Iron vs. Steel Authority 2

8/20/2019 Iron vs. Steel Authority 2

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G.R. No. 102976 October 25, 1995

IRON AND STEEL AUTHORITY, petitioner,

vs.

THE COURT O A!!EALS "#$ %ARIA CRISTINA ERTILI&ER COR!ORATION, respondents.

ELICIANO, J.:

Petitioner Iron and Steel Authority ("ISA") was created by Presidential Decree (P.D.) No. 22 dated ! Auust #!$ in

order, enerally, to develop and pro%ote the iron and steel industry in the Philippines. &he ob'ectives o the ISA are

spelled out in the ollowin ter%s

Sec. 2. Objectives * &he Authority shall have the ollowin ob'ectives

(a) to strenthen the iron and steel industry o the Philippines and to e+pand the do%estic and

e+port %arets or the products o the industry-

(b) to pro%ote the consolidation, interation and rationaliation o the industry in order to increase

industry capability and viability to service the do%estic %aret and to co%pete in international

%arets-

(c) to rationalie the %aretin and distribution o steel products in order to achieve a balance

between de%and and supply o iron and steel products or the country and to ensure that industry

prices and proits are at levels that provide a air balance between the interests o investors,

consu%ers suppliers, and the public at lare-

(d) to pro%ote ull utiliation o the e+istin capacity o the industry, to discourae invest%ent in

e+cess capacity, and in coordination, with appropriate overn%ent aencies to encourae capital

invest%ent in priority areas o the industry-

(e) to assist the industry in securin ade/uate and low0cost supplies o raw %aterials and to reduce

the e+cessive dependence o the country on i%ports o iron and steel.

&he list o powers and unctions o the ISA included the ollowin

Sec. 1. Powers and Functions. * &he authority shall have the ollowin powers and unctions

+++ +++ +++

(') to initiate expropriation of land required for basic iron and steel facilities for subsequent resale

and/or lease to the companies involved i it is shown that such use o the States power isnecessary to i%ple%ent the construction o capacity which is needed or the attain%ent o the

ob'ectives o the Authority-

+++ +++ +++

(3%phasis supplied)


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P.D. No. 22 initially created petitioner ISA or a ter% o ive (4) years countin ro% ! Auust #!$. 1 5hen ISAs

oriinal ter% e+pired on #6 7ctober #!8, its ter% was e+tended or another ten (#6) years by 3+ecutive 7rder No.

444 dated $# Auust #!!.

&he National Steel 9orporation ("NS9") then a wholly owned subsidiary o the National Develop%ent 9orporation

which is itsel an entity wholly owned by the National :overn%ent, e%bared on an e+pansion prora% e%bracin,

a%on other thins, the construction o an interated steel %ill in Ilian 9ity. &he construction o such a steel %ill wasconsidered a priority and %a'or industrial pro'ect o the :overn%ent. Pursuant to the e+pansion prora% o the NS9,

Procla%ation No. 22$! was issued by the President o the Philippines on #; Nove%ber #!82 withdrawin ro% sale

or settle%ent a lare tract o public land (totallin about $6.24 hectares in area) located in Ilian 9ity, and reservin

that land or the use and i%%ediate occupancy o NS9.

Since certain portions o the public land sub'ect %atter Procla%ation No. 22$! were occupied by a non0operational

che%ical ertilier plant and related acilities owned by private respondent etter o Instruction (>7I), No. #2, also dated #; Nove%ber #!82, was issued directin the NS9 to

"neotiate with the owners o


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reports, is oerin or sale to the public its Bshares o stoc in the National Steel

9orporation in line with the pronounced policy o the present ad%inistration to disenae

the overn%ent ro% its private business ventures. 5 (@racets supplied)

