SPECIAL CIVIL ACTION CASES (FOR FINALS) Full Text

G.R. No. 136349             January 23, 2006

LOURDES DE LA PAZ MASIKIP, Petitioner,

vs.
THE CITY OF PASIG, HON. MARIETTA A. LEGASPI, in her capacity as Presiding Judge of the Regional Trial
Court of Pasig City, Branch 165 and THE COURT OF APPEALS, Respondents.

DECISION

SANDOVAL GUTIERREZ, J.:

Where the taking by the State of private property is done for the benefit of a small community which
seeks to have its own sports and recreational facility, notwithstanding that there is such a recreational
facility only a short distance away, such taking cannot be considered to be for public use. Its expropriation
is not valid. In this case, the Court defines what constitutes a genuine necessity for public use.

This petition for review on certiorari assails the Decision1 of the Court of Appeals dated October 31, 1997
in CA-G.R. SP No. 41860 affirming the Order2 of the Regional Trial Court, Branch 165, Pasig City, dated
May 7, 1996 in S.C.A. No. 873. Likewise assailed is the Resolution 3 of the same court dated November 20,
1998 denying petitioner’s Motion for Reconsideration.

The facts of the case are:

Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land with an area of 4,521
square meters located at Pag-Asa, Caniogan, Pasig City, Metro Manila.

In a letter dated January 6, 1994, the then Municipality of Pasig, now City of Pasig, respondent, notified
petitioner of its intention to expropriate a 1,500 square meter portion of her property to be used for the
"sports development and recreational activities" of the residents of Barangay Caniogan. This was pursuant
to Ordinance No. 42, Series of 1993 enacted by the then Sangguniang Bayan of Pasig.

Again, on March 23, 1994, respondent wrote another letter to petitioner, but this time the purpose was
allegedly "in line with the program of the Municipal Government to provide land opportunities to deserving
poor sectors of our community."

On May 2, 1994, petitioner sent a reply to respondent stating that the intended expropriation of her
property is unconstitutional, invalid, and oppressive, as the area of her lot is neither sufficient nor suitable
to "provide land opportunities to deserving poor sectors of our community."

In its letter of December 20, 1994, respondent reiterated that the purpose of the expropriation of
petitioner’s property is "to provide sports and recreational facilities to its poor residents."

Subsequently, on February 21, 1995, respondent filed with the trial court a complaint for expropriation,
docketed as SCA No. 873. Respondent prayed that the trial court, after due notice and hearing, issue an
order for the condemnation of the property; that commissioners be appointed for the purpose of
determining the just compensation; and that judgment be rendered based on the report of the
commissioners.

On April 25, 1995, petitioner filed a Motion to Dismiss the complaint on the following grounds:

PLAINTIFF HAS NO CAUSE OF ACTION FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN,
CONSIDERING THAT:

(A) THERE IS NO GENUINE NECESSITY FOR THE TAKING OF THE PROPERTY SOUGHT TO BE
EXPROPRIATED.
 (B) PLAINTIFF HAS ARBITRARILY AND CAPRICIOUSLY CHOSEN THE PROPERTY SOUGHT TO BE
EXPROPRIATED.

(C) EVEN ASSUMING ARGUENDO THAT DEFENDANT’S PROPERTY MAY BE EXPROPRIATED BY

PLAINTIFF, THE FAIR MARKET VALUE OF THE PROPERTY TO BE EXPROPRIATED FAR EXCEEDS
SEVENTY-EIGHT THOUSAND PESOS (P78,000.00)

II

PLAINTIFF’S COMPLAINT IS DEFECTIVE IN FORM AND SUBSTANCE, CONSIDERING THAT:

(A) PLAINTIFF FAILS TO ALLEGE WITH CERTAINTY THE PURPOSE OF THE EXPROPRIATION.

(B) PLAINTIFF HAS FAILED TO COMPLY WITH THE PREREQUISITES LAID DOWN IN SECTION 34,
RULE VI OF THE RULES AND REGULATIONS IMPLEMENTING THE LOCAL GOVERNMENT CODE;
THUS, THE INSTANT EXPROPRIATION PROCEEDING IS PREMATURE.

III

THE GRANTING OF THE EXPROPRIATION WOULD VIOLATE SECTION 261 (V) OF THE OMNIBUS ELECTION
CODE.

IV

PLAINTIFF CANNOT TAKE POSSESSION OF THE SUBJECT PROPERTY BY MERELY DEPOSITING AN AMOUNT
EQUAL TO FIFTEEN PERCENT (15%) OF THE VALUE OF THE PROPERTY BASED ON THE CURRENT TAX
DECLARATION OF THE SUBJECT PROPERTY.4

On May 7, 1996, the trial court issued an Order denying the Motion to Dismiss, 5 on the ground that there
is a genuine necessity to expropriate the property for the sports and recreational activities of the residents
of Pasig. As to the issue of just compensation, the trial court held that the same is to be determined in
accordance with the Revised Rules of Court.

Petitioner filed a motion for reconsideration but it was denied by the trial court in its Order of July 31,
1996. Forthwith, it appointed the City Assessor and City Treasurer of Pasig City as commissioners to
ascertain the just compensation. This prompted petitioner to file with the Court of Appeals a special civil
action for certiorari, docketed as CA-G.R. SP No. 41860. On October 31, 1997, the Appellate Court
dismissed the petition for lack of merit. Petitioner’s Motion for Reconsideration was denied in a Resolution
dated November 20, 1998.

Hence, this petition anchored on the following grounds:

THE QUESTIONED DECISION DATED 31 OCTOBER 1997 (ATTACHMENT "A") AND RESOLUTION DATED 20
NOVEMBER 1998 (ATTACHMENT "B") ARE CONTRARY TO LAW, THE RULES OF COURT AND
JURISPRUDENCE CONSIDERING THAT:

A. THERE IS NO EVIDENCE TO PROVE THAT THERE IS GENUINE NECESSITY FOR THE TAKING OF
THE PETITIONER’S PROPERTY.

B. THERE IS NO EVIDENCE TO PROVE THAT THE PUBLIC USE REQUIREMENT FOR THE EXERCISE
OF THE POWER OF EMINENT DOMAIN HAS BEEN COMPLIED WITH.

C. THERE IS NO EVIDENCE TO PROVE THAT RESPONDENT CITY OF PASIG HAS COMPLIED WITH
ALL CONDITIONS PRECEDENT FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN.

THE COURT A QUO’S ORDER DATED 07 MAY 1996 AND 31 JULY 1996, WHICH WERE AFFIRMED BY THE
COURT OF APPEALS, EFFECTIVELY AMOUNT TO THE TAKING OF PETITIONER’S PROPERTY WITHOUT DUE
PROCESS OF LAW:
 II

THE COURT OF APPEALS GRAVELY ERRED IN APPLYING OF RULE ON ACTIONABLE DOCUMENTS TO THE
DOCUMENTS ATTACHED TO RESPONDENT CITY OF PASIG’S COMPLAINT DATED 07 APRIL 1995 TO
JUSTIFY THE COURT A QUO’S DENIAL OF PETITIONER’S RESPONSIVE PLEADING TO THE COMPLAINT FOR
EXPROPRIATION (THE MOTION TO DISMISS DATED 21 APRIL 1995).

III

THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE RULE ON HYPOTHETICAL ADMISSION OF
FACTS ALLEGED IN A COMPLAINT CONSIDERING THAT THE MOTION TO DISMISS FILED BY PETITIONER
IN THE EXPROPRIATION CASE BELOW WAS THE RESPONSIVE PLEADING REQUIRED TO BE FILED UNDER
THE THEN RULE 67 OF THE RULES OF COURT AND NOT AN ORIDNARY MOTION TO DISMISS UNDER RULE
16 OF THE RULES OF COURT.

The foregoing arguments may be synthesized into two main issues – one substantive and one procedural.
We will first address the procedural issue.

Petitioner filed her Motion to Dismiss the complaint for expropriation on April 25, 1995. It was denied by
the trial court on May 7, 1996. At that time, the rule on expropriation was governed by Section 3, Rule 67
of the Revised Rules of Court which provides:

"SEC. 3. Defenses and objections. – Within the time specified in the summons, each defendant, in lieu of
an answer, shall present in a single motion to dismiss or for other appropriate relief, all his objections and
defenses to the right of the plaintiff to take his property for the use or purpose specified in the complaint.
All such objections and defenses not so presented are waived. A copy of the motion shall be served on the
plaintiff’s attorney of record and filed with the court with proof of service."

The motion to dismiss contemplated in the above Rule clearly constitutes the responsive pleading which
takes the place of an answer to the complaint for expropriation. Such motion is the pleading that puts in
issue the right of the plaintiff to expropriate the defendant’s property for the use specified in the
complaint. All that the law requires is that a copy of the said motion be served on plaintiff’s attorney of
record. It is the court that at its convenience will set the case for trial after the filing of the said pleading. 6

The Court of Appeals therefore erred in holding that the motion to dismiss filed by petitioner
hypothetically admitted the truth of the facts alleged in the complaint, "specifically that there is a genuine
necessity to expropriate petitioner’s property for public use." Pursuant to the above Rule, the motion is a
responsive pleading joining the issues. What the trial court should have done was to set the case for the
reception of evidence to determine whether there is indeed a genuine necessity for the taking of the
property, instead of summarily making a finding that the taking is for public use and appointing
commissioners to fix just compensation. This is especially so considering that the purpose of the
expropriation was squarely challenged and put in issue by petitioner in her motion to dismiss.

Significantly, the above Rule allowing a defendant in an expropriation case to file a motion to dismiss in
lieu of an answer was amended by the 1997 Rules of Civil Procedure, which took effect on July 1, 1997.
Section 3, Rule 67 now expressly mandates that any objection or defense to the taking of the property of
a defendant must be set forth in an answer.

The fact that the Court of Appeals rendered its Decision in CA-G.R. SP No. 41860 on October 31, after the
1997 Rules of Civil Procedure took effect, is of no moment. It is only fair that the Rule at the time
petitioner filed her motion to dismiss should govern. The new provision cannot be applied retroactively to
her prejudice.

We now proceed to address the substantive issue.

In the early case of US v. Toribio,7 this Court defined the power of eminent domain as "the right of a
government to take and appropriate private property to public use, whenever the public exigency requires
it, which can be done only on condition of providing a reasonable compensation therefor." It has also been
described as the power of the State or its instrumentalities to take private property for public use and is
inseparable from sovereignty and inherent in government.8
The power of eminent domain is lodged in the legislative branch of the government. It delegates the
exercise thereof to local government units, other public entities and public utility corporations, 9 subject
only to Constitutional limitations. Local governments have no inherent power of eminent domain and may
exercise it only when expressly authorized by statute. 10 Section 19 of the Local Government Code of 1991
(Republic Act No. 7160) prescribes the delegation by Congress of the power of eminent domain to local
government units and lays down the parameters for its exercise, thus:

"SEC. 19. Eminent Domain. – A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise the power of eminent domain for public use, purpose or welfare for the
benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of
the Constitution and pertinent laws: Provided, however, That, the power of eminent domain may not be
exercised unless a valid and definite offer has been previously made to the owner and such offer was not
accepted: Provided, further, That, the local government unit may immediately take possession of the
property upon the filing of expropriation proceedings and upon making a deposit with the proper court of
at least fifteen percent (15%) of the fair market value of the property based on the current tax
declaration of the property to be expropriated: Provided, finally, That, the amount to be paid for
expropriated property shall be determined by the proper court, based on the fair market value at the time
of the taking of the property."

Judicial review of the exercise of eminent domain is limited to the following areas of concern: (a) the
adequacy of the compensation, (b) the necessity of the taking, and (c) the public use character of the
purpose of the taking.11

In this case, petitioner contends that respondent City of Pasig failed to establish a genuine necessity
which justifies the condemnation of her property. While she does not dispute the intended public purpose,
nonetheless, she insists that there must be a genuine necessity for the proposed use and purposes.
According to petitioner, there is already an established sports development and recreational activity
center at Rainforest Park in Pasig City, fully operational and being utilized by its residents, including those
from Barangay Caniogan. Respondent does not dispute this. Evidently, there is no "genuine necessity" to
justify the expropriation.

The right to take private property for public purposes necessarily originates from "the necessity" and the
taking must be limited to such necessity. In City of Manila v. Chinese Community of Manila,12 we held that
the very foundation of the right to exercise eminent domain is a genuine necessity and that necessity
must be of a public character. Moreover, the ascertainment of the necessity must precede or accompany
and not follow, the taking of the land. In City of Manila v. Arellano Law College,13 we ruled that "necessity
within the rule that the particular property to be expropriated must be necessary, does not mean an
absolute but only a reasonable or practical necessity, such as would combine the greatest benefit to the
public with the least inconvenience and expense to the condemning party and the property owner
consistent with such benefit."

Applying this standard, we hold that respondent City of Pasig has failed to establish that there is a
genuine necessity to expropriate petitioner’s property. Our scrutiny of the records shows that the
Certification14 issued by the Caniogan Barangay Council dated November 20, 1994, the basis for the
passage of Ordinance No. 42 s. 1993 authorizing the expropriation, indicates that the intended beneficiary
is the Melendres Compound Homeowners Association, a private, non-profit organization, not the residents
of Caniogan. It can be gleaned that the members of the said Association are desirous of having their own
private playground and recreational facility. Petitioner’s lot is the nearest vacant space available. The
purpose is, therefore, not clearly and categorically public. The necessity has not been shown, especially
considering that there exists an alternative facility for sports development and community recreation in
the area, which is the Rainforest Park, available to all residents of Pasig City, including those of Caniogan.

The right to own and possess property is one of the most cherished rights of men. It is so fundamental
that it has been written into organic law of every nation where the rule of law prevails. Unless the
requisite of genuine necessity for the expropriation of one’s property is clearly established, it shall be the
duty of the courts to protect the rights of individuals to their private property. Important as the power of
eminent domain may be, the inviolable sanctity which the Constitution attaches to the property of the
individual requires not only that the purpose for the taking of private property be specified. The genuine
necessity for the taking, which must be of a public character, must also be shown to exist.

WHEREFORE, the petition for review is GRANTED. The challenged Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 41860 are REVERSED. The complaint for expropriation filed before the trial
court by respondent City of Pasig, docketed as SCA No. 873, is ordered DISMISSED.
G.R. No. 166429 December 19, 2005

REPUBLIC OF THE PHILIPPINES, Represented by Executive Secretary Eduardo R. Ermita, the

DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS (DOTC), and the MANILA INTERNATIONAL
AIRPORT AUTHORITY (MIAA), Petitioners,
vs.
HON. HENRICK F. GINGOYON, In his capacity as Presiding Judge of the Regional Trial Court, Branch 117,
Pasay City and PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., Respondents.

DECISION

TINGA, J.:

The Ninoy Aquino International Airport Passenger Terminal III (NAIA 3) was conceived, designed and
constructed to serve as the country’s show window to the world. Regrettably, it has spawned
controversies. Regrettably too, despite the apparent completion of the terminal complex way back it has
not yet been operated. This has caused immeasurable economic damage to the country, not to mention
its deplorable discredit in the international community.

In the first case that reached this Court, Agan v. PIATCO,1 the contracts which the Government had with
the contractor were voided for being contrary to law and public policy. The second case now before the
Court involves the matter of just compensation due the contractor for the terminal complex it built. We
decide the case on the basis of fairness, the same norm that pervades both the Court’s 2004 Resolution in
the first case and the latest expropriation law.

The present controversy has its roots with the promulgation of the Court’s decision in Agan v. PIATCO,2
promulgated in 2003 (2003 Decision). This decision nullified the "Concession Agreement for the Build-
Operate-and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III"
entered into between the Philippine Government (Government) and the Philippine International Air
Terminals Co., Inc. (PIATCO), as well as the amendments and supplements thereto. The agreement had
authorized PIATCO to build a new international airport terminal (NAIA 3), as well as a franchise to operate
and maintain the said terminal during the concession period of 25 years. The contracts were nullified,
among others, that Paircargo Consortium, predecessor of PIATCO, did not possess the requisite financial
capacity when it was awarded the NAIA 3 contract and that the agreement was contrary to public policy. 3

At the time of the promulgation of the 2003 Decision, the NAIA 3 facilities had already been built by
PIATCO and were nearing completion. 4 However, the ponencia was silent as to the legal status of the
NAIA 3 facilities following the nullification of the contracts, as well as whatever rights of PIATCO for
reimbursement for its expenses in the construction of the facilities. Still, in his Separate Opinion, Justice
Panganiban, joined by Justice Callejo, declared as follows:

Should government pay at all for reasonable expenses incurred in the construction of the Terminal?
Indeed it should, otherwise it will be unjustly enriching itself at the expense of Piatco and, in particular, its
funders, contractors and investors — both local and foreign. After all, there is no question that the State
needs and will make use of Terminal III, it being part and parcel of the critical infrastructure and
transportation-related programs of government.5

PIATCO and several respondents-intervenors filed their respective motions for the reconsideration of the
2003 Decision. These motions were denied by the Court in its Resolution dated 21 January 2004 (2004
Resolution).6 However, the Court this time squarely addressed the issue of the rights of PIATCO to refund,
compensation or reimbursement for its expenses in the construction of the NAIA 3 facilities. The holding
of the Court on this crucial point follows:

This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III facility
are almost complete and that funds have been spent by PIATCO in their construction. For the government
to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures.
The compensation must be just and in accordance with law and equity for the government can not
unjustly enrich itself at the expense of PIATCO and its investors.7
After the promulgation of the rulings in Agan, the NAIA 3 facilities have remained in the possession of
PIATCO, despite the avowed intent of the Government to put the airport terminal into immediate
operation. The Government and PIATCO conducted several rounds of negotiation regarding the NAIA 3
facilities.8 It also appears that arbitral proceedings were commenced before the International Chamber of
Commerce International Court of Arbitration and the International Centre for the Settlement of
Investment Disputes,9 although the Government has raised jurisdictional questions before those two
bodies.10

Then, on 21 December 2004, the Government11 filed a Complaint for expropriation with the Pasay City
Regional Trial Court (RTC), together with an Application for Special Raffle seeking the immediate holding
of a special raffle. The Government sought upon the filing of the complaint the issuance of a writ of
possession authorizing it to take immediate possession and control over the NAIA 3 facilities.

The Government also declared that it had deposited the amount of P3,002,125,000.0012 (3 Billion)13 in
Cash with the Land Bank of the Philippines, representing the NAIA 3 terminal’s assessed value for taxation
purposes.14

The case15 was raffled to Branch 117 of the Pasay City RTC, presided by respondent judge Hon. Henrick F.
Gingoyon (Hon. Gingoyon). On the same day that the Complaint was filed, the RTC issued an Order16
directing the issuance of a writ of possession to the Government, authorizing it to "take or enter upon the
possession" of the NAIA 3 facilities. Citing the case of City of Manila v. Serrano,17 the RTC noted that it
had the ministerial duty to issue the writ of possession upon the filing of a complaint for expropriation
sufficient in form and substance, and upon deposit made by the government of the amount equivalent to
the assessed value of the property subject to expropriation. The RTC found these requisites present,
particularly noting that "[t]he case record shows that [the Government has] deposited the assessed value
of the [NAIA 3 facilities] in the Land Bank of the Philippines, an authorized depositary, as shown by the
certification attached to their complaint." Also on the same day, the RTC issued a Writ of Possession.
According to PIATCO, the Government was able to take possession over the NAIA 3 facilities immediately
after the Writ of Possession was issued.18

However, on 4 January 2005, the RTC issued another Order designed to supplement its 21 December
2004 Order and the Writ of Possession. In the 4 January 2005 Order, now assailed in the present petition,
the RTC noted that its earlier issuance of its writ of possession was pursuant to Section 2, Rule 67 of the
1997 Rules of Civil Procedure. However, it was observed that Republic Act No. 8974 (Rep. Act No. 8974),
otherwise known as "An Act to Facilitate the Acquisition of Right-of-Way, Site or Location for National
Government Infrastructure Projects and For Other Purposes" and its Implementing Rules and Regulations
(Implementing Rules) had amended Rule 67 in many respects.

There are at least two crucial differences between the respective procedures under Rep. Act No. 8974 and
Rule 67. Under the statute, the Government is required to make immediate payment to the property
owner upon the filing of the complaint to be entitled to a writ of possession, whereas in Rule 67, the
Government is required only to make an initial deposit with an authorized government depositary.
Moreover, Rule 67 prescribes that the initial deposit be equivalent to the assessed value of the property
for purposes of taxation, unlike Rep. Act No. 8974 which provides, as the relevant standard for initial
compensation, the market value of the property as stated in the tax declaration or the current relevant
zonal valuation of the Bureau of Internal Revenue (BIR), whichever is higher, and the value of the
improvements and/or structures using the replacement cost method.

Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974 and Section 10 of the Implementing
Rules, the RTC made key qualifications to its earlier issuances. First, it directed the Land Bank of the
Philippines, Baclaran Branch (LBP-Baclaran), to immediately release the amount of US$62,343,175.77 to
PIATCO, an amount which the RTC characterized as that which the Government "specifically made
available for the purpose of this expropriation;" and such amount to be deducted from the amount of just
compensation due PIATCO as eventually determined by the RTC. Second, the Government was directed to
submit to the RTC a Certificate of Availability of Funds signed by authorized officials to cover the payment
of just compensation. Third, the Government was directed "to maintain, preserve and safeguard" the
NAIA 3 facilities or "perform such as acts or activities in preparation for their direct operation" of the
airport terminal, pending expropriation proceedings and full payment of just compensation. However, the
Government was prohibited "from performing acts of ownership like awarding concessions or leasing any
part of [NAIA 3] to other parties."19

The very next day after the issuance of the assailed 4 January 2005 Order, the Government filed an
Urgent Motion for Reconsideration, which was set for hearing on 10 January 2005. On 7 January 2005,
the RTC issued another Order, the second now assailed before this Court, which appointed three (3)
Commissioners to ascertain the amount of just compensation for the NAIA 3 Complex. That same day, the
Government filed a Motion for Inhibition of Hon. Gingoyon.

The RTC heard the Urgent Motion for Reconsideration and Motion for Inhibition on 10 January 2005. On
the same day, it denied these motions in an Omnibus Order dated 10 January 2005. This is the third
Order now assailed before this Court. Nonetheless, while the Omnibus Order affirmed the earlier
dispositions in the 4 January 2005 Order, it excepted from affirmance "the superfluous part of the Order
prohibiting the plaintiffs from awarding concessions or leasing any part of [NAIA 3] to other parties." 20

Thus, the present Petition for Certiorari and Prohibition under Rule 65 was filed on 13 January 2005. The
petition prayed for the nullification of the RTC orders dated 4 January 2005, 7 January 2005, and 10
January 2005, and for the inhibition of Hon. Gingoyon from taking further action on the expropriation
case. A concurrent prayer for the issuance of a temporary restraining order and preliminary injunction was
granted by this Court in a Resolution dated 14 January 2005.21

The Government, in imputing grave abuse of discretion to the acts of Hon. Gingoyon, raises five general
arguments, to wit:

(i) that Rule 67, not Rep. Act No. 8974, governs the present expropriation proceedings;

(ii) that Hon. Gingoyon erred when he ordered the immediate release of the amount of US$62.3 Million to
PIATCO considering that the assessed value as alleged in the complaint was only P3 Billion;

(iii) that the RTC could not have prohibited the Government from enjoining the performance of acts of
ownership;

(iv) that the appointment of the three commissioners was erroneous; and

(v) that Hon. Gingoyon should be compelled to inhibit himself from the expropriation case.22

Before we delve into the merits of the issues raised by the Government, it is essential to consider the
crucial holding of the Court in its 2004 Resolution in Agan, which we repeat below:

This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III facility
are almost complete and that funds have been spent by PIATCO in their construction. For the government
to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures.
The compensation must be just and in accordance with law and equity for the government can not
unjustly enrich itself at the expense of PIATCO and its investors.23

This pronouncement contains the fundamental premises which permeate this decision of the Court.
Indeed, Agan, final and executory as it is, stands as governing law in this case, and any disposition of the
present petition must conform to the conditions laid down by the Court in its 2004 Resolution.

The 2004 Resolution Which Is

Law of This Case Generally

Permits Expropriation

The pronouncement in the 2004 Resolution is especially significant to this case in two aspects, namely: (i)
that PIATCO must receive payment of just compensation determined in accordance with law and equity;
and (ii) that the government is barred from taking over NAIA 3 until such just compensation is paid. The
parties cannot be allowed to evade the directives laid down by this Court through any mode of judicial
action, such as the complaint for eminent domain.

It cannot be denied though that the Court in the 2004 Resolution prescribed mandatory guidelines which
the Government must observe before it could acquire the NAIA 3 facilities. Thus, the actions of
respondent judge under review, as well as the arguments of the parties must, to merit affirmation, pass
the threshold test of whether such propositions are in accord with the 2004 Resolution.
The Government does not contest the efficacy of this pronouncement in the 2004 Resolution,24 thus its
application to the case at bar is not a matter of controversy. Of course, questions such as what is the
standard of "just compensation" and which particular laws and equitable principles are applicable, remain
in dispute and shall be resolved forthwith.

The Government has chosen to resort to expropriation, a remedy available under the law, which has the
added benefit of an integrated process for the determination of just compensation and the payment
thereof to PIATCO. We appreciate that the case at bar is a highly unusual case, whereby the Government
seeks to expropriate a building complex constructed on land which the State already owns. 25 There is an
inherent illogic in the resort to eminent domain on property already owned by the State. At first blush,
since the State already owns the property on which NAIA 3 stands, the proper remedy should be akin to
an action for ejectment.

However, the reason for the resort by the Government to expropriation proceedings is understandable in
this case. The 2004 Resolution, in requiring the payment of just compensation prior to the takeover by
the Government of NAIA 3, effectively precluded it from acquiring possession or ownership of the NAIA 3
through the unilateral exercise of its rights as the owner of the ground on which the facilities stood. Thus,
as things stood after the 2004 Resolution, the right of the Government to take over the NAIA 3 terminal
was preconditioned by lawful order on the payment of just compensation to PIATCO as builder of the
structures.

The determination of just compensation could very well be agreed upon by the parties without judicial
intervention, and it appears that steps towards that direction had been engaged in. Still, ultimately, the
Government resorted to its inherent power of eminent domain through expropriation proceedings. Is
eminent domain appropriate in the first place, with due regard not only to the law on expropriation but
also to the Court’s 2004 Resolution in Agan?

The right of eminent domain extends to personal and real property, and the NAIA 3 structures, adhered
as they are to the soil, are considered as real property.26 The public purpose for the expropriation is also
beyond dispute. It should also be noted that Section 1 of Rule 67 (on Expropriation) recognizes the
possibility that the property sought to be expropriated may be titled in the name of the Republic of the
Philippines, although occupied by private individuals, and in such case an averment to that effect should
be made in the complaint. The instant expropriation complaint did aver that the NAIA 3 complex "stands
on a parcel of land owned by the Bases Conversion Development Authority, another agency of [the
Republic of the Philippines]."27

Admittedly, eminent domain is not the sole judicial recourse by which the Government may have acquired
the NAIA 3 facilities while satisfying the requisites in the 2004 Resolution. Eminent domain though may be
the most effective, as well as the speediest means by which such goals may be accomplished. Not only
does it enable immediate possession after satisfaction of the requisites under the law, it also has a built-in
procedure through which just compensation may be ascertained. Thus, there should be no question as to
the propriety of eminent domain proceedings in this case.

Still, in applying the laws and rules on expropriation in the case at bar, we are impelled to apply or
construe these rules in accordance with the Court’s prescriptions in the 2004 Resolution to achieve the
end effect that the Government may validly take over the NAIA 3 facilities. Insofar as this case is
concerned, the 2004 Resolution is effective not only as a legal precedent, but as the source of rights and
prescriptions that must be guaranteed, if not enforced, in the resolution of this petition. Otherwise, the
integrity and efficacy of the rulings of this Court will be severely diminished.

It is from these premises that we resolve the first question, whether Rule 67 of the Rules of Court or Rep.
Act No. 8974 governs the expropriation proceedings in this case.

Application of Rule 67 Violates

the 2004 Agan Resolution

The Government insists that Rule 67 of the Rules of Court governs the expropriation proceedings in this
case to the exclusion of all other laws. On the other hand, PIATCO claims that it is Rep. Act No. 8974
which does apply. Earlier, we had adverted to the basic differences between the statute and the
procedural rule. Further elaboration is in order.
Rule 67 outlines the procedure under which eminent domain may be exercised by the Government. Yet by
no means does it serve at present as the solitary guideline through which the State may expropriate
private property. For example, Section 19 of the Local Government Code governs as to the exercise by
local government units of the power of eminent domain through an enabling ordinance. And then there is
Rep. Act No. 8974, which covers expropriation proceedings intended for national government
infrastructure projects.

Rep. Act No. 8974, which provides for a procedure eminently more favorable to the property owner than
Rule 67, inescapably applies in instances when the national government expropriates property "for
national government infrastructure projects."28 Thus, if expropriation is engaged in by the national
government for purposes other than national infrastructure projects, the assessed value standard and the
deposit mode prescribed in Rule 67 continues to apply.

Under both Rule 67 and Rep. Act No. 8974, the Government commences expropriation proceedings
through the filing of a complaint. Unlike in the case of local governments which necessitate an authorizing
ordinance before expropriation may be accomplished, there is no need under Rule 67 or Rep. Act No.
8974 for legislative authorization before the Government may proceed with a particular exercise of
eminent domain. The most crucial difference between Rule 67 and Rep. Act No. 8974 concerns the
particular essential step the Government has to undertake to be entitled to a writ of possession.

The first paragraph of Section 2 of Rule 67 provides:

SEC. 2. Entry of plaintiff upon depositing value with authorized government depository. — Upon the filing
of the complaint or at any time thereafter and after due notice to the defendant, the plaintiff shall have
the right to take or enter upon the possession of the real property involved if he deposits with the
authorized government depositary an amount equivalent to the assessed value of the property for
purposes of taxation to be held by such bank subject to the orders of the court. Such deposit shall be in
money, unless in lieu thereof the court authorizes the deposit of a certificate of deposit of a government
bank of the Republic of the Philippines payable on demand to the authorized government depositary.

In contrast, Section 4 of Rep. Act No. 8974 relevantly states:

SEC. 4. Guidelines for Expropriation Proceedings.— Whenever it is necessary to acquire real property for
the right-of-way, site or location for any national government infrastructure project through expropriation,
the appropriate proceedings before the proper court under the following guidelines:

a) Upon the filing of the complaint, and after due notice to the defendant, the implementing agency shall
immediately pay the owner of the property the amount equivalent to the sum of (1) one hundred percent
(100%) of the value of the property based on the current relevant zonal valuation of the Bureau of
Internal Revenue (BIR); and (2) the value of the improvements and/or structures as determined under
Section 7 hereof;

...

c) In case the completion of a government infrastructure project is of utmost urgency and importance,
and there is no existing valuation of the area concerned, the implementing agency shall immediately pay
the owner of the property its proffered value taking into consideration the standards prescribed in Section
5 hereof.

Upon completion with the guidelines abovementioned, the court shall immediately issue to the
implementing agency an order to take possession of the property and start the implementation of the
project.

Before the court can issue a Writ of Possession, the implementing agency shall present to the court a
certificate of availability of funds from the proper official concerned.

...

As can be gleaned from the above-quoted texts, Rule 67 merely requires the Government to deposit with
an authorized government depositary the assessed value of the property for expropriation for it to be
entitled to a writ of possession. On the other hand, Rep. Act No. 8974 requires that the Government make
a direct payment to the property owner before the writ may issue. Moreover, such payment is based on
the zonal valuation of the BIR in the case of land, the value of the improvements or structures under the
replacement cost method,29 or if no such valuation is available and in cases of utmost urgency, the
proffered value of the property to be seized.

It is quite apparent why the Government would prefer to apply Rule 67 in lieu of Rep. Act No. 8974.
Under Rule 67, it would not be obliged to immediately pay any amount to PIATCO before it can obtain the
writ of possession since all it need do is deposit the amount equivalent to the assessed value with an
authorized government depositary. Hence, it devotes considerable effort to point out that Rep. Act No.
8974 does not apply in this case, notwithstanding the undeniable reality that NAIA 3 is a national
government project. Yet, these efforts fail, especially considering the controlling effect of the 2004
Resolution in Agan on the adjudication of this case.

It is the finding of this Court that the staging of expropriation proceedings in this case with the exclusive
use of Rule 67 would allow for the Government to take over the NAIA 3 facilities in a fashion that directly
rebukes our 2004 Resolution in Agan. This Court cannot sanction deviation from its own final and
executory orders.

Section 2 of Rule 67 provides that the State "shall have the right to take or enter upon the possession of
the real property involved if [the plaintiff] deposits with the authorized government depositary an amount
equivalent to the assessed value of the property for purposes of taxation to be held by such bank subject
to the orders of the court."30 It is thus apparent that under the provision, all the Government need do to
obtain a writ of possession is to deposit the amount equivalent to the assessed value with an authorized
government depositary.

Would the deposit under Section 2 of Rule 67 satisfy the requirement laid down in the 2004 Resolution
that "[f]or the government to take over the said facility, it has to compensate respondent PIATCO as
builder of the said structures"? Evidently not.

If Section 2 of Rule 67 were to apply, PIATCO would be enjoined from receiving a single centavo as just
compensation before the Government takes over the NAIA 3 facility by virtue of a writ of possession. Such
an injunction squarely contradicts the letter and intent of the 2004 Resolution. Hence, the position of the
Government sanctions its own disregard or violation the prescription laid down by this Court that there
must first be just compensation paid to PIATCO before the Government may take over the NAIA 3
facilities.

Thus, at the very least, Rule 67 cannot apply in this case without violating the 2004 Resolution. Even
assuming that Rep. Act No. 8974 does not govern in this case, it does not necessarily follow that Rule 67
should then apply. After all, adherence to the letter of Section 2, Rule 67 would in turn violate the Court’s
requirement in the 2004 Resolution that there must first be payment of just compensation to PIATCO
before the Government may take over the property.

It is the plain intent of Rep. Act No. 8974 to supersede the system of deposit under Rule 67 with the
scheme of "immediate payment" in cases involving national government infrastructure projects. The
following portion of the Senate deliberations, cited by PIATCO in its Memorandum, is worth quoting to
cogitate on the purpose behind the plain meaning of the law:

THE CHAIRMAN (SEN. CAYETANO). "x x x Because the Senate believes that, you know, we have to pay
the landowners immediately not by treasury bills but by cash.

Since we are depriving them, you know, upon payment, ‘no, of possession, we might as well pay them as
much, ‘no, hindi lang 50 percent.

xxx

THE CHAIRMAN (REP. VERGARA). Accepted.

xxx

THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really in favor of the landowners, e.

THE CHAIRMAN (REP. VERGARA). That’s why we need to really secure the availability of funds.
xxx

THE CHAIRMAN (SEN. CAYETANO). No, no. It’s the same. It says here: iyong first paragraph, diba? Iyong
zonal – talagang magbabayad muna. In other words, you know, there must be a payment kaagad. (TSN,
Bicameral Conference on the Disagreeing Provisions of House Bill 1422 and Senate Bill 2117, August 29,
2000, pp. 14-20)

xxx

THE CHAIRMAN (SEN. CAYETANO). Okay, okay, ‘no. Unang-una, it is not deposit, ‘no. It’s payment."

REP. BATERINA. It’s payment, ho, payment." (Id., p. 63)31

It likewise bears noting that the appropriate standard of just compensation is a substantive matter. It is
well within the province of the legislature to fix the standard, which it did through the enactment of Rep.
Act No. 8974. Specifically, this prescribes the new standards in determining the amount of just
compensation in expropriation cases relating to national government infrastructure projects, as well as the
manner of payment thereof. At the same time, Section 14 of the Implementing Rules recognizes the
continued applicability of Rule 67 on procedural aspects when it provides "all matters regarding defenses
and objections to the complaint, issues on uncertain ownership and conflicting claims, effects of appeal on
the rights of the parties, and such other incidents affecting the complaint shall be resolved under the
provisions on expropriation of Rule 67 of the Rules of Court."32

Given that the 2004 Resolution militates against the continued use of the norm under Section 2, Rule 67,
is it then possible to apply Rep. Act No. 8974? We find that it is, and moreover, its application in this case
complements rather than contravenes the prescriptions laid down in the 2004 Resolution.

Rep. Act No. 8974 Fits

to the Situation at Bar

and Complements the

2004 Agan Resolution

Rep. Act No. 8974 is entitled "An Act To Facilitate The Acquisition Of Right-Of-Way, Site Or Location For
National Government Infrastructure Projects And For Other Purposes." Obviously, the law is intended to
cover expropriation proceedings intended for national government infrastructure projects. Section 2 of
Rep. Act No. 8974 explains what are considered as "national government projects."

Sec. 2. National Government Projects. – The term "national government projects" shall refer to all
national government infrastructure, engineering works and service contracts, including projects
undertaken by government-owned and controlled corporations, all projects covered by Republic Act No.
6957, as amended by Republic Act No. 7718, otherwise known as the Build-Operate-and-Transfer Law,
and other related and necessary activities, such as site acquisition, supply and/or installation of
equipment and materials, implementation, construction, completion, operation, maintenance,
improvement, repair and rehabilitation, regardless of the source of funding.

As acknowledged in the 2003 Decision, the development of NAIA 3 was made pursuant to a build-operate-
and-transfer arrangement pursuant to Republic Act No. 6957, as amended,33 which pertains to
infrastructure or development projects normally financed by the public sector but which are now wholly or
partly implemented by the private sector.34 Under the build-operate-and-transfer scheme, it is the project
proponent which undertakes the construction, including the financing, of a given infrastructure facility. 35
In Tatad v. Garcia,36 the Court acknowledged that the operator of the EDSA Light Rail Transit project
under a BOT scheme was the owner of the facilities such as "the rail tracks, rolling stocks like the
coaches, rail stations, terminals and the power plant." 37

There can be no doubt that PIATCO has ownership rights over the facilities which it had financed and
constructed. The 2004 Resolution squarely recognized that right when it mandated the payment of just
compensation to PIATCO prior to the takeover by the Government of NAIA 3. The fact that the
Government resorted to eminent domain proceedings in the first place is a concession on its part of
PIATCO’s ownership. Indeed, if no such right is recognized, then there should be no impediment for the
Government to seize control of NAIA 3 through ordinary ejectment proceedings.

Since the rights of PIATCO over the NAIA 3 facilities are established, the nature of these facilities should
now be determined. Under Section 415(1) of the Civil Code, these facilities are ineluctably immovable or
real property, as they constitute buildings, roads and constructions of all kinds adhered to the soil. 38
Certainly, the NAIA 3 facilities are of such nature that they cannot just be packed up and transported by
PIATCO like a traveling circus caravan.

Thus, the property subject of expropriation, the NAIA 3 facilities, are real property owned by PIATCO. This
point is critical, considering the Government’s insistence that the NAIA 3 facilities cannot be deemed as
the "right-of-way", "site" or "location" of a national government infrastructure project, within the coverage
of Rep. Act No. 8974.

There is no doubt that the NAIA 3 is not, under any sensible contemplation, a "right-of-way." Yet we
cannot agree with the Government’s insistence that neither could NAIA 3 be a "site" or "location". The
petition quotes the definitions provided in Black’s Law Dictionary of "location’" as the specific place or
position of a person or thing and ‘site’ as pertaining to a place or location or a piece of property set aside
for specific use.’"39 Yet even Black’s Law Dictionary provides that "[t]he term [site] does not of itself
necessarily mean a place or tract of land fixed by definite boundaries." 40 One would assume that the
Government, to back up its contention, would be able to point to a clear-cut rule that a "site" or "location"
exclusively refers to soil, grass, pebbles and weeds. There is none.

Indeed, we cannot accept the Government’s proposition that the only properties that may be expropriated
under Rep. Act No. 8974 are parcels of land. Rep. Act No. 8974 contemplates within its coverage such
real property constituting land, buildings, roads and constructions of all kinds adhered to the soil. Section
1 of Rep. Act No. 8974, which sets the declaration of the law’s policy, refers to "real property acquired for
national government infrastructure projects are promptly paid just compensation." 41 Section 4 is quite
explicit in stating that the scope of the law relates to the acquisition of "real property," which under civil
law includes buildings, roads and constructions adhered to the soil.

It is moreover apparent that the law and its implementing rules commonly provide for a rule for the
valuation of improvements and/or structures thereupon separate from that of the land on which such are
constructed. Section 2 of Rep. Act No. 8974 itself recognizes that the improvements or structures on the
land may very well be the subject of expropriation proceedings. Section 4(a), in relation to Section 7 of
the law provides for the guidelines for the valuation of the improvements or structures to be expropriated.
Indeed, nothing in the law would prohibit the application of Section 7, which provides for the valuation
method of the improvements and or structures in the instances wherein it is necessary for the
Government to expropriate only the improvements or structures, as in this case.

The law classifies the NAIA 3 facilities as real properties just like the soil to which they are adhered. Any
sub-classifications of real property and divergent treatment based thereupon for purposes of expropriation
must be based on substantial distinctions, otherwise the equal protection clause of the Constitution is
violated. There may be perhaps a molecular distinction between soil and the inorganic improvements
adhered thereto, yet there are no purposive distinctions that would justify a variant treatment for
purposes of expropriation. Both the land itself and the improvements thereupon are susceptible to private
ownership independent of each other, capable of pecuniary estimation, and if taken from the owner,
considered as a deprivation of property. The owner of improvements seized through expropriation suffers
the same degree of loss as the owner of land seized through similar means. Equal protection demands
that all persons or things similarly situated should be treated alike, both as to rights conferred and
responsibilities imposed. For purposes of expropriation, parcels of land are similarly situated as the
buildings or improvements constructed thereon, and a disparate treatment between those two classes of
real property infringes the equal protection clause.

Even as the provisions of Rep. Act No. 8974 call for that law’s application in this case, the threshold test
must still be met whether its implementation would conform to the dictates of the Court in the 2004
Resolution. Unlike in the case of Rule 67, the application of Rep. Act No. 8974 will not contravene the
2004 Resolution, which requires the payment of just compensation before any takeover of the NAIA 3
facilities by the Government. The 2004 Resolution does not particularize the extent such payment must be
effected before the takeover, but it unquestionably requires at least some degree of payment to the
private property owner before a writ of possession may issue. The utilization of Rep. Act No. 8974
guarantees compliance with this bare minimum requirement, as it assures the private property owner the
payment of, at the very least, the proffered value of the property to be seized. Such payment of the
proffered value to the owner, followed by the issuance of the writ of possession in favor of the
Government, is precisely the schematic under Rep. Act No. 8974, one which facially complies with the
prescription laid down in the 2004 Resolution.

Clearly then, we see no error on the part of the RTC when it ruled that Rep. Act No. 8974 governs the
instant expropriation proceedings.

The Proper Amount to be Paid

under Rep. Act No. 8974

Then, there is the matter of the proper amount which should be paid to PIATCO by the Government
before the writ of possession may issue, consonant to Rep. Act No. 8974.

At this juncture, we must address the observation made by the Office of the Solicitor General in behalf of
the Government that there could be no "BIR zonal valuations" on the NAIA 3 facility, as provided in Rep.
Act No. 8974, since zonal valuations are only for parcels of land, not for airport terminals. The Court
agrees with this point, yet does not see it as an impediment for the application of Rep. Act No. 8974.

It must be clarified that PIATCO cannot be reimbursed or justly compensated for the value of the parcel of
land on which NAIA 3 stands. PIATCO is not the owner of the land on which the NAIA 3 facility is
constructed, and it should not be entitled to just compensation that is inclusive of the value of the land
itself. It would be highly disingenuous to compensate PIATCO for the value of land it does not own. Its
entitlement to just compensation should be limited to the value of the improvements and/or structures
themselves. Thus, the determination of just compensation cannot include the BIR zonal valuation under
Section 4 of Rep. Act No. 8974.

Under Rep. Act No. 8974, the Government is required to "immediately pay" the owner of the property the
amount equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on
the current relevant zonal valuation of the [BIR]; and (2) the value of the improvements and/or
structures as determined under Section 7. As stated above, the BIR zonal valuation cannot apply in this
case, thus the amount subject to immediate payment should be limited to "the value of the improvements
and/or structures as determined under Section 7," with Section 7 referring to the "implementing rules and
regulations for the equitable valuation of the improvements and/or structures on the land." Under the
present implementing rules in place, the valuation of the improvements/structures are to be based using
"the replacement cost method."42 However, the replacement cost is only one of the factors to be
considered in determining the just compensation.

In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also mandated that the payment of just
compensation should be in accordance with equity as well. Thus, in ascertaining the ultimate amount of
just compensation, the duty of the trial court is to ensure that such amount conforms not only to the law,
such as Rep. Act No. 8974, but to principles of equity as well.

Admittedly, there is no way, at least for the present, to immediately ascertain the value of the
improvements and structures since such valuation is a matter for factual determination. 43 Yet Rep. Act No.
8974 permits an expedited means by which the Government can immediately take possession of the
property without having to await precise determination of the valuation. Section 4(c) of Rep. Act No. 8974
states that "in case the completion of a government infrastructure project is of utmost urgency and
importance, and there is no existing valuation of the area concerned, the implementing agency shall
immediately pay the owner of the property its proferred value, taking into consideration the standards
prescribed in Section 5 [of the law]."44 The "proffered value" may strike as a highly subjective standard
based solely on the intuition of the government, but Rep. Act No. 8974 does provide relevant standards
by which "proffered value" should be based,45 as well as the certainty

of judicial determination of the propriety of the proffered value.46

In filing the complaint for expropriation, the Government alleged to have deposited the amount of P3
Billion earmarked for expropriation, representing the assessed value of the property. The making of the
deposit, including the determination of the amount of the deposit, was undertaken under the erroneous
notion that Rule 67, and not Rep. Act No. 8974, is the applicable law. Still, as regards the amount, the
Court sees no impediment to recognize this sum of P3 Billion as the proffered value under Section 4(b) of
Rep. Act No. 8974. After all, in the initial determination of the proffered value, the Government is not
strictly required to adhere to any predetermined standards, although its proffered value may later be
subjected to judicial review using the standards enumerated under Section 5 of Rep. Act No. 8974.

How should we appreciate the questioned order of Hon. Gingoyon, which pegged the amount to be
immediately paid to PIATCO at around $62.3 Million? The Order dated 4 January 2005, which mandated
such amount, proves problematic in that regard. While the initial sum of P3 Billion may have been based
on the assessed value, a standard which should not however apply in this case, the RTC cites without
qualification Section 4(a) of Rep. Act No. 8974 as the basis for the amount of $62.3 Million, thus leaving
the impression that the BIR zonal valuation may form part of the basis for just compensation, which
should not be the case. Moreover, respondent judge made no attempt to apply the enumerated guidelines
for determination of just compensation under Section 5 of Rep. Act No. 8974, as required for judicial
review of the proffered value.

The Court notes that in the 10 January 2005 Omnibus Order, the RTC noted that the concessions
agreement entered into between the Government and PIATCO stated that the actual cost of building NAIA
3 was "not less than" US$350 Million.47 The RTC then proceeded to observe that while Rep. Act No. 8974
required the immediate payment to PIATCO the amount equivalent to 100% of the value of NAIA 3, the
amount deposited by the Government constituted only 18% of this value. At this point, no binding import
should be given to this observation that the actual cost of building NAIA 3 was "not less than" US$350
Million, as the final conclusions on the amount of just compensation can come only after due
ascertainment in accordance with the standards set under Rep. Act No. 8974, not the declarations of the
parties. At the same time, the expressed linkage between the BIR zonal valuation and the amount of just
compensation in this case, is revelatory of erroneous thought on the part of the RTC.

We have already pointed out the irrelevance of the BIR zonal valuation as an appropriate basis for
valuation in this case, PIATCO not being the owner of the land on which the NAIA 3 facilities stand. The
subject order is flawed insofar as it fails to qualify that such standard is inappropriate.

It does appear that the amount of US$62.3 Million was based on the certification issued by the LBP-
Baclaran that the Republic of the Philippines maintained a total balance in that branch amounting to such
amount. Yet the actual representation of the $62.3 Million is not clear. The Land Bank Certification
expressing such amount does state that it was issued upon request of the Manila International Airport
Authority "purportedly as guaranty deposit for the expropriation complaint." 48 The Government claims in
its Memorandum that the entire amount was made available as a guaranty fund for the final and
executory judgment of the trial court, and not merely for the issuance of the writ of possession. 49 One
could readily conclude that the entire amount of US$62.3 Million was intended by the Government to
answer for whatever guaranties may be required for the purpose of the expropriation complaint.

Still, such intention the Government may have had as to the entire US$62.3 Million is only inferentially
established. In ascertaining the proffered value adduced by the Government, the amount of P3 Billion as
the amount deposited characterized in the complaint as "to be held by [Land Bank] subject to the [RTC’s]
orders,"50 should be deemed as controlling. There is no clear evidence that the Government intended to
offer US$62.3 Million as the initial payment of just compensation, the wording of the Land Bank
Certification notwithstanding, and credence should be given to the consistent position of the Government
on that aspect.

In any event, for the RTC to be able to justify the payment of US$62.3 Million to PIATCO and not P3
Billion Pesos, he would have to establish that the higher amount represents the valuation of the
structures/improvements, and not the BIR zonal valuation on the land wherein NAIA 3 is built. The Order
dated 5 January 2005 fails to establish such integral fact, and in the absence of contravening proof, the
proffered value of P3 Billion, as presented by the Government, should prevail.

Strikingly, the Government submits that assuming that Rep. Act No. 8974 is applicable, the deposited
amount of P3 Billion should be considered as the proffered value, since the amount was based on
comparative values made by the City Assessor.51 Accordingly, it should be deemed as having faithfully
complied with the requirements of the statute. 52 While the Court agrees that P3 Billion should be
considered as the correct proffered value, still we cannot deem the Government as having faithfully
complied with Rep. Act No. 8974. For the law plainly requires direct payment to the property owner, and
not a mere deposit with the authorized government depositary. Without such direct payment, no writ of
possession may be obtained.

Writ of Possession May Not

Be Implemented Until Actual

Receipt by PIATCO of Proferred

Value

The Court thus finds another error on the part of the RTC. The RTC authorized the issuance of the writ of
possession to the Government notwithstanding the fact that no payment of any amount had yet been
made to PIATCO, despite the clear command of Rep. Act No. 8974 that there must first be payment
before the writ of possession can issue. While the RTC did direct the LBP-Baclaran to immediately release
the amount of US$62 Million to PIATCO, it should have likewise suspended the writ of possession, nay,
withdrawn it altogether, until the Government shall have actually paid PIATCO. This is the inevitable
consequence of the clear command of Rep. Act No. 8974 that requires immediate payment of the initially
determined amount of just compensation should be effected. Otherwise, the overpowering intention of
Rep. Act No. 8974 of ensuring payment first before transfer of repossession would be eviscerated.

Rep. Act No. 8974 represents a significant change from previous expropriation laws such as Rule 67, or
even Section 19 of the Local Government Code. Rule 67 and the Local Government Code merely provided
that the Government deposit the initial amounts53 antecedent to acquiring possession of the property with,
respectively, an authorized

Government depositary54 or the proper court.55 In both cases, the private owner does not receive
compensation prior to the deprivation of property. On the other hand, Rep. Act No. 8974 mandates
immediate payment of the initial just compensation prior to the issuance of the writ of possession in favor
of the Government.

Rep. Act No. 8974 is plainly clear in imposing the requirement of immediate prepayment, and no amount
of statutory deconstruction can evade such requisite. It enshrines a new approach towards eminent
domain that reconciles the inherent unease attending expropriation proceedings with a position of
fundamental equity. While expropriation proceedings have always demanded just compensation in
exchange for private property, the previous deposit requirement impeded immediate compensation to the
private owner, especially in cases wherein the determination

of the final amount of compensation would prove highly disputed. Under the new modality prescribed by
Rep. Act No. 8974, the private owner sees immediate monetary recompense with the same degree of
speed as the taking of his/her property.

While eminent domain lies as one of the inherent powers of the State, there is no requirement that it
undertake a prolonged procedure, or that the payment of the private owner be protracted as far as
practicable. In fact, the expedited procedure of payment, as highlighted under Rep. Act No. 8974, is
inherently more fair, especially to the layperson who would be hard-pressed to fully comprehend the
social value of expropriation in the first place. Immediate payment placates to some degree whatever ill-
will that arises from expropriation, as well as satisfies the demand of basic fairness.

The Court has the duty to implement Rep. Act No. 8974 and to direct compliance with the requirement of
immediate payment in this case. Accordingly, the Writ of Possession dated 21 December 2004 should be
held in abeyance, pending proof of actual payment by the Government to PIATCO of the proffered value of
the NAIA 3 facilities, which totals P3,002,125,000.00.

Rights of the Government

upon Issuance of the Writ

of Possession

Once the Government pays PIATCO the amount of the proffered value of P3 Billion, it will be entitled to
the Writ of Possession. However, the Government questions the qualification imposed by the RTC in its 4
January 2005 Order consisting of the prohibition on the Government from performing acts of ownership
such as awarding concessions or leasing any part of NAIA 3 to other parties. To be certain, the RTC, in its
10 January 2005 Omnibus Order, expressly stated that it was not affirming "the superfluous part of the
Order [of 4 January 2005] prohibiting the plaintiffs from awarding concessions or leasing any part of NAIA
[3] to other parties."56 Still, such statement was predicated on the notion that since the Government was
not yet the owner of NAIA 3 until final payment of just compensation, it was obviously incapacitated to
perform such acts of ownership.

In deciding this question, the 2004 Resolution in Agan cannot be ignored, particularly the declaration that
"[f]or the government to take over the said facility, it has to compensate respondent PIATCO as builder of
the said structures." The obvious import of this holding is that unless PIATCO is paid just compensation,
the Government is barred from "taking over," a phrase which in the strictest sense could encompass even
a bar of physical possession of NAIA 3, much less operation of the facilities.

There are critical reasons for the Court to view the 2004 Resolution less stringently, and thus allow the
operation by the Government of NAIA 3 upon the effectivity of the Writ of Possession. For one, the
national prestige is diminished every day that passes with the NAIA 3 remaining mothballed. For another,
the continued non-use of the facilities contributes to its physical deterioration, if it has not already. And
still for another, the economic benefits to the Government and the country at large are beyond dispute
once the NAIA 3 is put in operation.

Rep. Act No. 8974 provides the appropriate answer for the standard that governs the extent of the acts
the Government may be authorized to perform upon the issuance of the writ of possession. Section 4
states that "the court shall immediately issue to the implementing agency an order to take possession of
the property and start the implementation of the project." We hold that accordingly, once the Writ of
Possession is effective, the Government itself is authorized to perform the acts that are essential to the
operation of the NAIA 3 as an international airport terminal upon the effectivity of the Writ of Possession.
These would include the repair, reconditioning and improvement of the complex, maintenance of the
existing facilities and equipment, installation of new facilities and equipment, provision of services and
facilities pertaining to the facilitation of air traffic and transport, and other services that are integral to a
modern-day international airport.

The Government’s position is more expansive than that adopted by the Court. It argues that with the writ
of possession, it is enabled to perform acts de jure on the expropriated property. It cites Republic v.
Tagle,57 as well as the statement therein that "the expropriation of real property does not include mere
physical entry or occupation of land," and from them concludes that "its mere physical entry and
occupation of the property fall short of the taking of title, which includes all the rights that may be
exercised by an owner over the subject property."

This conclusion is indeed lifted directly from statements in Tagle,58 but not from the ratio decidendi of that
case. Tagle concerned whether a writ of possession in favor of the Government was still necessary in light
of the fact that it was already in actual possession of the property. In ruling that the Government was
entitled to the writ of possession, the Court in Tagle explains that such writ vested not only physical
possession, but also the legal right to possess the property. Continues the Court, such legal right to
possess was particularly important in the case, as there was a pending suit against the Republic for
unlawful detainer, and the writ of possession would serve to safeguard the Government from eviction. 59

At the same time, Tagle conforms to the obvious, that there is no transfer of ownership as of yet by virtue
of the writ of possession. Tagle may concede that the Government is entitled to exercise more than just
the right of possession by virtue of the writ of possession, yet it cannot be construed to grant the
Government the entire panoply of rights that are available to the owner. Certainly, neither Tagle nor any
other case or law, lends support to the Government’s proposition that it acquires beneficial or equitable
ownership of the expropriated property merely through the writ of possession.

Indeed, this Court has been vigilant in defense of the rights of the property owner who has been validly
deprived of possession, yet retains legal title over the expropriated property pending payment of just
compensation. We reiterated the various doctrines of such import in our recent holding in Republic v.
Lim:60

The recognized rule is that title to the property expropriated shall pass from the owner to the expropriator
only upon full payment of the just compensation. Jurisprudence on this settled principle is consistent both
here and in other democratic jurisdictions. In Association of Small Landowners in the Philippines, Inc. et
al., vs. Secretary of Agrarian Reform[61], thus:

"Title to property which is the subject of condemnation proceedings does not vest the condemnor until the
judgment fixing just compensation is entered and paid, but the condemnor’s title relates back to the date
on which the petition under the Eminent Domain Act, or the commissioner’s report under the Local
Improvement Act, is filed.
x x x Although the right to appropriate and use land taken for a canal is complete at the time of entry,
title to the property taken remains in the owner until payment is actually made. (Emphasis supplied.)

In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to property does
not pass to the condemnor until just compensation had actually been made. In fact, the decisions appear
to be uniform to this effect. As early as 1838, in Rubottom v. McLure, it was held that ‘actual payment to
the owner of the condemned property was a condition precedent to the investment of the title to the
property in the State’ albeit ‘not to the appropriation of it to public use.’ In Rexford v. Knight, the Court of
Appeals of New York said that the construction upon the statutes was that the fee did not vest in the
State until the payment of the compensation although the authority to enter upon and appropriate the
land was complete prior to the payment. Kennedy further said that ‘both on principle and authority the
rule is . . . that the right to enter on and use the property is complete, as soon as the property is actually
appropriated under the authority of law for a public use, but that the title does not pass from the owner
without his consent, until just compensation has been made to him."

Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that:

‘If the laws which we have exhibited or cited in the preceding discussion are attentively examined it will
be apparent that the method of expropriation adopted in this jurisdiction is such as to afford absolute
reassurance that no piece of land can be finally and irrevocably taken from an unwilling owner until
compensation is paid....’"(Emphasis supplied.)

Clearly, without full payment of just compensation, there can be no transfer of title from the landowner to
the expropriator. Otherwise stated, the Republic’s acquisition of ownership is conditioned upon the full
payment of just compensation within a reasonable time.

Significantly, in Municipality of Biñan v. Garcia[62] this Court ruled that the expropriation of lands consists
of two stages, to wit:

"x x x The first is concerned with the determination of the authority of the plaintiff to exercise the power
of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends
with an order, if not of dismissal of the action, "of condemnation declaring that the plaintiff has a lawful
right to take the property sought to be condemned, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the date of the filing of the
complaint" x x x.

The second phase of the eminent domain action is concerned with the determination by the court of "the
just compensation for the property sought to be taken." This is done by the court with the assistance of
not more than three (3) commissioners. x x x.

It is only upon the completion of these two stages that expropriation is said to have been completed. In
Republic v. Salem Investment Corporation[63] , we ruled that, "the process is not completed until payment
of just compensation." Thus, here, the failure of the Republic to pay respondent and his predecessors-in-
interest for a period of 57 years rendered the expropriation process incomplete.

Lim serves fair warning to the Government and its agencies who consistently refuse to pay just
compensation due to the private property owner whose property had been expropriated. At the same
time, Lim emphasizes the fragility of the rights of the Government as possessor pending the final payment
of just compensation, without diminishing the potency of such rights. Indeed, the public policy, enshrined
foremost in the Constitution, mandates that the Government must pay for the private property it
expropriates. Consequently, the proper judicial attitude is to guarantee compliance with this primordial
right to just compensation.

Final Determination of Just

Compensation Within 60 Days

The issuance of the writ of possession does not write finis to the expropriation proceedings. As earlier
pointed out, expropriation is not completed until payment to the property owner of just compensation.
The proffered value stands as merely a provisional determination of the amount of just compensation, the
payment of which is sufficient to transfer possession of the property to the Government. However, to
effectuate the transfer of ownership, it is necessary for the Government to pay the property owner the
final just compensation.

In Lim, the Court went as far as to countenance, given the exceptional circumstances of that case, the
reversion of the validly expropriated property to private ownership due to the failure of the Government to
pay just compensation in that case.64 It was noted in that case that the Government deliberately refused
to pay just compensation. The Court went on to rule that "in cases where the government failed to pay
just compensation within five (5) years from the finality of the judgment in the expropriation proceedings,
the owners concerned shall have the right to recover possession of their property." 65

Rep. Act No. 8974 mandates a speedy method by which the final determination of just compensation may
be had. Section 4 provides:

In the event that the owner of the property contests the implementing agency’s proffered value, the court
shall determine the just compensation to be paid the owner within sixty (60) days from the date of filing
of the expropriation case. When the decision of the court becomes final and executory, the implementing
agency shall pay the owner the difference between the amount already paid and the just compensation as
determined by the court.

We hold that this provision should apply in this case. The sixty (60)-day period prescribed in Rep. Act No.
8974 gives teeth to the law’s avowed policy "to ensure that owners of real property acquired for national
government infrastructure projects are promptly paid just compensation."66 In this case, there already has
been irreversible delay in the prompt payment of PIATCO of just compensation, and it is no longer
possible for the RTC to determine the just compensation due PIATCO within sixty (60) days from the filing
of the complaint last 21 December 2004, as contemplated by the law. Still, it is feasible to effectuate the
spirit of the law by requiring the trial court to make such determination within sixty (60) days from finality
of this decision, in accordance with the guidelines laid down in Rep. Act No. 8974 and its Implementing
Rules.

Of course, once the amount of just compensation has been finally determined, the Government is obliged
to pay PIATCO the said amount. As shown in Lim and other like-minded cases, the Government’s refusal
to make such payment is indubitably actionable in court.

Appointment of Commissioners

The next argument for consideration is the claim of the Government that the RTC erred in appointing the
three commissioners in its 7 January 2005 Order without prior consultation with either the Government or
PIATCO, or without affording the Government the opportunity to object to the appointment of these
commissioners. We can dispose of this argument without complication.

It must be noted that Rep. Act No. 8974 is silent on the appointment of commissioners tasked with the
ascertainment of just compensation.67 This protocol though is sanctioned under Rule 67. We rule that the
appointment of commissioners under Rule 67 may be resorted to, even in expropriation proceedings
under Rep. Act No. 8974, since the application of the provisions of Rule 67 in that regard do not conflict
with the statute. As earlier stated, Section 14 of the Implementing Rules does allow such other incidents
affecting the complaint to be resolved under the provisions on expropriation of Rule 67 of the Rules of
Court. Even without Rule 67, reference during trial to a commissioner of the examination of an issue of
fact is sanctioned under Rule 32 of the Rules of Court.

But while the appointment of commissioners under the aegis of Rule 67 may be sanctioned in
expropriation proceedings under Rep. Act No. 8974, the standards to be observed for the determination of
just compensation are provided not in Rule 67 but in the statute. In particular, the governing standards
for the determination of just compensation for the NAIA 3 facilities are found in Section 10 of the
Implementing Rules for Rep. Act No. 8974, which provides for the replacement cost method in the
valuation of improvements and structures.68

Nothing in Rule 67 or Rep. Act No. 8974 requires that the RTC consult with the parties in the expropriation
case on who should be appointed as commissioners. Neither does the Court feel that such a requirement
should be imposed in this case. We did rule in Municipality of Talisay v. Ramirez69 that "there is nothing to
prevent [the trial court] from seeking the recommendations of the parties on [the] matter [of
appointment of commissioners], the better to ensure their fair representation." 70 At the same time, such
solicitation of recommendations is not obligatory on the part of the court, hence we cannot impute error
on the part of the RTC in its exercise of solitary discretion in the appointment of the commissioners.
What Rule 67 does allow though is for the parties to protest the appointment of any of these
commissioners, as provided under Section 5 of the Rule. These objections though must be made filed
within ten (10) days from service of the order of appointment of the commissioners. 71 In this case, the
proper recourse of the Government to challenge the choice of the commissioners is to file an objection
with the trial court, conformably with Section 5, Rule 67, and not as it has done, assail the same through
a special civil action for certiorari. Considering that the expropriation proceedings in this case were
effectively halted seven (7) days after the Order appointing the commissioners,72 it is permissible to allow
the parties to file their objections with the RTC within five (5) days from finality of this decision.

Insufficient Ground for Inhibition

of Respondent Judge

The final argument for disposition is the claim of the Government is that Hon. Gingoyon has prejudged the
expropriation case against the Government’s cause and, thus, should be required to inhibit himself. This
grave charge is predicated on facts which the Government characterizes as "undeniable." In particular,
the Government notes that the 4 January 2005 Order was issued motu proprio, without any preceding
motion, notice or hearing. Further, such order, which directed the payment of US$62 Million to PIATCO,
was attended with error in the computation of just compensation. The Government also notes that the
said Order was issued even before summons had been served on PIATCO.

The disqualification of a judge is a deprivation of his/her judicial power73 and should not be allowed on the
basis of mere speculations and surmises. It certainly cannot be predicated on the adverse nature of the
judge’s rulings towards the movant for inhibition, especially if these rulings are in accord with law. Neither
could inhibition be justified merely on the erroneous nature of the rulings of the judge. We emphasized in
Webb v. People:74

To prove bias and prejudice on the part of respondent judge, petitioners harp on the alleged adverse and
erroneous rulings of respondent judge on their various motions. By themselves, however, they do not
sufficiently prove bias and prejudice to disqualify respondent judge. To be disqualifying, the bias and
prejudice must be shown to have stemmed from an extrajudicial source and result in an opinion on the
merits on some basis other than what the judge learned from his participation in the case. Opinions
formed in the course of judicial proceedings, although erroneous, as long as they are based on the
evidence presented and conduct observed by the judge, do not prove personal bias or prejudice on the
part of the judge. As a general rule, repeated rulings against a litigant, no matter how erroneous and
vigorously and consistently expressed, are not a basis for disqualification of a judge on grounds of bias
and prejudice. Extrinsic evidence is required to establish bias, bad faith, malice or corrupt purpose, in
addition to the palpable error which may be inferred from the decision or order itself. Although the
decision may seem so erroneous as to raise doubts concerning a judge's integrity, absent extrinsic
evidence, the decision itself would be insufficient to establish a case against the judge. The only exception
to the rule is when the error is so gross and patent as to produce an ineluctable inference of bad faith or
malice.75

The Government’s contentions against Hon. Gingoyon are severely undercut by the fact that the 21
December 2004 Order, which the 4 January 2005 Order sought to rectify, was indeed severely flawed as it
erroneously applied the provisions of Rule 67 of the Rules of Court, instead of Rep. Act No. 8974, in
ascertaining compliance with the requisites for the issuance of the writ of possession. The 4 January

2005 Order, which according to the Government establishes Hon. Gingoyon’s bias, was promulgated
precisely to correct the previous error by applying the correct provisions of law. It would not speak well of
the Court if it sanctions a judge for wanting or even attempting to correct a previous erroneous order
which precisely is the right move to take.

Neither are we convinced that the motu proprio issuance of the 4 January 2005 Order, without the benefit
of notice or hearing, sufficiently evinces bias on the part of Hon. Gingoyon. The motu proprio amendment
by a court of an erroneous order previously issued may be sanctioned depending on the circumstances, in
line with the long-recognized principle that every court has inherent power to do all things reasonably
necessary for the administration of justice within the scope of its jurisdiction. 76 Section 5(g), Rule 135 of
the Rules of Court further recognizes the inherent power of courts "to amend and control its process and
orders so as to make them conformable to law and justice," 77 a power which Hon. Gingoyon noted in his
10 January 2005 Omnibus Order.78 This inherent power includes the right of the court to reverse itself,
especially when in its honest opinion it has committed an error or mistake in judgment, and that to
adhere to its decision will cause injustice to a party litigant. 79
Certainly, the 4 January 2005 Order was designed to make the RTC’s previous order conformable to law
and justice, particularly to apply the correct law of the case. Of course, as earlier established, this effort
proved incomplete, as the 4 January 2005 Order did not correctly apply Rep. Act No. 8974 in several
respects. Still, at least, the 4 January 2005 Order correctly reformed the most basic premise of the case
that Rep. Act No. 8974 governs the expropriation proceedings.

Nonetheless, the Government belittles Hon. Gingoyon’s invocation of Section 5(g), Rule 135 as "patently
without merit". Certainly merit can be seen by the fact that the 4 January 2005 Order reoriented the
expropriation proceedings towards the correct governing law. Still, the Government claims that the
unilateral act of the RTC did not conform to law or justice, as it was not afforded the right to be heard.

The Court would be more charitably disposed towards this argument if not for the fact that the earlier
order with the 4 January 2005 Order sought to correct was itself issued without the benefit of any
hearing. In fact, nothing either in Rule 67 or Rep. Act No. 8975 requires the conduct of a hearing prior to
the issuance of the writ of possession, which by design is available immediately upon the filing of the
complaint provided that the requisites attaching thereto are present. Indeed, this expedited process for
the obtention of a writ of possession in expropriation cases comes at the expense of the rights of the
property owner to be heard or to be deprived of possession. Considering these predicates, it would be
highly awry to demand that an order modifying the earlier issuance of a writ of possession in an
expropriation case be barred until the staging of a hearing, when the issuance of the writ of possession
itself is not subject to hearing. Perhaps the conduct of a hearing under these circumstances would be
prudent. However, hearing is not mandatory, and the failure to conduct one does not establish the
manifest bias required for the inhibition of the judge.

The Government likewise faults Hon. Gingoyon for using the amount of US$350 Million as the basis for the
100% deposit under Rep. Act No. 8974. The Court has noted that this statement was predicated on the
erroneous belief that the BIR zonal valuation applies as a standard for determination of just compensation
in this case. Yet this is manifest not of bias, but merely of error on the part of the judge. Indeed, the
Government was not the only victim of the errors of the RTC in the assailed orders. PIATCO itself was
injured by the issuance by the RTC of the writ of possession, even though the former had yet to be paid
any amount of just compensation. At the same time, the Government was also prejudiced by the
erroneous ruling of the RTC that the amount of US$62.3 Million, and not P3 Billion, should be released to
PIATCO.

The Court has not been remiss in pointing out the multiple errors committed by the RTC in its assailed
orders, to the prejudice of both parties. This attitude of error towards all does not ipso facto negate the
charge of bias. Still, great care should be had in requiring the inhibition of judges simply because the
magistrate did err. Incompetence may be a ground for administrative sanction, but not for inhibition,
which requires lack of objectivity or impartiality to sit on a case.

The Court should necessarily guard against adopting a standard that a judge should be inhibited from
hearing the case if one litigant loses trust in the judge. Such loss of trust on the part of the Government
may be palpable, yet inhibition cannot be grounded merely on the feelings of the party-litigants. Indeed,
every losing litigant in any case can resort to claiming that the judge was biased, and he/she will gain a
sympathetic ear from friends, family, and people who do not understand the judicial process. The test in
believing such a proposition should not be the vehemence of the litigant’s claim of bias, but the Court’s
judicious estimation, as people who know better than to believe any old cry of "wolf!", whether such bias
has been irrefutably exhibited.

The Court acknowledges that it had been previously held that "at the very first sign of lack of faith and
trust in his actions, whether well-grounded or not, the judge has no other alternative but to inhibit himself
from the case."80 But this doctrine is qualified by the entrenched rule that "a judge may not be legally
prohibited from sitting in a litigation, but when circumstances appear that will induce doubt to his honest
actuations and probity in favor of either party, or incite such state of mind, he should conduct a careful
self-

examination. He should exercise his discretion in a way that the people's faith in the Courts of Justice is
not impaired."81 And a self-assessment by the judge that he/she is not impaired to hear the case will be
respected by the Court absent any evidence to the contrary. As held in Chin v. Court of Appeals:

An allegation of prejudgment, without more, constitutes mere conjecture and is not one of the "just and
valid reasons" contemplated in the second paragraph of Rule 137 of the Rules of Court for which a judge
may inhibit himself from hearing the case. We have repeatedly held that mere suspicion that a judge is
partial to a party is not enough. Bare allegations of partiality and prejudgment will not suffice in the
absence of clear and convincing evidence to overcome the presumption that the judge will undertake his
noble role to dispense justice according to law and evidence and without fear or favor. There should be
adequate evidence to prove the allegations, and there must be showing that the judge had an interest,
personal or otherwise, in the prosecution of the case. To be a disqualifying circumstance, the bias and
prejudice must be shown to have stemmed from an extrajudicial source and result in an opinion on the
merits on some basis other than what the judge learned from his participation in the case. 82

The mere vehemence of the Government’s claim of bias does not translate to clear and convincing
evidence of impairing bias. There is no sufficient ground to direct the inhibition of Hon. Gingoyon from
hearing the expropriation case.

In conclusion, the Court summarizes its rulings as follows:

(1) The 2004 Resolution in Agan sets the base requirement that has to be observed before the
Government may take over the NAIA 3, that there must be payment to PIATCO of just compensation in
accordance with law and equity. Any ruling in the present expropriation case must be conformable to the
dictates of the Court as pronounced in the Agan cases.

(2) Rep. Act No. 8974 applies in this case, particularly insofar as it requires the immediate payment by
the Government of at least the proffered value of the NAIA 3 facilities to PIATCO and provides certain
valuation standards or methods for the determination of just compensation.

(3) Applying Rep. Act No. 8974, the implementation of Writ of Possession in favor of the Government over
NAIA 3 is held in abeyance until PIATCO is directly paid the amount of P3 Billion, representing the
proffered value of NAIA 3 under Section 4(c) of the law.

(4) Applying Rep. Act No. 8974, the Government is authorized to start the implementation of the NAIA 3
Airport terminal project by performing the acts that are essential to the operation of the NAIA 3 as an
international airport terminal upon the effectivity of the Writ of Possession, subject to the conditions
above-stated. As prescribed by the Court, such authority encompasses "the repair, reconditioning and
improvement of the complex, maintenance of the existing facilities and equipment, installation of new
facilities and equipment, provision of services and facilities pertaining to the facilitation of air traffic and
transport, and other services that are integral to a modern-day international airport." 83

(5) The RTC is mandated to complete its determination of the just compensation within sixty (60) days
from finality of this Decision. In doing so, the RTC is obliged to comply with "law and equity" as ordained
in Again and the standard set under Implementing Rules of Rep. Act No. 8974 which is the "replacement
cost method" as the standard of valuation of structures and improvements.

(6) There was no grave abuse of discretion attending the RTC Order appointing the commissioners for the
purpose of determining just compensation. The provisions on commissioners under Rule 67 shall apply
insofar as they are not inconsistent with Rep. Act No. 8974, its Implementing Rules, or the rulings of the
Court in Agan.

(7) The Government shall pay the just compensation fixed in the decision of the trial court to PIATCO
immediately upon the finality of the said decision.

(8) There is no basis for the Court to direct the inhibition of Hon. Gingoyon.

All told, the Court finds no grave abuse of discretion on the part of the RTC to warrant the nullification of
the questioned orders. Nonetheless, portions of these orders should be modified to conform with law and
the pronouncements made by the Court herein.

WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4 January 2005 and 10
January 2005 of the lower court. Said orders are AFFIRMED with the following MODIFICATIONS:

1) The implementation of the Writ of Possession dated 21 December 2005 is HELD IN ABEYANCE, pending
payment by petitioners to PIATCO of the amount of Three Billion Two Million One Hundred Twenty Five
Thousand Pesos (P3,002,125,000.00), representing the proffered value of the NAIA 3 facilities;
2) Petitioners, upon the effectivity of the Writ of Possession, are authorized start the implementation of
the Ninoy Aquino International Airport Pasenger Terminal III project by performing the acts that are
essential to the operation of the said International Airport Passenger Terminal project;

3) RTC Branch 117 is hereby directed, within sixty (60) days from finality of this Decision, to determine
the just compensation to be paid to PIATCO by the Government.

The Order dated 7 January 2005 is AFFIRMED in all respects subject to the qualification that the parties
are given ten (10) days from finality of this Decision to file, if they so choose, objections to the
appointment of the commissioners decreed therein.

The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED.

G.R. No. 165734             June 16, 2006

ATTY. RAMON B. CENIZA, Petitioner,

vs.
DANIEL WISTEHUFF, SR., DANIEL WISTEHUFF III, MARITES GONZALES-WISTEHUFF, BRYAN K.
WISTEHUFF, ATTY. FRANCIS M. ZOSA, and GEMALYN PETEROS, Respondents.

DECISION

CALLEJO, SR., J.:

This is a petition for review on certiorari under Rule 45, Rules of Court, of the Order 1 dated April 15, 2004
of the Regional Trial Court (RTC) of Cebu City, in Civil Case No. CEB-29783 dismissing the Petition for
Indirect Contempt of petitioner Atty. Ramon B. Ceniza against respondents Daniel Wistehuff, Sr., Daniel
Wistehuff III, Marites Gonzales-Wistehuff, Bryan K. Wistehuff, Atty. Francis M. Zosa, and Gemalyn
Peteros. Also assailed in this petition is the Order2 denying the motion for reconsideration
of said decision. Petitioner prays, inter alia, that the court enjoin the Court of Appeals (CA) from enforcing
its Resolution in CA-G.R. SP No. 85301 granting the plea of Inmark Marketing Philippines, Inc. (IMPI) for a
temporary restraining order, as well as the Resolution dated October 14, 2004 which granted IMPI’s plea
for a writ of preliminary injunction on a P50,000.00 bond.

Petitioner and his client Daniel Wistehuff, Sr. organized and established IMPI.3 Petitioner owns 5% of the
shares of stocks of the IMPI, and the other stockholders are respondents Daniel Wistehuff III, Marites
Gonzales-Wistehuff, and Bryan K. Wistehuff.4

Petitioner, as plaintiff, filed a Complaint against IMPI and the Wistehuffs with the RTC of Cebu City for
accounting, declaration of dividends, specific performance, damages and attorney’s fees with a plea for a
writ of preliminary mandatory injunction. The case was raffled to Branch 11 of the court and docketed as
Civil Case No. CEB-26274-SRC. The complaint contained the following prayer:

x x x [That a] writ of preliminary mandatory injunction be issued ordering defendant corporation, its
President Daniel Wistehuff III and its former President Daniel Wistehuff, Sr. to: a) produce all financial
documents of the corporation from 1996 up to the present and deposit the same with the Court; b)
faithfully comply with the terms of the Retainership Contract to pay his retainer fee of P35,000.00 per
month and the extra legal services rendered; a Management Committee of a Receiver be constituted;
ordering defendants to make full accounting; ordering the declaration of stock and cash dividends;
ordering the individual defendants to whom legal services were rendered to pay attorney’s fees of not less
than P200,000.00; ordering defendants Daniel Wistehuff III and Daniel Wistehuff, Sr., jointly and
severally, to pay plaintiff not less than P500,000.00 in moral damages and not less than P250,000.00 in
exemplary damages, attorney’s fees of not less than P100,000.00 and litigation expenses of not less than
P10,000.00, plus appearance fees amounting to P2,000.00 per hour. x x x5

Petitioner thereafter amended his complaint, alleging therein that it had been filed by way of a derivative
suit against the defendants. He prayed for an accounting of income and expenses of the IMPI, declaration
of dividends, enforcement of his right to financial statements, attorney’s fees, and damages. 6 In the
course of the proceedings, the RTC issued an Order on October 10, 2001 denying his plea for the
appointment of a receiver or management committee pendente lite.7
On March 27, 2003, however, the court rendered judgment in favor of petitioner. The fallo of the decision
reads:

WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered in favor of the
plaintiff and against the defendants ordering the latter as follows:

1. to make a true and correct accounting of the earnings of the corporation which will be the basis
of the declaration of dividends;

2. to enjoin defendant Inmark Marketing Philippines, Inc. and the individual defendants to comply
with the terms and conditions of plaintiff Ceniza’s Retainer Contract;

3. to order the individual defendants to whom services were rendered to pay attorney’s fees of
P200,000.00;

4. to order defendants Daniel Wistehuff III and Daniel Wistehuff, Sr., jointly and severally, to pay
plaintiff the sum of P500,000.00 in moral damages and P25,000.00 in exemplary damages;

5. to order defendants Daniel Wistehuff III and Daniel Wistehuff, Sr. to pay, jointly and severally,
attorney’s fees of P100,000.00 and litigation expenses of P10,000.00.

SO ORDERED.8

Petitioner moved for the execution of the decision pending appeal. On August 14, 2003, the RTC issued an
Omnibus Order,9 partially granting the motion. The dispositive portion of the Order reads:

WHEREFORE, in view of [the] foregoing premises, the Court hereby does the following:

(a) Orders the issuance of a writ of execution to enforce the portion of the judgment rendered in
this case on March 27, 2003 ordering the defendants to make a true and correct accounting of the
earnings of Inmark Marketing Philippines, Inc. which will be the basis of declaration of dividends;

(b) Denies the plaintiff’s motion for immediate execution of the portions of the judgment relating
to awards for damages, attorney’s fees, and expenses of litigation; and

(c) Orders the release to Judge Jose P. Burgos of the receiver’s cash bond in the sum of
P25,000.00.

SO ORDERED.10

Consequently, a Writ of Execution11 was issued by the court on September 11, 2003, a copy of which was
served on the defendants on the same day. On September 15, 2003, the IMPI, through Atty. Francis M.
Zosa of the law firm of Zosa and Quijano, submitted the following documents to the sheriff in compliance
with the writ issued by the court: (a) Report of Sta. Ana Rivera & Co.; (b) Balance Sheet; (3) Statements
of Operation; (4) Statements of Changes in Equity; (5) Statements of Cash Flows; and (6) Notes to
Financial Statements pertaining to the corporation.12

Believing that the defendants-stockholders and their counsel acted in conspiracy with each other and
willfully and deliberately refused to comply with the writ of execution issued by the court, petitioner filed
against them a petition for indirect contempt under Rule 39, Section 11, in relation to Rule 71, Section
3(d) of the Rules of Court, in the RTC of Cebu City. Petitioner alleged therein that:

6. Following the willful, deliberate and contumacious refusal of respondents, this time with the
participation of, and in collusion with, respondent Atty. Francis M. Zosa, their counsel in the intracorporate
case before Branch 23, when said counsel acting for and in behalf of respondents willfully, deliberately,
insultingly and contumaciously submitted the 2002 Financial Statement of Inmark (Annexes "E", "F", and
"F-1" hereto attached) which he very well knew fraudulently and incorrectly reported a loss and, having
been marked and presented by him in evidence, is not, and cannot possibly be, in compliance with the
Writ of Execution served upon him and his client, which directed "the defendants to make a true and
correct accounting of the earnings of Inmark Marketing Philippines, Inc. which shall be the basis of
declaration of dividends."
Plaintiff (now petitioner) then moved the Court for a show cause order against the same respondents
herein but the Honorable Court, thru Judge Generosa A. Labra, in its Order dated 10 December 2003
ruled that indirect contempt must be initiated by a verified petition with supporting particulars and
certified true copies of documents or papers involved in accordance with the provisions of Sec. 4, Rule 71
of the 1997 Rules, hence, the instant petition;

7. Pursuant to the above-cited Sec. 4 of Rule 71, it is within the discretion of the Honorable Presiding
Judge of Branch 23 to order the consolidation of the present petition which is a Special Civil Action and
Civil Case No. CEB-26274-SRC which is the principal action pending before Branch 23 for joint hearing
and resolution/decision.

8. The 2002 Financial Statement is incorrect and fraudulent based on the judgment of this Honorable
Court in Civil Case No. CEB-26274-SRC which found that:

1) P28,000,000.00 was paid for the residential lot and building occupied by defendant Daniel
Wistehuff, Sr. located at Northtown Homes (Decision, p. 6);

2) P14,000,000.00 was paid for the residential lot and building occupied by defendant Daniel
Wistehuff III located at Ma. Luisa Subdivision (Ibid);

9. Other hidden or misappropriated earnings of defendant corporation were:

1) Dollar deposits of Inmark’s fund deposited with UCPB, Makati Branch, under Dollar Account No.
01-317-300307-0 from which are sourced funds transferred to 317-000429-1 UCPB, Banilad
Branch, which is an Inmark account, per CPA Celso Inocente’s report dated July 5, 2002 (Annex
"E", etc. Urgent Omnibus Motion) who at one time was engaged as a member of the staff of the
former Receiver;

2) $75,000.00 deposited by defendant Daniel Wistehuff III with a bank designated by the
Philippine Retirement Authority in support of his application for retiree’s visa;

3) The amounts used for the purchases of several cars/motor vehicles of the individual defendants
with the collective value conservatively estimated at P3,000,000.00;

4) Funds utilized for the purchase of furnitures and fixtures of the residences located at Northtown
Homes and at the Ma. Luisa Subdivision;

5) And other hidden earnings/funds which are yet to be discovered.

9. The present contempt charges arose out of or are related to Civil Case No. CEB-26274-SRC before
Branch 23 of this Honorable Court which rendered the judgment which[,] being in a nature of special
judgment[,] may be enforced by contempt proceedings if the same should be disobeyed pursuant to Sec.
11, Rule 39 of the 1997 Rules.13

Petitioner prayed that judgment be rendered against respondents, as follows:

1. To require the respondents to comment on the petition within such period as may be fixed by
the Court (Sec. 3, Rule 71) and thereafter to set the date for hearing on the contempt charge
requiring all respondents to appear in person at such hearing. (But nothing in this section shall be
so construed as to prevent the court from issuing process to bring the respondent into court, or
from holding him in custody pending such proceedings.) [Sec. 3];

2. If the hearing is not ordered to be had forthwith, to allow the release of the respondents from
custody upon filing bonds in amounts fixed by the Court for their appearance at the next hearing of
the charge (Sec. 6);

3. When respondents, released on bail, fail to appear on the date set under item 2 of the reliefs
herein prayed, for this Honorable Court to issue another order of arrest as well as to declare the
bonds of respondents to be forfeited and confiscated, or both, such bonds being understood to
answer for the measure of damages to the extent of the loss or injury sustained by petitioner by
reason of misconduct for which the contempt charge was prosecuted, with costs of the proceedings
and that such recovery shall be ordered by the Court for the benefit of the petitioner (Sec. 9);
 4. After hearing, to SENTENCE to the maximum, in view of aggravating circumstances attendant to
the commission of the offenses, the respondents guilty of indirect contempt according to the
penalties prescribed in Sec. 7, Rule 71 which consists of a fine not exceeding P30,000.00 or
imprisonment not exceeding 6 months or both, without prejudice to the provisions of Sec. 8 which
calls for an indefinite imprisonment should respondents refuse or omit to do an act which are yet in
their power to perform.

Petitioner prays for such other reliefs and remedies just and equitable in the premises.14

The case was docketed as CEB-29783 and raffled to Branch 23 of the RTC of Cebu. However, the case
was re-raffled to Branch 16 of said court.

In their answer to the petition, respondents averred that only the dispositive portion of the decision on
the subject execution may be enforced by the sheriff, and that they complied with the writ issued by the
court and submitted a true and correct accounting of the earnings of the IMPI which will be the basis of
the computation of dividends.15

On April 15, 2004, the RTC issued an Order16 dismissing the petition for indirect contempt proceedings
based on the Answer of the respondents. The court ruled that the petition for indirect contempt was
criminal in nature; hence, Ceniza, as petitioner, had to prove the guilt of the respondents beyond
reasonable doubt. It declared that petitioner had not overcome the presumption of innocence in favor of
respondents, who had sufficiently complied with the writ of execution by submitting the 2002 Financial
Statement containing all the data required of an accounting. 17

On May 3, 2004, petitioner filed a Motion for Reconsideration of the RTC Order on the ground that his
petition for indirect contempt was civil in nature; he adduced the requisite quantum of evidence to prove
respondents’ guilt for indirect contempt; and that they failed to present the auditor who prepared the
1992 Financial Statement of IMPI. He also alleged that he was denied his right to due process when the
court dismissed his petition without conducting any hearing. He pointed out that the auditor who prepared
the 2002 Financial Statement of IMPI was not presented and consequently could not be cross-examined
by him. He cited the ruling of this Court in Slade Perkins v. Director of Prisons, 18 as precedent, and
prayed:

WHEREFORE, premises considered, it is respectfully prayed of this Honorable Court (preferably through
another Presiding Judge in view of the requested voluntary inhibition of Hon. Agapito L. Hontanosas, Jr.),
to RECONSIDER and SET ASIDE the order of this Honorable Court thru Judge Hontanosas dated 15 April
2004 and for this Honorable Court (preferably through another Presiding Judge) to ACT on petitioner’s
OMNIBUS MOTION (dated 15 January 2004):

1) TO SET CONTEMPT CHARGE FOR HEARING AND TO REQUIRE RESPONDENTS TO APPEAR IN

PERSON;

2) FOR THE ISSUANCE OF A HOLD DEPARTURE ORDER;

3) TO EXPUNGE COUNTERCLAIM.19

On May 19, 2004, petitioner also filed a Motion for the appointment of a commissioner.

On July 7, 2004, the RTC issued an Order20 denying his Motion for Reconsideration of the Order of the
Court on the ground that respondents’ acquittal is not appealable, or cannot be the subject of a motion for
reconsideration as such a motion amounted to an appeal. The court ruled that, as in criminal proceedings,
an appeal would not lie from the order of dismissal of, or exoneration from, a charge of contempt of
court.21 The registry return receipt showed that petitioner received a copy of the Order on July 13, 2004.

On July 15, 2004, the court issued an Order22 in Civil Case No. CEB-26274-SRC granting petitioner’s
Motion for the Appointment of Atty. Bayani Atup as Commissioner to receive and report evidence to the
court on the following issue of fact – the true and correct accounting of the earnings of IMPI since the
start of its operations in 1996 up to the present. The Commissioner was ordered to file a report within ten
(10) days after completion of proceedings, and to attach all exhibits, affidavits, depositions, papers and
transcripts of the testimonial evidence presented before him.
Petitioner filed a "Notice of Appeal with Alternative Motion to Squarely Rule"23 on July 19, 2004. In his
alternative motion, he prayed that the court resolve the issues raised in his motion for reconsideration
premised on the following grounds: (1) this being a case for civil indirect contempt, an appeal lies from
the order finding respondents guilty or absolving them of the charge; and (2) even in criminal
proceedings, an appeal lies in instances where there has been lack of due process or lack of jurisdiction.

During the hearing of the motion, the petitioner offered in evidence Exhibits "A" to "F" and their sub-
markings in support of his motion.24

On September 30, 2004, the RTC issued an Order25 denying the Alternative Motion of petitioner and
declining to give due course to his Notice of Appeal. It ruled that, as gleaned from the relief prayed for in
the Petition for Indirect Contempt, petitioner’s purpose was primarily punishment and, only incidentally,
compensatory or remedial. The acquittal of the respondents was not subject to a motion for
reconsideration or appeal.

Petitioner received a copy of the September 30, 2004 Order on October 5, 2004. On November 10, 2004,
he filed with this Court a Motion for Extension of time to file a petition for review under Rule 45 of the
Rules of Court. On December 1, 2004, the Court issued a Resolution 26 granting the motion and gave him
an extension of 30 days counted from the expiration of the reglementary period and conditioned upon the
timeliness of the motion.

The IMPI filed a petition for certiorari, prohibition and mandamus with the Court of Appeals for the
nullification of the July 14, 2004 Order of the trial court in Civil Case No. CEB-26274-SRC (which granted
petitioner’s Motion for the Appointment of a Commissioner to receive evidence of the parties, and report
on the true and correct accounting of the earnings of IMPI from 1996 up to the present). The case was
docketed in the appellate court as CA-G.R. SP No. 85301. On August 4, 2004, the CA issued a Resolution 27
granting the motion of IMPI for a temporary restraining order, and thereafter, a Resolution 28 dated
October 14, 2004 granting the plea of IMPI for a writ of preliminary prohibitory injunction.

Petitioner then filed a petition for review on certiorari with this Court, seeking to nullify the April 15, 2004
and September 30, 2004 Orders of the RTC in Case No. CEB-29783, as well as the August 4, 2004 and
October 14, 2004 Resolutions of the appellate court in CA-G.R. SP No. 85301. He alleged the following
therein:

I. The Court a quo seriously erred in not holding that Civil Case No. CEB-29783 for Indirect
Contempt being civil in nature, a Motion for Reconsideration and an appeal from a judgment
exonerating the respondents is not barred by double jeopardy.

II. The Court a quo seriously erred in not finding respondents-appellees guilty as a matter of law of
Indirect Civil Contempt and sentencing them accordingly. 29

Petitioner avers that contempt proceedings may actually be either civil or criminal: it is criminal when the
purpose is to vindicate the authority of the court and protect its outraged dignity; it is civil when there is
failure to do something ordered by a court to be done for the benefit of a party. He asserts that his
petition for indirect contempt below is civil in nature for the reason that the accounting ordered by the
trial court was for the benefit of one party and the purpose of the contempt proceeding below was not to
vindicate the authority of the court and to protect its outraged dignity. He maintains that while criminal
contempt proceedings should be conducted according to the principles and rules applicable to criminal
cases, this is not so in civil contempt proceedings. Accordingly, an appeal from the decision dismissing the
same is not barred by double jeopardy.30

Petitioner further posits that respondents should be found guilty of indirect contempt for willfully and
deliberately refusing to submit a full and correct accounting of the earnings of the corporation. He posits
that the 2001 Financial Statements submitted by the corporation do not constitute compliance with the
Order to render a true and correct accounting as they do not merit faith and credence but show
documented fraud, wrongdoing and deception. 31 Petitioner prays that:

1. The challenged order of the Court a quo dated 15 April 2004 issued by ex-judge Agapito
Hontanosas, Jr. (formerly of Branch 16 of the Regional Trial Court of Cebu) dismissing on the
merits the petition for contempt in Civil Case No. CEB-29783 and the other challenged order of the
Court a quo issued by Judge Simeon P. Dumdum, Jr. of Branch 7 of the same Regional Trial Court
of Cebu, denying petitioner’s Motion for Reconsideration on grounds of double jeopardy, be
REVERSED and SET ASIDE;
 2. Pending final outcome of this petition, and in view of the continued, deliberate, willful and
intransigent refusal of respondents to render a true and correct, full and complete accounting of
the earnings of the corporation for over 1 year and 6 months now since the judgment dated 27
March 2003 in Civil Case No. CEB-26274-SRC, to HOLD respondents in the CUSTODY of the Court
(Sec. 6, Rule 71) to be released only upon their filing the commensurate bonds the amounts of
which shall be fixed corresponding to the measure of damages which shall be to the extent of the
loss or injury sustained, and [continues] to be sustained, by petitioner Ramon B. Ceniza (Sec. 9);

3. To render a judgment FINDING respondents Daniel Wistehuff, Sr., Daniel Wistehuff, Jr., Bryan
K. Wistehuff, Atty. Francis M. Zosa and Gemalyn Peteros (except respondent Marites Gonzales-
Wistehuff) guilty of civil contempt in said case and SENTENCING them accordingly by ordering the
continued detention of respondents (Sec. 8, Rule 71) until they shall have fully complied with the
true and correct, full and complete accounting of the earnings of Inmark Marketing Phils., Inc.
which shall be the basis of the declaration of dividends as decreed by the Court a quo in its
judgment dated 27 March 2003 in Civil Case No. CEB-26274-SRC;

4. In the interest of justice and equity, and on account of extreme urgency, pending final outcome
of this petition, that the Special 18th Division of the Court of Appeals in CA-G.R. [SP] No. 85301,
be TEMPORARILY RESTRAINED, and later PERMANENTLY RESTRAINED, from enforcing its October
14, 2004 Resolution and the writ of preliminary injunction issued pursuant thereto stopping the
implementation of the July 15, 2004 Order of Judge Simeon P. Dumdum, Jr. in Civil Case No. CEB-
26274-SRC appointing a commissioner tasked to conduct an accounting of the true and correct
earnings of Inmark Marketing Phils., Inc. which shall be the basis for the declaration of dividends;

5. Pending final action on this Petition, to further ISSUE a Hold-[D]eparture Order to the
Commissioner of Immigration to prevent the respondents from avoiding the jurisdiction of this
Honorable Court and thereby preserve its authority and dignity which should be respected even by
foreigners, especially in the light of the fact that respondent Daniel Wistehuff, Sr. has already fled
from the jurisdiction of Philippine Courts; and

6. In regard to respondent Atty. Francis M. Zosa, to require him to EXPLAIN why he should not be
disbarred.

Petitioner prays for such other reliefs and remedies just and equitable in the premises.32

For their part, respondents aver that the proper remedy of petitioner to question an order denying due
course to a notice of appeal is a petition for certiorari under Rule 65 of the Rules of Court and not a
petition for review under Rule 45. They assert that the RTC correctly denied the Notice of Appeal of
petitioner since the Petition for Indirect Contempt filed by him below was criminal in nature; hence, the
decision of the trial court dismissing the charge was not appealable. Moreover, the RTC correctly
dismissed petitioner’s contempt charge because they submitted the report of the independent auditor
together with the other documents, which, according to them, serve as a true and correct accounting of
the earnings of the corporation.33

The issues for resolution are: (1) whether the petition states a cause of action for the nullification of the
assailed Resolutions in CA-G.R. SP No. 85301; (b) whether the petition for indirect contempt filed by the
petitioner below is criminal in nature; (c) whether the assailed Orders of the RTC in Civil Case No. CEB-
29783 are appealable; and (d) whether a petition for certiorari under Rule 65 of the Rules of Court is the
proper remedy in seeking to nullify the assailed Orders of the RTC.

On the first issue, we find that the petition fails to state a cause of action for petition for review on
certiorari. The assailed Resolutions of the CA are interlocutory in nature and not appealable; to nullify the
same, the proper remedy of the petitioner was to file a petition for certiorari under Rule 65, on the
allegation that the CA acted with grave abuse of its discretion amounting to excess or lack of jurisdiction.
Consequently, the petition for review on certiorari of the petitioner for the nullification of the assailed
resolutions of the appellate court should be as it is hereby denied. It must be stressed that a petition for
review on certiorari under Rule 45 of the Rules of Court is a mode of appealing a judgment or final order
of the CA.

Considering that the rest of the issues are interrelated, the Court shall delve into and resolve them
simultaneously.

The pertinent provision of the Rules of Court is Section 3, Rule 71, which provides:
SEC. 3. Indirect contempt to be punished after charge and hearing. —After a charge in writing has been
filed, and an opportunity given to the respondent to comment thereon within such period as may be fixed
by the court and to be heard by himself or counsel, a person guilty of any of the following acts may be
punished for indirect contempt:

(a) Misbehavior of an officer of a court in the performance of his official duties or in his official
transactions;

(b) Disobedience of, or resistance to, a lawful writ, process, order, or judgment of a court,
including the act of a person who, after being dispossessed or ejected from any real property by
the judgment or process of any court of competent jurisdiction, enters or attempts or induces
another to enter into or upon such real property, for the purpose of executing acts of ownership or
possession, or in any manner disturbs the possession given to the person adjudged to be entitled
thereto;

(c) Any abuse of or any unlawful interference with the processes or proceedings of a court not
constituting direct contempt under Section 1 of this Rule;

(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the
administration of justice;

(e) Assuming to be an attorney or an officer of a court, and acting as such without authority;

(f) Failure to obey a subpoena duly served;

(g) The rescue, or attempted rescue, of a person or property in the custody of an officer by virtue
of an order or process of a court held by him.

But nothing in this section shall be so construed as to prevent the court from issuing process to bring the
respondent into court, or from holding him in custody pending such proceedings.

Section 7 of the same Rule provides for the punishment of indirect contempt, thus:

SEC. 7. Punishment for indirect contempt.—If the respondent is adjudged guilty of indirect contempt
committed against a Regional Trial Court or a court of equivalent or higher rank, he may be punished by a
fine

not exceeding thirty thousand (P30,000) pesos or imprisonment not exceeding six (6) months, or both. If
he is adjudged guilty of contempt committed against a lower court, he may be punished by a fine not
exceeding five thousand (P5,000) pesos or imprisonment not exceeding one (1) month, or both. If the
contempt consists in the violation of a writ of injunction, temporary restraining order or status quo order,
he may also be ordered to make complete restitution to the party injured by such violation of the property
involved or such amount as may be alleged and proved.

The writ of execution as in ordinary civil action shall issue for the enforcement of a judgment imposing a
fine, unless the court otherwise provides.

Section 8 of the same Rule further states:

SEC. 8 Imprisonment until order obeyed.—When the contempt consists in the refusal or omission to do an
act which is yet in the power of the respondent to perform, he may be imprisoned by order of the court
concerned until he performs it.

In the recent case of Montenegro v. Montenegro,34 the Court distinguished criminal contempt from civil
contempt, as follows:

Contempt, whether direct or indirect, may be civil or criminal depending on the nature and effect of the
contemptuous act. Criminal contempt is "conduct directed against the authority and dignity of the court or
a judge acting judicially; it is an act obstructing the administration of justice which tends to bring the
court to disrepute or disrespect." On the other hand, civil contempt is the failure to do something ordered
to be done by a court or a judge for the benefit of the opposing party therein and is therefore, an offense
against the party in whose behalf the violated order was made. If the purpose is to punish, then it is
criminal in nature; but if to compensate, then it is civil. 35

Thus, contempt proceedings has a dual function: (1) vindication of public interest by punishment of
contemptuous conduct; (2) coercion to compel the contemnor to do what the law requires him to uphold
the power of the Court, and also to secure the rights of the parties to a suit awarded by the Court. 36

Contempt proceedings are neither wholly civil nor altogether criminal. It may not always be easy to
classify a particular act as belonging to one of those two classes. It may partake of the characteristics of
both.37 If it is remedial and coercive in nature, it is civil; the parties are the individuals whose private
rights and remedies they were instituted to protect or enforce. The absence of willfulness does not release
one from civil contempt.38 It is civil if it is instituted to preserve and enforce the rights and administer the
remedies of the parties to which the court has to force them to obey.

Proceedings for contempt are criminal in nature if presented to preserve the power of the courts and to
punish for disobedience to their orders. Criminal contempt involves no element of personal injury; it is
directed against the power and dignity of the court and the private parties have little, if any interest in the
proceedings for its punishment.39

The Rules of Court provides for the following punishment for the contemnor: fine or imprisonment, or
both.

It is not the fact of punishment, but rather its character and purpose, that often serve to distinguish
between the two classes of contempt. If it is for civil contempt the punishment is remedial, and for the
benefit of the complainant. But if it is for criminal contempt the sentence is punitive, to vindicate the
authority of the court. But if the contempt consists in the refusal of a party or a person to do an act which
the court has ordered him to do for the benefit or the advantage of a party to a suit or action pending
before it, and he is committed until he complies with the order, the commitment is in the nature of an
execution to enforce the judgment of the court, and the party in whose favor that judgment was rendered
is the real party-in-interest in the proceedings. 40

It is true that punishment by imprisonment may be remedial as well as punitive, and many civil contempt
proceedings have resulted not only in the imposition of a fine, payable to the complainant, but also in
committing the defendant to prison. But imprisonment for civil contempt is ordered where the defendant
has refused to do an affirmative act required by the provisions of an order which, either in form or
substance, is mandatory in its character. Imprisonment in such cases is not inflicted as a punishment, but
is intended to be remedial by coercing the defendant to do what he had refused to do. The order in such
cases is that the defendant stand committed unless and until he performs the affirmative act required by
the court’s order.41 The defendant can end his imprisonment and discharge himself at any moment by
doing what he had previously refused to do. In fine, the defendant carries the keys of his prison in his
own pocket.42

It may happen that, in proceedings for criminal contempt, where the imprisonment is solely punitive to
vindicate the authority of the courts, the complainant may also derive some incidental benefits from the
fact that such punishment tends to prevent a repetition of the disobedience. However, such indirect
consequences will not change imprisonment which is merely coercive and remedial into that which is
solely punitive in character or vice- versa.43

We agree with the contention of petitioner that, as gleaned from the averments of his petition and the
relief prayed for, the indirect contempt charge filed by him below was civil in nature. He submits that
respondents willfully and deliberately refused to comply with the decision of the court requiring them to
submit a true and correct accounting of the earnings of IMPI which could be the basis of the declaration of
dividends and that the 2002 Financial Statement submitted by them did not comply with such decision.
Petitioner maintains that said financial statement is fraudulent, and the purpose of the petition was to
have the respondents punished for their alleged recalcitrance and to compel them to comply with the
court’s decision. Indeed, the petitioner’s prayer, that respondents be incarcerated and remain in detention
until they comply with the decision of the court conformably with Rule 71, Section 8 of the Rules of Court,
is in the nature of an execution to enforce the judgment. Thus, the punishment sought by petitioner for
the respondents is not punitive in nature, but designed for his own benefit and advantage, and not for the
purpose of vindicating the dignity of the court and preserving its power.

Since the proceedings below is civil in nature, petitioner had the right to file a motion for reconsideration
of the RTC’s April 15, 2004 Order and to appeal therefrom within the period therefor after its denial. 44
However, the RTC disallowed the appeal on its perception that the petition for indirect contempt was
criminal in nature and that, therefore, no motion for reconsideration or appeal could be filed, since
respondents would thereby be placed in double jeopardy. Such disallowance by the trial court of
petitioner’s appeal cannot be the subject of an appeal as provided for in Section 1(d) of Rule 41 of the
Rules of Court. Under Section 3, Rule 65, the remedy from an Order disallowing an appeal is to file a
petition for mandamus with the CA.45 However, petitioner filed with this Court a petition for review on
certiorari under Rule 45; patently then, the remedy resorted to by petitioner is inappropriate.

Anent the issue of whether or not respondents are liable for indirect contempt, we need not resolve the
same in this case for the reason that the trial court had already granted petitioner’s plea for the
appointment of a commissioner to receive the evidence of the parties. The Order of the trial court
appointing a commissioner is now the subject of the petition filed by respondents in CA-G.R. SP No.
85301.

IN LIGHT OF THE FOREGOING, the petition is DENIED.

G.R. No. 161656               June 29, 2005

REPUBLIC OF THE PHILIPPINES, GENERAL ROMEO ZULUETA, COMMODORE EDGARDO GALEOS, ANTONIO
CABALUNA, DOROTEO MANTOS & FLORENCIO BELOTINDOS, petitioners,
vs.
VICENTE G. LIM, respondent.

RESOLUTION

SANDOVAL-GUTIERREZ, J.:

Justice is the first virtue of social institutions.1 When the state wields its power of eminent domain, there
arises a correlative obligation on its part to pay the owner of the expropriated property a just
compensation. If it fails, there is a clear case of injustice that must be redressed. In the present case,
fifty-seven (57) years have lapsed from the time the Decision in the subject expropriation proceedings
became final, but still the Republic of the Philippines, herein petitioner, has not compensated the owner of
the property. To tolerate such prolonged inaction on its part is to encourage distrust and resentment
among our people – the very vices that corrode the ties of civility and tempt men to act in ways they
would otherwise shun.

A revisit of the pertinent facts in the instant case is imperative.

On September 5, 1938, the Republic of the Philippines (Republic) instituted a special civil action for
expropriation with the Court of First Instance (CFI) of Cebu, docketed as Civil Case No. 781, involving
Lots 932 and 939 of the Banilad Friar Land Estate, Lahug, Cebu City, for the purpose of establishing a
military reservation for the Philippine Army. Lot 932 was registered in the name of Gervasia Denzon under
Transfer Certificate of Title (TCT) No. 14921 with an area of 25,137 square meters, while Lot 939 was in
the name of Eulalia Denzon and covered by TCT No. 12560 consisting of 13,164 square meters.

After depositing P9,500.00 with the Philippine National Bank, pursuant to the Order of the CFI dated
October 19, 1938, the Republic took possession of the lots. Thereafter, or on May 14, 1940, the CFI
rendered its Decision ordering the Republic to pay the Denzons the sum of P4,062.10 as just
compensation.

The Denzons interposed an appeal to the Court of Appeals but it was dismissed on March 11, 1948. An
entry of judgment was made on April 5, 1948.

In 1950, Jose Galeos, one of the heirs of the Denzons, filed with the National Airports Corporation a claim
for rentals for the two lots, but it "denied knowledge of the matter." Another heir, Nestor Belocura,
brought the claim to the Office of then President Carlos Garcia who wrote the Civil Aeronautics
Administration and the Secretary of National Defense to expedite action on said claim. On September 6,
1961, Lt. Manuel Cabal rejected the claim but expressed willingness to pay the appraised value of the lots
within a reasonable time.

For failure of the Republic to pay for the lots, on September 20, 1961, the Denzons’ successors-in-
interest, Francisca Galeos-Valdehueza and Josefina Galeos-Panerio,2 filed with the same CFI an action for
recovery of possession with damages against the Republic and officers of the Armed Forces of the
Philippines in possession of the property. The case was docketed as Civil Case No. R-7208.

In the interim or on November 9, 1961, TCT Nos. 23934 and 23935 covering Lots 932 and 939 were
issued in the names of Francisca Valdehueza and Josefina Panerio, respectively. Annotated thereon was
the phrase "subject to the priority of the National Airports Corporation to acquire said parcels of land, Lots
932 and 939 upon previous payment of a reasonable market value."

On July 31, 1962, the CFI promulgated its Decision in favor of Valdehueza and Panerio, holding that they
are the owners and have retained their right as such over Lots 932 and 939 because of the Republic’s
failure to pay the amount of P4,062.10, adjudged in the expropriation proceedings. However, in view of
the annotation on their land titles, they were ordered to execute a deed of sale in favor of the Republic. In
view of "the differences in money value from 1940 up to the present," the court adjusted the market
value at P16,248.40, to be paid with 6% interest per annum from April 5, 1948, date of entry in the
expropriation proceedings, until full payment.

After their motion for reconsideration was denied, Valdehueza and Panerio appealed from the CFI
Decision, in view of the amount in controversy, directly to this Court. The case was docketed as No. L-
21032.3 On May 19, 1966, this Court rendered its Decision affirming the CFI Decision. It held that
Valdehueza and Panerio are still the registered owners of Lots 932 and 939, there having been no
payment of just compensation by the Republic. Apparently, this Court found nothing in the records to
show that the Republic paid the owners or their successors-in-interest according to the CFI decision. While
it deposited the amount of P9,500,00, and said deposit was allegedly disbursed, however, the payees
could not be ascertained.

Notwithstanding the above finding, this Court still ruled that Valdehueza and Panerio are not entitled to
recover possession of the lots but may only demand the payment of their fair market value, ratiocinating
as follows:

"Appellants would contend that: (1) possession of Lots 932 and 939 should be restored to them as owners
of the same; (2) the Republic should be ordered to pay rentals for the use of said lots, plus attorney’s
fees; and (3) the court a quo in the present suit had no power to fix the value of the lots and order the
execution of the deed of sale after payment.

It is true that plaintiffs are still the registered owners of the land, there not having been a transfer of said
lots in favor of the Government. The records do not show that the Government paid the owners or their
successors-in-interest according to the 1940 CFI decision although, as stated, P9,500.00 was deposited
by it, and said deposit had been disbursed. With the records lost, however, it cannot be known who
received the money (Exh. 14 says: ‘It is further certified that the corresponding Vouchers and pertinent
Journal and Cash Book were destroyed during the last World War, and therefore the names of the payees
concerned cannot be ascertained.’) And the Government now admits that there is no available record
showing that payment for the value of the lots in question has been made (Stipulation of Facts, par. 9,
Rec. on Appeal, p. 28).

The points in dispute are whether such payment can still be made and, if so, in what amount. Said lots
have been the subject of expropriation proceedings. By final and executory judgment in said proceedings,
they were condemned for public use, as part of an airport, and ordered sold to the Government. In fact,
the abovementioned title certificates secured by plaintiffs over said lots contained annotations of the right
of the National Airports Corporation (now CAA) to pay for and acquire them. It follows that both by virtue
of the judgment, long final, in the expropriation suit, as well as the annotations upon their title
certificates, plaintiffs are not entitled to recover possession of their expropriated lots – which are still
devoted to the public use for which they were expropriated – but only to demand the fair market value of
the same."

Meanwhile, in 1964, Valdehueza and Panerio mortgaged Lot 932 to Vicente Lim, herein respondent,4 as
security for their loans. For their failure to pay Lim despite demand, he had the mortgage foreclosed in
1976. Thus, TCT No. 23934 was cancelled, and in lieu thereof, TCT No. 63894 was issued in his name.

On August 20, 1992, respondent Lim filed a complaint for quieting of title with the Regional Trial Court
(RTC), Branch 10, Cebu City, against General Romeo Zulueta, as Commander of the Armed Forces of the
Philippines, Commodore Edgardo Galeos, as Commander of Naval District V of the Philippine Navy,
Antonio Cabaluna, Doroteo Mantos and Florencio Belotindos, herein petitioners. Subsequently, he
amended the complaint to implead the Republic.
On May 4, 2001, the RTC rendered a decision in favor of respondent, thus:

"WHEREFORE, judgment is hereby rendered in favor of plaintiff Vicente Lim and against all defendants,
public and private, declaring plaintiff Vicente Lim the absolute and exclusive owner of Lot No. 932 with all
the rights of an absolute owner including the right to possession. The monetary claims in the complaint
and in the counter claims contained in the answer of defendants are ordered Dismissed.

Petitioners elevated the case to the Court of Appeals, docketed therein as CA-G.R. CV No. 72915. In its
Decision5 dated September 18, 2003, the Appellate Court sustained the RTC Decision, thus:

"Obviously, defendant-appellant Republic evaded its duty of paying what was due to the landowners. The
expropriation proceedings had already become final in the late 1940’s and yet, up to now, or more than
fifty (50) years after, the Republic had not yet paid the compensation fixed by the court while
continuously reaping benefits from the expropriated property to the prejudice of the landowner. x x x.
This is contrary to the rules of fair play because the concept of just compensation embraces not only the
correct determination of the amount to be paid to the owners of the land, but also the payment for the
land within a reasonable time from its taking. Without prompt payment, compensation cannot be
considered "just" for the property owner is made to suffer the consequence of being immediately deprived
of his land while being made to wait for a decade or more, in this case more than 50 years, before
actually receiving the amount necessary to cope with the loss. To allow the taking of the landowners’
properties, and in the meantime leave them empty-handed by withholding payment of compensation
while the government speculates on whether or not it will pursue expropriation, or worse, for government
to subsequently decide to abandon the property and return it to the landowners, is undoubtedly an
oppressive exercise of eminent domain that must never be sanctioned. (Land Bank of the Philippines vs.
Court of Appeals, 258 SCRA 404).

xxxxxx

An action to quiet title is a common law remedy for the removal of any cloud or doubt or uncertainty on
the title to real property. It is essential for the plaintiff or complainant to have a legal or equitable title or
interest in the real property, which is the subject matter of the action. Also the deed, claim, encumbrance
or proceeding that is being alleged as cloud on plaintiff’s title must be shown to be in fact invalid or
inoperative despite its prima facie appearance of validity or legal efficacy (Robles vs. Court of Appeals,
328 SCRA 97). In view of the foregoing discussion, clearly, the claim of defendant-appellant Republic
constitutes a cloud, doubt or uncertainty on the title of plaintiff-appellee Vicente Lim that can be removed
by an action to quiet title.

WHEREFORE, in view of the foregoing, and finding no reversible error in the appealed May 4, 2001
Decision of Branch 9, Regional Trial Court of Cebu City, in Civil Case No. CEB-12701, the said decision is
UPHELD AND AFFIRMED. Accordingly, the appeal is DISMISSED for lack of merit."

Undaunted, petitioners, through the Office of the Solicitor General, filed with this Court a petition for
review on certiorari alleging that the Republic has remained the owner of Lot 932 as held by this Court in
Valdehueza vs. Republic.6

In our Resolution dated March 1, 2004, we denied the petition outright on the ground that the Court of
Appeals did not commit a reversible error. Petitioners filed an urgent motion for reconsideration but we
denied the same with finality in our Resolution of May 17, 2004.

On May 18, 2004, respondent filed an ex-parte motion for the issuance of an entry of judgment. We only
noted the motion in our Resolution of July 12, 2004.

On July 7, 2004, petitioners filed an urgent plea/motion for clarification, which is actually a second motion
for reconsideration. Thus, in our Resolution of September 6, 2004, we simply noted without action the
motion considering that the instant petition was already denied with finality in our Resolution of May 17,
2004.

On October 29, 2004, petitioners filed a very urgent motion for leave to file a motion for reconsideration
of our Resolution dated September 6, 2004 (with prayer to refer the case to the En Banc). They maintain
that the Republic’s right of ownership has been settled in Valdehueza.
The basic issue for our resolution is whether the Republic has retained ownership of Lot 932 despite its
failure to pay respondent’s predecessors-in-interest the just compensation therefor pursuant to the
judgment of the CFI rendered as early as May 14, 1940.

Initially, we must rule on the procedural obstacle.

While we commend the Republic for the zeal with which it pursues the present case, we reiterate that its
urgent motion for clarification filed on July 7, 2004 is actually a second motion for reconsideration. This
motion is prohibited under Section 2, Rule 52, of the 1997 Rules of Civil Procedure, as amended, which
provides:

"Sec. 2. Second motion for reconsideration. – No second motion for reconsideration of a judgment or final
resolution by the same party shall be entertained."

Consequently, as mentioned earlier, we simply noted without action the motion since petitioners’ petition
was already denied with finality.

Considering the Republic’s urgent and serious insistence that it is still the owner of Lot 932 and in the
interest of justice, we take another hard look at the controversial issue in order to determine the veracity
of petitioner’s stance.

One of the basic principles enshrined in our Constitution is that no person shall be deprived of his private
property without due process of law; and in expropriation cases, an essential element of due process is
that there must be just compensation whenever private property is taken for public use. 7 Accordingly,
Section 9, Article III, of our Constitution mandates: "Private property shall not be taken for public use
without just compensation."

