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G.R. No. 186069. January 30, 2013.*

SPOUSES JESUS L. CABAHUG AND CORONACION M.

CABAHUG, petitioners, vs. NATIONAL POWER
CORPORATION, respondent.

Civil Law; Contracts; A contract constitutes the law between the

parties who are bound by its stipulations which, when couched in
clear and plain language, should be applied according to their
literal tenor. Courts cannot supply material stipulations, read into
the contract words it does not contain or, for that matter, read into it
any other intention that would contradict its plain import.·It is
evident that the Spouses CabahugÊs receipt of the 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 payment of additional sums to the
Spouses Cabahug would be violative of the partiesÊ contract and
amount to

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* SECOND DIVISION.

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unjust enrichment. Indeed, the rule is settled that a contract

constitutes the law between the parties who are bound by its
stipulations which, when couched in clear and plain language,
should be applied according to their literal tenor. Courts cannot
supply material stipulations, read into the contract words it does
not contain or, for that matter, read into it any other intention that

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would contradict its plain import. Neither can they rewrite

contracts because they operate harshly or inequitably as to one of
the parties, or alter them for the benefit of one party and to the
detriment of the other, or by construction, relieve one of the parties
from the terms which he voluntarily consented to, or impose on him
those which he did not.
Same; Just Compensation; Easement of Right of Way; The
owner should be compensated for the monetary equivalent of the
land if the easement is intended to perpetually or indefinitely deprive
the owner of his proprietary rights through the imposition of
conditions that affect the ordinary use, free enjoyment and disposal
of the property or through restrictions and limitations that are
inconsistent with the exercise of the 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 on the land is necessary.·Where the right
of way easement, as in this case, similarly involves transmission
lines which not only endangers life and limb but restricts as well
the ownerÊs use of the land traversed thereby, the ruling in
Gutierrez remains doctrinal and should be applied. It has been
ruled that the owner should be compensated for the monetary
equivalent of the land if, as here, the easement is intended to
perpetually or indefinitely deprive the owner of his proprietary
rights through the imposition of conditions that affect the ordinary
use, free enjoyment and disposal of the property or through
restrictions and limitations that are inconsistent with the exercise
of the 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 on the land is necessary. Measured not by the takerÊs gain but
the ownerÊs loss, just compensation is defined as the full and fair
equivalent of the property taken from its owner by the expropriator.
Same; Same; Eminent Domain; 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
deter-

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mination shall prevail over the courtÊs findings.·The CA reversibly

erred in sustaining NPCÊs reliance on Section 3-A of RA 6395 which
states that only 10% of the market value of the property is due to
the owner of the property subject to an easement of right of way.
Since said easement falls within the purview of the power of
eminent domain, NPCÊs utilization of said provision has been
repeatedly struck down by this Court in a number of cases. 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 courtÊs
findings. 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
courtÊs own judgment as to what amount should be awarded and
how to arrive at such amount. Hence, Section 3A of R.A. No. 6395,
as amended, is not binding upon this Court.

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Jose P. Burgos for petitioners.
Office of the Solicitor General for respondent.

PEREZ, J.:
This Rule 45 Petition for Review on Certiorari seeks the
reversal of: (a) the 16 May 2007 Decision1 rendered by the
Eighteenth Division of the Court of Appeals (CA) in CA-
G.R. CV No. 67331 which reversed the 14 March 2000
Decision rendered by the Regional Trial Court (RTC),
Branch 17, Palompon, Leyte, in Civil Case No. PN-0213
and ordered the dismissal of the complaint for just
compensation filed by petitioners Spouses Jesus L.
Cabahug and Coronacion M. Caba-

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1 Penned by CA Associate Justice Agustin S. Dizon and concurred in
by Associate Justices Arsenio J. Magpale and Francisco P. Acosta.

