G.R. No. L-23455 - Strachan and Macmurray, Ltd. vs. Court of Appeals

National Power Corporation (NAPOCOR) sought to expropriate a 3,907‑square‑meter portion of the property owned by the Spouses Conchita Malapascua-Malijan and Lazaro Malijan in Barangay San Felix, Sto. Tomas, Batangas (Tax Declaration No. 15032).
An expropriation case was instituted at the Regional Trial Court (RTC), Branch 6 of Tanauan City, Batangas, where the only issue pertained to the determination of just compensation since the Spouses did not object to the expropriation per se.

On August 22, 2007, the RTC created a Board of Commissioners to recommend the amount of just compensation based on:

Ocular inspection of the property,
Local market conditions, and
The standards set in Section 5 of the Implementing Rules and Regulations (IRR) of Republic Act No. 8974.

The Board recommended a valuation of P3,500.00 per square meter, amounting to a total of approximately P13,674,500.00, basing their appraisal on the property’s use as a commercial or industrial area (influenced by nearby establishments) and its current utilization as an access road to NAPOCOR’s Mak-ban Geothermal Power Plant.

NAPOCOR claimed that it had taken possession of the property in 1972 and argued that just compensation should be computed based on the market value in that year.
The Spouses contended that there was no proper allegation in the complaint that the property had been taken in 1972 and that the determination of compensation should not unfairly advantage NAPOCOR by using an allegedly outdated valuation.
The dispute centered on the interpretation of Section 4, Rule 67 of the Rules of Court, which states that just compensation is to be determined based on the value at the time of taking or the filing of the complaint, whichever came first.

The RTC rendered a decision on February 22, 2008, ordering NAPOCOR to pay the Spouses an amount based on the commission’s recommendation (P3,500.00 per square meter).
NAPOCOR elevated the case to the Court of Appeals (CA), arguing that the value should be fixed as of 1972, not at the time of filing the complaint decades later.
On June 13, 2012, the CA reversed the RTC’s decision by setting aside the February 2008 decision and directing the RTC to recompute just compensation based on the fair market value as of 1972, along with legal interest computed at 6% per annum from the taking until full payment. Additionally, the CA imposed exemplary damages and attorney’s fees on NAPOCOR.
Subsequently, separate petitions for review on certiorari under Rule 45 were submitted:

Conchita Malapascua-Malijan and the heirs of Lazaro Malijan sought to set aside the CA’s decision.
NAPOCOR sought the modification of the CA’s decision.

The allegation that the property was taken in 1972, noting that such a claim was belatedly introduced and not mentioned in the original complaint.
Whether the existence of a long-tolerated right-of‑way connotes complete dominion amounting to a compensable taking.

Its claim that it had exercised its right of eminent domain by unlawfully occupying the property in 1972.
That the just compensation should be based on the property’s value at the time of taking (i.e. in 1972), despite the long lapse before initiating the expropriation proceedings.
It argued that the late filing should not entitle it to benefit from a higher market valuation made after decades of occupation.

The CA’s decision ordered the accrual of legal interest at 6% per annum from the time of taking until payment, in light of relevant laws and Central Bank circulars regarding interest rates effective from 1916 to the present.
NAPOCOR also contested the imposition of exemplary damages and attorney’s fees, claiming that:

There was no factual or legal basis for such awards.
Awarding these damages would contravene the principle that expropriation suits are primarily compensatory in nature and that only questions of law should be raised in petitions under Rule 45.

Whether the just compensation should be computed based on the property’s fair market value at the time the property was allegedly taken (1972) or at the time of filing the expropriation suit decades later.

Whether the belated claim by NAPOCOR that the property was taken in 1972 constitutes a valid basis for computing just compensation, given that the complaint itself was silent on this allegation.
Whether the government’s act of occupying the property without initiating timely expropriation proceedings violates the constitutional requirement of due process.

Whether the imposition of exemplary damages and attorney’s fees against NAPOCOR is factually and legally supported.
Whether such awards are appropriate in light of the government’s conduct and its efforts to negotiate with the landowners prior to filing the suit.

The extent to which cases such as Eusebio v. Luis, Forfom Development Corporation v. PNR, Manila International Airport Authority v. Rodriguez, and Republic v. Sarabia influence the determination of valuation dating as of the time of taking.
How the established doctrine that just compensation must reflect the value at the time of taking factors into the resolution of the current dispute.