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Case digest · Patrimonial property of the State; expropriation by a franchise holder limited to private property
PNOC Alternative Fuels Corporation vs. National Grid Corporation of the Philippines
The National Grid Corporation of the Philippines sued to expropriate about ten hectares of a State-owned industrial park in Bataan for a transmission line. Its franchise lets it acquire only private property.
Facts
1919–1969
About 621 hectares of land of the public domain were reserved for the Lamao Horticultural Experiment Station by E.O. No. 48 (1919). In 1968, P.P. No. 361 withdrew 418 of those hectares and declared them an industrial reservation; P.P. No. 630 enlarged that area in 1969.
1976–1994
P.D. No. 949 transferred the administration, management and ownership of the land to the Philippine National Oil Company (PNOC), to be developed as a petrochemical industrial zone. In 1993, PNOC Alternative Fuels Corporation (PAFC), then named PNOC Petrochemicals Development Corporation, was incorporated as a PNOC subsidiary to administer and operate the zone, and ownership of the property was later assigned to it.
February 9, 2011
The National Grid Corporation of the Philippines (NGCP), which described itself in its complaint as a private corporation, sued to expropriate 101,290.42 square meters of the industrial park for its Mariveles–Limay 230 kV transmission line, saying that negotiations had failed. PAFC answered that the land was already devoted to a public purpose and that only Congress could expropriate it.
2012–2013
In a Tripartite Agreement of August 17, 2012, the parties, PAFC included, acknowledged that the transmission line was necessary. In 2013, R.A. No. 10516 expanded the uses of the industrial park to include businesses engaged in energy and energy-allied activities or energy-related infrastructure projects.
February 11, 2016
The Regional Trial Court of Mariveles issued an order of expropriation. PAFC appealed directly to the Supreme Court, arguing that NGCP’s franchise, R.A. No. 9511, limits its power of eminent domain to private property.
Issue
May NGCP, whose franchise allows it to acquire only private property, expropriate land in the State-owned petrochemical industrial park?
Ruling
Yes. The land is patrimonial property that assumes the nature of private property. The Court denied PAFC’s appeal and affirmed the order of expropriation.
The Court first held that PAFC properly appealed directly under Rule 45, since only questions of law were involved. On the merits, it agreed with PAFC that NGCP’s delegated power is limited to private property, because Sec. 4 of R.A. No. 9511 is clear. But land owned by the State is not always land of public dominion: patrimonial property is held by the State in its private capacity and assumes the nature of private property. The industrial park is patrimonial. It is an industrial zone, operated by the State, through PAFC, in its proprietary capacity for economic ends, and P.D. No. 949, as amended by R.A. No. 10516, expressly allows portions to be leased, sold or conveyed to the private entities or persons that operate industries or businesses there. The law also allows energy-related infrastructure projects, which include transmission towers. PAFC did not allege that the line was unnecessary, and it had acknowledged the line’s necessity in the Tripartite Agreement, so the expropriation was reasonably necessary under NGCP’s franchise.
“If land owned by the State is considered patrimonial property, then such land assumes the nature of private property.”
Doctrine
“…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.” Inalienability is the defining mark of property of public dominion, so “an express declaration of alienability and disposability by the State negates the characterization of property as land of public dominion.” A delegate of the power of eminent domain, such as a franchise holder, must stay within the delegating law; NGCP may take only private property, and patrimonial property of the State counts as private property.
Compare: no declaration, no law
In Laurel vs. Garcia, G.R. Nos. 92013 and 92047, July 25, 1990, there was no formal declaration withdrawing the Roppongi property from public service and no law authorizing its sale, and the Court stopped the sale: “It requires executive and legislative concurrence.”
Bar tip
Do not assume that land owned by the State is public dominion. Ask whether the State holds it in its sovereign or its proprietary capacity, and whether a law expressly declares it alienable and disposable. A franchise holder limited to private property may expropriate patrimonial property of the State; that does not mean it may take any government land.
Hear it explained
Land Titles Jurisprudence Ep. 6, at 16:29
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This digest is general legal information for education, not legal advice, and it is not a substitute for reading the decision. Quoted passages are taken word for word from the full text.