National Power Corporation vs. Tiangco

In expropriation cases where no actual taking precedes the filing of the complaint, just compensation must be based on the property's fair market value at the time of the filing of the complaint, which is deemed the time of taking; and where an easement of right-of-way for transmission lines is perpetual or indefinite in nature and poses danger to life and property, the owner is entitled to the full monetary equivalent of the land, not merely the 10% easement fee prescribed under Section 3-A of RA 6395, as amended by PD 938.

Respondents Aurellano, Lourdes, and Nestor Tiangco are the registered owners of a 152,187-square-meter parcel of land in Barangay Sampaloc, Tanay, Rizal, covered by TCT No. M-17865. Petitioner National Power Corporation (NPC) is a government-owned and controlled corporation created under Republic Act No. 6395 for the purpose of undertaking the development and generation of power. NPC's charter authorizes it to acquire private property and exercise the right of eminent domain. NPC requires 19,423 square meters of respondents' property for its 500Kv Kalayaan-San Jose Transmission Line Project, which will traverse the land and leave 33,392 square meters separated from the remaining 99,372 square meters.

Respondents Aurellano, Lourdes, and Nestor Tiangco own a 152,187-square-meter parcel of land in Barangay Sampaloc, Tanay, Rizal, registered in their names under TCT No. M-17865. The property contains fruit-bearing trees including mango, avocado, jackfruit, casuy, santol, calamansi, sintones, and coconut. Petitioner NPC, a government-owned and controlled corporation created under Republic Act No. 6395, requires 19,423 square meters of the property for its 500Kv Kalayaan-San Jose Transmission Line Project. NPC's Segregation Plan shows that the desired right-of-way will cut through respondents' land, leaving 33,392 square meters separated from 99,372 square meters of the remaining property.

After repeated unsuccessful negotiations with respondents, NPC filed a complaint for expropriation with the RTC of Tanay, Rizal on November 20, 1990. The complaint originally sought to expropriate 20,220 square meters, but a resurvey later revealed that only 19,423 square meters were required, prompting NPC to file an amended complaint on September 14, 1993. On March 14, 1991, the trial court issued a Condemnation Order granting NPC the right to take possession and directing the appointment of a board of commissioners to determine just compensation. The board was composed of Atty. Restituto Mallo (NPC's nominee), Mr. Basilio Afuang (respondents' nominee, a geodetic engineer and real estate broker), and Ms. Amelia de Guzman Carbonell (court-appointed, Clerk of Court V). On April 5, 1991, the trial court directed NPC to deposit ₱81,204.00 as provisional value, and a writ of possession was issued on April 22, 1991 upon compliance.

During the commissioners' hearings, the Municipal Assessor of Tanay submitted a Schedule of Values for taxation purposes and certified that the unit value of respondents' property was ₱21,000.00 per hectare. Commissioner Afuang, for respondents, filed his report on August 7, 1993, pegging the price at ₱30.00 per square meter or ₱582,690.00 in aggregate, with improvements valued at ₱2,093,950.00—figures that contrasted with respondents' own valuations of ₱600,600.00 for the area and ₱4,935,500.00 for improvements. The court-appointed commissioner Carbonell found that the risk and dangerous nature of the transmission line project essentially deprived respondents of the use of the area, but recommended that the determination of just compensation be relegated to expert appraisers.

The trial court fixed the market value at ₱2.09 per square meter, or ₱40,594.07 for the entire 19,423 square meters, based on a 1984 tax declaration, and found reasonable the amount of ₱324,750.00 offered by NPC for improvements, based on the official current schedule of values determined by the Municipal Assessor. The trial court rejected NPC's reliance on Section 3-A of RA 6395, as amended by PD 938, giving more weight to respondents' argument that expropriation would result in substantial impairment of the use of the area even though only an aerial right-of-way was sought. On February 19, 1996, the trial court rendered judgment expropriating the 19,423 square meters in favor of NPC, ordering ₱40,594.07 as just compensation for the land and ₱324,750.00 for improvements, with legal interest from the time of possession. Respondents moved for reconsideration, presenting for the first time a BIR Circular of Appraisal showing that lands in Barangay Sampaloc were valued at ₱30.00 per square meter in 1985, ₱80.00 in 1992, and ₱100.00 in 1994, but the motion was denied for belated filing.

Both parties appealed to the CA, where the appeals were consolidated. The appellate court disregarded the trial court's ₱2.09 per square meter valuation based on a 1984 tax declaration and instead relied on a 1993 tax declaration, "being only two years removed from the time of taking," which it determined to be in 1991. The CA fixed land compensation at ₱116,538.00 based on Tax Declaration No. 011-2667 dated July 23, 1993, and increased the improvements award to ₱325,025.00, finding NPC's valuation more favorable as it was based on the current 1991 schedule of values for trees in Rizal and Laguna.

