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Dec.

10 Eminent Domain

Just Compensation
Just compensation is a judicial prerogative. Before, four issuances like PD 76, 1533, 42 and 1670
were all valid [NHA v Reyes]. However, the ascertainment of what constitutes just compensation
for property taken in eminent domain cases is a judicial prerogative, and
PD 76, which fixes payment on the basis of the assessment by the assessor or the declared
valuation by the owner whichever is lower, is unconstitutional [EPZA v. Dulay].
PD 1533 and PD 42, insofar as they sanction executive determination of just
compensation in eminent domain cases, are unconstitutional [Panes v. Visayas State
College of Agriculture].
Another Presidential Decree (PD 1670) which authorizes the City Assessor to fix the value
of the property is also unconstitutional [Belen v. Court of Appeals]. This declaration of
unconstitutionality may be given retroactive effect [Republic v. Court of Appeals].
The rule now in just compensation is to be determined by the MTC when it involves the valuation
of the property below 20,000 otherwise, RTC if it exceeds 20,000 (RA 7691). But in the
expropriation cases, it is the RTC even if it is below 20,000 because an action for expropriation is
incapable of pecuniary estimation that only the RTC has jurisdiction and not the MTC [Brgy. San
Roque Talisay v the heirs of Pastor].
Under Sec. 2 of Rule 67 of the Rules of Court, after the filing of the expropriation
complaint as soon as the expropriator shall have deposited in court in the amount of 100%
of the assessed value of the property or the value appearing in the tax declaration then
the court may allow in a writ of possession the expropriator to take action on possession
of the property even if the case is yet to be heard by the court. The amount deposited
may only be a partial payment.
EXCEPTIONS:
But if the expropriator is an LGU, what it needs to deposit in court is only 15% of the
assessed value of the property instead of the full assessed value of the property (Sec. 19
of RA 7160).
Another exception, if the expropriation is for the implementation of the national govt
infrastructure project like the transmission lines it requires not just deposit but payment
corresponding to the BIR value of the property (which is higher) (RA 8974). The RA 8974
amends the Sec. 2 of the Rule 67 [NPC v Co]. That is why an expropriator is not allowed
to purely withdraw its expropriation complaint as damage has been done when it already
took actual possession of the property through a writ in the pendency of the case [NPC v
Pobre]. The court will now determine the necessity of the taking as the first stage of
expropriation. If the court finds there is a necessity in taking private property then the
court will now issue an order of expropriation. The second stage is the fixing of just
compensation.
The courts have the final determination of the amount of just compensation [EPZA v. Dulay]. The
proper court is the RTC regardless of the amount of the expropriated property. A Board of
Commissioners of 3 members (Rule 67) will also be constituted to determine the just
compensation for recommendation to the court. One will be appointed by the expropriator, one
by the property owner, and the other one by the court who will be the chairman. The constitution
of the Board is mandatory except when (1) there is no issue in the valuation of the property and
(2) in agrarian cases. The Board is mandated to conduct a hearing where the parties are heard
and allowed to submit their respective manifestations regarding the valuation of the property.
The Board may also conduct an ocular inspection. In a case, NPC was not afforded the opportunity
to present its evidence to prove the valuation of the property [NPC v dela Cruz].
While commissioners are to be appointed by the court for the determination of just
compensation, the latter is not bound by the commissioners findings [Republic v. Santos;
Republic (MECS) v. Intermediate Appellate Court], However, the court may substitute its
own estimate of the value of the property only for valid reasons, to wit: (a) the
commissioners have applied illegal principles to the evidence submitted to them; (b) they
have disregarded a clear preponderance of evidence; or (c) where the amount allowed is
either grossly inadequate or excessive [National Power Corporation v. De la Cruz].
Reckoning point of market value of the property. Compensation is determined as of the date of
the filing of the complaint for eminent domain, but where the filing of the complaint occurs after
the actual taking of the property and the owner would be given undue incremental advantages
arising from the use to which the government devotes the property expropriated, just
compensation is determined as of the date of the taking [NPC v CA, Republic v. Lara, Republic v.
Castelvi, Commissioner of Public Highways v. Burgos; NPC v. Gutierrez; Belen v. Court of Appeals]
GENERAL RULE: However, in Eslaban v. De Onorio (2001), the Supreme Court said that in
the instances where the appropriating agency takes over the property prior to the
expropriation suit, just compensation shall be determined as of the time of the taking,
not as of the time of the filing of the complaint for eminent domain. Thus, it was declared
that the value of the property must be determined either as of the date of the taking or
the filing of the complaint, whichever comes first (Rule 67 was already amended in
1997, now under the Sec. 4 of Rule 67).
EXCEPTIONS:
When eminent domain is exercised by a local government unit, the amount to be paid
for the expropriated property shall be determined by the proper court, based on the fair
market value at the time of the taking of the property [Sec. 19, R.A. 7160]. This was
applied in City of Cebu v. Spouses Dedamo (2002) precisely because the expropriator was
the City of Cebu, a local government unit, and the Rules of Court cannot prevail over R.A.
7160, a substantive law.
Another, NPC constructed a tunnel and entered the property of Sangkay years before the
complaint, SC ruled that just compensation is set at the date of complaint when the heirs
of Sangkay did not know of such taking because it entered surreptitiously [NPC v heirs of
Sangkay]
Legal Interest
Entitlement of owner to interest. Reckoning point of the legal interest imposed by the court is
from the date of taking. SC awarded interest at the rate of 6% per annum because the SC was of
the view that the payment of just compensation cannot be characterized as a forbearance of
money applying Art. 2209 of the Civil Code [Republic v Castellvi and NPC v Henson].
But, the SC awarded interest at the rate of 12% per annum in expropriation cases by way
of penalty [NHA v Reyes].
Interest should now be at 12% per annum as the payment of just compensation is
characterized as a forbearance of money [Apo Fruits v Land Bank and NPP v Rivera].
Yet, in 2013, Central Bank enacted Circular No. 799 from 12% to 6% per annum.

Exemplary Damages and Back Rentals


Exemplary Damages is an award that sets out an example as a public rule esp. when there is
obstinate refusal of the expropriator to pay the just compensation.
Back Rentals cannot be awarded by the court because the interest that may be imposed will now
take the place of such court of actual damages esp. when the expropriator took actual possession
of the property through a writ during the pendency of the case.

Ownership of the Property


GENERAL RULE: It is only upon full payment of just compensation by which there is transfer of
ownership of the property to the State although the possession in the meantime may be awarded
to the expropriator [Republic v. Salem Investment]. In a case where there was no just
compensation, the property remained in the name of the owners [San Roque v Republic].
EXCEPTION:
In agrarian cases, the title of the property is already transferred to the farmers even if
there is as yet no full payment of just compensation. Under the police power of social
justice policy: land for the landless.