German Management and services Inc.

FERNAN, C.J.:

Spouses Cynthia Cuyegkeng Jose and Manuel Rene Jose, residents of Pennsylvania,
Philadelphia, USA are the owners of a parcel of land situated in Sitio Inarawan, San Isidro,
Antipolo, Rizal, with an area of 232,942 square meters and covered by TCT No. 50023 of the
Register of Deeds of the province of Rizal issued on September 11, 1980 which canceled TCT
No. 56762/ T-560. The land was originally registered on August 5, 1948 in the Office of the
Register of Deeds of Rizal as OCT No. 19, pursuant to a Homestead Patent granted by the
President of the Philippines on July 27, 1948, under Act No. 141.

On February 26, 1982, the spouses Jose executed a special power of attorney authorizing
petitioner German Management Services to develop their property covered by TCT No. 50023
into a residential subdivision. Consequently, petitioner on February 9,1983 obtained
Development Permit No. 00424 from the Human Settlements Regulatory Commission for said
development. Finding that part of the property was occupied by private respondents and twenty
other persons, petitioner advised the occupants to vacate the premises but the latter refused.
Nevertheless, petitioner proceeded with the development of the subject property which included
the portions occupied and cultivated by private respondents.

Private respondents filed an action for forcible entry against petitioner before the Municipal Trial
Court of Antipolo, Rizal, alleging that they are mountainside farmers of Sitio Inarawan, San
Isidro, Antipolo, Rizal and members of the Concerned Citizens of Farmer's Association; that
they have occupied and tilled their farmholdings some twelve to fifteen years prior to the
promulgation of P.D. No. 27; that during the first week of August 1983, petitioner, under a permit
from the Office of the Provincial Governor of Rizal, was allowed to improve the Barangay Road
at Sitio Inarawan, San Isidro, Antipolo, Rizal at its expense, subject to the condition that it shag
secure the needed right of way from the owners of the lot to be affected; that on August 15,
1983 and thereafter, petitioner deprived private respondents of their property without due
process of law by: (1) forcibly removing and destroying the barbed wire fence enclosing their
farmholdings without notice; (2) bulldozing the rice, corn fruit bearing trees and other crops of
private respondents by means of force, violence and intimidation, in violation of P.D. 1038 and
(3) trespassing, coercing and threatening to harass, remove and eject private respondents from
their respective farmholdings in violation of P.D. Nos. 316, 583, 815, and 1028. 1

On January 7,1985, the Municipal Trial Court dismissed private respondents' complaint for
forcible entry. 2 On appeal, the Regional Trial Court of Antipolo, Rizal, Branch LXXI sustained
the dismissal by the Municipal Trial Court. 3
Private respondents then filed a petition for review with the Court of Appeals. On July 24,1986,
said court gave due course to their petition and reversed the decisions of the Municipal Trial
Court and the Regional Trial Court. 4

The Appellate Court held that since private respondents were in actual possession of the
property at the time they were forcibly ejected by petitioner, private respondents have a right to
commence an action for forcible entry regardless of the legality or illegality of possession. 5
Petitioner moved to reconsider but the same was denied by the Appellate Court in its resolution
dated September 26, 1986. 6

Hence, this recourse.

The issue in this case is whether or not the Court of Appeals denied due process to petitioner
when it reversed the decision of the court a quo without giving petitioner the opportunity to file
its answer and whether or not private respondents are entitled to file a forcible entry case
against petitioner. 7

We affirm. The Court of Appeals need not require petitioner to file an answer for due process to
exist. The comment filed by petitioner on February 26, 1986 has sufficiently addressed the
issues presented in the petition for review filed by private respondents before the Court of
Appeals. Having heard both parties, the Appellate Court need not await or require any other
additional pleading. Moreover, the fact that petitioner was heard by the Court of Appeals on its
motion for reconsideration negates any violation of due process.

Notwithstanding petitioner's claim that it was duly authorized by the owners to develop the
subject property, private respondents, as actual possessors, can commence a forcible entry
case against petitioner because ownership is not in issue. Forcible entry is merely a quieting
process and never determines the actual title to an estate. Title is not involved. 8

In the case at bar, it is undisputed that at the time petitioner entered the property, private
respondents were already in possession thereof . There is no evidence that the spouses Jose
were ever in possession of the subject property. On the contrary, private respondents'
peaceable possession was manifested by the fact that they even planted rice, corn and fruit
bearing trees twelve to fifteen years prior to petitioner's act of destroying their crops.

Although admittedly petitioner may validly claim ownership based on the muniments of title it
presented, such evidence does not responsively address the issue of prior actual possession
raised in a forcible entry case. It must be stated that regardless of the actual condition of the title
to the property, the party in peaceable quiet possession shall not be turned out by a strong
hand, violence or terror. 9 Thus, a party who can prove prior possession can recover such
possession even against the owner himself. Whatever may be the character of his prior
possession, if he has in his favor priority in time, he has the security that entitles him to remain
on the property until he is lawfully ejected by a person having a better right by accion publiciana
or accion reivindicatoria. 10

Both the Municipal Trial Court and the Regional Trial Court have rationalized petitioner's drastic
action of bulldozing and destroying the crops of private respondents on the basis of the doctrine
of self-help enunciated in Article 429 of the New Civil Code. 11 Such justification is unavailing
because the doctrine of self-help can only be exercised at the time of actual or threatened
dispossession which is absent in the case at bar. When possession has already been lost, the
owner must resort to judicial process for the recovery of property. This is clear from Article 536
of the Civil Code which states, "In no case may possession be acquired through force or
intimidation as long as there is a possessor who objects thereto. He who believes that he has
an action or right to deprive another of the holding of a thing, must invoke the aid of the
competent court, if the holder should refuse to deliver the thing."

WHEREFORE, the Court resolved to DENY the instant petition. The decision of the Court of
Appeals dated July 24,1986 is hereby AFFIRMED. Costs against petitioner.

SO ORDERED.

GERMAN MANAGEMENT & SERVICES, INC. V COURT OF APPEALS

FACTS:
Spouses Jose are residents of Pennsylvania, Philadelphia, USA are owners of the land situated
in sitio Inarawan, San Isidro, Antipolo, Rizal (the land being disputed in the case at bar.) The
spouses Jose executed a special power of attorney authorizing petitioner German Management
Services to develop their property. They have already acquired the proper permits to do so but
they discovered that the land was occupied by the respondent with 20 other farmers (members
of the Concerned of Farmer’s Association.) These farmers have occupied the land for the last
twelve to fifteen years prior to the issuance of the permits and they already have their crops all
over the property. In short, they are in actual possession of the land.

Petitioners tried to forcibly drive the farmers away and; demolish and bulldoze their crops and
property. The respondents filed in CFI because they were deprived of their property without due
process of law by trespassing, demolishing and bulldozing their crops and property situated in
the land. CFI and RTC denied it but CA reversed the decision. Petitioners tried to appeal the
decision in CA but were denied thus this appeal
ISSUE:
Whether or not private respondents are entitled to file a forcible entry case against petitioner?
RULING:
YES, they are entitled to file a forcible entry case! Since private respondents were in actual
possession of the property at the time they were forcibly ejected by petitioner, private
respondents have a right to commence an action for forcible entry regardless of the legality or
illegality of possession.

