PNOC ALTERNATIVE FUELS CORPORATION, PETITIONER, VS. NATIONAL GRID CORPORATION OF THE PHILIPPINES, RESPONDENT.

PNOC Alternative Fuels Corporation versus National Grid Corporation of the Philippines

The Case

This is an appeal brought by PNOC Alternative Fuels Corporation against National Grid Corporation of the Philippines, arising from a complaint for expropriation over a large tract of land inside the Petrochemical Industrial Park in Bataan. National Grid, a private corporation holding a legislative franchise to transmit electricity, sought to condemn the property to build its transmission line, invoking the right of eminent domain granted by its franchise. PNOC Alternative Fuels Corporation resisted, arguing that the land is already devoted to a public purpose and that the franchise limits National Grid to expropriating only private property. The case matters because it fixes the outer boundary of a delegate's power of eminent domain: a private corporation granted the power by statute may take only what the delegating law allows, and here the law allows only private property.

Procedural History

National Grid filed its complaint for expropriation before the Regional Trial Court of Mariveles, Bataan, Branch 4. PNOC Alternative Fuels Corporation and its co-defendants filed their answers, raising the defense that the property was already devoted to a public purpose and could be expropriated only by Congress. The trial court denied these defenses and issued an order of expropriation, declaring that National Grid had a lawful right to take the property upon payment of just compensation, and directing the parties to submit the names of three commissioners. PNOC Alternative Fuels Corporation moved for reconsideration, which the trial court denied. It then went directly to the Supreme Court by a petition for review on certiorari under Rule 45, insisting that its appeal raised only pure questions of law. National Grid filed its comment, and PNOC Alternative Fuels Corporation filed its reply.

Facts

The land in question forms part of the Petrochemical Industrial Park in Mariveles and Limay, Bataan. It began as part of a large parcel of the public domain reserved by the government for the Lamao Horticultural Experiment Station. Through a series of presidential issuances, portions of that land were withdrawn from the reservation and set aside as an industrial reservation, first under the administration of the National Power Corporation, then enlarged and placed under the National Development Company, and eventually transferred to the Philippine National Oil Company to be managed and developed as a petrochemical industrial zone.

In 1993, PNOC Alternative Fuels Corporation, then named PNOC Petrochemicals Development Corporation, was incorporated as a subsidiary of the Philippine National Oil Company to administer and operate the industrial zone. Its articles of incorporation were later amended to change its name. Ownership of the property was assigned to it, and it was mandated to manage, operate, and develop the land. In 2013, Congress passed a law expanding the use of the park to include energy and energy-allied activities, and the Department of Energy issued the implementing rules confirming PNOC Alternative Fuels Corporation's ownership and mandate.

Meanwhile, National Grid needed the property for its transmission line project. Negotiations between the two corporations failed, and in 2011 National Grid filed a complaint for expropriation, invoking the right of eminent domain under its franchise. The trial court granted the order of expropriation, and PNOC Alternative Fuels Corporation appealed directly to the Supreme Court.

Issues

• Whether or not PNOC Alternative Fuels Corporation properly filed its appeal directly before the Supreme Court under Rule 45, on the ground that the petition raises only pure questions of law.
• Whether or not the trial court correctly issued the order of expropriation, holding that National Grid is empowered under its franchise to expropriate the subject property.

Applicable Provisions

Section 4 of Republic Act Number 9511, National Grid's franchise, defines the scope of its delegated power of eminent domain:

Section 4. Right of Eminent Domain. - Subject to the limitations and procedures prescribed by law, the Grantee is authorized to exercise the right of eminent domain insofar as it may be reasonably necessary for the construction, expansion, and efficient maintenance and operation of the transmission system and grid and the efficient operation and maintenance of the subtransmission systems which have not yet been disposed by TRANSCO. The Grantee may acquire such private property as is actually necessary for the realization of the purposes for which this franchise is granted: Provided, That the applicable law on eminent domain shall be observed, particularly, the prerequisites of taking of possession and the determination and payment of just compensation.

This provision is decisive because it limits National Grid's delegated power to the taking of private property, and the Court reads that limitation literally.

Article 420 of the Civil Code identifies what constitutes property of the public dominion:

Article 420. The following things are property of public dominion: (1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character; (2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.

This classification matters because land of the public dominion is inalienable and outside the commerce of man, while patrimonial property of the State is treated as private property and may be expropriated.

Ruling

On the first issue, the Court held that PNOC Alternative Fuels Corporation committed no procedural error. Although it labeled its pleading a petition for certiorari, it was in substance a petition for review on certiorari under Rule 45, and it raised a pure question of law. The Court explained that a question of law arises when there is doubt as to what the law is on a certain state of facts, while a question of fact arises when the doubt concerns the truth or falsity of the alleged facts. The validity of the order of expropriation could be resolved simply by examining the applicable law and jurisprudence on eminent domain and the franchise itself, without reviewing the evidence.

On the second issue, the Court held that the trial court erred in issuing the order of expropriation. The power of eminent domain is inherent in the State and lodged primarily in the legislature, but it may be delegated to government agencies, public officials, and quasi-public entities. For a private corporation like National Grid, the power is not inherent; it is a mere delegated power granted by legislative fiat, and its exercise is restrictively limited to the confines of the delegating law. Applying the plain-meaning rule, the Court read Section 4 of the franchise literally: National Grid may acquire only private property. Since the subject property is patrimonial property of the State held in its private and proprietary capacity, it is deemed private property and may be expropriated. The Court thus affirmed the order of expropriation on this ground, even as it clarified the limits of the delegated power.

Doctrine

The power of eminent domain is inherent in the State and lodged in the legislature, but it is not exclusive to Congress; it may be delegated to government agencies, public officials, and quasi-public entities. When the delegate is a private corporation, the power is not inherent but merely delegated, and its exercise is restrictively limited to the confines of the delegating law. Under the plain-meaning rule, if a statute is clear, plain, and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. Section 4 of Republic Act Number 9511 authorizes National Grid to acquire only private property, and this limitation must be strictly observed. Land of the public dominion is inalienable and outside the commerce of man, but patrimonial property of the State is held in its private and proprietary capacity and is deemed private property, which may be the object of expropriation.

Disposition

The Supreme Court denied the petition and affirmed the trial court's order of expropriation, holding that National Grid may expropriate the subject property upon payment of just compensation.

Remember This

A delegate's power of eminent domain is strictly confined to the terms of the delegating law, and a franchise that authorizes the taking of private property only cannot reach land of the public dominion. Examiners use this case to test the distinction between public dominion and patrimonial property, and the plain-meaning rule in statutory construction.