Spouses Baterna vs. National Transmission Corporation

Just compensation in expropriation cases where the government takes property before filing the complaint must be reckoned from the date of taking, not the date of filing, pursuant to Rule 67, Section 4 of the Rules of Court; however, where the expropriating agency delays payment for decades after the taking, the "present value formula" (PV = V × (1 + r)^n) must be applied to the date-of-taking value to account for the opportunity loss and time value of money, with legal interest of 6% per annum accruing only from the finality of the decision fixing just compensation until full payment.

National Transmission Corporation (TRANSCO) assumed the electrical transmission functions and eminent domain powers previously held by the National Power Corporation (NPC) under Republic Act No. 9136, the Electric Power Industry Reform Act of 2001. Spouses Quirino Roni T. Baterna and Marites M. Baterna are the registered owners of two parcels of land (Lots 2192-A and 2192-C, totaling 5,185 square meters) in Bo. Buntatala, Jaro, Iloilo City, covered by TCT Nos. 129920 and T-133560. NPC had constructed steel towers and transmission lines traversing these properties in 1979 and 1995 for the Sta. Barbara-Baldoza and Sta. Barbara-Ingore 69kV Transmission Lines. TRANSCO sought to acquire the properties to ensure continued operation, maintenance, and future upgrades of these lines, filing the expropriation complaint on December 12, 2014. The governing statutory framework includes Republic Act No. 8974, its successor Republic Act No. 10752 (effective March 7, 2016), and Republic Act No. 12289 (signed September 12, 2025), which extends coverage to private entities providing public services such as electricity transmission.

Spouses Quirino Roni T. Baterna and Marites M. Baterna are the registered owners of two parcels of land, designated as Lots 2192-A and 2192-C, situated in Bo. Buntatala, Jaro, Iloilo City, collectively encompassing 5,185 square meters and covered by Transfer Certificates of Title Nos. 129920 and T-133560. In 1979 and 1995, the National Power Corporation (NPC) constructed steel towers and transmission lines for the Sta. Barbara-Baldoza and Sta. Barbara-Ingore 69kV Transmission Lines, which traverse various properties including the subject properties owned by spouses Baterna. The construction was undertaken without prior expropriation proceedings or formal notice to the property owners.

On December 12, 2014, the National Transmission Corporation (TRANSCO)—which had assumed NPC's electrical transmission functions and eminent domain powers under Republic Act No. 9136—filed a Complaint for expropriation against spouses Baterna to ensure the continued operation, maintenance, and potential future upgrades of the transmission lines. The case underwent mediation and judicial dispute resolution, but settlement efforts failed. On July 29, 2016, spouses Baterna filed a Motion to Order Plaintiff to Deposit 100% Zonal Valuation pursuant to Republic Act No. 10752. The RTC granted this motion, and TRANSCO deposited PHP 6,688,650.00 with the Land Bank of the Philippines on February 21, 2017, representing the BIR zonal valuation of the subject properties at that time. The RTC subsequently directed Land Bank to release the deposited funds to spouses Baterna, which was effected through a manager's check on July 28, 2018.

On October 25, 2017, the RTC ordered the formation of a three-member Board of Commissioners to assess and determine the fair market value of the subject properties. The Board submitted its Report on January 10, 2018, estimating the fair market value at PHP 4,000.00 per square meter, yielding a total of PHP 20,740,000.00 for the 5,185-square-meter area. The RTC admitted this Report on January 22, 2018, and approved the valuation. TRANSCO objected, arguing that just compensation should be determined based on the prevailing fair market value at the time of taking in 1979 and 1995. Meanwhile, spouses Baterna raised the issue of "dangling areas"—portions of the subject properties that had become practically unusable and significantly diminished in value due to their separation from the main lots following the construction of the transmission lines.