Private respondents, as actual possessors, can commence a forcible entry case against
petitioner because ownership is not in issue. Forcible entry is merely a quieting process and
never determines the actual title to an estate. Title is not involved, only actual possession. It is
undisputed that private respondents were in possession of the property and not the petitioners
nor the spouses Jose. Although the petitioners have a valid claim over ownership this does not
in any way justify their act of ―forcible entry.‖ It must be stated that regardless of the actual
condition of the title to the property the party in peaceable quiet possession shall not be turned
out by a strong hand, violence or terror. Thus, a party who can prove prior possession can
recover such possession even against the owner himself. Whatever may be the character of his
possession, if he has in his favor priority in time, he has the security that entitles him to remain
on the property until he is lawfully ejected by a person having a better right by accion publiciana
or accion reivindicatoria. The doctrine of self help, which the petitioners were using to justify
their actions, are not applicable in the case because it can only be exercised at the time of
actual or threatened dispossession which is absent in the case at bar (in fact they are the ones
who are threatening to remove the respondents with the use of force.) Article 536 basically tells
us that the owner or a person who has a better right over the land must resort to judicial means
to recover the property from another person who possesses the land.

When possession has already been lost, the owner must resort to judicial process for the
recovery of property. As clearly stated in Article 536- ―In no case may possession be acquired
through force or intimidation as long as there is a possessor who objects thereto. He who
believes that he has an action or right to deprive another of the holding of a thing must invoke
the aid of the competent court, if holder should refuse to deliver the thing.
Yes, the petitioner forcibly entered the property of the PR. In forcible entry, ownership is not an
issue. It may be a fact that the German Management was duly authorised by the owners to
develop the subject property, the actual possessors of the land, the Prs, can commence a
forcible entry case against the petitioner. Forcible entry is merely a quieting process and never
determines the actual title to an estate.

Doctrine: The owner of a piece of land has rights not only to its surface but also to everything
underneath and the airspace above it up to a reasonable height. The rights over the land are
indivisible and the land itself cannot be half agricultural and half mineral. The classification must
be categorical; the land must be either completely mineral or completely agricultural.

Facts: These cases arose from the application for registration of a parcel of land filed on
February 11, 1965, by Jose de la Rosa on his own behalf and on behalf of his three children,
Victoria, Benjamin and Eduardo. The land, situated in Tuding, Itogon, Benguet Province, was
divided into 9 lots and covered by plan Psu-225009. According to the application, Lots 1-5 were
sold to Jose de la Rosa and Lots 6-9 to his children by Mamaya Balbalio and Jaime Alberto,
respectively, in 1964.
The application was separately opposed by Benguet Consolidated, Inc. as to Lots 1-5, Atok Big
Wedge Corporation, as to Portions of Lots 1-5 and all of Lots 6-9, and by the Republic of the
Philippines, through the Bureau of Forestry Development, as to lots 1-9.

In support of the application, both Balbalio and Alberto testified that they had acquired the
subject land by virtue of prescription Balbalio claimed to have received Lots 1-5 from her father
shortly after the Liberation.

Benguet opposed on the ground that the June Bug mineral claim covering Lots 1-5 was sold to
it on September 22, 1934, by the successors-in-interest of James Kelly, who located the claim in
September 1909 and recorded it on October 14, 1909. From the date of its purchase, Benguet
had been in actual, continuous and exclusive possession of the land in concept of owner, as
evidenced by its construction of adits, its affidavits of annual assessment, its geological
mappings, geological samplings and trench side cuts, and its payment of taxes on the land.

For its part, Atok alleged that a portion of Lots 1-5 and all of Lots 6-9 were covered by the
Emma and Fredia mineral claims located by Harrison and Reynolds on December 25, 1930,
and recorded on January 2, 1931, in the office of the mining recorder of Baguio. These claims
were purchased from these locators on November 2, 1931, by Atok, which has since then been
in open, continuous and exclusive possession of the said lots as evidenced by its annual
assessment work on the claims, such as the boring of tunnels, and its payment of annual taxes
thereon.

The Bureau of Forestry Development also interposed its objection, arguing that the land sought
to be registered was covered by the Central Cordillera Forest Reserve under Proclamation No.
217 dated February 16, 1929. Moreover, by reason of its nature, it was not subject to alienation
under the Constitutions of 1935 and 1973.

The trial court denied the application, holding that the applicants had failed to prove their claim
of possession and ownership of the land sought to be registered.
The applicants appealed to the respondent court, which reversed the trial court and recognized
the claims of the applicant, but subject to the rights of Benguet and Atok respecting their mining
claims. In other words, the Court of Appeals affirmed the surface rights of the de la Rosas over
the land while at the same time reserving the sub-surface rights of Benguet and Atok by virtue
of their mining claims. Both Benguet and Atok have appealed to this Court, invoking their
superior right of ownership.

Issue: Whether respondent court’s decision, i.e. “the surface rights of the de la Rosas over the
land while at the same time reserving the sub-surface rights of Benguet and Atok by virtue of
their mining claim,” is correct.

Held: No. Our holding is that Benguet and Atok have exclusive rights to the property in question
by virtue of their respective mining claims which they validly acquired before the Constitution of
1935 prohibited the alienation of all lands of the public domain except agricultural lands, subject
to vested rights existing at the time of its adoption. The land was not and could not have been
transferred to the private respondents by virtue of acquisitive prescription, nor could its use be
shared simultaneously by them and the mining companies for agricultural and mineral purposes.
It is true that the subject property was considered forest land and included in the Central
Cordillera Forest Reserve, but this did not impair the rights already vested in Benguet and Atok
at that time. Such rights were not affected either by the stricture in the Commonwealth
Constitution against the alienation of all lands of the public domain except those agricultural in
nature for this was made subject to existing rights. The perfection of the mining claim converted
the property to mineral land and under the laws then in force removed it from the public domain.
By such act, the locators acquired exclusive rights over the land, against even the government,
without need of any further act such as the purchase of the land or the obtention of a patent
over it. As the land had become the private property of the locators, they had the right to
transfer the same, as they did, to Benguet and Atok. The Court of Appeals justified this by
saying there is “no conflict of interest” between the owners of the surface rights and the owners
of the sub-surface rights. This is rather doctrine, for it is a well-known principle that the owner of
piece of land has rights not only to its surface but also to everything underneath and the
airspace above it up to a reasonable height. Under the aforesaid ruling, the land is classified as
mineral underneath and agricultural on the surface, subject to separate claims of title. This is
also difficult to understand, especially in its practical application.

The Court feels that the rights over the land are indivisible and that the land itself cannot be half
agricultural and half mineral. The classification must be categorical; the land must be either
completely mineral or completely agricultural. In the instant case, as already observed, the land
which was originally classified as forest land ceased to be so and became mineral — and
completely mineral — once the mining claims were perfected. As long as mining operations
were being undertaken thereon, or underneath, it did not cease to be so and become
agricultural, even if only partly so, because it was enclosed with a fence and was cultivated by
those who were unlawfully occupying the surface.
This is an application of the Regalian doctrine which, as its name implies, is intended for the
benefit of the State, not of private persons. The rule simply reserves to the State all minerals
that may be found in public and even private land devoted to “agricultural, industrial,
commercial, residential or (for) any purpose other than mining.” Thus, if a person is the owner of
agricultural land in which minerals are discovered, his ownership of such land does not give him
the right to extract or utilize the said minerals without the permission of the State to which such
minerals belong.

