6/29/2017 G.R.No.

168732

FIRSTDIVISION


NATIONALPOWERG.R.No.168732
CORPORATION,
Petitioner,
Present:
versus

LUCMANG.IBRAHIM,OMARPUNO,C.J.,Chairperson,
G.MARUHOM,ELIASG.SANDOVALGUTIERREZ,*
MARUHOM,BUCAYG.CORONA,
MARUHOM,FAROUKG.AZCUNA,and
MARUHOM,HIDJARAG.GARCIA,JJ.
MARUHOM,ROCANIAG.
MARUHOM,POTRISAMG.
MARUHOM,LUMBAG.Promulgated:
MARUHOM,SINABG.
MARUHOM,ACMADG.
MARUHOM,SOLAYMANG.June29,2007
MARUHOM,MOHAMADM.
IBRAHIM,andCAIRONESAM.
IBRAHIM,
Respondents.
XX
DECISION

AZCUNA,J.:

ThisisapetitionforreviewoncertiorariunderRule45oftheRulesofCourtseekingtoannulthe
[1]
Decision datedJune8,2005renderedbytheCourtofAppeals(CA)inC.A.G.R.CVNo.57792.
Thefactsareasfollows:

OnNovember23,1994,respondentLucmanG.Ibrahim,inhispersonalcapacityandinbehalfofhis
coheirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G.
Maruhom,HidjaraG.Maruhom,RocaniaG.Maruhom,PotrisamG.Maruhom,LumbaG.Maruhom,Sinab
G. Maruhom, Acmad G. Maruhom, Solayman G. Maruhom, Mohamad M. Ibrahim and Caironesa M.
Ibrahim, instituted an action against petitioner National Power Corporation (NAPOCOR) for recovery of
possessionoflandanddamagesbeforetheRegionalTrialCourt(RTC)ofLanaodelSur.

Intheircomplaint,Ibrahimandhiscoheirsclaimedthattheywereownersofseveralparcelsofland
describedinSurveyPlanFP(VII5)2278consistingof70,000squaremeters,dividedintothree(3)lots,i.e.

Lots 1, 2, and 3 consisting of 31,894, 14,915, and 23,191 square meters each respectively. Sometime in
1978, NAPOCOR, through alleged stealth and without respondents knowledge and prior consent, took
possessionofthesubterrainareaoftheirlandsandconstructedthereinundergroundtunnels.Theexistence
of the tunnels was only discovered sometime in July 1992 by respondents and then later confirmed on
November 13, 1992 by NAPOCOR itself through a memorandum issued by the latters Acting Assistant
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November 13, 1992 by NAPOCOR itself through a memorandum issued by the latters Acting Assistant
Project Manager.The tunnels were apparently being used by NAPOCOR in siphoning the water of Lake
LanaoandintheoperationofNAPOCORsAgusII,III,IV,V,VI,VIIprojectslocatedinSaguiran,Lanao
delSurNangcaandBaloiinLanaodelNorteandDitucalanandFuentesinIliganCity.

OnSeptember19,1992,respondentOmarG.MaruhomrequestedtheMarawiCityWaterDistrictfor
apermittoconstructand/orinstallamotorizeddeepwellinLot3locatedinSaduc,MarawiCitybuthis
request was turned down because the construction of the deep well would cause danger to lives and
property. On October 7, 1992, respondents demanded that NAPOCOR pay damages and vacate the sub
terrain portion of their lands but the latter refused to vacate much less pay damages. Respondents further
averred that the construction of the underground tunnels has endangered their lives and properties as
Marawi City lies in an area of local volcanic and tectonic activity. Further, these illegally constructed
tunnels caused them sleepless nights, serious anxiety and shock thereby entitling them to recover moral
damages and that by way of example for the public good, NAPOCOR must be held liable for exemplary
damages.
Disputing respondents claim, NAPOCOR filed an answer with counterclaim denying the material
allegations of the complaint and interposing affirmative and special defenses, namely that (1) there is a
failuretostateacauseofactionsincerespondentsseekpossessionofthesubterrainportionwhentheywere
neverinpossessionofthesame,(2)respondentshavenocauseofactionbecausetheyfailedtoshowproof
thattheyweretheownersoftheproperty,and(3)thetunnelsareagovernmentprojectforthebenefitofall
[2]
andallprivatelandsaresubjecttosucheasementasmaybenecessaryforthesame.

OnAugust7,1996,theRTCrenderedaDecision,thedecretalportionofwhichreadsasfollows:

WHEREFORE,judgmentisherebyrendered:

1. Denying plaintiffs [private respondents] prayer for defendant [petitioner] National Power
CorporationtodismantletheundergroundtunnelsconstructedbetweenthelandsofplaintiffsinLots1,2,and3
ofSurveyPlanFP(VII5)2278

2. Orderingdefendanttopaytoplaintiffsthefairmarketvalueofsaid70,000squaremetersof
land covering Lots 1, 2, and 3 as described in Survey Plan FP (VII5) 2278 less the area of 21,995 square
metersatP1,000.00persquaremeteroratotalofP48,005,000.00fortheremainingunpaidportionof48,005
squaremeterswith6%interestperannumfromthefilingofthiscaseuntilpaid

3.OrderingdefendanttopayplaintiffsareasonablemonthlyrentalofP0.68persquaremeterof
thetotalareaof48,005squaremeterseffectivefromitsoccupancyoftheforegoingareain1978oratotalof
P7,050,974.40.

