National Transmission Corporation vs. Religious of the Virgin Mary

Just compensation in cases of inverse condemnation must be reckoned from the date of actual taking, not from the date of the filing of the complaint or the date of the court order recognizing the taking, unless exceptional circumstances — such as the expropriator's stealth or deliberate misleading of the owner — justify a departure from the general rule. Where the records lack evidence of the property's value at the time of taking, the case must be remanded for the trial court to ascertain that value or make the most reasonable approximation of it, with legal interest imposed to compensate the owner for the delay in payment.

National Transmission Corporation (TransCo) is a government-owned and controlled corporation created under Republic Act No. 9136, the Electric Power Industry Reform Act of 2001 (EPIRA), to take over the electric transmission function of the National Power Corporation (NAPOCOR). Religious of the Virgin Mary is the registered owner of a 360,029-square-meter parcel of land in Barrio Iponan, Cagayan de Oro City, covered by Original Certificate of Title No. 0-452. In 1966, NAPOCOR — pursuant to its charter, Commonwealth Act No. 120 — constructed and commissioned the Lugait-Carmen 69 kV transmission line, portions of which traversed respondent's property, without instituting expropriation proceedings or obtaining the owner's consent. TransCo, as NAPOCOR's successor in the transmission function, became the party against whom the claim for just compensation was asserted.

Religious of the Virgin Mary is the registered owner of a 360,029-square-meter parcel of land located in Barrio Iponan, Cagayan de Oro City, covered by Original Certificate of Title No. 0-452. In 1966, the National Power Corporation (NAPOCOR) constructed and commissioned the Lugait-Carmen 69 kV transmission line, portions of which traversed respondent's property. No expropriation proceedings were instituted, and no permission was sought from or given by the owner. NAPOCOR's authority to construct transmission lines derived from its original charter, Commonwealth Act No. 120. Decades later, under Republic Act No. 9136 (the Electric Power Industry Reform Act of 2001), TransCo was created to take over NAPOCOR's electric transmission function, thereby becoming the entity responsible for the transmission lines occupying respondent's property.

On October 25, 2006, Religious of the Virgin Mary filed a Complaint for just compensation and damages before the Regional Trial Court, Cagayan de Oro City, alleging that TransCo had constructed transmission lines on a 17,185-square-meter portion of its property without consent and without instituting expropriation proceedings. TransCo acknowledged the occupation but disputed the area, claiming the affected portion was less than 17,185 square meters. It further asserted that it had acquired an easement or right of way by prescription, arguing that payment was no longer necessary.

The RTC commissioned the Department of Environment and Natural Resources to survey the disputed property. Engr. Agnes Dejoras reported that the transmission line occupied a total area of 8,721 square meters. On April 11, 2011, the RTC ordered TransCo to deposit a provisional amount of ₱982,742.00 and to issue a writ of possession. TransCo moved to correct the order, asserting the affected area was only 8,560 square meters and, at a zonal value of ₱105.00 per square meter, the deposit should be ₱898,800.00. The RTC granted the motion on May 18, 2012, and TransCo deposited ₱898,000.00.

Three commissioners were appointed to determine just compensation: Norberto Badelles, Jr. (nominated by TransCo), Engr. Romualdo Lagsa (nominated by respondent), and Atty. Noel Bacal (appointed as chairperson by the RTC). Badelles reported that an 8,580-square-meter portion was affected by the Lugait-Carmen Line, which was constructed and commissioned by NAPOCOR in 1966. Recognizing that taking occurred in 1966, he noted that no zonal valuation was undertaken by the Bureau of Internal Revenue until 1994 and recommended just compensation based on 1994 zonal values of ₱50.00 per square meter. Lagsa recommended ₱700.00 per square meter without specifying a basis. Atty. Bacal found the total affected area to be 8,721 square meters and also noted the 1966 construction, but recommended reckoning just compensation on the basis of 2006 zonal values at ₱200.00 per square meter, reasoning that it was near the market value as of the date of valuation.