The flaw in the reasoning of the respondent court is in supposing that the rights over the land
could be used for both mining and non-mining purposes simultaneously. The correct
interpretation is that once minerals are discovered in the land, whatever the use to which it is
being devoted at the time, such use may be discontinued by the State to enable it to extract the
minerals therein in the exercise of its sovereign prerogative. The land is thus converted to
mineral land and may not be used by any private party, including the registered owner thereof,
for any other purpose that will impede the mining operations to be undertaken therein, For the
loss sustained by such owner, he is of course entitled to just compensation under the Mining
Laws or in appropriate expropriation proceedings.
Republic of the Philippines vs. CA

The Regalian doctrine reserves to the State all natural wealth that may be found in the bowels
of the earth even if the land where the discovery is made be private. 1 In the cases at bar, which
have been consolidated because they pose a common issue, this doctrine was not correctly
applied.

These cases arose from the application for registration of a parcel of land filed on February 11,
1965, by Jose de la Rosa on his own behalf and on behalf of his three children, Victoria,
Benjamin and Eduardo. The land, situated in Tuding, Itogon, Benguet Province, was divided into
9 lots and covered by plan Psu-225009. According to the application, Lots 1-5 were sold to Jose
de la Rosa and Lots 6-9 to his children by Mamaya Balbalio and Jaime Alberto, respectively, in
1964. 2

The application was separately opposed by Benguet Consolidated, Inc. as to Lots 1-5, Atok Big
Wedge Corporation, as to Portions of Lots 1-5 and all of Lots 6-9, and by the Republic of the
Philippines, through the Bureau of Forestry Development, as to lots 1-9. 3

In support of the application, both Balbalio and Alberto testified that they had acquired the
subject land by virtue of prescription Balbalio claimed to have received Lots 1-5 from her father
shortly after the Liberation. She testified she was born in the land, which was possessed by her
parents under claim of ownership. 4 Alberto said he received Lots 6-9 in 1961 from his mother,
Bella Alberto, who declared that the land was planted by Jaime and his predecessors-in-interest
to bananas, avocado, nangka and camote, and was enclosed with a barbed-wire fence. She
was corroborated by Felix Marcos, 67 years old at the time, who recalled the earlier possession
of the land by Alberto's father. 5 Balbalio presented her tax declaration in 1956 and the realty tax
receipts from that year to 1964, 6 Alberto his tax declaration in 1961 and the realty tax receipts
from that year to 1964. 7

Benguet opposed on the ground that the June Bug mineral claim covering Lots 1-5 was sold to
it on September 22, 1934, by the successors-in-interest of James Kelly, who located the claim in
September 1909 and recorded it on October 14, 1909. From the date of its purchase, Benguet
had been in actual, continuous and exclusive possession of the land in concept of owner, as
evidenced by its construction of adits, its affidavits of annual assessment, its geological
mappings, geological samplings and trench side cuts, and its payment of taxes on the land. 8

For its part, Atok alleged that a portion of Lots 1-5 and all of Lots 6-9 were covered by the
Emma and Fredia mineral claims located by Harrison and Reynolds on December 25, 1930,
and recorded on January 2, 1931, in the office of the mining recorder of Baguio. These claims
were purchased from these locators on November 2, 1931, by Atok, which has since then been
in open, continuous and exclusive possession of the said lots as evidenced by its annual
assessment work on the claims, such as the boring of tunnels, and its payment of annual taxes
thereon. 9

The location of the mineral claims was made in accordance with Section 21 of the Philippine Bill
of 1902 which provided that:

SEC. 21. All valuable mineral deposits in public lands in the philippine Islands
both surveyed and unsurveyed are hereby declared to be free and open to
exploration, occupation and purchase and the land in which they are found to
occupation and purchase by the citizens of the United States, or of said islands.

The Bureau of Forestry Development also interposed its objection, arguing that the land sought
to be registered was covered by the Central Cordillera Forest Reserve under Proclamation No.
217 dated February 16, 1929. Moreover, by reason of its nature, it was not subject to alienation
under the Constitutions of 1935 and 1973. 10

The trial court * denied the application, holding that the applicants had failed to prove their claim
of possession and ownership of the land sought to be registered. 11 The applicants appealed to
the respondent court, * which reversed the trial court and recognized the claims of the applicant,
but subject to the rights of Benguet and Atok respecting their mining claims. 12 In other words,
the Court of Appeals affirmed the surface rights of the de la Rosas over the land while at the
same time reserving the sub-surface rights of Benguet and Atok by virtue of their mining claims.

Both Benguet and Atok have appealed to this Court, invoking their superior right of ownership.
The Republic has filed its own petition for review and reiterates its argument that neither the
private respondents nor the two mining companies have any valid claim to the land because it is
not alienable and registerable.

It is true that the subject property was considered forest land and included in the Central
Cordillera Forest Reserve, but this did not impair the rights already vested in Benguet and Atok
at that time. The Court of Appeals correctly declared that:

There is no question that the 9 lots applied for are within the June Bug mineral
claims of Benguet and the "Fredia and Emma" mineral claims of Atok. The June
Bug mineral claim of plaintiff Benguet was one of the 16 mining claims of James
E. Kelly, American and mining locator. He filed his declaration of the location of
the June Bug mineral and the same was recorded in the Mining Recorder's Office
on October 14, 1909. All of the Kelly claims ha subsequently been acquired by
Benguet Consolidated, Inc. Benguet's evidence is that it had made improvements
on the June Bug mineral claim consisting of mine tunnels prior to 1935. It had
submitted the required affidavit of annual assessment. After World War II,
Benguet introduced improvements on mineral claim June Bug, and also
conducted geological mappings, geological sampling and trench side cuts. In
1948, Benguet redeclared the "June Bug" for taxation and had religiously paid
the taxes.

The Emma and Fredia claims were two of the several claims of Harrison
registered in 1931, and which Atok representatives acquired. Portions of Lots 1
to 5 and all of Lots 6 to 9 are within the Emma and Fredia mineral claims of Atok
Big Wedge Mining Company.

The June Bug mineral claim of Benguet and the Fredia and Emma mineral
claims of Atok having been perfected prior to the approval of the Constitution of
the Philippines of 1935, they were removed from the public domain and had
become private properties of Benguet and Atok.

It is not disputed that the location of the mining claim under

consideration was perfected prior to November 15, 1935, when
the Government of the Commonwealth was inaugurated; and
according to the laws existing at that time, as construed and
applied by this court in McDaniel v. Apacible and Cuisia (42 Phil.
749), a valid location of a mining claim segregated the area from
the public domain. Said the court in that case: The moment the
locator discovered a valuable mineral deposit on the lands
located, and perfected his location in accordance with law, the
power of the United States Government to deprive him of the
exclusive right to the possession and enjoyment of the located
claim was gone, the lands had become mineral lands and they
were exempted from lands that could be granted to any other
person. The reservations of public lands cannot be made so as to
include prior mineral perfected locations; and, of course, if a valid
mining location is made upon public lands afterwards included in a
reservation, such inclusion or reservation does not affect the
validity of the former location. By such location and perfection, the
land located is segregated from the public domain even as against
the Government. (Union Oil Co. v. Smith, 249 U.S. 337; Van Mess
v. Roonet, 160 Cal. 131; 27 Cyc. 546).