• Basis of Valuation: Petitioner argued that the CA erred in fixing the value of the property on the basis of a 1993 assessment, asserting that respondents should not profit from an assessment made years after the taking, and that the trial court's 1984 valuation was likewise incorrect because it was several years behind the property's worth at the time the complaint was filed on November 20, 1990.
• Easement Fee Under PD 938: Petitioner maintained that it should pay only an easement fee equivalent to ten per cent (10%) of the market value of the property as declared by respondents or the Municipal Assessor, whichever is lower, pursuant to Section 3-A of RA 6395, as amended by PD 938, since it seeks only an easement of right-of-way and ownership of the area remains with respondents.

• Reasonable Valuation: Respondents argued that ₱30.00 per square meter for the needed area of 19,423 square meters was the reasonable amount and should be the basis for fixing just compensation, supported by a BIR Circular of Appraisal showing land values in Barangay Sampaloc at ₱30.00 per square meter for 1985.
• Impairment of Use: Respondents maintained that the expropriation would result in substantial impairment of the use of the area needed, even though what is sought is a mere aerial right-of-way, justifying full compensation rather than a mere percentage of the property's value.

• Basis of Just Compensation: Whether just compensation should be based on the 1984 or the 1993 valuation of the property.
• Easement Fee vs. Full Compensation: Whether NPC should pay for the full value of the land being taken, or should be limited to the ten per cent (10%) easement fee provided under Section 3-A of RA 6395, as amended by PD 938, considering that the purpose is merely for the establishment of a right-of-way for overhead transmission lines.

• Basis of Just Compensation: Neither valuation is correct. Just compensation must be based on the property's fair market value at the time of the filing of the complaint on November 20, 1990, which is deemed the time of taking; the case was remanded for proper determination on this basis.
• Easement Fee vs. Full Compensation: No, NPC is not limited to the 10% easement fee. Because the transmission line project is perpetual or indefinite in nature and poses danger to life and property, respondents are entitled to the full monetary equivalent of the land taken, and NPC's reliance on Section 3-A of RA 6395, as amended by PD 938, was rejected.

• Basis of Just Compensation: In eminent domain cases, the time of taking is the filing of the complaint if there was no actual taking prior thereto. Since NPC filed the expropriation complaint on November 20, 1990, the value of the property as of that date should be the basis for determining just compensation. The trial court's reliance on a 1984 tax declaration was unfair because it shortchanged the landowners, given that land values generally enjoy steady upward movement. The CA's reliance on a 1993 assessment was likewise erroneous because NPC would be paying too much—respondents should not profit from an assessment made years after the taking. Just compensation is the full and fair equivalent of the property taken, defined as the fair market value at the time of filing the complaint, or "that sum of money which a person desirous but not compelled to buy, and an owner willing but not compelled to sell, would agree on as a price to be given and received therefor." The measure is not the taker's gain but the owner's loss. Courts are not limited to assessed value or schedule of market values; the nature and character of the land at the time of taking is the principal criterion, and all facts as to the condition of the property, its surroundings, improvements, and capabilities should be considered. Neither lower court's determination was correct, necessitating a new valuation.

• Easement Fee vs. Full Compensation: While an easement of right-of-way transmits no rights except the easement itself and respondents retain full ownership, the acquisition of such easement is not gratis. The limitations on the use of the property for an indefinite period deprive the owner of normal use, entitling the owner to just compensation equal to the monetary equivalent of the land. The Court has consistently struck down NPC's reliance on Section 3-A of RA 6395, as amended by PD 938. When an easement is intended to perpetually or indefinitely deprive the owner of proprietary rights through conditions affecting ordinary use, free enjoyment, and disposal of the property, or when structures creating or increasing the probability of injury, death, or destruction are introduced, the owner should be compensated for the full monetary equivalent of the land. The evidence shows that NPC's transmission line project traversing respondents' property is perpetual or indefinite in nature. The high-tension current poses danger to life and limb. NPC will erect structures for its transmission lines within the property, and the expropriated area extends 326.34 meters, potentially accommodating several structures. Additionally, respondents will continue to pay realty taxes on the affected portion, further warranting rejection of NPC's thesis of paying a mere percentage of the property's actual value.

• Time of Taking in Eminent Domain — In expropriation cases, the time of taking is the filing of the complaint if there was no actual taking prior thereto. Just compensation must be based on the fair market value of the property as of the time of the filing of the complaint. The Court applied this doctrine to reject both the trial court's 1984 valuation (too early) and the CA's 1993 valuation (too late), fixing the relevant date as November 20, 1990, when NPC filed its complaint.

• Just Compensation for Perpetual or Indefinite Easement — While the power of eminent domain may be availed of to impose only a burden upon the owner without loss of title and possession, if the easement is intended to perpetually or indefinitely deprive the owner of proprietary rights through conditions affecting ordinary use, free enjoyment, and disposal of the property, or through restrictions inconsistent with the exercise of ownership attributes, or when structures creating or increasing the probability of injury, death, or destruction are necessary, the owner is entitled to the full monetary equivalent of the land. The Court applied this doctrine because NPC's transmission line project is perpetual or indefinite, the high-tension current poses danger to life and property, NPC will erect structures within the property, and respondents will continue paying realty taxes on the affected portion.

