Facts

• Petitioner National Power Corporation (NPC) is a government-owned and controlled corporation created under R.A. No. 6395, as amended by P.D. No. 938, whose charter grants it the power "to exercise the right of eminent domain." (Section 3A of the same charter is the provision it invokes to pay less — the tension in the case is entirely internal to NPC's own statute.)
• For its Leyte-Cebu Interconnection Project, NPC's 230 KV Talisay-Compostela transmission lines and towers had to pass parcels of land in Danao City and the Municipality of Carmen, Cebu, two of them at Cantipay, Carmen owned by respondent Carlos Villamor.
• On those lands stood fruit-bearing trees — mango, coconut, avocado, guyabano, jackfruit, tamarind, breadfruit, atis, siniguelas and banana — and non-fruit-bearing trees, mahogany and gemilina. (The land was found "first class, it being a fertile land and trees growing thereon produce plenty of fruits," with mango valued at ₱22,756 per tree and coconut at ₱2,310 — which is why the improvements alone came to over a million pesos.)
• On July 22, 1996, NPC filed a complaint for eminent domain in the RTC, Branch 25, Danao City, docketed Civil Case No. DNA-389, over Lot 3 (5,590.76 sq m, TCT No. 11970) and Lot 4 (3,134.53 sq m, TCT No. 15-12045), depositing ₱23,115.70 — the assessed value on the tax declaration — with PNB. That deposit is the measure of what NPC thought the taking was worth; the judgment came to roughly ₱4.9 million for land and improvements. The gap is the case.
• The trial court issued a writ of possession on July 14, 1997. Several parties intervened — Teodolo Villamor, Teofilo Villamor and Nunila Abellar, siblings of the respondent and heirs of the late spouses Jose and Dolores Villamor — claiming NPC had negotiated with only one of seven heirs. As between NPC and Villamor, "the only issue... involves the reasonableness and adequacy of the just compensation."
• A board of three commissioners was constituted — Fortunato C. Ligutom, Municipal Assessor of Carmen, as Chairman, with Sebastian C. Ocon, NPC's Right-of-Way Supervisor, and Nicolas Capoy of the BIR — which recommended ₱433 per square metre as fair market value. (The average of six opinion values was ₱290; the figure rose because RDC Resolution No. 38, s. 1993 of September 17, 1993 placed the area in an industrial zone, with a proposed value of ₱350.)
• Villamor pointed to a parallel case, Civil Case No. DNA-426 against Francisco Villamor over an adjoining lot, where compensation was fixed at ₱600 and, on NPC's motion, reduced to ₱450; and he asked that a 15.23-square-metre dangling portion of Lot 4, cut off and no longer usable "for any productive purposes," be paid for as well.
• On December 22, 1997, the trial court fixed compensation at ₱450 per square metre — ₱2,515,842.00 for Lot 3 and ₱1,410,538.50 for Lot 4, a total of ₱3,926,380.50 — plus ₱648,932.00 and ₱372,968.00 for the improvements, a further ₱1,021,900.00; and on January 22, 1998 it amended the judgment to add ₱6,853.50 for the dangling 15.23 square metres.
• On August 19, 2002, the Court of Appeals affirmed, noting that in other expropriations under the same project NPC had "executed several Deeds of Absolute Sale... where NPC agreed to pay the owners of the lands ₱450.00 per square meter" and two compromise agreements at ₱420, and that "[i]n all these cases, National Power Corporation did not invoke Sec. 3-A of the Revised Charter." Reconsideration was denied August 28, 2003. This is the point that most damages NPC's position: it had been paying ₱420–₱450 to neighbouring owners without once invoking the cap it now says binds the courts.

Issue

Ruling

"WHEREFORE, we DENY the petition. We AFFIRM the 19 August 2002 Decision and 28 August 2003 Resolution of the Court of Appeals in CA-G.R. CV No. 61749. SO ORDERED."

