PNOC Alternative Fuels Corporation vs. National Grid Corporation of the Philippines

A corporation exercising delegated eminent domain power under a legislative franchise may only expropriate private property, not lands of public dominion; however, property owned by the State or its instrumentalities assumes the character of private property (patrimonial property) once expressly declared alienable and disposable for commercial purposes, making it susceptible to expropriation by a delegatee of the power of eminent domain.

The National Grid Corporation of the Philippines (NGCP), a private corporation granted a franchise under Republic Act No. 9511 to operate the national transmission system, sought to construct the Mariveles-Limay 230 kV Transmission Line Project to ensure power stability in Bataan and Zambales. To realize this project, NGCP needed to expropriate portions of land situated within the Petrochemical Industrial Park in Mariveles and Limay, Bataan, which was being administered by PNOC Alternative Fuels Corporation (PAFC), a subsidiary of the Philippine National Oil Company (PNOC). The property had been reserved through various executive issuances starting from 1919, eventually becoming an industrial zone under PNOC's administration via Presidential Decree No. 949.

• Nature of the Property: The subject property formed part of the Petrochemical Industrial Park, originally public land reserved for the Lamao Horticultural Experiment Station under Executive Order No. 48 (1919). Presidential Proclamation No. 361 (1968) withdrew 418 hectares for industrial reservation, later expanded by Presidential Proclamation No. 630 (1969). Presidential Decree No. 949 (1976) transferred administration to PNOC to develop as a petrochemical industrial zone, allowing lease, sale, and conveyance to private entities. Republic Act No. 10516 (2013) further expanded allowable uses to include energy-related activities and commercial utilization.
• Parties' Positions: NGCP sought to expropriate 101,290.42 square meters for transmission lines, invoking Section 4 of R.A. No. 9511. PAFC opposed, claiming the land was devoted to public purpose (petrochemical industry essential to national interest) and therefore immune from expropriation by a private entity.
• Tripartite Agreement: On August 17, 2012, the parties entered into a Tripartite Agreement acknowledging the necessity of the transmission line project and agreeing on a revised route considering safety concerns of Orica (a lessee manufacturing explosives).
• RTC Ruling: The trial court overruled PAFC's defenses, holding that property devoted to public use could still be expropriated for another public purpose, and that NGCP's legislative franchise granted eminent domain authority.

• Statutory Limitation: PAFC argued that Section 4 of R.A. No. 9511 limits NGCP's eminent domain power to "private property" only, excluding public domain lands.
• Public Use Character: Petitioner maintained that the Petrochemical Industrial Park was devoted to a public purpose (development of petrochemical industry essential to national interest) and thus constituted land of public dominion, which only Congress could expropriate directly.
• Propriety of Direct Appeal: PAFC contended that the Petition raised pure questions of law (interpretation of R.A. No. 9511 and the nature of the property), justifying direct recourse to the Supreme Court under Rule 45.

• Question of Fact: NGCP countered that the issues required examination of probative value of evidence, constituting questions of fact inappropriate for Rule 45.
• Expropriation of Public Domain: Respondent argued that land already devoted to public use could still be expropriated for another public purpose, citing constitutionalist opinions.
• Necessity: NGCP maintained the expropriation was necessary for the Mariveles-Limay 230 kV Transmission Line Project to ensure power stability in Bataan and Zambales.

• Procedural: Whether PAFC properly filed its appeal directly before the Supreme Court via Rule 45.
• Substantive: Whether the RTC correctly issued the Order of Expropriation holding that NGCP could expropriate the subject property under R.A. No. 9511.

• Procedural: The appeal was properly filed directly with the Supreme Court. The Petition raised pure questions of law involving statutory interpretation of R.A. No. 9511 and classification of property under the Civil Code, requiring no examination of evidentiary probative value.
• Delegated Power Limitation: NGCP's eminent domain power under R.A. No. 9511 is strictly limited to "private property." As a delegated power, its exercise must conform strictly to the terms of the delegating law.
• Nature of Property: The subject property constituted patrimonial property (private property) despite State ownership. Under P.D. No. 949 and R.A. No. 10516, the property was expressly declared alienable, disposable, and available for lease, sale, and conveyance to private entities for commercial and industrial purposes. Such express declaration of alienability removed the property from public dominion status.
• Commercial Character: The Petrochemical Industrial Park was operated by the State in its proprietary capacity for economic ends (commercial and business venture), not sovereign purposes. The inclusion of energy-related activities under R.A. No. 10516 confirmed the commercial nature of the zone.
• Necessity: The expropriation was reasonably necessary for the transmission line project, as evidenced by the Tripartite Agreement and PAFC's failure to specifically deny allegations of necessity in its Answer.

