II.11NATIONAL POWER CORPORATION, Petitioner, v. LUCMAN G.

IBRAHIM, endangered their lives and properties as Marawi City lies in an area of local volcanic
OMAR G. MARUHOM, ELIAS G.MARUHOM, BUCAY G. MARUHOM, FAROUK G. and tectonic activity. Further, these illegally constructed tunnels caused them sleepless
MARUHOM, HIDJARA G. MARUHOM, ROCANIA G. MARUHOM, POTRISAM G. nights, serious anxiety and shock thereby entitling them to recover moral damages and
MARUHOM, LUMBA G. MARUHOM, SINAB G. MARUHOM, ACMAD G. MARUHOM, that by way of example for the public good, NAPOCOR must be held liable for
SOLAYMAN G. MARUHOM, MOHAMAD M. IBRAHIM, and CAIRONESA M. exemplary damages.
IBRAHIM, Respondents.
Disputing respondents' claim, NAPOCOR filed an answer with counterclaim denying the
DECISION material allegations of the complaint and interposing affirmative and special defenses,
namely that (1) there is a failure to state a cause of action since respondents seek
AZCUNA, J.: possession of the sub-terrain portion when they were never in possession of the same,
(2) respondents have no cause of action because they failed to show proof that they
were the owners of the property, and (3) the tunnels are a government project for the
This is a Petition for Review on Certiorariunder Rule 45 of the Rules of Court seeking to benefit of all and all private lands are subject to such easement as may be necessary
annul the Decision1 dated June 8, 2005 rendered by the Court of Appeals (CA) in C.A.- for the same.2
G.R. CV No. 57792.
On August 7, 1996, the RTC rendered a Decision, the decretal portion of which reads as
The facts are as follows: follows:

On November 23, 1994, respondent Lucman G. Ibrahim, in his personal capacity and in WHEREFORE, judgment is hereby rendered:
behalf of his co-heirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom,
Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Rocania G. Maruhom,
Potrisam G. Maruhom, Lumba G. Maruhom, Sinab G. Maruhom, Acmad G. Maruhom, 1. Denying plaintiffs' [private respondents'] prayer for defendant [petitioner] National
Solayman G. Maruhom, Mohamad M. Ibrahim and Caironesa M. Ibrahim, instituted an Power Corporation to dismantle the underground tunnels constructed between the
action against petitioner National Power Corporation (NAPOCOR) for recovery of lands of plaintiffs in Lots 1, 2, and 3 of Survey Plan FP (VII-5) 2278;
possession of land and damages before the Regional Trial Court (RTC) of Lanao del Sur.
2. Ordering defendant to pay to plaintiffs the fair market value of said 70,000 square
In their complaint, Ibrahim and his co-heirs claimed that they were owners of several meters of land covering Lots 1, 2, and 3 as described in Survey Plan FP (VII-5) 2278
parcels of land described in Survey Plan FP (VII-5) 2278 consisting of 70,000 square less the area of 21,995 square meters at P1,000.00 per square meter or a total
meters, divided into three (3) lots, i.e. Lots 1, 2, and 3 consisting of 31,894, 14,915, of P48,005,000.00 for the remaining unpaid portion of 48,005 square meters; with 6%
and 23,191 square meters each respectively. Sometime in 1978, NAPOCOR, through interest per annum from the filing of this case until paid;
alleged stealth and without respondents' knowledge and prior consent, took possession
of the sub-terrain area of their lands and constructed therein underground tunnels. The 3. Ordering defendant to pay plaintiffs a reasonable monthly rental of P0.68 per square
existence of the tunnels was only discovered sometime in July 1992 by respondents meter of the total area of 48,005 square meters effective from its occupancy of the
and then later confirmed on November 13, 1992 by NAPOCOR itself through a foregoing area in 1978 or a total of P7,050,974.40.
memorandum issued by the latter's Acting Assistant Project Manager. The tunnels were
apparently being used by NAPOCOR in siphoning the water of Lake Lanao and in the 4. Ordering defendant to pay plaintiffs the sum of P200,000.00 as moral damages;
operation of NAPOCOR's Agus II, III, IV, V, VI, VII projects located in Saguiran, Lanao and
del Sur; Nangca and Balo-i in Lanao del Norte; and Ditucalan and Fuentes in Iligan
cralawlib rary

City.
5. Ordering defendant to pay the further sum of P200,000.00 as attorney's fees and the
costs.
On September 19, 1992, respondent Omar G. Maruhom requested the Marawi City
Water District for a permit to construct and/or install a motorized deep well in Lot 3
located in Saduc, Marawi City but his request was turned down because the SO ORDERED.3
construction of the deep well would cause danger to lives and property. On October 7,
1992, respondents demanded that NAPOCOR pay damages and vacate the sub-terrain On August 15, 1996, Ibrahim, joined by his co-heirs, filed an Urgent Motion for
portion of their lands but the latter refused to vacate much less pay damages. Execution of Judgment Pending Appeal. On the other hand, NAPOCOR filed a Notice of
Respondents further averred that the construction of the underground tunnels has Appeal by registered mail on August 19, 1996. Thereafter, NAPOCOR filed a vigorous
opposition to the motion for execution of judgment pending appeal with a motion for WHEREFORE, a modified judgment is hereby rendered:
reconsideration of the Decision which it had received on August 9, 1996.
1) Reducing the judgment award of plaintiffs for the fair market value
On August 26, 1996, NAPOCOR filed a Manifestation and Motion withdrawing its Notice of P48,005,000.00 by 9,526,000.00 or for a difference by P38,479,000.00 and by the
of Appeal purposely to give way to the hearing of its motion for reconsideration. further sum of P33,603,500.00 subject of the execution pending appeal leaving a
difference of 4,878,500.00 which may be the subject of execution upon the finality of
On August 28, 1996, the RTC issued an Order granting execution pending appeal and this modified judgment with 6% interest per annum from the filing of the case until
denying NAPOCOR's motion for reconsideration, which Order was received by NAPOCOR paid.
on September 6, 1996.
2) Awarding the sum of P1,476,911.00 to herein petitioners Omar G. Maruhom, Elias G.
On September 9, 1996, NAPOCOR filed its Notice of Appeal by registered mail which Maruhom, Bucay G. Maruhom, Mahmod G. Maruhom, Farouk G. Maruhom, Hidjara G.
was denied by the RTC on the ground of having been filed out of time. Meanwhile, the Maruhom, Portrisam G. Maruhom and Lumba G. Maruhom as reasonable rental
Decision of the RTC was executed pending appeal and funds of NAPOCOR were deductible from the awarded sum of P7,050,974.40 pertaining to plaintiffs.
garnished by respondents Ibrahim and his co-heirs.
3) Ordering defendant embodied in the August 7, 1996 decision to pay plaintiffs the
On October 4, 1996, a Petition for Relief from Judgment was filed by respondents Omar sum of P200,000.00 as moral damages; and further sum of P200,000.00 as attorney's
G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. fees and costs.
Maruhom, Hidjara G. Maruhom, Potrisam G. Maruhom and Lumba G. Maruhom
asserting as follows: SO ORDERED.5

1) they did not file a motion to reconsider or appeal the decision within the Subsequently, both respondent Ibrahim and NAPOCOR appealed to the CA.
reglementary period of fifteen (15) days from receipt of judgment because they
believed in good faith that the decision was for damages and rentals and attorney's In the Decision dated June 8, 2005, the CA set aside the modified judgment and
fees only as prayed for in the complaint: reinstated the original Decision dated August 7, 1996, amending it further by deleting
the award of moral damages and reducing the amount of rentals and attorney's fees,
2) it was only on August 26, 1996 that they learned that the amounts awarded to the thus:
plaintiffs represented not only rentals, damages and attorney's fees but the greatest
portion of which was payment of just compensation which in effect would make the WHEREFORE, premises considered, herein Appeals are hereby partially GRANTED, the
defendant NPC the owner of the parcels of land involved in the case; Modified Judgment is ordered SET ASIDE and rendered of no force and effect and the
original Decision of the court a quo dated 7 August 1996 is hereby RESTORED with the
3) when they learned of the nature of the judgment, the period of appeal has already MODIFICATION that the award of moral damages is DELETED and the amounts of
expired; rentals and attorney's fees are REDUCED to P6,888,757.40 and P50,000.00,
respectively.
4) they were prevented by fraud, mistake, accident, or excusable negligence from
taking legal steps to protect and preserve their rights over their parcels of land in so far In this connection, the Clerk of Court of RTC Lanao del Sur is hereby directed to
as the part of the decision decreeing just compensation for petitioners' properties; reassess and determine the additional filing fee that should be paid by Plaintiff-
Appellant IBRAHIM taking into consideration the total amount of damages sought in the
5) they would never have agreed to the alienation of their property in favor of anybody, complaint vis - Ã -vis the actual amount of damages awarded by this Court. Such
considering the fact that the parcels of land involved in this case were among the additional filing fee shall constitute a lien on the judgment.
valuable properties they inherited from their dear father and they would rather see
their land crumble to dust than sell it to anybody.4 SO ORDERED.6