4.OrderingdefendanttopayplaintiffsthesumofP200,000.00asmoraldamagesand

5.OrderingdefendanttopaythefurthersumofP200,000.00asattorneysfeesandthecosts.

[3]
SOORDERED.

On August 15, 1996, Ibrahim, joined by his coheirs, filed an Urgent Motion for Execution of Judgment
PendingAppeal.Ontheotherhand,NAPOCORfiledaNoticeofAppealbyregisteredmailonAugust19,
1996.Thereafter,NAPOCORfiledavigorousoppositiontothemotionforexecutionofjudgmentpending
appealwithamotionforreconsiderationoftheDecisionwhichithadreceivedonAugust9,1996.

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OnAugust26,1996,NAPOCORfiledaManifestationandMotionwithdrawingitsNoticeofAppeal
purposelytogivewaytothehearingofitsmotionforreconsideration.

On August 28, 1996, the RTC issued an Order granting execution pending appeal and denying
NAPOCORsmotionforreconsideration,whichOrderwasreceivedbyNAPOCORonSeptember6,1996.

OnSeptember9,1996,NAPOCORfileditsNoticeofAppealbyregisteredmailwhichwasdeniedby
theRTConthegroundofhavingbeenfiledoutoftime.Meanwhile,theDecisionoftheRTCwasexecuted
pendingappealandfundsofNAPOCORweregarnishedbyrespondentsIbrahimandhiscoheirs.

On October 4, 1996, a Petition for Relief from Judgment was filed by respondents Omar G.
Maruhom,EliasG.Maruhom,BucayG.Maruhom,MamodG.Maruhom,FaroukG.Maruhom,HidjaraG.
Maruhom,PotrisamG.MaruhomandLumbaG.Maruhomassertingasfollows:

1)theydidnotfileamotiontoreconsiderorappealthedecisionwithinthereglementaryperiodoffifteen
(15) days from receipt of judgment because they believed in good faith that the decision was for
damagesandrentalsandattorneysfeesonlyasprayedforinthecomplaint:

2)itwasonlyonAugust26,1996thattheylearnedthattheamountsawardedtotheplaintiffsrepresented
not only rentals, damages and attorneys fees but the greatest portion of which was payment of just
compensationwhichineffectwouldmakethedefendantNPCtheowneroftheparcelsoflandinvolved
inthecase

3)whentheylearnedofthenatureofthejudgment,theperiodofappealhasalreadyexpired

4) theywerepreventedbyfraud,mistake,accident,orexcusablenegligencefromtakinglegalstepsto
protectandpreservetheirrightsovertheirparcelsoflandinsofarasthepartofthedecisiondecreeing
justcompensationforpetitionersproperties

5)theywouldneverhaveagreedtothealienationoftheirpropertyinfavorofanybody,consideringthe
fact that the parcels of land involved in this case were among the valuable properties they inherited
[4]
fromtheirdearfatherandtheywouldratherseetheirlandcrumbletodustthansellittoanybody.


TheRTCgrantedthepetitionandrenderedamodifiedjudgmentdatedSeptember8,1997,thus:

WHEREFORE,amodifiedjudgmentisherebyrendered:

1) ReducingthejudgmentawardofplaintiffsforthefairmarketvalueofP48,005,000.00by
9,526,000.00orforadifferencebyP38,479,000.00andbythefurthersumofP33,603,500.00
subjectoftheexecutionpendingappealleavingadifferenceof4,878,500.00whichmaybethe
subject of execution upon the finality of this modified judgment with 6% interest per annum
fromthefilingofthecaseuntilpaid.

2) Awarding the sum of P1,476,911.00 to herein petitioners Omar G. Maruhom, Elias G.
Maruhom, Bucay G. Maruhom, Mahmod G. Maruhom, Farouk G. Maruhom, Hidjara G.
Maruhom,PortrisamG.MaruhomandLumbaG.Maruhomasreasonablerentaldeductiblefrom
theawardedsumofP7,050,974.40pertainingtoplaintiffs.

3) OrderingdefendantembodiedintheAugust7,1996decisiontopayplaintiffsthesumof
P200,000.00asmoraldamagesandfurthersumofP200,000.00asattorneysfeesandcosts.

[5]
SOORDERED.


Subsequently,bothrespondentIbrahimandNAPOCORappealedtotheCA.
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Subsequently,bothrespondentIbrahimandNAPOCORappealedtotheCA.

