National Transmission Corporation vs. Spouses Taglao

When an easement of right of way for high-tension transmission lines perpetually or indefinitely deprives the owner of normal use, free enjoyment, and disposal of the property, or imposes restrictions inconsistent with the attributes of ownership, just compensation must be the full monetary equivalent of the land taken, computed as (Total Market Value × Area Affected) ÷ Total Area, rather than merely 10% of market value under Section 3A of Republic Act No. 6395, as amended.

The National Power Corporation, a government entity authorized under Republic Act No. 6395 to undertake hydroelectric generation and to acquire private properties for its purposes, filed an eminent domain complaint to construct and maintain its Tayabas-Dasmariñas 500 KV Transmission Line Project. The project required an easement of right of way over a 3,573-square-meter portion of a 5,143-square-meter unregistered parcel of land classified as orchard, located along a Barangay Road in San Pioquinto, Malvar, Batangas, owned by the spouses Mariano and Corazon Taglao.

Nature of the Action: On November 24, 1995, NPC filed a Complaint for Eminent Domain against Spouses Taglao to acquire an easement of right of way over a 3,573-square-meter portion of their 5,143-square-meter unregistered orchard property in Malvar, Batangas. The easement was necessary for the construction and maintenance of the Tayabas-Dasmariñas 500 KV Transmission Line Project.

Procedural Steps: The RTC denied Spouses Taglao's Motion to Dismiss and granted NPC's Motion for Issuance of a Writ of Possession on September 18, 1996. NPC took possession of the subject portion on October 9, 1996. The RTC declared the property condemned on June 23, 1999.

Commissioners' Reports: Two commissioners submitted divergent valuations. NPC's commissioner, Engr. Abcejo, recommended ₱156,690.44 as just compensation, based on the property's Tax Declaration for December 29, 1993, yielding an easement fee of ₱4,490.44 (10% of fair market value), ₱151,570.00 for damaged improvements, and ₱300.00 as tower occupancy fee. Spouses Taglao's commissioner, Atty. Zaballero, recommended ₱12,858,000.00, pegging the market value at ₱2,500.00 per sq.m. as of August 15, 2000.

RTC Valuation: The RTC, without citing supporting documentary evidence or explaining its methodology, fixed the market value at ₱1,000.00 per sq.m. It then computed just compensation at ₱509,170.00 by applying a formula based on Section 3A of RA 6395, as amended by PD No. 938: taking 10% of the proportionate market value of the affected area, adding tower occupancy fees, and adding the value of improvements. The RTC noted only that the lot was unregistered, classified as orchard, situated along a Barangay Road, and had a total area of 5,143 square meters with 3,573 square meters affected.

CA Ruling: The CA affirmed in toto, speculating that "if in the year 2000, the value of the subject property was between ₱2,000.00 to ₱2,500 per square meter, it could safely be inferred that the amount of ₱1,000.00 per square meter, as pegged by the court a quo, was the fair market value in the year 1995, when the complaint for eminent domain was filed."

• Date of Valuation: TRANSCO argued that just compensation must be determined as of the date of the filing of the complaint or the taking of the property, whichever came first. Since the complaint was filed on November 24, 1995, and possession was taken on October 9, 1996, the market value should be pegged as of the filing date.

• Speculative Valuation: TRANSCO maintained that the RTC and CA's calculation of just compensation was not based on any established rule, principle, or evidence, but merely on speculation and rough calculation. The CA's inference that the year 1995 value must have been ₱1,000.00 per sq.m. because the year 2000 value was between ₱2,000.00 and ₱2,500.00 per sq.m. belonged to the realm of surmise.

The decision does not detail specific counter-arguments raised by Spouses Taglao before the Supreme Court; the petition was decided on the basis of TRANSCO's submissions and the legal errors apparent in the lower courts' rulings.

• Valuation Methodology: Whether the RTC and CA's determination of the market value of the subject property at ₱1,000.00 per sq.m. was based on competent evidence and established legal principles, or was speculative and arbitrary.

• Proper Formula for Just Compensation: Whether the RTC and CA correctly applied Section 3A of RA 6395, as amended, in awarding only 10% of the market value of the affected area as just compensation for the easement of right of way.

• Valuation Methodology: The market value fixed at ₱1,000.00 per sq.m. was struck down as speculative. The RTC's disquisition contained no showing of how it arrived at the valuation, nor was it supported by any documentary evidence. The CA's inference—that a 1995 value of ₱1,000.00 per sq.m. could be safely deduced from a 2000 value of ₱2,000.00 to ₱2,500.00 per sq.m.—was highly speculative and devoid of any actual and reliable basis. Although the determination of just compensation lies within the trial court's discretion, it must be based on all established rules, correct legal principles, and competent evidence. Courts are proscribed from basing judgments on speculations and surmises.

• Proper Formula for Just Compensation: Reliance on Section 3A of RA 6395, as amended, to limit compensation to 10% of market value was erroneous. Citing National Power Corporation v. Tiangco and National Power Corporation v. Sps. Asoque, the Court ruled that where an easement perpetually or indefinitely deprives the owner of proprietary rights through conditions affecting ordinary use, free enjoyment, and disposal of the property, or imposes restrictions inconsistent with the attributes of ownership, the owner is entitled to the monetary equivalent of the land. The high-tension current conveyed through transmission lines poses danger to life and limb, creating probability of injury, death, or destruction to life and property within the vicinity. Consequently, the proper formula is: Just Compensation = (Total Market Value × Area Affected) ÷ Total Area. The market value must be fixed by the RTC considering the cost of acquisition, current value of like properties, size, shape, location, and tax declarations at the time of the filing of the complaint on November 24, 1995.