The RTC granted the petition and rendered a modified judgment dated September 8, Hence, this petition ascribing the following errors to the CA:
1997, thus:
(a) RESPONDENTS WERE NOT DENIED THE BENEFICIAL USE OF THEIR SUBJECT ART. 437. The owner of a parcel of land is the owner of its surface and of everything
PROPERTIES TO ENTITLE THEM TO JUST COMPENSATION BY WAY OF DAMAGES; under it, and he can construct thereon any works or make any plantations and
excavations which he may deem proper, without detriment to servitudes and subject to
(b) ASSUMING THAT RESPONDENTS ARE ENTITLED TO JUST COMPENSATION BY WAY special laws and ordinances. He cannot complain of the reasonable requirements of
OF DAMAGES, NO EVIDENCE WAS PRESENTED ANENT THE VALUATION OF aerial navigation.
RESPONDENTS' PROPERTY AT THE TIME OF ITS TAKING IN THE YEAR 1978 TO JUSTIFY
THE AWARD OF ONE THOUSAND SQUARE METERS (P1000.00/SQ. M.) EVEN AS Thus, the ownership of land extends to the surface as well as to the subsoil under it.
PAYMENT OF BACK RENTALS IS ITSELF IMPROPER. In Republic of the Philippines v. Court of Appeals,9 this principle was applied to show
that rights over lands are indivisible and, consequently, require a definitive and
This case revolves around the propriety of paying just compensation to respondents, categorical classification, thus:
and, by extension, the basis for computing the same. The threshold issue of whether
respondents are entitled to just compensation hinges upon who owns the sub-terrain The Court of Appeals justified this by saying there is "no conflict of interest" between
area occupied by petitioner. the owners of the surface rights and the owners of the sub-surface rights. This is rather
strange doctrine, for it is a well-known principle that the owner of a piece of land has
Petitioner maintains that the sub-terrain portion where the underground tunnels were rights not only to its surface but also to everything underneath and the airspace above
constructed does not belong to respondents because, even conceding the fact that it up to a reasonable height. Under the aforesaid ruling, the land is classified as mineral
respondents owned the property, their right to the subsoil of the same does not extend underneath and agricultural on the surface, subject to separate claims of title. This is
beyond what is necessary to enable them to obtain all the utility and convenience that also difficult to understand, especially in its practical application.
such property can normally give. In any case, petitioner asserts that respondents were
still able to use the subject property even with the existence of the tunnels, citing as an Under the theory of the respondent court, the surface owner will be planting on the
example the fact that one of the respondents, Omar G. Maruhom, had established his land while the mining locator will be boring tunnels underneath. The farmer cannot dig
residence on a part of the property. Petitioner concludes that the underground tunnels a well because he may interfere with the mining operations below and the miner cannot
115 meters below respondents' property could not have caused damage or prejudice to blast a tunnel lest he destroy the crops above. How deep can the farmer, and how high
respondents and their claim to this effect was, therefore, purely conjectural and can the miner go without encroaching on each others rights? Where is the dividing line
speculative.7 between the surface and the sub-surface rights? cralaw lib rary

The contention lacks merit. The Court feels that the rights over the land are indivisible and that the land itself
cannot be half agricultural and half mineral. The classification must be categorical; the
Generally, in an appeal by certiorari under Rule 45 of the Rules of Court, the Court does land must be either completely mineral or completely agricultural.
not pass upon questions of fact. Absent any showing that the trial and appellate courts
gravely abused their discretion, the Court will not examine the evidence introduced by Registered landowners may even be ousted of ownership and possession of their
the parties below to determine if they correctly assessed and evaluated the evidence on properties in the event the latter are reclassified as mineral lands because real
record.8 The jurisdiction of the Court in cases brought to it from the CA is limited to properties are characteristically indivisible. For the loss sustained by such owners, they
reviewing and revising the errors of law imputed to it, its findings of fact being as a rule are entitled to just compensation under the Mining Laws or in appropriate expropriation
conclusive and binding on the Court. proceedings.10

In the present case, petitioner failed to point to any evidence demonstrating grave Moreover, petitioner's argument that the landowners' right extends to the sub-soil
abuse of discretion on the part of the CA or to any other circumstances which would call insofar as necessary for their practical interests serves only to further weaken its case.
for the application of the exceptions to the above rule. Consequently, the CA's findings The theory would limit the right to the sub-soil upon the economic utility which such
which upheld those of the trial court that respondents owned and possessed the area offers to the surface owners. Presumably, the landowners' right extends to such
property and that its substrata was possessed by petitioner since 1978 for the height or depth where it is possible for them to obtain some benefit or enjoyment, and
underground tunnels, cannot be disturbed. Moreover, the Court sustains the finding of it is extinguished beyond such limit as there would be no more interest protected by
the lower courts that the sub-terrain portion of the property similarly belongs to law.11
respondents. This conclusion is drawn from Article 437 of the Civil Code which
provides: In this regard, the trial court found that respondents could have dug upon their
property motorized deep wells but were prevented from doing so by the authorities
precisely because of the construction and existence of the tunnels underneath the without even the benefit of expropriation proceedings or the payment of any just
surface of their property. Respondents, therefore, still had a legal interest in the sub- compensation and/or reasonable monthly rental since 1978.12
terrain portion insofar as they could have excavated the same for the construction of
the deep well. The fact that they could not was appreciated by the RTC as proof that In the past, the Court has held that if the government takes property without
the tunnels interfered with respondents' enjoyment of their property and deprived them expropriation and devotes the property to public use, after many years, the property
of its full use and enjoyment, thus: owner may demand payment of just compensation in the event restoration of
possession is neither convenient nor feasible.13 This is in accordance with the principle
Has it deprived the plaintiffs of the use of their lands when from the evidence they have that persons shall not be deprived of their property except by competent authority and
already existing residential houses over said tunnels and it was not shown that the for public use and always upon payment of just compensation.14
tunnels either destroyed said houses or disturb[ed] the possession thereof by plaintiffs?
From the evidence, an affirmative answer seems to be in order. The plaintiffs and Petitioner contends that the underground tunnels in this case constitute an easement
[their] co-heirs discovered [these] big underground tunnels in 1992. This was upon the property of respondents which does not involve any loss of title or possession.
confirmed by the defendant on November 13, 1992 by the Acting Assistant Project The manner in which the easement was created by petitioner, however, violates the
Manager, Agus 1 Hydro Electric Project (Exh. K). On September 16, 1992, Atty. Omar due process rights of respondents as it was without notice and indemnity to them and
Maruhom (co-heir) requested the Marawi City Water District for permit to construct a did not go through proper expropriation proceedings. Petitioner could have, at any
motorized deep well over Lot 3 for his residential house (Exh. Q). He was refused the time, validly exercised the power of eminent domain to acquire the easement over
permit "because the construction of the deep well as (sic) the parcels of land will cause respondents' property as this power encompasses not only the taking or appropriation
danger to lives and property." He was informed that "beneath your lands are of title to and possession of the expropriated property but likewise covers even the
constructed the Napocor underground tunnel in connection with Agua Hydroelectric imposition of a mere burden upon the owner of the condemned
plant" (Exh. Q-2). There in fact exists ample evidence that this construction of the property.15 Significantly, though, landowners cannot be deprived of their right over
tunnel without the prior consent of plaintiffs beneath the latter's property endangered their land until expropriation proceedings are instituted in court. The court must then
the lives and properties of said plaintiffs. It has been proved indubitably that Marawi see to it that the taking is for public use, that there is payment of just compensation
City lies in an area of local volcanic and tectonic activity. Lake Lanao has been formed and that there is due process of law.16
by extensive earth movements and is considered to be a drowned basin of
volcano/tectonic origin. In Marawi City, there are a number of former volcanoes and an
extensive amount of faulting. Some of these faults are still moving. (Feasibility Report In disregarding this procedure and failing to recognize respondents' ownership of the
on Marawi City Water District by Kampsa-Kruger, Consulting Engineers, Architects and sub-terrain portion, petitioner took a risk and exposed itself to greater liability with the
Economists, Exh. R). Moreover, it has been shown that the underground tunnels [have] passage of time. It must be emphasized that the acquisition of the easement is not
deprived the plaintiffs of the lawful use of the land and considerably reduced its value. without expense. The underground tunnels impose limitations on respondents' use of
On March 6, 1995, plaintiffs applied for a two-million peso loan with the Amanah the property for an indefinite period and deprive them of its ordinary use. Based upon
Islamic Bank for the expansion of the operation of the Ameer Construction and the foregoing, respondents are clearly entitled to the payment of just
Integrated Services to be secured by said land (Exh. N), but the application was compensation.17 Notwithstanding the fact that petitioner only occupies the sub-terrain
disapproved by the bank in its letter of April 25, 1995 (Exh. O) stating that: portion, it is liable to pay not merely an easement fee but rather the full compensation
for land. This is so because in this case, the nature of the easement practically deprives
the owners of its normal beneficial use. Respondents, as the owners of the property
"Apropos to this, we regret to inform you that we cannot consider your loan application thus expropriated, are entitled to a just compensation which should be neither more
due to the following reasons, to wit: nor less, whenever it is possible to make the assessment, than the money equivalent of
said property.18
That per my actual ocular inspection and verification, subject property offered as
collateral has an existing underground tunnel by the NPC for the Agus I Project, which The entitlement of respondents to just compensation having been settled, the issue
tunnel is traversing underneath your property, hence, an encumbrance. As a matter of now is on the manner of computing the same. In this regard, petitioner claims that the
bank policy, property with an existing encumbrance cannot be considered neither basis for the computation of the just compensation should be the value of the property
accepted as collateral for a loan." at the time it was taken in 1978. Petitioner also impugns the reliance made by the CA
upon National Power Corporation v. Court of Appeals and Macapanton Mangondato19 as
All the foregoing evidence and findings convince this Court that preponderantly the basis for computing the amount of just compensation in this action. The CA found
plaintiffs have established the condemnation of their land covering an area of 48,005 that "the award of damages is not excessive because the P1000 per square meter as
sq. meters located at Saduc, Marawi City by the defendant National Power Corporation the fair market value was sustained in a case involving a lot adjoining the property in
question which case involved an expropriation by [petitioner] of portion of Lot 1 of the
subdivision plan (LRC) PSD 116159 which is adjacent to Lots 2 and 3 of the same above provision of the Rules. So too, where the institution of the action precedes entry
subdivision plan which is the subject of the instant controversy."20 to the property, the just compensation is to be ascertained as of the time of filing of the
complaint.
Just compensation has been understood to be the just and complete equivalent of the
loss21 and is ordinarily determined by referring to the value of the land and its The general rule, however, admits of an exception: where this Court fixed the value of
character at the time it was taken by the expropriating authority.22 There is a "taking" the property as of the date it was taken and not the date of the commencement of the
in this sense when the owners are actually deprived or dispossessed of their property, expropriation proceedings.
where there is a practical destruction or a material impairment of the value of their
property, or when they are deprived of the ordinary use thereof. There is a "taking" in In the old case of Provincial Government of Rizal v. Caro de Araullo, the Court ruled
this context when the expropriator enters private property not only for a momentary that "x x x the owners of the land have no right to recover damages for this unearned
period but for more permanent duration, for the purpose of devoting the property to a increment resulting from the construction of the public improvement (lengthening of
public use in such a manner as to oust the owner and deprive him of all beneficial Taft Avenue from Manila to Pasay) from which the land was taken. To permit them to
enjoyment thereof.23 Moreover, "taking" of the property for purposes of eminent do so would be to allow them to recover more than the value of the land at the time it
domain entails that the entry into the property must be under warrant or color of legal was taken, which is the true measure of the damages, or just compensation, and would
authority.24 discourage the construction of important public improvements."

