Just compensation

When the government exercises its inherent power of eminent domain to take private property for public use without the owner’s consent, it must be kept in mind that the property owner is protected by the constitutional right to due process and the constitutional guarantee of just compensation.

Now, what exactly is the definition of just compensation?

Just compensation has been described as the full and fair equivalent of the property taken from its owner by the expropriator. The word “just” is used to modify the meaning of the word “compensation” to convey the idea that the equivalent to be given for the property to be taken shall be real, substantial, full and ample. (Evergreen Manufacturing Corporation vs Republic, G.R. 218628, 6 September 2017)

The true measure of just compensation pertains to the owner’s loss, not the taker’s gain. 

Moreover, just compensation must be promptly paid, otherwise it cannot be considered of adequate value sufficient to recoup the loss suffered by the owner. (Republic vs Jose-Gamir Consuelo Diaz Heirs Association Inc., G.R. 218732, 12 November 2018)

It is a common misconception that the concept of just compensation refers to the idea of market value. This is inaccurate and is not what is provided for in jurisprudence.

In the case of City Government of Pasay vs Arellano University (G.R. 260038, 7 May 2025), penned by Justice Gaerlan, the Supreme Court affirmed the “totality of circumstances” approach to determining just compensation. Thus, every fact relating to the property’s condition, surroundings, improvements and potential capabilities should be taken into consideration by the courts.

As can be read from the decision, one factor cannot be isolated to the exclusion of other relevant facts and conditions. It is through the “totality of circumstances” approach that enables the courts to consider all factors that give rise to the commercial value of a property.

In the City Government of Pasay case, the Supreme Court affirmed the decision of the Court of Appeals to remand the case back to the trial court, as the determination of just compensation made by the trial court was based on incomplete or inaccurate data. 

Here, the trial court relied solely on the Pasay City Assessor’s 1978 assessment values, without considering other factors such as the zonal valuation of the Bureau of Internal Revenue (BIR), the acquisition cost, tax declarations, size, shape and location of the property, as well as the value of similar properties.

This is a timely reminder for litigants engaged in expropriation cases. The property owner must be prepared to present all possible factors in the valuation of their property to lay the basis for the trial court to utilize the “totality of circumstances” approach in arriving at the determination of just compensation. 

Property assessors often acknowledge that valuation is not an exact science, but one marked by inherent estimation and approximation. This reality, however, should not deter trial courts from exercising sound judicial discretion in determining, as closely as possible, the amount of compensation that is truly just. 

After all, the constitutional guarantee of just compensation exists to ensure that property owners are made whole and to serve as a safeguard against the government’s broad power to take private property for public use.