On March 31, 2014, the RTC approved Atty. Bacal's recommendation, directing TransCo to pay ₱1,744,200.00 as just compensation, less the provisional deposit of ₱898,000.00, leaving a balance of ₱846,200.00, with 12% interest per annum. On March 31, 2017, the RTC modified the interest rates but maintained 2006 valuations as the basis, reasoning that TransCo failed to allege any date of taking in its Answer or Pre-Trial Brief and that TransCo came into existence only on June 26, 2001. TransCo appealed to the Court of Appeals, which, in its May 31, 2018 Decision, remanded the case to the RTC, ruling that just compensation should be based on 2014 values — the date of the RTC's order recognizing the taking — citing Heirs of Pidacan vs. Air Transportation Office. The Court of Appeals emphasized that the 1966 construction was not considered expropriation because the government never sought the owner's permission. TransCo's motion for reconsideration was denied, prompting the present petition.

• Reckoning Period for Just Compensation: Petitioner maintained that just compensation should be reckoned from the time of taking, that is, from 1966, when the transmission lines were constructed, consistent with Rule 67, Section 4 of the 1997 Rules of Civil Procedure and established jurisprudence.
• Inapplicability of Pidacan: Petitioner argued that the precedent cited by the Court of Appeals, Heirs of Pidacan vs. Air Transportation Office, is not applicable to this case because the exceptional circumstances present in Pidacan — where the government claimed the property had already been sold and paid for — do not obtain here.

• Reckoning Period for Just Compensation: Whether the Court of Appeals erred in ruling that just compensation should be reckoned from 2014, rather than from 1966 when the transmission lines were constructed.

• Reckoning Period for Just Compensation: Yes. The Court of Appeals erred. Just compensation must be reckoned from the date of taking in 1966, when NAPOCOR constructed and commissioned the Lugait-Carmen transmission line. However, owing to the dearth of evidence concerning 1966 valuations, the case was remanded to the RTC to ascertain the property's value at the time of taking or make the most reasonable approximation thereof.

• Reckoning Period for Just Compensation: The Court first established that taking occurred in 1966. Two commissioners' reports — those of chairperson Atty. Bacal and petitioner's nominated commissioner Badelles — noted that the Lugait-Carmen Line was constructed and commissioned by NAPOCOR in 1966, supported by a certified true copy of the Project Profile. The RTC's reliance on TransCo's coming into existence only in 2001 was disingenuous, as the RTC should have taken judicial notice of the relationship between NAPOCOR and TransCo under RA 9136, which created TransCo to take over NAPOCOR's transmission function. Applying the five requisites of taking articulated in Republic vs. Vda. de Castellvi and summarized in National Transmission Corporation vs. Oroville Development Corporation, the Court found all requisites satisfied: NAPOCOR entered private property to construct transmission lines for public benefit; the entry was for an indefinite period; it was under color of legal authority (NAPOCOR's charter); the property was devoted to public use; and the owner was deprived of beneficial enjoyment, as high-tension electric current perpetually deprives property owners of the normal use of their land.

On the reckoning period, the Court reaffirmed the general rule under Rule 67, Section 4 that just compensation must be determined as of the date of the taking or the filing of the complaint, whichever came first. This rule ensures that the owner is compensated only for what he actually loses — the actual value of the property at the time it was taken — and is just not only to the owner but also to the public. The Court distinguished cases like National Power Corporation vs. Heirs of Sangkay and National Power Corporation vs. Spouses Saludares, where just compensation was reckoned from the filing of the complaint due to exceptional circumstances: in Sangkay, the surreptitious construction of underground tunnels meant the owners could not have known of the intrusion; in Saludares, NAPOCOR misled the owners by claiming payment had already been made. The Court found none of these exceptional circumstances present here — transmission lines are visible structures running great distances and supported by towers several stories high, precluding stealth, and petitioner conceded the facts of unauthorized intrusion and non-payment, merely positing a legal argument for prescription rather than claiming prior payment. Pidacan, relied upon by the Court of Appeals, was likewise inapplicable because it involved circumstances akin to Saludares, where the government claimed the property had already been sold and paid for.

