DETERMINATION OF JUST COMPENSATION

84) EPZA vs. Dulay [149 SCRA 305 (1987)]

Facts:

The four parcels of land which are the subject of this case is where the Mactan Export
Processing Zone Authority in Cebu (EPZAl is to be constructed. Private respondent San Antonio
Development Corporation (San Antonio, for brevityl, in which these lands are registered under,
claimed that the lands were expropriated to the government without them reaching the
agreement as to the compensation. Respondent Judge Dulay then issued an order for the
appointment of the commissioners to determine the just compensation. It was later found out
that the payment of the government to San Antonio would be P15 per square meter, which was
objected to by the latter contending that under PD 1533, the basis of just compensation shall be
fair and according to the fair market value declared by the owner of the property sought to be
expropriated, or by the assessor, whichever is lower. Such obiection and the subsequent Motion
for Reconsideration were denied and hearing was set for the reception of the commissioner's
report. EPZA then filed this petition for certiorari and mandamus enjoining the respondent from
further hearing the case.

Issue:

Whether or not the exclusive and mandatory mode of determining just compensation in PD
1533 is unconstitutional.

Held: unconstitutional.

The Supreme Court ruled that the mode of determination of just compensation in PD 1533 is

The method of ascertaining just compensation constitutes impermissible encroachment to

judicial prerogatives. It tends to render the courts inutile in a matter in which under the
Constitution is reserved to it for financial determination. The valuation in the decree may only
serve as guiding principle or one of the factors in determining just compensation, but it may not
substitute the court's own judgment as to what amount should be awarded and how to arrive at
such amount. The determination of just compensation is a judicial function. The executive
department or the legislature may make the initial determination but when a party claims a
violation of the guarantee in the Bill of Rights that the private party may not be taken for public
use without just compensation, no statute decree, or executive order can mandate that its own
determination shall prevail over the court's findings. Much less can the courts be preduded from
looking into the justness of the decreed compensation.

85) Benguet Consolidated, Inc. vs. Republic (143 SCRA 466)

1. CONSTITUTIONAL LAW; POWER OF EMINENT DOMAIN; DEFINED. — The filing of
expropriation proceedings recognizes the fact that the petitioner’s property is no longer part of
the public domain. The power of eminent domain refers to the power of government to take
private property for public use. If the mineral claims are public, there would be no need to
expropriate them. The mineral claims of the petitioner are not being transferred to another
mining company or to a public entity interested in the claims as such. The land where the
mineral claims were located is needed for the Philippine Military Academy, a public use
completely unrelated to mining.

2. ID.; ID.; PERFECTION OF LOCATION OF MINING CLAIM NOT A BAR TO EXERCISE BY

THE STATE OF SAID POWER. — The fact that the location of a mining claim has been
perfected does not bar the Government’s exercise of its power of eminent domain. The right of
eminent domain covers all forms of private property, tangible or intangible, and includes rights
which are attached to land.

3. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; EMINENT DOMAIN; CONDEMNATION

PROCEEDINGS; CANNOT BE QUESTIONED BY PARTY HAVING INCONSISTENT
POSITION; CASE AT BAR. — The order of the lower court was not challenged by the
petitioner. Instead, it filed its second motion for clarification. It is to be noted that in its motion for
new trial and/or reconsideration, the petitioner stated: "Defendant Benguet Consolidated, Inc.,
does not dispute the right of the government to exercise the power of eminent domain with
respect to its property. However, in so doing this Court failed to comply with the basic
constitutional provision that said power can only be exercised upon payment of just
compensation. . . ." Under these circumstances, the petitioner is estopped from questioning the
proceedings of condemnation followed by the court. We cannot condone the inconsistent
positions of the petitioner. (See Republic v. Court of Appeals, 133 SCRA 505). It is very clear
from the statements of the petitioner that it had already abandoned its earlier stand on the
propriety of expropriation and that its intent shifted to the just compensation to be paid by the
plaintiff for its condemned properties.

4. ID.; EVIDENCE; FINDINGS OF FACTS OF THE LOWER COURT GENERALLY NOT

DISTURB. — The lower court affirmed the commissioners’ report to the effect that the petitioner
herein is only entitled to the surface value of the mineral claim when it said: "The Court regrets
that it has no basis on which to evaluate the value of the other claims the mineral reserves of
which were not included or taken into consideration in the above-mentioned evaluations. The
Court, however, realizes that these mineral claims have values. In the absence of any evidence
as to their positive, possible and probable ore contents, said claims shall be evaluated only on
the basis of their surface areas." "Other claims" include the petitioner’s mining claims. Thus, the
trial court computed the amount to be paid to the petitioner as just compensation on the basis of
the surface value of its mining claims. We find no reason to disturb the lower court’s findings on
this matter. The petitioner has not advanced any reason for us to reject such findings.

5. ID.; SPECIAL CIVIL ACTIONS; EMINENT DOMAIN; COMMISSIONER’S REPORT;

GROUND FOR ITS REJECTION. — The appellate court based its findings on the
Commissioner’s Report. The petitioner now assails the approval of the commissioners’ report
regarding the P7,532.46 just compensation to be paid by the government for its four (4) mining
claims. While it is true that the court may reject a Commissioner’s Report on the ground that the
amount allowed in palpably inadequate (Republic v. Vda. de Castellevi, 58 SCRA 336, citing
Manila Railroad Co. v. Caligsihan, 40 Phil. 326) it is to be noted that the petitioner herein has
not supported its stand that the P7,532.46 just compensation for its mining claims is by any
standard ridiculously low and cannot be considered just.

6. ID.; ID.; ID.; PAYMENT OF JUST COMPENSATION; OWNER ENTITLED TO LEGAL

INTEREST IF TAKING OF PROPERTY IS POSTPONED TO A LATER DATE. — The
appellate court, should have provided for the payment of legal interest from the time the
government took over the petitioner’s mining claims until payment is made by the government.
(See National Power Corporation v. Court of Appeals, 129 SCRA 665). We ruled in Republic v.
Juan (92 SCRA 26): . . .." . . [S]aid interest . . .’runs as a matter of law and follows as a matter of
course from the right of the landowner to be placed in as good a position as money can
accomplish, as of the date of the taking’ (30 CJS 230). Stated otherwise: ‘Where the payment of
compensation does not accompany the taking of property for public use but it postponed to a
later date, the owner of the property is ordinarily entitled to the award of an additional sum which
will compensate for delay (cases cited) or which will, in other words, produce the full equivalent
of the value of the property paid contemporaneously with the taking’ (29-A CJS 762). Under this
view, the interest awarded is deemed part of the just compensation required to be paid to the
owner. (27 Am. Jr. 112). . . ."

DECISION

GUTIERREZ, JR., J.:

This is a petition to review the decision of the Intermediate Appellate Court in an expropriation
case, insofar as the decision affects the petitioner.

On June 18, 1958, the Republic of the Philippines filed with the then Court of First Instance of
Benguet and Baguio a complaint for expropriation against ten (10) defendants, among them
Benguet Consolidated, Inc. The Republic stated that it needed the property for the purpose of
establishing and maintaining a permanent site for the Philippine Military Academy, a training
institution for officers in the Armed Forces of the Philippines, under the direct authority and
supervision of the Department of National Defense. It also averred that it had occupied since
May 6, 1950, the area covered by the mining claims of the defendants and had already installed
therein permanent buildings and other valuable improvements with no less than P3,000,000.00
in the belief that the area was unoccupied portions of the public domain, and that according to
the Appraisal Committee constituted under Administrative Order No. 144, dated October 10,
1955, by the President of the Philippines, the reasonable and fair market value of the rights and
interests of all the defendants which will be affected by these eminent domain proceedings
cannot exceed the total sum of P532,371.40.

The locations of the petitioner’s four mining claims with a total area of 25.1082 hectares were
made on the following dates:

JEAN May 18, 1933

DOLORES FR May 15, 1933

NUGGET FR August 24, 1930

SMOKE May 11 & 12, 1933.

