National Transmission Corporation vs. Clemente P. Untiveros, et al.

Procedural rules may be relaxed where exceptional circumstances and substantial merits would otherwise produce injustice disproportionate to the procedural lapse. In an inverse condemnation suit for a 2017 encroachment involving transmission-line properties, the concessionaire that assumed operations and liabilities as if owner after the January 15, 2009 concession commencement date is an indispensable party; its non-joinder is a jurisdictional defect requiring remand for inclusion.

National Transmission Corporation (TRANSCO) is a government-owned and controlled corporation created under Republic Act No. 9136, tasked with operating and maintaining the nationwide power transmission system. Those electrical transmission functions were turned over to the National Grid Corporation of the Philippines (NGCP) on January 15, 2009, following Republic Act No. 9511 and a Concession Agreement among the Power Sector Assets and Liabilities Management Corporation, TRANSCO, and NGCP. The private respondents are landowners of seven parcels in Barangay Bucal, Batangas City affected by the Batangas-Makban 230KV Transmission Line owned by TRANSCO. Their claim was brought as an inverse condemnation proceeding under Rule 67 in relation to Republic Act No. 10752.

Respondents Clemente P. Untiveros, the spouses Jose V. and Teodora M. Pagcaliwagan, Lucila M. Plata, the heirs of Juan and Geronima Torres, the spouses Leonisa M. and Natalio B. Lopez, and the spouses Bernardo B. and Anita C. Pagcaliwagan, together with the heirs of Rosario P. Plata, filed a Complaint for inverse condemnation under Rule 67 of the Rules of Court in relation to Republic Act No. 10752 against National Transmission Corporation (TRANSCO) before the Regional Trial Court of Batangas City. They alleged that they were the registered owners of seven parcels of land located in Barangay Bucal, Batangas City affected by the Batangas-Makban 230KV Transmission Line owned by TRANSCO.

In early 2017, TRANSCO allegedly encroached upon the subject properties and removed existing structures and trees, claiming that these were prohibited within a 40-meter range of the transmission line. TRANSCO also asserted ownership over the properties, contending that acquisition was necessary for the improvement of the electricity transmission system. The owners consequently sought to compel TRANSCO to exercise its power of eminent domain and to pay just compensation. TRANSCO answered with special and affirmative defenses and a counterclaim, praying for dismissal for lack of merit.

The property owners then moved to require TRANSCO to comply with Republic Act No. 10752 by depositing a provisional amount equivalent to the current Bureau of Internal Revenue zonal valuation of the subject properties. TRANSCO opposed, arguing that the Complaint was not covered by the statute and, alternatively, that any deposit should be based on value at the time of taking. The heirs of Rosario P. Plata later sought partial withdrawal of their Complaint, which the RTC granted on October 12, 2020. On October 13, 2020, the RTC granted the motion to require compliance and ordered TRANSCO to deposit PHP 138,448,000.00, representing 100% of the properties’ current relevant BIR zonal valuation; TRANSCO’s motion for reconsideration was denied.

Afterwards, TRANSCO filed a Manifestation with Motion to Archive and a Motion for Leave to Implead Indispensable Party, praying that NGCP be impleaded and that the case be archived pending NGCP’s inclusion. In its July 26, 2021 Resolution, the RTC denied both Motions for lack of merit. The trial court found that Republic Act No. 9511’s grant to NGCP of the right of eminent domain did not ipso facto make NGCP an indispensable party, that definitive judgment could be rendered with TRANSCO as owner of the transmission lines, and that exclusion of an indispensable party was not among the grounds for archiving civil cases. The RTC denied reconsideration on October 11, 2021. The respondents then obtained a cease and desist order preventing TRANSCO from entering and using the subject properties until issuance of a writ of possession.

TRANSCO thereafter filed a Petition for Certiorari before the Court of Appeals assailing the October 11, 2021 Order. The appellate court dismissed the Petition on procedural grounds: the filing was late, the docket fees were not timely paid in full, copies had not been served on the adverse party, and the petition lacked a duplicate original or certified true copy of the pertinent RTC Resolution. On reconsideration, the Court of Appeals found substantial compliance with proof of service but no sufficient justification for the remaining procedural defects.