Ratio

• NPC's contention was that under Section 3A of its charter, where private property "will be traversed by transmission lines," it "shall only acquire an easement of right of way since the landowner retains ownership of the property and can devote the land to farming and other agricultural purposes"; and that as these lands were agricultural "with no sign of commercial activity," ₱450 per square metre was "excessive and unreasonable."
• Villamor answered that the lands were not merely traversed — "a portion is also used as the site of its transmission tower" — so NPC "cannot hide behind the provisions of Section 3A and claim that it may only pay landowners an easement fee not exceeding 10% of the market value"; and that other owners on the same project had been paid ₱420 to ₱450 under deeds of absolute sale and compromise agreements.
• The Court disposed of the statutory argument shortly: "Petitioner's reliance on Section 3A of RA 6395 has been struck down by this Court in a number of cases."
• The governing characterisation: "Easement of right of way falls within the purview of the power of eminent domain."§
• Why the easement is a taking. "In installing the 230 KV Talisay-Compostela transmission lines which traverse respondent's lands, a permanent limitation is imposed by petitioner against the use of the lands for an indefinite period. This deprives respondent of the normal use of the lands."
• The deprivation on these facts. "In fact, not only are the affected areas of the lands traversed by petitioner's transmission lines but a portion is used as the site of its transmission tower. Because of the danger to life and limbs that may be caused beneath the high-tension live wires, the landowner will not be able to use the lands for farming or any agricultural purposes."
• The valuation was properly arrived at. "[T]he trial and appellate courts fixed the valuation of the lands at ₱450 per square meter. The courts considered not only the Commissioners' Report and the opinion values of different agencies submitted to the trial court but also the several deeds of absolute sale and compromise agreements entered into by petitioner with landowners adjacent to respondent's lands."
• NPC's own conduct. It "freely and voluntarily entered into several deeds of absolute sale with other landowners affected by the Leyte-Cebu Interconnection Project for a ₱450 per square meter selling price from the years 1996 to 1997," in five identified sales in Tuburan Sur, Maslog and Taboc, Danao City, each pursuant to a resolution of the Danao City Appraisal Committee. It also entered into two compromise agreements dated 26 May 1999, approved by the trial court, fixing ₱420 per square metre, based on valuations in DNA-426 (NPC v. Francisco Villamor, Sr.), DNA-389 (this case) and DNA-373 (NPC v. Francisco Camara, et al.).
• Conclusion on review. "Thus, we see no reason to disturb the findings of the trial and appellate courts."
• The measure of compensation. "Indeed, respondent is entitled to just compensation or the just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation."
• Whose function it is. "Since the determination of just compensation in expropriation proceedings is essentially a judicial function, this Court finds the amount of ₱450 per square meter to be just and reasonable compensation for the expropriated lands of respondent."

Doctrine

1. An Easement of Right of Way Is Within Eminent Domain: "Easement of right of way falls within the purview of the power of eminent domain." Calling the acquisition an easement rather than a purchase does not take it outside the constitutional requirement of just compensation.
2. Permanent Limitation = Taking: Transmission lines across private land impose "a permanent limitation... against the use of the lands for an indefinite period" which "deprives [the owner] of the normal use of the lands"; the danger beneath high-tension live wires means the land cannot be used "for farming or any agricultural purposes."
3. Section 3A of R.A. No. 6395 Does Not Bind the Courts: NPC's reliance on the easement-fee cap "has been struck down by this Court in a number of cases."
4. Just Compensation Defined: "[T]he just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation" — measured by the owner's loss.
5. A Judicial Function: "[T]he determination of just compensation in expropriation proceedings is essentially a judicial function"; commissioners' reports, appraisal-committee resolutions and statutory formulas inform but do not control it.
6. The Taker's Own Dealings Are Evidence: Deeds of absolute sale and compromise agreements the expropriator "freely and voluntarily" executed with adjacent landowners on the same project are competent evidence of value — the more so where it never invoked the statutory cap in those transactions.