The petitioner filed a motion to dismiss on the ground that, insofar as it is concerned, the
Republic did not need and has not occupied the areas covered by the above-mentioned mining
claims and neither have improvements been made on the said areas and that the area covers
ground which is rugged in terrain for which the Philippine Military Academy could have no use.
By way of separate and special grounds for dismissal, Benguet Consolidated, Inc. alleged that
the authority given by the President of the Philippines for the expropriation proceedings refers to
privately owned mineral lands, mining interests, and other private interests of private individuals
and entities of private individuals in certain portions of the site surveyed for and presently
occupied by the Philippine Military Academy at Loakan, Baguio and that the expropriation of
Benguet Consolidated, Inc.’s mineral claims is in violation of law.

On December 28, 1955, the trial court heard Benguet Consolidated Inc.’s motion to dismiss.
Valentin Camado was presented as witness and he testified that he performed the annual
assessment work for movant’s mineral claims. Since the possibility of an amicable settlement
was raised, the representatives of both parties agreed that pending any definite settlement, the
hearing of the motion to dismiss would be held in abeyance. On this same day, the trial court
issued an order, the dispositive portion of which reads:

"In view of the fact that the defendants are no longer challenging plaintiff’s right to condemn the
property, subject of the instant case, the plaintiff Republic of the Philippines is hereby declared
to have lawful right to take the property sought to be condemned, for the public use described in
the complaint, upon payment of just compensation to be determined as of the date of the filing
of the complaint."

Benguet Consolidated, Inc. took exception to the order of condemnation by filing a motion
stating that at no time, had it manifested, either expressly or impliedly, that it was no longer
challenging the plaintiff’s right to expropriate its former mineral claims. In the same motion,
Benguet Consolidated, Inc. moved for the setting of a date for the continuation of the hearing of
its motion to dismiss.

Acting on this motion, the trial court in its Order dated February 23, 1960, stated that." . . to
satisfy Benguet Consolidated, Inc., this Court makes it of record that, pending negotiations
between the Government and Benguet Consolidated, Inc. said corporation has not waived its
right to challenge plaintiff’s right to condemn the mineral claims in question."

In the course of the proceedings, a Board of Commissioners to assess and establish the
reasonable amount of compensation was formed. Appointed by the court as members of the
board of Commissioners were Engineer Ernesto C. Bengson and Attorney-Engineer Rolando J.
Gamboa representing the court and the army respectively and Mining Engineer Francisco G.
Joaquin, nominated by the defendants to represent all of them.

Commissioner Joaquin resigned after attending eight (8) hearings leaving the two other
commissioners to conduct 56 more hearings.

On February 28, 1963, the Board of Commissioners submitted their report recommending the
payment of P43,703.37 to the ten (10) defendants as just compensation for their expropriated
properties.

The parties filed their objections to the Commissioners’ report.

The trial court rejected the Commissioners’ Report and made its own findings and conclusions.
On July 5, 1973, the trial court promulgated a decision awarding various sums to the
defendants.

Benguet Consolidated filed a motion to clarify the decision since the dispositive portion of the
decision computed the respective amounts to be paid by the Republic to the defendants without,
however, including the amount to be paid to Benguet Consolidated for the expropriation of its
four (4) mining claims. In other words, the petitioner was excluded from the awards made by the
trial court.

After Benguet Consolidated filed two other motions (motion for new trial and/or reconsideration;
second motion for clarification) reiterating its objection to the decision in not providing for just
compensation for their expropriated properties, the trial court issued an order fixing the "just
compensation of the surface area of the four (4) claims of Benguet Consolidated, Inc. in the
amount of P128,051.82 with interest at 6% per annum from May 6, 1950 until fully paid, plus
attorney’s fees in an amount equal to 5% of the sum fixed by this Court." A motion to reopen the
case praying for a new trial to allow it to present evidence as to the value of the properties filed
by Benguet Consolidated was denied by the trial court.

Among all parties, only the plaintiff and defendant Benguet Consolidated, Inc. pursued their
appeal before the then Court of Appeals.
On June 28, 1985, the Intermediate Appellate Courts promulgated a decision setting aside the
trial court’s decision. The dispositive portion of the decision reads:

"WHEREFORE, the appealed judgment is hereby reversed and set aside, and another one is
rendered (1) condemning the mineral claims described in the complaint belonging to the
defendants for the public use therein stated; and (2) ordering the plaintiff to pay the defendants
as follows:

"Demonstration Gold

Mines, Ltd. 22.0037 Has.

x P600.00 P13,202.22

Benguet Goldfields

Mining Co. 50.6633 Has.

x P300.00 15,198.99

Crown Mines, Inc. none

Benguet Consolidated

Mining Co. 25.1082 Has.

x P300.00 7,532.46

Josephine McKenzie none

Josephine Murphy 5.8432 Has.

x P300.00 1,752.96

J.E.H. Stevenot 1.1151 Has. 334.53

x P300.00

Andres Trepp none

Gregoria Beley 18.9407 Has.

x P300.00 5,682.21

"No costs."

The petitioner asserts that there is a need to review and reverse the appellate court’s decision
because of the following reasons:

A.

THE CONDEMNATION OF PETITIONER’S MINERAL CLAIMS IS CONTRARY TO LAW AND

APPLICABLE JURISPRUDENCE.

B.

THE APPROVAL OF THE COMMISSIONER’S REPORT IS CONTRARY TO LAW AND

APPLICABLE JURISPRUDENCE.

The petitioner states that its mineral claims were located since 1933 at the latest. It argues that
by such location and perfection, the land is segregated from the public domain even as against
the government. Citing Gold Greek Mining Corporation v. Rodriguez, Et. Al. (66 Phil. 259), it
states that when the location of a mining claim is perfected, this has the effect of a grant of
exclusive possession with right to the enjoyment of the surface ground as well as of all the
minerals within the lines of the claim and that this right may not be infringed.
The petitioner’s arguments have no merit. The filing of expropriation proceedings recognizes the
fact that the petitioner’s property is no longer part of the public domain. The power of eminent
domain refers to the power of government to take private property for public use. If the mineral
claims are public, there would be no need to expropriate them. The mineral claims of the
petitioner are not being transferred to another mining company or to a public entity interested in
the claims as such. The land where the mineral claims were located is needed for the Philippine
Military Academy, a public use completely unrelated to mining. The fact that the location of a
mining claim has been perfected does not bar the Government’s exercise of its power of
eminent domain. The right of eminent domain covers all forms of private property, tangible or
intangible, and includes rights which are attached to land.

The petitioner next raises a procedural point — whether or not in expropriation proceedings an
order of condemnation may be entered by the court before a motion to dismiss is denied.

Citing the case of Nieto v. Ysip, etc., et al, (97 Phil. 31), the petitioner claims that this cannot be
done.

We ruled in the Nieto case that:

"A cursory reading of Sections 4, 5 and 6 of Rules 69 of the Rules of Court discloses the steps
to be followed, one after another, in condemnation proceedings from the institution thereof. The
first step is the presentation by defendants of their objections and defenses to the right of
plaintiff to take the property for the use specified, which objections and defenses shall be set
forth in a single motion to dismiss (Section 4). The second is the hearing on the motion and the
unfavorable resolution thereon by the court. That an adverse resolution on the motion to
dismiss, if objections and defenses are presented, is required because the rule (Sec. 5)
authorizes the court to enter an order of condemnation only if the motion to dismiss is overruled,
or if no motion to dismiss had been presented. The second step includes the order of
condemnation, which may be embodied in the resolution overruling the motion to dismiss. The
third is the appointment of commissioners to assess the just compensation for the property
(Sec. 6). That the above steps must follow one another is evident from the provisions of the
rules as well as from the inter-relation between the steps and the dependence of one upon the
previous step. Thus no order of condemnation may be entered if the motion to dismiss has not
been passed upon and over-ruled, and no assessment should be undertaken unless and until
an order of condemnation has already been entered."

In the instant case the ruling on the motion to dismiss was deferred by the trial court in view of a
possible amicable settlement. Moreover, after the trial court entered an order of condemnation
over the objection of the petitioner, the court issued an order to the effect that the trial court." . .
makes it of record that, pending negotiations between the Government and Benguet
Consolidated, Inc. said corporation has not waived its right to challenge plaintiff’s right to
condemn the mineral claims in question."

At the hearing conducted by the Board of Commissioners, the counsel for the petitioner
manifested that its motion to dismiss was still pending in court, and requested that the hearing
for the presentation of evidence for the petitioner be cancelled. At this point, negotiations
between the government and the petitioner were still going on.

