Lloyds Industrial vs NAPOCOR

G.R. No. 190207, June 30, 2021


Lloyds Richfield purchased parcels of land within its vicinity and quarried limestones from these areas, which would then be used to manufacture cement. NAPOCOR entered into negotiations with Lloyds Richfield to create an easement of right of way over the parcels of land for the construction of transmission lines.   When negotiations failed, the NAPOCOR filed a Complaint for expropriation before the Regional Trial Court of Danao City relating to 7 lots owned by Lloyds . 

Lloyds Richfield demanded by way of compulsory claim that the NAPOCOR pay the fair market value of the parcels of land, since the construction of transmission lines over its properties would render the properties useless to it. It also demanded to be paid the fair market value ofthe limestone deposits in the parcels of land.

The Committee on Appraisal recommended an increase in the safety zone which would require NAPOCOR to  expropriate four more lots that were not originally cited in the Complaint. 

NAPOCOR insisted that 

  1. That it could not be made to pay just compensation for the limestone deposits as these were minerals, which were owned not by Lloyds Richfield, but by the State. 
  2. It contended that it may only acquire an easement of right of way over the parcels of land pursuant to Republic Act No. 6395, and thus, may only pay an easement fee equivalent to 10% of the market value of the lands to be expropriated.


  1. Whether Lloyd is entitled to an amount equivalent to the fair market value of its properties expropriated by the National Power Corporation not just a 10% easement fee;
  2. Whether the award of just compensation for the limestone deposits shall be granted



1. YES.Here, constructing transmission lines over Lloyds Richfield’s properties impairs the principal purpose for which the parcels of expropriated land were actually devoted: quarrying activities. Consequently, a right-of-way easement will not suffice. Lloyds Richfield is entitled to the full market value of the properties as just compensation, not just an easement fee, for the taking of its properties.

The Constitution mandates the payment of just compensation for the taking of private property for public use. Section 9 of the Bill of Rights provides:

SECTION 9. Private property shall not be taken for public use without just compensation.

Just compensation is “the full and fair equivalent of the property taken from its owner by the expropriator.

“Just” means the compensation given to the owner for the taking of the property must be “real, substantial, full and ample.” In monetary terms, just compensation is the fair market value of the property taken. It is that “sum of money which a person desirous, but not compelled to buy, and an owner, willing, but not compelled to sell, would agree on as a price to be given and received for such property. Expropriation, however, is not limited to the taking of property with the corresponding transfer of title from the landowner to the expropriator. Easements of right of way fall within the purview of expropriation, allowed when the restrictions on the landowner’s property rights are not perpetual or indefinite In such a case, a mere easement fee may suffice.

Here, expropriation by creating an easement of right of way is impossible. Constructing transmission lines over the expropriated properties placed an indefinite and perpetual restriction on Lloyds Richfield’s proprietary rights. This is especially true since Lloyds Richfield has been perpetually prohibited from conducting dynamite blasting and quarrying activities in the properties expropriated, or else the transmission lines would be damaged or completely destroyed, endangering lives and properties. Therefore, the National Power Corporation has no choice but to expropriate the properties in the traditional sense, to take the properties and acquire title, for which it must pay the full market value of the properties as just compensation.

2. Lloyds Richfield, however, is not entitled to just compensation for the limestone deposits in its properties.

Under Article XII, Section 2 of the Constitution, the State owns all minerals found in Philippine soil. While Lloyds Richfield has title to the properties, it does not own the minerals underneath them, as shown by the permits and the Mineral Production Sharing Agreement it had to secure from the government to conduct quarrying activities in its properties. Article 437 of the Civil Code, which provides that the owner of a parcel of land is the owner of its surface and everything under it, is not without limitations. For one, it is a statute that cannot trump a constitutional provision. Article 437 itself provides that it is “subject to special laws and ordinances.” Certainly, the Constitution can be considered a special law, if not the fundamental law, to which all statutes must conform.

In Republic v. Court of Appeals, this Court held that an owner of a parcel of land may even be ousted of ownership of their land should minerals be found underneath it, in which case, they shall be paid just compensation for the taking of the land, not for the taking of the minerals underneath it.

The rule simply reserves to the State all minerals that may be found in public and even private land devoted to “agricultural, industrial, commercial, residential or (for) any purpose other than mining.” Thus, if a person is the owner of agricultural land in which minerals are discovered, his ownership of such land does not give him the right to extract or utilize the said minerals without the permission of the State to which such minerals belong.


… [O]nce minerals are discovered in the land, whatever the use to which it is being devoted at the time, such use may be discontinued by the State to enable it to extract the minerals therein in the exercise of its sovereign prerogative. The land is thus converted to mineral land and may not be used by any private party, including the registered owner thereof, for any other purpose that will impede the mining operations to be undertaken therein. For the loss sustained by such owner, he is of course entitled to just compensation under the Mining Laws or in appropriate expropriation proceedings.

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