DIVISION

[ GR No. 195217, Jan 13, 2021 ]

NATIONAL POWER CORPORATION v. SPS. RUFO AND TOMASA

LLORIN +

DECISION

LAZARO-JAVIER, J.:
The Case

Petitioner National Power Corporation (NPC)[1] assails the Court of Appeals'

Decision[2] dated June 27, 2008 and Resolution[3] dated January 12, 2011 in
CA-G.R. SP No. 101986 upholding the order for NPC to vacate subject
property and to pay monthly rentals thereon.

Antecedents

On October 27, 2006, respondents Spouses Rufo and Tomasa Llorin

(Spouses Llorin), represented by their attorney-in-fact, Corazon Candelaria
filed before the Municipal Trial Court in Cities (MTCC)-Naga City a
complaint for unlawful detainer[4] against NPC docketed Civil Case No.
12712. It was raffled off to Branch 1.

Essentially, Spouses Llorin alleged that they are the registered owners of a
102,606-square meter (sq. m.) parcel of land covered by Transfer
Certificate of Title No. 29725 (Lot 3162-B-2 of subdivision survey Psd-05-
020261) and located in Brgy. San Felipe, Naga City.

Sometime in 1978, NPC occupied the property without the consent of their
predecessors-in-interest and started the construction and installation of 69
kV Naga-Tinambac power transmission lines, affecting a total of 10,500 sq.
m. of the property.
Their predecessors-in-interest tolerated NPC's occupation of their property
on the latter's assurance that the structures were only temporary, it would
vacate the property when the owners already needed it and monthly rentals
would be paid.

When they and their predecessors-in-interest subsequently demanded the

return of the property and payment of monthly rentals, NPC continuously
failed and refused to heed their demand. Thus, on August 30, 2006, they
served their last formal demand on NPC.

In its answer with compulsory counterclaim, NPC claimed that the

complaint should be dismissed because it stated no cause of action against
it. The subject transmission assets had already been transferred to the
National Transmission Corporation (TRANSCO) by virtue of Republic Act
No. 9136[5] (RA 9136). The complaint was also barred by prescription and
laches.[6]

Ruling of the MTCC

Under Decision[7] dated June 19, 2007, the MTCC ruled in favor of Spouses
Llorin, viz.:

WHEREFORE, premises considered, decision is hereby rendered in favor

of plaintiff Sps. Rufo Llorin and Tomasa Tijam-Liorin, ordering defendant
NAPOCOR

1. To vacate the subject properties and turn over it [sic] possession to

plaintiff;

2. To pay to plaintiff monthly rental of Php5,000.00 per month as rental

for the use of land from September, 2006 until the land is finally vacated;

3. To pay to plaintiff the amount of Php20,000.00 as attorney's fee plus

cost.

SO ORDERED.
Ruling of the Regional Trial Court (RTC)

On appeal, RTC-Naga City, Branch 26, affirmed under Decision [8] dated

December 7, 2007.

NPC consequently went to the Court of Appeals by way of petition for

review under Rule 42 of the Rules of Court.

Ruling of the Court of Appeals

 
By Decision[9] dated June 27, 2008, the Court of Appeals, too, affirmed,
thus:

WHEREFORE, the petition is DISMISSED. Accordingly, the

assailed Decision dated December 7, 2007 of the Regional Trial Court,
Branch 26, Naga City, which affirmed the Decision dated June 19, 2007 of
the Municipal Trial Court in Cities, Branch 1, Naga City in Civil Case No.
12712 is hereby AFFIRMED.

SO ORDERED.
The Court of Appeals ruled that the allegations in the complaint were
sufficient for unlawful detainer to prosper. The right of Spouses Llorin to
recover possession of their property cannot be defeated by laches or
prescription. The non-inclusion of TRANSCO in the case was not fatal
considering that the parties, during the pre-trial, had already agreed that
the ownership of the transmission lines remained with NPC and TRANSCO
is its operator.

Under Resolution[10] dated January 12, 2011, the Court of Appeals denied

NPC's motion for reconsideration.

The Present Petition

NPC argues in the main that (1) the MTCC had no jurisdiction over the
subject matter of the complaint, (2) the complaint was already barred by
laches and prescription, (3) TRANSCO, an indispensable party, was not
impleaded, and (4) the proper remedy of Spouses Llorin was to claim for
just compensation.

Considering that Spouses Llorin failed to file the required comment, the
Court resolved to dispense with it per Resolution dated October 9, 2019.
 Issue

Does an action for unlawful detainer lie to oust the NPC (TRANSCO) from
the property which holds its 69 kV Naga-Tinambac power transmission
lines since 1978?