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Cabahug vs. National Power Corporation

hug (Spouses Cabahug) against respondent National Power

Corporation (NPC);2 and (b) the CAÊs Resolution dated 9
January 2009, denying the motion for reconsideration of
the 16 May 2007 Decision for lack of merit.3
The facts are not in dispute.
The Spouses Cabahug are the owners of two parcels of
land situated in Barangay Capokpok, Tabango, Leyte,
registered in their names under Transfer Certificate of
Title (TCT) Nos. T-9813 and T-1599 of the Leyte provincial
registry.4 They were among the defendants in Special Civil
Action No. 0019-PN, a suit for expropriation earlier filed by
NPC before the RTC, in connection with its Leyte-Cebu
Interconnection Project. The suit was later dismissed when
NPC opted to settle with the landowners by paying an
easement fee equivalent to 10% of value of their property in
accordance with Section 3-A of Republic Act (RA) No.
6395.5 In view of the 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 properties at P45.00 per
square meter.6
On 9 November 1996, Jesus Cabahug executed two
documents denominated as Right of Way Grant in favor of
NPC. For and in consideration of the easement fees in the
sums of P112,225.50 and P21,375.00, Jesus Cabahug
granted NPC a continuous easement of right of way for the
latterÊs transmissions lines and their appurtenances over
24,939 and 4,750 square 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,

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2 CAÊs 16 May 2007 Decision, Rollo, pp. 30-35.
3 CAÊs 9 January 2009 Resolution, id., at pp. 88a-89.
4 TCT Nos. T-9813 and T-1599, id., at pp. 50-52.
5 An Act Revising the Charter of the National Power Corporation.
6 Rollo, pp. 44-45; 57-58 and 77.

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nor plant in any area within the Right of Way that will
adversely affect or obstruct the transmission line of NPC,
except agricultural crops, the growth of which will not
exceed three meters high. Under paragraph 4 of the grant,
however, Jesus Cabahug reserved the option to seek
additional compensation for easement fee, based on the
Supreme CourtÊs 18 January 1991 Decision in G.R. No.
60077, entitled National Power Corporation v. Spouses
Misericordia Gutierrez and Ricardo Malit, et al.
(Gutierrez).7
On 21 September 1998, the Spouses Cabahug filed the
complaint for the payment of just compensation, damages
and attorneyÊs fees against NPC which was docketed as
Civil Case 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 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 subject
properties which, based on the valuation fixed by the Leyte
Provincial Appraisal Committee, amounted to
8
P1,202,404.50. In its answer, on the other hand, NPC
averred that it already paid the full easement fee
mandated under Section 3-A of RA 6395 and that the
reservation in the grant referred to additional
compensation for easement fee, not the full just
compensation sought by the Spouses Cabahug.9
Acting on the motion for judgment on the pleadings that
was filed by the Spouses Cabahug, the RTC went on to
render a Decision dated 14 March 2000. Brushing aside
NPCÊs reliance on Section 3-A of RA 6395, the RTC applied
the ruling handed down by this Court in Gutierrez to the
effect that

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7 9 November 1996 Right of Way Grant in Favor of NPC, id., at pp. 53-
56; G.R. No. 60077, 18 January 1991, 193 SCRA 1.

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8 Spouses CabahugÊs 18 September 1998 Complaint, id., at pp. 44-48.

9 NPCÊs 9 October 1998 Answer, id., at pp. 63-70.

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NPCÊs easement of right of way which indefinitely deprives

the owner of their proprietary rights over their property
falls within the purview of the power of eminent domain.10
As a consequence, the RTC disposed of the complaint in the
following wise:

WHEREFORE, premises considered, judgment is hereby

rendered for [the Spouses Cabahug] and against [NPC], ordering
[NPC]:
1. To pay [the Spouses Cabahug] the sum of ONE MILLION
THREE HUNDRED THIRTY SIX THOUSAND and FIVE PESOS
(P1,336,005.00) together with the legal rate of interest thereon per
annum reckoned from January 3, 1997 less the amount previously
paid by [NPC] to [the Spouses Cabahug] for easement fee only;
2. To pay [the Spouses Cabahug] the sum equivalent to FIVE
(5%) PERCENT of the amount mentioned in the next preceding
paragraph for attorneyÊs fees; and
3. To pay [the Spouses Cabahug] the sum of TWENTY
THOUSAND (P20,000.00) PESOS for actual damages and litigation
expenses plus costs of the proceedings.
SO ORDERED.11