Under the factual backdrop of this case, the last element of taking mentioned, i.e., that In subsequent cases, the Court, following the above doctrine, invariably held that the
the entry into the property is under warrant or color of legal authority, is patently time of taking is the critical date in determining lawful or just compensation. Justifying
lacking. Petitioner justified its nonpayment of the indemnity due respondents upon its this stance, Mr. Justice (later Chief Justice) Enrique Fernando, speaking for the Court in
mistaken belief that the property formed part of the public dominion. Municipality of La Carlota v. The Spouses Felicidad Baltazar and Vicente Gan, said, "x x
x the owner as is the constitutional intent, is paid what he is entitled to according to
This situation is on all fours with that in the Mangondato case. NAPOCOR in that case the value of the property so devoted to public use as of the date of taking. From that
took the property of therein respondents in 1979, using it to build its Aqua I time, he had been deprived thereof. He had no choice but to submit. He is not,
Hydroelectric Plant Project, without paying any compensation, allegedly under the however, to be despoiled of such a right. No less than the fundamental law guarantees
mistaken belief that it was public land. It was only in 1990, after more than a decade of just compensation. It would be injustice to him certainly if from such a period, he could
beneficial use, that NAPOCOR recognized therein respondents' ownership and not recover the value of what was lost. There could be on the other hand, injustice to
negotiated for the voluntary purchase of the property. the expropriator if by a delay in the collection, the increment in price would accrue to
the owner. The doctrine to which this Court has been committed is intended precisely
In Mangondato, this Court held: to avoid either contingency fraught with unfairness."

The First Issue: Date of Taking or Date of Suit? Simply stated, the exception finds the application where the owner would be given
undue incremental advantages arising from the use to which the government devotes
the property expropriated - - as for instance, the extension of a main thoroughfare as
The general rule in determining "just compensation" in eminent domain is the value of was in the case in Caro de Araullo. In the instant case, however, it is difficult to
the property as of the date of the filing of the complaint, as follows: conceive of how there could have been an extra-ordinary increase in the value of the
owner's land arising from the expropriation, as indeed the records do not show any
"Sec. 4. Order of Condemnation. When such a motion is overruled or when any party evidence that the valuation of P1,000.00 reached in 1992 was due to increments
fails to defend as required by this rule, the court may enter an order of condemnation directly caused by petitioner's use of the land. Since the petitioner is claiming an
declaring that the plaintiff has a lawful right to take the property sought to be exception to Rule 67, Section 4, it has the burden in proving its claim that its
condemned, for the public use or purpose described in the complaint, upon the occupancy and use - - not ordinary inflation and increase in land values - - was the
payment of just compensation to be determined as of the date of the filing of the direct cause of the increase in valuation from 1978 to 1992.
complaint. x x x" (Italics supplied).
Side Issue: When is there "Taking" of Property? cralaw libra ry

Normally, the time of the taking coincides with the filing of the complaint for
expropriation. Hence, many ruling of this Court have equated just compensation with
the value of the property as of the time of filing of the complaint consistent with the
But there is yet another cogent reason why this petition should be denied and why the City could not expropriate the building. Expropriation could be resorted to "only when it
respondent Court should be sustained. An examination of the undisputed factual is made necessary by the opposition of the owner to the sale or by the lack of any
environment would show that the "taking" was not really made in 1978. agreement as to the price." Said the Court:

This Court has defined the elements of "taking" as the main ingredient in the exercise "The contract, therefore, in so far as it refers to the purchase of the building, as we
of power of eminent domain, in the following words: have interpreted it, is in force, not having been revoked by the parties or by judicial
decision. This being the case, the city being bound to buy the building at an agreed
"A number of circumstances must be present in "taking" of property for purposes of price, under a valid and subsisting contract, and the plaintiff being agreeable to its sale,
eminent domain: (1) the expropriator must enter a private property; (2) the entrance the expropriation thereof, as sought by the defendant, is baseless. Expropriation lies
into private property must be for more than a momentary period; (3) the entry into the only when it is made necessary by the opposition of the owner to the sale or by the
property should be under warrant or color of legal authority; (4) the property must be lack of any agreement as to the price. There being in the present case a valid and
devoted to a public use or otherwise informally appropriated or injuriously affected; and subsisting contract, between the owner of the building and the city, for the purchase
(5) the utilization of the property for public use must be in such a way to oust the thereof at an agreed price, there is no reason for the expropriation." (Italics supplied)
owner and deprive him of all beneficial enjoyment of the property."(Italics supplied)
In the instant case, petitioner effectively repudiated the deed of sale it entered into
In this case, the petitioner's entrance in 1978 was without intent to expropriate or was with the private respondent when it passed Resolution No. 92-121 on May 25, 1992
not made under warrant or color of legal authority, for it believed the property was authorizing its president to negotiate, inter alia, that payment "shall be effective only
public land covered by Proclamation No. 1354. When the private respondent raised his after Agus I HE project has been placed in operation." It was only then that petitioner's
claim of ownership sometime in 1979, the petitioner flatly refused the claim for intent to expropriate became manifest as private respondent disagreed and, barely a
compensation, nakedly insisted that the property was public land and wrongly justified month, filed suit.25
its possession by alleging it had already paid "financial assistance" to Marawi City in
exchange for the rights over the property. Only in 1990, after more than a decade of In the present case, to allow petitioner to use the date it constructed the tunnels as the
beneficial use, did the petitioner recognize private respondent's ownership and date of valuation would be grossly unfair. First, it did not enter the land under warrant
negotiate for the voluntary purchase of the property. A Deed of Sale with provisional or color of legal authority or with intent to expropriate the same. In fact, it did not
payment and subject to negotiations for the correct price was then executed. Clearly, bother to notify the owners and wrongly assumed it had the right to dig those tunnels
this is not the intent nor the expropriation contemplated by law. This is a simple under their property. Secondly, the "improvements" introduced by petitioner, namely,
attempt at a voluntary purchase and sale. Obviously, the petitioner neglected and/or the tunnels, in no way contributed to an increase in the value of the land. The trial
refused to exercise the power of eminent domain. court, therefore, as affirmed by the CA, rightly computed the valuation of the property
as of 1992, when respondents discovered the construction of the huge underground
Only in 1992, after the private respondent sued to recover possession and petitioner tunnels beneath their lands and petitioner confirmed the same and started negotiations
filed its Complaint to expropriate, did petitioner manifest its intention to exercise the for their purchase but no agreement could be reached.26
power of eminent domain. Thus the respondent Court correctly held:
As to the amount of the valuation, the RTC and the CA both used as basis the value of
"If We decree that the fair market value of the land be determined as of 1978, then We the adjacent property, Lot 1 (the property involved herein being Lots 2 and 3 of the
would be sanctioning a deceptive scheme whereby NAPOCOR, for any reason other same subdivision plan), which was valued at P1,000 per sq. meter as of 1990, as
than for eminent domain would occupy another's property and when later pressed for sustained by this Court in Mangondato, thus:
payment, first negotiate for a low price and then conveniently expropriate the property
when the land owner refuses to accept its offer claiming that the taking of the property The Second Issue: Valuation
for the purpose of the eminent domain should be reckoned as of the date when it
started to occupy the property and that the value of the property should be computed We now come to the issue of valuation.
as of the date of the taking despite the increase in the meantime in the value of the
property."
The fair market value as held by the respondent Court, is the amount of P1,000.00 per
square meter. In an expropriation case where the principal issue is the determination of
In Noble v. City of Manila, the City entered into a lease-purchase agreement of a just compensation, as is the case here, a trial before Commissioners is indispensable to
building constructed by the petitioner's predecessor-in-interest in accordance with the allow the parties to present evidence on the issue of just compensation. Inasmuch as
specifications of the former. The Court held that being bound by the said contract, the the determination of just compensation in eminent domain cases is a judicial function
and factual findings of the Court of Appeals are conclusive on the parties and
reviewable only when the case falls within the recognized exceptions, which is not the
situation obtaining in this petition, we see no reason to disturb the factual findings as to
valuation of the subject property. As can be gleaned from the records, the court-and-
the-parties-appointed commissioners did not abuse their authority in evaluating the
evidence submitted to them nor misappreciate the clear preponderance of evidence.
The amount fixed and agreed to by the respondent appellate Court is not grossly
exorbitant. To quote:

"Commissioner Ali comes from the Office of the Register of Deeds who may well be
considered an expert, with a general knowledge of the appraisal of real estate and the
prevailing prices of land in the vicinity of the land in question so that his opinion on the
valuation of the property cannot be lightly brushed aside.

"The prevailing market value of the land is only one of the determinants used by the
commissioners' report the other being as herein shown:

xxx

"Commissioner Doromal's report, recommending P300.00 per square meter, differs

from the 2 commissioners only because his report was based on the valuation as of
1978 by the City Appraisal Committee as clarified by the latter's chairman in response
to NAPOCOR's general counsel's query."

In sum, we agree with the Court of Appeals that petitioner has failed to show why it
should be granted an exemption from the general rule in determining just
compensation provided under Section 4 of Rule 67. On the contrary, private respondent
has convinced us that, indeed, such general rule should in fact be observed in this
case.27

Petitioner has not shown any error on the part of the CA in reaching such a valuation.
Furthermore, these are factual matters that are not within the ambit of the present
review.

WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals in C.A.-
G.R. CV No. 57792 dated June 8, 2005 is AFFIRMED.
 II.12 [G.R. NO. G.R. No. 150936 : August 18, 2004] at Km. 8, Barangay Pacol, Naga City, Camarines Sur and described with more
particularity, as follows:
NATIONAL POWER CORPORATION, Petitioner, v. MANUBAY AGRO-INDUSTRIAL
DEVELOPMENT CORPORATION, Respondents.
TCT/OCT TOTAL AREA CLASS.
DECISION
NO. AREA OF LAND
IN SQ.M. AFFECTED
PANGANIBAN, J.: IN SQ. M.