During a pre-trial conference on October 18, 2018, the parties stipulated that the only remaining factual issues were: (1) whether just compensation should be based on the fair market value at the time of taking or at the time of filing the Complaint, and (2) which law should govern the payment of just compensation, including the determination of compensation for the "dangling areas." On March 12, 2019, the RTC granted TRANSCO a Writ of Possession and held that just compensation should be based on the fair market value at the time the expropriation proceedings were instituted. The RTC directed the Board of Commissioners to assess whether the "dangling areas" remained suitable for use and, if not, to determine consequential damages. The Board reconvened and, on December 12, 2019, submitted a Report valuing the 5,396-square-meter "dangling areas" at PHP 4,000.00 per square meter, totaling PHP 21,584,000.00. On May 29, 2020, the RTC approved both Commissioners' Reports and ordered TRANSCO to pay PHP 20,740,000.00 for the expropriated property (less the PHP 6,688,650.00 deposit) and PHP 21,584,000.00 for the "dangling areas," both with 12% per annum interest from December 12, 2014. TRANSCO's motion for reconsideration was denied, prompting its appeal to the CA.

• Absence of Valid Taking: Petitioners maintained that respondent failed to present written documentation proving that prior notice was given before entering the subject properties in 1979 and 1995, and that respondent's entry lacked legal warrant or authority, thus failing to meet the second element of a valid taking. They also asserted that respondent had no intent to acquire or expropriate the properties until it issued a Demand to Vacate, after which it filed the Complaint.
• No Deprivation of Beneficial Enjoyment: Petitioners argued that the fifth element of taking was absent, as respondent's use of the property for public purposes did not dispossess them or deprive them of beneficial enjoyment. They highlighted that they continued to pay real estate taxes on the properties, indicating that respondent's possession was not equivalent to ownership and that petitioners retained absolute control.
• Reckoning Point Under R.A. No. 10752: Petitioners asserted that under Republic Act No. 10752, the law in effect when the Complaint was filed, just compensation should be based on the current fair market value at the time the expropriation proceedings were commenced.
• Unwarranted Reconstitution of Board: Petitioners contended that reconvening or reconstituting the Board of Commissioners was unwarranted, as the Board had already discharged its mandated functions and the parties had been afforded sufficient opportunity to present all relevant documentary evidence for proper valuation.
• Full Market Value for Dangling Areas: Petitioners argued that the award of consequential damages should not be limited to 50% of the BIR zonal valuation of the "dangling areas," and that consequential damages should be based on the full market value of the affected areas as provided by Republic Act No. 10752 and consistent with prevailing jurisprudence.

• Correct Remand for Date of Taking: Respondent argued that the CA correctly remanded the case to the RTC to ascertain the exact date of taking of the subject properties and to determine just compensation based on their value at the time of taking, in accordance with the appellate court's directives.
• Proper Limitation of Consequential Damages: Respondent maintained that the CA properly limited the award of consequential damages to 50% of the BIR zonal valuation of the affected portions segregated by the transmission lines.

• Validity of Taking: Whether a valid taking of the subject properties occurred in 1979 and 1995.
• Reckoning Point for Just Compensation: Whether just compensation should be computed based on the date of taking in 1979 and 1995, or the date of filing of the Complaint on December 12, 2014.
• Consequential Damages: Whether consequential damages should be limited to 50% of the BIR zonal valuation of the "dangling areas" or affected properties traversed by the electric transmission lines.
• Reconstitution of Board of Commissioners: Whether the CA correctly ordered the reconvening or reconstitution of the Board of Commissioners.

• Validity of Taking: Yes. A valid taking occurred in 1979 and 1995 upon the installation of permanent transmission lines, satisfying all five requisites of taking under Republic vs. Vda. de Castellvi, including indefinite occupation, statutory authority, and deprivation of beneficial enjoyment.
• Reckoning Point for Just Compensation: The date of taking (1979 and 1995) is the reckoning point, pursuant to Rule 67, Section 4 of the Rules of Court, which provides that just compensation is determined "as of the date of the taking of the property or the filing of the complaint, whichever came first." However, the "present value formula" must be applied to the date-of-taking value to account for the opportunity loss caused by delayed payment.
• Consequential Damages: Yes, consequential damages are properly limited to 50% of the BIR zonal valuation of the "dangling areas," consistent with jurisprudence holding that valuation at full market value for dangling areas is unsupported and exceeds even the recommended just compensation for the property actually expropriated.
• Reconstitution of Board of Commissioners: Yes. Rule 67, Section 8 expressly authorizes the trial court to recommit matters to commissioners or appoint new commissioners when necessary, and the necessity is evident given the need to ascertain the precise date of taking, compute just compensation under the present value formula, determine consequential damages, and fix commissioners' fees.