"The legal effect of a valid location of a mining claim is not only to

segregate the area from the public domain, but to grant to the
locator the beneficial ownership of the claim and the right to a
patent therefor upon compliance with the terms and conditions
prescribed by law. Where there is a valid location of a mining
claim, the area becomes segregated from the public domain and
the property of the locator." (St. Louis Mining & Milling Co. v.
 Montana Mining Co., 171 U.S. 650; 655; 43 Law ed., 320, 322.)
"When a location of a mining claim is perfected it has the effect of
a grant by the United States of the right of present and exclusive
possession, with the right to the exclusive enjoyment of all the
surface ground as well as of all the minerals within the lines of the
claim, except as limited by the extralateral right of adjoining
locators; and this is the locator's right before as well as after the
issuance of the patent. While a lode locator acquires a vested
property right by virtue of his location made in compliance with the
mining laws, the fee remains in the government until patent
issues."(18 R.C.L. 1152) (Gold Creek Mining Corporation v. Hon.
Eulogio Rodriguez, Sec. of Agriculture and Commerce, and
Quirico Abadilla, Director of the Bureau of Mines, 66 Phil. 259,
265-266)

It is of no importance whether Benguet and Atok had secured a patent for as held
in the Gold Creek Mining Corp. Case, for all physical purposes of ownership, the
owner is not required to secure a patent as long as he complies with the
provisions of the mining laws; his possessory right, for all practical purposes of
ownership, is as good as though secured by patent.

We agree likewise with the oppositors that having complied with all the
requirements of the mining laws, the claims were removed from the public
domain, and not even the government of the Philippines can take away this right
from them. The reason is obvious. Having become the private properties of the
oppositors, they cannot be deprived thereof without due process of law. 13

Such rights were not affected either by the stricture in the Commonwealth Constitution against
the alienation of all lands of the public domain except those agricultural in nature for this was
made subject to existing rights. Thus, in its Article XIII, Section 1, it was categorically provided
that:

SEC. 1. All agricultural, timber and mineral lands of the public domain, waters,
minerals, coal, petroleum and other mineral oils, all forces of potential energy
and other natural resources of the Philipppines belong to the State, and their
disposition, exploitation, development, or utilization shall be limited to citizens of
the Philippines or to corporations or associations at least 60% of the capital of
which is owned by such citizens, subject to any existing right, grant, lease or
concession at the time of the inauguration of the government established under
this Constitution. Natural resources with the exception of public agricultural lands,
shall not be alienated, and no license, concession, or lease for the exploitation,
development or utilization of any of the natural resources shall be granted for a
period exceeding 25 years, except as to water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power, in which
case beneficial use may be the measure and the limit of the grant.

Implementing this provision, Act No. 4268, approved on November 8, 1935, declared:

Any provision of existing laws, executive order, proclamation to the contrary

notwithstanding, all locations of mining claim made prior to February 8, 1935
 within lands set apart as forest reserve under Sec. 1826 of the Revised
Administrative Code which would be valid and subsisting location except to the
existence of said reserve are hereby declared to be valid and subsisting locations
as of the date of their respective locations.

The perfection of the mining claim converted the property to mineral land and under the laws
then in force removed it from the public domain. 14 By such act, the locators acquired exclusive
rights over the land, against even the government, without need of any further act such as the
purchase of the land or the obtention of a patent over it. 15 As the land had become the private
property of the locators, they had the right to transfer the same, as they did, to Benguet and
Atok.

It is true, as the Court of Appeals observed, that such private property was subject to the
"vicissitudes of ownership," or even to forfeiture by non-user or abandonment or, as the private
respondents aver, by acquisitive prescription. However, the method invoked by the de la Rosas
is not available in the case at bar, for two reasons.

First, the trial court found that the evidence of open, continuous, adverse and exclusive
possession submitted by the applicants was insufficient to support their claim of ownership.
They themselves had acquired the land only in 1964 and applied for its registration in 1965,
relying on the earlier alleged possession of their predecessors-in-interest. 16 The trial judge, who
had the opportunity to consider the evidence first-hand and observe the demeanor of the
witnesses and test their credibility was not convinced. We defer to his judgment in the absence
of a showing that it was reached with grave abuse of discretion or without sufficient basis. 17

Second, even if it be assumed that the predecessors-in-interest of the de la Rosas had really
been in possession of the subject property, their possession was not in the concept of owner of
the mining claim but of the property as agricultural land, which it was not. The property was
mineral land, and they were claiming it as agricultural land. They were not disputing the lights of
the mining locators nor were they seeking to oust them as such and to replace them in the
mining of the land. In fact, Balbalio testified that she was aware of the diggings being
undertaken "down below" 18 but she did not mind, much less protest, the same although she
claimed to be the owner of the said land.

The Court of Appeals justified this by saying there is "no conflict of interest" between the owners
of the surface rights and the owners of the sub-surface rights. This is rather doctrine, for it is a
well-known principle that the owner of piece of land has rights not only to its surface but also to
everything underneath and the airspace above it up to a reasonable height. 19 Under the
aforesaid ruling, the land is classified as mineral underneath and agricultural on the surface,
subject to separate claims of title. This is also difficult to understand, especially in its practical
application.

Under the theory of the respondent court, the surface owner will be planting on the land while
the mining locator will be boring tunnels underneath. The farmer cannot dig a well because he
may interfere with the operations below and the miner cannot blast a tunnel lest he destroy the
crops above. How deep can the farmer, and how high can the miner, go without encroaching on
each other's rights? Where is the dividing line between the surface and the sub-surface rights?

The Court feels that the rights over the land are indivisible and that the land itself cannot be half
agricultural and half mineral. The classification must be categorical; the land must be either
completely mineral or completely agricultural. In the instant case, as already observed, the land
which was originally classified as forest land ceased to be so and became mineral — and
completely mineral — once the mining claims were perfected. 20 As long as mining operations
were being undertaken thereon, or underneath, it did not cease to be so and become
agricultural, even if only partly so, because it was enclosed with a fence and was cultivated by
those who were unlawfully occupying the surface.

What must have misled the respondent court is Commonwealth Act No. 137, providing as
follows:

Sec. 3. All mineral lands of the public domain and minerals belong to the State,
and their disposition, exploitation, development or utilization, shall be limited to
citizens of the Philippines, or to corporations, or associations, at least 60% of the
capital of which is owned by such citizens, subject to any existing right, grant,
lease or concession at the time of the inauguration of government established
under the Constitution.

SEC. 4. The ownership of, and the right to the use of land for agricultural,
industrial, commercial, residential, or for any purpose other than mining does not
include the ownership of, nor the right to extract or utilize, the minerals which
may be found on or under the surface.

SEC. 5. The ownership of, and the right to extract and utilize, the minerals
included within all areas for which public agricultural land patents are granted are
excluded and excepted from all such patents.

SEC. 6. The ownership of, and the right to extract and utilize, the minerals
included within all areas for which Torrens titles are granted are excluded and
excepted from all such titles.

This is an application of the Regalian doctrine which, as its name implies, is intended for the
benefit of the State, not of private persons. The rule simply reserves to the State all minerals
that may be found in public and even private land devoted to "agricultural, industrial,
commercial, residential or (for) any purpose other than mining." Thus, if a person is the owner of
agricultural land in which minerals are discovered, his ownership of such land does not give him
the right to extract or utilize the said minerals without the permission of the State to which such
minerals belong.