In its original decision, the lower court overlooked an award of just compensation for the
petitioner. This triggered off the filing of the following motions by the petitioner: (1) motion for
clarification praying that an order be issued clarifying the decision insofar as the compensation
to be paid to the petitioner is concerned; (2) motion for new trial and/or reconsideration on the
ground that the court did not award just compensation for the properties of the petitioner; (3)
motion to re-open case on the ground that the issues insofar as the petitioner is concerned have
not been joined since its motion to dismiss has not been resolved; and (4) a second motion for
clarification praying therein:

"WHEREFORE, it is respectfully prayed that a clarification of the decision rendered on July 9th
1973 be made particularly with respect to defendant Benguet Consolidated, Inc., so as to make
a specific award, as in the case of all the other defendants, for the just and fair market value of
the surface rights to its four condemned mineral claims at the very least on the basis of the
same rate of P0.51 per square meter, or for the total amount of P128,051.82; with interest
thereon at 6% per annum from May 6, 1950 until fully paid; plus attorney’s fees in an amount
equal to 5% of the sum fixed to be just and fair market value of the mineral claims."

The lower court denied the motion to re-open the case by stating in its Order:chanrob1es virtual
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x x x

"When this Court issued the order declaring that plaintiff has a lawful right to take the property
sought to be condemned, it impliedly overruled defendant’s Motion to dismiss which in
expropriation cases takes the place of an answer (Sec. 3, Rule 67, Rules of Court), and what
defendant could have done at the time would have been to present evidence on the fair market
value of its properties. Having slept on its rights, Benguet Consolidated, Inc. can no longer have
this case reopened for the presentation of its evidence."

This order was not challenged by the petitioner. Instead, it filed its above-mentioned second
motion for clarification. It is to be noted that in its motion for new trial and/or reconsideration, the
petitioner stated:jgc:

"Defendant Benguet Consolidated, Inc., does not dispute the right of the government to exercise
the power of eminent domain with respect to its property. However, in so doing this court failed
to comply with the basic constitutional provision that said power can only be exercised upon
payment of just compensation. . . ."
Under these circumstances, the petitioner is estopped from questioning the proceedings of
condemnation followed by the court. We cannot condone the inconsistent positions of the
petitioner. (See Republic v. Court of Appeals, 133 SCRA 505). It is very clear from the
statements of the petitioner that it had already abandoned its earlier stand on the propriety of
expropriation and that its intent shifted to the just compensation to be paid by the plaintiff for its
condemned properties.

The second issue centers on the amount of just compensation which should be paid by the
respondent to the petitioner for the condemned properties.

The petitioner assails the appellate court’s approval of the Commissioners’ Report which fixed
the amount of P7,532.46 as just compensation for the mineral claims. The petitioner contends
that this amount is by any standard ridiculously low and cannot be considered just and that in
fact the commissioners’ report was rejected by the trial court.

The Commissioners’ Report was submitted by Ernesto C. Bengson, chairman of the board and
Rolando J. Gamboa, Francisco Joaquin, representing the defendants resigned after attending
eight (8) hearings due to ill health. The defendants did not ask for a replacement.

The conclusion of the Commissioners are the result of documentary evidence presented by the
parties, testimonies of several mining experts and executives of mining companies including Mr.
Ralph W. Crosby, the then vice president of the petitioner, and ocular inspections of the mining
claims involved in this case. Among those present during the ocular inspection were Mr.
Joventino S. Perfecto and Mr. Kevin A. Callow, the Chief Engineer of the Acupan Mines and the
Exploration Geologist of the Benguet Consolidated, Inc., respectively. Among those considered
by the commissioners in order to determine the just compensation to be paid to the defendants
were the ore reserves, base metal concentrates, and gypsums deposits of the mining claims.

The P7,532.46 just compensation for the petitioner was based on the following findings of the
Board of Commissioners:

"The Commissioners conducted an ocular inspection of the mining claims involved in this case,
on October 14, 1961, with prior notice to all the parties. At this ocular inspection, Mr. Joventino
S. Perfecto and Mr. Kevin A. Callow, Chief Engineer of the Acupan Mines and Exploration
Geologist, respectively, of the Benguet Consolidated, Inc., also took part. In the mining claims of
Benguet Consolidated, Inc., involved in this case, namely, Dolores, Nugget, Jean and Smoke
mining claims, there are some exploration tunnels and trenches to explore the mineral character
of these claims. However, the exploration and/or development work on these claims is not
sufficient for making any estimate of the value of these claims for mining purposes. The property
has possibilities; but, with the limited work done on these claims, no ore body has as yet been
found. Consequently, the value of these claims cannot be determined at the present time.

x x x
"With respect to the mining claims of Benguet Consolidated, Inc., which are considered apart
from the other mining claims involved in this case, the mineral value of these claims cannot
possibly be determined for the present, as these claims are not yet sufficiently developed.

"Upon the foregoing considerations, it would appear that all that the defendants would be
entitled to would be the value of the surface rights of their mining claims.

x x x

"According to the ‘Schedule of Assessed Value of Mineral Lands’ (Exhs. B and B-1), the
assessed value of a patented lode claim (producing or non-producing) or a non-patented
producing claim is P600.00 per hectare, and for a non-producing unpatented claim, it is P300.00
per hectare."cralaw virtua1aw library

The petitioner’s mining claims were classified as non-producing unpatented claims. It was
established that the area of the mineral claims belonging to the petitioner and included in the
Philippine Military Reservation was 25.1082 hectares. Hence, the commissioners arrived at the
total amount of P7,532.46 (25.1082 x P300.00) as just compensation to be paid to the petitioner
for its mining claims.

The Schedule of Assessment Value of Mineral Lands (Exhibits B, B-1) presented by the
government, is a "SCHEDULE of Assessed Values of mineral lands, furnished by the Provincial
Assessor of Mountain Province on June 30, 1955" issued by Onofre D. Alabanza, ex-oficio
Mining Recorder of the Office of the Mining Recorder, City of Baguio, Bureau of Mines,
Department of Agriculture and Natural Resources.

These findings negate the trial court’s observation that the commissioners only took into
consideration the surface value of the mineral claims. In fact, the lower court affirmed the
commissioners’ report to the effect that the petitioner herein is only entitled to the surface value
of the mineral claims when it said:

"The Court regrets that it has no basis on which to evaluate the value of the other claims the
mineral reserves of which were not included or taken into consideration in the above-mentioned
evaluations. The Court, however, realizes that these mineral claims have values. In the absence
of any evidence as to their positive, possible and probable ore contents, said claims shall be
evaluated only on the basis of their surface areas."

"Other claims" include the petitioner’s mining claims. Thus, the trial court computed the amount
to be paid to the petitioner as just compensation on the basis of the surface value of its mining
claims.

We find no reason to disturb the lower court’s findings on this matter. The petitioner has not
advanced any reason for us to reject such findings.
As stated earlier, the appellate court based its findings on the Commissioners’ Report. The
petitioner now assails the approval of the commissioners’ report regarding the 7,532.46 just
compensation to be paid by the government for its four (4) mining claims.

While it is true that a court may reject a Commissioners’ Report on the ground that the amount
allowed is palpably in adequate (Republic v. Vda. de Castellvi, 58 SCRA 336, citing Manila
Railroad Co. v. Caligsihan, 40 Phil, 326) it is to be noted that the petitioner herein has not
supported its stand that the P7,532.46 just compensation for its mining claims is by any
standard ridiculously low and cannot be considered just.

On the other hand, the appellate court said:

"The integrity and impartiality of the remaining Commissioners, Engrs. Bengson and Gamboa,
were not questioned by the defendants. They are experienced mining engineers and members
of the bar. And the Commissioners did give value to the mineral contents of the claims. Pages
168 to 206 of the Report will show that the Board considered the ore reserves and the base
metal concentrates and gypsum deposits. The Board concluded that it was not profitable to
operate the claims, taking into account the cost of production, rehabilitation and depletion,
depreciation and smelting and marketing expenses. Although Engineer Joaquin resigned after
eight hearings of the Board, the defendants did not ask for a replacement. Anyway, the Court
was ably represented by Engineer Bengson. The Board held a total of 64 hearings. Besides
documentary evidence, and an ocular inspection of the mining claims involved made with prior
notice, twelve witnesses were presented by the parties."

