NATIONAL TRANSMISSION CORPORATION v. OROVILLE 3.
Later, TRANSCO offered to buy the said properties for a construction of a
(Danica)
August 01, 2017 | Mendoza, J. | Eminent Domain
PETITIONER: National Transmission Corporation (Transco)
RESPONDENTS: Oroville Development Corporation (Oroville)
SUMMARY: In 2006, Transco offered to buy two properties from Oroville.
The subject properties were privately owned by different persons when Transco
constructed a power transmission line back in 1983. RTC fixed the just
compensation at the rate of Php 1,520.00 per square meter with legal interest of
12% per annum reckoned from April 20, 2007 (date of filing the complaint).
The Court of Appeals affirmed the decision. The Court ruled here that the
computation of just compensation for the expropriated property be based on its
value at the time of the taking of the property. Section 4, Rule 67 of the Rules of
Court provides that the payment of just compensation is to be determined from
the date of the taking of the property or the date of the filing of the complaint,
whichever came first.
The factual circumstances of all the cases cited in aforementioned case is
similar to the case at bar, where the government took possession of private
properties without initiating expropriation proceedings and later on, the property
owners demanded either the return of their properties or the payment of just
compensation. Thus, pursuant to the Rules of Court and in accordance with
prevailing jurisprudence, the Court ruled that just compensation must be
reckoned from 1983 when Transco commenced construction of the transmission
lines. The court fixed the just compensation at Php 78.65 per square meter,
which is the fair market of the value of the property at the time of taking.
DOCTRINE: Section 4, Rule 67 of the Rules of Court provides that the
payment of just compensation is to be determined from the date of the taking of
the property or the date of the filing of the complaint, whichever came first. The
Court rules that just compensation must be ascertained as of the year 1983 when
TransCo commenced construction of the transmission lines. Just compensation
is therefore fixed at P78.65 per square meter, which is the fair market value of
the property at the time of taking.
FACTS:
1. This case involves 2 parcels of lands in Cagayan de Oro City which
originally belonged to Alfred Reyes (Reyes) and Grace Calingasan; that in
1983, the TRANSCO constructed a power transmission line on these
properties known as the Tagoloan-Pulangi (TP) 138 kV transmission line.
2. At some point, Reyes sold his land to Antoio Navarette, who later sold the
same property to respondent Oroville who thereafter became the registered
owner of the said properties with a total area of 13,904 sqm traversed by the
existing transmission lines.
new transmission line in Mindanao (Abaga-Kirahon “AK” 230 kV)
4. During negotiation, Oroville (through representative Antonio “Tiu”),
requested to re-route the new transmission line since the TP 138kV
transmission line already traverses its properties. Tiu further reported that
Oroville has not been paid just compensation for the TP 183kV
transmission line in its property. TRANSCO refused to reroute the new
transmission line because it planned to construct it in parallel to the TP
transmission line.
5. In April 2007, Oroville, in seeking to enjoin the construction of the new AK
transmission line, filed a complaint for injuction and damages with prayer
for issuance of a temporary restraining order against TRANSCO.
6. Subsequently, TRANSCO denied that allegation of Oroville’s complaint
and further manifested that it would file the required expropriation
proceedings against Oroville to acquire the latter’s’ properties for its new
transmission line.
7. During trial, Parties agreed to have the subject properties surveyed to fix the
just compensation and as a result, the trial court suspended the proceedings
and directed TRANSCO to conduct a survey.
8. Thereafter, Oroville filed an omnibus motion to convert the proceedings
into an expropriation case to require TRANSCO to pay the BIR the zonal
value of the subject properties; TRANSCO made no objections.
9. In May 2010, the trial court directed TRANSCO to make a provisional
deposit (Php7.6 million) as just compensation for Oroville’s properties
affected by the TP transmission line. TRANSCO complied.
10. A year later, the Court directed the Land Bank of the Philippines to release
the said deposit to Tiu (representative of Oroville); and later issued a writ of
possession directing Oroville to surrender possession of the properties to
TRANSCO.