How much just compensation should be paid for an easement of a right of way over a
parcel of land that will be traversed by high-powered transmission lines? Should such 17795 490,232 21,386.16 Agri.
compensation be a simple easement fee or the full value of the property? This is the
question to be answered in this case.
17797 40,848 1,358.17 Agri.
17798 5,279 217.38 Agri.
The Case
TOTAL 22,961.71
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to
reverse and set aside the November 23, 2001 Decision2 of the Court of Appeals (CA) in "On 02 January 1997, [respondent] filed its answer. Thereafter, the court a quo issued
CA-GR CV No. 60515. The CA affirmed the June 24, 1998 Decision3 of the Regional Trial an order dated 20 January 1997 authorizing the immediate issuance of a writ of
Court4 (RTC) of Naga City (Branch 26), directing the National Power Corporation (NPC) possession and directing Ex-Officio Provincial Sheriff to immediately place [petitioner]
to pay the value of the land expropriated from respondent for the use thereof in NPC's in possession of the subject land.
Leyte-Luzon HVDC Power Transmission Project.
"Subsequently, the court a quo directed the issuance of a writ of condemnation in favor
The Facts of [petitioner] through an order dated 14 February 1997. Likewise, for the purpose of
determining the fair and just compensation due to [respondent], the court appointed
three commissioners composed of one representative of the petitioner, one for the
The CA summarized the antecedents of the case as follows:
respondent and the other from the court, namely: OIC-Branch Clerk of Court Minda B.
Teoxon as Chairperson and Philippine National Bank-Naga City Loan Appraiser Mr.
"In 1996, [Petitioner] NATIONAL POWER CORPORATION, a government-owned and Isidro Virgilio Bulao, Jr. and City Assessor Ramon R. Albeus as members.
controlled corporation created for the purpose of undertaking the development and
generation of hydroelectric power, commenced its 350 KV Leyte-Luzon HVDC Power "On 03 and 06 March 1997, respectively, Commissioners Ramon Albeus and Isidro
Transmission Project. The project aims to transmit the excess electrical generating Bulao, Jr. took their oath of office before OIC Branch Clerk of Court and Chairperson
capacity coming from Leyte Geothermal Plant to Luzon and various load centers in its Minda B. Teoxon.
vision to interconnect the entire country into a single power grid. Apparently, the
project is for a public purpose.
"Accordingly, the commissioners submitted their individual appraisal/valuation reports.
The commissioner for the [petitioner], Commissioner Albeus, finding the subject land
"In order to carry out this project, it is imperative for the [petitioner's] transmission irregular and sloppy, classified the same as low density residential zone and
lines to cross over certain lands owned by private individuals and entities. One of these recommended the price of P115.00 per square meter. On the other hand,
lands, [where] only a portion will be traversed by the transmission lines, is owned by Commissioner Bulao, commissioner for the [respondent], recommended the price
[respondent] MANUBAY AGRO-INDUSTRIAL DEVELOPMENT CORPORATION.
of P550.00 per square meter. The court's Commissioner and Chairperson of the Board
Minda Teoxon, on the other hand, found Commissioner Albeus' appraisal low as
"Hence, on 03 December 1996, [petitioner] filed a complaint for expropriation before compared to the BIR Zonal Valuation and opted to adopt the price recommended by
the Regional Trial Court of Naga City against [respondent] in order to acquire an Commissioner Bulao. On the assumption that the subject land will be developed into a
easement of right of way over the land which the latter owns. The said land is situated first class subdivision, she recommended the amount of P550.00 per square meter as
just compensation for the subject property, or the total amount of P12,628,940.50 for The Court's Ruling
the entire area affected."5
The Petition is devoid of merit.
Taking into consideration the condition, the surroundings and the potentials of
respondent's expropriated property, the RTC approved Chairperson Minda B. Teoxon's Sole Issue:
recommended amount of P550 per square meter as just compensation for the property. Just Compensation
The trial court opined that the installation thereon of the 350 KV Leyte-Luzon HVDC
Power Transmission Project would impose a limitation on the use of the land for an
indefinite period of time, thereby justifying the payment of the full value of the Petitioner contends that the valuation of the expropriated property - - fixed by the trial
property. court and affirmed by the CA - - was too high a price for the acquisition of an easement
of a mere aerial right of way, because respondent would continue to own and use the
subject land anyway. Petitioner argues that in a strict sense, there is no "taking" of
Further, the RTC held that it was not bound by the provision cited by petitioner - - property, but merely an imposition of an encumbrance or a personal
Section 3-A6 of Republic Act 63957, as amended by Presidential Decree 938. This law easement/servitude under Article 61410 of the Civil Code. Such encumbrance will not
prescribes as just compensation for the acquired easement of a right of way over an result in ousting or depriving respondent of the beneficial enjoyment of the property.
expropriated property an easement fee in an amount not exceeding 10 percent of the And even if there was a "taking," petitioner points out that the loss is limited only to a
market value of such property. The trial court relied on the earlier pronouncements of portion of the aerial domain above the property of respondent. Hence, the latter should
this Court that the determination of just compensation in eminent domain cases is a be compensated only for what it would actually lose.
judicial function. Thus, valuations made by the executive branch or the legislature are
at best initial or preliminary only.
We are not persuaded.
Ruling of the Court of Appeals
Petitioner averred in its Complaint in Civil Case No. RTC 96-3675 that it had sought to
acquire an easement of a right of way over portions of respondent's land - - a total
Affirming the RTC, the CA held that RA 6395, as amended by PD No. 938, did not area of 22,961.71 square meters.11 In its prayer, however, it also sought authority to
preclude expropriation. Section 3-A thereof allowed the power company to acquire not enter the property and demolish all improvements existing thereon, in order to
just an easement of a right of way, but even the land itself. Such easement was commence and undertake the construction of its Power Transmission Project.
deemed by the appellate court to be a "taking" under the power of eminent domain.

In other words, the expropriation was not to be limited to an easement of a right of

The CA observed that, given their nature, high-powered electric lines traversing way. In its Answer, respondent alleged that it had already authorized petitioner to take
respondent's property would necessarily diminish - - if not damage entirely - - the possession of the affected portions of the property and to install electric towers
value and the use of the affected property; as well as endanger lives and limbs because thereon.12 The latter did not controvert this material allegation.
of the high-tension current conveyed through the lines. Respondent was therefore
deemed entitled to a just compensation, which should be neither more nor less than
the monetary equivalent of the property taken. Accordingly, the appellate found the Granting arguendo that what petitioner acquired over respondent's property was purely
award of P550 per square meter to be proper and reasonable. an easement of a right of way, still, we cannot sustain its view that it should pay only
an easement fee, and not the full value of the property. The acquisition of such an
easement falls within the purview of the power of eminent domain. This conclusion
Hence, this Petition.8 finds support in similar cases in which the Supreme Court sustained the award of just
compensation for private property condemned for public use.13 Republic v. PLDT 14 held
Issues thus:

In its Memorandum, petitioner submits this lone issue for our consideration: "x x x. Normally, of course, the power of eminent domain results in the taking or
appropriation of title to, and possession of, the expropriated property; but no cogent
"Whether or not the Honorable Court of Appeals gravely erred in affirming the Decision reason appears why the said power may not be availed of to impose only a burden
dated June 24, 1998 of the Regional Trial Court, Branch 26, Naga City considering that upon the owner of condemned property, without loss of title and possession. It is
its Decision dated November 23, 2001 is not in accord with law and the applicable unquestionable that real property may, through expropriation, be subjected to an
decisions of this Honorable Court."9 easement of right of way."15
True, an easement of a right of way transmits no rights except the easement itself, and proffered by respondent, citing its recently concluded sale of a portion of the same
respondent retains full ownership of the property. The acquisition of such easement is, property to Metro Naga Water District at a fixed price of P800 per square meter; (4)
nevertheless, not gratis. As correctly observed by the CA, considering the nature and the BIR zonal valuation of residential lots in Barangay Pacol, Naga City, fixed at a price
the effect of the installation power lines, the limitations on the use of the land for an of P220 per square meter as of 1997; and (5) the fact that the price of P430 per square
indefinite period would deprive respondent of normal use of the property. For this meter had been determined by the RTC of Naga City (Branch 21)24 as just
reason, the latter is entitled to payment of a just compensation, which must be neither compensation for the Mercados' adjoining property, which had been expropriated by
more nor less than the monetary equivalent of the land.16 NPC for the same power transmission project.