• Delegated vs. Inherent Power of Eminent Domain — The power of eminent domain is inherent in the State and primarily lodged in the legislature. When delegated to private corporations or government agencies, it becomes a restricted power that must be exercised strictly within the confines of the delegating law. The delegate's power is narrower than that of the delegating authority.
• Public Dominion vs. Patrimonial Property — Property of public dominion (Article 420, Civil Code) is inalienable and outside the commerce of man. Patrimonial property (Articles 421-422, Civil Code) refers to property owned by the State in its private or proprietary capacity, intended for economic ends. Once property of public dominion is expressly declared alienable and disposable, it assumes the nature of patrimonial property and becomes private property susceptible to acquisition and expropriation.
• Verba Legis — Where a statute is clear, plain, and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. The maxim index animi sermo est (speech is the index of intention) supports this rule.
• Two Stages of Expropriation — Expropriation consists of: (1) determination of the authority to exercise eminent domain and propriety of its exercise; and (2) determination of just compensation with the assistance of commissioners.

• "The right of eminent domain is an ultimate right of the sovereign power to appropriate any property within its territorial sovereignty for a public purpose. The exercise of this power, whether directly by the State or by its authorized agents, is necessarily in derogation of private rights. Hence, it is considered to be one of the harshest proceedings known to the law."
• "With the right of eminent domain not being an inherent power for private corporations, whose right to expropriate is granted by mere legislative fiat, the delegate's exercise of the right of eminent domain is restrictively limited to the confines of the delegating law."
• "The mere fact that a parcel of land is owned by the State or any of its instrumentalities does not necessarily mean that such land is of public dominion and not private property. If land owned by the State is considered patrimonial property, then such land assumes the nature of private property."
• "Upon the declaration of alienability and disposability, the land ceases to possess the characteristics inherent in properties of public dominion that they are outside the commerce of man, cannot be acquired by prescription, and cannot be registered under the land registration law, and accordingly assume the nature of patrimonial property of the State that is property owned by the State in its private capacity."

• Republic v. Spouses Alejandre, G.R. No. 217336, October 17, 2018 — Controlling precedent defining patrimonial property and the effect of declaration of alienability on property classification.
• Republic v. East Silverlane Realty Development Corp., 682 Phil. 376 (2012) — Cited for the proposition that classification as an industrial zone renders property patrimonial.
• Sps. Modesto v. Urbina, 647 Phil. 706 (2010) — Applied to illustrate that declaration of alienability converts public dominion to patrimonial property subject to private rights.
• City of Baguio v. National Waterworks and Sewerage Authority, 106 Phil. 144 (1959) — Referenced regarding waterworks as patrimonial property despite involving public utilities.
• Heirs of Suguitan v. City of Mandaluyong, 384 Phil. 676 (2000) — Cited for the principle that delegated eminent domain power must be exercised strictly within the terms of the delegating law.

• Article III, Section 9, 1987 Constitution — Not a grant but a limitation on the State's power of eminent domain; requires just compensation for private property taken for public use.
• Section 4, Republic Act No. 9511 — Grants NGCP the right of eminent domain limited to acquisition of "private property" actually necessary for franchise purposes.
• Articles 419-422, Civil Code — Classification of property into public dominion and private ownership; definition of patrimonial property as property owned by the State in its private capacity.
• Section 4, Rule 67, Rules of Court — Procedure for issuance of order of expropriation and right to appeal.
• Rule 8, Section 11, Rules of Court — Material averments deemed admitted when not specifically denied.

Carpio (Chairperson), Reyes, Jr., Lazaro-Javier, and Zalameda, JJ.