• Validity of Taking: The five requisites of taking articulated in Republic vs. Vda. de Castellvi were all satisfied: (1) the expropriator entered private property; (2) the entrance was for more than a momentary period, as permanent transmission lines entail indefinite occupation; (3) the entry was under color of legal authority, respondent's exercise of eminent domain being anchored on its statutory authority under Republic Act No. 9136 in relation to Republic Act No. 10752, as amended by Republic Act No. 12289; (4) the property was devoted to public use through the installation of transmission lines; and (5) the utilization ousted the owner and deprived him of beneficial enjoyment. Petitioners' contention that they retained beneficial enjoyment because they continued paying real estate taxes was rejected, as the perpetual and restrictive presence of high-tension transmission lines significantly impairs the normal use and enjoyment of the properties, citing National Transmission Corp. vs. Oroville Development Corporation. Petitioners' own demand letter dated October 16, 2014 demonstrated their knowledge and long-standing tolerance of the transmission lines, and there was no categorical denial that these lines were constructed on the subject properties in 1979 and 1995.

• Reckoning Point for Just Compensation: The contention that Republic Act No. 10752, as amended by Republic Act No. 12289, mandates the use of the current fair market value at the commencement of expropriation proceedings was found misplaced. A clear distinction must be drawn between statutory valuation and the judicial determination of just compensation: the statutes govern the computation of the provisional deposit and the fair market value required for the expropriating agency to obtain possession, while Rule 67 of the Rules of Court governs the judicial determination of just compensation. Under Rule 67, Section 4, just compensation must be reckoned "as of the date of the taking of the property or the filing of the complaint, whichever came first." Neither Republic Act No. 10752 nor Republic Act No. 12289 contains any provision modifying or superseding this rule. Because a valid taking occurred in 1979 and 1995, prior to the filing of the Complaint in 2014, the reckoning point is the date of taking. The exceptions recognized in National Power Corporation vs. Heirs of Sangkay and National Power Corporation vs. Saludares—where just compensation was fixed at the time of filing the complaint—were distinguished as grounded in equity involving extraordinary circumstances such as stealth construction or misleading conduct by the expropriating agency. No such exceptional circumstances exist here, as the installation was executed openly with petitioners' knowledge and tolerance. However, to temper the inequity arising from respondent's decades-long delayed payment, the Court applied the "present value formula" first enunciated in Republic vs. Spouses Nocom and affirmed in Heirs of Jose Mariano vs. City of Naga and Heirs of Cipriano vs. National Transmission Corporation. This formula "grosses up" the fair market value at the time of taking (V) by compounding an appropriate rate (r) over the period until payment using the formula PV = V × (1 + r)^n, representing the earnings the property owner could have realized had just compensation been paid when the property was taken. The CA's imposition of legal interest at 12% per annum from the time of taking up to June 30, 2013, and 6% per annum thereafter was set aside; instead, legal interest of 6% per annum accrues only from the finality of the decision fixing just compensation until full payment.

• Consequential Damages: Petitioners failed to present reliable and actual evidence to support the Board of Commissioners' valuation pegging damages at full market value—an amount unsupported and even exceeding the recommended just compensation for the property actually expropriated. Jurisprudence has consistently maintained that consequential damages in analogous cases are set at 50% of the BIR zonal valuation for properties affected by electric transmission lines, as held in National Power Corporation vs. Marasigan. The CA's award of consequential damages equivalent to 50% of the BIR zonal valuation of the "dangling areas" was therefore affirmed.

• Reconstitution of Board of Commissioners: Rule 67, Section 8 of the Rules of Court expressly authorizes the trial court to "recommit" matters to commissioners or "appoint new commissioners" when necessary to ensure that just compensation is determined in accordance with law. The necessity for remand was evident: (1) the precise date of taking must be ascertained—whether 1979 or 1995—as this directly affects the computation; (2) just compensation must be computed under the present value formula; (3) consequential damages limited to 50% of BIR zonal valuation must be determined; and (4) the number of days devoted by the Board in preparing their reports must be ascertained to fix their fees pursuant to Rule 141, Section 16.

• Requisites of Taking (Vda. de Castellvi doctrine) — The five requisites of a valid taking are: (1) the expropriator must enter 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. The Court found all five requisites satisfied by the installation of permanent transmission lines in 1979 and 1995, noting that high-tension electric current passing through transmission lines perpetually deprives property owners of the normal use of their land.

