CASE DIGEST: NPC sv. YCLA Sugar

G.R. No. 193936 : December 11, 2013

NATIONAL POWER CORPORATION, Petitioner, v. YCLA SUGAR DEVELOPMENT CORPORATION,Respondent.

REYES, J.:


FACTS:

In order to complete its 69 KV Calapan-Mamburao Island Grid Project in Puerto Galera, Oriental Mindoro, NPChad to construct transmission lines that would traverse several private properties, including the said parcels of land owned by YCLA.

Accordingly, on December 2, 1997, NPC filed a Complaint for expropriation with the RTC against YCLA and several other individuals. The NPC sought the expropriation of a portion of the parcels of land owned by the said defendants for the acquisition of an easement of right-of-way over areas that would be affected by the construction of transmission lines. The portion of YCLAs properties that would be affected by the construction of NPCs transmission lines has an aggregate area of 5,846 square meters.

YCLA filed its Answer dated July 9, 1998, alleging that the Complaint should be dismissed outright due to NPCs failure to allege the public use for the intended expropriation of its properties.

On April 30, 1999, the parties moved, inter alia, for the constitution of a Board of Commissioners to be appointed by the RTC to determine the reasonable amount of just compensation to be paid by the NPC. Thus, on even date, the RTC issued an order terminating the pre -trial conference and directing the constitution of a Board of Commissioners, which would submit a report and recommendation as to the reasonable amount of just compensation for the properties sought to be expropriated.

Meanwhile, on June 4, 1999, the RTC, acting on NPCs urgent ex- parte motion, issued a writ of possession placing NPC in possession of the properties sought to be expropriated.

On May 2, 2001, the Board of Commissioners submitted its Report, which fixed the amount of just compensation of the subject properties at P500.00 per sq m. YCLA objected to the amount recommended by the Board of Commissioners, claiming that the amount of just compensation should be fixed at P900.00 per sq m considering the improvements in their properties.

On October 19, 2001, the RTC issued an Order directing YCLA to submit its written manifestation, together with supporting documents, on its position on the proper valuation of the subject properties. NPC was likewise given 15 days to comment thereon. Trial on the determination of the reasonable amount of just compensation ensued thereafter.

Consequently, YCLA filed a motion asking the RTC to direct the Board of Commissioners to conduct an ocular inspection over the subject properties and, thereafter, amend/revise the Board of Commissioners Report dated May 2, 2001. YCLAs motion was granted by the RTC on July 25, 2003.

Meanwhile, on November 25, 2002, the RTC rendered a Partial Decision as regards the amount of just compensation that would be paid by the NPC to the other defendants.

On September 15, 2003, the Board of Commissioners submitted its second Report, which fixed the just compensation of the subject properties at P1,000.00 per sq m.

On May 12, 2005, the RTC rendered a Decision which adopted the report and recommendation of the Board of Commissioners.

The RTC pointed out that the Board of Commissioners Report dated May 2, 2001, which recommended that the amount of just compensation be fixed at P 500.00 per sq m, was arrived at without conducting an ocular inspection of the subject properties. That, upon YCLAs request, the Board of Commissioners subsequently conducted an ocular inspection of the subject properties, which prompted them to revise their earlier recommendation.

NPC appealed the RTC Decision dated May 12, 2005 to the CA, alleging that the RTC erred in relying on the recommendation of the Board of Commissioners as regards the amount of just compensation. NPC claimed that the amount of P1,000.00 per sq m recommended by the Board of Commissioners as the reasonable amount of just compensation, which was adopted by the RTC, is too excessive considering that the subject properties were barren and undeveloped agricultural lands at the time it instituted the action for expropriation.

On September 23, 2010, the CA rendered the Decision which affirmed with modification the RTC Decision dated May 12, 2005.

The CA held that the RTCs determination of the amount of just compensation was reasonable notwithstanding that it was merely based on the Report submitted by the Board of Commissioners. The RTC pointed out that there was no showing that the said Report was tainted with irregularity, fraud or bias. Nevertheless, the CA modified the award rendered by the RTC, by fixing the amount of just compensation to P900.00 per sq m instead of P1,000.00 per sq m, since YCLA only sought an award of P900.00 per sq m as just compensation for the subject properties in the proceedings before the RTC.

