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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
In land expropriation cases, just compensation must be based on all relevant factors, not just market value. Case law mandates a “totality of circumstances” approach to determining just compensation, considering all the facts as to the condition of the property and its surroundings, improvements and capabilities.
The market value of a piece of land is attained by a consideration of all those facts which make it commercially valuable. The Supreme Court has reiterated that in land expropriation cases, just compensation must be based on all relevant factors, not just market value.
In the case of City Government of Pasay v. Arellano University, G.R. No. 260038, May 7, 2025, Arellano University filed a complaint before the Regional Trial Court (RTC) in 2015, alleging that the City Government of Pasay took a portion of its 805-sq.m. parcel of land in Barangay San Isidro and converted it into a public street, without expropriation proceedings or payment of just compensation. The parties subsequently referred the matter to a board of commissioners composed of City Government of Pasay officials.
The board of commissioners started with the base value of PhP200.00 per square meter based on the 1978 General Revision of the City Assessor’s Office, and applied 6% interest per annum thereon from 1978 until 2017, resulting in a value of PhP 2,057.14 per square meter, which was rounded off to PhP 2,060.00.
Arellano University accepted the appraisal report’s valuation with modification, in that the annual interest was pegged to the rates published by the Bangko Sentral ng Pilipinas (BSP). Arellano thus valued the property at PhP 5,793,664.63 as of 2018.
The RTC adopted the board of commissioners’ base value but applied a different interest rate, ordering the City Government of Pasay to pay PhP161,000 plus 12% annual interest from 1978 to 2018.
The Court of Appeals (CA) remanded the case to the RTC, ruling that the RTC relied solely on the 1978 assessment and ignored other relevant factors. This decision was upheld by the Supreme Court, finding that the RTC’s decision was based on incomplete data.
Further, Article III, Section 9 of the Constitution declares that private property shall not be taken for public use without just compensation. The word “just” is used to intensify the meaning of the word “compensation” and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full, and ample.
In Export Processing Zone Authority v. Judge Dulay, G.R. No. L-59603, April 29, 1987, the SC explained why appraisals by local government assessors are not controlling in the valuation of just compensation in expropriation proceedings. They rely on general descriptions and may be inaccurate. And while tax values can serve as guides, they cannot be absolute substitutes for just compensation. Thus, case law mandates a “totality of circumstances” approach to determining just compensation, considering all the facts as to the condition of the property and its surroundings, improvements and capabilities. These include other factors such as the zonal valuation of the Bureau of Internal Revenue (BIR), the acquisition cost, tax declarations, size, shape, and location of the property, as well as the value of similar properties.
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.
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