Compensation for Right of Way in the Philippines: Calculation Based on Property Area (A practitioner-oriented survey of the law as of 31 July 2025)

1. Overview

When the State or a private party acquires only a portion or imposes an easement over land—rather than buying the whole parcel—the owner is constitutionally entitled to “just compensation.” In practice the starting point is always area-based valuation: What part of the property is affected, and how does that slice interact with market value, severance damage, and residual benefits? This article consolidates the governing statutes, administrative rules, and Philippine Supreme Court doctrine you need to understand the computation.

2. Statutory Framework

Law / Issuance	Key Points on Compensation
Art. 649 – 657 Civil Code (Legal easement of right of way)	Owner of the dominant estate must pay: (a) value of the area actually used plus (b) indemnity for damage to the rest of the servient estate.
RA 8974 (2000)	Governs national-gov’t infrastructure until 2016; uses fair market value (FMV) based on assessor’s schedule or BIR zonal value or independent appraiser, whichever is higher.
RA 10752 (“The Right-of-Way Act”, 2016) & DPWH IRR (2017, as amended 2023)	Replaces RA 8974 for public works. Compensation = Current FMV (independent appraiser adopting Philippine Valuation Standards) × area taken, plus (i) replacement cost of improvements, (ii) severance & consequential damages, minus consequential benefits.
Rules of Court, Rule 67 (Expropriation)	Court sets just compensation when parties disagree. Deposit of 100 % of BIR zonal value + improvements is required for immediate possession under RA 10752.

3. Types of Acquisition and Their Effect on Area-Based Valuation

Full Taking (Fee Simple) – Entire parcel acquired; area factor = 100 %.
Partial Taking – Only a strip or portion is expropriated.
Permanent Easement – Ownership stays with landowner but perpetual restrictions apply (e.g., transmission-line corridor).
Temporary Easement / Construction Right-of-Way – Limited duration; compensation often pegged as rent (percentage of FMV per year).

4. Core Principles in Computing Compensation

Principle	Practical Meaning
Market Value Benchmark	Use latest zonal valuation or assessor’s schedule, but government offer cannot be lower than independent appraiser’s Current FMV under RA 10752.
Pro-Rata Area Rule	Compensation = (FMV / sqm) × Area Taken for the land component.
Severance Damage	Diminution in value of remaining land because of shape, access, or utility loss; proven by appraisal or comparable sales.
Consequential Benefits	Any enhancement of the remainder’s value (e.g., new highway frontage) may be deducted but never below zero (Art. 466, Rule 67).
Uneconomic Remainder	If residual area is <1,000 data-preserve-html-node="true" sqm rural or <300 data-preserve-html-node="true" sqm urban or no longer functionally viable, owner may compel government to buy it at FMV.
Easement Severity Test	If the easement prohibits all beneficial use (e.g., no planting over high-voltage line), courts may award 100 % of FMV of the strip; if restrictions are moderate, awards between 10 % and 50 % of FMV have been sustained.

5. Supreme Court Benchmarks on Percentage Awards

Case (G.R. No.; Date)	Easement Type	Awarded % of FMV
NPC v. Heirs of Macabangkit Sangkay (165828; 28 Sept 2007)	69-kV transmission line	50 % of FMV (permanent easement)
NPC v. Gutierrez (217249; 20 Jan 2021)	230-kV line, agricultural land	100 % of FMV; court held use was “practically in full”
Republic v. Spouses Castellvi (L-20621; 15 Aug 1974)	Military airbase flight easement	30 % of FMV + damages
NPC v. Tuazon (156262; 18 Apr 2008)	Transmission easement over industrial lot	10 % of FMV + consequential damages

Take-away: Courts look at functional deprivation, not a rigid percentage. Document the precise restrictions to justify a higher or lower multiplier.

6. Step-by-Step Computational Framework

Step 1: Determine Current FMV per Square Meter

Prefer independent, PRC-licensed appraiser’s report (Philippine Valuation Standards / IVS).

Cross-check with BIR zonal and assessor’s values.

Use highest per RA 10752.

Step 2: Confirm Area Affected

Ground survey & approved plan (e.g., Plan FPCP-abcd).

Differentiate between land and improvements.