Petitioner went on appeal to the 9ourt o Appeals. In a Decision dated 8 7ctober #!!#, the 9ourt o Appeals air%ed

the order o dis%issal o the trial court. &he 9ourt o Appeals held that petitioner ISA, "a overn%ent reulatory

aency e+ercisin soverein unctions," did not have the sa%e rihts as an ordinary corporation and that the ISA,unlie corporations oranied under the 9orporation 9ode, was not entitled to a period or windin up its aairs ater

e+piration o its leally %andated ter%, with the result that upon e+piration o its ter% on ## Auust #!8, ISA was

"abolished and Bhad no %ore leal authority to peror% overn%ental unctions." &he 9ourt o Appeals went on to

say that the action or e+propriation could not prosper because the basis or the proceedins, the ISAs e+ercise o its

deleated authority to e+propriate, had beco%e ineective as a result o the deleates dissolution, and could not be

continued in the na%e o ?epublic o the Philippines, represented by the Solicitor :eneral

It is our considered opinion that under the law, the complaint cannot prosper , and thereore, has to

be dis%issed without prejudice to the refiling of a new complaint for expropriation i the 9onress

sees it it." (3%phases supplied)

At the sa%e ti%e, however, the 9ourt o Appeals held that it was pre%ature or the trial court to have ruledthat the e+propriation suit was not or a public purpose, considerin that the parties had not yet rested their

respective cases.

In this Petition or ?eview, the Solicitor :eneral arues that since ISA initiated and prosecuted the action or

e+propriation in its capacity as aent o the ?epublic o the Philippines, the ?epublic, as principal o ISA, is entitled to

be substituted and to be %ade a party0plainti ater the aent ISAs ter% had e+pired.

Private respondent


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3+a%ination o the statute which created petitioner ISA shows that ISA alls under cateory (b) above. P.D. No. 22,

as already noted, contains e+press authoriation to ISA to co%%ence e+propriation proceedins lie those here

involved

Sec. 1. Powers and Functions. * &he Authority shall have the ollowin powers and unctions

+++ +++ +++

(') to initiate expropriation of land required for basic iron and steel facilities or subse/uent resale

andFor lease to the co%panies involved i it is shown that such use o the States power is

necessary to i%ple%ent the construction o capacity which is needed or the attain%ent o the

ob'ectives o the Authority-

+++ +++ +++

(3%phasis supplied)

It should also be noted that the enablin statute o ISA e+pressly authoried it to enter into certain inds o

contracts %for and in behalf of the Government% in the ollowin ter%s

+++ +++ +++

(i) to negotiate, and when necessary, to enter into contracts for and in behalf of the government , or

the bul purchase o %aterials, supplies or services or any sectors in the industry, and to %aintain

inventories o such %aterials in order to insure a continuous and ade/uate supply thereo and

thereby reduce operatin costs o such sector-

+++ +++ +++

(3%phasis supplied)

9learly, ISA was vested with so%e o the powers or attributes nor%ally associated with 'uridical personality. &here is,

however, no provision in P.D. No. 22 reconiin ISA as possessin eneral or co%prehensive 'uridical personality

separate and distinct ro% that o the :overn%ent. &he ISA in act appears to the 9ourt to be a non&incorporated

agenc! or instrumentalit! o the ?epublic o the Philippines, or %ore precisely o the :overn%ent o the ?epublic o

the Philippines. It is co%%on nowlede that other aencies or instru%entalities o the :overn%ent o the ?epublic

are cast in corporate or%, that is to say, are incorporated agencies or instrumentalities, so%eti%es with and at other

ti%es without capital stoc, and accordinly vested with a 'uridical personality distinct ro% the personality o the

?epublic. A%on such incorporated aencies or instru%entalities are National Power 9orporation- 6 Philippine Ports

Authority- 7 National Gousin Authority- ) Philippine National 7il 9o%pany- 9Philippine National ?ailways- 10 Public

3states Authority- 11 Philippine Hirinia &obacco Ad%inistration, 12 and so orth. It is worth notin that the ter%

"Authority" has been used to desinate both incorporated and non0incorporated aencies or instru%entalities o the

:overn%ent.