Ruling

We reverse.

There is no dispute that since 1978, subject property has been devoted for a
public purpose serving as site for the government's 69 kV Naga-Tinambac
power transmission lines. Under RA 9136, TRANSCO has assumed the
electrical transmission functions of the NPC, including the latter's power of
eminent domain necessary for the discharge of these functions. Sec. 8 of RA
9136 provides:

SEC. 8. Creation of the National Transmission Company. There is hereby

created a National Transmission Corporation, hereinafter referred to as
TRANSCO, which shall assume the electrical transmission function of the
National Power Corporation (NPC), and have the power and functions
hereinafter granted. The TRANSCO shall assume the authority and
responsibility of NPC for the planning, construction and centralized
operation and maintenance of its high voltage transmission facilities,
including grid interconnections and ancillary services.

Within six (6) months from the effectivity of this Act, the transmission and
subtransmission facilities of NPC and all other assets related to
transmission operations, including the nationwide franchise of NPC for the
operation of the transmission system and the grid, shall be transferred to
the TRANSCO. The TRANSCO shall be wholly owned by the Power Sector
Assets and Liabilities Management Corporation (PSALM Corp.).

The subtransmission functions and assets shall be segregated from the

transmission functions, assets and liabilities for transparency and disposal:
Provided, That the subtransmission assets shall be operated and
maintained by TRANSCO until their disposal to qualified distribution
utilities which are in a position to take over the responsibility for operating,
maintaining, upgrading, and expanding said assets. All transmission and
subtransmission related liabilities of NPC shall be transferred to and
assumed by the PSALM Corp.

TRANSCO shall negotiate with and thereafter transfer such functions,

assets, and associated liabilities to the qualified distribution utility or
utilities connected to such subtransmission facilities not later than two (2)
years from the effectivity of this Act or the start of open access, whichever
comes earlier: x x x.
As ordained in the leading case of National Transmission Corp. v.
Bermuda Development Corp.,[11] for reasons of public policy and public
necessity, as well as equitable estoppel, the remedy of unlawful detainer is
unavailing to compel a public utility to vacate subject property. "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." Thus:

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. 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. 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. (Emphasis supplied)
Here, the MTCC therefore should have dismissed the case without
prejudice to the landowner's filing of the proper action for just
compensation and consequential damages; or directed the NPC
(TRANSCO) to initiate the proper expropriation proceedings and to pay
just compensation and consequential damages. Notably, the considerable
length of time that elapsed before Spouses Llorin or their predecessors-in-
interest questioned the government's so called unconsented entry into the
property and installation of the 69 kV Naga-Tinambac power transmission
lines, sans expropriation proceedings, constitutes a waiver of their right to
gain back its possession.[12] To repeat, the remedy left for them is to claim
for just compensation.

ACCORDINGLY, the petition is GRANTED. The Decision dated June 27,

2008 and Resolution dated January 12, 2011 of the Court of Appeals in CA-
G.R. SP No. 101986 as well as the Decision dated June 19, 2007 of the
Municipal Trial Court in Cities-Naga City, Branch 1 in Civil Case No. 12712
are REVERSED and SET ASIDE. The complaint for unlawful detainer
filed before the Municipal Trial Court in Cities-Naga City, Branch 1 in Civil
Case No. 12712 is DISMISSED, without prejudice to the filing of the action
for just compensation and consequential damages.

SO ORDERED.

Perlas-Bernabe, Senior Associate Justice, (Chairperson), Gesmundo,

Lopez, and Rosario,* JJ., concur.

*
 Designated as additional member per S.O. No. 2797 dated November 5,
2020.

 Represented by the Office of the Solicitor General through Associate

[1]

Solicitor General Reynaldo L. Saludares and Associate Solicitor Neil E.

Lorenzo.
[2]
 Penned by Associate Justice Magdangal M. De Leon and concurred in by
Associate Justices Josefina Guevara-Salonga and Normandie B.
Pizarro, rollo, pp. 65-75.
[3]
 Id. at 76-77.
[4]
 Id. at 176-177.

 An Act Ordaining Reforms In The Electric Power Industry, Amending

[5]

For The Purpose Certain Laws And For Other Purposes.

[6]
 Id. at 185-190.
[7]
 Id. at 230-233.
[8]
 Id. at 234-240.

 Penned by Associate Justice Magdangal M. De Leon and concurred in by

[9]

Associate Justices Josefina Guevara-Salonga and Normandie B.

Pizarro, id. at 65-75.
[10]
 Id.at 76-77.
[11]
 G.R. No. 214782, April 3, 2019.
[12]
 Eusebio v. Luis, 618 Phil. 586, 595-596 (2009).