Case Summary (G.R. No. 165828)
Petitioner
National Power Corporation
Respondents
Heirs of Macabangkit (all surnamed Macabangkit)
Key Dates
– 1970s: NPC constructs Agus River hydroelectric tunnels
– 1979: Alleged surreptitious completion of one underground tunnel
– November 21, 1997: Complaint filed for damages and just compensation
– August 13 & 18, 1999: RTC decisions and supplemental decision awarding compensation
– October 5, 2004: CA affirms RTC decision
– August 24, 2011: Supreme Court decision
Applicable Law
– 1987 Philippine Constitution, Article III, Section 9 (private property, just compensation)
– Republic Act No. 6395, Sections 3(f), 3(h), 3(i) (NPC powers, right of way, compensation, prescriptive period)
– Civil Code provisions on easements (Arts. 620, 634, 646), prescription, and obligations (Art. 19)
Factual Background
NPC diverted Agus River waters through underground tunnels to feed hydroelectric plants. In 1995 the Heirs discovered that one tunnel ran beneath their Iligan City land. Attempts to sell or develop the property failed due to safety and structural concerns. They alleged NPC constructed and concealed this tunnel in bad faith, impairing the land’s use and value, and filed suit in 1997 seeking recovery of the property, damages, or alternatively just compensation. NPC counterclaimed that only an easement existed under RA 6395, barred by prescription.
Issues
1. Did NPC’s underground tunnel actually traverse and affect the respondents’ land?
2. Was the respondents’ action for just compensation barred by the five-year prescriptive period in Section 3(i) of RA 6395 or by Civil Code prescription?
Ruling of the Regional Trial Court
– Ocular inspection confirmed a subterranean tunnel; uprooted trees evidenced disturbance.
– NPC acted in bad faith by concealing the tunnel since 1979.
– Ordered NPC to pay P500/sqm (total P113,532,500) as just compensation plus interest; monthly rentals of P30,000 from 1979 to 1999; moral and exemplary damages of P200,000 each; and 15% of the award as attorney’s fees.
– Supplemental decision condemned the land in favor of NPC upon payment.
Ruling of the Court of Appeals
– Affirmed factual findings on the tunnel’s existence based on eyewitness testimony, topographic survey, sketch map, and the ocular inspection.
– Held that Section 3(i) applies only to surface works readily discoverable and not to secret subterranean tunnels.
– Rejecting prescription defenses, affirmed all RTC awards.
Ruling of the Supreme Court
1. Factual Findings Binding
RTC’s and CA’s factual findings on the tunnel are conclusive in a certiorari review. NPC failed to rebut credible evidence (engineer testimony, maps, inspection).
2. Non-Applicability of RA 6395’s Five-Year Prescription
Section 3(i)’s prescriptive period covers actions for damages, not inverse condemnation suits for just compensation. Constitutional protection cannot be cut off by statutory prescription.
3. Nature of the Taking and Just Compensation
NPC’s surreptitious tunnel constituted a taking of the land’s beneficial use. Inverse condemnation principles apply: just compensation equals the landowner’s loss, measured by fair market value at the time the complaint was filed. NPC should have initiated formal expropriation or paid compensation upfront.
4. Modifications to Awards
– Interest at 12% per annum on the principal P113,532,500 from November 21, 1997 until full payme
Case Syllabus (G.R. No. 165828)
Facts/Antecedents
- Under Republic Act No. 6395, NPC undertook the Agus River Hydroelectric Power Plant Project in the 1970s, constructing underground tunnels to divert Agus River water to hydroelectric plants (Agus V, VI, VII).
- The Heirs of Macabangkit owned 221,573 sqm of land in Ditucalan, Iligan City, where, unbeknownst to them, NPC’s tunnels were built in 1979.
- In 1995 respondents discovered the tunnel’s presence when prospective buyers and developers (Arabic language center, housing project, Islamic bank) refused transactions due to safety and immovable‐easement concerns.
- Respondents alleged loss of agricultural, commercial, industrial, and residential value, noise, ground shaking, and unsafe living conditions; they and their workers relocated.
Procedural History
- November 21, 1997: Heirs filed suit in RTC Iligan City (Civil Case No. 4094) for damages, recovery of property, or in the alternative just compensation.
- NPC’s counterclaim: asserted a legal easement under Sec. 3(f) R.A. 6395, five-year prescriptive period since 1979, and prescription under Civil Code for continuous easement.
- July 23, 1998: RTC conducted ocular inspection, confirming tunnel construction, concrete post, uprooted trees, and dying coconuts.
- August 13, 1999: RTC ordered NPC to pay P113,532,500 (227,065 sqm × P500/sqm) plus interest, P30,000/month rentals (1979–1999), P200,000 moral damages, P200,000 exemplary damages, and 15% attorney’s fees; tunnel remained.
- August 18, 1999: Supplemental decision condemned respondents’ land in favor of NPC upon payment; writ of execution issued; NPC obtained TRO from CA on September 15, 1999.
- October 5, 2004: CA affirmed RTC decision in toto; NPC’s appeal to Supreme Court followed by certiorari relief.
Issues
- Whether factual and documentary evidence sufficiently established existence and location of the underground tunnel on respondents’ land.
- Whether respondents’ action for just compensation was barred by the five-year prescriptive period under Sec. 3(i) R.A. 6395 or by prescription under Civil Code Articles 620 and 646.
- Whether NPC’s surreptitious tunnel construction constituted a taking requiring just compensation.
- Whether awards of rentals, moral