• Reckoning Point for Just Compensation — Under Rule 67, Section 4 of the Rules of Court, just compensation is determined "as of the date of the taking of the property or the filing of the complaint, whichever came first." When taking occurs before the filing of the complaint, the valuation must be anchored to the date of taking. This rule is part of the Rules promulgated by the Court for purposes of uniformity and is not superseded by Republic Act No. 10752 or Republic Act No. 12289, which govern only the provisional deposit and statutory valuation for purposes of obtaining possession.

• Present Value Formula — When the expropriating agency delays payment for an extended period after taking, the present value formula (PV = V × (1 + r)^n, where V is the value at the time of taking, r is the rate, and n is the number of compounding periods) is applied to the date-of-taking value to account for the time value of money and the opportunity loss occasioned by delayed payment. This formula "grosses up" the date-of-taking value without altering the legally mandated reckoning point, ensuring full and fair compensation. After the present value is computed, legal interest of 6% per annum accrues from the finality of the decision fixing just compensation until full payment. The formula was first enunciated in Republic vs. Spouses Nocom and applied in Heirs of Jose Mariano vs. City of Naga and Heirs of Cipriano vs. National Transmission Corporation.

• Distinction Between Statutory Valuation and Judicial Determination of Just Compensation — Republic Act No. 10752, as amended by Republic Act No. 12289, governs the computation of the provisional deposit and the fair market value required for the expropriating agency to obtain possession and a writ of possession. Rule 67 of the Rules of Court, on the other hand, governs the judicial determination of just compensation and establishes the controlling reckoning point of valuation. The provisional deposit under the statutes does not constitute the final determination of just compensation.

• Consequential Damages for Dangling Areas — Consequential damages for "dangling areas"—portions of land not traversed by the transmission line project but rendered useless due to the presence of transmission lines—are limited to 50% of the BIR zonal valuation of the affected properties, consistent with jurisprudence including National Power Corporation vs. Marasigan.

• "Rule 67, Section 4 remains controlling: just compensation is determined 'as of the date of the taking of the property or of the filing of the complaint, whichever came first.'" — This passage articulates the controlling rule on the reckoning point for just compensation, distinguishing the judicial determination under Rule 67 from the statutory valuation under Republic Act No. 10752 and Republic Act No. 12289.

• "Through this method, petitioners are made whole—not only for the value of the properties occupied but also for the opportunity lost resulting from delayed payment. In so ruling, the Court ensures that while just compensation remains pegged to the date of taking pursuant to Section 4, Rule 67, it nonetheless reflects the full measure of fairness the Constitution demands." — This passage explains the rationale for applying the present value formula: it reconciles the date-of-taking rule with the constitutional mandate of just compensation by accounting for the opportunity loss caused by the government's delayed payment.

• "Thus, Republic Act No. 10752, as amended by Republic Act No. 12289, provides the valuation standards; Rule 67 prescribes when those standards must be applied; and the present value formula bridges the gap created by delayed payment, ensuring consistency between the valuation standards under the law, the procedural rules, and the constitutional mandate of just compensation." — This passage synthesizes the three-tiered analytical framework governing just compensation in expropriation cases involving delayed payment, clarifying the respective roles of statute, procedural rules, and equitable doctrine.

• "The practice of construct first, expropriate later is reprehensible and must not be countenanced." — This statement, quoted from National Transmission Corp. vs. Oroville Development Corporation, encapsulates the Court's condemnation of the government's pattern of taking private property without first initiating proper expropriation proceedings, while explaining why the present value formula is necessary to deter such conduct.

