CASE DIGEST: NPC VS. CA, G.R. No. 113194.

March 11, 1996

Doctrine of the case:
The general rule in determining “just compensation” in eminent domain is the value of the property as of
the date of the filing of the complaint. Normally, the time of the taking coincides with the filing of the
complaint for expropriation. Hence, many rulings of this Court have equated just compensation with the
value of the property as of the time of filing of the complaint consistent with the above provision of the
Rules. So too, where the institution of the action precedes entry into the property, the just compensation is
to be ascertained as of the time of the filing of the complaint.

This Court has defined the elements of “taking” as the main ingredient in the exercise of power of eminent
domain, in the following words: “A number of circumstances must be present in the ‘taking’ of property for
purposes of eminent domain: (1) the expropriator must enter a private property; (2) the entrance into
private property must be for more than a momentary period; (3) the entry into the property should be
under warrant or color of legal authority; (4) the property must be devoted to a public use or otherwise
informally appropriated or injuriously affected; and (5) the utilization of the property for public use must
be in such a way to oust the owner and deprive him of all beneficial enjoyment of the property.” (Italics
supplied)

In this case, the petitioner’s entrance in 1978 was without intent to expropriate or was not made under
warrant or color of legal authority, for it believed the property was public land covered by Proclamation
No. 1354. When the private respondent raised his claim of ownership sometime in 1979, the petitioner
flatly refused the claim for compensation, nakedly insisted that the property was public land and wrongly
justified its possession by alleging it had already paid “financial assistance” to Marawi City in exchange for
the rights over the property. Only in 1990, after more than a decade of beneficial use, did the petitioner
recognize private respondent’s ownership and negotiate for the voluntary purchase of the property. A Deed
of Sale with provisional payment and subject to negotiations for the correct price was then executed.
Clearly, this is not the intent nor the expropriation contemplated by law. This is a simple attempt at a
voluntary purchase and sale. Obviously, the petitioner neglected and/or refused to exercise the power of
eminent domain.

FACTS:

Petition for review on certiorari the decision of Court of Appeals affirming the trial court’s judgment on
the expropriation proceedings.

In 1978, National Power Corporation (NPC) took possession of a lot in Marawi City owned by Mangondatu,
under the mistaken belief that is was public property. Despite Mangondatu’s protests, NPC defended its
actions by claiming that it was already paying “financial assistance” to the city in exchange for the city’s
waiver of right over the property.

More than a decade later, NPC finally recognized that the lot was private property belonging to
Mangondatu and entered into a deed of sale with him. The fair market value of the property was
determined by Marawi City’s appraisal committee. A first resolution was issued by the NPC Board, fixing
the amount at P100/m2 for the 12,000m2 portion of the lot, plus 12% interest per annum from 1978.
When NPC’s regional counsel reclassified the lot to industrial, they issued two memoranda declaring the
value of the property at P300/m2. Despite the increase in the value of the property, NPC resolved to pay
Mangondatu P100/m2 without interest. Mangondatu demanded for the P300/m2 price, and during the
pendency of the final value, he demanded to be paid P100/m2.

In 1992, Mangondatu filed a civil case before the lower court to recover his property from NPC, and
demanded a monthly rent instead at P15,000/month from 1978. He also filed a TRO against the company.
It was only during this time that NPC filed a complaint for eminent domain against Mangondatu over the
subject property.

According to Mangondatu, NPC’s actions amounted to an “unauthorized taking and continued possession”
of his property since 1978, and that damages must be awarded to him for being deprived of its use for
more than a decade. He requested that just compensation for the land be reckoned at the time of the
filing of expropriation case. NPC opposed Mangondatu’s terms, stating that the assessed value of the
property should be computed from the time of the taking in 1978.

At the time of filing of complaint in 1992, the fair market value of the property was already at P1000/m 2.
The lower court decided to condemn the property in favor of NPC and declared the fair market value to
be computed from the time the complaint was filed, which led to a total of P21,995,000 as just
compensation.

The Court of Appeals affirmed the lower court’s decision.

ISSUES:

Whether the value of just compensation for the property was to be computed in 1992 when the complaint
was filed instead of in 1978 when the “taking of the property” was done. YES.

Whether the value for just compensation should be P1000/m2 rather than P40/m2. YES.

HELD:

1. The general rule in determining just compensation in eminent domain proceedings is found in Section
4, Rule 67 of the Revised Rules of Court, which stats that in an Order of Condemnation, the plaintiff has a
lawful right to take the property “…upon payment of just compensation to be determined as of the date
of the filing of the complaint.” Normally, the time of the taking coincides with the filing of the complaint
for expropriation.

The exception to this general rule is where the owner would be given undue incremental advantages from
the use of the expropriated property. Petitioner NPC has not established any proof that the increase of
P1000 was due to increments caused by petitioner’s use of the land. The present price can be attributed
to ordinary inflation and increase in land values from 1978 to 1992. Therefore, petitioner can not invoke
the exception to Section 4 of Rule 67.

The taking did not take place in 1978, because petitioner’s entrance in 1978 was not legal. It was without
intent to expropriate nor was it made under a “warrant or color of legal authority.” Petitioner believed that
the property was owned by the City of Marawi, and when private respondent claimed ownership of the
land in 1979, petitioner flatly refused the claim and thought that the city had already conferred upon it
rights over the property. After a decade of beneficial use was only when petitioner recognized private
respondent as the private owner and negotiated for a voluntary purchase of the property.

The acts of petitioner do not constitute the intent of expropriation nor the exercise of eminent domain as
contemplated by law. It was only in 1992 when private respondent filed a civil case against petitioner that
it decided to file its own complaint for eminent domain.

2. The value of just compensation should be P1000/m2. The Court finds no reason to disturb the factual
findings of the appointed commissioners who determined the price of the property. These people are
considered experts in their field, and were not shown to have abused their authority in evaluating the
evidence.

Petition DISMISSED. Decision of respondent court is AFFIRMED. 12% interest per annum is reduced to the
legal rate of 6% per annum.