SUBJECT: The Rule on ‘The Power of Eminent Domain’ of LGUs (Section 19)

I. Introduction

This memorandum provides an exhaustive analysis of the power of eminent domain as exercised by Local Government Units (LGUs) under Section 19 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991. The power of eminent domain is an inherent attribute of sovereignty, allowing the state to forcibly acquire private property for public use upon payment of just compensation. While traditionally exercised by the national government, the Local Government Code has expressly delegated this authority to LGUs, subject to specific constitutional and statutory limitations. This memo will delineate the legal basis, substantive and procedural requisites, judicial review parameters, and relevant jurisprudence governing this delegated power.

II. Legal Basis and Statutory Grant

The primary legal basis for an LGU’s exercise of eminent domain is Section 19 of the Local Government Code. This provision operates as a statutory delegation of the state’s inherent power. It is anchored in the constitutional mandate under Section 5, Article X of the 1987 Constitution, which grants LGUs the power to create their own sources of revenue and to levy taxes, fees, and charges, subject to guidelines and limitations set by Congress. The grant of eminent domain is considered an adjunct to this fiscal autonomy and the general welfare authority of LGUs. The operative clause states that an LGU may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, purpose, or welfare.

III. Substantive Requisites for a Valid Exercise

For an LGU’s exercise of eminent domain to be valid, it must comply with the following substantive requisites as derived from the Constitution, the Local Government Code, and jurisprudence:

Ordinance: The exercise must be authorized by a valid ordinance enacted by the sanggunian (local legislative council). A mere resolution is insufficient, as an ordinance is a law of permanent character.

Public Use: The taking must be for a public use, purpose, or welfare. The concept of public use has evolved to include not only use by the public but also public purpose or public advantage, encompassing projects that promote general welfare, economic development, and urban land reform.

Necessity: The taking must be necessary. The determination of necessity by the LGU is generally accorded respect and is considered prima facie correct, unless shown to be tainted with grave abuse of discretion.

Just Compensation: Payment of just compensation is an indispensable requirement. Compensation must be fair, market-based, and paid in full before the property is appropriated.

Prior Offer to Buy: The LGU must first make a prior, bona fide, but unsuccessful offer to purchase the property before resorting to expropriation proceedings.

IV. Procedural Requisites and Steps

The procedural steps for an LGU to lawfully exercise its power are strictly construed:

Enactment of an Ordinance: The local sanggunian must pass an ordinance authorizing the local chief executive to initiate expropriation proceedings for a specified public purpose.

Offer to Purchase: The LGU, through its chief executive, must make a written offer to the property owner to purchase the property at a price based on its current fair market value. Filing the court action without this prior offer is a fatal jurisdictional defect.

Filing of Complaint: If the offer is rejected or no agreement is reached, the LGU must file a complaint for expropriation in the proper Regional Trial Court.

Judicial Determination: The court will first determine the authority of the LGU to exercise the power and the propriety of the taking (expropriation). This is the order of condemnation.

Appointment of Commissioners: Upon an order of condemnation, the court appoints commissioners to ascertain and report to the court the precise amount of just compensation.

Final Determination of Just Compensation: The court, based on the commissioner’s report and evidence, renders a final determination of just compensation. Payment must be made or deposited before the LGU can take possession of the property.

V. Limitations on the LGU’s Power

The delegated power is not absolute and is subject to significant limitations:

Constitutional Limitations: The exercise is bounded by the Bill of Rights, particularly the due process clause and the clause mandating just compensation.

Statutory Monetary Limit: Under Section 19 of the Local Government Code, the total amount appropriated for the property must not exceed the limits set for supplementary appropriations in the Local Government Code (e.g., for provinces, 5% of the total annual regular income for the preceding fiscal year). Amounts in excess require national government approval.

Priorities in Land Use: The ordinance must comply with the prescribed order of priority in the use of property: first, land for socialized housing; second, agricultural land for distribution to landless farmers; third, other private property.

Personal, Commercial, and Industrial Use: The code explicitly prohibits the taking of property for commercial, industrial, or private purpose, even if accompanied by just compensation.

VI. Judicial Review and the Role of the Courts

Courts exercise a judicial review function over LGU expropriation actions. The scope of review includes:

Compliance with Requisites: The court reviews whether the LGU complied with all substantive and procedural requisites, particularly the existence of an authorizing ordinance and a prior offer to buy.