Aggrieved by the foregoing decision, the NPC perfected

the appeal which was docketed as CA-G.R. CV No. 67331
before the CA which, on 16 May 2007, rendered the herein
assailed decision, reversing and setting aside the RTCÊs
appealed decision. Finding that the facts of a 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 transmission
lines,12 the CA succinctly ruled as follows:

Unfortunately, [the Spouses Cabahug] had already accepted the

payment of easement fee, pursuant to R.A. 6395, as amended,

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10 RTCÊs 14 March 2000 Decision, id., at pp. 71-80.
11 Id., at p. 80.
12 Id., at pp. 30-35.

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way back in 1996. Therefore, [NPCÊs] easement of right of way has

for all legal intents and purpose[s], been established as far back as
1996. Since vested right has already accrued in favor of [NPC], to
allow [the Spouses Cabahug] to pursue this case when the easement
of right of way had already been consummated would be [in]
violation of the contract. The contracting parties, [the Spouses
Cabahug] and [NPC] had already conformed with the terms and
conditions of the agreement. To allow [the Spouses Cabahug] to
again collect from [NPC] payment of just compensation would
amount to unjust enrichment at the expense of [NPC] and would
sanction violation of the partiesÊ contract, which [the Spouses
Cabahug] cannot do in the case at bench. Further, the award of
attorneyÊs fees and litigation expenses and the 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

The Spouses CabahugÊs motion for reconsideration of the

16 May 2007 Decision14 was denied for lack of merit in the
CAÊs Resolution dated 9 January 2009. Hence, this petition
for review on certiorari.15 In urging the reversal of the CAÊs
assailed Decision and Resolution, the Spouses Cabahug
argue that the CA erred: (a) in disregarding paragraph 4 of
the Grant of Right of Way whereby Jesus Cabahug reserved
the right to seek additional compensation for easement fee;
and (b) in not applying this CourtÊs ruling in Gutierrez
case.16 In representation of NPC, on the other hand, the
Office of the Solicitor General (OSG) argues that the sums
paid in 1996 by way of easement fees represent the full
amount allowed by law and agreed upon by the parties.
Considering that Gutierrez concerned the payment of just
compensation for property expropriated by the NPC, the
OSG maintains the CA

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13 Rollo, p. 34.
14 Spouses CabahugÊs 6 June 2008 Motion for Reconsideration, id., at
pp. 81-88.
15 CAÊs 9 January 2009 Resolution, id., at pp. 88a-89.
16 Id., at pp. 22-23.

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did not err in according scant consideration to the Spouses

CabahugÊs invocation of the ruling in said case.17
We find the petition impressed with merit.
The CA regarded the Grant of Right of Way executed by
Jesus Cabahug in favor of NPC as a valid and binding
contract between the parties, a fact affirmed by the OSG in
its 8 October 2009 Comment to the petition at bench.18
Given that the parties have already agreed on the
easement fee for the portions of the subject parcels
traversed by NPCÊs transmissions lines, the CA ruled that
the Spouses CabahugÊs attempt to collect further sums by
way of additional easement fee and/or just compensation is
violative of said contract and tantamount to unjust
enrichment at the expense of NPC. As correctly pointed out
by the Spouses Cabahug, however, the CAÊs ruling totally
disregards the fourth paragraph of the Grant executed by
Jesus Cabahug which expressly states as follows:

That I hereby reserve the option to seek additional compensation

for Easement Fee, based on the Supreme Court Decision [i]n G.R.
No. 60077, promulgated on January 18, 1991, which jurisprudence
is designated as „NPC vs. Gutierrez‰ case.19

From the foregoing reservation, it is evident that the

Spouses CabahugÊs receipt of the 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 payment of additional
sums to the Spouses Cabahug would be violative of the
partiesÊ contract and amount to unjust enrichment. Indeed,

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the rule is settled that a contract constitutes the law

between the parties who are bound by its stipulations20
which, when couched in

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17 Id., at pp. 123-126.
18 Id., at p. 126.
19 Id., at p. 55.
20 R & M General Merchandise, Inc. v. Court of Appeals, 419 Phil.
131, 142; 366 SCRA 679, 688 (2001).

