Just Compensation for Right-of-Way Easement: Full Market Value, Not 10% Fee

When the government or its instrumentalities need private land for public projects, the Constitution requires payment of just compensation. But what happens when the government only needs an easement — for example, to string power lines over a farm or residential lot? Must the owner be paid only a small fee, or the full value of the land? In Republic v. Spouses Libunao (G.R. No. 166553, July 30, 2009), the Supreme Court settled this question in favor of landowners.

The Case: Power Lines Over Private Property

The National Power Corporation (NPC) filed an expropriation complaint to construct the Cabanatuan-Talavera 69 KV Transmission Line Project. NPC sought an easement of right-of-way over portions of two properties: a 1,212-square-meter residential lot owned by Spouses Libunao, and a 4,380-square-meter agricultural portion owned by the Heirs of Benita Domingo.

NPC took possession of the properties in January 1998. The trial court fixed just compensation at P1,500 per square meter for the residential lot and P600 per square meter for the agricultural land, with legal interest from the date of taking. The Court of Appeals later modified these amounts to P700 and P460 per square meter, respectively, based on an appraisal made two months before the complaint was filed.

NPC appealed, arguing that since it only acquired an easement of right-of-way over the aerial space, it should pay only 10% of the market value under Section 3-A of Republic Act No. 6395, its charter.

The Issue: Easement Fee or Full Value?

The central question was whether NPC should pay just compensation for the entire affected area or merely an easement fee of 10% of the market value.

The Ruling: Owners Get Full Market Value

The Supreme Court denied NPC's petition and affirmed the lower courts' rulings. The Court held that even if what NPC acquired was purely an easement of right-of-way, the acquisition still falls within the power of eminent domain, and the landowners are entitled to compensation based on the full market value of the affected properties.

The Court explained that the nature and effect of installing high-powered transmission lines, and the limitations on the use of the land for an indefinite period, deprive owners of the normal use of their property. The high-tension electric current passing through the lines also exposes occupants to danger. Thus, the expropriation was not limited to a mere easement.

Why the 10% Statutory Rule Did Not Apply

NPC relied on Section 3-A of R.A. 6395, which caps easement compensation at 10% of market value. The Court found this reliance misplaced. While the statute exists, the determination of just compensation is a judicial function. Any statutory valuation serves only as a guiding principle or factor — it cannot substitute the court's own judgment on what amount should be awarded.

The Court reiterated that just compensation is the full and fair equivalent of the property taken. The measure is not the taker's gain, but the owner's loss. Market value is generally the basis — the price that a willing buyer and a willing seller would agree upon.

Interest From the Date of Taking

The Court also upheld the award of legal interest at 6% per annum from the date of taking (January 7-8, 1998) until full payment, citing Section 10, Rule 67 of the Rules of Court. NPC's claim that it had already paid the owners was rejected — the amounts withdrawn by the owners corresponded only to damages to improvements, not the value of the land itself.

Practical Takeaways

• An easement of right-of-way for power lines is still a taking under eminent domain, and landowners are entitled to just compensation.
• The 10% easement fee rule in R.A. 6395 is not binding on courts. It may guide valuation, but judges have the final say on what is just.
• Full market value, not a token fee, is generally due when transmission lines traverse private property, because the lines indefinitely restrict normal use and create safety risks.
• Legal interest at 6% per annum runs from the date of taking until full payment of just compensation.
• Landowners should document all damage to improvements — crops, trees, and structures — as these are compensable separately from the land value.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.