G.R. No. 106804 - National Power Corp. vs. Court of Appeals

Case Summary (G.R. No. 106804)

Factual Background

The property at issue was a 68,969 square-meter tract in Barangay Bano, Municipality of Tiwi, Albay owned and developed by Antonino Pobre into the Tiwi Hot Springs Resort Subdivision, title covered by TCT No. 4067 and Subdivision Plan 11-9709. The Commission on Volcanology certified presence of thermal mineral water and steam beneath the land on August 4, 1965. National Power Corporation leased eleven lots in February 1972 and later undertook geothermal development. NPC instituted a first expropriation proceeding circa 1977 to acquire 8,311.60 square meters, and the trial court ordered expropriation on October 23, 1979 at P25 per square meter. While operations proceeded, NPC dumped waste beyond agreed sites and altered the topography, and continued development. NPC filed a second expropriation complaint on September 1, 1979 to acquire an additional 5,554 square meters, deposited the ten per cent statutory amount, and obtained a writ of possession issued September 6, 1979, upon which NPC entered the lot and continued operations that Pobre alleged impaired his entire subdivision.

Trial Court Proceedings

The Regional Trial Court, after receiving evidence and considering the effect of NPC’s geothermal activities on the whole subdivision, found that NPC’s operations caused permanent injury, pollution, and topographical change that rendered the whole 68,969 square-meter Property unfit as a resort-subdivision. The trial court found badges of bad faith in NPC’s conduct, valued the entire Property at P50 per square meter for a total of P3,448,450, imposed legal interest from September 6, 1979 until full payment, and awarded P150,000 as attorneys fees. The court ordered that upon payment Pobre execute a deed of conveyance in NPC’s favor.

Court of Appeals' Ruling

The Court of Appeals affirmed the trial court’s decision but deleted the award of attorneys fees because Pobre had not properly pleaded for such fees. The appellate court otherwise sustained the trial court’s factual findings and valuation and denied NPC’s motion for reconsideration in its August 14, 1992 resolution.

Issues Presented

NPC advanced multiple grounds for reversal, arguing that the trial court rendered judgment with grave abuse of discretion and without jurisdiction; that NPC did not take the entire Property; that any taking should exclude the 8,311.60 square-meter portion previously expropriated and paid for; that just compensation should be limited to P25 per square meter as previously agreed; and that the trial court’s award and findings should be wholly set aside.

The Parties' Contentions

NPC, represented by the Office of the Solicitor General, insisted that its filing of a notice of dismissal entitled it as plaintiff to have the expropriation complaint dismissed and that such dismissal should carry with it the dismissal of Pobre’s claim for damages. NPC relied on Section 1, Rule 17 of the 1964 Rules of Court for the right to dismiss without court order before service of an answer. NPC additionally contended that it had found an alternative site, had abandoned the project in 1981, and that it could not be liable for taking beyond the lots it had formally expropriated and paid for. Pobre maintained that the trial court properly reserved his right to claim damages when the expropriation complaint was dismissed; that NPC’s operations had effectively taken the whole Property by rendering it useless as a resort; and that NPC’s delay, dumping, and piecemeal approach exhibited bad faith warranting full compensation and damages.

Procedural and Legal Analysis on Dismissal

The Court examined the applicability of Section 1, Rule 17 of the 1964 Rules of Court and concluded that Rule 17’s exceptional right of unilateral dismissal did not govern expropriation proceedings. Rule 67 specifically regulated eminent domain actions and required a different procedure in which the defendant is to file a motion to dismiss or an answer presenting all defenses and objections. The record showed that Pobre had filed and served his motion to dismiss/answer on December 10, 1984 well before NPC filed its notice of dismissal on January 2, 1985; therefore NPC could not invoke the unilateral right to dismiss under Rule 17. The Court emphasized that in expropriation cases a plaintiff’s right to dismiss is subject to court supervision because private property rights may already have been affected; dismissal is not to be made arbitrarily and must preserve the landowner’s right to have damages ascertained either in the same or in a separate action.

Factual Findings Bind the Court

The Supreme Court accepted the trial court’s detailed findings of fact, particularly because they were affirmed by the Court of Appeals and because questions of fact are beyond the scope of review under Rule 45. The trial court’s findings that NPC’s geothermal facilities and operations changed topography, polluted water and air, and hemmed in and rendered the subdivision unfit were sustained as binding.