In the Decision dated June 8, 2005, the CA set aside the modified judgment and reinstated the
originalDecisiondatedAugust7,1996, amending it further by deleting the award of moral damages and
reducingtheamountofrentalsandattorneysfees,thus:

WHEREFORE,premisesconsidered,hereinAppealsareherebypartiallyGRANTED,theModifiedJudgment
isorderedSETASIDEandrenderedofnoforceandeffectandtheoriginalDecisionofthecourtaquodated7
August 1996 is hereby RESTORED with the MODIFICATION that the award of moral damages is
DELETEDandtheamountsofrentalsandattorneysfeesareREDUCEDtoP6,888,757.40andP50,000.00,
respectively.

Inthisconnection,theClerkofCourtofRTCLanaodelSurisherebydirectedtoreassessanddeterminethe
additional filing fee that should be paid by PlaintiffAppellant IBRAHIM taking into consideration the total
amountofdamagessoughtinthecomplaintvisvistheactualamountofdamagesawardedbythisCourt.Such
additionalfilingfeeshallconstitutealienonthejudgment.

[6]
SOORDERED.


Hence,thispetitionascribingthefollowingerrorstotheCA:


(a) RESPONDENTS WERE NOT DENIED THE BENEFICIAL USE OF THEIR SUBJECT
PROPERTIESTOENTITLETHEMTOJUSTCOMPENSATIONBYWAYOFDAMAGES

(b)ASSUMINGTHATRESPONDENTSAREENTITLEDTOJUSTCOMPENSATIONBYWAYOF
DAMAGES,NOEVIDENCEWASPRESENTEDANENTTHEVALUATIONOFRESPONDENTS
PROPERTYATTHETIMEOFITSTAKINGINTHEYEAR1978TOJUSTIFYTHEAWARDOF
ONE THOUSAND SQUARE METERS (P1000.00/SQ. M.) EVEN AS PAYMENT OF BACK
RENTALSISITSELFIMPROPER.

Thiscaserevolvesaroundtheproprietyofpayingjustcompensationtorespondents,and,byextension,the
basisforcomputingthesame.Thethresholdissueofwhetherrespondentsareentitledtojustcompensation

hingesuponwhoownsthesubterrainareaoccupiedbypetitioner.

Petitionermaintainsthatthesubterrainportionwheretheundergroundtunnelswereconstructeddoes
notbelongtorespondentsbecause,evenconcedingthefactthatrespondentsownedtheproperty,theirright
tothesubsoilofthesamedoesnotextendbeyondwhatisnecessarytoenablethemtoobtainalltheutility
andconveniencethatsuchpropertycannormallygive.Inanycase,petitionerassertsthatrespondentswere
stillabletousethesubjectpropertyevenwiththeexistenceofthetunnels,citingasanexamplethefactthat
one of the respondents, Omar G. Maruhom, had established his residence on a part of the property.
Petitioner concludes that the underground tunnels 115 meters below respondents property could not have
causeddamageorprejudicetorespondentsandtheirclaimtothiseffectwas,therefore,purelyconjectural
[7]
andspeculative.

Thecontentionlacksmerit.

Generally, in an appeal by certiorari under Rule 45 of the Rules of Court, the Court does not pass upon
questionsoffact.Absentanyshowingthatthetrialandappellatecourtsgravelyabusedtheirdiscretion,the
Courtwillnotexaminetheevidenceintroducedbythepartiesbelowtodetermineiftheycorrectlyassessed
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Courtwillnotexaminetheevidenceintroducedbythepartiesbelowtodetermineiftheycorrectlyassessed
[8]
andevaluatedtheevidenceonrecord. ThejurisdictionoftheCourtincasesbroughttoitfromtheCAis
limited to reviewing and revising the errors of law imputed to it, its findings of fact being as a rule
conclusiveandbindingontheCourt.

Inthepresentcase,petitionerfailedtopointtoanyevidencedemonstratinggraveabuseofdiscretion
onthepartoftheCAortoanyothercircumstanceswhichwouldcallfortheapplicationoftheexceptionsto
theaboverule.Consequently,theCAsfindingswhichupheldthoseofthetrialcourtthatrespondentsowned
andpossessedthepropertyandthatitssubstratawaspossessedbypetitionersince1978fortheunderground
tunnels, cannot be disturbed. Moreover, the Court sustains the finding of the lower courts that the sub
terrainportionofthepropertysimilarlybelongstorespondents.ThisconclusionisdrawnfromArticle437
oftheCivilCodewhichprovides:

ART.437.Theownerofaparceloflandistheownerofitssurfaceandofeverythingunderit,andhe
canconstructthereonanyworksormakeanyplantationsandexcavationswhichhemaydeemproper,without
detriment to servitudes and subject to special laws and ordinances. He cannot complain of the reasonable
requirementsofaerialnavigation.