• Strict Application of Procedural Rules: TRANSCO argued that the Court of Appeals erred in strictly applying the Rules and sought leniency, asserting that certified true copies of the pertinent RTC Resolution were in fact included in its Petition, as shown by the marking “certified true copy” on the electronic copy.

• Effect of the COVID-19 Pandemic: TRANSCO conceded that its Petition was filed a day late but attributed the delay to pandemic-related disruptions; the National Capital Region was under Alert Level 2 under the Inter-Agency Task Force for the Management of Emerging Infectious Diseases 151-C Series of 2021, both TRANSCO and the Office of the Government Corporate Counsel were under skeletal work arrangements, and its sole messenger failed to file on time but promptly filed through LBC on the same day.

• Docket Fee Underpayment: TRANSCO maintained that there was no intent to defraud; the underpayment of PHP 700.00 resulted from the messenger’s misguided reliance on A.M. No. 17-12-09-SC.

• Merits and Indispensable Party: TRANSCO argued that its Petition had substantial merit because it would be unfairly required to pay provisional just compensation unless NGCP was impleaded; under the Concession Agreement, NGCP had assumed operation and maintenance of the transmission system as if it were the owner, making NGCP’s involvement essential.

• Strict Procedural Compliance: Respondents maintained that the Court of Appeals correctly dismissed the case due to TRANSCO’s failure to comply with the procedural rules.

• No Justification for Leniency: Respondents asserted that the explanations offered did not warrant relaxation of the rules and prayed for denial of the Petition.

• Relaxation of Procedural Rules: Whether the Court of Appeals erred in strictly applying the procedural rules in dismissing TRANSCO’s Petition for Certiorari despite the claimed pandemic-related delay and the alleged merits.

• Archiving of Civil Cases: Whether the RTC committed grave abuse of discretion in denying TRANSCO’s Motion to Archive on the ground of the pending inclusion of an indispensable party.

• Indispensable Party: Whether NGCP is an indispensable party in the inverse condemnation action such that leave to implead it should have been granted.

• Relaxation of Procedural Rules: Yes. The Court of Appeals erred in strict application; the procedural rules were relaxed due to exceptional pandemic circumstances and the substantial merits of the case.

• Archiving of Civil Cases: No. The RTC’s denial was affirmed because the pending inclusion of an indispensable party is not one of the instances justifying archiving under OCA Circular No. 89-2004.

• Indispensable Party: Yes. NGCP is an indispensable party in the inverse condemnation action; the case must be remanded for NGCP’s inclusion.

• Relaxation of Procedural Rules: The special civil action of certiorari is a prerogative writ, not demandable as of right, and compliance with the Rules is ordinarily strict. The Court, however, may relax procedural rules to promote substantial justice where strict adherence would hinder rather than aid adjudication. TRANSCO failed to comply with Rule 46, Sections 2 and 3 and Rule 65, Section 4 of the Rules of Court. Nevertheless, the COVID-19 pandemic caused skeletal work arrangements and a sole messenger’s one-day delay in filing through a private courier, while the docket fee underpayment was only PHP 700.00 and attributable to reliance on A.M. No. 17-12-09-SC. These circumstances, together with the substantial merits of the indispensable-party issue, warranted relaxation and resolution on the merits.

• Archiving of Civil Cases: OCA Circular No. 89-2004, echoing OCA Circular No. 7-A-92, permits archiving of civil cases only where the parties are in settlement for up to 90 days; an interlocutory order is elevated and pending before a higher court that has issued a temporary restraining order or writ of preliminary injunction; or summons cannot be served within six months from issuance without the plaintiff’s fault or neglect. The pending inclusion of an indispensable party is not among these enumerated grounds. Accordingly, the RTC correctly denied the Motion to Archive.

