National Power Corporation vs. Heirs of Macabangkit Sangkay

The constitutional right to just compensation for private property taken for public use cannot be barred by statutory prescription periods; Section 3(i) of Republic Act No. 6395's five-year limitation applies only to actions for damages, not to inverse condemnation suits seeking just compensation. Furthermore, the construction of an underground tunnel that deprives the owner of the normal beneficial use of the land constitutes a compensable taking of the entire property, not merely an easement, requiring payment of full compensation based on the value at the time of the filing of the complaint when the entry was made without formal expropriation proceedings.

In the 1970s, pursuant to its mandate under Republic Act No. 6395, the National Power Corporation (NPC) undertook the Agus River Hydroelectric Power Plant Project in Mindanao to generate electricity. The project included the construction of several underground tunnels to divert water flow from the Agus River to hydroelectric plants. The respondents are the heirs of Macabangkit Sangkay, owners of a parcel of land situated in Ditucalan, Iligan City, with an area of 221,573 square meters.

• The Heirs of Macabangkit are the owners of a 221,573-square-meter parcel of land located in Ditucalan, Iligan City.
• In the 1970s, NPC constructed an underground tunnel beneath the Heirs' land as part of the Agus River Hydroelectric Power Plant Project to divert water flow to Agus V, Agus VI, and Agus VII plants, completing the construction in 1979.
• NPC concealed the construction from the Heirs and continuously denied the tunnel's existence; the Heirs only discovered it in 1995 when potential buyers rejected the land due to safety concerns for a proposed Arabic Language Training Center and Muslims Skills Development Center.
• The presence of the tunnel caused the withdrawal of a housing project development by Global Asia Management and Resource Corporation and the refusal of Al-Amanah Islamic Investment Bank of the Philippines to accept the land as collateral.
• The tunnel produced loud sounds of rushing water and caused constant ground shaking, rendering the land unsafe for habitation and forcing the Heirs and their workers to relocate.
• The tunnel deprived the Heirs of the agricultural, commercial, industrial, and residential value of the land, and restricted their right to excavate or construct motorized deep wells.
• An ocular inspection conducted by the RTC on July 23, 1998, confirmed the existence of the underground tunnel, noting concrete posts indicating the tunnel's middle point and damage to fruit-bearing trees.
• Evidence presented included a topographic survey map, a sketch map prepared by Engr. Pete Sacedon (a former NPC principal engineer), and testimonies establishing that the tunnel traversed the entire length of the property with an inlet and outlet channel.

• The witnesses presented by the Heirs lacked personal knowledge regarding the construction and existence of the tunnel and were therefore not entitled to credence.
• The topographic survey map and relocation maps were self-serving and insufficient to establish the presence and location of the tunnel.
• Section 3(i) of Republic Act No. 6395 applies, which provides a five-year prescriptive period from the date of construction (1979) within which affected landowners must bring claims against NPC.
• Alternatively, under Article 620 of the Civil Code, the action had prescribed after ten years because the tunnel constituted a continuous and apparent legal easement under Article 634 of the Civil Code.
• The underground tunnel constituted merely a legal easement under Section 3(f) of Republic Act No. 6395, not a taking requiring full compensation for the entire land.

• The existence of the underground tunnel traversing their land was established by the testimonies of NPC's own witness Gregorio Enterone and the Heirs' witness Engr. Pete Sacedon, supported by the topographic survey map, sketch map, and the RTC's ocular inspection report.
• NPC acted in bad faith by concealing the construction of the tunnel in 1979 and continuously denying its existence.
• Section 3(i) of Republic Act No. 6395 is inapplicable because it governs surface facilities that can be easily discovered, not subterranean tunnels surreptitiously constructed beneath the surface.
• The action to recover just compensation is based on the Constitution and does not prescribe, as it is an inverse condemnation suit distinct from an action for damages.
• The tunnel constituted a full taking of the land because it deprived the owners of the normal beneficial use of the property, preventing excavation, construction of deep wells, and other developments, thereby warranting payment of full just compensation rather than a mere easement fee.

• Procedural: Whether the Supreme Court should entertain questions of fact in a petition for review on certiorari under Rule 45 when the Court of Appeals affirmed the factual findings of the Regional Trial Court.
• Substantive Issues:
  1. Whether there was substantial evidence to prove that an underground tunnel constructed by NPC traversed the Heirs' land.
  2. Whether the Heirs' right to claim just compensation had prescribed under Section 3(i) of Republic Act No. 6395 or under Articles 620 and 634 of the Civil Code.
  3. Whether the construction of the underground tunnel constituted a compensable taking of the entire land or merely an easement.
  4. Whether the reckoning date for determining just compensation should be the time of taking (1979) or the time of filing the complaint (1997).