Thus, the ownership of land extends to the surface as well as to the subsoil under it. In Republic of the
[9]
Philippinesv.CourtofAppeals, thisprinciplewasappliedtoshowthatrightsoverlandsareindivisible
and,consequently,requireadefinitiveandcategoricalclassification,thus:

TheCourtofAppealsjustifiedthisbysayingthereisnoconflictofinterestbetweentheownersofthesurface
rightsandtheownersofthesubsurfacerights.Thisisratherstrangedoctrine,foritisawellknownprinciple
thattheownerofapieceoflandhasrightsnotonlytoitssurfacebutalsotoeverythingunderneathandthe
airspace above it up to a reasonable height. Under the aforesaid ruling, the land is classified as mineral
underneath and agricultural on the surface, subject to separate claims of title. This is also difficult to
understand,especiallyinitspracticalapplication.

Under the theory of the respondent court, the surface owner will be planting on the land while the
mininglocatorwillbeboringtunnelsunderneath.Thefarmercannotdigawellbecausehemayinterferewith
theminingoperationsbelowandtheminercannotblastatunnellesthedestroythecropsabove.Howdeep
can the farmer, and how high can the miner go without encroaching on each others rights? Where is the
dividinglinebetweenthesurfaceandthesubsurfacerights?

The Court feels that the rights over the land are indivisible and that the land itself cannot be half
agriculturalandhalfmineral.Theclassificationmustbecategoricalthelandmustbeeithercompletelymineral
orcompletelyagricultural.


Registered landowners may even be ousted of ownership and possession of their properties in the
eventthelatterarereclassifiedasminerallandsbecauserealpropertiesarecharacteristicallyindivisible.For
the loss sustained by such owners, they are entitled to just compensation under the Mining Laws or in
[10]
appropriateexpropriationproceedings.

Moreover,petitionersargumentthatthelandownersrightextendstothesubsoilinsofarasnecessary
fortheirpracticalinterestsservesonlytofurtherweakenitscase.The theory would limit the right to the
subsoilupontheeconomicutilitywhichsuchareaofferstothesurfaceowners.Presumably,thelandowners
rightextendstosuchheightordepthwhereitispossibleforthemtoobtainsomebenefitorenjoyment,and
[11]
itisextinguishedbeyondsuchlimitastherewouldbenomoreinterestprotectedbylaw.
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[11]
itisextinguishedbeyondsuchlimitastherewouldbenomoreinterestprotectedbylaw.

In this regard, the trial court found that respondents could have dug upon their property motorized
deepwellsbutwerepreventedfromdoingsobytheauthoritiespreciselybecauseoftheconstructionand
existence of the tunnels underneath the surface of their property. Respondents, therefore, still had a legal
interestinthesubterrainportioninsofarastheycouldhaveexcavatedthesamefortheconstructionofthe
deepwell.ThefactthattheycouldnotwasappreciatedbytheRTCasproofthatthetunnelsinterferedwith
respondentsenjoymentoftheirpropertyanddeprivedthemofitsfulluseandenjoyment,thus:

Has it deprived the plaintiffs of the use of their lands when from the evidence they have already
existingresidentialhousesoversaidtunnelsanditwasnotshownthatthetunnelseitherdestroyedsaidhouses
or disturb[ed] the possession thereof by plaintiffs? From the evidence, an affirmative answer seems to be in
order. The plaintiffs and [their] coheirs discovered [these] big underground tunnels in 1992. This was
confirmedbythedefendantonNovember13,1992 by the Acting Assistant Project Manager, Agus 1 Hydro
ElectricProject(Exh.K).OnSeptember16,1992,Atty.OmarMaruhom(coheir)requestedtheMarawiCity
WaterDistrictforpermittoconstructamotorizeddeepwelloverLot3forhisresidentialhouse(Exh.Q).He
wasrefusedthepermitbecausetheconstructionofthedeepwellas(sic)theparcelsoflandwillcausedanger
to lives and property. He was informed that beneath your lands are constructed the Napocor underground
tunnelinconnectionwithAguaHydroelectricplant(Exh.Q2).Thereinfactexistsampleevidencethatthis
construction of the tunnel without the prior consent of plaintiffs beneath the latters property endangered the
livesandpropertiesofsaidplaintiffs.IthasbeenprovedindubitablythatMarawiCityliesinanareaoflocal
volcanicandtectonicactivity.LakeLanaohasbeenformedbyextensiveearthmovementsandisconsideredto
beadrownedbasinofvolcano/tectonicorigin.InMarawiCity,thereareanumberofformervolcanoesandan
extensiveamountoffaulting.Someofthesefaultsarestillmoving.(FeasibilityReportonMarawiCityWater
DistrictbyKampsaKruger,ConsultingEngineers,ArchitectsandEconomists,Exh.R).Moreover,ithasbeen
shown that the underground tunnels [have] deprived the plaintiffs of the lawful use of the land and
considerably reduced its value. On March 6, 1995, plaintiffs applied for a twomillion peso loan with the
AmanahIslamicBankfortheexpansionoftheoperationoftheAmeerConstructionandIntegratedServicesto
besecuredbysaidland(Exh.N),buttheapplicationwasdisapprovedbythebankinitsletterofApril25,1995
(Exh.O)statingthat:

Apropostothis,weregrettoinformyouthatwecannotconsideryourloanapplicationdueto
thefollowingreasons,towit:

Thatpermyactualocularinspectionandverification,subjectpropertyofferedascollateralhasan
existing underground tunnel by the NPC for the Agus I Project, which tunnel is traversing
underneathyourproperty,hence,anencumbrance.Asamatterofbankpolicy,propertywithan
existingencumbrancecannotbeconsideredneitheracceptedascollateralforaloan.

