Hermano Oil Manufacturing & Sugar Corporation vs. Toll Regulatory Board

Government-owned and controlled corporations created under the Corporation Code, such as the PNCC, do not enjoy sovereign immunity from suit; however, courts are prohibited from issuing injunctions against government infrastructure projects under PD 1818 and RA 8975, and the establishment of access restrictions on limited access highways pursuant to RA 2000 constitutes a valid exercise of police power that does not require compensation under the power of eminent domain.

Hermano Oil Manufacturing & Sugar Corporation owned a parcel of land located at the right side of the Sta. Rita Exit of the North Luzon Expressway (NLEX) in Guiguinto, Bulacan, bounded by an access fence that prevented direct ingress to and egress from the expressway. The property was acquired by the petitioner in 1999 when the NLEX and the access fence were already in existence, and a portion of the land had previously been sold to the Republic of the Philippines in 1979 as indicated in the transfer certificate of title.

• Hermano Oil Manufacturing & Sugar Corporation owned a parcel of land at Barangay Sta. Rita, Guiguinto, Bulacan, covered by Transfer Certificate of Title No. T-134222, situated at the right side of the Sta. Rita Exit of the NLEX.
• The property was bounded by an access fence along the NLEX that prevented direct ingress and egress to the expressway.
• Entry No. 189568 in the title indicated that a portion of the property had been sold to the Republic of the Philippines in 1979.
• The petitioner acquired the property on December 14, 1999, at which time the NLEX and the access fence were already in existence.
• The petitioner requested the TRB to grant an easement of right of way in a letter dated September 7, 2001, contending that the access fence totally deprived it of enjoyment and possession of its property.
• The TRB denied the request on September 26, 2001, citing Section 7.0 of Republic Act No. 2000 (Limited Access Highway Act) and citing potential adverse effects on rehabilitation and improvement of NLEX interchanges and operational traffic problems.
• The petitioner filed a complaint for specific performance seeking to compel the grant of a right of way, a writ of preliminary injunction, a declaration that the condemnation was null and void or alternatively just compensation of not less than P4,000.00 per square meter, moral and exemplary damages, and attorney's fees.
• The petitioner alleged that it was deprived of property without due process and denied equal protection because adjacent property owners had been given access to their properties.
• The amended complaint impleaded PNCC as the entity operating the NLEX and responsible for constructing the access fence, and DPWH as an indispensable party.
• The property had a road network in front serving as its access to public roads.

• The denial of the easement violated the due process and equal protection clauses of the Constitution because adjacent property owners were granted access while the petitioner was denied.
• The Court of Appeals erred in declaring that Entry No. 189568 in the title showed the NLEX was already in existence before the 1999 acquisition, arguing that this did not justify the denial of access.
• The Court of Appeals erred in declaring that PNCC, although not strictly a government agency, should enjoy immunity from suit.
• The access fence constituted a taking of property without just compensation and due process.
• The reliefs sought, including specific performance and injunction, were proper remedies to compel access to the NLEX.

• The TRB, DPWH, and the Executive Director sued in their official capacities were immune from suit under the doctrine of sovereign immunity as they performed governmental functions.
• The PNCC, as a government-owned and controlled corporation performing functions incidental to government functions, should likewise enjoy immunity from suit.
• The complaint stated no cause of action because an easement would not lie under Republic Act No. 2000 (Limited Access Highway Act), which restricts access to limited access highways.
• The petitioner was not the real party in interest because the proper party to complain about lack of expropriation proceedings was the previous owner from whom the portion was acquired in 1979.
• The petitioner could not demand compulsory right of way because the isolation was due to the owner's own act (acquiring property when the NLEX already existed) and because there was adequate access via the road network in front of the property.
• The action for specific performance was improper because there was no contract between the parties.
• The courts had no jurisdiction to issue temporary restraining orders or writs of preliminary injunction against government infrastructure projects under Presidential Decree No. 1818 and Republic Act No. 8975.

• Procedural Issues:
  • Whether the Regional Trial Court had jurisdiction to issue a writ of preliminary injunction or temporary restraining order against the establishment of an access fence on a government infrastructure project.
  • Whether the complaint stated a cause of action for specific performance and compulsory easement.
• Substantive Issues:
  • Whether the doctrine of sovereign immunity barred the suit against the TRB, DPWH, and the PNCC.
  • Whether the denial of the easement violated the constitutional guarantees of due process and equal protection of the law.
  • Whether the establishment of the access fence constituted a compensable taking requiring just compensation under the power of eminent domain, or a valid exercise of police power.
  • Whether the petitioner was entitled to a compulsory easement of right of way under Article 649 of the Civil Code.

