G.R. No. 205193, July 05, 2021
Power Sector Assets and Liabilities Management Corporation (PSALM), Petitioner, vs. Felisa Agricultural Corporation, National Power Corporation, National Transmission Corporation, National Grid Corporation, and Manila Electric Company, Respondents.

FACTS

Felisa Agricultural Corporation filed an inverse condemnation case against the National Power Corporation (NPC) in 2001 before the Regional Trial Court (RTC) of Bacolod City, alleging NPC’s failure to pay just compensation for occupying its property since 1978. In 2010, the RTC ordered NPC to pay Felisa a provisional amount of P7,845,000.00. After the enactment of the Electric Power Industry Reform Act of 2001 (EPIRA), which created the National Transmission Corporation (TRANSCO) and PSALM, Felisa moved for the issuance of a writ of execution against NPC, TRANSCO, and PSALM. The RTC granted the motion and issued the writ. Notices of garnishment were subsequently issued against PSALM’s funds with the National Grid Corporation of the Philippines (NGCP) and Manila Electric Company (Meralco). PSALM filed a petition for certiorari before the Court of Appeals, challenging the issuance of the writ and garnishment. The Court of Appeals dismissed PSALM’s petition, finding no grave abuse of discretion, and held that PSALM was liable for the just compensation as the transferee of NPC’s transmission-related liabilities under the EPIRA. PSALM elevated the case to the Supreme Court via a petition for review on certiorari.

ISSUE

Whether the Court of Appeals committed reversible error in affirming the issuance of the writ of execution and notices of garnishment against PSALM for the payment of provisional just compensation to Felisa Agricultural Corporation.

RULING

The Supreme Court denied PSALM’s petition and affirmed the Court of Appeals’ decision. The Court held that under Section 8 of the EPIRA, PSALM assumed all outstanding obligations of NPC arising from loans, bonds, securities, and other instruments of indebtedness. The liability for just compensation, being a statutory obligation arising from the exercise of eminent domain, is considered a debt or an obligation that was transferred to PSALM. The Court further ruled that PSALM, as a government-owned and controlled corporation (GOCC) with the power to sue and be sued, is not immune from suit, and its assets are not exempt from execution to satisfy a judgment debt. The garnishment of PSALM’s funds with NGCP and Meralco was proper as these funds were not public funds earmarked for a specific governmental purpose but were corporate funds subject to execution. The Court also noted that the Concession Agreement between PSALM, TRANSCO, and NGCP, which allocated liability for right-of-way claims to TRANSCO, could not prejudice Felisa, which was not a party to the agreement. Therefore, PSALM remained liable to Felisa for the just compensation.