National Transmission Corporation vs. Bermuda Development Corporation

An unlawful detainer action will not prosper against a public service corporation endowed with the power of eminent domain that has occupied private property in the interest of public service without prior acquisition of title by negotiated purchase or expropriation proceedings, the landowner being denied the remedies of ejectment and injunction on grounds of public policy, public necessity, and equitable estoppel, and limited to an action for recovery of just compensation and consequential damages.

National Transmission Corporation (TransCo) is a government agency created under Republic Act No. 9136, the Electric Power Industry Reform Act of 2001 (EPIRA), to assume the electrical transmission functions of the National Power Corporation, and is vested with the power of eminent domain subject to the requirements of the Constitution and existing laws. Bermuda Development Corporation (BDC) is a private corporation owning Lot 10-B, Psd. 043404-058243, consisting of 8,920 square meters located at Barangay Banlic, Cabuyao, Laguna, covered by Transfer Certificate of Title No. T-258244. TransCo erected and energized a 230 KV transmission line traversing the whole extent of BDC's property without first acquiring title thereto through negotiated purchase or expropriation proceedings.

National Transmission Corporation (TransCo) is a government agency created under Republic Act No. 9136, the Electric Power Industry Reform Act of 2001, tasked with assuming the electrical transmission functions of the National Power Corporation and vested with the power of eminent domain. Bermuda Development Corporation (BDC) is the registered owner of Lot 10-B, Psd. 043404-058243, consisting of 8,920 square meters located at Barangay Banlic, Cabuyao, Laguna, covered by Transfer Certificate of Title No. T-258244. TransCo erected and energized a 230 KV transmission line traversing the whole extent of BDC's property without first acquiring title thereto through negotiated purchase or expropriation proceedings. TransCo maintained that the structure had been in existence before BDC acquired the subject property.

On December 22, 2009 (as stated in the decision), BDC filed a complaint for unlawful detainer against TransCo before the Municipal Trial Court (MTC) of Cabuyao, Laguna, docketed as Civil Case No. 2498. TransCo filed its Answer with Affirmative and Compulsory Counterclaim on January 23, 2009. After due proceedings, the MTC rendered a Decision on August 24, 2009, ordering TransCo and all persons claiming rights under it to vacate the subject lot, remove all structures thereon, and peacefully surrender possession to BDC. The MTC likewise ordered TransCo to pay BDC ₱10,350,000.00 as reasonable monthly rental computed from December 13, 2008 until complete vacatur, plus ₱50,000.00 as attorney's fees and ₱5,000.00 per court appearance.

TransCo interposed an appeal before RTC Branch 24, Biñan, Laguna, on September 17, 2009. BDC, for its part, filed an Urgent Motion for Execution of the MTC Decision. On October 28, 2009, RTC Branch 24 granted the motion, and a Writ of Execution Pending Appeal was issued. A Notice of Garnishment followed on November 6, 2009, directed against TransCo's account with the Land Bank of the Philippines. TransCo filed an Omnibus Motion on November 10, 2009, seeking reconsideration of the order granting execution and the quashal of the writ and notice of garnishment.

In the meantime, on January 21, 2010, TransCo filed a Complaint for Expropriation of the same property before RTC Branch 25, Biñan, Laguna, docketed as Civil Case B-7972. TransCo deposited ₱10,704,000.00 with the Land Bank of the Philippines, purportedly representing the provisional value of the property, and filed an Urgent Ex-Parte Motion for the Issuance of a Writ of Possession. On March 29, 2010, RTC Branch 25 granted the motion and issued the writ. Meanwhile, on July 29, 2010, RTC Branch 24 dismissed TransCo's appeal in the unlawful detainer case, holding that the issue of possession had become moot and academic in view of the filing of the expropriation proceedings and the formal delivery of possession to TransCo. TransCo's motion for reconsideration was denied on May 30, 2011, with the RTC ordering the remand of the case to the MTC for enforcement of the judgment regarding rental in arrears.

TransCo elevated the matter to the Court of Appeals via a Petition for Review under Rule 42. The CA, in its Decision dated May 29, 2014, dismissed the petition and affirmed the RTC orders, reasoning that it would be circuitous to require TransCo to first vacate the property and then restore it to possession on account of the writ of possession issued in the expropriation case. The CA further held that the rental in arrears should be collected in the enforcement of the MTC judgment, as the amount was not included in the computation of just compensation in the expropriation case. TransCo's motion for reconsideration was denied on October 7, 2014, prompting the instant Rule 45 petition before the Supreme Court.

• Inapplicability of Ejectment Against Public Service Corporations: Petitioner maintained that a case for recovery of possession or ejectment against a public service corporation endowed with the power of eminent domain will not prosper, as there can only remain to the owner a right of just compensation.
• Duty of the RTC to Dismiss: Petitioner argued that the RTC, Branch 24, after finding that TransCo is a public service corporation with expropriation powers, should have ordered the dismissal of the unlawful detainer complaint, since BDC has no right to the remedies of ejectment or injunction but only to the recovery of the value of the land taken and consequential damages.
• Prior Existence of Structures: Petitioner emphasized that the transmission structure had been in existence before BDC acquired the subject property, further supporting the inapplicability of ejectment remedies.

