Case Digest: Hermano Oil Manufacturing & Sugar Corporation vs. Toll Regulatory Board, G.R. No. 167290. November 26, 2014.

Easement

CASE TITLE: Hermano Oil Manufacturing & Sugar Corporation vs. Toll Regulatory Board
GR No/ Date: G.R. No. 167290. November 26, 2014.*
PONENTE: Bersamin, J.
CASE WITH THE SC: Petition for Review on Certiorari
PROCEDURAL ANTECEDENTS: RTC - Complaint for specific performance CA - Appeal
FACTS: Petitioner Hermano Oil Manufacturing & Sugar Corporation owned a parcel of land located at the right side of the Sta. Rita Exit of the NLEX, situated at Barangay Sta. Rita, Guiguinto, Bulacan. The land was bounded by an access fence along the NLEX. in 2001, the petitioner requested the Toll Regulatory Board (TRB) to grant an easement of right of way, claiming the access fence deprived it of the enjoyment and possession of its property. TRB: Denied the request, citing inconsistencies with the Limited Access Highway Act (Republic Act No. 2000) and potential negative impacts on NLEX's rehabilitation and improvement. The petitioner sued the TRB and its Executive Director, Engr. Jaime S. Dumlao, in the RTC, seeking specific performance, the grant of the easement of right of way, and damages. The petitioner amended the complaint to include the Philippine National Construction Corporation (PNCC) and the Department of Public Works and Highways (DPWH) as indispensable parties. The petitioner requested a preliminary injunction to prevent the defendants from blocking access, and sought a perpetual injunction, the right of way, nullification of the condemnation of its property, and compensation. OSG: Filed a Motion to Dismiss, arguing the court had no jurisdiction, the petitioner had no cause of action, the state cannot be sued without consent, and the requirements for an injunction were not met. RTC: Dismissed the complaint, ruling it was a suit against the state without consent, and the court could not grant the main relief sought due to Presidential Decree No. 1818 and Republic Act No. 8975. CA: Affirmed the RTC's dismissal, stating the petitioner's claims violated the Limited Access Highway Act, the property was isolated due to the owner's actions, and there was adequate access via a road network. The CA noted the action was for specific performance, proper only in case of contractual breach, and the maintenance of NLEX was a governmental function, thus immune from suit. The CA also ruled that any expropriation issues should have been raised by the previous owner.
ISSUE: Whether Civil Case No. 37-M-2002 was properly dismissed. YES
ARGUMENTS/LEGAL BASES
PETITIONER	RESPONDENTS
The petitioner claimed the access fence prevented ingress and egress, depriving it of property use without due process or just compensation, and denied equal protection as adjacent properties had access.	The court had no jurisdiction. The petitioner had no cause of action. The state cannot be sued without consent.
PREVAILING PARTY: Respondents
DECISION/DOCTRINE: We concur with both lower courts. In our view, the TRB, Dumlao and the DPWH correctly invoked the doctrine of sovereign immunity in their favor. The TRB and the DPWH performed purely or essentially government or public functions. As such, they were invested with the inherent power of sovereignty. Being unincorporated agencies or entities of the National Government, they could not be sued as such. On his part, Dumlao was acting as the agent of the TRB in respect of the matter concerned. In Air Transportation Office v. Ramos, we expounded on the doctrine of sovereign immunity in the following manner: An unincorporated government agency without any separate juridical personality of its own enjoys immunity from suit because it is invested with an inherent power of sovereignty. Accordingly, a claim for damages against the agency cannot prosper; otherwise, the doctrine of sovereign immunity is violated. However, the need to distinguish between an unincorporated government agency performing governmental function and one performing proprietary functions has arisen. The immunity has been upheld in favor of the former because its function is governmental or incidental to such function; it has not been upheld in favor of the latter whose function was not in pursuit of a necessary function of government but was essentially a business.  Nonetheless, the petitioner properly argued that the PNCC, being a private business entity, was not immune from suit. The PNCC was incorporated in 1966 under its original name of Construction Development Corporation of the Philippines (CDCP) for a term of fifty years pursuant to the Corporation Code. In 1983, the CDCP changed its corporate name to the PNCC to reflect the extent of the Government's equity investment in the company, a situation that came about after the government financial institutions converted their loans into equity following the CDCP's inability to pay the loans. Hence, the Government owned 90.3% of the equity of the PNCC, and only 9.70% of the PNCC's voting equity remained under private ownership. Although the majority or controlling shares of the PNCC belonged to the Government, the PNCC was essentially a private corporation due to its having been created in accordance with the Corporation Code, the general corporation statute.20 More specifically, the PNCC was an acquired asset corporation under Administrative Order No. 59, and was subject to the regulation and jurisdiction of the Securities and Exchange Commission. Consequently, the doctrine of sovereign immunity had no application to the PNCC. The foregoing conclusion as to the PNCC notwithstanding, the Court affirms the dismissal of the complaint due to lack of jurisdiction and due to lack of cause of action. It appears that the petitioner's complaint principally sought to restrain the respondents from implementing an access fence on its property, and to direct them to grant it a right of way to the NLEX. Clearly, the reliefs being sought by the petitioner were beyond the jurisdiction of the RTC because no court except the Supreme Court could issue an injunction against an infrastructure project of the Government. This is because Presidential Decree No. 1818, issued on January 16, 1981, prohibited judges from issuing restraining orders against government infrastructure projects, stating in its sole provision: "No court in the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction or preliminary order, preliminary mandatory injunction in any case, dispute or controversy involving an infrastructure project." Presidential Decree No. 1818 was amended by Republic Act No. 8975,22 approved on November 7, 2000, whose pertinent parts provide: Section 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions and Preliminary Mandatory Injunctions.  