Philippine Supreme Court Resolutions > Year 2010 > November 2010 Resolutions > [G.R. No. 170314 : November 17, 2010] NATIONAL POWER CORPORATION VS. FELINO B. LUCERO :

Please take notice that the Court, Second Division, issued a Resolution dated 17 November 2010 which reads as follows:

G.R. No. 170314- (National Power Corporation v. Felino B. Lucero) 

This resolves the petition for review^[1] of the Decision^[2] of the Court of Appeals ordering the National Power Corporation to pay compensation with interest for obtaining an easement of right of way.

Petitioner National Power Corporation (petitioner) is a government corporation tasked under its franchise, Republic Act No. 6395 (RA 6395), as amended by Presidential Decree No. 938 (PD 938), to generate and transmit electric power and, for this purpose, to obtain easement of right of way to string transmission lines across private property. Petitioner obtained such easement from respondent Feiino B. Lucero (respondent) in 1993 and strung 138 kilovolts transmission lines across 7,572 square meters of respondent's 64,477 square-meter land in Badian, Cebu. For petitioner's alleged failure to pay damages for the creation of the easement, respondent, in December 1999, sued petitioner in the Regional Trial Court of Barili, Cebu (trial court), for payment of damages, attorney's fees and costs.

In its Answer, petitioner admitted the fact of routing transmission lines over respondent's property but raised the defense of prescription, contending that respondent's suit was barred by the five-year prescriptive period for filing compensation claims under Section 3(i) of RA 6395. Alternatively, petitioner admitted liability only for the payment of an easement fee equivalent to 10% of the value of the 7,572 square meters traversed by its transmission lines, following Section 3(A)^[3] of RA 6395, as amended by PD 938.

On respondent's motion, the trial court rendered summary judgment ordering petitioner to pay to respondent actual damages of P16,000,000 subject to 12% annual interest, moral damages of P3,000,000 and attorney's fees of P915,000. On appeal by petitioner, the Court of Appeals (CA) affirmed the trial court's ruling but lowered, the amount of compensation to P3,505,836 with 6% annual interest, to cover only the 7,572 square-meter portion traversed by the transmission wires, valued at P463 per square meter.  The CA also deleted the award of moral damages and attorney's fees for lack of basis.

The parties sought reconsideration but the CA found no basis to alter its ruling save for the annual rate of interest on the compensation which it Increased to 12% following this Court's ruling in Republic v. Court of Appeals.^[4]

Hence this petition, questioning the amount of compensation and rate of interest the CA awarded to respondent.  Petitioner submits that the compensation should be limited to 10% of the value of the area traversed by its transmission lines and its annual rate of interest should only be 6%.

We find no reversible error in the CAs ruling hence, we deny the petition.

First.  This Court has consistently rejected as untenable petitioner's reliance on Section 3(A) of RA 6395, as amended, to lower its liability to 10% of the value of the property subjected to its easement of right of way in light of the perpetual and hazardous burden the stringing of high-voltage transmission wires imposes on private property.^[5]  Legally, this type of easement is akin to taking within the contemplation of eminent domain proceedings, thus compensation, as the CA correctly ruled, covers the full amount of the property burdened by the easement.^[6]

Second. The legal rate of 6% interest per annum applies to the breach of an obligation to pay a sum of money not constituting a loan or forbearance of money.^[7]  However, in expropriation proceedings marked by the government's failure to pay compensation for an unreasonable length of time, the obligation to pay becomes an "effective forbearance," earning an interest rate of 12% per annum to "help eliminate the issue of the constant fluctuation x x x of the value of currency over time."^[8] Thus, we imposed an annual interest rate of 12% in cases where the government failed to pay compensation decades after taking private property.^[9] Here, respondent remains unpaid nearly two decades after petitioner subjected his property to a perpetual and hazardous easement in 1993, a period which saw numerous fluctuations of the value of the peso. Hence, the CA did not err in amending its ruling to order payment of interest on the compensation at the rate of 12% per year.

WHEREFORE, we RESOLVED to DENY the petition.

SO ORDERED. (Nachura, J., no part; Leonardo-De Castro, J., designated additional member per Raffle dated 8 November 2010)

Endnotes:

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^[1] Under Rule 45 of the 1997 Rules of Civil Procedure.

In the Decision dated 24 March 2004, as amended on 28 October 2005, penned by Associate Justice Lucas P. Bersarnin (now a member of this Court), with Associate Justices Godardo A. jacinto and Elvi John S. Asuncion, concurring.

^[3] This provides: "Section 4. A new section shall be inserted to be known as Section 3 A of the same Act to read as follows:

'Sec. 3A. in acquiring private property or private property rights through expropriation proceedings where the land or portion thereof will be traversed by the transmission lines, only a right-of-way easement thereon shall be acquired when the principal purpose for which such land is actually devoted will not be impaired, and where the land itself or portion thereof will be needed for the projects or works, such land or portion thereof as necessary shall be acquired.

x x x x

(b) With respect to the acquired right-of-way easement over the land or portion thereof, not to exceed ten percent (10%) of the market value declared by the owner or administrator or anyone having legal interest in the property, or such market value as determined by the assessor whichever is lower.'"

^[4] 433 Phil. 106(2002).

^[5] National Power Corporation v. Villamor, G.R. No. 160080, 19 June 2009, 590 SCRA 11; National Power Corporation v. Tiangco, G.R. No. 170846, 6 February 2007. 514 SCRA 674; National Power Corporation v. San Pedro, G.R. No. 170945, 26 September 2006, 503 SCRA 333; National Power Corporation v. Aguirre-Paderonga, 502 Phil. 722 (2005); National Power Corporation v. Manubay Agro-Industrial Development Corp., 480 Phil. 470 (2004); National Power Corporation v. Chiong, 452 Phil. 649 (2003).

^[6] National Power Corporation v. Villamor, G.R. No. 160080, 19 June 2009, 590 SCRA 11; National Power Corporation v. Manubay Agro-Industrial Development Corp., 480 Phil. 470 (2004): National Power Corporation v. Gutierrez, G.R. No. 60077, 18 January '991, 193 SCRA 1.

^[7] Civil Code, Art. 2209 ("If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum."); Eastern Shipping Lines, Inc. v. Cowl of Appeals, G.R. No. 97412, 12 July 1994, 234 SCRA 78.

^[8] Republic v. Cowl of Appeals, 433 Phil. 106,123 (2002).

^[9] Id. (where the property owner remained unpaid for more than three decades);  Reyes v. National Housing Authority, 443 Phil. 603 (2003) (where the balance on the compensation to the property owner remained unpaid for more than two decades).