11. In August 2011, the trial court appointed 3 Commissioners to determine the
just compensation of the properties affected by the new transmission line
project. Summary of Commissioner’s reports are as follows:
a. Engr. Marilyn Legaspi (Court-appointed Commissioner)
Date of Taking: 1983 per Transmission Line Data and Information
(Tagoloan-Pulangi 138 kV Transmission Line)
Valuation of the Property: P78.65 per square meter or a total of
P5,924,772.48 inclusive of interests
b. Engr. Norberto Badelles (engaged by Transco)
Date of Taking: 1983 per Transmission Line Data and Information
(Tagoloan-Pulangi 138 kV Transmission Line) Valuation of the
Property: P1.20 per square meter or a total of P45,716.35 inclusive
of interests
c. Atty. Avelino Pakino (nominated by Oroville)
Date of Taking: 1983 per Transmission Line Data and Information
 (Tagoloan-Pulangi 138 kV Transmission Line) Valuation of the
Property: P2,000.00 per square meter or a total of P27,808,000.00
inclusive of interests
12. RTC: set aside the Comissioner’s report and fixed the just compensation at
the rate of P1,520 per sqm with legal interest of 12% per annum from the
date of filing of the complaint in April 2007; held that said amount was
based on the fair market value of the lots along the national highway of
Bgy. Puerto in CDO city in accordance with the schedule of value under its
City Ordinance & BIR’s comprarative Value of Zonal fair market values;
that the just compensation should not be reckoned from the time of taking,
1983, because it was established by the landowners because it was
established by the landowners that entry into their property was without
their knowledge.
13. CA modified the RTC’s judgement: TransCo’s entry into Oroville’s lots
in 193 was made without warrant or color of authority because at the time
TransCo constructed the TagoloanPulangi transmission line over the
disputed properties in 1983, there’s no intent to expropriate & that it
constructed the lines without negotiating with the owner to purchase the
disputed lots; (b) that the construction of the transmission lines did not
deprive the previous owners of the beneficial enjoyment of their properties
as they continued to possess the same; (c) finally, there was no actual taking
of the subject properties in 1983 when TransCo constructed the Tagoloan-
Pulangi 138 kV transmission line; accordingly the computation of the just
compensation should be reckoned at the time of the filing of the complaint
in 2007. Hence this petition.
14. Petitioner:
a. Section 4, Rule 67 of the Rules of Court and applicable
jurisprudence are explicit in saying that just compensation for
expropriated property shall be determined based on its fair market
value at the time of its taking; that Oroville could not claim lack of
knowledge to the construction of the transmission line since it is in
plain view, considering its height and the huge space that it
occupied; that Oroville should not be allowed to benefit from its
failure to question such construction more than a decade after its
completion; and that it should not be made to pay 12% interest per
annum in the nature of damages for delay as it complied with the
RTC's directive to make provisional deposit for the subject
property.
b. Further contended that this case is not an exception to the settled
rule that just compensation should be based on the property's value
at the time of its taking; that the value and classification of the
subject property at the time of its taking in 1983 should be the
basis for the computation of just compensation; that it informed
Oroville of the construction of the new transmission line over its
properties and readily agreed to the conversion of its complaint for
injunctive relief into an expropriation case; and that the landowner
should also bear the cost of being remiss in guarding against the
effects of a belated claim.
ISSUE/s:
1. W/N the Computation of Just Compensation for the expropriated property
should be based on its value at the time of the taking of the property. –
(main issue related to Eminent Domain) YES
2. W/N the imposition of legal interest of 12% is unjustified. YES.
RULING: WHEREFORE, the petition is GRANTED. The September 18, 2015
Decision and January 25, 2016 Resolution of the Court of Appeals in CAG.R. CV
No. 03571, are REVERSED and SET ASIDE. The valuation of the subject property
owned by respondent Oroville shall be P78.65 per square meter, with interest at
twelve percent (12%) per annum from January 1983 until January 21, 2011.
Petitioner Transco is also ordered to pay respondent Oroville exemplary damages in
the amount of P1,000,000.00 and attorney's fees in the amount of P200,000.00
RATIO:
Eminent domain is the right or power of a sovereign state to appropriate private
property to particular uses to promote public welfare. It is an indispensable attribute
of sovereignty; a power grounded in the primary duty of government to serve the
common need and advance the general welfare.12 The power of eminent domain is
inseparable in sovereignty being essential to the existence of the State and inherent in
government. But the exercise of such right is not unlimited, for two mandatory
requirements should underlie the Government's exercise of the power of
eminent domain, namely: (1) that it is for a particular public purpose; and (2) that
just compensation be paid to the property owner. These requirements partake the
nature of implied conditions that should be complied with to enable the condemnor
to keep the property expropriated
1. Taking of Oroville’s property occurred in 1983 upon construction of the TP
transmission lines
a. SC in ruling that there is taking of the property for purposes of eminent domain in
1983, cited the requisites of taking in Republic v. Vda. De Castellvi:
First, The expropriator must enter a private property; Second, the
entrance into private property must be for more than a momentary
period; Third, the entry into the property should be under warrant or
color of legal authority; Fourth, the property must be devoted to a public
use or otherwise informally appropriated or injuriously affected;
and Fifth, the utilization of the property for public use must be in such a
way as to oust the owner and deprive him of all beneficial enjoyment of
the property.
