National Power Corporation vs. Chiong

Full market value, rather than a mere easement fee, is the proper just compensation when the expropriator erects structures that impair the principal purpose for which the land is devoted, even if the complaint nominally seeks only an easement of right-of-way.

Petitioner National Power Corporation (NPC), a government-owned and controlled corporation authorized to exercise eminent domain, sought to acquire an easement of right-of-way over agricultural lands owned by respondents Spouses Chiong and the Heirs of Agrifina Angeles for its Northwestern Luzon Transmission Line Project. Respondents alleged that NPC actually occupied 4,000 square meters of their property to construct transmission line structures and sought to occupy an adjacent 4,000 square meters, claiming a fair market value of ₱1,100.00 per square meter for both lots.

• The Expropriation Suit: On February 19, 1998, NPC filed a complaint for eminent domain to acquire an easement of right-of-way over respondents' agricultural lands for its transmission line project. Respondents did not dispute the expropriation's purpose but alleged that NPC had already occupied 4,000 square meters (Lot "A") to construct structures and sought to occupy an adjacent 4,000 square meters (Lot "B"). Respondents claimed a fair market value of ₱1,100.00 per square meter.
• Commissioners' Reports: The RTC appointed three commissioners. The majority report (submitted by Ragadio and Castillo on March 9, 2000) classified the property as unirrigated riceland and fixed the fair market value at ₱500.00 per square meter, noting its location over 900 meters from the town proper. The minority report (submitted by Alog on May 5, 2000) assigned a fair market value of ₱15.75 to ₱22.50 per square meter and recommended the payment of easement fees.
• RTC Order: Without conducting a hearing on the commissioners' reports, the RTC issued an Order on June 7, 2000, adopting the majority report. NPC was directed to pay ₱500.00 per square meter for the 4,000-square-meter property, plus 6% interest per annum from April 16, 1998, until fully paid.

• Due Process: NPC argued that the trial court gravely abused its discretion by adopting the majority report without a hearing, thereby denying NPC the chance to object to the conflicting findings and violating Rule 67 of the Rules of Court.
• Adoption of Commissioners' Report: NPC maintained that the trial court erred in adopting the majority report in toto without considering the minority report or conducting a hearing to weigh the conflicting valuations.
• Just Compensation: NPC asserted that the CA erred in directing the payment of full market value instead of a mere easement fee, arguing that under Section 3-A of Republic Act No. 6395, compensation for a right-of-way easement should not exceed 10% of the market value when the principal purpose of the land is unimpaired.

• Opportunity to Be Heard: Respondents countered that NPC was afforded ample time and opportunity to object to the majority report but failed to do so. Having chosen the wrong remedy by filing a petition for certiorari instead of a motion for reconsideration or an appeal, NPC is estopped from claiming a denial of due process.

• Due Process: Whether NPC was deprived of due process when the trial court adopted the commissioners' majority report without a formal hearing.
• Just Compensation: Whether the Court of Appeals erred in sustaining the trial court's order directing the payment of full market value instead of a mere easement fee under Republic Act No. 6395.

• Due Process: No deprivation of due process occurred. The essence of due process is the opportunity to be heard, not a mandatory formal hearing. NPC had almost three months—from the submission of the majority report on March 9, 2000, to the issuance of the trial court's order on June 7, 2000—to file objections, move to recommit the report, or move to expunge it, but it did nothing. Certiorari cannot substitute for a lost appeal resulting from a party's failure to avail of proper remedies.
• Just Compensation: Full market value was correctly awarded. Although NPC's complaint sought only an easement, the uncontroverted allegations in the answer and the complaint itself showed that NPC erected structures for its transmission lines on the property. Under Section 3-A of Republic Act No. 6395, a mere easement fee applies only when the principal purpose for which the land is devoted remains unimpaired. Because the construction of structures impaired the land's agricultural purpose, the taking constituted a full acquisition requiring the payment of the property's fair market value. The valuation of ₱500.00 per square meter, being supported by the majority report and evidence, was binding on the Court.

• Due Process in Expropriation Proceedings — Due process requires only that a party be afforded a fair and reasonable opportunity to be heard; a formal hearing is not indispensable. Failure to object to a commissioners' report within the reglementary period forecloses the right to later claim a denial of due process.
• Just Compensation in Easement vs. Full Taking under RA 6395 — When only an easement of right-of-way is acquired and the principal purpose for which the land is devoted is unimpaired, compensation is limited to an easement fee not exceeding 10% of the market value. If the land itself is needed or the principal purpose is impaired by the construction of structures, the land must be acquired and full market value paid.

• "What is repugnant to due process is the denial of the opportunity to be heard."
• "In eminent domain or expropriation proceedings, the general rule is that the just compensation to which the owner of condemned property is entitled to is the market value."

• Banco Español-Filipino v. Palanca, 37 Phil. 921 (1918) — Cited for the established elements of due process.
• Republic v. Lara, 96 Phil. 170 (1954) — Followed for the rule that when only part of a property is expropriated, the owner is entitled to the market value of the portion taken plus consequential damages, minus consequential benefits.
• National Power Corporation v. Henson, G.R. No. 129998, 29 December 1998 — Followed for the principle that the nature and character of the land at the time of taking is the principal criterion for determining just compensation.

• Rule 67, Sections 7 and 8, 1997 Rules of Civil Procedure — Govern the filing of commissioners' reports, the period to file objections, and the court's options in acting upon the report. The Court noted that the trial court has the discretion to accept the report and render judgment therewith, especially when no objections were filed by the parties.
• Section 3-A, Republic Act No. 6395 (Revised NPC Charter) — Provides the formula for just compensation in NPC expropriation cases. It limits compensation to an easement fee not exceeding 10% of market value when only a right-of-way easement is acquired and the land's principal purpose is unimpaired. If the principal purpose is impaired, the land itself must be acquired at full market value.

Bellosillo (Chairman), Callejo, Sr.