Taking of the Entire Property and Just Compensation

Applying established precedent that property rendered uninhabitable by governmental or quasi-governmental action constitutes a compensable taking, the Court held that NPC’s conduct resulted in an effective taking of the entire 68,969 square-meter Property. The Court reasoned that because restoration of possession to Pobre was impracticable and the Property had become useful only to NPC, the proper remedy was payment of just compensation for the whole. The Court declined to exclude the 8,311.60 square meters previously expropriated from the total because Pobre no longer claimed other lots and had identified the 68,969 square-meter parcel in court without objection from NPC.

Valuation, Interest and Damages Awarded

The Court found the trial court’s valuation of P50 per square meter reasonable for an established resort-subdivision and noted NPC’s failure to contest that valuation in the trial court. Accordingly, NPC was ordered to pay P3,448,450 as just compensation for the 68,969 square-meter Property. The Court applied legal interest at six per cent (6%) per annum from September 6, 1979, the date of issuance of the writ of possession, until full payment. The Court declined to award moral damages or attorneys fees because Pobre did not assert a claim to moral damages and did not appeal from the denial of attorneys fees, but it awarded P50,000 in temperate damages and P100,000 in exemplary damages for NPC’s abuse of eminent domain authority.

Legal Basis and Reasoning

The Court grounded its decision on the constitutional guarantee that private property shall not be taken for public use without just compensation, as reflected in Section 9, Article III of the 1987 Constitution, and on long-standing jurisprudence that a

Case Syllabus (G.R. No. 106804)

Parties and Posture

National Power Corporation was the petitioner before the Supreme Court and the plaintiff in the expropriation proceedings below.
Court of Appeals was the respondent-appellate tribunal that affirmed the trial court decision with modification.
Antonino Pobre was the respondent and owner of the subject land who counterclaimed for damages and just compensation.
The petition for review invoked Rule 45, 1964 Rules of Court, and sought reversal of the Court of Appeals Decision dated 30 March 1992 and Resolution dated 14 August 1992 in CA-G.R. CV No. 16930.

Key Facts

Pobre owned a 68,969 square-meter parcel developed as Tiwi Hot Springs Resort Subdivision and covered by TCT No. 4067 and Subdivision Plan 11-9709.
The Commission on Volcanology certified on 4 August 1965 the presence of thermal mineral water and steam beneath the Property.
NPC leased eleven lots from the subdivision in 1972 and filed two expropriation cases, the first in 1977 for 8,311.60 sqm and the second on 1 September 1979 for 5,554 sqm.
NPC deposited P5,546.36 as 10% of the market value for the second expropriation and obtained a writ of possession on 6 September 1979.
NPC conducted geothermal development, dumped waste beyond agreed areas, and thereby altered topography and caused pollution alleged to have destroyed the resort potential of the entire Property.

Procedural History

The trial court heard Civil Case No. T-552 and, after evidentiary rulings and submissions, rendered judgment on 29 April 1987 in favor of Pobre awarding just compensation and attorneys fees.
NPC filed a motion for reconsideration denied on 30 October 1987 and appealed to the Court of Appeals, which affirmed on 30 March 1992 but deleted the award of attorneys fees.
NPC filed the present petition for review before the Supreme Court contesting multiple legal and factual rulings below.

Issues Presented

Whether the trial court rendered its decision with grave abuse of discretion and without jurisdiction.
Whether NPC took the entire 68,969 square-meter Property through its operations and whether the prior expropriated 8,311.60 sqm should be excluded from damages.
Whether the just compensation fixed at P3,448,450 (P50 per sqm) with interest from 6 September 1979 is just and fair.
Whether the trial court should have applied the P25 per sqm valuation allegedly agreed upon earlier.
Whether the dismissal by NPC of its expropriation complaint operated to dismiss Pobre's counterclaim for damages.

Trial Court Findings

The trial court found that NPC's geothermal operations permanently altered the Property, rendering it unfit as a resort-subdivision and effectively depriving Pobre of its entire use.
The trial court found badges of bad faith by NPC, including a five-year delay before moving to dismiss the second expropriation, failure to abate the damage, and piecemeal expropriation.
The trial court fixed just compensation at P50 per square meter for the entire 68,969 square meters, awarding P3,448,450 plus legal interest and attorneys fees of P150,000.

Court of Appeals Ruling

The Court of Appeals affirmed the trial court's factual and legal conclusions that NPC had effectively deprived Pobre of the whole Property and that just compensation for the entire 68,969 square meters was due.
The Court of Appeals deleted the award of a