• Indispensable Party: Under Rule 3, Section 7 of the Rules of Court, indispensable parties must be joined. A party is indispensable when a final adjudication cannot be made without injuring that party’s interest, as defined in Heirs of Dela Corta, Sr. vs. Alag-Pitogo. Non-joinder is jurisdictional, rendering subsequent actions null and void and requiring remand, as held in Florete, Jr. vs. Florete. Inverse condemnation seeks just compensation for property taken in fact by the government without formal expropriation; the entity ultimately accountable for the taking must be a defendant, as explained in National Power Corporation vs. Heirs of Macabangkit Sangkay. Although Republic Act No. 9136, Section 8 transferred transmission functions and eminent domain authority to TRANSCO, the Concession Agreement effective January 15, 2009 made NGCP the concessionaire that took over the operation, maintenance, and responsibilities of the transmission business as if it were the owner, and Republic Act No. 9511 granted NGCP a franchise and right of eminent domain. Concession Agreement Section 5.08 retained TRANSCO liability only for pre-existing right-of-way claims accruing before the commencement date. Because the alleged 2017 encroachment occurred after January 15, 2009, NGCP is accountable and therefore indispensable. Since joinder is mandatory and jurisdictional, the case was remanded for NGCP’s inclusion.

• Relaxation of Procedural Rules — The Supreme Court may relax procedural rules for compelling reasons to avoid injustice disproportionate to a litigant’s procedural lapse. Strict compliance may be set aside where it would hinder rather than aid the administration of justice, especially where exceptional circumstances and substantive merits exist. Here, the COVID-19 pandemic’s skeletal work arrangements, a one-day late filing through a private courier, a PHP 700.00 fee underpayment, and the substantial merits justified relaxing Rules 46 and 65.

• Certiorari as a Prerogative Writ — A special civil action for certiorari is not a natural right or a fundamental aspect of due process, but a prerogative writ issued only in judicial discretion; strict adherence to procedural requirements is generally required. This principle framed the Court of Appeals’ dismissal but yielded to equitable relaxation in this case.

• Archiving of Civil Cases — Under OCA Circular No. 89-2004, which reiterates OCA Circular No. 7-A-92, a civil case may be archived only when: (a) the parties are in settlement, for not more than 90 days; (b) an interlocutory order is elevated and pending before a higher court that has issued a temporary restraining order or writ of preliminary injunction; or (c) summons cannot be served within six months from issuance without the plaintiff’s fault. The pending inclusion of an indispensable party is not among these grounds.

• Indispensable Party — An indispensable party has such an interest in the controversy that a final adjudication cannot be made without injuring or affecting that interest. Non-joinder is a jurisdictional defect: all subsequent actions of the lower courts are null and void as to both absent and present parties, and the case must be remanded for inclusion. Dismissal follows only upon the plaintiff’s refusal to comply with an order to join.

• Inverse Condemnation — Inverse condemnation is an action to recover the value of property taken in fact by the governmental defendant without formal eminent domain proceedings. It is based on the constitutional prohibition against taking private property for public use without just compensation, not on tort. The entity ultimately accountable for the taking must be made a defendant and is therefore indispensable.

• Easement as Taking — Expropriation is not limited to acquisition of title and possession; it may impose only a burden, such as a right-of-way easement. An easement constitutes a taking when it substantially impairs the property’s value or interferes with its conventional use for an indefinite period. Restrictions due to transmission lines fall within the scope of expropriation.

• Concessionaire Liability for Post-Commencement Claims — Under the Concession Agreement, TRANSCO retained liability for right-of-way claims accruing before the commencement date, while NGCP became accountable for liabilities arising from its post-commencement operation and maintenance. The 2017 encroachment made NGCP accountable.

• "Nevertheless, if strict adherence to the rules of procedure would hinder rather than aid in the administration of justice, especially in instances where the circumstances of the case underscore the need for substantive justice, this Court may relax the application of these procedural rules in the exercise of its equity jurisdiction." — This passage states the controlling equitable principle for relaxing the certiorari rules because of the pandemic disruptions and merits.

• "An indispensable party is a party who has such an interest in the controversy or subject matter that a final adjudication cannot be made, in his absence, without injuring or affecting that interest, a party who has not only an interest in the subject matter of the controversy, but also has an interest of such nature that a final decree cannot be made without affecting his interest or leaving the controversy in such a condition that its final determination may be wholly inconsistent with equity and good conscience." — This canonical definition, quoted from Heirs of Dela Corta, Sr. vs. Alag-Pitogo, supplies the test used to classify NGCP as indispensable.