Prevention of Grave Abuse of Discretion: While the necessity and choice of property are generally legislative prerogatives, courts can intervene if the LGU’s determination is tainted with grave abuse of discretion, meaning a capricious, arbitrary, or whimsical exercise of judgment.

Ultimate Arbiter of Just Compensation: The determination of just compensation is a judicial function. The court is not bound by the LGU’s offer or the findings of its appointed assessors. It must ensure compensation is based on the fair market value at the time of taking, considering all relevant factors.

VII. Comparative Analysis: National Government vs. LGU Eminent Domain

The following table compares the exercise of eminent domain by the National Government and by LGUs.

Aspect	National Government (Inherent Power)	Local Government Unit (Delegated Power under Local Government Code)
Source of Authority	Inherent sovereignty; Constitution.	Statutory delegation via Section 19, RA 7160.
Governing Law	Constitution; Revised Rules of Court (Rule 67); various substantive laws.	Constitution; Local Government Code; Revised Rules of Court.
Authorizing Instrument	May be exercised pursuant to a statute, executive order, or administrative order for a national purpose.	Must be expressly authorized by a local legislative ordinance.
Monetary Limit	Generally no statutory monetary ceiling for national projects.	Subject to the supplementary appropriations limit in Section 19; excess requires national approval.
Priority in Land Use	Not bound by the Local Government Code priority list for national projects.	Must follow statutory priority: 1) Socialized Housing, 2) Agricultural Land, 3) Other Property.
Prohibited Takings	Subject to constitutional “public use” and “just compensation” limits.	Explicit statutory prohibition against taking for commercial, industrial, or private purpose.
Prior Offer to Buy	Required under jurisprudence as part of due process.	Express statutory requirement under Section 19; non-compliance is a jurisdictional defect.

VIII. Pertinent Jurisprudence

Moday v. Court of Appeals (G.R. No. 107916, 1997): Emphasized that the authorizing ordinance is mandatory. A resolution is insufficient to confer authority to initiate expropriation*.
Heirs of Alberto Suguitan v. City of Mandaluyong (G.R. No. 135087, 2000): Held that the prior offer to purchase is a conditio sine qua non for the validity of the expropriation* complaint. Failure to allege such offer is fatal.
Republic v. Gingoyon (G.R. No. 166429, 2005): While a national government case, it reinforced that just compensation* must be paid, or at least deposited, before the taking of property, aligning with the due process requirement for LGUs.
City of Manila v. Prieto (G.R. No. 220812, 2021): Clarified that the concept of public use is expansive and includes slum clearance and urban land reform, which are valid public purposes for LGU expropriation*.
Province of Camarines Sur v. Court of Appeals (G.R. No. 104639, 1994): Upheld the LGU’s authority and noted that the necessity of the taking is a political question initially determined by the LGU, reviewable only for grave abuse of discretion*.

IX. Common Defenses and Challenges

Property owners may challenge an LGU’s expropriation action on several grounds:

Absence of a Valid Ordinance: Arguing that the authorizing measure is a mere resolution or an invalid ordinance.

Failure to Make a Prior Offer: Demonstrating that no bona fide written offer to purchase was made before filing the complaint.

Lack of Public Use: Contending that the intended purpose is not truly public, or is for a prohibited commercial/industrial purpose disguised as a public use.

Violation of the Priority Rule: Showing that the taking violates the statutory order of priority for land use.

Excess of Authority: Proving that the total appropriation exceeds the supplementary appropriations limit without the required national approval.

Inadequate Just Compensation: Challenging the LGU’s valuation and presenting evidence for a higher fair market value.

X. Conclusion

The power of eminent domain delegated to LGUs under Section 19 of the Local Government Code is a potent tool for local development but is circumscribed by stringent constitutional and statutory safeguards. Its valid exercise hinges on strict adherence to the dual requirements of a legislative ordinance and a prior offer to buy, which are jurisdictional in nature. The courts play a critical role in ensuring that this power is not exercised arbitrarily, by reviewing compliance with procedural mandates and acting as the final arbiter of just compensation. LGUs must navigate these legal requirements meticulously to ensure their expropriation initiatives withstand judicial scrutiny and respect the property rights guaranteed by the Constitution.