• Definition of Just Compensation — Just compensation is the full and fair equivalent of the property taken from its owner by the expropriator, equivalent to the property's fair market value at the time of filing the the complaint, defined as "that sum of money which a person desirous but not compelled to buy, and an owner willing but not compelled to sell, would agree on as a price to be given and received therefor." The measure is not the taker's gain but the owner's loss. Courts are not limited to assessed value or schedule of market values determined by the provincial or city appraisal committee; these constitute but one factor in the judicial valuation. The nature and character of the land at the time of taking is the principal criterion, and all facts as to the condition of the property, its surroundings, improvements, and capabilities should be considered.

• "In eminent domain cases, the time of taking is the filing of the complaint, if there was no actual taking prior thereto. Hence, in this case, the value of the property at the time of the filing of the complaint on November 20, 1990 should be considered in determining the just compensation due the respondents." — This passage states the ratio decidendi on the first issue, establishing the controlling rule that the date of filing the expropriation complaint is the time of taking for purposes of determining just compensation.

• "The measure is not the taker's gain, but the owner's loss." — This is the canonical formulation of the principle underlying just compensation, frequently cited in subsequent expropriation jurisprudence to emphasize that the owner's deprivation, not the expropriator's benefit, determines the amount due.

• "if the easement is intended to perpetually or indefinitely deprive the owner of his proprietary rights through the imposition of conditions that affect the ordinary use, free enjoyment and disposal of the property or through restrictions and limitations that are inconsistent with the exercise of the attributes of ownership, or when the introduction of structures or objects which, by their nature, create or increase the probability of injury, death upon or destruction of life and property found on the land is necessary, then the owner should be compensated for the monetary equivalent of the land" — This passage articulates the doctrine governing when a right-of-way easement entitles the owner to full land compensation rather than a percentage easement fee, and is the key holding on the second issue.

• "It was certainly unfair for the trial court to have considered a property value several years behind its worth at the time the complaint in this case was filed on November 20, 1990. The landowners are necessarily shortchanged, considering that, as a rule, land values enjoy steady upward movement. It was likewise erroneous for the appellate court to have fixed the value of the property on the basis of a 1993 assessment. Petitioner corporation is correct in arguing that the respondents should not profit from an assessment made years after the taking." — This passage explains why both lower courts' valuations were rejected, illustrating the application of the time-of-taking rule to the specific facts.

• National Power Corporation vs. Court of Appeals, et al., G.R. No. 113194, March 11, 1996, 254 SCRA 577 — Cited as controlling authority for the proposition that the time of taking coincides with the filing of the complaint for expropriation, and just compensation is to be ascertained as of that time.

• Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform, G.R. No. 78742, July 14, 1989, 175 SCRA 343 — Cited for the principle that the equivalent rendered for property taken shall be substantial, full, ample, and real, meaning the value as of the time of taking should be the price paid.

• National Power Corporation vs. Chiong, G.R. No. 152436, June 20, 2003, 404 SCRA 527 — Cited for the definition of just compensation as the fair market value at the time of filing the complaint, and for the principle that the nature and character of the land at the time of taking is the principal criterion. Also cited for the proposition that it is not improper to assume NPC will erect structures for its transmission lines within the property.

• NPC vs. Manubay Agro-Industrial Development Corporation, G.R. No. 150936, August 18, 2004, 437 SCRA 60 — Cited as controlling authority for the rule that when limitations on the use of land for an indefinite period deprive the owner of normal use, the owner is entitled to payment of just compensation equal to the monetary equivalent of the land.

• NPC vs. Gutierrez, G.R. No. 60077, January 18, 1991, 193 SCRA 1 — Cited for the principle that the power of eminent domain may be availed of to impose only a burden upon the owner without loss of title and possession, and as part of the line of cases striking down NPC's reliance on Section 3-A of RA 6395.

• Export Processing Zone Authority vs. Dulay, G.R. No. L-59603, April 29, 1987, 149 SCRA 305 — Cited for the principle that all facts as to the condition of the property, its surroundings, improvements, and capabilities should be considered in determining just compensation.

• Republic vs. Ker and Company Limited, G.R. No. 136171, July 2, 2002, 383 SCRA 584 — Cited for the principle that courts are not limited to the assessed value of the property or the schedule of market values determined by the provincial or city appraisal committee in determining just compensation.

• Section 3-A, Republic Act No. 6395, as amended by Presidential Decree No. 938 — This provision governs the acquisition of private property or property rights through expropriation proceedings where land will be traversed by transmission lines, prescribing that only a right-of-way easement shall be acquired when the principal purpose for which the land is devoted will not be impaired, and limiting just compensation for the easement to not exceed 10% of the market value declared by the owner or determined by the assessor, whichever is lower. The Court rejected NPC's reliance on this provision, holding that because the transmission line project is perpetual or indefinite in nature and poses danger to life and property, respondents are entitled to the full monetary equivalent of the land rather than the 10% easement fee.

• Rule 45, Rules of Court — The procedural vehicle for the petition, under which NPC sought annulment and setting aside of the CA decision via petition for review on certiorari.

Chief Justice Reynato S. Puno (Chairperson), Associate Justice Angelina Sandoval-Gutierrez, Associate Justice Renato C. Corona, and Associate Justice Adolfo S. Azcuna concurred.