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clear and plain language, should be applied according to

their literal tenor.21 Courts cannot supply material
stipulations, read into the contract words it does not
contain22 or, for that matter, read into it any other
intention that would contradict its plain import.23 Neither
can they rewrite contracts because they operate harshly or
inequitably as to one of the parties, or alter them for the
benefit of one party and to the detriment of the other, or by
construction, relieve one of the parties from the terms
which he voluntarily consented to, or impose on him those
which he did not.24
Considering that Gutierrez was specifically made the
point of reference for Jesus CabahugÊs reservation to seek
further compensation from NPC, we find that the CA
likewise erred in finding that the ruling in said case does
not apply to the case at bench. Concededly, the NPC was
constrained to file an expropriation complaint in Gutierrez
due to the failure of the negotiations for its acquisition of
an easement of right of way for its transmission lines. The
issue that was eventually presented for this CourtÊs
resolution, however, was the propriety of making NPC
liable for the payment of the full market value of the
affected property despite the fact that transfer of title
thereto was not required by said easement. In upholding
the landownersÊ right to full just compensation, the Court

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ruled that the power of eminent domain may be exercised

although title is not transferred to the expropriator in an
easement of right of way. Just compensation which should
be neither more nor less than the money equivalent of the
property is, moreover, due where the nature and effect of
the easement is to

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21 Antipolo Properties, Inc. v. Nuyda, G.R. No. 171832, 12 October
2009, 603 SCRA 376, 381.
22 Sps. Barrera v. Sps. Lorenzo, 438 Phil. 42, 49; 389 SCRA 329, 333
(2002).
23 German Marine Agencies, Inc. v. National Labor Relations
Commission, 403 Phil. 572, 589; 350 SCRA 629, 641 (2001).
24 Bautista v. Court of Appeals, 379 Phil. 386, 399; 322 SCRA 365, 376
(2000).

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impose limitations against the use of the land for an

indefinite period and deprive the landowner its ordinary
use.
Even without the reservation made by Jesus Cabahug in
the Grant of Right of Way, the application of Gutierrez to
this case is not improper as NPC represents it to be. Where
the right of way easement, as in this case, similarly
involves transmission lines which not only endangers life
and limb but restricts as well the ownerÊs use of the land
traversed thereby, the ruling in Gutierrez remains doctrinal
and should be applied.25 It has been ruled that the owner
should be compensated for the monetary equivalent of the
land if, as here, the easement is intended to perpetually or
indefinitely deprive the owner of his proprietary rights
through the imposition of conditions that affect the
ordinary use, free enjoyment and disposal of the property
or through restrictions and limitations that are
inconsistent with the exercise of the attributes of
ownership, or when the introduction of structures or

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objects which, by their nature, create or increase the

probability of injury, death upon or destruction of life and
property found on the land is necessary.26 Measured not by
the takerÊs gain but the ownerÊs loss, just compensation is
defined as the full and fair equivalent of the property taken
from its owner by the expropriator.27
Too, the CA reversibly erred in sustaining NPCÊs
reliance on Section 3A of RA 6395 which states that only
10% of the market value of the property is due to the owner
of the property subject to an easement of right of way. Since
said easement falls within the purview of the power of
eminent domain, NPCÊs utilization of said provision has
been repeatedly

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25 National Power Corporation v. Tuazon, G.R. No. 193023, 29 June
2011, 653 SCRA 84, 94.
26 National Power Corporation v. Tiangco, G.R. No. 170846, 6
February 2007, 514 SCRA 674, 686-687.
27 National Power Corporation v. Manubay Agro-Industrial
Development Corp., 480 Phil. 470, 479; 437 SCRA 60, 68 (2004).

