NAPOCOR vs PUREFOODS

NAPOCOR vs PUREFOODS

G.R. No. 160725

September 12, 2008

National Power Corporation, Petitioner, vs PUREFOODS Corporation, Solid Development Corporation, Jose Ortega Jr., Silvestre Bautista, Alfredo Cabande, Heirs of Victor Trinidad and Moldex Reality Incorporated, Respondents

Facts:

    NAPOCOR, a government-owned and controlled corporation created for the purpose of undertaking development of hydroelectric power generation, the production of electricity from nuclear, geothermal and other sources and the transmission of electric power on a nationwide basis, is also empowered to acquire property incident to or necessary, convenient or proper to carry out its purpose. It is also empowered to enter private property in the lawful performance of its business purposed provided  that the owners of such private property shall be indemnified for any damage that may be caused thereby and exercise the right of eminent domain.

     In order to construct and maintain its Northwestern Luzon Project , NAPOCOR had to acquire an easement if right-of-way over certain parcels of land situated in the towns of Angat, San Rafael and San Ildefonso and in the city of San Jose del Monte ---- all in the province of Bulacan.

     On November 5, 1997, NAPOCOR filed a special civil action for eminent domain before the RTC of Malolos, Bulacan. The defendants were the vendors and vendees of the affected parcels of land.

The complaint alleged that the defendants were either the registered owners or the claimants of the affected pieces of properties. It also alleged that the public purpose of the Northwestern Luzon Project, as well as the urgency and necessity of acquiring easements of right-of-way over the said parcels of land consisting of 62,426.50 sq.m. It also averred that the affected properties were selected by NAPOCOR in a manner compatible with the greatest public good and the least private injury and had not been expropriated for public use and that the negotiations between the NAPOCOR and the defendants failed. The complaint prayed, among others, that the RTC issue a writ of possession in favor of the NAPOCOR in the event that it would be refused entry to the affected properties. Only the defendants herein filed their respective answers.

Respondents Heirs of Trinidad claimed that they should be indemnified for the value of the affected property based on the prevailing market purchase price of P 750/sq.m. They also added that there are other parcels of land within the area which are more suitable for NAPOCOR’s project.

Respondent Moldex, alleged that the expropriation of part if the landholding in which it has propriety interest would divest the peripheral area of its value and render the same totally useless and thus must be compensated for the loss of the peripheral area as well.

Purefoods Corporation and SDC prayed for the dismissal of the complaint. SDC averred that the taking would not serve any public purpose and that the selection of its property for expropriation would not be compatible with the greatest public good and the least private injury. Purefoods who also prayed for the dismissal of the complaint argued that NAPOCOR failed to append copies of the pertinent Torrens titles to the complaint. It also averred that NAPOCOR’s offer was excessively low, undervalued and obsolete and that its action had caused extreme prejudice to its investment and further delay in the construction and development of its piggery business, thereby adversely affecting its operation.

On December 19, 1997, NAPOCOR filed its Urgent Ex Parte Motion for the Issuance of Writ of Possession wherein it alleged that it had deposited with the Land Bank of the Philippines the amount of P 126, 565.42 as provisional valuation of the properties sought to be expropriated and that it had sent a Notice to Take Possession of the said properties. The RTC directed the clerk of court to issue a writ of possession on January 6, 1998.

The RTC issued an order dated June 14, 1999, after the pre-trial conference, reflecting he parties’ agreement to limit the issues to the amount of just compensation and to whether respondent Moldex was entitles to just compensation on the devaluation of the peripheral area within its property.

The RTC appointed a second set of commissioners after the first set of appointed commissioners failed to discharge their duties. On May 18, 2001, the commissioners submitted separate reports to the RTC which formed part of the case records. The commissioners recommended that the compensation due from NAPOCOR be based on the fair market value of P 600.00/sq.m. for the properties belonging to Moldex and P 400.00/sq.m. for the undeveloped and underdeveloped properties belonging to the rest of the respondents. In the rendered decision of the RTC dated December 17, 2001, it fixed the amount of P600.00/sq.m. for the land of Moldex as just compensation and P400.00/sq.m. for the properties of the other respondents and payment of interest of 12% per annum from the finality of its decision until full payment thereof.

Moldex sought for reconsideration of the said decision but was denied by the RTC in its Order dated December 7, 2001. Both Moldex and NAPOCOR filed separate appeals before the Court of Appeals.

Moldex argues that the RTC erred in the following instances: (1) in ruling that just compensation should be paid at P600/sq.m. and not P1,600/sq.m; (2) in not imposing interest of 12% per annum reckoned from the taking until the finality of the decision and; (3) in not ordering the payment of just compensation for the peripheral portion of the affected property.

NAPOCOR assailed the RTC’s valuations of the properties at P600/sq.m and P400/sq.m, contending that the same are not based on the value of the properties at the time of the taking when the properties were still agricultural in nature. It claimed that only an easement fee, which should not exceed 10% of the declared market value, should be paid to the respondents. It also questioned the awared of interest of 12% per annum from the finality of the decision until the full payment of the amount adjudged.

On November 7, 2003, the CA affirmed the RTCs decision in all respect except for the period during which the interest of 12% per annum would accrue.

Moldex sought the reconsideration of the November 7, 2003 decision of the CA while NAPOCOR, through the OSG, elevated the case to the SC via petition for review of certiorari.

ISSUE:

      Whether or not only the easement fee of 10% of the market value of the expropriated properties should be paid for the affected owners.

RULING:

     No. The question of just compensation for an easement of right-of-way over a parcel of land that will be traversed by NAPOCOR’s transmission lines has already been answered in the case of NAPOCOR vs Manubay Agro-Industrial Development Corporation. In the said case, it was held that because of the nature of the easement, which will deprive normal use of ther land for an indefinite period, just compensation must be based on the full market value of the affected properties. Also in the case of NAPOCOR vs Aguirre-Paderanga, the court noted that the passage of NAPOCOR’s transmission lines over the affected property causes not only actual damage but also restriction on the agricultural and economic activity normally undertaken on the entire property. While in the said case NAPOCOR was seeking to acquire only an easement of the right-of-way, the court nonetheless rules that the just compensation in the amount of only 10% of the market value of the property was not enough to indemnify the incursion of the affected property.

                The Court explained therein that expropriation is not limited to the acquisition of real property with 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 ambit of the terms “expropriation”. In eminent domain or expropriation proceedings, the general rule is that the just compensation to which the owner of the condemned property is entitles is the market value and market value is the “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 a price to be given and receive therefor. The aforementioned rule, however, is modified where only a part of a certain property is expropriated. In such case the owner is not restricted to compensation for the portion actually taken. In addition to the market value of the portion taken, he is also entitled to recover the consequential damage, if any, to the remaining part of the property. At the same time, from the total compensation must be deducted the value of the consequential benefits.”

       While section 3(a) of R.A. No. 6395, as amended, and the implementing rule of R.A. No. 8974 indeed state that only 10% of the market value of the property is due to the owner of the property subject to an easement of right-of-way, said rule is not binding on the court. Well-settled is the rule that the determination of “just compensation” in eminent domain cases is a judicial function.

        Thus, the decision of the RTC and CA with regard to the value of just compensation of P 400/sq.m. of the properties of the respondents except for Moldex which is P600/sq.m.  is affirmed.