NATIONAL POWER CORPORATION (NPC) VS HEIRS OF MACABANGKIT SANGKAY

656 SCRA 60 (AUGUST 24, 2011)

Just compensation is the full and fair equivalent of the property taken from its owner by the
expropriator. The measure is not the taker’s gain, but the owner’s loss.

The word just is used to intensify the meaning of the word compensation in order to convey the idea
that the equivalent to be rendered for the property to be taken shall be real, substantial, full, and
ample.

Action to recover just compensation from the

Action for damages
State (inverse condemnation)
has the objective to recover the value of property seeks to vindicate a legal wrong through damages,
taken in fact by the governmental defendant, even which may be actual, moral, nominal, temperate,
though no formal exercise of the power of liquidated, or exemplary. When a right is exercised
eminent domain has been attempted by the in a manner not conformable with the norms
taking agency enshrined in Article 19 and like provisions on
human relations in the Civil Code, and the exercise
results to the damage of another, a legal wrong is
committed and the wrongdoer is held responsible.
The action to recover just compensation is based while the action for damages is predicated on
on the Constitution statutory enactments
arises from the exercise by the State of its power emanates from the transgression of a right
of eminent domain against private property for
public use

FACTS

- Pursuant to its legal mandate under RA 6395 (An Act Revising the Charter of the National Power
Corporation), NPC undertook the Agus River Hydroelectric Power Plant Project in the 1970s to
generate electricity for Mindanao
o The project included the construction of several underground tunnels to be used in
diverting the water flow from the Agus River to the hydroelectric plants.
- On November 21, 1997, the respondents, namely: Cebu, Bangowa-an, Sayana, Nasser, Manta,
Edgar, Putri, Mongkoy and Amir, all surnamed Macabangkit (Heirs of Macabangkit), as the owners
of land in Iligan City, sued NPC in the RTC for the recovery of damages and of the property, with
the alternative prayer for the payment of just compensation

Respondents’ arguments
(among others)
- that they had belatedly discovered that one of the underground tunnels of NPC that diverted the
water flow of the Agus River for the operation of the Hydroelectric Project in Agus V, Agus VI and
Agus VII traversed their land;
- that the underground tunnel had been constructed without their knowledge and consent;
- that the presence of the tunnel deprived them of the agricultural, commercial, industrial and
residential value of their land
Petitioner’s contentions

- NPC countered that the Heirs of Macabangkit had no right to compensation under section 3(f) of
Republic Act No. 6395, under which a mere legal easement on their land was established;
- that their cause of action, should they be entitled to compensation, already prescribed (in five
years) under section 3(i) of RA 6395 due to the tunnel having been constructed in 1979
- and that even if RA 6395 should be inapplicable, the action of the Heirs of Macabangkit had
already prescribed due to the underground tunnel being susceptible to acquisitive prescription
after the lapse of 10 years pursuant to Article 620 of the Civil Code due to its being a continuous
and apparent legal easement under Article 634 of the Civil Code.

The RTC ruled in favor of the Heirs of Macabangkit Sangkay and CA affirmed the decision of the RTC

ISSUE

Whether or not the respondents are entitled to just compensation from the petitioner

RULING

Five-year prescriptive period under Section 3(i)

of RA 6395 does not apply to claims
for just compensation

- The prescriptive period provided under Section 3(i) of RA 6395 is applicable only to an action for
damages, and does not extend to an action to recover just compensation like this case.
o NPC cannot thereby bar the right of the Heirs of Macabangkit to recover just
compensation for their land
- Due to the need to construct the underground tunnel, NPC should have first moved to acquire
the land from the Heirs of Macabangkit either by voluntary tender to purchase or through formal
expropriation proceedings.
o In either case, NPC would have been liable to pay to the owners the fair market value of
the land, for Section 3(h) of Republic Act No. 6395 expressly requires NPC to pay the fair
market value of such property
- As the Court held in the case of National Power Corporation v. Ibrahim:

xxx
The manner in which the easement was created by petitioner, however, violates the due
process rights of respondents as it was without notice and indemnity to them and did not go
through proper expropriation proceedings.
xxx
Significantly, though, landowners cannot be deprived of their right over their land until
expropriation proceedings are instituted in court. The court must then see to it that the taking
is for public use, that there is payment of just compensation and that there is due process of
law.
NPC’s construction of the tunnel
constituted taking of the land,
and entitled owners to
just compensation

