21/10/2025
The has reiterated that just compensation in land expropriation cases must be based on all relevant factors, not just market value.
In a Decision written by Associate Justice Samuel H. Gaerlan, the SCโs Third Division remanded to the Regional Trial Court (RTC) the case between the City Government of Pasay (Pasay LGU) and Arellano University (University) to reassess the amount of just compensation owed to the latter.
The University filed a complaint before the RTC in 2015, claiming that the Pasay LGU took its 805-sq. m. parcel of land in Barangay San Isidro and turned it into a public road, now known as Menlo Street, without going through proper expropriation proceedings or paying just compensation. The parties subsequently referred the matter to a board of commissioners composed of Pasay LGU officials.
The board used a base value of PHP200/sq. m. based on the 1978 General Revision of the City Assessorโs Office, then added 6% annual interest from 1978, the year the street was discovered, up to 2017, resulting in a value of PHP2,060/sq. m.
The University disagreed and proposed a total compensation of PHP 5,793,664.63, arguing that the interest should be based on the rates published by the Bangko Sentral ng Pilipinas.
The RTC adopted the boardโs base value but applied a different interest rate, ordering Pasay LGU to pay PHP 161,000 plus 12% annual interest from 1978 to 2018.
The CA remanded the case to the RTC, ruling that the RTC relied solely on the 1978 assessment and ignored other relevant factors.
The SC upheld the CA, finding that the RTCโs decision was based on incomplete data.
Article III, Section 9 of the Constitution provides that private property cannot be taken for public use without just compensation. The SC emphasized that just compensation must be real, substantial, full, and ample, and that determining this amount is a matter for the courts to decide.
The SC clarified that although local government assessors provide appraisals, these are not controlling in expropriation cases. Such appraisals often cover broad areas and do not account for specific property differences. They rely on general descriptions and may be inaccurate. And while tax values can serve as a guideline, they cannot substitute for a comprehensive assessment of just compensation.
Thus, courts must use a โtotality of circumstancesโ approach, considering all facts about the propertyโs condition, surroundings, existing improvements, and capabilities. These include the zonal valuation of the Bureau of Internal Revenue, acquisition cost, tax declarations, size, shape, location, and the current value of similar properties.
Read the full text of the Press Release at https://sc.judiciary.gov.ph/?p=153762
Read the full text of the Decision at https://sc.judiciary.gov.ph/?p=153692
Read the Separate Opinion of Associate Justice Alfredo Benjamin S. Caguioa at https://sc.judiciary.gov.ph/?p=153737
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