The Republic disregarded the foregoing provision when it failed and refused to pay respondent’s
predecessors-in-interest the just compensation for Lots 932 and 939. The length of time and the manner
with which it evaded payment demonstrate its arbitrary high-handedness and confiscatory attitude. The
final judgment in the expropriation proceedings (Civil Case No. 781) was entered on April 5, 1948. More
than half of a century has passed, yet, to this day, the landowner, now respondent, has remained empty-
handed. Undoubtedly, over 50 years of delayed payment cannot, in any way, be viewed as fair. This is
more so when such delay is accompanied by bureaucratic hassles. Apparent from Valdehueza is the fact
that respondent’s predecessors-in-interest were given a "run around" by the Republic’s officials and
agents. In 1950, despite the benefits it derived from the use of the two lots, the National Airports
Corporation denied knowledge of the claim of respondent’s predecessors-in-interest. Even President
Garcia, who sent a letter to the Civil Aeronautics Administration and the Secretary of National Defense to
expedite the payment, failed in granting relief to them. And, on September 6, 1961, while the Chief of
Staff of the Armed Forces expressed willingness to pay the appraised value of the lots, nothing
happened.lawphil.net

The Court of Appeals is correct in saying that Republic’s delay is contrary to the rules of fair play, as "just
compensation embraces not only the correct determination of the amount to be paid to the owners of the
land, but also the payment for the land within a reasonable time from its taking. Without prompt
payment, compensation cannot be considered ‘just.’" In jurisdictions similar to ours, where an entry to
the expropriated property precedes the payment of compensation, it has been held that if the
compensation is not paid in a reasonable time, the party may be treated as a trespasser ab initio.8

Corollarily, in Provincial Government of Sorsogon vs. Vda. De Villaroya,9 similar to the present case, this
Court expressed its disgust over the government’s vexatious delay in the payment of just compensation,
thus:

"The petitioners have been waiting for more than thirty years to be paid for their land which was taken for
use as a public high school. As a matter of fair procedure, it is the duty of the Government, whenever it
takes property from private persons against their will, to supply all required documentation and facilitate
payment of just compensation. The imposition of unreasonable requirements and vexatious delays before
effecting payment is not only galling and arbitrary but a rich source of discontent with government. There
should be some kind of swift and effective recourse against unfeeling and uncaring acts of middle or lower
level bureaucrats."

We feel the same way in the instant case.

More than anything else, however, it is the obstinacy of the Republic that prompted us to dismiss its
petition outright. As early as May 19, 1966, in Valdehueza, this Court mandated the Republic to pay
respondent’s predecessors-in-interest the sum of P16,248.40 as "reasonable market value of the two lots
in question." Unfortunately, it did not comply and allowed several decades to pass without obeying this
Court’s mandate. Such prolonged obstinacy bespeaks of lack of respect to private rights and to the rule of
law, which we cannot countenance. It is tantamount to confiscation of private property. While it is true
that all private properties are subject to the need of government, and the government may take them
whenever the necessity or the exigency of the occasion demands, however, the Constitution guarantees
that when this governmental right of expropriation is exercised, it shall be attended by compensation. 10
From the taking of private property by the government under the power of eminent domain, there arises
an implied promise to compensate the owner for his loss.11

Significantly, the above-mentioned provision of Section 9, Article III of the Constitution is not a grant but
a limitation of power. This limiting function is in keeping with the philosophy of the Bill of Rights against
the arbitrary exercise of governmental powers to the detriment of the individual’s rights. Given this
function, the provision should therefore be strictly interpreted against the expropriator, the government,
and liberally in favor of the property owner.12

Ironically, in opposing respondent’s claim, the Republic is invoking this Court’s Decision in Valdehueza, a
Decision it utterly defied. How could the Republic acquire ownership over Lot 932 when it has not paid its
owner the just compensation, required by law, for more than 50 years? The recognized rule is that title to
the property expropriated shall pass from the owner to the expropriator only upon full payment of the just
compensation. Jurisprudence on this settled principle is consistent both here and in other democratic
jurisdictions. In Association of Small Landowners in the Philippines, Inc. et al., vs. Secretary of Agrarian
Reform,13 thus:

"Title to property which is the subject of condemnation proceedings does not vest the condemnor until the
judgment fixing just compensation is entered and paid, but the condemnor’s title relates back to the date
on which the petition under the Eminent Domain Act, or the commissioner’s report under the Local
Improvement Act, is filed.

x x x Although the right to appropriate and use land taken for a canal is complete at the time of entry,
title to the property taken remains in the owner until payment is actually made. (Emphasis supplied.)

In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to property does
not pass to the condemnor until just compensation had actually been made. In fact, the decisions appear
to be uniform to this effect. As early as 1838, in Rubottom v. McLure, it was held that ‘actual payment to
the owner of the condemned property was a condition precedent to the investment of the title to the
property in the State’ albeit ‘not to the appropriation of it to public use.’ In Rexford v. Knight, the Court of
Appeals of New York said that the construction upon the statutes was that the fee did not vest in the
State until the payment of the compensation although the authority to enter upon and appropriate the
land was complete prior to the payment. Kennedy further said that ‘both on principle and authority the
rule is . . . that the right to enter on and use the property is complete, as soon as the property is actually
appropriated under the authority of law for a public use, but that the title does not pass from the owner
without his consent, until just compensation has been made to him."

Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that:

‘If the laws which we have exhibited or cited in the preceding discussion are attentively examined it will
be apparent that the method of expropriation adopted in this jurisdiction is such as to afford absolute
reassurance that no piece of land can be finally and irrevocably taken from an unwilling owner until
compensation is paid...’"(Emphasis supplied.)

Clearly, without full payment of just compensation, there can be no transfer of title from the landowner to
the expropriator. Otherwise stated, the Republic’s acquisition of ownership is conditioned upon the full
payment of just compensation within a reasonable time.14

Significantly, in Municipality of Biñan v. Garcia15 this Court ruled that the expropriation of lands consists of
two stages, to wit:

"x x x The first is concerned with the determination of the authority of the plaintiff to exercise the power
of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends
with an order, if not of dismissal of the action, "of condemnation declaring that the plaintiff has a lawful
right to take the property sought to be condemned, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the date of the filing of the
complaint" x x x.

The second phase of the eminent domain action is concerned with the determination by the court of "the
just compensation for the property sought to be taken." This is done by the court with the assistance of
not more than three (3) commissioners. x x x.

It is only upon the completion of these two stages that expropriation is said to have been completed. In
Republic v. Salem Investment Corporation,16 we ruled that, "the process is not completed until payment of
just compensation." Thus, here, the failure of the Republic to pay respondent and his predecessors-in-
interest for a period of 57 years rendered the expropriation process incomplete.

The Republic now argues that under Valdehueza, respondent is not entitled to recover possession of Lot
932 but only to demand payment of its fair market value. Of course, we are aware of the doctrine that
"non-payment of just compensation (in an expropriation proceedings) does not entitle the private
landowners to recover possession of the expropriated lots." This is our ruling in the recent cases of
Republic of the Philippines vs. Court of Appeals, et al.,17 and Reyes vs. National Housing Authority.18
However, the facts of the present case do not justify its application. It bears stressing that the Republic
was ordered to pay just compensation twice, the first was in the expropriation proceedings and the
second, in Valdehueza. Fifty-seven (57) years have passed since then. We cannot but construe the
Republic’s failure to pay just compensation as a deliberate refusal on its part. Under such circumstance,
recovery of possession is in order. In several jurisdictions, the courts held that recovery of possession
may be had when property has been wrongfully taken or is wrongfully retained by one claiming to act
under the power of eminent domain19 or where a rightful entry is made and the party condemning refuses
to pay the compensation which has been assessed or agreed upon;20 or fails or refuses to have the
compensation assessed and paid.21

The Republic also contends that where there have been constructions being used by the military, as in this
case, public interest demands that the present suit should not be sustained.

It must be emphasized that an individual cannot be deprived of his property for the public convenience.22
In Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform,23 we ruled:

"One of the basic principles of the democratic system is that where the rights of the individual are
concerned, the end does not justify the means. It is not enough that there be a valid objective; it is also
necessary that the means employed to pursue it be in keeping with the Constitution. Mere expediency will
not excuse constitutional shortcuts. There is no question that not even the strongest moral conviction or
the most urgent public need, subject only to a few notable exceptions, will excuse the bypassing of an
individual's rights. It is no exaggeration to say that a person invoking a right guaranteed under Article III
of the Constitution is a majority of one even as against the rest of the nation who would deny him that
right.

The right covers the person’s life, his liberty and his property under Section 1 of Article III of the
Constitution. With regard to his property, the owner enjoys the added protection of Section 9, which
reaffirms the familiar rule that private property shall not be taken for public use without just
compensation."

The Republic’s assertion that the defense of the State will be in grave danger if we shall order the
reversion of Lot 932 to respondent is an overstatement. First, Lot 932 had ceased to operate as an
airport. What remains in the site is just the National Historical Institute’s marking stating that Lot 932 is
the "former location of Lahug Airport." And second, there are only thirteen (13) structures located on Lot
932, eight (8) of which are residence apartments of military personnel. Only two (2) buildings are actually
used as training centers. Thus, practically speaking, the reversion of Lot 932 to respondent will only affect
a handful of military personnel. It will not result to "irreparable damage" or "damage beyond pecuniary
estimation," as what the Republic vehemently claims.

We thus rule that the special circumstances prevailing in this case entitle respondent to recover
possession of the expropriated lot from the Republic. Unless this form of swift and effective relief is
granted to him, the grave injustice committed against his predecessors-in-interest, though no fault or
negligence on their part, will be perpetuated. Let this case, therefore, serve as a wake-up call to the
Republic that in the exercise of its power of eminent domain, necessarily in derogation of private rights, it
must comply with the Constitutional limitations. This Court, as the guardian of the people’s right, will not
stand still in the face of the Republic’s oppressive and confiscatory taking of private property, as in this
case.

At this point, it may be argued that respondent Vicente Lim acted in bad faith in entering into a contract
of mortgage with Valdehueza and Panerio despite the clear annotation in TCT No. 23934 that Lot 932 is
"subject to the priority of the National Airports Corporation [to acquire said parcels of land] x x x upon
previous payment of a reasonable market value."

The issue of whether or not respondent acted in bad faith is immaterial considering that the Republic did
not complete the expropriation process. In short, it failed to perfect its title over Lot 932 by its failure to
pay just compensation. The issue of bad faith would have assumed relevance if the Republic actually
acquired title over Lot 932. In such a case, even if respondent’s title was registered first, it would be the
Republic’s title or right of ownership that shall be upheld. But now, assuming that respondent was in bad
faith, can such fact vest upon the Republic a better title over Lot 932? We believe not. This is because in
the first place, the Republic has no title to speak of.

At any rate, assuming that respondent had indeed knowledge of the annotation, still nothing would have
prevented him from entering into a mortgage contract involving Lot 932 while the expropriation
proceeding was pending. Any person who deals with a property subject of an expropriation does so at his
own risk, taking into account the ultimate possibility of losing the property in favor of the government.
Here, the annotation merely served as a caveat that the Republic had a preferential right to acquire Lot
932 upon its payment of a "reasonable market value." It did not proscribe Valdehueza and Panerio from
exercising their rights of ownership including their right to mortgage or even to dispose of their property.
In Republic vs. Salem Investment Corporation,24 we recognized the owner’s absolute right over his
property pending completion of the expropriation proceeding, thus:

"It is only upon the completion of these two stages that expropriation is said to have been completed.
Moreover, it is only upon payment of just compensation that title over the property passes to the
government. Therefore, until the action for expropriation has been completed and terminated, ownership
over the property being expropriated remains with the registered owner. Consequently, the latter can
exercise all rights pertaining to an owner, including the right to dispose of his property subject to the
power of the State ultimately to acquire it through expropriation.

It bears emphasis that when Valdehueza and Panerio mortgaged Lot 932 to respondent in 1964, they
were still the owners thereof and their title had not yet passed to the petitioner Republic. In fact, it never
did. Such title or ownership was rendered conclusive when we categorically ruled in Valdehueza that: "It
is true that plaintiffs are still the registered owners of the land, there not having been a transfer of said
lots in favor of the Government."

For respondent’s part, it is reasonable to conclude that he entered into the contract of mortgage with
Valdehueza and Panerio fully aware of the extent of his right as a mortgagee. A mortgage is merely an
accessory contract intended to secure the performance of the principal obligation. One of its
characteristics is that it is inseparable from the property. It adheres to the property regardless of who its
owner may subsequently be.25 Respondent must have known that even if Lot 932 is ultimately
expropriated by the Republic, still, his right as a mortgagee is protected. In this regard, Article 2127 of
the Civil Code provides:

"Art. 2127. The mortgage extends to the natural accessions, to the improvements, growing fruits, and the
rents or income not yet received when the obligation becomes due, and to the amount of the indemnity
granted or owing to the proprietor from the insurers of the property mortgaged, or in virtue of
expropriation for public use, with the declarations, amplifications, and limitations established by law,
whether the estate remains in the possession of the mortgagor or it passes in the hands of a third person.

In summation, while the prevailing doctrine is that "the non-payment of just compensation does not
entitle the private landowner to recover possession of the expropriated lots, 26 however, in cases where the
government failed to pay just compensation within five (5)27 years from the finality of the judgment in the
expropriation proceedings, the owners concerned shall have the right to recover possession of their
property. This is in consonance with the principle that "the government cannot keep the property and
dishonor the judgment."28 To be sure, the five-year period limitation will encourage the government to
pay just compensation punctually. This is in keeping with justice and equity. After all, it is the duty of the
government, whenever it takes property from private persons against their will, to facilitate the payment
of just compensation. In Cosculluela v. Court of Appeals,29 we defined just compensation as not only the
correct determination of the amount to be paid to the property owner but also the payment of the
property within a reasonable time. Without prompt payment, compensation cannot be considered "just."

WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 72915 is AFFIRMED in toto.

The Republic’s motion for reconsideration of our Resolution dated March 1, 2004 is DENIED with
FINALITY. No further pleadings will be allowed.

Let an entry of judgment be made in this case.

G.R. No. 156067             August 11, 2004

MADRIGAL TRANSPORT, INC., petitioner,

vs.
LAPANDAY HOLDINGS CORPORATION; MACONDRAY AND COMPANY, INC.; and LUIS P. LORENZO JR.,
respondents.

DECISION

PANGANIBAN, J.:

The special civil action for certiorari and appeal are two different remedies that are mutually exclusive;
they are not alternative or successive. Where appeal is available, certiorari will not prosper, even if the
ground therefor is grave abuse of discretion. Basic is the rule that certiorari is not a substitute for the
lapsed remedy of appeal.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the February 28, 2002
Decision2 and the November 5, 2002 Resolution 3 of the Court of Appeals (CA) in CA-GR SP No. 54861. The
challenged Decision disposed as follows:

"WHEREFORE, in consideration of the foregoing premises, private respondents Lapanday

and Lorenzo, Jr.’s Motion for Reconsideration dated 10 February 2000 is GRANTED.
Accordingly, the Resolution dated 10 January 2000 is RECONSIDERED and SET ASIDE,
thereby dismissing the Petition for Certiorari dated 10 September 1999."4

The assailed Resolution denied reconsideration.

The Facts

The pertinent facts are undisputed. On February 9, 1998, Petitioner Madrigal Transport, Inc. ("Madrigal")
filed a Petition for Voluntary Insolvency before the Regional Trial Court (RTC) of Manila, Branch 49. 5
Subsequently, on February 21, 1998, petitioner filed a Complaint for damages against Respondents
Lapanday Holdings Corporation ("Lapanday"), Macondray and Company, Inc. ("Macondray"), and Luis P.
Lorenzo Jr. before the RTC of Manila, Branch 36.6

In the latter action, Madrigal alleged (1) that it had entered into a joint venture agreement with Lapanday
for the primary purpose of operating vessels to service the shipping requirements of Del Monte
Philippines, Inc.;7 (2) that it had done so on the strength of the representations of Lorenzo, in his capacity
either as chairman of the board or as president of Del Monte, Lapanday and Macondray; (3) that
Macondray had thereafter been appointed -- allegedly upon the insistence of Lapanday -- as broker, for
the purpose of securing charter hire contracts from Del Monte; (4) that pursuant to the joint venture
agreement, Madrigal had purchased a vessel by obtaining a P10,000,000 bank loan; and (5) that contrary
to their representations and guarantees and despite demands, Lapanday and Lorenzo had allegedly been
unable to deliver those Del Monte charter hire contracts.8
On February 23, 1998, the insolvency court (RTC Branch 49) declared petitioner insolvent. 9 On March 30,
1998 and April 6, 1998, Respondents Lapanday, Lorenzo and Macondray filed their respective Motions to
Dismiss the case pending before the RTC Branch 36.10

On December 16, 1998, Branch 36 granted the Motion, for failure of the Complaint to state a cause of
action. Applying Sections 32 and 33 of the Insolvency Law,11 the trial court opined that upon the filing by
Madrigal of a Petition for Voluntary Insolvency, the latter lost the right to institute the Complaint for
Damages. The RTC ruled that the exclusive right to prosecute the actions belonged to the court-appointed
assignee.12

On January 26, 1999, petitioner filed a Motion for Reconsideration, 13 which was later denied on July 26,
1999.14 Subsequently, petitioner filed a Petition for Certiorari with the Court of Appeals, seeking to set
aside the December 16, 1998 and the July 26, 1999 Orders of the trial court. 15 On September 29, 1999,
the CA issued a Resolution requiring petitioner to explain why its Petition should not be dismissed
outright, on the ground that the questioned Orders should have been elevated by ordinary appeal. 16

On January 10, 2000, the appellate court ruled that since the main issue in the instant case was purely
legal, the Petition could be treated as one for review as an exception to the general rule that certiorari
was not proper when appeal was available.17 Respondents Lapanday and Lorenzo challenged this ruling
through a Motion for Reconsideration dated February 10, 2000.18 The CA heard the Motion for
Reconsideration in oral arguments on April 7, 2000.19

Ruling of the Court of Appeals

On February 28, 2002, the appellate court issued the assailed Decision granting Respondents Lapanday
and Lorenzo’s Motion for Reconsideration and dismissing Madrigal’s Petition for Certiorari. The CA opined
that an order granting a motion to dismiss was final and thus the proper subject of an appeal, not
certiorari.20

Furthermore, even if the Petition could be treated as an appeal, it would still have to be dismissed for lack
of jurisdiction, according to the CA.21 The appellate court held that the issues raised by petitioner involved
pure questions of law that should be brought to the Supreme Court, pursuant to Section 2 of Rule 50 and
Section 2(c) of Rule 41 of the Rules of Court.22

Hence, this Petition.23

The Issues

In its Statement of Issues, petitioner contends:

"I

The Honorable Court of Appeals committed egregious error by ruling that the order of the
lower court which granted private respondents’ Motions to Dismiss are not proper subjects
of a Petition for Certiorari under Rule 65.

‘A. Section 5, Rule 16 does not apply in the present case since the grounds for
dismissal [were] petitioner’s purported lack of capacity to sue and its failure to state
a cause of action against private respondents, and not any of the three (3) grounds
provided under said provision, namely, res judicata, extinction of the claim, and
Statute of Frauds.

‘B. Section 1 of Rule 41, which is the applicable provision in petitioner’s case,
expressly proscribes the taking of an appeal from an order denying a motion for
reconsideration or one which dismisses an action without prejudice, instead, the
proper remedy is a special civil action under Rule 65.

‘C. A petition for certiorari under Rule 65 was correctly resorted to by petitioner from
the dismissal order of the lower court, which had clearly acted with grave abuse of
discretion amounting to lack of jurisdiction.

"II
 The Honorable Court of Appeals committed serious error in ruling that it had no jurisdiction
to entertain the Petition for Certiorari filed by petitioner before it.

‘A. Section 2, Rule 50 nor Section 2(c) and Section 2(c), Rule 41 find no application
in the present case, since said rule contemplates of a case where an appeal is the
proper remedy, and not where the appropriate remedy is a petition for certiorari
where questions of facts and laws may be reviewed by the court a quo.

‘B. The court a quo erroneously concluded that it has no jurisdiction over the subject
matter of the petition based on the wrong premise that an appeal from the lower
court’s dismissal order is the proper remedy by applying Section 2, Rule 50 and
Section 2(c), Rule 41 of the Rules of Court."24

The Court’s Ruling

The Petition is unmeritorious.

First Issue:
Remedy Against Dismissal of Complaint

The resolution of this case hinges on the proper remedy: an appeal or a petition for certiorari. Petitioner
claims that it correctly questioned the trial court’s Order through its Petition for Certiorari. Respondents
insist that an ordinary appeal was the proper remedy. We agree with respondents.

Appeal

Under Rule 41, Rules of Court, an appeal may be taken from a judgment or final order that completely
disposes of the case, or of a particular matter therein when declared by the Rules of Court to be
appealable.25 The manner of appealing an RTC judgment or final order is also provided in Rule 41 as
follows:

Section 2. Modes of appeal. —

(a) Ordinary appeal. — The appeal to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of
appeal with the court which rendered the judgment or final order appealed from and
serving a copy thereof upon the adverse party. No record on appeal shall be required
except in special proceedings and other cases of multiple or separate appeals where the law
or these Rules so require. In such cases, the record on appeal shall be filed and served in
like manner.

(b) Petition for review. — The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for review
in accordance with Rule 42.

(c) Appeal by certiorari. — In all cases where only questions of law are raised or involved,
the appeal shall be to the Supreme Court by petition for review on certiorari in accordance
with Rule 45.26

An order or a judgment is deemed final when it finally disposes of a pending action, so that nothing more
can be done with it in the trial court. In other words, the order or judgment ends the litigation in the
lower court. Au contraire, an interlocutory order does not dispose of the case completely, but leaves
something to be done as regards the merits of the latter.27

Petition for Certiorari

A petition for certiorari is governed by Rule 65, which reads:

Section 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of its or his jurisdiction, and there is no
appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person
 aggrieved thereby may file a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling or modifying the proceedings of
such tribunal, board or officer, and granting such incidental reliefs as law and justice may
require.

The petition shall be accompanied by a certified true copy of the judgment, order or
resolution subject thereof, copies of all pleadings and documents relevant and pertinent
thereto, and a sworn certification of non-forum shopping as provided in the third paragraph
of Section 3, Rule 46.28

A writ of certiorari may be issued only for the correction of errors of jurisdiction or grave abuse of
discretion amounting to lack or excess of jurisdiction. The writ cannot be used for any other purpose, as
its function is limited to keeping the inferior court within the bounds of its jurisdiction. 29

For certiorari to prosper, the following requisites must concur: (1) the writ is directed against a tribunal, a
board or any officer exercising judicial or quasi-judicial functions; (2) such tribunal, board or officer has
acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction; and (3) there is no appeal or any plain, speedy and adequate remedy in the ordinary course
of law.30

"Without jurisdiction" means that the court acted with absolute lack of authority. 31 There is "excess of
jurisdiction" when the court transcends its power or acts without any statutory authority. 32 "Grave abuse
of discretion" implies such capricious and whimsical exercise of judgment as to be equivalent to lack or
excess of jurisdiction; in other words, power is exercised in an arbitrary or despotic manner by reason of
passion, prejudice, or personal hostility; and such exercise is so patent or so gross as to amount to an
evasion of a positive duty or to a virtual refusal either to perform the duty enjoined or to act at all in
contemplation of law.33

Appeal and Certiorari Distinguished

Between an appeal and a petition for certiorari, there are substantial distinctions which shall be explained
below.

As to the Purpose. Certiorari is a remedy designed for the correction of errors of jurisdiction, not errors of
judgment.34 In Pure Foods Corporation v. NLRC, we explained the simple reason for the rule in this light:

"When a court exercises its jurisdiction, an error committed while so engaged does not
deprive it of the jurisdiction being exercised when the error is committed. If it did, every
error committed by a court would deprive it of its jurisdiction and every erroneous
judgment would be a void judgment. This cannot be allowed. The administration of justice
would not survive such a rule. Consequently, an error of judgment that the court may
commit in the exercise of its jurisdiction is not correct[a]ble through the original civil action
of certiorari."35

The supervisory jurisdiction of a court over the issuance of a writ of certiorari cannot be exercised for the
purpose of reviewing the intrinsic correctness of a judgment of the lower court -- on the basis either of
the law or the facts of the case, or of the wisdom or legal soundness of the decision. 36 Even if the findings
of the court are incorrect, as long as it has jurisdiction over the case, such correction is normally beyond
the province of certiorari.37 Where the error is not one of jurisdiction, but of an error of law or fact -- a
mistake of judgment -- appeal is the remedy. 38

As to the Manner of Filing. Over an appeal, the CA exercises its appellate jurisdiction and power of review.
Over a certiorari, the higher court uses its original jurisdiction in accordance with its power of control and
supervision over the proceedings of lower courts. 39 An appeal is thus a continuation of the original suit,
while a petition for certiorari is an original and independent action that was not part of the trial that had
resulted in the rendition of the judgment or order complained of. 40 The parties to an appeal are the
original parties to the action. In contrast, the parties to a petition for certiorari are the aggrieved party
(who thereby becomes the petitioner) against the lower court or quasi-judicial agency, and the prevailing
parties (the public and the private respondents, respectively). 41

As to the Subject Matter. Only judgments or final orders and those that the Rules of Court so declare are
appealable.42 Since the issue is jurisdiction, an original action for certiorari may be directed against an
interlocutory order of the lower court prior to an appeal from the judgment; or where there is no appeal
or any plain, speedy or adequate remedy.43

As to the Period of Filing. Ordinary appeals should be filed within fifteen days from the notice of judgment
or final order appealed from.44 Where a record on appeal is required, the appellant must file a notice of
appeal and a record on appeal within thirty days from the said notice of judgment or final order. 45 A
petition for review should be filed and served within fifteen days from the notice of denial of the decision,
or of the petitioner’s timely filed motion for new trial or motion for reconsideration. 46 In an appeal by
certiorari, the petition should be filed also within fifteen days from the notice of judgment or final order,
or of the denial of the petitioner’s motion for new trial or motion for reconsideration. 47

On the other hand, a petition for certiorari should be filed not later than sixty days from the notice of
judgment, order, or resolution.48 If a motion for new trial or motion for reconsideration was timely filed,
the period shall be counted from the denial of the motion.49

As to the Need for a Motion for Reconsideration. A motion for reconsideration is generally required prior to
the filing of a petition for certiorari, in order to afford the tribunal an opportunity to correct the alleged
errors. Note also that this motion is a plain and adequate remedy expressly available under the law. 50
Such motion is not required before appealing a judgment or final order. 51

Certiorari Not the Proper Remedy if Appeal Is Available

Where appeal is available to the aggrieved party, the action for certiorari will not be entertained.
Remedies of appeal (including petitions for review) and certiorari are mutually exclusive, not alternative
or successive.52 Hence, certiorari is not and cannot be a substitute for an appeal, especially if one’s own
negligence or error in one’s choice of remedy occasioned such loss or lapse. 53 One of the requisites of
certiorari is that there be no available appeal or any plain, speedy and adequate remedy.54 Where an
appeal is available, certiorari will not prosper, even if the ground therefor is grave abuse of discretion.

Second Issue:
CA Jurisdiction

Petitioner was ascribing errors of judgment, not jurisdiction, in its Petition for Certiorari filed with the
Court of Appeals. The issue raised there was the trial court’s alleged error in dismissing the Complaint for
lack of cause of action. Petitioner argues that it could still institute the Complaint, even if it had filed a
Petition for Insolvency earlier.55 As petitioner was challenging the trial court’s interpretation of the law --
posing a question of law -- the issue involved an error of judgment, not of jurisdiction. An error of
judgment committed by a court in the exercise of its legitimate jurisdiction is not necessarily equivalent to
"grave abuse of discretion."56

The instant case falls squarely with Barangay Blue Ridge "A" of QC v. Court of Appeals.57 In that case, the
trial court granted the Motion to Dismiss on the ground of failure to state a cause of action. After the
Motion for Reconsideration was denied, petitioner filed a Petition for Certiorari with the CA. The appellate
court denied the Petition on the ground that the proper remedy was appeal. Holding that an error of
judgment should be reviewed through an ordinary appeal, this Court upheld the CA.

The Dismissal -- a Final Order

An order of dismissal, whether correct or not, is a final order. 58 It is not interlocutory because the
proceedings are terminated; it leaves nothing more to be done by the lower court. Therefore the remedy
of the plaintiff is to appeal the order.59

Petitioner avers that Section 5 of Rule 1660 bars the filing of an appeal when the dismissal is based on lack
of cause of action. It adds that Section 5 limits the remedy of appeal only to dismissals grounded on prior
judgments or on the statute of limitations, or to claims that have been extinguished or are unenforceable.
We find this interpretation absurd.

The provision is clear. Dismissals on the aforesaid grounds constitute res judicata. However, such
dismissals are still subject to a timely appeal. For those based on other grounds, the complaint can be
refiled. Section 5, therefore, confirms that an appeal is the remedy for the dismissal of an action.
Citing Sections 1(a) and 1(h), Rule 41,61 petitioner further claims that it was prohibited from filing an
appeal. Section 1(a) of the said Rule prohibits the filing of an appeal from an order denying a motion for
reconsideration, because the remedy is to appeal the main decision as petitioner could have done. In fact,
under Section 9, Rule 37, the remedy against an order denying a motion for reconsideration is to appeal
the judgment or final order. Section 1(h) does not apply, because the trial court’s Order did not dismiss
the action without prejudice.62

Exception to the Rule Not Established by Petitioner

We are not unaware of instances when this Court has granted certiorari despite the availability of
appeal.63 Where the exigencies of the case are such that the ordinary methods of appeal may not prove
adequate -- either in point of promptness or completeness, so that a partial if not a total failure of justice
could result -- a writ of certiorari may still be issued.64 Petitioner cites some of these exceptions to justify
the remedy it has undertaken with the appellate court,65 but these are not applicable to the present
factual milieu.

Even assuming that the Order of the RTC was erroneous, its error did not constitute grave abuse of
discretion. Petitioner asserts that the trial court should not have dismissed the Complaint or should have
at least allowed the substitution of the assignee in petitioner’s stead. 66 These alleged errors of judgment,
however, do not constitute a despotic, capricious, or whimsical exercise of power. On the contrary,
petitioner availed of certiorari because the 15-day period within which to file an appeal had already
lapsed. Basic is the rule that certiorari is not a substitute for the lapsed remedy of appeal.

As previously stressed, appeal -- not certiorari -- was the correct remedy to elevate the RTC’s Order
granting the Motion to Dismiss. The appeal, which would have involved a pure question of law, should
have been filed with the Supreme Court pursuant to Section 2 (c) of Rule 41 and Section 2 of Rule 50, 67
Rules of Court.

WHEREFORE, this Petition is DENIED, and the challenged Decision and Resolution AFFIRMED.

G.R. No. 129368               August 25, 2003

LAND BANK OF THE PHILIPPINES, Petitioner,

vs.
THE HON. COURT OF APPEALS, MAMERTA B. RODRIGUEZ, SPS. ARMANDO and ZENAIDA STA ANA, EL
OBSERVATORIO DE MANILA INCORPORADA, SPS. WILFREDO and AURORA POSADAS, REGINALD F.
FRANCISCO, BIENVENIDO L. MACEDA, SPS. HECTOR and MATILDE MENDOZA and EUGENIO V. ROMILLO,
Respondents.

DECISION

CALLEJO, SR., J.:

Before this Court is a petition for certiorari under Rule 65 of the Revised Rules of Court which seeks to
annul and set aside the Decision1 and Resolution of the Court of Appeals in CA-G.R. CV Nos. 12533-35
dated November 12, 1996 and April 14, 1997, respectively, reversing the Order 2 of the Regional Trial
Court of Makati City, Branch 136, in Special Proceedings Cases Nos. M-108, M-125 and M-126.

THE ANTECEDENTS

Manotoc Securities, Inc. (MSI) was a duly licensed broker and dealer in securities, doing business and
operating under the provisions of the Securities Act. The Insular Bank of Asia and America (IBAA) and the
Land Bank of the Philippines (LBP) are private commercial banking corporations duly authorized to
operate as trust companies.

IBAA and MSI offered and sold securities to the public. Among the purchasers were private respondents
Mamerta B. Rodriguez, the Spouses Armando and Zenaida Sta. Ana, El Observatorio de Manila,
Incorporada, Spouses Wilfredo and Aurora Posadas, Reginald F. Francisco, Bienvenido L. Maceda, Spouses
Hector and Matilde Mendoza, and Eugenio V. Romillo. 3 As evidence of their purchases, the private
respondents executed individual investment agreements with MSI.
Under the said agreements, MSI undertook to invest funds primarily in a portfolio of certain specified
securities for fixed periods of time, and to return upon maturity the funds of the investors and their
corresponding share in the income of the same. As security for compliance of its undertaking with private
respondents, MSI, as the investment agent of the private respondents, delivered qualified securities to the
IBAA. Thus, on August 19, 1976, MSI and IBAA executed a custodianship agreement in which the latter
was constituted as custodian bank of the investment portfolio/collateral pool of securities of the private
respondents with corresponding duties and responsibilities thereunder defined, some of which are as
follows:

g) To sell out the portfolio in whole or in part upon failure by the Company to deliver additional securities
as provided for in Section 2.03 hereof, up to an amount that would at least equal to the maximum
security value of the Custodian Receipt outstanding and to hold such proceeds from the sale as part of the
portfolio under cash accounts until duly claimed (i) by the Company upon presentation of additional
qualified securities or cancellation of custodian receipts or (ii) the Investor upon failure of the Company to
make such presentation, upon proper presentation of the Investment Agreement together with the
Custodian Receipt.

h) To do and perform such other acts and things as the Company may, by any future instrument in
writing delivered to the Custodian, require of the Custodian, provided that such other acts and things are
germane to the intent and purpose of this Agreement. 4

In case of default by the investment agent, the custodian bank as its attorney-in-fact was authorized to
sell so much of the qualified securities held in the portfolio and to apply the proceeds thereof, thus:

Section 5.03. Sale of Securities Portfolio

The Company, by adhesion to this Agreement in the manner herein provided, shall be deemed as having
expressly in (sic) irrevocably constituted and appointed the Custodian, as its true and lawful attorney-in-
fact, with full power and authority, upon the occurrence of an event of default, to perform the following:

a) To sell so much of the qualified securities held in the portfolio as may be necessary to satisfy
the amounts due and payable whether by term or by declaration or otherwise such sale to be
effected at such time or times as the Trustee may determine, and any such sale or sales may be
made at a public or private sale in any broker’s board or securities exchange, or may be made
over-the-counter;

b) To collect and receive the proceeds of the sale and to issue receipts therefor and/or execute
and/or deliver such papers or documents and perform such acts as may be necessary to transfer to
the purchaser or purchasers of the qualified securities so sold, all the rights, title and interest on
such securities.

Section 5.04. Application of Proceeds of Sale; Accounting

The proceeds from the sale of the qualified securities held in the Portfolio shall be applied as follows:

a) First To the payment of the costs and expenses of the sale, and the compensation and other
claims of the Custodian pursuant to Section 3.09 hereof;

b) Second To the payment in full of the amounts then due and unpaid for principal and income of
the Investor’s investment upon the maturity of the Investment Agreement;

c) Third To the placement of cash accounts as part of the portfolio so as to maintain the aggregate
maximum security value required to cover custodian receipts outstanding pursuant to Section 2.03
and 3.01 (g) hereof;

d) Fourth Any surplus remaining shall be returned to the Company, its successors or assigns or to
whomsoever may be lawfully entitled to receive the same.

The Custodian shall submit and render to the Company written statements and reports of sales
transactions under this Section, if any, fifteenth (15th) day of each calendar month.5
MSI executed in favor of IBAA, conformably to the said custodianship agreement, deeds of assignment,
quoted in part as follows:

NOW THEREFORE, for and in consideration of the foregoing premises and by way of security for the
faithful compliance by the Company with the terms and conditions of the Investment Agreement and
pursuant to the Agreement, the Company hereby transfers, assigns, sets over and delivers to the
Custodian for the benefit and security of Investors, all rights, title and interest whether legal or beneficial
in and to the securities more particularly described in the schedule attached hereto as Exhibit "1" hereof,
and to such other securities as may from time to time be brought under the operation of this assignment
from time to time by way of supplementary schedules hereto incorporated and made an integral part
hereof by their terms of reference.

The Company hereby reiterates and affirms, as integral parts of this Agreement, all of the warranties set
forth in Section 4.01 of the Agreement, to which Agreement reference is hereby made for the other terms
and conditions applicable hereto.6

On December 12, 1979, MSI as trustor and LBP as trustee executed a contract denominated as
"Substitution of Trustee with Assumption of Liabilities" in which LBP substituted and succeeded IBAA as
custodian bank of the collateral pool of securities under the custodianship agreement, and thus assumed
the previous duties and responsibilities of IBAA as custodian and safekeeper of qualified securities for the
benefit of the investors:

2. Also effective as of December 12, 1979, Land Bank has agreed to be substituted as Custodian in
place of IBAA under the aforementioned Custodianship Agreement, and has assumed any and all
liabilities of IBAA thereunder.

3. IBAA, upon the instruction of the TRUSTOR shall, under the mechanics to be agreed upon
subsequent hereto, transfer the custody and management of the collateral pool to LAND BANK.

4. TRUSTOR undertake[s] to hold IBAA free from any and all liability which may arise under the
CUSTODIANSHIP AGREEMENT, referred to above, and agree to defend IBAA from any and all suits
which may arise by virtue thereof.

5. LAND BANK undertakes to collect all outstanding IBAA Custodian Receipts issued pursuant to
the CUSTODIANSHIP AGREEMENT mentioned above, and to substitute its own Custodianship
Receipts thereof within thirty (30) days from the execution of this AGREEMENT.

6. LAND BANK further agrees to notify all investors of the fact of substitution of IBAA as trustee of
the collateral pool, pursuant to Section 3.05 of the CUSTODIANSHIP AGREEMENT dated August 19,
1976.

7. The provision of Section 3.04-A of the said AGREEMENT relative to the effectivity of removal or
resignation of the trustee after the thirtieth banking day from date of notice is hereby waived.

8. The TRUSTOR shall, upon the execution of this AGREEMENT, liquidate all its outstanding
obligations with IBAA, including but not limited to outstanding trust fees and out of pocket
expenses.

9. Upon the execution of this AGREEMENT, IBAA will render its final accounting to the TRUSTOR.
Any exception thereto must be communicated in writing to IBAA within thirty (30) days from
receipt thereof, otherwise the same shall be deemed conclusively correct. 7

In the same month, Ricardo L. Manotoc, Jr. and Teodoro M. Kalaw filed a petition with the Securities and
Exchange Commission (SEC) docketed as SEC Case No. 1826 for the rehabilitation of MSI and the
appointment of a Management Committee for the said corporation "to avoid an imminent danger of
paralyzation of its business operations brought about by serious financial problems." Teodoro M. Kalaw
likewise filed a similar petition with the SEC docketed as SEC Case No. 1835 for the rehabilitation of the
Trans-Insular Management, Inc. et al. and for the appointment of a Management Committee.

On December 20, 1979 and January 11, 1980, the SEC issued orders placing MSI under rehabilitation and
appointing a Management Committee as interim receiver of the real and personal properties and assets of
MSI, its subsidiaries and subdivisions. The SEC issued another order on April 2, 1980 delineating the
duties of the Management Committee as interim receiver:

1. To bring and defend such action in its own name;

2. To take and keep possession of the properties in controversy;

3. To receive rents and other income;

4. To collect debts due to the corporations as receiver and all such funds, property and estate, due
to person or corporation of which it is receiver;

5. To compound for and compromise the same;

6. To make transfer;

7. To pay outstanding debts; to divide the money and other property that shall remain among the
persons legally entitled to receive the same;

8. To negotiate with any financial institution whether public or private, domestic or foreign, for
such funding and financial arrangement as may be necessary to support the rehabilitation project
and program. For this purpose, the Committee or its duly authorized representative may sign such
documents and papers as may be necessary;

9. To make such reports to the Commission as may be decreed necessary from time to time
regarding the aforementioned projects; and generally to do such acts respecting the property as
the Commission may authorize, including the authority to rehabilitate the said corporation, if
possible.8

Wilfrido B. Jacinto was appointed as Officer-In-Charge of the Committee.

On February 13, 1980, MSI wrote the LBP, advising the latter that the corporation had been placed under
rehabilitation, and that the SEC had appointed a Management Committee to handle its affairs. MSI
directed the LBP--

… to suspend any movement, disposition or substitution of any and all properties you now hold either, as
collateral, security or custodian for the above-mentioned companies as per the directive of the Securities
and Exchange Commission.9

On April 18, 1982, the private respondents, through counsel, wrote the LBP, requesting the latter to
return their investments with the MSI. The LBP referred the letter of the private respondents to the
Management Committee which on May 28, 1982 rejected the demands of the private respondents. On
June 1, 1982, the LBP wrote the private respondents that it could not possibly comply with their
demands:

As what we have told you in our letter of May 20, 1982 we referred your demands to the SEC-Appointed
Management Committee which took over Manotoc Securities, Inc. in view of the SEC order suspending
any movement or disposition of any and all properties of the company under our custody as per letter of
Enrique J. Unson, Asst. Vice-President of Manotoc Securities, Inc., and noted by W. B. Jacinto, Officer-In-
Charge for the SEC-Appointed Management Committee, dated February 13, 1980.

We are, therefore, attaching herewith a copy of the reply-letter from the SEC-Appointed Management
Committee dated May 28, 1982 which is self-explanatory.

Likewise, we would like to inform you that we shall be turning over all the properties/securities lodged
with us by Manotoc to the SEC-Appointed Management Committee pursuant to the directive of the Bank’s
top management to terminate and close this account.10

On June 24, 1982, the private respondents acknowledged receipt of the June 1, 1982 Letter and informed
LBP that as trustee of the investment portfolio, it held legal title over the same. As such, the said portfolio
could not be affected by any directives of the Management Committee. The private respondents urged the
LBP to--
… desist from "terminating and closing the account" and turning over the Investment Portfolio to the
Securities and Exchange Commission as you propose to do, and we hereby reiterate our request that you
proceed to sell and dispose of the securities in your custody for the satisfaction of the claims of our
clients, without prejudice to taking such action as you may consider necessary for securing a clarificatory
order or directive from the Securities and Exchange Commission regarding the scope and extent of its
alleged directive to you, or a reversal or nullification of said directive, as the case may require. Needless
to say, our clients shall hold you responsible for any and all acts or omissions in breach of trust, and for
any loss or damage which they or the trust estate may suffer resulting from such acts or omissions. 11

The LBP rejected the demands of the private respondents.

On June 29, 1982, the private respondents demanded for an accounting of their portfolio. 12 The LBP, in a
Letter dated July 20, 1982, informed the private respondents that it could not give due course to the
demands because as mere custodian of the securities in the portfolio, it does not have legal title over the
same. The demands of the private respondents for the remittance of their investments and the earnings
thereof, and for an accounting of their portfolio was, thus, further rejected by the bank. 13

In the meantime, the Management Committee proposed the appointment of a permanent Receiver to
perform the following:

(a) To liquidate the assets immediately for distribution to creditors and investors without prejudice
to the possibility of developing small but viable real estate properties;

(b) To continue to pursue collection efforts and/or legal action against all debtors;

(c) To run after the unlimited liability of the principal stockholders, Teodoro V. Kalaw, Jr. and
Ricardo L. Manotoc, Jr.;

(d) To call on the terms of the broker/dealer bond issued by FGU Insurance Corporation;

(e) To file a case against a former company officer, Raul R. Leveriza, Jr. and other parties involved
in the fake title case; and

(f) To take proper action against the company and other parties for violations of the Securities Act
regarding the pledging of shares of stock without the approval of the client-owners. 14

Fearing that their investments were in serious jeopardy due to the abovementioned developments, private
respondents Mamerto B. Rodriguez and Spouses Armando and Zenaida Sta. Ana filed a petition with the
RTC of Makati under Rule 98 of the Revised Rules of Court, seeking the removal of IBAA as trustee and
the appointment of a substitute trustee.15 On June 30, 1983, private respondents El Observatorio de
Manila, Incorporada, Spouses Wilfredo and Aurora Posadas and Reginald Francisco16 on the one hand, and
private respondents Bienvenido Maceda, Spouses Hector and Matilde Mendoza and Eugenio Romillo, 17 on
the other, also filed similar petitions. The respective petitions of the private respondents were thereafter
consolidated and assigned to the RTC of Makati, Branch 136.18

ALLEGATIONS OF FACTS IN THE COMPLAINTS

The three petitions for the removal of IBAA as trustee of the investment portfolio created under the
custodianship agreements contained substantially similar allegations. The private respondents alleged
inter alia that MSI named and appointed IBAA as the trustee of an investment portfolio, which was to
consist initially of investment funds solicited and obtained by MSI and IBAA from the issuance and sale to
the public of certain securities denominated as investment agreements and custodian receipts. 19 On May
24, 1977 and October 4, 1977, MSI and IBAA amended the agreement under instruments entitled
"Amendment to Custodianship Agreement." Under its provisions, the funds of the investors in the
investment pool were to be invested primarily in financing the margin accounts of clients of MSI and other
stockbrokers in the stock market, the payment of which was to be secured only with certain specified
shares of stock at 150% cover and/or real estate properties at 200% cover, based on the latest available
market quotations on such shares and the latest independent appraisal of such real estate properties. 20
The investment portfolio was to be held by IBAA in trust for the benefit and protection of the investors
therein, as security for the payment at maturity of the principal and income due on their respective
investments.21
The petitioner in Sp. Proc. Case No. M-125 alleged that on August 3, 1979, IBAA opened Trust Account
No. 576 and entered upon the discharge of its duties as trustee when it received investment funds in the
amount of P545,000 and accepted the conveyance and delivery of 9,900,000 A shares of Basic Petroleum
and Minerals, Inc. and 5,990,000 A shares of Philippine Overseas Drilling and Development Corporation
under a deed of assignment.22

On August 14, 1978, LBP opened Trust Account No. 03-019 in its Makati Branch for the petitioner in Sp.
Proc. Case No. M-126. LBP entered into the discharge of its duties as trustee upon its acceptance of the
conveyance and delivery of certain securities.23 In Sp. Proc. Case No. M-108, the custodianship agreement
was entered into on August 23, 1976, upon IBAA’s initial receipt of funds in the amount of P1,074,558.66,
and the receipt of specified securities.24

As part of and in connection with the investments made by the private respondents and other investors in
the portfolio, and as security for the payment or return of the said investments, IBAA as trustee issued
custodian receipts to the private respondents, certifying that it was holding in custody a portfolio of
qualified securities with values equivalent to the amounts of the investments, and acknowledged that its
custodian receipts, together with their corresponding investment agreements, constituted a lien on the
portfolio of qualified securities in its custody to the total amount of the investment portfolio. 25

Despite repeated demands made by the private respondents, MSI refused, failed and neglected to pay
over or return their investments as and when they matured, as follows:

a. P20,000.00 to Mamerta Rodriguez under Investment Agreement (IA) No. 4493 as of January 18,
1980;

b. P13,569.01 to the Sta. Ana spouses, under IA No. 3874 as of January 23, 1980;

c. P11,593.67 to Zenaida Sta. Ana under IA No. 4186 as of January 21, 1980;

d. P11,241.07 to Zenaida Sta. Ana under IA No. 4265 as of December 5, 1979;

e. P13,579.29 to Zenaida Sta. Ana under IA No. 4312 as of January 21, 1980; 26

f. P53,416.67 to Observatorio de Manila under IA No. 019 as of December 7, 1979;

g. P53,416.67 to Aurora S. Posadas under IA No. 015 as of December 4, 1979;

h. P309,133.11 to Reginald Francisco under IA No. 069 as of February 1, 1980;27

i. P135,005.00 to Bienvenido L. Maceda under IA No. 4231 as of December 10, 1979;

j. P120,000.00 to Matilde R. Mendoza and/or Bienvenido L. Maceda under IA No. 4232 as of

December 10, 1979; and

k. P40,895.56 to Eugenio V. Romillo under IA No. 4277 as of December 18, 1979. 28

The private respondents further alleged that MSI failed to maintain the required security value of the
investment portfolio at a level equivalent to at least 100% of the amount of the outstanding custodian
receipts even earlier than July 30, 1979, and at no time during the period between July 10 to December
10, 1979 did MSI deliver or assign sufficient securities to bring the security value of the portfolio to the
level of at least 100% of the amount of the outstanding custodian receipts. Thus, the non-payment by
MSI to private respondents and other investors of their returns on the investment agreements at
maturity, and the failure of MSI to maintain the security value of the investment portfolio as agreed upon,
constituted events of default under the terms and conditions of the custodianship agreement. 29

The private respondents claimed that instead of being obliged to deliver additional qualified securities to
cover the recurring deficiencies in the said investment portfolio, MSI was repeatedly allowed to effect the
release or withdrawal and/or substitution of securities which formed part of the same. IBAA likewise failed
and neglected to declare the principal and income of all investments then outstanding as due and payable,
or to make any serious and prompt demand on MSI to deliver additional securities. IBAA allowed MSI to
avail of funds pertaining to the trust, and to misappropriate and misapply the funds by directly borrowing
therefrom, and/or by extending loans to its parent and subsidiary companies, to companies and
enterprises owned and controlled by its principal officers and directors or their families, and/or controlling
stockholders, as well as to other ineligible borrowers. IBAA furthermore allowed MSI to accept inadequate
security, or to accept as security unimproved real estate, or real estate of dubious value or with
questionable title, notwithstanding clear indications that such security was worthless, grossly inflated in
value, ineligible and not readily convertible to cash if needed to pay maturing investment agreements. 30

To prevent IBAA from declaring all outstanding investment agreements as immediately due and payable,
MSI wrote a letter on December 10, 1979 advising IBAA that it was terminating the custodianship
agreement effective that same date and that LBP was assuming as the new trustee. On December 12,
1979, MSI and IBAA, together with LBP, executed an instrument entitled "Substitution of Trustee with
Assumption of Liabilities" whereby IBAA ceased to act as trustee, and LBP assumed as its substitute. Both
the purported termination of the agreement and the purported substitution of IBAA by LBP as trustee of
the investment portfolio were sought to be implemented or carried out without the knowledge and
consent of the investors, without the benefit of any accounting by IBAA, on its administration and
management of the investment portfolio, and without IBAA being discharged of its office and liability as
trustee of the investment portfolio by a court of competent jurisdiction. 31 In the interim, the SEC had
appointed a Management Committee to take custody of the properties and assets of MSI, to protect the
interest of the investors, creditors and stockholders, and to effectively carry out a program of
rehabilitation.

The private respondents prayed that after due proceedings, judgment be rendered in their favor (a)
ordering the removal of IBAA and LBP as trustee and substitute trustee of the investment portfolio of the
private respondents; (b) appointing Prudential Bank as trustee in substitute of IBAA and LBP; (c)
declaring as of no force and effect with respect to them the "Substitution of Trustee with Assumption of
Liabilities" executed by LBP and MSI; and to --

1. Order IBAA and LBP to render to the court for approval a full, just and complete accounting of
their administration and management of the IP;

2. Order IBAA and LBP to restore to the Investment Portfolio whatever losses, damages and
injuries it may have suffered through their fault or negligence or due to their failure to observe the
terms and conditions of the Custodianship Agreement and to perform the duties of trustee
thereunder;

3. Restrain and enjoin LBP from selling, disposing or encumbering any of the securities or assets of
the IP presently in its custody;

4. Order IBAA and LBP to turn over all the trust properties in their custody to the new trustee and
to execute any and all instruments necessary to accomplish such purpose, and restrain and enjoin
both of them from any further interference in the administration and management of the trust;

5. Order the forfeiture by the IBAA and/or LBP of any right of compensation as trustee of the IP;

6. Order IBAA and LBP, jointly and severally, to pay petitioners damages by way of attorney’s fees
and expenses of litigation in such amount as may be considered just and reasonable;

7. Order the discharge or release of IBAA and LBP from any and all other duties and responsibilities
as trustee under the CA only upon full restoration to the IP of all losses, damages and injuries it
may have suffered which are properly chargeable to either or both IBAA and LBP, full payment of
attorney’s fees and expenses of litigation, and approval in due course of their accounting of the
administration and management of the IP.

Both IBAA and LBP moved to dismiss/suspend the said petitions on the ground that it was the SEC, and
not the RTC, which had jurisdiction over the subject matter of the cases, pursuant to Presidential Decree
No. 902-A as amended by P.D. Nos. 1653 and 1799. Thus, conformably to Section 6(c) of P.D. 902-A, as
amended, all claims against the distressed corporation should be suspended upon the constitution of the
Management Committee. MSI, through its SEC-Appointed Management Committee, also filed a motion to
dismiss/suspend proceedings in SP Proc. Case No. 125 on the same ground. In behalf of MSI, Ricardo L.
Manotoc, Jr. filed a motion to intervene and a motion to suspend the proceedings, also on the same
ground. In their Reply, the private respondents averred that IBAA and LBP were trustees of the
investment portfolio, and as such, had acquired title over the properties included in the same; hence, the
distressed corporation was not the owner of the said investment portfolio. Consequently, the SEC had no
jurisdiction over the matter.
The petitions were set for hearing, during which the petitioners therein (private respondents herein)
adduced evidence to prove their claim.

THE TRIAL COURT’S RULING32

In an Order dated February 12, 1985, the trial court found merit in the motion to suspend the proceedings
pursuant to Section 6 of P.D. 902-A as amended. According to the court, the allegations in the petitions
indicated that although there was no prayer specifically directed against Manotoc or MSI, the petitions
were in reality claims against the latter, or, at the very least, the disposition of the petitions would affect
properties belonging or pertaining to a corporation under management or receivership of the SEC.

In ruling for the petitioners, the trial court held that the SEC had primary jurisdiction to the exclusion of
the RTC, and that the matter of determining whether the agreement was one of agency, bailment, or
trust, should be raised in and determined first by the SEC to the exclusion of the court. Since its
jurisdiction was merely secondary, the authority of the court was limited to reviewing the SEC’s final
deliberations on the petitions. The private respondents should have exhausted all remedies before the
SEC. To entertain the suit would open the gates to confusion, resulting in a duplication of proceedings
arising out of a conflict of jurisdiction, which could very well be avoided by respecting the jurisdiction of
the SEC.

The trial court resolved, thus:

1. Allowing Manotoc/MSI to intervene in all the cases;

2. Ordering the suspension and archiving of the case until after the termination of the proceedings
before the SEC in SEC Cases Nos. 1826 and 1835.33

The private respondents thereafter filed a motion for reconsideration which was denied on January 16,
1986. The private respondents appealed from the order to the Court of Appeals.

The private respondents alleged on appeal that when MSI named and appointed IBAA as trustee of the
investment portfolio, it carried no other implication than that IBAA, as trustee, became the legal owner of
the funds in the investment portfolio.34 Although the SEC placed MSI under management and receivership,
its jurisdiction extends only to the properties and assets of MSI. The doctrine of exhaustion of
administrative remedies should be applied only to those who, having gone to the SEC for relief, failed to
avail of and exhaust all possible remedies therein before seeking judicial intervention. The said doctrine
was erroneously applied by the trial court, as they were not parties to SEC Cases Nos. 1826 and 1835. 35
While Ricardo Manotoc, Jr. may be a stockholder of MSI, he does not have any legal interest in the trust
properties involved in the proceedings; it is the trustee who has legal ownership of the properties held in
trust, subject, however, to the equitable rights of the beneficiaries of the same.36

The petitioner bank, for its part, maintained that IBAA/LBP is a mere custodian of MSI under the
custodianship agreement with specific duties to perform, and as such, is only an agent of MSI; it is not a
trustee in the strict and legal sense, and does not hold any legal title over the properties or securities. 37

Manotoc, in behalf of MSI, contended that as one of the parties who filed the petition for the appointment
of a Management Committee and the approval of a rehabilitation scheme for the said corporation and its
affiliate companies, he has legal interests in the matter in litigation sufficient to entitle him to intervene in
the action.38

THE RULING OF THE COURT OF APPEALS39

The CA reversed and set aside the assailed orders of the RTC. It held that IBAA and LBP were trustees of
the investments of the private respondents and not merely custodians thereof; hence, IBAA and LBP had
legal title over the property covered by the said investments. The order of the lower court to archive the
cases and to relinquish in toto its jurisdiction over the actions initiated by the private respondents was
premature. The RTC should have resolved the motions on their merits and determined whether or not the
petitioner and IBAA were trustees of the investment portfolio.

The CA further explained that because of the existence of a trusteeship agreement, under Rule 98,
Sections 8 and 9 of the Rules of Court, the RTC had jurisdiction over the petitions of the private
respondents. The court a quo ought to have given due course to the petitions as originally filed, and
thereafter determine which of the reliefs sought were available, in the light of the limitations imposed by
the receivership status of the MSI and the SEC’s jurisdiction over its affairs and the claims against it,
instead of archiving the petition and suspending the proceedings. Moreover, the doctrine of primary
jurisdiction cannot be invoked as a pretext to bar the private respondents from seeking judicial relief until
the final resolution of SEC Cases Nos. 1826 and 1835, given the fact that the IBAA and LBP were trustees
of the portfolio of the private respondents. The CA further stated that the RTC had jurisdiction over
petitions for the removal of trustees:

MSI and its assets have been placed under a management committee assigned by the Securities and
Exchange Commission. We do not see, however, how this, of necessity, cancels the power of the court,
when it finds it meritorious and just, to order IBAA to render an accounting to the beneficiaries. The
doctrine of primary jurisdiction, in fact, has a positive import, insofar as judicial authority is concerned. It
is this that Davis, an acknowledged American authority on administrative law, propounds:

"The purpose of the doctrine of primary jurisdiction is not to divide powers between courts and agencies,
but to determine which tribunal should take initial action. An agency which has primary jurisdiction may in
effect merely lay the foundation for a judicial determination. x x x The reason for the primary jurisdiction
doctrine is not a belief that an agency’s expertise makes it superior to a court; the reason is that a court
confronted with problems within an agency’s area of specialization should have the advantage of whatever
contributions the agency can make to the solutions" (Davis, Administrative Law, 381)

Seen as urged on us by Davis, some circumstances of the instant cases become important: the investor-
appellees worry that in the tangle of convoluted relations entered into by MSI with IBAA and LBP, they
have lost track of their investment and worse still that IBAA, to their disadvantage, has not complied with
the terms of the trust. Coupled with the clear mandate of the Rules of Court to entertain petitions for the
removal of a trustee, the doctrine of primary jurisdiction cannot be invoked as a pretext to bar the
petitioners from seeking judicial relief. They have the right, at least, to be heard by the court. It is for the
lower court, after due hearing and after having passed on the evidence, to determine which reliefs sought
for are allowed and which are not, in view of the receivership status of MSI. It cannot be right, however,
for the lower court to eschew any authority over the cases at all.40

The petitioner received a copy of the assailed decision of the CA on November 18, 1996 and consequently
filed its motion for reconsideration on December 3, 1996. On April 18, 1997, the petitioner received a
copy of the questioned resolution dated April 14, 1997, denying its motion for reconsideration. Instead of
filing a petition for review on certiorari under Rule 45 of the Revised Rules of Court, the petitioner filed on
June 17, 1997 the instant petition for certiorari under Rule 65.

PETITIONER’S ARGUMENTS

The petitioner avers that the CA committed a grave abuse of its discretion amounting to lack or excess of
jurisdiction in ruling that the petitioner was a trustee of the portfolio of the private respondents and that
the RTC had jurisdiction over the petitions of the latter. It asserts that it has no appeal, nor any plain,
speedy, and adequate remedy in the ordinary course of law. As a mere custodian of MSI under the
custodianship agreement with specific duties to perform, it is only an agent and not a trustee in the strict
legal sense, and does not hold any legal title over the properties and securities. 41 The CA acted
despotically when it ignored the various documents showing the true relationship between it and the
private respondents.

The petitioner asserts that since it is not a trustee but a mere custodian, Section 8, Rule 98 of the Rules
of Court42 is clearly inapplicable. Consequently, the trial court does not have jurisdiction over the petitions
filed by the private respondents for the removal of LBP as trustee. Instead, the petitioner asserts, it is the
SEC who rightly has jurisdiction over the petitions. While cleverly denominated as "petition for the
removal of IBAA or LBP as trustee," the petitions are, in reality, a mere sly scheme of private respondents
to implement the custodianship agreement between LBP and MSI through the instrumentality of the trial
court. Even assuming that the petitions are not claims or actions against MSI, nonetheless, at the very
least, their disposition would affect properties belonging or pertaining to a corporation under management
or receivership of the SEC, and thus should accordingly be suspended, conformably to Section 6(c) of P.D.
902-A, as amended. Since the petitions before the court a quo are in effect clearly claims/actions against
a corporation under management or receivership by the SEC which even private respondents admit to
have been placed under management/receivership due to, among others, the alleged acts/schemes of its
board of directors/officers/partners amounting to fraud and misrepresentation which may be detrimental
to the interest of the public, it then follows that the trial court has no jurisdiction to entertain the same.
Thus, only the SEC has jurisdiction over the said cases to the exclusion of the courts. 43
Petitioner LBP also states its willingness to perform its duties and obligations as custodian bank under the
custodianship agreement even without instigation. It, however, averred that in deference to the SEC
Order of April 2, 1980 which directed it to suspend any movement, disposition or substitution of any and
all properties held in behalf of MSI, whether as collateral security or as custodian thereof, it is unable to
do so. The petitioner contends that it is duty-bound to comply with the order, considering that it was
issued by the SEC in the legitimate and valid exercise of its regulatory and adjudicatory powers pursuant
to P.D. 902-A. LBP reiterates that the petitions are part of a sly scheme to implement the custodianship
agreement between LBP and MSI through the instrumentality of the trial court. 44

PRIVATE RESPONDENTS’ ARGUMENTS

In their Comment, the private respondents moved to dismiss the petition. According to them, appeal
under Rule 45 of the Rules of Court was available to the petitioner and that it was an equally beneficial,
speedy and sufficient remedy in the ordinary course of law, which consequently should have been availed
of.45 It is not enough for the petitioner to merely allege that appeal is not a speedy or adequate remedy in
the instant case. Although the petitioner contends that it had to file the instant petition for certiorari under
Rule 65 to prevent it from further litigating the matter, it has not shown that an ordinary appeal from the
assailed decision would not have obtained the same effect. As a matter of fact, as the private respondents
assert, an appeal would have stayed the decision by preventing it from becoming final and executory,
from being entered by the Clerk of Court of the CA in the book of entries of judgments, and from being
remanded to the lower court.

Precisely, where the remedy of appeal is available, as it was in this case, the petitioner must interpose its
appeal under Rule 45 within the reglementary period of 15 days from notice of the decision, or of the
resolution denying its motion for reconsideration. The private respondents vehemently argue that the
petitioner cannot allow the period to appeal to expire, and after having lost his right to appeal, seek to
regain it by recourse to certiorari under Rule 65.46

The petitioner admits in its petition that it received a copy of the questioned decision on November 18,
1996 and filed its motion for reconsideration on December 3, 1996. Then, on April 18, 1997, it received a
copy of the questioned resolution denying its motion for reconsideration. According to the private
respondents, it is clear from the foregoing that the petitioner had 15 days from receipt of the resolution
denying its motion for reconsideration (April 18, 1997), within which to take an appeal to this Court. For
failure to do so, the decision and resolution of the CA became final and executory on May 3, 1997. It was,
thus, too late for petitioner LBP to take an appeal or to file a petition for certiorari under Rule 65. 47

In the statement of facts and of the case in the petition for certiorari, petitioner LBP makes reference to
the following pleadings and documents:

a. Investment Agreements of private respondents with MSI (3rd paragraph, p. 2);

b. Custodianship Agreement dated August 19, 1976 (1st paragraph, p. 3);

c. Order/s of the Securities and Exchange Commission issued in SEC Cases No. 1826 and No. 1835
placing MSI and all its subsidiaries under Receivership and Management Committee (1st
paragraph, p. 4);

d. Petition filed on June 8, 1983 by private respondents Mamerta Rodriguez and Spouses Armando
and Zenaida Sta. Ana with the Regional Trial Court of Makati seeking the removal of IBAA as
trustee and the appointment of a substitute trustee (2nd paragraph, p. 4);

e. Petition filed on June 30, 1983 by private respondents El Observatorio de Manila Incorporada,
Spouses Wilfredo and Aurora Posadas and Reginald Francisco seeking the removal of IBAA (as
alleged trustee) and LBP (as alleged substitute trustee [sic]) and the appointment of a substitute
trustee (Ibid.);

f. Petition filed on June 30, 1983 by private respondents Bienvenido Maceda, Spouses Hector and
Matilde Mendoza and Eugenio Romillo (Ibid.);

g. Order/s consolidating the above petitions and their assignment to Branch 136 of the Regional
Trial Court (Ibid.);
 h. Motion/s filed by petitioner LBP to dismiss/suspend said petitions (Ibid.);

i. Motion for reconsideration filed by private respondents (1st paragraph, p. 5);

j. Order dated January 16, 1986 denying private respondents’ motion for reconsideration (Ibid.);

k. (Notice of) Appeal filed by private respondents (2nd paragraph, p. 5);

l. Appellants’ Brief filed by private respondents herein with the Court of Appeals (Ibid.);

m. Appellee’s Brief filed by petitioner LBP (Ibid.);

n. Custodian receipts (3rd paragraph, p. 10).48

According to the private respondents, most, if not all, of the foregoing pleadings and documents are
relevant and pertinent to the instant petition for certiorari, and are absolutely necessary for a clear
understanding of the facts of the case. The petitioner’s failure to attach them to its petition, in violation of
the requirements of Section 1, Rule 65 of the Revised Rules of Court can only be fatal to its cause, and
constitutes another ground for dismissal of the instant petition. 49

Another argument relied upon by the private respondents is that one of the conclusions reached by public
respondent CA which is sought to be corrected by the instant petition for certiorari is that a trust was
created in each of the custodianship agreements. This conclusion, even if erroneous, amounts to nothing
more than an error of judgment, correctible by appeal. The private respondents assert that the instant
petition for certiorari cannot correct errors of judgment, since it is confined to the correction of errors of
jurisdiction only, or grave abuse of discretion amounting to lack or excess of jurisdiction. 50

According to the petitioner, the finding of facts made by the respondent CA as to the transfer,
assignment, set over, and delivery to IBAA and LBP of the securities in the investment portfolios for the
benefit and security of the investors should be conclusive upon the Court, except only if shown to have
been reached with abuse of discretion amounting to lack of jurisdiction, which petitioner has failed to do.

Even the claim of petitioner LBP that the disposition of the petitions for removal of trustees would affect
properties belonging or pertaining to a corporation (MSI) under SEC management or receivership lacks
factual basis. By virtue of the assignment of the securities in the investment portfolios to the trustee
banks, title and interest therein were in fact vested in them, making them the legal owners of the same.

Anent the contention of LBP that it is willing to perform its duties were it not for the directive issued by
the SEC, the private respondents assert that the SEC Order dated April 2, 1980 contains no such
directive, nor is it even addressed to LBP. It is simply a resolution placing MSI and its subsidiaries under
receivership, and appointing the Management Committee of the said entities as interim receiver of their
properties. And even if the SEC order had indeed contained an actual directive addressed to LBP to
suspend any movement, disposition or substitution of any and all properties of MSI, it knew or ought to
have known that an order so issued would be in excess of jurisdiction and would not be binding upon it,
because no court or tribunal can take property in the possession of a stranger to the action who claims in
good faith to be the owner thereof. Furthermore, under the terms of the appointment, the Management
Committee was not given the power or authority to take over the management or control of assets or
properties not belonging to MSI. LBP, according to the private respondents, would then be obliged, in the
exercise of its duty as trustee, to defend the trust property from all adverse claimants and to take the
necessary action to nullify or set such order aside.51

THE DECISIVE ISSUE

The threshold issue in the case at bar is whether or not a petition for certiorari under Rule 65 of the
Revised Rules of Court is the proper recourse of the petitioner for the reversal of the assailed decision and
resolution of the CA.

The petition is dismissed.

Section 1, Rule 65 of the Revised Rules of Court reads:

SECTION 1. Petition for certiorari. – When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may
require.

The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject
thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of
non-forum shopping as provided in the third paragraph of Section 3, Rule 46.

A writ of certiorari has been called a "supervisory or superintending" writ. It was a common law writ of
ancient origin. It’s earliest use was in the crown or criminal side of the Court of King’s bench. Its use on
the civil side later came into general use.52 Certiorari is a remedy narrow in scope and unflexible in
character. It is not a general utility tool in the legal workshop.53

The writ of certiorari issues for the correction of errors of jurisdiction only or grave abuse of discretion
amounting to lack or excess of jurisdiction. It cannot be legally used for any other purpose. Its function is
only to keep the inferior court within the bounds of its jurisdiction or to prevent it from committing such a
grave abuse of discretion amounting to lack or excess of jurisdiction. 54 It may issue only when the
following requirements are alleged in the petition and established: (1) the writ is directed against a
tribunal, a board or any officer exercising judicial or quasi-judicial functions; (2) such tribunal, board or
officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction; and (3) there is no appeal or any plain, speedy and adequate remedy in the
ordinary course of law.55 Excess of jurisdiction as distinguished from absence of jurisdiction means that an
act, though within the general power of a tribunal, board or officer is not authorized, and invalid with
respect to the particular proceeding, because the conditions which alone authorize the exercise of the
general power in respect of it are wanting.56 Without jurisdiction means lack or want of legal power, right
or authority to hear and determine a cause or causes, considered either in general or with reference to a
particular matter. It means lack of power to exercise authority. 57

The general rule is that a cert writ will not issue where the remedy of appeal is available to the aggrieved
party. The remedies of appeal in the ordinary course of law and that of certiorari under Rule 65 of the
Revised Rules of Court are mutually exclusive and not alternative or cumulative. 58 Hence, the special civil
action for certiorari under Rule 65 is not and cannot be a substitute for an appeal, where the latter
remedy is available. Such a remedy will not be a cure for failure to timely file a petition for review on
certiorari under Rule 45. Nor can it be availed of as a substitute for the lost remedy of an ordinary appeal,
especially if such loss or lapse was occasioned by one’s own negligence or error in the choice of
remedies.59 However, there are cases where the cert writ may still issue even if the aggrieved party has a
remedy of appeal in the ordinary course of law. Thus, where the exigencies of the case are such that the
ordinary methods of appeal may not prove adequate either in point of promptness or completeness so
that a partial or total failure of justice may result, a cert writ may issue. 60

In SMI Development Corporation v. Republic of the Philippines,61 we held that certiorari is available when
the remedy of appeal is not adequate, or equally beneficial, speedy and sufficient. The determination as to
what exactly constitutes a plain, speedy and adequate remedy rest on judicial discretion and depends on
the particular circumstances of each case. There are many authorities that subscribe to the view that it is
the inadequacy, and not the mere absence, of all other legal remedies, and the danger of a failure of
justice without it, that must usually determine the propriety of the writ. 62 An adequate remedy is a
remedy which is equally beneficial, speedy and sufficient, not merely a remedy which at some time in the
future will bring about a revival of the judgment of the lower court complained of in the certiorari
proceeding, but a remedy which would promptly relieve the petitioner from the injurious effects of that
judgment and the acts of the inferior court, tribunal, board or officer.63

Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to
lack of jurisdiction or, in other words, where the power is exercised in an arbitrary manner by reason of
passion, prejudice, or personal hostility, and it must be so patent or gross as to amount to an evasion of a
positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. 64

The special civil action for certiorari is a remedy designed for the correction of errors of jurisdiction and
not errors of judgment. The raison d’etre for the rule is when a court exercises its jurisdiction, an error
committed while so engaged does not deprive it of the jurisdiction being exercised when the error is
committed. If it did, every error committed by a court would deprive it of its jurisdiction and every
erroneous judgment would be a void judgment. In such a scenario, the administration of justice would not
survive.65 Hence, where the issue or question involved affects the wisdom or legal soundness of the
decision - not the jurisdiction of the court to render said decision - the same is beyond the province of a
special civil action for certiorari.66

The proper recourse of the aggrieved party from a decision of the CA is a petition for review on certiorari
under Rule 45 of the Revised Rules of Court. On the other hand, if the error subject of the recourse is one
of jurisdiction, or the act complained of was perpetrated by a quasi-judicial officer or agency with grave
abuse of discretion amounting to lack or excess of jurisdiction, the proper remedy available to the
aggrieved party is a petition for certiorari under Rule 65 of the said Rules. As expostulated by the Court in
Fortich v. Corona:67

Anent the first issue, in order to determine whether the recourse of petitioners is proper or not, it is
necessary to draw a line between an error of judgment and an error of jurisdiction. An error of judgment
is one which the court may commit in the exercise of its jurisdiction, and which error is reviewable only by
an appeal. On the other hand, an error of jurisdiction is one where the act complained of was issued by
the court, officer or a quasi-judicial body without or in excess of jurisdiction, or with grave abuse of
discretion which is tantamount to lack or in excess of jurisdiction. This error is correctible only by the
extraordinary writ of certiorari.68

The supervisory jurisdiction of the court to issue a cert writ cannot be exercised in order to review the
judgment of the lower court as to its intrinsic correctness, either upon the law or the facts of the case. 69

The general rule is that questions or findings of facts in the lower court, board or tribunal, and the
probative weight and sufficiency of the evidence upon which the said findings were based are not
reviewable by certiorari under Rule 65 of the Revised Rules of Court. However, the sufficiency of the
evidence may be inquired into in order to determine whether jurisdictional facts were or were not proved
or whether the lower court had exceeded its jurisdiction. This exception arises out of the most important
office and function of the writ – the keeping of the lower court and tribunal within their jurisdiction. If the
decision of the lower court as to the sufficiency of the evidence to establish jurisdictional facts were not
reviewable, certiorari would be of no avail as a remedy against an assumption of jurisdiction. For the
purpose of enabling the reviewing court to determine whether jurisdictional facts were established, it may
delve into and review the evidence on which such facts were based.70

THE ERRORS ASCRIBED TO THE COURT OF APPEALS IN

ITS DECISION ARE ERRORS OF JUDGMENT AND NOT OF JURISDICTION.

Inscrutably, the CA had jurisdiction over the appeals of the private respondents from the order of the trial
court. The decision of the CA was thus rendered by it in the proper exercise of its jurisdiction. In its
decision, the CA enumerated the following findings of facts:

(a) the RTC erred in ordering the petitions archived and the proceedings in said petitions
suspended simply because of the pendency of SEC Cases Nos. 1826 and 1835 and of the
appointment of Management Committee as interim receiver;

(b) based on the pleadings of the parties and the evidence on record, the petitioner and the IBAA
were trustees of the investment portfolios; hence, owners and not mere agents of MSI;

(c) the investment portfolios are not assets of MSI;

(d) the SEC had no jurisdiction over the investment portfolios held in trust by the petitioner and
IBAA;

(e) only those actions for claims against the distressed corporation are suspended, but the petition
for the dissolution of the trusteeship for IBAA and the petitioner LBP to render an accounting of
their stewardship of the investment portfolios, and to pay damages on account of their mishandling
and/or defalcation of the same, are not suspended but may proceed until the petitions are finally
resolved;

(f) the principle of primary administrative jurisdiction does not apply in the instant case. 71
These findings are mere errors of judgment and not errors of jurisdiction, correctible by a petition for
review on certiorari with this Court under Rule 45 of the Revised Rules of Court. Hence, the petitioner
should have filed with this Court a petition for review on certiorari under Rule 45 within the period
therefor, and not a petition for certiorari under Rule 65 of the said Rules.

APPEAL UNDER RULE 45 OF THE RULES OF COURT AS

AMENDED IS A SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW.

The petitioner avers that an appeal via a petition for review on certiorari under Rule 45 would not
promptly relieve it from the injurious effects of the patently erroneous decision and resolution of the CA;
the instant petition for certiorari under Rule 65 would afford it a more expeditious and efficient relief. The
petitioner also points out that if the petitions of the private respondents were to be remanded to the RTC
for appropriate proceedings, the already clogged dockets of the trial court would be needlessly
exacerbated considering that it had no jurisdiction over the petitions.

We do not agree with the petitioner. A petition for review on certiorari under Rule 45 of the Revised Rules
of Court is a plain, speedy and adequate remedy in the ordinary course of law. It bears stressing that if
the petitioner had filed its petition for review on certiorari under Rule 45 within the period therefor, the
assailed decision would have been stayed. In such case, the petitioner could have raised issues involving
questions of law, such as whether or not the RTC has jurisdiction over the petitions of the private
respondents, or whether the petitions are in effect actions for claims as defined by this Court in Finasia
Investments & Finance Corp. v. Court of Appeals: 72

The word "claim" is also defined as:

Right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or right
to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured, unsecured.

In conflicts of law, a receiver may be appointed in any state which has jurisdiction over the defendant who
owes a claim.73

THE DECISION OF THE

CA HAS BECOME FINAL AND EXECUTORY.

The petitioner received a copy of the decision of the CA on November 18, 1996.1âwphi1 It had until
December 3, 1996 within which to file its motion for reconsideration of the decision. The petitioner did so
on the said date and received on April 18, 1997 the resolution of the CA denying its motion for
reconsideration. The petitioner filed its petition at bar only on June 17, 1997, well beyond the period
therefor. Patently then, the decision of the CA had become, in the interim, final and executory, beyond
the purview of this Court to act upon.74

IN LIGHT OF ALL THE FOREGOING, the Petition is DISMISSED. The Decision of the Court of Appeals in CA-
G.R. CV Nos. 12533-35 is AFFIRMED.

G.R. No. 131977 February 4, 1999

PEDRO MENDOZA, petitioner,

vs.
RAY ALLAS and GODOFREDO OLORES, respondents.

PUNO, J.:

Before us, petitioner prays for the execution of the decision of the trial court 1 granting his petition for quo
warranto which ordered his reinstatement as Director III, Customs Intelligence and Investigation Service,
and the payment of his back salaries and benefits.
Petitioner Pedro Mendoza joined the Bureau of Customs in 1972. He held the positions of Port Security
Chief from March 1972 to August 1972, Deputy Commissioner of Customs from August 1972 to
September 1975, Acting Commissioner of Customs from September 1975 to April 1977 and Customs
Operations Chief I from October 1987 to February 1988. 2 On March 1, 1988, he was appointed Customs
Service Chief of the Customs Intelligence and Investigation Service (CIIS). In 1989, the position of
Customs Service Chief was reclassified by the Civil Service as "Director III" in accordance with Republic
Act No. 6758 and National Compensation Circular No. 50. Petitioner's position was thus categorized as
"Director III, CIIS" and he discharged the function and duties of said office.

On April 22, 1993, petitioner was temporarily designated as Acting District Collector, Collection District X,
Cagayan de Oro City. In his place, respondent Ray Allas was appointed as "Acting Director III" of the
CIIS. Despite petitioner's new assignment as Acting District Collector, however, he continued to receive
the salary and benefits of the position of Director III.

In September 1994, petitioner received a letter from Deputy Customs Commissioner Cesar Z. Dario,
informing him of his termination from the Bureau of Customs, in view of respondent Allas' appointment as
Director III by President Fidel V. Ramos. The pertinent portion of the letter reads:

Effective March 4, 1994, Mr. Ray Allas was appointed Director III by President Fidel V.
Ramos and as a consequence, [petitioner's] services were terminated without prejudice to
[his] claim for all government benefits due [him].

Attached to the letter was the appointment of respondent Ray Allas as "Director III, CIIS, Bureau
of Customs, vice Pedro Mendoza."

Petitioner wrote the Customs Commissioner demanding his reinstatement with full back wages and
without loss of seniority rights. No reply was made.

On December 2, 1994, petitioner filed a petition for quo warranto against respondent Allas before the
Regional Trial Court, Paranaque, Branch 258. 3 The case was tried and on September 11, 1995, a decision
was rendered granting the petition. The court found that petitioner was illegally terminated from office
without due process of law and in violation of his security of tenure, and that as he was deemed not to
have vacated his office, the appointment of respondent Allas to the same office was void ab initio. The
court ordered the ouster of respondent Allas from the position of Director III, and at the same time
directed the reinstatement of petitioner to the same position with payment of full back salaries and other
benefits appurtenant thereto.

Respondent Allas appealed to the Court of Appeals. On February 8, 1996, while the case was pending
before said court, respondent Allas was promoted by President Ramos to the position of Deputy
Commissioner of Customs for Assessment and Operations. As a consequence of this promotion, Petitioner
moved to dismiss respondent's appeal as having been rendered moot and academic. The Court of Appeals
granted the motion and dismissed the case accordingly. The order of dismissal became final and entry of
judgment was made on March 19, 1996. 4

On May 9, 1996, petitioner filed with the court a quo a Motion for Execution of its decision. On July 24,
1996, the court denied the motion on the ground that the contested position vacated by respondent Allas
was now being occupied by respondent Godofredo Olores who was not a party to the quo warranto
petition. 5

Petitioner filed a special civil action for certiorari and mandamus with the Court of Appeals questioning the
order of the trial court. 6 On November 27, 1997, the Court of Appeals dismissed the petition. 7 Hence,
this recourse.

Petitioner claims that:

The Court of Appeals grossly erred in holding that a writ of execution may no longer be
issued, considering that respondent Olores who was not a party to the case now occupies
the subject position. 8

The instant petition arose from a special civil action for quo warranto under Rule 66 of the Revised Rules
of Court. Quo warranto is a demand made by the state upon some individual or corporation to show by
what right they exercise some franchise or privilege appertaining to the state which, according to the
Constitution and laws of the land, they cannot legally exercise except by virtue of a grant or authority
from the state. 9 In other words, a petition for quo warranto is a proceeding to determine the right of a
person to the use or exercise of a franchise or office and to oust the holder from its enjoyment, if his
claim is not well-founded, or if he has forfeited his right to enjoy the privilege. 10 The action may be
commenced for the Government by the Solicitor General or the fiscal 11 against individuals who usurp a
public office, against a public officer whose acts constitute a ground for the forfeiture of his office, and
against an association which acts as a corporation without being legally incorporated. 12 The action may
also be instituted by an individual in his own name who claims to be entitled to the public office or
position usurped or unlawfully held or exercised by another. 13

Where the action is filed by a private person, he must prove that he is entitled to the controverted
position, otherwise respondent has a right to the undisturbed possession of the office. 14 If the court finds
for the respondent, the judgment should simply state that the respondent is entitled to the office. 15 If,
however, the court finds for the petitioner and declares the respondent guilty of usurping, intruding into,
or unlawfully holding or exercising the office, judgment may be rendered as follows:

Sec. 10. Judgment where usurpation found. — When the defendant is found guilty of
usurping, intruding into, or unlawfully holding or exercising an office, position, right,
privilege, or franchise, judgment shall be rendered that such defendant be ousted and
altogether excluded therefrom, and that the plaintiff or relator, as the case may be, recover
his costs. Such further judgment may be rendered determining the respective rights in and
to the office, position, right, privilege, or franchise of all the parties to the action as justice
requires.

If it is found that the respondent or defendant is usurping or intruding into the office, or unlawfully
holding the same, the court may order:

(1) The ouster and exclusion of the defendant from office;

(2) The recovery of costs by plaintiff or relator;

(3) The determination of the respective rights in and to the office, position, right, privilege
or franchise of all the parties to the action as justice requires. 16

The character of the judgment to be rendered in quo warranto rests to some extent in the discretion of
the court and on the relief sought. 17 In the case at bar, petitioner prayed for the following relief:

WHEREFORE, it is respectfully prayed that respondent be ousted and altogether excluded

from the position of Director III, Customs Intelligence and Investigation Service of the
Bureau of Customs, and petitioner be seated to the position as the one legally appointed
and entitled thereto.

18
Other reliefs, just or equitable in the premises, are likewise prayed for.

In granting the petition, the trial court ordered that:

WHEREFORE, viewed in the light of the foregoing, judgment is hereby rendered granting
this petition for quo warranto by:

1. Ousting and excluding respondent Ray Allas from the position of Director
III, Customs Intelligence and Investigation Service of the Bureau of Customs;
and

2. Reinstating petitioner Pedro C. Mendoza, Jr. to the position of Director III,

Customs Intelligence and Investigation Service of the Bureau of Customs with
full back wages and other monetary benefits appurtenant thereto from the
time they were withheld until reinstated. 19

The trial court found that respondent Allas usurped the position of "Director III, Chief of the Customs
Intelligence and Investigation Service." Consequently, the court ordered that respondent Allas be ousted
from the contested position and that petitioner be reinstated in his stead. Although petitioner did not
specifically pray for his back salaries, the court ordered that he be paid his "full back wages and other
monetary benefits" appurtenant to the contested position "from the time they were withheld until
reinstated."

The decision of the trial court had long become final and executory, and petitioner prays for its execution.
He alleges that he should have been reinstated despite respondent Olores' appointment because the
subject position was never vacant to begin with. Petitioner's removal was illegal and he was deemed
never to have vacated his office when respondent Allas was appointed to the same. Respondent Allas'
appointment was null and void and this nullity allegedly extends to respondent Olores, his successor-in-
interest. 20

Ordinarily, a judgment against a public officer in regard to a public right binds his successor in office. This
rule, however, is not applicable in quo warranto cases. 21 A judgment in quo warranto does not bind the
respondent's successor in office, even though such successor may trace his title to the same source. This
follows from the nature of the writ of quo warranto itself. It is never directed to an officer as such, but
always against the person — to determine whether he is constitutionally and legally authorized to perform
any act in, or exercise any function of the office to which he lays claim. 22 In the case at bar, the petition
for quo warranto was filed by petitioner solely against respondent Allas. What was threshed out before the
trial court was the qualification and right of petitioner to the contested position as against respondent Ray
Allas, not against Godofredo Olores. The Court of Appeals did not err in denying execution of the trial
court's decision.

Petitioner has apprised this Court that he reached the compulsory retirement age of sixty-five (65) years
on November 13, 1997. Reinstatement not being possible, petitioner now prays for the payment of his
back salaries and other benefits from the time he was illegally dismissed until finality of the trial court's
decision. 23

Respondent Allas cannot be held personally liable for petitioner's back salaries and benefits. He was
merely appointed to the subject position by the President of the Philippines in the exercise of his
constitutional power as Chief Executive. Neither can the Bureau of Customs be compelled to pay the said
back salaries and benefits of petitioner. The Bureau of Customs was not a party to the petition for quo
warranto. 24

IN VIEW WHEREOF, the petition is denied and the decision of the Court of Appeals in CA-G.R. SP No.
41801 is affirmed.

G.R. No. 117204           February 11, 2000

MAGDALITA Y. TANG, BENITO YAO, KUYSEN GO, ROBIN LIM TAN, WILBERT TAN ONG, APOLONIO CRUZ
HILARIO, ARNEL CHUA, AVELINO TAN, JR., AUGUSTO UY, ANABELLE LIM, WILLIAM PENALOSA, MARTINA
SY SOON, CONSUELO SOON NGO, RAM DIESEL PARTS CTR., INC. and WING ON REALTY DEV. CORP.,
petitioners,
vs.
COURT OF APPEALS, HON. ARTURO A. ROMERO, Presiding Judge, Regional Trial Court of Caloocan City,
Branch 129, LUCIANO R. SARNE, JR., City Engineer of Caloocan City, and PRUDENCIO TEODORO,
Administrator of the Estate of the Spouses Toribio and Marta Teodoro, respondents.

KAPUNAN, J.:

Before us is a petition seeking the reversal of the Resolutions of the Court of Appeals, dated 11 February
1994 and 23 August 1994, which denied due course to petitioners' special civil action for certiorari.

The facts of this case are as follows:

Respondent Estate of the Spouses Toribio Teodoro and Marta Teodoro is presently pending settlement
before the Regional Trial Court of Caloocan City, Branch 120. The court-appointed administrator of the
said estate is respondent Prudencio Teodoro. Included in the inventory of properties of the estate is a
1,704 square meter parcel of land designated as Lot No. 214-A, covered by Transfer Certificate of Title
("TCT") No. (28232) 12039. In 1991, the Republic of the Philippines expropriated 337 square meters of
the said lot for its C-3 Circumferential Road Project.1 Thus, Lot 214-A was subdivided into Lot 214-A-1,
covered by TCT No. 237325 and titled under the name of the Republic of the Philippines, 2 and Lot 214-A-
2, covered by TCT No. 237325 and titled under the name of respondent estate. 3
Subsequently, respondent administrator offered to sell Lot 214-A-2 to the City Government of Caloocan in
order to have funds to finally settle the estate. However, the latter, through the City Engineer, public
respondent Luciano R. Sarne, Jr., informed respondent administrator that the city government was not
interested.4

Since the estate was already in debt due to accruing interests from estate taxes, at the rate of P1,200 per
day, respondent administrator petitioned the probate court for an authority to mortgage or sell Lot 214-A-
2. This was readily granted by the probate court in its Order, dated 1 June 1992. 5 However, respondent
administrator found it difficult to sell the said lot. As a remedy, he sought to subdivide the lot into two (2)
smaller lots. Thus, after obtaining a duly approved plan from the Bureau of Land Management, Lot 214-A-
2 was sub-divided into Lot 214-A-2-A, covered by TCT No. 248052,6 and Lot 214-A-2-B, covered by TCT
No. 248053.7

Respondent Administrator then applied with the Caloocan City Engineer for a permit to fence the two lots.
The City Engineer endorsed the application to the City Legal Officer, Zosimo Santiago, for appropriate
action. The City Legal Officer then called a conference between respondent administrator and the owners
of the properties adjoining the subject lots, the petitioners in the instant case. During the conference,
petitioners opposed the issuance of the fencing permit on the claim that the subject lots are street lots
and, as such, its fencing would mean the closure of their access to public roads. On 9 November 1992,
the City Legal Officer, after concluding that the subject lots are street lots, recommended the denial of the
fencing permit to the City Engineer.8 Accordingly, the City Engineer denied respondent administrator's
application for a fencing permit.1âwphi1.nêt

This predicament prompted respondent administrator to file a petition before the probate court to order
the Caloocan City Engineer to issue the fencing permit for the subject lots. After hearing, the probate
court issued an Order, dated 30 June 1993, granting the petition. The said order reads:

Worthy of consideration is the respondent's ground for refusal or rejection of petitioner's

application for the fencing permit in question, based on the Answer, Special and Affirmative
Defenses, to the effect that:

7. . . . the subject property intended to be fenced are street lots and part and parcel of a
road known as J. Teodoro Street between 4th and 5th Avenues situated at Grace Park,
Kalookan City;

While it is apparent on the face of the title of the subject properties (which is TCT No.
248052 and 248053) that the properties are ordinary private lots, respondent found out
after investigation that in the mother title from which TCT No. 248052 and 248053 was
derived and all earlier titles affecting the subject properties, Lot 214-A-2-A and Lot 214-A-
2-B are delineated as street lots. Copies of the TCT No. 237326 and 28232 are hereto
attached as Annex "A" and "B";

However, a second hard look at the two aforementioned Lots 214-A-2-A and 214-A-2-8, covered
by TCT No. 248052 and TCT No. 248053, respectively, evidently are NOT described as Street (sic)
lots. Instead, said Lot 214-A-2-A is described merely as "A parcel of land (Lot 214-A-2-A of the
subd. plan Psd-007501-002231-D, being a portion of Lot 214-A-2, Psd-13-014307;" and likewise,
said Lot 214-A-2-B is NOT denominated as "Street lot".

Even the restrictions implicitly annotated in said titles do NOT include any prohibition against the
use, possession or appropriation of the lots in question. Moreover, said restrictions have been
already deleted as per Waiver of Restrictions now annotated in said titles (Exhibit "C-1") previously
imposed by the Philippine Realty Corporation, vendor of the same properties to the petitioner in
said titles.

Accordingly, said Lot 214-A-2-A, which contains an area of 684 square meters, registered under
TCT No. 248052, remains undiminished by the so-called street lots appearing in TCT N. 237326.

xxx     xxx     xxx

But what appears as the most decisive and pervasive matter for consideration is the fact that TCT
No. 248052, which is a transfer from TCT No. 237326, NOT only failed to carry over the description
of the street lot for Lot 214-A-2-A but, in fact, CANCELLED said TCT No. 237326.
 xxx     xxx     xxx

All better put, the inscription of "street lot" in question is stale, without legal force and effect.

xxx     xxx     xxx

The argument in the Answer that the petition is premature for failure to exhaust all administrative
remedies, is not persuasive since the act complained of, considered a ministerial duty under the
present circumstances, is clearly arbitrary, unjustified and illegal.

Finally, the letter of April 18, 1991 by respondent to Mr. Prudencio J. Teodoro (Exhibit "E"), which
states:

In response to your letter dated November 29, 1990, we wish to inform you that the city
government of Kalookan is no longer interested in acquiring the parcel of land situated between
the 4th and 5th Avenues, this city, which is under T.C.T. No. (28232) 12039.

is self-defeating and evidently affects the credibility of respondent's rejection or refusal of

petitioner's application for permit.

WHEREFORE, the petition is hereby GRANTED.

The respondent is hereby ordered to issue the fencing permit applied for by the petitioner
administrator of the estate of the spouses Toribio Teodoro and Marta J. Teodoro.

SO ORDERED.9

On 2 July 1993, the City Engineer filed a Notice of Appeal questioning the order of the probate court. 10
However, on 12 October 1993, he withdrew the said appeal11 and, consequently, issued the fencing permit
on 15 November 1993.12

When petitioner Magdalita Tang, a neighboring lot owner, noticed that the subject lots were already being
fenced, she questioned the 30 June 1993 Order of the probate court by filing a special civil action for
certiorari with prayer for preliminary injunction before the Court of Appeals. After the Court of Appeals
granted her a temporary restraining order, the other petitioners, also neighboring lot owners, joined her
cause in opposing the fencing of the subject lots. Accordingly, the petition was amended on 20 December
1993 to include the additional petitioners.13 On 11 February 1994, the Court of Appeals issued a resolution
denying due course to the said petition on the ground that certiorari was not the proper remedy for
petitioners to annul and set aside the order of the lower court. The pertinent portion reads:

Now let Us proceed to deliberate and consider the main petition for certiorari which seeks to annul
and set aside the order of the Regional Trial Court dated June 30, 1993 commanding the City
Engineer to issue the fencing permit for private respondent.

Petitioners contend that respondent Court acted with grave abuse of discretion amounting to or in
excess of jurisdiction when it ordered the respondent City Engineer to issue the questioned fencing
permit in contravention of Section 50 of P.D. 1529.

Basically, the provisions of the Rules of Court allow an aggrieved party to take a cause or apply for
relief to the Appellate Court either of two (2) ways: appeal or certiorari. An appeal brings up for
review errors of judgment committed by a Court with jurisdiction over the subject of the suit. On
the other hand, well-settled is the rule that certiorari is for the correction of errors of jurisdiction
only or for grave abuse of discretion amounting to lack or in excess of jurisdiction (Silverio vs. CA,
141 SCRA 527).

In the case at bar, there is no dispute that the lower court had jurisdiction or did not gravely abuse
its discretion when it issued the order, commanding the City Engineer to issue the fence permit. At
least, there was no showing to that effect. While a preliminary injunction can be questioned by a
petition for certiorari under Rule 65 of the Rules of Court, a judgment granting permanent
injunction should be the subject of a timely appeal (Casilan vs. Ybañez, 6 SCRA 590). For certiorari
to lie, there must be a capricious, arbitrary and whimsical exercise of power which is very
antithesis of judicial prerogatives founded on law and traditions (Imutan vs. CA, 102 SCRA 286).
 Normally certiorari does not lie if appeal is the proper remedy (Bacabac vs. Delfin, 1 SCRA 1194).
Errors of judgment are not correctible by certiorari (Commodity Financing Co. Inc. vs. Jimenez, 91
SCRA 57). If The petitioners did not agree with the order complained of, the respondent City
Engineer could have appealed (Lopez vs. Alvendia, 12 SCRA 634). In the instant case, there was
notice of appeal filed by the City Engineer, but he withdrew said appeal probably to allow petitioner
to file the instant petition for certiorari.

xxx     xxx     xxx

FINALLY, on July 2, 1993, respondent City Engineer filed a Notice of Appeal against the decision of
the RTC dated June 30, 1993, but withdrew said appeal on October 12, 1993, and, instead, the
instant petition for certiorari with prayer for preliminary injunction was filed by petitioner on
November 29, 1993. Certainly, certiorari is not appropriate in this case, since appeal previously
taken by the City Engineer could have been the proper remedy (Jose vs. Zulueta, 2 SCRA 574).

ACCORDINGLY, in the light of the foregoing disquisitions, the petition for certiorari with prayer for
preliminary injunction CANNOT BE GIVEN DUE COURSE as it is hereby DISMISSED for lack of
merit. Consequently, the prayer for preliminary injunction is likewise DENIED.

SO ORDERED.14

Petitioners filed a motion for reconsideration but the same was denied by the Court of Appeals in its
Resolution dated 23 August 1994.

Hence, the present petition where the following assignment of errors are raised:

THE COURT OF APPEALS COMMITTED GROSS ERROR IN DISMISSING THE PETITION FOR CERTIORARI,
THE RESPONDENT RTC OF CALOOCAN CITY HAVING NO JURISDICTION TO ENTERTAIN THE PETITION
FOR ISSUANCE OF A FENCING PERMIT, PRIVATE RESPONDENT NOT HAVING EXHAUSTED HIS
ADMINISTRATIVE REMEDY.

II

THE COURT OF APPEALS LIKEWISE COMMITTED A GRAVE ERROR IN DISMISSING THE PETITION,
RESPONDENT RTC OF CALOOCAN CITY HAVING COMMITTED GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OF JURISDICTION IN ORDERING THE CITY ENGINEER TO ISSUE A FENCING
PERMIT, SAID RESPONDENT RTC MERELY ACTING AS A PROBATE COURT WITH LIMITED JURISDICTION.

III

THE COURT OF APPEALS AGAIN COMMITTED GROSS ERROR IN DISMISSING THE PETITION, THE
RESPONDENT RTC OF CALOOCAN CITY HAVING ORDERED THE ISSUANCE OF A FENCING PERMIT
WITHOUT DUE COURSE, THE AFFECTED NEIGHBORING TITLE OWNERS NOT HAVING BEEN NOTIFIED
NOR HEARD.

IV

THE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT APPEAL NOT CERTIORARI IS THE
PROPER REMEDY.15

We shall first discuss the last assignment of error since the determination of this crucial matter dictates
the propriety of discussing the other issues in this petition.

Petitioners assert that since they were not parties in the proceedings before the probate court, they could
not have possibly availed of the remedy of appeal so as to question the said order before the Court of
Appeals.16 Because of this, petitioners conclude that the only remedy available to them is the special civil
action of certiorari under Rule 65.17
The Court agrees with petitioners that the remedy of appeal under Rule 42 is not available to them since
this mode of appeal can only be availed by one who was a party in the proceedings before the lower
court. However, the question remains, is the certiorari available to petitioners?

The circumstances obtaining in this present case are indeed peculiar. The persons who elevated the
questioned order of the probate court to the Court of Appeals, through the special civil action of certiorari,
were not parties in the proceedings before the probate court. The respondent impleaded in the petition
before the probate court, herein public respondent City Engineer of Caloocan, did not pursue his appeal
and the ones who elevated the questioned order are merely a group of individuals who, being the owners
of the lots adjoining Lots 214-A-2-A and 214-A-2-B, claim to have an interest in the fencing of the subject
lots.

Although Section 1 of Rule 65 provides that the special civil action of certiorari may be availed of by a
"person aggrieved" by the orders or decisions of a tribunal, the term "person aggrieved" is not to be
construed to mean that any person who feels injured by the lower court's order or decision can question
the said court's disposition via certiorari. To sanction a contrary interpretation would open the floodgates
to numerous and endless litigations which would undeniably lead to the clogging of court dockets and,
more importantly, the harassment of the party who prevailed in the lower court.

In a situation wherein the order or decision being questioned underwent adversarial proceedings before a
trial court, the "person aggrieved" referred to under Section 1 of Rule 65 who can avail of the special civil
action of certiorari pertains to one who was a party in the proceedings before the lower court. The
correctness of this interpretation can be gleaned from the fact that a special civil action for certiorari may
be dismissed motu proprio if the party elevating the case failed to file a motion for reconsideration of the
questioned order or decision before the lower court.18 Obviously, only one who was a party in the case
before the lower court can file a motion for reconsideration since a stranger to the litigation would not
have the legal standing to interfere in the orders or decisions of the said court. In relation to this, if a
non-party in the proceedings before the lower court has no standing to file a motion for reconsideration,
logic would lead us to the conclusion that he would likewise have no standing to question the said order or
decision before the appellate court via certiorari.

Another factor, which militates against the availability of certiorari to petitioners, is the principle that the
Court will only exercise its power of judicial review if the case is brought before it by a party who has the
legal standing to raise the legal question. "Legal standing" denotes a personal and substantial interest in
the case such that the party has sustained or will sustain direct injury as a result of the act that is being
challenged.19 The term "interest" means material interest as distinguished from a mere incidental
interest.20

In the present case, aside from the fact that petitioners were not parties in the proceedings before the
lower court, they have not cited any acceptable or valid basis to support their legal standing to question
the probate court's order. Since respondent estate is the undisputed owner of the subject private lots, the
right of the administrator to have the same fenced cannot be questioned by petitioners who do not have
any vested right over the subject lots. The fact that petitioners are neighboring lot owners whose access
to public roads will allegedly be affected by the fencing of the subject lots, merely gives them an
incidental interest over the questioned order of the probate court and cannot serve as basis to support
their legal standing to elevate the order of the probate court to the Court of Appeals and before this
Court.

Although petitioners maintain that their legal basis for filing the special civil action of certiorari with the
Court of Appeals and the present petition before this Court is Section 22 of Presidential Decree No. 957, 21
otherwise known as the "The Subdivision and Condominium Buyers' Protective Decree," the said section is
evidently inapplicable to the present case since it pertains to the proscription imposed upon a subdivision
owner or developer. In the present case, respondent estate is not a subdivision owner or developer but
merely the owner of a neighboring lot. Clearly, the aforementioned law cannot serve as their basis for
claiming legal standing in elevating the order of the probate court to the Court of Appeals and,
consequently, before this Court.

In this regard, it is worth mentioning that the only person who can rightfully oppose the issuance of the
fencing permit is the City Engineer of Caloocan. However, after initially opposing the issuance of the
fencing permit, he is now convinced of the propriety of issuing the said permit as shown by his Comment22
to the petition, to wit:
 2. With the resolution and categorical findings of the Honorable Court of Appeals that the property
in question which is the subject matter of the Fencing Permit is of private ownership, herein
respondent believes that petitioners have no valid ground to ask for the revocation of the
questioned Fencing permit;

3. The grounds for revocation/suspension and non-issuance of Building Permits including Fencing
Permits are expressly provided under Sec. 306 of P.D. 1096 otherwise known as the National
Building Code. For clarity Sec. 306 of P.D. 1096 is hereby quoted:

xxx     xxx     xxx

4. There being no allegation in the Petition sustaining the aforesaid grounds for revocation of
Permits, petitioners have no caused (sic) of action insofar as public respondent is concerned.

5. If petitioners believe that the fenced property is part of the street which should be reverted to
the government, the remedy of petitioners is not Certiorari but to cause the proper government
body to institute reversion proceedings before the courts of proper jurisdiction.

In conclusion, although petitioners are correct in claiming that the Court of Appeals erred in finding that
appeal is the proper remedy to question the orders of the probate court, they are, however, mistaken in
claiming that the special civil action of certiorari is available to them.

Having determined that the remedy of certiorari is not available to petitioners, the rest of the issues need
no longer be discussed.1âwphi1.nêt

WHEREFORE, premises considered, the instant petition is hereby DENIED.

G.R. No. 139760            October 5, 2001

FELIZARDO S. OBANDO, JUAN S. OBANDO and THE ESTATE OF ALEGRIA STREBEL Vda. DE FIGUERAS,
petitioners,
vs.
HON. COURT OF APPEALS, HON. PRESIDING JUDGE OF RTC-MANILA, BRANCH 17, ESTATE and/or HEIRS
OF EDUARDO FIGUERAS & HEIRS OF FRITZ STREBEL, respondents.

YNARES-SANTIAGO, J.:

This is a petition for certiorari and mandamus, seeking the annulment of the Decision and Resolution of
the Court of Appeals in CA-G.R. SP No. 49896 dated May 7, 19991 and August 13, 1999,2 and praying that
respondent Judge of the Regional Trial Court of Manila, Branch 17, be ordered to give due course to
petitioners' notice of appeal.

Jose Figueras died testate on January 8, 1964, leaving as heirs Alegria Strebel Vda. de Figueras, his
second wife, and Francisco and Eduardo Figueras, his two legitimate children by his first wife, Rosario
Francisco.

Sometime in June 1965, Francisco Figueras instituted Special Proceeding No. 61567, a petition for probate
of the last will and testament of Jose Figueras.

Alegria Strebel Vda. de Figueras died on May 11, 1979. Petitioner Felizardo Obando instituted on May 25,
1979 a petition for probate of the last will and testament of Alegria which was docketed as Special
Proceeding No. 123948 of the then Court of First Instance of Manila. Felizardo claimed that he and his
brother, Juan, are the children of Alegria's sister, Susan Strebel, and that they have been named as heirs
in Alegria's will.

The two probate proceedings were consolidated before the Regional Trial Court of Manila, Branch 17.
Eduardo Figueras and Felizardo Obando were appointed as co-administrators of the consolidated estates
of the deceased spouses.

On April 11, 1991, Felizardo filed with the probate court a motion for the removal of Eduardo Figueras as
his co-administrator, on the ground that he was suffering from a heart ailment which prevented him from
going to court; that Eduardo failed to prevent the foreclosure of the estate's property in Marikina and
failed to account for rentals received on behalf of the estate; that Eduardo instituted ejectment
proceedings against a lessee of the estate without naming Felizardo as co-administrator; and that
Eduardo was convicted of the crime of rebellion.

Meanwhile, the National Bureau of Investigation found that the last will and testament of Alegria was a
forgery. This finding was affirmed by the Philippine Constabulary Crime Laboratory. Hence, on July 26,
1990, criminal charges for falsfication were filed against petitioners Felizardo and Juan Obando who were
thereafter convicted of falsification.

In turn, Eduardo Figueras and intervenor Fritz Strebel filed on June 29, 1991, a motion to remove
Felizardo as co-administrator, citing as ground Felizardo's failure to account for the rentals received from
the Community of Learners, a lessee of the estate, in the amount of P313,000.00; and the conviction of
Felizardo and Juan Obando for falsifying the last will and testament of Alegria Strebel Vda. de Figueras.

In an Order dated December 17, 1997,3 the probate court denied the motion to remove Eduardo Figueras,
and granted the motion to remove Felizardo Obando as administrator.

Felizardo filed a motion for reconsideration of the aforesaid Order which was denied on February 5, 1998. 4
Further, the probate court dismissed Special Proceeding No. 123948, i.e., the petition for probate of the
last will and testament of Alegria Strebel Vda. de Figueras, on the ground that the same was forged.

Felizardo filed an Urgent Motion for Reconsideration, which the probate court denied for being actually a
second motion for reconsideration.5 The probate court also denied Felizardo's motion for reconsideration
of the order dismissing Special Proceeding No. 123948.

Again, Felizardo filed a motion for reconsideration of his removal as administrator, as well as the order
dismissing Special Proceeding No. 123948. On July 17, 1998,6 the probate court issued an Order denying
the aforesaid motions.

Thus, on August 6, 1998, Felizardo filed a Notice of Appeal against all the foregoing orders of the probate
court. In an Order dated August 27, 1998,7 the probate court denied due course thereto, finding that the
second and third motions for reconsideration, being prohibited under the Rules, did not toll the
reglementary period to appeal. Hence, the order removing him as administrator and dismissing Special
Proceeding No. 123948 had already become final.

Petitioners filed with the Court of Appeals, on December 15, 1998, a petition for certiorari and mandamus,
docketed as CA-G.R. SP No. 49896, raising the following issues:

I) MAY THE PUBLIC RESPONDENT COURT BE ORDERED TO GIVE DUE COURSE TO PETITIONERS'
APPEAL AND ELEVATE THE SAME TO THIS HONORABLE COURT?

II) WERE PETITIONERS' NOTICE OF APPEAL AND RECORD ON APPEAL SEASONABLY FILED AND
SUBMITTED?

III) WERE PETITIONERS' MOTIONS FOR RECONSIDERATION OF THE PREVIOUS ORDERS OF

DECEMBER 17, 1997, FEBRUARY 5, 1998, APRIL 6, 1998 AND LATELY THE ORDER OF AUGUST 27,
1998 PROSCRIBED BY THE RULES AS BEING IN THE CONCEPT OF PRO FORMA MOTIONS?

IV) ARE PETITIONERS ENTITLED TO APPEAL AS A MATTER OF FACT?8

On May 7, 1999, the Court of Appeals rendered the assailed Decision dismissing the petition. Petitioners
filed a Motion for Reconsideration which, however, was denied for lack of merit. Hence, this petition.

Petitioners invoke previous rulings of this Court which relate to the liberal construction of rules of
procedure. There is, however, nothing in the case at bar which would warrant the application thereof,
which is the exception rather than the rule.

Indeed, the Rules of Court are explicit that a second motion for reconsideration shall not be allowed. 9 In
this case, petitioners filed not only a second motion for reconsideration, but a third motion for
reconsideration as well. Since the period to appeal began to run from the denial of the first motion for
reconsideration, consequently, petitioners' Notice of Appeal filed six months later was correctly denied by
the probate court for being late.
We quote with approval the following ruling of the Court of Appeals:

We, on the other hand, agree with the respondents that the petitioners' period to appeal already
expired. They filed not only one but three Motions for Reconsideration. A second Motion for
Reconsideration, as a matter of fact, is not allowed (Rule 37, Section 5). Since a second Motion for
Reconsideration is not allowed, then necessarily, its filing did not toll the running of the period to
appeal, with more reason would a 3rd Motion for Reconsideration. To Us, the April 6, 1998 Order,
mentioning finality of the Order of dismissal of the Petition for Probate, together with Felizardo's
removal as co-administrator, was validly issued.10

Likewise, the remedy of certiorari was no longer available to petitioners. It is well-settled that the special
civil action for certiorari cannot be used as a substitute for the lost remedy of appeal. The remedies of
appeal and certiorari are mutually exclusive and not alternative or successive. 11 In a recent case, we held:

Hence, the Court of Appeals did not err when it dismissed the petition for certiorari and
mandamus, on the ground that the proper remedy was to appeal within fifteen (15) days. The
lapse of the reglementary period was of no moment. A basic requisite for the special civil action of
certiorari to lie is that there be no appeal nor plain, speedy and adequate remedy in the ordinary
course of law. Certiorari is a remedy of last recourse and is a limited form of review. Its principal
function is to keep inferior tribunals within their jurisdiction. It cannot be used as a substitute for a
lost appeal. It is not intended to correct errors of procedure or mistakes in the judge's findings or
conclusions.12

All told, therefore, the Court of Appeals committed neither reversible error nor grave abuse of discretion
in dismissing the petition for certiorari and mandamus.

WHEREFORE, in view of the foregoing, the instant petition is DISMISSED. The assailed Decision of the
Court of Appeals dated May 7, 1999 is AFFIRMED in toto.

G.R. No. 124293               November 20, 2000

JG SUMMIT HOLDINGS, INC., petitioner,

vs.
COURT OF APPEALS, COMMITTEE ON PRIVATIZATION, its Chairman and Members; ASSET
PRIVATIZATION TRUST and PHILYARDS HOLDINGS, INC., respondents.

DECISION

YNARES-SANTIAGO, J.:

On January 27, 1977, the National Investment and Development Corporation (NIDC), a government
corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe,
Japan (Kawasaki) for the construction, operation, and management of the Subic National Shipyard, Inc.
(SNS), which subsequently became the Philippine Shipyard and Engineering Corporation (PHILSECO).
Under the JVA, NIDC and Kawasaki would maintain a shareholding proportion of 60%-40%, respectively.
One of the provisions of the JVA accorded the parties the right of first refusal should either party sell,
assign or transfer its interest in the joint venture. Thus, paragraph 1.4 of the JVA states:

"Neither party shall sell, transfer or assign all or any part of its interest in SNS to any third party without
giving the other under the same terms the right of first refusal. This provision shall not apply if the
transferee is a corporation owned or controlled by the GOVERNMENT or by a KAWASAKI affiliate." (Italics
supplied.)

On November 25, 1986, NIDC transferred all its rights, title and interest in PHILSECO to the Philippine
National Bank (PNB). More than two months later or on February 3, 1987, by virtue of Administrative
Order No. 14, PNB’s interest in PHILSECO was transferred to the National Government.

Meanwhile, on December 8, 1986, President Corazon C. Aquino issued Proclamation No. 50 establishing
the Committee on Privatization (COP) and the Asset Privatization Trust (APT) to take title to and
possession of, conserve, manage and dispose of non-performing assets of the National Government. On
February 27, 1987, a trust agreement was entered into between the National Government and the APT by
virtue of which the latter was named the trustee of the National Government’s share in PHILSECO. In
1989, as a result of a quasi-reorganization of PHILSECO to settle its huge obligations to PNB, the National
Government’s shareholdings in PHILSECO increased to 97.41% thereby reducing Kawasaki’s
shareholdings to 2.59%.

Exercising their discretion, the COP and the APT deemed it in the best interest of the national economy
and the government to privatize PHILSECO by selling 87.67% of its total outstanding capital stock to
private entities. After a series of negotiations between the APT and Kasawaki, they agreed that the latter’s
right of first refusal under the JVA be "exchanged" for the right to top by five percent (5%) the highest bid
for said shares. They further agreed that Kawasaki would be entitled to name a company in which it was a
stockholder, which could exercise the right to top. On September 7, 1990, Kawasaki informed APT that
Philyards Holdings, Inc. (PHI) would exercise its right to top by 5%.

At the pre-bidding conference held on September 28, 1993, interested bidders were given copies of the
JVA between NIDC and Kawasaki, and of the Asset Specific Bidding Rules (ASBR) drafted for the 87.67%
equity (sic)1 in PHILSECO of the National Government. Salient provisions of the ASBR state:

"1.0. The subject of this Asset Privatization Trust (APT) sale through public bidding is the National
Government’s equity in PHILSECO consisting of 896,869,942 shares of stock (representing 87.67% of
PHILSECO’s oustanding capital stock), which will be sold as a whole block in accordance with the rules
herein enumerated.

x x x           x x x          x x x

3.0. This public bidding shall be on an Indicative Price Bidding basis. The Indicative price set for the
National Government’s 87.67% equity in PHILSECO is PESOS: ONE BILLION THREE HUNDRED MILLION
(P1,300,000,000.00).

x x x           x x x          x x x

12.0. The bidder shall be solely responsible for examining with appropriate care these rules, the official
bid forms, including any addenda or amendments thereto issued during the bidding period. The bidder
shall likewise be responsible for informing itself with respect to any and all conditions concerning the
PHILSECO Shares which may, in any manner, affect the bidder’s proposal. Failure on the part of the
bidder to so examine and inform itself shall be its sole risk and no relief for error or omission will be given
by APT or COP. x x x."

The provisions of the ASBR were explained to the interested bidders who were notified that bidding would
be held on December 2, 1993.

At the public bidding on said date, the consortium composed of petitioner JG Summit Holdings, Inc.,
Sembawang Shipyard Ltd. of Singapore (Sembawang), and Jurong Shipyard Limited of Malaysia (Jurong),
was declared the highest bidder at P2.03 billion. The following day, December 3, 1993, the COP approved
the sale of 87.67% National Government shares of stock in PHILSECO to said consortium. It notified
petitioner of said approval "subject to the right of Kawasaki Heavy Industries, Inc./Philyards Holdings,
Inc. to top JGSMI’s (petitioner’s) bid by 5% as specified in the bidding rules."

On December 29, 1993, petitioner informed the APT that it was protesting the offer of PHI to top its bid
on the grounds that: (a) the Kawasaki/PHI consortium composed of Kawasaki, Philyards, Mitsui, Keppel,
SM Group, ICTSI and Insular Life violated the ASBR because the last four (4) companies were the losing
bidders (for P1.528 billion) thereby circumventing the law and prejudicing the weak winning bidder; (b)
only Kawasaki could exercise the right to top; (c) giving the same option to top to PHI constituted
unwarranted benefit to a third party; (d) no right of first refusal can be exercised in a public bidding or
auction sale, and (e) the JG Summit Consortium was not estopped from questioning the proceedings.

On February 2, 1994, petitioner was notified that PHI had fully paid the balance of the purchase price of
the subject bidding. On February 7, 1994, the APT notified petitioner that PHI had exercised its option to
top the highest bid and that the COP had approved the same on January 6, 1994. On February 24, 1994,
the APT and PHI executed a Stock Purchase Agreement.

Consequently, petitioner filed with this Court a petition for mandamus under G.R. No. 114057. On May
11,1994, said petition was referred to the Court of Appeals ---
"x x x for proper determination and disposition, pursuant to Section 9, paragraph 1 of B.P. 129, granting
the Court of Appeals ‘original jurisdiction to issue writs of mandamus x x x and auxiliary writs or
processes, whether or not in aid of its appellate jurisdiction,’ which jurisdiction is concurrent with this
Court, there being no special and important reason for this Court to assume jurisdiction over the case in
the first instance."2

On July 18, 1995, the Court of Appeals "denied" for lack of merit the petition for mandamus. Citing
Guanio v. Fernandez,3 it held that mandamus is not the proper remedy to "compel the undoing of an act
already done or the correction of a wrong already perpetuated, even though the action taken was clearly
illegal." It was further ruled that it was not the proper forum for a "mere petition for mandamus" that
aimed to question the constitutionality or legality of the right of first refusal and the right to top that was
exercised by Kawasaki/PHI and that the matter must be brought "by the proper party in the proper forum
at the proper time and threshed out in a full blown trial."

After ruling that the right of first refusal and the right to top are prima facie legal, the Court of Appeals
found petitioner to be in estoppel for the following reasons:

"5. If petitioner found the right to top to be illegal, it should not have participated in the public bidding; or
it should have questioned the legality of the rules before the courts or filed a petition for declaratory relief
(Rule 64, Rules of Court) before the public bidding could have taken place.

By participating in the public bidding, with full knowledge of the right to top granted to
Kawasaki/Philyards, petitioner is estopped from questioning the validity of the award given to Philyards
after the latter exercised the right to top and had paid in full the purchase price of the subject shares,
pursuant to the ASBR.