• Procedural:
  • The Supreme Court held that the Regional Trial Court lacked jurisdiction to issue the writ of preliminary injunction or temporary restraining order sought by the petitioner. Under Presidential Decree No. 1818 and Republic Act No. 8975, no court except the Supreme Court may issue temporary restraining orders, preliminary injunctions, or preliminary mandatory injunctions against the government or any person or entity acting under the government's direction to restrain the commencement, prosecution, execution, implementation, or operation of any national government infrastructure project. The maintenance of safety measures, including the access fence along the NLEX, was a component of the continuous improvement and development of the NLEX, qualifying it as an infrastructure project.
  • The Court ruled that the complaint stated no cause of action for compulsory easement because the petitioner had an adequate access to a public highway via the road network in front of its property, and because the isolation of the property was due to the owner's own act (or that of its predecessors-in-interest) who acquired the property in 1999 when the NLEX and access fence were already in existence, as provided under Article 649 of the Civil Code.
• Substantive:
  • The Court ruled that the TRB and DPWH, as unincorporated government agencies performing purely governmental functions, were immune from suit under the doctrine of sovereign immunity. Executive Director Dumlao, being sued in his official capacity as an agent of the TRB, shared in this immunity.
  • The Court held that the PNCC, despite being government-owned (90.3% equity), was not immune from suit because it was incorporated under the Corporation Code as a private corporation (originally Construction Development Corporation of the Philippines), making it an acquired asset corporation subject to SEC regulation, distinct from unincorporated government agencies.
  • The Court ruled that the denial of the easement did not violate due process or equal protection. The restriction was a valid exercise of police power under Republic Act No. 2000 (Limited Access Highway Act), which authorizes the Department of Transportation and Communications (now DOTC) to regulate, restrict, or prohibit access to limited access facilities to ensure public safety and traffic efficiency. The classification between properties used for ancillary services (gas stations, food stores) and the petitioner's property was based on practical convenience and common knowledge, serving the traffic for which the facility was intended.
  • The Court held that the access fence did not constitute a compensable taking under the power of eminent domain because the property was not taken or devoted for public use. Instead, the property was merely subjected to a reasonable restraint to secure the general safety and welfare of motorists, constituting a valid exercise of police power that does not require compensation.

• Sovereign Immunity — Unincorporated government agencies performing governmental or public functions are immune from suit as they are invested with the inherent power of sovereignty; however, government-owned and controlled corporations created under the Corporation Code, such as the PNCC, are essentially private corporations and do not enjoy sovereign immunity.
• Prohibition on Injunctions Against Government Infrastructure Projects — Under Presidential Decree No. 1818 and Republic Act No. 8975, no court except the Supreme Court has jurisdiction to issue temporary restraining orders, preliminary injunctions, or preliminary mandatory injunctions against the government or its instrumentalities to restrain the implementation or operation of national government infrastructure projects, including the improvement and rehabilitation of roads.
• Police Power vs. Eminent Domain — A regulation restricting the use of property for public safety and welfare under the Limited Access Highway Act constitutes an exercise of police power, not eminent domain; therefore, it does not require the payment of just compensation, provided it does not unduly violate constitutional limitations like due process and equal protection.
• Compulsory Easement of Right of Way — Under Article 649 of the Civil Code, an owner cannot demand an easement of right of way if the isolation of the property was due to the owner's own act or that of his predecessors-in-interest; moreover, the dominant estate must be surrounded by other immovables without adequate access to a public highway to claim such easement.

• "An unincorporated government agency without any separate juridical personality of its own enjoys immunity from suit because it is invested with an inherent power of sovereignty."
• "Although the majority or controlling shares of the PNCC belonged to the Government, the PNCC was essentially a private corporation due to its having been created in accordance with the Corporation Code, the general corporation statute."
• "There can be no question that the respondents' maintenance of safety measures, including the establishment of the access fence along the NLEX, was a component of the continuous improvement and development of the NLEX."
• "A toll way is not an ordinary road. As a facility designed to promote the fastest access to certain destinations, its use, operation, and maintenance require close regulation. Public interest and safety require the imposition of certain restrictions on toll ways that do not apply to ordinary roads."
• "A classification based on practical convenience and common knowledge is not unconstitutional simply because it may lack purely theoretical or scientific uniformity."
• "There being a clear and valid exercise of police power, the petitioner was certainly not entitled to any just compensation."

• Air Transportation Office v. Ramos — Cited for the doctrine that unincorporated government agencies performing governmental functions enjoy sovereign immunity, while those performing proprietary functions do not.
• Villanueva v. Velasco — Cited for the rule that a person cannot demand an easement of right of way if the isolation of the property was due to the owner's own act, and that the dominant estate must not have adequate access to a public highway to claim compulsory easement.
• Francisco, Jr. v. UEM-MARA Philippines Corporation — Cited for the definition of "infrastructure projects" under PD 1818, which includes the improvement and rehabilitation of roads, and for the prohibition against courts issuing injunctions that delay government infrastructure projects.
• Mirasol v. Department of Public Works and Highways — Cited for the ruling that the Department of Transportation and Communications (DOTC), not the DPWH, has authority under RA 2000 to regulate access to limited access facilities, and for the principle that toll ways require special restrictions for public safety.
• Strategic Alliance Development Corporation v. Radstock Securities Limited and Philippine National Construction Corporation v. Pabion — Cited to establish that PNCC, despite government ownership, is a private corporation created under the Corporation Code and not immune from suit.
• Union Insurance Society of Canton, Ltd. v Republic of the Philippines — Cited by the Court of Appeals (but distinguished by the Supreme Court) regarding immunity of entities performing functions incidental to government functions.
• Didipio Earth Savers' Multi-Purpose Association, Incorporated (DESAMA) v. Gozun — Cited for the distinction between police power and eminent domain, and the rule that valid exercises of police power do not require compensation.

• Article 649 of the Civil Code — Provides that an owner cannot demand an easement of right of way if the isolation was due to his own act, and sets the conditions for compulsory easement.
• Republic Act No. 2000 (Limited Access Highway Act), Section 4 — Authorizes the Department of Public Works and Communications (now DOTC) to design limited access facilities and regulate, restrict, or prohibit access to best serve the intended traffic.
• Presidential Decree No. 1818 — Prohibits courts from issuing restraining orders or preliminary injunctions in any case involving an infrastructure project.
• Republic Act No. 8975, Sections 3 and 4 — Prohibits lower courts from issuing temporary restraining orders, preliminary injunctions, or preliminary mandatory injunctions against government infrastructure projects, and declares such writs void if issued in violation.
• Executive Order No. 546 — Divided the Ministry of Public Works, Transportation and Communications into the Ministry of Public Works and the Ministry of Transportation and Communications, clarifying that the latter has authority to regulate transportation facilities.