Just compensation is defined as the full and fair equivalent of the property taken from The chairperson of the Board of Commissioners, in adopting the recommendation of
its owner by the expropriator. The measure is not the taker's gain, but the owner's Commissioner Bulaos, made a careful study of the property. Factors considered in
loss. The word "just" is used to intensify the meaning of the word "compensation" and arriving at a reasonable estimate of just compensation for respondent were the
to convey thereby the idea that the equivalent to be rendered for the property to be location; the most profitable likely use of the remaining area; and the size, shape,
taken shall be real, substantial, full and ample.17 accessibility as well as listings of other properties within the vicinity. Averments
pertaining to these factors were supported by documentary evidence.
In eminent domain or expropriation proceedings, the just compensation to which the
owner of a condemned property is entitled is generally the market value. Market value On the other hand, the commissioner for petitioner - - City Assessor Albeus - -
is "that sum of money which a person desirous but not compelled to buy, and an owner recommended a price of P115 per square meter in his Report dated June 30, 1997. No
willing but not compelled to sell, would agree on as a price to be given and received documentary evidence, however, was attached to substantiate the opinions of the
therefor."18 Such amount is not limited to the assessed value of the property or to the banks and the realtors, indicated in the commissioner's Report and computation of the
schedule of market values determined by the provincial or city appraisal committee. market value of the property.
However, these values may serve as factors to be considered in the judicial valuation of
the property.19 The price of P550 per square meter appears to be the closest approximation of the
market value of the lots in the adjoining, fully developed San Francisco Village
The parcels of land sought to be expropriated are undeniably undeveloped, raw Subdivision. Considering that the parcels of land in question are still undeveloped raw
agricultural land. But a dominant portion thereof has been reclassified by the land, it appears to the Court that the just compensation of P550 per square meter is
Sangguniang Panlungsod ng Naga - - per Zoning Ordinance No. 94-076 dated August justified.
10, 1994 - - as residential, per the August 8, 1996 certification of Zoning Administrator
Juan O. Villegas Jr.20 The property is also covered by Naga City Mayor Jesse M. Inasmuch as the determination of just compensation in eminent domain cases is a
Robredo's favorable endorsement of the issuance of a certification for land use judicial function,25and the trial court apparently did not act capriciously or arbitrarily in
conversion by the Department of Agrarian Reform (DAR) on the ground that the locality setting the price at P550 per square meter - - an award affirmed by the CA - - we see
where the property was located had become highly urbanized and would have greater no reason to disturb the factual findings as to the valuation of the property. Both the
economic value for residential or commercial use.21 Report of Commissioner Bulao and the commissioners' majority Report were based on
uncontroverted facts supported by documentary evidence and confirmed by their ocular
The nature and character of the land at the time of its taking is the principal criterion inspection of the property. As can be gleaned from the records, they did not abuse their
for determining how much just compensation should be given to the landowner.22 All authority in evaluating the evidence submitted to them; neither did they misappreciate
the facts as to the condition of the property and its surroundings, as well as its the clear preponderance of evidence. The amount fixed and agreed to by the trial court
improvements and capabilities, should be considered.23 and respondent appellate court has not been grossly exorbitant or otherwise
unjustified.26
In fixing the valuation at P550 per square meter, the trial court had considered the
Report of the commissioners and the proofs submitted by the parties. These documents Majority Report of
included the following: (1) the established fact that the property of respondent was Commissioners Sufficient
located along the Naga-Carolina provincial road; (2) the fact that it was about 500
meters from the Kayumanggi Resort and 8 kilometers from the Naga City Central Deserving scant consideration is petitioner's contention that the Report adopted by the
Business District; and a half kilometer from the main entrance of the fully developed RTC and affirmed by the CA was not the same one submitted by the board of
Naga City Sports Complex - - used as the site of the Palarong Pambansa - - and the commissioners, but was only that of its chairperson. As correctly pointed out by the
San Francisco Village Subdivision, a first class subdivision where lots were priced trial court, the commissioner's Report was actually a decision of the majority of the
at P2,500 per square meter; (3) the fair market value of P650 per square meter
board. Note that after reviewing the Reports of the other commissioners, Chairperson
Teoxon opted to adopt the recommendation of Commissioner Bulao. There has been no
claim that fraud or prejudice tainted the majority Report. In fact, on December 19,
1997, the trial court admitted the commissioner's Report without objection from any of
the parties.27

Under Section 8 of Rule 67 of the Rules of Court, the court may "accept the report and
render judgment in accordance therewith; or for cause shown, it may recommit the
same to the commissioners for further report of facts, or it may set aside the report
and appoint new commissioners, or it may accept the report in part and reject it in
part; x x x." In other words, the reports of commissioners are merely advisory and
recommendatory in character, as far as the courts are concerned.28

Thus, it hardly matters whether the commissioners have unanimously agreed on their
recommended valuation of the property. It has been held that the report of only two
commissioners may suffice, even if the third commissioner dissents.29 As a court is not
bound by commissioners' reports it may make such order or render such judgment as
shall secure for the plaintiff the property essential to the exercise of the latter's right of
condemnation; and for the defendant, just compensation for the property expropriated.
For that matter, the court may even substitute its own estimate of the value as
gathered from the evidence on record.30

WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. No

pronouncement as to costs.
II.13 G.R. No. 186069 January 30, 2013 compensation for easement fee, based on the Supreme Court’s 18 January 1991 Decision in
G.R. No. 60077, entitled National Power Corporation v. Spouses Misericordia Gutierrez and
SPOUSES JESUS L. CABAHUG AND CORONACION M. CABAHUG, Petitioners, Ricardo Malit, et al. (Gutierrez).7
vs.
NATIONAL POWER CORPORATION, Respondent. On 21 September 1998, the Spouses Cabahug filed the complaint for the payment of just
compensation, damages and attorney’s fees against NPC which was docketed as Civil Case
DECISION No. PN-0213 before the RTC. Claiming to have been totally deprived of the use of the portions
of land covered by TCT Nos. T-9813 and T-1599, the Spouses Cabahug alleged, among other
PEREZ, J.: matters, that in accordance with the reservation provided under paragraph 4 of the aforesaid
grant, they have demanded from NPC payment of the balance of the just compensation for the
This Rule 45 Petition for Review on Certiorari seeks the reversal of (a) the 16 May 2007
subject properties which, based on the valuation fixed by the Leyte Provincial Appraisal
Decision1 rendered by the Eighteenth Division of the Court of Appeals (CA) in CA-G.R. CV No.
Committee, amounted to P1,202,404.50.8 In its answer, on the other hand, NPC averred that it
67331 which reversed the 14 March 2000 Decision rendered by the Regional Trial Court
already paid the full easement fee mandated under Section 3-A of RA 6395 and that the
(RTC), Branch 17, Palompon, Leyte, in Civil Case No. PN-0213 and ordered the dismissal of
reservation in the grant referred to additional compensation for easement fee, not the full just
the complaint for just compensation tiled by petitioners Spouses Jesus L. Cabahug and
compensation sought by the Spouses Cabahug.9
Coronacion M. Cabahug (Spouses Cabahug) against respondent National Power Corporation
(NPC);2 and (b) the CA's Resolution dated 9 January 2009, denying the motion for Acting on the motion for judgment on the pleadings that was filed by the Spouses Cabahug,
reconsideration of the 16 May 2007 Decision for lack of merit. 3 the RTC went on to render a Decision dated 14 March 2000. Brushing aside NPC’s reliance on
Section 3-A of RA 6395, the RTC applied the ruling handed down by this Court in Gutierrez to
The facts are not in dispute.
the effect that NPC’s easement of right of way which indefinitely deprives the owner of their
The Spouses Cabahug are the owners of two parcels of land situated in Barangay Capokpok, proprietary rights over their property falls within the purview of the power of eminent
Tabango, Leyte, registered in their names under Transfer Certificate of Title (TCT) Nos. T- domain.10 As a consequence, the RTC disposed of the complaint in the following wise:
9813 and T-1599 of the Leyte provincial registry.4 They were among the defendants in Special
WHEREFORE, premises considered, judgment is hereby rendered for the Spouses Cabahug
Civil
and against NPC, ordering NPC:
Action No. 0019-PN, a suit for expropriation earlier filed by NPC before the RTC, in connection
1. To pay the Spouses Cabahug the sum of ONE MILLION THREE HUNDRED THIRTY SIX
with its Leyte-Cebu Interconnection Project. The suit was later dismissed when NPC opted to
THOUSAND and FIVE PESOS (P1,336,005.00) together with the legal rate of interest thereon
settle with the landowners by paying an easement fee equivalent to 10% of value of their
per annum reckoned from January 3, 1997 less the amount previously paid by NPC to the
property in accordance with Section 3-A of Republic Act (RA) No. 6395.5 In view of the
Spouses Cabahug for easement fee only;
conflicting land values presented by the affected landowners, it appears that the Leyte
Provincial Appraisal Committee, upon request of NPC, fixed the valuation of the affected 2. To pay the Spouses Cabahug the sum equivalent to FIVE (5%) PERCENT of the amount
properties at P45.00 per square meter.6 mentioned in the next preceding paragraph for attorney’s fees; and

