Title
National Power Corp. vs. Heirs of Serra Serra
Case
G.R. No. 224324
Decision Date
Jan 22, 2020
NAPOCOR expropriated land for a public project; SC affirmed just compensation based on 1998 property value, with modified interest rates from possession date.
expropriation
transmission line project
valuation
A

Case Summary (G.R. No. 224324)

Factual Background

NAPOCOR instituted a complaint for eminent domain on October 16, 1998 to acquire easements of right of way over portions of Lots Nos. 1316, 2746 and, later by amendment, Lot No. 2747, for the Kabankalan-Maricalum 138KV Transmission Island Grid Project. The lands comprised an aggregate affected area of approximately 60,526.50 square meters after amendment. NAPOCOR deposited PHP 258,000.00 as provisional and assessed value and was placed in possession of the subject parcels on August 3, 1999. The complaint alleged public necessity and urgency for the transmission-line project.

Procedural History in the Trial Court

The RTC initially dismissed the complaint for failure to prosecute on April 29, 2003, but set aside that dismissal on October 15, 2003. The court then constituted a Board of Commissioners to assess just compensation, which submitted its report on October 25, 2007. On May 26, 2011, the RTC rendered judgment ordering expropriation and adjudging just compensation in specific amounts totalling P18,919,113.75 before deducting the deposited PHP 258,000.00, with legal interest from taking of possession until fully paid.

Trial Court’s Valuation and Considerations

In valuing the subject properties, the RTC considered the zonal values reflected in Department of Finance Department Order No. 60-97 assigned for 1997. The court also gave weight to the actual use of the lands, noting that the lots were planted with sugarcane despite a residential classification, and to the extent of disturbance the taking would cause to the owners. The RTC arrived at its compensation figures after reviewing the commissioners’ report and the parties’ respective proposals.

Appeal to the Court of Appeals

On appeal, the Court of Appeals-Cebu City affirmed the RTC decision with modification in its October 29, 2014 decision. The appellate court found the trial court’s reliance on indices such as actual use and potential of the properties proper and well founded. The CA modified the interest award by specifying 12% per annum as the legal interest, computed from taking of possession until fully paid. The CA later, by resolution dated April 8, 2016, amended its dispositive language to state the 12% interest to run from the time of filing of the complaint until fully paid, but corrected that amendment in the course of denying reconsideration.

Issue Presented to the Supreme Court

The lone issue presented by NAPOCOR in its Rule 45 petition was whether the amount of just compensation should have been based on the prevailing character and price of the properties at the time of filing of the complaint in 1998, and whether the courts below improperly considered improvements existing as of 2006 in fixing just compensation.

Parties’ Contentions

NAPOCOR contended that the courts below erred by allegedly relying on improvements appearing in 2006 when determining the value of the parcels, thereby inflating the award. The respondents countered that the RTC and the CA correctly ascertained the value and character of the properties as of 1998 in conformity with Rule 67, Rules of Court, and that the petition improperly seeks factual reexamination contrary to the limitations of Rule 45, Rules of Court.

Supreme Court’s Review of the Valuation Issue

The Court reviewed the record and the rulings below and found no need to remand for revaluation. The Supreme Court agreed with the CA that the RTC properly determined the character and fair market value as of the relevant period, namely the time of filing in 1998, pursuant to Rule 67 and established jurisprudence. The Court rejected NAPOCOR’s claim that the trial court or the appellate court had based valuation on 2006 improvements, explaining that the appellate court’s remark that respondents’ figures were “based on a comparative analysis … in the year 2006” referred to respondents’ proposal which the courts expressly did not adopt because it was not tied to the relevant period and rested on generalities.

Supreme Court’s Ruling on the Interest Computation

The Court addressed the reckoning point and rate for legal interest on the difference between the final adjudged compensation and the initial deposit. Citing precedent, the Court reiterated that legal interest accrues as forbearance of money and should run from the date the government actually deprived the owner of possession. The Court held that legal interest should run from August 3, 1999, the date NAPOCOR was placed in possession. The Court imposed 12% per annum on the balance of just compensation from August 3, 1999 until June 30, 2013. Thereafter, in line with Secretary of the Department of Public Works and Highways v. Spouses Tecson and applying Bangko Sentral ng Pilipinas–Monetary Board Circular No. 799, Series of 2013, the Court applied 6% per annum from July 1, 2013 until finality of the resolution. The Court further ruled that from finality until full payment the total adjudged amount shall earn 6% per annum.

Legal Basis and Reasoning

The Court grounded its valuation conclusions on Rule 67, Rules of Court, and on prior decisions construing the appropriate temporal point for appraising expropriated property. The Court reiterated the rule that factual findings of the trial and appellate courts will not be disturbed unless wholly unsupported or speculative. The Court distinguished between the period for valuation and the period for interest accrual, holding that valuation is fixed as of filing under Rule 67 but interest accrues only upon actual

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