Case Summary (G.R. No. 168732)
Key Dates
• 1978 – NAPOCOR’s covert construction of tunnels under respondents’ land.
• July–November 1992 – Discovery and confirmation of tunnels by respondents and NAPOCOR.
• November 23, 1994 – Complaint filed for recovery of possession and damages.
• August 7, 1996 – RTC decision ordering compensation, rentals, moral and exemplary damages.
• September 8, 1997 – RTC modified judgment on co-heirs’ petition for relief.
• June 8, 2005 – Court of Appeals reinstates original RTC decision with modifications.
• June 29, 2007 – Supreme Court denies NAPOCOR’s petition for review.
Applicable Law
• 1987 Philippine Constitution, Art. III, Sec. 9 – private property shall not be taken for public use without just compensation.
• Civil Code, Art. 437 – land ownership extends to surface and everything beneath, subject to servitudes and expropriation law.
• Rule 67, Sec. 4, Rules of Court – determination of just compensation as of date of taking or filing of complaint.
Factual and Procedural Background
Respondents alleged that NAPOCOR, without consent or expropriation proceedings, appropriated the subsoil of their lots and deprived them of full use and enjoyment. They were denied a permit for a deep well over Lot 3 due to the tunnels’ presence. The Regional Trial Court (RTC) held that NAPOCOR’s tunnels constituted a taking for public use without due process, and awarded P48,005,000.00 as just compensation, back rentals, moral damages, attorney’s fees, and costs. Execution of judgment pending appeal ensued. Co-heirs later secured relief from judgment, resulting in a modified award. Both sides appealed to the Court of Appeals (CA), which in 2005 reinstated the original RTC decision, deleting moral damages and adjusting rentals and fees.
Ownership of Subterranean Rights
Under Civil Code Article 437 and settled jurisprudence, ownership of land includes the substratum. NAPOCOR’s argument that respondents’ subsoil rights extend only to necessary economic utility was rejected. The presence of tunnels directly prevented respondents from exercising subsurface rights, e.g., constructing a deep well, and materially impaired their property’s value and enjoyment.
Nature of Taking and Due Process
A valid taking for public use must occur under color of legal authority, with notice and just compensation. NAPOCOR’s secret excavation without expropriation proceedings or notice violated due process. The clandestine tunnels amounted to an unauthorized easement with the practical effect of ousting the landowners, triggering entitlement to full compensation under the 1987 Constitution.
Entitlement to Just Compensation
Respondents were deprived of beneficial use and suffered diminution in property value. Following precedent, when expropriation is neither feasible nor subject to timely formal proceedings, owners may demand compensation for long-continued unauthorized occupation devoted to public use. NAPOCOR’s failure to institute eminent domain and its unilateral appropriation yielded liability for just compensation equivalent to the full value of the land.
Basis and Date of Valuation
Just compensation is measured by fair market value at the time of taking. Though NAPOCOR
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Facts
- In November 1994 Lucman G. Ibrahim, on behalf of himself and thirteen co-heirs, filed before the RTC of Lanao del Sur an action for recovery of possession and damages over three lots totaling 70,000 sq m (Lots 1, 2, 3 of Survey Plan FP (VII-5) 2278).
- NAPOCOR allegedly, in 1978 and without respondents’ knowledge or consent, entered the subterranean portion of those lots and built underground tunnels.
- The tunnels were discovered by respondents in July 1992 and confirmed by NAPOCOR in a November 13, 1992 memorandum of its Acting Assistant Project Manager.
- Respondents allege the tunnels siphoned water from Lake Lanao for NAPOCOR’s hydroelectric projects; endangered lives and property in a tectonically active area; prevented installation of a motorized well in Lot 3; and caused anxiety, sleeplessness, justifying claims for moral and exemplary damages.
- On October 7, 1992 respondents demanded NAPOCOR vacate the sub-terrain area and pay damages; NAPOCOR refused and filed counterclaims in RTC denying ownership and asserting government easement.
RTC Decision (August 7, 1996)
- Denied respondents’ prayer to dismantle the tunnels.
- Ordered NAPOCOR to pay fair market value of 48,005 sq m at ₱1,000/sq m (₱48,005,000) less ₱21,995,000 already paid, with 6% interest from filing.
- Ordered payment of monthly rental at ₱0.68/sq m from 1978 (total ₱7,050,974.40).
- Awarded moral damages of ₱200,000 and attorney’s fees and costs of ₱200,000.
Execution Proceedings
- Respondents moved for execution pending appeal (Aug 15, 1996).
- NAPOCOR filed and withdrew Notice of Appeal to pursue reconsideration; RTC granted execution pending appeal and denied reconsideration (Aug 28, 1996).
- NAPOCOR’s second Notice of Appeal (Sept 9, 1996) was denied as late; execution proceeded and NAPOCOR funds were garnished.
Petition for Relief from Judgment (Oct 4, 1996)
- Eight co-heirs argued they believed the RTC