All the foregoing evidence and findings convince this Court that preponderantly plaintiffs have
establishedthecondemnationoftheirlandcoveringanareaof48,005sq.meterslocatedatSaduc,MarawiCity
by the defendant National Power Corporation without even the benefit of expropriation proceedings or the
[12]
paymentofanyjustcompensationand/orreasonablemonthlyrentalsince1978.


Inthepast,theCourthasheldthatifthegovernmenttakespropertywithoutexpropriationanddevotesthe
propertytopublicuse,aftermanyyears,thepropertyownermaydemandpaymentofjustcompensationin
[13]
the event restoration of possession is neither convenient nor feasible. This is in accordance with the
principlethatpersonsshallnotbedeprivedoftheirpropertyexceptbycompetentauthorityandforpublic
[14]
useandalwaysuponpaymentofjustcompensation.

Petitionercontendsthattheundergroundtunnelsinthiscaseconstituteaneasementupontheproperty
ofrespondentswhichdoesnotinvolveanylossoftitleorpossession.Themannerinwhichtheeasement
wascreatedbypetitioner,however,violatesthedueprocessrightsofrespondentsasitwaswithoutnotice
andindemnitytothemanddidnotgothroughproperexpropriationproceedings.Petitionercouldhave,at
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anytime,validlyexercisedthepowerofeminentdomaintoacquiretheeasementoverrespondentsproperty
asthispowerencompassesnotonlythetakingorappropriationoftitletoandpossessionoftheexpropriated
property but likewise covers even the imposition of a mere burden upon the owner of the condemned
[15]
property. Significantly, though, landowners cannot be deprived of their right over their land until
expropriationproceedingsareinstitutedincourt.Thecourtmustthenseetoitthatthetakingisforpublic
[16]
use,thatthereispaymentofjustcompensationandthatthereisdueprocessoflaw.

In disregarding this procedure and failing to recognize respondents ownership of the subterrain
portion, petitioner took a risk and exposed itself to greater liability with the passage of time. It must be
emphasized that the acquisition of the easement is not without expense. The underground tunnels impose
limitationsonrespondentsuseofthepropertyforanindefiniteperiodanddeprivethemofitsordinaryuse.
[17]
Based upon the foregoing, respondents are clearly entitled to the payment of just compensation.

Notwithstandingthefactthatpetitioneronlyoccupiesthesubterrainportion,itisliabletopaynotmerely
aneasementfeebutratherthefullcompensationforland.Thisissobecauseinthiscase,thenatureofthe
easement practically deprives the owners of its normal beneficial use. Respondents, as the owners of the
property thus expropriated, are entitled to a just compensation which should be neither more nor less,
[18]
wheneveritispossibletomaketheassessment,thanthemoneyequivalentofsaidproperty.

The entitlement of respondents to just compensation having been settled, the issue now is on the
mannerofcomputingthesame.Inthisregard,petitionerclaimsthatthebasisforthecomputationofthejust
compensationshouldbethevalueofthepropertyatthetimeitwastakenin1978.Petitioneralsoimpugns
the reliance made by the CA upon National Power Corporation v. Court of Appeals and Macapanton
[19]
Mangondato asthebasisforcomputingtheamountofjustcompensationinthisaction.TheCAfound
thattheawardofdamagesisnotexcessivebecausetheP1000persquaremeterasthefairmarketvaluewas
sustainedinacaseinvolvingalotadjoiningthepropertyinquestionwhichcaseinvolvedanexpropriation
by[petitioner]ofportionofLot1ofthesubdivisionplan(LRC)PSD116159whichisadjacenttoLots2
[20]
and3ofthesamesubdivisionplanwhichisthesubjectoftheinstantcontroversy.

[21]
Justcompensationhasbeenunderstoodtobethejustandcompleteequivalentoftheloss andis
ordinarilydeterminedbyreferringtothevalueofthelandanditscharacteratthetimeitwastakenbythe
[22]
expropriating authority. There is a taking in this sense when the owners are actually deprived or
dispossessedoftheirproperty,wherethereisapracticaldestructionoramaterialimpairmentofthevalueof
theirproperty,orwhentheyaredeprivedoftheordinaryusethereof.Thereisatakinginthiscontextwhen
theexpropriatorentersprivatepropertynotonlyforamomentaryperiodbutformorepermanentduration,
forthepurposeofdevotingthepropertytoapublicuseinsuchamannerastoousttheowneranddeprive
[23]
him of all beneficial enjoyment thereof. Moreover, taking of the property for purposes of eminent
[24]
domainentailsthattheentryintothepropertymustbeunderwarrantorcoloroflegalauthority.
Underthefactualbackdropofthiscase,thelastelementoftakingmentioned,i.e.,thattheentryinto
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Underthefactualbackdropofthiscase,thelastelementoftakingmentioned,i.e.,thattheentryinto
the property is under warrant or color of legal authority, is patently lacking. Petitioner justified its
nonpaymentoftheindemnityduerespondentsuponitsmistakenbeliefthatthepropertyformedpartofthe
publicdominion.