Full Digest — Recitation Format

I. Gist and Central Doctrine

II. Chronological Narration of Material Facts

• Petitioner National Power Corporation (NPC) is a GOCC created under R.A. No. 6395, as amended by P.D. No. 938, whose main objective is the development of hydro-electric generation power, and whose charter grants it the power "to exercise the right of eminent domain."
• For its Leyte-Cebu Interconnection Project, NPC's 230 KV Talisay-Compostela transmission lines and towers had to pass parcels of land in Danao City and Carmen, Cebu, two of which — at Cantipay, Carmen — are owned by respondent Carlos Villamor.
• On these lands stand fruit-bearing trees — mango, coconut, avocado, soursop or guyabano, jackfruit, tamarind, breadfruit, sugar apple or atis, Spanish plum or siniguelas, and banana — and non-fruit-bearing trees, mahogany and gemilina.
• On July 22, 1996, NPC filed a complaint for eminent domain with the RTC, Branch 25, Danao City, docketed as Civil Case No. DNA-389, over Lot 3, 6191 Cad. 1046-D (5,590.76 square metres, TCT No. 11970) and Lot 4, 6191 Cad. 1046-D (3,134.53 square metres, TCT No. 15-12045).
• NPC deposited ₱23,115.70 with the Philippine National Bank, Fuenta Osmeña branch, "representing the assessed value on the tax declaration of the lands."
• By Order dated July 14, 1997, the trial court ordered the issuance of a writ of possession in NPC's favour.
• Several parties intervened — Teodolo Villamor, Teofilo Villamor and Nunila Abellar, allegedly siblings of the respondent and heirs of the late spouses Jose and Dolores Villamor — claiming that NPC violated their rights by negotiating only with Villamor, one of seven heirs. "The only issue between NPC and Villamor involves the reasonableness and adequacy of the just compensation of the properties."
• The trial court created a board of three commissioners: Fortunato C. Ligutom, Municipal Assessor of Carmen, as Chairman; Sebastian C. Ocon, NPC's Right-of-Way Supervisor; and Nicolas Capoy, a BIR collection agent.
• The Joint Commissioners' Report recommended ₱433 per square metre, based on the court's inspection report, documentary exhibits, opinion values submitted to the Provincial Appraisal Committee, certifications from government agencies, and the owner's proposal. The average of six opinion values was ₱290; the proposed ₱350 was taken into account because the lands fell within the industrial zone under Regional Development Council Resolution No. 38, series of 1993, dated September 17, 1993. Values for the trees were also reported — by average computation ₱22,756.00 per mango tree and ₱2,310 per coconut tree, the land being "classified as first class, it being a fertile land."
• On November 24, 1997, Villamor commented on the report, citing Civil Case No. DNA-426 (NPC v. Francisco Villamor) over an adjoining lot, where compensation was fixed at ₱600 and, on NPC's motion, reduced to ₱450; and praying that a 15.23-square-metre portion of Lot 4, separated from the remainder and unusable "for any productive purposes," be included in the compensation.
• On December 22, 1997, the trial court gave judgment for Villamor at ₱450 per square metre: ₱2,515,842.00 for Lot 3 and ₱1,410,538.50 for Lot 4 — ₱3,926,380.50 in all — plus ₱648,932.00 and ₱372,968.00 for the improvements, or ₱1,021,900.00; and directed that ₱1,783,506.50 representing Lot 4 and its improvements be divided among the heirs or awarded solely to Villamor as a pending appeal might determine.
• On January 22, 1998, on Villamor's motion for reconsideration, the trial court amended the judgment, "[o]rdering the plaintiff to pay the sum of ₱6,853.50 to defendant Carlos Villamor" for the dangling portion.
• On August 19, 2002, the Court of Appeals dismissed NPC's appeal and affirmed, noting that NPC had executed several Deeds of Absolute Sale at ₱450 and two Compromise Agreements at ₱420 with other owners affected by the same project, and that "[i]n all these cases, National Power Corporation did not invoke Sec. 3-A of the Revised Charter of the National Power Corporation."
• On August 28, 2003, the appellate court denied reconsideration; on June 19, 2009, the Supreme Court denied the petition.