The flaw in the reasoning of the respondent court is in supposing that the rights over the land
could be used for both mining and non-mining purposes simultaneously. The correct
interpretation is that once minerals are discovered in the land, whatever the use to which it is
being devoted at the time, such use may be discontinued by the State to enable it to extract the
minerals therein in the exercise of its sovereign prerogative. The land is thus converted to
mineral land and may not be used by any private party, including the registered owner thereof,
for any other purpose that will impede the mining operations to be undertaken therein, For the
loss sustained by such owner, he is of course entitled to just compensation under the Mining
Laws or in appropriate expropriation proceedings. 21

Our holding is that Benguet and Atok have exclusive rights to the property in question by virtue
of their respective mining claims which they validly acquired before the Constitution of 1935
prohibited the alienation of all lands of the public domain except agricultural lands, subject to
vested rights existing at the time of its adoption. The land was not and could not have been
transferred to the private respondents by virtue of acquisitive prescription, nor could its use be
shared simultaneously by them and the mining companies for agricultural and mineral purposes.

WHEREFORE, the decision of the respondent court dated April 30, 1976, is SET ASIDE and
that of the trial court dated March 11, 1969, is REINSTATED, without any pronouncement as to
costs.

SO ORDERED.

G.R No. 168732 National power corporation v. lucman Ibrahim

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul
the Decision1 dated June 8, 2005 rendered by the Court of Appeals (CA) in C.A.-G.R. CV No.
57792.

The facts are as follows:

On November 23, 1994, respondent Lucman G. Ibrahim, in his personal capacity and in behalf
of his co-heirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G.
Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Rocania G. Maruhom, Potrisam G.
Maruhom, Lumba G. Maruhom, Sinab G. Maruhom, Acmad G. Maruhom, Solayman G.
Maruhom, Mohamad M. Ibrahim and Caironesa M. Ibrahim, instituted an action against
petitioner National Power Corporation (NAPOCOR) for recovery of possession of land and
damages before the Regional Trial Court (RTC) of Lanao del Sur.

In their complaint, Ibrahim and his co-heirs claimed that they were owners of several parcels of
land described in Survey Plan FP (VII-5) 2278 consisting of 70,000 square meters, divided into
three (3) lots, i.e. Lots 1, 2, and 3 consisting of 31,894, 14,915, and 23,191 square meters each
respectively. Sometime in 1978, NAPOCOR, through alleged stealth and without respondents’
knowledge and prior consent, took possession of the sub-terrain area of their lands and
constructed therein underground tunnels. The existence of the tunnels was only discovered
sometime in July 1992 by respondents and then later confirmed on November 13, 1992 by
NAPOCOR itself through a memorandum issued by the latter’s Acting Assistant Project
Manager. The tunnels were apparently being used by NAPOCOR in siphoning the water of Lake
Lanao and in the operation of NAPOCOR’s Agus II, III, IV, V, VI, VII projects located in
Saguiran, Lanao del Sur; Nangca and Balo-i in Lanao del Norte; and Ditucalan and Fuentes in
Iligan City.

On September 19, 1992, respondent Omar G. Maruhom requested the Marawi City Water
District for a permit to construct and/or install a motorized deep well in Lot 3 located in Saduc,
Marawi City but his request was turned down because the construction of the deep well would
cause danger to lives and property. On October 7, 1992, respondents demanded that
NAPOCOR pay damages and vacate the sub-terrain portion of their lands but the latter refused
to vacate much less pay damages. Respondents further averred that the construction of the
underground tunnels has endangered their lives and properties as Marawi City lies in an area of
local volcanic and tectonic activity. Further, these illegally constructed tunnels caused them
sleepless nights, serious anxiety and shock thereby entitling them to recover moral damages
and that by way of example for the public good, NAPOCOR must be held liable for exemplary
damages.

Disputing respondents’ claim, NAPOCOR filed an answer with counterclaim denying the
material allegations of the complaint and interposing affirmative and special defenses, namely
that (1) there is a failure to state a cause of action since respondents seek possession of the
sub-terrain portion when they were never in possession of the same, (2) respondents have no
cause of action because they failed to show proof that they were the owners of the property,
and (3) the tunnels are a government project for the benefit of all and all private lands are
subject to such easement as may be necessary for the same.2

On August 7, 1996, the RTC rendered a Decision, the decretal portion of which reads as
follows:

WHEREFORE, judgment is hereby rendered:

1. Denying plaintiffs’ [private respondents’] prayer for defendant [petitioner] National Power
Corporation to dismantle the underground tunnels constructed between the lands of plaintiffs in
Lots 1, 2, and 3 of Survey Plan FP (VII-5) 2278;

2. Ordering defendant to pay to plaintiffs the fair market value of said 70,000 square meters of
land covering Lots 1, 2, and 3 as described in Survey Plan FP (VII-5) 2278 less the area of
21,995 square meters at ₱1,000.00 per square meter or a total of ₱48,005,000.00 for the
remaining unpaid portion of 48,005 square meters; with 6% interest per annum from the filing of
this case until paid;

3. Ordering defendant to pay plaintiffs a reasonable monthly rental of ₱0.68 per square meter of
the total area of 48,005 square meters effective from its occupancy of the foregoing area in
1978 or a total of ₱7,050,974.40.

4. Ordering defendant to pay plaintiffs the sum of ₱200,000.00 as moral damages; and

5. Ordering defendant to pay the further sum of ₱200,000.00 as attorney’s fees and the costs.

SO ORDERED.3

On August 15, 1996, Ibrahim, joined by his co-heirs, filed an Urgent Motion for Execution of
Judgment Pending Appeal. On the other hand, NAPOCOR filed a Notice of Appeal by
registered mail on August 19, 1996. Thereafter, NAPOCOR filed a vigorous opposition to the
motion for execution of judgment pending appeal with a motion for reconsideration of the
Decision which it had received on August 9, 1996.

On August 26, 1996, NAPOCOR filed a Manifestation and Motion withdrawing its Notice of
Appeal purposely to give way to the hearing of its motion for reconsideration.
On August 28, 1996, the RTC issued an Order granting execution pending appeal and denying
NAPOCOR’s motion for reconsideration, which Order was received by NAPOCOR on
September 6, 1996.

On September 9, 1996, NAPOCOR filed its Notice of Appeal by registered mail which was
denied by the RTC on the ground of having been filed out of time. Meanwhile, the Decision of
the RTC was executed pending appeal and funds of NAPOCOR were garnished by
respondents Ibrahim and his co-heirs.

On October 4, 1996, a Petition for Relief from Judgment was filed by respondents Omar G.
Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom,
Hidjara G. Maruhom, Potrisam G. Maruhom and Lumba G. Maruhom asserting as follows:

1) they did not file a motion to reconsider or appeal the decision within the reglementary period
of fifteen (15) days from receipt of judgment because they believed in good faith that the
decision was for damages and rentals and attorney’s fees only as prayed for in the complaint:

2) it was only on August 26, 1996 that they learned that the amounts awarded to the plaintiffs
represented not only rentals, damages and attorney’s fees but the greatest portion of which was
payment of just compensation which in effect would make the defendant NPC the owner of the
parcels of land involved in the case;

3) when they learned of the nature of the judgment, the period of appeal has already expired;

4) they were prevented by fraud, mistake, accident, or excusable negligence from taking legal
steps to protect and preserve their rights over their parcels of land in so far as the part of the
decision decreeing just compensation for petitioners’ properties;

5) they would never have agreed to the alienation of their property in favor of anybody,
considering the fact that the parcels of land involved in this case were among the valuable
properties they inherited from their dear father and they would rather see their land crumble to
dust than sell it to anybody.4

The RTC granted the petition and rendered a modified judgment dated September 8, 1997,
thus:

WHEREFORE, a modified judgment is hereby rendered:

1) Reducing the judgment award of plaintiffs for the fair market value of ₱48,005,000.00 by
9,526,000.00 or for a difference by ₱38,479,000.00 and by the further sum of ₱33,603,500.00
subject of the execution pending appeal leaving a difference of 4,878,500.00 which may be the
subject of execution upon the finality of this modified judgment with 6% interest per annum from
the filing of the case until paid.

