NPC vs. Spouses Llorin

Unlawful detainer does not lie against a public utility corporation endowed with the power of eminent domain that has occupied private land for public service purposes without prior acquisition of title, as public policy, public necessity, and equitable estoppel preclude ejectment; the landowner's sole remedy is to claim just compensation and consequential damages.

Spouses Rufo and Tomasa Llorin are the registered owners of a 102,606-square-meter parcel of land located in Barangay San Felipe, Naga City, covered by Transfer Certificate of Title No. 29725. In 1978, the National Power Corporation (NPC) entered and occupied 10,500 square meters thereof without the owners' consent to construct and install 69 kV Naga-Tinambac power transmission lines. The predecessors-in-interest of Spouses Llorin tolerated this occupation based on NPC's assurances that the structures were temporary, that NPC would vacate upon demand, and that monthly rentals would be paid. Despite subsequent demands for the return of the property and payment of rentals, NPC failed to comply, prompting Spouses Llorin to serve a final formal demand on August 30, 2006.

• Property and Ownership: Spouses Rufo and Tomasa Llorin are the registered owners of a 102,606-square-meter parcel of land covered by Transfer Certificate of Title No. 29725 (Lot 3162-B-2 of subdivision survey Psd-05-020261) situated in Barangay San Felipe, Naga City.
• Entry and Occupation by NPC: In 1978, NPC entered and occupied 10,500 square meters of the property without the consent of the owners or their predecessors-in-interest to construct and install 69 kV Naga-Tinambac power transmission lines.
• Tolerated Occupation: The predecessors-in-interest tolerated NPC's occupation based on the latter's assurances that the structures were temporary, that NPC would vacate the property when the owners needed it, and that monthly rentals would be paid.
• Demand to Vacate: Spouses Llorin and their predecessors-in-interest subsequently demanded the return of the property and payment of monthly rentals, which NPC continuously failed and refused to heed. On August 30, 2006, Spouses Llorin served their last formal demand upon NPC.
• Procedural Stance of NPC: In its answer with compulsory counterclaim, NPC asserted that the complaint stated no cause of action because the transmission assets had been transferred to the National Transmission Corporation (TRANSCO) under Republic Act No. 9136. NPC also raised the defenses of prescription and laches.
• Lower Courts' Findings: The MTCC, RTC, and Court of Appeals ruled in favor of Spouses Llorin. The Court of Appeals found that the allegations in the complaint were sufficient for unlawful detainer to prosper, that the right to recover possession could not be defeated by laches or prescription, and that the non-inclusion of TRANSCO was not fatal since the parties agreed during pre-trial that ownership of the transmission lines remained with NPC while TRANSCO acted merely as operator.

• Lack of Jurisdiction: NPC maintained that the Municipal Trial Court lacked jurisdiction over the subject matter of the complaint.
• Bar by Laches and Prescription: NPC argued that the complaint was barred by laches and prescription due to the substantial length of time that had elapsed since 1978.
• Indispensable Party: NPC contended that TRANSCO was an indispensable party that had not been impleaded in the action.
• Improper Remedy: NPC asserted that the proper remedy available to Spouses Llorin was not unlawful detainer but an action to claim just compensation for the taking of their property.

• Sufficiency of Cause of Action: Respondents argued that the allegations in the complaint were sufficient to state a cause of action for unlawful detainer.
• Non-Applicability of Laches and Prescription: Respondents maintained that their right to recover possession of their property could not be defeated by laches or prescription.
• Non-Fatal Absence of TRANSCO: Respondents countered that the non-inclusion of TRANSCO was not fatal to their case, noting that the parties had stipulated during pre-trial that NPC retained ownership of the transmission lines while TRANSCO served merely as the operator.

• Availability of Unlawful Detainer: Whether an action for unlawful detainer lies to oust NPC (and by extension TRANSCO) from property which has held 69 kV Naga-Tinambac power transmission lines since 1978.