ISSUE: Whether the RTC and the CA had sufficient basis in arriving at the questioned amount of just compensation of the subject properties.

HELD: RTC and CA decisions set aside.

POLITICAL LAW: just compensation definition


In expropriation proceedings, just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. The measure is not the takers gain, but the owners loss. The word just is used to intensify the meaning of the word compensation and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full and ample. The constitutional limitation of just compensation is considered to be a sum equivalent to the market value of the property, broadly defined as the price fixed by the seller in open market in the usual and ordinary course of legal action and competition; or the fair value of the property; as between one who receives and one who desires to sell it, fixed at the time of the actual taking by the government.

It is settled that the amount of just compensation is to be ascertained as of the time of the taking, which usually coincides with the commencement of the expropriation proceedings. Where the institution of the action precedes entry into the property, the amount of just compensation is to be ascertained as of the time of the filing of the complaint.

In this case, in arriving at the amount of just compensation, both the RTC and the CA relied heavily on the Board of Commissioners Report dated September 15, 2003, which, in turn, was arrived at after conducting an ocular inspection of the subject properties on August 27, 2003. However, the Board of Commissioners recommendation as to the amount of just compensation was based on the prevailing market value of the subject properties in 2003. What escaped the attention of the lower courts is that the prevailing market value of the subject properties in 2003 cannot be used to determine the amount of just compensation considering that the Complaint for expropriation was filed by NPC on December 2, 1997.

Further, the Court notes that the Board of Commissioners, in its Report dated September 15, 2003, merely alleged that its members arrived at the amount of P1,000.00 per sq m as just compensation for the subject properties based on actual sales, presumably of surrounding parcels of land, and on the opinion of reliable persons that were interviewed. However, the Report dated September 15, 2003 is not supported by any corroborative documents such as sworn declarations of the reliable persons that were supposedly interviewed.

POLITICAL LAW: determination of amount of just compensation

The Court has consistently ruled that just compensation cannot be arrived at arbitrarily; several factors must be considered such as, but not limited to, acquisition cost, current market value of like properties, tax value of the condemned property, its size, shape, and location. But before these factors can be considered and given weight, the same must be supported by documentary evidence. The amount of just compensation could only be attained by using reliable and actual data as bases for fixing the value of the condemned property. A commissioners report of land prices which is not based on any documentary evidence is manifestly hearsay and should be disregarded by the court.

Under the Rules of Court, any evidence whether oral or documentary is hearsay if its probative value is not based on the personal knowledge of the witness, but on that of some other person who is not on the witness stand.

A commissioners report of land prices is considered as evidence in the determination of the amount of just compensation due the land owner in expropriation cases. The recommended amount of just compensation contained in the commissioners report of land prices, in turn, is based on various factors such as the fair market value of the property, the value of like properties. Thus, it becomes imperative that the commissioners report of land prices be supported by pertinent documents, which impelled the commissioners to arrive at the recommended amount for the condemned properties, to aid the court in its determination of the amount of just compensation. Otherwise, the commissioners report becomes hearsay and should thus not be considered by the court.

The trial court, in expropriation cases, may accept or reject, whether in whole or in part, the report submitted by the Board of Commissioners, which is merely advisory and recommendatory in character. It may also recommit the report or set aside the same and appoint new commissioners. In this case, the lower courts gave full faith and credence to the Board of Commissioners' Report dated September 15, 2003 notwithstanding that it was not supported by any documentary evidence.

Considering that the legal basis for the determination of just compensation for the subject properties is insufficient, the respective Decisions of the RTC and the CA should be set aside.

Nevertheless, the Court cannot fix the amount of just compensation for the subject properties at P500.00 per sq m pursuant to the Board of Commissioners' Report dated May 2, 2001. The said Report suffers from the same infirmity as the Report dated September 15, 2003 - it is unsupported by any documentary evidence and its recommendation as regards the amount of just compensation are based on the prevailing market value of the subject properties in 2001.

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