Just compensation

Is expropriation in the exercise of the power of eminent domain limited only to the acquisition of private real property? How is just compensation computed and who has the power to determine it? These are the issues raised and answered in this case of seven owners of parcels of land with a total area of 62,426.50 square meters located in Bulacan.

On November 5, 1997, the National Power Corporation (NAPOCOR), a government owned and controlled corporation empowered by R.A. 6395 to undertake the development of hydroelectric power generation, the production of electricity and the transmission of electric power on a nationwide basis, filed a special civil action for eminent domain before the Regional Trial Court (RTC) to acquire an easement of right of way over the parcels of land situated in four Bulacan towns for the construction and maintenance of its 500 KV Transmission Line project in Northern Luzon. Impleaded in the action were a food manufacturing company which maintains a piggery in the area (PFI), two real estate developers (SDC and MRI) and certain private property owners (the heirs)

Among the defendants, only PFI, SDC MRI and the heirs filed their respective answers mainly raising the issue of just compensation for their property to be expropriated and secondarily for lack of public purpose. Hence the RTC appointed commissioners to determine the just compensation.

The appointed commissioners then made and ocular inspection of the area and then submitted their report to the RTC as to the fair market value of the properties to be expropriated. Based on this report, the RTC rendered a decision on September 17, 2001 ordering the expropriation of the properties of the defendants and fixing the amount of compensation in the sum of P600 per square meter for the lands of MRI and P400 per square meter for the lands of the other owners with 6% interest until finality of decision and 12% from finality until full payment. This decision was affirmed by the Court of Appeals CA).

Napocor thus questioned the CA ruling particularly its reliance on the Commissioners’ report fixing the just compensation based on the full market value of the affected properties. It contended that only an easement of right of way for the construction of the transmission line was being claimed, thus, only an easement fee equivalent to 10% of the fair market value of the properties should be paid based on Section 3A of RA 6395 and the implementing rules of RA 8974. Was the Napocor correct?

No. True, an easement of a right of way transmits no rights except the easement itself and full ownership is retained by the owner of the land to be expropriated. But because of the nature and effect of the easement which will deprive the normal use of the land for an indefinite period, just compensation must be based on the full market value of the affected properties.

Expropriation is not limited to the acquisition of real property with a corresponding transfer of title or possession. The right of way easement resulting in a restriction or limitation on property rights over the land traversed by transmission lines, as in the present case, also falls within the term “expropriation”. In eminent domain or expropriation proceedings, the general rule is that the just compensation to the owner of the condemned property is the market value. Market value is that sum of money which a person desirous but not compelled to buy, and an owner willing but not compelled to sell, would agree on as the price to be given and received.

Where only part of a certain property is expropriated, compensation consists not only of the market value of the portion actually taken but also of the consequential damages if any, of the remaining part of the property minus the value of the consequential benefits.

While Section 3(a) of RA 6395 and RA 8974 indeed state that only 10% of the market value is due to the owner of the property subject of the easement of right of way, said rule is not binding on the court. Just compensation in eminent domain case is a judicial function. Any valuation laid down by statutes may serve only as guiding principle or one of the factors in determining just compensation but it may not substitute the court’s own judgment of what amount should be awarded and how to arrive at such amount. No statute, decree or executive order can mandate that its own determination shall prevail over court findings when the guarantee in the Bill of Rights regarding the taking of property without just compensation is involved. Much less can the courts be precluded from looking into the “just-ness” of the decreed compensation (Napocor vs. Purefoods et.al. G.R. 160725, September 12, 2008).  

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.

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