• Legal Interest: The unpaid balance of just compensation shall earn legal interest at 12% per annum from the filing of the complaint on November 24, 1995, until June 30, 2013, and thereafter at 6% per annum until fully paid, pursuant to BSP-MB Circular No. 799, Series of 2013, as upheld in expropriation cases.

• Just Compensation Defined — Just compensation is the full and fair equivalent of the property taken from its owner by the expropriator: the 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.

• Factors in Determining Fair Market Value — The fair market value of expropriated property must be determined by considering the cost of acquisition, the current value of like properties, size, shape, location, and tax declarations. Valuation cannot be arbitrarily arrived at without considering these factors.

• Date of Valuation Rule — Just compensation must be computed based on the fair value of the property at the time of its taking or the filing of the complaint, whichever came first.

• Full Compensation for Perpetual Easements Affecting Normal Use — While an easement of right of way transmits no rights except the easement itself and the owner retains title, the acquisition is not without cost. Where 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 attributes of ownership, or where structures introduced create or increase the probability of injury, death, or destruction to life and property, the owner shall be compensated for the full monetary equivalent of the land. The 10% formula under Section 3A of RA 6395, as amended by PD No. 938, does not apply in such circumstances. Applied here, the high-tension transmission lines posed danger to life and limb, justifying full compensation.

• Standard Formula for Full Compensation — Just Compensation = (Total Market Value × Area Affected) ÷ Total Area.

• Limits of Appellate Review in Expropriation Cases — Under Rule 45, only questions of law are proper subjects of a petition for review on certiorari; the value of expropriated property is generally a factual question beyond the Court's review. However, where the valuation is grounded entirely on speculations, surmises, or conjectures, the exception applies and the Court may review and correct the determination.

• "While market value may be one of the basis in the determination of just compensation, the same cannot be arbitrarily arrived at without considering the factors to be appreciated in arriving at the fair market value of the property, e.g., the cost of acquisition, the current value of like properties, its size, shape, location, as well as the tax declarations thereon." — This passage articulates the mandatory factors for valuation and formed the basis for setting aside the lower courts' unsupported valuation.

• "True, an easement of a right of way transmits no rights except the easement itself, and the respondents would retain full ownership of the property taken. Nonetheless, the acquisition of such easement is not gratis. The limitations on the use of the property taken for an indefinite period would deprive its owner of the normal use thereof. For this reason, the latter is entitled to payment of a just compensation, which must be neither more nor less than the monetary equivalent of the land taken." — This excerpt from National Power Corporation v. Tiangco encapsulates the rationale for awarding full compensation rather than a mere percentage of market value.

• "If in the year 2000, the value of the subject property was between Php2,000.00 to Php2,500 per square meter, it could safely be inferred that the amount of Php1,000.00 per square meter, as pegged by the court a quo, was the fair market value in the year 1995, when the complaint for eminent domain was filed." — The CA's speculative reasoning, quoted by the Supreme Court as emblematic of the arbitrary valuation that must be rejected.

• National Power Corporation v. Tiangco, 543 Phil. 637 (2007) — Controlling precedent establishing that an easement of right of way for transmission lines that imposes limitations on the owner's normal use of the property for an indefinite period entitles the owner to the full monetary equivalent of the land, not merely a fraction of its value.

• National Power Corporation v. Sps. Asoque, 795 Phil. 19 (2016) — Followed; reiterated that where the easement is intended to perpetually deprive the owner of proprietary rights or introduces structures creating danger to life and property, full compensation is required.

• National Power Corp. v. Judge Paderanga, 502 Phil. 722 (2005) — Source of the standard formula for computing full compensation: (Total Market Value × Area Affected) ÷ Total Area.

• National Power Corp. v. Bagui, et al., 590 Phil. 424 (2008) — Cited for the rule that valuation must consider cost of acquisition, value of like properties, size, shape, location, and tax declarations.

• National Power Corporation v. Sps. Zabala, 702 Phil. 491 (2013) — Affirmed the rule that just compensation is computed based on fair value at the time of taking or filing of the complaint, whichever came first.

• Republic v. Macabagdal, G.R. No. 227215, January 10, 2018 — Upheld the applicability of BSP-MB Circular No. 799, Series of 2013, to forbearances of money in expropriation cases for purposes of determining legal interest rates.

• Section 3A, Republic Act No. 6395, as amended by Presidential Decree No. 938 — This provision, which would have limited just compensation for easements of right of way to 10% of the market value of the affected area, was held inapplicable. The Supreme Court struck down its application, consistent with prior jurisprudence, because the installation of high-tension transmission lines imposed restrictions inconsistent with the attributes of ownership and endangered life and property.

• BSP-MB Circular No. 799, Series of 2013 — Applied to determine the legal interest rates on the unpaid balance of just compensation: 12% per annum from the filing of the complaint until June 30, 2013, and 6% per annum from July 1, 2013 until fully paid.

Senior Associate Justice Perlas-Bernabe (Chairperson), Justice Gesmundo (designated additional member), and Justice Delos Santos concurred. Justice Hernando was on official leave.

N/A — The decision was unanimous among the participating justices.