In such cases, expropriation—the power of eminent domain—becomes a lawful and necessary tool to unlock PPP projects that serve the public. This power may be exercised by both the national government and LGUs, subject to constitutional and statutory requirements.
The 1987 Constitution mandates that private property shall not be taken without public use and just compensation.
For LGUs, the authority and procedures are primarily governed by the Local Government Code of 1991 (Republic Act No. 7160), which requires, among others, an ordinance authorizing the expropriation and a prior valid offer to purchase.
Public purpose
In the PPP context, expropriation must always be anchored on a genuine public purpose. Projects such as socialized housing, solid waste management facilities, roads, and other public infrastructure clearly fall within this scope.
Conversely, expropriation cannot be justified for purely commercial purposes, as this would violate the constitutional requirement of public use.
Private advances
A practical feature in PPP structuring is the role of the private sector in advancing costs related to expropriation. Once a private proponent has secured a PPP contract, it may advance the just compensation or the provisional deposit required for the government to take possession of the property.
These advances are not donations; rather, they form part of the project cost and are recoverable under the agreed PPP arrangement. This mechanism facilitates timely project implementation while preserving the government’s legal authority over expropriation.
Ownership rules
It is crucial to emphasize that ownership of the expropriated property must ultimately vest in the State or the LGU—not the private partner.
The government may then utilize the property as its equity or “skin in the game,” whether through contribution to the project, lease, or grant of usufruct rights to the private partner.
This arrangement aligns with the fundamental PPP principle of risk and resource sharing, where both public and private sectors have a stake in project success.
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