On 9 November 1996, Jesus Cabahug executed two documents denominated as Right of Way 3. To pay the Spouses Cabahug the sum of TWENTY THOUSAND (P20,000.00) PESOS for
Grant in favor of NPC. For and in consideration of the easement fees in the sums of actual damages and litigation expenses plus costs of the proceedings.
P112,225.50 and P21,375.00, Jesus Cabahug granted NPC a continuous easement of right of
way for the latter’s transmissions lines and their appurtenances over 24,939 and 4,750 square SO ORDERED.11
meters of the parcels of land covered by TCT Nos. T-9813 and T-1599, respectively. By said
grant, Jesus Cabahug agreed not to construct any building or structure whatsoever, nor plant Aggrieved by the foregoing decision, the NPC perfected the appeal which was docketed as
in any area within the Right of Way that will adversely affect or obstruct the transmission line of CA-G.R. CV No. 67331 before the CA which, on 16 May 2007, rendered the herein assailed
NPC, except agricultural crops, the growth of which will not exceed three meters high. Under decision, reversing and setting aside the RTC’s appealed decision. Finding that the facts of a
paragraph 4 of the grant, however, Jesus Cabahug reserved the option to seek additional case are different from those obtaining in Gutierrez and that Section 3-A of RA 6395 only
allows NPC to acquire an easement of right of way over properties traversed by its From the foregoing reservation, it is evident that the Spouses Cabahug’s receipt of the
transmission lines,12 the CA succinctly ruled as follows: easement fee did not bar them from seeking further compensation from NPC. Even by the
basic rules in the interpretation of contracts, we find that the CA erred in holding that the
Unfortunately, the Spouses Cabahug had already accepted the payment of easement fee, payment of additional sums to the Spouses Cabahug would be violative of the parties’ contract
pursuant to R.A. 6395, as amended, way back in 1996. Therefore, NPC’s easement of right of and amount to unjust enrichment. Indeed, the rule is settled that a contract constitutes the law
way has for all legal intents and purposes, been established as far back as 1996. Since vested between the parties who are bound by its stipulations 20 which, when couched in clear and plain
right has already accrued in favor of NPC, to allow the Spouses Cabahug to pursue this case language, should be applied according to their literal tenor. 21 Courts cannot supply material
when the easement of right of way had already been consummated would be in violation of the stipulations, read into the contract words it does not contain22 or, for that matter, read into it
contract. The contracting parties, the Spouses Cabahug and NPC had already conformed with any other intention that would contradict its plain import. 23 Neither can they rewrite contracts
the terms and conditions of the agreement. To allow the Spouses Cabahug to again collect because they operate harshly or inequitably as to one of the parties, or alter them for the
from NPC payment of just compensation would amount to unjust enrichment at the expense of benefit of one party and to the detriment of the other, or by construction, relieve one of the
NPC and would sanction violation of the parties’ contract, which the Spouses Cabahug cannot parties from the terms which he voluntarily consented to, or impose on him those which he did
do in the case at bench. Further, the award of attorney’s fees and litigation expenses and the not.24
costs of suit in favor of the Spouses Cabahug cannot be justified in the case at bar since it
appears that the complaint actually has no legal basis.13 Considering that Gutierrez was specifically made the point of reference for Jesus Cabahug’s
reservation to seek further compensation from NPC, we find that the CA likewise erred in
The Spouses Cabahug’s motion for reconsideration of the 16 May 2007 Decision 14 was denied finding that the ruling in said case does not apply to the case at bench. Concededly, the NPC
for lack of merit in the CA’s Resolution dated 9 January 2009. Hence, this petition for review on was constrained to file an expropriation complaint in Gutierrez due to the failure of the
certiorari.15 In urging the reversal of the CA’s assailed Decision and Resolution, the Spouses negotiations for its acquisition of an easement of right of way for its transmission lines. The
Cabahug argue that the CA erred: (a) in disregarding paragraph 4 of the Grant of Right of Way issue that was eventually presented for this Court’s resolution, however, was the propriety of
whereby Jesus Cabahug reserved the right to seek additional compensation for easement fee; making NPC liable for the payment of the full market value of the affected property despite the
and (b) in not applying this Court’s ruling in Gutierrez case.16 In representation of NPC, on the fact that transfer of title thereto was not required by said easement. In upholding the
other hand, the Office of the Solicitor General (OSG) argues that the sums paid in 1996 by way landowners’ right to full just compensation, the Court ruled that the power of eminent domain
of easement fees represent the full amount allowed by law and agreed upon by the parties. may be exercised although title is not transferred to the expropriator in an easement of right of
Considering that Gutierrez concerned the payment of just compensation for property way. Just compensation which should be neither more nor less than the money equivalent of
expropriated by the NPC, the OSG maintains the CA did not err in according scant the property is, moreover, due where the nature and effect of the easement is to impose
consideration to the Spouses Cabahug’s invocation of the ruling in said case. 17 limitations against the use of the land for an indefinite period and deprive the landowner its
ordinary use.
We find the petition impressed with merit.
Even without the reservation made by Jesus Cabahug in the Grant of Right of Way, the
The CA regarded the Grant of Right of Way executed by Jesus Cabahug in favor of NPC as a application of Gutierrez to this case is not improper as NPC represents it to be. Where the right
valid and binding contract between the parties, a fact affirmed by the OSG in its 8 October of way easement, as in this case, similarly involves transmission lines which not only
2009 Comment to the petition at bench.18Given that the parties have already agreed on the endangers life and limb but restricts as well the owner's use of the land traversed thereby, the
easement fee for the portions of the subject parcels traversed by NPC’s transmissions lines, ruling in Gutierrez remains doctrinal and should be applied.25 It has been ruled that the owner
the CA ruled that the Spouses Cabahug’s attempt to collect further sums by way of additional should be compensated for the monetary equivalent of the land if, as here, the easement is
easement fee and/or just compensation is violative of said contract and tantamount to unjust intended to perpetually or indefinitely deprive the owner of his proprietary rights through the
enrichment at the expense of NPC. As correctly pointed out by the Spouses Cabahug, imposition of conditions that affect the ordinary use, free enjoyment and disposal of the
however, the CA’s ruling totally disregards the fourth paragraph of the Grant executed by property or through restrictions and limitations that are inconsistent with the exercise of the
Jesus Cabahug which expressly states as follows: attributes of ownership, or when the introduction of structures or objects which, by their nature,
create or increase the probability of injury, death upon or destruction of life and property found
That I hereby reserve the option to seek additional compensation for Easement Fee, based on
on the land is necessary.26 Measured not by the taker’s gain but the owner’s loss, just
the Supreme Court Decision in G.R. No. 60077, promulgated on January 18, 1991, which
jurisprudence is designated as "NPC vs. Gutierrez" case.19
compensation is defined as the full and fair equivalent of the property taken from its owner by WHEREFORE, premises considered, the petition is GRANTED and the CA's assailed 16 May
the expropriator.271âwphi1 2007 Decision and 9 January 2009 Resolution are, accordingly, REVERSED and SET ASIDE.
In lieu thereof, another is entered REINSTATING the RTC's 14 March 2000 Decision, subject
Too, the CA reversibly erred in sustaining NPC’s reliance on Section 3-A of RA 6395 which to the MODIFICATION that the awards of attorney's fees, actual damages and/or litigation
states that only 10% of the market value of the property is due to the owner of the property expenses are DELETED.
subject to an easement of right of way. Since said easement falls within the purview of the
power of eminent domain, NPC’s utilization of said provision has been repeatedly struck down
by this Court in a number of cases.28 The determination of just compensation in eminent
domain proceedings is a judicial function and no statute, decree, or executive order can
mandate that its own determination shall prevail over the court's findings. 29 Any valuation for
just compensation laid down in the statutes may serve only as a guiding principle or one of the
factors in determining just compensation, but it may not substitute the court's own judgment as
to what amount should be awarded and how to arrive at such amount. 30Hence, Section 3A of
R.A. No. 6395, as amended, is not binding upon this Court. 31

In this case, the Leyte Provincial Appraisal Committee fixed the valuation of the affected
properties at P45.00 per square meter at the instance of NPC. Considering that the installation
of the latter’s transmission lines amounted to the taking of 24,939 and 4,750 square meters
from the parcels of land covered by TCT Nos. T-9813 and T-1599 or a total of 29,689 square
meters, the RTC correctly determined that the Spouses Cabahug are entitled to P1,336,005.00
(29,689 x P45.00) by way of just compensation for their properties. Inasmuch as NPC had
already paid the sums of P112,225.50 and P21,375.00 as easement fee, the sum of
P133,600.50 should be deducted from P1,336,005.00 for a remaining balance of
P1,202,404.50. To this latter sum, the RTC also correctly imposed legal interest since the
Spouses Cabahug, as landowners, are entitled to the payment of legal interest on the
compensation for the subject lands from the time of the taking of their possession up to the
time that full payment is made by petitioner. In accordance with jurisprudence, the legal
interest allowed in payment of just compensation for lands expropriated for public use is six
percent (6%) per annum.32

For want of a statement of the rationale for the award in the body of the RTC’s 14 March 2000
Decision, we are constrained, however, to disallow the grant of attorney’s fees in favor of the
Spouses Cabahug in an amount equivalent to 5% of the just compensation due as well as the
legal interest thereon. Considered the exception rather than the general rule, the award of
attorney’s fees is not due every time a party prevails in a suit because of the policy that no
premium should be set on the right to litigate.33 The RTC's award of litigation expenses should
likewise be deleted since, like attorney's fees, the award thereof requires that the reasons or
grounds therefor must be set forth in the decision of the court. 34 This is particularly true in this
case where the litigation expenses awarded were alternatively categorized by the RTC as
actual damages which, by jurisprudence, should be pleaded and adequately proved. Time and
again, it has been ruled that the fact and amount of actual damages cannot be based on
speculation, conjecture or guess work, but must depend on actual proof. 35
II.14 G. R. No. 185124 January 25, 2012 3) Lot No. 3039 – registered under the name of Littie Sarah Agdeppa3

REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL IRRIGATION On 11 July 1995, NIA filed an Amended Complaint to include Leosa Nanette A. Agdeppa and
ADMINISTRATION (NIA),Petitioner, Marcelino Viernes as registered owners of Lot No. 3039.4
vs.
RURAL BANK OF KABACAN, INC., LITTIE SARAH A. AGDEPPA, LEOSA NANETTE On 25 September 1995, NIA filed a Second Amended Complaint to allege properly the area
AGDEPPA and MARCELINO VIERNES, MARGARITA TABOADA, PORTIA CHARISMA sought to be expropriated, the exact address of the expropriated properties and the owners
RUTH ORTIZ, represented by LINA ERLINDA A. ORTIZ and MARIO ORTIZ, JUAN thereof. NIA further prayed that it be authorized to take immediate possession of the properties
MAMAC and GLORIA MATAS, Respondents. after depositing with the Philippine National Bank the amount of ₱ 19,246.58 representing the
provisional value thereof.5
DECISION
On 31 October 1995, respondents filed their Answer with Affirmative and Special Defenses
SERENO, J.: and Counterclaim.6 They alleged, inter alia, that NIA had no authority to expropriate portions of
their land, because it was not a sovereign political entity; that it was not necessary to
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, expropriate their properties, because there was an abandoned government property adjacent
seeking the reversal of the 12 August 2008 Court of Appeals (CA) Decision and 22 October to theirs, where the project could pass through; that Lot No. 3080 was no longer owned by the
2008 Resolution in CA-G.R. CV No. 65196. Rural Bank of Kabacan; that NIA’s valuation of their expropriated properties was inaccurate
because of the improvements on the land that should have placed its value at ₱ 5 million; and
The assailed issuances affirmed with modification the 31 August 1999 "Judgment" that NIA never negotiated with the landowners before taking their properties for the project,
promulgated by the Regional Trial Court (RTC), Branch 22, Judicial Region, Kabacan, causing permanent and irreparable damages to their properties valued at ₱ 250,000.7
Cotabato. The RTC had fixed the just compensation for the value of the land and
improvements thereon that were expropriated by petitioner, but excluded the value of the On 11 September 1996, the RTC issued an Order forming a committee tasked to determine
excavated soil. Petitioner Republic of the Philippines is represented in this case by the the fair market value of the expropriated properties to establish the just compensation to be
National Irrigation Authority (NIA). paid to the owners. The committee was composed of the Clerk of Court of RTC Branch 22 as
chairperson and two (2) members of the parties to the case. 8
The Facts
On 20 September 1996, in response to the expropriation Complaint, respondents-intervenors
NIA is a government-owned-and-controlled corporation created under Republic Act No. (R.A.) Margarita Tabaoda, Portia Charisma Ruth Ortiz, Lina Erlinda Ortiz, Mario Ortiz, Juan Mamac
3601 on 22 June 1963. It is primarily responsible for irrigation development and management and Gloria Matas filed their Answer-in-Intervention with Affirmative and Special Defenses and
in the country. Its charter was amended by Presidential Decree (P.D.) 552 on 11 September Counter-Claim. They essentially adopted the allegations in the Answer of the other
1974 and P.D. 1702 on 17 July 1980. To carry out its purpose, NIA was specifically authorized respondents and pointed out that Margarita Tabaoda and Portia Charisma Ruth Ortiz were the
under P.D. 552 to exercise the power of eminent domain. 1 new owners of Lot No. 3080, which the two acquired from the Rural Bank of Kabacan. They
further alleged that the four other respondents-intervenors were joint tenants-cultivators of Lot
NIA needed some parcels of land for the purpose of constructing the Malitubog-Marigadao
Nos. 3080 and 3039.9
Irrigation Project. On 08 September 1994, it filed with the RTC of Kabacan, Cotabato a
Complaint for the expropriation of a portion of three (3) parcels of land covering a total of On 10 October 1996, the lower court issued an Order stating it would issue a writ of
14,497.91 square meters.2 The case was docketed as Special Civil Case No. 61 and was possession in favor of NIA upon the determination of the fair market value of the properties,
assigned to RTC-Branch 22. The affected parcels of land were the following: subject of the expropriation proceedings.10 The lower court later amended its ruling and, on 21
October 1996, issued a Writ of Possession in favor of NIA.11
1) Lot No. 3080 – covered by Transfer Certificate of Title (TCT) No. T-61963 and registered
under the Rural Bank of Kabacan On 15 October 1996, the committee submitted a Commissioners’ Report12 to the RTC stating
the following observations:
2) Lot No. 455 – covered by TCT No. T-74516 and registered under the names of RG May,
Ronald and Rolando, all surnamed Lao
In the process of ocular inspection, the following were jointly observed: portions of Lot Nos. 3039 and 3080.18 Petitioner objected to the inclusion of the value of the
excavated soil in the computation of the value of the land. 19
1) The area that was already occupied is 6x200 meters which is equivalent to 1,200 square
meters; The Ruling of the Trial Court