2) Awarding the sum of ₱1,476,911.00 to herein petitioners Omar G. Maruhom, Elias G.

Maruhom, Bucay G. Maruhom, Mahmod G. Maruhom, Farouk G. Maruhom, Hidjara G.
Maruhom, Portrisam G. Maruhom and Lumba G. Maruhom as reasonable rental deductible from
the awarded sum of ₱7,050,974.40 pertaining to plaintiffs.
3) Ordering defendant embodied in the August 7, 1996 decision to pay plaintiffs the sum of
₱200,000.00 as moral damages; and further sum of ₱200,000.00 as attorney’s fees and costs.

SO ORDERED.5

Subsequently, both respondent Ibrahim and NAPOCOR appealed to the CA.

In the Decision dated June 8, 2005, the CA set aside the modified judgment and reinstated the
original Decision dated August 7, 1996, amending it further by deleting the award of moral
damages and reducing the amount of rentals and attorney’s fees, thus:

WHEREFORE, premises considered, herein Appeals are hereby partially GRANTED, the
Modified Judgment is ordered SET ASIDE and rendered of no force and effect and the original
Decision of the court a quo dated 7 August 1996 is hereby RESTORED with the
MODIFICATION that the award of moral damages is DELETED and the amounts of rentals and
attorney’s fees are REDUCED to ₱6,888,757.40 and ₱50,000.00, respectively.

In this connection, the Clerk of Court of RTC Lanao del Sur is hereby directed to reassess and
determine the additional filing fee that should be paid by Plaintiff-Appellant IBRAHIM taking into
consideration the total amount of damages sought in the complaint vis-à-vis the actual amount
of damages awarded by this Court. Such additional filing fee shall constitute a lien on the
judgment.

SO ORDERED.6

Hence, this petition ascribing the following errors to the CA:

(a) RESPONDENTS WERE NOT DENIED THE BENEFICIAL USE OF THEIR SUBJECT
PROPERTIES TO ENTITLE THEM TO JUST COMPENSATION BY WAY OF DAMAGES;

(b) ASSUMING THAT RESPONDENTS ARE ENTITLED TO JUST COMPENSATION BY WAY

OF DAMAGES, NO EVIDENCE WAS PRESENTED ANENT THE VALUATION OF
RESPONDENTS’ PROPERTY AT THE TIME OF ITS TAKING IN THE YEAR 1978 TO
JUSTIFY THE AWARD OF ONE THOUSAND SQUARE METERS (₱1000.00/SQ. M.) EVEN AS
PAYMENT OF BACK RENTALS IS ITSELF IMPROPER.

This case revolves around the propriety of paying just compensation to respondents, and, by
extension, the basis for computing the same. The threshold issue of whether respondents are
entitled to just compensation hinges upon who owns the sub-terrain area occupied by petitioner.

Petitioner maintains that the sub-terrain portion where the underground tunnels were
constructed does not belong to respondents because, even conceding the fact that respondents
owned the property, their right to the subsoil of the same does not extend beyond what is
necessary to enable them to obtain all the utility and convenience that such property can
normally give. In any case, petitioner asserts that respondents were still able to use the subject
property even with the existence of the tunnels, citing as an example the fact that one of the
respondents, Omar G. Maruhom, had established his residence on a part of the property.
Petitioner concludes that the underground tunnels 115 meters below respondents’ property
could not have caused damage or prejudice to respondents and their claim to this effect was,
therefore, purely conjectural and speculative.7
The contention lacks merit.

Generally, in an appeal by certiorari under Rule 45 of the Rules of Court, the Court does not
pass upon questions of fact. Absent any showing that the trial and appellate courts gravely
abused their discretion, the Court will not examine the evidence introduced by the parties below
to determine if they correctly assessed and evaluated the evidence on record.8 The jurisdiction
of the Court in cases brought to it from the CA is limited to reviewing and revising the errors of
law imputed to it, its findings of fact being as a rule conclusive and binding on the Court.

In the present case, petitioner failed to point to any evidence demonstrating grave abuse of
discretion on the part of the CA or to any other circumstances which would call for the
application of the exceptions to the above rule. Consequently, the CA’s findings which upheld
those of the trial court that respondents owned and possessed the property and that its
substrata was possessed by petitioner since 1978 for the underground tunnels, cannot be
disturbed. Moreover, the Court sustains the finding of the lower courts that the sub-terrain
portion of the property similarly belongs to respondents. This conclusion is drawn from Article
437 of the Civil Code which provides:

ART. 437. The owner of a parcel of land is the owner of its surface and of everything under it,
and he can construct thereon any works or make any plantations and excavations which he may
deem proper, without detriment to servitudes and subject to special laws and ordinances. He
cannot complain of the reasonable requirements of aerial navigation.

Thus, the ownership of land extends to the surface as well as to the subsoil under it. In Republic
of the Philippines v. Court of Appeals,9 this principle was applied to show that rights over lands
are indivisible and, consequently, require a definitive and categorical classification, thus:

The Court of Appeals justified this by saying there is "no conflict of interest" between the owners
of the surface rights and the owners of the sub-surface rights. This is rather strange doctrine, for
it is a well-known principle that the owner of a piece of land has rights not only to its surface but
also to everything underneath and the airspace above it up to a reasonable height. Under the
aforesaid ruling, the land is classified as mineral underneath and agricultural on the surface,
subject to separate claims of title. This is also difficult to understand, especially in its practical
application.

Under the theory of the respondent court, the surface owner will be planting on the land while
the mining locator will be boring tunnels underneath. The farmer cannot dig a well because he
may interfere with the mining operations below and the miner cannot blast a tunnel lest he
destroy the crops above. How deep can the farmer, and how high can the miner go without
encroaching on each others rights? Where is the dividing line between the surface and the sub-
surface rights?

The Court feels that the rights over the land are indivisible and that the land itself cannot be half
agricultural and half mineral. The classification must be categorical; the land must be either
completely mineral or completely agricultural.