• Mootness of Appeal: Whether the RTC erred in dismissing TransCo's appeal in the unlawful detainer case on the ground that it had become moot and academic due to the filing of the expropriation complaint involving the same property.
• Propriety of Unlawful Detainer Against a Public Service Corporation: Whether an unlawful detainer action may prosper against a public service corporation endowed with the power of eminent domain that has occupied private property in the interest of public service without prior acquisition of title by negotiated purchase or expropriation proceedings.

• Mootness of Appeal: Yes, the RTC erred. The unlawful detainer case should not have proceeded in the first place, the MTC being bereft of jurisdiction to entertain it against a public service corporation with expropriation powers, rendering the mootness analysis superfluous.
• Propriety of Unlawful Detainer Against a Public Service Corporation: No. An unlawful detainer action will not prosper against a public service corporation endowed with the power of eminent domain that has occupied private property for public use without prior acquisition of title; the landowner is limited to an action for just compensation and consequential damages.

• Mootness of Appeal: The RTC's dismissal of TransCo's appeal on the ground of mootness was predicated on a flawed premise, because the MTC should never have proceeded with the unlawful detainer case in the first place. The subsequent filing of expropriation proceedings by TransCo could not have rendered the unlawful detainer case moot and academic, since the MTC erred in not dismissing it upon recognizing or taking judicial notice of TransCo's nature as a public service corporation with expropriation powers. The MTC's Decision ordering TransCo to vacate and pay rentals was without legal basis, the MTC being bereft of jurisdiction to entertain the unlawful detainer case. The proper course would have been for the MTC to dismiss the case without prejudice to BDC's right to recover just compensation, or to direct TransCo to institute expropriation proceedings.

• Propriety of Unlawful Detainer Against a Public Service Corporation: The Court traced the jurisprudential line dating back to 1915 establishing that an action for ejectment, trespass, or injunction will not lie against a public service corporation endowed with the power of eminent domain that has occupied land without first acquiring title thereto. In Manila Railroad Co. vs. Paredes (1915), the Court held that the primary reason for denying the owner the remedies of ejectment and injunction is the irremedial injury that would result to the railroad company and to the public in general, as interruption of the transportation service impedes the entire service and causes loss and inconvenience to all passengers and shippers. Public policy, if not public necessity, demands that the landowner be denied these ordinary remedies. The fact that the corporation has the capacity to eventually acquire the land by expropriation assists in this conclusion, and there is equitable estoppel in the conduct of one who stands idly by and watches construction without protest. In De Ynchausti vs. Manila Electric Railroad & Light Co. (1917), the Court ruled that an owner who stands by without objection while a public railroad is constructed over his land cannot thereafter reclaim it; there can only remain to the owner a right of compensation. In Forfom Development Corporation vs. Philippine National Railways (2008), the Court synthesized these precedents and held that recovery of possession can no longer be allowed on grounds of estoppel and public policy; what is left to the landowner is the right of compensation. In Republic of the Philippines vs. Mendoza (2010), the Court applied the doctrine to the Government, holding that the owner's remedy is an action for payment of just compensation, not ejectment. The Court identified three proper courses for the ejectment court: (1) dismiss the case without prejudice to the landowner filing a proper action for recovery of just compensation and consequential damages; (2) dismiss the case and direct the public utility corporation to institute proper expropriation or condemnation proceedings and pay the just compensation and consequential damages assessed therein; or (3) continue with the case as if it were an expropriation case and determine just compensation pursuant to Rule 67, if the ejectment court has jurisdiction over the value of the subject land. Since TransCo is vested with eminent domain power under Section 8 of R.A. No. 9136, and it erected and energized a 230 KV transmission line traversing BDC's property, the MTC should have found or taken judicial notice of TransCo's status as a public service corporation and dismissed the unlawful detainer case. The MTC could not have determined just compensation given that the value of the subject property was clearly beyond its jurisdiction. The award of rental in arrears was likewise improper, because BDC is only entitled to just compensation and consequential damages as determined pursuant to Sections 5 and 6, Rule 67 of the Rules of Court, and an unlawful detainer action is not a sanctioned remedy in this context.

