Lloyds Industrial Richfield Corp. v. National Power Corp.
REITERATIONFacts
The Antecedents: Lloyds Richfield Industrial Corporation (Lloyds Richfield), a cement manufacturing company, quarried limestone from parcels of land it owned for its cement production. The National Power Corporation (NPC) sought to acquire an easement of right of way over these parcels of land for the 230 KV Leyte-Cebu Interconnection Project. When negotiations failed, NPC filed a complaint for expropriation. NPC was granted immediate possession of the properties. Lloyds Richfield demanded payment of the fair market value of the lands and the limestone deposits, arguing the easement would render the properties useless. Procedural History: The Committee on Appraisal recommended an increase in the safety zone from 20 to 200 meters, necessitating the expropriation of four additional lots. The Committee recommended P450.00 per square meter for the lands and P26.00 per ton for the limestone deposits. The Regional Trial Court (RTC) condemned all 11 lots in favor of NPC and ordered payment of the fair market value for the lands and limestone deposits. The Court of Appeals (CA) affirmed the condemnation of all 11 lots and the payment of just compensation for the lands but deleted the award for limestone deposits and remanded the case for redetermination of just compensation. The Petition: Both parties filed petitions for review on certiorari before the Supreme Court. Lloyds Richfield argued for full market value compensation for all 11 lots and compensation for limestone deposits. NPC argued for only an easement fee and questioned the inclusion of the additional lots.
Issue(s)
Whether Lloyds Richfield is entitled to just compensation equivalent to the fair market value of the properties expropriated, not just a 10% easement fee. Whether the four additional lots covered by the increased safety zone were properly included in the properties to be expropriated. Whether Lloyds Richfield is entitled to just compensation for the value of the limestone deposits found in its lots. Whether the Court of Appeals erred in remanding the case to the Regional Trial Court to determine anew the amount of just compensation payable to Lloyds Richfield.
Ruling
The Supreme Court partly granted the Petition in G.R. No. 190207 (Lloyds Richfield) and denied the Petition in G.R. No. 190213 (NPC). The Court affirmed the condemnation of the 11 lots, ordered NPC to pay Lloyds Richfield the fair market value of the 11 lots at P450.00 per square meter, affirmed the deletion of the award for limestone deposits, and deleted the order remanding the case for redetermination of just compensation.
Ratio Decidendi
On the entitlement to full market value compensation: The Court held that Lloyds Richfield is entitled to the full market value of the properties, not just an easement fee. It reiterated that when the construction of transmission lines imposes an indefinite and perpetual restriction on the landowner's proprietary rights, such as prohibiting dynamite blasting and quarrying, it constitutes a 'taking' under the power of eminent domain. This is because the landowner is perpetually deprived of the ordinary use and enjoyment of the property, necessitating full just compensation equivalent to the fair market value. The Court explicitly rejected NPC's reliance on Section 3A of Republic Act No. 6395, citing numerous prior rulings that have already struck down this argument when the principal purpose of the land is impaired. On the inclusion of the four additional lots: The Court affirmed the proper inclusion of the four additional lots (Lot Nos. 1824, 1831, 1862, and 1863) in the expropriation. It reasoned that the increased safety zone, recommended by the Mines and Geosciences Bureau, would render these lots useless for quarrying activities, thus restricting Lloyds Richfield's proprietary rights. The Court noted that NPC was given ample opportunity to present evidence to refute the recommendation for the increased safety zone but failed to do so, implying consent to the issues tried under Rule 10, Section 5 of the Rules of Civil Procedure. On entitlement to compensation for limestone deposits: The Court ruled that Lloyds Richfield is not entitled to just compensation for the limestone deposits. It emphasized that under Article XII, Section 2 of the Constitution, all minerals found in Philippine soil belong to the State. While Article 437 of the Civil Code grants landowners ownership of what is underneath their property, this is subject to special laws and the Constitution. The Court distinguished this case from Benguet Consolidated Mining v. Republic, noting that the mineral claim in Benguet was a vested right under an older law, whereas Lloyds Richfield's claim was made under the 1987 Constitution. Furthermore, the Court found the valuation of the limestone deposits in this case to be suspect. On the remand for redetermination of just compensation: The Court deleted the Court of Appeals' order remanding the case for redetermination of just compensation. It found that the P450.00 per square meter valuation was sufficiently supported, not only by deeds of sale of nearby properties but also by valuations in similar expropriation cases for the same project, such as National Power Corporation v. Santa Lora vda. de Capin and National Power Corporation v. Carlos Villamor. The Court found no sufficient reason to remand the case, as it could take judicial notice of the compensation paid in those related cases.
Main Doctrine
When the burden imposed by an easement of right of way is so cumbersome as to indefinitely restrict the owner from using the property, it constitutes a 'taking' within the meaning of the Constitution, requiring full just compensation, not merely an easement fee. The State's ownership of minerals under Article XII, Section 2 of the Constitution prevails over private ownership claims under Article 437 of the Civil Code.