We are not inclined to reject these findings of facts of the appellate court in the absence of any
contrary evidence pointed to by the petitioner.

Moreover, it is to be noted that unlike the plaintiff and other defendants, the petitioner did not file
any opposition to the Commissioners’ Report in the lower court.

The appellate court, however, should have provided for the payment of legal interest from the
time the government took over the petitioner’s mining claims until payment is made by the
government. (See National Power Corporation v. Court of Appeals, 129 SCRA 665).

We ruled in Republic v. Juan (192 SCRA 26):

x x x

". . . [S]aid interest . . .’runs as a matter of law and follows as a matter of course from the right of
the landowner to be placed in as good a position as money can accomplish, as of the date of
the taking’ (30 CJS 230). Stated otherwise: ‘Where the payment of compensation does not
accompany the taking of property for public use but is postponed to a later date, the owner of
the property is ordinarily entitled to the award of an additional sum which will compensate for
delay (cases cited) or which will, in other words, produce the full equivalent of the value of the
property paid contemporaneously with the taking’ (29-A CJS 762). Under this view, the interest
awarded is deemed part of the just compensation required to be paid to the owner (27 Am. Jur.
112). . ."

The appellate court’s decision is, therefore, modified in this respect.

WHEREFORE, the decision of the Intermediate Appellate Court is MODIFIED in that the
government is directed to pay the petitioner the amount of SEVEN THOUSAND FIVE
HUNDRED THIRTY-TWO PESOS) and 46/100 (P7,532.46 plus 6% interest from May 6, 1950
to July 29, 1974 and 12% thereafter until fully paid, and AFFIRMED in all other respects.

SO ORDERED.

86) Hacienda Luisita, Inc. vs. Presidential Agrarian Reform Council (G.R. No.
171101, April 24, 2012)

FACTS:

On July 5, 2011, the Supreme Court en banc voted unanimously (11-0) to DISMISS/DENY the
petition filed by HLI and AFFIRM with MODIFICATIONS the resolutions of the PARC revoking
HLI’s Stock Distribution Plan (SDP) and placing the subject lands in Hacienda Luisita under
compulsory coverage of the Comprehensive Agrarian Reform Program (CARP) of the
government.

The Court however did not order outright land distribution. Voting 6-5, the Court noted that there
are operative facts that occurred in the interim and which the Court cannot validly ignore. Thus,
the Court declared that the revocation of the SDP must, by application of the operative fact
principle, give way to the right of the original 6,296 qualified farmworkers-beneficiaries (FWBs)
to choose whether they want to remain as HLI stockholders or [choose actual land distribution].
It thus ordered the Department of Agrarian Reform (DAR) to “immediately schedule meetings
with the said 6,296 FWBs and explain to them the effects, consequences and legal or practical
implications of their choice, after which the FWBs will be asked to manifest, in secret voting,
their choices in the ballot, signing their signatures or placing their thumbmarks, as the case may
be, over their printed names.”

The parties thereafter filed their respective motions for reconsideration of the Court decision.

ISSUES:

(1) Is the operative fact doctrine available in this case?

(2) Is Sec. 31 of RA 6657 unconstitutional?

(3) Can’t the Court order that DAR’s compulsory acquisition of Hacienda Lusita cover the full
6,443 hectares allegedly covered by RA 6657 and previously held by Tarlac Development
Corporation (Tadeco), and not just the 4,915.75 hectares covered by HLI’s SDP?

(4) Is the date of the “taking” (for purposes of determining the just compensation payable to HLI)
November 21, 1989, when PARC approved HLI’s SDP?

(5) Has the 10-year period prohibition on the transfer of awarded lands under RA 6657 lapsed
on May 10, 1999 (since Hacienda Luisita were placed under CARP coverage through the SDOA
scheme on May 11, 1989), and thus the qualified FWBs should now be allowed to sell their land
interests in Hacienda Luisita to third parties, whether they have fully paid for the lands or not?

(6) THE CRUCIAL ISSUE: Should the ruling in the July 5, 2011 Decision that the qualified
FWBs be given an option to remain as stockholders of HLI be reconsidered?

RULING:

[The Court PARTIALLY GRANTED the motions for reconsideration of respondents PARC, et al.
with respect to the option granted to the original farmworkers-beneficiaries (FWBs) of Hacienda
Luisita to remain with petitioner HLI, which option the Court thereby RECALLED and SET
ASIDE. It reconsidered its earlier decision that the qualified FWBs should be given an option to
remain as stockholders of HLI, and UNANIMOUSLY directed immediate land distribution to the
qualified FWBs.]

1. YES, the operative fact doctrine is applicable in this case.

[The Court maintained its stance that the operative fact doctrine is applicable in this case since,
contrary to the suggestion of the minority, the doctrine is not limited only to invalid or
unconstitutional laws but also applies to decisions made by the President or the administrative
agencies that have the force and effect of laws. Prior to the nullification or recall of said
decisions, they may have produced acts and consequences that must be respected. It is on this
score that the operative fact doctrine should be applied to acts and consequences that resulted
from the implementation of the PARC Resolution approving the SDP of HLI. The majority
stressed that the application of the operative fact doctrine by the Court in its July 5, 2011
decision was in fact favorable to the FWBs because not only were they allowed to retain the
benefits and homelots they received under the stock distribution scheme, they were also given
the option to choose for themselves whether they want to remain as stockholders of HLI or not.]

2. NO, Sec. 31 of RA 6657 NOT unconstitutional.

[The Court maintained that the Court is NOT compelled to rule on the constitutionality of Sec. 31
of RA 6657, reiterating that it was not raised at the earliest opportunity and that the resolution
thereof is not the lis mota of the case. Moreover, the issue has been rendered moot and
academic since SDO is no longer one of the modes of acquisition under RA 9700. The majority
clarified that in its July 5, 2011 decision, it made no ruling in favor of the constitutionality of Sec.
31 of RA 6657, but found nonetheless that there was no apparent grave violation of the
Constitution that may justify the resolution of the issue of constitutionality.]

3. NO, the Court CANNOT order that DAR’s compulsory acquisition of Hacienda Lusita cover
the full 6,443 hectares and not just the 4,915.75 hectares covered by HLI’s SDP.

[Since what is put in issue before the Court is the propriety of the revocation of the SDP, which
only involves 4,915.75 has. of agricultural land and not 6,443 has., then the Court is constrained
to rule only as regards the 4,915.75 has. of agricultural land. Nonetheless, this should not
prevent the DAR, under its mandate under the agrarian reform law, from subsequently
subjecting to agrarian reform other agricultural lands originally held by Tadeco that were
allegedly not transferred to HLI but were supposedly covered by RA 6657.

However since the area to be awarded to each FWB in the July 5, 2011 Decision appears too
restrictive – considering that there are roads, irrigation canals, and other portions of the land
that are considered commonly-owned by farmworkers, and these may necessarily result in the
decrease of the area size that may be awarded per FWB – the Court reconsiders its Decision
and resolves to give the DAR leeway in adjusting the area that may be awarded per FWB in
case the number of actual qualified FWBs decreases. In order to ensure the proper distribution
of the agricultural lands of Hacienda Luisita per qualified FWB, and considering that matters
involving strictly the administrative implementation and enforcement of agrarian reform laws are
within the jurisdiction of the DAR, it is the latter which shall determine the area with which each
qualified FWB will be awarded.

On the other hand, the majority likewise reiterated its holding that the 500-hectare portion of
Hacienda Luisita that have been validly converted to industrial use and have been acquired by
intervenors Rizal Commercial Banking Corporation (RCBC) and Luisita Industrial Park
Corporation (LIPCO), as well as the separate 80.51-hectare SCTEX lot acquired by the
government, should be excluded from the coverage of the assailed PARC resolution. The Court
however ordered that the unused balance of the proceeds of the sale of the 500-hectare
converted land and of the 80.51-hectare land used for the SCTEX be distributed to the FWBs.]

