G.R. No. 205193 - Power Sector Assets and Liabilities Management Corp. vs. Felisa Agricultural Corp.

The case involves the inverse condemnation proceedings initiated by Felisa Agricultural Corporation against the National Power Corporation (NPC) for failure to pay just compensation after occupying its property since 1978.
In 1971, the corporate life and functions of the NPC were extended by Republic Act No. 6395, which notably retained NPC’s power of eminent domain for its corporate projects, including power generation and transmission.
On June 8, 2001, the enactment of Republic Act No. 9136 (EPIRA) restructured the electric power industry.

EPIRA transferred some functions of the NPC to new entities: the National Transmission Corporation (TRANSCO) and the Power Sector Assets and Liabilities Management Corporation (PSALM).
TRANSCO assumed NPC’s electrical transmission functions and was expressly granted the power to exercise eminent domain.
PSALM took over ownership of NPC’s generation assets, liabilities, and other disposable assets—and it wholly owns TRANSCO.

On January 11, 2001, Felisa Agricultural Corporation commenced inverse condemnation proceedings (Civil Case No. 01-11356) before the Regional Trial Court of Bacolod City.
On May 7, 2010, the trial court ordered NPC to pay provisional just compensation amounting to ₱7,845,000.00, based on Republic Act No. 8974 (facilitating acquisition of site for government infrastructure projects).
Felisa Agricultural Corporation filed a Motion for Issuance of Writ of Execution on August 8, 2011, seeking to enforce the said order against NPC and, by operation of EPIRA, its assignees—TRANSCO and PSALM.
On February 10, 2012, the trial court issued a Writ of Execution against NPC, TRANSCO, and PSALM, leading to the issuance of Notices of Garnishment against funds and properties of PSALM with the National Grid Corporation of the Philippines and Meralco.

PSALM challenged the issuance of the writ and garnishments before the Court of Appeals through a Petition for Certiorari alleging grave abuse of discretion by the trial court’s clerk and the sheriff.
The Court of Appeals initially granted a 60-day Temporary Restraining Order (TRO) enjoining the implementation of the writ and subsequently lifted it in its July 16, 2012 Decision, affirming that PSALM was liable for right-of-way claims because such liabilities had been transferred from NPC to PSALM by operation of law.
PSALM later filed a Petition for Review on Certiorari before the Supreme Court and an Urgent Motion for a TRO/injunction, particularly contesting that:

It was not a defendant in the inverse condemnation case;
Its funds and properties were improperly garnished; and
It was not liable for transmission-related right-of-way claims, which should fall on TRANSCO.

TRANSCO succeeded the NPC in transmission functions and assumed eminent domain powers, including liability for transmission and subtransmission-related right-of-way claims.
Although TRANSCO is wholly owned by PSALM, PSALM was created to manage and dispose of NPC’s generation assets and is a separate corporate personality.

The dispute also involved comments by the National Power Corporation, TRANSCO, the National Grid Corporation of the Philippines (concessionaire of TRANSCO’s transmission assets), and Meralco regarding the propriety of garnishment and the proper allocation of liabilities.

The Court compared the present case with PSALM v. RTC Branch 48, Bacolod City (G.R. No. 196550, 2011) and National Transmission Corporation v. Oroville Development Corporation (2017).
These cases addressed similar issues on the transfer of liabilities pursuant to EPIRA and the validity of executing judgments against entities not properly substituted as parties.

Whether PSALM is liable for the payment of the provisional just compensation and right-of-way claims arising from properties traversed by transmission towers built by the NPC.
Whether the transfer of liabilities under the EPIRA makes PSALM accountable, or if such liabilities fall solely on TRANSCO, given its assumption of transmission operations and its eminent domain powers.

Whether PSALM was deprived of due process when the writ of execution was issued against it, considering that it was not a proper party to the inverse condemnation case.
Whether the issuance of a writ and the subsequent garnishment of funds and properties against a non-party violates the constitutional guarantee of due process.

Whether government-owned and controlled corporations’ (GOCCs) funds and properties, such as those of PSALM, are subject to execution and garnishment considering the general rule exempting government properties used for public purposes.
Whether the separation between PSALM and TRANSCO in terms of corporate personality and liabilities is respected in applying the execution rules.