Despite correctly identifying 1966 as the date of taking, the Court could not fix the amount of just compensation because the records lacked any evidence of the property's valuation in 1966. Badelles's assertion that no BIR zonal valuation existed until 1994 was unsupported by independent proof. Following Sy vs. Local Government of Quezon City, where the Court similarly remanded a case due to the absence of valuation data at the time of taking, the case was remanded to the RTC to ascertain the property's value in 1966 or make the most reasonable approximation. The Court further held that the imposition of legal interest — already stipulated in the RTC's orders — adequately compensates for the delay in payment, and that reckoning just compensation to contemporary valuations is not the proper remedy for governmental delay. The liability for interest extends until full payment is made.

• Requisites of Taking in Eminent Domain — As articulated in Republic vs. Vda. de Castellvi and summarized in National Transmission Corporation vs. Oroville Development Corporation, taking requires: (1) the expropriator must enter a private property; (2) the entrance must be for more than a momentary period; (3) the entry should be under warrant or color of legal authority; (4) the property must be devoted to public use or otherwise informally appropriated or injuriously affected; and (5) the utilization for public use must oust the owner and deprive him of all beneficial enjoyment of the property. All five requisites were satisfied when NAPOCOR constructed the Lugait-Carmen transmission line in 1966.

• General Rule on Reckoning Just Compensation — Under Rule 67, Section 4 of the 1997 Rules of Civil Procedure, just compensation must be determined as of the date of the taking of the property or the filing of the complaint, whichever came first. The owner should be compensated only for what he actually loses — the actual value of the property at the time it is taken — and this is the only way compensation can be truly just to both the owner and the public.

• Exceptions to the General Rule (Inverse Condemnation) — In cases of inverse condemnation, just compensation may be reckoned as of the date of the filing of the owner's complaint when exceptional circumstances hinder the owner from timely bringing a claim, such as surreptitious underground construction (Sangkay) or deliberate misleading of the owner regarding prior payment (Saludares, Pidacan). These are equitable exceptions, not the general rule, and apply only where the owner could not have known of the taking or was misled by the government.

• Interest as Compensation for Delay — The imposition of legal interest on just compensation compensates the owner for the delay in payment, addressing the deprivation of property and loss of potential income. Interest accrues from the time of actual taking until full payment is made. Reckoning just compensation to contemporary valuations is not the proper remedy for governmental delay; interest is.

• "Just compensation must not only be fairly and reasonably assessed, but must also be promptly paid. It shall be reckoned from the time the private property is taken for public use. Any delay in the payment of just compensation entails the accrual of legal interest beginning from the time of actual taking, considering the deprivation of property and loss of potential income suffered by the owner." — This opening passage states the ratio decidendi of the decision, framing the twin requirements of fairness and promptness in just compensation and establishing that interest accrues from the time of taking.

• "The owner of private property should be compensated only for what he actually loses; it is not intended that his compensation shall extend beyond his loss or injury. And what he loses is only the actual value of his property at the time it is taken. This is the only way the compensation to be paid can be truly just; i.e., 'just' not only to the individual whose property is taken, 'but to the public, which is to pay for it'" — Quoted from Republic vs. Lara, this passage articulates the rationale for reckoning just compensation from the date of taking, balancing fairness to both owner and public.

• "The rulings in Macabangkit Sangkay and Saludares are more in consonance with the rules of equity than with the Rules of Court, specifically Rule 67 on expropriation. Indeed, the practice of construct first, expropriate later is reprehensible and must not be countenanced. The Court, however, must not lose sight of Section 4, Rule 67 which mandates that just compensation must be determined 'as of the date of the taking of the property or the filing of the complaint, whichever came first.'" — This passage, quoted from Oroville, delineates the boundary between the equitable exceptions and the procedural rule, affirming that the general rule controls absent exceptional circumstances.