6. The fact that the losing bidder, Keppel Consortium (composed of Keppel, SM Group, Insular Life
Assurance, Mitsui and ICTSI) appears to have joined Philyards in the latter’s effort to raise P2.131 billion
necessary in exercising the right to top by 5% is a valid activity in free enterprise that is not contrary to
law, public policy or public morals. It should not be a cause of grievance for petitioner as it is the very
essence of free competition in the business world. Astute businessmen involved in the public bidding in
question knew what they were up against. And when they participated in the public bidding with prior
knowledge of the right to top, they did so, with full knowledge of the eventuality that the highest bidder
may still be topped by Kawasaki/Philyards by 5%. It is admitted by petitioner that it likewise represents a
consortium composed of JG Summit, Sembawang Singapore and Jurong of Malaysia. Why should
petitioner then expect Philyards to limit itself to its own resources when the latter can enter into
agreements with other entities to help it raise the money it needed to pay the full purchase price as in
fact it had already paid the National Government in the amount of P2.131 billion as required under the
ASBR?"4

Petitioner filed a motion for the reconsideration of said Decision which was denied on March 15, 1996.
Petitioner thus filed the instant petition for review on certiorari, raising the following arguments:

I.

THE COURT OF APPEALS GRIEVOUSLY ERRED IN HOLDING THAT PETITIONER JG SUMMIT IS

LEGALLY ESTOPPED FROM CHALLENGING THE LEGALITY OF THE RIGHT TO TOP, INSERTED IN THE
BIDDING RULES, AS WELL AS THE RIGHT OF FIRST REFUSAL FROM WHICH THE RIGHT TO TOP
WAS ADMITTEDLY SOURCED, BY SIMPLY STATING THAT THOSE RIGHTS ARE VALID AND
ENFORCEABLE WITHOUT RULING ON ANY OF THE IMPORTANT LEGAL AND CONSTITUTIONAL
GROUNDS RAISED BY THE PETITIONER AS FOLLOWS:

(A) THE RIGHT OF FIRST REFUSAL, GRANTED TO A JAPANESE CORPORATION AT A TIME

WHEN IT HELD 40% EQUITY IN PHILSECO, A LANDHOLDING CORPORATION, IS NULL AND
VOID FOR BEING CONTRARY TO THE CONSTITUTION.

(B) THE RIGHT TO TOP WAS GRANTED TO THE JAPANESE CORPORATION AT A TIME WHEN
IT MERELY HELD 2.6% EQUITY IN PHILSECO.

(C) THE RIGHT OF FIRST REFUSAL GRANTED TO THE JAPANESE CORPORATION OVER
SHARES OF STOCK IS CONTRARY TO THE CORPORATION CODE.
 (D) THE RIGHT TO TOP IS CONTRARY TO PUBLIC POLICY AS IT IS ANATHEMA TO
COMPETITIVE PUBLIC BIDDING FOR BEING UNDULY RESTRICTIVE THEREOF, AND,
MOREOVER, IS CONTRARY TO DUE PROCESS OF LAW AS IT IS AGAINST THE BASIC
RUDIMENTS OF FAIR PLAY.

(E) THE GRANT OF THE RIGHT TO TOP IS A CRIMINAL VIOLATION OF THE ANTI-GRAFT
LAW AS IT GIVES A CLEARLY UNWARRANTED BENEFIT IN FAVOR OF PHILYARDS AS
SHOWN BY CLEAR AND UNDISPUTED DOCUMENTARY EVIDENCE.

II.

THE COURT OF APPEALS GRIEVOUSLY ERRED IN HOLDING THAT MANDAMUS IS NOT A PROPER
REMEDY IN THIS CASE.

III.

FOLLOWING ITS OWN FINDINGS, THE COURT OF APPEALS GRIEVOUSLY ERRED (A) IN NOT
DIRECTING THAT TRIAL BE HELD ON ALLEGED ISSUES OF FACT AND (B) IN NOT APPOINTING AN
AMICUS CURIAE FROM AMONG THE LAWYERS IN THE COMMISSION ON AUDIT TO DETERMINE
THE APPLICABILITY OF ITS REQUIREMENTS TO THE TRANSACTIONS IN THIS CASE. 5

In their comment on the petition, private respondent PHI contends that the real party in interest which
should have filed the petition for mandamus is the JG Summit Consortium and not solely petitioner JG
Summit Holdings, Inc. which is just a part of that consortium. Since Sembawang and Jurong, the other
members of the consortium, are indispensable parties to the petition, 6 petitioner’s failure to implead them
as co-petitioners warranted the dismissal of the petition.

Public respondents’ contention must fail. While it is true that Rule 3, Section 2 of the Rules of Court
provides that "(a)ll persons having an interest in the subject of the action and in obtaining the relief
demanded shall be joined as plaintiffs," petitioner may file the petition alone. In the first place,
Sembawang and Jurong are not indispensable parties, such that their non-joinder as petitioners will not
necessarily result in a failure to arrive at a final determination of the case.7 They may be necessary
parties as they were members of the consortium that won the public bidding prior to the exercise of the
right to top by private respondent, but the petition may be resolved even without their active
participation. Secondly, there is a doubt as to whether or not said foreign corporations are "subject to the
jurisdiction of the court as to both service of process and venue." 8 Thirdly, petitioner may be deemed to
represent Sembawang and Jurong. The admission of petitioner’s counsel that said foreign corporations are
underwriting his and the other counsel’s fees reflects this fact.9 By the nexus that binds the members of
the consortium, in the event that petitioner succeeds in pursuing this case, it is bound to respect the
existence of the consortium and the corresponding responsibilities arising therefrom.

Public respondents also contend that petitioner has no standing to question the legality of a provision of
the JVA in which it is not a party.10 However, as this Court held in Kilosbayan v. Morato,11 there is a
difference between the rule on real-party-in-interest and the rule on standing, as the latter has
constitutional underpinnings. In the case at bar, petitioner has sufficiently alleged constitutional
ramifications in the questioned public bidding of the PHILSECO that merit the attention of the Court.
Moreover, the prospect of financial gains arising from the award of the sale of PHILSECO is enough
personal stake in the outcome of the controversy to vest upon petitioner the locus standi to file the
petition for mandamus. Besides, without Kawasaki-PHI’s right to top the highest bid, petitioner would
have been awarded the sale as the highest bidder. A winning bidder has personality to initiate
proceedings to prevent setting at naught his right; otherwise, his right to due process would be violated. 12
As such winning bidder, petitioner has "a present substantial interest," or such interest in the subject
matter of action as will entitle it, under substantive law, to recover if the evidence is sufficient. 13

With respect to the propriety of the remedy availed by petitioner, the Court of Appeals correctly held that
the special civil action of mandamus is not the proper remedy to question the legality of the exercise of
the right to top by private respondent. It does not lie to compel the award of a contract subject of bidding
to an unsuccessful bidder.14 Mandamus applies as a remedy only where petitioner’s right is founded
clearly in law and not when it is doubtful.15 Thus:

"In order that a writ of mandamus may issue, it is essential that the person petitioning for the same has a
clear legal right to the thing demanded and that it is the imperative duty of the respondent to perform the
act required. It neither confers powers nor imposes duties and is never issued in doubtful cases. It is
simply a command to exercise a power already possessed and to perform a duty already imposed." 16

The Court of Appeals cannot declare petitioner as the winning bidder in this case and direct the COP/APT
to award the sale to it without first determining the validity of the right to top stipulated in the ASBR.
Moreover, the sale of government share in PHILSECO is a fait accompli, in view of the execution of the
Stock Purchase Agreement between APT and PHI. Mandamus may not be availed to direct the exercise of
judgment or discretion in a particular way or to retract or reverse an action already taken in the exercise
of either.17

Be that as it may, the Court of Appeals erred when it dismissed the petition on the sole ground of the
impropriety of the special civil action of mandamus. It must be stressed that the petition was also one for
certiorari, seeking to nullify the award of the sale to private respondent of the PHILSECO shares. Verily,
the petition alleges that "respondents COP and APT have committed such a grave abuse of discretion
tantamount to lack or excess of their jurisdiction in insisting on awarding the bid to Philyards, for the
various reasons stated herein, particularly since the right of first refusal and the right to top the bid are
unconstitutional, contrary to law and public policy." 18 Petitioner’s failure to include certiorari in its caption
should not negate the fact that the petition charged public respondent with grave abuse of discretion in
awarding the sale to private respondent. Well-settled is the rule that it is not the caption of the pleading
but the allegations therein that determine the nature of the action and the Court shall grant relief
warranted by the allegations and the proof even if no such relief is prayed for.19

Petitioner’s main contention is that PHILSECO, as a shipyard, is a public utility and, hence, could be
operated only by a corporation at least 60% of whose capital is owned by Filipino citizens, in accordance
with Article XII, Section 10 of the Constitution. Petitioner asserts that a shipyard is a public utility
pursuant to Section 13 (b) of Commonwealth Act No. 146.20 Respondents, on the other hand, contend
that shipyards are no longer public utilities by express provision of Presidential Decree No. 666, which
provided incentives to the shipbuilding and ship repair industry.

Indeed, P.D. No. 666 dated March 5, 1975 explicitly stated that a "shipyard" was not a "public utility."
Section 1 thereof provide as follows:

"d) Registration required but not as Public Utility. – The business of constructing and repairing vessels or
parts thereof shall not be considered a public utility and no Certificate of Public Convenience shall be
required therefor. However, no shipyard, graving dock, marine railway or marine repair shop and no
person or enterprise shall engage in the construction and/or repair of any vessel, or any phase or part
thereof, without a valid Certificate of Registration and license for this purpose from the Maritime Industry
Authority, except those owned or operated by the Armed Forces of the Philippines or by foreign
governments pursuant to a treaty or agreement." (Underscoring supplied.)

However, Section 1 of P.D. No. 666 was expressly repealed by Section 20 of Batas Pambansa Blg. 391,
the Investment Incentive Policy Act of 1983.21 Subsequently, Executive Order No. 226, the Omnibus
Investments Code of 1987, was issued and Section 85 thereof expressly repealed B.P. Blg. 391. 22

The express repeal of B.P. Blg. 391 by E.O. No. 226 did not revive Section 1 of P.D. No. 666, declassifying
the shipbuilding and ship repair industry as a public utility, as said executive order did not provide
otherwise. When a law which expressly repeals a prior law is itself repealed, the law first repealed shall
not be thereby revived unless expressly so provided. 23 Consequently, when the APT drafted the ASBR
sometime in 1993, P.D. No. 666 no longer existed in our statute books. While it is true that the repeal of
a statute does not operate to impair rights that have become vested or accrued while the statute was in
force, there are no vested rights of the parties that should be protected in the case at bar. The reason is
simple: said decree was already inexistent when the ASBR was issued.

A shipyard such as PHILSECO being a public utility as provided by law, the following provision of the
Article XII of the Constitution applies:

"Sec. 11. No franchise, certificate, or any other form of authorization for the operation of a public utility
shall be granted except to citizens of the Philippines or to corporations or associations organized under the
laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such
franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years.
Neither shall any such franchise or right be granted except under the condition that it shall be subject to
amendment, alteration, or repeal by the Congress when the common good so requires. The State shall
encourage equity participation in public utilities by the general public. The participation of foreign
investors in the governing body of any public utility enterprise shall be limited to their proportionate share
in its capital, and all the executive and managing officers of such corporation or association shall be
citizens of the Philippines." (Italics supplied.)

The progenitor of this constitutional provision, Article XIV, Section 5 of the 1973 Constitution, required the
same proportion of 60%-40% capitalization. The JVA between NIDC and Kawasaki entered into on
January 27, 1977 manifests the intention of the parties to abide by the constitutional mandate on
capitalization of public utilities.24 Paragraph 1.3 of the JVA, as amended by Addendum No. 2 dated
December 28, 1983,25 provides:

"The authorized capital stock of PHILSECO shall be P330 milion. The parties shall thereafter increase their
subscription in PHILSECO as may be necessary and as called by the Board of Directors, maintaining a
proportion of 60%-40% for NIDC and KAWASAKI, respectively, up to a total subscribed and paid-up
capital stock of P312 million." (Underscoring supplied.)

A joint venture is an association of persons or companies jointly undertaking some commercial enterprise
with all of them generally contributing assets and sharing risks. It requires a community of interest in the
performance of the subject matter, a right to direct and govern the policy in connection therewith, and
duty, which may be altered by agreement to share both in profit and losses. 26 Persons and business
enterprises usually enter into a joint venture because it is exempt from corporate income tax. 27
Considered more of a partnership,28 a joint venture is governed by the laws on contracts and on
partnership. The joint venture created between NIDC and Kawasaki falls within the purview of an
"association" pursuant to Section 5 of Article XIV of the 1973 Constitution and Section 11 of Article XII of
the 1987 Constitution. Consequently, a joint venture that would engage in the business of operating a
public utility, such as a shipyard, must observe the proportion of 60%-40% Filipino-foreign capitalization.

Notably, paragraph 1.4 of the JVA accorded the parties the right of first refusal "under the same terms."
This phrase implies that when either party exercises the right of first refusal under paragraph 1.4, they
can only do so to the extent allowed them by paragraphs 1.2 and 1.3 of the JVA or under the proportion
of 60%-40% of the shares of stock. Thus, should the NIDC opt to sell its shares of stock to a third party,
Kawasaki could only exercise its right of first refusal to the extent that its total shares of stock would not
exceed 40% of the entire shares of stock of SNS or PHILSECO. The NIDC, on the other hand, may
purchase even beyond 60% of the total shares. As a government corporation and necessarily a 100%
Filipino-owned corporation, there is nothing to prevent its purchase of stocks even beyond 60% of the
capitalization as the Constitution clearly limits only foreign capitalization.

Parenthetically, the Maritime Industry Authority (MARINA) which has been tasked to regulate the
operation of shipbuilding and ship repair yards,29 abides by the Filipino capitalization requirement as far as
corporations and partnerships are concerned. However, Section 2.3.1 (a) of its Memorandum Circular No.
95, Series of 1994,30 setting out the Revised Implementing Guidelines on the Licensing of Shipbuilders,
Ship Repairers, Afloat Repairers, Boatbuilders and Shipbreakers, seems to exempt joint ventures
registered with the SEC, the BOI and the EPZA from the 60% requirement of Filipino ownership. 31 The said
provision states:

"The applicant must be a Filipino citizen or a corporation/partnership at least 60% of the authorized
capital stock of which is owned by Filipino citizens except for joint ventures which are registered with the
Securities and Exchange Commission, the Board of Investments and/or Export Processing Zone
Authorities."32

The constitutionality of said MARINA guideline, however, is not in issue here. Kawasaki was bound by its
contractual obligation under the JVA that limits its right of first refusal to 40% of the total capitalization of
PHILSECO. Thus, Kawasaki cannot purchase beyond 40% of the capitalization of the joint venture on
account of both constitutional and contractual proscriptions.

From the facts on record, it appears that at the outset, the APT and Kawasaki respected the 60%-40%
capitalization proportion in PHILSECO. However, APT subsequently encouraged Kawasaki to participate in
the public bidding of the National Government’s shareholdings of 87.67% of the total PHILSECO shares,
definitely over and above the 40% limit of its shareholdings. In so doing, the APT went beyond the ambit
of its authority.

It is well settled that the role of courts is to ascertain whether a branch or instrumentality of Government
has transgressed its constitutional or statutory boundaries. The courts, must examine those boundaries in
the light of provisions of the law. Otherwise, it would stray into the realm of policy decision-making. 33
Proclamation No. 50, creating the COP and the APT, was issued by President Corazon C. Aquino pursuant
to her legislative powers under the Provisional Constitution of 1986. Section 12 of said Proclamation
vested the APT with the following powers:

(1) To formulate and, after approval by the Committee, implement a program for the disposition of
assets transferred to it under this Proclamation, such program to be completed within a period of
five years from the date of the issuance of this Proclamation;

(2) Subject to its having received the prior written approval of the Committee to sell such asset at
a price and on terms of payment and to a party disclosed to the Committee, to sell each asset
referred to it by the Committee to such party and on such terms as in its discretion are in the best
interest of the National Government, and for such purpose to execute and deliver, on behalf and in
the name of the National Government, such deeds of sale, contracts and other instruments as may
be necessary or appropriate to convey title to such assets;

x x x           x x x          x x x

(7) To adopt its internal rules and regulations, to adopt, alter and use a seal which shall be
judicially noticed; to enter into contracts; to sue and be sued;

x x x           x x x          x x x"

Pursuant to these provisions, the APT drafted the ASBR. Since the APT’s rule-making authority is merely
delegated, the ASBR should be measured by the standard set by said proclamation. 34 Notably, the
discretion granted by the proclamation to the APT for the sale of government property is circumscribed
only by the "best interest of the National Government."

Implicitly written in any delegated legislative authority, such as that provided for in Proclamation No. 50,
is the requisite that the rules and regulations which an administrative body adopts must respect pertinent
provisions of the Constitution and the law.35 Article XII, Section 11 of the Constitution providing for a 60%
Filipino capitalization in order that public utilities may be granted a franchise should thus be deemed a
paramount consideration in drafting the ASBR. In this regard, worth noting is paragraph 15.0 of the
ASBR, which provides that:

"In the event that the winning bidder is a 100% foreign-owned corporation, it may name its nominee
corporation to whom the NG shares shall be conveyed, provided it owns 40% equity in the nominee
corporation, so as not to affect PHILSECO’s qualification to own real estate properties in the Philippines."

This rule is fraught with dangerous implications. It allows a completely foreign corporation to participate in
the public bidding of more than 60% of the total shares of a public utility corporation without setting a
period within which the foreign bidder should name its nominee. As it is, the rule allows a totally foreign
investor to engage in the business of operating a public utility for an unlimited period of time in total
disregard of the constitutional proscription on the percentage of Filipino ownership of corporations
engaged therein. Paragraph 15.0 of the ASBR is thus directly and openly repugnant to the Constitution
considering that it allows foreign corporations to operate a public utility for an unlimited period of time.

In carrying out its objective of disposing of government property, the APT should take into account the
pertinent laws. Since the method of disposing the PHILSECO that the APT had adopted was through public
bidding, it was duty-bound to follow the rules and regulations on competitive public bidding, in order to
uphold the elementary rule on fairness in such disposition. As this Court once said:

"x x x. A competitive public bidding aims to protect the public interest by giving the public the best
possible advantages through open competition. It is a mechanism that enables the government agency to
avoid or preclude anomalies in the execution of public contracts." 36

The word "bidding" in its comprehensive sense means making an offer37 or an invitation to prospective
contractors whereby the government manifests its intention to make proposals 38 for the purchase of
supplies, materials and equipment for official business or public use,39 or for public works or repair. The
three principles in public bidding are: the offer to the public; an opportunity for competition; and a basis
for exact comparison of bids. The distinctive character of the system is destroyed and the purpose of its
adoption is thwarted when a regulation thereon excludes any of these principles. 40 Public bidding of
government contracts and for the disposition of government assets should have the same principles and
objectives. Their only difference, if at all, is that in the public bidding for public contracts, the award is
generally given to the lowest bidder while in the disposition of government assets, the award is to the
highest bidder.41 The term "public bidding" imports a sale to the highest bidder with absolute freedom for
competitive bidding.42

Under Section 504 of the Government Auditing Rules and Regulations, a public auction, which is the mode
of divestment or disposal of government property, shall adhere to established mechanics and procedures
in public bidding.43 In such public auction sales, the presence of a Commission on Audit (COA)
representative who shall see to the proper observance of auditing rules is imperative. 44 In this case, there
is no record that a COA representative witnessed the public auction on December 2, 1993. Neither is there
a showing that the APT observed the requirement of COA Circular No. 89-296, to the effect that a
government entity that is disposing of government property shall furnish the COA with the disposal
procedure adopted. Likewise, nowhere in the record is it stated that the APT heeded the suggestion of
Secretary of Finance and COP Chairman Jayme that its decision to grant Kawasaki the right to top the
highest bid be made "known to the Commission on Audit." What appears on record is that the COA did not
approve the ASBR, specifically the provision on the right to top the highest bidder. Thus, then COA
Chairman Pascasio S. Banaria, replying to the query of petitioner’s counsel on whether or not the COA had
approved the right to top the highest bid by 5%, stated:

"Per information received from our Auditor at APT, no prior approval was issued by their Office regarding
said preferential option. We have instructed our Auditor thereat to advise this Office of the result of the
review of the Corporation’s procedures for the sale of the assets including the review of the bidding
documents pertaining to the subject public bidding pursuant to the provisions of the Commission on Audit
Circular No. 89-296 dated January 27, 1989."45

In according the KHI/PHI the right to top, the APT violated the rule on competitive public bidding, under
which the highest bidder is declared the winner entitled to the award of the subject of the auction sale. In
effect, the grant to KHI/PHI of the right to top can be likened to a second bidding, which, however, is
allowed only if there is a failure of bidding, such as when there is only one bidder or none at all. 46 By
placing KHI/PHI in the advantageous position of topping the highest bidder, the APT set aside the basic
rule in public bidding that there be an opportunity for competition.

While it may be argued that the right to top was aimed at giving the best financial advantage to the
government, the manner by which that right was conceived and arrived at in this case manifested bias in
favor of KHI, thereby clearly brushing aside the rule on fair competition. More importantly, the ASBR
provision on the right to top the highest bidder completely disregarded the stipulation in the JVA between
NIDC and KHI to comply with the 60%-40% capitalization arrangement whereby KHI, the foreign
investor, would be able to exercise its right of first refusal to the extent of only 40% of the total
capitalization of the PHILSECO. Thus, KHI, whose investment exposure was already diminished to only
2.59% of the total PHILSECO shares, was given the privilege, through its nominee PHI, of exercising the
right to top the highest bid to 87.67% of those shares or definitely over and above its 40% contractual
right to PHILSECO shares under the JVA. Consequently, the APT rendered nugatory the constitutional and
contractual proscriptions clearly to favor a foreign investor.

Furthermore, while the right of first refusal entitled KHI to priority in the award of the contract, that right
cannot bar another bidder from submitting a bid because, precisely, the law requires public bidding in
government contracts.47 Thus, by engrafting in the provisions of the ASBR the right to top, which was only
an offshoot of the right of first refusal, the APT effectively did away with pubic bidding insofar as KHI/PHI
was concerned. To be sure, the right to top is different from the right to match. In the latter, a qualified
bidder is given the privilege of offering the same bid as that of the highest bidder.48 In the former, as
provided for by the ASBR, a non-bidder is accorded the right to top the highest bid. There is reason,
therefore, for the petitioner to complain that the APT made a show of a public bidding in order to elicit the
highest bid, only to award the sale to a non-bidder. The unfair manner by which the purported public
bidding was conducted by the APT is even made more blatant by the fact that after the "public bidding,"
KHI exercised the right to top through its nominee, private respondent PHI, which has among its
stockholders some losing bidders.

In drafting the ASBR, the APT should have noted the fact that foreign investors were competing in the
bidding. While it is true that foreign investment should be encouraged in this country, however, the ASBR
provision on the right to top is unfair to all competitors, be they foreign or local, in the public auction of
87.67% of PHILSECO shares as it provided for a method that would set at naught the entire public
bidding.
It was thus error for the Court of Appeals to conclude that petitioner was estopped from contesting the
validity of the ASBR and the bidding procedure conducted pursuant to it. It is clear from the provisions of
the ASBR itself that the basic rules on fair competition in public biddings have been disregarded. Although
petitioner had the opportunity to examine the ASBR before it participated in the bidding, it cannot be
estopped from questioning the unconstitutional, illegal and inequitable provisions thereof. Estoppel is
unavailing in this case; otherwise, it would stamp validity to an act that is prohibited by law or against
public policy.49

WHEREFORE, the instant petition for review on certiorari is GRANTED. The assailed Decision and
Resolution of the Court of Appeals are REVERSED and SET ASIDE. Petitioner is ordered to pay to APT its
bid price of Two Billion Thirty Million Pesos (P2,030,000,000.00), less its bid deposit plus interests upon
the finality of this Decision. In turn, APT is ordered to:

(a) accept said amount of P2,030,000,000.00 less bid deposit and interests from petitioner;

(b) execute a Stock Purchase Agreement with petitioner;

(c) cause the issuance in favor of petitioner of the certificates of stocks representing 87.67% of
PHILSECO’s total capitalization;

(d) return to private respondent PHI the amount of Two Billion One Hundred Thirty One Million Five
Hundred Thousand Pesos (P2,131,500,000.00); and

(e) cause the cancellation of the stock certificates issued to PHI.

G.R. No. 124293             January 31, 2005

J.G. SUMMIT HOLDINGS, INC., petitioner,

vs.
COURT OF APPEALS; COMMITTEE ON PRIVATIZATION, its Chairman and Members; ASSET
PRIVATIZATION TRUST; and PHILYARDS HOLDINGS, INC., respondents.

RESOLUTION

PUNO, J.:

For resolution before this Court are two motions filed by the petitioner, J.G. Summit Holdings, Inc. for
reconsideration of our Resolution dated September 24, 2003 and to elevate this case to the Court En
Banc. The petitioner questions the Resolution which reversed our Decision of November 20, 2000, which
in turn reversed and set aside a Decision of the Court of Appeals promulgated on July 18, 1995.

I. Facts

The undisputed facts of the case, as set forth in our Resolution of September 24, 2003, are as follows:

On January 27, 1997, the National Investment and Development Corporation (NIDC), a government
corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe,
Japan (KAWASAKI) for the construction, operation and management of the Subic National Shipyard, Inc.
(SNS) which subsequently became the Philippine Shipyard and Engineering Corporation (PHILSECO).
Under the JVA, the NIDC and KAWASAKI will contribute P330 million for the capitalization of PHILSECO in
the proportion of 60%-40% respectively. One of its salient features is the grant to the parties of the right
of first refusal should either of them decide to sell, assign or transfer its interest in the joint venture, viz:

1.4 Neither party shall sell, transfer or assign all or any part of its interest in SNS [PHILSECO] to any third
party without giving the other under the same terms the right of first refusal. This provision shall not
apply if the transferee is a corporation owned or controlled by the GOVERNMENT or by a KAWASAKI
affiliate.

On November 25, 1986, NIDC transferred all its rights, title and interest in PHILSECO to the Philippine
National Bank (PNB). Such interests were subsequently transferred to the National Government pursuant
to Administrative Order No. 14. On December 8, 1986, President Corazon C. Aquino issued Proclamation
No. 50 establishing the Committee on Privatization (COP) and the Asset Privatization Trust (APT) to take
title to, and possession of, conserve, manage and dispose of non-performing assets of the National
Government. Thereafter, on February 27, 1987, a trust agreement was entered into between the National
Government and the APT wherein the latter was named the trustee of the National Government's share in
PHILSECO. In 1989, as a result of a quasi-reorganization of PHILSECO to settle its huge obligations to
PNB, the National Government's shareholdings in PHILSECO increased to 97.41% thereby reducing
KAWASAKI's shareholdings to 2.59%.

In the interest of the national economy and the government, the COP and the APT deemed it best to sell
the National Government's share in PHILSECO to private entities. After a series of negotiations between
the APT and KAWASAKI, they agreed that the latter's right of first refusal under the JVA be "exchanged"
for the right to top by five percent (5%) the highest bid for the said shares. They further agreed that
KAWASAKI would be entitled to name a company in which it was a stockholder, which could exercise the
right to top. On September 7, 1990, KAWASAKI informed APT that Philyards Holdings, Inc. (PHI) 1 would
exercise its right to top.

At the pre-bidding conference held on September 18, 1993, interested bidders were given copies of the
JVA between NIDC and KAWASAKI, and of the Asset Specific Bidding Rules (ASBR) drafted for the
National Government's 87.6% equity share in PHILSECO. The provisions of the ASBR were explained to
the interested bidders who were notified that the bidding would be held on December 2, 1993. A portion
of the ASBR reads:

1.0 The subject of this Asset Privatization Trust (APT) sale through public bidding is the National
Government's equity in PHILSECO consisting of 896,869,942 shares of stock (representing 87.67% of
PHILSECO's outstanding capital stock), which will be sold as a whole block in accordance with the rules
herein enumerated.

xxx xxx xxx

2.0 The highest bid, as well as the buyer, shall be subject to the final approval of both the APT Board of
Trustees and the Committee on Privatization (COP).

2.1 APT reserves the right in its sole discretion, to reject any or all bids.

3.0 This public bidding shall be on an Indicative Price Bidding basis. The Indicative price set for the
National Government's 87.67% equity in PHILSECO is PESOS: ONE BILLION THREE HUNDRED MILLION
(P1,300,000,000.00).

xxx xxx xxx

6.0 The highest qualified bid will be submitted to the APT Board of Trustees at its regular meeting
following the bidding, for the purpose of determining whether or not it should be endorsed by the APT
Board of Trustees to the COP, and the latter approves the same. The APT shall advise Kawasaki Heavy
Industries, Inc. and/or its nominee, [PHILYARDS] Holdings, Inc., that the highest bid is acceptable to the
National Government. Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. shall then have
a period of thirty (30) calendar days from the date of receipt of such advice from APT within which to
exercise their "Option to Top the Highest Bid" by offering a bid equivalent to the highest bid plus five
(5%) percent thereof.

6.1 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. exercise their "Option to
Top the Highest Bid," they shall so notify the APT about such exercise of their option and deposit with APT
the amount equivalent to ten percent (10%) of the highest bid plus five percent (5%) thereof within the
thirty (30)-day period mentioned in paragraph 6.0 above. APT will then serve notice upon Kawasaki
Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. declaring them as the preferred bidder and they
shall have a period of ninety (90) days from the receipt of the APT's notice within which to pay the
balance of their bid price.

6.2 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. fail to exercise their
"Option to Top the Highest Bid" within the thirty (30)-day period, APT will declare the highest bidder as
the winning bidder.

xxx xxx xxx

12.0 The bidder shall be solely responsible for examining with appropriate care these rules, the official bid
forms, including any addenda or amendments thereto issued during the bidding period. The bidder shall
likewise be responsible for informing itself with respect to any and all conditions concerning the PHILSECO
Shares which may, in any manner, affect the bidder's proposal. Failure on the part of the bidder to so
examine and inform itself shall be its sole risk and no relief for error or omission will be given by APT or
COP. . . .

At the public bidding on the said date, petitioner J.G. Summit Holdings, Inc.2 submitted a bid of Two
Billion and Thirty Million Pesos (P2,030,000,000.00) with an acknowledgment of KAWASAKI/[PHILYARDS']
right to top, viz:

4. I/We understand that the Committee on Privatization (COP) has up to thirty (30) days to act on APT's
recommendation based on the result of this bidding. Should the COP approve the highest bid, APT shall
advise Kawasaki Heavy Industries, Inc. and/or its nominee, [PHILYARDS] Holdings, Inc. that the highest
bid is acceptable to the National Government. Kawasaki Heavy Industries, Inc. and/or [PHILYARDS]
Holdings, Inc. shall then have a period of thirty (30) calendar days from the date of receipt of such advice
from APT within which to exercise their "Option to Top the Highest Bid" by offering a bid equivalent to the
highest bid plus five (5%) percent thereof.

As petitioner was declared the highest bidder, the COP approved the sale on December 3, 1993 "subject
to the right of Kawasaki Heavy Industries, Inc./[PHILYARDS] Holdings, Inc. to top JGSMI's bid by 5% as
specified in the bidding rules."

On December 29, 1993, petitioner informed APT that it was protesting the offer of PHI to top its bid on
the grounds that: (a) the KAWASAKI/PHI consortium composed of KAWASAKI, [PHILYARDS], Mitsui,
Keppel, SM Group, ICTSI and Insular Life violated the ASBR because the last four (4) companies were the
losing bidders thereby circumventing the law and prejudicing the weak winning bidder; (b) only
KAWASAKI could exercise the right to top; (c) giving the same option to top to PHI constituted
unwarranted benefit to a third party; (d) no right of first refusal can be exercised in a public bidding or
auction sale; and (e) the JG Summit consortium was not estopped from questioning the proceedings.

On February 2, 1994, petitioner was notified that PHI had fully paid the balance of the purchase price of
the subject bidding. On February 7, 1994, the APT notified petitioner that PHI had exercised its option to
top the highest bid and that the COP had approved the same on January 6, 1994. On February 24, 1994,
the APT and PHI executed a Stock Purchase Agreement. Consequently, petitioner filed with this Court a
Petition for Mandamus under G.R. No. 114057. On May 11, 1994, said petition was referred to the Court
of Appeals. On July 18, 1995, the Court of Appeals denied the same for lack of merit. It ruled that the
petition for mandamus was not the proper remedy to question the constitutionality or legality of the right
of first refusal and the right to top that was exercised by KAWASAKI/PHI, and that the matter must be
brought "by the proper party in the proper forum at the proper time and threshed out in a full blown
trial." The Court of Appeals further ruled that the right of first refusal and the right to top are prima facie
legal and that the petitioner, "by participating in the public bidding, with full knowledge of the right to top
granted to KAWASAKI/[PHILYARDS] is…estopped from questioning the validity of the award given to
[PHILYARDS] after the latter exercised the right to top and had paid in full the purchase price of the
subject shares, pursuant to the ASBR." Petitioner filed a Motion for Reconsideration of said Decision which
was denied on March 15, 1996. Petitioner thus filed a Petition for Certiorari with this Court alleging grave
abuse of discretion on the part of the appellate court.

On November 20, 2000, this Court rendered x x x [a] Decision ruling among others that the Court of
Appeals erred when it dismissed the petition on the sole ground of the impropriety of the special civil
action of mandamus because the petition was also one of certiorari. It further ruled that a shipyard like
PHILSECO is a public utility whose capitalization must be sixty percent (60%) Filipino-owned.
Consequently, the right to top granted to KAWASAKI under the Asset Specific Bidding Rules (ASBR)
drafted for the sale of the 87.67% equity of the National Government in PHILSECO is illegal — not only
because it violates the rules on competitive bidding — but more so, because it allows foreign corporations
to own more than 40% equity in the shipyard. It also held that "although the petitioner had the
opportunity to examine the ASBR before it participated in the bidding, it cannot be estopped from
questioning the unconstitutional, illegal and inequitable provisions thereof." Thus, this Court voided the
transfer of the national government's 87.67% share in PHILSECO to Philyard[s] Holdings, Inc., and upheld
the right of JG Summit, as the highest bidder, to take title to the said shares, viz:

WHEREFORE, the instant petition for review on certiorari is GRANTED. The assailed Decision and
Resolution of the Court of Appeals are REVERSED and SET ASIDE. Petitioner is ordered to pay to APT its
bid price of Two Billion Thirty Million Pesos (P2,030,000,000.00), less its bid deposit plus interests upon
the finality of this Decision. In turn, APT is ordered to:

(a) accept the said amount of P2,030,000,000.00 less bid deposit and interests from petitioner;

(b) execute a Stock Purchase Agreement with petitioner;

(c) cause the issuance in favor of petitioner of the certificates of stocks representing 87.6% of
PHILSECO's total capitalization;

(d) return to private respondent PHGI the amount of Two Billion One Hundred Thirty-One Million
Five Hundred Thousand Pesos (P2,131,500,000.00); and

(e) cause the cancellation of the stock certificates issued to PHI.

SO ORDERED.

In separate Motions for Reconsideration, respondents submit[ted] three basic issues for x x x resolution:
(1) Whether PHILSECO is a public utility; (2) Whether under the 1977 JVA, KAWASAKI can exercise its
right of first refusal only up to 40% of the total capitalization of PHILSECO; and (3) Whether the right to
top granted to KAWASAKI violates the principles of competitive bidding. 3 (citations omitted)

In a Resolution dated September 24, 2003, this Court ruled in favor of the respondents. On the first issue,
we held that Philippine Shipyard and Engineering Corporation (PHILSECO) is not a public utility, as by
nature, a shipyard is not a public utility4 and that no law declares a shipyard to be a public utility.5 On the
second issue, we found nothing in the 1977 Joint Venture Agreement (JVA) which prevents Kawasaki
Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) from acquiring more than 40% of PHILSECO’s total
capitalization.6 On the final issue, we held that the right to top granted to KAWASAKI in exchange for its
right of first refusal did not violate the principles of competitive bidding. 7

On October 20, 2003, the petitioner filed a Motion for Reconsideration 8 and a Motion to Elevate This Case
to the Court En Banc.9 Public respondents Committee on Privatization (COP) and Asset Privatization Trust
(APT), and private respondent Philyards Holdings, Inc. (PHILYARDS) filed their Comments on J.G. Summit
Holdings, Inc.’s (JG Summit’s) Motion for Reconsideration and Motion to Elevate This Case to the Court En
Banc on January 29, 2004 and February 3, 2004, respectively.

II. Issues

Based on the foregoing, the relevant issues to resolve to end this litigation are the following:

1. Whether there are sufficient bases to elevate the case at bar to the Court en banc.

2. Whether the motion for reconsideration raises any new matter or cogent reason to warrant a
reconsideration of this Court’s Resolution of September 24, 2003.

Motion to Elevate this Case to the

Court En Banc

The petitioner prays for the elevation of the case to the Court en banc on the following grounds:

1. The main issue of the propriety of the bidding process involved in the present case has been
confused with the policy issue of the supposed fate of the shipping industry which has never been
an issue that is determinative of this case.10

2. The present case may be considered under the Supreme Court Resolution dated February 23,
1984 which included among en banc cases those involving a novel question of law and those where
a doctrine or principle laid down by the Court en banc or in division may be modified or reversed.11

3. There was clear executive interference in the judicial functions of the Court when the Honorable
Jose Isidro Camacho, Secretary of Finance, forwarded to Chief Justice Davide, a memorandum
 dated November 5, 2001, attaching a copy of the Foreign Chambers Report dated October 17,
2001, which matter was placed in the agenda of the Court and noted by it in a formal resolution
dated November 28, 2001.12

Opposing J.G. Summit’s motion to elevate the case en banc, PHILYARDS points out the petitioner’s
inconsistency in previously opposing PHILYARDS’ Motion to Refer the Case to the Court En Banc.
PHILYARDS contends that J.G. Summit should now be estopped from asking that the case be referred to
the Court en banc. PHILYARDS further contends that the Supreme Court en banc is not an appellate court
to which decisions or resolutions of its divisions may be appealed citing Supreme Court Circular No. 2-89
dated February 7, 1989.13 PHILYARDS also alleges that there is no novel question of law involved in the
present case as the assailed Resolution was based on well-settled jurisprudence. Likewise, PHILYARDS
stresses that the Resolution was merely an outcome of the motions for reconsideration filed by it and the
COP and APT and is "consistent with the inherent power of courts to ‘amend and control its process and
orders so as to make them conformable to law and justice.’ (Rule 135, sec. 5)"14 Private respondent
belittles the petitioner’s allegations regarding the change in ponente and the alleged executive
interference as shown by former Secretary of Finance Jose Isidro Camacho’s memorandum dated
November 5, 2001 arguing that these do not justify a referral of the present case to the Court en banc.

In insisting that its Motion to Elevate This Case to the Court En Banc should be granted, J.G. Summit
further argued that: its Opposition to the Office of the Solicitor General’s Motion to Refer is different from
its own Motion to Elevate; different grounds are invoked by the two motions; there was unwarranted
"executive interference"; and the change in ponente is merely noted in asserting that this case should be
decided by the Court en banc.15

We find no merit in petitioner’s contention that the propriety of the bidding process involved in the
present case has been confused with the policy issue of the fate of the shipping industry which, petitioner
maintains, has never been an issue that is determinative of this case. The Court’s Resolution of
September 24, 2003 reveals a clear and definitive ruling on the propriety of the bidding process. In
discussing whether the right to top granted to KAWASAKI in exchange for its right of first refusal violates
the principles of competitive bidding, we made an exhaustive discourse on the rules and principles of
public bidding and whether they were complied with in the case at bar.16 This Court categorically ruled on
the petitioner’s argument that PHILSECO, as a shipyard, is a public utility which should maintain a 60%-
40% Filipino-foreign equity ratio, as it was a pivotal issue. In doing so, we recognized the impact of our
ruling on the shipbuilding industry which was beyond avoidance.17

We reject petitioner’s argument that the present case may be considered under the Supreme Court
Resolution dated February 23, 1984 which included among en banc cases those involving a novel question
of law and those where a doctrine or principle laid down by the court en banc or in division may be
modified or reversed. The case was resolved based on basic principles of the right of first refusal in
commercial law and estoppel in civil law. Contractual obligations arising from rights of first refusal are not
new in this jurisdiction and have been recognized in numerous cases.18 Estoppel is too known a civil law
concept to require an elongated discussion. Fundamental principles on public bidding were likewise used
to resolve the issues raised by the petitioner. To be sure, petitioner leans on the right to top in a public
bidding in arguing that the case at bar involves a novel issue. We are not swayed. The right to top was
merely a condition or a reservation made in the bidding rules which was fully disclosed to all bidding
parties. In Bureau Veritas, represented by Theodor H. Hunermann v. Office of the President, et al., 19 we
dealt with this conditionality, viz:

x x x It must be stressed, as held in the case of A.C. Esguerra & Sons v. Aytona, et al., (L-18751, 28 April
1962, 4 SCRA 1245), that in an "invitation to bid, there is a condition imposed upon the bidders to the
effect that the bidding shall be subject to the right of the government to reject any and all bids subject to
its discretion. In the case at bar, the government has made its choice and unless an unfairness or
injustice is shown, the losing bidders have no cause to complain nor right to dispute that choice. This is a
well-settled doctrine in this jurisdiction and elsewhere."

The discretion to accept or reject a bid and award contracts is vested in the Government agencies
entrusted with that function. The discretion given to the authorities on this matter is of such wide latitude
that the Courts will not interfere therewith, unless it is apparent that it is used as a shield to a fraudulent
award (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x x The exercise of this discretion is a policy decision
that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation. This task can best
be discharged by the Government agencies concerned, not by the Courts. The role of the Courts is to
ascertain whether a branch or instrumentality of the Government has transgressed its constitutional
boundaries. But the Courts will not interfere with executive or legislative discretion exercised within those
boundaries. Otherwise, it strays into the realm of policy decision-making.

It is only upon a clear showing of grave abuse of discretion that the Courts will set aside the award of a
contract made by a government entity. Grave abuse of discretion implies a capricious, arbitrary and
whimsical exercise of power (Filinvest Credit Corp. v. Intermediate Appellate Court, No. 65935, 30
September 1988, 166 SCRA 155). The abuse of discretion must be so patent and gross as to amount to
an evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, as to act at all in
contemplation of law, where the power is exercised in an arbitrary and despotic manner by reason of
passion or hostility (Litton Mills, Inc. v. Galleon Trader, Inc., et al[.], L-40867, 26 July 1988, 163 SCRA
489).

The facts in this case do not indicate any such grave abuse of discretion on the part of public respondents
when they awarded the CISS contract to Respondent SGS. In the "Invitation to Prequalify and Bid"
(Annex "C," supra), the CISS Committee made an express reservation of the right of the Government to
"reject any or all bids or any part thereof or waive any defects contained thereon and accept an offer most
advantageous to the Government." It is a well-settled rule that where such reservation is made in an
Invitation to Bid, the highest or lowest bidder, as the case may be, is not entitled to an award as a matter
of right (C & C Commercial Corp. v. Menor, L-28360, 27 January 1983, 120 SCRA 112). Even the lowest
Bid or any Bid may be rejected or, in the exercise of sound discretion, the award may be made to another
than the lowest bidder (A.C. Esguerra & Sons v. Aytona, supra, citing 43 Am. Jur., 788). (emphases
supplied)1awphi1.nét

Like the condition in the Bureau Veritas case, the right to top was a condition imposed by the government
in the bidding rules which was made known to all parties. It was a condition imposed on all bidders
equally, based on the APT’s exercise of its discretion in deciding on how best to privatize the
government’s shares in PHILSECO. It was not a whimsical or arbitrary condition plucked from the ether
and inserted in the bidding rules but a condition which the APT approved as the best way the government
could comply with its contractual obligations to KAWASAKI under the JVA and its mandate of getting the
most advantageous deal for the government. The right to top had its history in the mutual right of first
refusal in the JVA and was reached by agreement of the government and KAWASAKI.

Further, there is no "executive interference" in the functions of this Court by the mere filing of a
memorandum by Secretary of Finance Jose Isidro Camacho. The memorandum was merely "noted" to
acknowledge its filing. It had no further legal significance. Notably too, the assailed Resolution dated
September 24, 2003 was decided unanimously by the Special First Division in favor of the respondents.

Again, we emphasize that a decision or resolution of a Division is that of the Supreme Court 20 and the
Court en banc is not an appellate court to which decisions or resolutions of a Division may be appealed. 21

For all the foregoing reasons, we find no basis to elevate this case to the Court en banc.

Motion for Reconsideration

Three principal arguments were raised in the petitioner’s Motion for Reconsideration. First, that a fair
resolution of the case should be based on contract law, not on policy considerations; the contracts do not
authorize the right to top to be derived from the right of first refusal. 22 Second, that neither the right of
first refusal nor the right to top can be legally exercised by the consortium which is not the proper party
granted such right under either the JVA or the Asset Specific Bidding Rules (ASBR).23 Third, that the
maintenance of the 60%-40% relationship between the National Investment and Development
Corporation (NIDC) and KAWASAKI arises from contract and from the Constitution because PHILSECO is a
landholding corporation and need not be a public utility to be bound by the 60%-40% constitutional
limitation.24

On the other hand, private respondent PHILYARDS asserts that J.G. Summit has not been able to show
compelling reasons to warrant a reconsideration of the Decision of the Court. 25 PHILYARDS denies that the
Decision is based mainly on policy considerations and points out that it is premised on principles
governing obligations and contracts and corporate law such as the rule requiring respect for contractual
stipulations, upholding rights of first refusal, and recognizing the assignable nature of contracts rights. 26
Also, the ruling that shipyards are not public utilities relies on established case law and fundamental rules
of statutory construction. PHILYARDS stresses that KAWASAKI’s right of first refusal or even the right to
top is not limited to the 40% equity of the latter.27 On the landholding issue raised by J.G. Summit,
PHILYARDS emphasizes that this is a non-issue and even involves a question of fact. Even assuming that
this Court can take cognizance of such question of fact even without the benefit of a trial, PHILYARDS
opines that landholding by PHILSECO at the time of the bidding is irrelevant because what is essential is
that ultimately a qualified entity would eventually hold PHILSECO’s real estate properties.28 Further, given
the assignable nature of the right of first refusal, any applicable nationality restrictions, including
landholding limitations, would not affect the right of first refusal itself, but only the manner of its
exercise.29 Also, PHILYARDS argues that if this Court takes cognizance of J.G. Summit’s allegations of fact
regarding PHILSECO’s landholding, it must also recognize PHILYARDS’ assertions that PHILSECO’s
landholdings were sold to another corporation.30 As regards the right of first refusal, private respondent
explains that KAWASAKI’s reduced shareholdings (from 40% to 2.59%) did not translate to a deprivation
or loss of its contractually granted right of first refusal. 31 Also, the bidding was valid because PHILYARDS
exercised the right to top and it was of no moment that losing bidders later joined PHILYARDS in raising
the purchase price.32

In cadence with the private respondent PHILYARDS, public respondents COP and APT contend:

1. The conversion of the right of first refusal into a right to top by 5% does not violate any
provision in the JVA between NIDC and KAWASAKI.

2. PHILSECO is not a public utility and therefore not governed by the constitutional restriction on
foreign ownership.

3. The petitioner is legally estopped from assailing the validity of the proceedings of the public
bidding as it voluntarily submitted itself to the terms of the ASBR which included the provision on
the right to top.

4. The right to top was exercised by PHILYARDS as the nominee of KAWASAKI and the fact that
PHILYARDS formed a consortium to raise the required amount to exercise the right to top the
highest bid by 5% does not violate the JVA or the ASBR.

5. The 60%-40% Filipino-foreign constitutional requirement for the acquisition of lands does not
apply to PHILSECO because as admitted by petitioner itself, PHILSECO no longer owns real
property.

6. Petitioner’s motion to elevate the case to the Court en banc is baseless and would only delay the
termination of this case.33

In a Consolidated Comment dated March 8, 2004, J.G. Summit countered the arguments of the public and
private respondents in this wise:

1. The award by the APT of 87.67% shares of PHILSECO to PHILYARDS with losing bidders through
the exercise of a right to top, which is contrary to law and the constitution is null and void for
being violative of substantive due process and the abuse of right provision in the Civil Code.

a. The bidders[’] right to top was actually exercised by losing bidders.

b. The right to top or the right of first refusal cannot co-exist with a genuine competitive
bidding.

c. The benefits derived from the right to top were unwarranted.

2. The landholding issue has been a legitimate issue since the start of this case but is shamelessly
ignored by the respondents.

a. The landholding issue is not a non-issue.

b. The landholding issue does not pose questions of fact.

c. That PHILSECO owned land at the time that the right of first refusal was agreed upon and
at the time of the bidding are most relevant.

d. Whether a shipyard is a public utility is not the core issue in this case.
 3. Fraud and bad faith attend the alleged conversion of an inexistent right of first refusal to the
right to top.

a. The history behind the birth of the right to top shows fraud and bad faith.

b. The right of first refusal was, indeed, "effectively useless."

4. Petitioner is not legally estopped to challenge the right to top in this case.

a. Estoppel is unavailing as it would stamp validity to an act that is prohibited by law or

against public policy.

b. Deception was patent; the right to top was an attractive nuisance.

c. The 10% bid deposit was placed in escrow.

J.G. Summit’s insistence that the right to top cannot be sourced from the right of first refusal is not new
and we have already ruled on the issue in our Resolution of September 24, 2003. We upheld the mutual
right of first refusal in the JVA.34 We also ruled that nothing in the JVA prevents KAWASAKI from acquiring
more than 40% of PHILSECO’s total capitalization. 35 Likewise, nothing in the JVA or ASBR bars the
conversion of the right of first refusal to the right to top. In sum, nothing new and of significance in the
petitioner’s pleading warrants a reconsideration of our ruling.

Likewise, we already disposed of the argument that neither the right of first refusal nor the right to top
can legally be exercised by the consortium which is not the proper party granted such right under either
the JVA or the ASBR. Thus, we held:

The fact that the losing bidder, Keppel Consortium (composed of Keppel, SM Group, Insular Life
Assurance, Mitsui and ICTSI), has joined PHILYARDS in the latter's effort to raise P2.131 billion necessary
in exercising the right to top is not contrary to law, public policy or public morals. There is nothing in the
ASBR that bars the losing bidders from joining either the winning bidder (should the right to top is not
exercised) or KAWASAKI/PHI (should it exercise its right to top as it did), to raise the purchase price. The
petitioner did not allege, nor was it shown by competent evidence, that the participation of the losing
bidders in the public bidding was done with fraudulent intent. Absent any proof of fraud, the formation by
[PHILYARDS] of a consortium is legitimate in a free enterprise system. The appellate court is thus correct
in holding the petitioner estopped from questioning the validity of the transfer of the National
Government's shares in PHILSECO to respondent.36

Further, we see no inherent illegality on PHILYARDS’ act in seeking funding from parties who were losing
bidders. This is a purely commercial decision over which the State should not interfere absent any legal
infirmity. It is emphasized that the case at bar involves the disposition of shares in a corporation which
the government sought to privatize. As such, the persons with whom PHILYARDS desired to enter into
business with in order to raise funds to purchase the shares are basically its business. This is in contrast
to a case involving a contract for the operation of or construction of a government infrastructure where
the identity of the buyer/bidder or financier constitutes an important consideration. In such cases, the
government would have to take utmost precaution to protect public interest by ensuring that the parties
with which it is contracting have the ability to satisfactorily construct or operate the infrastructure.

On the landholding issue, J.G. Summit submits that since PHILSECO is a landholding company, KAWASAKI
could exercise its right of first refusal only up to 40% of the shares of PHILSECO due to the constitutional
prohibition on landholding by corporations with more than 40% foreign-owned equity. It further argues
that since KAWASAKI already held at least 40% equity in PHILSECO, the right of first refusal was inutile
and as such, could not subsequently be converted into the right to top. 37 Petitioner also asserts that, at
present, PHILSECO continues to violate the constitutional provision on landholdings as its shares are more
than 40% foreign-owned.38 PHILYARDS admits that it may have previously held land but had already
divested such landholdings.39 It contends, however, that even if PHILSECO owned land, this would not
affect the right of first refusal but only the exercise thereof. If the land is retained, the right of first
refusal, being a property right, could be assigned to a qualified party. In the alternative, the land could be
divested before the exercise of the right of first refusal. In the case at bar, respondents assert that since
the right of first refusal was validly converted into a right to top, which was exercised not by KAWASAKI,
but by PHILYARDS which is a Filipino corporation (i.e., 60% of its shares are owned by Filipinos), then
there is no violation of the Constitution. 40 At first, it would seem that questions of fact beyond cognizance
by this Court were involved in the issue. However, the records show that PHILYARDS admits it had owned
land up until the time of the bidding.41 Hence, the only issue is whether KAWASAKI had a valid right of
first refusal over PHILSECO shares under the JVA considering that PHILSECO owned land until the time of
the bidding and KAWASAKI already held 40% of PHILSECO’s equity.

We uphold the validity of the mutual rights of first refusal under the JVA between KAWASAKI and NIDC.
First of all, the right of first refusal is a property right of PHILSECO shareholders, KAWASAKI and NIDC,
under the terms of their JVA. This right allows them to purchase the shares of their co-shareholder before
they are offered to a third party. The agreement of co-shareholders to mutually grant this right to each
other, by itself, does not constitute a violation of the provisions of the Constitution limiting land ownership
to Filipinos and Filipino corporations. As PHILYARDS correctly puts it, if PHILSECO still owns land, the right
of first refusal can be validly assigned to a qualified Filipino entity in order to maintain the 60%-40%
ratio. This transfer, by itself, does not amount to a violation of the Anti-Dummy Laws, absent proof of any
fraudulent intent. The transfer could be made either to a nominee or such other party which the holder of
the right of first refusal feels it can comfortably do business with. Alternatively, PHILSECO may divest of
its landholdings, in which case KAWASAKI, in exercising its right of first refusal, can exceed 40% of
PHILSECO’s equity. In fact, it can even be said that if the foreign shareholdings of a landholding
corporation exceeds 40%, it is not the foreign stockholders’ ownership of the shares which is adversely
affected but the capacity of the corporation to own land – that is, the corporation becomes disqualified to
own land. This finds support under the basic corporate law principle that the corporation and its
stockholders are separate juridical entities. In this vein, the right of first refusal over shares pertains to
the shareholders whereas the capacity to own land pertains to the corporation. Hence, the fact that
PHILSECO owns land cannot deprive stockholders of their right of first refusal. No law disqualifies a person
from purchasing shares in a landholding corporation even if the latter will exceed the allowed foreign
equity, what the law disqualifies is the corporation from owning land. This is the clear import of the
following provisions in the Constitution:

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception of agricultural lands, all other natural resources
shall not be alienated. The exploration, development, and utilization of natural resources shall be under
the full control and supervision of the State. The State may directly undertake such activities, or it may
enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such
agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-
five years, and under such terms and conditions as may be provided by law. In cases of water rights for
irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial
use may be the measure and limit of the grant.

xxx xxx xxx

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed
except to individuals, corporations, or associations qualified to acquire or hold lands of the public
domain.42 (emphases supplied)

The petitioner further argues that "an option to buy land is void in itself (Philippine Banking Corporation v.
Lui She, 21 SCRA 52 [1967]). The right of first refusal granted to KAWASAKI, a Japanese corporation, is
similarly void. Hence, the right to top, sourced from the right of first refusal, is also void." 43 Contrary to
the contention of petitioner, the case of Lui She did not that say "an option to buy land is void in itself,"
for we ruled as follows:

x x x To be sure, a lease to an alien for a reasonable period is valid. So is an option giving an alien the
right to buy real property on condition that he is granted Philippine citizenship. As this Court said in
Krivenko vs. Register of Deeds:

[A]liens are not completely excluded by the Constitution from the use of lands for residential purposes.
Since their residence in the Philippines is temporary, they may be granted temporary rights such as a
lease contract which is not forbidden by the Constitution. Should they desire to remain here forever and
share our fortunes and misfortunes, Filipino citizenship is not impossible to acquire.

But if an alien is given not only a lease of, but also an option to buy, a piece of land, by virtue of which
the Filipino owner cannot sell or otherwise dispose of his property, this to last for 50 years, then it
becomes clear that the arrangement is a virtual transfer of ownership whereby the owner divests himself
in stages not only of the right to enjoy the land (jus possidendi, jus utendi, jus fruendi and jus abutendi)
but also of the right to dispose of it (jus disponendi) — rights the sum total of which make up ownership.
It is just as if today the possession is transferred, tomorrow, the use, the next day, the disposition, and so
on, until ultimately all the rights of which ownership is made up are consolidated in an alien. And yet this
is just exactly what the parties in this case did within this pace of one year, with the result that Justina
Santos'[s] ownership of her property was reduced to a hollow concept. If this can be done, then the
Constitutional ban against alien landholding in the Philippines, as announced in Krivenko vs. Register of
Deeds, is indeed in grave peril.44 (emphases supplied; Citations omitted)

In Lui She, the option to buy was invalidated because it amounted to a virtual transfer of ownership as
the owner could not sell or dispose of his properties. The contract in Lui She prohibited the owner of the
land from selling, donating, mortgaging, or encumbering the property during the 50-year period of the
option to buy. This is not so in the case at bar where the mutual right of first refusal in favor of NIDC and
KAWASAKI does not amount to a virtual transfer of land to a non-Filipino. In fact, the case at bar involves
a right of first refusal over shares of stock while the Lui She case involves an option to buy the land itself.
As discussed earlier, there is a distinction between the shareholder’s ownership of shares and the
corporation’s ownership of land arising from the separate juridical personalities of the corporation and its
shareholders.

We note that in its Motion for Reconsideration, J.G. Summit alleges that PHILSECO continues to violate
the Constitution as its foreign equity is above 40% and yet owns long-term leasehold rights which are real
rights.45 It cites Article 415 of the Civil Code which includes in the definition of immovable property,
"contracts for public works, and servitudes and other real rights over immovable property." 46 Any existing
landholding, however, is denied by PHILYARDS citing its recent financial statements. 47 First, these are
questions of fact, the veracity of which would require introduction of evidence. The Court needs to
validate these factual allegations based on competent and reliable evidence. As such, the Court cannot
resolve the questions they pose. Second, J.G. Summit misreads the provisions of the Constitution cited in
its own pleadings, to wit:

29.2 Petitioner has consistently pointed out in the past that private respondent is not a 60%-40%
corporation, and this violates the Constitution x x x The violation continues to this day because under the
law, it continues to own real property…

xxx xxx xxx

32. To review the constitutional provisions involved, Section 14, Article XIV of the 1973 Constitution (the
JVA was signed in 1977), provided:

"Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to
individuals, corporations, or associations qualified to acquire or hold lands of the public domain."

32.1 This provision is the same as Section 7, Article XII of the 1987 Constitution.

32.2 Under the Public Land Act, corporations qualified to acquire or hold lands of the public domain are
corporations at least 60% of which is owned by Filipino citizens (Sec. 22, Commonwealth Act 141, as
amended). (emphases supplied)

As correctly observed by the public respondents, the prohibition in the Constitution applies only to
ownership of land.48 It does not extend to immovable or real property as defined under Article 415 of the
Civil Code. Otherwise, we would have a strange situation where the ownership of immovable property
such as trees, plants and growing fruit attached to the land49 would be limited to Filipinos and Filipino
corporations only.

III.

WHEREFORE, in view of the foregoing, the petitioner’s Motion for Reconsideration is DENIED WITH
FINALITY and the decision appealed from is AFFIRMED. The Motion to Elevate This Case to the Court En
Banc is likewise DENIED for lack of merit.

G.R. No. 137326               August 25, 2003

ROSARIO TEXTILE MILLS, INC., CORPORATE OFFICERS AND BOARD OF DIRECTORS OF ROSARIO
TEXTILE MILLS, INC., and EDILBERTO YUJUICO, Petitioners,
vs.
COURT OF APPEALS, HONORABLE LUIS R. TONGCO, Presiding Judge, Branch 155, Regional Trial Court,
Pasig City, PETER PAN CORP. and RMC GARMENTS, INC., Respondents.

DECISION

CARPIO, J.:

The Case

Before us is a petition for review on certiorari1 assailing the Decision2 of the Court of Appeals dated 31
July 1998, as well as the Resolution dated 22 January 1999 denying the motion for reconsideration in CA-
G.R. SP No. 46825. The Court of Appeals dismissed the special civil action for certiorari questioning the
Orders3 dated 23 May 1997 and 4 December 1997 of the Regional Trial Court of Pasig City, Branch 155
("trial court") in Civil Case No. 54163.

The Antecedents

On 1 August 1984, RMC Garments, Inc. ("RMC") leased from Peter Pan Corporation ("Peter Pan") its
properties ("Leased Premises") located on Ortigas Avenue Extension, Pasig, Metro Manila. The Leased
Premises were covered by Transfer Certificates of Title Nos. 144376 (7060), 144377 (7061), and 144460
(7062) issued in the name of Peter Pan by the Rizal Register of Deeds. RMC, a garments manufacturing
company, installed machinery on the Leased Premises and brought in furniture, office equipment and
supplies.

On 20 December 1986, Rosario Textile Mills Corp. ("Rosario Textile") advised RMC in a letter that it had
acquired the Leased Premises, including the chattels found inside, from GBC Corporation ("GBC") through
a Deed of Assignment of Rights and Interests. GBC in turn, bought the Leased Premises at a foreclosure
sale by the Development Bank of the Philippines ("DBP") on 15 August 1983. Rosario Textile demanded
that RMC vacate the Leased Premises within 10 days and warned that it would avail of its "rights of
ownership either judicially or extra-judicially" if RMC failed to do so. RMC replied that it neither mortgaged
to DBP nor sold to Rosario Textile the Leased Premises. RMC explained that Rosario Textile may have
mistaken it for Riverside Mills Corporation, another garments corporation whose properties DBP had
foreclosed.

Despite this letter, Rosario Textile proceeded to exercise its "right of self-help." Representatives of Rosario
Textile entered the Leased Premises in the evening of 2 January 1987 and cut off RMC’s power supply and
communication lines. They barricaded the road leading to the Leased Premises, padlocked the entrances
and posted guards to prevent entry. Subsequently, Rosario Textile removed the machinery, equipment,
garments and other chattels found inside the Leased Premises.

RMC and Peter Pan filed an injunction suit in the trial court to remove all the obstructions and the grant of
a right of way to the Leased Premises. Rosario Textile, DBP and the Philippine National Bank ("PNB")
opposed the injunction on the ground that RMC had not shown a clear right in esse that the court should
protect.

On 20 January 1987, the trial court issued an Order4 granting RMC access to the Leased Premises upon
posting a P50,000 bond. Upon entry, RMC representatives discovered the removal of its chattels from the
Leased Premises. Consequently, RMC filed a motion for the issuance of a writ of preliminary mandatory
injunction for the return of the missing chattels. Rosario Textile opposed the motion claiming ownership
over the building and its contents.

The trial court granted RMC’s motion in the Order dated 23 February 1987, the dispositive portion of
which reads:

Wherefore, plaintiffs’ said "Very Urgent Motion to Return Plaintiffs’ Garment/Sewing Machines", dated
February 3, 1987 is hereby granted, and defendant Rosario Textile Mills Corporation, its agents and all
persons acting on its behalf are hereby directed to return forthwith all the sewing machines taken and
removed by it from plaintiffs’ premises, particularly those enumerated in Annex "A" of plaintiffs’ said very
urgent motion. (Emphasis supplied)
 x x x.5

Rosario Textile assailed the Order in a special civil action for certiorari with the Court of Appeals. The
Court of Appeals upheld the validity of the Order in a Decision dated 30 June 1987. The Supreme Court
affirmed the Decision, which attained finality with the entry of judgment on 17 August 1988.

On 2 February 1989, the trial court issued an Order6 requiring Rosario Textile to comply with the 20
January 1987 and 23 February 1987 Orders. The trial court reiterated its orders directing "defendants" to
allow entry to the Leased Premises and to return the various machineries they took. The Sheriff’s Report
stated that copy of the Order was served on Rosario Textile’s counsel in the presence of its Vice-President
for Operations/Personnel, Mr. Antonio Angco. However, Rosario Textile did not comply. In 1993 and 1994,
RMC filed two motions to cite Rosario Textile’s board of directors and officers in contempt of court for
refusing to comply with the trial court’s final order. Rosario Textile’s board of directors and officers
opposed the motion claiming they had no knowledge of the order requiring them to return the sewing
machines since their counsel did not inform them of the order. On 8 April 1996, the trial court issued
another Order7 requiring the responsible officers8 of Rosario Textile ("petitioners’ officers") to return the
sewing machines within 5 days from notice under pain of contempt. Petitioners’ officers moved for
reconsideration, which the trial court denied on 30 August 1996.

Petitioners filed a Manifestation and Compliance on 7 January 1997 stating that they could no longer
return the sewing machines since these were gutted by the fire that razed Rosario Textile’s warehouse 6
years before on 22 August 1991. Petitioners attached the fire marshal’s report stating that the fire was
accidental.

On 23 May 1997, the trial court issued the Order ruling that the alleged destruction of the sewing
machines did not extinguish petitioners’ obligation to return these machines. The trial court held that
petitioners were already in default at the time the fire allegedly destroyed the machines. The dispositive
portion of the Order reads:

WHEREFORE, in view of the foregoing, and pursuant to Administrative Circular No. 22-95, Re:
Amendment of Sections 1 and 6, Rule 71 of the Rules of Court, the responsible officers of defendant
namely, Edilberto V. Yujuico, Chairman of the Board, Antonio E. Angco, VP-Administration, Romualdo
Dizon, Director, Ricardo S.D. Ledesma, Director, and Elpidio C. Ocampo, Director, are hereby ordered to
make complete restitution to the plaintiff of the value of the sewing machines they failed to return, within
ten (10) days from receipt of a copy of this Order.9 (Emphasis supplied)

The trial court denied petitioners’ motion for reconsideration in the Order dated 4 December 1997. 10

Petitioners assailed the Orders dated 23 May and 4 December 1997 in a petition for certiorari with the
Court of Appeals. Petitioners contended that the trial court gravely abused its discretion when it ordered
petitioners to make a complete restitution of the value of the sewing machines pursuant to Supreme
Court Administrative Circular No. 22-95. They also claimed that the trial court gravely abused its
discretion in denying the motion for reconsideration based on the doctrine of piercing the veil of corporate
fiction and on the theory of special capacities.

The Court of Appeals dismissed the petition for lack of merit in the assailed Decision dated 31 July 1998.
The appellate court denied the motion to reconsider the same in the Resolution dated 22 January 1999.

Hence, the instant petition.

The Ruling of the Court of Appeals

The Court of Appeals held that a violation of a writ of injunction subjects a party to a citation for civil or
criminal contempt, punishable by a fine or imprisonment. Courts may punish for contempt officers and
agents of corporations for breach of an injunction regardless of whether the injunction is directed against
them or the corporation only. The trial court did not deny petitioners’ officers due process even though
they were not impleaded as parties in the main case. The trial court gave petitioners sufficient opportunity
to be heard and to present their side in the contempt proceedings. The Court of Appeals explained that
since petitioners violated the writ of injunction issued for the benefit of a private party, a civil contempt
arose, which only requires a quantum of evidence higher than a mere preponderance. Simply put, the law
does not require proof beyond reasonable doubt in civil contempt.
The Court of Appeals also held that the trial court’s order of complete restitution of the value of the
sewing machines was not a prejudgment of the case on the issue of ownership. The Court of Appeals
explained that the trial court did not order restitution of the value of the sewing machines as a declaration
of ownership in RMC’s favor. Rather, the trial court used the value only as a measure of the amount of
penalty for the violation of the injunction when restitution of the machines became impossible.

The Issues

Petitioners contend that:

a. THE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN LAW BY SUBSTITUTING ITS OWN
INTERPRETATION OF THE DECISION OF THE LOWER COURT THAT "THE VALUE OF THE SEWING
MACHINES WAS USED BY THE TRIAL COURT ONLY AS A MEASURE OF THE AMOUNT OF PENALTY
FOR THE VIOLATION OF THE INJUNCTION IN VIEW OF THE ALLEGATION OF PETITIONERS THAT
RESTITUTION IS NO LONGER POSSIBLE;"

b. THE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN LAW WHEN IT UPHELD AS VALID
THE ORDER OF THE LOWER COURT ORDERING THE CORPORATE OFFICERS OF PETITIONER
ROSARIO TEXTILE TO MAKE COMPLETE RESTITUTION TO RMC OF THE VALUE OF THE SEWING
MACHINES;

c. THE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN LAW WHEN IT UPHELD THE DENIAL
OF THE MOTION FOR RECONSIDERATION OF ITS ORDER DATED 23 MAY 1997 FILED BY
PETITIONERS BASED ON THE DOCTRINE OF PIERCING THE CORPORATE VEIL AND ON THE
THEORY OF SPECIAL CAPACITIES;

d. THE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN LAW WHEN IT RULED THAT THE
CORPORATE OFFICERS OF ROSARIO TEXTILE WERE VALIDLY DECLARED IN CONTEMPT OF COURT.

Two principal issues arise from petitioners’ contentions: (1) whether the order finding petitioners in
contempt of court is valid; and (2) whether complete restitution of the value of the sewing machines by
petitioners in their personal capacities is proper.

The Court’s Ruling

The petition is bereft of merit.

Whether the Order Finding Petitioners Guilty

of Indirect Contempt is Valid
No Denial of Due Process

Petitioners’ officers lament their citation for indirect contempt on the ground that the trial court did not
give them notice of the injunction order they supposedly violated. Petitioners claim that the trial court
merely presumed their knowledge of the injunction order from its receipt by Rosario Textile’s former
counsel.

Whether petitioners’ officers had notice or knowledge of the injunction order is patently a question of fact
beyond the pale of Rule 45 of the Rules of Court, which mandates that only questions of law be raised in
the petition. In a petition for review on certiorari, the Court’s jurisdiction is limited to reviewing errors of
law that the lower courts may have committed.11 Moreover, prevailing jurisprudence uniformly holds that
findings of fact of the trial court, particularly when affirmed by the Court of Appeals, are generally binding
on this Court. Hence, the trial court’s factual finding affirmed by the Court of Appeals that petitioners had
knowledge of the injunction order is binding on us. Indeed, the Court of Appeals had sufficiently disposed
of this issue as follows:

We find that the officers of the petitioner corporation cannot credibly disclaim knowledge of the order
requiring the corporation to return the sewing machines. They claim that their lawyer never informed
them of the said order. The petitioners do not dispute the allegation made by the private respondent that
the president of the petitioner corporation and that of the respondent corporation met in the presence of
then Department of Trade and Industry Secretary, Jose Concepcion, for the amicable settlement of the
controversy and that the president of the private respondent corporation asked for the return of the
sewing machines but the president of the petitioner corporation refused. The petitioners knew or should
have known that their personnel took possession of the chattels inside the private respondent’s factory
and transferred them to the petitioners’ warehouse and that the private respondent demanded the return
of the subject machines. The sheriff’s Report dated February 22, 1989 states that the legal counsel for the
petitioner corporation and the Vice-President for operations and personnel were present when he tried to
enforce the order of the court against the petitioner but he was prevented by its security officers. It is not
believable that the officers of the corporation were unaware of the sheriff’s attempts to enforce the final
order against the corporation ordering it to release, among others, more than 120 units of sewing
machines (pp. 172-174, Rollo, CA GR SP No. 11445) from its warehouse. At the very least, the officers of
the petitioner corporation had actual notice of the order.

We likewise reject the claim of petitioners’ officers that the trial court did not afford them sufficient notice
and opportunity to be heard in the contempt proceedings. To comply with the procedural requirements of
indirect contempt under Rule 71 of the Rules of Court, there must be (1) a complaint in writing which may
either be a motion for contempt filed by a party or an order issued by the court requiring a person to
appear and explain his conduct, and (2) an opportunity for the person charged to appear and explain his
conduct.12

The trial court complied with these requirements in this case. When RMC filed motions for contempt, the
trial court gave petitioners’ officers an opportunity to explain their side. Petitioners’ officers filed
oppositions to the motions for contempt and even filed motions to reconsider the orders of the trial court
requiring them to return the sewing machines.

Distinction Between Civil and Criminal Contempt

Equally devoid of merit is petitioners’ argument that the Supreme Court treats contempt proceedings
regardless of whether these are civil or criminal as partaking of the nature of a criminal proceeding. It is
not correct to say that in contempt proceedings a court should observe all the due process requirements
attending a criminal proceeding and that proof beyond reasonable doubt should support a finding of
contempt of court.

In Cagayan Valley Enterprises, Inc. v. Court of Appeals,13 the Court held:

xxx True it is that generally, contempt proceedings are characterized as criminal in nature, but the more
accurate juridical concept is that contempt proceedings may actually be either civil or criminal, even if the
distinction between one and the other may be so thin as to be almost imperceptible. But it does exist in
law. It is criminal when the purpose is to vindicate the authority of the court and protect its outraged
dignity. It is civil when there is failure to do something ordered by a court to be done for the benefit of a
party (3 Moran Rules of Court, pp. 343-344, 1970 ed.; see also Perkins vs. Director of Prisons, 58 Phil.
272; Harden vs. Director of Prisons, 81 Phil. 741.)

Thus, the Court held in Remman Enterprises, Inc. v. Court of Appeals14 that:

In general, criminal contempt proceedings should be conducted in accordance with the principles and
rules applicable to criminal cases, in so far as such procedure is consistent with the summary nature of
contempt proceedings. So it has been held that the strict rules that govern criminal prosecutions apply to
a prosecution for criminal contempt, that the accused is to be afforded many of the protections provided
in regular criminal cases, and that proceedings under statutes governing them are to be strictly
construed. However, criminal proceedings are not required to take any particular form so long as the
substantial rights of the accused are preserved.

Civil contempt proceedings, on the other hand, are generally held to be remedial and civil in nature; that
is, for the enforcement of some duty, and essentially a remedy resorted to, to preserve and enforce the
rights of a private party to an action and to compel obedience to a judgment or decree intended to benefit
such a party litigant. The rules of procedure governing criminal contempt proceedings, or criminal
prosecutions, ordinarily are inapplicable to civil contempt proceedings. (Emphasis supplied)

The contempt involved in this case is civil since it arose from petitioners’ act of defying the trial court’s
writ of preliminary injunction, which clearly ordered petitioners’ officers to return all the sewing machines
taken from the Leased Premises.
Whether Restitution of the Value of the Sewing
Machines by Petitioners in their Personal
Capacities is Proper

Petitioners contend that the Court of Appeals went beyond the issues properly cognizable in a special civil
action for certiorari in substituting its own justification for the validity of the trial court’s orders. This
contention deserves scant consideration. Such a narrow interpretation will deprive appellate courts of the
power to sustain orders of trial courts that are correct in the result even though the appellate courts may
have different reasons for sustaining the orders. In any event, in the present case the trial court correctly
cited Supreme Court Administrative Circular No. 22-95 in requiring restitution, which the appellate court
amplified as the basis for determining the amount of the restitution.

Rosario Textile also contends that the Court of Appeals failed to address directly the issue on whether the
trial court’s reliance on the doctrine of piercing the veil of corporate fiction is proper. Rosario Textile also
asserts that the appellate court failed to address the question whether the orders constituted a partial
judgment of the case. Petitioners’ officers argue that there is no basis in piercing the veil of corporate
fiction to make them personally liable for the value of the sewing machines. They point out that no
fraudulent scheme exists in this case and the corporation is fully capable of satisfying the obligation. They
further argue that the orders in effect made a finding that RMC is the owner of the sewing machines which
issue must still be resolved in the main case.

These arguments do not persuade us.

RMC initiated this action way back in 1986 or more than 17 years ago today. The trial court issued in
1987 the first of several orders to the "agents and persons acting in behalf of Rosario Textile" to return
the sewing machines in 1987. The Court of Appeals and the Supreme Court sustained this order more
than 15 years ago in 1988. Still, RMC’s efforts to recover possession of the sewing machines proved futile.
RMC then sought to cite petitioners in contempt of court in 1993 and 1994 since non-compliance with the
trial court’s orders was in utter disregard of the court’s authority.

Petitioners continued to defy the trial court’s orders to return the sewing machines until they manifested
in 1997 that a fire destroyed the sewing machines in 1991. The trial court then directed the petitioners to
restitute the monetary value of the destroyed sewing machines in their personal capacities on the ground
that petitioners were in delay at the time of the destruction of the machines. The trial court justified its
order by correctly invoking Supreme Court Administrative Circular No. 22-95. In denying petitioners’
motion for reconsideration, the trial court in addition applied the doctrine of piercing the veil of corporate
fiction and the theory on personal capacities.

An injunction duly issued must be obeyed, however erroneous the action of the court may be, until a
higher court overrules such decision.15 As affirmed by the Court of Appeals and this Court, the trial court
properly issued the injunction order directing petitioners to return the sewing machines.

Supreme Court Administrative Circular No. 22-95 which took effect on 16 November 1995 amended
Sections 1 and 6, Rule 71 of the Rules of Court16 which provide the penalties for direct and indirect
contempt committed against superior and inferior courts. Section 6 of Rule 71 as amended reads:

SECTION 6. – Punishment if found guilty. – If the accused is thereupon adjudged guilty of contempt
committed against a superior court or judge, he may be fined not exceeding thirty thousand pesos or
imprisoned not more than six (6) months, or both; if adjudged guilty of contempt committed against an
inferior court or judge, he may be fined not exceeding five thousand pesos or imprisoned not more than
one (1) month, or both, and if the contempt consists in the violation of an injunction, he may also be
ordered to make complete restitution to the party injured by such violation. (Emphasis supplied)

Under the amendment, in case of violation of writs of injunction or restraining orders, the rule now
provides that the court may order complete restitution through the return of the property or the payment
of the amount alleged and proved.17 As aptly pointed out by RMC, restitution is defined as the "act of
making good or giving equivalent for any loss, damage or injury; and indemnification." 18 Petitioners are
not excused from complying with the writ of injunction on the ground a fire destroyed the machines,
considering that the fire occured years after the court had ordered petitioners to return the
machines.1âwphi1

In Quinio v. Court of Appeals,19 Toyota Bel Air, Inc. similarly failed to comply repeatedly with a final order
of the trial court to return a vehicle to the adverse party. The trial court then directed the corporation’s
President and General Manager to comply. For their continued defiance, the Court affirmed the citation for
contempt and ordered Toyota Bel Air, Inc.’s president, general manager and counsel incarcerated until
they return the vehicle.

Unlike in the Quinio case, there is nothing more to return in this case because of the destruction of the
sewing machines. However, just like in Quinio, petitioners’ officers must be held personally liable for the
restitution of the money equivalent of the lost sewing machines. Petitioners have only themselves to
blame for refusing to return the sewing machines while still able to do so. Verily, the trial court’s orders
were merely an offshoot of the contempt proceedings and not a judgment on the merits of the case. As
correctly pointed out by the Court of Appeals, the trial court ordered the restitution of the value of the
sewing machines not as a declaration of ownership in RMC’s favor but pursuant to Supreme Court
Administrative Circular No. 22-95. Not only did Rosario Textile deprive RMC of the sewing machines.
Petitioners blatantly disregarded the trial court’s orders to return the same despite their ability to comply
with the orders. Petitioners have not shown any justifiable reason why they have repeatedly ignored the
trial court’s orders.

We affirm the complete restitution of the value of the sewing machines to RMC by petitioners consistent
with the remedial and preservative principles of citations for contempt, and as demanded by the respect
due the orders, writs and processes of the courts of justice.

WHEREFORE, we DENY the petition for lack of merit.

G.R. No. 129368               August 25, 2003

LAND BANK OF THE PHILIPPINES, Petitioner,

vs.
THE HON. COURT OF APPEALS, MAMERTA B. RODRIGUEZ, SPS. ARMANDO and ZENAIDA STA ANA, EL
OBSERVATORIO DE MANILA INCORPORADA, SPS. WILFREDO and AURORA POSADAS, REGINALD F.
FRANCISCO, BIENVENIDO L. MACEDA, SPS. HECTOR and MATILDE MENDOZA and EUGENIO V. ROMILLO,
Respondents.

DECISION

CALLEJO, SR., J.:

Before this Court is a petition for certiorari under Rule 65 of the Revised Rules of Court which seeks to
annul and set aside the Decision1 and Resolution of the Court of Appeals in CA-G.R. CV Nos. 12533-35
dated November 12, 1996 and April 14, 1997, respectively, reversing the Order 2 of the Regional Trial
Court of Makati City, Branch 136, in Special Proceedings Cases Nos. M-108, M-125 and M-126.

THE ANTECEDENTS

Manotoc Securities, Inc. (MSI) was a duly licensed broker and dealer in securities, doing business and
operating under the provisions of the Securities Act. The Insular Bank of Asia and America (IBAA) and the
Land Bank of the Philippines (LBP) are private commercial banking corporations duly authorized to
operate as trust companies.

IBAA and MSI offered and sold securities to the public. Among the purchasers were private respondents
Mamerta B. Rodriguez, the Spouses Armando and Zenaida Sta. Ana, El Observatorio de Manila,
Incorporada, Spouses Wilfredo and Aurora Posadas, Reginald F. Francisco, Bienvenido L. Maceda, Spouses
Hector and Matilde Mendoza, and Eugenio V. Romillo. 3 As evidence of their purchases, the private
respondents executed individual investment agreements with MSI.

Under the said agreements, MSI undertook to invest funds primarily in a portfolio of certain specified
securities for fixed periods of time, and to return upon maturity the funds of the investors and their
corresponding share in the income of the same. As security for compliance of its undertaking with private
respondents, MSI, as the investment agent of the private respondents, delivered qualified securities to the
IBAA. Thus, on August 19, 1976, MSI and IBAA executed a custodianship agreement in which the latter
was constituted as custodian bank of the investment portfolio/collateral pool of securities of the private
respondents with corresponding duties and responsibilities thereunder defined, some of which are as
follows:
g) To sell out the portfolio in whole or in part upon failure by the Company to deliver additional securities
as provided for in Section 2.03 hereof, up to an amount that would at least equal to the maximum
security value of the Custodian Receipt outstanding and to hold such proceeds from the sale as part of the
portfolio under cash accounts until duly claimed (i) by the Company upon presentation of additional
qualified securities or cancellation of custodian receipts or (ii) the Investor upon failure of the Company to
make such presentation, upon proper presentation of the Investment Agreement together with the
Custodian Receipt.

h) To do and perform such other acts and things as the Company may, by any future instrument in
writing delivered to the Custodian, require of the Custodian, provided that such other acts and things are
germane to the intent and purpose of this Agreement. 4

In case of default by the investment agent, the custodian bank as its attorney-in-fact was authorized to
sell so much of the qualified securities held in the portfolio and to apply the proceeds thereof, thus:

Section 5.03. Sale of Securities Portfolio

The Company, by adhesion to this Agreement in the manner herein provided, shall be deemed as having
expressly in (sic) irrevocably constituted and appointed the Custodian, as its true and lawful attorney-in-
fact, with full power and authority, upon the occurrence of an event of default, to perform the following:

a) To sell so much of the qualified securities held in the portfolio as may be necessary to satisfy
the amounts due and payable whether by term or by declaration or otherwise such sale to be
effected at such time or times as the Trustee may determine, and any such sale or sales may be
made at a public or private sale in any broker’s board or securities exchange, or may be made
over-the-counter;

b) To collect and receive the proceeds of the sale and to issue receipts therefor and/or execute
and/or deliver such papers or documents and perform such acts as may be necessary to transfer to
the purchaser or purchasers of the qualified securities so sold, all the rights, title and interest on
such securities.

Section 5.04. Application of Proceeds of Sale; Accounting

The proceeds from the sale of the qualified securities held in the Portfolio shall be applied as follows:

a) First To the payment of the costs and expenses of the sale, and the compensation and other
claims of the Custodian pursuant to Section 3.09 hereof;

b) Second To the payment in full of the amounts then due and unpaid for principal and income of
the Investor’s investment upon the maturity of the Investment Agreement;

c) Third To the placement of cash accounts as part of the portfolio so as to maintain the aggregate
maximum security value required to cover custodian receipts outstanding pursuant to Section 2.03
and 3.01 (g) hereof;

d) Fourth Any surplus remaining shall be returned to the Company, its successors or assigns or to
whomsoever may be lawfully entitled to receive the same.

The Custodian shall submit and render to the Company written statements and reports of sales
transactions under this Section, if any, fifteenth (15th) day of each calendar month.5

MSI executed in favor of IBAA, conformably to the said custodianship agreement, deeds of assignment,
quoted in part as follows:

NOW THEREFORE, for and in consideration of the foregoing premises and by way of security for the
faithful compliance by the Company with the terms and conditions of the Investment Agreement and
pursuant to the Agreement, the Company hereby transfers, assigns, sets over and delivers to the
Custodian for the benefit and security of Investors, all rights, title and interest whether legal or beneficial
in and to the securities more particularly described in the schedule attached hereto as Exhibit "1" hereof,
and to such other securities as may from time to time be brought under the operation of this assignment
from time to time by way of supplementary schedules hereto incorporated and made an integral part
hereof by their terms of reference.

The Company hereby reiterates and affirms, as integral parts of this Agreement, all of the warranties set
forth in Section 4.01 of the Agreement, to which Agreement reference is hereby made for the other terms
and conditions applicable hereto.6

On December 12, 1979, MSI as trustor and LBP as trustee executed a contract denominated as
"Substitution of Trustee with Assumption of Liabilities" in which LBP substituted and succeeded IBAA as
custodian bank of the collateral pool of securities under the custodianship agreement, and thus assumed
the previous duties and responsibilities of IBAA as custodian and safekeeper of qualified securities for the
benefit of the investors:

2. Also effective as of December 12, 1979, Land Bank has agreed to be substituted as Custodian in
place of IBAA under the aforementioned Custodianship Agreement, and has assumed any and all
liabilities of IBAA thereunder.

3. IBAA, upon the instruction of the TRUSTOR shall, under the mechanics to be agreed upon
subsequent hereto, transfer the custody and management of the collateral pool to LAND BANK.

4. TRUSTOR undertake[s] to hold IBAA free from any and all liability which may arise under the
CUSTODIANSHIP AGREEMENT, referred to above, and agree to defend IBAA from any and all suits
which may arise by virtue thereof.

5. LAND BANK undertakes to collect all outstanding IBAA Custodian Receipts issued pursuant to
the CUSTODIANSHIP AGREEMENT mentioned above, and to substitute its own Custodianship
Receipts thereof within thirty (30) days from the execution of this AGREEMENT.

6. LAND BANK further agrees to notify all investors of the fact of substitution of IBAA as trustee of
the collateral pool, pursuant to Section 3.05 of the CUSTODIANSHIP AGREEMENT dated August 19,
1976.

7. The provision of Section 3.04-A of the said AGREEMENT relative to the effectivity of removal or
resignation of the trustee after the thirtieth banking day from date of notice is hereby waived.

8. The TRUSTOR shall, upon the execution of this AGREEMENT, liquidate all its outstanding
obligations with IBAA, including but not limited to outstanding trust fees and out of pocket
expenses.

9. Upon the execution of this AGREEMENT, IBAA will render its final accounting to the TRUSTOR.
Any exception thereto must be communicated in writing to IBAA within thirty (30) days from
receipt thereof, otherwise the same shall be deemed conclusively correct. 7

In the same month, Ricardo L. Manotoc, Jr. and Teodoro M. Kalaw filed a petition with the Securities and
Exchange Commission (SEC) docketed as SEC Case No. 1826 for the rehabilitation of MSI and the
appointment of a Management Committee for the said corporation "to avoid an imminent danger of
paralyzation of its business operations brought about by serious financial problems." Teodoro M. Kalaw
likewise filed a similar petition with the SEC docketed as SEC Case No. 1835 for the rehabilitation of the
Trans-Insular Management, Inc. et al. and for the appointment of a Management Committee.

On December 20, 1979 and January 11, 1980, the SEC issued orders placing MSI under rehabilitation and
appointing a Management Committee as interim receiver of the real and personal properties and assets of
MSI, its subsidiaries and subdivisions. The SEC issued another order on April 2, 1980 delineating the
duties of the Management Committee as interim receiver:

1. To bring and defend such action in its own name;

2. To take and keep possession of the properties in controversy;

3. To receive rents and other income;

 4. To collect debts due to the corporations as receiver and all such funds, property and estate, due
to person or corporation of which it is receiver;

5. To compound for and compromise the same;

6. To make transfer;

7. To pay outstanding debts; to divide the money and other property that shall remain among the
persons legally entitled to receive the same;

8. To negotiate with any financial institution whether public or private, domestic or foreign, for
such funding and financial arrangement as may be necessary to support the rehabilitation project
and program. For this purpose, the Committee or its duly authorized representative may sign such
documents and papers as may be necessary;

9. To make such reports to the Commission as may be decreed necessary from time to time
regarding the aforementioned projects; and generally to do such acts respecting the property as
the Commission may authorize, including the authority to rehabilitate the said corporation, if
possible.8

Wilfrido B. Jacinto was appointed as Officer-In-Charge of the Committee.

On February 13, 1980, MSI wrote the LBP, advising the latter that the corporation had been placed under
rehabilitation, and that the SEC had appointed a Management Committee to handle its affairs. MSI
directed the LBP--

… to suspend any movement, disposition or substitution of any and all properties you now hold either, as
collateral, security or custodian for the above-mentioned companies as per the directive of the Securities
and Exchange Commission.9

On April 18, 1982, the private respondents, through counsel, wrote the LBP, requesting the latter to
return their investments with the MSI. The LBP referred the letter of the private respondents to the
Management Committee which on May 28, 1982 rejected the demands of the private respondents. On
June 1, 1982, the LBP wrote the private respondents that it could not possibly comply with their
demands:

As what we have told you in our letter of May 20, 1982 we referred your demands to the SEC-Appointed
Management Committee which took over Manotoc Securities, Inc. in view of the SEC order suspending
any movement or disposition of any and all properties of the company under our custody as per letter of
Enrique J. Unson, Asst. Vice-President of Manotoc Securities, Inc., and noted by W. B. Jacinto, Officer-In-
Charge for the SEC-Appointed Management Committee, dated February 13, 1980.

We are, therefore, attaching herewith a copy of the reply-letter from the SEC-Appointed Management
Committee dated May 28, 1982 which is self-explanatory.

Likewise, we would like to inform you that we shall be turning over all the properties/securities lodged
with us by Manotoc to the SEC-Appointed Management Committee pursuant to the directive of the Bank’s
top management to terminate and close this account.10

On June 24, 1982, the private respondents acknowledged receipt of the June 1, 1982 Letter and informed
LBP that as trustee of the investment portfolio, it held legal title over the same. As such, the said portfolio
could not be affected by any directives of the Management Committee. The private respondents urged the
LBP to--

… desist from "terminating and closing the account" and turning over the Investment Portfolio to the
Securities and Exchange Commission as you propose to do, and we hereby reiterate our request that you
proceed to sell and dispose of the securities in your custody for the satisfaction of the claims of our
clients, without prejudice to taking such action as you may consider necessary for securing a clarificatory
order or directive from the Securities and Exchange Commission regarding the scope and extent of its
alleged directive to you, or a reversal or nullification of said directive, as the case may require. Needless
to say, our clients shall hold you responsible for any and all acts or omissions in breach of trust, and for
any loss or damage which they or the trust estate may suffer resulting from such acts or omissions. 11
The LBP rejected the demands of the private respondents.

On June 29, 1982, the private respondents demanded for an accounting of their portfolio. 12 The LBP, in a
Letter dated July 20, 1982, informed the private respondents that it could not give due course to the
demands because as mere custodian of the securities in the portfolio, it does not have legal title over the
same. The demands of the private respondents for the remittance of their investments and the earnings
thereof, and for an accounting of their portfolio was, thus, further rejected by the bank. 13

In the meantime, the Management Committee proposed the appointment of a permanent Receiver to
perform the following:

(a) To liquidate the assets immediately for distribution to creditors and investors without prejudice
to the possibility of developing small but viable real estate properties;

(b) To continue to pursue collection efforts and/or legal action against all debtors;

(c) To run after the unlimited liability of the principal stockholders, Teodoro V. Kalaw, Jr. and
Ricardo L. Manotoc, Jr.;

(d) To call on the terms of the broker/dealer bond issued by FGU Insurance Corporation;

(e) To file a case against a former company officer, Raul R. Leveriza, Jr. and other parties involved
in the fake title case; and

(f) To take proper action against the company and other parties for violations of the Securities Act
regarding the pledging of shares of stock without the approval of the client-owners. 14

Fearing that their investments were in serious jeopardy due to the abovementioned developments, private
respondents Mamerto B. Rodriguez and Spouses Armando and Zenaida Sta. Ana filed a petition with the
RTC of Makati under Rule 98 of the Revised Rules of Court, seeking the removal of IBAA as trustee and
the appointment of a substitute trustee.15 On June 30, 1983, private respondents El Observatorio de
Manila, Incorporada, Spouses Wilfredo and Aurora Posadas and Reginald Francisco16 on the one hand, and
private respondents Bienvenido Maceda, Spouses Hector and Matilde Mendoza and Eugenio Romillo, 17 on
the other, also filed similar petitions. The respective petitions of the private respondents were thereafter
consolidated and assigned to the RTC of Makati, Branch 136.18

ALLEGATIONS OF FACTS IN THE COMPLAINTS

The three petitions for the removal of IBAA as trustee of the investment portfolio created under the
custodianship agreements contained substantially similar allegations. The private respondents alleged
inter alia that MSI named and appointed IBAA as the trustee of an investment portfolio, which was to
consist initially of investment funds solicited and obtained by MSI and IBAA from the issuance and sale to
the public of certain securities denominated as investment agreements and custodian receipts. 19 On May
24, 1977 and October 4, 1977, MSI and IBAA amended the agreement under instruments entitled
"Amendment to Custodianship Agreement." Under its provisions, the funds of the investors in the
investment pool were to be invested primarily in financing the margin accounts of clients of MSI and other
stockbrokers in the stock market, the payment of which was to be secured only with certain specified
shares of stock at 150% cover and/or real estate properties at 200% cover, based on the latest available
market quotations on such shares and the latest independent appraisal of such real estate properties. 20
The investment portfolio was to be held by IBAA in trust for the benefit and protection of the investors
therein, as security for the payment at maturity of the principal and income due on their respective
investments.21

The petitioner in Sp. Proc. Case No. M-125 alleged that on August 3, 1979, IBAA opened Trust Account
No. 576 and entered upon the discharge of its duties as trustee when it received investment funds in the
amount of P545,000 and accepted the conveyance and delivery of 9,900,000 A shares of Basic Petroleum
and Minerals, Inc. and 5,990,000 A shares of Philippine Overseas Drilling and Development Corporation
under a deed of assignment.22

On August 14, 1978, LBP opened Trust Account No. 03-019 in its Makati Branch for the petitioner in Sp.
Proc. Case No. M-126. LBP entered into the discharge of its duties as trustee upon its acceptance of the
conveyance and delivery of certain securities.23 In Sp. Proc. Case No. M-108, the custodianship agreement
was entered into on August 23, 1976, upon IBAA’s initial receipt of funds in the amount of P1,074,558.66,
and the receipt of specified securities.24

As part of and in connection with the investments made by the private respondents and other investors in
the portfolio, and as security for the payment or return of the said investments, IBAA as trustee issued
custodian receipts to the private respondents, certifying that it was holding in custody a portfolio of
qualified securities with values equivalent to the amounts of the investments, and acknowledged that its
custodian receipts, together with their corresponding investment agreements, constituted a lien on the
portfolio of qualified securities in its custody to the total amount of the investment portfolio. 25

Despite repeated demands made by the private respondents, MSI refused, failed and neglected to pay
over or return their investments as and when they matured, as follows:

a. P20,000.00 to Mamerta Rodriguez under Investment Agreement (IA) No. 4493 as of January 18,
1980;

b. P13,569.01 to the Sta. Ana spouses, under IA No. 3874 as of January 23, 1980;

c. P11,593.67 to Zenaida Sta. Ana under IA No. 4186 as of January 21, 1980;

d. P11,241.07 to Zenaida Sta. Ana under IA No. 4265 as of December 5, 1979;

e. P13,579.29 to Zenaida Sta. Ana under IA No. 4312 as of January 21, 1980; 26

f. P53,416.67 to Observatorio de Manila under IA No. 019 as of December 7, 1979;

g. P53,416.67 to Aurora S. Posadas under IA No. 015 as of December 4, 1979;

h. P309,133.11 to Reginald Francisco under IA No. 069 as of February 1, 1980;27

i. P135,005.00 to Bienvenido L. Maceda under IA No. 4231 as of December 10, 1979;

j. P120,000.00 to Matilde R. Mendoza and/or Bienvenido L. Maceda under IA No. 4232 as of

December 10, 1979; and

k. P40,895.56 to Eugenio V. Romillo under IA No. 4277 as of December 18, 1979. 28

The private respondents further alleged that MSI failed to maintain the required security value of the
investment portfolio at a level equivalent to at least 100% of the amount of the outstanding custodian
receipts even earlier than July 30, 1979, and at no time during the period between July 10 to December
10, 1979 did MSI deliver or assign sufficient securities to bring the security value of the portfolio to the
level of at least 100% of the amount of the outstanding custodian receipts. Thus, the non-payment by
MSI to private respondents and other investors of their returns on the investment agreements at
maturity, and the failure of MSI to maintain the security value of the investment portfolio as agreed upon,
constituted events of default under the terms and conditions of the custodianship agreement. 29

The private respondents claimed that instead of being obliged to deliver additional qualified securities to
cover the recurring deficiencies in the said investment portfolio, MSI was repeatedly allowed to effect the
release or withdrawal and/or substitution of securities which formed part of the same. IBAA likewise failed
and neglected to declare the principal and income of all investments then outstanding as due and payable,
or to make any serious and prompt demand on MSI to deliver additional securities. IBAA allowed MSI to
avail of funds pertaining to the trust, and to misappropriate and misapply the funds by directly borrowing
therefrom, and/or by extending loans to its parent and subsidiary companies, to companies and
enterprises owned and controlled by its principal officers and directors or their families, and/or controlling
stockholders, as well as to other ineligible borrowers. IBAA furthermore allowed MSI to accept inadequate
security, or to accept as security unimproved real estate, or real estate of dubious value or with
questionable title, notwithstanding clear indications that such security was worthless, grossly inflated in
value, ineligible and not readily convertible to cash if needed to pay maturing investment agreements. 30

To prevent IBAA from declaring all outstanding investment agreements as immediately due and payable,
MSI wrote a letter on December 10, 1979 advising IBAA that it was terminating the custodianship
agreement effective that same date and that LBP was assuming as the new trustee. On December 12,
1979, MSI and IBAA, together with LBP, executed an instrument entitled "Substitution of Trustee with
Assumption of Liabilities" whereby IBAA ceased to act as trustee, and LBP assumed as its substitute. Both
the purported termination of the agreement and the purported substitution of IBAA by LBP as trustee of
the investment portfolio were sought to be implemented or carried out without the knowledge and
consent of the investors, without the benefit of any accounting by IBAA, on its administration and
management of the investment portfolio, and without IBAA being discharged of its office and liability as
trustee of the investment portfolio by a court of competent jurisdiction. 31 In the interim, the SEC had
appointed a Management Committee to take custody of the properties and assets of MSI, to protect the
interest of the investors, creditors and stockholders, and to effectively carry out a program of
rehabilitation.

The private respondents prayed that after due proceedings, judgment be rendered in their favor (a)
ordering the removal of IBAA and LBP as trustee and substitute trustee of the investment portfolio of the
private respondents; (b) appointing Prudential Bank as trustee in substitute of IBAA and LBP; (c)
declaring as of no force and effect with respect to them the "Substitution of Trustee with Assumption of
Liabilities" executed by LBP and MSI; and to --

1. Order IBAA and LBP to render to the court for approval a full, just and complete accounting of
their administration and management of the IP;

2. Order IBAA and LBP to restore to the Investment Portfolio whatever losses, damages and
injuries it may have suffered through their fault or negligence or due to their failure to observe the
terms and conditions of the Custodianship Agreement and to perform the duties of trustee
thereunder;

3. Restrain and enjoin LBP from selling, disposing or encumbering any of the securities or assets of
the IP presently in its custody;

4. Order IBAA and LBP to turn over all the trust properties in their custody to the new trustee and
to execute any and all instruments necessary to accomplish such purpose, and restrain and enjoin
both of them from any further interference in the administration and management of the trust;

5. Order the forfeiture by the IBAA and/or LBP of any right of compensation as trustee of the IP;

6. Order IBAA and LBP, jointly and severally, to pay petitioners damages by way of attorney’s fees
and expenses of litigation in such amount as may be considered just and reasonable;

7. Order the discharge or release of IBAA and LBP from any and all other duties and responsibilities
as trustee under the CA only upon full restoration to the IP of all losses, damages and injuries it
may have suffered which are properly chargeable to either or both IBAA and LBP, full payment of
attorney’s fees and expenses of litigation, and approval in due course of their accounting of the
administration and management of the IP.

Both IBAA and LBP moved to dismiss/suspend the said petitions on the ground that it was the SEC, and
not the RTC, which had jurisdiction over the subject matter of the cases, pursuant to Presidential Decree
No. 902-A as amended by P.D. Nos. 1653 and 1799. Thus, conformably to Section 6(c) of P.D. 902-A, as
amended, all claims against the distressed corporation should be suspended upon the constitution of the
Management Committee. MSI, through its SEC-Appointed Management Committee, also filed a motion to
dismiss/suspend proceedings in SP Proc. Case No. 125 on the same ground. In behalf of MSI, Ricardo L.
Manotoc, Jr. filed a motion to intervene and a motion to suspend the proceedings, also on the same
ground. In their Reply, the private respondents averred that IBAA and LBP were trustees of the
investment portfolio, and as such, had acquired title over the properties included in the same; hence, the
distressed corporation was not the owner of the said investment portfolio. Consequently, the SEC had no
jurisdiction over the matter.

The petitions were set for hearing, during which the petitioners therein (private respondents herein)
adduced evidence to prove their claim.

THE TRIAL COURT’S RULING32

In an Order dated February 12, 1985, the trial court found merit in the motion to suspend the proceedings
pursuant to Section 6 of P.D. 902-A as amended. According to the court, the allegations in the petitions
indicated that although there was no prayer specifically directed against Manotoc or MSI, the petitions
were in reality claims against the latter, or, at the very least, the disposition of the petitions would affect
properties belonging or pertaining to a corporation under management or receivership of the SEC.

In ruling for the petitioners, the trial court held that the SEC had primary jurisdiction to the exclusion of
the RTC, and that the matter of determining whether the agreement was one of agency, bailment, or
trust, should be raised in and determined first by the SEC to the exclusion of the court. Since its
jurisdiction was merely secondary, the authority of the court was limited to reviewing the SEC’s final
deliberations on the petitions. The private respondents should have exhausted all remedies before the
SEC. To entertain the suit would open the gates to confusion, resulting in a duplication of proceedings
arising out of a conflict of jurisdiction, which could very well be avoided by respecting the jurisdiction of
the SEC.

The trial court resolved, thus:

1. Allowing Manotoc/MSI to intervene in all the cases;

2. Ordering the suspension and archiving of the case until after the termination of the proceedings
before the SEC in SEC Cases Nos. 1826 and 1835.33

The private respondents thereafter filed a motion for reconsideration which was denied on January 16,
1986. The private respondents appealed from the order to the Court of Appeals.

The private respondents alleged on appeal that when MSI named and appointed IBAA as trustee of the
investment portfolio, it carried no other implication than that IBAA, as trustee, became the legal owner of
the funds in the investment portfolio.34 Although the SEC placed MSI under management and receivership,
its jurisdiction extends only to the properties and assets of MSI. The doctrine of exhaustion of
administrative remedies should be applied only to those who, having gone to the SEC for relief, failed to
avail of and exhaust all possible remedies therein before seeking judicial intervention. The said doctrine
was erroneously applied by the trial court, as they were not parties to SEC Cases Nos. 1826 and 1835. 35
While Ricardo Manotoc, Jr. may be a stockholder of MSI, he does not have any legal interest in the trust
properties involved in the proceedings; it is the trustee who has legal ownership of the properties held in
trust, subject, however, to the equitable rights of the beneficiaries of the same.36

The petitioner bank, for its part, maintained that IBAA/LBP is a mere custodian of MSI under the
custodianship agreement with specific duties to perform, and as such, is only an agent of MSI; it is not a
trustee in the strict and legal sense, and does not hold any legal title over the properties or securities. 37

Manotoc, in behalf of MSI, contended that as one of the parties who filed the petition for the appointment
of a Management Committee and the approval of a rehabilitation scheme for the said corporation and its
affiliate companies, he has legal interests in the matter in litigation sufficient to entitle him to intervene in
the action.38

THE RULING OF THE COURT OF APPEALS39

The CA reversed and set aside the assailed orders of the RTC. It held that IBAA and LBP were trustees of
the investments of the private respondents and not merely custodians thereof; hence, IBAA and LBP had
legal title over the property covered by the said investments. The order of the lower court to archive the
cases and to relinquish in toto its jurisdiction over the actions initiated by the private respondents was
premature. The RTC should have resolved the motions on their merits and determined whether or not the
petitioner and IBAA were trustees of the investment portfolio.

The CA further explained that because of the existence of a trusteeship agreement, under Rule 98,
Sections 8 and 9 of the Rules of Court, the RTC had jurisdiction over the petitions of the private
respondents. The court a quo ought to have given due course to the petitions as originally filed, and
thereafter determine which of the reliefs sought were available, in the light of the limitations imposed by
the receivership status of the MSI and the SEC’s jurisdiction over its affairs and the claims against it,
instead of archiving the petition and suspending the proceedings. Moreover, the doctrine of primary
jurisdiction cannot be invoked as a pretext to bar the private respondents from seeking judicial relief until
the final resolution of SEC Cases Nos. 1826 and 1835, given the fact that the IBAA and LBP were trustees
of the portfolio of the private respondents. The CA further stated that the RTC had jurisdiction over
petitions for the removal of trustees:
MSI and its assets have been placed under a management committee assigned by the Securities and
Exchange Commission. We do not see, however, how this, of necessity, cancels the power of the court,
when it finds it meritorious and just, to order IBAA to render an accounting to the beneficiaries. The
doctrine of primary jurisdiction, in fact, has a positive import, insofar as judicial authority is concerned. It
is this that Davis, an acknowledged American authority on administrative law, propounds:

"The purpose of the doctrine of primary jurisdiction is not to divide powers between courts and agencies,
but to determine which tribunal should take initial action. An agency which has primary jurisdiction may in
effect merely lay the foundation for a judicial determination. x x x The reason for the primary jurisdiction
doctrine is not a belief that an agency’s expertise makes it superior to a court; the reason is that a court
confronted with problems within an agency’s area of specialization should have the advantage of whatever
contributions the agency can make to the solutions" (Davis, Administrative Law, 381)

Seen as urged on us by Davis, some circumstances of the instant cases become important: the investor-
appellees worry that in the tangle of convoluted relations entered into by MSI with IBAA and LBP, they
have lost track of their investment and worse still that IBAA, to their disadvantage, has not complied with
the terms of the trust. Coupled with the clear mandate of the Rules of Court to entertain petitions for the
removal of a trustee, the doctrine of primary jurisdiction cannot be invoked as a pretext to bar the
petitioners from seeking judicial relief. They have the right, at least, to be heard by the court. It is for the
lower court, after due hearing and after having passed on the evidence, to determine which reliefs sought
for are allowed and which are not, in view of the receivership status of MSI. It cannot be right, however,
for the lower court to eschew any authority over the cases at all.40

The petitioner received a copy of the assailed decision of the CA on November 18, 1996 and consequently
filed its motion for reconsideration on December 3, 1996. On April 18, 1997, the petitioner received a
copy of the questioned resolution dated April 14, 1997, denying its motion for reconsideration. Instead of
filing a petition for review on certiorari under Rule 45 of the Revised Rules of Court, the petitioner filed on
June 17, 1997 the instant petition for certiorari under Rule 65.

PETITIONER’S ARGUMENTS

The petitioner avers that the CA committed a grave abuse of its discretion amounting to lack or excess of
jurisdiction in ruling that the petitioner was a trustee of the portfolio of the private respondents and that
the RTC had jurisdiction over the petitions of the latter. It asserts that it has no appeal, nor any plain,
speedy, and adequate remedy in the ordinary course of law. As a mere custodian of MSI under the
custodianship agreement with specific duties to perform, it is only an agent and not a trustee in the strict
legal sense, and does not hold any legal title over the properties and securities. 41 The CA acted
despotically when it ignored the various documents showing the true relationship between it and the
private respondents.

The petitioner asserts that since it is not a trustee but a mere custodian, Section 8, Rule 98 of the Rules
of Court42 is clearly inapplicable. Consequently, the trial court does not have jurisdiction over the petitions
filed by the private respondents for the removal of LBP as trustee. Instead, the petitioner asserts, it is the
SEC who rightly has jurisdiction over the petitions. While cleverly denominated as "petition for the
removal of IBAA or LBP as trustee," the petitions are, in reality, a mere sly scheme of private respondents
to implement the custodianship agreement between LBP and MSI through the instrumentality of the trial
court. Even assuming that the petitions are not claims or actions against MSI, nonetheless, at the very
least, their disposition would affect properties belonging or pertaining to a corporation under management
or receivership of the SEC, and thus should accordingly be suspended, conformably to Section 6(c) of P.D.
902-A, as amended. Since the petitions before the court a quo are in effect clearly claims/actions against
a corporation under management or receivership by the SEC which even private respondents admit to
have been placed under management/receivership due to, among others, the alleged acts/schemes of its
board of directors/officers/partners amounting to fraud and misrepresentation which may be detrimental
to the interest of the public, it then follows that the trial court has no jurisdiction to entertain the same.
Thus, only the SEC has jurisdiction over the said cases to the exclusion of the courts. 43

Petitioner LBP also states its willingness to perform its duties and obligations as custodian bank under the
custodianship agreement even without instigation. It, however, averred that in deference to the SEC
Order of April 2, 1980 which directed it to suspend any movement, disposition or substitution of any and
all properties held in behalf of MSI, whether as collateral security or as custodian thereof, it is unable to
do so. The petitioner contends that it is duty-bound to comply with the order, considering that it was
issued by the SEC in the legitimate and valid exercise of its regulatory and adjudicatory powers pursuant
to P.D. 902-A. LBP reiterates that the petitions are part of a sly scheme to implement the custodianship
agreement between LBP and MSI through the instrumentality of the trial court. 44

PRIVATE RESPONDENTS’ ARGUMENTS

In their Comment, the private respondents moved to dismiss the petition. According to them, appeal
under Rule 45 of the Rules of Court was available to the petitioner and that it was an equally beneficial,
speedy and sufficient remedy in the ordinary course of law, which consequently should have been availed
of.45 It is not enough for the petitioner to merely allege that appeal is not a speedy or adequate remedy in
the instant case. Although the petitioner contends that it had to file the instant petition for certiorari under
Rule 65 to prevent it from further litigating the matter, it has not shown that an ordinary appeal from the
assailed decision would not have obtained the same effect. As a matter of fact, as the private respondents
assert, an appeal would have stayed the decision by preventing it from becoming final and executory,
from being entered by the Clerk of Court of the CA in the book of entries of judgments, and from being
remanded to the lower court.

Precisely, where the remedy of appeal is available, as it was in this case, the petitioner must interpose its
appeal under Rule 45 within the reglementary period of 15 days from notice of the decision, or of the
resolution denying its motion for reconsideration. The private respondents vehemently argue that the
petitioner cannot allow the period to appeal to expire, and after having lost his right to appeal, seek to
regain it by recourse to certiorari under Rule 65.46

The petitioner admits in its petition that it received a copy of the questioned decision on November 18,
1996 and filed its motion for reconsideration on December 3, 1996. Then, on April 18, 1997, it received a
copy of the questioned resolution denying its motion for reconsideration. According to the private
respondents, it is clear from the foregoing that the petitioner had 15 days from receipt of the resolution
denying its motion for reconsideration (April 18, 1997), within which to take an appeal to this Court. For
failure to do so, the decision and resolution of the CA became final and executory on May 3, 1997. It was,
thus, too late for petitioner LBP to take an appeal or to file a petition for certiorari under Rule 65. 47

In the statement of facts and of the case in the petition for certiorari, petitioner LBP makes reference to
the following pleadings and documents:

a. Investment Agreements of private respondents with MSI (3rd paragraph, p. 2);

b. Custodianship Agreement dated August 19, 1976 (1st paragraph, p. 3);

c. Order/s of the Securities and Exchange Commission issued in SEC Cases No. 1826 and No. 1835
placing MSI and all its subsidiaries under Receivership and Management Committee (1st
paragraph, p. 4);

d. Petition filed on June 8, 1983 by private respondents Mamerta Rodriguez and Spouses Armando
and Zenaida Sta. Ana with the Regional Trial Court of Makati seeking the removal of IBAA as
trustee and the appointment of a substitute trustee (2nd paragraph, p. 4);

e. Petition filed on June 30, 1983 by private respondents El Observatorio de Manila Incorporada,
Spouses Wilfredo and Aurora Posadas and Reginald Francisco seeking the removal of IBAA (as
alleged trustee) and LBP (as alleged substitute trustee [sic]) and the appointment of a substitute
trustee (Ibid.);

f. Petition filed on June 30, 1983 by private respondents Bienvenido Maceda, Spouses Hector and
Matilde Mendoza and Eugenio Romillo (Ibid.);

g. Order/s consolidating the above petitions and their assignment to Branch 136 of the Regional
Trial Court (Ibid.);

h. Motion/s filed by petitioner LBP to dismiss/suspend said petitions (Ibid.);

i. Motion for reconsideration filed by private respondents (1st paragraph, p. 5);

j. Order dated January 16, 1986 denying private respondents’ motion for reconsideration (Ibid.);
 k. (Notice of) Appeal filed by private respondents (2nd paragraph, p. 5);

l. Appellants’ Brief filed by private respondents herein with the Court of Appeals (Ibid.);

m. Appellee’s Brief filed by petitioner LBP (Ibid.);

n. Custodian receipts (3rd paragraph, p. 10).48

According to the private respondents, most, if not all, of the foregoing pleadings and documents are
relevant and pertinent to the instant petition for certiorari, and are absolutely necessary for a clear
understanding of the facts of the case. The petitioner’s failure to attach them to its petition, in violation of
the requirements of Section 1, Rule 65 of the Revised Rules of Court can only be fatal to its cause, and
constitutes another ground for dismissal of the instant petition. 49

Another argument relied upon by the private respondents is that one of the conclusions reached by public
respondent CA which is sought to be corrected by the instant petition for certiorari is that a trust was
created in each of the custodianship agreements. This conclusion, even if erroneous, amounts to nothing
more than an error of judgment, correctible by appeal. The private respondents assert that the instant
petition for certiorari cannot correct errors of judgment, since it is confined to the correction of errors of
jurisdiction only, or grave abuse of discretion amounting to lack or excess of jurisdiction. 50

According to the petitioner, the finding of facts made by the respondent CA as to the transfer,
assignment, set over, and delivery to IBAA and LBP of the securities in the investment portfolios for the
benefit and security of the investors should be conclusive upon the Court, except only if shown to have
been reached with abuse of discretion amounting to lack of jurisdiction, which petitioner has failed to do.

Even the claim of petitioner LBP that the disposition of the petitions for removal of trustees would affect
properties belonging or pertaining to a corporation (MSI) under SEC management or receivership lacks
factual basis. By virtue of the assignment of the securities in the investment portfolios to the trustee
banks, title and interest therein were in fact vested in them, making them the legal owners of the same.

Anent the contention of LBP that it is willing to perform its duties were it not for the directive issued by
the SEC, the private respondents assert that the SEC Order dated April 2, 1980 contains no such
directive, nor is it even addressed to LBP. It is simply a resolution placing MSI and its subsidiaries under
receivership, and appointing the Management Committee of the said entities as interim receiver of their
properties. And even if the SEC order had indeed contained an actual directive addressed to LBP to
suspend any movement, disposition or substitution of any and all properties of MSI, it knew or ought to
have known that an order so issued would be in excess of jurisdiction and would not be binding upon it,
because no court or tribunal can take property in the possession of a stranger to the action who claims in
good faith to be the owner thereof. Furthermore, under the terms of the appointment, the Management
Committee was not given the power or authority to take over the management or control of assets or
properties not belonging to MSI. LBP, according to the private respondents, would then be obliged, in the
exercise of its duty as trustee, to defend the trust property from all adverse claimants and to take the
necessary action to nullify or set such order aside.51

THE DECISIVE ISSUE

The threshold issue in the case at bar is whether or not a petition for certiorari under Rule 65 of the
Revised Rules of Court is the proper recourse of the petitioner for the reversal of the assailed decision and
resolution of the CA.

The petition is dismissed.

Section 1, Rule 65 of the Revised Rules of Court reads:

SECTION 1. Petition for certiorari. – When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may
require.
The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject
thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of
non-forum shopping as provided in the third paragraph of Section 3, Rule 46.

