NATIONAL TRANSMISSION CORPORATION, PETITIONER, VS. BERMUDA DEVELOPMENT CORPORATION, RESPONDENT.

National Transmission Corporation versus Bermuda Development Corporation

The Case

This is a petition for review filed by the National Transmission Corporation, which I will call NTC, against the Bermuda Development Corporation, which I will call Bermuda. NTC asks the Supreme Court to reverse the orders of the Regional Trial Court of Biñan, Laguna, Branch 24, which dismissed NTC's appeal in an unlawful detainer case on the ground that the appeal had become moot and academic. The case matters because it draws the line between two great concerns: the private owner's right to recover possession through ejectment, and the State's inherent power of eminent domain, which the Court holds must not be defeated by an ejectment suit. It is a favorite testing ground for the rule that an ejectment suit ordinarily should not prevail over the State's power of eminent domain.

Procedural History

Bermuda filed a complaint for unlawful detainer against NTC before the Municipal Trial Court of Cabuyao, Laguna. After proceedings, the Municipal Trial Court rendered judgment in favor of Bermuda, ordering NTC to vacate the property, to pay reasonable monthly rentals, and to pay attorney's fees, appearance fees, and costs. NTC appealed to the Regional Trial Court of Biñan, Laguna, Branch 24. Bermuda moved for execution pending appeal, which the Regional Trial Court granted, issuing a writ of execution pending appeal and later a notice of garnishment against NTC's account with the Land Bank of the Philippines. NTC moved to reconsider and to quash these processes.

In the meantime, NTC filed a complaint for expropriation of the same property before the Regional Trial Court of Biñan, Laguna, which was raffled to Branch 25. After depositing the provisional value with the Land Bank, NTC obtained a writ of possession from Branch 25. Branch 24 then dismissed NTC's appeal in the ejectment case as moot and academic, and denied reconsideration. NTC came to the Supreme Court by petition for review under Rule 42 of the Revised Rules of Court.

Facts

Bermuda filed an unlawful detainer case against NTC before the Municipal Trial Court of Cabuyao over a parcel of land covered by a transfer certificate of title. On 24 August 2009, the Municipal Trial Court ruled for Bermuda, ordering NTC and all persons claiming rights under it to vacate the lot and surrender possession to Bermuda, to pay 10,350,000 pesos as reasonable monthly rental computed from 13 December 2008 until complete vacatur, and to pay 50,000 pesos as attorney's fees, 5,000 pesos per court appearance, and the costs of suit.

NTC appealed to the Regional Trial Court, Branch 24 of Biñan. Bermuda sought urgent execution, which Branch 24 granted, issuing a writ of execution pending appeal and a notice of garnishment against NTC's account with the Land Bank. NTC moved to reconsider and to quash.

Then NTC filed a complaint for expropriation of the very same property before Branch 25 of the same court. NTC deposited 10,704,000 pesos with the Land Bank as the provisional value, and Branch 25 issued a writ of possession in its favor. On 29 July 2010, Branch 24 dismissed NTC's appeal as moot and academic, reasoning that with the expropriation and the deposit, NTC already owned the property and its possession was no longer in doubt. Reconsideration was denied on 30 May 2011, and NTC elevated the matter to the Supreme Court.

Issues

• Whether or not the Regional Trial Court, Branch 24, erred in dismissing NTC's appeal in the unlawful detainer case as moot and academic.
• Whether or not a writ of possession issued in an eminent domain case, placing the expropriating party in possession, renders moot and academic an earlier ejectment judgment directing the same party to vacate the same land.
• Whether or not the rentals in arrears awarded in the ejectment case may still be collected after the dismissal of the appeal.

Applicable Provisions

Section 9, Article III of the Constitution provides:

Private property shall not be taken for public use without just compensation.

The Court cites this to show that eminent domain is an inherent power of the State, and that this provision merely limits its exercise and protects the individual's right to property.

Ruling

On the first two issues, the Court found no cogent reason to overturn Branch 24. It held that an ejectment suit ordinarily should not prevail over the State's power of eminent domain. To require NTC to first vacate under the ejectment judgment and then restore possession under the writ of possession from the expropriation court would be circuitous, a bureaucratic waste of time and resources, and a pernicious delay of government infrastructure projects that the Court will not countenance. The Court quoted with approval the observation of Branch 24 that with the filing of the expropriation and the acceptance of payment, there was no more basis to eject NTC, and that the appeal had become moot and academic.

On the third issue, the Court held that the rental in arrears of 10,350,000 pesos, computed from 13 December 2008, should be collected in the enforcement of judgment by the Municipal Trial Court once the ejectment decision becomes final and executory, since that amount was not included in the computation of just compensation in the expropriation case. The petition therefore fails.

Doctrine

Eminent domain is an inherent power of the State that need not be granted even by the fundamental law; the constitutional guarantee that private property shall not be taken for public use without just compensation merely limits that power and protects the individual's right to property. An action for unlawful detainer exists when a person unlawfully withholds possession of land or a building after the expiration or termination of the right to hold possession by virtue of a contract, express or implied, and the only issue in such a case is physical or material possession, independent of any claim of ownership. The rule a bar candidate must retain is that an ejectment suit ordinarily should not prevail over the State's power of eminent domain, and that a writ of possession issued in an expropriation case renders moot and academic an earlier ejectment judgment directing the same party to vacate the same land. Finally, rentals in arrears awarded in the ejectment case, not included in the just compensation, may still be enforced in the ejectment court once its judgment becomes final and executory.

Disposition

The Supreme Court dismissed the petition and affirmed the orders of the Regional Trial Court, Branch 24, of Biñan, Laguna, dated 29 July 2010 and 30 May 2011.

Remember This

Memorize the line: an ejectment suit ordinarily should not prevail over the State's power of eminent domain. Examiners use this case to test whether you know that a writ of possession in expropriation moots an earlier ejectment judgment, and that unpaid rentals in arrears are enforced in the ejectment court, not in the expropriation case.