What Is The Power Of Eminent Domain In The Philippines?

Introduction

While the Covid-19 virus causes a great damage not only in the people’s lives but also in the development and growth of the country’s economy, the Philippines is on its way to recover from economic downturn owing to the pandemic.

In 2016 when the Duterte’s administration started, one of its projects is the “BUILD, BUILD, BUILD PROGRAM” that aims to bring significant and substantial improvement in infrastructure growth in the Philippines, catches up with the population growth, and helps improve the quality of life for Filipinos.

The project, aside from huge amount of money, requires a great number of lands. This will affect the private property of ordinary people. The “BUILD, BUILD, BUILD PROGRAM” will not be possible if there are no lands available where the infrastructures may be constructed.

So, how can the Government build infrastructures on privately-owned properties? The answer is the exercise of its fundamental power – the power of Eminent Domain.

In this article, we will discuss the elements of eminent domain, and how it is exercised by the government.

What is the power of eminent domain in the Philippines?

It is one of the fundamental powers of the State. It is also called as the power of expropriation. This is the use of the government of its coercive authority, upon just compensation, to forcibly acquire the needed property for public purpose. Hence, it is an involuntary sale of real estate.

This only means that even if the owner of the private property does not wish to sell it to the government, the latter may force the former to sell the property by exercising the State’s power of eminent domain.

Under the Executive Order No. 292, otherwise known as the Administrative Code of 1987, it provides that:

Power of Eminent Domain.—The President shall determine when it is necessary or advantageous to exercise the power of eminent domain in behalf of the National Government, and direct the Solicitor General, whenever he deems the action advisable, to institute expropriation proceedings in the proper court.¹

Who may exercise the power of eminent domain?

The power of eminent domain is inherent in the Congress but this may be validly delegated to the President, local government bodies, certain public corporations like the National Housing Authority, and even to private corporations performing public functions like the Philippine Long Distance Telephone Company (PLDT) and Meralco.

Thus, in the case of More Electric and Power Corporation (MORE) vs. Panay Electric Company (PECO),² the former filed a Complaint for Expropriation with the Regional Trial Court (RTC) of Iloilo City over the distribution system of PECO, the Court held:

“The power of eminent domain is exercised by the Legislature. However, it may be delegated by Congress to the President, administrative bodies, local government units, and even to private enterprises performing public services.³

The exercise of the right to expropriate given to MORE under its franchise is a delegated authority granted by Congress. The restrictive view that expropriation may be exercised by the State alone, without any consideration for the State’s authority to delegate its powers, cannot be upheld. Being a private enterprise allowed by the Congress to operate a public utility for public interest, the delegation by Congress of the power to expropriate PECO’s distribution system is valid.”³

What are the requisites for the valid exercise of the power of eminent domain?

The power of eminent domain, being inherent, need not be specifically conferred on the government by the Constitution. Section 9 of Article III of the Constitution provides that “private property shall not be taken for a public use without just compensation.” This merely imposes a limit on the state’s exercise of the power and a measure of protection to the individual’s right to property.

In Manapat vs. Court of Appeals,⁴ the Court recognized the following requisites for the valid exercise of the power of eminent domain:

1. The property taken must be private property;
2. There must be genuine necessity to take the private property;
3. The taking must be for public use;
4. There must be payment of just compensation; and
5. The taking must comply with due process of law.

In this article, we will discuss only the first four (4) requirements as the due process clause is broad and can be discussed separately.

The property taken must be private property

As a general rule, all private properties can be subjected to expropriation proceedings except private properties already devoted to public use. Thus, in City of Manila vs. Chinese Community,⁵ the Court ruled:

“It is alleged, and not denied, that the cemetery in question may be used by the general community of Chinese, which fact, in the general acceptation of the definition of a public cemetery, would make the cemetery in question public property. If that is true, then, of course, the petition of the plaintiff must be denied, for the reason that the City of Manila has no authority or right under the law to expropriate public property.”⁶

Necessity of Exercise

In order for the exercise of the power of eminent domain to be valid, there must be a genuine necessity to expropriate the private property. But the question is when there is genuine necessity?

In City of Manila vs. Arellano Law College,⁷ the Supreme Court explained that “necessity within the rule that the particular property to be expropriated must be necessary, does not mean an absolute but only a reasonable or practical necessity, such as would combine the greatest benefit to the public with the least inconvenience and expense to the condemning party and the property owner consistent with such benefit.”⁸

In short, there is a genuine necessity when there is at least reasonable or practical necessity to take the property for public purpose.

The taking must be for public use

There is public purpose whenever the taking is beneficially employed for the general welfare of the public. This includes both indirect and direct benefit and advantage to the public.

