Expropriation in the Philippines: When Can Land Be Sold During Proceedings

The power of eminent domain allows the government to take private property for public use, but only upon payment of just compensation. A common question from landowners is whether they can still sell their property while expropriation proceedings are ongoing. The Supreme Court addressed this in Republic v. Salem Investment Corporation (G.R. No. 137569, June 23, 2000), clarifying that ownership—and the right to sell—remains with the registered owner until just compensation is actually paid.

The Facts of the Case

In 1983, Batas Pambansa Blg. 340 authorized the expropriation of several parcels of land, including a 1,380-square-meter portion of a lot owned by the De la Rama siblings in Pasay City. The property was covered by Transfer Certificate of Title No. 16213.

Five years later, in December 1988, the De la Ramas entered into a contract to sell the entire 4,075-square-meter lot to Alfredo Guerrero for P11.8 million. Guerrero paid a partial amount, and the balance was to be paid upon release of the title.

In 1990, the Republic filed an expropriation case and obtained a writ of possession after depositing 10 percent of the property's approximate market value. Guerrero later intervened in the expropriation case, claiming he was entitled to receive the just compensation because he had bought the property. The trial court and the Court of Appeals agreed with Guerrero, prompting the De la Ramas to appeal to the Supreme Court.

The Issue

The central question was: who between the De la Ramas and Guerrero should receive the just compensation for the expropriated portion of the land?

The De la Ramas argued that they could not have sold the expropriated portion in 1988 because the government had already taken the property when B.P. Blg. 340 took effect in 1983. They claimed that title to the expropriated land had already passed to the government, leaving them with nothing to sell.

The Ruling: Title Passes Only Upon Payment

The Supreme Court ruled in favor of Guerrero, holding that the De la Ramas still owned the property when they sold it in 1988.

The Court explained that expropriation involves two stages. The first stage determines the government's authority to take the property. The second stage involves the court's determination of just compensation, usually with the help of commissioners.

Critically, title to the expropriated property passes to the government only upon full payment of just compensation. Until the expropriation action is completed and payment is made, the registered owner retains ownership and can exercise all rights of an owner—including the right to sell the property—subject to the government's power to ultimately acquire it.

In this case, B.P. Blg. 340 merely commenced the expropriation. The second stage—determination of just compensation—was not completed because of the dispute over ownership. Therefore, the De la Ramas still had authority in 1988 to transfer their land, including the right to receive just compensation.

The Contract to Sell and Deed of Absolute Sale

The Court also examined the contract to sell and the subsequent deed of absolute sale. The contract covered the entire Lot 834, including the expropriated portion. While a contract to sell does not immediately transfer ownership, it creates an obligation to convey the property once suspensive conditions are fulfilled.

The deed of absolute sale, executed in 1994 through court order, conveyed the entire 4,075-square-meter property to Guerrero. The deed noted that the property was "free from all liens and encumbrances except" the portion being expropriated—meaning Guerrero bought the whole property subject only to the government's claim. By subrogation, Guerrero stepped into the De la Ramas' shoes and became entitled to receive the just compensation.

The Court also rejected the De la Ramas' argument that Guerrero underpaid. The amount he paid was computed after offsetting damages and legal interest awarded in the separate specific performance case, which had become final and executory.

Practical Takeaways

• Title remains with the owner until just compensation is paid. The government's mere enactment of an expropriation law or filing of a case does not automatically transfer ownership.
• Landowners can sell expropriated property during proceedings. The owner retains the right to dispose of the property, and the buyer may receive the just compensation by subrogation.
• Review contracts carefully. A deed of sale that references an expropriated portion as an "exception" may still convey the entire property, with the expropriation merely noted as an encumbrance.
• Final judgments bind the parties. Issues resolved in a final and executory judgment—such as the computation of payments—cannot be re-litigated in a separate proceeding.
• Avoid unjust enrichment. A seller who already received the full purchase price for the entire property cannot also claim just compensation for the expropriated portion.

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