The Court’s Ruling
On the first issue, the Petition is not meritorious.
In expropriation proceedings, just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. The measure is not the taker's gain, but the owner's loss. The word “just” is used to intensify the meaning of the word “compensation” and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full and ample.[32] The constitutional limitation of “just compensation” is considered to be a 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; 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]
In the instant case, we affirm the appellate court’s ruling that the commissioners properly determined the just compensation to be awarded to the landowners whose properties were expropriated by petitioner.
The records show that the trial court dutifully followed the procedure under Rule 67 of the 1997 Rules of Civil Procedure when it formed a committee that was tasked to determine the just compensation for the expropriated properties. The first set of committee members made an ocular inspection of the properties, subject of the expropriation. They also determined the exact areas affected, as well as the kinds and the number of improvements on the properties.[34] When the members were unable to agree on the valuation of the land and the improvements thereon, the trial court selected another batch of disinterested members to carry out the task of determining the value of the land and the improvements.
The new committee members even made a second ocular inspection of the expropriated 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 factors such as distance from the highway and the nearby town center.[35] Further, the 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 and the improvements for taxation purposes.[36]
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 expropriated properties. We cannot, as petitioner would want us to, oversimplify the process undertaken by the committee in arriving at its recommendations, because these were not based on mere conjectures and unreliable data.
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 were the sworn declarations of realtors in the area, as well as tax declarations and zonal valuation from the BIR. In disregarding the Committee Report assailed by the National Power Corporation in the said case, we ruled thus:
It is evident that the above conclusions are highly speculative and devoid of any actual and reliable basis. First, the market values of the subject property’s neighboring lots were mere estimates and unsupported by any corroborative documents, such as sworn declarations of realtors in the area concerned, tax declarations or zonal valuation from the Bureau of Internal Revenue for the contiguous residential dwellings and commercial establishments. The report also failed to elaborate on how and by how much the community centers and convenience facilities enhanced the value of respondent’s property. Finally, the market sales data and price listings alluded to in the report were not even appended thereto.
As correctly invoked by NAPOCOR, a commissioners’ report of land prices which is not based on any documentary evidence is manifestly hearsay and should be disregarded by the court.
The trial court adopted the flawed findings of the commissioners hook, line, and sinker. It did not even bother to require the submission of the alleged “market sales data” and “price listings.” Further, the RTC overlooked the fact that the recommended just compensation was gauged as of September 10, 1999 or more than two years after the complaint was filed on 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. Where the institution of the action precedes entry into the property, the just compensation is to be ascertained as of the time of the filing of the complaint. Clearly, the recommended just compensation in the commissioners’ report is unacceptable.[38]
In the instant case, the committee members based their recommendations on reliable data and, as aptly noted by the appellate court, considered various factors that affected the value of the land and the improvements.[39]
Petitioner, however, strongly objects to the CA’s affirmation of the trial court’s adoption of Provincial Ordinance No. 173. The OSG, on behalf of petitioner, strongly argues that the recommendations of the committee formed by the trial court were inaccurate. The OSG contends that the ordinance reflects the 1999 market values of real properties in the Province of Cotabato, while the actual taking was made in 1996.[40]
We are not persuaded.
We note that petitioner had ample opportunity to rebut the testimonial, as well as documentary evidence presented by respondents when the case was still on trial. It failed to do so, however. The issue raised by petitioner was adequately addresses by the CA’s assailed Decision in this wise:
A thorough scrutiny of the records reveals that the second set of Commissioners, with Atty. Marasigan still being the Chairperson and Mr. Zambrano and Mr. Tomacmol as members, was not arbitrary and capricious in performing the task assigned to them. We note that these 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 in the province of Cotabato. They made a careful study of the area affected by the expropriation, mindful of the fact that the value of the land and its may be affected by many factors. The duly appointed Commissioners made a second ocular inspection of the subject area on 4 September 1997; went to the BIR office in order to get the BIR zonal valuation of the properties located in Carmen, Cotabato; interviewed adjacent property owners; and took into consideration various factors such as the location of the land which is just less than a kilometer away from the Poblacion and half a kilometer away from the highway and the fact that it is near 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 their productivity.
Thus, it could not be said that the schedule of market values in Ordinance No. 173 was the sole basis of the Commissioners in arriving at their valuation. Said ordinance merely gave credence to their valuation which is comparable to the current price at that time. Besides, Mr. Zambrano testified that the date used as bases for Ordinance No. 173 were taken from 1995 to 1996.[41]
Moreover, factual findings of the CA are generally binding on this Court. The rule admits of exceptions, though, such as when the factual findings of the appellate court and the trial court are contradictory, or when the findings are not supported by the evidence on record.[42] These exceptions, however, are not present in the instant case.
