost method is consistent with the principle that the
property owner shall be compensated for his actual loss, bearing in mind
that the concept of just compensation does not imply fairness to the property
owner alone, but must likewise be just to the public which ultimately bears
the cost of expropriation. The property owner is entitled to compensation
only for what he actually loses, and what he loses is only the actual value of
the property at the time of the taking. Hence, even as undervaluation would
deprive the owner of his property without due process, so too would its
overvaluation unduly favor him to the prejudice of the public.

Vda de Ouano vs. Republic, 168770, February 9, 2011- The twin

elements of just compensation and public purpose are, by themselves, direct
limitations to the exercise of eminent domain, arguing, in a way, against the
notion of fee simple title. The simple fee does not vest until payment of just
compensation. In esse, expropriation is forced private property taking, the
landowner being really without a ghost of a chance to defeat the case of the
expropriating agency. In other words, in expropriation, the private owner is
deprived of property against his will. Withal, the mandatory requirement of
due process ought to be strictly followed, such that the state must show, at
the minimum, a genuine need, an exacting public purpose to take private
property, the purpose to be specifically alleged or least reasonably deducible
from the complaint. Public use, as an eminent domain concept, has now
acquired an expansive meaning to include any use that is of usefulness,
utility, or advantage, or what is productive of general benefit [of the public].
If the genuine public necessity the very reason or condition as it were
allowing, at the first instance, the expropriation of a private land ceases or
disappears, then there is no more cogent point for the governments retention
of the expropriated land. The same legal situation should hold if the
government devotes the property to another public use very much different
from the original or deviates from the declared purpose to benefit another
private person. It has been said that the direct use by the state of its power to
oblige landowners to renounce their productive possession to another
citizen, who will use it predominantly for that citizens own private gain, is
offensive to our laws. A condemnor should commit to use the property
pursuant to the purpose stated in the petition for expropriation, failing which
it should file another petition for the new purpose. If not, then it behooves
the condemnor to return the said property to its private owner, if the latter so
desires. The government cannot plausibly keep the property it expropriated
in any manner it pleases and, in the process, dishonor the judgment of
expropriation. This is not in keeping with the idea of fair play

ATO vs. Tongoy, 551 SCRA 320- the right of the previous owners who
were able to prove the commitment of the government to allow them to
repurchase their land.

Asia’s Emerging Dragon Corp. vs. DOTC, 552 SCRA 59- The State,
through expropriation proceedings may take private property even if,
admittedly, it will transfer this property again to another private party as
long as there is public purpose to the taking.

Tiongson vs. NHA, 558 SCRA 56- Where the initial taking of a property
subject to expropriation was by virtue of a law which was subsequently
declared unconstitutional, just compensation is to be determined as of the
date of the filing of the complaint, and not the earlier taking.

MCWD vs. J. King and Sons Co., Inc., GR No. 175983, April 16, 2009 -
For MCWD to exercise its power of eminent domain, two requirements
should be met, namely: first, its board of directors passed a resolution
authorizing the expropriation, and second, the exercise of the power of
eminent domain was subjected to review by the LWUA.

Republic vs. Lim, June 29, 2005- Section 9, Article III of the Constitution
is not a grant but a limitation of power. This limiting function is in keeping
with the philosophy of the Bill of Rights against the arbitrary exercise of
governmental powers to the detriment of the individual’s rights. Given this
function, the provision should therefore be strictly interpreted against the
expropriator, the government, and liberally in favor of the property owner.

- While the prevailing doctrine is that “the non-payment of just

compensation does not entitle the private landowner to recover possession
of the expropriated lots, however, in cases where the government failed to
pay just compensation within five (5) years from the finality of the
judgment in the expropriation proceedings, the owners concerned shall have
the right to recover possession of their property. This is in consonance with
the principle that “the government cannot keep the property and dishonor
the judgment.” To be sure, the five-year period limitation will encourage the
government to pay just compensation punctually. This is in keeping with
justice and equity. After all, it is the duty of the government, whenever it
takes property from private persons against their will, to facilitate the
payment of just compensation.

Local government units possessed the delegated power of eminent domain,

subject to judicial review (City of Manila vs. Chinese Community).

Any property owned by a municipal corporation in its private capacity

(patrimonial), in any expropriation proceeding, must be paid just
compensation. If the property owned is public or otherwise held in trust then
no compensation need be paid (City of Baguio vs. NAWASA).

To set just compensation is a judicial prerogative (EPZA vs. Dulay).

GR No. 177056, Office of the Solicitor General v. Ayala Land

Incorporated, September 18, 2009- The Court said that the total
prohibition against the collection by respondents of parking fees from
persons who use the mall parking facilities has no basis in the National
Building Code or its implementing rules and regulations. It added that the
State also cannot impose the same prohibition by generally invoking police
power, since said prohibition amounts to a taking of respondents’ property
without payment of just compensation.

Cmsr. of IR vs. Central Luzon Drug Corp., GR No. 148512, June 26,
2006, Cmsr. of IR vs. Bicolandia Drug Corp., GR No. 148083, July 21,
2006 – The tax credit given to commercial establishments for the discount
enjoyed by senior citizens pursuant to RA 7432 is a form of just
compensation for private property taken by the State for public use, since
the privilege enjoyed by senior citizens does not come directly from the
State, but from private establishments concerned.

Public use does not mean use by the public. As long as the purpose of the
taking is public, then power of eminent domain comes into play. It is
inconsequential that private entities may benefit as long as in the end, public
interest is served (Ardona vs. Reyes).

Reyes v. National Housing Authority, 395 SCRA 494, Taking of property

for socialized housing is for public use.

- Lands for socialized housing are to be acquired n the following order: 1)

government lands; 2) alienable lands of the public domain; 3) unregistered
or abandoned or idle lands; 4) lands within the declared areas for priority
development, zonal improvement program sites, slum improvement and
resettlement sites which have not yet been acquired; 5) BLISS sites which
have not yet been acquired; and 6) privately-owned lands (City of
Mandaluyong vs. Aguilar, 350SCRA 487 2001).