III. Arguments of the Parties

A. Petitioner (National Power Corporation)

B. Respondent (Carlos Villamor)

C. Intervenors

IV. Issues

A. MAIN ISSUE

V. Ruling / Disposition

A. MAIN ISSUE

VI. Ratio Decidendi and Doctrines

A. Ratio Decidendi

• Section 3A does not control. "Petitioner's reliance on Section 3A of RA 6395 has been struck down by this Court in a number of cases."
• The characterisation that decides the case. "Easement of right of way falls within the purview of the power of eminent domain."
• Why it is a taking. "In installing the 230 KV Talisay-Compostela transmission lines which traverse respondent's lands, a permanent limitation is imposed by petitioner against the use of the lands for an indefinite period. This deprives respondent of the normal use of the lands."
• The factual aggravation. "In fact, not only are the affected areas of the lands traversed by petitioner's transmission lines but a portion is used as the site of its transmission tower. Because of the danger to life and limbs that may be caused beneath the high-tension live wires, the landowner will not be able to use the lands for farming or any agricultural purposes."
• How the valuation was reached. "[T]he trial and appellate courts fixed the valuation of the lands at ₱450 per square meter. The courts considered not only the Commissioners' Report and the opinion values of different agencies submitted to the trial court but also the several deeds of absolute sale and compromise agreements entered into by petitioner with landowners adjacent to respondent's lands."
• NPC's own transactions. It "freely and voluntarily entered into several deeds of absolute sale with other landowners affected by the Leyte-Cebu Interconnection Project for a ₱450 per square meter selling price from the years 1996 to 1997," in five identified sales in Tuburan Sur, Maslog and Taboc, Danao City, each pursuant to a Danao City Appraisal Committee resolution; and it entered into "two compromise agreements dated 26 May 1999, duly approved by the trial court, which fixed the valuation of the lands at ₱420 per square meter," based on valuations in DNA-426, DNA-389 and DNA-373.
• No reason to disturb. "Thus, we see no reason to disturb the findings of the trial and appellate courts."
• The standard of compensation. "Indeed, respondent is entitled to just compensation or the just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation."
• Whose function. "Since the determination of just compensation in expropriation proceedings is essentially a judicial function, this Court finds the amount of ₱450 per square meter to be just and reasonable compensation for the expropriated lands of respondent."

B. Doctrines/Rules

1. Easement of Right of Way and Eminent Domain: An easement of right of way for transmission lines "falls within the purview of the power of eminent domain"; it is a taking, not a lesser burden to be paid for at a discount.
2. The Test Is Deprivation of Normal Use: Where a "permanent limitation... for an indefinite period" deprives the owner of the normal use of the land, full just compensation is due — regardless that naked ownership formally remains.
3. Statutory Easement Fees Do Not Bind the Courts: NPC's reliance on the Section 3A cap "has been struck down by this Court in a number of cases."
4. Just Compensation: "[T]he just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation."
5. Judicial Function: "[T]he determination of just compensation in expropriation proceedings is essentially a judicial function."
6. Comparable Transactions as Evidence: Deeds of sale and compromise agreements the expropriator itself executed with neighbouring owners on the same project are strong evidence of fair market value.

C. Limitations/Exceptions

• The strength of the holding rests partly on the facts: a portion of the land carried the transmission tower itself, not merely the wires overhead, and the danger beneath high-tension lines foreclosed any agricultural use.
• Classification as agricultural does not fix the value. The lands here lay within an industrial zone under RDC Resolution No. 38, s. 1993, and the commissioners weighed that in moving from an average opinion value of ₱290 toward ₱350 and beyond.
• Consequential loss to the remainder is compensable: the 15.23-square-metre dangling portion of Lot 4, left unusable "for any productive purposes," was ordered paid at ₱6,853.50.
• The dispute over the intervenors' shares was not resolved here; the trial court directed that the portion representing Lot 4 be divided among the heirs or awarded solely to Villamor as a separate pending appeal might determine.

D. Topic Integration

• The relationship is DIRECT.
• The case belongs to "Legal Easements — Easement of right of way: nature of the easement," and it is the authority for the proposition that the nature of this easement, when imposed by the State, is that of a taking under eminent domain rather than a mere encumbrance.
• Set it against the private right-of-way cases on the same list. In Valdez, Quintanilla and Ramos the claimant must prove necessity and pay indemnity to get a way over a neighbour's land; here the State already has the way and the fight is over price. The common thread is that a servitude is never free — what changes is who must prove what.
• The practical lesson is about labels versus effects: NPC's argument was entirely nominal — "we take only an easement, so we pay only an easement fee." The Court measures the compensation by what the owner loses, and a permanent aerial burden that forecloses farming beneath it takes the substance of the land even though the title stays put.

VII. Separate Opinions