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[ G.R. No. 137817. June 16, 1999]

NAT'L ELECTRIFICATION ADM. vs. SAPANG PALAY PROJ. RURAL ELECTRIC COOP., INC.

FIRST DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated JUN 16, 1999.

G.R. No. 137817 (National electrification Administration [NEA] vs. Sapang Palay Project Rural Electric Coop., Inc. [SAPPRESCO].)

Petitioner National Electrification Administration assails the decision of the Court of Appeals affirming the decision of the regional trial court which disposed:

WHEREFORE, the Court hereby rendered judgment as follows:

1. Dismissing the complaint as against defendant MERALCO.

2. Ordering defendant NEA to pay plaintiff the amount of the latter's properties at the time of its takeover on November 19, 1973 after an inventory is submitted by the plaintiff, and

3. For defendant NEA to pay the costs of suit.

(pp. 41-42, Rollo.)

On November 19, 1973, petitioner took over the management and operation of private respondent SAPPRESCO which was engaged in the operation of the electric system in certain areas of Bulacan.

On December 20, 1973, the board of Administrators of the NEA in a resolution foreclosed the loan acquired by APPRESCO and declared its corporate existence dissolved the SAPPRESCO was thereafter considered by petitioner as a mere subsidiary.

On November 8, 1982 then President Marcos approved a 3-year program for extension of services of MERALCO to areas within a 60-kilometers radius of Manila. Consequently, pursuant to a memorandum issued by former President Marcos, MERALCO and NEA took over the franchise are of SAPPRESCO.

Finally on January 7, 1986, MERALCO and SAPPRESCO entered into a memorandum of agreement and Deed of Sale agreeing that for the amount of P16.3 million pesos, MERALCO shall take over the electric service operations in certain barangays of San Jose del Monte and Norzagaray and the electric distribution system consisting of distribution lines and substation equipment and all other appurtenances of SAPPRESCO with all the rights necessary for the operation of the electric service.

On May 29, 1987, SAPPRESCO filed an action against MERALCO and petitioner NEA for the annulment of the contract. The trial court rendered its decision which was appealed by the parties to the Court of Appeals, wherein an affirmance decision was handed down.

Thus, the instant petition which we find unavailing.

The Court cannot accept petitioner's contention that the corporate existence of SAPPRESCO was dissolve, repealed, or canceled when NEA took over the former's management and operations pursuant to their agreements in the contract of loan they had entered into. As correctly ratiocinated by the Court of Appeals, although NEA is empowered to dissolve franchises, the cancellation of the franchise of SAPPRESCO became effective, if at all, only at the time when NFA lawfully enforced the memorandum of former President Marcos directing MERALCO and NEA to take over the franchise area of SAPPRESCO.

Likewise, this Court cannot sustain petitioner's assertion that NEA has no financial accountability to SAPPRESCO. We are inclined to adhere with the finding of the two lower courts that at the time when NEA authorized the sale of SAPPRESCO to MERALCO, it appropriated pieces of property exclusively belonging to SAPPRESCO without the corresponding payment for its value, hence, violative of SAPPRESCO's constitutional right against deprivation of property without just compensation. It should be noted that this is a factual finding which cannot be reviewed or disturbed at the instance.

WHEREFORE, petition is denied due course.

Very truly yours,

(Sgd.) VIRGINIA ANCHETA-SORIANO

Clerk of Court

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