No court, except the Supreme Court, shall issue any temporary restraining order, preliminary injunction or preliminary mandatory injunction against the government, or any of its subdivisions, officials or any person or entity, whether public or private, acting under the government's direction, to restrain, prohibit or compel the following acts: Acquisition, clearance and development of the right-of-way and/or site or location of any national government project; Bidding or awarding of contract/project of the national government as defined under Section 2 hereof; Commencement, prosecution, execution, implementation, operation of any such contract or project; Termination or rescission of any such contract/project; and The undertaking or authorization of any other lawful activity necessary for such contract/project. This prohibition shall apply in all cases, disputes or controversies instituted by a private party, including but not limited to cases filed by bidders or those claiming to have rights through such bidders involving such contract/project. This prohibition shall not apply when the matter is of extreme urgency involving a constitutional issue, such that unless a temporary restraining order is issued, grave injustice and irreparable injury will arise. The applicant shall file a bond, in an amount to be fixed by the court, which bond shall accrue in favor of the government if the court should finally decide that the applicant was not entitled to the relief sought. If after due hearing the court finds that the award of the contract is null and void, the court may, if appropriate under the circumstances, award the contract to the qualified and winning bidder or order a rebidding of the same, without prejudice to any liability that the guilty party may incur under existing laws. Section 4. Nullity of Writs and Orders. Any temporary restraining order, preliminary injunction or preliminary mandatory injunction issued in violation of Section 3 hereof is void and of no force and effect. Section 5. Designation of Regional Trial Courts. The Supreme Court may designate regional trial courts to act as commissioners with the sole function of receiving facts of the case involving acquisition, clearance and development of right-of-way for government infrastructure projects. The designated regional trial court shall within thirty (30) days from the date of receipt of the referral, forward its findings of facts to the Supreme Court for appropriate action. x x x As to what was embraced by the term infrastructure project as used in Presidential Decree No. 1818, the Court has ruled in Francisco, Jr. v. UEMMARA Philippines Corporation: PD 1818 proscribes the issuance of a writ of preliminary injunction in any case involving an infrastructure project of the government. The aim of the prohibition, as expressed in its second whereas clause, is to prevent delay in the implementation or execution of government infrastructure projects (particularly through the use of provisional remedies) to the detriment of the greater good since it disrupts the pursuit of essential government projects and frustrates the economic development effort of the nation. Petitioner argues that the collection of toll fees is not an infrastructure project of the government. He cites the definition of "infrastructure projects" we used in Republic v. Silerio: The term "infrastructure projects" means "construction, improvement and rehabilitation of roads, and bridges, railways, airports, seaports, communication facilities, irrigation, flood control and drainage, water supply and sewage systems, shore protection, power facilities, national buildings, school buildings, hospital buildings, and other related construction projects that form part of the government capital investment." x x x x The definition of infrastructure projects specifically includes the improvement and rehabilitation of roads and not just its construction. Accordingly, even if the Coastal Road was merely upgraded and not constructed from scratch, it is still covered by the definition. Moreover, PD 1818 itself states that any person, entity or governmental official cannot be prohibited from continuing the execution or implementation of such project or pursuing any lawful activity necessary for such execution or implementation. Undeniably, the collection of toll fees is part of the execution or implementation of the MCTEP as agreed upon in the TOA. The TOA is valid since it has not been nullified. Thus it is a legitimate source of rights and obligations. It has the force and effect of law between the contracting parties and is entitled to recognition by this Court. The MCTEP is an infrastructure project of the government forming part of the government capital investment considering that under the TOA, the government owns the expressways comprising the project. There can be no question that the respondents' maintenance of safety measures, including the establishment of the access fence along the NLEX, was a component of the continuous improvement and development of the