A writ of certiorari has been called a "supervisory or superintending" writ. It was a common law writ of
ancient origin. It’s earliest use was in the crown or criminal side of the Court of King’s bench. Its use on
the civil side later came into general use.52 Certiorari is a remedy narrow in scope and unflexible in
character. It is not a general utility tool in the legal workshop.53

The writ of certiorari issues for the correction of errors of jurisdiction only or grave abuse of discretion
amounting to lack or excess of jurisdiction. It cannot be legally used for any other purpose. Its function is
only to keep the inferior court within the bounds of its jurisdiction or to prevent it from committing such a
grave abuse of discretion amounting to lack or excess of jurisdiction. 54 It may issue only when the
following requirements are alleged in the petition and established: (1) the writ is directed against a
tribunal, a board or any officer exercising judicial or quasi-judicial functions; (2) such tribunal, board or
officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction; and (3) there is no appeal or any plain, speedy and adequate remedy in the
ordinary course of law.55 Excess of jurisdiction as distinguished from absence of jurisdiction means that an
act, though within the general power of a tribunal, board or officer is not authorized, and invalid with
respect to the particular proceeding, because the conditions which alone authorize the exercise of the
general power in respect of it are wanting.56 Without jurisdiction means lack or want of legal power, right
or authority to hear and determine a cause or causes, considered either in general or with reference to a
particular matter. It means lack of power to exercise authority. 57

The general rule is that a cert writ will not issue where the remedy of appeal is available to the aggrieved
party. The remedies of appeal in the ordinary course of law and that of certiorari under Rule 65 of the
Revised Rules of Court are mutually exclusive and not alternative or cumulative. 58 Hence, the special civil
action for certiorari under Rule 65 is not and cannot be a substitute for an appeal, where the latter
remedy is available. Such a remedy will not be a cure for failure to timely file a petition for review on
certiorari under Rule 45. Nor can it be availed of as a substitute for the lost remedy of an ordinary appeal,
especially if such loss or lapse was occasioned by one’s own negligence or error in the choice of
remedies.59 However, there are cases where the cert writ may still issue even if the aggrieved party has a
remedy of appeal in the ordinary course of law. Thus, where the exigencies of the case are such that the
ordinary methods of appeal may not prove adequate either in point of promptness or completeness so
that a partial or total failure of justice may result, a cert writ may issue. 60

In SMI Development Corporation v. Republic of the Philippines,61 we held that certiorari is available when
the remedy of appeal is not adequate, or equally beneficial, speedy and sufficient. The determination as to
what exactly constitutes a plain, speedy and adequate remedy rest on judicial discretion and depends on
the particular circumstances of each case. There are many authorities that subscribe to the view that it is
the inadequacy, and not the mere absence, of all other legal remedies, and the danger of a failure of
justice without it, that must usually determine the propriety of the writ. 62 An adequate remedy is a
remedy which is equally beneficial, speedy and sufficient, not merely a remedy which at some time in the
future will bring about a revival of the judgment of the lower court complained of in the certiorari
proceeding, but a remedy which would promptly relieve the petitioner from the injurious effects of that
judgment and the acts of the inferior court, tribunal, board or officer.63

Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to
lack of jurisdiction or, in other words, where the power is exercised in an arbitrary manner by reason of
passion, prejudice, or personal hostility, and it must be so patent or gross as to amount to an evasion of a
positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. 64

The special civil action for certiorari is a remedy designed for the correction of errors of jurisdiction and
not errors of judgment. The raison d’etre for the rule is when a court exercises its jurisdiction, an error
committed while so engaged does not deprive it of the jurisdiction being exercised when the error is
committed. If it did, every error committed by a court would deprive it of its jurisdiction and every
erroneous judgment would be a void judgment. In such a scenario, the administration of justice would not
survive.65 Hence, where the issue or question involved affects the wisdom or legal soundness of the
decision - not the jurisdiction of the court to render said decision - the same is beyond the province of a
special civil action for certiorari.66

The proper recourse of the aggrieved party from a decision of the CA is a petition for review on certiorari
under Rule 45 of the Revised Rules of Court. On the other hand, if the error subject of the recourse is one
of jurisdiction, or the act complained of was perpetrated by a quasi-judicial officer or agency with grave
abuse of discretion amounting to lack or excess of jurisdiction, the proper remedy available to the
aggrieved party is a petition for certiorari under Rule 65 of the said Rules. As expostulated by the Court in
Fortich v. Corona:67

Anent the first issue, in order to determine whether the recourse of petitioners is proper or not, it is
necessary to draw a line between an error of judgment and an error of jurisdiction. An error of judgment
is one which the court may commit in the exercise of its jurisdiction, and which error is reviewable only by
an appeal. On the other hand, an error of jurisdiction is one where the act complained of was issued by
the court, officer or a quasi-judicial body without or in excess of jurisdiction, or with grave abuse of
discretion which is tantamount to lack or in excess of jurisdiction. This error is correctible only by the
extraordinary writ of certiorari.68

The supervisory jurisdiction of the court to issue a cert writ cannot be exercised in order to review the
judgment of the lower court as to its intrinsic correctness, either upon the law or the facts of the case. 69

The general rule is that questions or findings of facts in the lower court, board or tribunal, and the
probative weight and sufficiency of the evidence upon which the said findings were based are not
reviewable by certiorari under Rule 65 of the Revised Rules of Court. However, the sufficiency of the
evidence may be inquired into in order to determine whether jurisdictional facts were or were not proved
or whether the lower court had exceeded its jurisdiction. This exception arises out of the most important
office and function of the writ – the keeping of the lower court and tribunal within their jurisdiction. If the
decision of the lower court as to the sufficiency of the evidence to establish jurisdictional facts were not
reviewable, certiorari would be of no avail as a remedy against an assumption of jurisdiction. For the
purpose of enabling the reviewing court to determine whether jurisdictional facts were established, it may
delve into and review the evidence on which such facts were based.70

THE ERRORS ASCRIBED TO THE COURT OF APPEALS IN

ITS DECISION ARE ERRORS OF JUDGMENT AND NOT OF JURISDICTION.

Inscrutably, the CA had jurisdiction over the appeals of the private respondents from the order of the trial
court. The decision of the CA was thus rendered by it in the proper exercise of its jurisdiction. In its
decision, the CA enumerated the following findings of facts:

(a) the RTC erred in ordering the petitions archived and the proceedings in said petitions
suspended simply because of the pendency of SEC Cases Nos. 1826 and 1835 and of the
appointment of Management Committee as interim receiver;

(b) based on the pleadings of the parties and the evidence on record, the petitioner and the IBAA
were trustees of the investment portfolios; hence, owners and not mere agents of MSI;

(c) the investment portfolios are not assets of MSI;

(d) the SEC had no jurisdiction over the investment portfolios held in trust by the petitioner and
IBAA;

(e) only those actions for claims against the distressed corporation are suspended, but the petition
for the dissolution of the trusteeship for IBAA and the petitioner LBP to render an accounting of
their stewardship of the investment portfolios, and to pay damages on account of their mishandling
and/or defalcation of the same, are not suspended but may proceed until the petitions are finally
resolved;

(f) the principle of primary administrative jurisdiction does not apply in the instant case. 71

These findings are mere errors of judgment and not errors of jurisdiction, correctible by a petition for
review on certiorari with this Court under Rule 45 of the Revised Rules of Court. Hence, the petitioner
should have filed with this Court a petition for review on certiorari under Rule 45 within the period
therefor, and not a petition for certiorari under Rule 65 of the said Rules.

APPEAL UNDER RULE 45 OF THE RULES OF COURT AS

AMENDED IS A SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW.
The petitioner avers that an appeal via a petition for review on certiorari under Rule 45 would not
promptly relieve it from the injurious effects of the patently erroneous decision and resolution of the CA;
the instant petition for certiorari under Rule 65 would afford it a more expeditious and efficient relief. The
petitioner also points out that if the petitions of the private respondents were to be remanded to the RTC
for appropriate proceedings, the already clogged dockets of the trial court would be needlessly
exacerbated considering that it had no jurisdiction over the petitions.

We do not agree with the petitioner. A petition for review on certiorari under Rule 45 of the Revised Rules
of Court is a plain, speedy and adequate remedy in the ordinary course of law. It bears stressing that if
the petitioner had filed its petition for review on certiorari under Rule 45 within the period therefor, the
assailed decision would have been stayed. In such case, the petitioner could have raised issues involving
questions of law, such as whether or not the RTC has jurisdiction over the petitions of the private
respondents, or whether the petitions are in effect actions for claims as defined by this Court in Finasia
Investments & Finance Corp. v. Court of Appeals: 72

The word "claim" is also defined as:

Right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or right
to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured, unsecured.

In conflicts of law, a receiver may be appointed in any state which has jurisdiction over the defendant who
owes a claim.73

THE DECISION OF THE

CA HAS BECOME FINAL AND EXECUTORY.

The petitioner received a copy of the decision of the CA on November 18, 1996.1âwphi1 It had until
December 3, 1996 within which to file its motion for reconsideration of the decision. The petitioner did so
on the said date and received on April 18, 1997 the resolution of the CA denying its motion for
reconsideration. The petitioner filed its petition at bar only on June 17, 1997, well beyond the period
therefor. Patently then, the decision of the CA had become, in the interim, final and executory, beyond
the purview of this Court to act upon.74

IN LIGHT OF ALL THE FOREGOING, the Petition is DISMISSED. The Decision of the Court of Appeals in CA-
G.R. CV Nos. 12533-35 is AFFIRMED. Costs against the petitioner.

G.R. No. 152611            August 5, 2003

LAND BANK OF THE PHILIPPINES, petitioner,

vs.
SEVERINO LISTANA, SR., respondent.

YNARES-SANTIAGO, J.:

This is a petition for review of the decision of the Court of Appeals in CA-G.R. SP No. 65276 dated
December 11, 2001,1 which annulled the Orders dated January 29, 2001 and April 2, 2001 of the Regional
Trial Court of Sorsogon, Sorsogon, Branch 51.2

Respondent Severino Listana is the owner of a parcel of land containing an area of 246.0561 hectares,
located in Inlagadian, Casiguran, Sorsogon, covered by Transfer Certificate of Title No. T-20193. He
voluntarily offered to sell the said land to the government, through the Department of Agrarian Reform
(DAR),3 under Section 20 of R.A. 6657, also known as the Comprehensive Agrarian Reform Law of 1988
(CARL). The DAR valued the property at P5,871,689.03, which was however rejected by the respondent.
Hence, the Department of Agrarian Reform Adjudication Board (DARAB) of Sorsogon commenced
summary administrative proceedings to determine the just compensation of the land.

On October 14, 1998, the DARAB rendered a Decision, the dispositive portion of which reads as follows:
 WHEREFORE, taking into consideration the foregoing computation, the prior valuation made by the
Land Bank of the Philippines is hereby set aside and a new valuation in the amount of TEN
MILLION NINE HUNDRED FIFTY SIX THOUSAND NINE HUNDRED SIXTY THREE PESOS AND 25
CENTAVOS (P10,956,963.25) for the acquired area of 240.9066 hectares. The Land Bank of the
Philippines is hereby ordered to pay the same to the landowner in the manner provided for by law.

SO ORDERED.4

Thereafter, a Writ of Execution was issued by the PARAD directing the manager of Land Bank to pay the
respondent the aforesaid amount as just compensation in the manner provided by law.5

On September 2, 1999, respondent filed a Motion for Contempt with the PARAD, alleging that petitioner
Land Bank failed to comply with the Writ of Execution issued on June 18, 1999. He argued that such
failure of the petitioner to comply with the writ of execution constitutes contempt of the DARAB.

Meanwhile, on September 6, 1999, petitioner Land Bank filed a petition with the Regional Trial Court of
Sorsogon, Branch 52, sitting as a Special Agrarian Court (SAC), for the determination of just
compensation, as provided for in Section 16 (f) of the CARL.6

On August 20, 2000, the PARAD issued an Order granting the Motion for Contempt, as follows:

WHEREFORE, premises considered, the motion for contempt is hereby GRANTED, thus ALEX A.
LORAYES, as Manager of respondent LAND BANK, is cited for indirect contempt and hereby ordered
to be imprisoned until he complies with the Decision of the case dated October 14, 1998.

SO ORDERED.7

Petitioner Land Bank filed a Motion for Reconsideration of the aforequoted Order,8 which was however
denied by the PARAD on September 20, 2000.9 Thus, petitioner filed a Notice of Appeal with the PARAD,
manifesting its intention to appeal the decision to the DARAB Central, pursuant to Rule XI, Section 3 of
the 1994 DARAB New Rules of Procedure.10

On the other hand, the Special Agrarian Court dismissed the petition for the determination of just
compensation filed by petitioner Land Bank in an Order dated October 25, 2000. Petitioner’s Motion for
Reconsideration of said dismissal was likewise denied.

In a Resolution dated November 27, 2000, PARAD Capellan denied due course to petitioner’s Notice of
Appeal and ordered the issuance of an Alias Writ of Execution for the payment of the adjudged amount of
just compensation to respondent.11 On January 3, 2001, he directed the issuance of an arrest order
against Manager Alex A. Lorayes.12

Petitioner Land Bank filed a petition for injunction before the Regional Trial Court of Sorsogon, Sorsogon,
with application for the issuance of a writ of preliminary injunction to restrain PARAD Capellan from
issuing the order of arrest.13 The case was raffled to Branch 51 of said court. On January 29, 2001, the
trial court issued an Order, the dispositive portion of which reads:

WHEREFORE, premises considered, the respondent Provincial Adjudicator of the DARAB or anyone
acting in its stead is enjoined as it is hereby enjoined from enforcing its order of arrest against Mr.
Alex A. Lorayes pending the final termination of the case before RTC Branch 52, Sorsogon upon
the posting of a cash bond by the Land Bank.

SO ORDERED.14

Respondent filed a Motion for Reconsideration of the trial court’s order, which was denied in an Order
dated April 2, 2001.15

Thus, respondent filed a special civil action for certiorari with the Court of Appeals,16 docketed as CA-G.R.
SP No. 65276. On December 11, 2001, the Court of Appeals rendered the assailed decision which nullified
the Orders of the Regional Trial Court of Sorsogon, Sorsogon, Branch 51.

Hence, the instant petition for review on the following issues:

 I. WHETHER OR NOT THE CA DEPARTED FROM THE ACCEPTED COURSE OF JUDICIAL
PROCEEDINGS IN ENTERTAINING THE RESPONDENT’S SPECIAL CIVIL ACTION FOR CERTIORARI
TO QUESTION THE FINAL ORDER OF THE RTC WHICH, HOWEVER, WAS SUBJECT TO APPEAL
UNDER THE 1997 RULES OF CIVIL PROCEDURE.

II. WHETHER OR NOT THE CA DECIDED IN A WAY NOT IN ACCORD WITH LAW AND SUBSTANTIAL
JUSTICE IN ANNULLING AND SETTING ASIDE THE RTC FINAL ORDER OF INJUNCTION,
CONSIDERING THAT:

A. THE PARAD DID NOT ACQUIRE COMPETENT JURISDICTION OVER THE CONTEMPT
PROCEEDINGS INASMUCH AS IT WAS INITIATED BY MERE MOTION FOR CONTEMPT AND NOT BY
VERIFIED PETITION, IN VIOLATION OF SECTION 2, RULE XI OF THE NEW DARAB RULES OF
PROCEDURE AND OF RULE 71 OF THE REVISED RULES OF COURT.

B. THE PARAD CONTEMPT ORDER CANNOT BE CONSIDERED FINAL AND EXECUTORY, BECAUSE
THE PARAD ITSELF DISALLOWED THE PETITIONER’S APPEAL TO THE DARAB CENTRAL OFFICE, IN
DISREGARD OF THE BASIC RULE THAT THE APPELLATE TRIBUNAL DETERMINES THE MERITS OF
THE APPEAL.

C. THE PARAD ORDER OF ARREST AGAINST LBP MANAGER ALEX LORAYES WAS IN GROSS AND
PATENT VIOLATION OF HIS PERSONAL, CONSTITUTIONAL AND CIVIL RIGHTS AGAINST UNJUST
ARREST AND IMPRISONMENT, INASMUCH AS, UNDER THE 1987 CONSTITUTION, ONLY JUDGES
CAN ISSUE WARRANTS OF ARREST AGAINST CITIZENS, AND THE PROPER SUBJECT OF THE
CONTEMPT PROCEEDING WAS THE PETITIONER ITSELF AND NOT THE LBP MANAGER, AND YET
THE CONTEMPT ORDER WAS AGAINST THE LBP MANAGER.

D. THE PARAD ORDER OF CONTEMPT WAS PATENTLY NULL AND VOID, AS IT ATTEMPTED TO
ENFORCE COMPLIANCE WITH THE PARAD DECISION THAT WAS ADMITTEDLY NOT FINAL AND
EXECUTORY, AS THE MATTER OF JUST COMPENSATION BEFORE THE SPECIAL AGRARIAN COURT
WAS ON APPEAL WITH THE COURT OF APPEALS.17

As regards the first issue, petitioner submits that the special civil action for certiorari filed by respondent
before the Court of Appeals to nullify the injunction issued by the trial court was improper, considering
that the preliminary injunction issued by the trial court was a final order which is appealable to the Court
of Appeals via a notice of appeal.18

Petitioner’s submission is untenable. Generally, injunction is a preservative remedy for the protection of
one’s substantive right or interest. It is not a cause of action in itself but merely a provisional remedy, an
adjunct to a main suit. Thus, it has been held that an order granting a writ of preliminary injunction is an
interlocutory order. As distinguished from a final order which disposes of the subject matter in its entirety
or terminates a particular proceeding or action, leaving nothing else to be done but to enforce by
execution what has been determined by the court, an interlocutory order does not dispose of a case
completely, but leaves something more to be adjudicated upon.19

Clearly, the grant of a writ of preliminary injunction is in the nature of an interlocutory order, hence,
unappealable. Therefore, respondent’s special civil action for certiorari before the Court of Appeals was
the correct remedy under the circumstances. Certiorari is available where there is no appeal, or any plain,
speedy, and adequate remedy in the ordinary course of law.20

The order granting a writ of preliminary injunction is an interlocutory order; as such, it cannot by
itself be subject of an appeal or a petition for review on certiorari. The proper remedy of a party
aggrieved by such an order is to bring an ordinary appeal from an adverse judgment in the main
case, citing therein the grounds for assailing the interlocutory order. However, the party concerned
may file a petition for certiorari where the assailed order is patently erroneous and appeal would
not afford adequate and expeditious relief.21

On the substantive issue of whether the order for the arrest of petitioner’s manager, Mr. Alex Lorayes by
the PARAD, was valid, Rule XVIII of the 2003 DARAB Rules reads, in pertinent part:

Section 2. Indirect Contempt. – The Board or any of its members or its Adjudicator may also cite
and punish any person for indirect contempt on any of the grounds and in the manner prescribed
under Rule 71 of the Revised Rules of Court.
In this connection, Rule 71, Section 4 of the 1997 Rules of Civil Procedure, which deals with the
commencement of indirect contempt proceedings, provides:

Sec. 4. How proceedings commenced. — Proceedings for indirect contempt may be initiated motu
proprio by the court against which the contempt was committed by an order or any other formal
charge requiring the respondent to show cause why he should not be punished for contempt.

In all other cases, charges for indirect contempt shall be commenced by a verified petition with
supporting particulars and certified true copies of documents or papers involved therein, and upon
full compliance with the requirements for filing initiatory pleadings for civil actions in the court
concerned. If the contempt charges arose out of or are related to a principal action pending in the
court, the petition for contempt shall allege that fact but said petition shall be docketed, heard and
decided separately, unless the court in its discretion orders the consolidation of the contempt
charge and the principal action for joint hearing and decision.

x x x           x x x           x x x

The requirement of a verified petition is mandatory. Justice Florenz D. Regalado, Vice-Chairman of the
Revision of the Rules of Court Committee that drafted the 1997 Rules of Civil Procedure explains this
requirement:

1. This new provision clarifies with a regulatory norm the proper procedure for commencing
contempt proceedings. While such proceeding has been classified as a special civil action under the
former Rules, the heterogeneous practice, tolerated by the courts, has been for any party to file a
mere motion without paying any docket or lawful fees therefor and without complying with the
requirements for initiatory pleadings, which is now required in the second paragraph of this
amended section.

x x x           x x x           x x x

Henceforth, except for indirect contempt proceedings initiated motu proprio by order of or a formal
charge by the offended court, all charges shall be commenced by a verified petition with full
compliance with the requirements therefor and shall be disposed of in accordance with the second
paragraph of this section.22

Therefore, there are only two ways a person can be charged with indirect contempt, namely, (1) through
a verified petition; and (2) by order or formal charge initiated by the court motu proprio.

In the case at bar, neither of these modes was adopted in charging Mr. Lorayes with indirect contempt.

More specifically, Rule 71, Section 12 of the 1997 Rules of Civil Procedure, referring to indirect contempt
against quasi-judicial entities, provides:

Sec. 12. Contempt against quasi-judicial entities. — Unless otherwise provided by law, this Rule
shall apply to contempt committed against persons, entities, bodies or agencies exercising quasi-
judicial functions, or shall have suppletory effect to such rules as they may have adopted pursuant
to authority granted to them by law to punish for contempt. The Regional Trial Court of the place
wherein the contempt has been committed shall have jurisdiction over such charges as may be
filed therefore. (emphasis supplied)

The foregoing amended provision puts to rest once and for all the questions regarding the applicability of
these rules to quasi-judicial bodies, to wit:

1. This new section was necessitated by the holdings that the former Rule 71 applied only to
superior and inferior courts and did not comprehend contempt committed against administrative or
quasi-judicial officials or bodies, unless said contempt is clearly considered and expressly defined
as contempt of court, as is done in the second paragraph of Sec. 580, Revised Administrative
Code. The provision referred to contemplates the situation where a person, without lawful excuse,
fails to appear, make oath, give testimony or produce documents when required to do so by the
official or body exercising such powers. For such violation, said person shall be subject to
discipline, as in the case of contempt of court, upon application of the official or body with the
Regional Trial Court for the corresponding sanctions. 23 (emphasis in the original)
Evidently, quasi-judicial agencies that have the power to cite persons for indirect contempt pursuant to
Rule 71 of the Rules of Court can only do so by initiating them in the proper Regional Trial Court. It is not
within their jurisdiction and competence to decide the indirect contempt cases. These matters are still
within the province of the Regional Trial Courts. In the present case, the indirect contempt charge was
filed, not with the Regional Trial Court, but with the PARAD, and it was the PARAD that cited Mr. Lorayes
with indirect contempt.

Hence, the contempt proceedings initiated through an unverified "Motion for Contempt" filed by the
respondent with the PARAD were invalid for the following reasons: 24 First, the Rules of Court clearly
require the filing of a verified petition with the Regional Trial Court, which was not complied with in this
case. The charge was not initiated by the PARAD motu proprio; rather, it was by a motion filed by
respondent. Second, neither the PARAD nor the DARAB have jurisdiction to decide the contempt charge
filed by the respondent. The issuance of a warrant of arrest was beyond the power of the PARAD and the
DARAB. Consequently, all the proceedings that stemmed from respondent’s "Motion for Contempt,"
specifically the Orders of the PARAD dated August 20, 2000 and January 3, 2001 for the arrest of Alex A.
Lorayes, are null and void.

WHEREFORE, in view of the foregoing, the petition for review is GRANTED. The Decision of the Court of
Appeals in CA-G.R. SP No. 65276, dated December 11, 2001, is REVERSED and SET ASIDE. The Order of
the Regional Trial Court of Sorsogon, Sorsogon, Branch 51, dated January 29, 2001, which enjoined the
Provincial Adjudicator of the DARAB or anyone acting in its stead from enforcing its order of arrest against
Mr. Alex A. Lorayes pending the final termination of the case before Regional Trial Court of Sorsogon,
Sorsogon, Branch 52, is REINSTATED.

G.R. No. 128448      February 1, 2001

SPOUSES ALEJANDRO MlRASOL and LILIA E. MIRASOL, petitioners,

vs.
THE COURT OF APPEALS, PHILIPPINE NATIONAL and PHILIPPINE EXCHANGE CO., INC., respondent.

QUISUMBING, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals dated July 22, 1996, in
CA-G.R. CY No. 38607, as well as of its resolution of January 23, 1997, denying petitioners' motion for
reconsideration. The challenged decision reversed the judgment of the Regional Trial Court of Bacolod
City, Branch 42 in Civil Case No. 14725.

The factual background of this case, as gleaned from the records, is as follows:

The Mirasols are sugarland owners and planters. In 1973-1974, they produced 70,501.08 piculs 1 of sugar,
25,662.36 of which were assigned for export. The following crop year, their acreage planted to the same
crop was lower, yielding 65,100 piculs of sugar, with 23,696.40 piculs marked for export.

Private respondent Philippine National Bank (PNB) financed the Mirasols' sugar production venture for
crop years, 1973-1974 and 1974-1975 under a crop loan financing scheme. Under said scheme, the
Mirasols signed Credit Agreements, a Chattel Mortgage on Standing Crops, and a Real Estate Mortgage in
favor of PNB. The Chattel Mortgage empowered PNB as the petitioners' attorney-in-fact to negotiate and
to sell the latter's sugar in both domestic and export markets and to apply the proceeds to the payment of
their obligations to it.

Exercising his law-making powers under Martial Law, then President Ferdinand Marcos issued Presidential
Decree (P.D.) No. 5792 in November, 1974. The decree authorized private respondent Philippine
Exchange Co., Inc. (PHILEX) to purchase sugar allocated for export to the United States and to other
foreign markets. The price and quantity was determined by the Sugar Quota Administration, PNB, the
Department of Trade and Industry, and finally, by the Office of the President. The decree further
authorized PNB to finance PHILEX's purchases. Finally, the decree directed that whatever profit PHILEX
might realize from sales of sugar abroad was to be remitted to a special fund of the national government,
after commissions, overhead expenses and liabilities had been deducted. The government offices and
entities tasked by existing laws and administrative regulations to oversee the sugar export pegged the
purchase price of export sugar in crop years 1973-1974 and 1974-1975 at P180.00 per picul.
PNB continued to finance the sugar production of the Mirasols for crop years 1975-1976 and 1976-1977.
These crop loans and similar obligations were secured by real estate mortgages over several properties of
the Mirasols and chattel mortgages over standing crops. Believing that the proceeds of their sugar sales to
PNB, if properly accounted for, were more than enough to pay their obligations, petitioners asked PNB for
an accounting of the proceeds of the sale of their export sugar. PNB ignored the request. Meanwhile,
petitioners continued to avail of other loans from PNB and to make unfunded withdrawals from their
current accounts with said bank. PNB then asked petitioners to settle their due and demandable accounts.
As a result of these demands for payment, petitioners on August 4, 1977, conveyed to PNB real properties
valued at P1,410,466.00 by way of dacion en pago, leaving an unpaid overdrawn account of
P1,513,347.78.

On August 10, 1982, the balance of outstanding sugar crop and other loans owed by petitioners to PNB
stood at P15,964,252.93. Despite demands, the Mirasols failed to settle said due anti demandable
accounts. PNB then proceeded to extrajudicially for close the mortgaged properties. After applying the
proceeds of the auction sale of the mortgaged realties, PNB still had a deficiency claim of P12,551,252.93.

Petitioners continued to ask PNB to account for the proceeds of the sale of their export sugar for crop
years 1973-1974 and 1974-1975, insisting that said proceeds, if properly liquidated, could offset their
outstanding obligations with the batik. PNB remained adamant in its stance that under P.D. No. 579, there
was nothing to account since under said law, all earnings from the export sales of sugar pertained to the
National Government and were subject to the disposition of the President of the Philippines for public
purposes.1âwphi1.nêt

On August 9, 1979, the Mirasols filed a suit for accounting, specific performance, and damages against
PNB with the Regional Trial Court of Bacolod City, docketed as Civil Case No. 14725.

On June 16, 1987, the complaint was amended to implead PHILEX as party-defendant.

The parties agreed at pre-trial to limit the issues to the following:

"1. The constitutionality and/or legality of Presidential Decrees numbered 338, 579, and 1192;

"2. The determination of the total amount allegedly due the plaintiffs from the defendants
corresponding to the allege(d) unliquidated cost price of export sugar during crop years 1973-1974
and 1974-1975."3

After trial on the merits, the trial court decided as follows:

"WHEREFORE, the foregoing premises considered, judgment is hereby rendered in favor of the
plaintiffs and against the defendants Philippine National Bank (PNB) and Philippine Exchange Co.,
Inc. (PHILEX):

(1) Declaring Presidential Decree 579 enacted on November 12, 1974 and all circulars, as well as
policies, orders and other issuances issued in furtherance thereof, unconstitutional and therefore,
NULL and VOID being in gross violation of the Bill of Rights;

(2) Ordering defendants PNB and PHILEX to pay, jointly and severally, plaintiffs the whole amount
corresponding to the residue of the unliquidated actual cost price of 25,662 piculs in export sugar
for crop year 1973-1974 at an average price of P300.00 per picul, deducting therefrom however,
the amount of P180.00 already paid in advance plus the allowable deductions in service fees and
other charges;

(3) And also, for the same defendants to pay, jointly and severally, same plaintiffs the whole
amount corresponding to the unpaid actual price of 14,596 piculs of export sugar for crop year
1974-1975 at an average rate of P214.14 per picul minus however, the sum of P180.00 per picul
already paid by the defendants in advance and the allowable deducting (sic) in service fees and
other charges.

"The unliquidated amount of money due the plaintiffs but withheld by the defendants, shall earn
the legal rate of interest at 12% per annum computed from the date this action was instituted until
fully paid; and, finally -
 (4) Directing the defendants PNB and PHILEX to pay, jointly and severally, plaintiffs the sum of
P50,000.00 in moral damages and the amount of P50,000.00 as attorney's fees, plus the costs of
this litigation.

"SO ORDERED."4

The same was, however, modified by a Resolution of the trial court dated May 14, 1992, which added the
following paragraph:

"This however whatever benefits that may have accrued in favor of the plaintiffs with the massage
and approval of Republic Act. 7202 otherwise known as the 'Sugar Restitution Law,' authorizing the
restitution of losses suffered by the plaintiffs from Crop year 1974-1975 to Crop year 1984-1985
occasioned by the actuations of government-owned and controlled agencies. (Underscoring in the
original).

"SO ORDERED."5

The Mirasols then filed an appeal with the respondent court, docketed as CA-G.R. CY No. 38607, faulting
the trial court for not nullifying the dacion en pago and the mortgage contracts, as well as the foreclosure
of their mortgaged properties. Also faulted was the trial court's failure to award them the full money
claims and damages sought from both PNB and PHILEX.

On July 22, 1996, the Court of Appeals reversed the trial court as follows:

"WHEREFORE, this Court renders judgment REVERSING the appealed Decision and entering the following
verdict:

"1. Declaring the dacion en pago and the foreclosure of the mortgaged properties valid;

"2. Ordering the PNB to render an accounting of the sugar account of the Mirasol[s] specifically
stating the indebtedness of the latter to the former and the proceeds of Mirasols' 1973-1974 and
1974-1975 sugar production sold pursuant to and in accordance with P.D. 579 and the issuances
therefrom;

"3. Ordering the PNB to recompute in accordance with RA 7202 Mirasols' indebtedness to it
crediting to the latter payments already made as well as the auction price of their foreclosed real
estate and stipulated value of their properties ceded to PNB in the dacon (sic) en pago;

"4. Whatever the result of the recomputation of Mirasols' account, the outstanding balance or the
excess payment shall be governed by the pertinent provisions of RA 7202.

"SO ORDERED."6

On August 28, 1996, petitioners moved for reconsideration, which the appellate court denied on January
23, 1997.

Hence, the instant petition, with petitioners submitting the following issues for our resolution:

"1. Whether the Trial Court has jurisdiction to declare a statute unconstitutional without notice to
the Solicitor General where the parties have agreed to submit such issue for the resolution of the
Trial Court.

"2. Whether PD 579 and subsequent issuances7 thereof are unconstitutional.

"3. Whether the Honorable Court of Appeals committed manifest error in not applying the doctrine
of piercing the corporate veil between respondents PNB and PHILEX.

"4. Whether the Honorable Court of Appeals committed manifest error in upholding the validity of
the foreclosure on petitioners property and in upholding the validity of the dacion en pago in this
case.
 "5. Whether the Honorable Court of Appeals committed manifest error in not awarding damages to
petitioners grounds relied upon the allowance of the petition. (Underscored in the original)" 8

On the first issue. It is settled that Regional Trial Courts have the authority and jurisdiction to consider the
constitutionality of a statute, presidential decree, or executive order.9 The Constitution vests the power of
judicial review or the power to declare a law, treaty, international or executive agreement, presidential
decree, order, instruction, ordinance, or regulation not. only in this Court, but in all Regional Trial
Courts.10 In J.M. Tuason and Co. v. Court of Appeals, 3 SCRA 696 (1961) we held:

"Plainly, the Constitution contemplates that the inferior courts should have jurisdiction in cases
involving constitutionality of any treaty or law, for it speaks of appellate review of final judgments
of inferior courts in cases where such constitutionality happens to be in issue." 11

Furthermore, B.P. BIg. 129 grants Regional Trial Courts the authority to rule on the conformity of laws or
treaties with the Constitution, thus:

"SECTION 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise exclusive original
jurisdiction:

(1) In all civil actions in which the subject of the litigations is incapable of pecuniary estimation;"

The pivotal issue, which we must address, is whether it was proper for the trial court to have exercised
judicial review.

Petitioners argue that the Court of Appeals erred in finding that it was improper for the trial court to have
declared P.D. No. 57912 unconstitutional, since petitioners had not complied with Rule 64, Section 3, of
the Rules of Court. Petitioners contend that said Rule specifically refers only to actions for declaratory
relief and not to an ordinary action for accounting, specific performance, and damages.

Petitioners' contentions are bereft of merit. Rule 64, Section 3 of the Rules of Court provides:

"SEC. 3. Notice to Solicitor General. - In any action which involves the validity of a statute, or
executive order or regulation, the Solicitor General shall be notified by the party attacking the
statute, executive order, or regulation, and shall be entitled to be heard upon such question."

This should be read in relation to Section 1 [c] of P.D. No. 478,13 which states in part:

"SECTION 1. Functions and Organizations - (1) The Office of the Solicitor General shall...have the
following specific powers and functions:

xxx

"[c] Appear in any court in any action involving the validity of any treaty, law, executive order or
proclamation, rule or regulation when in his judgment his intervention is necessary or when
requested by the court."

It is basic legal construction that where words of command such as "shall," "must," or "ought" are
employed, they are generally and ordinarily regarded as mandatory.14 Thus, where, as in Rule 64, Section
3 of the Rules of Court, the word "shall" is used, a mandatory duty is imposed, which the courts ought to
enforce.

The purpose of the mandatory Notice in Rule 64, Section 3 is to enable the Solicitor General to decide
whether or not his intervention in the action assailing the validity of a law or treaty is necessary. To deny
the Solicitor General such notice would be tantamount to depriving him of his day in court. We must
stress that, contrary to petitioners' stand, the mandatory notice requirement is not limited to actions
involving declaratory relief and similar remedies. The rule itself provides that such notice is required in
"any action" and not just actions involving declaratory relief. Where there is no ambiguity in the words
used in the true, there is no room for constnlction. 15 In all actions assailing the validity of a statute,
treaty, presidential decree, order, or proclamation, notice to the Solicitor General is mandatory.

In this case, the Solicitor General was never notified about Civil Case No. 14725. Nor did the trial court
ever require him to appear in person or by a representative or to file any pleading or memorandum on the
constitutionality of the assailed decree. Hence, the Court of Appeals did not err in holding that lack of the
required notice made it improper for the trial court to pass upon the constitutional validity of the
questioned presidential decrees.

As regards the second issue, petitioners contend that P.D. No. 579 and its implementing issuances are
void for violating the due process clause and the prohibition against the taking of private property without
just compensation. Petitioners now ask this Court to exercise its power of judicial review.

Jurisprudence has laid down the following requisites for the exercise of this power: First, there must be
before the Court an actual case calling for the exercise of judicial review. Second, the question before the
Court must be ripe for adjudication. Third, the person challenging the validity of the act must have
standing to challenge. Fourth, the question of constitutionality must have been raised at the earliest
opportunity, and lastly, the issue of constitutionality must be the very lis mota of the case.16

As a rule, the courts will not resolve the constitutionality of a law, if the controversy can be settled on
other grounds.17 The policy of the courts is to avoid ruling on constitutional questions and to presume that
the acts of the political departments are valid, absent a clear and unmistakable showing to the contrary.
To doubt is to sustain. This presumption is based on the doctrine of separation of powers. This means that
the measure had first been carefully studied by the legislative and executive departments and found to be
in accord with the Constitution before it was finally enacted and approved. 18

The present case was instituted primarily for accounting and specific performance. The Court of Appeals
correctly ruled that PNB's obligation to render an accounting is an issue, which can be determined,
without having to rule on the constitutionality of P.D. No. 579. In fact there is nothing in P.D. No. 579,
which is applicable to PNB's intransigence in refusing to give an accounting. The governing law should be
the law on agency, it being undisputed that PNB acted as petitioners' agent. In other words, the requisite
that the constitutionality of the law in question be the very lis mota of the case is absent. Thus we cannot
rule on the constitutionality of P.D. No. 579.

Petitioners further contend that the passage of R.A. No. 720219 rendered P.D. No. 579 unconstitutional,
since R.A. No. 7202 affirms that under P.D. 579, the due process clause of the Constitution and the right
of the sugar planters not to be deprived of their property without just compensation were violated.

A perusal of the text of R.A. No. 7202 shows that the repealing clause of said law merely reads:

"SEC. 10. All laws, acts, executive orders and circulars in conflict herewith are hereby repealed or
modified accordingly."

The settled rule of statutory construction is that repeals by implication are not favored. 20 R.A. No. 7202
cannot be deemed to have repealed P.D. No. 579. In addition, the power to declare a law unconstitutional
does not lie with the legislature, but with the courts.21 Assuming arguendo that R.A. No. 7202 did indeed
repeal P.D. No. 579, said repeal is not a legislative declaration finding the earlier law unconstitutional.

To resolve the third issue, petitioners ask us to apply the doctrine of piercing the veil of corporate fiction
with respect to PNB and PHILEX. Petitioners submit that PHILEX was a wholly-owned subsidiary of PNB
prior to the latter's privatization.

We note, however, that the appellate court made the following finding of fact:

"1. PNB and PHILEX are separate juridical persons and there is no reason to pierce the veil of
corporate personality. Both existed by virtue of separate organic acts. They had separate
operations and different purposes and powers."22

Findings of fact by the Court of Appeals are conclusive and binding upon this Court unless said findings
are not supported by the evidence.23 Our jurisdiction in a petition for review under Rule 45 of the Rules of
Court is limited only to reviewing questions of law and factual issues are not within its province. 24 In view
of the aforequoted finding of fact, no manifest error is chargeable to the respondent court for refusing to
pierce the veil of corporate fiction.

On the fourth issue, the appellate court found that there were two sets of accounts between petitioners
and PNB, namely:
 "1. The accounts relative to the loan financing scheme entered into by the Mirasols with PNB
(PNB's Brief, p. 16) On the question of haw much the PNB lent the Mirasols for crop years 1973-
1974 and 1974-1975, the evidence recited by the lower court in its decision was deficient. We are
offered (sic) PNB the amount of FIFTEEN MILLION NINE HUNDRED SIXTY FOUR THOUSAND TWO
HUNDRED FIFTY TWO PESOS and NINETY THREE Centavos (Ps15,964,252.93) but this is the
alleged balance the Mirasols owe PNB covering the years 1975 to 1982.

"2. The account relative to the Mirasol's current account Numbers 5186 and 5177 involving the
amount of THREE MILLION FOUR HUNDRED THOUSAND Pesos (P3,400,000.00). PNB claims
against the Mirasols. (PNB's Brief, p. 17)

"In regard to the first set of accounts, besides the proceeds from PNB's sale of sugar (involving the
defendant PHILEX in relation to the export portion of tile stock), the PNB foreclosed the Mirasols'
mortgaged properties realizing therefrom in 1981 THREE MILLION FOUR HUNDRED THIRTEEN
THOUSAND pesos (P3,413,000.00), the PNB itself having acquired the properties as the highest
bidder.

"As to the second set of accounts, PNB proposed, and the Mirasols accepted, a dacion en pago
scheme by which the Mirasols conveyed to PNB pieces of property valued at ONE MILLION FOUR
HUNDRED TEN THOUSAND FOUR HUNDRED SIXTY-SIX Pesos (Ps1,410,466.00) (PNB's Brief, pp.
16-17)."25

Petitioners now claim that the dacion en pago and the foreclosure of their mortgaged properties were void
for want of consideration. Petitioners insist that the loans granted them by PNB from 1975 to 1982 had
been fully paid by virtue of legal compensation. Hence, the foreclosure was invalid and of no effect, since
the mortgages were already fully discharged. It is also averred that they agreed to the dacion only by
virtue of a martial law Arrest, Search, and Seizure Order (ASSO).

We find petitioners' arguments unpersuasive. Both the lower court and the appellate court found that the
Mirasols admitted that they were indebted to PNB in the sum stated in the latter's counterclaim. 26
Petitioners nonetheless insist that the same can be offset by the unliquidated amounts owed them by PNB
for crop years 1973-74 and 1974-75. Petitioners' argument has no basis in law. For legal compensation to
take place, the requirements set forth in Articles 1278 and 1279 of the Civil Code must be present. Said
articles read as follows:

"Art. 1278. Compensation shall take place when two persons, in their own right, are creditors and
debtors of each other.

Art. 1279. In order that compensation may be proper, it is necessary:

(1) That each one of the obligors be bound principally, and that he be at the same time a principal
creditor of the other;

(2) That both debts consist in a sum of money, or if the things due are consumable, they be of the
same kind, and also of the same quality if the latter has been stated;

(3) That the two debts are due;

(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or controversy, commenced by third persons
and communicated in due time to the debtor."

In the present case, set-off or compensation cannot take place between the parties because: First, neither
of the parties are mutually creditors and debtors of each other. Under P.D. No. 579, neither PNB nor
PHILEX could retain any difference claimed by the Mirasols in the price of sugar sold by the two firms.
P.D. No. 579 prescribed where the profits from the sales are to be paid, to wit:

"SECTION 7. x x x After deducting its commission of two and one-half (2-1/2%) percent of gross
sales, the balance of the proceeds of sugar trading operations for every crop year shall be set
aside by the Philippine Exchange Company, Inc,. as profits which shall be paid to a special fund of
the National Government subject to the disposition of the President for public purposes."
Thus, as correctly found by the Court of Appeals, "there was nothing with which PNB was supposed to
have off-set Mirasols' admitted indebtedness."27

Second, compensation cannot take place where one claim, as in the instant case, is still the subject of
litigation, as the same cannot be deemed liquidated. 28

With respect to the duress allegedly employed by PNB, which impugned petitioners' consent to the dacion
en pago, both the trial court and the Court of Appeals found that there was no evidence to support said
claim. Factual findings of the trial court, affirmed by the appellate court, are conclusive upon this Court. 29

On the fifth issue, the trial court awarded petitioners P50,000.00 in moral damages and P50,000.00 in
attorney's fees. Petitioners now theorize that it was error for the Court of Appeals to have deleted these
awards, considering that the appellate court found PNB breached its duty as an agent to render an
accounting to petitioners.

An agent's failure to render an accounting to his principal is contrary to Article 1891 of the Civil Code. 30
The erring agent is liable for damages under Article 1170 of the Civil Code, which states:

"Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor thereof, are liable for damages."

Article 1170 of the Civil Code, however, must be construed in relation to Article 2217 of said Code which
reads:

"Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury .Though incapable
of pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendant's wrongful act or omission."

Moral damages are explicitly authorized in breaches of contract where the defendant acted fraudulently or
in bad faith.31 Good faith, however, is always presumed and any person who seeks to be awarded
damages due to the acts of another has the burden of proving that the latter acted in bad faith, with
malice, or with ill motive. In the instant case, petitioners have failed to show malice or bad faith 32 on the
part of PNB in failing to render an accounting. Absent such showing, moral damages cannot be awarded.

Nor can we restore the award of attorney's fees and costs of suit in favor of petitioners. Under Article
2208 (5) of the Civil Code, attorney's fees are allowed in the absence of stipulation only if "the defendant
acted in gross and evident bad faith in refusing to satisfy the plaintiff s plainly valid, just, and demandable
claim." As earlier stated, petitioners have not proven bad faith on the part of PNB and PHILEX.
1âwphi1.nêt

WHEREFORE, the instant petition is DENIED and the assailed decision of the respondent court in CA-G.R.
CY 38607 AFFIRMED. Costs against petitioners.

G.R. No. 140688       January 26, 2001

EDUARDO E. GATDULA, petitioner,

vs.
PEOPLE OF THE PHILIPPINES, respondent.

PARDO, J.:

The case is an appeal via certiorari from the decision of the Court of Appeals 1 that denied a petition for
certiorari to nullify the orders of the trial court admitting certain evidence of the prosecution and holding
in abeyance resolution on the demurrer to evidence filed by petitioner until after he has presented
evidence.

We unwind the facts as narrated in the petition, as follows:

On August 24, 1994, the City Prosecutor of Pasay City filed wit the Regional Trial Court, Pasay City an
information charging petitioner with violation of Presidential Decree No. 1612 (Anti-Fencing Law), alleging
that:
 "That on or about and sometime during the period January 9, 1994 to March 10, 1994, in Pasay
City, Philippines, and within the jurisdiction of this Honorable Court, the above named accused,
Eduardo Gatdula, with intent to gain for himself, did then and there wilfully, unlawfully and
feloniously buy a motor vehicle, an Isuzu Gemini Sonic Taxi with engine no. 235358 and with
Serial Chassis no. 5F69DOF203249 valued at P140,000.00 which he knows to have been derived
from the proceeds of carnapping." 2

After presenting their case in chief, on September 29, 1995, the prosecution rested its case and filed its
offer of exhibits.3

On October 9, 1995, petitioner filed his comment/opposition specifically objecting to the offer of exhibits
on the ground that they were taken from him without the presence and assistance of counsel and that
they were obtained during his unlawful arrest and for being hearsay. 4

On October 11, 1995, the trial court ordered the admission of all the exhibits of the prosecution and
granted petitioner permission to file a demurrer to evidence. 5

On October 17, 1995, petitioner filed with the trial court a demurrer to evidence.6

On October 19, 1995, the trial court issued orders admitting all the evidence of the prosecution and
holding the resolution on the demurrer in abeyance until petitioner has presented evidence.7

On November 15, 1995, petitioner filed with the Court of Appeals a petition for certiorari questioning the
trial court's orders admitting all evidence of the prosecution and holding in abeyance the resolution on
petitioner's demurrer to evidence until he has presented evidence.8

On February 17, 1999, the Court of Appeals promulgated its decision that denied the petition and affirmed
the two orders of the trial court.9

On May 4, 1999, petitioner filed a motion for reconsideration of the decision. 10

On September 8, 1999, the Court of Appeals denied petitioner's motion for reconsideration. 11

Hence, this appeal.12

Petitioner assails the two orders of the trial court on the ground that they were issued with grave abuse of
discretion amounting to excess or lack of jurisdiction.

The petition is without merit.

"The established principle is that rulings of the trial court on procedural questions and on admissibility of
evidence during the course of a trial are interlocutory in nature and may not be the subject of separate
appeal or review on certiorari, but are to be assigned as errors and reviewed in the appeal properly taken
from the decision rendered by the trial court on the merits of the case."13 "If the rule were otherwise,
there simply would be no end to the trial of cases, for any litigant, not satisfied with the trial court's ruling
admitting or excluding any proffered oral or documentary evidence, would then indefinitely tie up the trial
while elevating the ruling for review by the appellate court." 14

It has been held that the question of "[W]hether or not the evidence presented by the prosecuting
attorney, at the time he rests his cause, is sufficient to convince the court that the defendant is guilty,
beyond a reasonable doubt, of the crime charged, rests entirely within the sound discretion and judgment
of the lower court."15

In Joseph v. Villaluz,16 we held that the court cannot, in a special civil action for certiorari and prohibition,
decide whether the evidence adduced by the prosecution has established beyond reasonable doubt the
guilt of the accused.

On the other hand, the trial court must rule either to grant or deny the demurrer to evidence filed by
petitioner. The trial court has a specific duty under the Rules to act on petitioner's demurrer to evidence,
either by granting or denying the same.17 The denial of the demurrer may be the proper subject of a
petition for certiorari if there was grave abuse of discretion.1âwphi1.nêt
Perhaps, the trial court really wanted to deny the demurrer to evidence that is why it deferred resolution
thereon until petitioner has adduced evidence. In such case, the court must expressly deny the demurrer.
Nevertheless, the error is not jurisdictional, and certiorari is not available to correct errors in judgment or
conclusions of law and fact not amounting to excess or lack of jurisdiction.

IN VIEW WHEREOF, we deny the petition for lack of merit.

G.R. No. 143044. July 14, 2005

WILLIAM MADARANG and EVANS KHO, Petitioners,

vs.
HON. COURT OF APPEALS and THE PEOPLE OF THE PHILIPPINES, HON. OFELIA ARELLANO-MARQUEZ,
Presiding Judge of the METROPOLITAN TRIAL COURT OF QUEZON CITY, BRANCH 32 and JANICE YOUNG-
CHUA, Respondents.

DECISION

VELOSO REBATO, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court which seeks the
reversal of the Decision,1 dated April 18, 2000, of the Court of Appeals (CA) in CA-G.R. SP No. 58038
dismissing petitioners’ petition for certiorari.

The factual background of the case is as follows:

On February 11, 1994, private respondent Janice Young-Chua and her husband, Eduardo Chan-Chua, filed
a complaint for replevin and damages against petitioners William Madarang and Evans Kho in the Regional
Trial Court of Quezon City, docketed as Civil Case No. Q-94-19266 and raffled to Branch 84 (RTC, Branch
84). The complaint alleged that private respondent is the owner of a 1990 dark gray Kia Pride car,
evidenced by Certificate of Registration No. 086058002 dated May 31, 1991; and that on January 29,
1994, petitioners, through force and intimidation, took possession of the subject car by virtue of a falsified
Deed of Sale dated December 3, 1993 allegedly executed by private respondent in favor of petitioner
Madarang.3

On May 12, 1994, upon complaint of private respondent, petitioner Madarang was charged with
Falsification of Public Document in the Metropolitan Trial Court of Quezon City (MeTC) which was docketed
as Criminal Case No. 94-24930 and raffled to Branch 32.4 On the same date, petitioners were charged
with Grave Coercion in the same MeTC which was docketed as Criminal Case No. 94-24931, also raffled to
Branch 32.5 The cases were consolidated and jointly tried.

On August 8, 1996, a Motion to Suspend Criminal Proceedings on the ground of prejudicial question was
filed by petitioner Madarang in the MeTC, claiming that the issues presented in the replevin case pending
in RTC, Branch 84 are intimately related to the issues pending before the MeTC, the resolution of which
would necessarily determine the guilt of the accused in the criminal case for falsification. 6

On October 1, 1996, the MeTC denied petitioner Madarang’s motion to suspend proceedings on the
ground that the decision in the civil case for replevin will not be determinative of the guilt of the accused
in the criminal charge for falsification.7

On March 7, 1997, RTC, Branch 84 dismissed the complaint for replevin upon finding that the deed of sale
is genuine and that private respondent voluntarily surrendered possession of the car to the petitioners. 8
Private respondent filed a timely appeal with the CA, docketed as CA-G.R. CV No. 57597.

On June 13, 1997, petitioner Madarang filed a Motion to Dismiss the falsification case on the ground that
the decision dismissing the replevin suit in RTC, Branch 84 involving the same parties absolved him of
criminal liability in the falsification case.9 On January 22, 1998, the MeTC granted the Motion to Dismiss of
petitioner Madarang.10 On February 27, 1998, a Motion for Reconsideration was filed by the prosecution
on the ground that the dismissal was unwarranted since the decision dismissing the replevin suit in RTC,
Branch 84 is not yet final and executory, as it is pending appeal before the CA and the accused
deliberately omitted to send the private prosecutor a copy of said Motion to Dismiss. 11 On July 27, 1998,
the MeTC recalled the dismissal of the case for falsification. 12
Petitioners filed a Second Omnibus Motion to Quash Criminal Case Nos. 94-24930 and 94-24931 on the
ground that the findings of RTC, Branch 84 that the signature of private respondent in the deed of sale is
not falsified and that private respondent voluntarily surrendered possession of the car to the petitioners
bar the prosecution for falsification and grave coercion. Petitioners alleged that the findings of the RTC are
binding and must be given due respect by the MeTC notwithstanding the appeal taken by private
respondent.13

In its Opposition, the prosecution alleged that: the motion to quash is a mere scrap of paper as it is
contrary to Section 1, Rule 117 of the Rules of Court that a Motion to Quash must be filed before
arraignment of accused and such failure to move to quash before entering his plea, accused is deemed to
have waived his right to file the same; and, the replevin suit is an independent civil action, separate and
distinct from these cases for falsification of public document and grave coercion.14

On March 26, 1999, the MeTC denied petitioners’ motion to quash, ruling that the decision rendered by
the RTC, Branch 84 in the replevin case cannot absolve petitioners of the charges in the criminal cases as
said decision has not attained finality since it is pending appeal before the CA; and that petitioners waived
any grounds of a Motion to Quash pursuant to Section 1, Rule 117 of the Rules of Court.15

Petitioners then filed a petition for certiorari before the RTC, Branch 77, Quezon City (RTC, Branch 77),
docketed as Civil Case No. Q-99-37324. They assailed the MeTC’s denial of their motion to quash the
informations for falsification of public document and grave coercion and alleged that the MeTC should
have adopted the factual findings of RTC, Branch 84 in the Decision dated March 7, 1997 in the replevin
case as res judicata.16

On October 8, 1999, the RTC, Branch 77 dismissed petitioners’ petition for certiorari upon holding that:
res judicata cannot be invoked considering that the Decision dated March 7, 1997 of RTC, Branch 84 in
the replevin case is not yet a final and executory judgment, being on appeal; in any event, a final
judgment rendered in a civil action absolving the defendant from civil liability is not a bar to criminal
action; the issues of falsification and coercion were not made the subject of a full-dressed hearing in the
replevin case; and, the motion to quash was filed only after their arraignment in violation of the well-
settled doctrine that a motion to quash may be filed only before the accused has entered his plea to the
accusatory pleading.17

Petitioners’ filed a motion for reconsideration 18 but was denied in an Order dated February 29, 2000.19

Undaunted, petitioners filed a petition for certiorari before the CA which, on April 18, 2000, was
dismissed. In dismissing the petition, the CA held that the writ of certiorari is not the proper remedy
where a motion to quash an information is denied. It further held that the People of the Philippines was
not impleaded as a respondent in the case nor was the Office of the Solicitor General furnished a copy of
the petition when the Informations were filed in the name of the People of the Philippines and necessarily
it is the party interested in sustaining the proceedings in the court.20

Hence, the present petition for review on certiorari anchored on the following grounds:

THE HONORABLE COURT OF APPEALS HAS DECIDED THE ISSUES PRESENTED PROBABLY NOT IN
ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT.

THE HONORABLE COURT OF APPEALS HAS SO FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE
OF JUDICIAL PROCEEDINGS OR SO FAR SANCTIONED SUCH DEPARTURE BY THE LOWER COURT AS TO
CALL FOR AN EXERCISE OF THE POWER OF SUPERVISION.21

Petitioners claim that the MeTC Judge committed grave abuse of discretion when she denied their motion
to quash the Informations and refused to dismiss the charges against them since the charges against
them pending before her court were "obliterated" by the positive factual findings of RTC, Branch 84 in its
Decision dated March 7, 1997 that the signature of private respondent in the Deed of Sale dated
December 3, 1993 is genuine and she voluntarily surrendered the car to petitioners. They maintain that
such factual findings of RTC, Branch 84 in its Decision dated March 7, 1997 bar their prosecution in the
criminal cases for falsification of public document and grave coercion. They submit that once a court of
competent jurisdiction puts to finish an issue of fact, it cannot be disturbed by the lower court and,
accordingly, the factual findings of RTC, Branch 84 cannot be overturned by the MeTC.
The Solicitor General, on the other hand, avers that the decision in the replevin suit cannot foreclose or
suspend the prosecution of the criminal cases for falsification and grave coercion as replevin is an entirely
separate and distinct remedy allowed by the rules. He states that res judicata cannot apply for lack of the
essential elements of identity of parties and finality of the decision in the replevin suit.

As for private respondent, she argues that the decision of RTC, Branch 84 can not be conclusive upon the
MeTC because it is not a final and executory judgment, being on appeal in the CA, and, even if final, the
rules provide that such final decision does not foreclose prosecution of the criminal action. She insists that
the MeTC Judge did not act beyond her jurisdiction as the denial of the motion to quash was in accordance
with law and jurisprudence and, thus, petitioners’ resort to certiorari was improper and appropriately
dismissed by the RTC and the CA.

At the outset, we observe that while the assigned errors appear to raise errors of judgment committed by
the CA, the arguments of the petitioners purely dwell on the alleged grave abuse of discretion or error of
jurisdiction committed by the MeTC in denying the Motion to Quash, the very issue they raised in the
petition for certiorari before the RTC, when the issues that should have been raised in the petition for
review on certiorari before us are the errors of judgment that the CA may have committed in dismissing
their petition for certiorari. Petitioners’ utter failure to bring up the matter concerning the CA’s bases in
dismissing their petition shows that they are evading the issues.

Nonetheless, we find that the CA is correct in dismissing petitioners’ petition for certiorari.

First. We note that the petitions for certiorari in the RTC and CA are defective since petitioners failed to
implead the People of the Philippines as respondent therein. As provided in Section 5,22 Rule 110 of the
Rules of Criminal Procedure, all criminal actions are prosecuted under the direction and control of the
public prosecutor. The prosecution of offenses is thus the concern of the government prosecutors. It
behooved the petitioners to implead the People of the Philippines as respondent in the RTC and in the CA
to enable the public prosecutor or Solicitor General, as the case may be, to comment on the petitions. The
failure to implead is fatal to petitioners’ cause.

Second. It is settled that a special civil action for certiorari and prohibition is not the proper remedy to
assail the denial of a motion to quash an information. The established rule is that when such an adverse
interlocutory order is rendered, the remedy is not to resort forthwith to certiorari or prohibition, but to
continue with the case in due course and, when an unfavorable verdict is handed down to take an appeal
in the manner authorized by law.23 Only when the court issued such order without or in excess of
jurisdiction or with grave abuse of discretion and when the assailed interlocutory order is patently
erroneous and the remedy of appeal would not afford adequate and expeditious relief will certiorari be
considered an appropriate remedy to assail an interlocutory order.24 No such special circumstances are
present in the case at bar.

The declaration of RTC, Branch 84 in its Decision dated March 7, 1997 that the signature of private
respondent in the Deed of Sale dated December 3, 1993 is genuine and she voluntarily surrendered the
car to petitioners is not res judicata in the criminal cases for falsification and grave coercion because there
is no identity of parties as the People of the Philippines is not a party in the replevin suit and cannot be
bound by the factual findings therein. Besides, the decision of RTC, Branch 84 is still pending appeal with
the CA. Hence, at the time the MeTC, the RTC and the CA rendered their assailed order, decision and
resolution, respectively, there existed no special circumstance to warrant a dismissal of the cases pending
in the MeTC.

It is noted that during the pendency of the case before us, the CA has rendered a Decision dated April 19,
2005 modifying the Decision dated March 7, 1997 of RTC, Branch 84, in this wise:

WHEREFORE, the application for a Writ of Replevin is hereby DENIED, the plaintiff Janice Chua having
executed a Deed of Sale in favor of defendant William Madarang.

The Deed of Sale is however, hereby declared as an equitable mortgage and, therefore, plaintiff Janice
Chua possesses the right of redemption pursuant to Article 1606 of the New Civil Code.

SO ORDERED.
However, records before us do not show that this decision had become final and executory. As a natural
or inherent and inevitable consequence of said declaration, a decision which has not become final and
executory has no conclusive effect.

Third. Section 3, Rule 117 of the 1985 Rules of Criminal Procedure, the governing law at the time of the
filing of the indictments, provides the grounds on which an accused can move to quash the complaint or
information. These are: (a) the facts charged do not constitute an offense; (b) the court trying the case
has no jurisdiction over the offense charged; (c) the court trying the case has no jurisdiction over the
person of the accused; (d) the officer who filed the information had no authority to do so; (e) the
information does not conform substantially to the prescribed form; (f) more than one offense is charged,
except in those cases in which existing laws prescribe a single punishment for various offenses; (g) the
criminal action or liability has been extinguished; (h) the information contains averments which, if true,
would constitute a legal excuse or justification; and (i) the accused has been previously convicted or is in
jeopardy of being convicted or acquitted of the offense charged.25

Section 8 of the same Rule specifically provides:

SEC. 8. Failure to move to quash or to allege any ground therefor. – The failure of the accused to assert
any ground of a motion to quash before he pleads to the complaint or information, either because he did
not file a motion to quash or failed to allege the same in said motion, shall be deemed a waiver of the
grounds of a motion to quash, except the grounds of no offense charged, lack of jurisdiction over the
offense charged, extinction of the offense or penalty and jeopardy, as provided for in paragraphs (a), (b),
(f) and (h) of Section 3 of this Rule. (10a)

Thus, a motion to quash may still be filed after pleading to the complaint or information where the
grounds are that no offense is charged, lack of jurisdiction over the offense charged, extinction of the
offense or penalty and jeopardy. Nowhere in the enumerated excepted grounds is there any mention of
res judicata as a ground to quash an information.

Fourth. Section 4, Rule 111 of the Rules of Court explicitly recognizes that "a final judgment rendered in a
civil action absolving the defendant from civil liability is no bar to a criminal action." 26

Fifth. Article 3327 of the Civil Code provides that in cases involving alleged fraudulent acts, a civil action
for damages, entirely separate and distinct from the criminal action, may be brought by the injured party.
Such civil action shall proceed independently of the criminal prosecution and shall require only a
preponderance of evidence. It is clear, therefore, that the civil case for replevin may proceed
independently of the criminal cases for falsification and grave coercion, especially because while both
cases are based on the same facts, the quantum of proof required for holding the parties liable therein
differs.28

All told, the petitioners failed to show why the actions of the MeTC, RTC and the CA which have passed
upon the same issue should be reversed. We are thus convinced that the CA committed no reversible
error in its challenged Decision.

WHEREFORE, the present petition is DENIED. The assailed Decision of the Court of Appeals, dated April
18, 2000, is AFFIRMED. Costs against petitioners.

G.R. No. 132518             March 28, 2000

GAVINA MAGLUCOT-AW, CATALINA ORCULLO, RICHARD ESTANO, NIDA MAGLUCOT, MELANIA

MAGLUCOT-CATUBIG, EMILIANO CATUBIG, LADISLAO SALMA, petitioners,
vs.
LEOPOLDO MAGLUCOT, SEVERO MAGLUCOT, WILFREDA MAGLUCOT-ALEJO and CONSTANCIO ALEJO,
respondents.

KAPUNAN, J.:

This petition for review on certiorari assails the Decision, dated 11 November 1997, of the Court of
Appeals in CA-G.R. CV No. 48816 which reversed and set aside the Decision, dated 13 December 1994, of
the Regional Trial Court, Branch 30 of Dumaguete City, Negros Oriental in an action for recovery of
possession and damages.

The core issue in this case is whether a partition of Lot No. 1639 had been effected in 1952. Petitioners
contend that there was already a partition of said lot; hence, they are entitled to exclusive possession and
ownership of Lot No. 1639-D which originally formed part of Lot No. 1639 until its partition. Private
respondents, upon the other hand, claim that there was no partition; hence, they are co-owners of Lot
No. 1639-D. Notably, this case presents a unique situation where there is an order for partition but there
is no showing that the sketch/subdivision plan was submitted to the then Court of First Instance for its
approval or that a decree or order was registered in the Register of Deeds.

The antecedent facts of the case are as follows:

Petitioners filed with the RTC a complaint for recovery of possession and damages alleging, inter alia, that
they are the owners of Lot No. 1639-D. Said lot was originally part of Lot No. 1639 which was covered by
Original Certificate Title No. 6775 issued in the names of Hermogenes Olis, Bartolome Maglucot. Pascual
Olis, Roberto Maglucot, Anselmo Lara and Tomas Maglucot on 16 August 1927. 1 On 19 April 1952, Tomas
Maglucot, one of the registered owners and respondents predecessors-in-interest, filed a petition to
subdivide lot No. 1639. 2 Consequently, on 13 May 1952, then CFI of Negros Oriental issued an order 3
directing the parties to subdivide said lot into six portions as follows:

a) Hermogenes Olis — lot 1639-A

b) Pascual Olis — lot 1639-B

c) Bartolome Maglucot — lot 1639-C

d) Roberto (Alberto) Maglucot — lot 1639-D

e) Anselmo Lara — lot 1639-E

4
f) Tomas Maglucot — lot 1639-F.

Sometime in 1963, Guillermo Maglucot rented a portion of Lot No. 1639-D (subject lot). Subsequently,
Leopoldo and Severo, both surnamed Maglucot, rented portions of subject lot in 1964 and 1969,
respectively, and each paying rentals therefor. Said respondents built houses on their corresponding
leased lots. They paid the rental amount of P100.00 per annum to Mrs. Ruperta Salma, who represented
the heirs of Roberto Maglucot, petitioners predecessors-in-interest. In December 1992, however, said
respondents stopped paying rentals claiming ownership over the subject lot. Petitioners thus filed the
complaint a quo.

After trail, the lower court rendered judgment in favor of petitioners. The RTC found the existence of tax
declarations in the names of Hermogenes Olis and Pascual Oils (purported owners of Lot Nos. 1639-A and
1639-B, respectively) 5 as indubitable proof that there was a subdivision of Lot No. 1639. It likewise found
that Tomas Maglucot, respondents' predecessors-in-interest, took active part in the partition as it was he,
in fact, who commenced the action for partition. 6 The court a quo cited Article 1431 of the Civil Code
which states that "[t]hrough estoppel an admission or representation is rendered conclusive upon the
person making it, and cannot be denied or disproved as against the person relying thereon." Applying said
provision of law, it held that while there was no court order showing that Lot No. 1639 was partitioned, its
absence could not be used by Tomas Maglucot, or respondents as his successors-in-interest, to deny the
existence of an approved partitioned against the other co-owners who claim that there was one. 7 Said
court, likewise, ruled that the tax declarations 8 over the houses of respondents, expressly stating that the
same are constructed on the lots of Roberto Maglucot, constitute a conclusive admission by them of the
ownership of the subject lot by the latter. 9

The dispositive portion of the lower court's decision reads as follows:

WHEREFORE, on the basis of the foregoing discussion, judgment is hereby rendered in favor of the
plaintiffs against the defendants ordering the latter:

1. To demolish their houses inside lot 1639-D, vacate the premises thereof and
deliver the possession of the same to Plaintiffs;
 2. To jointly and solidarily pay plaintiffs the sum of P15,000.00 for attorney's fees:

3. To each pay plaintiffs the sum of P100.00 every year from 1993 for actual
damages representing the amount of unpaid rentals up to the time they actually
vacate the premises in question;

10
4. To pay the costs.

On appeal, the CA reversed the decision of the RTC. The appellate court ruled that the sketch plan and tax
declarations relied upon by petitioners are not conclusive evidence of partition. 11 The CA likewise found
that the prescribed procedure under Rule 69 of the Rules of Court was not followed. It thus declared that
there was no partition of Lot No. 1639.

Petitioners filed this petition for review on certiorari alleging that the CA committed the following
reversible errors:

IN VIOLATING THE LAW ON ACQUISITIVE PRESCRIPTION PLAINTIFFS HAVING POSSESSED LOT

1639-D SINCE 1946;

II

IN VIOLATING THE LAW ON ESTOPPEL, THE FACT OF PAYMENT OF RENTALS AND OFFER TO BUY
THE DEFENDANTS IS ADMISSION THAT THE AREA IN LOT 1639-D. HAD LONG BEEN ADJUDICATED
TO PLAINTIFFS;

III

IN DECLARING THAT THERE WAS NO PRIOR PARTITION, CONTRARY TO THE FINDINGS OF THE
TRIAL COURT, AND AGAINST THE EVIDENCE ON RECORD, OF WHICH IF PROPERLY CONSIDERED
WOULD CHANGE THE OUTCOME OF THE CASE;

IV

IN DECLARING THAT THERE IS NO LAW OR JURISPRUDENCE APPLICABLE UNDER THE PREMISES;

THIS WOULD ONLY SHOW THAT THE RECORD OF THE CASE WAS NOT PROPERLY SCRUTINIZED,
AND THE LAW WAS NOT PROPERLY STUDIED; ESPECIALLY IN THE CASE AT BENCH THAT THE
ORAL AND MUTUAL PARTITION HAPPENED DURING THE REGIME OF THE OLD RULES OF
PROCEDURE; 12

Petitioners maintain that Lot No. 1639 was mutually partitioned and physically subdivided among the co-
owners and that majority of them participated in the actual execution of the subdivision. Further, the co-
owners accepted their designated shares in 1946 as averred by Tomas Maglucot in his petition for
partition. 13 Petitioners opine that in 1952, Tomas Maglucot himself initiated a court proceeding for a
formal subdivision of Lot No. 1639. In said petition, he averred that only Hermogenes Olis and the heirs of
Pascual Olis were not agreeable to the partition. 14 Petitioners further contend that respondents admitted
in their tax declarations covering their respective houses that they are "constructed on the land of Roberto
Maglucot." 15 Simply put, petitioners vigorously assert that respondents are estopped from claiming to be
co-owners of the subject lot in view of the mutual agreement in 1946, judicial confirmation in 1952, and
respondents' acquiescence because they themselves exclusively exercised ownership over Lot No. 1639-A
beginning 1952 up to the present. 16

For their part, respondents posit three points in support of their position. First, they emphasize that
petitioners failed to show that the interested parties were apprised, or notified of the tentative subdivision
contained in the sketch and that the CFI subsequently confirmed the same. 17 Second, they point to the
fact that petitioners were unable to show any court approval of any partition. 18 Third, they maintain that
Lot No. 1639 remain undivided since to date, OCT No. 6275 is still an existing and perfectly valid title,
containing no annotation of any encumbrance or partition whatsoever. 19
After a careful consideration of the pleadings filed by the parties and the evidence on record, we find that
the petition is meritorious. As stated earlier, the core issue in this case is whether there was a valid
partition in 1952.

Preliminary, this Court recognizes that "the jurisdiction of this Court in cases brought before it from the
Court of Appeals via Rule 45 of the Rules of Court is limited to reviewing errors of law. Findings of fact of
the latter are conclusive, except in the following instances: (1) when the findings are grounded entirely on
speculation, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or
impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in making its findings the
Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both
the appellant and the appellee; (7) when the findings are contrary to those of the trial court; (8) when the
findings are conclusions without citation of specific evidence on which they are based; (9) when the facts
set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the
respondent; and (10) when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record." 20 This case falls under exceptions (7), (8) and (10) in that the
findings of facts of the CA are in conflict with that of the RTC, are mere conclusions without citation of
specific evidence on which they are based and are premised on absence of evidence but are contradicted
by the evidence on record. For these reasons, we shall consider the evidence on record to determine
whether indeed there was partition.

In this jurisdiction, an action for partition is comprised of two phases: first, an order for partition which
determines whether a co-ownership in fact exists, and whether partition is proper, and, second, a decision
confirming the sketch or subdivision submitted by the parties or the commissioners appointed by the
court, as the case may be. 21 The first phase of a partition and/or accounting suit is taken up with the
determination of whether or not a co-ownership in fact exists, (i.e., not otherwise legally proscribed) and
may be made by voluntary agreement of all the parties interested in the property. This phase may end
with a declaration that plaintiff is not entitled to have a partition either because a co-ownership does not
exist, or partition is legally prohibited. It may end, upon the other hand, with an adjudgment that a co-
ownership does in truth exist, partition is proper in the premises and an accounting of rents and profits
received by the defendant from the real estate in question is in order. In the latter case, "the parties may,
if they are able to agree, make partition among themselves by proper instruments of conveyance, and the
court shall confirm the partition so agreed upon. In either case — i.e., either the action is dismissed or
partition and/or accounting is decreed — the order is a final one, and may be appealed by any party
aggrieved thereby. 22 The second phase commences when it appears that "the parties are unable to agree
upon the partition" directed by the court. In that event, partition shall be done for the parties by the court
with the assistance of not more than three (3) commissioners. This second stage may well also deal with
the rendition of the accounting itself and its approval by the court after the parties have been accorded
opportunity to be heard thereon, and an award for the recovery by the party or parties thereto entitled of
their just share in the rents and profits of the real estate in question." Such an order is, to be sure, final
and appealable. 23

The present rule on the question of finality and appealability of a decision or order decreeing partition is
that it is final and appealable. 23 The order of partition is a final determination of the co-ownership over
Lot No. 1639 by the parties and the propriety of the partition thereof. Hence, if the present rule were
applied, the order not having been appealed or questioned by any of the parties to the case, it has
become final and executory and cannot be disturbed.

The true test to ascertain whether or not an order or a judgment is interlocutory or final is: Does it leave
something to be done in the trial court with respect to the merits of the case? If it does, it is interlocutory;
if it does not, it is final. The key test to what is interlocutory is when there is something more to be done
on the merits of the case. 24 An order for partition is final and not interlocutory and, hence, appealable
because it decides the rights of the parties upon the issue submitted. 25

However, this Court notes that the order of partition was issued when the ruling in Fuentebella vs.
Carrascoso, 26 which held that the order of partition is interlocutory, was controlling. In addition, the
reports of the commissioners not having been confirmed by the trial court are not binding. 27 In this case,
both the order of partition and the unconfirmed sketch plan are, thus, interlocutory. Nevertheless, where
parties do not object to the interlocutory decree, but show by their conduct that they have assented
thereto, they cannot thereafter question the decree, 28 especially, where, by reason of their conduct,
considerable expense has been incurred in the execution of the commission. 29 Respondents in this case
have occupied their respective lots in accordance with the sketch/subdivision plan. They cannot after
acquiescing to the order for more than forty (40) years be allowed to question the binding effect thereof.
This case is to be distinguished from the order in the action for partition in Arcenas vs. Cinco. 30 In that
case, the order was clearly interlocutory since it required the parties "to submit the corresponding deed of
partition to the Court for its approval." Here, the order appointed two commissioners and directed them
merely to approve the sketch plan already existing and tentatively followed by the parties.

Under the present rule, the proceedings of the commissioners without being confirmed by the court are
not binding upon the parties. 31 However, this rule does not apply in case where the parties themselves
actualized the supposedly unconfirmed sketch/subdivision plan. The purpose of the court approval is to
give effect to the sketch/subdivision plan. In this case, the parties themselves or through their
predecessors-in-interest implemented the sketch plan made pursuant to a court order for partition by
actually occupying specific portions of Lot No. 1639 in 1952 and continue to do so until the present until
this case was filed, clearly, the purpose of the court approval has been met. This statement is not to be
taken to mean that confirmation of the commissioners may be dispensed with but only that the parties
herein are estopped from raising this question by their own acts of ratification of the supposedly non-
binding sketch/subdivision plan.

The records of the case show that sometime in 1946 there was a prior oral agreement to tentatively
partition Lot No. 1639. 32 By virtue of this agreement, the original co-owners occupied specific portions of
Lot No. 1639.33 It was only in 1952 when the petition to subdivide Lot No. 1639 was filed because two of
the co-owners, namely Hermogenes Olis and heirs of Pascual Olis, refused to have said lot subdivided and
have separate certificates of title. Significantly, after the 1952 proceedings, the parties in this case by
themselves and/or through their predecessors-in-interest occupied specific portions of Lot No. 1639 in
accordance with the sketch plan. Such possession remained so until this case arose, or about forty (40)
years later.

From its order in 1952, it can be gleaned that the CFI took notice of the tentative subdivision plan by oral
partition of the parties therein. Further, it appears that the court was aware that the parties therein
actually took possession of the portions in accordance with the sketch/subdivision plan. With the factual
backdrop, said court ordered the partition and appointed two (2) commissioners to approve the tentative
sketch/subdivision plan. It would not be unreasonable to presume that the parties therein, having
occupied specific portions of Lot No. 1639 in accordance with the sketch/subdivision plan, were aware that
it was that same sketch/subdivision plan which would be considered by the commissioners for approval.
There is no showing that respondents by themselves or through their predecessors-in-interest raised any
objections. On the contrary, the records show that the parties continued their possession of the specific
portions of Lot No. 1639 pursuant to the sketch/subdivision plan.

It has been previously held that a co-owner, who, though not a party to a partition accepts the partition
allotted to him, and holds and conveys the same in severalty, will not be subsequently permitted to avoid
partition. 34 It follows that a party to a partition is also barred from avoiding partition when he has
received and held a portion of the subdivided land especially in this case where respondents have enjoyed
ownership rights over their share for a long time.

Parties to a partition proceeding, who elected to take under partition, and who took possession of the
portion allotted to them, are estopped to question title to portion allotted to another party. 35 A person
cannot claim both under and against the same instrument. 36 In other words, they accepted the lands
awarded them by its provisions, and they cannot accept the decree in part, and repudiate it in part. They
must accept all or none. 37 Parties who had received the property assigned to them are precluded from
subsequently attacking its validity of any part of it. 38 Here, respondents, by themselves and/or through
their predecessors-in-interest, already occupied of the lots in accordance with the sketch plan. This
occupation continued until this action was filed. They cannot now be heard to question the possession and
ownership of the other co-owners who took exclusive possession of Lot 1639-D also in accordance with
the sketch plan.

In technical estoppel, the party to be estopped must knowingly have acted so as to mislead his adversary,
and the adversary must have placed reliance on the action and acted as he would otherwise not have
done. Some authorities, however, hold that what is tantamount to estoppel may arise without this
reliance on the part of the adversary, and this is called, ratification or election by acceptance or benefits,
which arises when a party, knowing that he is not bound by a defective proceeding, and is free to
repudiate it if he will, upon knowledge, and while under no disability, chooses to adopt such defective
proceeding as his own. 39 Ratification means that one under no disability voluntarily adopts and gives
sanction to some unauthorized act or defective proceeding, which without his sanction would not be
binding on him. It is this voluntary choice, knowingly made, which amounts to ratification of what was
therefore unauthorized, and becomes the authorized act of the party so making the ratification. 40
The records show that respondents were paying rent for the use of a portion of Lot No. 1639-D. Had they
been of the belief that they were co-owners of the entire Lot No. 1639 they would not have paid rent.
Respondents attempted to counter this point by presenting an uncorroborated testimony of their sole
witness to the effect that the amount so paid to Roberto Maglucot and, subsequently, to Ruperta Salma
was for the payment of real property taxes. We are not persuaded. In its quite improbable that the parties
would be unaware of the difference in their treatment of their transactions for so long a time. Moreover,
no evidence was ever presented to show that a tax declaration for the entire Lot No. 1639 has ever been
made. Replete in the records are tax declarations for specific portions of Lot 1639. It is inconceivable that
respondents would not be aware of this. With due diligence on their part, they could have easily verified
this fact. This they did not do for a period spanning more than four decades.

The payment of rentals by respondents reveal that they are mere lessees. As such, the possession of
respondents over Lot No. 1639-D is that of a holder and not in the concept of an owner. One who
possesses as a mere holder acknowledges in another a superior right which he believes to be ownership,
whether his belief be right or wrong. 41 Since the possession of respondents were found to be that of
lessors of petitioners, it goes without saying that the latter were in possession of Lot No. 1639-D in the
concept of an owner from 1952 up to the time the present action was commenced.

Partition may be inferred from circumstances sufficiently strong to support presumption. 42 Thus, after a
long possession in severalty, a deed of partition may be presumed. 43 It has been held that recitals in
deeds, possession and occupation of land, improvements made thereon for a long series of years, and
acquiescence for 60 years, furnish sufficient evidence that there was an actual partition of land either by
deed or by proceedings in the probate court, which had been lost and were not recorded. 44 And where a
tract of land held in common has been subdivided into lots, and one of the lots has long been known and
called by the name of one of the tenants in common, and there is no evidence of any subsequent claim of
a tenancy in common, it may fairly be inferred that there has been a partition and that such lot was set
off to him whose name it bears. 45

Respondents insist that the absence of any annotation in the certificate of title showing any partition of
Lot No. 1639 and that OCT No. 6725 has not been canceled clearly indicate that no partition took place.
The logic of this argument is that unless partition is shown in the title of the subject property, there can
be no valid partition or that the annotation in the title is the sole evidence of partition.

Again, we are not persuaded. The purpose of registration is to notify and protect the interests of strangers
to a given transaction, who may be ignorant thereof, but the non-registration of the deed evidencing such
transaction does not relieve the parties thereto of their obligations thereunder. 46 As originally conceived,
registration is merely a species of notice. The act of registering a document is never necessary in order to
give it legal effect as between the parties. 47 Requirements for the recording of the instruments are
designed to prevent frauds and to permit and require the public to act with the presumption that recorded
instrument exist and are genuine. 48

It must be noted that there was a prior oral partition in 1946. Although the oral agreement was merely
tentative, the facts subsequent thereto all point to the confirmation of said oral partition. By virtue of that
agreement, the parties took possession of specific portions of the subject lot. The action for partition was
instituted because some of the co-owners refused to have separate titles issued in lieu of the original title.
In 1952, an order for partition was issued by the cadastral court. There is no evidence that there has been
any change in the possession of the parties. The only significant fact subsequent to the issuance of the
order of partition in 1952 is that respondents rented portions of Lot No. 1639-D. It would be safe to
conclude, therefore, that the oral partition as well as the order of partition in 1952 were the bases for the
finding of actual partition among the parties. The legal consequences of the order of partition in 1952
having been discussed separately, we now deal with oral partition in 1946. Given that the oral partition
was initially tentative, the actual possession of specific portions of Lot No. 1639 in accordance with the
oral partition and the continuation of such possession for a very long period indicate the permanency and
ratification of such oral partition. The validity of an oral partition is already well-settled. In Espina vs.
Abaya, 49 we declared that an oral partition is valid. In Hernandez vs. Andal, 50 reiterated in Tan vs. Lim, 51
this Court has ruled, thus:

On general principle, independent and in spite of the statute of frauds, courts of equity have
enforce oral partition when it has been completely or partly performed.

Regardless of whether a parol partition or agreement to partition is valid and enforceable at law,
equity will proper cases where the parol partition has actually been consummated by the taking of
possession in severalty and the exercise of ownership by the parties of the respective portions set
 off to each, recognize and enforce such parol partition and the rights of the parties thereunder.
Thus, it has been held or stated in a number of cases involving an oral partition under which the
parties went into possession, exercised acts of ownership, or otherwise partly performed the
partition agreement, that equity will confirm such partition and in a proper case decree title in
accordance with the possession in severalty.

In numerous cases it has been held or stated that parol partition may be sustained on the ground
of estoppel of the parties to assert the rights of a tenant in common as to parts of land divided by
parol partition as to which possession in severalty was taken and acts of individual ownership were
exercised. And a court of equity will recognize the agreement and decree it to be valid and
effectual for the purpose of concluding the right of the parties as between each other to hold their
respective parts in severalty.

A parol partition may also be sustained on the ground that the parties thereto have acquiesced in
and ratified the partition by taking possession in severalty, exercising acts of ownership with
respect thereto, or otherwise recognizing the existence of the partition.

A number of cases have specifically applied the doctrine of part performance, or have stated that a
part performance is necessary, to take a parol partition out of the operation of the statute of
frauds. It has been held that where there was a partition in fact between tenants in common, and
a part performance, a court of equity would have regard to enforce such partition agreed to by the
parties.

Two more points have constrained this Court to rule against respondents. First, respondents Wilfreda
Maglucot-Alejo and Constancio Alejo offered to buy the share of Roberto Maglucot. Second, the tax
declarations contain statements that the houses of respondents were built on the land owned by Roberto
Maglucot.

On the first point, petitioners presented Aida Maglucot who testified that after respondents were informed
that petitioners were going to use Lot No. 1639-D belonging to Roberto Maglucot, respondents Wilfreda
Maglucot-Alejo and Constancio Alejo went to the house of said witness and offered to buy the share of
Roberto Maglucot. 52 Aida Maglucot further testified that they refused the offer because they also intend to
use the lot for a residential purpose. 53 This testimony of Aida Maglucot is unrebutted by respondents, and
the CA did not touch upon this finding of fact. Hence, the offer to buy has been established by the
unrebutted evidence of the petitioners. Why would they give such offer if they claim to be at least a co-
owner of the said lot? In effect, respondents impliedly admit the title of the petitioners and that they are
not co-owners, much less the sole owners, of Lot No. 1639-D.

On the second point, the existence of Tax Declaration No. 04-557 in the names of Constancio Alejo and
Godofreda Maglucot, 54 Tax Declaration No. 04-87-13 in the names of Leopoldo Maglucot and Regina
Barot, 55 Tax Declaration No. 04-593 in the names of Severo Maglucot and Samni Posida 56 showing that
the houses of the above-mentioned persons are constructed on the land of Roberto Maglucot 57 constitute
incontrovertible evidence of admission by the same persons of the ownership of the land by Roberto
Maglucot. Tax Declarations are public documents. Unless their veracity is directly attacked, the contents
therein are presumed to be true and accurate. 58 The lone testimony of Severo Maglucot that Roberto
Maglucot was only made to appear as owner of the land in their respective declarations because he was
the administrator of Lot No. 1639 is uncorroborated and not supported by any other evidence.

No injustice is dealt upon respondents because they are entitled to occupy a portion of Lot No. 1639,
particularly Lot No. 1639-A, in their capacity as heirs of Tomas Maglucot, one of the original co-owners of
Lot No. 1639 in accordance with the sketch plan of said lot showing the partition into six portions. 59

Finally, this Court takes notice of the language utilized by counsel for petitioners in their petition for
review on certiorari.1âwphi1 Thrice in the petition, counsel for petitioners made reference to the
researcher of the CA. First, he alluded to the lack of scrutiny of the records and lack of study of the law
"by the researcher." 60 Second, he cited the researcher of the CA as having "sweepingly stated without
reference to the record" 61 that "[w]e have scanned the records on hand and found no evidence of any
partition." Finally, counsel for petitioners assailed the CA decision, stating that "this will only show that
there was no proper study of the case by the researcher." 62

Any court when it renders a decision does so as an arm of the justice system and as an institution apart
from the persons that comprise it. Decisions are rendered by the courts and not the persons or personnel
that may participate therein by virtue of their office. It is highly improper and unethical for counsel for
petitioners to berate the researcher in his appeal. Counsel for petitioner should be reminded of the
elementary rules of the legal profession regarding respect for the courts by the use of proper language in
its pleadings and admonished for his improper references to the researcher of the CA in his petition. A
lawyer shall abstain from scandalous, offensive, or menacing language or behavior before the courts. 63

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals is SET ASIDE and the decision
of the Regional Trial Court is hereby REINSTATED.1âwphi1.nêt

G.R. No. 140189             February 28, 2005

GREAT SOUTHERN MARITIME SERVICES CORPORATION, FERRY CASINOS LIMITED and PIONEER
INSURANCE AND SURETY CORPORATION, petitioners,
vs.
JENNIFER ANNE B. ACUÑA, HAYDEE ANNE B. ACUÑA, MARITES T. CLARION, MARISSA C. ENRIQUEZ,
GRACIELA M. TORRALBA and MARY PAMELA A. SANTIAGO, respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Decision1
of the Court of Appeals dated June 30, 1999 in CA-G.R. SP No. 50504, which set aside the Decision of the
National Labor Relations Commission (NLRC) dated January 15, 1997 in NLRC CA No. 010186-96.

The factual background of the case is as follows:

Petitioner Great Southern Maritime Services Corporation (GSMSC) is a manning agency organized and
existing under Philippine laws. It is the local agent of petitioner Ferry Casinos Limited. Petitioner Pioneer
Insurance and Surety Corporation is the surety company of petitioner GSMSC.

On October 7, 1993, respondents Jennifer Anne B. Acuña, Haydee Anne B. Acuña, Marites T. Clarion,
Marissa C. Enriquez, Graciela M. Torralba, and Mary Pamela A. Santiago filed a complaint for illegal
dismissal against petitioners before the Philippine Overseas Employment Administration (POEA), docketed
as POEA Case No. (M) 93-10-1987.2

Respondents claim that: between the months of March and April 1993, they were deployed by petitioner
GSMSC to work as croupiers (card dealers) for petitioner Ferry Casinos Limited under a six-month
contract with monthly salaries of US$356.45 plus fixed overtime pay of US$107 a month and vacation
leave pay equivalent to two months salary pro rata, except for respondent Jennifer Anne B. Acuña who
had a monthly salary of US$250.56 plus fixed overtime pay of US$87.17 and vacation leave pay
equivalent to two months salary pro rata; sometime in July 1993, Sue Smits, the Casino Manager,
informed them that their services were no longer needed; considering that their plane tickets were
already ready and they were subjected to harassment, they had no alternative but to sign documents on
July 11 and 12, 1993 specifying that they were the ones who terminated their employment; they were
repatriated on July 25, 1993.3

Petitioners denied the allegations of respondents and averred that respondents voluntarily resigned from
employment. They contend that: respondents were hired by petitioner Ferry Casinos Limited through
petitioner GSMSC to work as croupiers for a period of six months; sometime in July 1993, respondents
intimated their desire to resign; petitioner Ferry Casinos Limited did not allow them to resign as the
simultaneous loss of croupiers would paralyze casino operations; respondents thereafter exhibited
lukewarm attitude towards work, became defiant and rude; consequently, petitioner Ferry Casinos Limited
was forced to accede to respondents’ demands; and respondents executed resignation letters and
disembarked on July 27, 1993.4

On October 5, 1995, the POEA decided the case against petitioners, thus:

WHEREFORE, premises considered, respondent Great Southern Maritime Services [Corporation] and
Pioneer Insurance and Surety Corporation, are hereby ordered jointly and severally liable to pay
complainants the following amounts:
 1. Jennifer B. Acuña US $ 610.17
2. Marissa C. Enriquez 986.17
3. Marites T. Clarion 986.17
4. Graciela M. Torralba 986.17
5. Pamela Santiago 582.20
6. Haydee Anne B. Acuña 582.20

representing their salaries for the unexpired portion of their contract.l^vvphi1.net All other claims are
dismissed for lack of merit.

SO ORDERED.5

The POEA ruled that the respondents were illegally dismissed since petitioners failed to prove that
respondents’ voluntarily resigned from employment. It held that the alleged resignation letters are only
declarations of release and quitclaim.

Petitioners appealed to the NLRC6 which, on January 15, 1997, set aside the decision of the POEA and
dismissed the complaint for illegal dismissal.7 The NLRC held that the contested letters are not only
declarations of release and quitclaim but resignations as well. It further held that there is no concrete
evidence of undue pressure, force and duress in the execution of the resignation letters. The NLRC gave
credence to petitioners’ claim that respondents pre-terminated their contracts en masse because two of
the respondents, Haydee Anne B. Acuña and Marites T. Clarion, are now working in Singapore.

Respondents filed a motion for reconsideration8 but the NLRC denied the same in a Resolution dated April
30, 1997.9

On July 18, 1997, respondents filed a petition for certiorari before us, docketed as G.R. No. 129673.10

On October 3, 1997, petitioners, in their Comment, prayed for outright dismissal of the petition for: (a)
failure of respondents to submit a verified statement of the material dates to show that the petition was
filed on time, and (b) filing a certification on non-forum shopping signed only by their counsel. In addition,
petitioners argued that the issues raised are factual and there is no showing that the NLRC committed
grave abuse of discretion.11

On January 27, 1998, the Solicitor General, in lieu of Comment, manifested that he is unable to sustain
the position of the NLRC because the allegation that respondents voluntarily resigned was not
substantially established and respondents’ non-compliance with the formal requirements of the petition
should be waived since the petition is meritorious.12

The NLRC, in compliance with our Resolution dated March 16, 1998,13 filed its own Comment praying for
the dismissal of the petition and the affirmance of its decision with finality. It argued that in reversing the
POEA, it focused its attention on the correct evaluation of the evidence on record which substantially
showed that petitioners did not dismiss respondents but that the latter resigned en masse on July 12,
1993. 14

In accordance with St. Martin Funeral Homes vs. NLRC,15 we referred the petition to the Court of Appeals
which, on June 30, 1999, set aside the decision of the NLRC and reinstated the decision of the POEA. 16
The Court of Appeals held that respondents were illegally dismissed since the petitioners failed to
substantiate their claim that respondents voluntarily resigned from employment. It ruled that the
quitclaims are not sufficient to show valid terminations. Anent non-compliance with the formal
requirements of the petition, the Court of Appeals, adopting the observation of the Solicitor General, held
that the case is an exception to the rule on strict adherence to technicality.

On July 21, 1999, petitioners filed a motion for reconsideration but the Court of Appeals denied it in a
Resolution dated September 22, 1999.

Hence, the present petition for review on certiorari on the following grounds:
 1. Under the law and applicable jurisprudence, the Petition for Certiorari filed by
respondents should have been denied outright for non-compliance with the requirements
for filing a Petition for Certiorari.17

2. Under the law and applicable jurisprudence, respondents cannot be considered to have
been dismissed from employment, because it was respondents who resigned from their
employment.18

Petitioners maintain that the petition for certiorari should have merited outright dismissal for non-
compliance with the mandatory requirements of the rules. There is no statement indicating the material
dates when the decision of the NLRC was received and when the motion for reconsideration was filed.
Likewise, the certification on non-forum shopping was not signed by respondents but by their counsel. In
any event, petitioners insist that respondents voluntarily resigned from their employment.

In their Comment, respondents allege that the instant petition highlights the same arguments already
raised and squarely resolved by the Court of Appeals. Nevertheless, they reiterate that they did not resign
from employment but were abruptly and unceremoniously terminated by petitioner Ferry Casinos
Limited.19

Section 320 of Rule 46 of the Rules of Court provides that there are three material dates that must be
stated in a petition for certiorari brought under Rule 65: (a) the date when notice of the judgment or final
order or resolution was received, (b) the date when a motion for new trial or for reconsideration when one
such was filed, and, (c) the date when notice of the denial thereof was received. This requirement is for
the purpose of determining the timeliness of the petition, since the perfection of an appeal in the manner
and within the period prescribed by law is jurisdictional and failure to perfect an appeal as required by law
renders the judgment final and executory.21

The same rule requires the pleader to submit a certificate of non-forum shopping to be executed by the
plaintiff or principal party. Obviously, it is the plaintiff or principal party, and not the counsel whose
professional services have been retained for a particular case, who is in the best position to know whether
he or it actually filed or caused the filing of a petition in that case.22

As a general rule, these requirements are mandatory, meaning, non-compliance therewith is a sufficient
ground for the dismissal of the petition.23

In the case before us, the failure to comply with the rule on a statement of material dates in the petition
may be excused since the dates are evident from the records. A thorough scrutiny of the records reveals
that the January 15, 1997 decision of the NLRC was received by respondents’ counsel on January 24,
1997.24 On February 19, 1997, respondents filed a motion for reconsideration 25 which was denied by the
NLRC in a Resolution dated April 30, 1997.26 Respondents’ counsel received the resolution on May 30,
1997 and they filed the petition for certiorari on July 18, 1997.

In view of the retroactive application of procedural laws,27 Section 4, Rule 65 of the 1997 Rules of
Procedure, 28 as amended by A.M. No. 00-2-03 which took effect on September 1, 2000, is the governing
provision. It provides that when a motion for reconsideration is timely filed, the 60-day period for filing a
petition for certiorari shall be counted from notice of the denial of said motion. While respondents’ motion
for reconsideration was filed 16 days late,29 the NLRC nonetheless acted thereon and denied it on the
basis of lack of merit.l^vvphi1.net In resolving the merits of the motion despite being filed out of time,
the NLRC undoubtedly recognized that it is not strictly bound by the technicalities of law and procedure.
Thus, the 60-day period for filing of a petition for certiorari should be reckoned from the date of the
receipt of the resolution denying the motion for reconsideration, i.e., May 30, 1997, and thus, the filing
made on July 18, 1997 was well within the 60-day reglementary period.

As regards the verification signed only by respondents’ counsel, this procedural lapse could have
warranted the outright dismissal of respondents’ petition for certiorari before the Court of Appeals.
However, it must be remembered that the rules on forum shopping, which were precisely designed to
promote and facilitate the orderly administration of justice, should not be interpreted with such absolute
literalness as to subvert its own ultimate and legitimate objective which is the goal of all rules of
procedure - that is, to achieve substantial justice as expeditiously as possible.30

Needless to stress, rules of procedure are merely tools designed to facilitate the attainment of justice.
They were conceived and promulgated to effectively aid the court in the dispensation of justice. Courts
are not slaves to or robots of technical rules, shorn of judicial discretion. In rendering justice, courts have
always been, as they ought to be, conscientiously guided by the norm that on the balance, technicalities
take a backseat against substantive rights, and not the other way around. Thus, if the application of the
Rules would tend to frustrate rather than promote justice, it is always within our power to suspend the
rules or except a particular case from its operation.31

As the Court eloquently stated in the case of Aguam vs. Court of Appeals:32

…The court has the discretion to dismiss or not to dismiss an appellant's appeal. It is a power conferred
on the court, not a duty. The "discretion must be a sound one, to be exercised in accordance with the
tenets of justice and fair play, having in mind the circumstances obtaining in each case." Technicalities,
however, must be avoided. The law abhors technicalities that impede the cause of justice. The court's
primary duty is to render or dispense justice. "A litigation is not a game of technicalities." "Lawsuits unlike
duels are not to be won by a rapier's thrust. Technicality, when it deserts its proper office as an aid to
justice and becomes its great hindrance and chief enemy, deserves scant consideration from courts."
Litigations must be decided on their merits and not on technicality. Every party litigant must be afforded
the amplest opportunity for the proper and just determination of his cause, free from the unacceptable
plea of technicalities. Thus, dismissal of appeals purely on technical grounds is frowned upon where the
policy of the court is to encourage hearings of appeals on their merits and the rules of procedure ought
not to be applied in a very rigid, technical sense; rules of procedure are used only to help secure, not
override substantial justice. It is a far better and more prudent course of action for the court to excuse a
technical lapse and afford the parties a review of the case on appeal to attain the ends of justice rather
than dispose of the case on technicality and cause a grave injustice to the parties, giving a false
impression of speedy disposal of cases while actually resulting in more delay, if not a miscarriage of
justice.33 (Emphasis supplied)

Thus, in Sy Chin vs. Court of Appeals,34 we held that the procedural lapse of a party’s counsel in signing
the certificate of non-forum shopping may be overlooked if the interests of substantial justice would
thereby be served. Further, in Damasco vs. NLRC,35 we noted that the certificate of non-forum shopping
was executed by the petitioners’ counsel, but nevertheless resolved the case on its merits for the reason
that "technicality should not be allowed to stand in the way of equitably and completely resolving the
equity and obligations of the parties to a labor case."

Indeed, where a decision may be made to rest on informed judgment rather than rigid rules, the equities
of the case must be accorded their due weight because labor determinations should not only be secundum
rationem but also secundum caritatem.36

In this case, the Court of Appeals aptly found compelling reasons to disregard respondents’ procedural
lapses in order to obviate a patent injustice.1awphi1.nét

Time and again we have ruled that in illegal dismissal cases like the present one, the onus of proving that
the employee was not dismissed or if dismissed, that the dismissal was not illegal, rests on the employer
and failure to discharge the same would mean that the dismissal is not justified and therefore illegal. 37
Thus, petitioners must not only rely on the weakness of respondents’ evidence but must stand on the
merits of their own defense. A party alleging a critical fact must support his allegation with substantial
evidence for any decision based on unsubstantiated allegation cannot stand as it will offend due process. 38
Petitioners failed to discharge this burden.

Petitioners’ complete reliance on the alleged "resignation letters cum release and quitclaim" to support
their claim that respondents voluntarily resigned is unavailing as the filing of the complaint for illegal
dismissal is inconsistent with resignation.39 Resignation is the voluntary act of employees who are
compelled by personal reasons to dissociate themselves from their employment. It must be done with the
intention of relinquishing an office, accompanied by the act of abandonment. 40 Thus, it is illogical for
respondents to resign and then file a complaint for illegal dismissal. We find it highly unlikely that
respondents would just quit even before the expiration of their contracts, after all the expenses and the
trouble they went through in seeking greener pastures and financial upliftment, and the concomitant
tribulations of being separated from their families, having invested so much time, effort and money to
secure their employment abroad. Considering the hard economic times, it is incongruous for respondents
to simply give up their work, return home and be jobless once again.

Likewise, petitioners’ submission that respondents voluntarily resigned because of their desire to seek
employment elsewhere, as accentuated by the concurrent fact that two of the respondents, Haydee Anne
B. Acuña and Marites T. Clarion, already have jobs in Singapore is an unreasonable inference. The fact
that these two have already found employment elsewhere should not be weighed against their favor. It
should be expected that they would seek other means of income to tide them over during the time that
the legality of their termination is under litigation. They should not be faulted for seeking employment
elsewhere for their economic survival.

We further note that the alleged resignation letters, one of which reads:

In signing this document, I am declaring my decision to return to the Philippines with the other eight
employees of Ferry Casinos Limited and Great Southern Maritime Corporation, on the 25th July 1993. I
understand that my contract is uncompleted and I fully understand the consequences of that. I do
however promise to work to full for both companies before my departure.

I realise (sic) that I may be dismissed by the captain or Purser of my assigned vessel, if I am suspected of
misconduct in the remaining weeks of my employment, until my departure, and I understand that I will
compansate (sic) both companies for the results from (sic) my actions.

I sign to say that I will follow the instructions of Captain A. Sanchez upon my arrival in the Philippines and
that any previous arrangements to this date are nul (sic) and void.

I recognise (sic) that I have been fairly treated by both companies and for this I will not jeopardise (sic)
them upon my arrival in the Philippines.

I acknowledge and accept this as evidence for (sic) my departure to be shown to the P.O.E.A. in the
Philippines.41

which were all prepared by petitioner Ferry Casinos Limited, are substantially similarly worded and of the
same tenor. A thorough scrutiny of the purported resignation letters reveals the true nature of these
documents. In reality, they are waivers or quitclaims which are not sufficient to show valid separation
from work or bar respondents from assailing their termination. The burden of proving that quitclaims were
voluntarily entered into falls upon the employer.42 Deeds of release or quitclaim cannot bar employees
from demanding benefits to which they are legally entitled or from contesting the legality of their
dismissal.43 The reason for this rule was laid down in the landmark case of Cariño vs. ACCFA:44

Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer and employee,
obviously, do not stand on the same footing. The employer drove the employee to the wall. The latter
must have to get hold of money. Because, out of job, he had to face the harsh necessities of life. He thus
found himself in no position to resist money proffered. His, then, is a case of adherence, not of choice.
One thing sure, however, is that petitioners did not relent their claim. They pressed it. They are deemed
not to have waived any of their rights. Renuntiatio non praesumitur.

Thus, we are more than convinced that respondents did not voluntarily quit their jobs. Rather, they were
forced to resign or were summarily dismissed without just cause. The Court of Appeals acted in the
exercise of its sound discretion when it denied petitioners’ insistence to dismiss the petition for certiorari,
in light of the factual and antecedent milieu. By so doing, the appellate court correctly gave more
importance to the resolution of the case on the merits.

WHEREFORE, the instant petition is DENIED and the assailed Decision of the Court of Appeals dated June
30, 1999 in CA-G.R. SP No. 50504 is AFFIRMED.

G.R. No. 158015             August 11, 2004

LAURA and ERIBERTO BAUTISTA, petitioner,

vs.
HON. COURT OF APPEALS and FERNANDO MORELOS, respondents.

DECISION

YNARES-SANTIAGO, J.:
On appeal by Petition for Review on Certiorari under Rule 45 of the 1997 Rules on Civil Procedure is a
Decision of the Court of Appeals in CA-G.R. CV No. 45549,1 reversing and setting aside the judgment of
the Regional Trial Court of Manila, Branch VII in Civil Case No. 83-179002 and entering a new one
declaring the April 5, 1982 Deed of Absolute Sale between the late Cesar Morelos and Laura Bautista null
and void.

The dispute involves a parcel of land situated along Maceda (formerly Washington) Street, Sampaloc,
Manila, containing an area of approximately 105 square meters. This parcel of land was previously owned
and registered in the name of the late Cesar Morelos under Transfer Certificate of Title No. 27604. Cesar
is the uncle of petitioner Laura Morelos Bautista, being the brother of her mother, Rosario Morelos. 3

Cesar, who was married to Rosario Duran, did not have any children. Rosario died in 1972. Cesar died of
cardiac arrest on April 15, 1982. During his lifetime, Cesar sold and conveyed the above-mentioned parcel
of land in favor of petitioner Laura Morelos Bautista, as evidenced by a "Deed of Absolute Sale" notarized
by Luis M. de Guzman. Accordingly, Transfer Certificate of Title No. 254843 was issued in the name of
petitioner Laura Bautista.4

Respondent Fernando Morelos, claiming to be the illegitimate child of Cesar Morelos with Angelina Lim-
Gue, instituted a complaint for the declaration of nullity of sale and title with damages, docketed as Civil
Case No. 83-17900, before the Regional Trial Court of Manila, Branch VII. At the trial, he presented
testimonies of expert witnesses who claimed that the signature of Cesar Morelos on the Deed of Absolute
Sale and the fingerprint appearing on his Residence Certificate were not his. 5

Petitioners countered that the Deed of Absolute Sale was valid. The witness to the Deed, Carmelita
Marcelino, testified that she saw Cesar Morelos and petitioner Laura Bautista sign the same.6

After hearing, the court a quo rendered judgment declaring the Deed of Sale dated April 5, 1982 executed
between the late Cesar Morelos in favor of Laura Bautista valid, and dismissed for insufficient evidence the
claims and counterclaims for damages of the parties.7

Respondent appealed to the Court of Appeals, which reversed and set aside the judgment of the trial
court. The dispositive portion of the CA decision reads:

WHEREFORE, premises considered, the appealed decision is hereby REVERSED AND SET
ASIDE. In lieu thereof, another one is entered declaring AS NULL AND VOID the Deed of
Absolute Sale, dated April 5, 1982, executed between the late Cesar G. Morelos and
defendant-appellee Laura R. Bautista. The Register of Deeds of Manila is DIRECTED to
cause the cancellation of Transfer Certificate of Title No. 154043 in the name of defendant-
appellee LAURA R. BAUTISTA and to issue another one in the name of the ESTATE OF
CESAR G. MORELOS. Defendants-appellees are also directed to surrender possession of the
disputed property to plaintiff-appellant.

SO ORDERED.8

Petitioners' motion for reconsideration was denied.

Hence, this petition for review on certiorari raising the following issues:

I.

WHETHER OR NOT THE TESTIMONIES OF EXPERT WITNESSES ARE CONCLUSIVE TO BE A

STRONG BASIS TO NULLIFY A DULY EXECUTED AND NOTARIZED DEED OF ABSOLUTE
SALE.

II.

WHETHER OR NOT THE DEED OF ABSOLUTE SALE (ANNEX "3") IS VALID.

III.

WHETHER OR NOT PRIVATE RESPONDENT HAS THE LEGAL PERSONALITY TO SEEK THE
ANNULMENT OF THE DEED OF ABSOLUTE SALE.9
Petitioner asserts the validity of the Deed of Absolute Sale and invoke the testimony of Carmelita
Marcelino, the instrumental witness to the signing of the document, who confirmed that it was the
decedent Cesar Morelos who affixed his signature to the document.

On the other hand, respondent contends that the decedent's signature on the Deed was forged. He
presented the testimony of Francisco Cruz, Jr., Chief Examiner of the PC-INP Crime Laboratory Service,
that the signature of decedent on the questioned instrument, when compared to other documents bearing
the authentic signature of Cesar Morelos, did not match and appeared to have been authored by a
different person. Cruz, Jr. declared that the latest document bearing the genuine signature of the
decedent is dated March 31, 1982, while the alleged forged signature was made on April 5, 1982, or a
mere lapse of five days. According to him, it is not possible to have significant variation between the two
signatures, considering the proximity of time when the signatures where affixed. 10

Another witness, Major Braulio Monge, Chief of the Fingerprint Division of the PC-INP, testified that the
thumbmark of Cesar Morelos appearing on the residence certificate indicated in the Deed of Absolute Sale,
when compared to those affixed on previous residence certificates issued to the decedent, did not match
and appears to be the thumbmark of another person.

Under Rule 132, Section 22 of the Rules of Court, the genuineness of handwriting may be proved in the
following manner: (1) by any witness who believes it to be the handwriting of such person because he has
seen the person write; or he has seen writing purporting to be his upon which the witness has acted or
been charged; (2) by a comparison, made by the witness or the court, with writings admitted or treated
as genuine by the party, against whom the evidence is offered, or proved to be genuine to the satisfaction
of the judge.

It is well-settled that a duly notarized contract enjoys the prima facie presumption of authenticity and due
execution as well as the full faith and credence attached to a public instrument. 11 To overturn this legal
presumption, evidence must be clear, convincing and more than merely preponderant to establish that
there was forgery that gave rise to a spurious contract.

As a general rule, forgery cannot be presumed and must be proved by clear, positive and convincing
evidence. The burden of proof lies on the party alleging forgery. In Heirs of Severa P. Gregorio v. Court of
Appeals,12 we held that due to the technicality of the procedure involved in the examination of the forged
documents, the expertise of questioned document examiners is usually helpful; however, resort to
questioned document examiners is not mandatory and while probably useful, they are not indispensable in
examining or comparing handwriting.

Hence, a finding of forgery does not depend entirely on the testimony of handwriting experts. Although
such testimony may be useful, the judge still exercises independent judgment on the issue of authenticity
of the signatures under scrutiny; he cannot rely on the mere testimony of the handwriting expert. 13

The authenticity of signatures is not a highly technical issue in the same sense that questions concerning,
e.g., quantum physics or topology or molecular biology, would constitute matters of a highly technical
nature. The opinion of a handwriting expert on the genuineness of a questioned signature is certainly
much less compelling upon a judge than an opinion rendered by a specialist on a highly technical issue. 14

In the case at bar, the presumption of validity and regularity prevails over allegations of forgery and
fraud. As against direct evidence consisting of the testimony of a witness who was physically present at
the signing of the contract and who had personal knowledge thereof, the testimony of an expert witness
constitutes indirect or circumstantial evidence at best. Carmelita Marcelino, the witness to the Deed of
Absolute Sale, confirmed the genuineness, authenticity and due execution thereof. 15 Having been
physically present to see the decedent Cesar Morelos and petitioner Laura Bautista affix their signatures
on the document, the weight of evidence preponderates in favor of petitioners.

Witness Francisco Cruz, Jr. failed to establish the fact that the signature on the Deed of Absolute Sale was
not that of Cesar Morelos. He merely concluded that the document was a forgery without citing any
factual basis for arriving at that conclusion. Cruz did not point out distinguishing marks, characteristics
and discrepancies in and between genuine and false specimens of writing, which would ordinarily escape
detection by an ordinary lay person.16

When the trial court and the appellate court arrived at divergent factual assessments in their respective
decisions and the bases therefor refer to documents made available to the scrutiny of both courts, the
well-settled rule that factual findings of trial courts deserve respect and even finality will not apply. 17 In
the case at bar, the varying factual assessments pertained to the authenticity of the signature of the late
Cesar Morelos on the questioned Deed of Absolute Sale conveying the 105-square meter property in favor
of his niece, Laura Bautista.

In Jimenez v. Commission on Ecumenical Mission and Relations of the United Presbyterian Church in the
United States of America,18 we held that the authenticity of a questioned signature cannot be determined
solely upon its general characteristics, similarities or dissimilarities with the genuine signature.
Dissimilarities as regards spontaneity, rhythm, pressure of the pen, loops in the strokes, signs of stops,
shades, that may be found between the questioned signature and the genuine one are not decisive on the
question of the former's authenticity. The result of examinations of questioned handwriting, even with the
benefit of aid of experts and scientific instruments, is, at best, inconclusive. There are other factors that
must be taken into consideration, such as the position of the writer, the condition of the surface on which
the paper where the questioned signature is written, his state of mind, feelings and nerves, and the kind
of pen and paper used. These play an important role on the general appearance of the signature. Unless,
therefore, there is, in a given case, absolute absence, or manifest dearth, of direct or circumstantial
competent evidence on the character of a questioned handwriting, much weight should not be given to
characteristic similarities, or dissimilarities, between a questioned handwriting and an authentic one.

Besides, a notarial document is evidence of the facts in the clear unequivocal manner therein expressed
and has in its favor the presumption of regularity.19 The authenticity and due execution of the Deed of
Absolute Sale must therefore be upheld.

As to the alleged insufficient consideration of the sale of the property, the mere inadequacy of the price
does not affect its validity when both parties are in a position to form an independent judgment
concerning the transaction,20 unless fraud, mistake or undue influence indicative of a defect in consent is
present.21 A contract may consequently be annulled on the ground of vitiated consent and not due to the
inadequacy of the price. In the case at bar, however, no evidence to prove fraud, mistake or undue
influence indicative of vitiated consent was presented other than the respondent's self-serving allegations.

WHEREFORE, in view of the foregoing, the Petition is GRANTED. The Decision of the Court of Appeals in
CA-G.R. CV No. 45549 is REVERSED and SET ASIDE. The judgment of the Regional Trial Court of Makati,
Branch VII in Civil Case No. 83-17900, declaring the Deed of Absolute Sale between petitioner Laura
Morelos Bautista and Cesar Morelos over the subject parcel of land covered by Transfer Certificate of Title
No. 2760 as valid is REINSTATED.

G.R. No. 154599             January 21, 2004

THE LIGA NG MGA BARANGAY NATIONAL, petitioner,

vs.
THE CITY MAYOR OF MANILA, HON. JOSE ATIENZA, JR., and THE CITY COUNCIL OF MANILA,
respondents.

DECISION

DAVIDE, JR., C.J.:

This petition for certiorari under Rule 65 of the Rules of Court seeks the nullification of Manila City
Ordinance No. 8039, Series of 2002,1 and respondent City Mayor’s Executive Order No. 011, Series of
2002,2 dated 15 August 2002 , for being patently contrary to law.

The antecedents are as follows:

Petitioner Liga ng mga Barangay National (Liga for brevity) is the national organization of all the
barangays in the Philippines, which pursuant to Section 492 of Republic Act No. 7160, otherwise
known as The Local Government Code of 1991, constitutes the duly elected presidents of highly-
urbanized cities, provincial chapters, the metropolitan Manila Chapter, and metropolitan political
subdivision chapters.

Section 493 of that law provides that "[t]he liga at the municipal, city, provincial, metropolitan
political subdivision, and national levels directly elect a president, a vice-president, and five (5)
members of the board of directors." All other matters not provided for in the law affecting the
internal organization of the leagues of local government units shall be governed by their respective
 constitution and by-laws, which must always conform to the provisions of the Constitution and
existing laws.3

On 16 March 2000, the Liga adopted and ratified its own Constitution and By-laws to govern its internal
organization.4 Section 1, third paragraph, Article XI of said Constitution and By-Laws states:

All other election matters not covered in this Article shall be governed by the "Liga Election Code"
or such other rules as may be promulgated by the National Liga Executive Board in conformity with
the provisions of existing laws.

By virtue of the above-cited provision, the Liga adopted and ratified its own Election Code.5 Section 1.2,
Article I of the Liga Election Code states:

1.2 Liga ng mga Barangay Provincial, Metropolitan, HUC/ICC Chapters. There shall be nationwide
synchronized elections for the provincial, metropolitan, and HUC/ICC chapters to be held on the
third Monday of the month immediately after the month when the synchronized elections in
paragraph 1.1 above was held. The incumbent Liga chapter president concerned duly assisted by
the proper government agency, office or department, e.g. Provincial/City/NCR/Regional Director,
shall convene all the duly elected Component City/Municipal Chapter Presidents and all the current
elected Punong Barangays (for HUC/ICC) of the respective chapters in any public place within its
area of jurisdiction for the purpose of reorganizing and electing the officers and directors of the
provincial, metropolitan or HUC/ICC Liga chapters. Said president duly assisted by the government
officer aforementioned, shall notify, in writing, all the above concerned at least fifteen (15) days
before the scheduled election meeting on the exact date, time, place and requirements of the said
meeting.

The Liga thereafter came out with its Calendar of Activities and Guidelines in the Implementation of the
Liga Election Code of 2002,6 setting on 21 October 2002 the synchronized elections for highly urbanized
city chapters, such as the Liga Chapter of Manila, together with independent component city, provincial,
and metropolitan chapters.lawphi1.net

On 28 June 2002, respondent City Council of Manila enacted Ordinance No. 8039, Series of 2002,
providing, among other things, for the election of representatives of the District Chapters in the City
Chapter of Manila and setting the elections for both chapters thirty days after the barangay elections.
Section 3 (A) and (B) of the assailed ordinance read:

SEC. 3. Representation Chapters. — Every Barangay shall be represented in the said Liga Chapters
… by the Punong Barangay…or, in his absence or incapacity, by the kagawad duly elected for the
purpose among its members….

A. District Chapter

All elected Barangay Chairman in each District shall elect from among themselves the President,
Vice-President and five (5) members of the Board….

B. City Chapter

The District Chapter representatives shall automatically become members of the Board and they
shall elect from among themselves a President, Vice-President, Secretary, Treasurer, Auditor and
create other positions as it may deem necessary for the management of the chapter.

The assailed ordinance was later transmitted to respondent City Mayor Jose L. Atienza, Jr., for his
signature and approval.

On 16 July 2002, upon being informed that the ordinance had been forwarded to the Office of the
City Mayor, still unnumbered and yet to be officially released, the Liga sent respondent Mayor of
Manila a letter requesting him that said ordinance be vetoed considering that it encroached upon,
or even assumed, the functions of the Liga through legislation, a function which was clearly beyond
the ambit of the powers of the City Council.7

Respondent Mayor, however, signed and approved the assailed city ordinance and issued on 15 August
2002 Executive Order No. 011, Series of 2002, to implement the ordinance.
Hence, on 27 August 2002, the Liga filed the instant petition raising the following issues:

WHETHER OR NOT THE RESPONDENT CITY COUNCIL OF MANILA COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION, WHEN IT ENACTED CITY
ORDINANCE NO. 8039 S. 2002 PURPOSELY TO GOVERN THE ELECTIONS OF THE MANILA CHAPTER OF
THE LIGA NG MGA BARANGAYS AND WHICH PROVIDES A DIFFERENT MANNER OF ELECTING ITS
OFFICERS, DESPITE THE FACT THAT SAID CHAPTER’S ELECTIONS, AND THE ELECTIONS OF ALL OTHER
CHAPTERS OF THE LIGA NG MGA BARANGAYS FOR THAT MATTER, ARE BY LAW MANDATED TO BE
GOVERNED BY THE LIGA CONSTITUTION AND BY-LAWS AND THE LIGA ELECTION CODE.

II

WHETHER OR NOT THE RESPONDENT CITY MAYOR OF MANILA COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION WHEN HE ISSUED EXECUTIVE
ORDER NO. 011 TO IMPLEMENT THE QUESTIONED CITY ORDINANCE NO. 8039 S. 2002.

In support of its petition, the Liga argues that City Ordinance No. 8039, Series of 2002, and Executive
Order No. 011, Series of 2002, contradict the Liga Election Code and are therefore invalid. There exists
neither rhyme nor reason, not to mention the absence of legal basis, for the Manila City Council to
encroach upon, or even assume, the functions of the Liga by prescribing, through legislation, the manner
of conducting the Liga elections other than what has been provided for by the Liga Constitution and By-
laws and the Liga Election Code. Accordingly, the subject ordinance is an ultra vires act of the
respondents and, as such, should be declared null and void.