• Doctrine on Ejectment Against Public Service Corporations with Eminent Domain Power — A case filed by a landowner for recovery of possession or ejectment against a public utility corporation, endowed with the power of eminent domain, which has occupied the land belonging to the former in the interest of public service without prior acquisition of title thereto by negotiated purchase or expropriation proceedings, will not prosper. The landowner is denied the remedies of ejectment and injunction for reasons of (1) public policy and public necessity — the irremedial injury that would result to the public service corporation and to the public in general from interruption of service; and (2) equitable estoppel — the conduct of one who stands idly by and watches construction without protest. What is left to the landowner is the right of compensation. The proper recourse for the ejectment court is one of three options: (1) dismiss the case without prejudice to the landowner filing the proper action for recovery of just compensation and consequential damages; (2) dismiss the case and direct the public utility corporation to institute the proper expropriation or condemnation proceedings and to pay the just compensation and consequential damages assessed therein; or (3) continue with the case as if it were an expropriation case and determine the just compensation and consequential damages pursuant to Rule 67 of the Rules of Court, if the ejectment court has jurisdiction over the value of the subject land. In this case, the Court applied the doctrine to hold that the MTC should have dismissed the unlawful detainer case upon recognizing TransCo's status as a public service corporation with expropriation powers, and that the MTC's award of rental in arrears was improper, BDC being entitled only to just compensation and consequential damages under Rule 67.

• "it is well-settled that a case filed by a landowner for recovery of possession or ejectment against a public utility corporation, endowed with the power of eminent domain, which has occupied the land belonging to the former in the interest of public service without prior acquisition of title thereto by negotiated purchase or expropriation proceedings, will not prosper. Any action to compel the public utility corporation to vacate such property is unavailing since the landowner is denied the remedies of ejectment and injunction for reasons of public policy and public necessity as well as equitable estoppel." — This passage articulates the controlling doctrine synthesizing the jurisprudential line from 1915 to the present, establishing the rule that ejectment does not lie against a public service corporation with eminent domain power and stating the dual grounds of public policy and equitable estoppel.

• "The primary reason for thus denying to the owner the remedies usually afforded to him against usurpers is the irremedial injury which would result to the railroad company and to the public in general." — This quotation from Manila Railroad Co. vs. Paredes, as cited in the decision, states the foundational rationale for the doctrine: the public interest in uninterrupted service outweighs the landowner's possessory remedies, a principle that has guided Philippine jurisprudence on this point for over a century.

• "The MTC being bereft of jurisdiction to entertain the unlawful detainer case, its Decision mandating TransCo to vacate the subject property and remove all structures thereon and to pay BDC ₱10,350,000.00 as reasonable rental computed from December 13, 2008 is without legal basis." — This passage states the ratio decidendi as applied to the facts: the MTC lacked jurisdiction to entertain the unlawful detainer case against a public service corporation with expropriation powers, rendering its dispositive nullities.

• Manila Railroad Co. vs. Paredes, 32 Phil. 534 (1915) — The foundational case establishing the doctrine that ejectment, trespass, or injunction will not lie against a public service corporation with eminent domain power that has occupied land without prior acquisition of title, on grounds of public policy and equitable estoppel. Followed and applied in this case.
• De Ynchausti vs. Manila Electric Railroad & Light Co., 36 Phil. 908 (1917) — Reinforced the doctrine, holding that an owner who stands by without objection while a public railroad is constructed over his land cannot thereafter reclaim it; only a right of compensation remains. Followed.
• Ansaldo vs. Tantuico, Jr., 266 Phil. 319 (1990) — Directed the expropriator to forthwith institute the appropriate expropriation action so that just compensation may be determined. Followed as part of the jurisprudential line.
• Forfom Development Corporation vs. Philippine National Railways, 594 Phil. 10 (2008) — Traced the entire jurisprudential line from 1915 and held that recovery of possession can no longer be allowed; what is left to the landowner is the right of compensation. Served as the principal synthesis of the doctrine relied upon in this case.
• Republic of the Philippines vs. Mendoza, 641 Phil. 562 (2010) — Applied the doctrine to the Government, holding that the owner's remedy is an action for just compensation, not ejectment, and that the ejectment court should have ordered the complaint dismissed without prejudice to filing a proper action for recovery of compensation. Followed.
• Republic of the Philippines vs. Court of Appeals, 494 Phil. 494 (2005) — Held that the RTC can determine just compensation even in the absence of a proper expropriation proceeding, and that where property was taken without expropriation and the owner filed an action for recovery of possession before commencement of expropriation, the value at the time of taking is controlling. Cited as supporting authority.
• Eusebio vs. Luis, 618 Phil. 586 (2009) — Held that failure for a long time of the owner to question the lack of expropriation proceedings constitutes a waiver of the right to recover possession. Cited within Republic vs. Mendoza.

• Section 8, Republic Act No. 9136 (Electric Power Industry Reform Act of 2001) — Creates the National Transmission Corporation (TransCo) to assume the electrical transmission functions of the National Power Corporation and vests it with the power of eminent domain subject to the requirements of the Constitution and existing laws. The Court relied on this provision to establish that TransCo is a public service corporation endowed with expropriation powers, triggering the application of the doctrine barring ejectment against such entities.
• Sections 5 and 6, Rule 67 of the Rules of Court (Expropriation) — Govern the determination of just compensation and consequential damages in expropriation proceedings. The Court held that BDC is entitled only to just compensation and consequential damages as determined pursuant to these provisions, not to rental in arrears awarded in the unlawful detainer action.

Carpio (Chairperson), Perlas-Bernabe, and Lazaro-Javier, JJ., concurred. J. Reyes, Jr. was on wellness leave.