When can gov't take over private property?

Together with police power and the power of taxation, the power of eminent domain, sometimes referred to as expropriation or condemnation, is one of the tripod of great powers that inheres in the State in the exercise of sovereign authority.  In the context of the Philippines today, this power has become awesome and deserves examination.

The notion of eminent domain comes from the writings of 17th-century natural-law jurists Hugo Grotius and Samuel Pufendorf. Dutch jurist Hugo Grotius, in his legal treatise De Jure Belli et Pacis uses the term dominium eminens (Latin for supreme lordship) or the right of the state to use or even destroy property of subjects for the ends of public utility or extreme necessity but with compensation. German jurist Samuel Pufendorf advanced the legal theory that legitimacy of property rests on two conditions: occupation and state sanction.

Over the centuries, most civil and common law countries have adopted the practice of eminent domain, by way of constitutional or statutory dicta, as an exercise of sovereign power.

What the Constitution, Supreme Court say

In the Philippines, the power of expropriation is also set in stone as it is enshrined in all our constitutions, present and present. Under the 1987 Constitution, the power of eminent domain is contained in article III section 9, which provides: Private property shall not be taken for public use without just compensation.

As early as 1910, the Supreme Court in US v. Toribio defined the power of eminent domain as "the right of a government to take and appropriate private property to public use, whenever the public exigency requires it, which can be done only on condition of providing a reasonable compensation therefor."

From this definition, we cull the recognized elements of the valid exercise of eminent domain, namely: (1) the property taken must be private property; (2) there must be genuine necessity to take the private property; (3) the taking must be for public use; (4) there must be payment of just compensation; and (5) the taking must comply with due process of law.

Eminent domain, although vested in the legislature, may be validly delegated to local government units, other public entities and public utilities, subject to the terms stated in the delegating law.

As abovementioned, the taking of private property for expropriation can only be validly done if there is genuine necessity and the necessity is public in character.

Thus as explained in the case of Jesus is Lord Christian School Foundation vs. City of Pasig, the government may not capriciously or arbitrarily choose which private property should be expropriated. Such public necessity must be proven by preponderance of evidence.

It must be for public use. Over the years the concept has acquired an expansive meaning to include any use that is of "usefulness, utility, or advantage, or what is productive of general benefit to the public."

Past cases: Expropriation cannot benefit private entities, persons

There is likewise a plethora of cases to the effect that an expropriated property devoted for public use cannot be further expropriated for another public use.

This is the Court’s ruling in the case of City of Manila v. Chinese Community of Manila where the Court invalidated the expropriation of the Chinese cemetery in the City of Manila as it is already devoted to public use and may no longer be taken for another public purpose. In principle, no private property for public use can be expropriated for the same use because no public use or necessity could be subserved thereby.

Where the expropriation is exercised for the benefit of a private individual or private entity, it will be at war with the constitutional mandate for public use. The practical reason behind the proscription of taking for private benefit is because a private beneficiary has a more powerful incentive to concentrate benefit or private aggrandizement and subvert the eminent domain process which may not be the case where the taking is primarily for the general public.  

The owner of the private property subject of the taking must be justly compensated; meaning the owner must be paid in a timely or prompt manner of an adequate value sufficient to recoup the loss suffered by the property owner.

As explained in Yujuico v. Atienza, just compensation means not only the correct determination of the amount to be paid to the owner of the land but also the payment of the land within a reasonable time from its taking. Without prompt payment, compensation cannot be considered “just” for the property owner is made to suffer the consequence of being immediately deprived of his/her land while being made to wait for 5 years.

These well-entrenched principles will serve as guiding posts for any plan by any public entity to exercise its delegated authority to expropriate, even for public purpose and especially when private parties will benefit from the expropriation.

This is not an academic issue that will arise only in the future. We see this already playing out in the on-going fight between Panay Electric Company, Inc. (PECO) and MORE Electric and Power Corporation (MORE) for the right to distribute electricity in the City of Iloilo.

As I have written in one of my Eagle Eyes columns, PECO was the sole power distributor of the city for almost a century but its franchise has expired while MORE, a mining corporation, has acquired a legislative franchise but is now seeking to expropriate the facilities and assets of its predecessor.

The battle is between a veteran with no franchise but with all its power facilities and assets already in place and ready for use as against an upstart with a franchise. Should MORE be allowed to expropriate assets of PECO which are already used for public purpose? Will the taking by MORE redound to public or private benefit?

Given the basic principles on eminent domain, recalled in this article, the answer is straightforward. A provision in the MORE franchise authorizing such private takeover of the assets of a private company would not be consistent with such principles. This applies to electricity as well as other franchises. – Rappler.com