This situation is on all fours with that in the Mangondato case. NAPOCOR in that case took the
property of therein respondents in 1979, using it to build its Aqua I Hydroelectric Plant Project, without
payinganycompensation,allegedlyunderthemistakenbeliefthatitwaspublicland.Itwasonlyin1990,
aftermorethanadecadeofbeneficialuse,thatNAPOCORrecognizedthereinrespondentsownershipand
negotiatedforthevoluntarypurchaseoftheproperty.

InMangondato,thisCourtheld:

TheFirstIssue:DateofTakingorDateofSuit?

Thegeneralruleindeterminingjustcompensationineminentdomainisthevalueoftheproperty
asofthedateofthefilingofthecomplaint,asfollows:

Sec.4.OrderofCondemnation.Whensuchamotionisoverruledorwhenanypartyfailstodefendasrequired
bythisrule,thecourtmayenteranorderofcondemnationdeclaringthattheplaintiffhasalawfulrighttotake
the property sought to be condemned, for the public use or purpose described in the complaint, upon the
payment of just compensation to be determined as of the date of the filing of the complaint. x x x (Italics
supplied).

Normally, the time of the taking coincides with the filing of the complaint for expropriation. Hence, many
rulingofthisCourthaveequatedjustcompensationwiththevalueofthepropertyasofthetimeoffilingofthe
complaintconsistentwiththeaboveprovisionoftheRules.Sotoo,wheretheinstitutionoftheactionprecedes
entrytotheproperty,thejustcompensationistobeascertainedasofthetimeoffilingofthecomplaint.

Thegeneralrule,however,admitsofanexception:wherethisCourtfixedthevalueofthepropertyasof
thedateitwastakenandnotthedateofthecommencementoftheexpropriationproceedings.

IntheoldcaseofProvincialGovernmentofRizalvs.CarodeAraullo,theCourtruledthatxxxtheownersof
thelandhavenorighttorecoverdamagesforthisunearnedincrementresultingfromtheconstructionofthe
public improvement (lengthening of TaftAvenue from Manila to Pasay) from which the land was taken. To
permitthemtodosowouldbetoallowthemtorecovermorethanthevalueofthelandatthetimeitwastaken,
which is the true measure of the damages, or just compensation, and would discourage the construction of
importantpublicimprovements.

Insubsequentcases,theCourt,followingtheabovedoctrine,invariablyheldthatthetimeoftakingis
thecriticaldateindetermininglawfulorjustcompensation.Justifyingthisstance,Mr.Justice(laterChief
Justice) Enrique Fernando, speaking for the Court in Municipality of La Carlota vs. The Spouses Felicidad
BaltazarandVicenteGan, said, x x x the owner as is the constitutional intent, is paid what he is entitled to
accordingtothevalueofthepropertysodevotedtopublicuseasofthedateoftaking.Fromthattime,hehad
beendeprivedthereof.Hehadnochoicebuttosubmit.Heisnot,however,tobedespoiledofsucharight.No
lessthanthefundamentallawguaranteesjustcompensation.Itwouldbeinjusticetohimcertainlyiffromsuch
aperiod,hecouldnotrecoverthevalueofwhatwaslost.Therecouldbeontheotherhand,injusticetothe
expropriator if by a delay in the collection, the increment in price would accrue to the owner. The
doctrinetowhichthisCourthasbeencommittedisintendedpreciselytoavoideithercontingencyfraughtwith
unfairness.

Simply stated, the exception finds the application where the owner would be given undue incremental
advantages arising from the use to which the government devotes the property expropriated as for
instance, the extension of a main thoroughfare as was in the case in Caro de Araullo. In the instant case,
however,itisdifficulttoconceiveofhowtherecouldhavebeenanextraordinaryincreaseinthevalueof
theownerslandarisingfromtheexpropriation,asindeedtherecordsdonotshowanyevidencethatthe
valuationofP1,000.00reachedin1992wasduetoincrementsdirectlycausedbypetitionersuseofthe
land.SincethepetitionerisclaiminganexceptiontoRule67,Section4,ithastheburdeninprovingitsclaim
thatitsoccupancyandusenotordinaryinflationandincreaseinlandvalueswasthedirectcauseofthe
increaseinvaluationfrom1978to1992.
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increaseinvaluationfrom1978to1992.


SideIssue:WhenisthereTakingofProperty?

ButthereisyetanothercogentreasonwhythispetitionshouldbedeniedandwhytherespondentCourtshould
besustained.Anexaminationoftheundisputedfactualenvironmentwouldshowthatthetakingwasnotreally
madein1978.

