G.R. No. 167290 - Hermano Oil Manufacturing and Sugar Corp. vs. Toll Regulatory Board

Case Summary (G.R. No. 167290)

Factual Background

The petitioner owned a parcel of land at the right side of the Sta. Rita Exit of the North Luzon Expressway (NLEX) in Barangay Sta. Rita, Guiguinto, Bulacan, titled under Transfer Certificate of Title No. T-134222. An access fence along the NLEX prevented vehicular ingress to and egress from the property. On September 7, 2001, the petitioner requested that the TOLL REGULATORY BOARD grant an easement of right of way to restore access. The TRB denied the request on September 26, 2001, citing inconsistency with Republic Act No. 2000 and adverse operational and safety consequences from allowing easements.

Trial Court Proceedings

The petitioner filed a complaint for specific performance in the RTC, seeking injunctive relief to enjoin the respondents from depriving it of ingress and egress, a perpetual injunction, the grant of a right of way, declaration that any condemnation was null and void, alternatively just compensation at not less than Four Thousand Pesos (Ps. 4,000.00) per square meter, attorneys’ fees of THREE HUNDRED THOUSAND PESOS (Ps. 300,000.00) and Ps. 5,000.00 per court appearance, moral and exemplary damages of Ps. 200,000.00, and costs. The petitioner amended the complaint to implead PNCC and the DPWH as indispensable parties.

Respondents’ Motion to Dismiss

The Office of the Solicitor General, appearing for the TRB, moved to dismiss on multiple grounds, asserting lack of jurisdiction, absence of cause of action, that the plaintiff was not the real party in interest, that an easement would not lie because the NLEX was a limited access facility under RA 2000, that the State could not be sued without consent, that prerequisites for provisional reliefs were not present, and that the proper remedy was a petition for certiorari under Rule 65, Rules of Court.

RTC Ruling and Rationale

By order dated March 6, 2002, the RTC granted the motion to dismiss. The RTC held that the complaint amounted to a suit against the State because it sought monetary compensation payable from public funds and because the individual respondent was sued in his official capacity. The RTC further found that the main relief sought — an injunction to restrain implementation of an access fence and to compel a right of way — was beyond its jurisdiction in view of Presidential Decree No. 1818 and Republic Act No. 8975, which bar courts, except the Supreme Court, from issuing temporary restraining orders or preliminary injunctions against government infrastructure projects. The petitioner’s motion for reconsideration was denied.

Court of Appeals Judgment

The Court of Appeals, in its October 27, 2004 decision, affirmed the RTC dismissal. The CA observed that the NLEX was already in existence when the petitioner acquired the property in December 1999, and that Entry No. 189568 on the title reflected that a portion of the property had been sold to the Republic of the Philippines earlier. The CA relied on the rule that one cannot demand a right of way when isolation of the property results from the owner’s or predecessors’ acts (citing Art. 649, New Civil Code and Villanueva v. Velasco). The CA further found that the property had access by an existing road network in front and that the petitioner had not demonstrated inadequacy of that access. The CA also treated the action as one for specific performance unsuited to the facts because no contract existed between the parties. Regarding immunity, the CA held that while PNCC was government-controlled, it functioned effectively as a private corporation and thus the doctrine of sovereign immunity did not strictly apply to it; nevertheless, the CA affirmed dismissal on other grounds and noted that challenges to alleged defective expropriation should have been raised by the prior owner.

Issues on Appeal to the Supreme Court

The petitioner advanced three principal contentions: that the CA decision violated the petitioner’s rights to due process and equal protection; that the CA erred in concluding that Entry No. 189568 reflected prior isolation of the property and that the petitioner’s predecessors allowed isolation; and that the CA wrongly extended immunity to PNCC despite its private corporate character.

Supreme Court Disposition

The Supreme Court denied the petition for review on certiorari and affirmed the CA decision. The Court concurred with the lower courts that dismissal was proper. The Court accepted the invocation of sovereign immunity in favor of the TRB, DPWH, and respondent Dumlao because those agencies and the official were performing essentially governmental functions and thus enjoyed immunity from suit when acting in that capacity. The Supreme Court acknowledged the separate status of PNCC as a corporation created under the Corporation Code and recognized authorities holding that PNCC is essentially a private corporation despite majority government equity; therefore, sovereign immunity did not apply to PNCC. Notwithstanding that conclusion as to PNCC, the Court affirmed dismissal on the independent grounds of lack of jurisdiction and absence of a cause of action.