• "There are two consequences of a finding on appeal that indispensable parties have not been joined. First, all subsequent actions of the lower courts are null and void for lack of jurisdiction. Second, the case should be remanded to the trial court for the inclusion of indispensable parties. It is only upon the plaintiff's refusal to comply with an order to join indispensable parties that the case may be dismissed." — This passage articulates the jurisdictional consequence of non-joinder and supports the remand.

• "The action to recover just compensation from the State or its expropriating agency differs from the action for damages. The former, also known as inverse condemnation, has the objective to recover the value of property taken in fact by the governmental defendant, even though no formal exercise of the power of eminent domain has been attempted by the taking agency." — This defines inverse condemnation and anchors the analysis that the accountable entity must be a defendant.

• Heirs of Dela Corta, Sr. vs. Alag-Pitogo, 871 Phil. 356 (2020) — Followed; defined indispensable parties and supplied the test that a final adjudication cannot be made without affecting their interests.

• Florete, Jr. vs. Florete, 778 Phil. 614 (2016) — Followed; laid down the consequences of failing to implead an indispensable party: lower court actions are null and void for lack of jurisdiction, and the case must be remanded for inclusion.

• National Power Corporation vs. Heirs of Macabangkit Sangkay, 671 Phil. 569 (2011) — Followed; distinguished inverse condemnation from damages and established that the entity ultimately accountable for the taking is the proper defendant.

• Republic vs. Philippine Long Distance Telephone Company, 136 Phil. 20 (1969) — Followed; recognized that expropriation may impose an easement without loss of title and possession.

• National Power Corp. vs. Spouses Asoque, 795 Phil. 19 (2016) — Followed; applied the principle that a right-of-way easement may constitute a taking when it substantially impairs property value or conventional use.

• Asia United Bank vs. Goodland Co., Inc., 650 Phil. 174 (2010) — Followed; stated that the Court has discretion to relax procedural rules for compelling reasons to avoid injustice disproportionate to procedural lapses.

• Rule 46, Sections 2 and 3, Rules of Court — Govern original actions for certiorari; require seven legible copies with proof of service, a duplicate original or certified true copy of the assailed ruling, material record portions, and payment of docket fees. Applied: TRANSCO’s noncompliance was grounds for dismissal, but relaxation was warranted.

• Rule 65, Section 4, Rules of Court — Requires certiorari petitions to be filed within 60 days from notice of the assailed judgment, order, or resolution. Applied: TRANSCO was one day late, a defect excused by pandemic circumstances.

• Rule 3, Section 7, Rules of Court — Requires compulsory joinder of indispensable parties. Applied: NGCP, being indispensable to the inverse condemnation suit, must be impleaded before trial proceeds.

• OCA Circular No. 89-2004 — Governs archiving of civil cases and limits grounds to settlement, pending elevated interlocutory order with temporary restraining order or injunction, and inability to serve summons. Applied: TRANSCO’s ground was not among them.

• Republic Act No. 9136, Section 8 (Electric Power Industry Reform Act) — Created TRANSCO, transferred NPC’s electrical transmission functions to it, and granted it eminent domain power. Applied: supplied TRANSCO’s original authority over the transmission line.

• Republic Act No. 9511, Sections 1 and 4 — Granted NGCP a franchise to operate the nationwide transmission system and authorized it to exercise eminent domain. Applied: established NGCP’s role as concessionaire.

• Constitution, Article III, Section 9 — Prohibits taking of private property for public use without just compensation. Applied: the basis of inverse condemnation.

• Republic Act No. 10752 (Right-of-Way Act) — The statute under which the trial court ordered deposit of 100% of the properties’ Bureau of Internal Revenue zonal value. Applied: framed the provisional payment aspect of the case.

• Concession Agreement, Sections 3.01, 3.03(c), and 5.08 — Provided that NGCP took over TRANSCO’s transmission business and assumed responsibilities as if owner, while TRANSCO retained liability for pre-commencement right-of-way claims. Applied: allocated liability and made NGCP indispensable for the 2017 encroachment.

Lazaro-Javier (Acting Chairperson), M. Lopez, and Kho, Jr., JJ., concurred. Leonen, SAJ., was on official business.