G.R. No. 166553 ; July 30, 2009
Republic of the Philippines (National Power Corporation) vs. Spouses Ruperto Libunao and Sonia P. Sanopo & Heirs of Benita Domingo

FACTS

The National Power Corporation (NPC) filed an expropriation case to acquire an easement of right-of-way over portions of land owned by the respondents for its Cabanatuan-Talavera 69 KV Transmission Line Project. The affected properties were a 1,212-square-meter lot owned by the Spouses Libunao and a 4,380-square-meter portion of a lot owned by the Heirs of Benita Domingo. The Regional Trial Court (RTC), after considering commissioners’ reports, ordered NPC to pay just compensation. For the Libunao property, classified as residential, the RTC ordered payment based on the full market value of ₱1,500 per square meter. For the Domingo property, classified as agricultural, the RTC ordered payment of ₱600 per square meter for the entire area taken. NPC appealed, arguing that for the agricultural land, it should only pay a 10% easement fee as per Section 3A of Republic Act No. 6395 , as amended.

ISSUE

Whether the Court of Appeals erred in affirming the RTC’s decision to award full market value compensation for the agricultural land taken for an easement of right-of-way, instead of limiting compensation to a 10% easement fee as provided under Section 3A of RA 6395.

RULING

The Supreme Court denied NPC’s petition and affirmed the CA decision. The Court held that Section 3A of RA 6395, which prescribes a 10% easement fee for agricultural lands, is unconstitutional. The legal logic is grounded in the fundamental principle that the power of eminent domain requires the government to pay “just compensation,” which is a judicial prerogative. Just compensation means the full and fair equivalent of the property taken from its owner. The Court reiterated that any law which prescribes a fixed formula or pre-determines compensation, thereby encroaching upon the court’s constitutional duty to determine just compensation on a case-by-case basis, is invalid. The legislature cannot impair the courts’ judicial function. Consequently, the statutory 10% limitation was struck down. The RTC correctly exercised its discretion in determining just compensation based on the evidence before it, awarding the full market value for the property affected by the transmission lines. The taking, though in the form of an easement, resulted in a permanent limitation on the landowner’s rights, effectively depriving them of its ordinary use, thus warranting full compensation.