ownership; right to receive just compensation in case of expropriation REPUBLIC v RURAL BANK OF KABACAN 25 January 2012 Sereno, ponente

petition for review on certiorari of a Court of Appeals decision SHORT VERSION: Just compensation is the full and fair equivalent of the property taken from its owner by the expropriator; measured not by takers gain, but the owners loss. The equivalent to be rendered to the property should be real, substantial, full and ample. It does not include earthfill, and should only be awarded to the present owner of the expropriated property. FACTS: National Irrigation Authority (petitioner) was a GOCC with original charter (RA 3601); it was specifically authorized under PD 552 to exercise the power of eminent domain. NIA needed parcels of land to construct the Malitubog-Marigadao Irrigation Project. 8 September 1994: it filed with the RTC of Kabacan a complaint to expropriate a portion of three parcels of land (total: 14497.91 sq m). Lot 3080: registered under the Rural Bank of Kabacan Lot 455: registered under RG May, Ronald and Ronaldo, all surnamed Lao Lot 3039: registered under Littie Sarah Agdeppa 11 July 1995: NIA filed an amended complaint to include Leosa Agdeppa and Marcelino Viernes as registered owners of Lot 3039. 25 September 1995: NIA filed a second amended complaint to properly allege the area sought to be expropriates, the exact address of the properties and their owners. It also prayed to be authorized to take immediate possession of the properties after depositing with the PNB P19246.56 (provisional value). 31 October 1995: respondents filed an answer saying, among other allegations, that NIAs valuation of their property was inaccurate 11 September 1996: RTC issued an order forming a committee to determine the fair market value of the expropriated properties to establish just compensation There were two reports: Committee 1: area to be occupied 18930 sq m; there were gmelina trees, banana clumps and coco trees Committee 2: fair market value = P65 per sq m based on BIR

zonal valuation; on the improvements: P200 per gmelina tree older than four years old; P150 per gmelina tree older than one year; P164 per coco tree; also added to computation the value of earthfill excavated from Lots 3039 and 3080. RTC judgment: 18930 sq m to be expropriated to NIA P1230450 for the areas to be expropriated P5128375.50 to Lot 3080 owners for removed earthfill P1929611.30 to Lot 3039 owners for removed earthfill P60000 for one-year-old gmelina trees P3786000 for four-year-old gmelina trees P2460 for coconut trees CA affirmed RTC decision, but deleted the inclusion of the value of the earthfill

ISSUES:

was the just compensation awarded correct? YES should Margarita Taboada and Portia Ortiz be paid compensation for Lot 3080? NOT YET

REASONING: ON JUST COMPENSATION Just compensation was the full and fair equivalent of the property taken from its owner by the expropriator. Measured not by takers gain, but the owners loss. The equivalent to be rendered to the property should be real, substantial, full and ample.

Sum equivalent to the market value of the property (broadly

defined as the price fixed by the seller in open market in the usual and ordinary course of legal action and competition; 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). The RTC followed the procedure under 1997 Rules of Civil Procedure Rule 67 in forming a committee to determine just compensations. The first committee conducted an ocular inspection and determined the exact areas affected, as well as the improvements. When the members couldnt agree on valuation, the RTC selected a new committee to do so. The second committee also conducted an ocular inspection; it obtained data from the BIR, interviewed adjacent property owners and considered Provincial Ordinance 173 providing the value of the properties and improvements for tax purposes. Napocor v Diato-Bernal: just-ness of could only be attained by using

reliable and actual data as bases for fixing the value of the condemned property. In that case those were sworn declarations of realtors in area, tax declarations and zonal valuation from the BIR. The Supreme Court then rejected the committee report for not being based on any documentary evidence.

In the present case, the committee members based their recommendations on reliable data and considered various factors that affected the value of the land and the improvements. Adoption of the provincial ordinance was allowed even though petitioner argued that it reflected 1999 market values when the actual taking was in 1996. Factual findings of the trial court and CA were binding on the SC. There was no legal basis to separate the value of excavated soil from that of the expropriated properties. Soil had no value separate from that of the expropriated land; just compensation referred to the value of the land to compensate for what the owner actually lost; the value could only be that which prevailed at the time of the taking.

Napocor v Ibrahim: rights over land were indivisible; cited NCC Art
437, stating that the ownership of land extended to the surface as well as the subsoil under it.

The CA: the law does not limit the use of the expropriated land to
the surface area only. NIA, now being the owner of the expropriated property, has the right to enjoy and make use of the property in accordance with its mandate and objectives as provided by law. To sanction the payment of the excavated soil is to allow the landowners to recover more than the value of the land at the time when it was taken, which is the true measure of the damages, or just compensation, and would discourage the construction of important public improvements. ON COMPENSATING ALLEGED OWNERS The CA awarded payment to Taboada and Ortiz based on Rural Bank of Kabacans non-participation in the proceedings and its subsequent manifestation that it didnt own Lot 3080 anymore. Eminent domain cases involved expenditure of public funds; trial courts should be circumspect in their valuation of just compensation awarded to owners of expropriated property. CA shouldnt have relied on Rural Banks declaration to validate Taboada and Ortizs claim of entitlement to the payment.

The law imposed certain legal requirements in order for a conveyance of real property to be valid. The conveyance must be in a public document and registered in the Register of Deeds where the property

was situated.

The TCT covering Lot 3080 was still in Rural Banks name. The trial court should have required the bank/T&O to show proof of the conveyance.

RULING: petition partly granted; just compensation affirmed; case remanded to RTC to establish present owner of Lot 3080