Iron and Steel Authority (ISA) v. Court of Appeals, 249 SCRA 538

FACTS: Petitioner ISA was created by PD No. 272 in order, generally, to develop and promote the iron and steel industry.

PD No. 272 initially created ISA for a term of 5 years counting from August 9, 1973. When ISA’s original term expired on October 10, 1978, its term was extended for another 10 years by EO No. 555 dated August 31, 1979.

The National Steel Corporation (NSC) then a wholly owned subsidiary of the National Development Corporation which is itself an entity wholly owned by the National Government, embarked on an expansion program embracing, among other things, the construction of an integrated steel mill in Iligan City. The construction of such steel mill was considered a priority and major industrial project of the government. Pursuant to the expansion program of the NSC, Proclamation No. 2239 was issued by the President of the Philippines on November 16, 1982 withdrawing from sale or settlement a large tract of public land located in Iligan City, and reserving that land for the use and immediate occupancy of NSC.

Since certain portions of the aforesaid public land were occupied by a non-operational chemical fertilizer plant and related facilities owned by Maria Cristina Fertilizer Corporation (MCFC), LOI No. 1277, also dated November 16, 1982, was issued directing the NSC to “negotiate with the owners of MCFC, for and on behalf of the Government, for the compensation of MCFC’s present occupancy rights on the subject land.

Negotiations between NSC and MCFC failed.

ISSUE: WON the Government is entitled to be substituted for ISA in view of the expiration of ISA’s term.

RULING: Yes

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Clearly, ISA was vested with some of the powers or attributed normally associated with juridical personality. There is, however, no provision in PD No. 272 recognizing ISA as possessing general or comprehensive juridical personality separate and distinct from that of the government. The ISA in fact appears to the Court to be a non-incorporated agency or instrumentality of the RP, or more precisely of the Government of the Philippines. It is common knowledge that other agencies or instrumentalities of the Government of the Republic are cast in corporate form, that is to say, are incorporated agencies or instrumentalities, sometimes with and at other times without capital stock, and accordingly vested with a juridical personality distinct from the personality of the Republic.

We consider that the ISA is properly regarded as an agent or delegate of the RP. The Republic itself is a body corporate and juridical person vested with the full panoply of powers and attributes which are compendiously described as “legal personality.”

When the statutory term of non-incorporated agency expires, the powers, duties and functions as well as the assets and liabilities of that agency revert back to, and are reassumed by the RP, in the absence of special provisions of law specifying some other disposition thereof, e.g., devolution or transmission of such powers, duties and functions, etc. to some other identified successor agency or instrumentality of the RP.

When the expiring agency is an incorporated one, the consequence of such expiry must be looked for, in the first instance, in the charters and, by way of supplementation, the provisions of the Corporation Code. Since in the instant case, ISA is a non-incorporated agency or instrumentality of the Republic, its powers, duties and functions, assets and liabilities are properly regarded as folded back into the Government and hence assumed once again by the Republic, no special statutory provision having been shown to have mandated succession thereto by some other entity or agency of the Republic.

In the instant case, ISA substituted the expropriation proceedings in its capacity as an agent or delegate or representative of the Republic of the Philippines pursuant to its authority under PD 272.

The principal or the real party in interest is thus the Republic of the Philippines and not the NSC, even though the latter may be an ultimate user of the properties involved.

From the foregoing premises, it follows that the Republic is entitled to be substituted in the expropriation proceedings in lieu of ISA, the statutory term of ISA having expired. Put a little differently, the expiration of ISA’s statutory term did not by itself require or justify the dismissal of the eminent domain proceedings.