• Unavailability of Unlawful Detainer Against Public Utilities: Unlawful detainer does not lie against a public utility corporation endowed with the power of eminent domain that has occupied private land in the interest of public service without prior acquisition of title by negotiated purchase or expropriation proceedings. Public policy, public necessity, and equitable estoppel preclude the landowner from obtaining ejectment or injunction. Under Section 8 of Republic Act No. 9136, TRANSCO assumed the electrical transmission functions of NPC, including the power of eminent domain necessary for the discharge of these functions. Pursuant to National Transmission Corp. v. Bermuda Development Corp., the proper recourse for the ejectment court is either: (1) to dismiss the case without prejudice to the landowner filing the proper action for recovery of just compensation and consequential damages; (2) to dismiss the case and direct the public utility corporation to institute proper expropriation or condemnation proceedings and to pay the just compensation and consequential damages assessed therein; or (3) to 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.
• Waiver by Delay: The considerable length of time that elapsed from 1978 until Spouses Llorin or their predecessors-in-interest questioned the government's unconsented entry and installation of the transmission lines, sans expropriation proceedings, constitutes a waiver of their right to regain possession of the property, leaving them only the remedy of claiming just compensation.

• Eminent Domain and Public Utilities Doctrine — A public utility corporation vested with eminent domain power that occupies private land for public service purposes without prior expropriation or purchase cannot be compelled to vacate through unlawful detainer or injunction. Public policy and necessity preclude such ejectment because the property is devoted to public use. The landowner is limited to recovering just compensation and consequential damages.
• Remedies in Ejectment Cases Against Public Utilities — When an ejectment case is filed against a public utility corporation with eminent domain power, the court must: (1) dismiss without prejudice to the landowner filing an action for just compensation; (2) dismiss and direct the utility to institute expropriation proceedings; or (3) treat the case as an expropriation proceeding under Rule 67 and determine just compensation if jurisdiction over the land value exists.
• Waiver of Right to Regain Possession — Substantial delay in asserting the right to recover possession of property occupied by the government or a public utility for public purposes, coupled with tolerance of such occupation, may constitute waiver of the right to ejectment, limiting the remedy to just compensation.

• "Thus, 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." — Establishes the fundamental rule that ejectment is unavailable against public utilities with eminent domain power occupying land for public service.
• "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." — Articulates the rationale based on public interest and equitable estoppel.
• "The proper recourse is for the ejectment court: (1) to dismiss the case without prejudice to the landowner filing the proper action for recovery of just compensation and consequential damages; or (2) to 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) to continue with the case as if it were an expropriation case and determine the just compensation and consequential damages pursuant to Rule 67 (Expropriation) of the Rules of Court, if the ejectment court has jurisdiction over the value of the subject land." — Enumerates the three alternative remedies available to the court when faced with an ejectment suit against a public utility.

• National Transmission Corp. v. Bermuda Development Corp., G.R. No. 214782, April 3, 2019 — Controlling precedent establishing that unlawful detainer is unavailing against public utilities with eminent domain power; cited for the three procedural options available to ejectment courts when public utilities are involved.
• Eusebio v. Luis, 618 Phil. 586 (2009) — Cited for the principle that considerable delay in asserting the right to recover possession constitutes waiver of that right, limiting the landowner to claiming just compensation.

• Section 8, Republic Act No. 9136 (Electric Power Industry Reform Act of 2001) — Creates the National Transmission Corporation (TRANSCO), transfers NPC's transmission functions and assets thereto, and vests TRANSCO with the power of eminent domain necessary for the discharge of its transmission functions.
• Rule 67, Rules of Court — Governs expropriation proceedings; referenced regarding the court's authority to determine just compensation and consequential damages when treating an ejectment case as an expropriation proceeding.

Perlas-Bernabe, Senior Associate Justice (Chairperson), Gesmundo, Lopez, and Rosario, JJ.