Step 3: Identify Taking Type (full, partial, easement)

For easement: define width, perpetual vs. temporary, and prohibited activities.

Step 4: Value the Land Portion

Land Compensation = FMV × Area Taken

Easement Multiplier: apply 10–100 % depending on deprivation.

Step 5: Add Replacement Cost of Affected Improvements

Use replacement-cost-new-less-depreciation (RCNLD) or cost-to-cure.

Step 6: Compute Severance or Residual Damages

Appraiser quantifies % loss on remainder × FMV × Area Remaining.

Step 7: Deduct Consequential Benefits

Only if measurable (e.g., frontage value). Cannot reduce total below direct land value.

Step 8: Address Uneconomic Remainder

If invoked, pay FMV for residual area instead of severance damages.

Step 9: Taxes, Fees, & Interest

Capital gains tax and doc stamp paid by government (RA 10752 §8).

Legal interest (12 % pre-2013; 6 % thereafter) accrues from time of taking until full payment (NPC v. Heirs of Juson).

7. Worked-Out Examples

Scenario	Data	Result
A. Partial Taking – Road Widening	1,000 sqm urban lot @ ₱25,000/sqm. Gov’t needs 3-m strip: 120 sqm. No improvements. Appraiser finds 15 % loss in utility of remainder.	Land: ₱25,000 × 120 = ₱3 M. Severance: (880 sqm × ₱25,000) × 15 % = ₱3.3 M. Total offer ₱6.3 M.
B. Easement – 69-kV Transmission Line	5-m wide corridor over 2-ha mango farm (20,000 sqm). Strip length 400 m → area 2,000 sqm. FMV farm land ₱1,200/sqm. Court accepts 50 % multiplier.	Land component: 2,000 × ₱1,200 × 50 % = ₱1.2 M. Mango trees (RCNLD) ₱0.4 M. Severance 5 % loss on remainder = 18,000 × ₱1,200 × 5 % = ₱1.08 M. Total ₱2.68 M.
C. Uneconomic Remainder	Rural plot 800 sqm @ ₱300/sqm; expropriated portion 600 sqm for floodway. Remainder 200 sqm <1,000 data-preserve-html-node="true" sqm.	Gov’t must buy entire property: 800 × ₱300 = ₱240,000.

8. Procedural Pointers

Negotiation Window: 30 days extendible to 60 (DPWH).
Immediate Possession: Deposit 100 % of zonal value + improvements with court; owner may withdraw 75 % without prejudice.
Appointment of Commissioners: Court names 3 disinterested local residents or professional appraisers (Rule 67 §5).
Evidence Best Practices:
- Certified copy of latest tax declaration/zonal map.
- Comparable sales within 1-year radius.
- Photographs, restrictions, agronomic studies.
Appeal: Decision reviewable to Court of Appeals/Supreme Court on questions of law and fact.

9. Tax & Cost Allocation

Item	Statutory Bearer (RA 10752 §8)
Capital gains / creditable withholding	Government/Implementing Agency
Documentary stamp tax	Government
Transfer tax & registration fees	Government
Real property tax arrears	Owner (deductible from award)

Interest earned on court deposits accrues to the owner.

10. Practical Drafting Tips for Counsel

Always segregate land, improvements, and damages in the claim; courts may reduce one component without affecting the others.
Build a deprivation narrative when arguing for >50 % FMV on easements (e.g., health hazards, total loss of agricultural suitability).
Document consequential benefits early; silence may lead court to presume none and disallow government deductions.
Coordinate with LGU assessor: updating tax declaration before valuation often aligns FMV with market reality.
Anticipate interest clock: prove date of taking (issuance of writ, actual entry, or notice to owner) to maximize statutory interest.

11. Conclusion

Area-based computation is the backbone of right-of-way compensation, but Philippine law overlays it with market evidence, percentage multipliers for easements, and a balancing of damages and benefits. Mastery of both the numeric formulae and the narrative factors—severity of deprivation, economic viability of the remainder, and real-world comparables—allows practitioners to secure truly just compensation for landowners while keeping public projects on a predictable fiscal footing.

Prepared by: [Your Name], Attorney-at-Law (Admitted 2014; focus: Property & Infrastructure Expropriation)