This Court has defined the elements of taking as the main ingredient in the exercise of power of eminent
domain,inthefollowingwords:

A number of circumstances must be present in taking of property for purposes of eminent domain: (1) the
expropriator must enter a private property (2) the entrance into private property must be for more than a
momentaryperiod(3)theentryintothepropertyshouldbeunderwarrantorcoloroflegalauthority(4)the
propertymustbedevotedtoapublicuseorotherwiseinformallyappropriatedorinjuriouslyaffectedand(5)
theutilizationofthepropertyforpublicusemustbeinsuchawaytoousttheowneranddeprivehimofall
beneficialenjoymentoftheproperty.(Italicssupplied)

Inthiscase,thepetitionersentrancein1978waswithoutintenttoexpropriateorwasnotmadeunderwarrant
or color of legal authority, for it believed the property was public land covered by Proclamation No. 1354.
Whentheprivaterespondentraisedhisclaimofownershipsometimein1979,thepetitionerflatlyrefusedthe
claimforcompensation,nakedlyinsistedthatthepropertywaspubliclandandwronglyjustifieditspossession
byallegingithadalreadypaidfinancialassistancetoMarawiCityinexchangefortherightsovertheproperty.
Only in 1990, after more than a decade of beneficial use, did the petitioner recognize private respondents
ownershipandnegotiateforthevoluntarypurchaseoftheproperty.ADeedofSalewithprovisionalpayment
and subject to negotiations for the correct price was then executed. Clearly, this is not the intent nor the
expropriationcontemplatedbylaw.Thisisasimpleattemptatavoluntarypurchaseandsale.Obviously,the
petitionerneglectedand/orrefusedtoexercisethepowerofeminentdomain.

Only in 1992, after the private respondent sued to recover possession and petitioner filed its Complaint to
expropriate,didpetitionermanifestitsintentiontoexercisethepowerofeminentdomain.Thustherespondent
Courtcorrectlyheld:

If We decree that the fair market value of the land be determined as of 1978, then We would be
sanctioning a deceptive scheme whereby NAPOCOR, for any reason other than for eminent domain
wouldoccupyanotherspropertyandwhenlaterpressedforpayment,firstnegotiateforalowpriceand
thenconvenientlyexpropriatethepropertywhenthelandownerrefusestoacceptitsofferclaimingthat
thetakingofthepropertyforthepurposeoftheeminentdomainshouldbereckonedasofthedatewhen
itstartedtooccupythepropertyandthatthevalueofthepropertyshouldbecomputedasofthedateof
thetakingdespitetheincreaseinthemeantimeinthevalueoftheproperty.

InNoblevs.CityofManila,theCityenteredintoaleasepurchaseagreementofabuildingconstructedbythe
petitioners predecessorininterest in accordance with the specifications of the former. The Court held that
beingboundbythesaidcontract,theCitycouldnotexpropriatethebuilding.Expropriationcouldberesorted
toonlywhenitismadenecessarybytheoppositionoftheownertothesaleorbythelackofanyagreementas
totheprice.SaidtheCourt:

The contract, therefore, in so far as it refers to the purchase of the building, as we have interpreted it, is in
force,nothavingbeenrevokedbythepartiesorbyjudicialdecision.Thisbeingthecase,thecitybeingbound
tobuythebuildingatanagreedprice,underavalidandsubsistingcontract,andtheplaintiffbeingagreeableto
its sale, the expropriation thereof, as sought by the defendant, is baseless.Expropriation lies only when it is
made necessary by the opposition of the owner to the sale or by the lack of any agreement as to the price.
Therebeinginthepresentcaseavalidandsubsistingcontract,betweentheownerofthebuildingandthecity,
forthepurchasethereofatanagreedprice,thereisnoreasonfortheexpropriation.(Italicssupplied)

Intheinstantcase,petitionereffectivelyrepudiatedthedeedofsaleitenteredintowiththeprivaterespondent
whenitpassedResolutionNo.92121onMay25,1992authorizingitspresidenttonegotiate,interalia,that
payment shall be effective only after Agus I HE project has been placed in operation.It was only then that
petitioners intent to expropriate became manifest as private respondent disagreed and, barely a month, filed
[25]
suit.

In the present case, to allow petitioner to use the date it constructed the tunnels as the date of
valuationwouldbegrosslyunfair.First,itdidnotenterthelandunderwarrantorcoloroflegalauthorityor
withintenttoexpropriatethesame.Infact,itdidnotbothertonotifytheownersandwronglyassumedit
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withintenttoexpropriatethesame.Infact,itdidnotbothertonotifytheownersandwronglyassumedit
hadtherighttodigthosetunnelsundertheirproperty.Secondly,theimprovementsintroducedbypetitioner,

namely,thetunnels,innowaycontributedtoanincreaseinthevalueoftheland.Thetrialcourt,therefore,
as affirmed by the CA, rightly computed the valuation of the property as of 1992, when respondents
discoveredtheconstructionofthehugeundergroundtunnelsbeneaththeirlandsandpetitionerconfirmed
[26]
thesameandstartednegotiationsfortheirpurchasebutnoagreementcouldbereached.