4. YES, the date of “taking” is November 21, 1989, when PARC approved HLI’s SDP.

[For the purpose of determining just compensation, the date of “taking” is November 21, 1989
(the date when PARC approved HLI’s SDP) since this is the time that the FWBs were
considered to own and possess the agricultural lands in Hacienda Luisita. To be precise, these
lands became subject of the agrarian reform coverage through the stock distribution scheme
only upon the approval of the SDP, that is, on November 21, 1989. Such approval is akin to a
notice of coverage ordinarily issued under compulsory acquisition. On the contention of the
minority (Justice Sereno) that the date of the notice of coverage [after PARC’s revocation of the
SDP], that is, January 2, 2006, is determinative of the just compensation that HLI is entitled to
receive, the Court majority noted that none of the cases cited to justify this position involved the
stock distribution scheme. Thus, said cases do not squarely apply to the instant case. The
foregoing notwithstanding, it bears stressing that the DAR's land valuation is only preliminary
and is not, by any means, final and conclusive upon the landowner. The landowner can file an
original action with the RTC acting as a special agrarian court to determine just compensation.
The court has the right to review with finality the determination in the exercise of what is
admittedly a judicial function.]

5. NO, the 10-year period prohibition on the transfer of awarded lands under RA 6657 has NOT
lapsed on May 10, 1999; thus, the qualified FWBs should NOT yet be allowed to sell their land
interests in Hacienda Luisita to third parties.

[Under RA 6657 and DAO 1, the awarded lands may only be transferred or conveyed after 10
years from the issuance and registration of the emancipation patent (EP) or certificate of land
ownership award (CLOA). Considering that the EPs or CLOAs have not yet been issued to the
qualified FWBs in the instant case, the 10-year prohibitive period has not even started.
Significantly, the reckoning point is the issuance of the EP or CLOA, and not the placing of the
agricultural lands under CARP coverage. Moreover, should the FWBs be immediately allowed
the option to sell or convey their interest in the subject lands, then all efforts at agrarian reform
would be rendered nugatory, since, at the end of the day, these lands will just be transferred to
persons not entitled to land distribution under CARP.]

6. YES, the ruling in the July 5, 2011 Decision that the qualified FWBs be given an option to
remain as stockholders of HLI should be reconsidered.

[The Court reconsidered its earlier decision that the qualified FWBs should be given an option to
remain as stockholders of HLI, inasmuch as these qualified FWBs will never gain control [over
the subject lands] given the present proportion of shareholdings in HLI. The Court noted that the
share of the FWBs in the HLI capital stock is [just] 33.296%. Thus, even if all the holders of this
33.296% unanimously vote to remain as HLI stockholders, which is unlikely, control will never
be in the hands of the FWBs. Control means the majority of [sic] 50% plus at least one share of
the common shares and other voting shares. Applying the formula to the HLI stockholdings, the
number of shares that will constitute the majority is 295,112,101 shares (590,554,220 total HLI
capital shares divided by 2 plus one [1] HLI share). The 118,391,976.85 shares subject to the
SDP approved by PARC substantially fall short of the 295,112,101 shares needed by the FWBs
to acquire control over HLI.]

87) NPC vs. Ibrahim et. al. (G.R. No. 168732, June 29, 2007)

FACTS:

Respondent Lucman G. Ibrahim, in his personal capacity and in behalf of his co-heirs
instituted an action against petitioner National Power Corporation (NAPOCOR) for
recovery of possession of land and damages before the Regional Trial Court (RTC) of
Lanao del Sur. In their complaint, Ibrahim and his co-heirs claimed that they were
owners of several parcels of land. Sometime in 1978, NAPOCOR, through alleged
stealth and without respondents’ knowledge and prior consent, took possession of the
sub-terrain area of their lands and constructed therein underground tunnels. The
existence of the tunnels was only discovered sometime in July 1992 by respondents
and then later confirmed on November 13, 1992 by NAPOCOR itself through a
memorandum issued by the latter’s Acting Assistant Project Manager. The tunnels were
apparently being used by NAPOCOR in siphoning the water of Lake Lanao and in the
operation of NAPOCOR. Respondent Omar G. Maruhom requested the Marawi City
Water District for a permit to construct and/or install a motorized deep well in Lot 3
located in Saduc, Marawi City but his request was turned down because the
construction of the deep well would cause danger to lives and property. On October 7,
1992, respondents demanded that NAPOCOR pay damages and vacate the sub-terrain
portion of their lands but the latter refused to vacate much less pay damages.
Respondents further averred that the construction of the underground tunnels has
endangered their lives and properties as Marawi City lies in an area of local volcanic
and tectonic activity. Further, these illegally constructed tunnels caused them sleepless
nights, serious anxiety and shock thereby entitling them to recover moral damages and
that by way of example for the public good, NAPOCOR must be held liable for
exemplary damages. Disputing respondents’ claim, NAPOCOR filed an answer with
counterclaim denying the material allegations of the complaint and interposing
affirmative and special defenses, namely that (1) there is a failure to state a cause of
action since respondents seek possession of the subterrain portion when they were
never in possession of the same, (2) respondents have no cause of action because they
failed to show proof that they were the owners of the property, and (3) the tunnels are a
government project for the benefit of all and all private lands are subject to such
easement as may be necessary for the same. Ibrahim, joined by his co-heirs, filed an
Urgent Motion for Execution of Judgment Pending Appeal. On the other hand,
NAPOCOR filed a Notice of Appeal. Thereafter, NAPOCOR filed a vigorous opposition
to the motion for execution of judgment pending appeal with a motion for
reconsideration of the Decision. NAPOCOR filed a Manifestation and Motion
withdrawing its Notice of Appeal purposely to give way to the hearing of its motion for
reconsideration. The RTC issued an Order granting execution pending appeal and
denying NAPOCOR’s motion for reconsideration.

NAPOCOR filed its Notice of Appeal by registered mail which was denied by the RTC
on the ground of having been filed out of time. Meanwhile, the Decision of the RTC was
executed pending appeal and funds of NAPOCOR were garnished by respondents
Ibrahim and his co-heirs.
The RTC granted the petition and rendered a modified judgment. Subsequently, both
respondent Ibrahim and NAPOCOR appealed to the CA. The CA set aside the modified
judgment and reinstated the original decision amending it further by deleting the award
of moral damages and reducing the amount of rentals and attorney’s fees, Issue:
Whether respondents are entitled to just compensation hinges upon who owns the sub-
terrain area occupied by petitioner.

ISSUE:

W/N Ibrahim et al are entitled to just compensation? - YES

RULING:

NAPOCOR contends

- The tunnels constitute an EASEMENT, hence no loss of title or possession

SC: The manner in which the easement was created violated due process

- Without notice and indemnity

- Not done through expropriation proceedings

Landowners cannot be deprived of their right over their land until expropriation
proceedings are instituted in court

-Tunnels limited Ibrahim's use of the land, hence they are entitled to FULL COMPENSATION,
not just an easement fee

- In this case, the easement practically deprived Ibrahim of the land's normal and
beneficial use for an indefinite period

How to compute the compensation

Just compensation

- Just and complete equivalent of the loss, determined by referring to the value of the land
and its character at the time it was taken by the expropriating authority.

There is "taking" when

- Owners are actually deprived or dispossessed of the property

- There is practical destruction or a material impairment of the value of the property
A. Expropriator enters property permanently for purposes of public use
B. In a manner that ousts the owner and deprives him of all beneficial enjoyment
- Under warrant or color of legal authority
Taking was not under warrant or color of legal authority - NAPOCOR mistakenly believed
that the property was under public dominion

SC likened the case to PC v. CA and Macapanton Mangondato where it was held:

1. General Rule in determining just compensation

a. Value of property as of the date of filing the complaint

2. Exception - where the Court fixed the property as of the date it was taken and not the date of
commencement of expropriation proceedings

a. There would be an injustice to the expropriator of by a delay in the collection the increment in
price would accrue to the owner

b. Exception applies when the owner would be given undue incremental advantages arising
from the use to which the govt devotes the property expropriated

If the fair market value were determined at the time of NAPOCOR's used of Mangondato's
property, the Court would be sanctioning a deceptive scheme

1. NPC for any other reason than eminent domain would occupy another's property

2. When pressed for payment, NPC can negotiate for a low price (from when occupation
commenced) THEN expropriate of the landowner refuses the offer, DESPITE the increased in
value of the property.

