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Property rules

Selling land for a public purpose

Under the Rules of Court, a property owner may object to a complaint for expropriation filed by government.

If the property owner’s objections to the complaint were overruled, or when no party appears to defend as required by the Rules of Court, the court may issue an order of expropriation declaring that the government has a lawful right sought to be expropriated, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the taking of the property or the filing of the complaint, whichever came first.

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Meanwhile, in the government’s acquisition of right-of-way site or location for its national infrastructure projects, the court shall immediately issue an order authorizing the implementing agency to take possession of the subject property and start the implementation of the project, upon the filing of the complaint and the deposit of:

100 percent of the value of the land based on current relevant zonal valuation of the Bureau of Internal Revenue (BIR);

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replacement cost at current market value of the improvements and structures to be determined by the appropriate government agency or institution; and

current market value of crops and trees located within the property as determined by the government financial institution or the duly selected independent property appraiser.

As to the element of public use or purpose, the Supreme Court held that the government should commit to use the property pursuant to the purpose stated in its complaint, failing which the government should file another complaint, stating its new purpose.

If the government would not file a new complaint, it should return the property to its owner. Otherwise, the court’s order of expropriation suffers from an intrinsic flaw because public use or purpose as an element of the government’s lawful exercise of its right of expropriation is lacking.

After the rendition of the order, the government is prohibited from discontinuing the expropriation proceedings except on such terms as the court deems just and equitable.

Also, the court shall appoint not more than three commissioners to ascertain and report the just compensation for the property sought to be taken. The commissioners’ report on the expropriation proceedings is ineffectual until the court accepts it and renders judgment in accordance with their recommendations.

If the ownership of the property sought to be expropriated were the subject of conflicting claims, the court may order any sum awarded as compensation for the property to be deposited to it in favor of the person adjudged to be its rightful owner.

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Even so, the government must pay just compensation before entering the property being expropriated.

The government shall have the right to enter upon and appropriate the property expropriated for the public purpose stated in the court’s judgment or retain it, should it have immediately possessed said property before filing the complaint, upon the payment of just compensation to the property owner, with legal interest thereon.

The government may exercise this right even if the court’s judgment were appealed. But if upon appeal, the appellate court determines that the government has no right of expropriation, it shall render judgment directing the lower court to (a) enforce the restoration of possession of the property to its owner; and (b) determine the damages which the property owner may have sustained because of the government’s possession of said property.

For decades, the government’s exercise of its right of expropriation is marred by disputes over its legality and the determination of just compensation.

For instance, in the article written by Raul J. Palabrica, entitled “Thorny Right-of-Way Issues,” which was published in the Philippine Daily Inquirer’s February 19, 2018 issue, the government’s right-of-way acquisitions “have been a pain in the neck in the construction of the country’s roads, airports, seaports and other facilities.”

Palabrica said: “Although courts are prohibited by law from issuing temporary restraining orders or similar writs on government infrastructure projects, some judges, on the pretext of protecting the rights of allegedly aggrieved contractors, have done so to the detriment of the prompt completion of the projects.”

In an effort to address disputes concerning national government infrastructure projects, former President Benigno “Noynoy” Aquino III signed into law Republic Act No. 10752 entitled, “The Right-of-Way Act,” which seeks to facilitate the acquisition of right-of-way sites or locations for national government infrastructure projects.

A review of the country’s current expropriation laws may also be necessary.

In its report on expropriation laws and review processes, the Organisation for Economic Co-operation and Development (OECD) recommends that the government review its policy practices and criteria on its ability to expropriate property, implementation of expropriation laws and practices, and independent channels to review or contest expropriation decisions.

“When a government expropriates property, compensation should be timely, adequate and effective. The right to fair compensation and due process is uncontested and is reflected in all international investment agreements,” said OECD. “At the same time, some recent agreements provide that, except in rare circumstances, non-discriminatory regulatory actions that are designed and applied to protect legitimate public welfare objectives, such as public health, safety and the environment, are not considered to constitute expropriations.”

“Uncertainty about the enforceability of lawful rights and obligations should be avoided because it will restrain investment by raising the cost of capital, weakening firms’ competitiveness,” it further stated.

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