NLEX. Consequently, the lower courts could not validly restrain the implementation of the access fence by granting the petitioner its right of way without exceeding its jurisdiction. Nor did the establishment of the access fence violate the petitioner's constitutional and legal rights. It is relevant to mention that the access fence was put up pursuant to Republic Act No. 2000 (Limited Access Highway Act), the enforcement of which was under the authority of the DOTC. Clarifying the DOTC's jurisdiction under this law in Mirasol v. Department of Public Works and Highways, the Court has said— RA 2000, otherwise known as the Limited Access Highway Act, was approved on 22 June 1957. Section 4 of RA 2000 provides that "[t]he Department of Public Works and Communications is authorized to do so design any limited access facility and to so regulate, restrict, or prohibit access as to best serve the traffic for which such facility is intended." The RTC construed this authorization to regulate, restrict, or prohibit access to limited access facilities to apply to the Department of Public Works and Highways (DPWH). The RTC's ruling is based on a wrong premise. The RTC assumed that the DPWH derived its authority from its predecessor, the Department of Public Works and Communications, which is expressly authorized to regulate, restrict, or prohibit access to limited access facilities under Section 4 of RA 2000. However, such assumption fails to consider the evolution of the Department of Public Works and Communications. x x x x Upon the ratification of the 1987 Constitution in February 1987, the former Ministry of Public Works and Highways became the Department of Public Works and Highways (DPWH) and the former Ministry of Transportation and Communications became the Department of Transportation and Communications (DOTC). DPWH issued DO 74 and DO 215 declaring certain expressways as limited access facilities on 5 April 1993 and 25 June 1998, respectively. Later, the TRB, under the DPWH, issued the Revised Rules and Regulations on Limited Access Facilities. However, on 23 July 1979, long before these department orders and regulations were issued, the Ministry of Public Works, Transportation and Communications was divided into two agencies - the Ministry of Public Works and the Ministry of Transportation and Communications - by virtue of EO 546. The question is, which of these two agencies is now authorized to regulate, restrict, or prohibit access to limited access facilities? Under Section 1 of EO 546, the Ministry of Public Works (now DPWH) assumed the public works functions of the Ministry of Public Works, Transportation and Communications. On the other hand, among the functions of the Ministry of Transportation and Communications (now Department of Transportation and Communications [DOTC]) were to (1) formulate and recommend national policies and guidelines for the preparation and implementation of an integrated and comprehensive transportation and communications systems at the national, regional, and local levels; and (2) regulate, whenever necessary, activities relative to transportation and communications and prescribe and collect fees in the exercise of such power. Clearly, under EO 546, it is the DOTC, not the DPWH, which has authority to regulate, restrict, or prohibit access to limited access facilities. Even under Executive Order No. 125 (EO 125) and Executive Order No. 125-A (EO 125-A), which further reorganized the DOTC, the authority to administer and enforce all laws, rules and regulations relative to transportation is clearly with the DOTC. Thus, DO 74 and DO 215 arc void because the DPWH has no authority to declare certain expressways as limited access facilities. Under the law, it is the DOTC which is authorized to administer and enforce all laws, rules and regulations in the field of transportation and to regulate related activities.   Moreover, the putting up of the access fence on the petitioner's property was in the valid exercise of police power, assailable only upon proof that such putting up unduly violated constitutional limitations like due process and equal protection of the law. In Mirasol v. Department of Public Works and Highways, the Court has further noted that: A toll way is not an ordinary road. As a facility designed to promote the fastest access to certain destinations, its use, operation, and maintenance require close regulation. Public interest and safety require the imposition of certain restrictions on toll ways that do not apply to ordinary roads. As a special kind of road, it is but reasonable that not all forms of transport could use it.2 Clearly, therefore, the access fence was a reasonable restriction on the petitioner's property given the location thereof at the right side of Sta. Rita Exit of the NLEX. Although some adjacent properties were accorded unrestricted access to the expressway, there was a valid and reasonable classification for doing so because their owners provided ancillary services to motorists using the NLEX, like gasoline service stations and food stores. A classification based on practical convenience and common knowledge is not unconstitutional simply because it may lack purely theoretical or scientific uniformity. Lastly, the limited access imposed on the petitioner's property did not partake of a compensable taking due to the exercise of the power of eminent domain. There is no question that the property was not taken and devoted for public use. Instead, the property was subjected to a certain restraint, i.e. the access fence, in order to secure the general safety and welfare of the motorists using the NLEX. There being a clear and valid exercise of police power, the petitioner was certainly not entitled to any just compensation. WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision promulgated on October 27, 2004; and ORDERS the petitioner to pay the costs of suit. SO ORDERED.