SC. To allow NAPOCOR to use the date when it constructed the tunnels as valuation date
would be GROSSLY UNFAIR value must be computed as of 1992 (when Ibrahim
discovered the tunnels)

- It entered the property w/o warrant or color of legal authority

-There was also no intent to expropriate

-It did not notify the owners and wrongly assumed it had the right to dig the
tunnels

- The "improvements" (tunnels) it introduced had no contribution to the increase of the

land value

*** it is liable to pay consequential damages if in enforcing the legal easement on Andaya’s
property, the remaining area would be rendered unusable and uninhabitable. “Taking”, in the
exercise of the power of eminent domain, occurs not only when the government actually
deprives or dispossess the property owner of his property or of its ordinary use, but also when
there is a practical destruction or material impairment of the value of his property. Using this
standard, there was undoubtedly a taking of the remaining area of Andaya’s property. True, no
burden was imposed thereon and Andaya still retained title and possession of the property. But,
the nature and the effect of the floodwalls would deprive Andaya of the normal use of the
remaining areas. It would prevent ingress and egress to the property and turn it into a catch
basin for the floodwaters coming from the Agusan River.

For this reason, Andaya is entitled to payment of just compensation, which must be neither
more nor less than the monetary equivalent of the land. One of the basic principles enshrined in
our Constitution is that no person shall be deprived of his private property without due process
of law; and in expropriation cases, an essential element of due process is that there must be
just compensation whenever private property is taken for public use. Noteworthy, Section 9,
Article III of our Constitution mandates that private property shall not be taken for public use
without just compensation. (Rep. v. Lim, G.R. No. 161656, June 29, 2005, 462 SCRA 265; Rep.
v. Andaya, G.R. No. 160656, June 15, 2007).

88) NPC vs. Spouses Zabala (G.R. No. 173520, January 30, 2013)

FACTS:

On October 27, 1994, plaintiff-appellant National Power Corporation (Napocor) filed a complaint
for Eminent Domain against defendants-appellees Sps. R. Zabala & L. Baylon, before the RTC,
Balanga City, Bataan alleging that Spouses Zabala and Baylon own parcels of land located in
Balanga City, Bataan and that it urgently needed an easement of right of way over the affected
areas for its 230 KV Limay-Hermosa Transmission Lines. The Commissioners submitted their
Report/ Recommendation fixing the just compensation at P150.00 per square meter. Napocor
prayed that the report be recommitted to the commissioners for the modification of the report
and the substantiation of the same with reliable and competent documentary evidence based on
the value of the property at the time of its taking. The Commissioners submitted their Final
Report fixing the just compensation at P500.00 per square meter.

On June 28, 2004, the RTC rendered its Partial Decision and ordered Napocor to pay
Php150.00 per square meter for the 6,820 square meters determined as of the date of the
taking of the property.

Napocor appealed to the CA arguing that the Commissioners reports are not supported by
documentary evidence. Napocor argued that the RTC did not apply Section 3A of R.A. No. 6395
which limits its liability to easement fee of not more than 10% of the market value of the property
traversed by its transmission lines. CA affirmed the RTCs Partial Decision.

ISSUE:

Whether or not the RTC erred in fixing the amount of Php150.00 per square meter as the fair
market value of the property subject of the easement right of way of Napocor?

HELD:

The petition is partially meritorious.

CONSTITUTIONAL LAW: just compensation

Sec. 3A of RA No. 6395 cannot restrict the constitutional power of the courts to determine just
compensation. The payment of just compensation for private property taken for public use is
guaranteed no less by our Constitution and is included in the Bill of Rights. As such, no
legislative enactments or executive issuances can prevent the courts from determining whether
the right of the property owners to just compensation has been violated. It is a judicial function
that cannot be usurped by any other branch or official of the government. Statutes and
executive issuances fixing or providing for the method of computing just compensation are not
binding on courts and, at best, are treated as mere guidelines in ascertaining the amount
thereof.

The Supreme Court has held in a long line of cases that 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.

89) NPC vs. Marasigan (G.R. No. 220367, November 20, 2017)

IJAM, J.:

This Petition for Review[1] on Certiorari under Rule 45 challenges the Decision[2] dated
September 1, 2015 of the Court of Appeals (CA) in CA G.R. CV No. 97640, which affirmed the
Decision[3] dated December 20, 2010 of the Regional Trial Court (RTC) of Pili, Camarines Sur,
in the expropriation case commenced by petitioner National Power Corporation (NPC) against
respondents as registered owners of the subject properties.

FACTS:

For purposes of constructing and maintaining its steel transmission lines and wooden electric
poles for its Naga-Tiwi 230 KV (Single Bundle), Naga-Tiwi 230 KV (Double Bundle) and 69 KV
Naga-Daraga Transmission Lines, NPC filed, on January 23, 2006, an expropriation
complaint[4] against respondents as registered owners of the following four parcels of land
located in Barangays Sagurong, San Agustin and San Jose, Pili, Camarines Sur: -----------

The total area over which NPC sought an easement of right of way covers 49,173 square
meters of the subject properties.[13] Based on the tax declarations allegedly classifying the
properties as agricultural and based on the corresponding Bureau of Internal Revenue's (BIR)
zoning valuation therefor, NPC offered to pay PhP 299,550.50.[14]

While interposing no objection to the expropriation, respondents nevertheless opposed the

classification of the properties as agricultural on the ground that the same were classified as
industrial, commercial and residential since the year 1993 as shown by (1) Sangguniang Bayan
Resolution No. 17; (2) Municipal Ordinance No. 7 dated February 1, 1993; (3) annotations on
the memorandum of encumbrances of the titles; (4) DARCO Conversion Order No.
050301016014-(300)-00, Series of 2000 issued by the Department of Agrarian Reform; and (5)
Certification issued by the Municipal Assessor of Pili, Camarines Sur.[15] Respondents thus
claimed PhP 47,064,400 for the affected 49,173 square meters. By way of counterclaim,
respondents sought payment of consequential damages for the areas left in between each
transmission line, like the spaces underneath the infrastructure, commonly known as "dangling"
portions in the total area of 41,869 square meters.[16]

After the pre-trial, the RTC issued an Order of Expropriation and further fixed the provisional
value of the properties at PhP 47,064,400, which amount was eventually deposited by NPC with
Landbank of the Philippines.[17] Accordingly, in an Omnibus Order dated May 23, 2006, the
RTC issued a writ of possession in favor of NPC and ordered the LBP to release to respondents
the amount deposited.[18] Meanwhile, an appraisal committee was formed by the RTC for
purposes of determining just compensation,[19] which thereafter submitted a Consolidated
Report dated August 10, 2006.[20] A reversed trial thereafter ensued.

Respondents presented the Chairman[21] of the appraisal committee who testified that the
appraisal committee recommended[22] the total valuation of PhP 49,064,400 based on the
assessor's data and the BIR zonal valuations as indicated on the 1997 tax declarations.[23]
Also presented was the succeeding Chairman[24] of the appraisal committee who testified that
the properties suffered consequential damages which the appraisal committee recommended to
be computed at 50% of the BIR zonal value per square meter or for a total amount of PhP
22,227,800.[25] On ocular inspection, the appraisal committee found that the existence of the
transmission lines hampered the properties' potential use such that while the areas before and
after the transmission lines could still be used, the areas in between could no longer be utilized.
The appraisal committee also noted that the transmission lines produced considerable noise
making the area unsuitable for residential purposes.[26]

NPC, on the other hand, presented its right-of-way officers whose testimonies sought to
establish that the lots being claimed by respondents as "dangling" areas were classified as
agricultural under the tax declarations and that NPC negotiated with respondents for purposes
of installing the transmission lines in 1996[27] and that NPC took the subject properties in
between the years 1996 to 1998.[28] The right-of-way officer further testified that the "dangling"
areas could still be used for agricultural purposes but nevertheless agreed that the presence of
the transmission lines may endanger the people and animals therein if in case they fell.[29] On
cross-examination, the right of way officer admitted that the properties were classified as agro
industrial as stated in the 1998 tax declarations. He admitted that the classification of the
properties as agricultural which was used as basis for computing its value was erroneous.[30]