• "Given the dearth of information on respondent's property's valuation in 1966, this Court is constrained — as in Sy — to remand the case to the Regional Trial Court, Cagayan de Oro City. The Regional Trial Court shall ascertain the property's value at the time of taking in 1966, or otherwise endeavor to make the most reasonable approximation of that value, and, based on this, determine the amount of just compensation properly due to respondent." — This passage states the Court's disposition on the evidentiary insufficiency that necessitated the remand.

• Republic vs. Vda. de Castellvi, 157 Phil. 329 (1974) — Originating precedent articulating the five requisites of a compensable taking in the context of eminent domain. Applied to determine that taking occurred in 1966.
• National Transmission Corporation vs. Oroville Development Corporation, 815 Phil. 91 (2017) — Controlling precedent involving substantially similar facts (TransCo's transmission lines constructed by NAPOCOR without expropriation). Followed for the proposition that just compensation must be reckoned from the date of taking and for its explanation distinguishing Sangkay and Saludares as equitable exceptions.
• Secretary of the Department of Public Works and Highways vs. Spouses Tecson, 713 Phil. 55 (2013) — Leading case enumerating prior decisions where just compensation was reckoned from the date of taking despite long-delayed claims. Followed.
• National Power Corporation vs. Heirs of Sangkay, 671 Phil. 569 (2011) — Distinguished. Involved surreptitious underground construction unknown to the owner, justifying reckoning from the filing of the complaint. Held inapplicable because transmission lines are visible.
• National Power Corporation vs. Spouses Saludares, 686 Phil. 967 (2012) — Distinguished. Involved NAPOCOR's misleading claim that just compensation had already been paid. Held inapplicable because petitioner here conceded non-payment.
• Heirs of Pidacan vs. Air Transportation Office, 552 Phil. 48 (2007) — Distinguished. Relied upon by the Court of Appeals but held inapplicable because it involved circumstances akin to Saludares (government claiming the property had already been sold and paid for), which are absent here.
• Sy vs. Local Government of Quezon City, 710 Phil. 549 (2013) — Followed for the proposition that where the records lack valuation data at the time of taking, the case must be remanded to the trial court to ascertain or approximate the value at that time.
• Republic vs. Lara, 96 Phil. 170 (1954) — Cited for the rationale that just compensation must reflect the actual value of the property at the time of taking, ensuring fairness to both owner and public.
• Apo Fruits Corporation vs. Land Bank of the Philippines, 647 Phil. 251 (2010) — Cited for the principle that compensation, to be "just," must be made without delay, and that interest compensates for the loss of income-generating potential.
• Republic vs. Court of Appeals and Heirs of Santos, 433 Phil. 106 (2002) — Cited for the rule that legal interest accrues from the time of taking to the time of actual payment to place the owner in as good a position as before the taking.

• Section 4, Rule 67, 1997 Rules of Civil Procedure — Provides that just compensation must be determined "as of the date of the taking of the property or the filing of the complaint, whichever came first." Applied as the controlling procedural rule, from which the equitable exceptions in Sangkay, Saludares, and Pidacan were distinguished.
• Article III, Section 9, 1987 Constitution — Provides that "[p]rivate property shall not be taken for public use without just compensation." Served as the constitutional imperative underlying the entire analysis.
• Section 8, Republic Act No. 9136 (Electric Power Industry Reform Act of 2001) — Created TransCo to take over NAPOCOR's electric transmission function. Applied to establish TransCo's association with the Lugait-Carmen Line despite its creation only in 2001.
• Section 2(g), Commonwealth Act No. 120 (NAPOCOR Charter, 1936) — Granted NAPOCOR the power to construct, operate, and maintain transmission lines. Applied to establish that NAPOCOR's 1966 construction was under color of legal authority.
• Article 2212, Civil Code of the Philippines — Provides that "[i]nterest due shall earn legal interest from the time it is judicially demanded." Cited in connection with the compounding of interest on just compensation.

Lazaro-Javier, M. Lopez, and Lopez, JJ., concurred. Kho, Jr., was on leave.