As for its prayer for the issuance of a temporary restraining order, the petitioner cites as reason therefor
the fact that under Section 5 of the assailed city ordinance, the Manila District Chapter elections would be
held thirty days after the regular barangay elections. Hence, it argued that the issuance of a temporary
restraining order and/or preliminary injunction would be imperative to prevent the implementation of the
ordinance and executive order.

On 12 September 2002, Barangay Chairman Arnel Peña, in his capacity as a member of the Liga ng mga
Barangay in the City Chapter of Manila, filed a Complaint in Intervention with Urgent Motion for the
Issuance of Temporary Restraining Order and/or Preliminary Injunction.8 He supports the position of the
Liga and prays for the declaration of the questioned ordinance and executive order, as well as the
elections of the Liga ng mga Barangay pursuant thereto, to be null and void. The assailed ordinance
prescribing for an "indirect manner of election" amended, in effect, the provisions of the Local
Government Code of 1991, which provides for the election of the Liga officers at large. It also violated and
curtailed the rights of the petitioner and intervenor, as well as the other 896 Barangay Chairmen in the
City of Manila, to vote and be voted upon in a direct election.

On 25 October 2002, the Office of the Solicitor General (OSG) filed a Manifestation in lieu of Comment. 9 It
supports the petition of the Liga, arguing that the assailed city ordinance and executive order are clearly
inconsistent with the express public policy enunciated in R.A. No. 7160. Local political subdivisions are
able to legislate only by virtue of a valid delegation of legislative power from the national legislature. They
are mere agents vested with what is called the power of subordinate legislation. Thus, the enactments in
question, which are local in origin, cannot prevail against the decree, which has the force and effect of
law.

On the issue of non-observance by the petitioners of the hierarchy-of-courts rule, the OSG posits that
technical rules of procedure should be relaxed in the instant petition. While Batas Pambansa Blg. 129, as
amended, grants original jurisdiction over cases of this nature to the Regional Trial Court (RTC), the
exigency of the present petition, however, calls for the relaxation of this rule. Section 496 (should be
Section 491) of the Local Government Code of 1991 primarily intended that the Liga ng mga Barangay
determine the representation of the Liga in the sanggunians for the immediate ventilation, articulation,
and crystallization of issues affecting barangay government administration. Thus, the immediate
resolution of this petition is a must.

On the other hand, the respondents defend the validity of the assailed ordinance and executive order and
pray for the dismissal of the present petition on the following grounds: (1) certiorari under Rule 65 of the
Rules of Court is unavailing; (2) the petition should not be entertained by this Court in view of the
pendency before the Regional Trial Court of Manila of two actions or petitions questioning the subject
ordinance and executive order; (3) the petitioner is guilty of forum shopping; and (4) the act sought to be
enjoined is fait accompli.

The respondents maintain that certiorari is an extraordinary remedy available to one aggrieved by the
decision of a tribunal, officer, or board exercising judicial or quasi-judicial functions. The City Council and
City Mayor of Manila are not the "board" and "officer" contemplated in Rule 65 of the Rules of Court
because both do not exercise judicial functions. The enactment of the subject ordinance and issuance of
the questioned executive order are legislative and executive functions, respectively, and thus, do not fall
within the ambit of "judicial functions." They are both within the prerogatives, powers, and authority of
the City Council and City Mayor of Manila, respectively. Furthermore, the petition failed to show with
certainty that the respondents acted without or in excess of jurisdiction or with grave abuse of discretion.

The respondents also asseverate that the petitioner cannot claim that it has no other recourse in
addressing its grievance other than this petition for certiorari. As a matter of fact, there are two cases
pending before Branches 33 and 51 of the RTC of Manila (one is for mandamus; the other, for declaratory
relief) and three in the Court of Appeals (one is for prohibition; the two other cases, for quo warranto),
which are all akin to the present petition in the sense that the relief being sought therein is the
declaration of the invalidity of the subject ordinance. Clearly, the petitioner may ask the RTC or the Court
of Appeals the relief being prayed for before this Court. Moreover, the petitioner failed to prove discernible
compelling reasons attending the present petition that would warrant cognizance of the present petition
by this Court.

Besides, according to the respondents, the petitioner has transgressed the proscription against forum-
shopping in filing the instant suit. Although the parties in the other pending cases and in this petition are
different individuals or entities, they represent the same interest.

With regard to petitioner's prayer for temporary restraining order and/ or preliminary injunction in its
petition, the respondents maintain that the same had become moot and academic in view of the elections
of officers of the City Liga ng mga Barangay on 15 September 2002 and their subsequent assumption to
their respective offices.10 Since the acts to be enjoined are now fait accompli, this petition for certiorari
with an application for provisional remedies must necessarily fail. Thus, where the records show that
during the pendency of the case certain events or circumstances had taken place that render the case
moot and academic, the petition for certiorari must be dismissed.

After due deliberation on the pleadings filed, we resolve to dismiss this petition for certiorari.

First, the respondents neither acted in any judicial or quasi-judicial capacity nor arrogated unto
themselves any judicial or quasi-judicial prerogatives. A petition for certiorari under Rule 65 of the 1997
Rules of Civil Procedure is a special civil action that may be invoked only against a tribunal, board, or
officer exercising judicial or quasi-judicial functions.

Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides:

SECTION 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse
of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain,
speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with certainty and praying that judgment be
rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting
such incidental reliefs as law and justice may require.

Elsewise stated, for a writ of certiorari to issue, the following requisites must concur: (1) it must be
directed against a tribunal, board, or officer exercising judicial or quasi-judicial functions; (2) the
tribunal, board, or officer must have acted without or in excess of jurisdiction or with grave abuse
of discretion amounting lack or excess of jurisdiction; and (3) there is no appeal or any plain,
speedy, and adequate remedy in the ordinary course of law.

A respondent is said to be exercising judicial function where he has the power to determine what
the law is and what the legal rights of the parties are, and then undertakes to determine these
questions and adjudicate upon the rights of the parties.11
Quasi-judicial function, on the other hand, is "a term which applies to the actions, discretion, etc., of
public administrative officers or bodies … required to investigate facts or ascertain the existence of facts,
hold hearings, and draw conclusions from them as a basis for their official action and to exercise
discretion of a judicial nature."12

Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that there be
a law that gives rise to some specific rights of persons or property under which adverse claims to such
rights are made, and the controversy ensuing therefrom is brought before a tribunal, board, or officer
clothed with power and authority to determine the law and adjudicate the respective rights of the
contending parties.13

The respondents do not fall within the ambit of tribunal, board, or officer exercising judicial or quasi-
judicial functions. As correctly pointed out by the respondents, the enactment by the City Council of
Manila of the assailed ordinance and the issuance by respondent Mayor of the questioned executive order
were done in the exercise of legislative and executive functions, respectively, and not of judicial or quasi-
judicial functions. On this score alone, certiorari will not lie.

Second, although the instant petition is styled as a petition for certiorari, in essence, it seeks the
declaration by this Court of the unconstitutionality or illegality of the questioned ordinance and executive
order. It, thus, partakes of the nature of a petition for declaratory relief over which this Court has only
appellate, not original, jurisdiction.14 Section 5, Article VIII of the Constitution provides:

Sec. 5. The Supreme Court shall have the following powers:

(1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers
and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and
habeas corpus.

(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules
of Court may provide, final judgments and orders of lower courts in:

(a) All cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order, instruction,
ordinance, or regulation is in question. (Italics supplied).

As such, this petition must necessary fail, as this Court does not have original jurisdiction over a
petition for declaratory relief even if only questions of law are involved. 15

Third, even granting arguendo that the present petition is ripe for the extraordinary writ of certiorari,
there is here a clear disregard of the hierarchy of courts. No special and important reason or exceptional
and compelling circumstance has been adduced by the petitioner or the intervenor why direct recourse to
this Court should be allowed.

We have held that this Court’s original jurisdiction to issue a writ of certiorari (as well as of prohibition,
mandamus, quo warranto, habeas corpus and injunction) is not exclusive, but is concurrent with the
Regional Trial Courts and the Court of Appeals in certain cases. As aptly stated in People v. Cuaresma:16

This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of
the writs an absolute, unrestrained freedom of choice of the court to which application therefor0
will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the
venue of appeals, and also serves as a general determinant of the appropriate forum for petitions
for the extraordinary writs. A becoming regard of that judicial hierarchy most certainly indicates
that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be
filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct
invocation of the Supreme Court’s original jurisdiction to issue these writs should be allowed only
when there are special and important reasons therefor, clearly and specifically set out in the
petition. This is [an] established policy. It is a policy necessary to prevent inordinate demands
upon the Court’s time and attention which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Court’s docket.

As we have said in Santiago v. Vasquez,17 the propensity of litigants and lawyers to disregard the
hierarchy of courts in our judicial system by seeking relief directly from this Court must be put to a halt
for two reasons: (1) it would be an imposition upon the precious time of this Court; and (2) it would cause
an inevitable and resultant delay, intended or otherwise, in the adjudication of cases, which in some
instances had to be remanded or referred to the lower court as the proper forum under the rules of
procedure, or as better equipped to resolve the issues because this Court is not a trier of facts.

Thus, we shall reaffirm the judicial policy that this Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts, and exceptional and compelling
circumstances justify the availment of the extraordinary remedy of writ of certiorari, calling for the
exercise of its primary jurisdiction.18

Petitioner’s reliance on Pimentel v. Aguirre19 is misplaced because the non-observance of the hierarchy-of-
courts rule was not an issue therein. Besides, what was sought to be nullified in the petition for certiorari
and prohibition therein was an act of the President of the Philippines, which would have greatly affected
all local government units. We reiterated therein that when an act of the legislative department is
seriously alleged to have infringed the Constitution, settling the controversy becomes the duty of this
Court. The same is true when what is seriously alleged to be unconstitutional is an act of the President,
who in our constitutional scheme is coequal with Congress.

We hesitate to rule that the petitioner and the intervenor are guilty of forum-shopping. Forum-shopping
exists where the elements of litis pendentia are present or when a final judgment in one case will amount
to res judicata in the other. For litis pendentia to exist, the following requisites must be present: (1)
identity of parties, or at least such parties as are representing the same interests in both actions; (2)
identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and (3)
identity with respect to the two preceding particulars in the two cases, such that any judgment that may
be rendered in the pending case, regardless of which party is successful, would amount to res judicata in
the other case.20

In the instant petition, and as admitted by the respondents, the parties in this case and in the alleged
other pending cases are different individuals or entities; thus, forum-shopping cannot be said to exist.
Moreover, even assuming that those five petitions are indeed pending before the RTC of Manila and the
Court of Appeals, we can only guess the causes of action and issues raised before those courts,
considering that the respondents failed to furnish this Court with copies of the said petitions.

WHEREFORE, the petition is DISMISSED.

G.R. No. 144101 September 16, 2005

ANTONIO P. TAMBUNTING, JR. and COMMERCIAL HOUSE OF FINANCE, INC., Petitioners,

vs.
SPOUSES EMILIO SUMABAT and ESPERANZA BAELLO, Respondent.

DECISION

CORONA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court assails the February 11, 2000
decision of the Regional Trial Court (RTC) of Caloocan City, Branch 120, in Civil Case No. C-16822.

This case involves a dispute over a parcel of land situated in Caloocan City covered by TCT No. (87655)
18837. It was previously registered in the names of respondents, spouses Emilio Sumabat and Esperanza
Baello. On May 3, 1973, respondents mortgaged it to petitioner Antonio Tambunting, Jr. to secure the
payment of a P7,727.95 loan. In August 1976, respondents were informed that their indebtedness had
ballooned to P15,000 for their failure to pay the monthly amortizations. In May 1977, because
respondents defaulted in their obligation, petitioner Commercial House of Finance, Inc. (CHFI), as
assignee of the mortgage, initiated foreclosure proceedings on the mortgaged property but the same did
not push through. It was restrained by the then Court of First Instance (CFI) of Caloocan City, Branch 33
(now RTC Branch 123) in Civil Case No. C-6329, a complaint for injunction filed by respondents against
petitioners. However, the case was subsequently dismissed for failure of the parties to appear at the
hearing on November 9, 1977.

On March 16, 1979, respondents filed an action for declaratory relief with the CFI of Caloocan City, Branch
33, seeking a declaration of the extent of their actual indebtedness. It was docketed as Civil Case No. C-
7496. Petitioners were declared in default for failure to file an answer within the reglementary period.
They moved for the dismissal of the action on the ground that its subject, the mortgage deed, had already
been breached prior to the filing of the action. The motion was denied for having been filed out of time
and petitioners had already been declared in default.

On January 8, 1981, the CFI rendered its decision. It fixed respondents’ liability at P15,743.83 and
authorized them to consign the amount to the court for proper disposition. In compliance with the
decision, respondents consigned the required amount on January 9, 1981.

In March 1995, respondents received a notice of sheriff’s sale indicating that the mortgage had been
foreclosed by CHFI on February 8, 1995 and that an extrajudicial sale of the property would be held on
March 27, 1995.

On March 27, 1995, respondents instituted Civil Case No. C-16822, a petition for preliminary injunction,
damages and cancellation of annotation of encumbrance with prayer for the issuance of a temporary
restraining order, with the RTC of Caloocan City, Branch 120. However, the public auction scheduled on
that same day proceeded and the property was sold to CHFI as the highest bidder. Respondents failed to
redeem the property during the redemption period. Hence, title to the property was consolidated in favor
of CHFI and a new certificate of title (TCT No. 310191) was issued in its name. In view of these
developments, respondents amended their complaint to an action for nullification of foreclosure, sheriff’s
sale and consolidation of title, reconveyance and damages.

On February 11, 2000, the RTC issued the assailed decision. It ruled that the 1981 CFI decision in Civil
Case No. C-7496 (fixing respondents’ liability at P15,743.83 and authorizing consignation) had long
attained finality. The mortgage was extinguished when respondents paid their indebtedness by consigning
the amount in court. Moreover, the ten-year period within which petitioners should have foreclosed the
property was already barred by prescription. They abused their right to foreclose the property and
exercised it in bad faith. As a consequence, the trial court nullified the foreclosure and extrajudicial sale of
the property, as well as the consolidation of title in CHFI’s name in 1995. It then ordered the register of
deeds of Caloocan City to cancel TCT No. 310191 and to reconvey the property to respondents. It also
held petitioners liable for moral damages, exemplary damages and attorney’s fees.

Petitioners moved for a reconsideration of the trial court’s decision but it was denied. Hence, this petition.

Petitioners claim that the trial court erred when it affirmed the validity of the consignation. They insist
that the CFI was barred from taking cognizance of the action for declaratory relief since, petitioners being
already in default in their loan amortizations, there existed a violation of the mortgage deed even before
the institution of the action. Hence, the CFI could not have rendered a valid judgment in Civil Case No. C-
7496 and the consignation made pursuant to a void judgment was likewise void. Respondents also fault
the trial court for holding that their right to foreclose the property had already prescribed.

True, the trial court erred when it ruled that the 1981 CFI decision in Civil Case No. C-7496 was already
final and executory.

An action for declaratory relief should be filed by a person interested under a deed, will, contract or other
written instrument, and whose rights are affected by a statute, executive order, regulation or ordinance
before breach or violation thereof.1 The purpose of the action is to secure an authoritative statement of
the rights and obligations of the parties under a statute, deed, contract, etc. for their guidance in its
enforcement or compliance and not to settle issues arising from its alleged breach. 2 It may be entertained
only before the breach or violation of the statute, deed, contract, etc. to which it refers.3 Where the law or
contract has already been contravened prior to the filing of an action for declaratory relief, the court can
no longer assume jurisdiction over the action.4 In other words, a court has no more jurisdiction over an
action for declaratory relief if its subject, i.e., the statute, deed, contract, etc., has already been infringed
or transgressed before the institution of the action. Under such circumstances, inasmuch as a cause of
action has already accrued in favor of one or the other party, there is nothing more for the court to
explain or clarify short of a judgment or final order.

Here, an infraction of the mortgage terms had already taken place before the filing of Civil Case No. C-
7496. Thus, the CFI lacked jurisdiction when it took cognizance of the case in 1979. And in the absence of
jurisdiction, its decision was void and without legal effect. As this Court held in Arevalo v. Benedicto:5

Furthermore, the want of jurisdiction by a court over the subject-matter renders its judgment void and a
mere nullity, and considering that a void judgment is in legal effect no judgment, by which no rights are
divested, from which no rights can be obtained, which neither binds nor bars any one, and under which all
acts performed and all claims flowing out of are void, and considering further, that the decision, for want
of jurisdiction of the court, is not a decision in contemplation of law, and, hence, can never become
executory, it follows that such a void judgment cannot constitute a bar to another case by reason of res
judicata.

Nonetheless, the petition must fail.

Article 1142 of the Civil Code is clear. A mortgage action prescribes after ten years.

An action to enforce a right arising from a mortgage should be enforced within ten years from the time
the right of action accrues.6 Otherwise, it will be barred by prescription and the mortgage creditor will lose
his rights under the mortgage.

Here, petitioners’ right of action accrued in May 1977 when respondents defaulted in their obligation to
pay their loan amortizations. It was from that time that the ten-year period to enforce the right under the
mortgage started to run. The period was interrupted when respondents filed Civil Case No. C-6329
sometime after May 1977 and the CFI restrained the intended foreclosure of the property. However, the
period commenced to run again on November 9, 1977 when the case was dismissed.

The respondents’ institution of Civil Case No. C-7496 in the CFI on March 16, 1979 did not interrupt the
running of the ten-year prescriptive period because, as discussed above, the court lacked jurisdiction over
the action for declaratory relief. All proceedings therein were without legal effect. Thus, petitioners could
have enforced their right under the mortgage, including its foreclosure, only until November 7, 1987, the
tenth year from the dismissal of Civil Case No. C-6329. Thereafter, their right to do so was already barred
by prescription.

The foreclosure held on February 8, 1995 was therefore some seven years too late. The same thing can
be said about the public auction held on March 27, 1995, the consolidation of title in CHFI’s favor and the
issuance of TCT No. 310191 in its name. They were all void and did not exist in the eyes of the law.

WHEREFORE, the petition is hereby DENIED.

G.R. No. 165881             April 19, 2006

OSCAR VILLAMARIA, JR. Petitioner,

vs.
COURT OF APPEALS and JERRY V. BUSTAMANTE, Respondents

DECISION

CALLEJO, SR., J.:

Before us is a Petition for Review on Certiorari under Rule 65 of the Revised Rules of Court assailing the
Decision1 and Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 78720 which set aside the
Resolution3 of the National Labor Relations Commission (NLRC) in NCR-30-08-03247-00, which in turn
affirmed the Decision4 of the Labor Arbiter dismissing the complaint filed by respondent Jerry V.
Bustamante.

Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole proprietorship engaged in
assembling passenger jeepneys with a public utility franchise to operate along the Baclaran-Sucat route.
By 1995, Villamaria stopped assembling jeepneys and retained only nine, four of which he operated by
employing drivers on a "boundary basis." One of those drivers was respondent Bustamante who drove the
jeepney with Plate No. PVU-660. Bustamante remitted P450.00 a day to Villamaria as boundary and kept
the residue of his daily earnings as compensation for driving the vehicle. In August 1997, Villamaria
verbally agreed to sell the jeepney to Bustamante under the "boundary-hulog scheme," where
Bustamante would remit to Villarama P550.00 a day for a period of four years; Bustamante would then
become the owner of the vehicle and continue to drive the same under Villamaria’s franchise. It was also
agreed that Bustamante would make a downpayment of P10,000.00.

On August 7, 1997, Villamaria executed a contract entitled "Kasunduan ng Bilihan ng Sasakyan sa

Pamamagitan ng Boundary-Hulog"5 over the passenger jeepney with Plate No. PVU-660, Chassis No.
EVER95-38168-C and Motor No. SL-26647. The parties agreed that if Bustamante failed to pay the
boundary-hulog for three days, Villamaria Motors would hold on to the vehicle until Bustamante paid his
arrears, including a penalty of P50.00 a day; in case Bustamante failed to remit the daily boundary-hulog
for a period of one week, the Kasunduan would cease to have legal effect and Bustamante would have to
return the vehicle to Villamaria Motors.

Under the Kasunduan, Bustamante was prohibited from driving the vehicle without prior authority from
Villamaria Motors. Thus, Bustamante was authorized to operate the vehicle to transport passengers only
and not for other purposes. He was also required to display an identification card in front of the windshield
of the vehicle; in case of failure to do so, any fine that may be imposed by government authorities would
be charged against his account. Bustamante further obliged himself to pay for the cost of replacing any
parts of the vehicle that would be lost or damaged due to his negligence. In case the vehicle sustained
serious damage, Bustamante was obliged to notify Villamaria Motors before commencing repairs.
Bustamante was not allowed to wear slippers, short pants or undershirts while driving. He was required to
be polite and respectful towards the passengers. He was also obliged to notify Villamaria Motors in case
the vehicle was leased for two or more days and was required to attend any meetings which may be
called from time to time. Aside from the boundary-hulog, Bustamante was also obliged to pay for the
annual registration fees of the vehicle and the premium for the vehicle’s comprehensive insurance.
Bustamante promised to strictly comply with the rules and regulations imposed by Villamaria for the
upkeep and maintenance of the jeepney.

Bustamante continued driving the jeepney under the supervision and control of Villamaria. As agreed
upon, he made daily remittances of P550.00 in payment of the purchase price of the vehicle. Bustamante
failed to pay for the annual registration fees of the vehicle, but Villamaria allowed him to continue driving
the jeepney.

In 1999, Bustamante and other drivers who also had the same arrangement with Villamaria Motors failed
to pay their respective boundary-hulog. This prompted Villamaria to serve a "Paalala," 6 reminding them
that under the Kasunduan, failure to pay the daily boundary-hulog for one week, would mean their
respective jeepneys would be returned to him without any complaints. He warned the drivers that the
Kasunduan would henceforth be strictly enforced and urged them to comply with their obligation to avoid
litigation.

On July 24, 2000, Villamaria took back the jeepney driven by Bustamante and barred the latter from
driving the vehicle.

On August 15, 2000, Bustamante filed a Complaint7 for Illegal Dismissal against Villamaria and his wife
Teresita. In his Position Paper,8 Bustamante alleged that he was employed by Villamaria in July 1996
under the boundary system, where he was required to remit P450.00 a day. After one year of
continuously working for them, the spouses Villamaria presented the Kasunduan for his signature, with
the assurance that he (Bustamante) would own the jeepney by March 2001 after paying P550.00 in daily
installments and that he would thereafter continue driving the vehicle along the same route under the
same franchise. He further narrated that in July 2000, he informed the Villamaria spouses that the surplus
engine of the jeepney needed to be replaced, and was assured that it would be done. However, he was
later arrested and his driver’s license was confiscated because apparently, the replacement engine that
was installed was taken from a stolen vehicle. Due to negotiations with the apprehending authorities, the
jeepney was not impounded. The Villamaria spouses took the jeepney from him on July 24, 2000, and he
was no longer allowed to drive the vehicle since then unless he paid them P70,000.00.

Bustamante prayed that judgment be rendered in his favor, thus:

WHEREFORE, in the light of the foregoing, it is most respectfully prayed that judgment be rendered
ordering the respondents, jointly and severally, the following:

1. Reinstate complainant to his former position without loss of seniority rights and execute a Deed
of Sale in favor of the complainant relative to the PUJ with Plate No. PVU-660;

2. Ordering the respondents to pay backwages in the amount of P400.00 a day and other benefits
computed from July 24, 2000 up to the time of his actual reinstatement;

3. Ordering respondents to return the amount of P10,000.00 and P180,000.00 for the expenses
incurred by the complainant in the repair and maintenance of the subject jeep;
 4. Ordering the respondents to refund the amount of One Hundred (P100.00) Pesos per day
counted from August 7, 1997 up to June 2000 or a total of P91,200.00;

5. To pay moral and exemplary damages of not less than P200,000.00;

6. Attorney’s fee[s] of not less than 10% of the monetary award.

Other just and equitable reliefs under the premises are also being prayed for. 9

In their Position Paper,10 the spouses Villamaria admitted the existence of the Kasunduan, but alleged that
Bustamante failed to pay the P10,000.00 downpayment and the vehicle’s annual registration fees. They
further alleged that Bustamante eventually failed to remit the requisite boundary-hulog of P550.00 a day,
which prompted them to issue the Paalaala. Instead of complying with his obligations, Bustamante
stopped making his remittances despite his daily trips and even brought the jeepney to the province
without permission. Worse, the jeepney figured in an accident and its license plate was confiscated;
Bustamante even abandoned the vehicle in a gasoline station in Sucat, Parañaque City for two weeks.
When the security guard at the gasoline station requested that the vehicle be retrieved and Teresita
Villamaria asked Bustamante for the keys, Bustamante told her: "Di kunin ninyo." When the vehicle was
finally retrieved, the tires were worn, the alternator was gone, and the battery was no longer working.

Citing the cases of Cathedral School of Technology v. NLRC11 and Canlubang Security Agency Corporation
v. NLRC,12 the spouses Villamaria argued that Bustamante was not illegally dismissed since the
Kasunduan executed on August 7, 1997 transformed the employer-employee relationship into that of
vendor-vendee. Hence, the spouses concluded, there was no legal basis to hold them liable for illegal
dismissal. They prayed that the case be dismissed for lack of jurisdiction and patent lack of merit.

In his Reply,13 Bustamante claimed that Villamaria exercised control and supervision over the conduct of
his employment. He maintained that the rulings of the Court in National Labor Union v. Dinglasan, 14
Magboo v. Bernardo,15 and Citizen's League of Free Workers v. Abbas16 are germane to the issue as they
define the nature of the owner/operator-driver relationship under the boundary system. He further
reiterated that it was the Villamaria spouses who presented the Kasunduan to him and that he conformed
thereto only upon their representation that he would own the vehicle after four years. Moreover, it
appeared that the Paalala was duly received by him, as he, together with other drivers, was made to affix
his signature on a blank piece of paper purporting to be an "attendance sheet."

On March 15, 2002, the Labor Arbiter rendered judgment 17 in favor of the spouses Villamaria and ordered
the complaint dismissed on the following ratiocination:

Respondents presented the contract of Boundary-Hulog, as well as the PAALALA, to prove their claim that
complainant violated the terms of their contract and afterwards abandoned the vehicle assigned to him.
As against the foregoing, [the] complaint’s (sic) mere allegations to the contrary cannot prevail.

Not having been illegally dismissed, complainant is not entitled to damages and attorney's fees.18

Bustamante appealed the decision to the NLRC,19 insisting that the Kasunduan did not extinguish the
employer-employee relationship between him and Villamaria. While he did not receive fixed wages, he
kept only the excess of the boundary-hulog which he was required to remit daily to Villamaria under the
agreement. Bustamante maintained that he remained an employee because he was engaged to perform
activities which were necessary or desirable to Villamaria’s trade or business.

The NLRC rendered judgment20 dismissing the appeal for lack of merit, thus:

WHEREFORE, premises considered, complainant's appeal is hereby DISMISSED for reasons not stated in
the Labor Arbiter's decision but mainly on a jurisdictional issue, there being none over the subject matter
of the controversy.21

The NLRC ruled that under the Kasunduan, the juridical relationship between Bustamante and Villamaria
was that of vendor and vendee, hence, the Labor Arbiter had no jurisdiction over the complaint.
Bustamante filed a Motion for Reconsideration, which the NLRC resolved to deny on May 30, 2003.22

Bustamante elevated the matter to the CA via Petition for Certiorari, alleging that the NLRC erred
 I

IN DISMISSING PETITIONER’S APPEAL "FOR REASON NOT STATED IN THE LABOR ARBITER’S DECISION,
BUT MAINLY ON JURISDICTIONAL ISSUE;"

II

IN DISREGARDING THE LAW AND PREVAILING JURISPRUDENCE WHEN IT DECLARED THAT THE
RELATIONSHIP WHICH WAS ESTABLISHED BETWEEN PETITIONER AND THE PRIVATE RESPONDENT WAS
DEFINITELY A MATTER WHICH IS BEYOND THE PROTECTIVE MANTLE OF OUR LABOR LAWS. 23

Bustamante insisted that despite the Kasunduan, the relationship between him and Villamaria continued
to be that of employer-employee and as such, the Labor Arbiter had jurisdiction over his complaint. He
further alleged that it is common knowledge that operators of passenger jeepneys (including taxis) pay
their drivers not on a regular monthly basis but on commission or boundary basis, or even the boundary-
hulog system. Bustamante asserted that he was dismissed from employment without any lawful or just
cause and without due notice.

For his part, Villamaria averred that Bustamante failed to adduce proof of their employer-employee
relationship. He further pointed out that the Dinglasan case pertains to the boundary system and not the
boundary-hulog system, hence inapplicable in the instant case. He argued that upon the execution of the
Kasunduan, the juridical tie between him and Bustamante was transformed into a vendor-vendee
relationship. Noting that he was engaged in the manufacture and sale of jeepneys and not in the business
of transporting passengers for consideration, Villamaria contended that the daily fees which Bustmante
paid were actually periodic installments for the the vehicle and were not the same fees as understood in
the boundary system. He added that the boundary-hulog plan was basically a scheme to help the driver-
buyer earn money and eventually pay for the unit in full, and for the owner to profit not from the daily
earnings of the driver-buyer but from the purchase price of the unit sold. Villamaria further asserted that
the apparently restrictive conditions in the Kasunduan did not mean that the means and method of driver-
buyer’s conduct was controlled, but were mere ways to preserve the vehicle for the benefit of both
parties: Villamaria would be able to collect the agreed purchase price, while Bustamante would be assured
that the vehicle would still be in good running condition even after four years. Moreover, the right of
vendor to impose certain conditions on the buyer should be respected until full ownership of the property
is vested on the latter. Villamaria insisted that the parallel circumstances obtaining in Singer Sewing
Machine Company v. Drilon24 has analogous application to the instant issue.

In its Decision25 dated August 30, 2004, the CA reversed and set aside the NLRC decision. The fallo of the
decision reads:

UPON THE VIEW WE TAKE IN THIS CASE, THUS, the impugned resolutions of the NLRC must be, as they
are hereby are, REVERSED AND SET ASIDE, and judgment entered in favor of petitioner:

1. Sentencing private respondent Oscar Villamaria, Jr. to pay petitioner Jerry Bustamante
separation pay computed from the time of his employment up to the time of termination based on
the prevailing minimum wage at the time of termination; and,

2. Condemning private respondent Oscar Villamaria, Jr. to pay petitioner Jerry Bustamante back
wages computed from the time of his dismissal up to March 2001 based on the prevailing minimum
wage at the time of his dismissal.

Without Costs.

SO ORDERED.26

The appellate court ruled that the Labor Arbiter had jurisdiction over Bustamante’s complaint. Under the
Kasunduan, the relationship between him and Villamaria was dual: that of vendor-vendee and employer-
employee. The CA ratiocinated that Villamaria’s exercise of control over Bustamante’s conduct in
operating the jeepney is inconsistent with the former’s claim that he was not engaged in the
transportation business. There was no evidence that petitioner was allowed to let some other person drive
the jeepney.
The CA further held that, while the power to dismiss was not mentioned in the Kasunduan, it did not
mean that Villamaria could not exercise it. It explained that the existence of an employment relationship
did not depend on how the worker was paid but on the presence or absence of control over the means
and method of the employee’s work. In this case, Villamaria’s directives (to drive carefully, wear an
identification card, don decent attire, park the vehicle in his garage, and to inform him about provincial
trips, etc.) was a means to control the way in which Bustamante was to go about his work. In view of
Villamaria’s supervision and control as employer, the fact that the "boundary" represented installment
payments of the purchase price on the jeepney did not remove the parties’ employer-employee
relationship.

While the appellate court recognized that a week’s default in paying the boundary-hulog constituted an
additional cause for terminating Bustamante’s employment, it held that the latter was illegally dismissed.
According to the CA, assuming that Bustamante failed to make the required payments as claimed by
Villamaria, the latter nevertheless failed to take steps to recover the unit and waited for Bustamante to
abandon it. It also pointed out that Villamaria neither submitted any police report to support his claim that
the vehicle figured in a mishap nor presented the affidavit of the gas station guard to substantiate the
claim that Bustamante abandoned the unit.

Villamaria received a copy of the decision on September 8, 2004, and filed, on September 17, 2004, a
motion for reconsideration thereof. The CA denied the motion in a Resolution 27 dated November 2, 2004,
and Villamaria received a copy thereof on November 8, 2004.

Villamaria, now petitioner, seeks relief from this Court via petition for review on certiorari under Rule 65
of the Rules of Court, alleging that the CA committed grave abuse of its discretion amounting to excess or
lack of jurisdiction in reversing the decision of the Labor Arbiter and the NLRC. He claims that the CA
erred in ruling that the juridical relationship between him and respondent under the Kasunduan was a
combination of employer-employee and vendor-vendee relationships. The terms and conditions of the
Kasunduan clearly state that he and respondent Bustamante had entered into a conditional deed of sale
over the jeepney; as such, their employer-employee relationship had been transformed into that of
vendor-vendee. Petitioner insists that he had the right to reserve his title on the jeepney until after the
purchase price thereof had been paid in full.

In his Comment on the petition, respondent avers that the appropriate remedy of petitioner was an
appeal via a petition for review on certiorari under Rule 45 of the Rules of Court and not a special civil
action of certiorari under Rule 65. He argues that petitioner failed to establish that the CA committed
grave abuse of its discretion amounting to excess or lack of jurisdiction in its decision, as the said ruling is
in accord with law and the evidence on record.

Respondent further asserts that the Kasunduan presented to him by petitioner which provides for a
boundary-hulog scheme was a devious circumvention of the Labor Code of the Philippines. Respondent
insists that his juridical relationship with petitioner is that of employer-employee because he was engaged
to perform activities which were necessary or desirable in the usual business of petitioner, his employer.

In his Reply, petitioner avers that the Rules of Procedure should be liberally construed in his favor; hence,
it behooves the Court to resolve the merits of his petition.

We agree with respondent’s contention that the remedy of petitioner from the CA decision was to file a
petition for review on certiorari under Rule 45 of the Rules of Court and not the independent action of
certiorari under Rule 65. Petitioner had 15 days from receipt of the CA resolution denying his motion for
the reconsideration within which to file the petition under Rule 45.28 But instead of doing so, he filed a
petition for certiorari under Rule 65 on November 22, 2004, which did not, however, suspend the running
of the 15-day reglementary period; consequently, the CA decision became final and executory upon the
lapse of the reglementary period for appeal. Thus, on this procedural lapse, the instant petition stands to
be dismissed.29

It must be stressed that the recourse to a special civil action under Rule 65 of the Rules of Court is
proscribed by the remedy of appeal under Rule 45. As the Court elaborated in Tomas Claudio Memorial
College, Inc. v. Court of Appeals:30

We agree that the remedy of the aggrieved party from a decision or final resolution of the CA is to file a
petition for review on certiorari under Rule 45 of the Rules of Court, as amended, on questions of facts or
issues of law within fifteen days from notice of the said resolution. Otherwise, the decision of the CA shall
become final and executory. The remedy under Rule 45 of the Rules of Court is a mode of appeal to this
Court from the decision of the CA. It is a continuation of the appellate process over the original case. A
review is not a matter of right but is a matter of judicial discretion. The aggrieved party may, however,
assail the decision of the CA via a petition for certiorari under Rule 65 of the Rules of Court within sixty
days from notice of the decision of the CA or its resolution denying the motion for reconsideration of the
same. This is based on the premise that in issuing the assailed decision and resolution, the CA acted with
grave abuse of discretion, amounting to excess or lack of jurisdiction and there is no plain, speedy and
adequate remedy in the ordinary course of law. A remedy is considered plain, speedy and adequate if it
will promptly relieve the petitioner from the injurious effect of the judgment and the acts of the lower
court.

The aggrieved party is proscribed from filing a petition for certiorari if appeal is available, for the remedies
of appeal and certiorari are mutually exclusive and not alternative or successive. The aggrieved party is,
likewise, barred from filing a petition for certiorari if the remedy of appeal is lost through his negligence. A
petition for certiorari is an original action and does not interrupt the course of the principal case unless a
temporary restraining order or a writ of preliminary injunction has been issued against the public
respondent from further proceeding. A petition for certiorari must be based on jurisdictional grounds
because, as long as the respondent court acted within its jurisdiction, any error committed by it will
amount to nothing more than an error of judgment which may be corrected or reviewed only by appeal. 31

However, we have also ruled that a petition for certiorari under Rule 65 may be considered as filed under
Rule 45, conformably with the principle that rules of procedure are to be construed liberally, provided that
the petition is filed within the reglementary period under Section 2, Rule 45 of the Rules of Court, and
where valid and compelling circumstances warrant that the petition be resolved on its merits. 32 In this
case, the petition was filed within the reglementary period and petitioner has raised an issue of
substance: whether the existence of a boundary-hulog agreement negates the employer-employee
relationship between the vendor and vendee, and, as a corollary, whether the Labor Arbiter has
jurisdiction over a complaint for illegal dismissal in such case.

We resolve these issues in the affirmative.

The rule is that, the nature of an action and the subject matter thereof, as well as, which court or agency
of the government has jurisdiction over the same, are determined by the material allegations of the
complaint in relation to the law involved and the character of the reliefs prayed for, whether or not the
complainant/plaintiff is entitled to any or all of such reliefs.33 A prayer or demand for relief is not part of
the petition of the cause of action; nor does it enlarge the cause of action stated or change the legal effect
of what is alleged.34 In determining which body has jurisdiction over a case, the better policy is to
consider not only the status or relationship of the parties but also the nature of the action that is the
subject of their controversy.35

Article 217 of the Labor Code, as amended, vests on the Labor Arbiter exclusive original jurisdiction only
over the following:

x x x (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case
by the parties for decision without extension, even in the absence of stenographic notes, the following
cases involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wage, rates of pay, hours of work, and other terms and conditions of employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;

5. Cases arising from violation of Article 264 of this Code, including questions involving the legality
of strikes and lockouts; and

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee relationship, including those of persons in domestic
 or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless
of whether accompanied with a claim for reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by
Labor Arbiters.

(c) Cases arising from the interpretation or implementation of collective bargaining

agreements, and those arising from the interpretation or enforcement of company
personnel policies shall be disposed of by the Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration as may be provided in said agreements.

In the foregoing cases, an employer-employee relationship is an indispensable jurisdictional requisite. 36

The jurisdiction of Labor Arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes
arising from an employer-employee relationship which can only be resolved by reference to the Labor
Code, other labor statutes or their collective bargaining agreement.37 Not every dispute between an
employer and employee involves matters that only the Labor Arbiter and the NLRC can resolve in the
exercise of their adjudicatory or quasi-judicial powers. Actions between employers and employees where
the employer-employee relationship is merely incidental is within the exclusive original jurisdiction of the
regular courts.38 When the principal relief is to be granted under labor legislation or a collective bargaining
agreement, the case falls within the exclusive jurisdiction of the Labor Arbiter and the NLRC even though
a claim for damages might be asserted as an incident to such claim.39

We agree with the ruling of the CA that, under the boundary-hulog scheme incorporated in the
Kasunduan, a dual juridical relationship was created between petitioner and respondent: that of
employer-employee and vendor-vendee. The Kasunduan did not extinguish the employer-employee
relationship of the parties extant before the execution of said deed.

As early as 1956, the Court ruled in National Labor Union v. Dinglasan 40 that the jeepney owner/operator-
driver relationship under the boundary system is that of employer-employee and not lessor-lessee. This
doctrine was affirmed, under similar factual settings, in Magboo v. Bernardo41 and Lantaco, Sr. v.
Llamas,42 and was analogously applied to govern the relationships between auto-calesa owner/operator
and driver,43 bus owner/operator and conductor,44 and taxi owner/operator and driver.45

The boundary system is a scheme by an owner/operator engaged in transporting passengers as a

common carrier to primarily govern the compensation of the driver, that is, the latter’s daily earnings are
remitted to the owner/operator less the excess of the boundary which represents the driver’s
compensation. Under this system, the owner/operator exercises control and supervision over the driver. It
is unlike in lease of chattels where the lessor loses complete control over the chattel leased but the lessee
is still ultimately responsible for the consequences of its use. The management of the business is still in
the hands of the owner/operator, who, being the holder of the certificate of public convenience, must see
to it that the driver follows the route prescribed by the franchising and regulatory authority, and the rules
promulgated with regard to the business operations. The fact that the driver does not receive fixed wages
but only the excess of the "boundary" given to the owner/operator is not sufficient to change the
relationship between them. Indubitably, the driver performs activities which are usually necessary or
desirable in the usual business or trade of the owner/operator.46

Under the Kasunduan, respondent was required to remit P550.00 daily to petitioner, an amount which
represented the boundary of petitioner as well as respondent’s partial payment (hulog) of the purchase
price of the jeepney.

Respondent was entitled to keep the excess of his daily earnings as his daily wage. Thus, the daily
remittances also had a dual purpose: that of petitioner’s boundary and respondent’s partial payment
(hulog) for the vehicle. This dual purpose was expressly stated in the Kasunduan. The well-settled rule is
that an obligation is not novated by an instrument that expressly recognizes the old one, changes only the
terms of payment, and adds other obligations not incompatible with the old provisions or where the new
contract merely supplements the previous one. 47 The two obligations of the respondent to remit to
petitioner the boundary-hulog can stand together.

In resolving an issue based on contract, this Court must first examine the contract itself, keeping in mind
that when the terms of the agreement are clear and leave no doubt as to the intention of the contracting
parties, the literal meaning of its stipulations shall prevail.48 The intention of the contracting parties should
be ascertained by looking at the words used to project their intention, that is, all the words, not just a
particular word or two or more words standing alone. The various stipulations of a contract shall be
interpreted together, attributing to the doubtful ones that sense which may result from all of them taken
jointly.49 The parts and clauses must be interpreted in relation to one another to give effect to the whole.
The legal effect of a contract is to be determined from the whole read together. 50

Under the Kasunduan, petitioner retained supervision and control over the conduct of the respondent as
driver of the jeepney, thus:

Ang mga patakaran, kaugnay ng bilihang ito sa pamamagitan ng boundary hulog ay ang mga sumusunod:

1. Pangangalagaan at pag-iingatan ng TAUHAN NG IKALAWANG PANIG ang sasakyan

ipinagkatiwala sa kanya ng TAUHAN NG UNANG PANIG.

2. Na ang sasakyan nabanggit ay gagamitin lamang ng TAUHAN NG IKALAWANG PANIG sa

paghahanapbuhay bilang pampasada o pangangalakal sa malinis at maayos na pamamaraan.

3. Na ang sasakyan nabanggit ay hindi gagamitin ng TAUHAN NG IKALAWANG PANIG sa mga

bagay na makapagdudulot ng kahihiyan, kasiraan o pananagutan sa TAUHAN NG UNANG PANIG.

4. Na hindi ito mamanehohin ng hindi awtorisado ng opisina ng UNANG PANIG.

5. Na ang TAUHAN NG IKALAWANG PANIG ay kinakailangang maglagay ng ID Card sa harap ng

windshield upang sa pamamagitan nito ay madaliang malaman kung ang nagmamaneho ay
awtorisado ng VILLAMARIA MOTORS o hindi.

6. Na sasagutin ng TAUHAN NG IKALAWANG PANIG ang [halaga ng] multa kung sakaling mahuli
ang sasakyang ito na hindi nakakabit ang ID card sa wastong lugar o anuman kasalanan o
kapabayaan.

7. Na sasagutin din ng TAUHAN NG IKALAWANG PANIG ang materyales o piyesa na papalitan ng

nasira o nawala ito dahil sa kanyang kapabayaan.

8. Kailangan sa VILLAMARIA MOTORS pa rin ang garahe habang hinuhulugan pa rin ng TAUHAN
NG IKALAWANG PANIG ang nasabing sasakyan.

9. Na kung magkaroon ng mabigat na kasiraan ang sasakyang ipinagkaloob ng TAUHAN NG

UNANG PANIG, ang TAUHAN NG IKALAWANG PANIG ay obligadong itawag ito muna sa
VILLAMARIA MOTORS bago ipagawa sa alin mang Motor Shop na awtorisado ng VILLAMARIA
MOTORS.

10. Na hindi pahihintulutan ng TAUHAN NG IKALAWANG PANIG sa panahon ng pamamasada na

ang nagmamaneho ay naka-tsinelas, naka short pants at nakasando lamang. Dapat ang
nagmamaneho ay laging nasa maayos ang kasuotan upang igalang ng mga pasahero.

11. Na ang TAUHAN NG IKALAWANG PANIG o ang awtorisado niyang driver ay magpapakita ng
magandang asal sa mga pasaheros at hindi dapat magsasalita ng masama kung sakali man may
pasaherong pilosopo upang maiwasan ang anumang kaguluhan na maaaring kasangkutan.

12. Na kung sakaling hindi makapagbigay ng BOUNDARY HULOG ang TAUHAN NG IKALAWANG
PANIG sa loob ng tatlong (3) araw ay ang opisina ng VILLAMARIA MOTORS ang may karapatang
mangasiwa ng nasabing sasakyan hanggang matugunan ang lahat ng responsibilidad. Ang
halagang dapat bayaran sa opisina ay may karagdagang multa ng P50.00 sa araw-araw na ito ay
nasa pangangasiwa ng VILLAMARIA MOTORS.

13. Na kung ang TAUHAN NG IKALAWANG PANIG ay hindi makapagbigay ng BOUNDARY HULOG sa
loob ng isang linggo ay nangangahulugan na ang kasunduang ito ay wala ng bisa at kusang
ibabalik ng TAUHAN NG IKALAWANG PANIG ang nasabing sasakyan sa TAUHAN NG UNANG PANIG.

14. Sasagutin ng TAUHAN NG IKALAWANG PANIG ang bayad sa rehistro, comprehensive insurance
taon-taon at kahit anong uri ng aksidente habang ito ay hinuhulugan pa sa TAUHAN NG UNANG
PANIG.
 15. Na ang TAUHAN NG IKALAWANG PANIG ay obligadong dumalo sa pangkalahatang
pagpupulong ng VILLAMARIA MOTORS sa tuwing tatawag ang mga tagapangasiwa nito upang
maipaabot ang anumang mungkahi sa ikasusulong ng samahan.

16. Na ang TAUHAN NG IKALAWANG PANIG ay makikiisa sa lahat ng mga patakaran na

magkakaroon ng pagbabago o karagdagan sa mga darating na panahon at hindi magiging hadlang
sa lahat ng mga balakin ng VILLAMARIA MOTORS sa lalo pang ipagtatagumpay at ikakatibay ng
Samahan.

17. Na ang TAUHAN NG IKALAWANG PANIG ay hindi magiging buwaya sa pasahero upang hindi
kainisan ng kapwa driver at maiwasan ang pagkakasangkot sa anumang gulo.

18. Ang nasabing sasakyan ay hindi kalilimutang siyasatin ang kalagayan lalo na sa umaga bago
pumasada, at sa hapon o gabi naman ay sisikapin mapanatili ang kalinisan nito.

19. Na kung sakaling ang nasabing sasakyan ay maaarkila at aabutin ng dalawa o higit pang araw
sa lalawigan ay dapat lamang na ipagbigay alam muna ito sa VILLAMARIA MOTORS upang
maiwasan ang mga anumang suliranin.

20. Na ang TAUHAN NG IKALAWANG PANIG ay iiwasan ang pakikipag-unahan sa kaninumang

sasakyan upang maiwasan ang aksidente.

21. Na kung ang TAUHAN NG IKALAWANG PANIG ay mayroon sasabihin sa VILLAMARIA MOTORS
mabuti man or masama ay iparating agad ito sa kinauukulan at iwasan na iparating ito kung [kani-
kanino] lamang upang maiwasan ang anumang usapin. Magsadya agad sa opisina ng VILLAMARIA
MOTORS.

22. Ang mga nasasaad sa KASUNDUAN ito ay buong galang at puso kong sinasang-ayunan at
buong sikap na pangangalagaan ng TAUHAN NG IKALAWANG PANIG ang nasabing sasakyan at
gagamitin lamang ito sa paghahanapbuhay at wala nang iba pa.51

The parties expressly agreed that petitioner, as vendor, and respondent, as vendee, entered into a
contract to sell the jeepney on a daily installment basis of P550.00 payable in four years and that
petitioner would thereafter become its owner. A contract is one of conditional sale, oftentimes referred to
as contract to sell, if the ownership or title over the property sold is retained by the vendor, and is not
passed to the vendee unless and until there is full payment of the purchase price and/or upon faithful
compliance with the other terms and conditions that may lawfully be stipulated. 52 Such payment or
satisfaction of other preconditions, as the case may be, is a positive suspensive condition, the failure of
which is not a breach of contract, casual or serious, but simply an event that would prevent the obligation
of the vendor to convey title from acquiring binding force.53 Stated differently, the efficacy or obligatory
force of the vendor's obligation to transfer title is subordinated to the happening of a future and uncertain
event so that if the suspensive condition does not take place, the parties would stand as if the conditional
obligation had never existed.54 The vendor may extrajudicially terminate the operation of the contract,
refuse conveyance, and retain the sums or installments already received, where such rights are expressly
provided for.55

Under the boundary-hulog scheme, petitioner retained ownership of the jeepney although its material
possession was vested in respondent as its driver. In case respondent failed to make his P550.00 daily
installment payment for a week, the agreement would be of no force and effect and respondent would
have to return the jeepney to petitioner; the employer-employee relationship would likewise be
terminated unless petitioner would allow respondent to continue driving the jeepney on a boundary basis
of P550.00 daily despite the termination of their vendor-vendee relationship.

The juridical relationship of employer-employee between petitioner and respondent was not negated by
the foregoing stipulation in the Kasunduan, considering that petitioner retained control of respondent’s
conduct as driver of the vehicle. As correctly ruled by the CA:

The exercise of control by private respondent over petitioner’s conduct in operating the jeepney he was
driving is inconsistent with private respondent’s claim that he is, or was, not engaged in the
transportation business; that, even if petitioner was allowed to let some other person drive the unit, it
was not shown that he did so; that the existence of an employment relation is not dependent on how the
worker is paid but on the presence or absence of control over the means and method of the work; that
the amount earned in excess of the "boundary hulog" is equivalent to wages; and that the fact that the
power of dismissal was not mentioned in the Kasunduan did not mean that private respondent never
exercised such power, or could not exercise such power.

Moreover, requiring petitioner to drive the unit for commercial use, or to wear an identification card, or to
don a decent attire, or to park the vehicle in Villamaria Motors garage, or to inform Villamaria Motors
about the fact that the unit would be going out to the province for two days of more, or to drive the unit
carefully, etc. necessarily related to control over the means by which the petitioner was to go about his
work; that the ruling applicable here is not Singer Sewing Machine but National Labor Union since the
latter case involved jeepney owners/operators and jeepney drivers, and that the fact that the "boundary"
here represented installment payment of the purchase price on the jeepney did not withdraw the
relationship from that of employer-employee, in view of the overt presence of supervision and control by
the employer.56

Neither is such juridical relationship negated by petitioner’s claim that the terms and conditions in the
Kasunduan relative to respondent’s behavior and deportment as driver was for his and respondent’s
benefit: to insure that respondent would be able to pay the requisite daily installment of P550.00, and
that the vehicle would still be in good condition despite the lapse of four years. What is primordial is that
petitioner retained control over the conduct of the respondent as driver of the jeepney.

Indeed, petitioner, as the owner of the vehicle and the holder of the franchise, is entitled to exercise
supervision and control over the respondent, by seeing to it that the route provided in his franchise, and
the rules and regulations of the Land Transportation Regulatory Board are duly complied with. Moreover,
in a business establishment, an identification card is usually provided not just as a security measure but
to mainly identify the holder thereof as a bona fide employee of the firm who issues it. 57

As respondent’s employer, it was the burden of petitioner to prove that respondent’s termination from
employment was for a lawful or just cause, or, at the very least, that respondent failed to make his daily
remittances of P550.00 as boundary. However, petitioner failed to do so. As correctly ruled by the
appellate court:

It is basic of course that termination of employment must be effected in accordance with law. The just
and authorized causes for termination of employment are enumerated under Articles 282, 283 and 284 of
the Labor Code.

Parenthetically, given the peculiarity of the situation of the parties here, the default in the remittance of
the boundary hulog for one week or longer may be considered an additional cause for termination of
employment. The reason is because the Kasunduan would be of no force and effect in the event that the
purchaser failed to remit the boundary hulog for one week. The Kasunduan in this case pertinently
stipulates:

13. Na kung ang TAUHAN NG IKALAWANG PANIG ay hindi makapagbigay ng BOUNDARY HULOG sa loob
ng isang linggo ay NANGANGAHULUGAN na ang kasunduang ito ay wala ng bisa at kusang ibabalik ng
TAUHAN NG IKALAWANG PANIG ang nasabing sasakyan sa TAUHAN NG UNANG PANIG na wala ng
paghahabol pa.

Moreover, well-settled is the rule that, the employer has the burden of proving that the dismissal of an
employee is for a just cause. The failure of the employer to discharge this burden means that the
dismissal is not justified and that the employee is entitled to reinstatement and back wages.

In the case at bench, private respondent in his position paper before the Labor Arbiter, alleged that
petitioner failed to pay the miscellaneous fee of P10,000.00 and the yearly registration of the unit; that
petitioner also stopped remitting the "boundary hulog," prompting him (private respondent) to issue a
"Paalala," which petitioner however ignored; that petitioner even brought the unit to his (petitioner’s)
province without informing him (private respondent) about it; and that petitioner eventually abandoned
the vehicle at a gasoline station after figuring in an accident. But private respondent failed to substantiate
these allegations with solid, sufficient proof. Notably, private respondent’s allegation viz, that he retrieved
the vehicle from the gas station, where petitioner abandoned it, contradicted his statement in the Paalala
that he would enforce the provision (in the Kasunduan) to the effect that default in the remittance of the
boundary hulog for one week would result in the forfeiture of the unit. The Paalala reads as follows:

"Sa lahat ng mga kumukuha ng sasakyan

"Sa pamamagitan ng ‘BOUNDARY HULOG’

"Nais ko pong ipaalala sa inyo ang Kasunduan na inyong pinirmahan particular na ang paragrapo 13 na
nagsasaad na kung hindi kayo makapagbigay ng Boundary Hulog sa loob ng isang linggo ay kusa ninyong
ibabalik and nasabing sasakyan na inyong hinuhulugan ng wala ng paghahabol pa.

"Mula po sa araw ng inyong pagkatanggap ng Paalala na ito ay akin na pong ipatutupad ang nasabing
Kasunduan kaya’t aking pinaaalala sa inyong lahat na tuparin natin ang nakalagay sa kasunduan upang
maiwasan natin ito.

"Hinihiling ko na sumunod kayo sa hinihingi ng paalalang ito upang hindi na tayo makaabot pa sa korte
kung sakaling hindi ninyo isasauli ang inyong sasakyan na hinuhulugan na ang mga magagastos ay kayo
pa ang magbabayad sapagkat ang hindi ninyo pagtupad sa kasunduan ang naging dahilan ng pagsampa
ng kaso.

"Sumasainyo

"Attendance: 8/27/99

"(The Signatures appearing herein

include (sic) that of petitioner’s) (Sgd.)

OSCAR VILLAMARIA, JR."

If it were true that petitioner did not remit the boundary hulog for one week or more, why did private
respondent not forthwith take steps to recover the unit, and why did he have to wait for petitioner to
abandon it?1avvphil.net

On another point, private respondent did not submit any police report to support his claim that petitioner
really figured in a vehicular mishap. Neither did he present the affidavit of the guard from the gas station
to substantiate his claim that petitioner abandoned the unit there.58

Petitioner’s claim that he opted not to terminate the employment of respondent because of magnanimity
is negated by his (petitioner’s) own evidence that he took the jeepney from the respondent only on July
24, 2000.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of the Court of Appeals in CA-
G.R. SP No. 78720 is AFFIRMED. Costs against petitioner.

G.R. No. 158290             October 23, 2006

HILARION M. HENARES, JR., VICTOR C. AGUSTIN, ALFREDO L. HENARES, DANIEL L. HENARES, ENRIQUE
BELO HENARES, and CRISTINA BELO HENARES, petitioners,
vs.
LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD and DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, respondents.

RESOLUTION

QUISUMBING, J.:

Petitioners challenge this Court to issue a writ of mandamus commanding respondents Land
Transportation Franchising and Regulatory Board (LTFRB) and the Department of Transportation and
Communications (DOTC) to require public utility vehicles (PUVs) to use compressed natural gas (CNG) as
alternative fuel.
Citing statistics from the Metro Manila Transportation and Traffic Situation Study of 1996,1 the
Environmental Management Bureau (EMB) of the National Capital Region, 2 a study of the Asian
Development Bank,3 the Manila Observatory4 and the Department of Environment and Natural Resources5
(DENR) on the high growth and low turnover in vehicle ownership in the Philippines, including diesel-
powered vehicles, two-stroke engine powered motorcycles and their concomitant emission of air
pollutants, petitioners attempt to present a compelling case for judicial action against the bane of air
pollution and related environmental hazards.

Petitioners allege that the particulate matters (PM) – complex mixtures of dust, dirt, smoke, and liquid
droplets, varying in sizes and compositions emitted into the air from various engine combustions – have
caused detrimental effects on health, productivity, infrastructure and the overall quality of life. Petitioners
particularly cite the effects of certain fuel emissions from engine combustion when these react to other
pollutants. For instance, petitioners aver, with hydrocarbons, oxide of nitrogen (NO x) creates smog; with
sulfur dioxide, it creates acid rain; and with ammonia, moisture and other compounds, it reacts to form
nitric acid and harmful nitrates. Fuel emissions also cause retardation and leaf bleaching in plants.
According to petitioner, another emission, carbon monoxide (CO), when not completely burned but
emitted into the atmosphere and then inhaled can disrupt the necessary oxygen in blood. With prolonged
exposure, CO affects the nervous system and can be lethal to people with weak hearts. 6

Petitioners add that although much of the new power generated in the country will use natural gas while a
number of oil and coal-fired fuel stations are being phased-out, still with the projected doubling of power
generation over the next 10 years, and with the continuing high demand for motor vehicles, the energy
and transport sectors are likely to remain the major sources of harmful emissions. Petitioners refer us to
the study of the Philippine Environment Monitor 20027, stating that in four of the country's major cities,
Metro Manila, Davao, Cebu and Baguio, the exposure to PM10, a finer PM which can penetrate deep into
the lungs causing serious health problems, is estimated at over US$430 million. 8 The study also reports
that the emissions of PMs have caused the following:

· Over 2,000 people die prematurely. This loss is valued at about US$140 million.

· Over 9,000 people suffer from chronic bronchitis, which is valued at about US$120 million.

· Nearly 51 million cases of respiratory symptom days in Metro Manila (averaging twice a
year in Davao and Cebu, and five to six times in Metro Manila and Baguio), costs about
US$170 million. This is a 70 percent increase, over a decade, when compared with the
findings of a similar study done in 1992 for Metro Manila, which reported 33 million cases.9

Petitioners likewise cite the University of the Philippines' studies in 1990-91 and 1994 showing that
vehicular emissions in Metro Manila have resulted to the prevalence of chronic obstructive pulmonary
diseases (COPD); that pulmonary tuberculosis is highest among jeepney drivers; and there is a 4.8 to
27.5 percent prevalence of respiratory symptoms among school children and 15.8 to 40.6 percent among
child vendors. The studies also revealed that the children in Metro Manila showed more compromised
pulmonary function than their rural counterparts. Petitioners infer that these are mostly due to the
emissions of PUVs.

To counter the aforementioned detrimental effects of emissions from PUVs, petitioners propose the use of
CNG. According to petitioners, CNG is a natural gas comprised mostly of methane which although
containing small amounts of propane and butane,10 is colorless and odorless and considered the cleanest
fossil fuel because it produces much less pollutants than coal and petroleum; produces up to 90 percent
less CO compared to gasoline and diesel fuel; reduces NOx emissions by 50 percent and cuts hydrocarbon
emissions by half; emits 60 percent less PMs; and releases virtually no sulfur dioxide. Although, according
to petitioners, the only drawback of CNG is that it produces more methane, one of the gases blamed for
global warming.11

Asserting their right to clean air, petitioners contend that the bases for their petition for a writ of
mandamus to order the LTFRB to require PUVs to use CNG as an alternative fuel, lie in Section 16, 12
Article II of the 1987 Constitution, our ruling in Oposa v. Factoran, Jr.,13 and Section 414 of Republic Act
No. 8749 otherwise known as the "Philippine Clean Air Act of 1999."

Meantime, following a subsequent motion, the Court granted petitioners' motion to implead the
Department of Transportation and Communications (DOTC) as additional respondent.
In his Comment for respondents LTFRB and DOTC, the Solicitor General, cites Section 3, Rule 65 of the
Revised Rules of Court and explains that the writ of mandamus is not the correct remedy since the writ
may be issued only to command a tribunal, corporation, board or person to do an act that is required to
be done, when he or it unlawfully neglects the performance of an act which the law specifically enjoins as
a duty resulting from an office, trust or station, or unlawfully excludes another from the use and
enjoyment of a right or office to which such other is entitled, there being no other plain, speedy and
adequate remedy in the ordinary course of law.15 Further citing existing jurisprudence, the Solicitor
General explains that in contrast to a discretionary act, a ministerial act, which a mandamus is, is one in
which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to a
mandate of legal authority, without regard to or the exercise of his own judgment upon the propriety or
impropriety of an act done.

The Solicitor General also notes that nothing in Rep. Act No. 8749 that petitioners invoke, prohibits the
use of gasoline and diesel by owners of motor vehicles. Sadly too, according to the Solicitor General, Rep.
Act No. 8749 does not even mention the existence of CNG as alternative fuel and avers that unless this
law is amended to provide CNG as alternative fuel for PUVs, the respondents cannot propose that PUVs
use CNG as alternative fuel.

The Solicitor General also adds that it is the DENR that is tasked to implement Rep. Act No. 8749 and not
the LTFRB nor the DOTC. Moreover, he says, it is the Department of Energy (DOE), under Section 26 16 of
Rep. Act No. 8749, that is required to set the specifications for all types of fuel and fuel-related products
to improve fuel compositions for improved efficiency and reduced emissions. He adds that under Section
2117 of the cited Republic Act, the DOTC is limited to implementing the emission standards for motor
vehicles, and the herein respondents cannot alter, change or modify the emission standards. The Solicitor
General opines that the Court should declare the instant petition for mandamus without merit.

Petitioners, in their Reply, insist that the respondents possess the administrative and regulatory powers to
implement measures in accordance with the policies and principles mandated by Rep. Act No. 8749,
specifically Section 218 and Section 21.19 Petitioners state that under these laws and with all the available
information provided by the DOE on the benefits of CNG, respondents cannot ignore the existence of CNG,
and their failure to recognize CNG and compel its use by PUVs as alternative fuel while air pollution
brought about by the emissions of gasoline and diesel endanger the environment and the people, is
tantamount to neglect in the performance of a duty which the law enjoins.

Lastly, petitioners aver that other than the writ applied for, they have no other plain, speedy and
adequate remedy in the ordinary course of law. Petitioners insist that the writ in fact should be issued
pursuant to the very same Section 3, Rule 65 of the Revised Rules of Court that the Solicitor General
invokes.

In their Memorandum, petitioners phrase the issues before us as follows:

I. WHETHER OR NOT THE PETITIONERS HAVE THE PERSONALITY TO BRING THE PRESENT
ACTION

II. WHETHER OR NOT THE PRESENT ACTION IS SUPPORTED BY LAW

III. WHETHER OR NOT THE RESPONDENT IS THE AGENCY RESPONSIBLE TO IMPLEMENT

THE SUGGESTED ALTERNATIVE OF REQUIRING PUBLIC UTILITY VEHICLES TO USE
COMPRESSED NATURAL GAS (CNG)

IV. WHETHER OR NOT THE RESPONDENT CAN BE COMPELLED TO REQUIRE PUBLIC UTILITY
VEHICLES TO USE COMPRESSED NATURAL GAS THROUGH A WRIT OF MANDAMUS20

Briefly put, the issues are two-fold. First, Do petitioners have legal personality to bring this petition before
us? Second, Should mandamus issue against respondents to compel PUVs to use CNG as alternative fuel?

According to petitioners, Section 16,21 Article II of the 1987 Constitution is the policy statement that
bestows on the people the right to breathe clean air in a healthy environment. This policy is enunciated in
Oposa.22 The implementation of this policy is articulated in Rep. Act No. 8749. These, according to
petitioners, are the bases for their standing to file the instant petition. They aver that when there is an
omission by the government to safeguard a right, in this case their right to clean air, then, the citizens
can resort to and exhaust all remedies to challenge this omission by the government. This, they say, is
embodied in Section 423 of Rep. Act No. 8749.

Petitioners insist that since it is the LTFRB and the DOTC that are the government agencies clothed with
power to regulate and control motor vehicles, particularly PUVs, and with the same agencies' awareness
and knowledge that the PUVs emit dangerous levels of air pollutants, then, the responsibility to see that
these are curbed falls under respondents' functions and a writ of mandamus should issue against them.

The Solicitor General, for his part, reiterates his position that the respondent government agencies, the
DOTC and the LTFRB, are not in a position to compel the PUVs to use CNG as alternative fuel. The
Solicitor General explains that the function of the DOTC is limited to implementing the emission standards
set forth in Rep. Act No. 8749 and the said law only goes as far as setting the maximum limit for the
emission of vehicles, but it does not recognize CNG as alternative engine fuel. The Solicitor General avers
that the petition should be addressed to Congress for it to come up with a policy that would compel the
use of CNG as alternative fuel.

Patently, this Court is being asked to resolve issues that are not only procedural. Petitioners challenge this
Court to decide if what petitioners propose could be done through a less circuitous, speedy and
unchartered course in an issue that Chief Justice Hilario G. Davide, Jr. in his ponencia in the Oposa case,24
describes as "inter-generational responsibility" and "inter-generational justice."

Now, as to petitioners' standing. There is no dispute that petitioners have standing to bring their case
before this Court. Even respondents do not question their standing. This petition focuses on one
fundamental legal right of petitioners, their right to clean air. Moreover, as held previously, a party's
standing before this Court is a procedural technicality which may, in the exercise of the Court's discretion,
be set aside in view of the importance of the issue raised. We brush aside this issue of technicality under
the principle of the transcendental importance to the public, especially so if these cases demand that they
be settled promptly.

Undeniably, the right to clean air not only is an issue of paramount importance to petitioners for it
concerns the air they breathe, but it is also impressed with public interest. The consequences of the
counter-productive and retrogressive effects of a neglected environment due to emissions of motor
vehicles immeasurably affect the well-being of petitioners. On these considerations, the legal standing of
the petitioners deserves recognition.

Our next concern is whether the writ of mandamus is the proper remedy, and if the writ could issue
against respondents.

Under Section 3, Rule 65 of the Rules of Court, mandamus lies under any of the following cases: (1)
against any tribunal which unlawfully neglects the performance of an act which the law specifically enjoins
as a duty; (2) in case any corporation, board or person unlawfully neglects the performance of an act
which the law enjoins as a duty resulting from an office, trust, or station; and (3) in case any tribunal,
corporation, board or person unlawfully excludes another from the use and enjoyment of a right or office
to which such other is legally entitled; and there is no other plain, speedy, and adequate remedy in the
ordinary course of law.

In University of San Agustin, Inc. v. Court of Appeals,25 we said,

…It is settled that mandamus is employed to compel the performance, when refused,
of a ministerial duty, this being its main objective. It does not lie to require anyone
to fulfill contractual obligations or to compel a course of conduct, nor to control or
review the exercise of discretion. On the part of the petitioner, it is essential to the
issuance of a writ of mandamus that he should have a clear legal right to the thing
demanded and it must be the imperative duty of the respondent to perform the act
required. It never issues in doubtful cases. While it may not be necessary that the
duty be absolutely expressed, it must however, be clear. The writ will not issue to
compel an official to do anything which is not his duty to do or which is his duty not
to do, or give to the applicant anything to which he is not entitled by law. The writ
neither confers powers nor imposes duties. It is simply a command to exercise a
power already possessed and to perform a duty already imposed. (Emphasis
supplied.)
In this petition the legal right which is sought to be recognized and enforced hinges on a constitutional
and a statutory policy already articulated in operational terms, e.g. in Rep. Act No. 8749, the Philippine
Clean Air Act of 1999. Paragraph (a), Section 21 of the Act specifically provides that when PUVs are
concerned, the responsibility of implementing the policy falls on respondent DOTC. It provides as follows:

SEC 21. Pollution from Motor Vehicles. - a) The DOTC shall implement the emission
standards for motor vehicles set pursuant to and as provided in this Act. To further improve
the emission standards, the Department [DENR] shall review, revise and publish the
standards every two (2) years, or as the need arises. It shall consider the maximum limits
for all major pollutants to ensure substantial improvement in air quality for the health,
safety and welfare of the general public.

Paragraph (b) states:

b) The Department [DENR] in collaboration with the DOTC, DTI and LGUs, shall develop an
action plan for the control and management of air pollution from motor vehicles consistent
with the Integrated Air Quality Framework . . . . (Emphasis supplied.)

There is no dispute that under the Clean Air Act it is the DENR that is tasked to set the emission standards
for fuel use and the task of developing an action plan. As far as motor vehicles are concerned, it devolves
upon the DOTC and the line agency whose mandate is to oversee that motor vehicles prepare an action
plan and implement the emission standards for motor vehicles, namely the LTFRB.

In Oposa26 we said, the right to a balanced and healthful ecology carries with it the correlative duty to
refrain from impairing the environment. We also said, it is clearly the duty of the responsible government
agencies to advance the said right.

Petitioners invoke the provisions of the Constitution and the Clean Air Act in their prayer for issuance of a
writ of mandamus commanding the respondents to require PUVs to use CNG as an alternative fuel.
Although both are general mandates that do not specifically enjoin the use of any kind of fuel, particularly
the use of CNG, there is an executive order implementing a program on the use of CNG by public vehicles.
Executive Order No. 290, entitled Implementing the Natural Gas Vehicle Program for Public Transport
(NGVPPT), took effect on February 24, 2004. The program recognized, among others, natural gas as a
clean burning alternative fuel for vehicle which has the potential to produce substantially lower pollutants;
and the Malampaya Gas-to-Power Project as representing the beginning of the natural gas industry of the
Philippines. Paragraph 1.2, Section 1 of E.O. No. 290 cites as one of its objectives, the use of CNG as a
clean alternative fuel for transport. Furthermore, one of the components of the program is the
development of CNG refueling stations and all related facilities in strategic locations in the country to
serve the needs of CNG-powered PUVs. Section 3 of E.O. No. 290, consistent with E.O. No. 66, series of
2002, designated the DOE as the lead agency (a) in developing the natural gas industry of the country
with the DENR, through the EMB and (b) in formulating emission standards for CNG. Most significantly,
par. 4.5, Section 4 tasks the DOTC, working with the DOE, to develop an implementation plan for "a
gradual shift to CNG fuel utilization in PUVs and promote NGVs [natural gas vehicles] in Metro Manila and
Luzon through the issuance of directives/orders providing preferential franchises in present day major
routes and exclusive franchises to NGVs in newly opened routes…" A thorough reading of the executive
order assures us that implementation for a cleaner environment is being addressed. To a certain extent,
the instant petition had been mooted by the issuance of E.O. No. 290.

Regrettably, however, the plain, speedy and adequate remedy herein sought by petitioners, i.e., a writ of
mandamus commanding the respondents to require PUVs to use CNG, is unavailing. Mandamus is
available only to compel the doing of an act specifically enjoined by law as a duty. Here, there is no law
that mandates the respondents LTFRB and the DOTC to order owners of motor vehicles to use CNG. At
most the LTFRB has been tasked by E.O. No. 290 in par. 4.5 (ii), Section 4 "to grant preferential and
exclusive Certificates of Public Convenience (CPC) or franchises to operators of NGVs based on the results
of the DOTC surveys."

Further, mandamus will not generally lie from one branch of government to a coordinate branch, for the
obvious reason that neither is inferior to the other.27 The need for future changes in both legislation and
its implementation cannot be preempted by orders from this Court, especially when what is prayed for is
procedurally infirm. Besides, comity with and courtesy to a coequal branch dictate that we give sufficient
time and leeway for the coequal branches to address by themselves the environmental problems raised in
this petition.
In the same manner that we have associated the fundamental right to a balanced and healthful ecology
with the twin concepts of "inter-generational responsibility" and "inter-generational justice" in Oposa,28
where we upheld the right of future Filipinos to prevent the destruction of the rainforests, so do we
recognize, in this petition, the right of petitioners and the future generation to clean air. In Oposa we said
that if the right to a balanced and healthful ecology is now explicitly found in the Constitution even if the
right is "assumed to exist from the inception of humankind,… it is because of the well-founded fear of its
framers [of the Constitution] that unless the rights to a balanced and healthful ecology and to health are
mandated as state policies by the Constitution itself, thereby highlighting their continuing importance and
imposing upon the state a solemn obligation to preserve the first and protect and advance the second, the
day would not be too far when all else would be lost not only for the present generation, but also for those
to come. . ."29

It is the firm belief of this Court that in this case, it is timely to reaffirm the premium we have placed on
the protection of the environment in the landmark case of Oposa. Yet, as serious as the statistics are on
air pollution, with the present fuels deemed toxic as they are to the environment, as fatal as these
pollutants are to the health of the citizens, and urgently requiring resort to drastic measures to reduce air
pollutants emitted by motor vehicles, we must admit in particular that petitioners are unable to pinpoint
the law that imposes an indubitable legal duty on respondents that will justify a grant of the writ of
mandamus compelling the use of CNG for public utility vehicles. It appears to us that more properly, the
legislature should provide first the specific statutory remedy to the complex environmental problems
bared by herein petitioners before any judicial recourse by mandamus is taken.

WHEREFORE, the petition for the issuance of a writ of mandamus is DISMISSED for lack of merit.

G.R. No. 161973 November 11, 2005

FRANCISCO RAMOS, Petitioner,

vs.
STATELAND INVESTMENT CORPORATION, Respondent.

DECISION

CALLEJO, SR., J.:

This is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No.
61722. The petition stemmed from the following antecedents:

The American Realty Corporation (ARC) was the registered owner of five parcels of land located in Igay,
Barangay Sto. Cristo, San Jose del Monte, Bulacan. The property had a total area of 39 hectares and was
covered by Transfer Certificate of Title (TCT) Nos. 78759 to 78763 of the Register of Deeds of Bulacan. A
concrete two-storey house stood on a portion of the property.

Sometime in 1983 and 1984, the ARC executed two real estate mortgage contracts in favor of the Bank of
America NT & SA, with the said parcel of land as security for the payment of a US$1,500,000.00 loan. The
real estate mortgages were foreclosed sometime in 1991 upon the failure of ARC to pay its loan accounts.
The lots were then sold at public auction to the highest bidder, Integrated Credit and Cooperative Service
(ICCS). A Certificate of Sale over the property was issued in its favor on January 25, 1993. The property
was not redeemed, and the Register of Deeds thereafter issued new titles covering the property in the
name of ICCS: TCT Nos. 164171, 164727, 186271, 186272 and 186273. 2

On March 18, 1994, the ICCS sold the property to Stateland Investment Corporation (SIC), on the basis
of which the Register of Deeds issued TCT Nos. 16652, 16653, 187781 to 187783 in the name of the new
owner.3 Sometime in March 1994, SIC representatives inspected the property. They found that the house
which stood on a portion of the property was occupied by Francisco Ramos and his family, who were
promptly informed that the property had been acquired by SIC. The lots were fenced, and security guards
were employed to prevent the influx of squatters.

Fearing that they would be evicted from the landholding, Ramos and the other occupants filed a complaint
before the Department of Agrarian Reform (DAR) Provincial Adjudication Board against the SIC and
Reynaldo Litonjua for the maintenance of their peaceful possession of the landholding, for redemption of
the land and damages with prayer for a writ of preliminary injunction. The case was docketed as Reg.
Case No. 756-Bul.’94. No injunctive relief was issued.4
After due proceedings, the Provincial Adjudicator ordered the dismissal of the complaint for lack of merit,
but directed Reynaldo Litonjua to compensate the complainants for an amount equivalent to five years of
gross harvests.5 Ramos and the other complainants appealed the decision to the DAR Adjudication Board
(DARAB), docketed as DARAB Case No. 4471.

On September 23, 1997, SIC filed an "Urgent Motion" alleging, inter alia, that the complainants unlawfully
broke into and occupied the two-storey building of strong materials, which had been previously sold to it
together with the landholding. Various crops had been planted on the property to make it appear that the
complainants were bona fide tenants even if, in fact, they were mere squatters. The complainants
harvested mangoes,
destroyed the fences, hired laborers to burn portions of the property and resorted to a continuous barrage
of physical provocation on the security guards and harassment of its personnel. According to the SIC, all
these undermined the appealed decision, thus:

WHEREFORE, defendant STATELAND INVESTMENT CORPORATION, by counsel, respectfully prays that a

status quo Order be issued ordering:

a) Plaintiffs to immediately vacate the previous owner’s residence in its condition prior to the filing of the
complaint;

b) Plaintiffs limit its illegal planting and sowing on the area which they have previously illegally planted
and sown immediately prior to the filing of the complaint; and

c) Plaintiffs to stop its physical harassment and provocation on SIC’s security personnel.

All other reliefs just and equitable are hereby sought.6

Francisco Ramos opposed the motion, alleging that he had possessed the two-storey house since 1974
and had the right to stay therein. This led the SIC to believe that Ramos’s possession of the house had no
connection with his claim of being a tenant on the property; hence, the Municipal Trial Court (MTC) had
jurisdiction over his eviction therefrom.7 Consequently, on November 26, 1997, SIC filed a Motion in
DARAB Case No. 4471 for the partial withdrawal of its prayer in the September 23, 1997 Urgent Motion
regarding the complainants’ eviction from the property.8 The SIC also sent a Letter dated November 25,
1997 to Ramos, where it demanded that he vacate the house within five days, otherwise, it would take
the appropriate legal action to protect its rights and interests.9 Ramos, however, still refused to vacate the
house.

On January 15, 1998, the SIC filed a complaint 10 for ejectment against Ramos with the MTC of San Jose
del Monte. It alleged therein that it had purchased the five parcels of land, including the two-storey
concrete house, and that despite oral and written demands Ramos refused to leave. The case was
docketed as Civil Case No. 443-98.

In his answer11 to the complaint, Ramos admitted that SIC was the owner of the house and the
landholding, but alleged that he had been a tenant on the land since 1974, and that the house was
assigned to him by the ARC as his residence. By way of special and affirmative defenses, he alleged that
the MTC had no jurisdiction over the subject matter of the complaint, and that DARAB Case No. 4471 was
pending before the DARAB. He further averred that the SIC had filed in the said case an Urgent Motion
dated September 23, 1997 praying for recovery of possession of the questioned land and building, and
appended a copy thereof to his Answer. He pointed out that the SIC filed the instant case against him
without awaiting the resolution of the said motion.12

The parties were unable to arrive at an amicable settlement during the preliminary conference. They were
then required to submit their respective

position papers under the Rules on Summary Procedure. The parties did not adduce any evidence.

On May 13, 1998, the MTC rendered a decision in favor of the SIC. The fallo of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the
defendant and all persons claiming rights under him to:
1.) to vacate the premises of the two story (sic) houses and all the structures possessed by them and
surrender peaceful possession thereof to the plaintiff;

2.) pay plaintiff reasonable rent of P10,000.00 a month for the use or occupancy in the premises from
November 25, 1997 and up to such time that they peacefully surrender possession thereof to the plaintiff;

3.) pay the sum of P50,000.00 as and for attorney’s fees;

4.) pay the cost of suit; and

5.) taking into consideration that the defendants have shown no legal justification or right to the mango
fruits taken from the mango trees inside the premises, the Court with its ruling on the relationship
between the plaintiff and the defendant hereby ordered that the amount of P4,800.00 be deposited to this
Court as proceeds for mango trees be released unto the plaintiff together with the bond in the amount of
P10,000.00 as evidenced by Official Receipt No. 7167456.

SO ORDERED.13

The MTC ruled that it had jurisdiction over the action: the property subject matter of the case was the
house occupied by the defendant, while the subject matter of DARAB Case No. 4471 was the landholding
and the issue therein was whether Ramos was an agricultural tenant on the property. The MTC held that
the issue before it was limited to who, as between the parties, had the right of possession over the two-
storey building situated on
the property. Thus, even if the DARAB ruled that Ramos was a tenant, he would still not be entitled to
possess the house. Besides, according to the court, Ramos failed to prove that he was an agricultural
tenant on the landholding. Citing Atienza v. Court of Appeals14 and First Philippine International Bank v.
Court of Appeals,15 the MTC maintained that the case before it and DARAB Case No. 4471 could proceed
independently of each other.

The MTC further pointed that SIC was the registered owner of the land; hence, based on the principle that
the accessory follows the principal, SIC was also the owner of the house constructed thereon.

Ramos filed a Notice of Appeal16 on May 27, 1998, docketed as Civil Case No. 533-01-98. The records of
the case were then elevated to the Regional Trial Court (RTC). The SIC, for its part, filed a Motion for
Execution Pending Appeal.17 Ramos opposed the motion and offered to post a supersedeas bond in the
amount of P84,000.00 to stay the execution. 18 He was given a period of five days within which to file the
bond, but instead of doing so, filed a Notice of Withdrawal of Appeal19 on July 6, 1998, with the
reservation to take other legal remedies as may be provided by law.

On July 7, 1998, the RTC issued an Order20 declaring that, with the withdrawal of the Notice of Appeal, the
decision of the MTC had become final and executory. The RTC thus ordered the remand of the records to
the MTC for the implementation of its decision.

On July 9, 1998, Ramos filed a petition21 before the RTC of Bulacan for the nullification of the decision of
the MTC in Civil Case No. 443-98 with a plea for injunctive relief. He alleged therein that he raised the
issue of tenancy in his Answer to the Complaint in Civil Case No. 443-98; hence, the MTC had no
jurisdiction over the complaint. Moreover, the MTC was aware that he was a bona fide tenant and was
entitled to disturbance compensation from the previous owner of the property, as gleaned from the
decision of the DAR Provincial Adjudicator and embodied in the Urgent Motion of the SIC in DARAB Case
No. 4471. He also asserted that under Section 14 of Republic Act (R.A.) No. 3844, he was entitled to a
homelot which included the house. Ramos appended to his petition copies of the Receipts 22 dated January
22, 1979 and February 5, 1985 signed by Reynaldo Litonjua, showing the latter’s receipt of the share of
the landowner over the produce of the landholding from Ramos, and a Certificate from Reynaldo Litonjua
that Ramos and his family were bona fide tenants over a seven-hectare portion of the property and were
paying rentals.23

Ramos prayed in his petition that judgment be rendered in his favor, thus:

1. The Decision rendered by the Municipal Trial Court of San Jose del Monte, Bulacan as null and void for
lack of jurisdiction, and denial of due process upon the petitioner;
2. The Department of Agrarian Reform Adjudication Board to have the primary and exclusive jurisdiction
in the ejectment proceedings pursuant to Sec. 50 of RA 6657;

3. The private respondent to have committing acts against forum shopping;

4. The private respondent to pay petitioner the sum of P400,000.00 as and for damages;

5. The private respondent liable to pay petitioner the sum of P100,000.00 as and for attorney’s fees, plus
the costs of the suit.

FURTHER, petitioner prays for such other reliefs and remedies as this Honorable Court may deem just and
equitable in the premises.24

The SIC filed a motion to dismiss the petition on the grounds of res judicata and forum shopping. It
maintained that the MTC had jurisdiction over its complaint for unlawful detainer and that the proceedings
therein, including the decision of the MTC, were valid. While Ramos raised the tenancy issue in his Answer
to the complaint in Civil Case No. 443-98, he failed to substantiate such claim with substantial evidence.
Moreover, the allegations of the petition were but a reiteration of those in his Answer in Civil Case No.
443-98. The SIC averred that the remedy from the MTC decision was appeal by writ of error in the RTC.
Since Ramos withdrew his appeal, he was estopped from assailing the jurisdiction of the MTC under Rule
47 of the Rules of Court.

In a Resolution dated August 7, 1998, the RTC denied the motion to dismiss of SIC. The court also
nullified the decision of the MTC in Civil Case No. 443-98 on the ground that the action filed by
respondent SIC in the said case was an agrarian case, within the exclusive jurisdiction of the DARAB;
hence, the MTC had no jurisdiction over the action, and its decision was null and void. The RTC declared
that the MTC was aware of the pendency of DARAB Case No. 4471.

On September 2, 1998, the SIC appealed the resolution of the RTC to the CA. It maintained that the MTC
had jurisdiction over the complaint and that the said decision was valid.

On February 4, 2004, the CA rendered judgment granting the appeal of the SIC and setting aside the RTC
resolution. The CA ruled that, as gleaned from the averments of the complaint, the MTC had jurisdiction
over the case. It also ruled that Ramos failed to adduce evidence in the MTC that he was a bona fide
tenant over the landholding and had a right of possession over the two-storey house. The proper remedy
from an adverse decision of the MTC was to appeal to the RTC, and in case the RTC affirmed such
decision, to file a petition for review with the CA. However, since Ramos opted to withdraw his appeal, he
was barred from filing a petition to annul the decision of the MTC. The CA further declared that by filing a
petition to annul the decision of the MTC in the RTC, Ramos was in effect litigating the same issues raised
in the MTC.

Ramos, now the petitioner, filed the instant petition for review on certiorari, insisting that the appellate
court erred in reversing the resolution of the RTC. The petitioner points out that he alleged in his answer
in the MTC that he was a bona fide agricultural lessee-tenant in the landholding. As such, the MTC had no
jurisdiction over the complaint of respondent SIC for unlawful detainer. In fact, the petitioner avers, the
DARAB declared in its Decision in DARAB Case No. 4471 dated September 25, 2000 that he was a bona
fide tenant on the landholding and could not be evicted without first being paid disturbance compensation.

In its Comment on the petition, the respondent maintained that the CA Decision is in accord with the
Rules of Civil Procedure and case law. It calls the Court’s attention to the fact that on February 27, 2003,
the Office of the President of the Philippines in O.P. Case No. 001-G-9480 affirmed the DAR Secretary’s
Decision of February 25, 1998; thus, its petition for the exemption of the landholding from the
Comprehensive Agrarian Reform Law (CARL), except for a two-hectare portion and subject to the
payment of disturbance compensation to any qualified tiller-occupant who would be affected by the
decision, was granted on September 26, 1994.25 The respondent points out that this decision had become
final and executory. The respondent also made of record that the DAR Provincial Adjudicator had
recommended the approval of its application for the retention of the two-hectare portion of the subject
property on March 5, 2004.26

The issues for resolution are the following: whether the MTC had jurisdiction over the nature of the
respondent’s action (as plaintiff therein); and whether the petitioner availed of the proper remedy from
the MTC Decision in favor of the respondent.
On the first issue, the Court finds that the MTC had jurisdiction over the respondent’s action. It is
axiomatic that the nature of the action and the
jurisdiction of the court is to be determined from the material allegations of the complaint as well as the
character of the relief prayed for irrespective of whether or not the plaintiff is entitled to such relief. 27 The
jurisdiction of the court or tribunal over the subject matter of the action is determined exclusively by the
Constitution and the law. Jurisdiction cannot be conferred by the voluntary act or agreement of the
parties; it cannot be acquired through or waived, enlarged or diminished by their act or omission. Neither
is it conferred by the acquiescence of the court. It is neither for the court nor the parties to violate or
disregard the rule, this matter being legislative in character.28 Thus, the jurisdiction over the nature of an
action and the subject matter thereof is not affected by the theories set up by the defendant in an answer
or motion to dismiss.

An action for unlawful detainer is within the exclusive jurisdiction of the Municipal Trial Court, Metropolitan
Circuit Trial Court, or Metropolitan Trial Court.29 Under Section 3, Rule 70 of the Rules of Civil Procedure,
"except in cases covering agricultural tenancy laws or where the law otherwise expressly provides, all
actions for forcible entry and unlawful detainer irrespective of the amount of damages or unpaid rentals
sought to be recovered shall be governed by the Rules on Summary Procedure provided thereunder." An
action not involving an agrarian dispute but only for recovery of possession of real property is within the
jurisdiction of the regular courts.30

Under Section 50 of R.A. No. 6657, as well as Section 34 of Executive Order No. 129-A, the DARAB has
primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian
disputes involving the implementation of the Comprehensive Agrarian Reform Program (CARP) under R.A.
No. 6657, and other agrarian laws and their implementing rules and regulations.

The subject matter of agricultural tenancy or agrarian reform laws are agricultural lands or farmlands
devoted to agricultural activity.31 An agrarian dispute refers to any controversy relating the tenurial
arrangement, whether leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture,
including disputes concerning farmworking association or representation of persons in negotiating, fixing,
maintaining, changing and seeking to arrange terms and conditions of such tenurial arrangement. It
includes any controversy relating to compensation of lands acquired under R.A. No. 6657 and other terms
and conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian
reform beneficiaries, whether the disputants stand in the proximate relation of farm operator and
beneficiary, landowner and tenant, or lessor and lessee.32 Section 1, Rule II of the DARAB Rules of Civil
Procedure enumerates further some of the cases over which the DARAB has primary and exclusive
jurisdiction:

a) The rights and obligations of persons, whether natural or juridical, engaged in the management,
cultivation and use of all agricultural lands covered by the CARP and other agrarian laws;

b) The valuation of land, and the preliminary determination and payment of just compensation, fixing and
collection of lease rentals, disturbance compensation, amortization payments, and similar disputes
concerning the functions of the Land Bank of the Philippines (LBP);

c) The annulment or cancellation of lease contracts or deeds of sale or their amendments, involving lands
under the administration and disposition of the DAR or LBP;

d) Those cases arising from, or connected with membership or representation in compact farms, farmers’
cooperatives and other registered farmers’ association or organizations, related to lands covered by the
CARP and other agrarian laws;

e) Those involving the sale, alienation, mortgage, foreclosure, pre-emption and redemption of agricultural
lands under the coverage of the CARP or other agrarian laws;

f) Those involving the issuance, correction and cancellation of Certificates of Land Ownership Award
(CLOAs) and Emancipation Patents (EPs) which are registered with the Land Registration Authority;

g) Those cases previously falling under the original and exclusive jurisdiction of the defunct Court of
Agrarian Relations under Section 12 of Presidential [Decree] No. 946, except sub-paragraph (Q) thereof
and Presidential Decree No. 815.
It is understood that the aforementioned cases, complaints or petitions were filed with the DARAB after
August 29, 1987.

Matters involving strictly the administrative implementation of Republic Act No. 6657, otherwise known as
the Comprehensive Agrarian Reform Law (CARP) of 1988 and other agrarian laws as enunciated by
pertinent rules shall be the exclusive prerogative of and cognizable by the Secretary of the DAR.

The Court notes that the SIC, as plaintiff in the MTC, made the following allegations and prayer in its
complaint:

3. Plaintiff is the absolute owner and possessor of a concrete two-storey house located at Igay Road,
Santo Cristo, San Jose del Monte, Bulacan having acquired the same and the land on which it stands by
purchase from Integrated Credit and Services Corp. on March 18, 1994.

4. Immediately after such purchase, plaintiff through [its] representative visited the property. It was
learned that defendant entered into the premises and lived therein.

5. Such fact was tolerated by the plaintiff until late last year when plaintiff demanded that defendant
vacate the premises.

6. Demands, both oral and written, have been made on defendant to peacefully vacate the premises and
restore plaintiff in possession thereof, the last demand in writing being on November 25, 1997 and
received by defendant on November 26, 1997 or more than fifteen (15) days before the filing of this
complaint. …

7. Notwithstanding the said demand to vacate, defendant still failed and refused and continue to this day
to fail and refuse to vacate and surrender peaceful possession of the property to plaintiff thereby causing
damages and injury to the latter in the form of reasonable rental for the use and occupancy of the
property which may be placed at not less than TEN THOUSAND PESOS (P10,000.00) per month beginning
from the unlawful occupancy of the property which is the time when plaintiff acquired the property up to
the time they actually vacate the same.

8. Likewise, by reason of defendant’s refusal to vacate the subject premises and in order to protect its
interests, plaintiff was constrained to engage the services of undersigned counsel for an agreed fee of
ONE HUNDRED THOUSAND PESOS (P100,000.00) plus P1,000.00 per court appearance.

9. Barangay arbitration/conciliation proceedings were not had considering that one of the parties herein
(the plaintiff) is a corporation.

WHEREFORE, premises considered, plaintiff respectfully prays that judgment be rendered ordering
defendant and all persons claiming rights under him to:

1. vacate the premises and surrender peaceful possession thereof to plaintiff;

2. pay plaintiff reasonable rent for the use and occupancy of the premises from the time plaintiff acquired
the property until the time defendant actually vacates the same;

3. pay the sum of ONE HUNDRED THOUSAND PESOS (P100,000.00) as and for attorney’s fees plus
P1,000.00 per court appearance

4. pay cost of suit.

Other reliefs just and equitable under the premises are also prayed for.33

Based on these material averments, it is crystal-clear that the action in the MTC was one for unlawful
detainer or the petitioner’s eviction from the two-storey house and not from the landholding. It must be
stressed that the respondent, as plaintiff in the MTC, anchored its claim on its purchase of the five parcels
of land, and asserted that it had the right of possession over such house as well.

The Court has ruled that when a tenancy is merely averred as a special and affirmative defense to a
complaint for unlawful detainer, the MTC does not automatically lose its jurisdiction over the said action.
The MTC is duty-bound to conduct a preliminary conference and, if necessary, to receive evidence to
determine if such tenancy relationship had, in fact, been shown to be the real issue. The MTC may even
opt to conduct a hearing on the special and affirmative defense of the defendant, although under the
Rules on Summary Procedure, such a hearing is not a matter of right. 34 If it is shown during the hearing
or conference that, indeed, tenancy is the issue, the MTC should dismiss the case for lack of jurisdiction. 35

The records show that a preliminary conference took place in the MTC, but was terminated when the
parties failed to settle the case. The records also show that the petitioner failed to adduce any evidence to
prove that the issue before the MTC involved or related to the material possession of the landholding, or
that it was interwoven with the issue of tenancy over the landholding in DARAB Case No. 4471. There is
even no showing that the resolution of the principal relief sought by the respondent would indicate any
need to refer to agrarian reform laws, rules and regulations.

The petitioner’s reliance on the respondent’s Urgent Motion dated September 23, 1997 in DARAB Case No.
4471 is misplaced. The Court rejects the petitioner’s contention that, by filing such motion praying for his
eviction from the house, the respondent thereby vested jurisdiction in the DARAB to resolve the issue of
whether he had the right to maintain possession of the house. In Atuel v. Valdez,36 the Court ruled that
jurisdiction over the subject matter and the nature of an action may not be conferred on the court by
consent or waiver of the party, where the court otherwise would have no jurisdiction. It must also be
stressed that the active participation of the parties in the proceedings in the DARAB does not
automatically vest jurisdiction of the case in the said body, as jurisdiction is conferred only by law. Except
in some instances, estoppel does not apply to confer jurisdiction to the court or tribunal that has no
jurisdiction over the nature of the action.

In any case, the respondent partially withdrew its urgent motion insofar as it prayed for the petitioner’s
eviction from the house. In so doing, the respondent considered the petitioner’s claim (in his Opposition to
the Urgent Motion) that he had prior possession over the house and consequently, had the right to remain
in possession thereof.

What is clear is that the issue of whether the petitioner was the owner of the portion of the house
occupied by him and his family or was merely allowed by the former owner of the land to reside therein is
an issue which may be resolved by the application of general civil laws. Certainly, the resolution of such
issue will certainly not entail the application of Agrarian Reform Laws or the rules and regulations issued
in the implementation thereof.

Indubitably, the issues of whether the petitioner was a bona fide tenant or agricultural lessee and whether
he had a right to redeem the landholding under the CARL are within the exclusive jurisdiction of the
Provincial Agrarian Reform Adjudicators (PARAD) and the DARAB on appeal. The res in the PARAD and the
DARAB were the five parcels of land; in contrast, the res subject of the action in the MTC was the two-
storey house occupied by the petitioner and his family. The sole issue in the MTC was who between the
petitioner (as the defendant therein) and the respondent (as the plaintiff) had the right to the material or
physical possession of the house. This issue was neither raised nor resolved by the PARAD or the DARAB
on appeal. Indeed, the issues in DARAB Case No. 4471 were defined as follows:

WHETHER OR NOT PLAINTIFFS-APPELLANTS ARE BONA FIDE TENANTS; and

WHETHER OR NOT THE LANDHOLDING IS WITHIN THE COVERAGE OF THE COMPREHENSIVE AGRARIAN
REFORM PROGRAM OR REPUBLIC ACT NO. 6657 OTHERWISE KNOWN AS THE COMPREHENSIVE
AGRARIAN REFORM LAW OF 1988.37

The DARAB Decision of September 25, 2000 declared the petitioner a bona fide tenant who had the right
to continue in the peaceful possession over a two-hectare portion of the landholding. It also declared that
the petitioner should not be evicted from the property until he was paid

disturbance compensation by Litonjua.38 However, the DARAB did not enjoin the respondent from causing
the petitioner’s eviction from the house itself. In fine, under such decision, the petitioner may remain in
the landholding and continue cultivating the same until he was duly compensated, but should still vacate
the house as declared by the MTC. Moreover, the Office of the President in O.P. Case No. 001-G-9480
declared with finality that the landholding was exempt from the CARL except for an area of two hectares. 39

The Court also agrees with the MTC that the decision of the DARAB would not resolve the issue of who, as
between the parties, had the right to the material possession of the house, and any such resolution would
not be conclusive on the issue. Indeed, in Atienza, Sr. v. Court of Appeals,40 this Court held that:
The Court has considered the petition for review, the comments of the respondents, and the reply thereto,
but has found no reversible error in the decision complained of, hence, it is constrained to deny the
petition for lack of merit. Indeed, the award of the lot to the petitioner by the NHA is not a valid defense
to the private respondents’ action to eject him from the house which admittedly belongs to the private
respondents. The only issue in an ejectment suit is the possession of the leased premises (the house) not
the ownership of the lot, the award of which to the petitioner is still being contested by Laja in another
action (Alvir vs. Vera, 130 SCRA 357; Mediran vs. Villanueva, 37 Phil. 752; Bautista vs. Fernandez, 38
SCRA 549; Vda. De Sengbengco vs. Arellano, 1 SCRA 711).

The petitioner’s claim of entitlement to a homelot is a factual issue, wholly dependent upon whether the
DAR Secretary will approve, with finality, the recommendation of the Provincial Agrarian Reform Officer
(PARO) to grant the respondent’s application to retain the two hectares. Even assuming the petitioner’s
entitlement to such homelot, it would not equate to entitlement to the house he claims.

In sum then, the RTC resolution declaring that the MTC had no jurisdiction over the respondent’s action is
erroneous. It is the CA ruling, which reversed the RTC resolution, that is accurate.

Indeed, the remedy of the petitioner from the decision of the MTC was to appeal in due course to the RTC.
However, instead of pursuing his appeal, the petitioner withdrew the same on his erroneous perception
that the MTC had no jurisdiction over the respondent’s action. Hence, the decision of the MTC had become
final and executory.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit.

G.R. No. 152992 July 28, 2005

LEONARDO DAVID, Petitioner,

vs.
NELSON and DANNY CORDOVA, Respondents.

DECISION

Tinga, J.:

In this Petition1 under Rule 45 of the Rules of Court, petitioner Leonardo A. David (David) assails the
Decision2 of the Court of Appeals, Fifteenth Division, and the Resolution3 of the same division denying his
Motion for Reconsideration4 and Supplement to the Motion for Reconsideration.5 The Court of Appeals
declared null and void the Decision6 of the First Municipal Circuit Trial Court (FMCTC) of Dinalupihan-
Hermosa, Bataan and the Order7 of the Regional Trial Court (RTC) of Dinalupihan, Bataan, Branch 5.

The antecedents are as follows:

Petitioner David filed a Complaint8 for forcible entry, docketed as Civil Case No. 1067, with the FMCTC of
Dinalupihan, Bataan against respondents Nelson and Danny Cordova (the Cordovas). The Complaint
alleged these material facts:

....

3. That plaintiff is the co-owner of Lot 774, with an area of 14,000 square meters, situated in Dinalupihan,
Bataan, Philippines, covered by Tax Declaration No. 009087, xerox copy of which is hereto attached,
marked as ANNEX "A", and made part hereof.

4. That on April 26, 1997, plaintiff passed by said Lot 774 on his way to Dinalupihan Public Market and he
noticed persons who forcibly entered said Lot 774 by destroying the fence and started erecting a structure
thereon.

5. That when plaintiff got near said Lot 774, defendants and their workers threatened him with harm
should he interfere with their work.

6. That plaintiff requested defendants and their workers to stop the construction of a structure inside said
Lot 774, but defendants and their workers refused to stop their said construction.
7. That plaintiff reported the matter to the Government Authorities of Dinalupihan, Bataan and requested
assistance in stopping said construction undertaken by defendants inside said Lot 774 of plaintiff.

8. That the Municipal Engineer together with some policemen of Dinalupihan, Bataan, went to the place
where said Lot 774 is situated and they stopped the construction undertaken by defendants.

9. However, on the succeeding days, defendants continued with construction of the structure inside
plaintiff’s Lot 774, despite plaintiff’s vehement protest.

10. That this construction undertaken by defendants inside plaintiff’s said Lot 774 is without the
knowledge and consent of plaintiff nor his co-owners.

11. That plaintiff brought the matter before the Barangay Authorities for conciliation, but no settlement
was arrived at the Barangay Authorities, xerox copy of the Barangay Certification is hereto attached,
marked as ANNEX "B", and made part hereof.

12. That plaintiff has been compelled by defendants to litigate to enforce his rights and to engage the
services of counsel for the sum of P20,000.00

13. That the reasonable compensation for the use and occupation by defendants of plaintiff’s said Lot 774
is P15,000.00 per month.

ALLEGATIONS FOR THE ISSUANCE OF THE WRIT OF PRELIMINARY MANDATORY INJUNCTION

14. That plaintiff hereby reproduced all the allegations of the preceding paragraphs insofar as they are
material to issuance of the writ of preliminary mandatory injunction.

15. That under the provisions of Article 539 of the Civil Code of the Philippines and Section 3, Rule 70,
Revised Rules of Court, plaintiff should be restored to the possession of said Lot 774.

16. That plaintiff is ready, able and willing to post a bond to be fixed by this Honorable Court to answer
for any and all damages in the event that the Honorable Court finally adjudge that plaintiff is entitled
thereto.9

and incorporated the following-

PRAYER

WHEREFORE, it is respectfully prayed that after the filing of the case and upon posting of the bond to be
fixed by this Honorable Court, a writ of preliminary mandatory injunction issue to restore plaintiff in
possession of said Lot 774, . . . . 10

Before filing their Answer,11 respondents filed a motion to dismiss alleging that it is the Department of
Agrarian Reform (DAR) and not the FMCTC that has jurisdiction over the case. Said motion was denied in
an Order of the lower court dated 24 November 1997.12

In their Answer, the Cordovas contended that David "is not a co-owner of the subject property, it being
owned by the Government as said property forms part and parcel of the Dinalupihan Landed Estate . . . .
"13 The Cordovas questioned the jurisdiction of the FMCTC to take cognizance of the case as allegedly the
subject property is under the disposition and administration of DAR which will award it to qualified
beneficiaries such as respondents. The Cordovas prayed that the Complaint be dismissed for lack of cause
of action and lack of jurisdiction. 14

Based on the position papers submitted by the parties to the case, the inferior court rendered a Decision
on 20 January 1998, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered:

1. Ordering the defendants and all persons claiming rights under them to vacate the landholdings in suit;
2. Ordering defendants to pay jointly and severally plaintiff the amount of P2,000.00 per month as
reasonable compensation for the use and occupation of the property;

3. Ordering the defendants to pay jointly and severally the amount of P3,000.00 as attorney’s fees; and

4. To pay the costs of suit.

SO ORDERED.15

The Cordovas thereafter filed with the RTC, Branch 5 of Dinalupihan, Bataan, a petition 16 for certiorari
under Rule 65 of the Rules of Court to nullify the Decision of the lower court, docketed as Civil Case No.
DH-456-98. The Cordovas contended that the inferior court had no jurisdiction over the forcible entry case
as the property, being an agricultural land, is within the administration and disposition of the DAR. Hence,
they argued that the Decision dated 20 January 1998 was null and void for having been issued without
jurisdiction.17

On 26 May 1998, the RTC issued an order18 dismissing the petition. Apart from the petition being filed out
of time, the RTC ruled that the findings of facts of the lower court is given due respect and at times
treated with finality.

On 8 September 1998, the Cordovas filed another petition 19 for certiorari under Rule 65 of the Rules of
Court before the RTC of Bataan to annul the Decision dated 20 January 1998 of the lower court, docketed
as Civil Case No. DH-492-98. Again, the Cordovas put forward that the assailed Decision was null and void
as the inferior court had no jurisdiction to entertain the forcible entry case considering that subject
property is government-owned and falls within the administration and disposition of the
DAR.20 The Cordovas’ petition was dismissed by the RTC, this time on the ground of res judicata.21

The Cordovas then filed a petition22 for certiorari before the Court of Appeals praying that the Decision
dated 20 January 1998 of the lower court be nullified. They restated before the Court of Appeals their
previous assertion that the Decision rendered by the lower court was null and void for having been issued
without jurisdiction, the subject property being under the administration and disposition of the DAR. And
for the first time they raised the argument that the Complaint for forcible entry suffers from a fatal flaw as
it failed to allege prior physical possession of the property by David. 23

For his part, David contended that the petition should be dismissed for having resorted to in lieu of the
lost remedy of appeal and for having been filed out of time at that.24

On 8 April 1999, the Court of Appeals promulgated a Decision25 granting the Cordovas’ petition. It agreed
with the Cordovas’ allegation that the lower court lacked jurisdiction over the property in litigation as this
was supported by a certification26 dated 12 January 1999 issued by the Municipal Agrarian Reform Office
in Dinalupihan, Bataan to the effect that the land in suit is situated within the Dinalupihan Landed Estate;
and that Danilo Cordova had filed an application dated 10 January 1997 to purchase the said lot. 27

The Court of Appeals likewise considered a statement in the Order28 dated 14 May 1992 of the Secretary
of Agrarian Reform which pointed out that-

(r)egarding Lot No. 774, it was not included in the Order of Partition and based on the report of the Chief
of Landed Estate Division of DAR Region III, the said lot is not identifiable at the moment for lack of
approved reference map.29

in its finding that David fell short of proving that he has a better right to the subject property as he failed
to prove ownership of the same and the identity thereof.30

The Court of Appeals also observed that the Complaint for forcible entry suffers from a major flaw as it
failed to allege, much less prove, prior physical possession over the property. It held that such allegation
is indispensable in actions for forcible entry.31

In the instant Petition, David insists that the Cordovas’ petition before the Court of Appeals should not
have been given due course as it was filed out of time and in lieu of a timely appeal. David also maintains
that the FMCTC of Dinalupihan, Bataan has jurisdiction over the forcible entry case he filed against the
Cordovas.
We grant the petition.

Petition before Court of Appeals

was a wrong remedy that was even

filed out of time

At the outset, the petition must be upheld on procedural grounds. We find, as David has repeatedly
posited, the Court of Appeals erred in giving due course to the Cordovas’ petition for certiorari as it was
filed in lieu of appeal which is the prescribed remedy, and far beyond the reglementary period to boot.
Quite lamentably, the appellate court did not accord the fundamental grounds raised by David even with a
perfunctory acknowledgment, totally ignoring said grounds and opting to rule on the petition solely on the
basis of the arguments raised therein.

Instead of filing an appeal, the Cordovas filed two petitions for certiorari32 under Rule 65 before the RTC
and a petition for certiorari also under Rule 65 before the Court of Appeals on 16 November 1998, notably
almost nine (9) months after the lower court had rendered its assailed Decision on 20 January 1998. It
bears stressing that a petition for certiorari under Rule 65 must be filed "not later than sixty (60) days
from notice of the judgment, order or resolution"33 sought to be annulled. Presumably the Cordovas
received a copy of the assailed Decision of the lower court when they first filed a petition for certiorari
before the RTC on 5 May 1998. Even if we were to begin counting the period from such date or from 26
May 1998, when the RTC issued an order denying the Cordovas’ petition, the petition for certiorari before
the Court of Appeals would still have been filed out of time.

In addition, a petition for certiorari cannot be a substitute for an appeal from a lower court decision.
Where appeal is available to the aggrieved party, the action for certiorari will not be entertained. The
remedies of appeal (including petitions for review) and certiorari are mutually exclusive, not alternative or
successive. Hence, certiorari is not and cannot be a substitute for an appeal, especially if one’s own
negligence or error in one’s choice of remedy occasioned such loss or lapse. One of the requisites of
certiorari is that there be no available appeal or any plain, speedy and adequate remedy. Where an
appeal is available, certiorari will not prosper, even if the ground therefore is grave abuse of discretion. 34

As certiorari is not a substitute for lost appeal, time and again, we have emphasized that the perfection of
appeals in the manner and within the period permitted by law is not only mandatory but jurisdictional,
and that the failure to perfect an appeal renders the decision of the trial court final and executory. This
rule is founded upon the principle that the right to appeal is not part of due process of law but is a mere
statutory privilege to be exercised only in the manner and in accordance with the provisions of the law.
Neither can petitioner invoke the doctrine that rules of technicality must yield to the broader interest of
substantial justice. While every litigant must be given the amplest opportunity for the proper and just
determination of his cause, free from constraints of technicalities, the failure to perfect an appeal within
the reglementary period is not a mere technicality. It raises a jurisdictional problem as it deprives the
appellate court of jurisdiction over the appeal.35

As the Cordovas failed to file a timely appeal, the lower court’s Decision had long become final and
executory in favor of David. The Court of Appeals should have denied outright the Cordovas’ petition for
certiorari.

Complaint recites facts essential

to a forcible entry suit falling

within the jurisdiction of the

inferior court

Now to the substantive aspect of the case. The issue for our resolution is whether or not the FMCTC of
Dinalupihan, Bataan had jurisdiction over the Complaint for forcible entry filed by David against the
Cordovas. According to the Court of Appeals, the inferior court was bereft of jurisdiction because: (1) its
Complaint allegedly failed to allege David’s prior physical possession and his dispossession by any modes
on which an action for forcible entry is based; and (2) the lot in question is allegedly a public agricultural
land.
Jurisdiction of the court over the subject matter is conferred only by the Constitution or by law.
Jurisdiction of the court, as well as the nature of the action, is determined by the allegations in the
complaint.36 An error in jurisdiction can be raised at any time and even for the first time on appeal. 37

Contrary to the Court of Appeals’ ruling, a careful reading of the facts averred in the Complaint filed by
David reveals that his action is indeed one of forcible entry that falls within the jurisdiction of the FMCTC.

The facts upon which an action for forcible entry can be brought are specially mentioned in Section 1, Rule
70 of the Rules of Court. Said section likewise defines an action for unlawful detainer. In forcible entry
(desahucio), one is deprived of physical possession of land or building by means of force, intimidation,
threat, strategy, or stealth. In unlawful detainer (detentacion), one unlawfully withholds possession
thereof after the expiration or termination of his right to hold possession under any contract, express or
implied. In forcible entry, the possession is illegal from the beginning and the basic inquiry centers on who
has the prior possession de facto. In unlawful detainer, the possession was originally lawful but became
unlawful by the expiration or termination of the right to possess, hence the issue of rightful possession is
decisive for, in such action, the defendant is in actual possession and the plaintiff’s cause of action is the
termination of the defendant’s right to continue in possession.38

In pleadings filed in courts of special jurisdiction, the special facts giving the court jurisdiction must be
specially alleged and set out. In actions for forcible entry, the law tells us that two allegations are
mandatory for the municipal court to acquire jurisdiction: First, the plaintiff must allege prior physical
possession of the property. Second, he must also allege that he was deprived of his possession by any of
the means provided for in Section 1, Rule 70 of the Rules of Court. 39

It is not necessary that the complaint allege, in the language of the statute, that the person has been
deprived of his possession by force, intimidation, threat, strategy or stealth. However, the plaintiff in an
action of desahucio must set up in his complaint facts which show that he had prior physical possession of
the property and that he was deprived of such possession by reason of force, intimidation, threat,
strategy or stealth.40 To effect the ejectment of an occupant or deforciant on the land, the complaint
should embody such a statement of facts as brings the party clearly within the class of cases for which the
statutes provide a remedy, as these proceedings are summary in nature. The complaint must show
enough on its face to give the court jurisdiction without resort to parol evidence.41

The Complaint filed by David alleged these material facts:

....

3. That plaintiff is the co-owner of Lot 774, with an area of 14,000 square meters, situated in Dinalupihan,
Bataan, Philippines, covered by Tax Declaration No. 009087, xerox copy of which is hereto attached,
marked as ANNEX "A", and made part hereof.

4. That on April 26, 1997, plaintiff passed by said Lot 774 on his way to Dinalupihan Public Market and he
noticed persons who forcibly entered said Lot 774 by destroying the fence and started erecting a structure
thereon.

5. That when plaintiff got near said Lot 774, defendants and their workers threatened him with harm
should he interfere with their work.

....

13. That the reasonable compensation for the use and occupation by defendants of plaintiff’s said Lot 774
is P15,000.00 per month.

ALLEGATIONS FOR THE ISSUANCE OF THE WRIT OF PRELIMINARY MANDATORY INJUNCTION

....

15. That under the provisions of Article 539 of the Civil Code of the Philippines and Section 3, Rule 70,
Revised Rules of Court, plaintiff should be restored to the possession of said Lot 774.…42 (Emphasis
supplied.)
Clearly, David alleged that he is the co-owner of the subject property, evidenced by a tax declaration
receipt, and therefore entitled to possession thereof; that the Cordovas illegally and forcibly entered the
premises without his consent and started erecting a structure thereon; and despite the request to vacate
the premises, the Cordovas refused to leave the property thus David prayed for restoration of possession
thereof. On the face of the Complaint, it also appears that David was seeking to recover merely the
physical possession or possession de facto of the subject property. In fine, the allegations in the
Complaint make out a case for forcible entry.

David’s prior physical possession of the subject property and deprivation thereof are clear from the
allegation that he is the owner of the subject property which the Cordovas forcibly entered, of which he
was unlawfully turned out of possession and for which he prays to be restored in possession. 43 The acts of
the Cordovas in unlawfully entering the land, erecting a structure thereon and excluding therefrom the
prior possessor would also imply the use of force.44 In order to constitute force, the trespasser does not
have to institute a state of war. The act of going on the property and excluding the lawful possessor
therefrom necessarily implies the exertion of force over the property and this is all that is necessary. 45
Thus, the foregoing averments are sufficient to show that the action is based upon the proviso of Section
1, Rule 70 of the Rules of Court.

We have previously held that the foundation of a possessory action is really the forcible exclusion of the
original possessor by a person who has entered without right. The words "by force, intimidation, threat,
strategy or stealth" include every situation or condition under which one person can wrongfully enter upon
real property and exclude another, who has had prior possession therefrom. If a trespasser enters upon
land in open daylight, under the very eyes of the person already clothed with lawful possession, but
without the consent of the latter, and there plants himself and excludes such prior possessor from the
property, the action of forcibly entry and detainer can unquestionably be maintained, even though no
force is used by the trespasser other than such as is necessarily implied from the mere acts of planting
himself on the ground and excluding the other party.46

The foregoing establish that indeed David averred the necessary jurisdictional facts and should therefore
quell the Cordovas’ assertion that David’s Complaint suffered from a major flaw.

Respondents are estopped from

assailing jurisdiction of the

inferior court

In any event, the Cordovas are estopped from questioning the jurisdiction of the lower court on the
ground that the Complaint filed by David lacked the material averments sufficient to make out a case for
forcible entry.

A party may be estopped or barred from raising a question in different ways and for different reasons. In
the case at bar, the respondents are estopped by laches. This we defined in the seminal case of Tijam v.
Sibonghanoy:47

Laches, in a general sense, is failure or neglect, for an unreasonable and unexplained length of time, to do
that which, by exercising due diligence, could or should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting a presumption that the party entitled to
assert it either has abandoned it or declined to assert it.

The doctrine of laches or of "stale demands" is based upon grounds of public policy which requires, for the
peace of society, the discouragement of stale claims and, unlike the statute of limitations, is not a mere
question of time but is principally a question of the inequity or unfairness of permitting a right or claim to
be enforced or asserted.

….

Furthermore, it has been held that after voluntary submitting a cause and encountering an adverse
decision on the merits, it is too late for the loser to question the jurisdiction or power of the court (Pease
vs. Rathbun-Jones etc. 243 U.S. 273, 61 L. Ed. 715, 37 S.Ct. 283; St. Louis etc. vs. McBride, 141 U.S.
127, 35 L. Ed. 659). 48
It is too late in the day for the Cordovas to challenge the jurisdiction of the lower court on the ground that
the Complaint failed to assert the necessary jurisdictional facts. The Cordovas first raised the issue in its
petition for certiorari before the Court of Appeals. After participating in all stages of the case before the
lower court, the Cordovas are effectively barred by estoppel from challenging the lower court’s
jurisdiction. While it is a rule that a jurisdictional question may be raised any time, this, however, admits
of an exception where, as in this case, estoppel has supervened.49

Participation in all stages of a case before the lower court effectively estops a party from challenging its
jurisdiction. One cannot belatedly reject or repudiate its decision after voluntarily submitting to its
jurisdiction, just to secure affirmative relief against one’s opponent or after failing to obtain such relief.
The Court has time and again frowned upon the undesirable practice of a party submitting his case for
decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction when
adverse.50

Alleged public character of land

does not deprive court of jurisdiction

over forcible entry case

Next, the point that the property in dispute is public land. The matter is of no moment and does not
operate to divest the lower court of its jurisdiction over actions for forcible entry involving such property.
Indeed, the public character of the land does not preclude inferior courts from exercising jurisdiction over
forcible entry cases. We have ruled in the case of Robles v. Zambales Chromite Mining Co., et al.,51 that
the land spoken of in Section 1, Rule 70 of the Rules of Court includes all kinds of land, whether
agricultural or mineral. It is a well known maxim in statutory construction that where the law does not
distinguish, we should not distinguish.52

Moreover, ejectment proceedings are summary proceedings only intended to provide an expeditious
means of protecting actual possession or right to possession of property. Title is not involved. The sole
issue to be resolved is the question as to who is entitled to the physical or material possession of the
premises or possession de facto.53 Our ruling in Pajuyo v. Court of Appeals54 illustrates this point, thus:

The only question that the courts must resolve in ejectment proceedings is-who is entitled to the physical
possession of the premises, that is, to the possession de facto and not to the possession de jure. It does
not even matter if a party’s title to the property is questionable, or when both parties intruded into public
land and their applications to own the land have yet to be approved by the proper government agency.
Regardless of the actual condition of the title to the property, the party in peaceable quiet possession shall
not be thrown out by a strong hand, violence or terror. Neither is the unlawful withholding of property
allowed. Courts will always uphold respect for prior possession.