Registered landowners may even be ousted of ownership and possession of their properties in
the event the latter are reclassified as mineral lands because real properties are
characteristically indivisible. For the loss sustained by such owners, they are entitled to just
compensation under the Mining Laws or in appropriate expropriation proceedings.10
Moreover, petitioner’s argument that the landowners’ right extends to the sub-soil insofar as
necessary for their practical interests serves only to further weaken its case. The theory would
limit the right to the sub-soil upon the economic utility which such area offers to the surface
owners. Presumably, the landowners’ right extends to such height or depth where it is possible
for them to obtain some benefit or enjoyment, and it is extinguished beyond such limit as there
would be no more interest protected by law.11

In this regard, the trial court found that respondents could have dug upon their property
motorized deep wells but were prevented from doing so by the authorities precisely because of
the construction and existence of the tunnels underneath the surface of their property.
Respondents, therefore, still had a legal interest in the sub-terrain portion insofar as they could
have excavated the same for the construction of the deep well. The fact that they could not was
appreciated by the RTC as proof that the tunnels interfered with respondents’ enjoyment of their
property and deprived them of its full use and enjoyment, thus:

Has it deprived the plaintiffs of the use of their lands when from the evidence they have already
existing residential houses over said tunnels and it was not shown that the tunnels either
destroyed said houses or disturb[ed] the possession thereof by plaintiffs? From the evidence, an
affirmative answer seems to be in order. The plaintiffs and [their] co-heirs discovered [these] big
underground tunnels in 1992. This was confirmed by the defendant on November 13, 1992 by
the Acting Assistant Project Manager, Agus 1 Hydro Electric Project (Exh. K). On September
16, 1992, Atty. Omar Maruhom (co-heir) requested the Marawi City Water District for permit to
construct a motorized deep well over Lot 3 for his residential house (Exh. Q). He was refused
the permit "because the construction of the deep well as (sic) the parcels of land will cause
danger to lives and property." He was informed that "beneath your lands are constructed the
Napocor underground tunnel in connection with Agua Hydroelectric plant" (Exh. Q-2). There in
fact exists ample evidence that this construction of the tunnel without the prior consent of
plaintiffs beneath the latter’s property endangered the lives and properties of said plaintiffs. It
has been proved indubitably that Marawi City lies in an area of local volcanic and tectonic
activity. Lake Lanao has been formed by extensive earth movements and is considered to be a
drowned basin of volcano/tectonic origin. In Marawi City, there are a number of former
volcanoes and an extensive amount of faulting. Some of these faults are still moving. (Feasibility
Report on Marawi City Water District by Kampsa-Kruger, Consulting Engineers, Architects and
Economists, Exh. R). Moreover, it has been shown that the underground tunnels [have]
deprived the plaintiffs of the lawful use of the land and considerably reduced its value. On March
6, 1995, plaintiffs applied for a two-million peso loan with the Amanah Islamic Bank for the
expansion of the operation of the Ameer Construction and Integrated Services to be secured by
said land (Exh. N), but the application was disapproved by the bank in its letter of April 25, 1995
(Exh. O) stating that:

"Apropos to this, we regret to inform you that we cannot consider your loan application due to
the following reasons, to wit:

That per my actual ocular inspection and verification, subject property offered as collateral has
an existing underground tunnel by the NPC for the Agus I Project, which tunnel is traversing
underneath your property, hence, an encumbrance. As a matter of bank policy, property with an
existing encumbrance cannot be considered neither accepted as collateral for a loan."

All the foregoing evidence and findings convince this Court that preponderantly plaintiffs have
established the condemnation of their land covering an area of 48,005 sq. meters located at
Saduc, Marawi City by the defendant National Power Corporation without even the benefit of
expropriation proceedings or the payment of any just compensation and/or reasonable monthly
rental since 1978.12

In the past, the Court has held that if the government takes property without expropriation and
devotes the property to public use, after many years, the property owner may demand payment
of just compensation in the event restoration of possession is neither convenient nor
feasible.13 This is in accordance with the principle that persons shall not be deprived of their
property except by competent authority and for public use and always upon payment of just
compensation.14

Petitioner contends that the underground tunnels in this case constitute an easement upon the
property of respondents which does not involve any loss of title or possession. 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. Petitioner could have, at any time, validly exercised the power of
eminent domain to acquire the easement over respondents’ property as this power
encompasses not only the taking or appropriation of title to and possession of the expropriated
property but likewise covers even the imposition of a mere burden upon the owner of the
condemned property.15 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.16

In disregarding this procedure and failing to recognize respondents’ ownership of the sub-terrain
portion, petitioner took a risk and exposed itself to greater liability with the passage of time. It
must be emphasized that the acquisition of the easement is not without expense. The
underground tunnels impose limitations on respondents’ use of the property for an indefinite
period and deprive them of its ordinary use. Based upon the foregoing, respondents are clearly
entitled to the payment of just compensation.17 Notwithstanding the fact that petitioner only
occupies the sub-terrain portion, it is liable to pay not merely an easement fee but rather the full
compensation for land. This is so because in this case, the nature of the easement practically
deprives the owners of its normal beneficial use. Respondents, as the owners of the property
thus expropriated, are entitled to a just compensation which should be neither more nor less,
whenever it is possible to make the assessment, than the money equivalent of said property.18

The entitlement of respondents to just compensation having been settled, the issue now is on
the manner of computing the same. In this regard, petitioner claims that the basis for the
computation of the just compensation should be the value of the property at the time it was
taken in 1978. Petitioner also impugns the reliance made by the CA upon National Power
Corporation v. Court of Appeals and Macapanton Mangondato19 as the basis for computing the
amount of just compensation in this action. The CA found that "the award of damages is not
excessive because the ₱1000 per square meter as the fair market value was sustained in a
case involving a lot adjoining the property in question which case involved an expropriation by
[petitioner] of portion of Lot 1 of the subdivision plan (LRC) PSD 116159 which is adjacent to
Lots 2 and 3 of the same subdivision plan which is the subject of the instant controversy."20

Just compensation has been understood to be the just and complete equivalent of the
loss21 and is ordinarily determined by referring to the value of the land and its character at the
time it was taken by the expropriating authority.22 There is a "taking" in this sense when the
owners are actually deprived or dispossessed of their property, where there is a practical
destruction or a material impairment of the value of their property, or when they are deprived of
the ordinary use thereof. There is a "taking" in this context when the expropriator enters private
property not only for a momentary period but for more permanent duration, for the purpose of
devoting the property to a public use in such a manner as to oust the owner and deprive him of
all beneficial enjoyment thereof.23 Moreover, "taking" of the property for purposes of eminent
domain entails that the entry into the property must be under warrant or color of legal authority.24

Under the factual backdrop of this case, the last element of taking mentioned, i.e., that the entry
into the property is under warrant or color of legal authority, is patently lacking. Petitioner
justified its nonpayment of the indemnity due respondents upon its mistaken belief that the
property formed part of the public dominion.

This situation is on all fours with that in the Mangondato case. NAPOCOR in that case took the
property of therein respondents in 1979, using it to build its Aqua I Hydroelectric Plant Project,
without paying any compensation, allegedly under the mistaken belief that it was public land. It
was only in 1990, after more than a decade of beneficial use, that NAPOCOR recognized
therein respondents’ ownership and negotiated for the voluntary purchase of the property.

In Mangondato, this Court held:

The First Issue: Date of Taking or Date of Suit?

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, as follows:

"Sec. 4. Order of Condemnation. When such a motion is overruled or when any party fails to
defend as required by this rule, the court may enter an order of condemnation declaring that the
plaintiff has a lawful right to take the property sought to be condemned, for the public use or
purpose described in the complaint, upon the payment of just compensation to be determined
as of the date of the filing of the complaint. x x x" (Italics supplied).

Normally, the time of the taking coincides with the filing of the complaint for expropriation.
Hence, many ruling 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 to the property, the just compensation is to be
ascertained as of the time of filing of the complaint.