The RTC rendered its Decision dated December 20, 2010 affirming the recommendation of the
appraisal committee for the payment of just compensation and fixed the amount of PhP
47,064,400 for the 49,173 square meters based on the BIR zonal valuation of the properties
classified as residential, commercial and industrial as of the time of the filing of the complaint on
January 23, 2006. The RTC rejected NPC's claim that it took possession of the property in 1972
and 1974 when respondents allegedly. allowed NPC to construct the transmission lines for lack
of proof. In addition, the RTC held that had the properties been taken on said years, such taking
was without color of legal authority. The RTC likewise adopted the recommendation of the
appraisal committee for the payment of PhP 22,227,800 as consequential damages for the
41,867 square meters portion of the properties which were rendered useless or no longer fit for
its intended use due to the construction of the transmission lines.[31]

In disposal, the RTC held:

Wherefore, judgment is hereby rendered:

1. Approving and adopting the Commissioner's Report dated August 9, 2006 and November 24,
2008;

2. The payment of the provisional value (on May 19, 2006 when plaintiff made the deposit) of
P47,064,400.00 as just compensation for the 49,173 square meters area directly affected by the
transmission lines is the payment for the just compensation with 12% interest per annum
(Marina Z. Reyes, et al. vs. National Housing Authority, G.R. No. 147511, January 20, 2003),
from the date of filing of this case until paid;

3. Condemning plaintiff to pay defendants the amount of P22,227,800.00 as consequential

damages with interest at 12% per annum from January 23, 2006 until fully paid;

4. To pay P20,000.00 attorney's fees.

SO ORDERED.[32]

NPC's motion for reconsideration was denied by the RTC in its Order dated May 2, 2011.
[33] However, the RTC modified the imposition of interest as follows:

Wherefore, judgment is hereby rendered:

1. Approving and adopting the Commissioner's Report dated August 9, 2006 and November 24,
2008;

2. The payment of the provisional value (on May 19, 2006 when plaintiff made the deposit) of
P47,064,400.00 as just compensation for the 49,173 square meters area directly affected by the
transmission lines is the payment for the just compensation with interest at 6% per annum from
the date of filing of the case until full payment less the interest collected by the defendants from
the bank deposit;

3. Condemning plaintiff to pay defendants the amount of P22,227,800.00 as consequential

damages with interest at 6% per annum from January 23, 2006 and at 12% per annum from the
date of finality of this decision until fully paid;

5. To pay P20,000.00 attorney's fees.

SO ORDERED.[34]
Consequently, NPC interposed its appeal before the CA raising as issues the alleged erroneous
award of just compensation and consequential damages. Specifically, NPC argued that the
award was based on the premise that it sought to acquire ownership over the properties when it
merely seeks to acquire a right-of-way thus necessitating the payment of a mere easement fee
equivalent to 10% of the market value of the properties. Further, it argued that the award is
contrary to the zonal valuation of the property classified as agricultural and erroneously
reckoned as of the time of the filing of the complaint instead as of the time of taking.

On the other hand, respondents moved for the execution of the award pending appeal which the
RTC granted.[35] A writ of execution and a notice of garnishment were thereafter issued.[36]

On September 1, 2015, the CA rendered its Decision denying NPC's appeal. Contrary to NPC's
claim, the CA held that the just compensation to be paid for an easement of a right-of-way over
lands that would be traversed by high-powered transmission lines should be the full value of the
subject property.[37]

The CA likewise found no merit in NPC's argument that the fair market value of the properties
should have been based on the BIR zonal valuation at the time of its supposed taking of the
property in the 1970s and on the basis of its classification as agricultural land as stated in the
tax declarations. The CA reasoned that NPC failed to allege the issue of taking. in its complaint
nor was such raised during pre-trial or proven during trial. The CA also held that to base the fair
market value of the property during the alleged actual taking in the 1970s is to compound the
injustice caused to respondents as the expropriation complaint was filed more than 30 years
after NPC allegedly took respondents' properties.[38]As regards to the proper classification of
the properties, the CA noted that these were already reclassified as residential, commercial and
industrial by the municipality of Pili, Camarines Sur even prior to the filing of the expropriation
complaint.[39]

Finally, the CA found no reason to disturb the RTC's award of consequential damages as
testimony to that effect was presented by respondents while NPC, on the other hand, failed to
prove the alleged consequential benefits.

The CA thus disposed:

WHEREFORE, the foregoing considered, the appeal is hereby DENIED and the decision of the
trial court [dated] December 20,2010, as modified by its Order dated May 2, 2011, is
AFFIRMED in toto.

SO ORDERED.[40]

Upon denial of its motion for reconsideration, NPC filed the present petition.

ISSUES:

Reiterating its arguments before the lower courts, NPC interposes the following issues for
resolution: (1.) should the value of the property be reckoned at the time of the taking in the
1970s; (2.) should the amount of just compensation be based on the properties' BIR zonal
valuation corresponding to its classification as agricultural in the tax declarations; and (3.) is the
award of consequential damages for the "dangling" area proper.[41]

Essentially, NPC contests the amount of just compensation and the award of consequential
damages.

RULING:

We deny the petition.

Reckoning point of the market value of the properties

The circumstances surrounding the "taking" of property in the context of the State's exercise of
the power of eminent domain has been jurisprudentially listed in the seminal case of Republic v.
Vda. De Castellvi,[42] thus:

First, the expropriator must enter a private property. x x x

Second, the entrance into private property must be for more than a momentary period. x x x

xxxx

Fourth, the property must be devoted to a public use or otherwise informally appropriated or
injuriously affected. x x x

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. x x x[43]

That there was taking of the subject properties for purposes of expropriation is beyond contest.
What plagues the court and the parties is the date when such taking is to be reckoned because
this will, in turn, be determinative of the value of the subject properties from which the amount of
just compensation will be based.

Sec. 4,[44] Rule 67 lays down the basic rule that the value of the just compensation is to be
determined as of the date of the taking of the property or the filing of the complaint, whichever
came first.

The case of National Transmission Corporation v. Oroville Development Corporation,[45]

settles that just compensation should be reckoned from the date of actual taking when such
preceded the filing of the complaint for expropriation. In Oroville, the Court explains that the
State is only obliged to make good the loss sustained by the landowner and considering the
circumstances availing at the time the property was taken. Deviation from this general rule was
permitted in the cases of National Power Corporation v. Heirs of Macabangkit Sangkay[46] and
National Power Corporation v. Spouses Saludares[47] due to special circumstances[48] therein
obtaining which necessitated a valuation of just compensation at the time the landowners
initiated inverse condemnation proceedings notwithstanding that taking of the properties
occurred first.
The peculiarity of the instant case is that NPC insists that it took the subject properties in the
1970s despite having initiated the expropriation complaint only on January 23, 2006. Following
the general rule, NPC thus reasons that the value of the properties should be reckoned in the
1970s. However, NPC's expropriation complaint and the very testimonial evidence it offered
strongly militate against such proposition.

NPC's expropriation complaint filed on January 23, 2006 clearly sought "to acquire an easement
of right-of-way over portions of the [subject properties]"[49] to enable it "to construct and
maintain its steel transmission lines and wooden electric poles for its Naga-Tiwi 230 KV (Single
Bundle), Naga-Tiwi 230 KV (Double Bundle) and 69 KV Naga-Daraga Transmission Lines".[50]
NPC's action relative to the acquisition of an easement of right-of-way made prior to the filing of
its expropriation complaint was limited only to the conduct of negotiations with respondents.
Even then, such negotiations pertained to the construction of HVDC 350 KV transmission lines
which was not among the transmission lines subject of the expropriation complaint. This, as
much, was alleged by NPC itself in its expropriation complaint[51] and was testified to by NPC's
right-of-way officer who conducted the negotiations in 1996.[52] The lower courts were thus
correct in disregarding NPC's claim of actual taking in the 1970s as such was not alleged in the
expropriation complaint nor was it successfully proven during the trial.