2) The area which is to be occupied is 18,930 square meters, more or less; On 31 August 1999, the RTC promulgated its "Judgment," 20 the dispositive portion of which
reads:
3) That the area to be occupied is fully planted by gmelina trees with a spacing of 1x1 meters;
WHEREFORE, IN VIEW of all the foregoing considerations, the court finds and so holds that
4) That the gmelina tress found in the area already occupied and used for [the] road is planted the commissioners have arrived at and were able to determine the fair market value of the
with gmelina with spacing of 2x2 and more or less one (1) year old; properties. The court adopts their findings, and orders:

5) That the gmelina trees found in the area to be occupied are already four (4) years old; 1. That 18,930 square meters of the lands owned by the defendants is hereby expropriated in
favor of the Republic of the Philippines through the National Irrigation Administration;
6) That the number of banana clumps (is) two hundred twenty (220);
2. That the NIA shall pay to the defendants the amount of ₱ 1,230,450 for the 18,930 square
7) That the number of coco trees found (is) fifteen (15). 13 meters expropriated in proportion to the areas so expropriated;

The report, however, stated that the committee members could not agree on the market value 3. That the NIA shall pay to the defendant-intervenors, owners of Lot No. 3080, the sum of ₱
of the subject properties and recommended the appointment of new independent 5,128,375.50, representing removed earthfill;
commissioners to replace the ones coming from the parties only. 14 On 22 October 1996, the
RTC issued an Order15 revoking the appointments of Atty. Agdeppa and Engr. Mabang as 4. That the NIA shall pay to the defendants, owners of Lot No. 3039, the sum of P1,929,611.30
members of the committee and, in their stead, appointed Renato Sambrano, Assistant representing earthfill;
Provincial Assessor of the Province of Cotabato; and Jack Tumacmol, Division Chief of the
Land Bank of the Philippines–Kidapawan Branch.16 5. To pay to the defendants the sum of ₱ 60,000 for the destroyed G-melina trees (1 year old);

On 25 November 1996, the new committee submitted its Commissioners’ Report to the lower 6. To pay to the defendants the sum of ₱ 3,786,000.00 for the 4-year old G-melina trees;
court. The committee had agreed that the fair market value of the land to be expropriated
should be ₱ 65 per square meter based on the zonal valuation of the Bureau of Internal 7. That NIA shall pay to the defendants the sum of ₱ 2,460.00 for the coconut trees;
Revenue (BIR). As regards the improvement on the properties, the report recommended the
following compensation: 8. That all payments intended for the defendant Rural Bank of Kabacan shall be given to the
defendants and intervenors who have already acquired ownership over the land titled in the
a. ₱ 200 for each gmelina tree that are more than four (4) years old name of the Bank.21

b. ₱ 150 for each gmelina tree that are more than one (1) year old NIA, through the Office of the Solicitor General (OSG), appealed the Decision of the RTC to
the CA, which docketed the case as CA-G.R. CV No. 65196. NIA assailed the trial court’s
c. ₱ 164 for each coco tree adoption of the Commissioners’ Report, which had determined the just compensation to be
awarded to the owners of the lands expropriated. NIA also impugned as error the RTC’s
d. ₱ 270 for each banana clump17 inclusion for compensation of the excavated soil from the expropriated properties. Finally, it
disputed the trial court’s Order to deliver the payment intended for the Rural Bank of Kabacan
On 03 December 1997, the committee submitted to the RTC another report, which had to defendants-intervenors, who allegedly acquired ownership of the land still titled in the name
adopted the first Committee Report, as well as the former’s 25 November 1996 report. of the said rural bank.22
However, the committee added to its computation the value of the earthfill excavated from
The Ruling of the Court of Appeals
On 12 August 2008, the CA through its Twenty-First (21st) Division, promulgated a The Court’s Ruling
Decision23 affirming with modification the RTC Decision. It ruled that the committee tasked to
determine the fair market value of the properties and improvements for the purpose of arriving On the first issue, the Petition is not meritorious.
at the just compensation, properly performed its function. The appellate court noted that the
committee members had conducted ocular inspections of the area surrounding the In expropriation proceedings, just compensation is defined as the full and fair equivalent of the
expropriated properties and made their recommendations based on official documents from property taken from its owner by the expropriator. The measure is not the taker's gain, but the
the BIR with regard to the zonal valuations of the affected properties.24 The CA observed that, owner's loss. The word "just" is used to intensify the meaning of the word "compensation" and
as far as the valuation of the improvements on the properties was concerned, the committee to convey thereby the idea that the equivalent to be rendered for the property to be taken shall
members took into consideration the provincial assessor’s appraisal of the age of the trees, be real, substantial, full and ample.32 The constitutional limitation of "just compensation" is
their productivity and the inputs made.25 The appellate court further noted that despite the considered to be a sum equivalent to the market value of the property, broadly defined as the
Manifestation of NIA that it be allowed to present evidence to rebut the recommendation of the price fixed by the seller in open market in the usual and ordinary course of legal action and
committee on the valuations of the expropriated properties, NIA failed to do so.26 competition; or the fair value of the property; as between one who receives and one who
desires to sell it, fixed at the time of the actual taking by the government.33
The assailed CA Decision, however, deleted the inclusion of the value of the soil excavated
from the properties in the just compensation. It ruled that the property owner was entitled to In the instant case, we affirm the appellate court’s ruling that the commissioners properly
compensation only for the value of the property at the time of the taking. 27 In the construction determined the just compensation to be awarded to the landowners whose properties were
of irrigation projects, excavations are necessary to build the canals, and the excavated soil expropriated by petitioner.
cannot be valued separately from the land expropriated. Thus, it concluded that NIA, as the
The records show that the trial court dutifully followed the procedure under Rule 67 of the 1997
new owner of the affected properties, had the right to enjoy and make use of the property,
Rules of Civil Procedure when it formed a committee that was tasked to determine the just
including the excavated soil, pursuant to the latter’s objectives. 28
compensation for the expropriated properties. The first set of committee members made an
Finally, the CA affirmed the trial court’s ruling that recognized defendants-intervenors ocular inspection of the properties, subject of the expropriation. They also determined the
Margarita Tabaoda and Portia Charisma Ruth Ortiz as the new owners of Lot No. 3080 and exact areas affected, as well as the kinds and the number of improvements on the
held that they were thus entitled to just compensation. The appellate court based its conclusion properties.34 When the members were unable to agree on the valuation of the land and the
on the non-participation by the Rural Bank of Kabacan in the expropriation proceedings and improvements thereon, the trial court selected another batch of disinterested members to carry
the latter’s Manifestation that it no longer owned Lot No. 3080. 29 out the task of determining the value of the land and the improvements.

