In the case of Republic of the Philippines vs. C.C. Unson Company, Inc., the Supreme Court addressed the critical issue of determining just compensation in expropriation cases, particularly when the taking of property results in consequential damages to the remaining portions. The Court affirmed the Court of Appeals’ decision, which upheld the trial court’s valuation of P3,500.00 per square meter as just compensation, emphasizing that such determination is a judicial function that must account for not only the market value of the land but also any consequential damages suffered by the owner due to the taking. This ruling underscores the principle that ‘just compensation’ must be real, substantial, full, and ample, ensuring that property owners are fairly compensated for their losses.

When a Tollway Claimed Land: Ensuring Fair Price for What’s Lost

The Republic of the Philippines, through the Toll Regulatory Board (TRB), initiated expropriation proceedings against C.C. Unson Company, Inc. (Unson) to acquire land for the South Luzon Tollway Extension Project (SLEP). Unson owned two properties, Lot 6B and Lot 4C2, which were affected by the project. The government initially offered P2,250.00 per square meter, but disputes arose regarding the proper valuation, particularly for Lot 4C2, which Unson claimed had a higher residential value.

The Regional Trial Court (RTC) directed the petitioner to pay an additional amount, recognizing the residential classification of a portion of Lot 4C2. A Board of Commissioners was formed to determine just compensation, considering factors like location, highest and best use, ocular inspection, and market value. Ultimately, the RTC fixed the just compensation at P3,500.00 per square meter, a decision affirmed by the Court of Appeals (CA). The petitioner then appealed to the Supreme Court, questioning the CA’s affirmation of the trial court’s determination of just compensation.

At the heart of the legal matter was the determination of ‘just compensation,’ a concept enshrined in the Constitution. The Supreme Court, in Republic v. Asia Pacific Integrated Steel Corporation, defined it as:

…the full and fair equivalent of the property taken from its owner by the expropriator. The measure is not the taker’s gain, but the owner’s loss. 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.

This definition emphasizes that just compensation is not merely about the market value of the property. It includes all damages that the property owner may sustain as a result of the expropriation. The determination of just compensation is a judicial function. As the Supreme Court noted in National Power Corporation v. Tuazon, this role cannot be usurped by other branches of government:

The determination of just compensation in expropriation cases is a function addressed to the discretion of the courts, and may not be usurped by any other branch or official of the government. This judicial function has constitutional raison d’etre; Article III of the 1987 Constitution mandates that no private property shall be taken for public use without payment of just compensation.

This principle ensures that property owners receive fair treatment and protection under the law when their properties are taken for public use. The Court reiterated that legislative enactments and executive issuances that attempt to fix or provide methods for computing just compensation are not binding on courts and serve only as guidelines.

The Supreme Court also addressed the issue of the remaining 750 square meters of land, which were rendered unusable due to the expropriation. The lower courts had agreed that Unson was entitled to compensation for these ‘dangling lots.’ Section 6 of Rule 67 of the Rules of Court addresses consequential damages, stating:

The commissioners shall assess the consequential damages to the property not taken and deduct from such consequential damages the consequential benefits to be derived by the owner from the public use or purpose of the property taken…But in no case shall the consequential benefits assessed exceed the consequential damages assessed, or the owner be deprived of the actual value of his property so taken.

The court recognized that the remaining land had lost its utility and value due to the irregular shape and size resulting from the expropriation. This resulted in consequential damages for which the owner must be compensated.

The Supreme Court found that the RTC had already factored in these consequential damages when it set the just compensation at P3,500.00 per square meter. To allow Unson to retain ownership of the unusable lots while also receiving compensation for them would result in unjust enrichment, which the law prohibits. Therefore, the Court ruled that upon full payment of the just compensation, ownership of both the expropriated property and the remaining dangling lots should be transferred to the Republic of the Philippines.

FAQs

What was the key issue in this case?	The main issue was determining the proper amount of just compensation for expropriated land, including consideration of consequential damages to the remaining portions of the property. The court needed to decide if the property owner was justly compensated for the land taken and the resulting unusable portions.
What are consequential damages in expropriation cases?	Consequential damages refer to the losses or reduction in value suffered by the remaining portion of a property after a part of it has been expropriated. These damages can arise when the remaining land becomes unusable or less valuable due to the taking.
How is just compensation determined in the Philippines?	Just compensation is determined by the courts based on the fair market value of the property at the time of taking, as well as any consequential damages suffered by the owner. The determination is a judicial function, and the court may consider reports from a Board of Commissioners, among other factors.
What role does the Board of Commissioners play in expropriation?	The Board of Commissioners is appointed by the court to assess the value of the expropriated property and any consequential damages. They conduct ocular inspections, gather evidence, and submit a report to the court, which the court considers in determining just compensation.
What is unjust enrichment?	Unjust enrichment occurs when one party benefits unfairly at the expense of another without any legal justification. The principle aims to prevent individuals or entities from gaining advantages they are not entitled to.
What happens to remaining portions of land that become unusable after expropriation?	If the remaining portions of land become unusable or significantly reduced in value due to expropriation, the property owner is entitled to compensation for these consequential damages. The court may order the transfer of ownership of these unusable portions to the expropriating party.
Can the government take private property for public use?	Yes, the government can take private property for public use through the power of eminent domain, but it must pay the property owner just compensation. This right is enshrined in the Constitution to protect property rights.
What factors are considered when determining the value of expropriated land?	Factors considered include the land’s classification and use, developmental costs, declared value by the owner, current selling prices of similar lands, and any disturbance compensation needed. The size, shape, location, tax declaration, and zonal valuation are also relevant.

The Supreme Court’s decision in Republic vs. C.C. Unson Company, Inc. reinforces the principle that just compensation in expropriation cases must be comprehensive, covering not only the market value of the land taken but also any consequential damages suffered by the property owner. This ruling ensures that property owners are fully indemnified for their losses, upholding their constitutional right to just compensation. This case underscores the judiciary’s crucial role in safeguarding property rights and ensuring fairness in the exercise of eminent domain.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: REPUBLIC OF THE PHILIPPINES VS. C.C. UNSON COMPANY, INC., G.R. No. 215107, February 24, 2016