New expropriation law

EXPROPRIATING private property for public use has been a pain in the neck for the government, both national and local, due to ambiguities in the law and delays in the judicial process.

To address these problems, President Aquino recently signed into law Republic Act No. 10752, or “The Right-of-Way Act,” which aimed to facilitate the acquisition of right-of-way (ROW) site or location for national government infrastructure projects.

The law applies to all national government infrastructure projects and its public service facilities, engineering works and service contracts, including those undertaken by government-owned and -controlled corporations.

The government can acquire private real property for such projects through donation, negotiated sale, expropriation and other modes of acquisition authorized by existing laws.

Since negotiated sales and expropriations are often contentious and result in delays, the law states in detail the procedures to be followed by the government agency concerned and the time frames that the courts should observe in resolving expropriation issues.

The idea is, time is of the essence in the acquisition of ROW-sites so the process should be completed as fast as possible without sacrificing the right to just compensation of property owners.

Negotiated sale

Negotiated sale is the preferred mode in ROW acquisitions (unless the owner agrees to donate the site) as it avoids going through the tedious process of expropriation.

In negotiating the purchase of a property, the government agency is required to offer compensation to the owner in an amount equivalent to the sum of (a) current market value of the land, (b) replacement cost of structures and improvements on it, and (c) current value of planted crops and trees.

For this purpose, the agency may engage the services of a government financial institution with adequate experience in property appraisal, or an independent property appraiser accredited by the Bangko Sentral ng Pilipinas (BSP), or a professional association of appraisers recognized by the BSP.

The property appraisal will enable the agency to make a reasonable offer to the owner and the latter will have no reason to complain that he is being short-changed.

The owner has 30 days from receipt of the offer to buy his property whether or not to accept it.

In an act of generosity, the law allows the payment of the replacement cost of structures and improvements even if their owners “do not have legally recognized rights to the land” on condition they are Filipino citizens, they do not own any real property or other housing facility in any urban or rural area, and are not professional squatters or members of a squatting syndicate, as defined in the Urban Development and Housing Act of 1992.

Payment terms

If the owner agrees to the sale, 50 percent of the agreed price of the land and 70 percent of the price of the structures, improvements, crops and trees (in both cases exclusive of unpaid real estate taxes) shall be paid by the agency upon the signing of the deed of sale.

The balance of 50 percent for the land and 30 percent for the structures and improvements shall be paid when the title to the land has been transferred to the Republic of the Philippines and the land is completely cleared of structures, improvements, crops and trees.

To sweeten the pot in negotiated sales, the capital gains tax payable from the sale of the land and its improvements (which under existing laws is the seller’s obligation), shall be paid by the agency for the account of the seller.

However, in case the owner refuses or fails to accept the offer of negotiated sale within the 30-day period, the agency shall institute expropriation proceedings.

Unlike before when expropriation cases can be filed only by the Solicitor General or Gov- ernment Corporate Counsel, this time the action can be instituted by, in addition to these offices, any government or private legal counsel that they may deputize for that purpose.

Possession

Upon the filing of the expropriation complaint and the owner is notified of that action, the agency shall immediately deposit with the court in favor of the owner the amount equivalent to the sum of:

100 percent of the value of the land based on the current relevant zonal valuation of the Bureau of Internal Revenue issued not more than three years prior to the filing of the complaint

Replacement cost at current market value of the improvements and structures as determined by the agency, a government financial institution with experience in property appraisal, and an independent property appraisal accredited by the BSP.

Current market value of crops and trees located in the land as determined by a government financial institution or an independent property appraiser.

Once payment is made, the court is required to immediately issue an order to the agency to take possession of the land and start the implementation of the project.

If the writ is not issued within seven working days after payment has been deposited in court, the agency’s lawyer can file a motion for the issuance of the writ, and the court is obliged to issue it ex parte, or even without a hearing.

Anticipating that the owner may not accept the deposited payment, the law obliges the court to determine the just compensation to be paid to the owner within 60 days from the date of the filing of the expropriation case.

The difference between the deposited payment and just compensation adjudged by the court has to be paid by the agency as soon as the court’s decision becomes final.

Hopefully, the new terms of payment and judicial procedures prescribed by the law will result in the faster implementation of the government’s infrastructure projects.

For comments, please send your e-mail to rpalabrica@inquirer.com.ph.