Thus, a party who can prove prior possession can recover such possession even against the owner
himself. Whatever may be the character of his possession, if he has in his favor prior possession in time,
he has the security that entitles him to remain on the property until a person with a better right lawfully
ejects him. To repeat, the only issue that the court has to settle in an ejectment suit is the right to
physical possession.55

Also worth noting is the case of Pitargue v. Sevilla,56 wherein, as in this case, the government owned the
land in dispute. The government did not authorize either the plaintiff or the defendant in the forcible entry
case to occupy the land. Both parties were in effect squatting on government property. Yet we upheld the
court’s jurisdiction to resolve the issue of possession even if title remained with the government.

Courts must not abdicate their jurisdiction to resolve the issue of physical possession because of the
public need to preserve the basic policy behind the summary actions of forcible entry and unlawful
detainer. The underlying philosophy behind ejectment suits is to prevent breach of peace and criminal
disorder and to compel the party out of possession to respect and resort to the law alone to obtain what
he claims is his. The party deprived of possession must not take the law into his own hands. Ejectment
proceedings are summary in nature so the authorities can settle speedily actions to recover possession
because of the overriding need to quell social disturbances.57

Thus, the better rule is that even while the power of administration and disposition of public or private
agricultural lands belongs to DAR, courts retain jurisdiction over actions for forcible entry involving such
lands. To restate this, courts have jurisdiction over possessory actions involving public or private
agricultural lands to determine the issue of physical possession as this issue is independent of the
question of disposition and alienation of such lands which should be threshed out in DAR.58

In addition, the instant case does not involve the adjudication of an agrarian reform matter 59 nor an
agrarian

dispute60 falling within the jurisdiction of DAR. As such, possessory actions involving the land in dispute
rightfully falls within the jurisdiction of the FMCTC.

On this point, the following pronouncements we made in Pitargue are enlightening:

The question that is before this Court is: Are courts without jurisdiction to take cognizance of possessory
actions involving these public lands before final award is made by the Lands Department, and before title
is given any of the conflicting claimants? It is one of utmost importance, as there are public lands
everywhere and there are thousands of settlers, especially in newly opened regions. It also involves a
matter of policy, as it requires the determination of the respective authorities and functions of two
coordinate branches of the Government in connection with public land conflicts.

Our problem is made simple by the fact that under the Civil Code, either in the old, which was in force in
this country before the American occupation, or in the new, we have a possessory action, the aim and
purpose of which is the recovery of the physical possession of real property, irrespective of the question
as to who has the title thereto. Under the Spanish Civil Code we had the accion interdictal, a summary
proceeding which could be brought within one year from dispossession (Roman Catholic Bishop of Cebu
vs. Mangaron, 6 Phil. 286, 291); and as early as October 1, 1901, upon the enactment of the Code of Civil
Procedure (Act No. 190 of the Philippine Commission) we implanted the common law action of forcible
entry (Section 80 of Act No. 190), the object of which has been stated by this Court to be "to prevent
breaches of the peace and criminal disorder which would ensue from the withdrawal of the remedy, and
the reasonable hope such withdrawal would create that some advantage must accrue to those persons
who, believing themselves entitled to the possession of property, resort to force to gain possession rather
than to some appropriate action in the courts to assert their claims." (Supia and Batioco vs. Quintero and
Ayala, 59 Phil. 312, 314.) So before the enactment of the first Public Land Act (Act No. 926) the action of
forcible entry was already available in the courts of the country. So the question to be resolved is, Did the
Legislature intend, when it vested the power and authority to alienate and dispose of the public lands in
the Lands Department, to exclude the courts from entertaining the possessory action of forcible entry
between rival claimants or occupants of any land before award thereof to any of the parties? Did Congress
intend that the lands applied for, or all public lands for that matter, be removed from the jurisdiction of
the Judicial Branch of the Government, so that any troubles arising therefrom, or any breaches of the
peace or disorders caused by rival claimants, could be inquired into only by the Lands Department to the
exclusion of the courts? The answer to this question seems to us evident. The Lands Department does not
have the means to police public lands; neither does it have the means to prevent disorders arising
therefrom, or contain breaches of the peace among settlers; or to pass promptly upon conflicts of
possession. Then its power is clearly limited to disposition and alienation, and while it may decide conflicts
of possession in order to make proper award, the settlement of conflicts of possession which is recognized
in the courts herein has another ultimate purpose, i.e., the protection of actual possessors and occupants
with a view to the prevention of breaches of the peace. The power to dispose and alienate could not have
been intended to include the power to prevent or settle disorders or breaches of the peace among rival
settlers or claimants prior to the final award. As to this, therefore, the corresponding branches of the
Government must continue to exercise power and jurisdiction within the limits of their respective
functions. The vesting of the Lands Department with authority to administer, dispose, and alienate public
lands, therefore, must not be understood as depriving the other branches of the Government of the
exercise of their respective functions or powers thereon, such as the authority to stop disorders and quell
breaches of the peace by the police, the authority on the part of the courts to take jurisdiction over
possessory actions arising therefrom not involving, directly or indirectly, alienation and disposition.

Our attention has been called to a principle enunciated in American courts to the effect that courts have
no jurisdiction to determine the rights of claimants to public lands, and that until the disposition of the
land has passed from the control of the Federal Government, the courts will not interfere with the
administration of matters concerning the same. (50 C.J. 1093-1094.) We have no quarrel with this
principle. The determination of the respective rights of rival claimants to public lands is different from the
determination of who has the actual physical possession of occupation with a view to protecting the same
and preventing disorder and breaches of the peace. A judgment of the court ordering restitution of the
possession of a parcel of land to the actual occupant, who has been deprived thereof by another through
the use of force or in any other illegal manner, can never be "prejudicial interference" with the disposition
or alienation of public lands. On the other hand, if courts were deprived of jurisdiction of cases involving
conflicts of possession, that threat of judicial action against breaches of the peace committed on public
lands would be eliminated, and a state of lawlessness would probably be produced between applicants,
occupants or squatters, where force or might, not right or justice, would rule.

It must be borne in mind that the action that would be used to solve conflicts of possession between rivals
or conflicting applicants or claimants would be no other than that of forcible entry. This action, both in
England and the United States and in our jurisdiction, is a summary and expeditious remedy whereby one
in peaceful and quiet possession may recover the possession of which he has been deprived by a stronger
hand, by violence or terror; its ultimate object being to prevent breach of the peace and criminal disorder.
(Supia and Batioco vs. Quintero and Ayala, 59 Phil. 312, 314.) The basis of the remedy is mere
possession as a fact, of physical possession, not a legal possession. (Mediran vs. Villanueva, 37 Phil. 752.)
The title or right to possession is never in issue in an action of forcible entry; as a matter of fact, evidence
thereof is expressly banned, except to prove the nature of the possession. (Section 4, Rule 72, Rules of
Court.) With this nature of the action in mind, by no stretch of the imagination can conclusion be arrived
at the use of the remedy in the courts of justice would constitute an interference with the alienation,
disposition, and control of public lands. To limit ourselves to the case at bar can it be pretended at all that
its result would in any way interfere with the manner of the alienation or disposition of the land
contested? On the contrary, it would facilitate adjudication, for the question of priority of possession
having been decided in a final manner by the courts, said question need no longer waste the time of the
land officers making the adjudication or award.61

Forum-shopping

A final note. We observe that the Cordovas in their petition for certiorari before the Court of Appeals were
not completely forthright about the pleadings they filed previously before the RTC. They only disclosed the
petition for certiorari62 they last filed on 8 September 1998 before the RTC of Bataan, thus concealing the
fact that they had previously filed a petition for certiorari on 5 May 1998 also under Rule 65 of the Rules
of Court before the RTC, Branch 5 of Dinalupihan, Bataan. Such failure to declare may constitute forum-
shopping under Section 1, Rule 65 of the Rules of Court.63

WHEREFORE, the instant petition is GRANTED. The Decision dated 8 April 1999 and Resolution dated 15
April 2002 of the Court of Appeals are REVERSED and SET ASIDE. The Decision dated 20 January 1998 of
the First Municipal Circuit Trial Court of Dinalupihan, Bataan is REINSTATED. Atty. Jaime G. Mena, counsel
for herein respondents in their petition for certiorari before the Court of Appeals, is given ten (10) days
from receipt of this Decision to show cause why he should not be held liable for forum-shopping.

G.R. No. L-12560             September 30, 1958

JOSE ROBLES, petitioner-appellant,

vs.
ZAMBALES CHROMITE MINING COMPANY, ET AL., respondents-appellees.

PARAS, C.J.:

On November 28, 1956, the Zambales Chromite Mining Company filed a complaint for unlawful detainer
against Jose Robles in the Justice of the Peace Court of Sta. Cruz, Zambales, alleging among other things
that Robles and the Company entered into a contract whereby the latter delivered the possession of
certain mining properties over which it had control to Robles who was to extract, mine and sell ores from
said properties upon payment of certain royalties; that Robles had violated the terms of the contract; that
the Company thereupon served notice on Robles to vacate the premises; and that Robles failed to comply
with said demand.

Robles filed a motion to dismiss the complaint on the ground that the Justice of the Peace did not have
jurisdiction, but the latter denied said motion. Robles thereafter filed a petition for certiorari in the Court
of First Instance of Zambales, alleging that the Justice of the Peace was without jurisdiction in taking
cognizance of the case for unlawful detainer involving mineral land. The Court of First Instance ruled
against Robles, holding that the provisions of Section 1, Rule 72, of the Rules of Court, are sufficiently
broad to cover any kind of land, including mineral land. Robles has appealed.

The appeal is clearly without basis. Section 1, of Rule 72 provides that, "a landlord, vendor, vendee, or
other person against whom the possession of any land or building is unlawfully withheld after the
expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or
the legal representatives or assigns of any such landlord, vendor, vendee, or other person, may, at any
time within one year after such unlawful deprivation or withholding of possession, bring an action in the
proper inferior court against the person or persons unlawfully withholding or depriving of possession, or
any person or persons claiming under them, for the restitution of such possession, together with damages
and costs." Any land spoken of in this provision obviously includes all kinds of land, whether agricultural,
residential or mineral. It is a well known maxim in statutory construction that where the law does not
distinguish, we should not distinguish.

Wherefore, the appealed decision is affirmed with costs against the appellant, Jose Robles.

G.R. No. L-12845             February 25, 1960

ZAMBALES CHROMITE MINING CO., plaintiff-appellant,

vs.
JOSE ROBLES, ET AL., defendants-appellees.

MONTEMAYOR, J.:

This is an appeal by plaintiff Zambales Chromite Mining Co. from the order of the Court of First Instance
of Zambales, dated April 23, 1957, dismissing plaintiff's first third, fourth and fifth causes of action, and
from the order of July 23, 1957, denying plaintiff's motion for reconsideration.

On March 17, 1953, Jose Robles, later referred to as the operator, and the Zambales Chromite Mining Co.,
later mentioned as the Mining company, executed a contract later supplemented by a "supplementary
agreement", ratified on August 14, 1953. According to these two documents, the mining company owned
or had possession of several mineral claims containing mineral deposits, principally chrome ore, delivered
them to Robles who undertook to operate them, extract chrome ore in a minimum amount of 2,000 tons a
month and to pay the company a royalty of P3.00 per ton net. The other terms of the agreements were
that Robles was to repair and rehabilitate at his own expense within a certain period, the roads and
bridges of the mining camp and points of mining operations to the provincial road in Sta. Cruz, Zambales,
for the purpose of transporting the chrome ore to the Acoje pier or to shippingpoints of Sta. Cruz,
Zambales, and to spend for said repair and rehabilitation at least P30,000; that as operator, Robles
guaranteed the prompt payment of the wages and salaries, at the minimum wage rate, of all laborers and
employees; that any violation of any of the terms and conditions of the agreements was sufficient ground
for the cancellation of the same by the aggrieved party; and that at the termination or cancellation of the
agreements, all improvements placed on or undertaken by the operator at his expenses on the premises,
such as, buildings, development work, roads, bridges and the like, which are not movable machinery or
equipment, shall become the property of the mining company, without obligation to pay for the same.

Appellants claiming that Robles had violated the terms and conditions of the agreement and the
notwithstanding demands made by it on him to comply therewith, he refused to do so, advised him in
writting on October 10, 1956 that it had cancelled and resolved the contract and demanded that he
vacate the mining properties. On November 28, 1956, it filed an action for unlawful detainer against him
in the Justice of the Peace Court of Sta. Cruz, Zambales. Robles moved for dismissal of the case on the
ground that the Justice of the Peace Court had no jurisdiction over the same, involving as it did mineral
land. His motion was denied by the Justice of the Peace Court as well as the Court of First Instance of
Zambales before which he raised the question of jurisdication. Not satisfied, Robles brought the case to
this Tribunal in a petition for certiorari (Robles vs. Zambales Chromite Mining Co., et al., 104 Phil., 688;
55 Off. Gaz. [31] 6012). In our decision promulgated on the September 30, 1958, we ruled that the
Justice of the Peace Court had juridication to take cognizance of the unlawful detainer case, although it
involved mineral land.

In the meantime, on January 7, 1957, plaintiff-appellant filed the present action. Its complaint contained
six causes of action. Under the first cause of action, plaintiff claims that defendant Robles failed to extract
at least 2,000 tons of chrome ore a month, beginning August 15, 1953, he having produced only the total
of about 3,158 tons of chrome ore, instead of a total of 76,000 tons up to October 15, 1956; that
defendant failed to pay plaintiff at least the sum of P12,000 per month beginning August 15, 1953, or the
total sum of P456,000 from August 15, 1953, computed at 12% of the total value of said 76,000 tons
computed at the selling price of P48.00 per ton, defendant having paid the plaintiff as of October 11,
1956, only the total sum of P3,426.25; that the defendant Robles did not spend at least P30,000,
Philippine currency, as agreed upon for the rehabilitation and repair of plaintiff's roads and bridges; that
he also failed to promptly pay the wages and salaries of his laborers and employees working at the said
mines, causing many of said laborers to quit their jobs, thereby contributing largely to defendant's failure
to comply with the other terms of the agreements; and that despite the cancellation and dissolution of the
contract by plaintiff, defendant continued to operate the mining mineral claims and had removed a total of
at least 1,258.22 tons of chrome ore between October 11 and 31, 1956, of which 858.22 tons defendant
shipped on board a steamer and sold at a total price of P43,280.44, and the remaining 400 tons were
deposited by him along the bank of the Nayum River in Sta. Cruz, Zambales, preparatory to their being
shipped out and removed from the municipality of Sta. Cruz, Zambales. For the protection of the rights
and interest of the plaintiff, it later asked the court to perpetually restrain Robles and his co-defendants
from further mining, extracting and removing chrome ore from the aforementioned mineral claims.

Under the second cause of action, plaintiff alleges that contrary to the stipulations of the contract, plaintiff
had been reliably informed that Robles and his co-defendants, representatives and employees, were
contemplating or threatening to remove and destroy or tear down the buildings, roads, and bridges and
other permanent improvements and installations belonging to the plaintiff and in within its mining
properties. Plaintiff asked that defendants be restrained from removing and destroying or tearing down
said improvements.

Under the third cause action, plaintiff alleges that although under the conditions of the contract, plaintiff
had the right to send and station its representatives at the mines to verify the status of the same and to
take the necessary precautions to protect its properties, Domingo Sison and Juan Francisco, acting for
themselves and/or representatives of defendant Robles, with the aid of the Philippine Constabulary,
ejected the representatives sent by the plaintiff on or about January 2, 1957; that inasmuch as Robles
had lost any right to occupy the mineral claims and extract chrome ore therefrom because of the
cancellation of the contract, he had no right to prevent plaintiff or its authorized representatives from
entering the mines and from using its building, roads, and bridges and other permanent improvements;
consequently, defendant should be restrained from preventing plaintiff or any of its representatives from
entering the mining premises and using the building, roads, bridges, etc.

Under the fourth cause of action, plaintiff asks that defendants be required jointly and severally to pay the
sum of P43,280.44, which represents the value of 858.22 tons of chrome ore referred to in the first cause
of action.

Under the fifth cause of action, plaintiff claims delivery by or payment from the defendants of the balance
of 400 tons of chrome ore removed from the mines after the cancellation of the contract and deposited
along the bank of the Nayum River, mentioned in the first cause of action.

Under the sixth cause of action, plaintiff claims the sum of P10,000 attorney's fees plus expenses of
litigation.

Robles filed his answer to the complaint with the motion to dismiss the first, fourth and fifth causes of
action and that after trial on the merits, the second, third and sixth causes of action be likewise
dismissed.

On April 23, 1957, the trial court dismissed plaintiff's first, third, fourth and fifth causes of action and at
the same time ordered that the second and sixth causes of action be set for hearing. For purposes of
reference, we reproduce said order:

Acting on the defendant's petition to dismiss plaintiff's instant complaint and it appearing that
there is pending before the Justice of the Peace Court of Sta. Cruz, Zambales, Civil Case No. 127
entitled "Zambales Chromite Mining Co. vs. Jose Robles' for ejectment; that this Court has found in
Civil Case No. 1878 of this court, which is a certiorari case filed by Jose Robles against the Justice
of the Peace of Sta. Cruz, Zambales, in connection with said Case No. 127, that said Justice of the
Peace has jurisdiction to try said Civil Case No. 127; that between said Case No. 127 and the
instant case there is identity of parties and rights asserted, as well as substantial identity in the
relief prayed for, so that any judgment which may be rendered in said Case No. 127 will
undoubtedly amount to res adjudicata with respect to plaintiff's First, Third, Fourth and Fifth
causes of action in this case; that the proper remedy for these causes of action is an action for
recovery of possessions and rents; that it has been held that an injunction should not be a
substitute for an ordinary action of forcible entry and detainer (Sofia Devera vs. Crispin Arbes, 13
Phil., pp. 273, 277), the Court finds the dismissal of plaintiff's first, third, fourth and fifth causes of
action to be in order.
 PREMISES CONSIDERED, the plaintiff's first, third, fourth and fifth causes of action in this case, are
hereby dismissed, and the case is set for hearing on June 12, 1957 at 9:00 o'clock in the morning
with respect to plaintiff's Second and Sixth causes of action. (Record pp. 84-85).

In asking for the dismissal of the first cause of action, Robles claimed that there was another action
pending between the same parties and for the same parties and for the same causes before the Justice of
the Peace Court of Sta. Cruz, Zambales, Case No. 127, referring to the illegal detainer case already
mentioned. In answer, plaintiff contends that the pendency of another action may not be invoked in the
instant case because although the basis of the complaint for ejectment and the present action arose from
the same cause, namely, violation by the defendant of the terms and conditions of the contract,
nevertheless, the relief prayed for and the rights asserted are different. In the ejectment case, plaintiff
seeks to obtain possession of the mining premises, while in the present action, in its first cause of action,
plaintiff merely asks that defendant be restrained from operating the mining properties without
necessarily being ejected therefrom. Moreover, other causes of action set forth in plaintiff's complaint,
such as the recovery of P43,280.44 (fourth cause of action) and the recovery of P400 tons of chrome ore
or its value (fifth cause of action) are well beyond the jurisdiction of the Justice of the Peace Court, and
what is more, the same do not represent back rentals or damages on account of the unlawful detainer.

Defendant, however, asserts that the first cause of action is in the guise of a separate action of injunction
and is in effect a petition for preliminary injunction in aid of its action for illegal detainer, a remedy which
the Justice of the Peace Court may not grant; naturally, plaintiff may not obtain such relief by filing a
separate action for injunction in the Court of First Instance based on the same set of facts. As to the
distinction sought to be made by plaintiff between the right to possess the mining properties and the right
to operate them, such distinction according to defendant is untenable for the reason that both rights are
co-existent on the question of whether the contract between the parties still exists. And as regards the
fourth and fifth causes of action, defendant urges that an action for injunction is not the proper remedy,
but rather the filing of an ordinary action for the recovery of a sum of money and for replevin,
respectively.

The test by which to determine whether or not the pendency of another action is a bar to a second action,
is whether or not "the judgment to be rendered in the action first instituted will be such that, regardless of
which party is successful, it will amount to res adjudicata against the second action." (Hongkong &
Shanghai Banking Corporation vs. Aldecoa & Co., 30 Phil., 255). In said case, it was held that to sustain
the plea of another action —

. . . there must be the same parties, or at least such as represent the same interests. There must
be the same rights asserted and the same relief prayed for. This relief must be founded on the
same facts, and the title or essential basis of the relief sought must be the same. The identity of
these particulars should be such that if the pending case had already been disposed of, it could be
pleaded in bar as a former adjudication of the same matter matter between the parties.

In that case, it was held that an action to annul the mortgage was not a bar to an action for foreclosure of
the same, for the reason that although a final judgment in the first case declaring the mortgage null and
void, would preclude the bank from foreclosing the mortgage, and therefore dismiss its foreclosure suit,
still a decision holding such mortgage valid would pave the way for the foreclosure of the same. So, in the
present case, the action for ejectment in the Justice of the Peace Court may not bar plaintiff's suit in the
Court of First Instance, or rather some of his causes of action because if it finally decided that defendant
should be ejected from the mining premises in the illegal detainer case, plaintiff could still prosecute his
causes of action against defendant in the Court of First Instance. It is argued that injunction should not be
a substitute for an ordinary action for forcible entry and detainer (Sofia Devesa vs. Crispin Arbes, 13 Phil.,
277, cited in the appealed order). However, in the four causes of action dismissed by the trial court,
plaintiff does not seek to deprive defendant of the possession of the property. In the first cause of action,
plaintiff merely asks that defendant be restrained from further operating the mines or otherwise
extracting ore from the same; in the third cause of action, the relief sought was to restrain defendant
from preventing plaintiff's representation from entering the premises, and from using the buildings, roads,
bridges, etc. on the premises. The fourth and fifth causes of action only ask for the recovery of sums of
money or the possession of chrome ore, other than damages due to illegal detainer. Incidentally, it will be
observed that although defendant Robles in his answer did not ask for the dismissal of the third cause of
action, nevertheless, the trial court motu proprio dismissed the same.

There is another and practical reason for holding that the unlawful detainer case in the Justice of the
Peace Court of Sta. Cruz, Zambales, does not bar the causes of action of plaintiff company in the Court of
First Instance, dismissed by the latter, and it is this. Said unlawful detainer case may for all practical
purposes now be considered abandoned and if it has not yet been tried and decided by the Justice of the
Peace Court, plaintiff company may well ask for its dismissal.

It is highly possible that plaintiff company, seeing that the final determination of the unlawful detainer
case would be unduly delayed, as in fact it was, and consequently, it could not obtain the possession of
the property in question in the immediate future, it filed the present case in the Court of First Instance in
1957, in order to obtain apropriate relief and minimize damages and losses. But then it could not well ask
for the dismissal of said unlawful detainer case, for the reason that the Justice of Peace Court had
temporarily lost jurisdiction over same, the case having been finally taken to this Tribunal on appeal, and
said appeal was not decided by us until September 30, 1958.

The abandonment or dismissal of the unlawful detainer case would not substantially affect the rights of
the mining company over the property in litigation, particularly, possession thereof, for the reason that
such possession may well be included in the relief prayed for in the Court of First Instance under the
prayer at the end of its complaint that "plaintiff further respectfully prays the Honorable Court to such
other relief as to it may seem just equitable under the premises". Besides, the Court of First Instance in
the present action would be in a much better position to determine the relative rights of the parties over
the property in question, and from the standpoint the plaintiff company, grant it all the relief it is entitled
to. Ordinarily, the relief that a plaintiff in an unlawful detainer case is entitled to is the possession of the
property under litigation, and damages in the form of accrued rentals or the reasonable value of the use
and occupation of the premises. In the present case, however, the rentals and property were to be in
form of royalties based on the production of chrome ore as a result of the operation of the mineral claims
by the defendant. However, there looms an incompatibility, namely, that in order to pay said royalties,
the defendant must operate the mines and produce chrome ore, but according to relief prayed for by
plaintiff"s complaint, it does not want defendant to continue operating the mines. Besides, there are other
reliefs demanded by plaintiff company which are not available in an unlawful detainer case, such as, the
payment of royalties, preventing defendant from removing, burning, or otherwise destroying any of the
buildings, roads, bridges and other permanent improvement and installations on the premises; preventing
defendant from impeding plaintiff's representatives from entering and staying on the properties as agreed
upon in the contract; the payment by defendant to the plaintiff of about P43,000 for chrome ore said to
have been sold by him, and for the delivery of chrome ore deposited by defendant along the bank of the
river, preparatory to the shipment thereof abroad, or value of said ore.

In view of the foregoing, the order appealed from is set aside and the case is ordered remanded to the
trial court for further proceedings, with costs.

G.R. No. 117389 May 11, 1995

ROMEO V. OBLEA and RAMON S. MELENCIO, petitioners,

vs.
COURT OF APPEALS and JUAN S, ESTEBAN, respondents.

BELLOSILLO, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals dismissing the petition for
certiorari and prohibition and denying the prayer for a writ of preliminary injunction against the order of 6
April 1994 of the Regional Trial Court of Cabanatuan City, Br. 27, which lifted and cancelled the temporary
restraining order issued by Judge Lydia B. Hipolito of the Municipal Trial Court of Cabanatuan City, Br. 9. 1

The controverted lot, designated as Lot 1, Block 2, was formerly a part of a mother lot covered by TCT
No. 26604 of the Register of Deeds of Cabanatuan City, containing an area of 83,325 square meters and
registered in the names of Manuel Melencio (1/3), Pura Melencio (1/3) and Wilfredo Wico and Mariabelle
M. Wico (1/3). Subsequently, TCT No. 26604 was cancelled and in lieu thereof TCT No. 65031 was issued
in the name of petitioner Ramon S. Melencio who became a co-owner with Pura Melencio and the Wicos
by virtue of a deed of sale executed in his favor by his now deceased father Manuel Melencio.

On 6 June 1958 subject lot was bought by private respondent Juan S. Esteban from Mauricio Ramos who
claimed to have acquired the property from Ursula Melencio, the alleged administratrix of the estate of
Manuel and Pura Melencio. 2
Meanwhile, petitioner Romeo V. Oblea leased a building located on the subject lot from a certain Marius
Esteban, an alleged son of private respondent Juan S. Esteban. Oblea eventually bought from Marius the
lot on which the building stood. 3 As a consequence, on 4 July 1991 Esteban filed an ejectment suit
against petitioner Oblea in the Municipal Trial Court of Cabanatuan City docketed as Civil Case No. 10588.
On 3 April 1992, the case was decided by Judge Romeo G. Mauricio in favor of Esteban and against
petitioner Oblea who was ordered to vacate the premises and pay rental arrears from January 1983, as
well as litigation expenses and attorney's fees in the total sum of P8,000.00.

On appeal, the Regional Trial Court of Cabanatuan City rendered judgment on 26 March 1993 modifying
the MTC decision by ordering Oblea to pay rentals only from 2 March 1988, but sustaining the MTC in
other respects.

On 3 June 1993, the registered owners 4 sold the disputed lot to petitioner Oblea. Afterwards, Oblea
together with Ramon Melencio, Pura Melencio and Wilfredo Wico and Mariabelle Wico filed before the
Regional Trial Court an action for quieting of title against Esteban, docketed as Civil Case No. 1536. They
contended that the deeds of sale executed by Mauricio Ramos in favor of Juan Esteban and by Ursula
Melencio in favor of Mauricio Ramos were a nullity.

The ejectment case, Civil Case No. 10588, was in the meantime appealed to the Court of Appeals by way
of petition for review, which petition was dismissed by the appellate court on 2 July 1993. Upon remand of
the records to the court of origin, and on motion of Esteban, the prevailing party, MTC Judge Hipolito
directed execution and issued the corresponding writ to enforce the final and executory judgment in the
ejectment suit.

The execution was however thwarted when petitioners Romeo Oblea and Ramon Melencio filed another
petition before the Regional Trial Court of Cabanatuan City for certiorari and prohibition with application
for a temporary restraining order and preliminary injunction, docketed as Civil Case No. 1676-AF. On 22
November 1993 the Executive Judge thereof issued a temporary restraining order to stop the enforcement
of the writ of execution issued by Judge Hipolito. On 6 April 1994 however Judge Adriano I. Tuason,
Acting Presiding Judge of Br. 27, lifted and canceled the restraining order earlier issued, thus paving the
way for the execution of the judgment in the ejectment case.

Undeterred by the reversal, petitioners elevated their case to the appellate court which on 27 September
1994 dismissed their appeal, the reason being that the eviction case had long become final and executory
and that the various actions taken by petitioners were merely designed to delay execution.

We agree with respondent Court of Appeals.

The main argument of petitioners is that in view of the subsequent sale of the controversial lot to them on
3 June 1993, and under the mistaken notion of "doctrine of supervening event," they have acquired a
better right of possession and ownership. Hence, they argue that with this "supervening event," the
judgment evicting them can no longer be enforced.

The argument is untenable. It must be stressed that the sole issue in an action for unlawful detainer is
physical or material possession, i.e., possession de facto and not possession de jure. This is settled
doctrine. Resultantly, the pendency of an action for quieting of title before the Regional Trial Court does
not divest the city or municipal trial court of its jurisdiction to proceed with the ejectment case over the
same property. The subsequent acquisition of ownership by petitioners is not a supervening event that
will bar the execution of the judgment in said unlawful detainer case, the fact remaining that when
judgment was rendered by the MTC in the ejectment case, petitioner Oblea was a mere possessor of the
subject lot.

Similarly, the fact that petitioners instituted a separate action for quieting of title is not a valid reason for
defeating the execution of the summary remedy of ejectment. On the contrary, it bolsters the conclusion
that the eviction case did not deal with the issue of ownership which was precisely the subject matter of
the action for quieting of title before the Regional Trial Court of Cabanatuan City. 5 With the finality of the
decision in the ejectment case, execution in favor of the prevailing party has become a matter of right; its
implementation mandatory. It cannot be avoided. 6

In fine, the Court of Appeals did not commit reversible error in upholding the order of 6 April 1994 which
lifted the temporary restraining order enjoining the implementation of the writ of execution in favor of
private respondent Esteban. Simply put, the petition is a desperate attempt on the part of petitioners to
unduly prolong the litigation of an issue which has been settled and should have been long laid to rest.
WHEREFORE, the petition is DENIED.

G.R. No. 128743 November 29, 1999

ORO CAM ENTERPRISES, INC., petitioner,

vs.
COURT OF APPEALS, former Fourth Division and ANGEL CHAVES, INC., respondents.

MENDOZA, J.:

This is a petition for review of the decision of the Court of Appeals, 1 dated November 27, 1996, annulling
an injunctive order of the Regional Trial Court, Branch 37, Cagayan de Oro City, enjoining the
enforcement of the writ of execution in an ejectment case and ordering said court to dismiss the petition
for certiorari filed by petitioner for lack of cause of action. For the reasons stated hereunder, the decision
of the Court of Appeals is affirmed.

The facts are as follows:

Private respondent Angel Chaves, Inc. is the owner of a commercial building in Cagayan de Oro which he
leased to several business establishments.

On January 15, 1991, private respondent filed a complaint for unlawful detainer in the Municipal Trial
Court in Cities (MTCC), Cagayan de Oro City, docketed as Civil Case No. 13040. The complaint alleged
inter alia that —

2. Plaintiff owns a commercial building with frontage along J.R. Borja and Yacapin Extension
Streets, Cagayan de Oro City leased to business establishments, some of whom are
defendants herein, for uniform and fixed period of one (1) year since 1986.

3. The latest written contracts of lease for 1 year period between the parties were executed
on July 31, 1988, with following particulars:

Lessee/Business Name Lease Period Monthly rentals

Constancio Manzano July 1, 1988 P7,750.00

Oro Cam Enterprises June 30, 1989

Ernesto/Leody Marcoso July 1, 1988 P3,400.00

Queenie's Jewelry June 30, 1989

Fortunato Melodia Sr. July 1, 1988 P3,400.00

Meltrade June 30, 1989

Alfredo/Elena Co July 1, 1988 P3,400.00

Oro Jewelry June 30, 1989

The complaint further alleged that, before the aforementioned leases expired on June 30, 1989, private
respondent sent forms for new lease contracts to the lessees, indicating increased rentals for the period
July 1, 1989 to June 30, 1990, for their signatures, to wit:

Name New monthly rentals

Oro Cam Enterprises P10,000.00

Queenie's Jewelry P 4,000.00

 Meltrade P 4,000.00

Oro Jetcycle P 4,000.00

Thereafter, private respondent made a demand upon the lessees to pay the increased rent or, otherwise,
vacate the premises. The failure of the lessees to comply with the demand of private respondent led to
the filing of the suit for unlawful detainer.

In his answer to the complaint, defendant Constancio Manzano, through his counsel, Atty. Cesilo Adaza,
alleged: 2

3. That it is not true that in the said contract the monthly rentals of the defendants as
stated in paragraph 3 of the complaint are to be paid by the defendants. What was agreed
was for the following defendants to pay the following rentals beginning July 1, 1988 and
two years thereafter, to wit:

a. Constancio Manzano

Oro Cam Enterprises — P5,000.00

On July 23, 1992, the MTCC rendered a decision dismissing the complaint against three defendants,
including petitioner, but ordered the ejectment of the fourth defendant Alfred Co. The dispositive portion
of the MTCC decision reads:

WHEREFORE, premises considered, the court hereby renders judgment as follows:

1. Dismissing complaint as against Manzano (Oro Cam), Melodia (Meltrade) and Marcoso
(Queenie' s Jewelry) for lack of cause of action.

xxx xxx xxx

SO ORDERED.

On appeal, the Regional Trial Court, Branch 23, Misamis Oriental, Cagayan de Oro City, reversed the
MTCC and ordered the four defendants ejected from the premises. The dispositive portion of the RTC
decision ordered defendants —

1. To vacate and surrender to plaintiff-appellant the premises in question that

they respectively occupied;

2. To pay the corresponding reasonable rent of said premises from July 1,

1990 until they have fully vacated the same, at the following rates:

a) Constancio Manzano at P12,500.00 per month

b) Melodia at P5,000.00 per month

c) Ernesto Marcoso at P5,000.00 per month, and

3. To pay jointly and solidarily to plaintiff-appellant the sum of P30,000.00 as

attorney's fees and P10,000.00 as litigants expenses, and the costs of the
suit.

Vicente Manzano, brother of Constancio Manzano, then filed a petition for review of the RTC decision with
the Court of Appeals (CA-GR Sp. No. 34167), alleging that Constancio Manzano had died in the meantime
and informing it of his status as administrator of the estate. The Court of Appeals dismissed the petition
for having been filed beyond the reglamentary period. The dismissal was subsequently affirmed by this
Court in a resolution issued on September 26, 1994 in G.R. No. 116933.

On January 9, 1995, private respondent filed with the MTCC a motion for the issuance of a writ of
execution specifically against Constancio Manzano and petitioner Oro Cam Enterprises. Petitioner opposed
the motion on the ground that it was never impleaded nor included as party-defendant in the ejectment
case (Civil Case No. 13040). It appears that petitioner later filed a petition for certiorari and prohibition,
with an application for the issuance of a writ of preliminary injunction, in the Regional Trial Court, Branch
37, Cagayan de Oro City, where the case was docketed as Sp. Civil Case No. 95-560, entitled "Oro Cam
Enterprises, Inc. v. Hon. Antonio A. Orcullo and Angel Chaves, Inc." On December 7, 1995, the trial court
issued an order granting the application for preliminary injunction, viz.:

WHEREFORE, petitioner's application for preliminary injunction, being meritorious, is hereby

GRANTED, and, accordingly, respondents, their agents or representatives or all persons
acting on their behalf, are hereby ordered during the pendency of this case to cease and
desist and refrain from issuing, implementing, enforcing or carrying out any writ of
execution or similar order in Civil Case No. 13040 entitled "Angel Chaves, Inc. vs.
Constancio Manzano, et al." to execute the Decision dated December 27, 1993 rendered by
Branch 25 of this Court, or from doing or performing other acts prejudicial to the rights of
petitioner. 3

Private respondent then filed a petition for certiorari with the Court of Appeals which, on November 27,
1996, rendered a decision declaring the writ of injunction as null and void, and ordering the trial court to
dismiss Sp. Civil Case No. 95-560.

Hence, this petition where petitioner submits the following issues:

1. Whether or not, the Court of Appeals erred in holding that [petitioner] Oro
Cam Enterprises Inc. is privy to the contract of lease between [private
respondent] and defendant Constancio Manzano.

2. Whether or not the Court of Appeals acted without or in excess of

jurisdiction with grave abuse of discretion in declaring null and void the order
granting the writ of preliminary injunction as an interlocutory order issued by
the RTC.

The petition has no merit.

Petitioner contends that Oro Cam Enterprises is a corporation with a personality separate and distinct
from the latter and that the Court of Appeals erred in holding that petitioner is privy to the lease
agreement between private respondent and Constancio Manzano.

The argument is untenable. As the Court of Appeals pointed out in the appealed decision:

1. In the complaint for unlawful detainer filed by petitioner ACI with the MTCC of Cagayan
de Oro City, docketed as Civil Case No. 13040, it is specifically alleged that:

2. Plaintiff owns a commercial building with frontage along J.R. Borja and
Yacapin Extension Streets, Cagayan de Oro City, leased to business
establishments, some of whom are defendants herein, for uniform and fixed
period of one (1) year since 1986:

3. The latest written contracts of lease for 1-year periods between the parties
were executed on July 31, 1988, with the following particulars:

Lessee/Business Name Lease Period Monthly Rental

Constancio Manzano July 1, 1988 to P7,750.00

Oro Cam Enterprises June 30, 1989

2. In the Answer dated March 12, 1991 filed by defendant Constancio A. Manzano through
his counsel, Atty. Cesilo Adaza, he did not deny that he/Oro Cam is a lessee of petitioner
ACI, thus:

3. That it is not true that in the said contract the monthly rentals of the
defendants as stated in paragraph 3 of the complaint are to be paid by the
 defendants. What was agreed was for the following defendants to pay the
following rentals beginning July 1, 1988 and tow year thereafter to:

a. Constancio Manzano

Oro Cam Enterprises — P5,000.00

xxx xxx xxx

3. The dispositive portion of the decision rendered by MTCC reads:

WHEREFORE, premises considered, the court hereby renders judgment as

follows:

1. Dismissing complaint as against Manzano (Oro Cam), Melodia (Meltrade)

and Marcoso (Queenie's Jewelry) for lack of cause of action.

xxx xxx xxx

SO ORDERED.

Cagayan de Oro City, July 23, 1992

4. On appeal to the Regional Trial Court of Misamis Oriental (Branch 23), Cagayan de Oro
City, docketed as Civil Case No. 92-486, Oro Cam is undeniably interlinked with defendant-
appellee Manzano, to wit:

In consequence, there [are] subsisting and binding oral lease contracts

between appellant and the respective appellees during the period July 1,
1989 up to June 30, 1990; which were at the agreed monthly rates of
P10,000.00 for three (3) doors of appellant's building in the case of
Constancio Manzano (Oro Cam) and P4,000.00 each for Appellees Melodia
(Meltrade) and Marcoso (Queenie's Jewelry).

Indeed, this agreed rate of rentals is borne out by the evidence on record and
affirmed by the rebuttal evidences:

a) O.R. No. 2755 (Exh. 16) issued in the name of Oro Cam Ent. Inc. for the
declared sum of P5,000.00 for the month of December, 1989, . . .

b) Again O.R. No. 2716, (Exh. 15) in the name of Oro Cam Ent. Inc. for the
declared sum of P5,000.00 as rental for October 1989, x. . .

and the dispositive portion of the decision of said RTC reads:

. . . SETTING ASIDE the part dealing with the rest of the defendants-appellees and a new
one entered, ORDERING Defendants-appellees Constancio Manzano, FORTUNATO MELODIA,
SR. and ERNESTO MARCOSO, their heirs, assigns and representatives:

1. To vacate and surrender to plaintiff-appellant the permission question that

they respectively occupied;

2. To pay the corresponding reasonable rent of said premises from July 1,

1990, until they have fully vacated the same, at the following rates:

a) Constancio Manzano at P12,500.00 per month;

b) Melodia at P5,000.00 per month;

c) Ernesto Marcoso at P5,000.00 per month, and

 3. To pay jointly and solidarily to plaintiff-appellant the sum of P30,00.00 as
attorney's fees and P10,000.00 as litigation expenses; and the costs of the
suit.

SO ORDERED.

Cagayan de Oro City, December 27, 1993.

5. Upon the above decision having become final and executory, herein petitioner ACI filed a
motion for issuance of writ of execution specifically against defendants Constancio Manzano,
Jr. and Oro Cam Enterprises, represented by administrator/general manager Vicente
Manzano, their heirs, assigns and representatives.

6. In its "Opposition to Motion for Execution, Etc.", private respondent Oro Cam posited that
if the motion for execution is granted, it would be deprived of the possession of the
premises in question without due process as it has never been impleaded nor included as
party-defendant in ejectment case (Civil Case No. 13040). Oro Cam further contended that:

4. The Oro Cam Enterprises Inc., being an indispensable party considering

the fact that said corporation as a separate entity, is the actual possessor and
occupant of the three doors portion of the subject building should have been
impleaded as party defendant and of which the plaintiff have failed to do,
therefore, the Honorable Court has no jurisdiction over said Corporation
(Sene versus Mangubal, 156 SCRA 113 and National Development Co. versus
Court of Appeals, 211 SCRA 422).

5. The Oro Cam Enterprises Inc. has been paying religiously its rental of the
three doors portion of the subject building to Constancio Manzano and later
to the estate of Constancio Manzano by virtue of a verbal agreement thereof.

7. The letter dated May 30, 1991 addressed to the Clerk of Court of the RTC for
consignation of monthly rental of Oro Cam in the light of the refusal of collector of the
lessor to accept the same was sent by Atty. Cesilo A. Adaza as counsel for Oro Cam. Atty.
Adaza himself filed the Answer of defendant Constancio A. Manzano in the ejectment case
(Civil Case No. 13040).

8. In its motion for reconsideration filed in Civil Case No. 92-456, Oro Cam referred to itself
as defendant-appellee. While it prayed to set aside the decision of the RTC ordering
defendant Manzano, his heirs, assigns and representatives to vacate the leased premises, it
did not deny being a privy to said defendant Manzano.

It is noteworthy that the existence of the lease agreement was never denied in the answer filed on behalf
of Constancio Manzano and petitioner. What the answer questioned was amount of monthly rentals.
Throughout the proceedings in the MTCC, RTC, and in this Court in G.R. No. 116933, petitioner never
questioned the jurisdiction of the court over it. Only when the order of ejectment was sought to be
executed did petitioner raise this argument. As noted by the Court of Appeals:

Contrary to the findings of respondent court, the MTCC had jurisdiction over Oro Cam
against which the writ of execution was correctly issued. The claim of Oro Cam that it is a
corporation with a personality separate and distinct from Manzano is irrelevant. The judicial
admission of Oro Cam that it paid the monthly rentals to Constancio Manzano, the
undisputed lessee of herein petitioner, indubitably shows, without need of any further
presentation of evidence, that it is privy with defendant Manzano insofar as the leasing of
the premises in question is concerned. 4

Petitioner is thus estopped from asserting that the MTCC had not acquired jurisdiction over it. It did not
question the failure of private respondent to implead it as a party defendant. On the contrary, evidence
clearly showed that petitioner had knowledge of the existence and the pendency of the unlawful detainer
suit filed against Constancio Manzano. It would be unjust to private respondent to allow petitioner to put
in issue at this late stage the jurisdiction of the court over it. In Korean Airlines Co., Ltd. v. Court of
Appeals, 5 we held:
 While it is a rule that jurisdictional question may be raised at any time, this, however,
admits of an exception where, as in this case, estoppel has supervened. This Court has time
and again frowned upon the undesirable practice of a party submitting his case for decision
and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction
when adverse.

Moreover, petitioner admits that it has been the actual occupant of the leased premises since 1980 and it
has authorized Constancio Manzano to pay the rents for and in its behalf. In fact, it claims to have been
paying the rent religiously, effectively implying that it is a co-lessee or sub-lessee of the property. Thus, it
is still bound by the ejectment suit even if it was not named a party thereto. 6 It is well-settled that a
judgment in an ejectment suit is binding not only upon the defendants in the suit but also against those
not made parties thereto, if they are:

a) trespassers, squatters or agents of the defendant fraudulently occupying the property to

frustrate the judgment;

b) guests or other occupants of the premises with the permission of the defendant;

c) transferees pendente lite;

d) sublessee;

e) co-lessees; or

7
f) members of the family, relatives and other privies of the defendant.

Consequently, the appellate court did not act with grave abuse of discretion in annulling the trial
court's order granting the writ of preliminary injunction.

The order granting a writ of preliminary injunction is an interlocutory order; as such, it cannot by itself be
subject of an appeal or a petition for review on certiorari. 8 The proper remedy of a party aggrieved by
such an order is to bring an ordinary appeal from an adverse judgment in the main case, citing therein
the grounds for assailing the interlocutory order. However, the party concerned may file a petition for
certiorari where the assailed order is patently erroneous and appeal would not afford adequate and
expeditious relief. 9 In the instant case, the trial court issued a writ of preliminary injunction enjoining the
execution of the judgment in Civil Case No. 13040, in spite of the fact that the right of petitioner to
occupy the leased premises has been declared by final judgment to be inexistent. Having no clear legal
right, petitioner's plea should not have merited the favorable action of the trial court. The order granting
the writ of preliminary injunction was thus clearly erroneous and must be set aside. As the appellate court
succinctly explained:

We are mindful of the ruling of the Supreme Court that where the court has jurisdiction
over the subject matter, the orders or decisions pertaining to the cause are orders or
decisions within its jurisdiction and however erroneous they may be, they cannot be
corrected by certiorari. However, while certiorari is generally not available to challenge an
interlocutory order of a trial court, the Supreme Court allows certiorari as a mode of redress
where the assailed order is patently erroneous and appeal would not afford adequate and
expeditious relief. Petitioner would be made to suffer unnecessary waste of time before it
could proceed with the ejectment of its lessees and all persons, including private
respondent Oro Cam claiming under them if we opt to dismiss the petition and ignore the
patently erroneous granting of the writ of preliminary injunction and unduly impose upon
petitioner the burden of going through the proceedings with respondent court which had
evidently taken a patently erroneous view against herein petitioner's valid stand. 10

WHEREFORE, the petition is DISMISSED and the decision of the Court of Appeals is AFFIRMED.

G.R. No. 156273             October 15, 2003

HEIRS OF TIMOTEO MORENO and MARIA ROTEA, namely: ESPERANZA R. EDJEC, BERNARDA R. SUELA,
RUBY C. ROTEA, BERNARDA R. ROTEA, ELIA R. VDA. DE LIMBAGA, VIRGINIA R. ARBON, ROSALINDA R.
ARQUISOLA, CORAZON ROTEA, FE R. EBORA, CARIDAD ROTEA, ANGELES VDA. DE RENACIA, JORGE
ROTEA, MARIA LUISA ROTEA-VILLEGAS, ALFREDO R. ROTEA, represented by his heirs LIZBETH ROTEA
and ELEPETH ROTEA; LUIS ROTEA, represented by his heir JENNIFER ROTEA; and ROLANDO R. ROTEA,
represented by his heir ROLANDO R. ROTEA JR., petitioners,
vs.
MACTAN - CEBU INTERNATIONAL AIRPORT AUTHORITY, respondent.

DECISION

BELLOSILLO, J.:

THE HEIRS OF TIMOTEO MORENO AND MARIA ROTEA, petitioners herein, are the successors-in-interest of
the former registered owners of two (2) parcels of land situated in Lahug, Cebu City, designated as Lot
No. 916 with an area of 2,355 square meters under TCT No. RT-7543 (106) T-13694, and Lot No. 920
consisting of 3,097 square meters under TCT No. RT-7544 (107) T-13695.1

In 1949 the National Airport Corporation as the predecessor agency of respondent Mactan-Cebu
International Airport Authority (MCIAA) wanted to acquire Lots Nos. 916 and 920 above described among
other parcels of land for the proposed expansion of Lahug Airport. 2 To entice the landowners to cede their
properties, the government assured them that they could repurchase their lands once Lahug Airport was
closed or its operations transferred to Mactan Airport.3 Some of the landowners executed deeds of sale
with right of repurchase in favor of the government but many others, including the owners of Lots Nos.
916 and 920 herein mentioned, refused the offer because the payment was perceived to be way below
the market price.4

On 16 April 1952, as the negotiations for the purchase of the lots necessary for the expansion and
improvement of Lahug Airport irredeemably broke down, the Civil Aeronautics Administration as the
successor agency of the National Airport Corporation filed a complaint with the Court of First Instance of
Cebu, for the expropriation of Lots Nos. 916 and 920 and other subject realties, docketed as Civil Case
No. R-1881.

On 29 December 1961 the trial court promulgated its Decision in Civil Case No. R-1881 condemning Lots
Nos. 916 and 920 and other lots for public use upon payment of just compensation. 5 Petitioners’
predecessors were paid P7,065.00 for Lot No. 916 and P9,291.00 for Lot No. 920 with consequential
damages by way of legal interest from 16 November 1947. No appeal was taken from the Decision on
Lots Nos. 916 and 920, and the judgment of condemnation became final and executory. 6 Thereafter, the
certificates of title for these parcels of land were issued in the name of the Republic of the Philippines
under TCT No. 58691 for Lot No. 916 and TCT No. 58692 for Lot No. 920, which under RA 6958 (1990)
were subsequently transferred in favor of respondent MCIAA. 7

At the end of 1991, or soon after the transfer of Lots Nos. 916 and 920 to MCIAA, Lahug Airport ceased
operations as the Mactan Airport was opened for incoming and outgoing flights. 8 Lots Nos. 916 and 920
which had been expropriated for the extension of Lahug Airport were not utilized. 9 In fact, no expansion of
Lahug Airport was undertaken by MCIAA and its predecessors-in-interest. 10 Hence, petitioners wrote then
President Fidel V. Ramos and the airport manager begging them for the exercise of their alleged right to
repurchase Lots Nos. 916 and 920.11 Their pleas were not heeded.12

On 11 March 1997 petitioners filed a complaint for reconveyance and damages with RTC of Cebu City
against respondent MCIAA to compel the repurchase of Lots Nos. 916 and 920, docketed as Civil Case No.
CEB-20015. In the main, petitioners averred that they had been convinced by the officers of the
predecessor agency of respondent MCIAA not to oppose the expropriation proceedings since in the future
they could repurchase the properties if the airport expansion would not push through. MCIAA did not
object to petitioners’ evidence establishing these allegations.

When the civil case was pending, one Richard E. Enchuan filed a Motion for Transfer of Interest alleging
that he acquired through deeds of assignment the rights of some of herein petitioners over Lots Nos. 916
and 920.13 The Department of Public Works and Highways (DPWH) also sought to intervene in the civil
case claiming that it leased in good faith Lot No. 920 from the predecessor agencies of respondent MCIAA
and that it built thereon its Regional Equipment Services and its Region 7 Office. 14

On 12 April 1999 the trial court found merit in the claims of petitioners and granted them the right to
repurchase the properties at the amount pegged as just compensation in Civil Case No. R-1881 but
subject to the alleged property rights of Richard E. Enchuan and the leasehold of DPWH. 15 The trial court
opined that the expropriation became illegal or functus officio when the purpose for which it was intended
was no longer there.16
Respondent MCIAA appealed the Decision of the trial court to the Court of Appeals, docketed as CA-G.R.
CV No. 64456.1ªvvphi1.nét

On 20 December 2001 the Court of Appeals reversed the assailed Decision on the ground that the
judgment of condemnation in Civil Case No. R-1881 was unconditional so that the rights gained therefrom
by respondent MCIAA were indicative of ownership in fee simple.17 The appellate court cited Fery v.
Municpality of Cabanatuan18 which held that mere deviation from the public purpose for which the power
of eminent domain was exercised does not justify the reversion of the property to its former owners, and
Mactan-Cebu International Airport Authority v. Court of Appeals 19 which is allegedly stare decisis to the
instant case to prevent the exercise of the right of repurchase as the former dealt with a parcel of land
similarly expropriated under Civil Case No. R-1881.20

21
On 28 November 2002 reconsideration of the Decision was denied. Hence, this petition for review.

Petitioners argue that Fery v. Municpality of Cabanatuan does not apply to the case at bar since what was
involved therein was the "right of reversion" and not the "right of repurchase" which they are invoking.
They also differentiate Mactan-Cebu International Airport Authority v. Court of Appeals 22 from the instant
case in that the landowners in the MCIAA case offered inadmissible evidence to show their entitlement to
a right of repurchase, while petitioners herein offered evidence based on personal knowledge for which
reason MCIAA did not object and thus waived whatever objection it might have had to the admissibility
thereof. Finally, petitioners allege that their right to equal protection of the laws would be infringed if
some landowners are given the right to repurchase their former properties even as they are denied the
exercise of such prerogative.

On the other hand, respondent MCIAA clings to our decisions in Fery v. Municpality of Cabanatuan and
Mactan-Cebu International Airport Authority v. Court of Appeals. According to respondent MCIAA "there is
only one instance when expropriated land may be repurchased by its previous owners, and that is, if the
decision of expropriation itself provides [the] condition for such repurchase." Respondent asserts that the
Decision in Civil Case No. R-1881 is absolute and without conditions, thus, no repurchase could be validly
exercised.

This is a difficult case calling for a difficult but just solution. To begin with, there exists an undeniable
historical narrative that the predecessors of respondent MCIAA had suggested to the landowners of the
properties covered by the Lahug Airport expansion scheme that they could repurchase their properties at
the termination of the airport’s venture.23 Some acted on this assurance and sold their properties;24 other
landowners held out and waited for the exercise of eminent domain to take its course until finally coming
to terms with respondent’s predecessors that they would not appeal nor block further the judgment of
condemnation if the same right of repurchase was extended to them.25 A handful failed to prove that they
acted on such assurance when they parted with the ownership of their lands. 26

In resolving this dispute, we must reckon with the rulings of this Court in Fery v. Municpality of
Cabanatuan and Mactan-Cebu International Airport Authority v. Court of Appeals, which define the rights
and obligations of landowners whose properties were expropriated when the public purpose for which
eminent domain was exercised no longer subsists. In Fery, which was cited in the recent case of Reyes v.
Court of Appeals,27 we declared that the government acquires only such rights in expropriated parcels of
land as may be allowed by the character of its title over the properties -

If x x x land is expropriated for a particular purpose, with the condition that when that purpose is ended
or abandoned the property shall return to its former owner, then, of course, when the purpose is
terminated or abandoned the former owner reacquires the property so expropriated. If x x x land is
expropriated for a public street and the expropriation is granted upon condition that the city can only use
it for a public street, then, of course, when the city abandons its use as a public street, it returns to the
former owner, unless there is some statutory provision to the contrary x x x x If, upon the contrary,
however, the decree of expropriation gives to the entity a fee simple title, then, of course, the land
becomes the absolute property of the expropriator, whether it be the State, a province, or municipality,
and in that case the non-user does not have the effect of defeating the title acquired by the expropriation
proceedings x x x x When land has been acquired for public use in fee simple, unconditionally, either by
the exercise of eminent domain or by purchase, the former owner retains no rights in the land, and the
public use may be abandoned, or the land may be devoted to a different use, without any impairment of
the estate or title acquired, or any reversion to the former owner x x x x28

In Mactan-Cebu International Airport Authority, respondent Chiongbian sought to enforce an alleged right
of repurchase over her properties that had been expropriated in Civil Case No. R-1881. This Court did not
allow her to adduce evidence of her claim, for to do so would unsettle as to her properties the judgment
of condemnation in the eminent domain proceedings. We also held therein that Chiongbian’s evidence was
both inadmissible and lacking in probative value -

The terms of the judgment are clear and unequivocal and grant title to Lot No. 941 in fee simple to the
Republic of the Philippines. There was no condition imposed to the effect that the lot would return to
CHIONGBIAN or that CHIONGBIAN had a right to repurchase the same if the purpose for which it was
expropriated is ended or abandoned or if the property was to be used other than as the Lahug Airport.
CHIONGBIAN cannot rely on the ruling in Mactan-Cebu International Airport vs. Court of Appeals wherein
the presentation of parol evidence was allowed to prove the existence of a written agreement containing
the right to repurchase. Said case did not involve expropriation proceedings but a contract of sale x x x x
To permit CHIONGBIAN to prove the existence of a compromise settlement which she claims to have
entered into with the Republic of the Philippines prior to the rendition of judgment in the expropriation
case would result in a modification of the judgment of a court which has long become final and executory
x x x x And even assuming for the sake of argument that CHIONGBIAN could prove the existence of the
alleged written agreement acknowledging her right to repurchase Lot No. 941 through parol evidence, the
Court of Appeals erred in holding that the evidence presented by CHIONGBIAN was admissible x x x x
Aside from being inadmissible under the provisions of the Statute of Frauds, [the] testimonies are also
inadmissible for being hearsay in nature x x x x29

We adhere to the principles enunciated in Fery and in Mactan-Cebu International Airport Authority, and do
not overrule them. Nonetheless the weight of their import, particularly our ruling as regards the properties
of respondent Chiongbian in Mactan-Cebu International Airport Authority, must be commensurate to the
facts that were established therein as distinguished from those extant in the case at bar. Chiongbian put
forth inadmissible and inconclusive evidence, while in the instant case we have preponderant proof as
found by the trial court of the existence of the right of repurchase in favor of petitioners.

Moreover, respondent MCIAA has brought to our attention a significant and telling portion in the Decision
in Civil Case No. R-1881 validating our discernment that the expropriation by the predecessors of
respondent was ordered under the running impression that Lahug Airport would continue in operation -

As for the public purpose of the expropriation proceeding, it cannot now be doubted. Although Mactan
Airport is being constructed, it does not take away the actual usefulness and importance of the Lahug
Airport: it is handling the air traffic both civilian and military. From it aircrafts fly to Mindanao and Visayas
and pass thru it on their flights to the North and Manila. Then, no evidence was adduced to show how
soon is the Mactan Airport to be placed in operation and whether the Lahug Airport will be closed
immediately thereafter. It is up to the other departments of the Government to determine said matters.
The Court cannot substitute its judgment for those of the said departments or agencies. In the absence of
such showing, the Court will presume that the Lahug Airport will continue to be in operation (emphasis
supplied).301awphi1.nét

While the trial court in Civil Case No. R-1881 could have simply acknowledged the presence of public
purpose for the exercise of eminent domain regardless of the survival of Lahug Airport, the trial court in
its Decision chose not to do so but instead prefixed its finding of public purpose upon its understanding
that "Lahug Airport will continue to be in operation." Verily, these meaningful statements in the body of
the Decision warrant the conclusion that the expropriated properties would remain to be so until it was
confirmed that Lahug Airport was no longer "in operation." This inference further implies two (2) things:
(a) after the Lahug Airport ceased its undertaking as such and the expropriated lots were not being used
for any airport expansion project, the rights vis-à-vis the expropriated Lots Nos. 916 and 920 as between
the State and their former owners, petitioners herein, must be equitably adjusted; and, (b) the foregoing
unmistakable declarations in the body of the Decision should merge with and become an intrinsic part of
the fallo thereof which under the premises is clearly inadequate since the dispositive portion is not in
accord with the findings as contained in the body thereof.31

Significantly, in light of the discussion above, the admission of petitioners during the pre-trial of Civil Case
No. CEB-20015 for reconveyance and damages that respondent MCIAA was the absolute owner of Lots
Nos. 916 and 920 does not prejudice petitioners’ interests. This is as it should be not only because the
admission concerns a legal conclusion fiercely debated by the parties 32 but more so since respondent was
truly the absolute owner of the realties until it was apparent that Lahug Airport had stopped doing
business.

To sum up what we have said so far, the attendance in the case at bar of standing admissible evidence
validating the claim of petitioners as well as the portions above-quoted of the Decision in the
expropriation case volunteered no less than by respondent itself, takes this case away from the ambit of
Mactan-Cebu International Airport Authority v. Court of Appeals 33 but within the principles enunciated in
Fery as mentioned earlier. In addition, there should be no doubt that our present reading of the fallo of
the Decision in Civil Case No. R-1881 spoo as to include the statements in the body thereof afore-quoted
is sanctioned by the rule that a final and executory judgment may nonetheless be "clarified" by reference
to other portions of the decision of which it forms a part. In Republic v. De Los Angeles 34 we ruled -

This Court has promulgated many cases x x x wherein it was held that a judgment must not be read
separately but in connection with the other portions of the decision of which it forms a part. Hence x x x
the decision of the court below should be taken as a whole and considered in its entirety to get the true
meaning and intent of any particular portion thereof x x x x Neither is this Court inclined to confine itself
to a reading of the said fallo literally. On the contrary, the judgment portion of a decision should be
interpreted and construed in harmony with the ratio decidendi thereof x x x x As stated in the case of
Policarpio vs. Philippine Veterans Board, et al., supra, to get the true intent and meaning of a decision, no
specific portion thereof should be resorted to but the same must be considered in its entirety. Hence, a
resolution or ruling may and does appear in other parts of the decision and not merely in the fallo thereof
x x x x The foregoing pronouncements find support in the case of Locsin, et al. vs. Paredes, et al., 63
Phil., 87, 91-92, wherein this Court allowed a judgment that had become final and executory to be
"clarified" by supplying a word which had been inadvertently omitted and which, when supplied, in effect
changed the literal import of the original phraseology x x x x This is so because, in the first place, if an
already final judgment can still be amended to supply an omission committed through oversight, this
simply means that in the construction or interpretation of an already final decision, the fallo or dispositive
portion thereof must be correlated with the body of such final decision x x x x [I]f an amendment may be
allowed after a decision has already become final x x x such amendment may consist x x x either in the x
x x interpretation of an ambiguous phrase therein in relation to the body of the decision which gives it
life.35

We now resolve to harmonize the respective rights of the State and petitioners to the expropriated Lots
Nos. 916 and 920.

Mactan-Cebu International Airport Authority 36 is correct in stating that one would not find an express
statement in the Decision in Civil Case No. R-1881 to the effect that "the [condemned] lot would return to
[the landowner] or that [the landowner] had a right to repurchase the same if the purpose for which it
was expropriated is ended or abandoned or if the property was to be used other than as the Lahug
Airport." This omission notwithstanding, and while the inclusion of this pronouncement in the judgment of
condemnation would have been ideal, such precision is not absolutely necessary nor is it fatal to the cause
of petitioners herein. No doubt, the return or repurchase of the condemned properties of petitioners could
be readily justified as the manifest legal effect or consequence of the trial court’s underlying presumption
that "Lahug Airport will continue to be in operation" when it granted the complaint for eminent domain
and the airport discontinued its activities.

The predicament of petitioners involves a constructive trust, one that is akin 37 to the implied trust referred
to in Art. 1454 of the Civil Code, "If an absolute conveyance of property is made in order to secure the
performance of an obligation of the grantor toward the grantee, a trust by virtue of law is established. If
the fulfillment of the obligation is offered by the grantor when it becomes due, he may demand the
reconveyance of the property to him." In the case at bar, petitioners conveyed Lots Nos. 916 and 920 to
the government with the latter obliging itself to use the realties for the expansion of Lahug Airport; failing
to keep its bargain, the government can be compelled by petitioners to reconvey the parcels of land to
them, otherwise, petitioners would be denied the use of their properties upon a state of affairs that was
not conceived nor contemplated when the expropriation was authorized.

Although the symmetry between the instant case and the situation contemplated by Art. 1454 is not
perfect, the provision is undoubtedly applicable. For, as explained by an expert on the law of trusts: "The
only problem of great importance in the field of constructive trusts is to decide whether in the numerous
and varying fact situations presented to the courts there is a wrongful holding of property and hence a
threatened unjust enrichment of the defendant." 38 Constructive trusts are fictions of equity which are
bound by no unyielding formula when they are used by courts as devices to remedy any situation in which
the holder of the legal title may not in good conscience retain the beneficial interest. 39

In constructive trusts, the arrangement is temporary and passive in which the trustee’s sole duty is to
transfer the title and possession over the property to the plaintiff-beneficiary. 40 Of course, the "wronged
party seeking the aid of a court of equity in establishing a constructive trust must himself do equity." 41
Accordingly, the court will exercise its discretion in deciding what acts are required of the plaintiff-
beneficiary as conditions precedent to obtaining such decree and has the obligation to reimburse the
trustee the consideration received from the latter just as the plaintiff-beneficiary would if he proceeded on
the theory of rescission.42 In the good judgment of the court, the trustee may also be paid the necessary
expenses he may have incurred in sustaining the property, his fixed costs for improvements thereon, and
the monetary value of his services in managing the property to the extent that plaintiff-beneficiary will
secure a benefit from his acts.43

The rights and obligations between the constructive trustee and the beneficiary, in this case, respondent
MCIAA and petitioners over Lots Nos. 916 and 920, are echoed in Art. 1190 of the Civil Code, "When the
conditions have for their purpose the extinguishment of an obligation to give, the parties, upon the
fulfillment of said conditions, shall return to each other what they have received x x x x In case of the
loss, deterioration or improvement of the thing, the provisions which, with respect to the debtor, are laid
down in the preceding article shall be applied to the party who is bound to return x x x x"

Hence, respondent MCIAA as representative of the State is obliged to reconvey Lots Nos. 916 and 920 to
petitioners who shall hold the same subject to existing liens thereon, i.e., leasehold right of DPWH. In
return, petitioners as if they were plaintiff-beneficiaries of a constructive trust must restore to respondent
MCIAA what they received as just compensation for the expropriation of Lots Nos. 916 and 920 in Civil
Case No. R-1881, i.e., P7,065.00 for Lot No. 916 and P9,291.00 for Lot No. 920 with consequential
damages by way of legal interest from 16 November 1947. Petitioners must likewise pay respondent
MCIAA the necessary expenses it may have incurred in sustaining the properties and the monetary value
of its services in managing them to the extent that petitioners will be benefited thereby. The government
however may keep whatever income or fruits it may have obtained from the parcels of land, in the same
way that petitioners need not account for the interests that the amounts they received as just
compensation may have earned in the meantime. As a matter of justice and convenience, the law
considers the fruits and interests as the equivalent of each other.44

Under Art. 1189 of the Civil Code, "If the thing is improved by its nature, or by time, the improvement
shall inure to the benefit of the creditor x x x," the creditor being the person who stands to receive
something as a result of the process of restitution. Consequently, petitioners as creditors do not have to
settle as part of the process of restitution the appreciation in value of Lots Nos. 916 and 920 which is the
natural consequence of nature and time.

Petitioners need not also pay for improvements introduced by third parties, i.e., DPWH, as the disposition
of these properties is governed by existing contracts and relevant provisions of law. As for the
improvements that respondent MCIAA may have made on Lots Nos. 916 and 920, if any, petitioners must
pay respondent their prevailing free market price in case petitioners opt to buy them and respondent
decides to sell. In other words, if petitioners do not want to appropriate such improvements or respondent
does not choose to sell them, the improvements would have to be removed without any obligation on the
part of petitioners to pay any compensation to respondent MCIAA for whatever it may have tangibly
introduced therein.45

The medium of compensation for the restitution shall be ready money or cash payable within a period of
three hundred sixty five (365) days from the date that the amount to be returned by petitioners is
determined with finality, unless the parties herein stipulate and agree upon a different scheme, medium
or schedule of payment. If after the period of three hundred sixty five (365) days or the lapse of the
compromise scheme or schedule of payment such amount owed is not settled, the right of repurchase of
petitioners and the obligation of respondent MCIAA to reconvey Lots Nos. 916 and 920 and/or the latter’s
improvements as set forth herein shall be deemed forfeited and the ownership of those parcels of land
shall vest absolutely upon respondent MCIAA.

Finally, we delete the award of P60,000.00 for attorney’s fees and P15,000.00 for litigation expenses in
favor of petitioners as decreed in the assailed Decision of 12 April 1999 of the trial court. It is not sound
public policy to set a premium upon the right to litigate where such right is exercised in good faith, as in
the present case, albeit the decision to resist the claim is erroneous. 46

The rule on awards of attorney’s fees and litigation expenses is found in Art. 2208 of the Civil Code -

In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot
be recovered, except:

(1) When exemplary damages are awarded;

 (2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons
or to incur expenses to protect his interests;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's
valid and demandable claim;1awphi1.nét

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen's compensation and employer's liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney's fees and
expenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable.

As noted in Mirasol v. De la Cruz,47 Art. 2208 intends to retain the award of attorney’s fees as the
exception in our law and the general rule remains that attorney’s fees are not recoverable in the absence
of a stipulation thereto.

In the case at bar, considering the established absence of any stipulation regarding attorney’s fees, the
trial court cannot base its award on any of the exceptions enumerated in Art. 2208. The records of the
instant case do not disclose any proof presented by petitioners to substantiate that the actuations of
respondent MCIAA were clearly unfounded or purely for the purpose of harassment; neither does the trial
court make any finding to that effect in its appealed Decision.

While Art. 2208, par. (4), allows attorney’s fees in cases of clearly unfounded civil actions, this exception
must be understood to mean those where the defenses are so untenable as to amount to gross and
evident bad faith. Evidence must be presented to the court as to the facts and circumstances constituting
the alleged bad faith, otherwise, the award of attorney’s fees is not justified where there is no proof other
than the bare statement of harassment that a party to be so adjudged had acted in bad faith. The
exercise of judicial discretion in the award of attorney’s fees under Art. 2208, par. (11), demands a
factual, legal or equitable justification that would bring the case within the exception and justify the grant
of such award.

WHEREFORE, the instant Petition for Review is GRANTED. The Decision of the Court of Appeals in CA-G.R.
CV No. 64456 dated 20 December 2001 and its Resolution of 28 November 2002 denying reconsideration
of the Decision are REVERSED and SET ASIDE.

The Decision of RTC-Br. 19 of Cebu City dated 12 April 1999 in Civil Case No. CEB-20015 is MODIFIED IN
PART by -

(a) ORDERING respondent Mactan-Cebu International Airport Authority (MCIAA) TO RECONVEY to

petitioner Heirs of Timoteo Moreno and Maria Rotea, namely: Esperanza R. Edjec, Bernarda R.
Suela, Ruby C. Rotea, Bernarda R. Rotea, Elia R. Vda De Limbaga, Virginia R. Arbon, Rosalinda R.
Arquisola, Corazon Rotea, Fe R. Ebora, Caridad Rotea, Angeles Vda. De Renacia, Jorge Rotea,
Maria Luisa Rotea-Villegas, Alfredo R. Rotea, represented by his heirs, namely: Lizbeth Rotea and
Elepeth Rotea; Luis Rotea, represented by his heir Jennifer Rotea; and Rolando R. Rotea,
represented by his heir Rolando R. Rotea Jr., Lot No. 916 with an area of 2,355 square meters and
Lot No. 920 consisting of 3,097 square meters in Lahug, Cebu City, with all the improvements
thereon evolving through nature or time, but excluding those that were introduced by third parties,
i.e., DPWH, which shall be governed by existing contracts and relevant provisions of law;
 (b) ORDERING petitioner Heirs of Timoteo Moreno and Maria Rotea TO PAY respondent MCIAA
what the former received as just compensation for the expropriation of Lots Nos. 916 and 920 in
Civil Case No. R-1881, i.e., P7,065.00 for Lot No. 916 and P9,291.00 for Lot No. 920 with
consequential damages by way of legal interest from 16 November 1947. Petitioners must likewise
PAY respondent MCIAA the necessary expenses that the latter may have incurred in sustaining the
properties and the monetary value of its services in managing the properties to the extent that
petitioners will secure a benefit from such acts. Respondent MCIAA however may keep whatever
income or fruits it may have obtained from the parcels of land, in the same way that petitioners
need not account for the interests that the amounts they received as just compensation may have
earned in the meantime;

(c) ORDERING respondent MCIAA TO CONVEY to petitioners the improvements it may have built
on Lots Nos. 916 and 920, if any, in which case petitioners SHALL PAY for these improvements at
the prevailing free market price, otherwise, if petitioners do not want to appropriate such
improvements, or if respondent does not choose to sell them, respondent MCIAA SHALL REMOVE
these improvements WITHOUT ANY OBLIGATION on the part of petitioners to pay any
compensation to respondent MCIAA for them;

(d) ORDERING petitioners TO PAY the amount so determined under letter (b) of this dispositive
portion as consideration for the reconveyance of Lots Nos. 916 and 920, as well as the prevailing
free market price of the improvements built thereon by respondent MCIAA, if any and desired to be
bought and sold by the parties, in ready money or cash PAYABLE within a period of three hundred
sixty five (365) days from the date that the amount under letter (b) above is determined with
finality, unless the parties herein stipulate a different scheme or schedule of payment, otherwise,
after the period of three hundred sixty five (365) days or the lapse of the compromise scheme or
schedule of payment and the amount so payable is not settled, the right of repurchase of
petitioners and the obligation of respondent MCIAA to so reconvey Lots Nos. 916 and 920 and/or
the improvements shall be DEEMED FORFEITED and the ownership of those parcels of land shall
VEST ABSOLUTELY upon respondent MCIAA;

(e) REMANDING the instant case to RTC-Br. 19 of Cebu City for purposes of determining the
amount of compensation for Lots Nos. 916 and 920 to be paid by petitioners as mandated in letter
(b) hereof, and the value of the prevailing free market price of the improvements built thereon by
respondent MCIAA, if any and desired to be bought and sold by the parties, and in general,
securing the immediate execution of this Decision under the premises;

(f) ORDERING petitioners to respect the right of the Department of Public Works and Highways to
its lease contract until the expiration of the lease period; and

(g) DELETING the award of P60,000.00 for attorney’s fees and P15,000.00 for litigation expenses
against respondent MCIAA and in favor of petitioners.

This Decision is without prejudice to the claim of intervenor one Richard E. Enchuan on his allegation that
he acquired through deeds of assignment the rights of some of herein petitioners over Lots Nos. 916 and
920.

G.R. No. 156273. August 9, 2005

HEIRS OF TIMOTEO MORENO and MARIA ROTEA, namely, ESPERANZA R. EDJEC, BERNARDA R. SUELA,
RUBY C. ROTEA, BERNARDA R. ROTEA, ELIA R. VDA. DE LIMBAGA, VIRGINIA R. ARBON, ROSALINDA R.
ARQUISOLA, CORAZON ROTEA, FE R. EBORA, CARIDAD ROTEA, ANGELES VDA. DE RENACIA, JORGE
ROTEA, MARIA LUISA ROTEA-VILLEGAS, ALFREDO R. ROTEA, represented by his heirs, namely, LIZBETH
ROTEA and ELEPETH ROTEA; LUIS ROTEA, represented by his heir JENNIFER ROTEA; and ROLANDO R.
ROTEA, represented by his heir ROLANDO R. ROTEA, JR., Petitioners,
vs.
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY, Respondent.

RESOLUTION

CALLEJO, SR., J.:

This is a Motion for Reconsideration dated November 10, 2003 filed by respondent Mactan-Cebu
International Airport Authority (MCIAA), through the Office of the Solicitor General (OSG), seeking the
reversal of the Decision1 dated October 15, 2003,2 the dispositive portion of which reads:

WHEREFORE, the instant Petition for Review is GRANTED. The Decision of the Court of Appeals in CA-G.R.
CV No. 64456 dated 20 December 2001 and its Resolution of 28 November 2002, denying reconsideration
of the Decision are REVERSED and SET ASIDE.

The Decision of RTC-Br. 19 of Cebu City dated 12 April 1999 in Civil Case No. CEB 20015 is MODIFIED IN
PART by –

(a) ORDERING respondent Mactan-Cebu International Airport Authority (MCIAA) TO RECONVEY to

petitioner Heirs of Timoteo Moreno and Maria Rotea, namely: Esperanza R. Edjec, Bernarda R. Suela,
Ruby C. Rotea, Bernarda R. Rotea, Elia R. Vda. de Limbaga, Virginia R. Arbon, Rosalinda R. Arquisola,
Corazon Rotea, Fe R. Ebora, Caridad Rotea, Angeles Vda. de Renacia, Jorge Rotea, Maria Luisa Rotea-
Villegas, Alfredo R. Rotea, represented by his heirs, namely: Lizbeth Rotea and Elepeth Rotea; Luis Rotea,
represented by his heir Jennifer Rotea; and Rolando R. Rotea, represented by his heir Rolando R. Rotea,
Jr., Lot No. 916 with an area of 2,355 square meters and Lot No. 920 consisting of 3,097 square meters
in Lahug, Cebu City, with all the improvements thereon evolving through nature or time, but excluding
those that were introduced by third parties, i.e., DPWH, which shall be governed by existing contracts and
relevant provisions of law;

(b) ORDERING petitioner Heirs of Timoteo Moreno and Maria Rotea TO PAY respondent MCIAA what the
former received as just compensation for the expropriation of Lot Nos. 916 and 920 in Civil Case No. R-
1881, i.e., P7,065.00 for Lot No. 916 and P9,291.00 for Lot No. 920 with consequential damages by way
of legal interest from 16 November 1947. Petitioners must likewise PAY respondent MCIAA the necessary
expenses that the latter may have incurred in sustaining the properties and the monetary value of its
services in managing the properties to the extent that petitioners will secure a benefit from such acts.
Respondent MCIAA however may keep whatever income or fruits it may have obtained from the parcels of
land, in the same way that petitioners need not account for the interests that the amounts they received
as just compensation may have earned in the meantime;

(c) ORDERING respondent MCIAA TO CONVEY to petitioners the improvements it may have built on Lot
Nos. 916 and 920, if any, in which case petitioners SHALL PAY for these improvements at the prevailing
free market price, otherwise, if petitioners do not want to appropriate such improvements, or if
respondent does not choose to sell them, respondent MCIAA SHALL REMOVE these improvements
WITHOUT ANY OBLIGATION on the part of petitioners to pay any compensation to respondent MCIAA
from them;

(d) ORDERING petitioners TO PAY the amount so determined under letter (b) of this dispositive portion as
consideration for the reconveyance of Lot Nos. 916 and 920, as well as the prevailing free market price of
the improvements built thereon by respondent MCIAA, if any and desired to be bought and sold by the
parties, in ready money or cash PAYABLE within a period of three hundred sixty-five (365) days from the
date that the amount under letter (b) above is determined with finality, unless the parties herein stipulate
a different scheme or schedule of payment, otherwise, after the period of three hundred sixty-five (365)
days or the lapse of the compromise scheme or schedule of payment and the amount so payable is not
settled, the right of repurchase of petitioners and the obligation of respondent MCIAA to so reconvey Lot
Nos. 916 and 920 and/or the improvements shall be DEEMED FORFEITED and the ownership of those
parcels of land shall VEST ABSOLUTELY upon the respondent MCIAA;

(e) REMANDING the instant case to RTC-Br. 19 of Cebu City for purposes of determining the amount of
compensation for Lot Nos. 916 and 920 to be paid by petitioners as mandated in letter (b) hereof, and the
value of the prevailing free market price of the improvements built thereon by respondent MCIAA, if any
and desired to be bought and sold by the parties, and in general, securing the immediate execution of this
Decision under the premises;

(f) ORDERING petitioners to respect the right of the Department of Public Works and Highways to its lease
contract until the expiration of the lease period; and

(g) DELETING the award of P60,000.00 for attorney’s fees and P15,000.00 for litigation expenses against
respondent MCIAA and in favor of petitioners.
This Decision is without prejudice to the claim of intervenor one Richard E. Enchuan on his allegation that
he acquired through deeds of assignment the rights of some of herein petitioners over Lot Nos. 916 and
920.

No costs.

SO ORDERED.3

A review of the factual milieu of the case reveals that in 1949, the National Airport Corporation (NAC), as
the predecessor of herein respondent MCIAA, sought to acquire Lot No. 916, having a total area of 2,355
square meters under Transfer Certificate of Title (TCT) No. RT-7543 (106) T-13694, and Lot No. 920
containing an area of 3,097 square meters covered by TCT No. RT-7544 (107) T-13695 for the proposed
expansion of the Lahug Airport. The two parcels of land located in Lahug, Cebu City were owned by the
spouses Timoteo Moreno and Maria Rotea.4 The spouses refused to sell their properties because the
proposed price was unacceptably way below the market value of the lands at that time. As an incentive
for the other owners to cede their lots adjoining the then existing Lahug Airport, NAC guaranteed them or
their successors-in-interest the right to repurchase their properties for the same price paid by the
government in the event that these properties were no longer used for purposes of the airport. 5 Some
landowners executed deeds of conveyance while others who refused to cede their properties became
defendants in an action for expropriation filed by the Republic of the Philippines before the Court of First
Instance (CFI) of Cebu, docketed as Civil Case No. R-1881.6 Lot Nos. 916 and 920 were among those
included in the expropriation case.

In a Decision7 rendered by the trial court on December 29, 1961, Lot Nos. 916 and 920, along with the
other adjoining lands, were condemned for public use after payment of just compensation. 8 The trial court
fixed the price at P3.00 per square meter for the two lots and ordered the payment thereof to the owners
in the sum of P7,065.00 for Lot No. 916 and P9,291.00 for Lot No. 920, with payment of consequential
damages by way of legal interest from November 16, 1947.9 Thereafter, the subject lands were
transferred in the name of the Republic of the Philippines under TCT No. 58691 10 for Lot No. 916 and TCT
No. 5869211 for Lot No. 920 and subsequently turned over to MCIAA under Republic Act (Rep. Act) No.
6958 in 1990.12

Subsequently, the Lahug Airport was abandoned and all its functions and operations were transferred to
the Mactan Airport. In two various letters sent on different dates, the heirs of Timoteo Moreno and Maria
Rotea, the petitioners herein, wrote then President Fidel V. Ramos13 and the MCIAA General Manager,14
requesting for the exercise of their supposed right to repurchase Lot Nos. 916 and 920 considering that
the said lots intended for the expansion of the Lahug Airport were not utilized. Their written and verbal
demands were ignored by the respondent.

Consequently, the petitioners filed a complaint for reconveyance and damages with the Regional Trial
Court of Cebu City docketed as Civil Case No. CEB-20015, against the respondent asserting their right to
reacquire the subject properties. In the complaint, the petitioners claimed that assurances were given by
the NAC officials regarding the entitlement of the landowners to repurchase their properties for the same
price paid by NAC in the event that the lots were no longer used for airport purposes. 15 The petitioners
further added that the guaranty of right to repurchase was the propelling factor that persuaded the
registered owners to continue with the expropriation proceedings. The same reason was given by the
petitioners for not opposing and appealing the case later on.16

During the pendency of the case, one Richard E. Unchuan filed a Motion for Transfer of Interest, 17 alleging
that some of the petitioners had already assigned to him their respective rights, interests, participation,
and ownership over the subject properties. Thereafter, the Department of Public Works and Highways
(DPWH), likewise, sought to intervene alleging that it is the lessee of Lot No. 920 and would be adversely
affected by the outcome of the litigation.18

At the start of the trial, the petitioners presented two witnesses to support their allegations in the
complaint. The first witness was Esperanza Rotea Edjec, who testified that when she was just 22 years
old, the airport authority representatives called for a meeting with the landowners affected by the
expropriation. The witness was present during the gathering and attested that the registered owners of
the lots were assured of the return of the expropriated lands should the same be no longer utilized as an
airport.19

The next witness was Asterio Uy, a retired government employee of the Civil Aeronautics Administration
(CAA), who attested that in 1957, he was sent as part of the legal team to Mactan, Cebu City, tasked to
acquire certain lots for the extension of the Lahug Airport. He added that when the negotiations broke
down, the legal contingent resorted to expropriation proceedings. Upon instructions from the central office
of CAA in Manila, Atty. Ocampo, the head of the legal corps which undertook the procurement of the
subject lands, gave the assurance to the landowners that if the airport is transferred to Mactan, the lots
will be returned to their previous owners.20

The respondent, on the other hand, presented on the witness stand Michael M. Bacarisas, a legal assistant
of the MCIAA. The witness testified that as a consequence of the expropriation proceedings, the TCTs of
Lot Nos. 916 and 920 were cancelled and in lieu thereof, new ones were issued in the name of the
Republic of the Philippines in 1962. He pronounced that the decision in Civil Case No. R-1881 did not
expressly impart that the landowners were guaranteed the reconveyance of the lots to them if the lands
expropriated would not be used for the purpose. On cross-examination, the witness admitted that he had
no personal knowledge of any agreement between the airport officials and the previous registered owners
of the disputed properties. His research likewise revealed that a total of 65 lots were expropriated by the
government; 19 lots were the subject of court litigations concerning their reconveyance; and that out of
the 19 lots, 15 lots were already returned to their former owners. Moreover, Bacarisas alleged that some
of the expropriated lots were recovered by their previous landowners because they were acquired through
negotiated sale wherein the standard contract had an express provision that should the proposed
expansion of the Lahug Airport not materialize, the landowners may recover their properties. 21

On April 12, 1999, the trial court rendered judgment 22 in favor of the petitioners, granting them the right
to repurchase the properties at the amount originally paid by the respondent in Civil Case No. R-1881,
including consequential damages. The trial court ruled that the public purpose for which the lands were
expropriated had ceased to exist, therefore, it is but logical and in the higher interest of substantial justice
to give back the right of ownership of the subject lots to the former owners.

Aggrieved, the respondent appealed the decision to the Court of Appeals (CA). On December 20, 2001,
the CA reversed the trial court’s decision on the premise that the judgment affirming the state’s right to
exercise its power of eminent domain was unconditional. In maintaining a contrary view, the CA cited Fery
v. Municipality of Cabanatuan,23 which held that when a land has been acquired for public use
unconditionally and in fee simple, the previous owner retains no right in the land and the title obtained
will not, in any way, be impaired. Another case relied upon by the appellate court was Mactan-Cebu
International Airport Authority v. Court of Appeals24 which is allegedly stare decisis to the case to prevent
the exercise of the right of repurchase as the former dealt with a parcel of land similarly expropriated
under Civil Case No. R-1881; hence, the same questions relating to the same event have already been
previously litigated and decided by a competent court.

On February 11, 2002, the petitioners filed a motion for reconsideration before the CA, which was denied
in a Resolution dated November 28, 2002.

Expectedly, the petitioners filed before this Court a petition for review of the decision of the CA.

In reversing the decision of the CA, the Court ratiocinated that the attendance in the case at bar of
standing admissible evidence validating the claim of the petitioners’ right to repurchase the expropriated
properties took away the instant case from the ambit of Mactan-Cebu International Airport Authority v.
Court of Appeals, but still within the principles enunciated in the Fery case.25 This Court moreover added:

Mactan-Cebu International Airport Authority is correct in stating that one would not find an express
statement in the Decision in Civil Case No. R-1881 to the effect that "the [condemned] lot would return to
[the landowner] or that [the landowner] had a right to repurchase the same if the purpose for which it
was expropriated is ended or abandoned or if the property was to be used other than as the Lahug
Airport." This omission notwithstanding, and while the inclusion of this pronouncement in the judgment of
condemnation would have been ideal, such precision is not absolutely necessary nor is it fatal to the cause
of petitioners herein. No doubt, the return or repurchase of the condemned properties of petitioners could
be readily justified as the manifest legal effect or consequence of the trial court’s underlying presumption
that "Lahug Airport will continue to be in operation" when it granted the complaint for eminent domain
and the airport discontinued its activities.

The predicament of petitioners involves a constructive trust, one that is akin to the implied trust referred
to in Art. 1454 of the Civil Code, "If an absolute conveyance of property is made in order to secure the
performance of an obligation of the grantor toward the grantee, a trust by virtue of law is established. If
the fulfillment of the obligation is offered by the grantor when it becomes due, he may demand the
reconveyance of the property to him." In the case at bar, petitioners conveyed Lot Nos. 916 and 920 to
the government with the latter obliging itself to use the realties for the expansion of Lahug Airport; failing
to keep its bargain, the government can be compelled by petitioners to reconvey the parcels of land to
them, otherwise, petitioners would be denied the use of their properties upon a state of affairs that was
not conceived nor contemplated when the expropriation was authorized. 26

Respondent MCIAA filed a Motion for Reconsideration27 dated November 10, 2003 praying that the Court’s
decision be reconsidered and set aside. In the said motion, the respondent reiterated its earlier claim
that: (a) the decision of the trial court in Civil Case No. R-1881, which granted to MCIAA the titles to Lot
Nos. 916 and 920 in fee simple, has long become final and executory; (b) this Court’s October 15, 2003
Decision, granting the petitioners’ right of repurchase, effectively overturns the rulings in Fery v.
Municipality of Cabanatuan,28 MCIAA v. Court of Appeals,29 and Reyes v. National Housing Authority;30 (c)
the petitioners are not entitled to reconveyance or repurchase of the questioned lots after the closure of
the Lahug Airport; (d) Lot Nos. 916 and 920, which were expropriated in Civil Case No. R-1881, should
not be treated like those lots sold through negotiated sale with a stipulation for reconveyance or
repurchase; and (e) granting arguendo that petitioners have a right to repurchase Lot Nos. 916 and 920,
the repurchase price should be the fair market value of the lands.

Additionally, MCIAA filed a Motion to Resolve the Motion for Reconsideration by the Honorable Court En
Banc dated November 11, 2003, alleging that the present case involves novel questions of law.

On November 20, 2003, the petitioners filed an Opposition to the respondent’s Motion for Reconsideration
stating that no new arguments have been proffered by the respondent to warrant the reversal of the
Court’s decision.

We remain unpersuaded by the respondent’s assertions. The merits of the case have already been
discussed at length in the challenged decision and to linger further on them herein would be inordinate.
Suffice it to say that the Court considered the rulings in Fery v. Municipality of Cabanatuan and Mactan-
Cebu International Airport Authority v. Court of Appeals which defined the rights and obligations of
landowners, whose properties were expropriated, "when the public purpose for which the eminent domain
was exercised no longer subsists."31

The respondent insists that the decision effectively overturned the ruling in the Fery case which requires
that for an expropriation to be conditional, the judgment must clearly spell out said condition. The
respondent is mistaken. We reiterate what we stated in our decision, to wit:

… In Fery, which was cited in the recent case of Reyes v. National Housing Authority, we declared that the
government acquires only such rights in expropriated parcels of land as may be allowed by the character
of its title over the properties –

If x x x land is expropriated for a particular purpose, with the condition that when that purpose is ended
or abandoned the property shall return to its former owner, then, of course, when the purpose is
terminated or abandoned the former owner reacquires the property so expropriated. If x x x land is
expropriated for a public street and the expropriation is granted upon condition that the city can only use
it for a public street, it returns to the former owner, unless there is some statutory provision to the
contrary x x x x If, upon the contrary, however, the decree of expropriation gives to the entity a fee
simple title, then, of course, the land becomes the absolute property of the expropriator, whether it be
the State, a province, or municipality, and in that case the non-user does not have the effect of defeating
the title acquired by the expropriation proceedings x x x x When land has been acquired for public use in
fee simple, unconditionally, either by the exercise of eminent domain or by purchase, the former owner
retains no rights in the land, and the public use may be abandoned, or the land may be devoted to a
different use, without any impairment of the estate or title acquired, or any reversion to the former owner
x x x x32

It must be pointed out that nothing in the Fery case bespeaks that there should foremost be an express
condition in the dispositive portion of the decision before the condemned property can be returned to its
former owner after the purpose for its taking has been abandoned or ended. The indisputable certainty in
the present case is that there was a prior promise by the predecessor of the respondent that the
expropriated properties may be recovered by the former owners once the airport is transferred to Mactan,
Cebu. In fact, the witness for the respondent testified that 15 lots were already reconveyed to their
previous owners. Intervenor DPWH, likewise, manifested that Lot No. 920 is the subject of a
memorandum of agreement33 with the respondent’s predecessor-in-interest wherein the property was
leased to DPWH. This belated news further bolsters the fact that the purpose for which the properties
were condemned has been abandoned.
A more pressing discovery unearthed by this Court is that a significant portion of the subject properties
had been purchased by the Cebu Property Ventures, Inc. for the development of a commercial complex. 34
The respondent, in its answer, did not deny this allegation in the petitioners’ complaint. Section 10, Rule 8
of the Revised Rules of Court provides:

Specific denial. – A defendant must specify each material allegation of fact the truth of which he does not
admit and, whenever practicable, shall set forth the substance of the matters upon which he relies to
support his denial. Where a defendant desires to deny only a part of an averment, he shall specify so
much of it as is true and material and shall deny only the remainder. Where a defendant is without
knowledge or information sufficient to form a belief as to the truth of a material averment made in the
complaint, he shall so state, and this shall have the effect of a denial.

Section 11 of the same Rule likewise states that "[m]aterial averment in the complaint, … shall be
deemed admitted when not specifically denied." The predominant precept is that upon abandonment of
real property condemned for public purpose, the party who originally condemned the property recovers
control of the land if the condemning party continues to use the property for public purpose; however, if
the condemning authority ceases to use the property for a public purpose, property reverts to the owner
in fee simple.35 The government’s taking of private property, and then transferring it to private persons
under the guise of public use or purpose is the despotism found in the immense power of eminent
domain.36 Moreover, the direct and unconstitutional state’s power to oblige a landowner to renounce his
productive and invaluable possession to another citizen, who will use it predominantly for his own private
gain, is offensive to our laws.37

Next, the respondent asseverates that the Court departed from the ruling enunciated in Mactan-Cebu
International Airport Authority v. Court of Appeals. We are not convinced. Clearly, the respondent’s
contention can prevail only if the facts of the present case are accurately in point with those in the other
case. We recapitulate our rulings that in MCIAA v. CA, respondent Virginia Chiongbian proffered
"inadmissible and inconclusive evidence, while in the present case we have preponderant proof as found
by the trial court of the existence of the right of repurchase in favor of the petitioners." No less than
Asterio Uy, one of the members of the CAA Mactan Legal Team, which interceded for the acquisition of the
lots for the Lahug Airport’s expansion, affirmed that persistent assurances were given to the landowners
to the effect that as soon as the Lahug Airport is abandoned or transferred to Mactan, the lot owners
would be able to reacquire their properties. Unlike in the case of MCIAA v. CA, where respondent
Chiongbian offered inadmissible evidence for being hearsay in nature, the petitioners in this case
presented a witness whose testimony was based on his own personal knowledge. Surely, Uy is a credible
witness inasmuch as he was even tasked by the negotiating panel to directly communicate to the
landowners the instructions from the CAA main office that the properties will be returned to the original
owners once the Lahug Airport is transferred to Mactan. Likewise, he cannot be considered as a biased
witness as he was a former employee of the respondent’s predecessor-in-interest and was merely
recalling and informing the court of the events that transpired during the negotiations for the
expropriations of the lots. Part of Uy’s testimony is as follows:

Atty. Jacinto

Q: Lahug Airport. In what capacity or what position were you holding at the time when you were assigned
to Cebu for the purpose of conducting negotiations with the landowners?

Witness

A: I was a member of the CAA Legal Team.

Q: I see, CAA Legal Team. Can you tell the court who were the members, if you still remember, of that
team?

A: I will mention Atty. Ocampo, Atty. Lansang, Atty. Sarigumba and myself.

Q: You stated that you were sent to Cebu as a member of the CAA Legal Team to negotiate with the
landowners for the acquisition of lots for purposes, for airport purposes, you are referring of course to the
acquisition of lot in Mactan?

A: Yes, sir.
 …

Q: Now what was the purpose of your negotiations also in Lahug, what was the purpose of those
negotiations?

A: The purpose there was to purchase or buy the property affected by the Lahug extension.

Q: When you say affected, did you have any specific instructions as to what Lahug airport would be
devoted to? I will reform Your Honor. Since Lahug airport was already in existence, why did you still have
to negotiate with the adjacent landowners?

A: For the Lahug airport expansion.

Q: Now, how did you conduct the negotiations, in what manner?

A: We convinced the landowners affected by the expansion to sell their properties and if they refuse,
there is another right of eminent domain of the government to acquire the properties through
expropriation. And with the assurance that these properties, I am referring to the properties in Lahug, as
soon as Lahug airport will be transferred to Mactan, that will be the time that these properties will be
returned to the landowners at the same price.

Q: Why do you say that there was an assurance given, how did you come to know about this?

A: The assurance was from the Chief of the team, Atty. Ocampo, through him and accordingly per
instruction from the Central Office in Manila.

Q: As a member of the legal team, did you gave [sic] the assurance to the landowners or was it Atty.
Ocampo?

A: We, because I was made as the spokesman considering that I am a Boholano who knows the dialect,
Cebuano, and my companions were Tagalogs, they don’t know Cebuano so I participated in the
negotiations.

Q: In short, you were the one who conducted the negotiations?

A: Together with the members of the team, I was there assisting.38

Moreover, we do not subscribe to the respondent’s contention that since the possibility of the Lahug
Airport’s closure was actually considered by the trial court, a stipulation on reversion or repurchase was so
material that it should not have been discounted by the court a quo in its decision in Civil Case No. R-
1881, if, in fact, there was one. We find it proper to cite, once more, this Court’s ruling that the fallo of
the decision in Civil Case No. R-1881 must be read in reference to the other portions of the decision in
which it forms a part. A reading of the Court’s judgment must not be confined to the dispositive portion
alone; rather, it should be meaningfully construed in unanimity with the ratio decidendi thereof to grasp
the true intent and meaning of a decision.39

On the other hand, we agree with the respondent in asserting that Lot Nos. 916 and 920 should not be
treated like those lands acquired through negotiated sale with a proviso in their contracts for
reconveyance or repurchase. Be that as it may, we however find that there is historic as well as rational
bases for affording the petitioners the right of repurchase. We are cognizant of the incontestable fact that
some landowners immediately sold their properties upon the assurance that they could repurchase them
at the cessation of the Lahug Airport’s operations. And, indeed, these landowners who chose to cede their
properties were fortunate to have a stipulation in their contract of sale vouching for their right of
repurchase. Meanwhile, the landowners who found it burdensomely difficult to part with their cherished
lands underwent the costly expropriation proceedings which lasted for a number of years. Inevitably,
justice and equity dictates the reconveyance of the expropriated lots to their previous owners. One must
never fail to overlook the reality that the power to condemn property is an awesome power of the State 40
and that to compel a citizen to forcibly surrender his precious property to the enormous governmental
power is too much a sacrifice which deserves more consideration than those landowners, who, from the
very beginning voluntarily relinquished their ownership.
We now come to the discussion of the amount of repurchase price. The respondent maintains that the
sum to be paid by the petitioners for Lot Nos. 916 and 920 should be their prevailing market price, and
not the expropriation price which would be grossly unfair considering that the petitioners were paid just
compensation and the lots are now millions of pesos in value. Our stand on the amount of repurchase
price remains unperturbed. When the State reconveys land, it should not profit from sudden appreciations
in land values. Any increase or decrease in market value due to the proposed improvement may not be
considered in determining the market value. Thus, reconveyance to the original owner shall be for
whatever amount he was paid by the government, plus legal interest, whether or not the consideration
was based on the land’s highest and best use when the sale to the State occurred.41

WHEREFORE, the motion for reconsideration is DENIED.

G.R. No. 139495               November 27, 2000

MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA), petitioner,

vs.
THE HON. COURT OF APPEALS and VIRGINIA CHIONGBIAN, respondents.

DECISION

GONZAGA-REYES, J.:

This Petition for Review on Certiorari seeks the reversal of the Decision of the Court of Appeals 1 in CA G.R.
CV No. 56495 entitled "Virginia Chiongbian vs. Mactan-Cebu International Airport Authority" which
affirmed the Decision of the Regional Trial Court2 , 7th Judicial Region, Branch 24, Cebu City.

The Court of Appeals rendered its decision based on the following facts:

"Subject of the action is Lot 941 consisting of 13,766 square meters located in Lahug, Cebu City,
adjoining the then Lahug Airport and covered by TCT No. 120366 of the Registry of Deeds of Cebu City, in
the name of MCIAA.

During the liberation, the Lahug Airport was occupied by the United States Army. Then, in 1947, it was
turned over to the Philippine Government through the Surplus Property Commission. Subsequently, it was
transferred to the Bureau of Aeronautics which was succeeded by the National Airports Corporation. When
the latter was dissolved, it was replaced by the Civil Aeronautics Administration (CAA).

On April 16, 1952, the Republic of the Philippines, represented by the CAA, filed an expropriation
proceeding, Civil Case No. R-1881 (Court of First Instance of Cebu, Third Branch), on several parcels of
land in Lahug, Cebu City, which included Lot 941, for the expansion and improvement of Lahug Airport.

In June 1953, appellee Virginia Chiongbian purchased Lot 941 from its original owner, Antonina Faborada,
the original defendant in the expropriation case, for P8,000.00. Subsequently, TCT No. 9919 was issued in
her name (Exh. D).

Then, on December 29, 1961, judgment was rendered in the expropriation case in favor of the Republic of
the Philippines which was made to pay Virginia Chiongbian the amount of P34,415.00 for Lot 941, with
legal interest computed from November 16, 1947, the date when the government begun using it. Virginia
Chiongbian did not appeal therefrom.

Thereafter, absolute title to Lot 941 was transferred to the Republic of the Philippines under TCT No.
27696 (Exhs. E and 2).

Then, in 1990, Republic Act No. 6958 was passed by Congress creating the Mactan-Cebu International
Airport Authority to which the assets of the Lahug Airport was transferred. Lot 941 was then transferred in
the name of MCIAA under TCT No. 120366 on May 8, 1992.

On July 24, 1995, Virginia Chiongbian filed a complaint for reconveyance of Lot 941 with the Regional Trial
Court of Cebu, Branch 9, docketed as Civil Case No. CEB-17650 alleging, that sometime in 1949, the
National Airport Corporation (NAC) ventured to expand the Cebu Lahug Airport. As a consequence, it
sought to acquire by expropriation or negotiated sale several parcels of lands adjoining the Lahug Airport,
one of which was Lot 941 owned by Virginia Chiongbian. Since she and other landowners could not agree
with the NAC’s offer for the compensation of their lands, a suit for eminent domain was instituted on April
16, 1952, before the then Court of First Instance of Cebu (Branch III), against forty-five (45) landowners,
including Virginia Chiongbian, docketed as Civil Case No. R-1881, entitled "Republic of the Philippine vs.
Damian Ouano, et al." It was finally decided on December 29, 1961 in favor of the Republic of the
Philippines.

Some of the defendants-landowners, namely, Milagros Urgello, Mamerto Escano, Inc. and Ma. Atega Vda.
de Deen, appealed the decision to the Court of Appeals under CA-G.R. No. 33045-R, which rendered a
modified judgment allowing them to repurchase their expropriated properties. Virginia Chiongbian, on the
other hand, did not appeal and instead, accepted the compensation for Lot 941 in the amount of P34,415,
upon the assurance of the NAC that she or her heirs would be given the right of reconveyance for the
same price once the land would no longer be used as (sic) airport.

Consequently, TCT No. 9919 of Virginia Chiongbian was cancelled and TCT No. 27696 was issued in the
name of the Republic of the Philippines. Then, with the creation of the MCIAA, it was cancelled and TCT
No. 120366 was issued in its name.

However, no expansion of the Lahug Airport was undertaken by MCIAA and its predecessors-in-interest.
In fact, when Mactan International Airport was opened for commercial flights, the Lahug Airport was
closed at the end of 1991 and all its airport activities were undertaken at and transferred to the Mactan
International Airport. Thus, the purpose for which Lot 941 was taken ceased to exist." 3

On June 3, 1997, the RTC rendered judgment in favor of the respondent Virginia Chiongbian
(CHIONGBIAN) the dispositive portion of the decision reads:

"WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in favor of the plaintiff,
Virginia Chiongbian and against the defendant, Mactan Cebu International Authority (MCIAA), ordering the
latter to restore to plaintiff the possession and ownership of the property denominated as Lot No. 941
upon reimbursement of the expropriation price paid to plaintiff.

The Register of Deeds is therefore ordered to effect the Transfer of the Certificate Title from the defendant
to the plaintiff on Lot No. 941, cancelling Transfer Certificate of Title No. 120366 in the name of defendant
MCIAA and to issue a new title on the same lot in the name of Virginia Chiongbian.

No pronouncement as to cost.

SO ORDERED."4

Aggrieved by the holding of the trial court, the petitioner Mactan Cebu International Airport Authority
(MCIAA) appealed the decision to the Court of Appeals, which affirmed the RTC decision. Motion for
Reconsideration was denied5 hence this petition where MCIAA raises the following grounds in support of
its petition:

"I.

THE COURT OF APPEALS ERRED IN UPHOLDING THE TRIAL COURT’S JUDGMENT THAT THERE WAS A
REPURCHASE AGREEMENT AND IGNORING PETITIONER’S PROTESTATIONS THAT ADMISSION OF
RESPONDENT’S ORAL EVIDENCE IS NOT ALLOWED UNDER THE STATUE OF FRAUDS.

II.

THE COURT OF APPEALS ERRED IN HOLDING THAT THE DECISION IN LIMBACO IS MATERIAL AND
APPLICABLE TO THE CASE AT BAR.

III.

THE COURT OF APPEALS ERRED IN HOLDING THAT THE MODIFIED JUDGMENT IN CA-GR NO. 33045
SHOULD INURE TO THE BENEFIT OF CHIONGBIAN EVEN IF SHE WAS NOT A PARTY IN SAID APPEALED
CASE.

IV.
THE COURT OF APPEALS ERRED IN RULING THAT THE RIGHT OF VIRGINIA CHIONGBIAN TO REPURCHASE
SHOULD BE UNDER THE SAME TERMS AND CONDITIONS AS THE OTHER LANDOWNERS SUCH THAT HER
REPURCHASE PRICE IS ONLY P 34, 415.00."6

MCIAA contends that the Republic of the Philippines appropriated Lot No. 941 through expropriation
proceedings in Civil Case No. R-1881. The judgment rendered therein was unconditional and did not
contain a stipulation that ownership thereof would revert to CHIONGBIAN nor did it give CHIONGBIAN the
right to repurchase the same in the event the lot was no longer used for the purpose it was expropriated.
Moreover, CHIONGBIAN’s claim that there was a repurchase agreement is not supported by documentary
evidence. The mere fact that twenty six (26) other landowners repurchased their property located at the
aforementioned Lahug airport is of no consequence considering that said landowners were able to secure
a rider in their contracts entitling them to repurchase their property.

MCIAA also argues that the Court of Appeals erroneously concluded that it did not object to the evidence
presented by CHIONGBIAN to prove the alleged repurchase agreement considering that the transcript of
stenographic notes shows that it manifested its objections thereto for being in violation of the Statute of
Frauds.

MCIAA also faults the Court of Appeals for applying the ruling in the case of Limbaco vs. Court of Appeals7
. It is the position of MCIAA that the ruling in the case of Limbaco is not squarely in point with respect to
the present case for the reason that the Limbaco case involved a contract of sale of real property and not
an expropriation.

Moreover, MCIAA alleges that the Court of Appeals erred in ruling that the case of Escaño, et. al. vs.
Republic8 proves the existence of the repurchase agreement. MCIAA claims that although the parties in
said case were CHIONGBIAN’s co-defendants in Civil Case No. R-1881, CHIONGBIAN did not join in their
appeal of the judgment of condemnation. The modified judgment in CA G.R. No. 33045-R should not
therefore redound to CHIONGBIAN’s benefit who was no longer a party thereto or to the compromise
agreement which Escaño et. al. entered into with the Republic of the Philippines.

Finally, assuming for the sake of argument that CHIONGBIAN has a right to repurchase Lot No. 941,
MCIAA claims that the Court of Appeals erred in ruling that the right of CHIONGBIAN to purchase said lot
should be under the same terms and conditions given to the other landowners and not at the prevailing
market price. Such ruling is grossly unfair and would result in unjustly enriching CHIONGBIAN for the
reason that she received just compensation for the property at the time of its taking by the government
and that the property is now worth several hundreds of millions of pesos due to the improvements
introduced by MCIAA.9

On the other hand, aside from praying that this Court affirm the decision of the Court of Appeals, the
private respondent CHIONGBIAN prays that the petition be denied for the reason that it violates the 1997
Rules on Civil Procedure, more specifically the requirement of a certification of non-forum shopping.
CHIONGBIAN claims that the Verification and Certification on Non-Forum Shopping executed by the
MCIAA on September 13, 1999 was signed by a Colonel Marcelino A. Cordova whose appointment as
Assistant General Manager of MCIAA was disapproved by the Civil Service Commission as early as
September 2, 1999. It is CHIONGBIAN’s position that since his appointment was disapproved, the
Verification attached to the petition for review on certiorari cannot be considered as having been executed
by the "plaintiff" or "principal party" who under Section 5, Rule 7 of the Rules of Court can validly make
the certification in the instant petition. Consequently, the petition should be considered as not being
verified and as such should not be considered as having been filed at all.1âwphi1

After a careful consideration of the arguments presented by the parties, we resolve to grant the petition.

We first resolve the procedural issue.

We are not persuaded by CHIONGBIAN’s claim that the Verification and Certification against forum
shopping accompanying MCIAA’s petition was insufficient for allegedly having been signed by one who
was not qualified to do so. As pointed out by the MCIAA, Colonel Cordova signed the Verification and
Certification against forum shopping as Acting General Manager of the MCIAA, pursuant to Office Order
No. 5322-99 dated September 10, 1999 issued by the General Manager of MCIAA, Alfonso Allere. 10
Colonel Cordova did not sign the Verification and Certification against forum shopping pursuant to his
appointment as assistant General Manager of the MCIAA, which was later disapproved by the Commission
on Appointments. This fact has not been disputed by CHIONGBIAN.
We come now to the substantive aspects of the case wherein the issue to be resolved is whether the
abandonment of the public use for which Lot No. 941 was expropriated entitles CHIONGBIAN to reacquire
it.

In Fery vs. Municipality of Cabanatuan11 , this Court had occasion to rule on the same issue as follows:

"The answer to that question depends upon the character of the title acquired by the expropriator,
whether it be the State, a province, a municipality, or a corporation which has the right to acquire
property under the power of eminent domain. If, for example, land is expropriated for a particular
purpose, with the condition that when that purpose is ended or abandoned the property shall return to its
former owner, then, of course, when the purpose is terminated or abandoned the former owner reacquires
the property so expropriated. If, for example, land is expropriated for a public street and the
expropriation is granted upon condition that the city can only use it for a public street, then, of course,
when the city abandons its use as a public street, it returns to the former owner, unless there is some
statutory provision to the contrary. Many other similar examples might be given. If, upon the contrary,
however, the decree of expropriation gives to the entity a fee simple title, then, of course, the land
becomes the absolute property of the expropriator, whether it be the State, a province, or municipality,
and in that case the non-user does not have the effect of defeating the title acquired by the expropriation
proceedings.

When land has been acquired for public use in fee simple, unconditionally, either by the exercise of
eminent domain or by purchase, the former owner retains no rights in the land, and the public use may
be abandoned, or the land may be devoted to a different use, without any impairment of the estate or
title acquired, or any reversion to the former owner."12

In the present case, evidence reveals that Lot No. 941 was appropriated by the Republic of the Philippines
through expropriation proceedings in Civil Case No. R-1881. The dispositive portion of the decision in said
case reads insofar as pertinent as follows:

"IN VIEW OF THE FOREGOING, judgment is hereby rendered:

1. Declaring the expropriation of Lots Nos. 75, 76, 89, 90, 91, 105, 106, 107, 108, 104, 921-A, 88,
93, 913-B, 72, 77, 916, 777-A, 918, 919, 920, 764-A, 988, 744-A, 745-A, 746, 747, 752-A, 263-
A, 941, 942, 740-A, 743, 985, 956, 976-A, 984, 989-A; and 947, including in the Lahug Airport,
Cebu City, justified and in lawful exercise of the right of eminent domain;

2. Declaring the fair market values of the lots thus taken and condemning the plaintiff to pay the
same to the respective owners with legal interest from the dates indicated therein, as follows: Lots
Nos. 75, 76, 89, 90, 91, 92, 105, 106, 107, 108-P31, 977 (minus P10,639 or P21,278 as balance
in favor of Mamerto Escaño, Inc., with legal interest from November 16, 1947 until fully paid; xxx
Lot No. 941- P34,415.00 in favor of Virginia Chiongbian, with legal interest from November 16,
1947 until fully paid; xxx

3. After the payment of the foregoing financial obligation to the landowners, directing the latter to
deliver to the plaintiff the corresponding Transfer Certificate of Title to their representative lots;
and upon the presentation of the said titles to the Register of Deeds, ordering the latter to cancel
the same and to issue, in lieu thereof, new Transfer Certificates of Title in the name of the plaintiff.

NO COST.

SO ORDERED."13 (Emphasis supplied)

The terms of the judgment are clear and unequivocal and grant title to Lot No. 941 in fee simple to the
Republic of the Philippines. There was no condition imposed to the effect that the lot would return to
CHIONGBIAN or that CHIONGBIAN had a right to repurchase the same if the purpose for which it was
expropriated is ended or abandoned or if the property was to be used other than as the Lahug airport.

CHIONGBIAN cannot rely on the ruling in Mactan Cebu International Airport vs. Court of Appeals14 wherein
the presentation of parol evidence was allowed to prove the existence of a written agreement containing
the right to repurchase. Said case did not involve expropriation proceedings but a contract of sale. This
Court consequently allowed the presentation of parol evidence to prove the existence of an agreement
allowing the right of repurchase based on the following ratiocination:
"Under the parol evidence rule, when the terms of an agreement have been reduced into writing, it is
considered as containing all the terms agreed upon, and there can be, between the parties and their
successors-in-interest, no evidence of such terms other than the contents of the written agreement.
However, a party may present evidence to modify, explain or add to the terms of the written agreement if
he puts in issue in his pleading, the failure of the written agreement to express the true intent of the
parties thereto. In the case at bench, the fact which private respondents seek to establish by parol
evidence consists of the agreement or representation made by the NAC that induced Inez Ouano to
execute the deed of sale; that the vendors and their heirs are given the right of repurchase should the
government no longer need the property. Where a parol contemporaneous agreement was the moving
cause of the written contract, or where the parol agreement forms part of the consideration of the written
contract, and it appears that the written contract was executed on the faith of the parol contract or
representation, such evidence is admissible. It is recognized that proof is admissible of any collateral parol
agreement that is not inconsistent with the terms of the written contract though it may relate to the same
subject matter. The rule excluding parol evidence to vary or contradict a writing does not extend so far as
to preclude the admission of existing evidence to show prior or contemporaneous collateral parol
agreements between the parties, but such evidence may be received, regardless of whether or not the
written agreement contains any reference to such collateral agreement, and whether the action is at law
or in equity.

More importantly, no objection was made by petitioner when private respondents introduced evidence to
show the right of repurchase granted by the NAC to Inez Ouano. It has been repeatedly laid down as a
rule of evidence that a protest or objection against the admission of any evidence must be made at the
proper time, and if not so made, it will be understood to have been waived." 15

This pronouncement is not applicable to the present case since the parol evidence rule which provides that
"when the terms of a written agreement have been reduced to writing, it is considered as containing all
the terms agreed upon, and there can be, between the parties and their successors-in-interest, no
evidence of such terms other than the contents of the written agreement" applies to written agreements
and has no application to a judgment of a court. To permit CHIONGBIAN to prove the existence of a
compromise settlement which she claims to have entered into with the Republic of the Philippines prior to
the rendition of judgment in the expropriation case would result in a modification of the judgment of a
court which has long become final and executory.

And even assuming for the sake of argument that CHIONGBIAN could prove the existence of the alleged
written agreement acknowledging her right to repurchase Lot No. 941 through parol evidence, the Court
of Appeals erred in holding that the evidence presented by CHIONGBIAN was admissible.

Under 1403 of the Civil Code, a contract for the sale of real property shall be unenforceable unless the
same, or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by
his agent; evidence, therefore of the agreement cannot be received without the writing or a secondary
evidence of its contents.

Contrary to the finding of the Court of Appeals, the records reveal that MCIAA objected to the purpose for
which the testimonies of CHIONGBIAN16 and Patrosinio Bercede17 (BERCEDE) were offered, i.e. to prove
the existence of the alleged written agreement evincing a right to repurchase Lot No. 941 in favor of
CHIONGBIAN, for being in violation of the Statute of Frauds. MCIAA also objected to the purpose for
which the testimony of Attorney Manuel Pastrana (PASTRANA) was offered, i.e. to prove the existence of
the alleged written agreement and an alleged deed of sale, on the same ground. 18 Consequently, the
testimonies of these witnesses are inadmissible under the Statute of Frauds to prove the existence of the
alleged sale.

Aside from being inadmissible under the provisions of the Statute of Frauds, CHIONGBIAN’s and
BERCEDE’s testimonies are also inadmissible for being hearsay in nature. Evidence is hearsay if its
probative value is not based on the personal knowledge of the witness but on the knowledge of another
person who is not on the witness stand. 19 CHIONGBIAN, through deposition, testified that:

"ATTY. DUBLIN (To Witness)

Q: Mrs. Chiongbian, you said a while ago that there was an assurance by the government to return this
property to you in case Lahug Airport will be no longer used, is that correct?

WITNESS:
A: Yes, sir. That is true.

ATTY. DUBLIN: (To witness)

Q: Can you recall when was this verbal assurance made?

A: I cannot remember anymore.

Q: You cannot also remember the year in which the alleged assurance was made?

A: I cannot also remember because I’m very forgetful.

Q: Now, can you tell us so far as you can remember who was that person or government authority or
employee that made the alleged assurance?

A: The owner of the property.

Q: Now, how many times was this assurance being made to you to return this property in case the Lahug
Airport will no longer be used?

A: 2 or 3, I cannot recall.

Q: You cannot also remember in what particular place or places was this assurance being made?

