G.R. No. 165828 ; August 24, 2011
NATIONAL POWER CORPORATION, Petitioner, vs. HEIRS OF MACABANGKIT SANGKAY, namely: CEBU, BATOWA-AN, SAYANA, NASSER, MANTA, EDGAR, PUTRI, MONGKOY*, and AMIR, all surnamed MACABANGKIT, Respondents.

FACTS

Pursuant to its mandate under Republic Act No. 6395 , the National Power Corporation (NPC) undertook the Agus River Hydroelectric Power Plant Project in the 1970s, which included the construction of underground tunnels to divert water flow. In 1997, the Heirs of Macabangkit, owners of a 221,573-square-meter land in Ditucalan, Iligan City, sued NPC for recovery of damages and property, with an alternative prayer for just compensation. They alleged they belatedly discovered in 1995 that one of NPC’s underground tunnels traversed their land without their knowledge and consent. This discovery occurred after potential buyers and a bank rejected the land due to the danger posed by the tunnel. The presence of the tunnel allegedly deprived the land of its value and made it unsafe for habitation due to loud sounds and ground shaking. NPC countered that the heirs had no right to compensation under Section 3(f) of R.A. No. 6395 , which it claimed established a mere legal easement, and that any cause of action had prescribed since the tunnel was constructed in 1979. An ocular inspection in 1998 confirmed the tunnel’s presence, uprooted trees, and dead coconuts. The Regional Trial Court (RTC) ruled in favor of the heirs, ordering NPC to pay just compensation at ₱500.00 per square meter for 227,065 square meters, plus rentals, moral and exemplary damages, attorney’s fees, and costs. The RTC later issued a supplemental decision condemning the land in favor of NPC upon payment. NPC appealed to the Court of Appeals (CA), which affirmed the RTC’s decision. NPC then elevated the case to the Supreme Court via certiorari.

ISSUE

The primary issue is whether the Heirs of Macabangkit are entitled to just compensation for the taking of their property by NPC through the construction of an underground tunnel without their knowledge and consent.

RULING

The Supreme Court DENIED the petition and AFFIRMED the decision of the Court of Appeals with MODIFICATIONS. The Court held that the construction of the underground tunnel constituted a taking of private property for public use, entitling the owners to just compensation under Section 9, Article III of the 1987 Constitution . The Court found that the tunnel’s construction deprived the heirs of the beneficial use of their land, effectively appropriating it for NPC’s power generation project. The defense of prescription was rejected because the taking was continuous, and the cause of action accrued only upon the heirs’ discovery of the tunnel in 1995. The Court also ruled that Section 3(i) of R.A. No. 6395 , which NPC invoked to claim a mere easement, was inapplicable as it did not cover underground tunnels constructed surreptitiously. However, the awards for rentals, moral damages, exemplary damages, and attorney’s fees were deleted for lack of basis, as just compensation should be the sole relief for a valid taking for public use. The compensation was fixed at ₱500.00 per square meter based on the evidence presented, and the land was condemned in favor of NPC upon payment.