The general rule, however, admits of an exception: where this Court fixed the value of the
property as of the date it was taken and not the date of the commencement of the expropriation
proceedings.

In the old case of Provincial Government of Rizal vs. Caro de Araullo, the Court ruled that "x x x
the owners of the land have no right to recover damages for this unearned increment resulting
from the construction of the public improvement (lengthening of Taft Avenue from Manila to
Pasay) from which the land was taken. To permit them to do so would be to allow them to
recover more than the value of the land at the time it was taken, which is the true measure of
the damages, or just compensation, and would discourage the construction of important public
improvements."
In subsequent cases, the Court, following the above doctrine, invariably held that the time of
taking is the critical date in determining lawful or just compensation. Justifying this stance, Mr.
Justice (later Chief Justice) Enrique Fernando, speaking for the Court in Municipality of La
Carlota vs. The Spouses Felicidad Baltazar and Vicente Gan, said, "x x x the owner as is the
constitutional intent, is paid what he is entitled to according to the value of the property so
devoted to public use as of the date of taking. From that time, he had been deprived thereof. He
had no choice but to submit. He is not, however, to be despoiled of such a right. No less than
the fundamental law guarantees just compensation. It would be injustice to him certainly if from
such a period, he could not recover the value of what was lost. There could be on the other
hand, injustice to the expropriator if by a delay in the collection, the increment in price would
accrue to the owner. The doctrine to which this Court has been committed is intended precisely
to avoid either contingency fraught with unfairness."

Simply stated, the exception finds the application where the owner would be given undue
incremental advantages arising from the use to which the government devotes the property
expropriated -- as for instance, the extension of a main thoroughfare as was in the case in Caro
de Araullo. In the instant case, however, it is difficult to conceive of how there could have been
an extra-ordinary increase in the value of the owner’s land arising from the expropriation, as
indeed the records do not show any evidence that the valuation of P1,000.00 reached in 1992
was due to increments directly caused by petitioner’s use of the land. Since the petitioner is
claiming an exception to Rule 67, Section 4, it has the burden in proving its claim that its
occupancy and use -- not ordinary inflation and increase in land values -- was the direct cause
of the increase in valuation from 1978 to 1992.

Side Issue: When is there "Taking" of Property?

But there is yet another cogent reason why this petition should be denied and why the
respondent Court should be sustained. An examination of the undisputed factual environment
would show that the "taking" was not really made in 1978.

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 "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.

Only in 1992, after the private respondent sued to recover possession and petitioner filed its
Complaint to expropriate, did petitioner manifest its intention to exercise the power of eminent
domain. Thus the respondent Court correctly held:

"If We decree that the fair market value of the land be determined as of 1978, then We would be
sanctioning a deceptive scheme whereby NAPOCOR, for any reason other than for eminent
domain would occupy another’s property and when later pressed for payment, first negotiate for
a low price and then conveniently expropriate the property when the land owner refuses to
accept its offer claiming that the taking of the property for the purpose of the eminent domain
should be reckoned as of the date when it started to occupy the property and that the value of
the property should be computed as of the date of the taking despite the increase in the
meantime in the value of the property."

In Noble vs. City of Manila, the City entered into a lease-purchase agreement of a building
constructed by the petitioner’s predecessor-in-interest in accordance with the specifications of
the former. The Court held that being bound by the said contract, the City could not expropriate
the building. Expropriation could be resorted to "only when it is made necessary by the
opposition of the owner to the sale or by the lack of any agreement as to the price." Said the
Court:

"The contract, therefore, in so far as it refers to the purchase of the building, as we have
interpreted it, is in force, not having been revoked by the parties or by judicial decision. This
being the case, the city being bound to buy the building at an agreed price, under a valid and
subsisting contract, and the plaintiff being agreeable to its sale, the expropriation thereof, as
sought by the defendant, is baseless. Expropriation lies only when it is made necessary by the
opposition of the owner to the sale or by the lack of any agreement as to the price. There being
in the present case a valid and subsisting contract, between the owner of the building and the
city, for the purchase thereof at an agreed price, there is no reason for the expropriation."
(Italics supplied)

In the instant case, petitioner effectively repudiated the deed of sale it entered into with the
private respondent when it passed Resolution No. 92-121 on May 25, 1992 authorizing its
president to negotiate, inter alia, that payment "shall be effective only after Agus I HE project
has been placed in operation." It was only then that petitioner’s intent to expropriate became
manifest as private respondent disagreed and, barely a month, filed suit.25

In the present case, to allow petitioner to use the date it constructed the tunnels as the date of
valuation would be grossly unfair. First, it did not enter the land under warrant or color of legal
authority or with intent to expropriate the same. In fact, it did not bother to notify the owners and
wrongly assumed it had the right to dig those tunnels under their property. Secondly, the
"improvements" introduced by petitioner, namely, the tunnels, in no way contributed to an
increase in the value of the land. The trial court, therefore, as affirmed by the CA, rightly
computed the valuation of the property as of 1992, when respondents discovered the
construction of the huge underground tunnels beneath their lands and petitioner confirmed the
same and started negotiations for their purchase but no agreement could be reached.26
As to the amount of the valuation, the RTC and the CA both used as basis the value of the
adjacent property, Lot 1 (the property involved herein being Lots 2 and 3 of the same
subdivision plan), which was valued at ₱1,000 per sq. meter as of 1990, as sustained by this
Court in Mangondato, thus:

The Second Issue: Valuation

We now come to the issue of valuation.

The fair market value as held by the respondent Court, is the amount of ₱1,000.00 per square
meter. In an expropriation case where the principal issue is the determination of just
compensation, as is the case here, a trial before Commissioners is indispensable to allow the
parties to present evidence on the issue of just compensation. Inasmuch as the determination of
just compensation in eminent domain cases is a judicial function and factual findings of the
Court of Appeals are conclusive on the parties and reviewable only when the case falls within
the recognized exceptions, which is not the situation obtaining in this petition, we see no reason
to disturb the factual findings as to valuation of the subject property. As can be gleaned from the
records, the court-and-the-parties-appointed commissioners did not abuse their authority in
evaluating the evidence submitted to them nor misappreciate the clear preponderance of
evidence. The amount fixed and agreed to by the respondent appellate Court is not grossly
exorbitant. To quote:

"Commissioner Ali comes from the Office of the Register of Deeds who may well be considered
an expert, with a general knowledge of the appraisal of real estate and the prevailing prices of
land in the vicinity of the land in question so that his opinion on the valuation of the property
cannot be lightly brushed aside.

"The prevailing market value of the land is only one of the determinants used by the
commissioners’ report the other being as herein shown:

xxx

xxx

"Commissioner Doromal’s report, recommending P300.00 per square meter, differs from the 2
commissioners only because his report was based on the valuation as of 1978 by the City
Appraisal Committee as clarified by the latter’s chairman in response to NAPOCOR’s general
counsel’s query."

In sum, we agree with the Court of Appeals that petitioner has failed to show why it should be
granted an exemption from the general rule in determining just compensation provided under
Section 4 of Rule 67. On the contrary, private respondent has convinced us that, indeed, such
general rule should in fact be observed in this case.27

Petitioner has not shown any error on the part of the CA in reaching such a valuation.
Furthermore, these are factual matters that are not within the ambit of the present review.

WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals in C.A.-G.R.
CV No. 57792 dated June 8, 2005 is AFFIRMED.
No costs.

SO ORDERED.