A: In my previous residence in Mabolo.

DEPOSITION OFFICER:

The assurance was made in my previous residence at Mabolo.

WITNESS:

A: I entrusted that to my lawyer, Atty. Pedro Calderon.

ATTY. DUBLIN: (to witness)

Q: You mean the assurance was made personally to your lawyer at that time, Atty. Pedro Calderon?

A: Yes, sir.

Q: So you are now trying to tell us that that assurance was never made to you personally. Is that right,
Mam?

A: He assured me directly that the property will be returned to me.

Q: When you said "he", are you referring to your lawyer at that time, Atty. Pedro Calderon

A: Yes, sir.

Q: So, in effect, it was your lawyer, Atty. Pedro Calderon, who made the assurance to you that the
property will be returned in case Lahug Airport will be abandoned?

A: Yes, sir."20

CHIONGBIAN’s testimony shows that she had no personal knowledge of the alleged assurance made by
the Republic of the Philippines that Lot No. 941 would be returned to her in the event that the Lahug
Airport was closed. She stated that she only learned of the alleged assurance of the Republic of the
Philippines through her lawyer, Attorney Calderon, who was not presented as a witness.
BERCEDE’s testimony regarding the alleged agreement is likewise inadmissible to prove the existence of
the agreement for also being hearsay in nature. Like CHIONGBIAN, BERCEDE did not have personal
knowledge of the alleged assurance made by the Republic of the Philippines to his father that their land
would be returned should the Lahug Airport cease to operate for he only learned of the alleged assurance
through his father.

PASTRANA’s testimony does little to help CHIONGBIAN’s cause.1âwphi1 He claims that subsequent to the
execution of the alleged written agreement but prior to the rendition of judgment in the expropriation
case, the Republic and CHIONGBIAN executed a Deed of Sale over Lot No. 941 wherein CHIONGBIAN sold
the aforementioned lot to the Republic of the Philippines. However, CHIONGBIAN never mentioned the
existence of a deed of sale.21 In fact, the records disclose that Lot No. 941 was transferred to the Republic
of the Philippines pursuant to the judgment of expropriation in Civil Case No. R-1881 which CHIONGBIAN
herself enforced by filing a motion for withdrawal of the money after the decision was rendered. 22
Moreover, since the very terms of the judgment in Civil Case No. R-1881 are silent regarding the alleged
deed of sale or of the alleged written agreement acknowledging the right of CHIONGBIAN to repurchase
Lot No. 941, the only logical conclusion is that no sale in fact took place and that no compromise
agreement was executed prior to the rendition of the judgment. Had CHIONGBIAN and the Republic
executed a contract of sale as claimed by PASTRANA, the Republic of the Philippines would not have
needed to pursue the expropriation case inasmuch as it would be duplicitous and would result in the
Republic of the Philippines expropriating something it had already owned. Expropriation lies only when it
is made necessary by the opposition of the owner to the sale or by the lack of agreement as to the price. 23
Consequently, CHIONGBIAN cannot compel MCIAA to reconvey Lot No. 941 to her since she has no cause
of action against MCIAA.

Finally, CHIONGBIAN cannot invoke the modified judgment of the Court of Appeals in the case of Republic
of the Philippines vs. Escaño, et. al.24 where her co-defendants, Mamerto Escaño, Inc., Milagros Urgello
and Maria Atega Vda. De Deen entered into separate and distinct compromise agreements with the
Republic of the Philippines wherein they agreed to sell their land subject of the expropriation proceedings
to the latter subject to the resolutory condition that in the event the Republic of the Philippines no longer
uses said property as an airport, title and ownership of said property shall revert to its respective owners
upon reimbursement of the price paid therefor without interest. MCIAA correctly points out that since
CHIONGBIAN did not appeal the judgment of expropriation in Civil Case No. R-1881 and was not a party
to the appeal of her co-defendants, the judgment therein cannot redound to her benefit. And even
assuming that CHIONGBIAN was a party to the appeal, she was not a party to the compromise
agreements entered into by her co-defendants. A compromise is a contract whereby the parties, by
making reciprocal concessions, avoid litigation or put an end to one already commenced. 25 Essentially, it is
a contract perfected by mere consent, the latter being manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract.26 A judicial compromise has
the force of law and is conclusive between the parties27 and it is not valid and binding on a party who did
not sign the same.28 Since CHIONGBIAN was not a party to the compromise agreements, she cannot
legally invoke the same.

ACCORDINGLY, the Decision of the Court of Appeals is hereby REVERSED and SET ASIDE. The complaint
of Virgina Chiongbian against the Mactan-Cebu International Airport Authority for reconveyance of Lot No.
941 is DISMISSED.

G.R. No. 152230. August 9, 2005

JESUS IS LORD CHRISTIAN SCHOOL FOUNDATION, INC., Petitioners,

vs.
MUNICIPALITY (now CITY) OF PASIG, METRO MANILA, Respondent.

DECISION

CALLEJO, SR., J.:

Before us is a petition for review of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 59050,
and its Resolution dated February 18, 2002, denying the motion for reconsideration thereof. The assailed
decision affirmed the order of the Regional Trial Court (RTC) of Pasig, Branch 160, declaring the
respondent Municipality (now City) of Pasig as having the right to expropriate and take possession of the
subject property.

The Antecedents
The Municipality of Pasig needed an access road from E. R. Santos Street, a municipal road near the Pasig
Public Market, to Barangay Sto. Tomas Bukid, Pasig, where 60 to 70 houses, mostly made of light
materials, were located. The road had to be at least three meters in width, as required by the Fire Code,
so that fire trucks could pass through in case of conflagration.2 Likewise, the residents in the area needed
the road for water and electrical outlets. 3 The municipality then decided to acquire 51 square meters out
of the 1,791-square meter property of Lorenzo Ching Cuanco, Victor Ching Cuanco and Ernesto Ching
Cuanco Kho covered by Transfer Certificate of Title (TCT) No. PT-66585, 4 which is abutting E. R. Santos
Street.

On April 19, 1993, the Sangguniang Bayan of Pasig approved an Ordinance5 authorizing the municipal
mayor to initiate expropriation proceedings to acquire the said property and appropriate the fund therefor.
The ordinance stated that the property owners were notified of the municipality’s intent to purchase the
property for public use as an access road but they rejected the offer.

On July 21, 1993, the municipality filed a complaint, amended on August 6, 1993, against the Ching
Cuancos for the expropriation of the property under Section 19 of Republic Act (R.A.) No. 7160, otherwise
known as the Local Government Code. The plaintiff alleged therein that it notified the defendants, by
letter, of its intention to construct an access road on a portion of the property but they refused to sell the
same portion. The plaintiff appended to the complaint a photocopy of the letter addressed to defendant
Lorenzo Ching Cuanco.6

The plaintiff deposited with the RTC 15% of the market value of the property based on the latest tax
declaration covering the property. On plaintiff’s motion, the RTC issued a writ of possession over the
property sought to be expropriated. On November 26, 1993, the plaintiff caused the annotation of a
notice of lis pendens at the dorsal portion of TCT No. PT-92579 under the name of the Jesus Is Lord
Christian School Foundation, Incorporated (JILCSFI) which had purchased the property. 7 Thereafter, the
plaintiff constructed therein a cemented road with a width of three meters; the road was called Damayan
Street.

In their answer,8 the defendants claimed that, as early as February 1993, they had sold the said property
to JILCSFI as evidenced by a deed of sale9 bearing the signature of defendant Ernesto Ching Cuanco Kho
and his wife.

When apprised about the complaint, JILCSFI filed a motion for leave to intervene as defendant-in-
intervention, which motion the RTC granted on August 26, 1994.10

In its answer-in-intervention, JILCSFI averred, by way of special and affirmative defenses, that the
plaintiff’s exercise of eminent domain was only for a particular class and not for the benefit of the poor
and the landless. It alleged that the property sought to be expropriated is not the best portion for the
road and the least burdensome to it. The intervenor filed a crossclaim against its co-defendants for
reimbursement in case the subject property is expropriated.11 In its amended answer, JILCSFI also
averred that it has been denied the use and enjoyment of its property because the road was constructed
in the middle portion and that the plaintiff was not the real party-in-interest. The intervenor, likewise,
interposed counterclaims against the plaintiff for moral damages and attorney’s fees. 12

During trial, Rolando Togonon, the plaintiff’s messenger, testified on direct examination that on February
23, 1993, he served a letter of Engr. Jose Reyes, the Technical Assistant to the Mayor on Infrastructure,
to Lorenzo Ching Cuanco at his store at No. 18 Alkalde Jose Street, Kapasigan, Pasig. A lady received the
same and brought it inside the store. When she returned the letter to him, it already bore the signature of
Luz Bernarte. He identified a photocopy of the letter as similar to the one he served at the store. On
cross-examination, he admitted that he never met Luz Bernarte. 13

Edgardo del Rosario, a resident of Sto. Tomas Bukid since 1982 declared that he would pass through a
wooden bridge to go to E. R. Santos Street. At times, the bridge would be slippery and many had met
accidents while walking along the bridge. Because of this, they requested Mayor Vicente Eusebio to
construct a road therein. He attested that after the construction of the cemented access road, the
residents had water and electricity.14

Augusto Paz of the City Engineer’s Office testified that, sometime in 1992, the plaintiff constructed a road
perpendicular from E. R. Santos Street to Sto. Tomas Bukid; he was the Project Engineer for the said
undertaking. Before the construction of the road, the lot was raw and they had to put filling materials so
that vehicles could use it. According to him, the length of the road which they constructed was 70 meters
long and 3 meters wide so that a fire truck could pass through. He averred that there is no other road
through which a fire truck could pass to go to Sto. Tomas Bukid.15

Manuel Tembrevilla, the Fire Marshall, averred that he had seen the new road, that is, Damayan Street,
and found that a fire truck could pass through it. He estimated the houses in the area to be around 300 to
400. Tembrevilla also stated that Damayan Street is the only road in the area. 16

Finally, Bonifacio Maceda, Jr., Tax Mapper IV, testified that, according to their records, JILCSFI became
the owner of the property only on January 13, 1994.17

The plaintiff offered in evidence a photocopy of the letter of Engr. Jose Reyes addressed to Lorenzo Ching
Cuanco to prove that the plaintiff made a definite and valid offer to acquire the property to the co-owners.
However, the RTC rejected the same letter for being a mere photocopy. 18

For the defendant-intervenor, Normita del Rosario, owner of the property located across the subject
property, testified that there are other roads leading to E. R. Santos Street. She asserted that only about
ten houses of the urban poor are using the new road because the other residents are using an alternative
right-of-way. She averred that she did not actually occupy her property; but there were times that she
visited it.19

Danilo Caballero averred that he had been a resident of Sto. Tomas Bukid for seven years. From his
house, he could use three streets to go to E. R. Santos Street, namely, Catalina Street, Damayan Street
and Bagong Taon Street. On cross-examination, he admitted that no vehicle could enter Sto. Tomas Bukid
except through the newly constructed Damayan Street.20

Eduardo Villanueva, Chairman of the Board of Trustees and President of JILCSFI, testified that the parcel
of land was purchased for purposes of constructing a school building and a church as worship center. He
averred that the realization of these projects was delayed due to the passing of the ordinance for
expropriation.21

The intervenor adduced documentary evidence that on February 27, 1993, Lorenzo Ching Cuanco and the
co-owners agreed to sell their property covered by TCT No. PT-66585 for P1,719,000.00.22 It paid a down
payment of P1,000,000.00 for the property. After payment of the total purchase price, the Ching Cuancos
executed a Deed of Absolute Sale23 over the property on December 13, 1993. On December 21, 1993,
TCT No. PT-92579 was issued in the name of JILCSFI. 24 It declared the property for taxation purposes
under its name.25

On September 3, 1997, the RTC issued an Order in favor of the plaintiff, the dispositive portion of which
reads:

WHEREFORE, in view of the foregoing and in accordance with Section 4, Rule 67 of the Revised Rules of
Court, the Court Resolves to DECLARE the plaintiff as having a lawful right to take the property in
question for purposes for which the same is expropriated.

The plaintiff and intervenor are hereby directed to submit at least two (2) names of their recommended
commissioners for the determination of just compensation within ten (10) days from receipt hereof.

SO ORDERED.26

The RTC held that, as gleaned from the declaration in Ordinance No. 21, there was substantial compliance
with the definite and valid offer requirement of Section 19 of R.A. No. 7160, and that the expropriated
portion is the most convenient access to the interior of Sto. Tomas Bukid.

Dissatisfied, JILCSFI elevated the case to the CA on the following assignment of errors:

First Assignment of Error

THE LOWER COURT SERIOUS[LY] ERRED WHEN IT RULED THAT PLAINTIFF-APPELLEE SUBSTANTIALLY
COMPLIED WITH THE LAW WHEN IT EXPROPRIATED JIL’S PROPERTY TO BE USED AS A RIGHT OF WAY.

Second Assignment of Error

THE LOWER COURT ERRED IN DISREGARDING JIL’S EVIDENCE PROVING THAT THERE WAS NO PUBLIC
NECESSITY TO WARRANT THE EXPROPRIATION OF THE SUBJECT PROPERTY.27

The Court of Appeals’ Decision

In a Decision dated March 13, 2001, the CA affirmed the order of the RTC.28 The CA agreed with the trial
court that the plaintiff substantially complied with Section 19 of R.A. No. 7160, particularly the
requirement that a valid and definite offer must be made to the owner. The CA declared that the letter of
Engr. Reyes, inviting Lorenzo Ching Cuanco to a conference to discuss with him the road project and the
price of the lot, was a substantial compliance with the "valid and definite offer" requirement under said
Section 19. In addition, the CA noted that there was also constructive notice to the defendants of the
expropriation proceedings since a notice of lis pendens was annotated at the dorsal portion of TCT No. PT-
92579 on November 26, 1993.29

Finally, the CA upheld the public necessity for the subject property based on the findings of the trial court
that the portion of the property sought to be expropriated appears to be, not only the most convenient
access to the interior of Sto. Tomas Bukid, but also an easy path for vehicles entering the area,
particularly fire trucks. Moreover, the CA took into consideration the provision of Article 33 of the Rules
and Regulations Implementing the Local Government Code, which regards the "construction or extension
of roads, streets, sidewalks" as public use, purpose or welfare.30

On April 6, 2001, JILCSFI filed a motion for reconsideration of the said decision alleging that the CA erred
in relying on the photocopy of Engr. Reyes’ letter to Lorenzo Ching Cuanco because the same was not
admitted in evidence by the trial court for being a mere photocopy. It also contended that the CA erred in
concluding that constructive notice of the expropriation proceeding, in the form of annotation of the notice
of lis pendens, could be considered as a substantial compliance with the requirement under Section 19 of
the Local Government Code for a valid and definite offer. JILCSFI also averred that no inspection was ever
ordered by the trial court to be conducted on the property, and, if there was one, it had the right to be
present thereat since an inspection is considered to be part of the trial of the case. 31

The CA denied the motion for reconsideration for lack of merit. It held that it was not precluded from
considering the photocopy32 of the letter, notwithstanding that the same was excluded by the trial court,
since the fact of its existence was duly established by corroborative evidence. This corroborative evidence
consisted of the testimony of the plaintiff’s messenger that he personally served the letter to Lorenzo
Ching Cuanco, and Municipal Ordinance No. 21 which expressly stated that the property owners were
already notified of the expropriation proceeding. The CA noted that JILCSFI failed to adduce controverting
evidence, thus the presumption of regularity was not overcome.33

The Present Petition

In this petition, petitioner JILCSFI raises the following issues: (1) whether the respondent complied with
the requirement, under Section 19 of the Local Government Code, of a valid and definite offer to acquire
the property prior to the filing of the complaint; (2) whether its property which is already intended to be
used for public purposes may still be expropriated by the respondent; and (3) whether the requisites for
an easement for right-of-way under Articles 649 to 657 of the New Civil Code may be dispensed with.

The petitioner stresses that the law explicitly requires that a valid and definite offer be made to the owner
of the property and that such offer was not accepted. It argues that, in this case, there was no evidence
to show that such offer has been made either to the previous owner or the petitioner, the present owner.
The petitioner contends that the photocopy of the letter of Engr. Reyes, notifying Lorenzo Ching Cuanco of
the respondent’s intention to construct a road on its property, cannot be considered because the trial
court did not admit it in evidence. And assuming that such letter is admissible in evidence, it would not
prove that the offer has been made to the previous owner because mere notice of intent to purchase is
not equivalent to an offer to purchase. The petitioner further argues that the offer should be made to the
proper party, that is, to the owner of the property. It noted that the records in this case show that as of
February 1993, it was already the owner of the property. Assuming, therefore, that there was an offer to
purchase the property, the same should have been addressed to the petitioner, as present owner. 34

The petitioner maintains that the power of eminent domain must be strictly construed since its exercise is
necessarily in derogation of the right to property ownership. All the requirements of the enabling law
must, therefore, be strictly complied with. Compliance with such requirements cannot be presumed but
must be proved by the local government exercising the power. The petitioner adds that the local
government should, likewise, comply with the requirements for an easement of right-of-way; hence, the
road must be established at a point least prejudicial to the owner of the property. Finally, the petitioner
argues that, if the property is already devoted to or intended to be devoted to another public use, its
expropriation should not be allowed.35

For its part, the respondent avers that the CA already squarely resolved the issues raised in this petition,
and the petitioner failed to show valid and compelling reason to reverse the CA’s findings. Moreover, it is
not the function of the Supreme Court to weigh the evidence on factual issues all over again. 36 The
respondent contends that the Ching Cuancos were deemed to have admitted that an offer to purchase has
been made and that they refused to accept such offer considering their failure to specifically deny such
allegation in the complaint. In light of such admission, the exclusion of the photocopy of the letter of
Engr. Reyes, therefore, is no longer significant. 37

The Ruling of the Court

The petition is meritorious.

At the outset, it must be stressed that only questions of law may be raised by the parties and passed
upon by the Supreme Court in petitions for review on certiorari.38 Findings of fact of the CA, affirming
those of the trial court, are final and conclusive and may not be reviewed on appeal. 39

Nonetheless, where it is shown that the conclusion is a finding grounded on speculations, surmises or
conjectures or where the judgment is based on misapprehension of facts, the Supreme Court may
reexamine the evidence on record.40

Eminent Domain: Nature and Scope

The right of eminent domain is usually understood to be an ultimate right of the sovereign power to
appropriate any property within its territorial sovereignty for a public purpose. The nature and scope of
such power has been comprehensively described as follows:

… It is an indispensable attribute of sovereignty; a power grounded in the primary duty of government to

serve the common need and advance the general welfare. Thus, the right of eminent domain appertains
to every independent government without the necessity for constitutional recognition. The provisions
found in modern constitutions of civilized countries relating to the taking of property for the public use do
not by implication grant the power to the government, but limit the power which would, otherwise, be
without limit. Thus, our own Constitution provides that "[p]rivate property shall not be taken for public
use without just compensation." Furthermore, the due process and equal protection clauses act as
additional safeguards against the arbitrary exercise of this governmental power.41

Strict Construction and Burden of Proof

The exercise of the right of eminent domain, whether directly by the State or by its authorized agents, is
necessarily in derogation of private rights.42 It is one of the harshest proceedings known to the law.
Consequently, when the sovereign delegates the power to a political unit or agency, a strict construction
will be given against the agency asserting the power.43 The authority to condemn is to be strictly
construed in favor of the owner and against the condemnor.44 When the power is granted, the extent to
which it may be exercised is limited to the express terms or clear implication of the statute in which the
grant is contained.45

Corollarily, the respondent, which is the condemnor, has the burden of proving all the essentials
necessary to show the right of condemnation.46 It has the burden of proof to establish that it has complied
with all the requirements provided by law for the valid exercise of the power of eminent domain.

The grant of the power of eminent domain to local government units is grounded on Section 19 of R.A.
No. 7160 which reads:

SEC. 19. Eminent Domain. – A local government unit may, through its chief executive and acting pursuant
to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the
benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of
the Constitution and pertinent laws; Provided, however, That the power of eminent domain may not be
exercised unless a valid and definite offer has been previously made to the owner, and such offer was not
accepted: Provided, further, That the local government unit may immediately take possession of the
property upon the filing of the expropriation proceedings and upon making a deposit with the proper court
of at least fifteen percent (15%) of the fair market value of the property based on the current tax
declaration of the property to be expropriated: Provided, finally, That the amount to be paid for the
expropriated property shall be determined by the proper court based on the fair market value at the time
of the taking of the property.

The Court declared that the following requisites for the valid exercise of the power of eminent domain by
a local government unit must be complied with:

1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of
the local government unit, to exercise the power of eminent domain or pursue expropriation proceedings
over a particular private property.

2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the
poor and the landless.

3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and
other pertinent laws.

4. A valid and definite offer has been previously made to the owner of the property sought to be
expropriated, but said offer was not accepted.47

Valid and Definite Offer

Article 35 of the Rules and Regulations Implementing the Local Government Code provides:

ARTICLE 35. Offer to Buy and Contract of Sale. – (a) The offer to buy private property for public use or
purpose shall be in writing. It shall specify the property sought to be acquired, the reasons for its
acquisition, and the price offered.

(b) If the owner or owners accept the offer in its entirety, a contract of sale shall be executed and
payment forthwith made.

(c) If the owner or owners are willing to sell their property but at a price higher than that offered to them,
the local chief executive shall call them to a conference for the purpose of reaching an agreement on the
selling price. The chairman of the appropriation or finance committee of the sanggunian, or in his
absence, any member of the sanggunian duly chosen as its representative, shall participate in the
conference. When an agreement is reached by the parties, a contract of sale shall be drawn and executed.

(d) The contract of sale shall be supported by the following documents:

(1) Resolution of the sanggunian authorizing the local chief executive to enter into a contract of sale. The
resolution shall specify the terms and conditions to be embodied in the contract;

(2) Ordinance appropriating the amount specified in the contract; and

(3) Certification of the local treasurer as to availability of funds together with a statement that such fund
shall not be disbursed or spent for any purpose other than to pay for the purchase of the property
involved.

The respondent was burdened to prove the mandatory requirement of a valid and definite offer to the
owner of the property before filing its complaint and the rejection thereof by the latter. 48 It is incumbent
upon the condemnor to exhaust all reasonable efforts to obtain the land it desires by agreement. 49 Failure
to prove compliance with the mandatory requirement will result in the dismissal of the complaint. 50

An offer is a unilateral proposition which one party makes to the other for the celebration of a contract. 51
It creates a power of acceptance permitting the offeree, by accepting the offer, to transform the offeror’s
promise into a contractual obligation.52 Corollarily, the offer must be complete, indicating with sufficient
clearness the kind of contract intended and definitely stating the essential conditions of the proposed
contract.53 An offer would require, among other things, a clear certainty on both the object and the cause
or consideration of the envisioned contract. 54
The purpose of the requirement of a valid and definite offer to be first made to the owner is to encourage
settlements and voluntary acquisition of property needed for public purposes in order to avoid the
expense and delay of a court action.55 The law is designed to give to the owner the opportunity to sell his
land without the expense and inconvenience of a protracted and expensive litigation. This is a substantial
right which should be protected in every instance.56 It encourages acquisition without litigation and spares
not only the landowner but also the condemnor, the expenses and delays of litigation. It permits the
landowner to receive full compensation, and the entity acquiring the property, immediate use and
enjoyment of the property. A reasonable offer in good faith, not merely perfunctory or pro forma offer, to
acquire the property for a reasonable price must be made to the owner or his privy. 57 A single bona fide
offer that is rejected by the owner will suffice.

The expropriating authority is burdened to make known its definite and valid offer to all the owners of the
property. However, it has a right to rely on what appears in the certificate of title covering the land to be
expropriated. Hence, it is required to make its offer only to the registered owners of the property. After
all, it is well-settled that persons dealing with property covered by a Torrens certificate of title are not
required to go beyond what appears on its face.58

In the present case, the respondent failed to prove that before it filed its complaint, it made a written
definite and valid offer to acquire the property for public use as an access road. The only evidence
adduced by the respondent to prove its compliance with Section 19 of the Local Government Code is the
photocopy of the letter purportedly bearing the signature of Engr. Jose Reyes, to only one of the co-
owners, Lorenzo Ching Cuanco. The letter reads:

MR. LORENZO CHING CUANCO

18 Alcalde Jose Street

Capasigan, Pasig

Metro Manila

Dear Mr. Cuanco:

This refers to your parcel of land located along E. Santos Street, Barangay Palatiw, Pasig, Metro Manila
embraced in and covered by TCT No. 66585, a portion of which with an area of fifty-one (51) square
meters is needed by the Municipal Government of Pasig for conversion into a road-right of way for the
benefit of several residents living in the vicinity of your property. Attached herewith is the sketch plan for
your information.

In this connection, may we respectfully request your presence in our office to discuss this project and the
price that may be mutually agreed upon by you and the Municipality of Pasig.

Thank you.

Very truly yours,

(Sgd.)

ENGR. JOSE L. REYES

Technical Asst. to the Mayor

on Infrastructure59

It bears stressing, however, that the respondent offered the letter only to prove its desire or intent to
acquire the property for a right-of-way.60 The document was not offered to prove that the respondent
made a definite and valid offer to acquire the property. Moreover, the RTC rejected the document because
the respondent failed to adduce in evidence the original copy thereof. 61 The respondent, likewise, failed to
adduce evidence that copies of the letter were sent to and received by all the co-owners of the property,
namely, Lorenzo Ching Cuanco, Victor Ching Cuanco and Ernesto Kho.
The respondent sought to prove, through the testimony of its messenger, Rolando Togonon, that Lorenzo
Ching Cuanco received the original of the said letter. But Togonon testified that he merely gave the letter
to a lady, whom he failed to identify. He stated that the lady went inside the store of Lorenzo Ching
Cuanco, and later gave the letter back to him bearing the signature purportedly of one Luz Bernarte.
However, Togonon admitted, on cross-examination, that he did not see Bernarte affixing her signature on
the letter. Togonon also declared that he did not know and had never met Lorenzo Ching Cuanco and
Bernarte:

Q And after you received this letter from that lady, what did you do afterwards?

A I brought it with me, that letter, and then I went to Caruncho.

Q So, [M]r. Witness, you are telling this Honorable Court that this letter intended to Mr. Lorenzo was
served at Pasig Trading which was situated at No. 18 Alkalde Jose Street on February 23, 1993?

A Yes, Ma’am.

ATTY. TAN:

That is all for the witness, Your Honor.

COURT:

Do you have any cross-examination?

ATTY. JOLO:

Just a few cross, Your Honor, please. With the kind permission of the Honorable Court.

COURT:

Proceed.

CROSS-EXAMINATION

BY ATTY. JOLO:

Q Mr. Witness, do you know Mr. Lorenzo Ching [Cuanco]

A I do not know him.

Q As a matter of fact, you have not seen him even once, isn’t not (sic)?

A Yes, Sir.

Q This Luz Bernarte, do you know her?

A I do not know her.

Q As a matter of fact, you did not see Mrs. Bernarte even once?

A That is correct.

Q And as a matter of fact, [M]r. Witness, you did not see Mrs. Luz Bernarte affixing her signature on the
bottom portion of this demand letter, marked as Exh. "C-2"?

A Yes, Sir.62

Even if the letter was, indeed, received by the co-owners, the letter is not a valid and definite offer to
purchase a specific portion of the property for a price certain. It is merely an invitation for only one of the
co-owners, Lorenzo Ching Cuanco, to a conference to discuss the project and the price that may be
mutually acceptable to both parties.

There is no legal and factual basis to the CA’s ruling that the annotation of a notice of lis pendens at the
dorsal portion of petitioner’s TCT No. PT-92579 is a substantial compliance with the requisite offer. A
notice of lis pendens is a notice to the whole world of the pendency of an action involving the title to or
possession of real property and a warning that those who acquire an interest in the property do so at their
own risk and that they gamble on the result of the litigation over it.63 Moreover, the lis pendens was
annotated at the dorsal portion of the title only on November 26, 1993, long after the complaint had been
filed in the RTC against the Ching Cuancos.

Neither is the declaration in one of the whereas clauses of the ordinance that "the property owners were
already notified by the municipality of the intent to purchase the same for public use as a municipal road,"
a substantial compliance with the requirement of a valid and definite offer under Section 19 of R.A. No.
7160. Presumably, the Sangguniang Bayan relied on the erroneous premise that the letter of Engr. Reyes
reached the co-owners of the property. In the absence of competent evidence that, indeed, the
respondent made a definite and valid offer to all the co-owners of the property, aside from the letter of
Engr. Reyes, the declaration in the ordinance is not a compliance with Section 19 of R.A. No. 7160.

The respondent contends, however, that the Ching Cuancos, impliedly admitted the allegation in its
complaint that an offer to purchase the property was made to them and that they refused to accept the
offer by their failure to specifically deny such allegation in their answer. This contention is wrong. As
gleaned from their answer to the complaint, the Ching Cuancos specifically denied such allegation for
want of sufficient knowledge to form a belief as to its correctness. Under Section 10,64 Rule 8 of the Rules
of Court, such form of denial, although not specific, is sufficient.

Public Necessity

We reject the contention of the petitioner that its property can no longer be expropriated by the
respondent because it is intended for the construction of a place for religious worship and a school for its
members. As aptly explained by this Court in Manosca v. Court of Appeals,65 thus:

It has been explained as early as Seña v. Manila Railroad Co., that:

… A historical research discloses the meaning of the term "public use" to be one of constant growth. As
society advances, its demands upon the individual increases and each demand is a new use to which the
resources of the individual may be devoted. … for "whatever is beneficially employed for the community is
a public use."

Chief Justice Enrique M. Fernando states:

The taking to be valid must be for public use. There was a time when it was felt that a literal meaning
should be attached to such a requirement. Whatever project is undertaken must be for the public to
enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It is not so any more.
As long as the purpose of the taking is public, then the power of eminent domain comes into play. As just
noted, the constitution in at least two cases, to remove any doubt, determines what is public use. One is
the expropriation of lands to be subdivided into small lots for resale at cost to individuals. The other is the
transfer, through the exercise of this power, of utilities and other private enterprise to the government. It
is accurate to state then that at present whatever may be beneficially employed for the general welfare
satisfies the requirements of public use.

Chief Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land Tenure Administration, has
viewed the Constitution a dynamic instrument and one that "is not to be construed narrowly or
pedantically so as to enable it to meet adequately whatever problems the future has in store." Fr. Joaquin
Bernas, a noted constitutionalist himself, has aptly observed that what, in fact, has ultimately emerged is
a concept of public use which is just as broad as "public welfare."

Petitioners ask: But "(w)hat is the so-called unusual interest that the expropriation of (Felix Manalo’s)
birthplace become so vital as to be a public use appropriate for the exercise of the power of eminent
domain" when only members of the Iglesia ni Cristo would benefit? This attempt to give some religious
perspective to the case deserves little consideration, for what should be significant is the principal
objective of, not the casual consequences that might follow from, the exercise of the power. The purpose
in setting up the marker is essentially to recognize the distinctive contribution of the late Felix Manalo to
the culture of the Philippines, rather than to commemorate his founding and leadership of the Iglesia ni
Cristo. The practical reality that greater benefit may be derived by members of the Iglesia ni Cristo than
by most others could well be true but such a peculiar advantage still remains to be merely incidental and
secondary in nature. Indeed, that only a few would actually benefit from the expropriation of property,
does not necessarily diminish the essence and character of public use.

The petitioner asserts that the respondent must comply with the requirements for the establishment of an
easement of right-of-way, more specifically, the road must be constructed at the point least prejudicial to
the servient state, and that there must be no adequate outlet to a public highway. The petitioner asserts
that the portion of the lot sought to be expropriated is located at the middle portion of the petitioner’s
entire parcel of land, thereby splitting the lot into two halves, and making it impossible for the petitioner
to put up its school building and worship center.

The subject property is expropriated for the purpose of constructing a road. The respondent is not
mandated to comply with the essential requisites for an easement of right-of-way under the New Civil
Code. Case law has it that in the absence of legislative restriction, the grantee of the power of eminent
domain may determine the location and route of the land to be taken66 unless such determination is
capricious and wantonly injurious.67 Expropriation is justified so long as it is for the public good and there
is genuine necessity of public character.68 Government may not capriciously choose what private property
should be taken.69

The respondent has demonstrated the necessity for constructing a road from E. R. Santos Street to Sto.
Tomas Bukid. The witnesses, who were residents of Sto. Tomas Bukid, testified that although there were
other ways through which one can enter the vicinity, no vehicle, however, especially fire trucks, could
enter the area except through the newly constructed Damayan Street. This is more than sufficient to
establish that there is a genuine necessity for the construction of a road in the area. After all, absolute
necessity is not required, only reasonable and practical necessity will suffice. 70

Nonetheless, the respondent failed to show the necessity for constructing the road particularly in the
petitioner’s property and not elsewhere.71 We note that the whereas clause of the ordinance states that
the 51-square meter lot is the shortest and most suitable access road to connect Sto. Tomas Bukid to E.
R. Santos Street. The respondent’s complaint also alleged that the said portion of the petitioner’s lot has
been surveyed as the best possible ingress and egress. However, the respondent failed to adduce a
preponderance of evidence to prove its claims.

On this point, the trial court made the following findings:

… The contention of the defendants that there is an existing alley that can serve the purpose of the
expropriator is not accurate. An inspection of the vicinity reveals that the alley being referred to by the
defendants actually passes thru Bagong Taon St. but only about one-half (1/2) of its entire length is
passable by vehicle and the other half is merely a foot-path. It would be more inconvenient to widen the
alley considering that its sides are occupied by permanent structures and its length from the municipal
road to the area sought to be served by the expropriation is considerably longer than the proposed access
road. The area to be served by the access road is composed of compact wooden houses and literally a
slum area. As a result of the expropriation of the 51-square meter portion of the property of the
intervenor, a 3-meter wide road open to the public is created. This portion of the property of the
intervenor is the most convenient access to the interior of Sto. Tomas Bukid since it is not only a short cut
to the interior of the Sto. Tomas Bukid but also an easy path for vehicles entering the area, not to
mention the 3-meter wide road requirement of the Fire Code. 72

However, as correctly pointed out by the petitioner, there is no showing in the record that an ocular
inspection was conducted during the trial. If, at all, the trial court conducted an ocular inspection of the
subject property during the trial, the petitioner was not notified thereof. The petitioner was, therefore,
deprived of its right to due process. It bears stressing that an ocular inspection is part of the trial as
evidence is thereby received and the parties are entitled to be present at any stage of the trial. 73
Consequently, where, as in this case, the petitioner was not notified of any ocular inspection of the
property, any factual finding of the court based on the said inspection has no probative weight. The
findings of the trial court based on the conduct of the ocular inspection must, therefore, be rejected.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and Resolution of the Court of
Appeals are REVERSED AND SET ASIDE. The RTC is ordered to dismiss the complaint of the respondent
without prejudice to the refiling thereof.
G.R. No. 141833            March 26, 2003

LM POWER ENGINEERING CORPORATION, petitioner,

vs.
CAPITOL INDUSTRIAL CONSTRUCTION GROUPS, INC., respondent.

PANGANIBAN, J.:

Alternative dispute resolution methods or ADRs -- like arbitration, mediation, negotiation and conciliation
-- are encouraged by the Supreme Court. By enabling parties to resolve their disputes amicably, they
provide solutions that are less time-consuming, less tedious, less confrontational, and more productive of
goodwill and lasting relationships.1

The Case

Before us is a Petition for Review on Certiorari2 under Rule 45 of the Rules of Court, seeking to set aside
the January 28, 2000 Decision of the Court of Appeals3 (CA) in CA-GR CV No. 54232. The dispositive
portion of the Decision reads as follows:

"WHEREFORE, the judgment appealed from is REVERSED and SET ASIDE. The parties are
ORDERED to present their dispute to arbitration in accordance with their Sub-contract Agreement.
The surety bond posted by [respondent] is [d]ischarged." 4

The Facts

On February 22, 1983, Petitioner LM Power Engineering Corporation and Respondent Capitol Industrial
Construction Groups Inc. entered into a "Subcontract Agreement" involving electrical work at the Third
Port of Zamboanga.5

On April 25, 1985, respondent took over some of the work contracted to petitioner. 6 Allegedly, the latter
had failed to finish it because of its inability to procure materials.7

Upon completing its task under the Contract, petitioner billed respondent in the amount of
P6,711,813.90.8 Contesting the accuracy of the amount of advances and billable accomplishments listed
by the former, the latter refused to pay. Respondent also took refuge in the termination clause of the
Agreement.9 That clause allowed it to set off the cost of the work that petitioner had failed to undertake --
due to termination or take-over -- against the amount it owed the latter.

Because of the dispute, petitioner filed with the Regional Trial Court (RTC) of Makati (Branch 141) a
Complaint10 for the collection of the amount representing the alleged balance due it under the
Subcontract. Instead of submitting an Answer, respondent filed a Motion to Dismiss, 11 alleging that the
Complaint was premature, because there was no prior recourse to arbitration.

In its Order12 dated September 15, 1987, the RTC denied the Motion on the ground that the dispute did
not involve the interpretation or the implementation of the Agreement and was, therefore, not covered by
the arbitral clause.13

After trial on the merits, the RTC14 ruled that the take-over of some work items by respondent was not
equivalent to a termination, but a mere modification, of the Subcontract. The latter was ordered to give
full payment for the work completed by petitioner.

Ruling of the Court of Appeals

On appeal, the CA reversed the RTC and ordered the referral of the case to arbitration. The appellate
court held as arbitrable the issue of whether respondent’s take-over of some work items had been
intended to be a termination of the original contract under Letter "K" of the Subcontract. It ruled likewise
on two other issues: whether petitioner was liable under the warranty clause of the Agreement, and
whether it should reimburse respondent for the work the latter had taken over. 15

Hence, this Petition.16

The Issues
In its Memorandum, petitioner raises the following issues for the Court’s consideration:

"A

Whether or not there exist[s] a controversy/dispute between petitioner and respondent regarding the
interpretation and implementation of the Sub-Contract Agreement dated February 22, 1983 that requires
prior recourse to voluntary arbitration;

"B

1
In the affirmative, whether or not the requirements provided in Article III of CIAC Arbitration Rules
regarding request for arbitration ha[ve] been complied with[.]" 17

The Court’s Ruling

The Petition is unmeritorious.

First Issue:
Whether Dispute Is Arbitrable

Petitioner claims that there is no conflict regarding the interpretation or the implementation of the
Agreement. Thus, without having to resort to prior arbitration, it is entitled to collect the value of the
services it rendered through an ordinary action for the collection of a sum of money from respondent. On
the other hand, the latter contends that there is a need for prior arbitration as provided in the Agreement.
This is because there are some disparities between the parties’ positions regarding the extent of the work
done, the amount of advances and billable accomplishments, and the set off of expenses incurred by
respondent in its take-over of petitioner’s work.

We side with respondent. Essentially, the dispute arose from the parties’ ncongruent positions on whether
certain provisions of their Agreement could be applied to the facts. The instant case involves technical
discrepancies that are better left to an arbitral body that has expertise in those areas. In any event, the
inclusion of an arbitration clause in a contract does not ipso facto divest the courts of jurisdiction to pass
upon the findings of arbitral bodies, because the awards are still judicially reviewable under certain
conditions.18

In the case before us, the Subcontract has the following arbitral clause:

"6. The Parties hereto agree that any dispute or conflict as regards to interpretation and
implementation of this Agreement which cannot be settled between [respondent] and [petitioner]
amicably shall be settled by means of arbitration x x x."19

Clearly, the resolution of the dispute between the parties herein requires a referral to the provisions of
their Agreement. Within the scope of the arbitration clause are discrepancies as to the amount of
advances and billable accomplishments, the application of the provision on termination, and the
consequent set-off of expenses.

A review of the factual allegations of the parties reveals that they differ on the following questions: (1)
Did a take-over/termination occur? (2) May the expenses incurred by respondent in the take-over be set
off against the amounts it owed petitioner? (3) How much were the advances and billable
accomplishments?

The resolution of the foregoing issues lies in the interpretation of the provisions of the Agreement.
According to respondent, the take-over was caused by petitioner’s delay in completing the work. Such
delay was in violation of the provision in the Agreement as to time schedule:

"G. TIME SCHEDULE

"[Petitioner] shall adhere strictly to the schedule related to the WORK and complete the WORK
within the period set forth in Annex C hereof. NO time extension shall be granted by [respondent]
to [petitioner] unless a corresponding time extension is granted by [the Ministry of Public Works
and Highways] to the CONSORTIUM."20
Because of the delay, respondent alleges that it took over some of the work contracted to petitioner,
pursuant to the following provision in the Agreement:

"K. TERMINATION OF AGREEMENT

"[Respondent] has the right to terminate and/or take over this Agreement for any of the following
causes:

x x x           x x x           x x x

‘6. If despite previous warnings by [respondent], [petitioner] does not execute the WORK in
accordance with this Agreement, or persistently or flagrantly neglects to carry out [its]
obligations under this Agreement."21

Supposedly, as a result of the "take-over," respondent incurred expenses in excess of the contracted
price. It sought to set off those expenses against the amount claimed by petitioner for the work the latter
accomplished, pursuant to the following provision:

"If the total direct and indirect cost of completing the remaining part of the WORK exceed the sum
which would have been payable to [petitioner] had it completed the WORK, the amount of such
excess [may be] claimed by [respondent] from either of the following:

‘1. Any amount due [petitioner] from [respondent] at the time of the termination of this
Agreement."22

The issue as to the correct amount of petitioner’s advances and billable accomplishments involves an
evaluation of the manner in which the parties completed the work, the extent to which they did it, and the
expenses each of them incurred in connection therewith. Arbitrators also need to look into the
computation of foreign and local costs of materials, foreign and local advances, retention fees and letters
of credit, and taxes and duties as set forth in the Agreement. These data can be gathered from a review
of the Agreement, pertinent portions of which are reproduced hereunder:

"C. CONTRACT PRICE AND TERMS OF PAYMENT

x x x           x x x           x x x

"All progress payments to be made by [respondent] to [petitioner] shall be subject to a retention

sum of ten percent (10%) of the value of the approved quantities. Any claims by [respondent] on
[petitioner] may be deducted by [respondent] from the progress payments and/or retained
amount. Any excess from the retained amount after deducting [respondent’s] claims shall be
released by [respondent] to [petitioner] after the issuance of [the Ministry of Public Works and
Highways] of the Certificate of Completion and final acceptance of the WORK by [the Ministry of
Public Works and Highways].

x x x           x x x           x x x

"D. IMPORTED MATERIALS AND EQUIPMENT

"[Respondent shall open the letters of credit for the importation of equipment and materials listed
in Annex E hereof after the drawings, brochures, and other technical data of each items in the list
have been formally approved by [the Ministry of Public Works and Highways]. However, petitioner
will still be fully responsible for all imported materials and equipment.

"All expenses incurred by [respondent], both in foreign and local currencies in connection with the
opening of the letters of credit shall be deducted from the Contract Prices.

x x x           x x x           x x x

"N. OTHER CONDITIONS

x x x           x x x           x x x
 "2. All customs duties, import duties, contractor’s taxes, income taxes, and other taxes that may
be required by any government agencies in connection with this Agreement shall be for the sole
account of [petitioner]."23

Being an inexpensive, speedy and amicable method of settling disputes,24 arbitration -- along with
mediation, conciliation and negotiation -- is encouraged by the Supreme Court. Aside from unclogging
judicial dockets, arbitration also hastens the resolution of disputes, especially of the commercial kind. 25 It
is thus regarded as the "wave of the future" in international civil and commercial disputes. 26 Brushing
aside a contractual agreement calling for arbitration between the parties would be a step backward. 27

Consistent with the above-mentioned policy of encouraging alternative dispute resolution methods, courts
should liberally construe arbitration clauses. Provided such clause is susceptible of an interpretation that
covers the asserted dispute, an order to arbitrate should be granted. 28 Any doubt should be resolved in
favor of arbitration.29

Second Issue:
Prior Request for Arbitration

According to petitioner, assuming arguendo that the dispute is arbitrable, the failure to file a formal
request for arbitration with the Construction Industry Arbitration Commission (CIAC) precluded the latter
from acquiring jurisdiction over the question. To bolster its position, petitioner even cites our ruling in
Tesco Services Incorporated v. Vera.30 We are not persuaded.

Section 1 of Article II of the old Rules of Procedure Governing Construction Arbitration indeed required the
submission of a request for arbitration, as follows:

"SECTION. 1. Submission to Arbitration -- Any party to a construction contract wishing to have

recourse to arbitration by the Construction Industry Arbitration Commission (CIAC) shall submit its
Request for Arbitration in sufficient copies to the Secretariat of the CIAC; PROVIDED, that in the
case of government construction contracts, all administrative remedies available to the parties
must have been exhausted within 90 days from the time the dispute arose."

Tesco was promulgated by this Court, using the foregoing provision as reference.

On the other hand, Section 1 of Article III of the new Rules of Procedure Governing Construction
Arbitration has dispensed with this requirement and recourse to the CIAC may now be availed of
whenever a contract "contains a clause for the submission of a future controversy to arbitration," in this
wise:

"SECTION 1. Submission to CIAC Jurisdiction — An arbitration clause in a construction contract or

a submission to arbitration of a construction dispute shall be deemed an agreement to submit an
existing or future controversy to CIAC jurisdiction, notwithstanding the reference to a different
arbitration institution or arbitral body in such contract or submission. When a contract contains a
clause for the submission of a future controversy to arbitration, it is not necessary for the parties
to enter into a submission agreement before the claimant may invoke the jurisdiction of CIAC."

The foregoing amendments in the Rules were formalized by CIAC Resolution Nos. 2-91 and 3-93. 31

The difference in the two provisions was clearly explained in China Chang Jiang Energy Corporation
(Philippines) v. Rosal Infrastructure Builders et al.32 (an extended unsigned Resolution) and reiterated in
National Irrigation Administration v. Court of Appeals,33 from which we quote thus:

"Under the present Rules of Procedure, for a particular construction contract to fall within the
jurisdiction of CIAC, it is merely required that the parties agree to submit the same to voluntary
arbitration Unlike in the original version of Section 1, as applied in the Tesco case, the law as it
now stands does not provide that the parties should agree to submit disputes arising from their
agreement specifically to the CIAC for the latter to acquire jurisdiction over the same. Rather, it is
plain and clear that as long as the parties agree to submit to voluntary arbitration, regardless of
what forum they may choose, their agreement will fall within the jurisdiction of the CIAC, such
that, even if they specifically choose another forum, the parties will not be precluded from electing
to submit their dispute before the CIAC because this right has been vested upon each party by law,
i.e., E.O. No. 1008."34
Clearly, there is no more need to file a request with the CIAC in order to vest it with jurisdiction to decide
a construction dispute.

The arbitral clause in the Agreement is a commitment on the part of the parties to submit to arbitration
the disputes covered therein. Because that clause is binding, they are expected to abide by it in good
faith.35 And because it covers the dispute between the parties in the present case, either of them may
compel the other to arbitrate.36

Since petitioner has already filed a Complaint with the RTC without prior recourse to arbitration, the
proper procedure to enable the CIAC to decide on the dispute is to request the stay or suspension of such
action, as provided under RA 876 [the Arbitration Law].37

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED.

G.R. No. 147511            January 20, 2003

MARINA Z. REYES; ALFREDO A. FRANCISCO; ANGELITA Z. GARCIA; ALFREDO Z. FRANCISCO, JR;

ARMANDO Z. FRANCISCO; ALMA C. FRANCISCO; EUGENIA Z. LUNA; CLARITA Z. ZABALLERO, LEONARDO
Z. ZABALLERO, JR, and TEODORO Z. ZABALLERO, in substitution of LEONARDO M. ZABALLERO; AUGUSTO
M. ZABALLERO; FRINE A. ZABALLERO; ELENA FRONDA ZABALLERO; VICTOR GREGORIO F. ZABALLERO;
MARIA ELENA F. ZABALLERO; LOURDES ZABALLERO-LAVA; SOCORRO EMILIA ZABALLERO-YAP; and
TERESITA F. ZABALLERO, petitioners,
vs.
NATIONAL HOUSING AUTHORITY, respondent.

PUNO, J.:

This is an appeal by certiorari from the decision of the Court of Appeals in CA-GR CV No. 51641 dated
September 29, 20001 affirming the judgment of the Regional Trial Court of Quezon City, Branch 79 which
dismissed the complaint for forfeiture of rights filed by herein petitioners, as well as the Resolution dated
March 13, 2001 denying petitioners' motion for reconsideration.

Records show that in 1977, respondent National Housing Authority (NHA) filed separate complaints for the
expropriation of sugarcane lands, particularly Lot Nos. 6450, 6448-E, 6198-A and 6199 of the cadastral
survey of Dasmariñas, Cavite belonging to the petitioners, before the then Court of First Instance of
Cavite, and docketed as Civil Case Nos. T.G.-392, T.G.-396 and T.G.-417. The stated public purpose of
the expropriation was the expansion of the Dasmariñas Resettlement Project to accommodate the
squatters who were relocated from the Metropolitan Manila area. The trial court rendered judgment
ordering the expropriation of these lots and the payment of just compensation. This was affirmed by the
Supreme Court in a decision rendered on October 29, 1987 in the case of NHA vs. Zaballero 2 and which
became final on November 26, 1987.3

On February 24, 1989, the expropriation court (now Branch 18, Regional Trial Court of Tagaytay City)
issued an Order4 the dispositive portion of which reads:

"WHEREFORE, and resolving thus, let an Alias Writ of Execution be immediately issued and that:

(1) The Register of Deeds of the Province of Cavite is hereby ordered to transfer, in the name of
the plaintiff National Housing Authority, the following:

(a) Transfer Certificate No. RT-638 containing an area of 79,167 square meters situated in
Barrio Bangkal, Dasmariñas, Cavite;

(b) Transfer Certificate of Title No. T-55702 containing an area of 20,872 square meters
situated in Barrio Bangkal, Dasmariñas, Cavite;

(c) Transfer Certificate of Title No. RT-639 and RT-4641 covering Lot Nos. 6198-A and 6199
with an aggregate area of 159,985 square meters also situated in Barrio Bangkal,
Dasmariñas, Cavite.

(2) Plaintiff National Housing Authority is likewise hereby ordered, under pain of contempt, to
immediately pay the defendants, the amounts stated in the Writ of Execution as the adjudicated
 compensation of their expropriated properties, which process was received by it according to the
records, on September 26, 1988, segregating therefrom, and in separate check, the lawyer's fees
in favor of Atty. Bobby P. Yuseco, in the amount of P322,123.05, as sustained by their contract as
gleaned from the records, with no other deduction, paying on its own (NHA) account, the
necessary legal expenses incident to the registration or issuance of new certificates of title,
pursuant to the provisions of the Property Registration Law (PD 1529);

(3) Defendants, however, are directed to pay the corresponding capital gains tax on the subject
properties, directing them additionally, to coordinate with the plaintiff NHA in this regard, in order
to facilitate the termination of this case, put an end to this controversy and consign the same to its
final rest."

For the alleged failure of respondent NHA to comply with the above order, petitioners filed on April 28,
1992 a complaint5 for forfeiture of rights before the Regional Trial Court of Quezon City, Branch 79, in
Civil Case No. Q-92-12093. They alleged that respondent NHA had not relocated squatters from the
Metropolitan Manila area on the expropriated lands in violation of the stated public purpose for
expropriation and had not paid the just compensation fixed by the court. They prayed that respondent
NHA be enjoined from disposing and alienating the expropriated properties and that judgment be
rendered forfeiting all its rights and interests under the expropriation judgment. In its Answer, 6
respondent NHA averred that it had already paid a substantial amount to herein petitioners and that the
expropriation judgment could not be executed in view of several issues raised by respondent NHA before
the expropriation court (now Branch 18, RTC, Tagaytay City) concerning capital gains tax, registration
fees and other expenses for the transfer of title to respondent NHA, as well as the claims for attorney's
fees of Atty. Joaquin Yuseco, Jr., collaborating counsel for petitioners.

Ocular inspections7 conducted by the trial court on the subject properties show that:

"1. 80% of Lot No. 6198-A with an area of 120,146 square meters is already occupied by
relocatees whose houses are made of light materials with very few houses partly made of hollow
blocks. The relocatees were relocated only on (sic) March of 1994;

2. Most of the area covered by Lot No. 2075 is almost occupied by houses and structures, most of
which are made of concrete materials. These houses are not being occupied by squatters relocated
to the said lot by the defendant NHA;

3. Lot No. 6199 is also occupied by concrete houses and structures but likewise there are no
relocatees in said lot. A large area of the same is still unoccupied."

On September 29, 1995, the trial court rendered judgment dismissing the complaint. Finding that the
failure of respondent NHA to pay just compensation and of petitioners to pay capital gains tax are both
unjustified and unreasonable, the trial court held that: (1) respondent NHA is not deemed to have
abandoned the public purpose for which the subject properties were expropriated because the relocation
of squatters involves a long and tedious process. It ruled that respondent NHA actually pursued the public
purpose of the expropriation when it entered into a contract with Arceo C. Cruz involving the construction
of low cost housing on the expropriated lots to be sold to qualified low income beneficiaries; (2) there is
no condition imposed in the expropriation judgment that the subject properties shall revert back to its
original owners in case the purpose of expropriation is terminated or abandoned; (3) the payment of just
compensation is independent of the obligation of herein petitioners to pay capital gains tax; and (4) in the
payment of just compensation, the basis should be the value at the time the property was taken. On
appeal, the Court of Appeals affirmed the decision of the trial court.

Petitioners are now before us raising the following assignment of errors:

"1. The Honorable Court of Appeals had decided a question of substance not in accord with justice
and equity when it ruled that, as the judgment of the expropriation court did not contain a
condition that should the expropriated property be not used for the intended purpose it would
revert to the condemnee, the action to declare the forfeiture of rights under the expropriation
judgment can not prosper;

2. The Honorable Court of Appeals decided a question of substance not in accord with
jurisprudence, justice and equity when it ruled that the non-payment is not a ground for forfeiture;
 3. The Honorable Court of Appeals erred in not declaring the judgment of expropriation forfeited in
light of the failure of respondent to use the expropriated property for the intended purpose but for
a totally different purpose."

The petition is not impressed with merit.

Petitioners contend that respondent NHA violated the stated public purpose for the expansion of the
Dasmariñas Resettlement Project when it failed to relocate the squatters from the Metro Manila area, as
borne out by the ocular inspection conducted by the trial court which showed that most of the
expropriated properties remain unoccupied. Petitioners likewise question the public nature of the use by
respondent NHA when it entered into a contract for the construction of low cost housing units, which is
allegedly different from the stated public purpose in the expropriation proceedings. Hence, it is claimed
that respondent NHA has forfeited its rights and interests by virtue of the expropriation judgment and the
expropriated properties should now be returned to herein petitioners. We are not persuaded.

The 1987 Constitution explicitly provides for the exercise of the power of eminent domain over private
properties upon payment of just compensation. More specifically, section 9, Article III states that private
property shall not be taken for public use without just compensation. The constitutional restraints are
public use and just compensation.

Petitioners cannot insist on a restrictive view of the eminent domain provision of the Constitution by
contending that the contract for low cost housing is a deviation from the stated public use. It is now
settled doctrine that the concept of public use is no longer limited to traditional purposes. Here, as
elsewhere, the idea that "public use" is strictly limited to clear cases of "use by the public" has been
abandoned. The term "public use" has now been held to be synonymous with "public interest," "public
benefit," "public welfare," and "public convenience."8 The rationale for this new approach is well explained
in the case of Heirs of Juancho Ardona, et al. vs. Reyes, et al.,9 to wit:

"The restrictive view of public use may be appropriate for a nation which circumscribes the scope
of government activities and public concerns and which possesses big and correctly located public
lands that obviate the need to take private property for public purposes. Neither circumstance
applies to the Philippines. We have never been a laissez faire State. And the necessities which
impel the exertion of sovereign power are all too often found in areas of scarce public land or
limited government resources.

x x x           x x x           x x x

The taking to be valid must be for public use. There was a time when it was felt that a literal
meaning should be attached to such a requirement. Whatever project is undertaken must be for
the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It
is not anymore. As long as the purpose of the taking is public, then the power of eminent domain
comes into play. As just noted, the constitution in at least two cases, to remove any doubt,
determines what is public use. One is the expropriation of lands to be subdivided into small lots for
resale at cost to individuals. The other is in the transfer, through the exercise of this power, of
utilities and other private enterprise to the government. It is accurate to state then that at present
whatever may be beneficially employed for the general welfare satisfies the requirement of public
use." (emphasis supplied)

The act of respondent NHA in entering into a contract with a real estate developer for the construction of
low cost housing on the expropriated lots to be sold to qualified low income beneficiaries cannot be taken
to mean as a deviation from the stated public purpose of their taking. Jurisprudence has it that the
expropriation of private land for slum clearance and urban development is for a public purpose even if the
developed area is later sold to private homeowners, commercials firms, entertainment and service
companies, and other private concerns.10

Moreover, the Constitution itself allows the State to undertake, for the common good and in cooperation
with the private sector, a continuing program of urban land reform and housing which will make at
affordable cost decent housing and basic services to underprivileged and homeless citizens in urban
centers and resettlement areas.11 The expropriation of private property for the purpose of socialized
housing for the marginalized sector is in furtherance of the social justice provision under Section 1, Article
XIII of the Constitution which provides that:
 "SECTION 1. The Congress shall give highest priority to the enactment of measures that protect
and enhance the right of all the people to human dignity, reduce social, economic, and political
inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the
common good.

To this end, the State shall require the acquisition, ownership, use and disposition of property and
its increments."

It follows that the low cost housing project of respondent NHA on the expropriated lots is compliant with
the "public use" requirement.

We likewise do not subscribe to petitioners' contention that the stated public purpose was abandoned
when respondent NHA failed to occupy the expropriated lots by relocating squatters from the Metro Manila
area. The expropriation judgment declared that respondent NHA has a lawful right to take petitioners
properties "for the public use or purpose of expanding the Dasmariñas Resettlement Project." The taking
here is absolute, without any condition, restriction or qualification. Contrary to petitioners' submission, the
ruling enunciated in the early case of Fery vs. Municipality of Cabanatuan,12 is still good and sound
doctrine, viz.:

"x x x If, for example, land is expropriated for a particular purpose, with the condition that when
that purpose is ended or abandoned the property shall return to its former owner, then, of course,
when the purpose is terminated or abandoned the former owner reacquires the property so
expropriated. x x x If, upon the contrary, however, the decree of expropriation gives to the entity
a fee simple title, then, of course, the land becomes the absolute property of the expropriator x x
x.

When land has been acquired for public use in fee simple unconditionally, either by the exercise of
eminent domain or by purchase, the former owner retains no rights in the land, and the public use
may be abandoned, or the land may be devoted to a different use, without any impairment of the
estate or title acquired, or any reversion to the former owner."

Petitioners further aver that the continued failure of respondent NHA to pay just compensation for a long
period of time justifies the forfeiture of its rights and interests over the expropriated lots. They demand
the return of the expropriated lots. Respondent NHA justifies the delay to pay just compensation by
reason of the failure of petitioners to pay the capital gains tax and to surrender the owners' duplicate
certificates of title.

In the recent case of Republic of the Philippines vs. Court of Appeals, et al.,13 the Court ruled that non-
payment of just compensation does not entitle the private landowners to recover possession of their
expropriated lots. Thus:

"Thus, in Valdehueza vs. Republic where the private landowners had remained unpaid ten years
after the termination of the expropriation proceedings, this Court ruled –

'The points in dispute are whether such payment can still be made and, if so, in what amount. Said
lots have been the subject of expropriation proceedings. By final and executory judgment in said
proceedings, they were condemned for public use, as part of an airport, and ordered sold to the
government. x x x. It follows that both by virtue of the judgment, long final, in the expropriation
suit, as well as the annotations upon their title certificates, plaintiffs are not entitled to recover
possession of their expropriated lots – which are still devoted to the public use for which they were
expropriated – but only to demand the market value of the same.

Said relief may be granted under plaintiffs' prayer for such other remedies, which may be deemed
just and equitable under the premises.'

The Court proceeded to reiterate its pronouncement in Alfonso vs. Pasay City where the recovery
of possession of property taken for public use prayed for by the unpaid landowner was denied even
while no requisite expropriation proceedings were first instituted. The landowner was merely given
the relief of recovering compensation for his property computed at its market value at the time it
was taken and appropriated by the State.
 The judgment rendered by the Bulacan RTC in 1979 on the expropriation proceedings provides not
only for the payment of just compensation to herein respondents but likewise adjudges the
property condemned in favor of petitioner over which parties, as well as their privies, are bound.
Petitioner has occupied, utilized and, for all intents and purposes, exercised dominion over the
property pursuant to the judgment. The exercise of such rights vested to it as the condemnee
indeed has amounted to at least a partial compliance or satisfaction of the 1979 judgment, thereby
preempting any claim of bar by prescription on grounds of non-execution. In arguing for the return
of their property on the basis of non-payment, respondents ignore the fact that the right of the
expropriating authority is far from that of an unpaid seller in ordinary sales, to which the remedy
of rescission might perhaps apply. An in rem proceeding, condemnation acts upon the property.
After condemnation, the paramount title is in the public under a new and independent title; thus,
by giving notice to all claimants to a disputed title, condemnation proceedings provide a judicial
process for securing better title against all the world than may be obtained by voluntary
conveyance." (emphasis supplied)

We, however, likewise find the refusal of respondent NHA to pay just compensation, allegedly for failure of
petitioners to pay capital gains tax and surrender the owners' duplicate certificates of title, to be
unfounded and unjustified.

First, under the expropriation judgment the payment of just compensation is not subject to any condition.
Second, it is a recognized rule that although the right to enter upon and appropriate the land to public use
is completed prior to payment, title to the property expropriated shall pass from the owner to the
expropriator only upon full payment of the just compensation. In the case of Association of Small
Landowners in the Phils., Inc., et al. vs. Secretary of Agrarian Reform,14 it was held that:

"Title to property which is the subject of condemnation proceedings does not vest the condemnor
until the judgment fixing just compensation is entered and paid, but the condemnor's title relates
back to the date on which the petition under the Eminent Domain Act, or the commissioner's
report under the Local Improvement Act, is filed.

x x x Although the right to appropriate and use land taken for a canal is complete at the time of
entry, title to the property taken remains in the owner until payment is actually made.

In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to property
does not pass to the condemnor until just compensation had actually been made. In fact, the
decisions appear to be uniformly to this effect. As early as 1838, in Rubottom v. McLure, it was
held that 'actual payment to the owner of the condemned property was a condition precedent to
the investment of the title to the property in the State' albeit 'not to the appropriation of it to
public use.' In Rexford v. Knight, the Court of Appeals of New York said that the construction upon
the statutes was that the fee did not vest in the State until the payment of the compensation
although the authority to enter upon and appropriate the land was complete prior to the payment.
Kennedy further said that 'both on principle and authority the rule is x x x that the right to enter
on and use the property is complete, as soon as the property is actually appropriated under the
authority of law for a public use, but that the title does not pass from the owner without his
consent, until just compensation has been made to him.'"

Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that:

If the laws which we have exhibited or cited in the preceding discussion are attentively examined it
will be apparent that the method of expropriation adopted in this jurisdiction is such as to afford
absolute reassurance that no piece of land can be finally and irrevocably taken from an unwilling
owner until compensation is paid. x x x." (emphasis supplied)

With respect to the amount of the just compensation still due and demandable from respondent NHA, the
lower courts erred in not awarding interest computed from the time the property is actually taken to the
time when compensation is actually paid or deposited in court. In Republic, et al. vs. Court of Appeals, et
al.,15 the Court imposed interest at 12% per annum in order to help eliminate the issue of the constant
fluctuation and inflation of the value of the currency over time, thus:

"The constitutional limitation of 'just compensation' is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market
in the usual and ordinary course of legal action and competition or the fair value of the property as
between one who receives, and one who desires to sell, it being fixed at the time of the actual
 taking by the government. Thus, if property is taken for public use before compensation is
deposited with the court having jurisdiction over the case, the final compensation must include
interests on its just value to be computed from the time the property is taken to the time when
compensation is actually paid or deposited with the court. In fine, between the taking of the
property and the actual payment, legal interests accrue in order to place the owner in a position as
good as (but not better than) the position he was in before the taking occurred.

x x x This allowance of interest on the amount found to be the value of the property as of the time
of the taking computed, being an effective forbearance, at 12% per annum should help eliminate
the issue of the constant fluctuation and inflation of the value of the currency over time. Article
1250 of the Civil Code, providing that, in case of extraordinary inflation or deflation, the value of
the currency at the time of the establishment of the obligation shall be the basis for the payment
when no agreement to the contrary is stipulated, has strict application only to contractual
obligations. In other words, a contractual agreement is needed for the effects of extraordinary
inflation to be taken into account to alter the value of the currency."

Records show that there is an outstanding balance of P1,218,574.35 that ought to be paid to petitioners. 16
It is not disputed that respondent NHA took actual possession of the expropriated properties in 1977. 17
Perforce, while petitioners are not entitled to the return of the expropriated property, they are entitled to
be paid the balance of P1,218,574.35 with legal interest thereon at 12% per annum computed from the
taking of the property in 1977 until the due amount shall have been fully paid.

WHEREFORE, the appealed judgment is modified as follows:

1. Ordering respondent National Housing Authority to pay petitioners the amount of P1,218,574.35
with legal interest thereon at 12% per annum computed from the taking of the expropriated
properties in 1997 until the amount due shall have been fully paid;

2. Ordering petitioners to pay the capital gains tax; and

3. Ordering petitioners to surrender to respondent National Housing Authority the owners'

duplicate certificates of title of the expropriated properties upon full payment of just compensation.

G.R. No. 155065. July 28, 2005

NATIONAL POWER CORPORATION, Petitioner,

vs.
HON. SYLVA G. AGUIRRE PADERANGA, Presiding Judge, Regional Trial Court of Danao City, Branch 25,
PETRONA O. DILAO, FEDIL T. OSMEÑA, ISABEL T. OSMEÑA, CELESTINO O. GALON, POTENCIA O.
BATUCAN, TRINIDAD T. OSMEÑA, LULIA T. OSMEÑA, LOURDES O. DAFFON, VICTORIA O. BARRIGA and
JUAN T. OSMEÑA, JR., and ESTEFANIA ENRIQUEZ, Respondents.

DECISION

CARPIO MORALES, J.:

The Court of Appeals Decision1 dated June 6, 2002, as well as its Resolution 2 dated August 30, 2002,
affirming the decision3 of the Regional Trial Court of Danao City, Branch 25 which granted the complaint
for expropriation filed by herein petitioner National Power Corporation (NPC) against herein respondents
"Petrona Dilao et al." are being assailed in the present Petition for Review on Certiorari.

To implement its Leyte-Cebu Interconnection Project, the NPC filed on March 19, 1996 before the
Regional Trial Court of Danao City a complaint for expropriation 4 of parcels of land situated at Baring and
Cantumog, Carmen, Cebu5 against the following defendants:

NAMES ADDRESS

1. Petrona O.6 Dilao Poblacion, Carmen, Cebu

2. Fidel T. Osmeña -do-

3. Isabel T. Osmeña -do-

4. Celestina O. Galon -do-

5. Potenciana O. Batucan -do-

6. Trinidad T. Osmeña -do-

7. Lulia T.Osmeña -do-

8. Lourdes O. Daffon -do-

9. Victoria O. Barriga -do-

10. Juan T. Osmeña, Jr. -do-

11. Estefania Enriquez Marijoy Realty Corp.

Natalio Bacalso Ave.

Mambaling, Cebu City7

(Underscoring supplied)

The complaint covers (a) 7,281 square meters of the 25,758 square meters of land co-owned by herein
respondents Petrona O. Dilao (Dilao) and the above-listed defendant Nos. 2-10 who are her siblings, and
(b) 7,879 square meters of the 17,019 square meters of land owned by Estefania Enriquez (Enriquez). 8

A day after the complaint was filed or on March 20, 1996, NPC filed an urgent ex parte motion for the
issuance of writ of possession of the lands.

Dilao filed her Answer with Counterclaim on April 19, 1996.9 Enriquez did not.10

On May 9, 1996, Branch 25 of the RTC Danao, issued an Order11 granting NPC’s motion for the issuance of
writ of possession. It then appointed a Board of Commissioners to determine just compensation. 12

The commissioners submitted on April 15, 1999 their report13 to the trial court containing, among other
things, their recommended appraisal of the parcel of land co-owned by defendants Dilao and her siblings
at P516.66 per square meter.

To the Commissioners’ Report, the NPC filed its Comment/Opposition 14 assailing the correctness of the
appraisal for failing to take into account Republic Act (R.A.) No. 6395 (an act revising the charter of the
national power corporation), as amended, specifically Section 3A15 thereof which provides that the just
compensation for right-of-way easement (for which that portion of the Dilao property is being
expropriated) shall be equivalent to ten percent (10%) of the market value of the property. The traversed
land, NPC asserted, could still be used for agricultural purposes by the defendants, subject only to its
easement. It added that the lots were of no use to its operations except for its transmission lines. 16

By Decision of November 10, 1999, the trial court rendered a decision on the complaint, adopting the
commissioners’ recommended appraisal of the land co-owned by Dilao and her siblings. The dispositive
portion of the decision reads:

WHEREFORE, judgment is hereby rendered condemning the property of Petrona Dilao et al. which has
been affected by 7,281 square meters in favor of plaintiff; declaring in favor of defendants for plaintiff to
pay the fair market value of said area affected at P516.66 per square or a total of P3,761,801.40 plus
P250,000.00 for the value of the improvements affected by herein expropriation.

SO ORDERED.17 (Emphasis and underscoring supplied).

Copy of the decision was received by NPC on November 18, 1999.18

NPC filed a Notice of Appeal19 but the trial court, by Order of January 17, 2000, denied the same for NPC’s
failure to file and perfect it within the reglementary period, it having failed to file a record on appeal. 20 To
the Order, NPC filed a motion for reconsideration,21 contending that a record on appeal was not required
as the trial court rendered judgment against all the defendants including Enriquez as shown, so it claimed,
by the dispositive portion of the decision referring to "Petrona Dilao et al."

By Resolution22 of March 7, 2000, the trial court denied NPC’s motion for reconsideration, clarifying that
the reference to "Petrona Dilao et al." in the dispositive portion of its decision was meant to cover only
Dilao and her co-owner-siblings.23

NPC subsequently filed before the trial court a petition for relief from the denial of its appeal on the
ground that its failure to file a record on appeal was due to honest mistake and excusable neglect, it
having believed that a record on appeal was not required in light of the failure of the other defendant,
Enriquez, to file an answer to the complaint. 24

The trial court denied NPC’s petition for relief for lack of factual and legal basis. 25

On August 17, 2001, the trial court granted Dilao et al.’s motion for execution of judgment. 26 NPC
thereupon filed a petition for certiorari with the Court of Appeals with prayer for temporary restraining
order and a writ of preliminary injunction27 assailing the trial court’s order denying its appeal and other
orders related thereto, as well as the order granting Dilao et al.’s motion for execution. The appellate
court, however, denied NPC’s petition,28 it holding that under Rule 41, Section 2 of the 1997 Rules of Civil
Procedure, the filing of a record on appeal is required in special proceedings and other cases of multiple or
separate appeals, as in an action for expropriation in which the order determining the right of the plaintiff
to expropriate and the subsequent adjudication on the issue of just compensation may be the subject of
separate appeals.29

Aggrieved, NPC challenged the appellate court’s decision via the present petition, 30 it contending that the
trial court’s questioned orders "effectively deprived it of its constitutional right to due process."

NPC argues that a complaint for expropriation is a Special Civil Action under Rule 67 of the Rules of Civil
Procedure, not a "special proceeding" as contemplated under Rule 41, Section 2 of the Rules of Civil
Procedure; that there is no law or rules specifically requiring that a record on appeal shall be filed in
expropriation cases; and of the two sets of defendants in the present case, the Dilaos and Enriquez, the
first, while they filed an answer, did not appeal the trial court’s decision, while with respect to the second,
there is no showing that summons was served upon her, hence, the trial court did not acquire jurisdiction
over her and, therefore, no appeal could arise whatsoever with respect to the complaint against her. Ergo,
petitioner concludes, no possibility of multiple appeals arose from the case.

The petition fails.

Rule 41, Section 2 of the 1997 Rules of Civil Procedure, as amended, clearly provides:

SEC. 2. Modes of Appeals. —

(a) Ordinary appeal. — The appeal to the Court of Appeals in cases decided by the Regional Trial Court in
the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which
rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party.
No record on appeal shall be required except in special proceedings and other cases of multiple or
separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be
filed and served in like manner.

x x x (Emphasis and underscoring supplied).

While admittedly a complaint for expropriation is not a special proceeding, the above-quoted rule requires
the filing of a record on appeal in "other cases of multiple or separate appeal."

Jurisprudential law, no doubt, recognizes the existence of multiple appeals in a complaint for
expropriation.31 The case of Municipality of Biñan v. Garcia32 vividly expounds on the matter, viz:

1. There are two (2) stages in every action of expropriation. The first is concerned with the determination
of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise
in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action, "of
condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned,
for the public use or purpose described in the complaint, upon the payment of just compensation to be
determined as of the date of the filing of the complaint." An order of dismissal, if this be ordained, would
be a final one, of course, since it finally disposes of the action and leaves nothing more to be done by the
Court on the merits. So, too, would an order of condemnation be a final one, for thereafter, as the Rules
expressly state, in the proceedings before the Trial Court, "no objection to the exercise of the right of
condemnation (or the propriety thereof) shall be filed or heard.

The second phase of the eminent domain action is concerned with the determination by the Court of "the
just compensation for the property sought to be taken." This is done by the Court with the assistance of
not more than three (3) commissioners. The order fixing the just compensation on the basis of the
evidence before, and findings of, the commissioners would be final, too. It would finally dispose of the
second stage of the suit, and leave nothing more to be done by the Court regarding the issue. Obviously,
one or another of the parties may believe the order to be erroneous in its appreciation of the evidence or
findings of fact or otherwise. Obviously, too, such a dissatisfied party may seek reversal of the order by
taking an appeal therefrom. (Underscoring supplied).

Thus, in Municipality of Biñan, this Court held that in actions for eminent domain, since no less than two
appeals are allowed by law, the period for appeal from an order of condemnation is thirty days counted
from notice thereof and not the ordinary period of fifteen days prescribed for actions in general. 33 As such,
the complaint falls under the classification of "other cases of multiple or separate appeal where the law or
these rules so require" in above-quoted Section 2(a) of Rule 41 of the Rules of Civil Procedure in which a
record on appeal is required to be filed and served.

Respecting NPC’s claim that the trial court did not acquire jurisdiction over the other defendant, Enriquez,
there being no evidence that summons was served on her and, therefore, no appeal with respect to the
case against her arose, the trial court’s Order34 of May 9, 1996 belies said claim:

xxx

In the letter-appeal by defendant Estefania V. Enriquez addressed to the Court, defendant did manifest no
opposition to the right of plaintiff to the use of her land but only wich (sic) that payment be based on the
actual market value of the property sought to be expropriated. In comment to said letter-appeal, plaintiff
stressed that the amount deposited was purely to secure a writ of possession as provided under PD 42. It
agreed with defendant that the fair market value or actual market value shall be the basis for the just
compensation of the property.

x x x (Emphasis and underscoring supplied)

That the defendant Enriquez did not file an answer to the complaint did not foreclose the possibility of an
appeal arising therefrom. For Section 3 of Rule 67 provides:

Sec. 3. Defenses and objections. – If a defendant has no objection or defense to the action or the taking
of his property, he may file and serve a notice of appearance and a manifestation to that effect,
specifically designating or identifying the property in which he claims to be interested, within the time
stated in the summons. Thereafter, he shall be entitled to notice of all proceedings affecting the same.

If a defendant has any objection to the filing of or the allegations in the complaint, or any objection or
defense to the taking of his property, he shall serve his answer within the time stated in the summons.
The answer shall specifically designate or identify the property in which he claims to have an interest,
state the nature and extent of the interest claimed, and adduce all his objections and defenses to the
taking of his property. No counterclaim, cross-claim or third-party complaint shall be alleged or allowed in
the answer or any subsequent pleading.

A defendant waives all defenses and objections not so alleged but the court, in the interest of justice, may
permit amendments to the answer to be made not later than ten (10) days from the filing thereof.
However, at the trial of the issue of just compensation, whether or not a defendant has previously
appeared or answered, he may present evidence as to the amount of the compensation to be paid for his
property, and he may share in the distribution of the award. (Emphasis and underscoring supplied).

In other words, once the compensation for Enriquez’ property is placed in issue at the trial, she could,
following the third paragraph of the immediately-quoted Section 3 of Rule 67, participate therein and if
she is not in conformity with the trial court’s determination of the compensation, she can appeal
therefrom.

Multiple or separate appeals being existent in the present expropriation case, NPC should have filed a
record on appeal within 30 days from receipt of the trial court’s decision. The trial court’s dismissal of its
appeal, which was affirmed by the appellate court, was thus in order.

En passant, glossing over NPC’s failure to file record on appeal, its appeal would still not prosper on
substantive grounds.

NPC anchored its appeal35 on the alleged overvalued appraisal by the commissioners of the compensation
to be awarded to Dilao et al., the commissioners having allegedly lost sight of the already mentioned 10%
limit provided under Section 3A of R.A. No. 6395.

In National Power Corporation v. Chiong,36 petitioner similarly argued therein that the Court of Appeals
gravely erred in upholding the RTC order requiring it to pay the full market value of the expropriated
properties, despite the fact that it was only acquiring an easement of right-of-way for its transmission
lines. It pointed out, as it does in the present case, that under Section 3A of RA No. 6395, as amended,
where only an easement of right-of-way shall be acquired, with the principal purpose for which the land is
actually devoted is unimpaired, the compensation should not exceed ten percent (10%) of the market
value of the property. Upholding the trial court and the Court of Appeals’s approval of the commissioners’
recommendation in that case, this Court declared:

In fixing the valuation at P500.00 per square meter, the Court of Appeals noted that the trial court had
considered the reports of the commissioners and the proofs submitted by the parties. This includes the
fair market value of P1,100.00 per square meter proffered by the respondents. This valuation by owners
of the property may not be binding upon the petitioner or the court, although it should at least set a
ceiling price for the compensation to be awarded. The trial court found that the parcels of land sought to
be expropriated are agricultural land, with minimal improvements. It is the nature and character of the
land at the time of its taking that is the principal criterion to determine just compensation to the
landowner. Hence, the trial court accepted not the owner’s valuation of P1,100 per square meter but only
P500 as recommended in the majority report of the commissioners.

xxx

In finding that the trial court did not abuse its authority in evaluating the evidence and the reports placed
before it nor did it misapply the rules governing fair valuation, the Court of Appeals found the majority
report’s valuation of P500 per square meter to be fair. Said factual finding of the Court of Appeals, absent
any showing that the valuation is exorbitant or otherwise unjustified, is binding on the parties as well as
this Court. (Emphasis and underscoring supplied).

Indeed, expropriation is not limited to the acquisition of real property with a corresponding transfer of title
or possession. The right-of-way easement resulting in a restriction or limitation on property rights over
the land traversed by transmission lines, as in the present case, also falls within the ambit of the term
"expropriation." As explained in National Power Corporation v. Gutierrez,37 viz:

The trial court’s observation shared by the appellate court show that "x x x While it is true that plaintiff
[is] only after a right-of-way easement, it nevertheless perpetually deprives defendants of their
proprietary rights as manifested by the imposition by the plaintiff upon defendants that below said
transmission lines no plant higher than three (3) meters is allowed. Furthermore, because of the high-
tension current conveyed through said transmission lines, danger to life and limbs that may be caused
beneath said wires cannot altogether be discounted, and to cap it all, plaintiff only pays the fee to
defendants once, while the latter shall continually pay the taxes due on said affected portion of their
property."

The foregoing facts considered, the acquisition of the right-of-way easement falls within the purview of
the power of eminent domain. Such conclusion finds support in similar cases of easement of right-of-way
where the Supreme Court sustained the award of just compensation for private property condemned for
public use (See National Power Corporation vs. Court of Appeals, 129 SCRA 665, 1984; Garcia vs. Court
of Appeals, 102 SCRA 597, 1981). The Supreme Court, in Republic of the Philippines vs. PLDT, thus held
that:
"Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and
possession of, the expropriated property; but no cogent reason appears why said power may not be
availed of to impose only a burden upon the owner of condemned property, without loss of title and
possession. It is unquestionable that real property may, through expropriation, be subjected to an
easement of right-of-way."

In the case at bar, the easement of right-of-way is definitely a taking under the power of eminent domain.
Considering the nature and effect of the installation of the 230 KV Mexico-Limay transmission lines, the
limitation imposed by NPC against the use of the land for an indefinite period deprives private
respondents of its ordinary use. (Emphasis and underscoring supplied).

From the Commissioners’ Report38 chronicling the following findings:

xxx

1. The parcel of land owned by the defendant PETRONA O. DILAO, et al. is very fertile, plain, suited for
any crops production, portion of which planted with coco trees and mango trees, portion planted with
corn, sometimes planted with sugar cane, the said land has a distance of about 1 kilometer from the
trading center, about 100 meters from an industrial land (Shemberg Biotech Corp.) adjacent to a Poultry
Farm and lies along the Provincial Road.

xxx

IMPROVEMENTS AFFECTED

Per ocular inspection made on lot own by PETRONA O. DILAO, et al. traversed by a transmission line of
NPC and with my verification as to the number of improvements, the following trees had been damaged.

1. 55 coco trees productive

2. 10 mango trees productive

3. 30 cacao trees productive

4. 110 bananas

5. 400 ipil-ipil trees

x x x,39

it cannot be gainsaid that NPC’s complaint merely involves a simple case of mere passage of transmission
lines over Dilao et al.’s property. Aside from the actual damage done to the property traversed by the
transmission lines, the agricultural and economic activity normally undertaken on the entire property is
unquestionably restricted and perpetually hampered as the environment is made dangerous to the
occupant’s life and limb.

The determination of just compensation in expropriation proceedings being a judicial function, 40 this Court
finds the commissioners’ recommendation of P516.66 per square meter, which was approved by the trial
court, to be just and reasonable compensation for the expropriated property of Dilao and her siblings.

In fine, the appeal sought by NPC does not stand on both procedural and substantive grounds.

WHEREFORE, the petition is hereby DENIED.

G.R. No. 147245. March 31, 2005

THE REPUBLIC OF THE PHILIPPINES REPRESENTED BY THE NATIONAL IRRIGATION ADMINISTRATION,

Petitioner,
vs.
THE HONORABLE COURT OF APPEALS and FRANCISCO DIAZ, IN HIS CAPACITY AS ADMINISTRATOR OF
THE INTESTATE ESTATE OF THE LATE MANUEL DIAZ, Respondents.
 DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review on certiorari1 assailing the Decision2 of 26 January 2001 of the
Court of Appeals in CA-G.R. CV No. 57493. The Court of Appeals modified the Decision 3 of 28 November
1996 of the Regional Trial Court of Cabanatuan City, Branch 28 in Civil Case No. 1593-AF, but affirmed
the trial court’s award of P4 million to respondent.

Antecedent Facts

Manuel Diaz owned approximately 172 hectares of tenanted agricultural land ("Property") devoted to the
planting of palay. The Property was located in La Fuente, Sta. Rosa, Nueva Ecija, and allegedly yielded
between 132 to 200 cavans of palay per hectare every year. After Manuel Diaz’s death, his son, Francis o
Diaz ("respondent"), was appointed administrator of the Property.

In 1972, the National Irrigation Administration ("NIA") bulldozed about ten (10) hectares of the Property
to build two irrigation canals ("canals"). Although the canals when finished occupied only a portion of the
10 hectares, the entire area became prone to flooding two months out of every year because of the side-
burrow method NIA used in the construction of the canals.4 NIA completed the canals without instituting
expropriation proceedings or indemnifying the Property’s owners.

Respondent sought compensation from NIA for the land affected by the canals, as well as for losses due to
unrealized profits. He submitted various documents requested by NIA officials and even traveled to NIA’s
Manila office to present his claims.

In 1980, NIA belatedly offered to buy the portions of the Property occupied by the canals pursuant to
NIA’s expansion program. Respondent and then NIA Acting Administrator Pelagio Gamad, Jr. signed three
deeds of sale5 ("1980 deeds of sale") on 24 December 1980 to convey 15,677, 1,897 and 4,499 square
meters, or a total of 22,073 square meters, of the Property to NIA. For reasons that neither party has
adequately explained, NIA and respondent did not push through with the sale. The 1980 deeds of sale
were never implemented. Respondent did not receive any consideration pursuant to these deeds.

On 20 August 1993, respondent, as administrator of the Property, filed an action for damages and just
compensation against NIA. Respondent sought P10 million from NIA as just compensation, P3 million as
unrealized profits or lucro cessante, P1 million attorney’s fees, and costs of suit. Respondent later filed an
Amended Complaint,6 in which respondent additionally prayed that, in the alternative, the court order NIA
to vacate and surrender the Property to respondent, and to pay damages, interest, attorney’s fees and
costs of suit. The trial court accepted and gave due course to the Amended Complaint in its Order of 22
July 1994.

NIA countered that respondent’s right to bring the action had prescribed in accordance with Republic Act
No. 3601 ("RA 3601"), as amended by Presidential Decree No. 552 7 ("PD 552"). NIA also argued that
respondent’s failure to pursue the implementation of the 1980 deeds of sale amounted to laches.

The Ruling of the Trial Court

The trial court found that NIA took between 9 to 11 hectares of the Property. NIA never paid respondent
for the use of the land or for the subsequent loss of crops.

The trial court also ruled that respondent’s right to seek damages had not lapsed. The trial court’s
Decision of 28 November 1996 ("trial court’s decision") reads in part:

xxx Defendant should not waylay the plaintiff by prolonging the negotiation and then later on invoked
(sic) prescription of action as a defense, this is a plain and simple way of defrauding others which Courts
of Justice should not countenance. While it is true that R.A. No. 3601 is (sic) amended by PD 552 sets a
limit on [or] capped the time within which to file the claims against acts and/or usurpation by the NIA,
running of the prescriptive period should not be absolute but must be dependent on the circumstances
attendant to each case, because of the confiscatory nature of the law.
IN VIEW OF THE ABOVE FINDINGS AND DISCUSSION of the matters relevant to the instant case, the
Court finds for the plaintiff and judgment is hereby rendered directing the defendant to pay the plaintiff
the following:

1. the sum of Four Million Pesos (P4,000,000.00) representing payment to the 11 hectares of riceland
occupied by the irrigation canal that traversed on the property of the Diazes;

2. the sum of Six Million Six Hundred Seventy Nine Thousand Two Hundred Pesos (P6,679,200.00)
representing the loss of 23,396 cavans of palay on account of the destruction made when the two
irrigation canals were constructed on the property of the plaintiff through side-burrow instead of the
earthfilling method, thus resulting further depression on the lots of the plaintiffs where during rainy
season water stays for months and (sic) cannot be planted with palay;

3. the sum of P500,000.00 by way of attorney’s fees; and defendant is likewise directed to pay the costs
of the suit.

SO ORDERED.8

NIA appealed the trial court’s decision to the Court of Appeals.

The Ruling of the Court of Appeals

The Court of Appeals found that NIA bulldozed approximately 10 hectares of the Property without paying
compensation. Like the trial court, the appellate court rejected NIA’s argument that respondent’s claims
had prescribed under PD 552. The Court of Appeals held that the 5-year prescriptive period mandated by
PD 552 did not apply because respondent and NIA were in deep negotiations during that period, and
because NIA itself had stalled respondent’s attempts to present his claims.

The Court of Appeals upheld the trial court’s award of P4 Million. Citing Garcia v. Court of Appeals,9 the
appellate court held that the rule requiring just compensation to be fixed as of the time of the taking was
inapplicable to the present case. However, the appellate court struck down the award of P6,679,200 on
the ground that respondent failed to adequately prove lost earnings. The appellate court also set aside the
award of attorney’s fees for lack of sufficient basis.

The dispositive portion of the Court of Appeals’ Decision of 26 January 2001 ("CA Decision") states:

WHEREFORE, premises considered, the assailed Decision of the Regional Trial Court of Cabanatuan City is
hereby AFFIRMED, with the MODIFICATION that the lower court’s award of P6,679,200.00 representing
loss of earnings and attorney’s fees of P500,000.00 is hereby DELETED.

SO ORDERED.10

Respondent did not appeal the CA Decision. NIA elevated the case to this Court.

The Issues

NIA, through the Solicitor General, raises the following issues:

I. The Court of Appeals committed Grave Error in awarding P4,000,000.00 in just compensation without
taking into consideration that just compensation must be ascertained at the time of taking in 1972 of the
property, not at the time of the commencement of the filing of the complaint by respondent which, if not
corrected, would result in a miscarriage of justice and grave and irreparable damage to petitioner/NIA.

II. The Court of Appeals gravely erred when it affirmed the trial court’s decision awarding just
compensation of P4,000,000.00 to respondent on the basis of respondent’s Sinumpaang Salaysay dated
September 20, 1995 and a letter of respondent, through counsel, dated February 8, 1994.

III. The Court of Appeals gravely erred in not remanding the case to the trial court and in not directing it
to appoint at least three commissioners selected by the parties, to hear, review, view the property and
thereafter to assess the amount for the just compensation.11
NIA no longer argues that respondent’s claim has prescribed under PD 552, but maintains that respondent
is guilty of laches. NIA also assails the lower courts’ award of P4 million. NIA claims that the construction
of the canals affected only 96,655 square meters of the Property. NIA computes the just compensation
due to respondent at P1.39 per square meter, the price NIA and respondent agreed on in 1980. In sum,
NIA contends that it should only pay respondent P134,350.45, and legal interest of 6% per annum from
1972 until the amount is fully paid, for 96,655 square meters of the Property.

The appellate court’s denial of the awards for loss of earnings and attorney’s fees are no longer in issue as
respondent chose not to appeal the CA Decision. The remaining questions for resolution by this Court are:
(1) whether laches bars respondent’s claims; (2) whether this case should be remanded to the trial court
for the appointment of commissioners; and (3) whether the Court of Appeals erred in affirming the award
of P4 million to respondent.

The Ruling of the Court

The petition is partly meritorious.

Respondent’s Action Not Barred by Laches

Having failed for three decades to pay respondent just compensation, NIA would now have respondent’s
complaint dismissed on the ground that too much time has passed for respondent to pursue his claim. NIA
first argued before the trial and appellate courts that respondent’s action had prescribed under PD 552.
Although NIA has dropped its argument of prescription before this Court, NIA still contends that
respondent slept on his rights and laches now bars his action.

Laches is principally a doctrine of equity. Courts apply laches to avoid recognizing a right when to do so
would result in a clearly inequitable situation or in an injustice.12 The principle of laches finds no
application in the present case. There is nothing inequitable in giving due course to respondent’s claim for
compensation. Both equity and the law direct that a property owner should be compensated if his
property is taken for public use.

Eminent domain is the inherent power of a sovereign state to appropriate private property to particular
uses to promote public welfare.13 No one questions NIA’s authority to exercise the delegated power of
eminent domain. However, the power of eminent domain is not limitless. NIA cannot exercise the power
with wanton disregard for property rights. One basic limitation on the State’s power of eminent domain is
the constitutional directive that, "[p]rivate property shall not be taken for public use without just
compensation."14

The thirteen-year interval between the execution of the 1980 deeds of sale and the filing of the complaint
in 1993 does not bar respondent’s claim for compensation. In National Power Corporation v. Campos,
Jr.,15 this Court reiterated the long-standing rule "that where private property is taken by the Government
for public use without first acquiring title thereto either through expropriation or negotiated sale, the
owner’s action to recover the land or the value thereof does not prescribe."16

Thus, in Ansaldo v. Tantuico, Jr.17 the Court allowed the landowners to seek compensation twenty-six
years after the government took their land. In Amigable v. Cuenca, etc., et al.,18 Amigable filed an action
to claim compensation more than thirty years after the government constructed the roads on her lot. In
both cases, the property owners were silent for several years before finally bringing their claims to the
attention of the authorities. In contrast, in the present case, respondent has steadfastly pursued his claim
with NIA since 1972.

NIA faults respondent for "desisting from claiming just compensation from NIA in 1980," 19 referring to the
1980 deeds of sale which were never implemented. NIA conveniently fails to mention that, as the other
party to the 1980 deeds of sale, it was equally delinquent when it failed to perform its obligations under
the deeds.

NIA is partly to blame for the delay in this case. The trial and appellate courts found that NIA stalled and
prolonged negotiations with respondent. Eight years passed before NIA even offered to buy the area
occupied by the canals. More than three decades later, respondent has yet to receive an iota of
compensation from NIA. In the meantime, NIA has been charging respondent and the other farmers in the
area irrigation fees for the beneficial use of these canals. 20
NIA’s conduct shows callous disregard for the rights of the Property’s owners and for NIA’s own duties
under the law. As the expropriating agency in this case, NIA should have instituted the proceedings
necessary to acquire the private property it took for public purpose and to compensate the Property’s
owners. Section 2(e) of RA 3601, as amended by PD 552, expressly states that the NIA should "exercise
the right of eminent domain in the manner provided by law for the institution of expropriation
proceedings."21

The exercise of eminent domain entails payment of just compensation. Otherwise, title over the
expropriated property cannot pass to the government.22 Following its own enabling law, NIA should have
taken steps to acquire the affected portion of the Property either through "any mode of acquisition" or
"the institution of expropriation proceedings." 23 RA 3601, as amended, does not authorize NIA to simply
appropriate part of the Property without instituting legal proceedings or compensating respondent.

Whether this Case Should be Remanded to the

Trial Court for the Appointment of Commissioners

NIA contends that it was deprived of due process when the trial court determined the compensation due
to respondent without the assistance of commissioners. NIA refers to the procedure found in Section 5,
Rule 67 of the 1964 Rules of Court applicable at the time, to wit:

SEC. 5. Ascertainment of compensation. – Upon the entry of the order of condemnation, the court shall
appoint not more than three (3) competent and disinterested persons as commissioners to ascertain and
report to the court the just compensation for the property sought to be taken. The order of appointment
shall designate the time and place of the first session of the hearing to be held by the commissioners and
specify the time within which their report is to be filed with the court.

Rule 67, however, presupposes that NIA exercised its right of eminent domain by filing a complaint for
that purpose before the appropriate court.24 Judicial determination of the propriety of the exercise of the
power of eminent domain and the just compensation for the subject property then follows. 25 The
proceedings give the property owner the chance to object to the taking of his property and to present
evidence on its value and on the consequential damage to other parts of his property. 26

Respondent was not given these opportunities, as NIA did not observe the procedure in Rule 67. Worse,
NIA refused to pay respondent just compensation. The seizure of one’s property without payment, even
though intended for public use, is a taking without due process of law and a denial of the equal protection
of the laws.27 NIA, not respondent, transgressed the requirements of due process.

When a government agency itself violates procedural requirements, it waives the usual procedure
prescribed in Rule 67. This Court ruled in the recent case of National Power Corporation ("NPC") v. Court
of Appeals,28 to wit:

We have held that the usual procedure in the determination of just compensation is waived when the
government itself initially violates procedural requirements. NPC’s taking of Pobre’s property without filing
the appropriate expropriation proceedings and paying him just compensation is a transgression of
procedural due process.29 (Emphasis supplied.)

Like in NPC, the present case is not an action for expropriation. NIA never filed expropriation proceedings
although it had ample opportunity to do so. Respondent’s complaint is an ordinary civil action for the
recovery of possession of the Property or its value, and damages. Under these circumstances, a trial
before commissioners is not necessary.30

The records show that NIA had every opportunity to argue its case before the trial court. NIA presented a
witness, cross-examined respondent’s witnesses, and submitted documentary evidence.31 NIA’s officers
even went with respondent on an ocular inspection of the Property. The trial court took into account the
inspection in arriving at its decision. However, NIA never raised the appointment of commissioners as an
issue before the trial court.

Though NIA actively participated in the proceedings below, it did not move for the appointment of
commissioners or object to their absence at any time. A party cannot raise for the first time on appeal an
issue not raised in the trial court.32 NIA is thus estopped from belatedly protesting the lack of
commissioners.
Whether the Court of Appeals Erred in Affirming the

Trial Court’s Award of P4 Million

Jurisprudence clearly provides for the remedies available to a landowner when his land is taken by the
government for public use. The owner may recover his property if its return is feasible, or, if it is not, the
aggrieved owner may demand payment of just compensation for the land taken. 33 In this case, the trial
court found that respondent is entitled to compensation of P4 Million for 11 hectares of the Property, or
P36.36 per square meter.

NIA assails the lower courts’ award on two grounds. First, NIA claims that the affected area of the
Property is 96,655 square meters and not 10 or 11 hectares. Second, NIA maintains that the just
compensation for the 96,655 square meters is P1.39 per square meter, the price agreed upon by the
parties in 1980. On the other hand, respondent argues that these are questions of fact, which are not the
province of this Court.

True, factual findings of the Court of Appeals are generally binding on this Court. However, there are
exceptions to this rule, such as when the factual findings of the Court of Appeals and the trial court are
contradictory, or when the findings are not supported by the evidence on record.34 These exceptions
obtain in the present case.

At first glance, it would appear that the Court of Appeals affirmed the trial court’s findings that served as
basis for the award of P4 Million. A closer reading of the Court of Appeals’ and trial court’s decisions
reveals otherwise. The trial court awarded P4 Million as "payment [for] the 11 hectares of land,"35 but the
appellate court found that only "approximately ten (10) hectares [were] bulldozed by the defendant." 36
These findings of the trial court and Court of Appeals are actually contradictory.

Further, respondent himself alleged in a demand letter37 to NIA dated 8 February 1994 that the total area
affected by the construction of the canals was 96,655 square meters. The trial court based its finding of
11 hectares on the testimony of retired NIA Engineer Agapito Panahon ("Engineer Panahon"), the area
engineer who headed the construction of the canals in 1972. However, Engineer Panahon merely testified
that the area of the Property affected by the construction was "(m)ore or less 9 to 11 hectares" 38
Respondent testified that the bulldozed area was "about 10 hectares, more or less." 39

These testimonies, in conjunction with respondent’s demand letter, NIA’s own allegations, and other
evidence, suffice to establish that NIA took or damaged 96,655 square meters of the Property. The area
of 96,655 square meters, or about 9.67 hectares, falls within the "9 to 11 hectares" range estimated by
Engineer Panahon, and is near enough to "10 hectares, more or less." However, Engineer Panahon’s and
respondent’s estimates, standing alone, cannot prove with any certainty that a larger area of 10 or 11
hectares was damaged.

The lower courts likewise erred in awarding P4 Million to respondent.

Just compensation is "the fair value of the property as between one who receives, and one who desires to
sell, x x x fixed at the time of the actual taking by the government."40 This rule holds true when the
property is taken before the filing of an expropriation suit, and even if it is the property owner who brings
the action for compensation.41

In affirming the trial court’s award, the Court of Appeals cited Garcia v. Court of Appeals,42 which provides
an exception to the rule. In Garcia, the Court held that when the government takes property, not for the
purpose of eminent domain, and the government does not initiate condemnation proceedings or other
attempts to acquire such property, just compensation should be reckoned not at the time of taking but at
the time the trial court made its order of expropriation. 43

However, the Garcia ruling does not apply to the present case. The 15,677, 1,897 and 4,499 square
meter portions – a total of 22,073 square meters ("Canal Sites") – of the Property identified in the 1980
deeds of sale are occupied by irrigation canals. There is no dispute that the Canal Sites serve a public
purpose because the canals provide much-needed irrigation to farms in the locality. There is also no
dispute that when NIA actually took over the Canal Sites, the purpose was to exercise NIA’s delegated
power of eminent domain.
Just compensation for the Canal Sites must thus be computed as of the time of taking. In this case,
respondent does not contest that NIA’s valuation of P1.39 per square meter was the approximate fair
market value of the Property in 1972. Respondent even agreed to this price when he signed the 1980
deeds of sale. At the least, P1.39 per square meter was "that sum of money which a person, desirous but
not compelled to buy, and an owner, willing but not compelled to sell, would agree on as a price." 44

Respondent protests that to value the Canal Sites at this rate would hardly be just to him, considering
that he has waited for more than thirty years to be compensated.

The Court finds it no less reprehensible that NIA has denied respondent’s valid claim for compensation for
so long. Just compensation means not only the correct determination of the amount due to the property
owner but also payment to him of the amount due within a reasonable time from the taking. 45 Respondent
is certainly entitled to legal interest and damages by reason of NIA’s inexcusable delay.

The concept of just compensation, however, does not imply fairness to the property owner alone.
Compensation must be just not only to the property owner, but also to the public which ultimately bears
the cost of expropriation. The property owner is entitled to compensation only for what he actually loses,
and what he loses is only the actual value of the property at the time of the taking. 46

Respondent is thus entitled to just compensation for the 22,073 square meter Canal Sites at P1.39 per
square meter, with legal interest from the time of the taking of the Canal Sites in 1972 until the amount
due is fully paid. In line with current jurisprudence,47 we set the legal interest at 12% per annum in order
to eliminate the usual issue of the constant fluctuation and inflation of the value of currency over time.

The remaining 74,582 square meters ("surrounding land") encircling the Canal Sites is another matter.
NIA took the surrounding land when NIA bulldozed the area and rendered it useless for the planting of
palay for several years. Taking occurs not only when the government actually deprives or dispossesses
the property owner of his property or of its ordinary use, but also when there is a practical destruction or
material impairment of the value of his property.48

NIA never filed proceedings to expropriate the surrounding land, nor did it exhibit intent, or attempt, to
purchase it. The 1980 deeds of sale referred only to the 22,073 square meters comprising the Canal Sites.
There is no showing that the surrounding land served, or continues to serve, some public purpose.

In awarding compensation for the surrounding land affected by NIA’s construction activities in 1972,
however, the lower courts overlooked respondent’s prayer for recovery of possession. As we pointed out
earlier, possession of the unpaid property may be returned to the aggrieved landowner if the
circumstances permit it.49

In this case, the return to respondent of a substantial portion of his Property, specifically, the 74,582
square meters surrounding the Canal Sites, is indeed feasible. The ocular inspection authorized by the
trial court revealed "that there were signs of planting and harvesting on the land xxx except that portion
occupied by the irrigation canal(s)."50 This indicates that the surrounding land has recovered, and can be
devoted again to the planting of palay. Respondent affirmed this fact in his testimony.51 Certainly,
respondent would not seek the return of a parcel of land that is no longer of any use to him.

Respondent’s prayer for recovery of possession should thus be granted. NIA should immediately vacate
the 74,582 square meters of the Property surrounding the Canal Sites. NIA should turn over to
respondent possession of the surrounding land without further delay.

Award of Temperate and Exemplary Damages

The Court will not award attorney’s fees in light of respondent’s choice not to appeal the CA Decision
striking down the award.52 However, we find it proper to award temperate and exemplary damages in
light of NIA’s misuse of its power of eminent domain. Any arm of the State that exercises the delegated
power of eminent domain must wield that power with circumspection and utmost regard for procedural
requirements.53 A government instrumentality that fails to observe the constitutional guarantees of just
compensation and due process abuses the authority delegated to it, and is liable to the property owner for
damages.

Temperate or moderate damages may be recovered if pecuniary loss has been suffered but the amount
cannot be proved with certainty from the nature of the case.54 Here, the trial and appellate courts found
that the owners were unable to plant palay on 96,655 square meters of the Property for an unspecified
period during and after NIA’s construction of the canals in 1972. The passage of time, however, has made
it impossible to determine these losses with any certainty. NIA also deprived the owners of the Property of
possession of a substantial portion of their land since 1972. Considering the particular circumstances of
this case, an award of P150,000 as temperate damages is reasonable.

NIA’s irresponsible exercise of its eminent domain powers also deserves censure. For more than three
decades, NIA has been charging irrigation fees from respondent and other landowners for the use of the
canals built on the Property, without reimbursing respondent a single cent for the loss and damage. NIA
exhibits a disturbingly cavalier attitude towards respondent’s property rights, rights to due process of law
and to equal protection of the laws. Worse, this is not the first time NIA has disregarded the rights of
private property owners by refusing to pay just compensation promptly. 55 To dissuade NIA from
continuing this practice and to set an example for other agencies exercising eminent domain powers, NIA
is directed to pay respondent exemplary damages56 of P250,000.

WHEREFORE, we AFFIRM the Decision of 26 January 2001 of the Court of Appeals in CA-G.R. CV No.
57493 with the following MODIFICATIONS:

1. The National Irrigation Authority shall immediately return possession and control of the 74,582 square
meter portion of the Property surrounding, but not occupied by, the irrigation canals to the Estate of the
late Manuel Diaz, represented by its Administrator, respondent Francisco Diaz;

2. We reduce the award of P4 Million and instead order the National Irrigation Authority to pay the Estate
of Manuel Diaz, through respondent Administrator, P30,681.47 or P1.39 per square meter as just
compensation for the 15,677, 1,897 and 4,499 square meter portions of the Property occupied by the
irrigation canals, as well as legal interest of 12% per annum on the amount adjudged from 1972 until fully
paid. The National Irrigation Authority shall further pay respondent temperate and exemplary damages of
P150,000 and P250,000, respectively, and costs of suit; and

3. Upon receipt of full payment, the Estate of Manuel Diaz shall convey the 22,073 square meter portion
of the Property occupied by the irrigation canals to the National Irrigation Authority.

G.R. No. 143643            June 27, 2003

NATIONAL POWER CORPORATION, petitioner,

vs.
SPS. JOSE C. CAMPOS, JR. and MA. CLARA LOPEZ-CAMPOS, respondents.

CALLEJO, SR., J.:

This is a petition for review of the Decision1 dated June 16, 2000 of the Court of Appeals in CA-G.R. CV
No. 54265. The assailed decision affirmed in toto the Decision2 of the Regional Trial Court (RTC) of
Quezon City, Branch 98, which ordered petitioner National Power Corporation to pay, among others,
actual, moral and nominal damages in the total amount of P1,980,000 to respondents Spouses Jose C.
Campos, Jr. and Ma. Clara A. Lopez-Campos.

The petition at bar stemmed from the following antecedents:

On February 2, 1996, the respondents filed with the court a quo an action for sum of money and damages
against the petitioner. In their complaint, the respondents alleged that they are the owners of a parcel of
land situated in Bo. San Agustin, Dasmariñas, Cavite, consisting of 66,819 square meters ("subject
property") covered by Transfer Certificate of Title (TCT) No. T-957323. Sometime in the middle of 1970,
Dr. Paulo C. Campos, who was then the President of the Cavite Electric Cooperative and brother of
respondent Jose C. Campos, Jr., verbally requested the respondents to grant the petitioner a right-of-way
over a portion of the subject property. Wooden electrical posts and transmission lines were to be installed
for the electrification of Puerto Azul. The respondents acceded to this request upon the condition that the
said installation would only be temporary in nature. The petitioner assured the respondents that the
arrangement would be temporary and that the wooden electric posts would be relocated as soon as
permanent posts and transmission lines shall have been installed. Contrary to the verbal agreement of the
parties, however, the petitioner continued to use the subject property for its wooden electrical posts and
transmission lines without compensating the respondents therefor.3
The complaint likewise alleged that some time in 1994, the petitioner’s agents trespassed on the subject
property and conducted engineering surveys thereon. The respondents’ caretaker asked these agents to
leave the property. Thereafter, in 1995, a certain "Mr. Raz," who claimed to be the petitioner’s agent,
went to the office of respondent Jose C. Campos, Jr., then Associate Justice of the Supreme Court, and
requested permission from the latter to enter the subject property and conduct a survey in connection
with the petitioner’s plan to erect an all-steel transmission line tower on a 24-square meter area inside
the subject property. Respondent Jose Campos, Jr., refused to grant the permission and expressed his
preference to talk to the Chief of the Calaca Sub-station or the head of the petitioner’s Quezon City office.
The respondents did not hear from "Mr. Raz" or any one from the petitioner’s office since then. Sometime
in July or August of 1995, the petitioner’s agents again trespassed on the subject property, presenting to
the respondents’ caretaker a letter of authority purportedly written by respondent Jose C. Campos, Jr.
When the caretaker demanded that the letter be given to him for verification with respondent Jose C.
Campos, Jr. himself, the petitioner’s agents refused to do so. Consequently, the caretaker ordered the
agents to leave the subject property.4

The complaint further alleged that on December 12, 1995, the petitioner instituted an expropriation case
involving the subject property before the RTC of Imus, Cavite, Branch 22. The case was docketed as Civil
Case No. 1174-95. The petitioner alleged in its complaint therein that the subject property was selected
"in a manner compatible with the greatest public good and the least private injury" and that it (petitioner)
had tried to negotiate with the respondents for the acquisition of the right-of-way easement on the
subject property but that the parties failed to reach an amicable settlement. 5

The respondents maintained that, contrary to the petitioner’s allegations, there were other more suitable
or appropriate sites for the petitioner’s all-steel transmission lines and that the petitioner chose the
subject property in a whimsical and capricious manner. The respondents averred that the proposed right-
of-way was not the least injurious to them as the system design prepared by the petitioner could be
further revised to avoid having to traverse the subject property. The respondents vigorously denied
negotiating with the petitioner in connection with the latter’s acquisition of a right-of-way on the subject
property.6

Finally, the complaint alleged that unaware of the petitioner’s intention to expropriate a portion of the
subject property, the respondents sold the same to Solar Resources, Inc. As a consequence, the
respondents stand to lose a substantial amount of money derived from the proceeds of the sale of the
subject property should the buyer (Solar Resources, Inc.) decide to annul the sale because of the
contemplated expropriation of the subject property.7

The complaint a quo thus prayed that the petitioner be adjudged liable to pay the respondents, among
others, actual, nominal and moral damages:

WHEREFORE, premises considered, it is respectfully prayed that the Honorable Court award the
plaintiffs:

a. Actual damages for the use of defendants’ property since middle 1970’s, including legal
interest thereon, as may be established during the trial;

b. P1,000,000.00 as nominal damages;

c. P1,000,000.00 as moral damages;

d. Lost business opportunity as may be established during the trial;

e. P250,000.00 as attorney’s fees;

f. Costs of suit.

Plaintiffs pray for other, further and different reliefs as may be just and equitable under the
premises.8

Upon receipt of the summons and complaint, the petitioner moved for additional time to file its responsive
pleading. However, instead of filing an answer to the complaint, the petitioner filed a motion to dismiss on
the ground that the action had prescribed and that there was another action pending between the same
parties for the same cause (litis pendencia). The respondents opposed said motion. On May 2, 1996, the
RTC issued an order denying the petitioner’s motion to dismiss.

The petitioner then moved for reconsideration of the aforesaid order. The respondents opposed the same
and moved to declare the petitioner in default on the ground that its motion for reconsideration did not
have the required notice of hearing; hence, it did not toll the running of the reglementary period to file an
answer.

On July 15, 1996, the RTC issued an order denying the petitioner’s motion for reconsideration.
Subsequently, on July 24, 1996, it issued another order granting the respondents’ motion and declared
the petitioner in default for its failure to file an answer. The petitioner filed a motion to set aside the order
of default but the same was denied by the RTC.

The petitioner filed a petition for certiorari, prohibition and preliminary injunction with the Court of
Appeals, docketed as CA-G.R. SP No. 41782, assailing the May 2, 1996, July 15, 1996 and July 24, 1996
Orders issued by the RTC as having been issued with grave abuse of discretion and to enjoin it from
proceeding with the case. On February 13, 1996, the CA dismissed the petition for certiorari, prohibition
and preliminary injunction filed by the petitioner in CA-G.R. SP No. 41782.

In the meantime, the respondents adduced their evidence ex parte in the RTC. As synthesized by the trial
court, the respondents adduced evidence, thus:

From the evidence thus far submitted, it appears that the plaintiffs spouses, both of whom
professional of high standing in society, are the absolute owners of a certain parcel of land situated
in Bo. San Agustin, Dasmariñas, Cavite, consisting of 66,819 square meters, more or less, covered
and embraced in TCT No. T-95732. Sometime in the mid-1970, Dr. Paulo C. Campos, brother of
Justice Jose Campos, Jr., then President of the Cavite Electric Cooperative, approached the latter
and confided to him the desire of the National Power Corporation to be allowed to install temporary
wooden electric posts on the portion of his wife’s property in order that the high-tension
transmission line coming from Kaliraya passing thru that part of Cavite can be continued to the
direction of Puerto Azul.

Having heard the plea of his brother and the fact that National Power Corporation was under
pressure because at the time that Puerto Azul was being developed there was no electricity nor
was there electrical lines towards that place and acting on the belief that the installation of wooden
electric posts would be temporary in nature, plaintiffs gave oral permission for the NPC personnel
to enter the said parcel of land. Dr. Paulo C. Campos, assured him that it was just a temporary
measure to meet the emergency need of the Puerto Azul and that the wooden electric posts will be
relocated when a permanent posts and transmission lines shall have been installed. Pursuant to
their understanding, the National Power Corporation installed wooden posts across a portion of
plaintiffs’ property occupying a total area of about 2,000 square meters more or less. To date,
defendant NPC has been using the plaintiffs’ property for its wooden electrical posts and
transmission lines; that the latter has estimated that the aggregate rental (which they peg at the
conservative rate of P1.00 per square meter) of the 2,000 square meters for twenty-four (24)
years period, would amount to the aggregate sum of P480,000.00.

From the time National Power Corporation installed those temporary wooden posts, no notice was
ever served upon the plaintiffs of their intention to relocate the same or to install permanent
transmission line on the property. Also, there was no personal contact between them. However, in
late 1994, plaintiffs’ overseer found a group of persons of the defendant NPC conducting survey
inside the said property, and were asked to leave the premises upon being discovered that they
have no authority to do so from the owners thereof. Subsequently thereafter, or sometime in
1995, a person by the name of Mr. Paz, bearing a letter from Calaca Regional Office, went to see
Justice Jose C. Campos, Jr. in his office, informing the latter that he was authorized by the National
Power Corporation to acquire private lands. In the same breath, Mr. Paz requested his permission
to let NPC men enter the subject property and to conduct a survey in connection with its plan to
erect an all steel transmission line tower on a 24 square meter area inside plaintiffs’ property, but
same was denied. Justice Campos, however, expressed his preference to talk instead to the Chief
of the Calaca Sub-station or the Head of the NPC, Quezon City office. Since then, nothing however
transpired.

Sometime in July or August 1995, plaintiffs learned that defendant’s agents again entered the
subject property. This time, they have presented to the caretaker a letter of authority supposedly
 from Justice Jose C. Campos, Jr. And, when prodded to see the letter for verification, defendant’s
agents refused to do so. So, they were ordered out of the vicinity. Plaintiffs stressed that
defendant’s repeated intrusions into their property without their expressed knowledge and consent
had impugned on their constitutional right to protection over their property.

Later, on December 12, 1995, plaintiffs received copy of summons and complaint in Civil Case No.
1174-95 filed by the defendant before the Regional Trial Court, Fourth Judicial Region, Branch 22,
Imus, Cavite for the expropriation of 5,320 square meters of plaintiffs’ above-described property to
be used as right-of-way for the all-steel transmission line tower of the Calaca-Dasmariñas 230 KV
T/L Project. But what had caused plaintiffs’ discomfiture is the allegation in said complaint stating
that the "parcel of land sought to be expropriated has not been applied to nor expropriated for any
public use and is selected by plaintiff in a manner compatible with the greatest good and the least
private injury" and that defendant "had negotiated with (plaintiffs) for the acquisition of the right-
of-way easement over the portion of the same for the public purpose as above-stated at a price
prescribed by law, but failed to reach an agreement with them notwithstanding the repeated
negotiations between the parties".

Plaintiffs’ assert that at no instance was there a negotiation between them and the NPC or its
representative. The alleged "talk" initiated by Mr. Paz with Justice Campos, Jr. just ended in the
latter’s remonstrance and in prevailing upon the former of his preference to discuss the matter
with a more responsible officer of the National Power Corporation, such as the Chief of the Calaca
Sub-Station or the Head of NPC’s Office in Quezon City. But plaintiffs’ plea just fell on the deaf ear.
The next thing they know was Civil Case No. Q-1174-95 already filed in court. A party to a case
shall not do falsehood nor shall mislead or misrepresent the contents of its pleading. That gross
misrepresentation had been made by the National Power Corporation in their said pleading is
irrefutable.

Plaintiffs-spouses Campos declared that there are other areas more suitable or appropriate that
can be utilized as alternative sites for the all-steel transmission line tower. Just a few meters from
the planned right-of-way is an abandoned road occupied by squatters; it is a government property
and the possession of which the NPC need not compensate. The latter had not exercised judiciously
in the proper selection of the property to be appropriated. Evidently, NPC’s choice was whimsical
and capricious. Such arbitrary selection of plaintiffs’ property despite the availability of another
property in a manner compatible with the greatest public good and the least private injury,
constitutes an impermissible encroachment of plaintiffs’ proprietary rights and their right to due
process and equal protection.

Concededly, NPC’s intention is to expropriate a portion of plaintiffs’ property. This limitation on the
right of ownership is the paramount right of the National Power Corporation granted by law. But
before a person can be deprived of his property through the exercise of the power of eminent
domain, the requisites of law must strictly be complied with. (Endencia vs. Lualhati, 9 Phil. 177) No
person shall be deprived of his property except by competent authority and for public use and
always upon payment of just compensation. Should this requirement be not first complied with,
the courts shall protect and, in a proper case, restore the owner in his possession. (Art. 433 Civil
Code of the Philippines)

Records disclose that in breach of such verbal promise, defendant NPC had not withdrawn the
wooden electrical posts and transmission lines; said wooden electrical posts and transmission lines
still occupy a portion of plaintiffs’ property; that the NPC had benefited from them for a long period
of time already, sans compensation to the owners thereof.

