National Power Corporation vs. Henson

The nature and character of the land at the time of its taking is the principal criterion to determine just compensation to the landowner. The Court held that just compensation for raw, undeveloped land cannot be equated with the value of lots in a fully developed subdivision absent evidentiary support, warranting the adoption of the commissioner's report that most closely approximated the land's actual condition while reflecting its reclassification.

The National Power Corporation (NPC) required five parcels of land totaling 58,311 square meters in Barangay San Jose Matulid, Mexico, Pampanga, for the expansion of its Mexico Sub-Station. The subject parcels were idle, undeveloped, raw agricultural lands covered by Operation Land Transfer of the Department of Agrarian Reform, although they had been reclassified as residential. The registered owners and claimants included the Henson family, Alfredo Tanchiatco, Bienvenido David, Maria Bondoc Capili, and Miguel Manoloto.

• Nature: An eminent domain proceeding instituted by NPC for the expansion of its Mexico Sub-Station.
• The Property: Five parcels of land with an aggregate area of 58,311 square meters, situated in Mexico, Pampanga. The land was idle, undeveloped, raw agricultural land, although it had been reclassified as residential.
• Provisional Value and Possession: The RTC fixed the provisional value at P100.00 per square meter. NPC deposited the provisional value with the Provincial Treasurer, and respondents subsequently moved to withdraw the deposit. On September 11, 1990, the RTC issued a writ of possession, and NPC was placed in possession of the subject land.
• Commissioners' Reports: The RTC appointed three commissioners to determine just compensation. Commissioner Tiglao recommended P350.00 per square meter; Commissioner Atienza recommended P375.00 per square meter; and Commissioner Orocio recommended P170.00 per square meter. The RTC did not conduct a hearing on any of the reports.
• Lower Courts' Valuation: The RTC fixed the just compensation at P400.00 per square meter, pegging the value to the selling price of lots in the adjacent, fully developed Santo Domingo Village Subdivision. The Court of Appeals affirmed the RTC's valuation, deleting only the award of attorney's fees.

• Petitioner argued that the valuation of P400.00 per square meter was erroneous because it equated raw, undeveloped land to lots in a fully developed subdivision.
• Petitioner maintained that the communal irrigation canal, consisting of 4,809 square meters, must be excluded from the expropriated area because it was excluded in the amended complaint.
• Petitioner contended that the trial court erroneously ordered double payment for 3,611 square meters of Lot 5.
• Petitioner asserted that it is exempt from the payment of costs of the proceedings under its charter.

• Respondents did not challenge petitioner's right to expropriate the property.
• Respondents initially declared that the fair market value of their property was between P180.00 and P250.00 per square meter.
• Respondents implicitly supported the lower courts' valuation of P400.00 per square meter as just compensation.

• Procedural Issues: N/A
• Substantive Issues:
  • Whether the lower courts erred in fixing just compensation at P400.00 per square meter by valuing raw, undeveloped land at the price of lots in a fully developed subdivision.
  • Whether the communal irrigation canal area should be excluded from the expropriated area.
  • Whether NPC is exempt from paying the costs of the proceedings.

• Procedural: N/A
• Substantive:
  • Yes. The Court ruled that the nature and character of the land at the time of its taking is the principal criterion to determine just compensation. The trial court erred in adopting a valuation higher than any of the commissioners' recommendations and without conducting a hearing on their reports. Valuing raw, undeveloped agricultural land at the same price as lots in a fully developed subdivision finds no support in the evidence. The Court adopted Commissioner Atienza's valuation of P375.00 per square meter as it appeared to be the closest valuation to the market value of the adjacent subdivision while appropriately accounting for the subject land's undeveloped condition.
  • Yes. The communal irrigation canal must be excluded from the expropriated area because it was excluded in the amended complaint.
  • Yes. The Court ruled that petitioner is exempt from the payment of costs of the proceedings pursuant to its charter.

• Nature and Character of the Land at the Time of Taking — The principal criterion to determine just compensation to the landowner in eminent domain is the nature and character of the land at the time of its taking. The Court applied this doctrine to preclude valuing raw, undeveloped agricultural land at the same rate as lots in a fully developed subdivision, emphasizing that the property's actual condition at the time of expropriation controls its valuation.

• "The nature and character of the land at the time of its taking is the principal criterion to determine just compensation to the landowner."
• "Considering that the subject parcels of land are undeveloped raw land, the price of P375.00 per square meter would appear to the Court as the just compensation for the taking of such raw land."

• Republic vs. PNB, 1 SCRA 957; Republic vs. Juan, 92 SCRA 26 — Cited as controlling precedents establishing the principle that the nature and character of the land at the time of taking is the principal criterion for determining just compensation.
• Tio Khe Chio vs. Court of Appeals, 202 SCRA 119 — Cited as authority for the imposition of a six percent (6%) per annum legal interest on the compensation awarded.

• Rule 67, Section 3, Revised Rules of Court — Applied to note that in eminent domain cases, a motion to dismiss takes the place of an answer as a responsive pleading.
• Rule 67, Section 4, Revised Rules of Court — Referenced regarding the procedural mechanism for the issuance of a writ of possession upon deposit of the provisional value.
• NPC Charter — Applied to exempt the National Power Corporation from the payment of costs of the proceedings.

Romero, Kapunan, and Purisima, JJ.