View full case

NATIONAL TRANSMISSION CORPORATION v. OROVILLE DEVELOPMENT CORPORATION

FACTS:

The case involves the construction of a transmission line by the National Transmission Corporation (TransCo) over the properties owned by Oroville Corporation. The construction was made in 1983 without the intent to expropriate, and TransCo did not negotiate with the owner to purchase or expropriate the properties. In 2007, Oroville filed a complaint seeking just compensation for the affected area. The Regional Trial Court (RTC) ordered TransCo to pay Oroville just compensation for the affected area, with interest and the fee for the commissioners. TransCo appealed to the Court of Appeals (CA), which ruled that there was no actual taking of the properties in 1983 and that the computation of just compensation should be reckoned at the time of filing the complaint in 2007. The CA modified the RTC's judgment and ordered TransCo to pay the unpaid balance of the just compensation with legal interest. TransCo filed a petition for review before the Supreme Court, raising issues on the computation of just compensation and the imposition of legal interest.

The National Power Corporation (NPC) was granted authority by the Energy Regulatory Board (ERB) to construct a new transmission line. In the process, NPC sought an easement over the properties of several landowners, including Asufruto and his co-plaintiffs. Asufruto did not object to the construction and instead agreed to convert their complaint for injunctive relief into an expropriation case. The landowners argued that NPC should bear the cost of delaying their claim and failing to properly guard against the effects of the transmission line.

ISSUES:

  1. Whether there was a taking of Oroville's property for purposes of eminent domain

  2. Whether just compensation should be reckoned from the date of the taking in 1983

  3. Whether the landowners are entitled to just compensation for the taking of their properties for public use without initiating expropriation proceedings.

  4. What is the proper amount of just compensation to be awarded to the landowners.

  5. Whether the reckoning value of just compensation in an inverse condemnation proceeding is that prevailing at the time of the taking or filing of the complaint.

  6. Whether the rulings in Macabangkit Sangkay and Saludares, which set the valuation of just compensation at the time of filing the inverse condemnation proceedings instead of the time of taking, apply to the present case.

  7. Whether the Court must adhere to the doctrine of stare decisis and follow the ruling in Tecson, which set the valuation of just compensation at the time of taking.

  8. Whether interest on just compensation should be computed from the time the property is taken until the full amount of just compensation is paid.

  9. Whether the interest should be compounded at the time judicial demand is made.

RULING:

  1. The Court ruled that there was a taking of Oroville's property for purposes of eminent domain. The requisites of taking, as enumerated in Republic v. Vda. De Castellvi, were all present in this case. TransCo took possession of Oroville's property in order to construct transmission lines for the benefit of the public, the construction of the transmission lines meant an indefinite stay in Oroville's property, TransCo's exercise of eminent domain was authorized under the Electric Power Industry Reform Act of 2001, and Oroville was deprived of the beneficial enjoyment of its property.

  2. The Court ruled that just compensation should be reckoned from the date of the taking in 1983. Section 4, Rule 67 of the Rules of Court provides that just compensation should be determined as of the date of the taking of the property or the filing of the complaint, whichever came first. Citing the case of Secretary of the Department of Public Works and Highways v. Spouses Tecson, the Court held that when the taking predates the filing of the complaint for expropriation, just compensation should be reckoned from the date of taking.

  3. The landowners are entitled to just compensation for the taking of their properties for public use without initiating expropriation proceedings. The Court ruled that just compensation is the value of the property at the time of taking, and the government's failure to initiate expropriation proceedings does not negate the landowners' right to just compensation.

  4. The proper amount of just compensation to be awarded to the landowners is determined based on the fair market value of the property at the time of taking. In this case, just compensation is fixed at P78.65 per square meter, which is the fair market value of the property at the time of taking in the year 1983.

  5. The reckoning value of just compensation in an inverse condemnation proceeding is generally that prevailing at the time of the taking or the filing of the complaint, whichever came first.

  6. The rulings in Macabangkit Sangkay and Saludares, which set the valuation of just compensation at the time of filing the inverse condemnation proceedings, do not apply to the present case.

  7. The Court must adhere to the doctrine of stare decisis and follow the ruling in Tecson, which set the valuation of just compensation at the time of taking.

  8. Yes, interest on just compensation should be computed from the time the property is taken until the full amount of just compensation is paid. This is to place the owner in a position as good as (but not better than) the position he was in before the taking occurred.

  9. Yes, the interest should be compounded at the time judicial demand is made pursuant to Article 2212 of the Civil Code of the Philippines, except for the reduction of interest rate to 6% for loans or forbearance of money.

PRINCIPLES:

  • Eminent domain is the right or power of a sovereign state to appropriate private property to particular uses to promote public welfare. It is subject to the requirements of a particular public purpose and the payment of just compensation to the property owner.

  • The requisites of taking, as enumerated in Republic v. Vda. De Castellvi, are as follows: (1) the expropriator must enter a private property; (2) the entry into the property must be for more than a momentary period; (3) the entry into the property should be under warrant or color of legal authority; (4) the property must be devoted to a public use or otherwise informally appropriated or injuriously affected; and (5) 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.

  • Just compensation, defined as the full and fair equivalent of the property taken, should be determined as of the date of the taking or the filing of the complaint, whichever came first. This is in accordance with Section 4, Rule 67 of the Rules of Court.

  • Just compensation is the value of the property at the time of taking that is controlling for purposes of compensation.

  • The value of the property should be fixed as of the date when it was taken and not the date of the filing of the proceedings.

  • The owner of private property should be compensated only for what he actually loses, and just compensation must also be just to the public, which ultimately bears the cost of expropriation.

  • The imposition of interest can adequately compensate the property owner for the delay in the payment of just compensation.

  • The rulings in National Power Corporation v. Heirs of Macabangkit Sangkay and National Power Corporation v. Spouses Saludares, where just compensation was reckoned from the time the property owners initiated inverse condemnation proceedings, are exceptions to the general rule that just compensation should be reckoned from the time of taking.

  • Just compensation must generally be reckoned from the time of the taking or filing of the complaint, whichever came first.

  • The practice of construct first, expropriate later is reprehensible and must not be countenanced.

  • The doctrine of stare decisis constrains the Court to follow a previously decided principle of law in similar cases with substantially the same facts.

  • The just compensation due to landowners includes interest computed from the time the property was taken until the full amount of just compensation is paid.

  • Interest on just compensation is intended to eradicate the issue of the constant variability of the value of the currency over time.

  • Interest shall be compounded at the time judicial demand is made pursuant to Article 2212 of the Civil Code.

  • Government agencies must initiate eminent domain proceedings before constructing infrastructure on private properties.

  • Failure of the government to initiate an expropriation proceeding may be corrected with the awarding of exemplary damages, attorney's fees, and costs of litigation.