- there was a full taking on the part of NPC, notwithstanding that the owners were not completely
and actually dispossessed
- It is settled that the taking of private property for public use, to be compensable, need not be an
actual physical taking or appropriation.
o the expropriator’s action may be short of acquisition of title, physical possession, or
occupancy but may still amount to a taking.
o 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.
o 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.
- As a result, NPC should pay just compensation for the entire land.

Reckoning value for

just compensation
- the reckoning value is the value at the time of the filing of the complaint
o it is unjust to reckon the compensation on the market value prevailing at the time either
when NPC entered or when it completed the tunnel
 it would compound the gross unfairness already caused to the owners by NPC’s
entering without the intention of formally expropriating the land, and without
the prior knowledge and consent of the Heirs of Macabangkit
- NPC’s entry denied elementary due process of law to the owners since then until the owners
commenced the inverse condemnation proceedings.
o The Court is more concerned with the necessity to prevent NPC from unjustly profiting
from its deliberate acts of denying due process of law to the owners.
- As held in the case of National Power Corporation v. Court of Appeals:

xxx an underground tunnel by NPC without the prior consent and knowledge of the
owners, xxx we held that the basis in fixing just compensation when the initiation of the
action preceded the entry into the property was the time of the filing of the complaint,
not the time of taking, we pointed out that there was no taking when the entry by NPC
was made “without intent to expropriate or was not made under warrant or color of legal
authority.”

Section 3 (i) of Republic Act No. 6395, the cited law, relevantly provides:

Section 3. Powers and General Functions of the Corporation.—The powers, functions, rights and activities of the
Corporation shall be the following:

xxx
(f) To take water from any public stream, river, creek, lake, spring or waterfall in the Philippines, for the purposes
specified in this Act; to intercept and divert the flow of waters from lands of riparian owners and from persons
owning or interested in waters which are or may be necessary for said purposes, upon payment of just
compensation therefor; to alter, straighten, obstruct or increase the flow of water in streams or water channels
intersecting or connecting therewith or contiguous to its works or any part thereof: Provided, That just
compensation shall be paid to any person or persons whose property is, directly or indirectly, adversely
affected or damaged thereby;
xxx
(h) To acquire, promote, hold, transfer, sell, lease, rent, mortgage, encumber and otherwise dispose of property
incident to, or necessary, convenient or proper to carry out the purposes for which the Corporation was
created: Provided, That in case a right of way is necessary for its transmission lines, easement of right of way shall
only be sought: Provided, however, That in case the property itself shall be acquired by purchase, the cost thereof
shall be the fair market value at the time of the taking of such property;

(i) To construct works across, or otherwise, any stream, watercourse, canal, ditch, flume, street, avenue, highway
or railway of private and public ownership, as the location of said works may require: Provided, That said works
be constructed in such a manner as not to endanger life or property; And provided, further, That the stream,
watercourse, canal ditch, flume, street, avenue, highway or railway so crossed or intersected be restored as near
as possible to their former state, or in a manner not to impair unnecessarily their usefulness. Every person or
entity whose right of way or property is lawfully crossed or intersected by said works shall not obstruct any such
crossings or intersection and shall grant the Board or its representative, the proper authority for the execution of
such work. The Corporation is hereby given the right of way to locate, construct and maintain such works over
and throughout the lands owned by the Republic of the Philippines or any of its branches and political
subdivisions. The Corporation or its representative may also enter upon private property in the lawful
performance or prosecution of its business and purposes, including the construction of the transmission lines
thereon; Provided, that the owner of such property shall be indemnified for any actual damage caused thereby;
Provided, further, That said action for damages is filed within five years after the rights of way, transmission
lines, substations, plants or other facilities shall have been established; Provided, finally, That after said period,
no suit shall be brought to question the said rights of way, transmission lines, substations, plants or other facilities;