NATIONAL POWER CORPORATION, PETITIONER, VS. PUREFOODS CORPORATION, SOLID DEVELOPMENT CORPORATION, JOSE ORTEGA, JR., SILVESTRE BAUTISTA, ALFREDO CABANDE, HEIRS OF VICTOR TRINIDAD…

National Power Corporation versus Purefoods Corporation

The Case

This is a special civil action for eminent domain brought by the National Power Corporation, a government-owned and controlled corporation created to develop and transmit electric power nationwide, against several registered owners and claimants of parcels of land in Bulacan. The Power Corporation needed a right-of-way for its San Jose to San Manuel transmission line project and sought to expropriate portions of the affected properties. The case matters because it settles a question every expropriation practitioner must answer: when a power transmission line is strung over private land, does the owner receive only a modest easement fee, or the full market value of the land? The Court answers that the full value is due, because the determination of just compensation is a judicial function that no statute may displace.

Procedural History

The Power Corporation filed its complaint for eminent domain before the Regional Trial Court of Malolos, Bulacan, Branch 18. After pre-trial, the parties agreed to limit the issues to the amount of just compensation and to whether one respondent was entitled to compensation for the devaluation of its peripheral area. A first set of commissioners failed to discharge its duties, so the trial court appointed a second set, which conducted hearings and submitted reports. The trial court then rendered judgment ordering the expropriation and fixing just compensation at 600 pesos per square meter for the properties of one respondent and 400 pesos per square meter for the rest, with interest at 6 percent per annum from the deposit of the provisional valuation until finality and at 12 percent per annum thereafter until full payment.

Both the Power Corporation and one respondent appealed to the Court of Appeals. The appellate court affirmed the trial court in all respects except for the period during which the 12 percent interest would accrue. Only that one respondent sought reconsideration of the appellate decision. The Power Corporation then elevated the case to the Supreme Court by petition for review on certiorari under Rule 45. During the pendency of the petition, the Power Corporation and that respondent forged a compromise agreement, and the Court granted the withdrawal of the petition as to that respondent alone. The petition therefore proceeded only against the remaining respondents.

Facts

To construct and maintain its Northwestern Luzon Project, particularly the San Jose to San Manuel 500 kilovolt transmission line, the Power Corporation had to acquire an easement of right-of-way over certain parcels of land situated in Angat, San Rafael and San Ildefonso and in San Jose del Monte, all in Bulacan. The affected area totaled 62,426.50 square meters. Negotiations between the Power Corporation and the landowners failed, and on 5 November 1997 the corporation filed its complaint for eminent domain against the vendors and vendees of the affected parcels.

The complaint alleged the public purpose of the project and the urgency and necessity of the acquisition, and prayed for a writ of possession should entry be refused. The Power Corporation deposited 126,565.42 pesos with the Land Bank of the Philippines as provisional valuation and sent a notice to take possession. On 6 January 1998, the trial court directed the issuance of a writ of possession.

After hearings, the commissioners recommended compensation based on a fair market value of 600 pesos per square meter for the properties of one respondent and 400 pesos per square meter for the undeveloped or underdeveloped properties of the rest. The trial court adopted these figures. On appeal, the Power Corporation insisted that it was claiming only an easement of right-of-way, so that only an easement fee equivalent to 10 percent of the fair market value should be paid, citing its charter and the implementing regulation of the law on right-of-way acquisitions.

Issues

• Whether or not the question raised by the Power Corporation is a question of law reviewable by the Supreme Court.
• Whether or not just compensation for an easement of right-of-way over land traversed by transmission lines must be based on the full market value of the affected property rather than on an easement fee of 10 percent of that value.
• Whether or not the trial court erred in relying on the commissioners' report in fixing just compensation.

Applicable Provisions

Section 8 of Rule 67 of the 1997 Rules of Civil Procedure provides:

Upon the report being submitted to the court, the court may accept the same and render judgment therewith; or for cause shown, it may recommit the report to the commissioners for further report of facts; or set aside the report and appoint new commissioners; or accept the report in part and reject it in part; and it may make such order or render such judgment as shall secure to the plaintiff the property essential to the exercise of his right of expropriation, and to the defendant just compensation for the property so taken.

This provision defines the discretion the trial court may exercise over the commissioners' report, which the Court finds was not abused in this case.

Ruling

On the first issue, the Court held that the Power Corporation raises a question of law. There is a question of law when the doubt concerns the correct application of law and jurisprudence on admitted facts, and a question of fact when the doubt arises as to the truth or falsity of the alleged facts. The issue here does not call for a reevaluation of the probative value of the evidence, but only for a determination of whether the laws cited by the Power Corporation apply.

On the second issue, the Court ruled that just compensation must be based on the full market value of the affected properties. It relied on its earlier holding that the acquisition of an easement of right-of-way falls within the power of eminent domain, and that although an easement transmits no rights except the easement itself, its acquisition is not gratis. Because the installation of power lines imposes limitations on the use of the land for an indefinite period, the owner is deprived of the normal use of the property and is entitled to compensation that is neither more nor less than the monetary equivalent of the land. The Court acknowledged that the charter of the Power Corporation and the implementing regulation of the right-of-way law state that only 10 percent of the market value is due, but held that this rule is not binding on the Court, because the determination of just compensation in eminent domain cases is a judicial function. Any valuation laid down in a statute may serve only as a guiding principle or as one of the factors in determining just compensation, but it may not substitute the court's own judgment.

On the third issue, the Court found no reversible error in the trial court's reliance on the commissioners' report, there being no showing that the report was tainted with irregularity, fraud or bias. The commissioners had made an ocular inspection and were disinterested persons, so their report is entitled to great weight.

Doctrine

First, the acquisition of an easement of right-of-way for the passage of transmission lines falls within the power of eminent domain, and the owner is entitled to just compensation based on the full market value of the affected property, not merely an easement fee. Second, the determination of just compensation is a judicial function; a statutory valuation, such as the 10 percent easement fee, may guide the court but cannot bind it or substitute for its judgment. Third, where only part of a property is expropriated, the owner may recover the market value of the portion taken plus consequential damage to the remaining part, less the value of consequential benefits. Fourth, the trial court has discretion under Section 8 of Rule 67 to accept, recommit, set aside, or partly accept and partly reject the commissioners' report, and its findings, absent irregularity, fraud or bias, are entitled to great weight.

Disposition

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, with the modification already made as to the period of accrual of the 12 percent interest, thereby sustaining the award of just compensation based on the full market value of the affected properties.

Remember This

The one line to memorize: the determination of just compensation is a judicial function, so an easement of right-of-way for transmission lines is paid at full market value, not at a 10 percent easement fee. Examiners use this case to test the limits of statutory valuation formulas against the constitutional guarantee that private property shall not be taken for public use without just compensation.