G.R. No. 197329, September 8, 2014
NATIONAL POWER CORPORATION, Petitioner, vs. LUIS SAMAR and MAGDALENA SAMAR, Respondents.

FACTS

In 1990, petitioner National Power Corporation (NPC) filed Civil Case No. IR-2243 for the expropriation of respondents’ 1,020-square meter lot in Camarines Sur to construct a transmission line. The Regional Trial Court (RTC) issued an Order dated August 29, 1990, directing the issuance of a Writ of Condemnation. NPC entered the property and constructed Tower No. 83. However, on July 12, 1994, the RTC dismissed Civil Case No. IR-2243 without prejudice for failure to prosecute. This order was not assailed, and NPC did not commence another expropriation proceeding.
On December 5, 1994, respondents filed Civil Case No. IR-2678 against NPC for compensation and damages due to NPC’s taking of the lot without payment following the dismissal of the expropriation case. The parties agreed to constitute a panel of commissioners to determine the lot’s value. The commissioners submitted reports with varying valuations: the respondents’ commissioner recommended ₱1,000-₱1,500 per square meter; NPC’s commissioner did not set an amount but stated it should be valued as agricultural land; and the court representative proposed ₱1,100 per square meter. The RTC, in its February 21, 2003 Decision, fixed the value at ₱1,000 per square meter, ordering NPC to pay ₱1,020,000.
NPC appealed to the Court of Appeals (CA), arguing that just compensation should be computed based on the property’s value at the time of taking or the filing of the expropriation case in 1990, pursuant to Section 4, Rule 67 of the 1964 Rules of Court, and sought remand for further proceedings. The CA, in its June 17, 2011 Decision, denied the appeal and affirmed the RTC, holding that Civil Case No. IR-2678 was not an expropriation case but a simple action for recovery of damages, making Rule 67 inapplicable.

ISSUE

Whether the Court of Appeals erred in affirming the RTC’s valuation of the expropriated property at ₱1,000 per square meter based on current market value and in not remanding the case for determination of just compensation in accordance with Section 4, Rule 67 of the 1964 Rules of Court, which bases compensation on the value at the time of taking or filing of the expropriation complaint.

RULING

The Supreme Court GRANTED the Petition, REVERSED and SET ASIDE the Court of Appeals Decision, and REMANDED the case to the Regional Trial Court.
The Court held that just compensation must be based on the value of the property at the time it was taken by the government. Since NPC took possession of the property in 1990 pursuant to the Writ of Condemnation, the value at that time, not at the time of filing or pendency of the subsequent compensation case (Civil Case No. IR-2678), should govern. The dismissal of the original expropriation case (Civil Case No. IR-2243) for failure to prosecute meant that no expropriation suit was effectively filed, and NPC waived the procedure under Rule 67, including the appointment of commissioners. However, this waiver does not extend to the substantive rule that just compensation is determined as of the time of taking. The trial court’s valuation based on the commissioners’ reports, which used current market values, was erroneous as it did not reflect the value at the time of taking in 1990. The case was remanded to the RTC to re-convene or appoint new commissioners to determine just compensation based on the property’s value at the time of taking in 1990. Additionally, respondents are entitled to legal interest on the compensation from the time of taking until full payment.