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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 courtÊs 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 courtÊs
own judgment as to what amount should be awarded and
how to arrive at such amount.30 Hence, 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

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installation of the latterÊs 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.

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28 National Power Corporation v. Villamor, G.R. No. 160080, 19 June
2009, 590 SCRA 11, 20-21; National Power Corporation v. Tiangco, 543
Phil. 637, 649; 514 SCRA 674, 686 (2007); National Power Corporation v.
San Pedro, 534 Phil. 448, 470; 503 SCRA 333, 353 (2006); Didipio Earth
SaversÊ Multi-Purpose Association, Inc. (DESAMA) v. Sec. Gozun, 520
Phil. 457; 485 SCRA 586 (2006); National Power Corporation v. Aguirre-
Paderanga, 502 Phil. 722; 464 SCRA 481 (2005); National Power
Corporation v. Igmedio, 452 Phil. 649, 662; 404 SCRA 527, 538 (2000);
Camarines Norte Electric Cooperative Inc. v. Court of Appeals, 398 Phil.
886, 899; 345 SCRA 85, 94 (2000); National Power Corporation v.
Gutierrez, supra, note 7.
29 National Power Corporation v. Bongbong, G.R. No. 164079, 3 April
2007, 520 SCRA 290, 307.
30 Republic v. Libunao, G.R. No. 166553, 30 July 2009, 594 SCRA 363,
378.
31 National Power Corporation v. Saludares, G.R. No. 189127, 25
April 2012, 671 SCRA 266, 277.

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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

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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 RTCÊs 14 March 2000 Decision, we are
constrained, however, to disallow the grant of attorneyÊs
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 attorneyÊs 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 RTCÊs award of litigation expenses should
likewise be deleted since, like attorneyÊs 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

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32 Republic v. Spouses Libunao, supra note 29, at p. 379.
33 Country Bankers Insurance Corp. v. Lianga Bay and Community
Multi-Purpose Cooperative, Inc., 425 Phil. 511, 525; 374 SCRA 653, 666
(2002).
34 Mercury Drug Corporation v. Baking, G.R. No. 156037, 25 May
2007, 523 SCRA 184, 192.

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based on speculation, conjecture or guess work, but must

depend on actual proof.35
WHEREFORE, premises considered, the petition is
GRANTED and the CAÊs assailed 16 May 2007 Decision
and 9 January 2009 Resolution are, accordingly,
REVERSED and SET ASIDE. In lieu thereof, another is

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entered REINSTATING the RTCÊs 14 March 2000 Decision,

subject to the MODIFICATION that the awards of
attorneyÊs fees, actual damages and/or litigation expenses
are DELETED.
SO ORDERED.

Carpio, Brion, Del Castillo and Perlas-Bernabe, JJ.,

concur.

Petition granted, judgment and resolution reversed and

set aside.

Notes.·The existence of a dominant estate and a

servient estate is incompatible with the idea that both
estates belong to the same person. (Salimbangon vs. Tan,
610 SCRA 426 [2010])
To be entitled to an easement of right of way, the
following requisites should be met: 1. The dominant estate
is surrounded by other immovables and has no adequate
outlet to a public highway; 2. There is payment of proper
indemnity; 3. The isolation is not due to the acts of the
proprietor of the dominant estate; and 4. The right of way
claimed is at the point least prejudicial to the servient
estate; and insofar as consistent with this rule, where the
distance from the dominant estate to a public highway may
be the shortest. (Dichoso, Jr. vs. Marcos, 647 SCRA 495
[2011])
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35 Government Service Insurance System v. Sps. Gonzalo and Labung-
Deang, 417 Phil. 662, 671; 365 SCRA 341, 349 (2001).

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