25/10/2025
MARKET VALUE OF PROPERTY NOT THE SOLE DETERMINANT OF JUST COMPENSATION IN EXPROPRIATION CASES—SUPREME COURT
JUST IN: The Supreme Court (SC) clarified that just compensation in land expropriation cases must be based on all relevant factors using a “totality of circumstances” approach, by taking into consideration all facts about the property’s condition, surroundings, existing improvements, and capabilities, not just market value.
In a ruling authored by Associate Justice Samuel Gaerlan, the SC’s First Division remanded a case involving the Pasay City Government and Arellano University back to the Regional Trial Court (RTC) to reassess the amount of just compensation owed to the University.
The case stemmed from the complaint filed by Arellano University before the RTC in 2015, claiming that the Pasay City government took its 805-square-meter 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.
Since both parties never came into agreement, the matter was referred to a board of commissioners made up of Pasay LGU officials. The board used a base value of PHP200 per square meter (sqm) based on the 1978 General Revision of the City Assessor’s Office, then added 6% annual interest from 1978, the year the street was discovered, up to 2017, resulting in a value of PHP2,060/sqm.
The university disagreed with the computation, saying that the interest should be based on the rates published by the Bangko Sentral ng Pilipinas. Applying this and other factors such as inflation, fiscal policies, and fluctuations in currency rates, the university proposed a total compensation of PHP 5,793,664.63.
The RTC adopted the commissioners’ base value but applied a different interest rate, ordering Pasay LGU to pay PHP 161,000.00 plus 12% annual interest from 1978 to 2018. But the Court of Appeals held that the RTC’s computation relied only on the 1978 assessment and ignored other relevant factors and thus sent the case back to the RTC.
This was affirmed by the Supreme Court, saying the RTC’s decision was based on incomplete data. It cited Article III, Section 9 of the Constitution: private property cannot be taken for public use without just compensation.
The high court noted that just compensation must be real, substantial, full, and ample, and that determining this amount is a matter for the courts to decide. It explained 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.
The highest bench stressed that courts must use a “totality of circumstances” approach, considering all facts about the property’s 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.
Since the RTC relied only on the Pasay City Assessor’s 1978 assessment. The BIR’s zonal valuation was barely mentioned, and no other data sources appear to have been considered. Since the amount of just compensation is based on incomplete or inaccurate data.