• Procedural: The Court held that factual findings of the trial court, when affirmed by the Court of Appeals, are generally binding on the Supreme Court in a petition for review on certiorari limited to questions of law. However, the Court proceeded to discuss the merits assuming arguendo that it could review the factual findings, finding that substantial evidence supported the existence of the tunnel.
• Substantive:
  1. Existence of the Tunnel: The Court affirmed the existence of the underground tunnel based on substantial evidence, including the topographic survey map, sketch map, ocular inspection report, and the credible testimony of Engr. Pete Sacedon, a former NPC principal engineer who personally supervised the tunnel layout and experienced the vibrations caused by the rushing currents.
  2. Prescription: The five-year prescriptive period under Section 3(i) of Republic Act No. 6395 applies only to actions for damages, not to actions to recover just compensation. An action for just compensation (inverse condemnation) is based on the constitutional prohibition against taking property without just compensation and cannot be barred by statutory prescription. Article 620 of the Civil Code does not apply to inverse condemnation proceedings.
  3. Nature of the Taking: The construction of the tunnel constituted a compensable taking of the entire land, not merely an easement. Compensable taking includes destruction, restriction, diminution, or interruption of the rights of ownership that lessens or destroys the value of the property. The tunnel deprived the owners of the normal beneficial use of the land, preventing excavation, construction of deep wells, and other developments, and rendering the property unsafe and unmarketable.
  4. Just Compensation: The value should be reckoned at the time of the filing of the complaint (November 21, 1997), not at the time of taking (1979), to prevent NPC from unjustly profiting from its deliberate denial of due process to the owners. The Court affirmed the valuation of P500.00 per square meter (totaling P113,532,500.00) based on the testimony of the City Assessor.
  5. Ancillary Awards: The awards for monthly rentals (P30,000.00), moral damages (P200,000.00), exemplary damages (P200,000.00), and attorney's fees (15%) were deleted for insufficiency of factual and legal bases. In lieu of rentals, legal interest of 12% per annum was imposed on the principal amount from the date of filing the complaint until full payment.
  6. Attorney's Fees on Quantum Meruit: Atty. Macarupung Dibaratun was awarded attorney's fees fixed at 10% of the principal award (P113,532,500.00) for his substantial legal work from the trial until the final resolution. Atty. Manuel D. Ballelos was awarded only P5,000.00 for minimal work performed, recoverable only from the specific heirs who engaged him.

• Inverse Condemnation — An action against a governmental defendant to recover the value of property which has been taken in fact by the governmental defendant, even though no formal exercise of the power of eminent domain has been attempted. Distinguished from actions for damages, inverse condemnation is based on the constitutional prohibition against taking property without just compensation and does not prescribe.
• Compensable Taking — The taking of private property for public use need not be an actual physical taking or appropriation of title. It includes destruction, restriction, diminution, or interruption of the rights of ownership or of the common and necessary use and enjoyment of the property in a lawful manner, lessening or destroying its value. It is not necessary that the owner be wholly deprived of the use of his property.
• Quantum Meruit — Literally meaning "as much as he deserves," this principle is used as the basis for determining an attorney's professional fees in the absence of an express written contract for contingent fees. It prevents unjust enrichment of either the client or the attorney and requires consideration of factors such as time spent, novelty of questions, importance of subject matter, skill demanded, and customary charges.
• Reckoning Date for Just Compensation — When property is taken by the government without formal expropriation proceedings and without the intent to expropriate, just compensation is determined based on the value of the property at the time of the filing of the complaint for inverse condemnation, not at the time of taking, to prevent the expropriator from benefiting from its own neglect or denial of due process.

• "Private property shall not be taken for public use without just compensation." — Section 9, Article III, 1987 Constitution
• "It would very well be contrary to the clear language of the Constitution to bar the recovery of just compensation for private property taken for a public use solely on the basis of statutory prescription."
• "The measure is not the taker's gain, but the owner's loss."
• "Just compensation is the full and fair equivalent of the property taken from its owner by the expropriator."
• "Compensable taking includes destruction, restriction, diminution, or interruption of the rights of ownership or of the common and necessary use and enjoyment of the property in a lawful manner, lessening or destroying its value."
• "It is neither necessary that the owner be wholly deprived of the use of his property, nor material whether the property is removed from the possession of the owner, or in any respect changes hands."

• National Power Corporation v. Ibrahim — Controlling precedent holding that NPC is liable to pay full compensation for land traversed by underground tunnels, not merely an easement fee, when the tunnels deprive owners of normal beneficial use.
• National Power Corporation v. Court of Appeals — Authority for the rule that when entry is made without intent to expropriate or without color of legal authority, the basis for fixing just compensation is the value at the time of filing the complaint, not the time of taking.
• Manila International Airport Authority v. Rodriguez — Cited for the principle that awards for back rentals are unwarranted when interest is imposed on the just compensation.
• Traders Royal Bank Employees Union-Independent v. NLRC — Distinguished between ordinary attorney's fees (compensation paid by client to lawyer) and extraordinary attorney's fees (indemnity for damages ordered paid by losing party to winning party).
• National Power Corporation v. Manubay Agro-Industrial Development Corporation — Reiterated that just compensation must be neither more nor less than the monetary equivalent of the property, and that easements depriving owners of normal use warrant full compensation.

• Section 9, Article III, 1987 Constitution — Mandates payment of just compensation when private property is taken for public use; the constitutional basis for inverse condemnation.
• Section 3(i), Republic Act No. 6395 — Grants NPC the power to construct works across private property and limits actions for damages to five years from establishment of facilities; construed by the Court as inapplicable to actions for just compensation.
• Section 3(h), Republic Act No. 6395 — Requires NPC to pay the fair market value of property at the time of taking when acquired by purchase.
• Section 3(f), Republic Act No. 6395 — Cited by NPC regarding legal easements; held inapplicable as the tunnel constituted a taking, not a mere easement.
• Article 19, Civil Code — General provisions on human relations; basis for actions for damages as distinguished from inverse condemnation.
• Article 2208, Civil Code — Enumerates instances where attorney's fees may be recovered as damages.
• Article 620, Civil Code — Provides for prescription of actions for removal of easements; held inapplicable to inverse condemnation suits.
• Article 634, Civil Code — Defines continuous and apparent easements; cited by NPC regarding prescription.
• Article 635, Civil Code — Provides that easements for public use are governed by special laws; cited to argue application of RA 6395.
• Rule 20.01, Code of Professional Responsibility — Lists guidelines for determining proper amount of attorney's fees on quantum meruit basis.