Thus, in the absence of contrary evidence, we affirm the findings of the CA, which sustained the trial court’s Decision adopting the committee’s recommendations on the just compensation to be awarded to herein respondents.
We also uphold the CA ruling, which deleted the inclusion of the value of the excavated soil in the payment for just compensation. There is no legal basis to separate the value of the excavated soil from that of the expropriated properties, contrary to what the trial court did. In the context of expropriation proceedings, the soil has no value separate from that of the 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 the taking.
In National Power Corporation v. Ibrahim, et al.,[43] we held that rights over lands are indivisible, viz:
[C]onsequently, the CA’s findings which upheld those of the trial court that respondents owned and possessed the property and that its substrata was possessed by petitioner since 1978 for the underground tunnels, cannot be disturbed. Moreover, the Court sustains the finding of the lower courts that the sub-terrain portion of the property similarly belongs to respondents. This conclusion is drawn from Article 437 of the Civil Code which provides:
ART. 437. The owner of a parcel of land is the owner of its surface and of everything 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 special laws and ordinances. He cannot complain of the reasonable requirements of aerial navigation.
Thus, the ownership of land extends to the surface as well as to the subsoil under it.
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Registered landowners may even be ousted of ownership and possession of their properties in the event the latter are reclassified as mineral lands because real properties are characteristically indivisible. For the loss sustained by such owners, they are entitled to just compensation under the Mining Laws or in appropriate expropriation proceedings.
Moreover, petitioner’s argument that the landowners’ right extends to the sub-soil insofar as necessary for their practical interests serves only to further weaken its case. The theory would limit the right to the sub-soil upon the economic utility which such area offers to the surface owners. Presumably, the landowners’ right extends to such height or depth where it is possible for them to obtain some benefit or enjoyment, and it is extinguished beyond such limit as there would be no more interest protected by law.
Hence, the CA correctly modified the trial court’s Decision when it ruled thus:
We agree with the OSG that NIA, in the construction of irrigation projects, must necessarily make excavations in order to build the canals. Indeed it is preposterous that NIA will be made 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 use of the excavated soil is of no moment and is of no concern to the landowner who has been paid the fair market value of his land. As pointed out by the OSG, the law does not limit the use of the expropriated land to the surface area only. Further, 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.[44]
On the second issue, the Petition is meritorious.
The CA affirmed the ruling of the trial court, which had awarded the payment of just compensation – intended for Lot No. 3080 registered in the name of the Rural Bank of Kabacan – to the defendants-intervenors on the basis of the non-participation of the rural bank in the proceedings and the latter’s subsequent Manifestation that it was no longer the owner of that lot. The appellate court erred on this matter.
It should be noted that eminent domain cases involve the expenditure of public funds.[45] In this kind of proceeding, we require trial courts to be more circumspect in their evaluation of the just compensation to be awarded to the owner of the expropriated property.[46] Thus, it was 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-intervenors’ claim of entitlement to that payment.
The law imposes certain legal requirements in order for a conveyance of real property to be valid. It should be noted that Lot No. 3080 is a registered parcel of land covered by TCT No. T-61963. In order for the reconveyance of real property to be valid, the conveyance must be embodied in a public document[47] and registered in the office of the Register of Deeds where the property is situated.[48]
We have scrupulously examined the records of the case and found no proof of conveyance or evidence of transfer of ownership of Lot No. 3080 from its registered owner, the Rural Bank of Kabacan, to defendants-intervenors. As it is, the TCT is still registered in the name of the said rural bank. It is not disputed that the bank did not participate in the expropriation proceedings, and that it manifested that it no longer owned Lot No. 3080. The trial court should have nevertheless required the rural bank and the defendants-intervenors to show proof or evidence 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 based on the latter’s proof of ownership.
The trial court should have been guided by Rule 67, Section 9 of the 1997 Rules of Court, which provides thus:
SEC. 9. Uncertain ownership; conflicting claims. — If the ownership of the property taken is uncertain, or there are conflicting claims to any part thereof, the court may order any sum or sums awarded as compensation for the property to be paid to the court for the benefit of the person adjudged in the same proceeding to be entitled thereto. But the judgment shall require the payment of the sum or sums awarded to either the defendant or the court before the plaintiff can enter upon the property, or retain it for the public use or purpose if entry has already been made.
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. 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.
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