On 11 September 2008, the NIA through the OSG filed a Motion for Reconsideration of the 12 The new committee members even made a second ocular inspection of the expropriated
August 2008 Decision, but that motion was denied.30 areas. They also obtained data from the BIR to determine the zonal valuation of the
expropriated properties, interviewed the adjacent property owners, and considered other
Aggrieved by the appellate court’s Decision, NIA now comes to this Court via a Petition for factors such as distance from the highway and the nearby town center. 35 Further, the
Review on Certiorari under Rule 45. committee members also considered Provincial Ordinance No. 173, which was promulgated by
the Province of Cotabato on 15 June 1999, and which provide for the value of the properties
The Issues and the improvements for taxation purposes.36

The following are the issues proffered by petitioner: We can readily deduce from these established facts that the committee members endeavored
a rigorous process to determine the just compensation to be awarded to the owners of the
The Court of appeals seriously erred in affirming the trial court’s finding of just compensation of expropriated properties. We cannot, as petitioner would want us to, oversimplify the process
the land and the improvements thereon based on the report of the commissioners. undertaken by the committee in arriving at its recommendations, because these were not
based on mere conjectures and unreliable data.
The court of appeals erred in ruling that the payment of just compensation for lot no. 3080
should be made to respondents margarita taboada and Portia charisma ruth Ortiz. 31 In National Power Corporation v. Diato-Bernal,37 this Court emphasized that the "just"-ness of
the compensation could only be attained by using reliable and actual data as bases for fixing
the value of the condemned property. The reliable and actual data we referred to in that case A thorough scrutiny of the records reveals that the second set of Commissioners, with Atty.
were the sworn declarations of realtors in the area, as well as tax declarations and zonal Marasigan still being the Chairperson and Mr. Zambrano and Mr. Tomacmol as members, was
valuation from the BIR. In disregarding the Committee Report assailed by the National Power not arbitrary and capricious in performing the task assigned to them. We note that these
Corporation in the said case, we ruled thus: Commissioners were competent and disinterested persons who were handpicked by the court
a quo due to their expertise in appraising the value of the land and the improvements thereon
It is evident that the above conclusions are highly speculative and devoid of any actual and in the province of Cotabato. They made a careful study of the area affected by the
reliable basis. First, the market values of the subject property’s neighboring lots were mere expropriation, mindful of the fact that the value of the land and its may be affected by many
estimates and unsupported by any corroborative documents, such as sworn declarations of factors. The duly appointed Commissioners made a second ocular inspection of the subject
realtors in the area concerned, tax declarations or zonal valuation from the Bureau of Internal area on 4 September 1997; went to the BIR office in order to get the BIR zonal valuation of the
Revenue for the contiguous residential dwellings and commercial establishments. The report properties located in Carmen, Cotabato; interviewed adjacent property owners; and took into
also failed to elaborate on how and by how much the community centers and convenience consideration various factors such as the location of the land which is just less than a kilometer
facilities enhanced the value of respondent’s property. Finally, the market sales data and price away from the Poblacion and half a kilometer away from the highway and the fact that it is near
listings alluded to in the report were not even appended thereto. a military reservation. With regard to the improvements, the Commissioners took into
consideration the valuation of the Provincial Assessor, the age of the trees, and the inputs and
As correctly invoked by NAPOCOR, a commissioners’ report of land prices which is not based their productivity.
on any documentary evidence is manifestly hearsay and should be disregarded by the court.
Thus, it could not be said that the schedule of market values in Ordinance No. 173 was the
The trial court adopted the flawed findings of the commissioners hook, line, and sinker. It did sole basis of the Commissioners in arriving at their valuation. Said ordinance merely gave
not even bother to require the submission of the alleged "market sales data" and "price credence to their valuation which is comparable to the current price at that time. Besides, Mr.
listings." Further, the RTC overlooked the fact that the recommended just compensation was Zambrano testified that the date used as bases for Ordinance No. 173 were taken from 1995
gauged as of September 10, 1999 or more than two years after the complaint was filed on to 1996.41
January 8, 1997. It is settled that just compensation is to be ascertained as of the time of the
taking, which usually coincides with the commencement of the expropriation proceedings. Moreover, factual findings of the CA are generally binding on this Court. The rule admits of
Where the institution of the action precedes entry into the property, the just compensation is to exceptions, though, such as when the factual findings of the appellate court and the trial court
be ascertained as of the time of the filing of the complaint. Clearly, the recommended just are contradictory, or when the findings are not supported by the evidence on record. 42 These
compensation in the commissioners’ report is unacceptable. 38 exceptions, however, are not present in the instant case.

In the instant case, the committee members based their recommendations on reliable data Thus, in the absence of contrary evidence, we affirm the findings of the CA, which sustained
and, as aptly noted by the appellate court, considered various factors that affected the value of the trial court’s Decision adopting the committee’s recommendations on the just compensation
the land and the improvements.39 to be awarded to herein respondents.

Petitioner, however, strongly objects to the CA’s affirmation of the trial court’s adoption of We also uphold the CA ruling, which deleted the inclusion of the value of the excavated soil in
Provincial Ordinance No. 173. The OSG, on behalf of petitioner, strongly argues that the the payment for just compensation. There is no legal basis to separate the value of the
recommendations of the committee formed by the trial court were inaccurate. The OSG excavated soil from that of the expropriated properties, contrary to what the trial court did. In
contends that the ordinance reflects the 1999 market values of real properties in the Province the context of expropriation proceedings, the soil has no value separate from that of the
of Cotabato, while the actual taking was made in 1996.40 expropriated land. Just compensation ordinarily refers to the value of the land to compensate
for what the owner actually loses. Such value could only be that which prevailed at the time of
We are not persuaded. the taking.

We note that petitioner had ample opportunity to rebut the testimonial, as well as documentary In National Power Corporation v. Ibrahim, et al.,43 we held that rights over lands are indivisible,
evidence presented by respondents when the case was still on trial. It failed to do so, however. viz:
The issue raised by petitioner was adequately addresses by the CA’s assailed Decision in this
wise:
[C]onsequently, the CA’s findings which upheld those of the trial court that respondents owned The CA affirmed the ruling of the trial court, which had awarded the payment of just
and possessed the property and that its substrata was possessed by petitioner since 1978 for compensation – intended for Lot No. 3080 registered in the name of the Rural Bank of
the underground tunnels, cannot be disturbed. Moreover, the Court sustains the finding of the Kabacan – to the defendants-intervenors on the basis of the non-participation of the rural bank
lower courts that the sub-terrain portion of the property similarly belongs to respondents. This in the proceedings and the latter’s subsequent Manifestation that it was no longer the owner of
conclusion is drawn from Article 437 of the Civil Code which provides: that lot. The appellate court erred on this matter.

ART. 437. The owner of a parcel of land is the owner of its surface and of everything under it, It should be noted that eminent domain cases involve the expenditure of public funds. 45 In this
and he can construct thereon any works or make any plantations and excavations which he kind of proceeding, we require trial courts to be more circumspect in their evaluation of the just
may deem proper, without detriment to servitudes and subject to special laws and ordinances. compensation to be awarded to the owner of the expropriated property. 46 Thus, it was
He cannot complain of the reasonable requirements of aerial navigation. imprudent for the appellate court to rely on the Rural Bank of Kabacan’s mere declaration of
non-ownership and non-participation in the expropriation proceeding to validate defendants-
Thus, the ownership of land extends to the surface as well as to the subsoil under it. intervenors’ claim of entitlement to that payment.

xxx xxx xxx The law imposes certain legal requirements in order for a conveyance of real property to be
valid.1âwphi1 It should be noted that Lot No. 3080 is a registered parcel of land covered by
Registered landowners may even be ousted of ownership and possession of their properties in TCT No. T-61963. In order for the reconveyance of real property to be valid, the conveyance
the event the latter are reclassified as mineral lands because real properties are must be embodied in a public document47 and registered in the office of the Register of Deeds
characteristically indivisible. For the loss sustained by such owners, they are entitled to just where the property is situated.48
compensation under the Mining Laws or in appropriate expropriation proceedings.
We have scrupulously examined the records of the case and found no proof of conveyance or
Moreover, petitioner’s argument that the landowners’ right extends to the sub-soil insofar as evidence of transfer of ownership of Lot No. 3080 from its registered owner, the Rural Bank of
necessary for their practical interests serves only to further weaken its case. The theory would Kabacan, to defendants-intervenors. As it is, the TCT is still registered in the name of the said
limit the right to the sub-soil upon the economic utility which such area offers to the surface rural bank. It is not disputed that the bank did not participate in the expropriation proceedings,
owners. Presumably, the landowners’ right extends to such height or depth where it is possible and that it manifested that it no longer owned Lot No. 3080. The trial court should have
for them to obtain some benefit or enjoyment, and it is extinguished beyond such limit as there nevertheless required the rural bank and the defendants-intervenors to show proof or evidence
would be no more interest protected by law. pertaining to the conveyance of the subject lot. The court cannot rely on mere inference,
considering that the payment of just compensation is intended to be awarded solely owner
Hence, the CA correctly modified the trial court’s Decision when it ruled thus:
based on the latter’s proof of ownership.
We agree with the OSG that NIA, in the construction of irrigation projects, must necessarily
The trial court should have been guided by Rule 67, Section 9 of the 1997 Rules of Court,
make excavations in order to build the canals. Indeed it is preposterous that NIA will be made
which provides thus:
to pay not only for the value of the land but also for the soil excavated from such land when
such excavation is a necessary phase in the building of irrigation projects. That NIA will make SEC. 9. Uncertain ownership; conflicting claims. — If the ownership of the property taken is
use of the excavated soil is of no moment and is of no concern to the landowner who has been uncertain, or there are conflicting claims to any part thereof, the court may order any sum or
paid the fair market value of his land. As pointed out by the OSG, the law does not limit the use sums awarded as compensation for the property to be paid to the court for the benefit of the
of the expropriated land to the surface area only. Further, NIA, now being the owner of the person adjudged in the same proceeding to be entitled thereto. But the judgment shall require
expropriated property, has the right to enjoy and make use of the property in accordance with the payment of the sum or sums awarded to either the defendant or the court before the
its mandate and objectives as provided by law. To sanction the payment of the excavated soil plaintiff can enter upon the property, or retain it for the public use or purpose if entry has
is to allow the landowners to recover more than the value of the land at the time when it was already been made.
taken, which is the true measure of the damages, or just compensation, and would discourage
the construction of important public improvements.44 Hence, the appellate court erred in affirming the trial court’s Order to award payment of just
compensation to the defendants-intervenors. There is doubt as to the real owner of Lot No.
On the second issue, the Petition is meritorious. 3080. Despite the fact that the lot was covered by TCT No. T-61963 and was registered under
its name, the Rural Bank of Kabacan manifested that the owner of the lot was no longer the
bank, but the defendants-intervenors; however, it presented no proof as to the conveyance
thereof. In this regard, we deem it proper to remand this case to the trial court for the reception
of evidence to establish the present owner of Lot No. 3080 who will be entitled to receive the
payment of just compensation.

WHEREFORE, the Petition is PARTLY GRANTED. The 12 August 2008 CA Decision in CA-
G.R. CV No. 65196, awarding just compensation to the defendants as owners of the
expropriated properties and deleting the inclusion of the value of the excavated soil, is hereby
AFFIRMED with MODIFICATION. The case is hereby REMANDED to the trial court for the
reception of evidence to establish the present owner of Lot No. 3080. No pronouncements as
to cost.