In Yap vs. COA,⁹ the Supreme Court explained;

“x x x As understood in the traditional sense, public purpose or public use means any purpose or use directly available to the general public as a matter of right. Thus, it has also been defined as “an activity as will serve as benefit to the community as a body and which at the same time is directly related function of government. “However, the concept of public use is not limited to traditional purposes. Here as elsewhere, the idea that “public use” is strictly limited to clear cases of “use by the public” has been discarded. In fact, this Court has already categorically stated that the term “public purpose” is not defined, since it is an elastic concept that can be hammered to fit modern standards. It should be given a broad interpretation; therefore, it does not only pertain to those purposes that which are traditionally viewed as essentially government functions, such as building roads and delivery of basic services, but also includes those purposes designed to promote social justice.”¹⁰

Hence, in the Heirs of Ardona vs. Reyes,¹¹ the Court quoted the opinion of Chief Justice Enrique M. Fernando in his book, entitled: The Constitution of the Philippines, to wit:

“The taking to be valid must be for public use. There was a time when it was felt that a literal meaning should be attached to such a requirement. Whatever project is undertaken must be for the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It is not any more. As long as the purpose of the taking is public, then the power of eminent domain comes into play. As just noted, the constitution in at least two cases, to remove any doubt, determines what is public use. One is the expropriation of lands to be subdivided into small lots for resale at cost to individuals. The other is in the transfer, through the exercise of this power, of utilities and other private enterprise to the government. It is accurate to state then that at present whatever may be beneficially employed for the general welfare satisfies the requirement of public use. (Fernando, The Constitution of the Philippines, 2nd ed., pp. 523-524)”¹²

What constitutes taking?

Under the power of eminent domain, the following requisites must concur in order to constitute taking:

1. The expropriator must enter a private property;
2. The entry must be for more than a momentary period;
3. The entry must be under warrant or color of legal authority;
4. The entry is for public purpose; and
5. The owner is deprived of enjoying his property.

The above requisites were clearly explained in the case of the Republic of the Philippines vs. Castellvi,¹³ the Court defined ,”taking’ under the power of eminent domain may be defined generally as entering upon private property for more than a momentary period, and, under the warrant or color of legal authority, devoting it to a public use, or otherwise informally appropriating or injuriously affecting it in such a way as substantially to oust the owner and deprive him of all beneficial enjoyment thereof.”¹⁴

In the case of NAPOCOR vs. Sangkay,¹⁵ NAPOCOR constructed the underground tunnel in the property of Sankay without going through formal expropriation proceedings and without procuring the latter’s consent or at least informing them beforehand of the construction.

As a result of the construction of the tunnel at least three fruit bearing durian trees were uprooted and about one hundred coconuts planted died, hence, prevented Sangkay from instituting any developments on the surface, and from disposing of the land or any portion of it, either by mortgage or sale.

Thus, the Supreme Court held:

“We agree with both the RTC and the CA that there was a full taking on the part of NPC, notwithstanding that the owners were not completely and actually dispossessed. It is settled that the taking of private property for public use, to be compensable, need not be an actual physical taking or appropriation. Indeed, the expropriator’s action may be short of acquisition of title, physical possession, or occupancy but may still amount to a taking. Compensable taking includes destruction, restriction, diminution, or interruption of the rights of ownership or of the common and necessary use and enjoyment of the property in a lawful manner, lessening or destroying its value. It is neither necessary that the owner be wholly deprived of the use of his property, nor material whether the property is removed from the possession of the owner, or in any respect changes hands.”¹⁶

There must be payment of just compensation

In taking the private property, the state must compensate the owner. Whenever there is expropriation proceedings, the expectation of the owner is that he shall earn a profit in selling the property and that, in cases where just compensation is not yet paid to the owner after a long period of time, the amount to be paid must be on the current fair market value of the property taken.

This is a wrong perception on the part of the owner 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 concept of just compensation does not suggest fairness to the property owner alone but must also be just to the public, which eventually bears the cost of expropriation.

The question now is when and how to determine the amount of compensation to be just? It is a general knowledge in the world of selling and buying of real property that the amount to be used should be based on the current market value of the property.

As a rule, the property should be valued based on the fair market value at the time of the sale. However, in expropriation proceedings, in determining just compensation, the well settled rule is that the reckoning point of market value of the property taken is either as of the filing of the complaint or the date of taking, whichever comes earlier.

And when there is delay on the payment of just compensation, the owner is entitled for legal interest, by way of damages, from the date of taking or the filing of the complaint until the date of full payment.

Thus, in the case of Secretary of the DPWH vs. Spouses Tecson,¹⁷ the court ruled:

“x x x If property is taken for public use before compensation is deposited with the court having jurisdiction over the case, the final compensation must include interests on its just value to be computed from the time the property is taken to the time when compensation is actually paid or deposited with the court. In fine, between the taking of the property and the actual payment, legal interests accrue in order to place the owner in a position as good as (but not better than) the position he was in before the taking occurred.”¹⁸

Is the property taken may be repurchased by the owner?

