Supreme Court Clarifies Just Compensation Payment and COA's Role in Expropriation

The Supreme Court has clarified a crucial point in expropriation cases: when a court has finally determined the amount of just compensation due to a property owner, the government agency concerned may pay that amount without first securing the approval of the Commission on Audit (COA). The payment, however, remains subject to the COA's post-audit.

The ruling came in Republic v. Espina & Madarang, Co. and Makar Agricultural Corp. (G.R. No. 226138, February 27, 2024), a case that began with a road right of way (RROW) claim over land traversed by the Cotabato-Kiamba-General Santos-Koronadal National Highway.

The Long Road to Compensation

The dispute involved a 3.5-kilometer stretch of land in General Santos City, approximately 186,856 square meters, taken for the national highway. The property had a complicated ownership history. The original owners, the Olarte Hermanos estate, had mortgaged the land to El Hogar Filipino. After foreclosure and a series of sales, ownership passed to respondents Espina & Madarang, Co. and Makar Agricultural Corp.

Meanwhile, the Department of Public Works and Highways (DPWH) had been paying RROW compensation to the heirs of the original owners. When the true owners emerged, they sued. The courts eventually ruled in their favor, and the judgment became final and executory.

The problem: the DPWH resisted payment, and the courts ordered the sheriff to garnish the agency's funds. The Supreme Court initially directed the property owners to file a money claim with the COA before they could be paid. The owners asked the Court to reconsider.

The Issue: Who Approves the Payment?

The central question was whether the COA's prior approval was still required before the government could pay a final and executory judgment for just compensation.

The Court revisited its earlier ruling in light of COA Resolution No. 2021-008, as amended by COA Resolution No. 2021-040. These issuances recognized that the determination of just compensation is a judicial prerogative. The COA itself declared that it has no original jurisdiction over money claims for just compensation based on a court judgment in expropriation proceedings.

The Ruling: Post-Audit, Not Pre-Audit

The Supreme Court held that the COA's prior approval is no longer necessary for the disbursement of funds to pay just compensation that a court has finally determined. Instead, such disbursements are subject to the COA's post-audit.

The Court reasoned that the COA's audit review power over money claims already confirmed by final judgment is necessarily limited. Once a court validly acquires jurisdiction over a money claim against the government, it retains that jurisdiction to the exclusion of all others, including the COA. The COA has no appellate review power over court decisions and cannot disregard the principle of immutability of final judgments.

The Court also emphasized that just compensation means not only the correct determination of the amount to be paid, but also payment within a reasonable time from the taking. The property owners here had waited more than 15 years. The Court noted that the government's error in paying the wrong claimants should not burden the rightful owners. The government's proper recourse is to recover the erroneous payments from the recipients, not to delay the constitutional obligation to pay the true owners.

Practical Takeaways

• Final judgments bind the COA. Once a court's decision on just compensation becomes final and executory, the COA cannot alter it or require a fresh determination.
• No prior COA approval needed. Government agencies may pay just compensation awards directly, subject only to the COA's post-audit.
• Prompt payment is part of just compensation. Property owners are entitled to be paid within a reasonable time from the taking, not decades later.
• The government bears the risk of its own mistakes. If the government pays the wrong party, it must recover from that party rather than penalize the rightful owner.
• Documentation matters. Claimants should secure authenticated copies of the final decision and entry of judgment to support their claim for payment.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.