G.R. No. 246565, June 10, 2020
RICARDO S. SCHULZE, SR., SUBSTITUTED BY HIS WIFE, ANA MARIA L. SCHULZE AS PRESIDENT OF ELARIS INVESTMENT CO., INC., JOSE LUIS S. VALDES, SPOUSES MARIA ELENA S. VALDES AND ANTONIO VALDES, AND ELARIS INVESTMENT CO., INC., PETITIONERS, VS. NATIONAL POWER CORPORATION AND PHILIPPINE NATIONAL BANK, RESPONDENTS.

FACTS

On September 7, 2001, respondent National Power Corporation (NAPOCOR) filed a complaint for expropriation against petitioners, seeking an easement of right of way over portions of land (subject lots) with an aggregate area of 23,563 sq. m. for its 138 KV Bacolod-Cadiz Transmission Line. The subject lots formed part of five larger tracts of land. NAPOCOR sought to pay a simple easement fee. Petitioners contended that the market values of their lands had increased and that the remainder of their lots (affected lots) would suffer a reduction in value due to the installation of NAPOCOR’s facilities, entitling them to consequential damages. After petitioners received a deposit representing 100% of the BIR zonal valuation plus improvements, NAPOCOR was granted a Writ of Possession and took possession on December 19, 2003. A Board of Commissioners recommended valuing the subject lots at P593.86/sq. m. based on market data from 2002 and 2003 and factors like location and utility. The RTC adopted this valuation, fixed just compensation at P13,993,260.00, awarded consequential damages equivalent to 10% of the fair market value of the affected lots (P26,538,415.68), and awarded attorney’s fees. The CA affirmed the just compensation but found the award of consequential damages improper for being speculative, remanding the case for further evidence, and deleted the attorney’s fees. It also denied petitioners’ claim for legal interest. Petitioners moved for partial reconsideration, which was denied.

ISSUE

1. Whether the CA erred in remanding the case to determine the proper amount of consequential damages.
2. Whether the CA erred in failing to impose legal interest on the award of just compensation.

RULING

The petition is partly meritorious.
1. On consequential damages: The Court ruled that the CA erred in finding the award of consequential damages unsupported by evidence. The Court held that when only a portion of a property is expropriated, the owner is entitled to just compensation for the part taken and may recover consequential damages for the remainder if its value is impaired as a result of the expropriation, provided such fact is proven. The records, including the Court Commission’s Report adopted by the RTC, showed that the value of the affected lots was impaired due to their proximity to the power posts and transmission lines, which constrained their use and created a perceived fear of health risks, making the properties less desirable. The Court recognized that power transmission lines adversely affect market value as potential buyers would shy away. Therefore, the payment of consequential damages is in order. However, the Court agreed with the CA that the specific award of 10% of the fair market value of the affected lots was speculative and without reliable supporting data. Thus, the case must be remanded to the RTC for the proper determination of the amount of consequential damages.
2. On legal interest: The Court ruled that the CA erred in denying the imposition of legal interest. The Court held that just compensation is due on the date of actual taking, which was December 19, 2003. Since NAPOCOR failed to pay the full amount on that date, the unpaid balance should earn legal interest to compensate for the delay. The Court imposed legal interest at the rate of twelve percent (12%) per annum from December 19, 2003, until June 30, 2013, and at six percent (6%) per annum from July 1, 2013, until full payment, on the unpaid balance of the just compensation.