G.R. No. L-21291 - Corliss vs. Manila Railroad Co.

Case Summary (G.R. No. L-21291)

Factual Background

NATIONAL POWER CORPORATION is a government-owned and controlled corporation authorized to develop hydroelectric power and to exercise eminent domain. YCLA SUGAR DEVELOPMENT CORPORATION owned three parcels in Puerto Galera, Oriental Mindoro, covered by Transfer Certificates of Title Nos. T-5209, T-21280 and T-78583. NPC’s 69 KV Calapan-Mamburao Island Grid Project required transmission lines to traverse portions of those parcels, an aggregate area of 5,846 square meters. NPC filed a complaint for expropriation on December 2, 1997 seeking an easement of right-of-way. YCLA answered on July 9, 1998, urging dismissal for alleged failure to allege public use. The RTC ordered the constitution of a Board of Commissioners on April 30, 1999. A writ of possession placing NPC in possession of the properties issued June 4, 1999.

Commissioners’ Reports and Evidence

The Board of Commissioners first reported on May 2, 2001, recommending just compensation of P500.00 per square meter. YCLA objected and requested an ocular inspection. The Board conducted an ocular inspection on August 27, 2003 and submitted a second report on September 15, 2003, recommending P1,000.00 per square meter. The second report noted an assessed value from the Provincial Assessor of P11.50 per square meter but asserted a prevailing market value of P500.00 to P1,500.00 per square meter based on unspecified actual sales and the opinion of unnamed “reliable persons.” The report did not append sworn statements or documentary proof of those sales or opinions.

Proceedings in the Regional Trial Court

The RTC adopted the Board of Commissioners’ report and, in a Decision dated May 12, 2005, ordered NPC to pay YCLA a total of P5,786,000.00 representing the value of the expropriated land and twenty-six molave trees cut for the project, with legal interest from the time the plaintiff had actually took possession of the subject properties on April 19, 1999 until full payment. The RTC explained that the Board’s May 2, 2001 recommendation had been revised following the ocular inspection ordered at YCLA’s instance.

Appeal to and Disposition by the Court of Appeals

NPC appealed to the Court of Appeals, contending that the RTC erred in relying on the commissioners’ recommendation and that P1,000.00 per square meter was excessive because the lands were barren and undeveloped at the time the complaint was filed. On September 23, 2010, the Court of Appeals affirmed the RTC decision but modified the award to P900.00 per square meter, reasoning that YCLA sought P900.00 per square meter before the RTC and that there was no showing of irregularity, fraud or bias in the commissioners’ report. Costs were imposed against NPC.

Issue Presented to the Supreme Court

The principal issue presented was whether the RTC and the Court of Appeals had a sufficient factual and legal basis to fix the amount of just compensation for the expropriated properties at the amounts they awarded.

Parties’ Contentions before the Supreme Court

NPC maintained that the September 15, 2003 commissioners’ report lacked factual and documentary support and that the P900.00 per square meter award was excessive given the condition of the land at the time of filing; it urged the Court to adopt the P500.00 per square meter figure from the May 2, 2001 report. YCLA defended the reliance on the September 15, 2003 report, stressing that the Board was in the best position to value the property after conducting an ocular inspection.

Legal Standards Applied by the Supreme Court

The Court reiterated that just compensation is the full and fair equivalent of the property taken, measured by the market value of the property at the time of taking, and that where the action precedes entry, the valuation date is the filing of the complaint. The Court cited prior decisions including Republic v. Rural Bank of Kabacan, Inc. and National Power Corporation v. Diato-Bernal to restate that just compensation must reflect the fair market value and must be supported by reliable evidence. The Court emphasized that several factors bearing on valuation — acquisition cost, current market value of like properties, tax assessment, size, shape and location — must be considered and that such factors require documentary support before they may carry weight.

Analysis of the Commissioners’ Reports

The Court found that the commissioners’ September 15, 2003 report relied on 2003 prevailing market values while the complaint was filed December 2, 1997, and therefore the 2003 market data were not the correct temporal basis for determining just compensation. The Court further noted that the September 15, 2003 report rested on assertions of actual sales and opinions of “reliable persons” without corroborative documentary evidence, such as sworn statements or supporting sale documents. The Court held that a commissioners’ report of land prices that is unsupported by documentary evidence is hearsay under Rule 130, Section 36, Rules of Court, and that such a report is inadmissible as reliable proof of value. The Court reiterated that the trial court may accept, reject, recommit or set aside a commissioners’ report under Rule 67, Section 8, Rules of Court, but that acceptance requires a sound evidentiary basis.

Supreme Court Ruling and Disposition

The Supreme Court held that the lower courts erred in giving full credence to the September 15, 2003 commissioners’ report because it was both temporally misplaced and unsupported by documentary evidence. The Court set aside the Decision dated September 23, 2010 of the Court of Appeals and the Decision dated May 12, 2005 of the Regional Trial Court. The petition was partially g

Case Syllabus (G.R. No. L-21291)

Parties and Procedural Posture

National Power Corporation was the petitioner and a government-owned and controlled corporation authorized under Section 3(h) of Republic Act No. 6395 to exercise eminent domain for power development.
YCLA Sugar Development Corporation was the respondent and the registered owner of three parcels covered by Transfer Certificates of Title Nos. T-5209, T-21280 and T-78583.
The petition sought review under Rule 45, Rules of Court of the Court of Appeals Decision affirming with modification the Regional Trial Court Decision in Civil Case No. R-4600.
The Supreme Court rendered decision on the petition on December 11, 2013 as reflected in the source.

Key Factual Allegations

NPC filed a Complaint for expropriation on December 2, 1997 to acquire easements for a 69 KV transmission grid that traversed properties including respondent’s parcels.
The area of respondent’s lands affected by the transmission lines aggregated 5,846 square meters.
The RTC, upon NPC's urgent ex parte motion, issued a writ of possession placing NPC in possession; the writ was issued on June 4, 1999 while the RTC found actual possession as of April 19, 1999.
Twenty-six molave trees on the property were cut to make way for the project.

Board Reports and Valuations

The Board of Commissioners first reported on May 2, 2001, recommending just compensation at P500.00 per square meter.
After an ocular inspection conducted on August 27, 2003, the Board submitted a second Report dated September 15, 2003 recommending P1,000.00 per square meter.
The September 15, 2003 Report noted an assessor appraisal at P11.50 per square meter but asserted a prevailing market range of P500.00 to P1,500.00 per square meter and justified P1,000.00 by location and consequential damages.
Neither the May 2, 2001 Report nor the September 15, 2003 Report was supported by corroborative documentary evidence or sworn declarations of the persons allegedly interviewed.

Procedural History

The RTC terminated pre-trial and constituted a Board of Commissioners to fix just compensation after NPC's 1997 complaint.
The RTC conducted proceedings, granted YCLA’s motion for ocular inspection, and thereafter adopted the Board’s September 15, 2003 Report in its Decision dated May 12, 2005.
The RTC ordered NPC to pay YCLA P5,786,000.00 representing the value of the expropriated lands and 26 molave trees, with legal interest from the time of possession until full payment.
NPC appealed to the Court of Appeals, which on September 23, 2010 affirmed the RTC Decision but modified the per-square-meter award to P900.00 because YCLA had sought P900.00 before the RTC.
NPC then filed the present petition for certiorari under Rule 45 to the Supreme Court.

Issues Presented

Whether the RTC and the CA had sufficient fact