5e consider that the ISA is properly rearded as an aent or deleate o the ?epublic o the Philippines. &he

?epublic itsel is a body corporate and 'uridical person vested with the ull panoply o powers and attributes which are

co%pendiously described as "leal personality." &he relevant deinitions are ound in the Ad%inistrative 9ode o #!8

Sec. 2. General 'erms (efined . * Enless the speciic words o the te+t, or the conte+t as a whole,

or a particular statute, re/uire a dierent %eanin


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(#) Government of the )epublic of the Philippines reers to the corporate governmental

entit! throuh which the unctions o overn%ent are e+ercised throuhout the Philippines,

includin, save as the contrary appears ro% the conte+t, the various ar%s throuh which political

authority is %ade eective in the Philippines, whether pertainin to the autono%ous reions, the

provincial, city, %unicipal or baranay subdivisions or other or%s o local overn%ent.

+++ +++ +++

(1) *genc! of the Government reers to an! of the various units of the Government , includin a

depart%ent, bureau, office, instru%entality, or overn%ent0owned or controlled corporation, or a

local overn%ent or a distinct unit therein.

+++ +++ +++

(#6) +nstrumentalit! reers to any aency o the National :overn%ent, not interated within the

depart%ent ra%ewor, vested with special unctions or 'urisdiction by law, endowed with some if

not all corporate powers, ad%inisterin special unds, and en'oyin operational autono%y, usually

throuh a charter. &his ter% includes reulatory aencies, chartered institutions and overn%ent0

owned or controlled corporations.

+++ +++ +++

(3%phases supplied)

5hen the statutory ter% o a non&incorporated aency e+pires, the powers, duties and unctions as well as the assets

and liabilities o that aency revert bac to, and are re0assu%ed by, the ?epublic o the Philippines, in the absence o

special provisions o law speciyin so%e other disposition thereo such as, e.., devolution or trans%ission o such

powers, duties, unctions, etc. to so%e other identiied successor aency or instru%entality o the ?epublic o the

Philippines. 5hen the e+pirin aency is an incorporated one, the conse/uences o such e+piry %ust be looed or,

in the irst instance, in the charter o that aency and, by way o supple%entation, in the provisions o the 9orporation

9ode. Since, in the instant case, ISA is a non0incorporated aency or instru%entality o the ?epublic, its powers,

duties, unctions, assets and liabilities are properly rearded as olded bac into the :overn%ent o the ?epublic o

the Philippines and hence assu%ed once aain by the ?epublic, no special statutory provision havin been shown to

have %andated succession thereto by so%e other entity or aency o the ?epublic.

&he procedural i%plications o the relationship between an aent or deleate o the ?epublic o the Philippines and

the ?epublic itsel are, at least in part, spelled out in the ?ules o 9ourt. &he eneral rule is, o course, that an action

%ust be prosecuted and deended in the na%e o the real party in interest. (?ule $, Section 2) Petitioner ISA was, at

the co%%ence%ent o the e+propriation proceedins, a real party in interest, havin been e+plicitly authoried by its

enablin statute to institute e+propriation proceedins. &he ?ules o 9ourt at the sa%e ti%e e+pressly reconie the

role o representative parties

Sec. $. )epresentative Parties. * A trustee o an e+pressed trust, a uardian, an e+ecutor or

ad%inistrator, or a part! authori$ed b! statute ma! sue or be sued without joining the part! forwhose benefit the action is presented or deended- but the court %ay, at any stae o the

proceedins, order such beneiciary to be %ade a party. . . . . (3%phasis supplied)

In the instant case, ISA instituted the e+propriation proceedins in its capacity as an aent or deleate or

representative o the ?epublic o the Philippines pursuant to its authority under P.D. No. 22. &he present

e+propriation suit was brouht on behal o and or the beneit o the ?epublic as the principal o ISA. Pararaph o

the co%plaint stated


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. 'he Government, thru the plaintiff +*, urently needs the sub'ect parcels o land or the

construction and installation o iron and steel %anuacturin acilities that are indispensable to the

interation o the iron and steel %ain industry which is vital to the pro%otion o public interest and

welare. (3%phasis supplied)

&he principal or the real party in interest is thus the ?epublic o the Philippines and not the National Steel

9orporation, even thouh the latter %ay be an ulti%ate user o the properties involved should theconde%nation suit be eventually successul.