b. That the 1st and 4th requisites are present in this case when TRANSCO took
possession of Oroville’s property in order to construct the TP transmission lines
to be used in generating electricity for the benefit of the property; 2nd requisite is
present since there’s no question that the construction of the transmission lines meant
an indefinite stay in the subject properties of Oroville; TRANSCO’s exercise of
eminent domain is pursuant to R.A 9136 (Electricity Power Industry Reform Act of
2001); that Oroville has been deprived of the beneficial enjoyment of its property
"since the high-tension electric current passing through the transmission lines
will perpetually deprive the property owners of the normal use of their land, it
is only just and proper to require Napocor to recompense them for the full
market value of their property."
Just compensation reckoned from the date of actual taking
meter, which is the fair market value of the property at the time of taking. As
will be discussed later on, the imposition of interest would adequately compensate
the property owner for the delay in the payment of just compensation considering
that more often than not, the amount of interest to be paid is higher than the increase
in the property's market value.
II. Amount of Interest to be paid
The owner's loss, of course, is not only his property but also its income-generating
potential. Thus, when property is taken, full compensation of its value must
immediately be paid to achieve a fair exchange for the property and the potential
income lost. Thus, the rationale for imposing the interest is to compensate the
landowners for the income they would have made had they been properly
compensated for their properties at the time of the taking.

a. Just compensation is defined as the full and fair equivalent of the property taken
from its owner by the expropriator. The measure is not the taker's gain, but the
owner's loss. The word "just" is used to intensify the meaning of the word
"compensation" and to convey thereby the idea that the equivalent to be rendered for
the property to be taken shall be real, substantial, full, and ample.
b. In addition, Section 4, Rule 67 of the Rules of Court provides:
Section 4. Order of expropriation. - If the objections to and the defenses against the
right of the plaintiff to expropriate the property are overruled, or when no party
appears to defend as required by this Rule, the court may issue an order of
expropriation declaring that the plaintiff has a lawful right to take the property
sought to be expropriated, for the public use or purpose described in the complaint,
upon the payment of just compensation to be determined as of the date of the
taking of the property or the filing of the complaint, whichever came first.
In the case at bench, Transco made a provisional deposit of P7,647,200.00 on
January 21, 2011. Consequently, from 1983 to January 21, 2011, Oroville is entitled
to twelve percent (12%) interest per annum which is the prevailing rate during such
period pursuant to Central Bank Circular No. 905.
On a final note, there are several cases which reached this Court in which TransCo
and even other government agencies constructed transmission lines, tunnels and
other infrastructures before it decided to expropriate the private properties upon
which they built the same. The Court reminds the government and its agencies that it
is their obligation to initiate eminent domain proceedings whenever they intend to
take private property for any public purpose. Before the expropriating power enters a
private property, it must first file an action for eminent domain and deposit with
the authorized government depositary an amount equivalent to the assessed
value of the property.

It ruled in Tecson the the Court was was confronted with common factual
circumstances where the government took control and possession of the subject
properties for public use without initiating expropriation proceedings and without
payment of just compensation, while the landowners failed for a long period of time
to question such government act and later instituted actions for recovery of
possession with damages. The Court thus determined the landowners' right to the
payment of just compensation and, more importantly, the amount of just
compensation. The Court has uniformly ruled that just compensation is the value of
the property at the time of taking that is controlling for purposes of compensation.

In the case at bench, the government took possession of private properties

without initiating expropriation proceedings and later on, the property owners
demanded either the return of their properties or the payment of just
compensation. Thus, pursuant to the Rules of Court and in accordance with
prevailing jurisprudence, the Court rules that just compensation must be
ascertained as of the year 1983 when TRANSCO commenced construction of
the transmission lines. Just compensation is therefore fixed at P78.65 per square