Legal Basis: Jurisdictional Bar on Injunctive Relief

The Court reaffirmed that no court except the Supreme Court may issue a temporary restraining order, preliminary injunction, or preliminary mandatory injunction against government infrastructure projects, citing Presidential Decree No. 1818 and its legislative successor Republic Act No. 8975, and recited Section 3 and Section 4 of RA 8975 which broadly prohibit such provisional reliefs and declare any such orders void. The Court explained that the maintenance of safety measures and establishment of an access fence along NLEX formed part of the continuous improvement, implementation, and operation of an infrastructure project and thus fell squarely within the proscription.

Legal Basis: Sovereign Immunity and PNCC’s Status

The Court applied the doctrine of sovereign immunity, reiterating that unincorporated government agencies performing governmental functions enjoy immunity from suit, while entities performing proprietary or business functions do not necessarily enjoy that immunity. The Court referenced Air Transportation Office v. Ramos in explaining the principle. The Court analyzed PNCC’s corporate origins, government equity share (ninety point three percent), and administrative classification, and concluded that PNCC, though government-controlled, was created under the Corporation Code and was subject to the Securities and Exchange Commission, rendering it essentially a private corporation for immunity purposes; therefore the doctrine of sovereign immunity did not apply to PNCC.

Legal Basis: Limited Access Law, Police Power and Compensation

The Court held that the access fence had been established pursuant to Republic Act No. 2000 (Limited Access Highway Act), and that regulation of access to limited access facilities was consisten

Case Syllabus (G.R. No. 167290)

Parties and Posture

HERMANO OIL MANUFACTURING & SUGAR CORPORATION, Petitioner, owned the parcel covered by TCT No. T-134222 at the right side of the Sta. Rita Exit of the NLEX in Barangay Sta. Rita, Guiguinto, Bulacan.
TOLL REGULATORY BOARD and ENGR. JAIME S. DUMLAO, JR., Respondents, denied petitioner's request for an easement of right of way and were sued in the RTC.
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION (PNCC) and DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH) were impleaded as additional defendants in the trial court.
The petitioner appealed the RTC dismissal of its complaint to the Court of Appeals, which affirmed on October 27, 2004.
The petitioner filed a petition for review on certiorari to the Supreme Court, which promulgated the challenged decision on November 26, 2014.

Key Facts

The subject parcel was bounded by an access fence along the North Luzon Expressway (NLEX) that barred ingress and egress from the expressway.
The petitioner wrote to the TRB on September 7, 2001, requesting an easement of right of way to access the NLEX.
The TRB denied the request on September 26, 2001, citing inconsistency with Republic Act No. 2000 and potential adverse effects on NLEX rehabilitation and traffic operations.
The petitioner alleged total deprivation of use and enjoyment of its property, denial of due process and equal protection, and unequal treatment vis-à-vis adjacent landowners.

Reliefs Sought

The petitioner sought a writ of preliminary injunction/TRO enjoining deprivation of ingress and egress.
The petitioner prayed for a perpetual injunction, the grant of a right of way, and declaration that any alleged condemnation was null and void.
Alternatively, the petitioner sought just and fair compensation at not less than Four Thousand Pesos per square meter, attorneys’ fees, moral and exemplary damages, and costs.

Procedural History

The Office of the Solicitor General filed a motion to dismiss asserting lack of jurisdiction, absence of cause of action, non-suability of the State, and that the proper remedy was a Rule 65 certiorari petition.
The RTC granted the motion to dismiss on March 6, 2002, on grounds that the suit amounted to a claim against the State without consent and that courts (other than the Supreme Court) were barred from issuing injunctions against infrastructure projects under Presidential Decree No. 1818 and Republic Act No. 8975.
The RTC denied reconsideration on July 25, 2002, and the petitioner appealed to the Court of Appeals.
The Court of Appeals affirmed the dismissal on October 27, 2004, and the petitioner appealed to the Supreme Court by petition for review on certiorari.

Trial Court Rationale

The RTC held that the complaint sought monetary relief that would require appropriation by the State and therefore constituted a suit against the State without consent.
The RTC determined that issuance of the injunctive relief sought would contravene PD No. 1818 and R.A. No. 8975, which prohibit lower courts from enjoining government infrastructure projects.
The RTC found that the principal relief sought was beyond its jurisdiction and dismissed the complaint for lack of jurisdiction.

Court of Appeals Rationale

The CA held that the NLEX was a limited access facility and that the petitioner acquired the property in 1999 subject to existing conditions, including Entry No. 189568 indicating a portion sold to the Republic of the Philippines.
The CA applied Art. 649, New Civil Code principles and Villanueva v. Velasco to conclude that a compulsory easement would not lie when isolation stemmed fr