=ro% the oreoin pre%ises, it ollows that the ?epublic o the Philippines is entitled to be substituted in the

e+propriation proceedins as party0plainti in lieu o ISA, the statutory ter% o ISA havin e+pired. Put a little

dierently, the e+piration o ISAs statutory ter% did not by itsel re/uire or 'ustiy the dis%issal o the e%inent do%ain

proceedins.

It is also relevant to note that the non0'oinder o the ?epublic which occurred upon the e+piration o ISAs statutory

ter%, was not a round or dis%issal o such proceedins since a party %ay be dropped or added by order o the

court, on motion of an! part! or on the court-s own initiative at an! stage of the action and on such ter%s as are

'ust. 1' In the instant case, the ?epublic has precisely %oved to tae over the proceedins as party0plainti.

In .#"# archa 'ransport ompan!, +nc# v# +ntermediate *ppellate ourt , 1( the 9ourt reconied that the ?epublic

%ay initiate or participate in actions involvin its aents. &here the ?epublic o the Philippines was held to be a proper

party to sue or recovery o possession o property althouh the "real" or reistered owner o the property was the

Philippine Ports Authority, a overn%ent aency vested with a separate 'uridical personality. &he 9ourt said

+t can be said that in suing for the recover! of the rentals, the )epublic of the Philippines

acted as principal of the Philippine Ports *uthorit!, directl! exercising the commission it

had earlier conferred on the latter as its agent . . . . 15 (3%phasis supplied)

In .#"# archa, the 9ourt also stressed that to re/uire the ?epublic to co%%ence all over aain another

proceedin, as the trial court and 9ourt o Appeals had re/uired, was to enerate unwarranted delay and

create needless repetition o proceedins


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?evised Ad%inistrative 9ode, which was in eect at the ti%e o the co%%ence%ent o the present e+propriation

proceedins beore the Ilian ?eional &rial 9ourt, provided that

Sec. ;1. Particular powers and duties of the President of the Philippines. * In addition to his

eneral supervisory authority, the President o the Philippines shall have such other speciic powers

and duties as are e+pressly conerred or i%posed on hi% by law, and also, in particular, the powers

and duties set orth in this 9hapter.

A%on such special powers and duties shall be

+++ +++ +++

(h) &o deter%ine when it is necessary or advantaeous to e+ercise the riht o e%inent do%ain in

behal o the :overn%ent o the Philippines- and to direct the ecretar! of 0ustice, where such act

is deemed advisable, to cause the condemnation proceedings to be begun in the court having

proper jurisdiction. (3%phasis supplied)

&he ?evised Ad%inistrative 9ode o #!8 currently in orce has substantially reproduced the oreoin

provision in the ollowin ter%s

Sec. #2. Power of eminent domain. * &he President shall deter%ine when it is necessary or

advantaeous to e+ercise the power o e%inent do%ain in behal o the National :overn%ent,

anddirect the olicitor General, whenever he deems the action advisable, to institute expopriation

proceedings in the proper court . (3%phasis supplied)

In the present case, the President, e+ercisin the power duly deleated under both the #!# and #!8

?evised Ad%inistrative 9odes in eect %ade a deter%ination that it was necessary and advantaeous to

e+ercise the power o e%inent do%ain in behal o the :overn%ent o the ?epublic and accordinly directed

the Solicitor :eneral to proceed with the suit. 17

It is arued by private respondent


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S7 7?D3?3D.

Iron vs. Steel Authority 2

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