There being no sufficient proof that NPC actually took the subject properties at a date preceding
the filing of the expropriation complaint, the time of the taking should be taken to mean as
coinciding with the commencement of the expropriation proceedings on January 23, 2006.
Hence, the value at the time of the filing of the complaint should be the basis for the
determination of the value when the taking of the property involved coincides with or is
subsequent to the commencement of the proceedings.[53]

Amount of just compensation

To begin with, factual issues pertaining to the value of an expropriated property is beyond the
scope of judicial review under a petition filed via Rule 45.[54] As such, factual findings of the trial
and appellate courts will not be disturbed by this Court unless any of the recognized exceptions
is present.[55] No such exception obtains in the instant case.

The various provisions of the Constitution[56] uniformly treat the payment of just compensation
as a limitation to the State's exercise of eminent domain. Just compensation likewise bears the
consistent and settled meaning 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 qualify the meaning of the word "compensation" and to convey thereby the idea
that the amount to be tendered for the property to be taken shall be real, substantial, full and
ample.[57]

Further, the determination of just compensation in expropriation cases is a function addressed

to the discretion of the courts owing to the constitutional mandate that no private property shall
be taken for public use without payment of just compensation.[58] As such, legislative
enactments, as well as executive issuances, fixing or providing for the method of computing just
compensation are tantamount to impermissible encroachment on judicial prerogatives. As such,
they are not binding on courts and are treated as mere guidelines in ascertaining the amount of
just compensation.[59] Even the enumeration of the standards for the assessment of the value
of the land for purposes of expropriation under Section 5 of Republic Act No. 8974[60] reflects
the non-exclusive, permissive and discretionary character thereof.[61]

Here, NPC assails the valuation assigned to the subject properties for being contrary to its
alleged classification as agricultural as appearing on the tax declarations attached to its
expropriation complaint.

However, the insistence of NPC to base the value of the properties solely on the tax
declarations is misplaced considering that such is only one of the several factors which the court
may consider to facilitate the determination of just compensation. Indeed, courts enjoy sufficient
judicial discretion to determine the classification of lands, because such classification is one of
the relevant standards for the assessment of the value of lands subject of expropriation
proceedings. It bears to emphasize, however, that the court's discretion in classifying the
expropriated land is only for the purpose of determining just compensation and is not meant to
substitute that of the local government's power to reclassify and convert lands through local
ordinance.[62]

The subject properties in this case had been reclassified as residential, commercial and
industrial several years before the expropriation complaint was filed. If NPC contests the
reclassification of the subject properties, the expropriation case is not the proper venue to do so.
As such, the RTC and the CA did not err in abiding by the classification of the subject properties
as residential, commercial and industrial as reclassified under Sangguniang Bayan Resolution
No. 17 and Municipal Ordinance No. 7 dated February 1, 1993 and as certified to by the
Municipal Assessor of Pili, Camarines Sur.

In any case, reliance on the tax declarations attached to NPC's expropriation complaint to
classify the properties as purely agricultural is inaccurate as these very same tax declarations
reveal that portions of the expropriated Lot No. 4237 and Lot No. 2870 are in fact classified as
residential and commercial.[63]

Award of consequential damages

As a rule, just compensation, to which the owner of the property to be expropriated is entitled, is
equivalent to the market value.[64] The rule is modified where only a part of a certain property is
expropriated. In such a case, the owner is not restricted to compensation for the portion actually
taken, he is also entitled to recover the consequential damages, if any, to the remaining part of
the property.

Consequential damages is specifically enunciated under Section 6 of Rule 67 as follows:

Section 6. Proceedings by Commissioners. — Before entering upon the performance of their

duties, the commissioners shall take and subscribe an oath that they will faithfully perform their
duties as commissioners, which oath shall be filed in court with the other proceedings in the
case. Evidence may be introduced by either party before the commissioners who are authorized
to administer oaths on hearings before them, and the commissioners shall, unless the parties
consent to the contrary, after due notice to the parties, to attend, view and examine the property
sought to be expropriated and its surroundings, and may measure the same, after which either
party may, by himself or counsel, argue the case. The commissioners shall assess the
consequential damages to the property not taken and deduct from such consequential damages
the consequential benefits to be derived by the owner from the public use or purpose of the
property taken, the operation of its franchise by the corporation or the carrying on of the
business of the corporation or person taking the property. But in no case shall the consequential
benefits assessed exceed the consequential damages assessed, or the owner be deprived of
the actual value of his property so taken. (Emphasis supplied)

Thus, if as a result of expropriation, the remaining portion of the property suffers from
impairment or decrease in value, the award of consequential damages is proper.[65]

Respondents in this case claim consequential damages for the areas in between the
transmission lines which were rendered unfit for use. "Dangling" areas, as defined under
National Power Board Resolution No. 94-313, refer to those remaining small portions of the land
not traversed by the transmission line project but which are nevertheless rendered useless in
view of the presence of the transmission lines. The appraisal committee determined the total
dangling area to be 41,867 square meters[66] and consequently recommended the payment of
consequential damages equivalent to 50% of the BIR zonal value per square meter or for a total
amount of PhP 22,227,800.

In arriving at its recommendation to pay consequential damages, the appraisal committee

conducted an ocular inspection of the properties and observed that the areas before and behind
the transmission lines could no longer be used either for commercial or residential purposes.
Despite this determination, NPC insists that the affected areas cannot be considered "dangling"
as these may still be used for agricultural purposes.[67] In so arguing, NPC loses sight of the
undisputed fact that the transmission lines conveying high-tension current posed danger to the
lives and limbs of respondents and to potential farm workers, making the affected areas no
longer suitable even for agricultural production. Thus, the Court finds no reason to depart from
the assessment of the appraisal committee, as affirmed and adopted by the RTC.

NPC's contention that the consequential benefits should have canceled the consequential
damages likewise deserve no merit. It is true that if the expropriation resulted in benefits to the
remaining lot, such consequential benefits may be deducted from the consequential damages or
from the value of the expropriated property.[68] However, such consequential benefits refer to
the actual benefits derived by the landowner which are the direct and proximate results of the
improvements as a consequence of the expropriation and not to the general benefits which the
landowner may receive in common with the community.[69] Here, it was not shown by NPC how
the alleged "tremendous increase" in the value of the remaining portions of the properties could
have been directly caused by the construction of the transmission lines.[70] If at all, any
appreciation in the value of the properties is caused by the consequent increase in land value
over time and not by the mere presence of the transmission lines.

Imposition of interest
Notwithstanding the foregoing, We find the need to modify the imposition of interest.

The award of interest is imposed in the nature of damages for delay in payment which, in effect,
makes the obligation on the part of the government one of forbearance to ensure prompt
payment of the value of the land and limit the opportunity loss of the owner.[71] Thus, the
imposition of interest is justified only in cases where delay has been sufficiently established.[72]

In this case, NPC deposited the provisional value of the subject properties in the amount of PhP
47,064,400 on May 19, 2006 which was days before the issuance of a writ of possession.
Considering NPC's prompt payment, the imposition of interest thereon is unjustified and should
therefore be deleted.

However, interest should be imposed on the award of consequential damages as it is a

component of just compensation. To emphasize, in order to determine just compensation, the
trial court should first ascertain the market value of the property, to which should be added the
consequential damages after deducting therefrom the consequential benefits which may arise
from the expropriation. If the consequential benefits exceed the consequential damages, these
items should be disregarded altogether as the basic value of the property should be paid in
every case.[73] Here, when the RTC pegged the amount of PhP 47,064,400 for the
expropriated 49,173 square meters, the consequential damages was not yet included. The total
just compensation should therefore be the total of PhP 47,064,400 and PhP22,227,800.
Considering that the amount of PhP 22,227,800 as consequential damages was not yet paid,
such amount should earn interest at the rate of 12% per annum from January 23, 2006 until
June 30, 2013[74] and the interest rate of 6% per annum is imposed from July 1, 2013 until fully
paid.[75]

WHEREFORE, the Petition is DENIED. The Decision dated September 1, 2015 of the Court of
Appeals, which affirmed the Decision dated December 20, 2010 of the Regional Trial Court of
Pili, Camarines Sur, is AFFIRMED with MODIFICATION such that the interest imposed on the
amount of PhP 47,064,409 is DELETED and that the award of consequential damages in the
amount of PhP 22,227,800 shall earn interest at the rate of 12% per annum from January 23,
2006 until June 30, 2013 and the interest rate of 6% per annum is imposed from July 1, 2013
until fully paid.

SO ORDERED.