It is now undisputed that the state may expropriate private property, upon just compensation, for public purpose. However, what happens in the event the public purpose to which the property is devoted ceased to exist? May the private owner reacquire the property?

Jurisprudence answers it in affirmative. This case is applicable where the expropriation is proceeded with a condition. Thus, if the property is expropriated for a particular purpose, with the condition that when that purpose is terminated or abandoned the property shall be returned to its former owner, when the purpose has ended or abandoned, the former owner should then be allowed to reacquire the property so expropriated.

In the case of Mactan Cebu International Airport Authority vs. Lozada,¹⁹ the property of private respondent Lozada was expropriated for the expansion and improvement of Lahug Airport with the condition that the expropriated lots would be resold at the price they were expropriated in the event the Lahug Airport is abandoned or when the public purpose to which the expropriation is made is not pursued. The Supreme Court elucidated that:

“The taking of private property, consequent to the Government’s exercise of its power of eminent domain, is always subject to the condition that the property be devoted to the specific public purpose for which it was taken. Corollary, if this particular purpose or intent is not initiated or not at all pursued, and is peremptorily abandoned, then the former owners, if they so desire, may seek the reversion of the property, subject to the return of the amount of just compensation received. In such a case, the exercise of the power of eminent domain has become improper for lack of the required factual justification.”²⁰

In short, when the condition not having materialized because the airport had been abandoned, the private respondent Lozada should then be allowed to reacquire the expropriated property.

But in must be noted that the sum to be paid to the government by the former owner must not be based on the prevailing market price of the property. The former owner shall only return the amount paid to him by the government plus legal interest.

Hence, in Heirs of Moreno vs. Mactan-Cebu International Airport,²¹ the Court clearly explained that “when the State reconveys land, it should not profit from sudden appreciations in land values. Any increase or decrease in market value due to the proposed improvement may not be considered in determining the market value. Thus, reconveyance to the original owner shall be for whatever amount he was paid by the government, plus legal interest, whether or not the consideration was based on the land’s highest and best use when the sale to the State occurred.”²²

Who determines just compensation?

The determination of just compensation in expropriation proceedings is exclusively vested to the Court.

Thus, in Export Processing Zone Authority vs. Dulay,²³ the court resolved:

“The determination of just compensation in eminent domain cases is a judicial function. The executive department or the legislature may make the initial determinations but when a party claims a violation of the guarantee in the Bill of Rights that private property may not be taken for public use without just compensation, no statute, decree, or executive order can mandate that its own determination shall prevail over the court’s findings. Much less can the courts be precluded from looking into the “just-ness” of the decreed compensation.”²⁴

Republic Act(RA) No. 8974 likewise included a provision that reads:

“In the event that the owner of the property contests the implementing agency’s proffered value, the court shall determine the just compensation to be paid the owner within sixty (60) days from the date of filing of the expropriation case.”²⁵

Final Thoughts

Taking private property may be coercive on the part of the State when it exercises the power of eminent domain. The private owner may be compelled to sell his property against his will but that does not mean that his property will be taken for free or that he cannot reacquire his property in the future.

The Constitution sets out limitation to such power by providing a just compensation clause, and as discuss above, whenever the purpose to the taking is devoted ceased to exist the former owner may seek the return of his property upon payment of the amount he received from the State with legal interest.

Further, bear in mind that the taking is for public purpose, meaning, it may be used to build infrastructures, among others, to spur the growth of our economy. We may see it unfair, especially when the just compensation is lower compared to the price it can be sold to private corporations. But, however unfair and coercive it may seem, the government is doing its best for the Filipino people – to improve our daily lives and provide a better future for the next generations.

1. Section 12, Book III, Title 1, Chapter 4, E. O. 292[↩]
2. G.R. No. 248061, March 09, 2021[↩]
3. Ibid.[↩][↩]
4. G.R. No. 110478, October 15, 2007[↩]
5. G.R. No. L-14355, October 31, 1919[↩]
6. Ibid.[↩]
7. G.R. No. L-2929. February 28, 1950[↩]
8. Ibid.[↩]
9. G.R. No. 158562, April 23, 2010[↩]
10. Ibid.[↩]
11. G.R. Nos. L-60549, 60553 to 60555 October 26, 1983[↩]
12. Ibid.[↩]
13. G.R. No. L-20620, August 15, 1974[↩]
14. Ibid.[↩]
15. G.R. No. 165828, August 24, 2011[↩]
16. Ibid.[↩]
17. G.R. No. 179334, April 21, 2015[↩]
18. Ibid.[↩]
19. G.R. No. 176625, February 25, 2010[↩]
20. Ibid.[↩]
21. G.R. No. 156273, August 9, 2005[↩]
22. Ibid.[↩]
23. G.R. No. L-59603, April 29, 1987[↩]
24. Ibid.[↩]
25. RA 8974[↩]