Letter to Attorney

Dear Attorney,

I am seeking your legal advice regarding a project involving the construction of a road that will be open for vehicle traffic. My concern centers on whether there is a legal requirement to pay for the right of way in cases where this road will serve not only the project but also the general public. I would appreciate it if you could provide a thorough explanation of the laws governing right of way in this context, especially in terms of compensation, government involvement, and obligations to landowners.

Thank you for your guidance.

Sincerely,
A Project Developer

Legal Article: Understanding Compensation for Right of Way in the Philippines

The question of whether payment is required for the right of way, particularly for roads intended for vehicular traffic and public use, is a pertinent legal issue under Philippine law. The creation of public or private roads that traverse privately owned land raises legal questions about property rights, compensation, and the proper process for obtaining such easements.

This article offers a comprehensive examination of the legal framework governing the establishment of rights of way in the Philippines, focusing on when compensation is due, the role of the government in expropriation, and the obligations developers and landowners have concerning these rights.

Legal Definition of Right of Way

In the Philippine context, the term "right of way" refers to an easement or servitude, which is a legal right granted to someone to pass through or use another person's property for a specific purpose. According to Articles 649 to 657 of the Civil Code of the Philippines, an easement of right of way can be established when a property owner’s estate is enclosed or otherwise lacks sufficient access to public roads. This type of easement is crucial when constructing infrastructure, such as roads, that may be intended for private or public use.

The law provides specific conditions under which an easement of right of way can be established:

The party seeking the right of way must be the owner of a property (called the dominant estate) that is enclosed or has no adequate access to public roads.
The easement must be absolutely necessary for ingress and egress to the dominant estate.
The easement must be the least burdensome route for the servient estate (the property over which the right of way is being sought).
The dominant estate must compensate the owner of the servient estate for the use of the land.

Right of Way and Compensation

A key component of establishing a right of way is the requirement to compensate the landowner of the servient estate. The Civil Code explicitly mandates indemnification to the landowner who is burdened by the right of way. This indemnification usually takes the form of monetary compensation, calculated based on the extent of the property used, its market value, and the degree of inconvenience caused by the easement.

Private Right of Way Compensation

In cases where a right of way is requested for a private road—meaning the road is used primarily by the claimant and not open to the general public—compensation is required. The amount to be paid typically depends on the value of the land affected by the easement. The law provides that the dominant estate must compensate the servient estate to cover the cost of the land being utilized for passage, along with any damages caused by the construction or use of the road.

Public Right of Way and Eminent Domain

For roads that are intended to be used by the general public, the legal dynamics change somewhat. The concept of eminent domain—the government’s right to expropriate private property for public use, subject to the payment of just compensation—becomes relevant.

Under Article III, Section 9 of the 1987 Philippine Constitution, it is stated that:

“Private property shall not be taken for public use without just compensation.”

When a public road needs to be constructed, the government (or a developer acting on behalf of the government) can exercise the right of eminent domain. This allows the government to compulsorily acquire private land for public use, provided that the landowner is compensated fairly. This compensation is referred to as just compensation, which is the market value of the property at the time it is taken.

If the parties cannot agree on the compensation amount, the matter may be brought to court for a judicial determination of the property's value. The courts typically consider factors such as the location, current use, and future potential of the property in determining just compensation.

When Does the Government Pay for Right of Way?

In situations where the road serves a public purpose—such as a road to be used by multiple vehicles and the general public—the government may become involved in acquiring the right of way. The process generally involves either a negotiation with the landowner or an expropriation proceeding, wherein the government files a case in court to compel the transfer of property rights in exchange for fair compensation.

It is important to note that the Local Government Units (LGUs) or relevant national government agencies (such as the Department of Public Works and Highways, or DPWH) are typically responsible for managing and funding the expropriation process when the road serves a public purpose. In such cases, the government agency must ensure that the landowner is compensated in line with the constitutional mandate.

The Process of Expropriation

The expropriation process begins with the filing of a complaint in court by the government or its authorized agent. The court will then issue an order allowing the government to take possession of the property, provided it deposits the initial compensation as determined by the court (often based on an initial estimate of the property's fair market value).

The court will later determine the final amount of just compensation, following hearings that allow both the government and the landowner to present evidence of the property's value. The government cannot take possession of the land until the initial payment is made, and the landowner must be fully compensated before ownership is transferred.

Special Cases: Private Roads with Public Access

There are instances where a private road may be constructed by a developer, but the road is later opened up for public access. This raises questions about the responsibilities and rights of both the developer and the landowner.

Voluntary Agreement: In some cases, the developer and landowner may voluntarily agree to allow public access to a private road, either for a fee or without any payment. This is common in private subdivisions where certain roads are made accessible to the general public, subject to terms set by the developer.
Conversion to Public Road: If a road initially constructed as a private road is formally converted into a public road by an LGU, the expropriation process may be triggered. The landowner would then be entitled to just compensation for the portion of the land that is being turned into a public thoroughfare.
Unintended Public Use: In other cases, a private road may informally be used by the public without proper authorization. The landowner may, in such instances, demand compensation for damages or inconvenience caused by public use of the road, or may restrict access if the use of the road was not part of an agreed-upon arrangement.

Determining Just Compensation

Just compensation refers to the fair market value of the property at the time of expropriation or establishment of the right of way. Determining this value requires careful consideration of several factors:

Market Value: The fair market value of the land as determined by current market prices in the area where the property is located.
Extent of Use: The portion of the land being used for the right of way and whether other areas of the land will be affected.
Economic Impact: The potential future use of the land, which may increase its value.
Improvements: The presence of any buildings, structures, or utilities on the land that may affect its value.

If the parties cannot agree on just compensation, the court may appoint independent appraisers to assess the property's value.

Taxation of Compensation

The compensation received by the landowner for the right of way may be subject to certain taxes. For example, capital gains tax may be levied on the amount received, and documentary stamp tax may also apply. These taxes must be factored into the overall compensation package and the legal documentation for the transfer of property rights.

Conclusion: Navigating Right of Way and Compensation in Road Construction Projects

In summary, the question of whether there is a cost associated with securing a right of way for roads used by vehicles depends on whether the right of way is for private or public use. In both cases, the law is clear: compensation is required when private property is burdened by an easement or expropriated for public use.

If the road is intended for public use, the government or the developer must pay just compensation to the landowner. In cases where a road is used for private purposes, the landowner must also be indemnified, though the process may be less formal than public expropriation.

Understanding the full implications of these legal provisions and the corresponding obligations is crucial for any developer involved in the construction of roads in the Philippines. Consulting with legal professionals is advisable to ensure that the proper procedures are followed, and that both landowner rights and public infrastructure needs are appropriately balanced.