• Republic vs. Vda. de Castellvi, 157 Phil. 329 (1974) — Controlling precedent defining the five requisites of a valid taking under the power of eminent domain; applied to determine that the installation of permanent transmission lines in 1979 and 1995 constituted a valid taking.
• National Transmission Corp. vs. Oroville Development Corporation, 815 Phil. 91 (2017) — Followed; established that high-tension electric current passing through transmission lines perpetually deprives property owners of normal use of their land, constituting compensable deprivation of beneficial enjoyment; also articulated the rationale for fixing just compensation as of the date of taking and distinguished the equitable exceptions in Sangkay and Saludares.
• Republic vs. Spouses Nocom, 914 Phil. 686 (2021) — Controlling precedent first enunciating the "present value formula" for computing just compensation to account for the time value of money and opportunity loss caused by delayed payment; applied to adjust the date-of-taking value.
• Heirs of Jose Mariano vs. City of Naga, 931 Phil. 369 (2022) — Followed; affirmed the application of the present value formula and explained the economic concept of present value with compounding interest as a middle ground between established doctrine and substantial justice.
• Heirs of Cipriano vs. National Transmission Corporation, G.R. No. 255113, August 6, 2025 — Followed; applied the present value formula to TRANSCO transmission line cases and confirmed that legal interest of 6% per annum accrues from the finality of the decision fixing just compensation until full payment.
• National Power Corporation vs. Heirs of Sangkay, 671 Phil. 569 (2011) — Distinguished; recognized as an equitable exception where just compensation was fixed at the time of filing the complaint due to NPC's stealth construction of underground tunnels without notice; distinguished on the ground that no exceptional circumstances (stealth or misleading conduct) exist in the present case.
• National Power Corporation vs. Saludares, 686 Phil. 967 (2012) — Distinguished; recognized as an equitable exception where just compensation was fixed at the time of filing the complaint due to NPC's refusal to acknowledge the owners' claim and insistence that compensation had already been paid; distinguished on the ground that no such misleading conduct exists here.
• Secretary of DPWH vs. Spouses Tecson, 713 Phil. 55 (2013) — Followed; established that when taking occurs prior to the filing of the complaint, the valuation of the property must be anchored to the date of taking.
• National Power Corporation vs. Marasigan, 820 Phil. 1107 (2017) — Followed; awarded consequential damages equivalent to 50% of the BIR zonal valuation of property impacted by transmission lines; applied to limit consequential damages for "dangling areas."
• National Transmission Corporation vs. Spouses Manalo, 950 Phil. 165 (2024) — Followed; clarified that Republic Act No. 10752, as amended by Republic Act No. 12289, applies to expropriation proceedings involving the installation of transmission lines and governs the provisional deposit and statutory valuation.

• Section 4, Rule 67, Rules of Court — 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 rule on the reckoning point for just compensation, prevailing over the statutory valuation provisions of Republic Act No. 10752 and Republic Act No. 12289.
• Section 8, Rule 67, Rules of Court — Authorizes the trial court to recommit matters to commissioners for further report, set aside the report and appoint new commissioners, or accept the report in part and reject it in part. Applied to uphold the CA's directive to reconvene or reconstitute the Board of Commissioners.
• Section 16, Rule 141, Rules of Court — Fixes the fees of commissioners in eminent domain proceedings at not less than PHP 300.00 per day for the time actually and necessarily employed in the performance of their duties. Applied to require recomputation of commissioners' fees based on the actual number of days devoted to preparing their reports.
• Republic Act No. 9136 (Electric Power Industry Reform Act of 2001), Section 8 — Granted TRANSCO the authority and duty to plan, construct, and operate high-voltage transmission facilities, including the power of eminent domain. Served as the statutory basis for respondent's exercise of eminent domain.
• Republic Act No. 10752 (The Right-of-Way Act, 2016) — Governs the acquisition of right-of-way for national government infrastructure projects; provides the standards for the provisional deposit and statutory valuation for purposes of obtaining possession. Applied as the governing statute for the provisional deposit made by TRANSCO in 2017, which occurred after the law's effectivity on March 7, 2016.
• Republic Act No. 12289 (Accelerated and Reformed Right-of-Way Act, 2025), Section 3 and Section 19 — Extends coverage to private entities providing public services such as electricity transmission; Section 19 provides a transitory clause making the Act applicable to all right-of-way transactions except those where a written agreement on compensation has been reached. Applied to hold that the transaction is "ongoing" and not "concluded," rendering the Act applicable.
• National Power Board Resolution No. 94-313 — Defines "dangling areas" as portions of land not traversed by the transmission line project but rendered useless due to the presence of transmission lines. Applied to identify the nature of the consequential damages claimed by petitioners.

Gesmundo, C.J. (Chairperson), Zalameda, Rosario, and Marquez, JJ., concurred.