Astotheamountofthevaluation,theRTCandtheCAbothusedasbasisthevalueoftheadjacent
property,Lot1(thepropertyinvolvedhereinbeingLots2and3ofthesamesubdivisionplan),whichwas
valuedatP1,000persq.meterasof1990,assustainedbythisCourtinMangondato,thus:
TheSecondIssue:Valuation

Wenowcometotheissueofvaluation.

The fair market value as held by the respondent Court, is the amount of P1,000.00 per square meter. In an
expropriationcasewheretheprincipalissueisthedeterminationofjustcompensation,asisthecasehere,a
trial before Commissioners is indispensable to allow the parties to present evidence on the issue of just
compensation. Inasmuch as the determination of just compensation in eminent domain cases is a judicial
functionandfactualfindingsoftheCourtofAppealsareconclusiveonthepartiesandreviewableonlywhen
thecasefallswithintherecognizedexceptions,whichisnotthesituationobtaininginthispetition,weseeno
reason to disturb the factual findings as to valuation of the subject property. As can be gleaned from the
records, the courtandthepartiesappointed commissioners did not abuse their authority in evaluating the
evidence submitted to them nor misappreciate the clear preponderance of evidence. The amount fixed and
agreedtobytherespondentappellateCourtisnotgrosslyexorbitant.Toquote:

CommissionerAlicomesfromtheOfficeoftheRegisterofDeedswhomaywellbeconsideredanexpert,with
ageneralknowledgeoftheappraisalofrealestateandtheprevailingpricesoflandinthevicinityofthelandin
questionsothathisopiniononthevaluationofthepropertycannotbelightlybrushedaside.

Theprevailingmarketvalueofthelandisonlyoneofthedeterminantsusedbythecommissionersreportthe
otherbeingashereinshown:

xxx

xxx

Commissioner Doromals report, recommending P300.00 per square meter, differs from the 2 commissioners
onlybecausehisreportwasbasedonthevaluationasof1978bytheCityAppraisalCommitteeasclarifiedby
thelatterschairmaninresponsetoNAPOCORsgeneralcounselsquery.

In sum, we agree with the Court of Appeals that petitioner has failed to show why it should be granted an
exemptionfromthegeneralruleindeterminingjustcompensationprovidedunderSection4ofRule67.Onthe
contrary,privaterespondenthasconvincedusthat,indeed,suchgeneralruleshouldinfactbeobservedinthis
[27]
case.

PetitionerhasnotshownanyerroronthepartoftheCAinreachingsuchavaluation.Furthermore,
thesearefactualmattersthatarenotwithintheambitofthepresentreview.

WHEREFORE,thepetitionisDENIEDandtheDecisionoftheCourtofAppealsinC.A.G.R.CV
No.57792datedJune8,2005isAFFIRMED.

Nocosts.

SOORDERED.

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ADOLFOS.AZCUNA
AssociateJustice



WECONCUR:



REYNATOS.PUNO
Chairperson
ChiefJustice


(OnLeave)
ANGELINASANDOVALGUTIERREZRENATOC.CORONA
AssociateJusticeAssociateJustice




CANCIOC.GARCIA
AssociateJustice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the
aboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriteroftheopinionof
theCourtsDivision.




REYNATOS.PUNO
ChiefJustice

*OnLeave.
[1]
Rollo,pp.114133.
[2]
Id.at117118.

[3]
Id.at118119.
[4]
Id.at121122.
[5]
Id.at122123.
[6]
Id.at132133.
[7]
Id.at9598.
[8]
Concepcionv.CA,G.R.No.120707,January31,2000,324SCRA85.
[9]
G.R.No.L43938,April15,1988,160SCRA228.
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6/29/2017 G.R.No.168732
[10]
Id.
[11]
TOLENTINO,COMMENTARIESANDJURISPRUDENCEONTHECIVILCODE,Vol.II,p.90.
[12]
Rollo,pp.152154.
[13]
Militantev.CourtofAppeals,386Phil.522(2000).
[14]
CONSTITUTION,Art.III,Sec.9.SeealsoCIVILCODE,Art.435.
[15]
Republicv.PLDT,136Phil.20(1969).
[16]
NAPOCORv.CA,G.R.No.106804,August12,2004,436SCRA195.
[17]
NAPOCORv.Gutierrez,G.R.No.60077,January18,1991,193SCRA1.
[18]
Id.
[19]
G.R.No.113194,March11,1996,254SCRA577.
[20]
Rollo,p.130.
[21]
Supranote16.
[22]
Supranote17.
[23]
RepublicofthePhilippinesv.Sarabia,G.R.No.157847,August25,2005,468SCRA142.
[24]
Supranote19.
[25]
Supra,note19at588592Emphasissupplied,italicsintheoriginal.
[26]
SeeRTCdecisionofAugust7,1996,Rollo,p.158.
[27]
See,supranote19at592593.

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