Published 20 August 2018, The Daily Tribune

One of the top priorities of the Duterte Administration is the much talked about “Build, Build, Build” program which would reportedly “provide the solid backbone for growth” and “will continue to upgrade the infrastructure, connect more people and communities and create more jobs”.

In the course of said program, the government may be constrained to acquire private properties. Should this happen, private individuals and/or entities concerned should know their rights and the government’s limitations under the law.

One significant and relevant legislation is Republic Act No. 10752, otherwise known as the “Right-of-Way Act”, which implements the constitutional fiat that “private property shall not be taken for public use without just compensation.” (Section 9, Article III, 1987 Philippine Constitution). The law’s primordial purpose is to “ensure that owners of real property acquired for national government infrastructure projects are promptly paid just compensation for the expeditious acquisition of the required right-of-way for the projects.”

The law covers all national government infrastructure projects and its public service facilities, engineering works and service contracts, including projects undertaken by government-owned and -controlled corporations (GOCCs), all projects covered by R.A. No. 6957, as amended by R.A. No. 7718, and other related and necessary activities.

Under this law, the government may acquire real properties needed as right-of-way (ROW) site or location for any national government infrastructure project through donationnegotiated saleexpropriation or any other mode of acquisition as provided by law.

By donation, property owners disposes gratuitously their real properties to the government’s Implementing Agency (IA) where the parties execute a notarized deed of donation. Under R.A. No. 10752, donation may also be resorted to if the landowner is a GOCCs.

In a negotiated sale, the IA will offer to the landowner the sum of: (a) the current market value of the land; (b) the replacement cost of structures and improvements therein; and (c) the current market value of crops and trees therein.  The owner should decide within 30 days whether or not to accept the offer.

If the offer is accepted, the property owner and the IA shall execute a deed of absolute sale. The IA shall pay the capital gains tax (CGT), documentary stamp tax (DST), transfer tax and registration fees. Whereas, the property owner shall be responsible for any unpaid real property tax.

Upon the execution of a deed of sale, the IA shall pay the property owner: (a) 50% of the negotiated price of the affected land; and (b) 70% of the negotiated price of the affected structures, improvements, crops and trees, both exclusive of taxes remitted to the Local Government Unit (LGU) concerned.

The remaining balance of the negotiated prices of the affected land and structures, improvements, etc. shall be paid to the owner either: (a) at the time of the transfer of title in the name of the Republic of the Philippines, if the land is wholly affected; or (b) at the time of the annotation of a deed of sale on the title if the land is partially affected.

Conversely, if the property owner declines the offer, the IA shall initiate an expropriation proceeding, which under R.A. No. 10752, is filed before the proper court to acquire real property for the ROW site or location for any national government infrastructure.

Upon the filing of the Complaint for expropriation, or anytime thereafter, the IA shall immediately deposit to the court in favor of the property owner the amount equivalent to the sum of:

  • 100% of the value of the land based on the current relevant zonal valuation of the Bureau of Internal Revenue (BIR) issued not more than 3 years prior to the filing of the expropriation complaint;
  • replacement cost at current market value of the improvements and structures;
  • current market value of crops and trees located within the property.

Upon compliance with deposit requirement, the court shall immediately issue to IA an order to take possession of the property and start the implementation of the project. Meanwhile, the court shall release the amount to the property owner upon presentation of sufficient proofs of ownership.

The property owner may contest the IA’s proffered value in which case, the court shall determine the just compensation to be paid the owner within 60 days from the date of filing of the expropriation case. When the decision of the court becomes final and executory, IA shall pay the owner the difference between the amount already paid and the just compensation as determined by the court.

Note that unlike in negotiated sale, CGT is paid by the landowner if the property is expropriated. As to other taxes and fees, the above rules on negotiated sale shall apply.

If the portion needed for ROW is minimal (the expenses for surveying or segregating said portion is much more than the value thereof), the IA, with the owner’s consent, may resort to the mode of easement of ROW under the Civil Code. Here, the owner retains ownership of the affected portion and the IA shall pay the value of the affected portion based on the existing zonal valuation. (Sec. 10, IRR of R.A. No. 10752)

In cases where informal settlers occupy the subject property, the government, through the Housing and Urban Development Coordinating Council and the National Housing Authority, in coordination with the LGUs and implementing agencies concerned, shall establish and develop resettlement sites for them, including provision of adequate basic services and community facilities.

The foregoing salient features of the law prove that while the government has the power to acquire private properties, every citizen has substantial rights which the government must at all times, uphold and respect.

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