Without first complying with the primordial requisites appurtenant to the exercise of the power of
eminent domain, defendant NPC again boldly intruded into plaintiffs’ property by conducting
engineering surveys with the end in view of expropriating 5,320 square meters thereof to be used
as right-of-way for the all-steel transmission line tower of the Calaca-Dasmariñas 230 KV T/L
Project. Such acts constitute a deprivation of one’s property for public use without due
compensation. It would therefore seem that the expropriation had indeed departed from its own
purpose and turns out to be an instrument to repudiate compliance with obligation legally and
validly contracted.9

On September 26, 1996, the RTC rendered a decision finding the petitioner liable for damages to the
respondents. The dispositive portion of the RTC decision reads:
 WHEREFORE, in view of the foregoing consideration, justment [sic] is hereby rendered in favor of
the plaintiffs, condemning the defendant to pay –

(a) Actual damages of P480,000.00 for the use of plaintiff’s property;

(b) One Million Pesos (P1,000,000.00) as moral damages;

(c ) Five Hundred Thousand Pesos (P500,000.00) as nominal damages;

(d) One Hundred Fifty Thousand Pesos (P150,000.00) as attorney’s fees; and

(e) Costs of suit in the amount of P11,239.00.

SO ORDERED.10

The petitioner appealed the decision to the Court of Appeals which on June 16, 1990 rendered a decision
affirming the ruling of the RTC.

Essentially, the CA held that the respondents’ claim for compensation and damages had not prescribed
because Section 3(i) of the petitioner’s Charter, Republic Act No. 6395, as amended, is not applicable to
the case. The CA likewise gave scant consideration to the petitioner’s claim that the respondents’
complaint should be dismissed on the ground of litis pendencia. According to the CA, the complaint a quo
was the more appropriate action considering that the venue for the expropriation case (Civil Case No.
1174-95) was initially improperly laid. The petitioner filed the expropriation proceedings with the RTC in
Imus, Cavite, when the subject property is located in Dasmariñas, Cavite. Moreover, the parties in the
two actions are not the same since the respondents were no longer included as defendants in the
petitioner’s amended complaint in the expropriation case (Civil Case No. 1174-95) but were already
replaced by Solar Resources, Inc., the buyer of the subject property, as defendant therein.

The CA likewise found the damages awarded by the RTC in favor of the respondents just and reasonable
under the circumstances obtaining in the case.

The petitioner now comes to this Court seeking to reverse and set aside the assailed decision. The
petitioner alleges as follows:

The Court of Appeals grievously erred and labored under a gross misapprehension of fact in finding
that the Complaint below should not be dismissed on the ground of prescription.

II

The Court of Appeals erred in affirming the award of nominal and moral damages, attorney’s fees
and costs of litigation.11

Citing Article 620 of the Civil Code, the petitioner contends that it had already acquired the easement of
right-of-way over the portion of the subject property by prescription, the said easement having been
allegedly continuous and apparent for a period of about twenty-three (23) years, i.e., from about the
middle of 1970 to the early part of 1994. The petitioner further invokes Section 3(i) of its Charter in
asserting that the respondents already waived their right to institute any action for compensation and/or
damages concerning the acquisition of the easement of right-of-way in the subject property. Accordingly,
the petitioner concludes that the award of damages in favor of the respondents is not warranted.

The petition is bereft of merit.

The petitioner’s claim that, under Article 620 of the Civil Code, it had already acquired by prescription the
easement of right-of-way over that portion of the subject property where its wooden electric posts and
transmission lines were erected is untenable. Article 620 of the Civil Code provides that:

Art. 620. Continuous and apparent easements are acquired either by virtue of a title or by
prescription of ten years.
Prescription as a mode of acquisition requires the existence of the following: (1) capacity to acquire by
prescription; (2) a thing capable of acquisition by prescription; (3) possession of the thing under certain
conditions; and (4) lapse of time provided by law.12 Acquisitive prescription may either be ordinary, in
which case the possession must be in good faith and with just title,13 or extraordinary, in which case there
is neither good faith nor just title. In either case, there has to be possession which must be in the concept
of an owner, public, peaceful and uninterrupted. 14 As a corollary, Article 1119 of the Civil Code provides
that:

Art. 1119. Acts of possessory character executed in virtue of license or by mere tolerance of the
owner shall not be available for the purposes of possession.

In this case, the records clearly reveal that the petitioner’s possession of that portion of the subject
property where it erected the wooden posts and transmission lines was merely upon the tolerance of the
respondents. Accordingly, this permissive use by the petitioner of that portion of the subject property, no
matter how long continued, will not create an easement of right-of-way by prescription. The case of
Cuaycong vs. Benedicto15 is particularly instructive. In that case, the plaintiffs for more than twenty years
made use of the road that passed through the hacienda owned by the defendants, being the only road
that connected the plaintiff’s hacienda to the public road. The defendants closed the road in question and
refused the use of the same unless a toll was paid. The plaintiffs therein brought an action to enjoin the
defendants from interfering with the use of the road. In support of their action, the plaintiffs presented
evidence tending to show that they have acquired the right-of-way through the road by prescription. This
Court rejected the contention, holding as follows:

Had it been shown that the road had been maintained at the public expense, with the acquiescence
of the owners of the estates crossed by it, this would indicate such adverse possession by the
government as in course of time would ripen into title or warrant the presumption of a grant or of
a dedication. But in this case there is no such evidence, and the claims of plaintiffs, whether
regarded as members of the public asserting a right to use the road as such, or as persons
claiming a private easement of way over the land of another must be regarded as resting upon the
mere fact of user.

If the owner of a tract of land, to accommodate his neighbors or the public in general, permits
them to cross his property, it is reasonable to suppose that it is not his intention, in so doing, to
divest himself of the ownership of the land so used, or to establish an easement upon it, and that
the persons to whom such permission, tacit or express, is granted, do not regard their privilege of
use as being based upon anything more than the mere tolerance of the owner. Clearly, such
permissive use is in its inception based upon an essentially revocable license. If the use continues
for a long period of time, no change being made in the relations of the parties by any express or
implied agreement, does the owner of the property affected lose his right of revocation? Or,
putting the same question in another form, does the mere permissive use ripen into title by
prescription?

It is a fundamental principle of the law in this jurisdiction concerning the possession of real
property that such possession is not affected by acts of a possessory character which are "merely
tolerated" by the possessor, which are or due to his license (Civil Code, arts. 444 and 1942). This
principle is applicable not only with respect to the prescription of the dominium as a whole, but to
the prescription of right in rem. In the case of Cortes vs. Palanca Yu-Tibo (2 Phil. Rep., 24, 38),
the Court said:

The provision of article 1942 of the Civil Code to the effect that acts which are merely
tolerated produce no effect with respect to possession is applicable as much to the
prescription of real rights as to the prescription of the fee, it being a glaring and self-evident
error to affirm the contrary, as does the appellant in his motion papers. Possession is the
fundamental basis of prescription. Without it no kind of prescription is possible, not even
the extraordinary. Consequently, if acts of mere tolerance produce no effect with respect to
possession, as that article provides, in conformity with article 444 of the same Code, it is
evident that they can produce no effect with respect to prescription, whether ordinary or
extraordinary. This is true whether the prescriptive acquisition be of a fee or of real rights,
for the same reason holds in one and the other case; that is, that there has been no true
possession in the legal sense of the word. (Citations omitted)

Possession, under the Civil Code, to constitute the foundation of a prescriptive right, must be
possession under claim of title (en concepto de dueño), or to use the common law equivalent of
 the term, it must be adverse. Acts of possessory character performed by one who holds by mere
tolerance of the owner are clearly not en concepto de dueño, and such possessory acts, no matter
how long so continued, do not start the running of the period of prescription. 16

Following the foregoing disquisition, the petitioner’s claim that it had acquired the easement of right-of-
way by prescription must perforce fail. As intimated above, possession is the fundamental basis of
prescription, whether ordinary or extraordinary. The petitioner never acquired the requisite possession in
this case. Its use of that portion of the subject property where it erected the wooden poles and
transmission lines was due merely to the tacit license and tolerance of the respondents. As such, it cannot
be made the basis of the acquisition of an easement of right-of-way by prescription.

Neither can the petitioner invoke Section 3(i) of its Charter (Rep. Act No. 6395, as amended) to put up
the defense of prescription against the respondents. The said provision reads in part:

Sec. 3(i). … The Corporation or its representatives may also enter upon private property in the
lawful performance or prosecution of its business or purposes, including the construction of
transmission lines thereon; Provided, that the owner of such private property shall be paid the just
compensation therefor in accordance with the provisions hereinafter provided; Provided, further,
that any action by any person claiming compensation and/or damages shall be filed within five
years after the right-of-way, transmission lines, substations, plants or other facilities shall have
been established: Provided, finally, that after the said period no suit shall be brought to question
the said right-of-way, transmission lines, substations, plants or other facilities nor the amounts of
compensation and/or damages involved;

Two requisites must be complied before the above provision of law may be invoked:

1. The petitioner entered upon the private property in the lawful performance or prosecution of its
businesses or purposes; and

2.The owner of the private property shall be paid the just compensation therefor.

As correctly asserted by the respondents, Section 3(i) of Rep. Act No. 6395, as amended, presupposes
that the petitioner had already taken the property through a negotiated sale or the exercise of the power
of eminent domain, and not where, as in this case, the petitioner was merely temporarily allowed to erect
wooden electrical posts and transmission lines on the subject property. Significantly, the provision uses
the term "just compensation," implying that the power of eminent domain must first be exercised by the
petitioner in accordance with Section 9, Article III of the Constitution, which provides that "no private
property shall be taken for public use without just compensation."

This Court’s ruling in Lopez vs. Auditor General17 is likewise in point:

The petitioner brought this case to this Court on the sole issue of prescription. He cites Alfonso vs.
Pasay City in which a lot owner was allowed to bring an action to recover compensation for the
value of his land, which the Government had taken for road purposes, despite the lapse of thirty
years (1924-1954). On the other hand, the respondents base their defense of prescription on Jaen
vs. Agregado which held an action for compensation for land taken in building a road barred by
prescription because it was brought after more than ten years (i.e., thirty three years, from 1920
to 1953). They argue that the ruling in Alfonso cannot be applied to this case because, unlike
Alfonso who made repeated demands for compensation within ten years, thereby interrupting the
running of the period of prescription, the petitioner here filed his claim only in 1959.

It is true that in Alfonso vs. Pasay City this Court made the statement that "registered lands are
not subject to prescription and that on grounds of equity, the government should pay for private
property which it appropriates though for the benefit of the public, regardless of the passing of
time." But the rationale in that case is that where private property is taken by the Government for
public use without first acquiring title thereto either through expropriation or negotiated sale, the
owner’s action to recover the land or the value thereof does not prescribe. This is the point that
has been overlooked by both parties.

On the other hand, where private property is acquired by the Government and all that remains is
the payment of the price, the owner’s action to collect the price must be brought within ten years
otherwise it would be barred by the statue of limitations.18
Thus, the five-year period provided under Section 3(i) of Rep. Act No. 6395, as amended, within which all
claims for compensation and/or damages may be allowed against the petitioner should be reckoned from
the time that it acquired title over the private property on which the right-of-way is sought to be
established. Prior thereto, the claims for compensation and/or damages do not prescribe. In this case, the
findings of the CA is apropos:

Undeniably, NPC never acquired title over the property over which its wooden electrical posts and
transmission lines were erected. It never filed expropriation proceedings against such property.
Neither did it negotiate for the sale of the same. It was merely allowed to temporarily enter into
the premises. As NPC’s entry was gained through permission, it had no intention to acquire
ownership either by voluntary purchase or by the exercise of eminent domain. 19

The petitioner instituted the expropriation proceedings only on December 12, 1995. Indisputably, the
petitioner never acquired title to that portion of the subject property where it erected the wooden
electrical posts and transmission lines. Until such time, the five-year prescriptive period within which the
respondents’ right to file an action to claim for compensation and/or damages for the petitioner’s use of
their property does not even commence to run. The CA thus correctly ruled that Section 3(i) of Rep. Act
No. 6395, as amended, finds no application in this case and that the respondents’ action against the
petitioner has not prescribed.

With respect to the damages awarded in favor of the respondents, the petitioner avers, thus:

The Court of Appeals erred in affirming the award of nominal and moral damages, attorney’s fees
and costs of litigation.

It follows from Section 31(c) of R.A. 6395 that the award moral and nominal damages, as well as
attorney’s fees and costs are baseless. The right to claim them has likewise prescribed. 20

With our ruling that the claims of the respondents had not prescribed, the petitioner’s contention that the
respondents are not entitled to moral and nominal damages and attorney’s fees must fail. In affixing the
award for moral and nominal damages and attorney’s fees, the CA ratiocinated:

With respect to the fourth assignment of error, this Court is not persuaded to reverse much less
modify the court a quo’s findings.

An award of moral damages would require certain conditions to be met, to wit: (1) first, there
must be an injury, whether physical, mental or psychological, clearly sustained by the claimant;
(2) second, there must be a culpable act or omission factually established; (3) third, the wrongful
act or omission of the defendant is the proximate cause of the injury sustained by the claimant;
and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of
the Civil Code.

NPC made it appear that it negotiated with the appellees when no actual negotiations took place.
This allegation seriously affected the on-going sale of the property to Solar Resources, Inc. as
appellees seemed to have sold the property knowing fully well that a portion thereof was being
expropriated. Such an act falls well within Article 21 of the Civil Code. NPC’s subterfuge certainly
besmirched the reputation and professional standing of Justice Jose C. Campos, Jr. and Professor
Maria Clara A. Lopez-Campos, and caused them physical suffering, mental anguish, moral shock
and wounded feelings.

The records show that Justice Campos’ career included, among other[s], being a Professor of Law
at the University of the Philippines; Acting Chairman of the Board of Transportation; Presiding
Judge of the Court of First Instance of Pasay City, and Associate Justice of the Court of Appeals.
Such career reached its apex when he was appointed Associate Justice of the Supreme Court in
1992. Justice Campos was a member of the Judicial and Bar Council when NPC filed its Civil Case
No. 1174-95. Professor Maria Clara A. Lopez-Campos is a noted authority in Corporate and
Banking Laws and is a Professor Emerita of the University of the Philippines from 1981 to the
present. She had taught more than three decades at the College of Law. Against such backdrop, it
does not take too much imagination to conclude that the oppressive and wanton manner in which
NPC sought to exercise its statutory right of eminent domain warranted the grant of moral
damages.
 On the award of nominal damages, such are adjudicated in order that a right of the plaintiff, which
has been violated or invaded by the defendant, may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by him. As previously discussed, it does
not brood well for a government entity such as NPC to disregard the tenets of private property
enshrined in the Constitution. NPC not only intentionally trespassed on appellees’ property and
conducted engineering surveys thereon but also sought to fool the appellees’ caretaker by claiming
that such entry was authorized. Moreover, NPC even justifies such trespass as falling under its
right to expropriate the property. Under the circumstances, the award of nominal damages is
sustained.

That NPC’s highhanded exercise of its right of eminent domain constrained the appellees to engage
the services of counsel is obvious. As testified upon, the appellees engaged their counsel for an
agreed fee of P250,000.00. The trial court substantially reduced this to P150,000.00. Inasmuch as
such services included not only the present action but also those for Civil Case No. 1174-95
erroneously filed by NPC with the Regional Trial Court of Imus, Cavite, and the Petition for
Certiorari in CA-GR No. 41782, this Court finds such attorney’s fees to be reasonable and
equitable.21

We agree with the CA.

The award of moral damages in favor of the respondents is proper given the circumstances obtaining in
this case. As found by the CA:

NPC made it appear that it negotiated with the appellees when no actual negotiation took place.
This allegation seriously affected the on-going sale of the property to Solar Resources, Inc. as
appellees seemed to have sold the property knowing fully well that a portion thereof was being
expropriated. Such an act falls well within Article 21 of the Civil Code. NPC’s subterfuge certainly
besmirched the reputation and professionally standing of Justice Jose C. Campos, Jr. and Professor
Maria Clara A. Lopez-Campos, and caused them physical suffering, mental anguish, moral shock
and wounded feelings.

The records show that Justice Campos’ career included, among other[s], being a Professor of Law
at the University of the Philippines; Acting Chairman of the Board of Transportation; Presiding
Judge of the Court of First Instance of Pasay City, and Associate Justice of the Court of Appeals.
Such career reached its apex when he was appointed Associate Justice of the Supreme Court in
1992. Justice Campos was a member of the Judicial and Bar Council when NPC filed its Civil Case
No. 1174-95. Professor Maria Clara A. Lopez-Campos is a noted authority in Corporate and
Banking Laws and is a Professor Emerita of the University of the Philippines from 1981 to the
present. She had taught more than three decades at the College of Law. Against such backdrop, it
does not take too much imagination to conclude that the oppressive and wanton manner in which
NPC sought to exercise its statutory right of eminent domain warranted the grant of moral
damages.22

Further, nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him.23 Similarly, the court may award nominal damages in every case
where any property right has been invaded. 24 The petitioner, in blatant disregard of the respondents’
proprietary right, trespassed the subject property and conducted engineering surveys thereon. It even
attempted to deceive the respondents’ caretaker by claiming that its agents were authorized by the
respondents to enter the property when in fact, the respondents never gave such authority. Under the
circumstances, the award of nominal damages is likewise warranted.

Finally, the award of attorney’s fees as part of damages is deemed just and equitable considering that by
the petitioner’s unjustified acts, the respondents were obviously compelled to litigate and incur expenses
to protect their interests over the subject property.25

WHEREFORE, the petition is hereby DENIED for lack of merit. The assailed Decision dated June 16, 2000
of the Court of Appeals in CA-G.R. CV No. 54265 is AFFIRMED in toto.

G.R. No. L-50147 August 3, 1990

JOSE MA. ANSALDO, for himself and as attorney-in-fact of Maria Angela Ansaldo, petitioners
vs.
FRANCISCO S. TANTUICO, JR., Acting Chairman, Commission on Audit, and BALTAZAR AQUINO, Minister
of Public Highways, respondents. 

NARVASA, J.:

This expropriation case is quite unique. Two lots of private ownership were taken by the Government and
used for the widening of a road more than forty-three years ago, without benefit of an action of eminent
domain or agreement with its owners, albeit without protest by the latter.

The lots belong to the petitioners, Jose Ma. Ansaldo and Maria Angela Ansaldo, are covered by title in their
names 1 and have an aggregate area of 1,041 square meters. These lots were taken from the Ansaldos
sometime in 1947 by the Department of Public Work Transportation and Communication and made part of
what used to be Sta. Mesa Street and is now Ramon Magsaysay Avenue at San Juan, Metro Manila. This,
to repeat, without demur on the part of the owners.

Said owners made no move whatever until twenty-six years later. They wrote to ask for compensation for
their land on January 22, 1973. 2 Their claim was referred to the Secretary of Justice who in due course
rendered an opinion dated February 22, 1973, 3 that just compensation should be paid in accordance with
Presidential Decree No. 76. 4 The Decree provided that the basis for the payment of just compensation of
property taken for public use should be the current and fair market value thereof as declared by the
owner or administrator, or such market value as determined by the assessor, whichever was lower. 5 The
Secretary of Justice thus advised that the corresponding expropriation suit be forthwith instituted to fix
the just compensation to be paid to the Ansaldos.

Pursuant to this opinion, the Commissioner of Public Highways requested the Provincial Assessor of Rizal
to make a redetermination of the market value of the Ansaldos' property in accordance with PD 76. 6 The
new valuation was made, after which the Auditor of the Bureau of Public Highways forwarded the
Ansaldos' claim to the Auditor General with the recommendation that payment be made on the basis of
the "current and fair market value, . . . and not on the fair market value at the time of taking. 7

The Commission on Audit, however, declined to adopt the recommendation. In a decision handed down on
September 26, 1973, the Acting Chairman ruled that "the amount of compensation to be paid to the
claimants is to be determined as of the time of the taking of the subject lots, 8 i.e. 1947. The ruling was
reiterated by the Commission on September 8, 1978, and again on January 25, 1979 when it denied the
Ansaldos' motion for reconsideration. 9 It is these rulings of the Commission on Audit that the Ansaldos
have appealed to this Court.

While not decisive of this case, it may be stressed that the provisions of Presidential Decree No. 76 and its
related or successor decrees (Numbered 464, 794 and 1533) no longer determine the just compensation
payable to owners of expropriated property. Said provisions were, it may be recalled, struck down as
unconstitutional and void in 1988, in Export Processing Zone Authority v. Dulay, 10 which declared that the
mode therein prescribed for determining just compensation, i. e., on the basis of the value declared by
the owner or administrator or on that determined by the assessor, whichever is lower, constituted an
impermissible encroachment on the judicial prerogative to resolve the issue in an appropriate proceeding
of eminent domain.

Now, nothing in the record even remotely suggests that the land was taken from the Ansaldos against
their will. Indeed, all indications, not the least of which is their silence for more than two decades, are
that they consented to such a taking although they knew that no expropriation case had been commenced
at all. There is therefore no reason, as regards the Ansaldos' property, to impugn the existence of the
power to expropriate, or the public purpose for which that power was exercised.

The sole question thus confronting the Court involves the precise time at which just compensation should
be fixed, whether as of the time of actual taking of possession by the expropriating entity or, as the
Ansaldos maintain, only after conveyance of title to the expropriator pursuant to expropriation
proceedings duly instituted since it is only at such a time that the constitutional requirements of due
process aside from those of just compensation may be fully met.

Normally, of course, where the institution of an expropriation action precedes the taking of the property
subject thereof, the just compensation is fixed as of the time of the filing of the complaint. This is so
provided by the Rules of Court, 11 the assumption of possession by the expropriator ordinarily being
conditioned on its deposits with the National or Provincial Treasurer of the value of the property as
provisionally ascertained by the court having jurisdiction of the proceedings.
There are instances, however, where the expropriating agency takes over the property prior to the
expropriation suit, as in this case although, to repeat, the case at bar is quite extraordinary in that
possession was taken by the expropriator more than 40 years prior to suit. In these instances, this Court
has ruled that the just compensation shall be determined as of the time of taking, not as of the time of
filing of the action of eminent domain.

In the context of the State's inherent power of eminent domain, there is a "taking" when the owner is
actually deprived or dispossessed of his property; when there is a practical destruction or a material
impairment of the value of his property or when he is deprived of the ordinary use thereof. 12 There is a
"taking" in this sense when the expropriator enters private property not only for a momentary period but
for a more permanent duration, for the purpose of devoting the property to a public use in such a manner
as to oust the owner and deprive him of all beneficial enjoyment thereof. 13 For ownership, after all, "is
nothing without the inherent rights of possession, control and enjoyment. Where the owner is deprived of
the ordinary and beneficial use of his property or of its value by its being diverted to public use, there is
taking within the Constitutional sense. 14 Under these norms, there was undoubtedly a taking of the
Ansaldos' property when the Government obtained possession thereof and converted it into a part of a
thoroughfare for public use.

It is as of the time of such a taking, to repeat, that the just compensation for the property is to be
established. As stated in Republic v. Philippine National Bank, 15

. . . (W)hen plaintiff takes possession before the institution of the condemnation

proceedings, the value should be fixed as of the time of the taking of said possession, not of
filing of the complaint and the latter should be the basis for the determination of the value,
when the taking of the property involved coincides with or is subsequent to, the
commencement of the proceedings. Indeed, otherwise, the provision of Rule 69, Section 3,
directing that compensation be determined as of the date of the filing of the complaint'
would never be operative. As intimated in Republic v. Lara (supra), said provision
contemplates normal circumstances, under which the complaint coincides or even precedes
the taking of the property by the plaintiff.

16
The reason for the rule, as pointed out in Rpublic v. Larae, is that —

. . . (W)here property is taken ahead of the filing of the condemnation proceedings, the
value thereof may be enchanced by the public purpose for which it is taken; the entry by
the plaintiff upon the property may have depreciated its value thereby; or, there may have
been a natural increase in the value of the property from the time the complaint is filed,
due to general economic conditions. The owner of private property should be compensated
only for what he actually loses; it is not intended that his compensation shall extend beyond
his loss or injury. And what he loses is only the actual value of his property at the time it is
taken. This is the only way that compensation to be paid can be truly just i.e.,"just; not
only to the individual whose property is taken but, to the public, which is to pay for it.

Clearly, then, the value of the Ansaldos' property must be ascertained as of the year 1947, when it was
actually taken, and not at the time of the filing of the expropriation suit, which, by the way, still has to be
done. It is as of that time that the real measure of their loss may fairly be adjudged. The value, once
fixed, shall earn interest at the legal rate until full payment is effected, conformably with other principles
laid down by case law. 17

WHEREFORE, the petition is DENIED, the challenged decision of the Commission on Audit is AFFIRMED,
and the Department of Public Works and Highways is DIRECTED to forthwith institute the appropriate
expropriation action over the land in question so that the just compensation due its owners may be
determined in accordance with the Rules of Court, with interest at the legal rate of six percent (6%) per
annum from the time of taking until full payment is made.

G.R. No. L-26400 February 29, 1972

VICTORIA AMIGABLE, plaintiff-appellant,

vs.
NICOLAS CUENCA, as Commissioner of Public Highways and REPUBLIC OF THE PHILIPPINES, defendants-
appellees.

MAKALINTAL, J.:
This is an appeal from the decision of the Court of First Instance of Cebu in its Civil Case No. R-5977,
dismissing the plaintiff's complaint.

Victoria Amigable, the appellant herein, is the registered owner of Lot No. 639 of the Banilad Estate in
Cebu City as shown by Transfer Certificate of Title No. T-18060, which superseded Transfer Certificate of
Title No. RT-3272 (T-3435) issued to her by the Register of Deeds of Cebu on February 1, 1924. No
annotation in favor of the government of any right or interest in the property appears at the back of the
certificate. Without prior expropriation or negotiated sale, the government used a portion of said lot, with
an area of 6,167 square meters, for the construction of the Mango and Gorordo Avenues.

It appears that said avenues were already existing in 1921 although "they were in bad condition and very
narrow, unlike the wide and beautiful avenues that they are now," and "that the tracing of said roads was
begun in 1924, and the formal construction in
1925." *

On March 27, 1958 Amigable's counsel wrote the President of the Philippines, requesting payment of the
portion of her lot which had been appropriated by the government. The claim was indorsed to the Auditor
General, who disallowed it in his 9th Indorsement dated December 9, 1958. A copy of said indorsement
was transmitted to Amigable's counsel by the Office of the President on January 7, 1959.

On February 6, 1959 Amigable filed in the court a quo a complaint, which was later amended on April 17,
1959 upon motion of the defendants, against the Republic of the Philippines and Nicolas Cuenca, in his
capacity as Commissioner of Public Highways for the recovery of ownership and possession of the 6,167
square meters of land traversed by the Mango and Gorordo Avenues. She also sought the payment of
compensatory damages in the sum of P50,000.00 for the illegal occupation of her land, moral damages in
the sum of P25,000.00, attorney's fees in the sum of P5,000.00 and the costs of the suit.

Within the reglementary period the defendants filed a joint answer denying the material allegations of the
complaint and interposing the following affirmative defenses, to wit: (1) that the action was premature,
the claim not having been filed first with the Office of the Auditor General; (2) that the right of action for
the recovery of any amount which might be due the plaintiff, if any, had already prescribed; (3) that the
action being a suit against the Government, the claim for moral damages, attorney's fees and costs had
no valid basis since as to these items the Government had not given its consent to be sued; and (4) that
inasmuch as it was the province of Cebu that appropriated and used the area involved in the construction
of Mango Avenue, plaintiff had no cause of action against the defendants.

During the scheduled hearings nobody appeared for the defendants notwithstanding due notice, so the
trial court proceeded to receive the plaintiff's evidence ex parte. On July 29, 1959 said court rendered its
decision holding that it had no jurisdiction over the plaintiff's cause of action for the recovery of
possession and ownership of the portion of her lot in question on the ground that the government cannot
be sued without its consent; that it had neither original nor appellate jurisdiction to hear, try and decide
plaintiff's claim for compensatory damages in the sum of P50,000.00, the same being a money claim
against the government; and that the claim for moral damages had long prescribed, nor did it have
jurisdiction over said claim because the government had not given its consent to be sued. Accordingly, the
complaint was dismissed. Unable to secure a reconsideration, the plaintiff appealed to the Court of
Appeals, which subsequently certified the case to Us, there being no question of fact involved.

The issue here is whether or not the appellant may properly sue the government under the facts of the
case.

In the case of Ministerio vs. Court of First Instance of Cebu, 1 involving a claim for payment of the value of
a portion of land used for the widening of the Gorordo Avenue in Cebu City, this Court, through Mr.
Justice Enrique M. Fernando, held that where the government takes away property from a private
landowner for public use without going through the legal process of expropriation or negotiated sale, the
aggrieved party may properly maintain a suit against the government without thereby violating the
doctrine of governmental immunity from suit without its consent. We there said: .

... . If the constitutional mandate that the owner be compensated for property taken for
public use were to be respected, as it should, then a suit of this character should not be
summarily dismissed. The doctrine of governmental immunity from suit cannot serve as an
instrument for perpetrating an injustice on a citizen. Had the government followed the
procedure indicated by the governing law at the time, a complaint would have been filed by
it, and only upon payment of the compensation fixed by the judgment, or after tender to
 the party entitled to such payment of the amount fixed, may it "have the right to enter in
and upon the land so condemned, to appropriate the same to the public use defined in the
judgment." If there were an observance of procedural regularity, petitioners would not be in
the sad plaint they are now. It is unthinkable then that precisely because there was a
failure to abide by what the law requires, the government would stand to benefit. It is just
as important, if not more so, that there be fidelity to legal norms on the part of officialdom
if the rule of law were to be maintained. It is not too much to say that when the
government takes any property for public use, which is conditioned upon the payment of
just compensation, to be judicially ascertained, it makes manifest that it submits to the
jurisdiction of a court. There is no thought then that the doctrine of immunity from suit
could still be appropriately invoked.

Considering that no annotation in favor of the government appears at the back of her certificate of title
and that she has not executed any deed of conveyance of any portion of her lot to the government, the
appellant remains the owner of the whole lot. As registered owner, she could bring an action to recover
possession of the portion of land in question at anytime because possession is one of the attributes of
ownership. However, since restoration of possession of said portion by the government is neither
convenient nor feasible at this time because it is now and has been used for road purposes, the only relief
available is for the government to make due compensation which it could and should have done years
ago. To determine the due compensation for the land, the basis should be the price or value thereof at the
time of the taking. 2

As regards the claim for damages, the plaintiff is entitled thereto in the form of legal interest on the price
of the land from the time it was taken up to the time that payment is made by the government. 3 In
addition, the government should pay for attorney's fees, the amount of which should be fixed by the trial
court after hearing.

WHEREFORE, the decision appealed from is hereby set aside and the case remanded to the court a quo
for the determination of compensation, including attorney's fees, to which the appellant is entitled as
above indicated. No pronouncement as to costs.

G.R. No. 106804             August 12, 2004

NATIONAL POWER CORPORATION, petitioner,

vs.
COURT OF APPEALS and ANTONINO POBRE, respondents.

DECISION

CARPIO, J.:

The Case

Before us is a petition for review1 of the 30 March 1992 Decision2 and 14 August 1992 Resolution of the
Court of Appeals in CA-G.R. CV No. 16930. The Court of Appeals affirmed the Decision 3 of the Regional
Trial Court, Branch 17, Tabaco, Albay in Civil Case No. T-552.

The Antecedents

Petitioner National Power Corporation ("NPC") is a public corporation created to generate geothermal,
hydroelectric, nuclear and other power and to transmit electric power nationwide. 4 NPC is authorized by
law to acquire property and exercise the right of eminent domain.

Private respondent Antonino Pobre ("Pobre") is the owner of a 68,969 square-meter land ("Property")
located in Barangay Bano, Municipality of Tiwi, Albay. The Property is covered by TCT No. 4067 and
Subdivision Plan 11-9709.

In 1963, Pobre began developing the Property as a resort-subdivision, which he named as "Tiwi Hot
Springs Resort Subdivision." On 12 January 1966, the then Court of First Instance of Albay approved the
subdivision plan of the Property. The Register of Deeds thus cancelled TCT No. 4067 and issued
independent titles for the approved lots. In 1969, Pobre started advertising and selling the lots.
On 4 August 1965, the Commission on Volcanology certified that thermal mineral water and steam were
present beneath the Property. The Commission on Volcanology found the thermal mineral water and
steam suitable for domestic use and potentially for commercial or industrial use.

NPC then became involved with Pobre's Property in three instances.

First was on 18 February 1972 when Pobre leased to NPC for one year eleven lots from the approved
subdivision plan.

Second was sometime in 1977, the first time that NPC filed its expropriation case against Pobre to acquire
an 8,311.60 square-meter portion of the Property.5 On 23 October 1979, the trial court ordered the
expropriation of the lots upon NPC's payment of P25 per square meter or a total amount of P207,790.
NPC began drilling operations and construction of steam wells. While this first expropriation case was
pending, NPC dumped waste materials beyond the site agreed upon by NPC with Pobre. The dumping of
waste materials altered the topography of some portions of the Property. NPC did not act on Pobre's
complaints and NPC continued with its dumping.

Third was on 1 September 1979, when NPC filed its second expropriation case against Pobre to acquire an
additional 5,554 square meters of the Property. This is the subject of this petition. NPC needed the lot for
the construction and maintenance of Naglagbong Well Site F-20, pursuant to Proclamation No. 739 6 and
Republic Act No. 5092.7 NPC immediately deposited P5,546.36 with the Philippine National Bank. The
deposit represented 10% of the total market value of the lots covered by the second expropriation. On 6
September 1979, NPC entered the 5,554 square-meter lot upon the trial court's issuance of a writ of
possession to NPC.

On 10 December 1984, Pobre filed a motion to dismiss the second complaint for expropriation. Pobre
claimed that NPC damaged his Property. Pobre prayed for just compensation of all the lots affected by
NPC's actions and for the payment of damages.

On 2 January 1985, NPC filed a motion to dismiss the second expropriation case on the ground that NPC
had found an alternative site and that NPC had already abandoned in 1981 the project within the Property
due to Pobre's opposition.

On 8 January 1985, the trial court granted NPC's motion to dismiss but the trial court allowed Pobre to
adduce evidence on his claim for damages. The trial court admitted Pobre's exhibits on the damages
because NPC failed to object.

On 30 August 1985, the trial court ordered the case submitted for decision since NPC failed to appear to
present its evidence. The trial court denied NPC's motion to reconsider the submission of the case for
decision.

NPC filed a petition for certiorari8 with the then Intermediate Appellate Court, questioning the 30 August
1985 Order of the trial court. On 12 February 1987, the Intermediate Appellate Court dismissed NPC's
petition but directed the lower court to rule on NPC's objections to Pobre's documentary exhibits.

On 27 March 1987, the trial court admitted all of Pobre's exhibits and upheld its Order dated 30 August
1985. The trial court considered the case submitted for decision.

On 29 April 1987, the trial court issued its Decision in favor of Pobre. The dispositive portion of the
decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the defendant

and against the plaintiff, ordering the plaintiff to pay unto the defendant:

(1) The sum of THREE MILLION FOUR HUNDRED FORTY EIGHT THOUSAND FOUR
HUNDRED FIFTY (P3,448,450.00) PESOS which is the fair market value of the
subdivision of defendant with an area of sixty eight thousand nine hundred sixty nine
(68,969) square meters, plus legal rate of interest per annum from September 6,
1979 until the whole amount is paid, and upon payment thereof by the plaintiff the
defendant is hereby ordered to execute the necessary Deed of Conveyance or
Absolute Sale of the property in favor of the plaintiff;
 (2) The sum of ONE HUNDRED FIFTY THOUSAND (P150,000.00) PESOS for and as
attorney's fees.

Costs against the plaintiff.

SO ORDERED.9

On 13 July 1987, NPC filed its motion for reconsideration of the decision. On 30 October 1987, the trial
court issued its Order denying NPC's motion for reconsideration.

NPC appealed to the Court of Appeals. On 30 March 1992, the Court of Appeals upheld the decision of the
trial court but deleted the award of attorney's fees. The dispositive portion of the decision reads:

WHEREFORE, by reason of the foregoing, the Decision appealed from is AFFIRMED with the
modification that the award of attorney's fees is deleted. No pronouncement as to costs.

SO ORDERED.10

The Court of Appeals denied NPC's motion for reconsideration in a Resolution dated 14 August 1992.

The Ruling of the Trial Court

In its 69-page decision, the trial court recounted in great detail the scale and scope of the damage NPC
inflicted on the Property that Pobre had developed into a resort-subdivision. Pobre's Property suffered
"permanent injury" because of the noise, water, air and land pollution generated by NPC's geothermal
plants. The construction and operation of the geothermal plants drastically changed the topography of the
Property making it no longer viable as a resort-subdivision. The chemicals emitted by the geothermal
plants damaged the natural resources in the Property and endangered the lives of the residents.

NPC did not only take the 8,311.60 square-meter portion of the Property, but also the remaining area of
the 68,969 square-meter Property. NPC had rendered Pobre's entire Property useless as a resort-
subdivision. The Property has become useful only to NPC. NPC must therefore take Pobre's entire Property
and pay for it.

The trial court found the following badges of NPC's bad faith: (1) NPC allowed five years to pass before it
moved for the dismissal of the second expropriation case; (2) NPC did not act on Pobre's plea for NPC to
eliminate or at least reduce the damage to the Property; and (3) NPC singled out Pobre's Property for
piecemeal expropriation when NPC could have expropriated other properties which were not affected in
their entirety by NPC's operation.

The trial court found the just compensation to be P50 per square meter or a total of P3,448,450 for
Pobre's 68,969 square-meter Property. NPC failed to contest this valuation. Since NPC was in bad faith
and it employed dilatory tactics to prolong this case, the trial court imposed legal interest on the
P3,448,450 from 6 September 1979 until full payment. The trial court awarded Pobre attorney's fees of
P150,000.

The Ruling of the Court of Appeals

The Court of Appeals affirmed the decision of the trial court. However, the appellate court deleted the
award of attorney's fees because Pobre did not properly plead for it.

The Issues

NPC claims that the Court of Appeals committed the following errors that warrant reversal of the appellate
court's decision:

1. In not annulling the appealed Decision for having been rendered by the trial court with
grave abuse of discretion and without jurisdiction;

2. In holding that NPC had "taken" the entire Property of Pobre;

 3. Assuming arguendo that there was "taking" of the entire Property, in not excluding from
the Property the 8,311.60 square-meter portion NPC had previously expropriated and paid
for;

4. In holding that the amount of just compensation fixed by the trial court at P3,448,450.00
with interest from September 6, 1979 until fully paid, is just and fair;

5. In not holding that the just compensation should be fixed at P25.00 per square meter
only as what NPC and Pobre had previously mutually agreed upon; and

6. In not totally setting aside the appealed Decision of the trial court. 11

Procedural Issues

NPC, represented by the Office of the Solicitor General, insists that at the time that it moved for the
dismissal of its complaint, Pobre had yet to serve an answer or a motion for summary judgment on NPC.
Thus, NPC as plaintiff had the right to move for the automatic dismissal of its complaint. NPC relies on
Section 1, Rule 17 of the 1964 Rules of Court, the Rules then in effect. NPC argues that the dismissal of
the complaint should have carried with it the dismissal of the entire case including Pobre's counterclaim.

NPC's belated attack on Pobre's claim for damages must fail. The trial court's reservation of Pobre's right
to recover damages in the same case is already beyond review. The 8 January 1985 Order of the trial
court attained finality when NPC failed to move for its reconsideration within the 15-day reglementary
period. NPC opposed the order only on 27 May 1985 or more than four months from the issuance of the
order.

We cannot fault the Court of Appeals for not considering NPC's objections against the subsistence of
Pobre's claim for damages. NPC neither included this issue in its assignment of errors nor discussed it in
its appellant's brief. NPC also failed to question the trial court's 8 January 1985 Order in the petition for
certiorari12 it had earlier filed with the Court of Appeals. It is only before this Court that NPC now
vigorously assails the preservation of Pobre's claim for damages. Clearly, NPC's opposition to the
existence of Pobre's claim for damages is a mere afterthought. Rules of fair play, justice and due process
dictate that parties cannot raise an issue for the first time on appeal. 13

We must correct NPC's claim that it filed the notice of dismissal just "shortly" after it had filed the
complaint for expropriation. While NPC had intimated several times to the trial court its desire to dismiss
the expropriation case it filed on 5 September 1979,14 it was only on 2 January 1985 that NPC filed its
notice of dismissal.15 It took NPC more than five years to actually file the notice of dismissal. Five years is
definitely not a short period of time. NPC obviously dilly-dallied in filing its notice of dismissal while NPC
meanwhile burdened Pobre's property rights.

Even a timely opposition against Pobre's claim for damages would not yield a favorable ruling for NPC. It
is not Section 1, Rule 17 of the 1964 Rules of Court that is applicable to this case but Rule 67 of the same
Rules, as well as jurisprudence on expropriation cases. Rule 17 referred to dismissal of civil actions in
general while Rule 67 specifically governed eminent domain cases.

Eminent domain is the authority and right of the state, as sovereign, to take private property for public
use upon observance of due process of law and payment of just compensation. 16 The power of eminent
domain may be validly delegated to the local governments, other public entities and public utilities 17 such
as NPC. Expropriation is the procedure for enforcing the right of eminent domain. 18 "Eminent Domain" was
the former title of Rule 67 of the 1964 Rules of Court. In the 1997 Rules of Civil Procedure, which took
effect on 1 July 1997, the prescribed method of expropriation is still found in Rule 67, but its title is now
"Expropriation."

Section 1, Rule 17 of the 1964 Rules of Court provided the exception to the general rule that the dismissal
of the complaint is addressed to the sound discretion of the court.19 For as long as all of the elements of
Section 1, Rule 17 were present the dismissal of the complaint rested exclusively on the plaintiff's will. 20
The defending party and even the courts were powerless to prevent the dismissal. 21 The courts could only
accept and record the dismissal.22
A plain reading of Section 1, Rule 17 of the 1964 Rules of Court makes it obvious that this rule was not
intended to supplement Rule 67 of the same Rules. Section 1, Rule 17 of the 1964 Rules of Court,
provided that:

SECTION 1. Dismissal by the plaintiff. — An action may be dismissed by the plaintiff without
order of court by filing a notice of dismissal at any time before service of the answer or of a
motion for summary judgment. Unless otherwise stated in the notice, the dismissal is
without prejudice, except that a notice operates as an adjudication upon the merits when
filed by a plaintiff who has once dismissed in a competent court an action based on or
including the same claim. A class suit shall not be dismissed or compromised without
approval of the court.

While Section 1, Rule 17 spoke of the "service of answer or summary judgment," the Rules then did not
require the filing of an answer or summary judgment in eminent domain cases.23 In lieu of an answer,
Section 3 of Rule 67 required the defendant to file a single motion to dismiss where he should present all
of his objections and defenses to the taking of his property for the purpose specified in the complaint. 24 In
short, in expropriation cases under Section 3 of Rule 67, the motion to dismiss took the place of the
answer.

The records show that Pobre had already filed and served on NPC his "motion to dismiss/answer"25 even
before NPC filed its own motion to dismiss. NPC filed its notice of dismissal of the complaint on 2 January
1985. However, as early as 10 December 1984, Pobre had already filed with the trial court and served on
NPC his "motion to dismiss/answer." A certain Divina Cerela received Pobre's pleading on behalf of NPC. 26
Unfortunately for NPC, even Section 1, Rule 17 of the 1964 Rules of Court could not save its cause.

NPC is in no position to invoke Section 1, Rule 17 of the 1964 Rules of Court. A plaintiff loses his right
under this rule to move for the immediate dismissal of the complaint once the defendant had served on
the plaintiff the answer or a motion for summary judgment before the plaintiff could file his notice of
dismissal of the complaint.27 Pobre's "motion to dismiss/answer," filed and served way ahead of NPC's
motion to dismiss, takes the case out of Section 1, Rule 17 assuming the same applies.

In expropriation cases, there is no such thing as the plaintiff's matter of right to dismiss the complaint
precisely because the landowner may have already suffered damages at the start of the taking. The
plaintiff's right in expropriation cases to dismiss the complaint has always been subject to court approval
and to certain conditions.28 The exceptional right that Section 1, Rule 17 of the 1964 Rules of Court
conferred on the plaintiff must be understood to have applied only to other civil actions. The 1997 Rules
of Civil Procedure abrogated this exceptional right.29

The power of eminent domain is subject to limitations. A landowner cannot be deprived of his right over
his land until expropriation proceedings are instituted in court.30 The court must then see to it that the
taking is for public use, there is payment of just compensation and there is due process of law. 31

If the propriety of the taking of private property through eminent domain is subject to judicial scrutiny,
the dismissal of the complaint must also pass judicial inquiry because private rights may have suffered in
the meantime. The dismissal, withdrawal or abandonment of the expropriation case cannot be made
arbitrarily. If it appears to the court that the expropriation is not for some public use, 32 then it becomes
the duty of the court to dismiss the action.33 However, when the defendant claims that his land suffered
damage because of the expropriation, the dismissal of the action should not foreclose the defendant's
right to have his damages ascertained either in the same case or in a separate action. 34

Thus, NPC's theory that the dismissal of its complaint carried with it the dismissal of Pobre's claim for
damages is baseless. There is nothing in Rule 67 of the 1964 Rules of Court that provided for the
dismissal of the defendant's claim for damages, upon the dismissal of the expropriation case. Case law
holds that in the event of dismissal of the expropriation case, the claim for damages may be made either
in a separate or in the same action, for all damages occasioned by the institution of the expropriation
case.35 The dismissal of the complaint can be made under certain conditions, such as the reservation of
the defendant's right to recover damages either in the same or in another action. 36 The trial court in this
case reserved Pobre's right to prove his claim in the same case, a reservation that has become final due
to NPC's own fault.

Factual Findings of the Trial and Appellate Courts Bind the Court
The trial and appellate courts held that even before the first expropriation case, Pobre had already
established his Property as a resort-subdivision. NPC had wrought so much damage to the Property that
NPC had made the Property uninhabitable as a resort-subdivision. NPC's facilities such as steam wells,
nag wells, power plants, power lines, and canals had hemmed in Pobre's Property. NPC's operations of its
geothermal project also posed a risk to lives and properties.

We uphold the factual findings of the trial and appellate courts. Questions of facts are beyond the pale of
Rule 45 of the Rules of Court as a petition for review may only raise questions of law. 37 Moreover, factual
findings of the trial court, particularly when affirmed by the Court of Appeals, are generally binding on this
Court.38 We thus find no reason to set aside the two courts' factual findings.

NPC points out that it did not take Pobre's 68,969 square-meter Property. NPC argues that assuming that
it is liable for damages, the 8,311.60 square-meter portion that it had successfully expropriated and fully
paid for should have been excluded from the 68,969 square-meter Property that Pobre claims NPC had
damaged.

We are not persuaded.

In its 30 October 1987 Order denying NPC's motion for reconsideration, the trial court pointed out that the
Property originally had a total area of 141,300 square meters.39 Pobre converted the Property into a
resort-subdivision and sold lots to the public. What remained of the lots are the 68,969 square meters of
land.40 Pobre no longer claimed damages for the other lots that he had before the expropriation.

Pobre identified in court the lots forming the 68,969 square-meter Property. NPC had the opportunity to
object to the identification of the lots.41 NPC, however, failed to do so. Thus, we do not disturb the trial
and appellate courts' finding on the total land area NPC had damaged.

NPC must Pay Just Compensation for the Entire Property

Ordinarily, the dismissal of the expropriation case restores possession of the expropriated land to the
landowner.42 However, when possession of the land cannot be turned over to the landowner because it is
neither convenient nor feasible anymore to do so, the only remedy available to the aggrieved landowner is
to demand payment of just compensation.43

In this case, we agree with the trial and appellate courts that it is no longer possible and practical to
restore possession of the Property to Pobre. The Property is no longer habitable as a resort-subdivision.
The Property is worthless to Pobre and is now useful only to NPC. Pobre has completely lost the Property
as if NPC had physically taken over the entire 68,969 square-meter Property.

In United States v. Causby,44 the U.S. Supreme Court ruled that when private property is rendered
uninhabitable by an entity with the power to exercise eminent domain, the taking is deemed complete.
Such taking is thus compensable.

In this jurisdiction, the Court has ruled that if the government takes property without expropriation and
devotes the property to public use, after many years the property owner may demand payment of just
compensation.45 This principle is in accord with the constitutional mandate that private property shall not
be taken for public use without just compensation. 46

In the recent case of National Housing Authority v. Heirs of Isidro Guivelondo,47 the Court compelled the
National Housing Authority ("NHA") to pay just compensation to the landowners even after the NHA had
already abandoned the expropriation case. The Court pointed out that a government agency could not
initiate expropriation proceedings, seize a person's property, and then just decide not to proceed with the
expropriation. Such a complete turn-around is arbitrary and capricious and was condemned by the Court
in the strongest possible terms. NHA was held liable to the landowners for the prejudice that they had
suffered.

In this case, NPC appropriated Pobre's Property without resort to expropriation proceedings. NPC
dismissed its own complaint for the second expropriation. At no point did NPC institute expropriation
proceedings for the lots outside the 5,554 square-meter portion subject of the second expropriation. The
only issues that the trial court had to settle were the amount of just compensation and damages that NPC
had to pay Pobre.
This case ceased to be an action for expropriation when NPC dismissed its complaint for expropriation.
Since this case has been reduced to a simple case of recovery of damages, the provisions of the Rules of
Court on the ascertainment of the just compensation to be paid were no longer applicable. A trial before
commissioners, for instance, was dispensable.

We have held that the usual procedure in the determination of just compensation is waived when the
government itself initially violates procedural requirements.48 NPC's taking of Pobre's property without
filing the appropriate expropriation proceedings and paying him just compensation is a transgression of
procedural due process.

From the beginning, NPC should have initiated expropriation proceedings for Pobre's entire 68,969
square-meter Property. NPC did not. Instead, NPC embarked on a piecemeal expropriation of the
Property. Even as the second expropriation case was still pending, NPC was well aware of the damage
that it had unleashed on the entire Property. NPC, however, remained impervious to Pobre's repeated
demands for NPC to abate the damage that it had wrought on his Property.

NPC moved for the dismissal of the complaint for the second expropriation on the ground that it had found
an alternative site and there was stiff opposition from Pobre.49 NPC abandoned the second expropriation
case five years after it had already deprived the Property virtually of all its value. NPC has demonstrated
its utter disregard for Pobre's property rights.

Thus, it would now be futile to compel NPC to institute expropriation proceedings to determine the just
compensation for Pobre's 68,969 square-meter Property. Pobre must be spared any further delay in his
pursuit to receive just compensation from NPC.

Just compensation is the fair and full equivalent of the loss.50 The trial and appellate courts endeavored to
meet this standard. The P50 per square meter valuation of the 68,969 square-meter Property is
reasonable considering that the Property was already an established resort-subdivision. NPC has itself to
blame for not contesting the valuation before the trial court. Based on the P50 per square meter
valuation, the total amount of just compensation that NPC must pay Pobre is P3,448,450.

The landowner is entitled to legal interest on the price of the land from the time of the taking up to the
time of full payment by the government.51 In accord with jurisprudence, we fix the legal interest at six per
cent (6%) per annum.52 The legal interest should accrue from 6 September 1979, the date when the trial
court issued the writ of possession to NPC, up to the time that NPC fully pays Pobre.53

NPC's abuse of its eminent domain authority is appalling. However, we cannot award moral damages
because Pobre did not assert his right to it.54 We also cannot award attorney's fees in Pobre's favor since
he did not appeal from the decision of the Court of Appeals denying recovery of attorney's fees. 55

Nonetheless, we find it proper to award P50,000 in temperate damages to Pobre. The court may award
temperate or moderate damages, which are more than nominal but less than compensatory damages, if
the court finds that a party has suffered some pecuniary loss but its amount cannot be proved with
certainty from the nature of the case.56 As the trial and appellate courts noted, Pobre's resort-subdivision
was no longer just a dream because Pobre had already established the resort-subdivision and the
prospect for it was initially encouraging. That is, until NPC permanently damaged Pobre's Property. NPC
did not just destroy the property. NPC dashed Pobre's hope of seeing his Property achieve its full potential
as a resort-subdivision.

The lesson in this case must not be lost on entities with eminent domain authority. Such entities cannot
trifle with a citizen's property rights. The power of eminent domain is an extraordinary power they must
wield with circumspection and utmost regard for procedural requirements. Thus, we hold NPC liable for
exemplary damages of P100,000. Exemplary damages or corrective damages are imposed, by way of
example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory
damages.57

WHEREFORE, we DENY the petition for lack of merit. The appealed Decision of the Court of Appeals dated
30 March 1992 in CA-G.R. CV No. 16930 is AFFIRMED with MODIFICATION. National Power Corporation is
ordered to pay Antonino Pobre P3,448,450 as just compensation for the 68,969 square-meter Property at
P50 per square meter. National Power Corporation is directed to pay legal interest at 6% per annum on
the amount adjudged from 6 September 1979 until fully paid. Upon National Power Corporation's payment
of the full amount, Antonino Pobre is ordered to execute a Deed of Conveyance of the Property in National
Power Corporation's favor. National Power Corporation is further ordered to pay temperate and exemplary
damages of P50,000 and P100,000, respectively.

G.R. No. 147245. March 31, 2005

THE REPUBLIC OF THE PHILIPPINES REPRESENTED BY THE NATIONAL IRRIGATION ADMINISTRATION,

Petitioner,
vs.
THE HONORABLE COURT OF APPEALS and FRANCISCO DIAZ, IN HIS CAPACITY AS ADMINISTRATOR OF
THE INTESTATE ESTATE OF THE LATE MANUEL DIAZ, Respondents.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review on certiorari1 assailing the Decision2 of 26 January 2001 of the
Court of Appeals in CA-G.R. CV No. 57493. The Court of Appeals modified the Decision 3 of 28 November
1996 of the Regional Trial Court of Cabanatuan City, Branch 28 in Civil Case No. 1593-AF, but affirmed
the trial court’s award of P4 million to respondent.

Antecedent Facts

Manuel Diaz owned approximately 172 hectares of tenanted agricultural land ("Property") devoted to the
planting of palay. The Property was located in La Fuente, Sta. Rosa, Nueva Ecija, and allegedly yielded
between 132 to 200 cavans of palay per hectare every year. After Manuel Diaz’s death, his son, Franciso
Diaz ("respondent"), was appointed administrator of the Property.

In 1972, the National Irrigation Administration ("NIA") bulldozed about ten (10) hectares of the Property
to build two irrigation canals ("canals"). Although the canals when finished occupied only a portion of the
10 hectares, the entire area became prone to flooding two months out of every year because of the side-
burrow method NIA used in the construction of the canals.4 NIA completed the canals without instituting
expropriation proceedings or indemnifying the Property’s owners.

Respondent sought compensation from NIA for the land affected by the canals, as well as for losses due to
unrealized profits. He submitted various documents requested by NIA officials and even traveled to NIA’s
Manila office to present his claims.

In 1980, NIA belatedly offered to buy the portions of the Property occupied by the canals pursuant to
NIA’s expansion program. Respondent and then NIA Acting Administrator Pelagio Gamad, Jr. signed three
deeds of sale5 ("1980 deeds of sale") on 24 December 1980 to convey 15,677, 1,897 and 4,499 square
meters, or a total of 22,073 square meters, of the Property to NIA. For reasons that neither party has
adequately explained, NIA and respondent did not push through with the sale. The 1980 deeds of sale
were never implemented. Respondent did not receive any consideration pursuant to these deeds.

On 20 August 1993, respondent, as administrator of the Property, filed an action for damages and just
compensation against NIA. Respondent sought P10 million from NIA as just compensation, P3 million as
unrealized profits or lucro cessante, P1 million attorney’s fees, and costs of suit. Respondent later filed an
Amended Complaint,6 in which respondent additionally prayed that, in the alternative, the court order NIA
to vacate and surrender the Property to respondent, and to pay damages, interest, attorney’s fees and
costs of suit. The trial court accepted and gave due course to the Amended Complaint in its Order of 22
July 1994.

NIA countered that respondent’s right to bring the action had prescribed in accordance with Republic Act
No. 3601 ("RA 3601"), as amended by Presidential Decree No. 552 7 ("PD 552"). NIA also argued that
respondent’s failure to pursue the implementation of the 1980 deeds of sale amounted to laches.

The Ruling of the Trial Court

The trial court found that NIA took between 9 to 11 hectares of the Property. NIA never paid respondent
for the use of the land or for the subsequent loss of crops.
The trial court also ruled that respondent’s right to seek damages had not lapsed. The trial court’s
Decision of 28 November 1996 ("trial court’s decision") reads in part:

xxx Defendant should not waylay the plaintiff by prolonging the negotiation and then later on invoked
(sic) prescription of action as a defense, this is a plain and simple way of defrauding others which Courts
of Justice should not countenance. While it is true that R.A. No. 3601 is (sic) amended by PD 552 sets a
limit on [or] capped the time within which to file the claims against acts and/or usurpation by the NIA,
running of the prescriptive period should not be absolute but must be dependent on the circumstances
attendant to each case, because of the confiscatory nature of the law.

IN VIEW OF THE ABOVE FINDINGS AND DISCUSSION of the matters relevant to the instant case, the
Court finds for the plaintiff and judgment is hereby rendered directing the defendant to pay the plaintiff
the following:

1. the sum of Four Million Pesos (P4,000,000.00) representing payment to the 11 hectares of riceland
occupied by the irrigation canal that traversed on the property of the Diazes;

2. the sum of Six Million Six Hundred Seventy Nine Thousand Two Hundred Pesos (P6,679,200.00)
representing the loss of 23,396 cavans of palay on account of the destruction made when the two
irrigation canals were constructed on the property of the plaintiff through side-burrow instead of the
earthfilling method, thus resulting further depression on the lots of the plaintiffs where during rainy
season water stays for months and (sic) cannot be planted with palay;

3. the sum of P500,000.00 by way of attorney’s fees; and defendant is likewise directed to pay the costs
of the suit.

SO ORDERED.8

NIA appealed the trial court’s decision to the Court of Appeals.

The Ruling of the Court of Appeals

The Court of Appeals found that NIA bulldozed approximately 10 hectares of the Property without paying
compensation. Like the trial court, the appellate court rejected NIA’s argument that respondent’s claims
had prescribed under PD 552. The Court of Appeals held that the 5-year prescriptive period mandated by
PD 552 did not apply because respondent and NIA were in deep negotiations during that period, and
because NIA itself had stalled respondent’s attempts to present his claims.

The Court of Appeals upheld the trial court’s award of P4 Million. Citing Garcia v. Court of Appeals,9 the
appellate court held that the rule requiring just compensation to be fixed as of the time of the taking was
inapplicable to the present case. However, the appellate court struck down the award of P6,679,200 on
the ground that respondent failed to adequately prove lost earnings. The appellate court also set aside the
award of attorney’s fees for lack of sufficient basis.

The dispositive portion of the Court of Appeals’ Decision of 26 January 2001 ("CA Decision") states:

WHEREFORE, premises considered, the assailed Decision of the Regional Trial Court of Cabanatuan City is
hereby AFFIRMED, with the MODIFICATION that the lower court’s award of P6,679,200.00 representing
loss of earnings and attorney’s fees of P500,000.00 is hereby DELETED.

SO ORDERED.10

Respondent did not appeal the CA Decision. NIA elevated the case to this Court.

The Issues

NIA, through the Solicitor General, raises the following issues:

I. The Court of Appeals committed Grave Error in awarding P4,000,000.00 in just compensation without
taking into consideration that just compensation must be ascertained at the time of taking in 1972 of the
property, not at the time of the commencement of the filing of the complaint by respondent which, if not
corrected, would result in a miscarriage of justice and grave and irreparable damage to petitioner/NIA.
II. The Court of Appeals gravely erred when it affirmed the trial court’s decision awarding just
compensation of P4,000,000.00 to respondent on the basis of respondent’s Sinumpaang Salaysay dated
September 20, 1995 and a letter of respondent, through counsel, dated February 8, 1994.

III. The Court of Appeals gravely erred in not remanding the case to the trial court and in not directing it
to appoint at least three commissioners selected by the parties, to hear, review, view the property and
thereafter to assess the amount for the just compensation.11

NIA no longer argues that respondent’s claim has prescribed under PD 552, but maintains that respondent
is guilty of laches. NIA also assails the lower courts’ award of P4 million. NIA claims that the construction
of the canals affected only 96,655 square meters of the Property. NIA computes the just compensation
due to respondent at P1.39 per square meter, the price NIA and respondent agreed on in 1980. In sum,
NIA contends that it should only pay respondent P134,350.45, and legal interest of 6% per annum from
1972 until the amount is fully paid, for 96,655 square meters of the Property.

The appellate court’s denial of the awards for loss of earnings and attorney’s fees are no longer in issue as
respondent chose not to appeal the CA Decision. The remaining questions for resolution by this Court are:
(1) whether laches bars respondent’s claims; (2) whether this case should be remanded to the trial court
for the appointment of commissioners; and (3) whether the Court of Appeals erred in affirming the award
of P4 million to respondent.

The Ruling of the Court

The petition is partly meritorious.

Respondent’s Action Not Barred by Laches

Having failed for three decades to pay respondent just compensation, NIA would now have respondent’s
complaint dismissed on the ground that too much time has passed for respondent to pursue his claim. NIA
first argued before the trial and appellate courts that respondent’s action had prescribed under PD 552.
Although NIA has dropped its argument of prescription before this Court, NIA still contends that
respondent slept on his rights and laches now bars his action.

Laches is principally a doctrine of equity. Courts apply laches to avoid recognizing a right when to do so
would result in a clearly inequitable situation or in an injustice.12 The principle of laches finds no
application in the present case. There is nothing inequitable in giving due course to respondent’s claim for
compensation. Both equity and the law direct that a property owner should be compensated if his
property is taken for public use.

Eminent domain is the inherent power of a sovereign state to appropriate private property to particular
uses to promote public welfare.13 No one questions NIA’s authority to exercise the delegated power of
eminent domain. However, the power of eminent domain is not limitless. NIA cannot exercise the power
with wanton disregard for property rights. One basic limitation on the State’s power of eminent domain is
the constitutional directive that, "[p]rivate property shall not be taken for public use without just
compensation."14

The thirteen-year interval between the execution of the 1980 deeds of sale and the filing of the complaint
in 1993 does not bar respondent’s claim for compensation. In National Power Corporation v. Campos,
Jr.,15 this Court reiterated the long-standing rule "that where private property is taken by the Government
for public use without first acquiring title thereto either through expropriation or negotiated sale, the
owner’s action to recover the land or the value thereof does not prescribe."16

Thus, in Ansaldo v. Tantuico, Jr.17 the Court allowed the landowners to seek compensation twenty-six
years after the government took their land. In Amigable v. Cuenca, etc., et al.,18 Amigable filed an action
to claim compensation more than thirty years after the government constructed the roads on her lot. In
both cases, the property owners were silent for several years before finally bringing their claims to the
attention of the authorities. In contrast, in the present case, respondent has steadfastly pursued his claim
with NIA since 1972.

NIA faults respondent for "desisting from claiming just compensation from NIA in 1980," 19 referring to the
1980 deeds of sale which were never implemented. NIA conveniently fails to mention that, as the other
party to the 1980 deeds of sale, it was equally delinquent when it failed to perform its obligations under
the deeds.

NIA is partly to blame for the delay in this case. The trial and appellate courts found that NIA stalled and
prolonged negotiations with respondent. Eight years passed before NIA even offered to buy the area
occupied by the canals. More than three decades later, respondent has yet to receive an iota of
compensation from NIA. In the meantime, NIA has been charging respondent and the other farmers in the
area irrigation fees for the beneficial use of these canals. 20

NIA’s conduct shows callous disregard for the rights of the Property’s owners and for NIA’s own duties
under the law. As the expropriating agency in this case, NIA should have instituted the proceedings
necessary to acquire the private property it took for public purpose and to compensate the Property’s
owners. Section 2(e) of RA 3601, as amended by PD 552, expressly states that the NIA should "exercise
the right of eminent domain in the manner provided by law for the institution of expropriation
proceedings."21

The exercise of eminent domain entails payment of just compensation. Otherwise, title over the
expropriated property cannot pass to the government.22 Following its own enabling law, NIA should have
taken steps to acquire the affected portion of the Property either through "any mode of acquisition" or
"the institution of expropriation proceedings." 23 RA 3601, as amended, does not authorize NIA to simply
appropriate part of the Property without instituting legal proceedings or compensating respondent.

Whether this Case Should be Remanded to the

Trial Court for the Appointment of Commissioners

NIA contends that it was deprived of due process when the trial court determined the compensation due
to respondent without the assistance of commissioners. NIA refers to the procedure found in Section 5,
Rule 67 of the 1964 Rules of Court applicable at the time, to wit:

SEC. 5. Ascertainment of compensation. – Upon the entry of the order of condemnation, the court shall
appoint not more than three (3) competent and disinterested persons as commissioners to ascertain and
report to the court the just compensation for the property sought to be taken. The order of appointment
shall designate the time and place of the first session of the hearing to be held by the commissioners and
specify the time within which their report is to be filed with the court.

Rule 67, however, presupposes that NIA exercised its right of eminent domain by filing a complaint for
that purpose before the appropriate court.24 Judicial determination of the propriety of the exercise of the
power of eminent domain and the just compensation for the subject property then follows. 25 The
proceedings give the property owner the chance to object to the taking of his property and to present
evidence on its value and on the consequential damage to other parts of his property. 26

Respondent was not given these opportunities, as NIA did not observe the procedure in Rule 67. Worse,
NIA refused to pay respondent just compensation. The seizure of one’s property without payment, even
though intended for public use, is a taking without due process of law and a denial of the equal protection
of the laws.27 NIA, not respondent, transgressed the requirements of due process.

When a government agency itself violates procedural requirements, it waives the usual procedure
prescribed in Rule 67. This Court ruled in the recent case of National Power Corporation ("NPC") v. Court
of Appeals,28 to wit:

We have held that the usual procedure in the determination of just compensation is waived when the
government itself initially violates procedural requirements. NPC’s taking of Pobre’s property without filing
the appropriate expropriation proceedings and paying him just compensation is a transgression of
procedural due process.29 (Emphasis supplied.)

Like in NPC, the present case is not an action for expropriation. NIA never filed expropriation proceedings
although it had ample opportunity to do so. Respondent’s complaint is an ordinary civil action for the
recovery of possession of the Property or its value, and damages. Under these circumstances, a trial
before commissioners is not necessary.30
The records show that NIA had every opportunity to argue its case before the trial court. NIA presented a
witness, cross-examined respondent’s witnesses, and submitted documentary evidence.31 NIA’s officers
even went with respondent on an ocular inspection of the Property. The trial court took into account the
inspection in arriving at its decision. However, NIA never raised the appointment of commissioners as an
issue before the trial court.

Though NIA actively participated in the proceedings below, it did not move for the appointment of
commissioners or object to their absence at any time. A party cannot raise for the first time on appeal an
issue not raised in the trial court.32 NIA is thus estopped from belatedly protesting the lack of
commissioners.

Whether the Court of Appeals Erred in Affirming the

Trial Court’s Award of P4 Million

Jurisprudence clearly provides for the remedies available to a landowner when his land is taken by the
government for public use. The owner may recover his property if its return is feasible, or, if it is not, the
aggrieved owner may demand payment of just compensation for the land taken. 33 In this case, the trial
court found that respondent is entitled to compensation of P4 Million for 11 hectares of the Property, or
P36.36 per square meter.

NIA assails the lower courts’ award on two grounds. First, NIA claims that the affected area of the
Property is 96,655 square meters and not 10 or 11 hectares. Second, NIA maintains that the just
compensation for the 96,655 square meters is P1.39 per square meter, the price agreed upon by the
parties in 1980. On the other hand, respondent argues that these are questions of fact, which are not the
province of this Court.

True, factual findings of the Court of Appeals are generally binding on this Court. However, there are
exceptions to this rule, such as when the factual findings of the Court of Appeals and the trial court are
contradictory, or when the findings are not supported by the evidence on record.34 These exceptions
obtain in the present case.

At first glance, it would appear that the Court of Appeals affirmed the trial court’s findings that served as
basis for the award of P4 Million. A closer reading of the Court of Appeals’ and trial court’s decisions
reveals otherwise. The trial court awarded P4 Million as "payment [for] the 11 hectares of land,"35 but the
appellate court found that only "approximately ten (10) hectares [were] bulldozed by the defendant." 36
These findings of the trial court and Court of Appeals are actually contradictory.

Further, respondent himself alleged in a demand letter37 to NIA dated 8 February 1994 that the total area
affected by the construction of the canals was 96,655 square meters. The trial court based its finding of
11 hectares on the testimony of retired NIA Engineer Agapito Panahon ("Engineer Panahon"), the area
engineer who headed the construction of the canals in 1972. However, Engineer Panahon merely testified
that the area of the Property affected by the construction was "(m)ore or less 9 to 11 hectares" 38
Respondent testified that the bulldozed area was "about 10 hectares, more or less." 39

These testimonies, in conjunction with respondent’s demand letter, NIA’s own allegations, and other
evidence, suffice to establish that NIA took or damaged 96,655 square meters of the Property. The area
of 96,655 square meters, or about 9.67 hectares, falls within the "9 to 11 hectares" range estimated by
Engineer Panahon, and is near enough to "10 hectares, more or less." However, Engineer Panahon’s and
respondent’s estimates, standing alone, cannot prove with any certainty that a larger area of 10 or 11
hectares was damaged.

The lower courts likewise erred in awarding P4 Million to respondent.

Just compensation is "the fair value of the property as between one who receives, and one who desires to
sell, x x x fixed at the time of the actual taking by the government."40 This rule holds true when the
property is taken before the filing of an expropriation suit, and even if it is the property owner who brings
the action for compensation.41

In affirming the trial court’s award, the Court of Appeals cited Garcia v. Court of Appeals,42 which provides
an exception to the rule. In Garcia, the Court held that when the government takes property, not for the
purpose of eminent domain, and the government does not initiate condemnation proceedings or other
attempts to acquire such property, just compensation should be reckoned not at the time of taking but at
the time the trial court made its order of expropriation. 43

However, the Garcia ruling does not apply to the present case. The 15,677, 1,897 and 4,499 square
meter portions – a total of 22,073 square meters ("Canal Sites") – of the Property identified in the 1980
deeds of sale are occupied by irrigation canals. There is no dispute that the Canal Sites serve a public
purpose because the canals provide much-needed irrigation to farms in the locality. There is also no
dispute that when NIA actually took over the Canal Sites, the purpose was to exercise NIA’s delegated
power of eminent domain.

Just compensation for the Canal Sites must thus be computed as of the time of taking. In this case,
respondent does not contest that NIA’s valuation of P1.39 per square meter was the approximate fair
market value of the Property in 1972. Respondent even agreed to this price when he signed the 1980
deeds of sale. At the least, P1.39 per square meter was "that sum of money which a person, desirous but
not compelled to buy, and an owner, willing but not compelled to sell, would agree on as a price." 44

Respondent protests that to value the Canal Sites at this rate would hardly be just to him, considering
that he has waited for more than thirty years to be compensated.

The Court finds it no less reprehensible that NIA has denied respondent’s valid claim for compensation for
so long. Just compensation means not only the correct determination of the amount due to the property
owner but also payment to him of the amount due within a reasonable time from the taking. 45 Respondent
is certainly entitled to legal interest and damages by reason of NIA’s inexcusable delay.

The concept of just compensation, however, does not imply fairness to the property owner alone.
Compensation must be just not only to the property owner, but also to the public which ultimately bears
the cost of expropriation. The property owner is entitled to compensation only for what he actually loses,
and what he loses is only the actual value of the property at the time of the taking. 46

Respondent is thus entitled to just compensation for the 22,073 square meter Canal Sites at P1.39 per
square meter, with legal interest from the time of the taking of the Canal Sites in 1972 until the amount
due is fully paid. In line with current jurisprudence,47 we set the legal interest at 12% per annum in order
to eliminate the usual issue of the constant fluctuation and inflation of the value of currency over time.

The remaining 74,582 square meters ("surrounding land") encircling the Canal Sites is another matter.
NIA took the surrounding land when NIA bulldozed the area and rendered it useless for the planting of
palay for several years. Taking occurs not only when the government actually deprives or dispossesses
the property owner of his property or of its ordinary use, but also when there is a practical destruction or
material impairment of the value of his property.48

NIA never filed proceedings to expropriate the surrounding land, nor did it exhibit intent, or attempt, to
purchase it. The 1980 deeds of sale referred only to the 22,073 square meters comprising the Canal Sites.
There is no showing that the surrounding land served, or continues to serve, some public purpose.

In awarding compensation for the surrounding land affected by NIA’s construction activities in 1972,
however, the lower courts overlooked respondent’s prayer for recovery of possession. As we pointed out
earlier, possession of the unpaid property may be returned to the aggrieved landowner if the
circumstances permit it.49

In this case, the return to respondent of a substantial portion of his Property, specifically, the 74,582
square meters surrounding the Canal Sites, is indeed feasible. The ocular inspection authorized by the
trial court revealed "that there were signs of planting and harvesting on the land xxx except that portion
occupied by the irrigation canal(s)."50 This indicates that the surrounding land has recovered, and can be
devoted again to the planting of palay. Respondent affirmed this fact in his testimony.51 Certainly,
respondent would not seek the return of a parcel of land that is no longer of any use to him.

Respondent’s prayer for recovery of possession should thus be granted. NIA should immediately vacate
the 74,582 square meters of the Property surrounding the Canal Sites. NIA should turn over to
respondent possession of the surrounding land without further delay.

Award of Temperate and Exemplary Damages

The Court will not award attorney’s fees in light of respondent’s choice not to appeal the CA Decision
striking down the award.52 However, we find it proper to award temperate and exemplary damages in
light of NIA’s misuse of its power of eminent domain. Any arm of the State that exercises the delegated
power of eminent domain must wield that power with circumspection and utmost regard for procedural
requirements.53 A government instrumentality that fails to observe the constitutional guarantees of just
compensation and due process abuses the authority delegated to it, and is liable to the property owner for
damages.

Temperate or moderate damages may be recovered if pecuniary loss has been suffered but the amount
cannot be proved with certainty from the nature of the case.54 Here, the trial and appellate courts found
that the owners were unable to plant palay on 96,655 square meters of the Property for an unspecified
period during and after NIA’s construction of the canals in 1972. The passage of time, however, has made
it impossible to determine these losses with any certainty. NIA also deprived the owners of the Property of
possession of a substantial portion of their land since 1972. Considering the particular circumstances of
this case, an award of P150,000 as temperate damages is reasonable.

NIA’s irresponsible exercise of its eminent domain powers also deserves censure. For more than three
decades, NIA has been charging irrigation fees from respondent and other landowners for the use of the
canals built on the Property, without reimbursing respondent a single cent for the loss and damage. NIA
exhibits a disturbingly cavalier attitude towards respondent’s property rights, rights to due process of law
and to equal protection of the laws. Worse, this is not the first time NIA has disregarded the rights of
private property owners by refusing to pay just compensation promptly. 55 To dissuade NIA from
continuing this practice and to set an example for other agencies exercising eminent domain powers, NIA
is directed to pay respondent exemplary damages56 of P250,000.

WHEREFORE, we AFFIRM the Decision of 26 January 2001 of the Court of Appeals in CA-G.R. CV No.
57493 with the following MODIFICATIONS:

1. The National Irrigation Authority shall immediately return possession and control of the 74,582 square
meter portion of the Property surrounding, but not occupied by, the irrigation canals to the Estate of the
late Manuel Diaz, represented by its Administrator, respondent Francisco Diaz;

2. We reduce the award of P4 Million and instead order the National Irrigation Authority to pay the Estate
of Manuel Diaz, through respondent Administrator, P30,681.47 or P1.39 per square meter as just
compensation for the 15,677, 1,897 and 4,499 square meter portions of the Property occupied by the
irrigation canals, as well as legal interest of 12% per annum on the amount adjudged from 1972 until fully
paid. The National Irrigation Authority shall further pay respondent temperate and exemplary damages of
P150,000 and P250,000, respectively, and costs of suit; and

3. Upon receipt of full payment, the Estate of Manuel Diaz shall convey the 22,073 square meter portion
of the Property occupied by the irrigation canals to the National Irrigation Authority.

G.R. No. 158563               June 30, 2005

AIR TRANSPORTATION OFFICE (ATO) and MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (mciaa),
petitioners,
vs.
APOLONIO GOPUCO, JR., respondent.

DECISION

CHICO-NAZARIO, J.:

When private land is expropriated for a particular public use, and that particular public use is abandoned,
does its former owner acquire a cause of action for recovery of the property?

The trial court’s ruling in the negative was reversed by the Court of Appeals in its Decision 1 of 28 February
2001. Hence this petition for review under Rule 45 of the 1997 Rules of Civil Procedure of the said
Decision of the court a quo, and its Resolution2 of 22 May 2003 dismissing petitioners’ motion for
reconsideration.

The facts, as adduced from the records, are as follows:

Respondent Apolonio Gopuco, Jr. was the owner of Cadastral Lot No. 72 consisting of 995 square meters
located in the vicinity of the Lahug Airport in Cebu City covered by Transfer Certificate of Title (TCT) No.
13061-T.

The Lahug Airport had been turned over by the Unites States Army to the Republic of the Philippines
sometime in 1947 through the Surplus Property Commission, which accepted it in behalf of the Philippine
Government. In 1947, the Surplus Property Commission was succeeded by the Bureau of Aeronautics,
which office was supplanted by the National Airport Corporation (NAC). The NAC was in turn dissolved and
replaced with the Civil Aeronautics Administration (CAA). 3

Sometime in 1949, the NAC informed the owners of the various lots surrounding the Lahug Airport,
including the herein respondent, that the government was acquiring their lands for purposes of expansion.
Some landowners were convinced to sell their properties on the assurance that they would be able to
repurchase the same when these would no longer be used by the airport. Others, including Gopuco,
refused to do so.

Thus, on 16 April 1952, the CAA filed a complaint with the Court of First Instance (CFI) of Cebu for the
expropriation of Lot No. 72 and its neighboring realties, docketed as Civil Case No. R-1881.

On 29 December 1961, the CFI promulgated a Decision,

1. Declaring the expropriation of [the subject lots, including Lot No. 72] justified and in lawful
exercise of the right of eminent domain;

2. Declaring …. a balance of P1,990 in favor of Apolonio Go Puco, Jr. with legal interest from
November 16, 1947 until fully paid…. ;

3. After the payment of the foregoing financial obligation to the landowners, directing the latter to
deliver to the plaintiff the corresponding Transfer Certificates of Title to their respective lots; and
upon the presentation of the said titles to the Register of Deeds, ordering the latter to cancel the
same and to issue, in lieu thereof, new Transfer Certificates of Title in the name of the plaintiff. 4

No appeal was taken from the above Decision on Lot No. 72, and the judgment of condemnation became
final and executory. Thereafter, on 23 May 1962, absolute title to Lot No. 72 was transferred to the
Republic of the Philippines under TCT No. 25030.5

Subsequently, when the Mactan International Airport commenced operations, the Lahug Airport was
ordered closed by then President Corazon C. Aquino in a Memorandum of 29 November 1989.6 Lot No. 72
was thus virtually abandoned.7

On 16 March 1990, Gopuco wrote8 the Bureau of Air Transportation, through the manager of the Lahug
Airport, seeking the return of his lot and offering to return the money previously received by him as
payment for the expropriation. This letter was ignored.9

In the same year, Congress passed Republic Act No. 6958 creating the Mactan-Cebu International Airport
Authority (MCIAA) and in part providing for the transfer of the assets of the Lahug Airport thereto.
Consequently, on 08 May 1992, ownership of Lot No. 72 was transferred to MCIAA under TCT No.
120356.10

On 06 August 1992, Apolonio Gopuco, Jr. filed an amended complaint 11 for recovery of ownership of Lot
No. 72 against the Air Transportation Office12 and the Province of Cebu with the Regional Trial Court (RTC)
of Cebu, Branch X, docketed as Civil Case No. CEB-11914. He maintained that by virtue of the closure of
the Lahug Airport, the original purpose for which the property was expropriated had ceased or otherwise
been abandoned, and title to the property had therefore reverted to him.

Gopuco further alleged that when the original judgment of expropriation had been handed down, and
before they could file an appeal thereto, the CAA offered them a compromise settlement whereby they
were assured that the expropriated lots would be resold to them for the same price as when it was
expropriated in the event that the Lahug Airport would be abandoned. Gopuco claims to have accepted
this offer.13 However, he failed to present any proof on this matter, and later admitted that insofar as the
said lot was concerned, no compromise agreement was entered into by the government and the previous
owners.14
Lastly, Gopuco asserted that he had come across several announcements in the papers that the Lahug
Airport was soon to be developed into a commercial complex, which he took to be a scheme of the
Province of Cebu to make permanent the deprivation of his property.

On 20 May 1994, the trial court rendered a Decision15 dismissing the complaint and directing the herein
respondent to pay the MCIAA exemplary damages, litigation expenses and costs.

Aggrieved by the holding of the trial court, Gopuco appealed to the Court of Appeals, which overturned
the RTC decision, ordered the herein petitioners to reconvey Lot No. 72 to Gopuco upon payment of the
reasonable price as determined by it, and deleted the award to the petitioners of exemplary damages,
litigation expenses and costs.

The Motion for Reconsideration was denied16 on 22 May 2003, hence this petition, which raises the
following issues:

WHETHER THE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT HAS THE RIGHT TO RECLAIM
OWNERSHIP OVER THE SUBJECT EXPROPRIATED LOT BASED ON THE IMPORT OF THE DECEMBER 29,
1961 DECISION IN CIVIL CASE NO. 1881.

WHETHER THE COURT OF APPEALS ERRED IN DELETING THE AWARD OF LITIGATION EXPENSES AND
COSTS IN FAVOR OF PETITIONERS.

In deciding the original expropriation case that gave rise to the present controversy, Civil Case No. R-
1881, the CFI reasoned that the planned expansion of the airport justified the exercise of eminent
domain, thus:

As for the public purpose of the expropriation proceeding, it cannot be doubted. Although the Mactan
Airport is being constructed, it does not take away the actual usefulness and importance of the Lahug
Airport; it is handling the air traffic both civilian and military. From it aircrafts fly to Mindanao and Visayas
and pass thru it on their return flights to the North and Manila. Then, no evidence was adduced to show
how soon is the Mactan Airport to be placed in operation and whether the Lahug Airport will be closed
immediately thereafter. It is for the other departments of the Government to determine said matters. The
Court cannot substitute its judgment for those of the said departments or agencies. In the absence of
such a showing, the Court will presume that the Lahug Airport will continue to be in operation.17
(emphasis supplied)1avvphi1

By the time Gopuco had filed his action for recovery of ownership of Lot No. 72, Lahug Airport had indeed
ceased to operate. Nevertheless, the trial court held:

The fact of abandonment or closure of the Lahug Airport admitted by the defendant did not by itself,
result in the reversion of the subject property back to the plaintiff. Nor did it vest in the plaintiff the right
to demand reconveyance of said property.

When real property has been acquired for public use unconditionally, either by eminent domain or by
purchase, the abandonment or non-use of the real property, does not ipso facto give to the previous
owner of said property any right to recover the same (Fery vs. Municipality of Cabanatuan, 42 Phil. 28).18

In reversing the trial court, the Court of Appeals called attention to the fact that both parties cited Fery v.
Municipality of Cabanatuan,19 which the trial court also relied on in its Decision. The court a quo agreed in
Gopuco’s interpretation of Fery that when the CFI in Civil Case No. R-1881 held that,

. . . [T]hen, no evidence was adduced to show how soon is the Mactan Airport to be placed in operation
and whether the Lahug Airport will be closed immediately thereafter….In the absence of such a showing,
the Court will presume that the Lahug Airport will continue to be in operation, . . . . 20

the expropriation of the property was conditioned on its continued devotion to its public purpose. Thus,
although the MCIAA stressed that nothing in the judgment of expropriation expressly stated that the lands
would revert to their previous owners should the public use be terminated or abandoned, the Court of
Appeals nevertheless ruled that,

. . . [W]hile, there is no explicit statement that the land is expropriated with the condition that when the
purpose is ended the property shall return to its owner, the full import of the decision (in Civil Case No. R-
1881) suggests that the expropriation was granted because there is no clear showing that Lahug Airport
will be closed, the moment Mactan International Airport is put to operation. It stands to reason that
should that public use be abandoned, then the expropriated property should revert back to its former
owner.

Moreover, the foundation of the right to exercise the power of eminent domain is genuine necessity.
Condemnation is justified only if it is for the public good and there is genuine necessity of a public
character. Thus, when such genuine necessity no longer exists as when the State abandons the property
expropriated, government interest must yield to the private right of the former land owner, whose
property right was disturbed as a consequence of the exercise of eminent domain.

Justice, equity and fair play demand that the property should revert back to plaintiff-appellant upon
paying the reasonable value of the land to be based on the prevailing market value at the time of judicial
demand to recover the property. If the State expects landowners to cooperate in its bid to take private
property for its public use, so must it apply also the same standard, to allow the landowner to reclaim the
property, now that the public use has been abandoned. 21

In this petition, the MCIAA reiterates that the Republic of the Philippines validly expropriated Lot No. 72
through the proceedings in Civil Case No. R-1881, the judgment of which had long become final and
executory. It further asserts that said judgment vested absolute and unconditional title in the
government, specifically on the petitioners, there having been no condition whatsoever that the property
should revert to its owners in case the Lahug Airport should be abandoned.

On the other hand, the respondent would have us sustain the appellate court’s interpretation of Fery as
applied to the original judgment of expropriation, to the effect that this was subject to the condition "that
the Lahug Airport will continue to be in operation."

We resolve to grant the petition.

In Fery, the Court asked and answered the same question confronting us now: When private land is
expropriated for a particular public use, and that particular public use is abandoned, does the land so
expropriated return to its former owner?22

The answer to that question depends upon the character of the title acquired by the expropriator, whether
it be the State, a province, a municipality, or a corporation which has the right to acquire property under
the power of eminent domain. If, for example, land is expropriated for a particular purpose, with the
condition that when that purpose is ended or abandoned the property shall return to its former owner,
then, of course, when the purpose is terminated or abandoned the former owner reacquires the property
so expropriated. If, for example, land is expropriated for a public street and the expropriation is granted
upon condition that the city can only use it for a public street, then, of course, when the city abandons its
use as a public street, it returns to the former owner, unless there is some statutory provision to the
contrary. . . If upon the contrary, however, the decree of expropriation gives to the entity a fee simple
title, then of course, the land becomes the absolute property of the expropriator, whether it be the State,
a province, or municipality, and in that case the non-user does not have the effect of defeating the title
acquired by the expropriation proceedings. (10 R.C.L., 240, sec. 202; 20 C.J. 1234, secs. 593-599 and
numerous cases cited; Reichling vs. Covington Lumber Co., 57 Wash., 225; 135 Am. St. Rep., 976;
McConihay vs. Wright, 121 U.S., 201.)

When land has been acquired for public use in fee simple, unconditionally, either by the exercise of
eminent domain or by purchase, the former owner retains no rights in the land, and the public use may
be abandoned or the land may be devoted to a different use, without any impairment of the estate or title
acquired, or any reversion to the former owner. (Fort Wayne vs. Lake Shore, etc. Ry. Co., 132 Ind., 558;
18 L.R.A., 367.) (Emphases Supplied)23

Did the judgment of expropriation in Civil Case No. R-1881 vest absolute and unconditional title in the
government? We have already had occasion to rule on this matter in Mactan-Cebu International Airport
Authority v. Court of Appeals,24 which is a related action for reconveyance of a parcel of land also subject
of the expropriation proceedings in Civil Case No. R-1881. One of the landowners affected by the said
proceeding was Virginia Chiongbian, to whom the CFI ordered the Republic of the Philippines to pay
P34,415.00, with legal interest computed from the time the government began using her land. Like the
herein respondent, she did not appeal from the CFI’s judgment. Also like Gopuco, she eventually filed for
the reconveyance of her property when the airport closed. Although she was upheld by both the RTC of
Cebu and the Court of Appeals, on appeal we held that "the terms of the judgment (in Civil Case No. R-
1881) are clear and unequivocal and granted title to Lot No. 941 in fee simple to the Republic of the
Philippines. There was no condition imposed to the effect that the lot would return to CHIONGBIAN or that
CHIONGBIAN had a right to repurchase the same if the purpose for which it was expropriated is ended or
abandoned or if the property was to be used other than as the Lahug Airport."25 Moreover, we held that
although other lot owners were able to successfully reacquire their lands by virtue of a compromise
agreement, since CHIONGBIAN was not a party to any such agreement, she could not validly invoke the
same.

The respondent would have us revisit this ruling for three reasons. First, because he claims there is no
showing that the government benefited from entering into compromise agreements with the other lot
owners; second, because such a doctrine supposedly discriminates against those who have "neither the
werewithal nor the savvy to contest the expropriation," or agree to modify the judgment; and third,
because there exists between the government and the owners of expropriated realty an "implied contract"
that the properties involved will be used only for the public purpose for which they were acquired in the
first place.

As to respondent’s first and second arguments, we have time and again ruled that a compromise
agreement, when not contrary to law, public order, public policy, morals, or good customs, is a valid
contract which is the law between the parties.26 It is a contract perfected by mere consent,27 whereby the
parties, making reciprocal concessions, avoid litigation or put an end to one already commenced. It has
the force of law and is conclusive between the parties,28 and courts will not relieve parties from obligations
voluntarily assumed, simply because their contracts turned out to be unwise. 29 Note that respondent has
not shown that any of the compromise agreements were in any way tainted with illegality, irregularity or
imprudence. Indeed, anyone who is not a party to a contract or agreement cannot be bound by its terms,
and cannot be affected by it.30 Since Gopuco was not a party to the compromise agreements, he cannot
legally invoke the same.31

Lastly, Gopuco argues that there is present, in cases of expropriation, an "implied contract" that the
properties will be used only for the public purpose for which they were acquired. No such contract exists.

Eminent domain is generally described as "the highest and most exact idea of property remaining in the
government" that may be acquired for some public purpose through a method in the nature of a forced
purchase by the State.32 Also often referred to as expropriation and, with less frequency, as
condemnation, it is, like police power and taxation, an inherent power of sovereignty and need not be
clothed with any constitutional gear to exist; instead, provisions in our Constitution on the subject are
meant more to regulate, rather than to grant, the exercise of the power. It is a right to take or reassert
dominion over property within the state for public use or to meet a public exigency and is said to be an
essential part of governance even in its most primitive form and thus inseparable from sovereignty. 33 In
fact, "all separate interests of individuals in property are held of the government under this tacit
agreement or implied reservation. Notwithstanding the grant to individuals, the eminent domain, the
highest and most exact idea of property, remains in the government, or in the aggregate body of people
in their sovereign capacity; and they have the right to resume the possession of the property whenever
the public interest so requires it." 34

The ubiquitous character of eminent domain is manifest in the nature of the expropriation proceedings.
Expropriation proceedings are not adversarial in the conventional sense, for the condemning authority is
not required to assert any conflicting interest in the property. Thus, by filing the action, the condemnor in
effect merely serves notice that it is taking title and possession of the property, and the defendant asserts
title or interest in the property, not to prove a right to possession, but to prove a right to compensation
for the taking.35

The only direct constitutional qualification is thus that "private property shall not be taken for public use
without just compensation."36 This prescription is intended to provide a safeguard against possible abuse
and so to protect as well the individual against whose property the power is sought to be
enforced.37lawphil.net

In this case, the judgment on the propriety of the taking and the adequacy of the compensation received
have long become final. We have also already held that the terms of that judgment granted title in fee
simple to the Republic of the Philippines. Therefore, pursuant to our ruling in Fery, as recently cited in
Reyes v. National Housing Authority,38 no rights to Lot No. 72, either express or implied, have been
retained by the herein respondent.
We are not unaware of the ruling in Heirs of Timoteo Moreno v. Mactan-Cebu International Airport
Authority,39 concerning still another set of owners of lots declared expropriated in the judgment in Civil
Case No. R-1881. As with Chiongbian and the herein respondent, the owners of the lots therein did not
appeal the judgment of expropriation, but subsequently filed a complaint for reconveyance. In ordering
MCIAA to reconvey the said lots in their favor, we held that the predicament of petitioners therein
involved a constructive trust "akin to the implied trust referred to in Art. 145440 of the Civil Code."41
However, we qualified our Decision in that case, to the effect that,

We adhere to the principles enunciated in Fery and in Mactan-Cebu International Airport Authority, and do
not overrule them. Nonetheless the weight of their import, particularly our ruling as regards the properties
of respondent Chiongbian in Mactan-Cebu International Airport Authority, must be commensurate to the
facts that were established therein as distinguished from those extant in the case at bar. Chiongbian put
forth inadmissible and inconclusive evidence, while in the instant case we have preponderant proof as
found by the trial court of the existence of the right of repurchase in favor of petitioners.

Neither has Gopuco, in the present case, adduced any evidence at all concerning a right of repurchase in
his favor. Heirs of Moreno is thus not in point.

The trial court was thus correct in denying Gopuco’s claim for the reconveyance of Lot No. 72 in his favor.
However, for failure of the petitioners to present any proof that this case was clearly unfounded or filed
for purposes of harassment, or that the herein respondent acted in gross and evident bad faith, the
reimposition of litigation expenses and costs has no basis. It is not sound public policy to set a premium
upon the right to litigate where such right is exercised in good faith, as in the present case.42

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 49898
dated 28 February 2001, and its Resolution of 22 May 2003 are hereby REVERSED and SET ASIDE. The
Decision of RTC-Branch X of Cebu dated 20 May 1994 in Civil Case No. CEB-11914 is REINSTATED with
the modification that the award of exemplary damages, litigation expenses and costs are DELETED.

G.R. No. 137152       January 29, 2001

CITY OF MANDALUYONG, petitioner,

vs.
ANTONIO N., FRANCISCO N., THELMA N., EUSEBIO N., RODOLFO N., all surnamed AGUILAR,
respondents.

PUNO, J.:

This is a petition for review under Rule 45 of the Rules of Court of the Orders dated September 17, 1998
and December 29, 1998 of the Regional Trial Court, Branch 168, Pasig City1 dismissing the petitioner's
Amended Complaint in SCA No. 1427 for expropriation of two (2) parcels of land in Mandaluyong City.

The antecedent facts are as follows:

On August 4, 1997, petitioner filed with the Regional Trial Court, Branch 168, Pasig City a complaint for
expropriation entitled "City of Mandaluyong, plaintiff v. Antonio N., Francisco N, Thelma N, Eusebio N,
Rodolfo N., all surnamed Aguilar, defendants." Petitioner sought to expropriate three (3) adjoining parcels
of land with an aggregate area of 1,847 square meters registered under Transfer Certificates of Title Nos.
59780, 63766 and 63767 in the names of the defendants, herein respondents, located at 9 de Febrero
Street, Barangay Mauwag, City of Mandaluyong; on a portion of the 3 lots, respondents constructed
residential houses several decades ago which they had since leased out to tenants until the present; on
the vacant portion of the lots, other families constructed residential structures which they likewise
occupied; in 1983, the lots were classified by Resolution No. 125 of the Board of the Housing and Urban
Development Coordinating Council as an Area for Priority Development for urban land reform under
Proclamation Nos. 1967 and 2284 of then President Marcos; as a result of this classification, the tenants
and occupants of the lots offered to purchase the land from respondents, but the latter refused to sell; on
November 7, 1996, the Sangguniang Panlungsod of petitioner, upon petition of the Kapitbisig, an
association of tenants and occupants of the subject land, adopted Resolution No. 516, Series of 1996
authorizing Mayor Benjamin Abalos of the City of Mandaluyong to initiate action for the expropriation of
the subject lots and construction of a medium-rise condominium for qualified occupants of the land; on
January 10, 1996, Mayor Abalos sent a letter to respondents offering to purchase the said property at
P3,000.00 per square meter; respondents did not answer the letter. Petitioner thus prayed for the
expropriation of the said lots and the fixing of just compensation at the fair market value of P3,000.00 per
square meter.2

In their answer, respondents, except Eusebio N. Aguilar who died in 1995, denied having received a copy
of Mayor Abalos' offer to purchase their lots. They alleged that the expropriation of their land is arbitrary
and capricious, and is not for a public purpose; the subject lots are their only real property and are too
small for expropriation, while petitioner has several properties inventoried for socialized housing; the fair
market value of P3,000.00 per square meter is arbitrary because the zonal valuation set by the Bureau of
Internal Revenue is P7,000.00 per square meter. As counterclaim, respondents prayed for damages of
P21 million.3

Respondents filed a "Motion for Preliminary Hearing" claiming that the defenses alleged in their Answer
are valid grounds for dismissal of the complaint for lack of jurisdiction over the person of the defendants
and lack of cause of action. Respondents prayed that the affirmative defenses be set for preliminary
hearing and that the complaint be dismissed.4 Petitioner replied.

On November 5, 1997, petitioner filed an Amended Complaint and named as an additional defendant
Virginia N. Aguilar and, at the same time, substituted Eusebio Aguilar with his heirs. Petitioner also
excluded from expropriation TCT No. 59870 and thereby reduced the area sought to be expropriated from
three (3) parcels of land to two (2) parcels totalling 1,636 square meters under TCT Nos. 63766 and
63767.5

The Amended Complaint was admitted by the trial court on December 18, 1997. Respondents, who, with
the exception of Virginia Aguilar and the Heirs of Eusebio Aguilar had yet to be served with summons and
copies of the Amended Complaint, filed a "Manifestation and Motion" adopting their "Answer with
Counterclaim" and "Motion for Preliminary Hearing" as their answer to the Amended Complaint. 6

The motion was granted. At the hearing of February 25, 1998, respondents presented Antonio Aguilar who
testified and identified several documentary evidence. Petitioner did not present any evidence. Thereafter,
both parties filed their respective memoranda. 7

On September 17, 1998, the trial court issued an order dismissing the Amended Complaint after declaring
respondents as "small property owners" whose land is exempt from expropriation under Republic Act No.
7279. The court also found that the expropriation was not for a public purpose for petitioner's failure to
present any evidence that the intended beneficiaries of the expropriation are landless and homeless
residents of Mandaluyong. The court thus disposed of as follows:

"WHEREFORE, the Amended Complaint is hereby ordered dismissed without pronouncement as to

cost.

SO ORDERED."8

Petitioner moved for reconsideration. On December 29, 1998, the court denied the motion. Hence this
petition.

Petitioner claims that the trial court erred

"IN UPHOLDING RESPONDENT'S CONTENTION THAT THEY QUALIFY AS SMALL PROPERTY OWNERS
AND ARE THUS EXEMPT FROM EXPROPRIATION."9

Petitioner mainly claims that the size of the lots in litigation does not exempt the same from expropriation
in view of the fact that the said lots have been declared to be within the Area for Priority Development
(APD) No. 5 of Mandaluyong by virtue of Proclamation No. 1967, as amended by Proclamation No. 2284 in
relation to Presidential Decree No. 1517.10 This declaration allegedly authorizes petitioner to expropriate
the property, ipso facto, regardless of the area of the land.

Presidential Decree (P.D.) No. 1517, the Urban Land Reform Act, was issued by then President Marcos in
1978. The decree adopted as a State policy the liberation of human communities from blight, congestion
and hazard, and promotion of their development and modernization, the optimum use of land as a
national resource for public welfare.11 Pursuant to this law, Proclamation No. 1893 was issued in 1979
declaring the entire Metro Manila as Urban Land Reform Zone for purposes of urban land reform. This was
amended in 1980 by Proclamation No. 1967 and in 1983 by Proclamation No. 2284 which identified and
specified 245 sites in Metro Manila as Areas for Priority Development and Urban Land Reform Zones.

In 1992, the Congress of the Philippines passed Republic Act No. 7279, the "Urban Development and
Housing Act of 1992." The law lays down as a policy that the state, in cooperation with the private sector,
undertake a comprehensive and continuing Urban Development and Housing Program; uplift the
conditions of the underprivileged and homeless citizens in urban, areas and resettlement areas by making
available to them decent housing at affordable cost, basic services and employment opportunities and
provide for the rational use and development of urban land to bring about, among others, equitable
utilization of residential lands; encourage more effective people's participation in the urban development
process and improve the capability of local government units in undertaking urban development and
housing programs and projects.12 Towards this end, all city and municipal governments are mandated to
conduct an inventory of all lands and improvements within their respective localities, and in coordination
with the National Housing Authority, the Housing and Land Use Regulatory Board, the National Mapping
Resource Information Authority, and the Land Management Bureau, identify lands for socialized housing
and resettlement areas for the immediate and future needs of the underprivileged and homeless in the
urban areas, acquire the lands, and dispose of said lands to the beneficiaries of the program.13

The acquisition of lands for socialized housing is governed by several provisions in the law. Section 9 of
R.A. 7279 provides:

"Sec. 9. Priorities in the Acquisition of Land. — Lands for socialized housing shall be acquired in the
following order:

(a) Those owned by the Government or any of its subdivisions, instrumentalities, or

agencies, including government-owned or controlled corporations and their subsidiaries;

(b) Alienable lands of the public domain;

(c) Unregistered or abandoned and idle lands;

(d) Those within the declared Areas for Priority Development, Zonal Improvement Program
sites, and Slum Improvement and Resettlement Program sites which have not yet been
acquired;

(e) Bagong Lipunan Improvement of Sites and Services or BLISS Sites which have not yet
been acquired;

(f) Privately-owned lands.

Where on-site development is found more practicable and advantageous to the beneficiaries, the
priorities mentioned in this section shall not apply. The local government units shall give budgetary
priority to on-site development of government lands."

Lands for socialized housing are to be acquired in the following order: (1) government lands; (2) alienable
lands of the public domain; (3) unregistered or abandoned or idle lands; (4) lands within the declared
Areas for Priority Development (APD), Zonal Improvement Program (ZIP) sites, Slum Improvement and
Resettlement (SIR) sites which have not yet been acquired; (5) BLISS sites which have not yet been
acquired; and (6) privately-owned lands.

There is no dispute that the two lots in litigation are privately-owned and therefore last in the order of
priority acquisition. However, the law also provides that lands within the declared APD's which have not
yet been acquired by the government are fourth in the order of priority. According to petitioner, since the
subject lots lie within the declared APD, this fact mandates that the lots be given priority in acquisition. 14

Section 9, however, is not a single provision that can be read separate from the other provisions of the
law. It must be read together with Section 10 of R.A. 7279 which also provides:

"Section 10. Modes of Land Acquisition. — The modes of acquiring lands for purposes of this Act
shall include, among others, community mortgage, land swapping, land assembly or consolidation,
land banking, donation to the Government, joint-venture agreement, negotiated purchase, and
expropriation: Provided, however, That expropriation shall be resorted to only when other modes
 of acquisition have been exhausted: Provided, further, That where expropriation is resorted to,
parcels of land owned by small property owners shall be exempted for purposes of this Act:
Provided, finally, That abandoned property, as herein defined, shall be reverted and escheated to
the State in a proceeding analogous to the procedure laid down in Rule 91 of the Rules of Court. 15

For the purposes of socialized housing, government-owned and foreclosed properties shall be
acquired by the local government units, or by the National Housing Authority primarily through
negotiated purchase: Provided, That qualified beneficiaries who are actual occupants of the land
shall be given the right of first refusal."

Lands for socialized housing under R.A. 7279 are to be acquired in several modes. Among these modes
are the following: (1) community mortgage; (2) land swapping, (3) land assembly or consolidation; (4)
land banking; (5) donation to the government; (6) joint venture agreement; (7) negotiated purchase; and
(8) expropriation. The mode of expropriation is subject to two conditions: (a) it shall be resorted to only
when the other modes of acquisition have been exhausted; (b) parcels of land owned by small property
owners are exempt from such acquisition.

Section 9 of R.A. 7279 speaks of priorities in the acquisition of lands. It enumerates the type of lands to
be acquired and the heirarchy in their acquisition. Section 10 deals with the modes of land acquisition or
the process of acquiring lands for socialized housing. These are two different things. They mean that the
type of lands that may be acquired in the order of priority in Section 9 are to be acquired only in the
modes authorized under Section 10. The acquisition of the lands in the priority list must be made subject
to the modes and conditions set forth in the next provision. In other words, land that lies within the APD,
such as in the instant case, may be acquired only in the modes under, and subject to the conditions of,
Section 10.

Petitioner claims that it had faithfully observed the different modes of land acquisition for socialized
housing under R.A. 7279 and adhered to the priorities in the acquisition for socialized housing under said
law.16 It, however, did not state with particularity whether it exhausted the other modes of acquisition in
Section 9 of the law before it decided to expropriate the subject lots. The law states "expropriation shall
be resorted to when other modes of acquisition have been exhausted." Petitioner alleged only one mode
of acquisition, i.e., by negotiated purchase. Petitioner, through the City Mayor, tried to purchase the lots
from respondents but the latter refused to sell.17 As to the other modes of acquisition, no mention has
been made. Not even Resolution No. 516, Series of 1996 of the Sangguniang Panlungsod authorizing the
Mayor of Mandaluyong to effect the expropriation of the subject property states whether the city
government tried to acquire the same by community mortgage, land swapping, land assembly or
consolidation, land banking, donation to the government, or joint venture agreement under Section 9 of
the law.

Section 9 also exempts from expropriation parcels of land owned by small property owners.18 Petitioner
argues that the exercise of the power of eminent domain is not anymore conditioned on the size of the
land sought to be expropriated.19 By the expanded notion of public use, present jurisprudence has
established the concept that expropriation is not anymore confined to the vast tracts of land and landed
estates, but also covers small parcels of land.20 That only a few could actually benefit from the
expropriation of the property does not diminish its public use character.21 It simply is not possible to
provide, in one instance, land and shelter for all who need them.22

While we adhere to the expanded notion of public use, the passage of R.A. No. 7279, the "Urban
Development and Housing Act of 1992" introduced a limitation on the size of the land sought to be
expropriated for socialized housing. The law expressly exempted "small property owners" from
expropriation of their land for urban land reform. R.A. No. 7279 originated as Senate Bill No. 234
authored by Senator Joey Lina23 and House Bill No. 34310. Senate Bill No. 234 then provided that one of
those lands not covered by the urban land reform and housing program was "land actually used by small
property owners within the just and equitable retention limit as provided under this Act." 24 "Small property
owners" were defined in Senate Bill No. 234 as:

"4. Small Property Owners — are those whose rights are protected under Section 9, Article XIII of
the Constitution of the Philippines, who own small parcels of land within the fair and just retention
limit provided under this Act and which are adequate to meet the reasonable needs of the small
property owner's family and their means of livelihood.25
The exemption from expropriation of lands of small-property owners was never questioned on the Senate
floor.26 This exemption, although with a modified definition, was actually retained in the consolidation of
Senate Bill No. 234 and House Bill No. 34310 which became R.A. No. 7279.27

The question now is whether respondents qualify as "small property owners" as defined in Section 3 (q) of
R.A. 7279. Section 3 (q) provides:

"Section 3 x x x (q). "Small property owners" refers to those whose only real property consists of
residential lands not exceeding three hundred square meters (300 sq.m.) in highly urbanized cities
and eight hundred square meters (800 sq.m.) in other urban areas."

"Small-property owners" are defined by two elements: (1) those owners of real property whose property
consists of residential lands with an area of not more than 300 square meters in highly urbanized cities
and 800 square meters in other urban areas; and (2) that they do not own real property other than the
same.

The case at bar involves two (2) residential lots in Mandaluyong City, a highly urbanized city. The lot
under TCT No. 63766 is 687 square meters in area and the second under TCT No. 63767 is 949 square
meters, both totalling 1,636 square meters in area. TCT No. 63766 was issued in the names of herein five
(5) respondents, viz:

"FRANCISCO N. AGUILAR, widower; THELMA N. AGUILAR, single; EUSEBIO N. AGUILAR, JR.,

widower; RODOLFO N. AGUILAR, single and ANTONIO N. AGUILAR, married to Teresita Puig; all of
legal age, Filipinos."28

TCT No. 63767 was issued in the names of the five (5) respondents plus Virginia Aguilar, thus:

"FRANCISCO N. AGUILAR, widower; THELMA N. AGUILAR, single; EUSEBIO N. AGUILAR, JR.,

widower; RODOLFO N. AGUILAR, single and ANTONIO N. AGUILAR, married to Teresita Puig; and
VIRGINIA N. AGUILAR, single, all of legal age, Filipinos."29

Respondent Antonio Aguilar testified that he and the other registered owners are all siblings who inherited
the subject property by intestate succession from their parents. 30 Their father died in 1945 and their
mother in 1976.31 Both TCT's were issued in the siblings' names on September 2, 1987.31 In 1986,
however, the siblings agreed to extrajudicially partition the lots among themselves, but no action was
taken by them to this end. It was only eleven (11) years later, on November 28, 1997 that a survey of
the two lots was made33 and on February 10, 1998, a consolidation subdivision plan was approved by the
Lands Management Service of the Department of Environment and Natural Resources. 34 The co-owners
signed a Partition Agreement on February 24, 199835 and on May 21, 1998, TCT Nos. 63766 and 63767
were cancelled and new titles issued in the names of the individual owners pursuant to the Partition
Agreement.

Petitioner argues that the consolidation of the subject lots and their partition was made more than six (6)
months after the complaint for expropriation was filed on August 4, 1997, hence, the partition was made
in bad faith, for the purpose of circumventing the provisions of R.A. 7279.36

At the time of filing of the complaint for expropriation, the lots subject of this case were owned in
common by respondents; Under a co-ownership, the ownership of an undivided thing or right belongs to
different persons.37 During the existence of the co-ownership, no individual can claim title to any definite
portion of the community property until the partition thereof; and prior to the partition, all that the co-
owner has is an ideal or abstract quota or proportionate share in the entire land or thing. 38 Article 493 of
the Civil Code however provides that:

"Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute
another person in its enjoyment, except when personal rights are involved. But the effect of the
alienation or the mortgage, with respect to the co-owners shall be limited to the portion which may
be allotted to him in the division upon termination of the co-ownership. 39

Before partition in a co-ownership, every co-owner has the absolute ownership of his undivided interest in
the common property. The co-owner is free to alienate, assign or mortgage his interest, except as to
purely personal rights.40 He may also validly lease his undivided interest to a third party independently of
the other co-owners.41 The effect of any such transfer is limited to the portion which may be awarded to
him upon the partition of the property.42

Article 493 therefore gives the owner of an undivided interest in the property the right to freely sell and
dispose of his undivided interest.43 The co-owner, however, has no right to sell or alienate a concrete
specific or determinate part of the thing owned in common, because his right over the thing is
represented by a quota or ideal portion without any physical adjudication. 44 If the co-owner sells a
concrete portion, this, nonetheless, does not render the sale void. Such a sale affects only his own share,
subject to the results of the partition but not those of the other co-owners who did not consent to the
sale.45

In the instant case, the titles to the subject lots were issued in respondents' names as co-owners in 1987
—ten (10) years before the expropriation case was filed in 1997. As co-owners, all that the respondents
had was an ideal or abstract quota or proportionate share in the lots. This, however, did not mean that
they could not separately exercise any rights over the lots. Each respondent had the full ownership of his
undivided interest in the property. He could freely sell or dispose of his interest independently of the other
co-owners. And this interest could have even been attached by his creditors. 46 The partition in 1998, six
(6) months after the filing of the expropriation case, terminated the co-ownership by converting into
certain and definite parts the respective undivided shares of the co-owners.47 The subject property is not a
thing essentially indivisible. The rights of the co-owners to have the property partitioned and their share
in the same delivered to them cannot be questioned for "[n]o co-owner shall be obliged to remain in the
co-ownership."48 The partition was merely a necessary incident of the co-ownership; 49 and absent any
evidence to the contrary, this partition is presumed to have been done in good faith.

Upon partition, four (4) co-owners, namely, Francisco, Thelma, Rodolfo and Antonio Aguilar each had a
share of 300 square meters under TCT Nos. 13849, 13852, 13850, 13851.50 Eusebio Aguilar's share was
347 square meters under TCT No. 1385351 while Virginia Aguilar's was 89 square meters under TCT No.
13854.52

It is noted that Virginia Aguilar, although granted 89 square meters only of the subject lots, is, at the
same time, the sole registered owner of TCT No. 59780, one of the three (3) titles initially sought to be
expropriated in the original complaint. TCT No. 59780, with a land area of 211 square meters, was
dropped in the amended complaint. Eusebio Aguilar was granted 347 square meters, which is 47 square
meters more than the maximum of 300 square meters set by R.A. 7279 for small property owners. In TCT
No. 13853, Eusebio's title, however, appears the following annotation:

"... subject to x x x, and to the prov. of Sec. 4 Rule 74 of the Rules of Court with respect to the
inheritance left by the deceased Eusebio N. Aguilar." 53

Eusebio died on March 23, 1995,54 and, according to Antonio's testimony, the former was survived by five
(5) children.55 Where there are several co-owners, and some of them die, the heirs of those who die, with
respect to that part belonging to the deceased, become also co-owners of the property together with
those who survive.56 After Eusebio died, his five heirs became co-owners of his 347 square-meter portion.
Dividing the 347 square meters among the five entitled each heir to 69.4 square meters of the land
subject of litigation.

Consequently, the share of each co-owner did not exceed the 300 square meter limit set in R.A. 7279.
The second question, however, is whether the subject property is the only real property of respondents
for them to comply with the second requisite for small property owners.

Antonio Aguilar testified that he and most of the original co-owners do not reside on the subject property
but in their ancestral home in Paco, Manila.57 Respondents therefore appear to own real property other
than the lots in litigation. Nonetheless, the records do not show that the ancestral home in Paco, Manila
and the land on which it stands are owned by respondents or anyone of them. Petitioner did not present
any title or proof of this fact despite Antonio Aguilar's testimony.

On the other hand, respondents claim that the subject lots are their only real property 58 and that they,
particularly two of the five heirs of Eusebio Aguilar, are merely renting their houses and therefore do not
own any other real property in Metro Manila. 59 To prove this, they submitted certifications from the offices
of the City and Municipal Assessors in Metro Manila attesting to the fact that they have no registered real
property declared for taxation purposes in the respective cities. Respondents were certified by the City
Assessor of Manila;60 Quezon City;61 Makati City;62 Pasay City;63 Paranaque;64 Caloocan City;65 Pasig City;66
Muntinlupa;67 Marikina;68 and the then municipality of Las Piñas69 and the municipality of San Juan del
Monte70 as having no real property registered for taxation in their individual names.1âwphi1.nêt

Finally, this court notes that the subject lots are now in the possession of respondents. Antonio Aguilar
testified that he and the other co-owners filed ejectment cases against the occupants of the land before
the Metropolitan Trial Court, Mandaluyong, Branches 59 and 60. Orders of eviction were issued and
executed on September 17, 1997 which resulted in the eviction of the tenants and other occupants from
the land in question.71

IN VIEW WHEREOF, the petition is DENIED and the orders dated September 17. 1998 and December 29,
1998 of the Regional Trial Court, Branch 168, Pasig City in SCA No. 1427 are AFFIRMED.

G.R. No. 106440             January 29, 1996

ALEJANDRO MANOSCA, ASUNCION MANOSCA and LEONICA MANOSCA, petitioners,

vs.
HON. COURT OF APPEALS, HON. BENJAMIN V. PELAYO, Presiding Judge, RTC-Pasig, Metro Manila, Branch
168, HON. GRADUACION A. REYES CLARAVAL, Presiding Judge, RTC-Pasig, Metro Manila, Branch 71, and
REPUBLIC OF THE PHILIPPINES, respondents.

DECISION

VITUG, J.:

In this appeal, via a petition for review on certiorari, from the decision1 of the Court of Appeals, dated 15
January 1992, in CA-G.R. SP No. 24969 (entitled "Alejandro Manosca, et al. v. Hon. Benjamin V. Pelayo,
et al."), this Court is asked to resolve whether or not the "public use" requirement of Eminent Domain is
extant in the attempted expropriation by the Republic of a 492-square-meter parcel of land so declared by
the National Historical Institute ("NHI") as a national historical landmark.

The facts of the case are not in dispute.

Petitioners inherited a piece of land located at P. Burgos Street, Calzada, Taguig. Metro Manila, with an
area of about four hundred ninety-two (492) square meters. When the parcel was ascertained by the NHI
to have been the birthsite of Felix Y. Manalo, the founder of Iglesia Ni Cristo, it passed Resolution No. 1,
Series of 1986, pursuant to Section 42 of Presidential Decree No. 260, declaring the land to be a national
historical landmark. The resolution was, on 06 January 1986, approved by the Minister of Education,
Culture and Sports. Later, the opinion of the Secretary of Justice was asked on the legality of the
measure. In his Opinion No. 133, Series of 1987, the Secretary of Justice replied in the affirmative; he
explained:

According to your guidelines, national landmarks are places or objects that are associated with an
event, achievement, characteristic, or modification that makes a turning point or stage in
Philippine history. Thus, the birthsite of the founder of the Iglesia ni Cristo, the late Felix Y.
Manalo, who, admittedly, had made contributions to Philippine history and culture has been
declared as a national landmark. It has been held that places invested with unusual historical
interest is a public use for which the power of eminent domain may be authorized . . . .

In view thereof, it is believed that the National Historical Institute as an agency of the Government
charged with the maintenance and care of national shrines, monuments and landmarks and the
development of historical sites that may be declared as national shrines, monuments and/or
landmarks, may initiate the institution of condemnation proceedings for the purpose of acquiring
the lot in question in accordance with the procedure provided for in Rule 67 of the Revised Rules of
Court. The proceedings should be instituted by the Office of the Solicitor General in behalf of the
Republic.

Accordingly, on 29 May 1989, the Republic, through the Office of the Solicitor-General, instituted a
complaint for expropriation3 before the Regional Trial Court of Pasig for and in behalf of the NHI alleging,
inter alia, that:

Pursuant to Section 4 of Presidential Decree No. 260, the National Historical Institute issued
Resolution No. 1, Series of 1986, which was approved on January, 1986 by the then Minister of
 Education, Culture and Sports, declaring the above described parcel of land which is the birthsite of
Felix Y. Manalo, founder of the "Iglesia ni Cristo," as a National Historical Landrnark. The plaintiff
perforce needs the land as such national historical landmark which is a public purpose.

At the same time, respondent Republic filed an urgent motion for the issuance of an order to permit it to
take immediate possession of the property. The motion was opposed by petitioners. After a hearing, the
trial court issued, on 03 August 1989,4 an order fixing the provisional market (P54,120.00) and assessed
(P16,236.00) values of the property and authorizing the Republic to take over the property once the
required sum would have been deposited with the Municipal Treasurer of Taguig, Metro Manila.

Petitioners moved to dismiss the complaint on the main thesis that the intended expropriation was not for
a public purpose and, incidentally, that the act would constitute an application of public funds, directly or
indirectly, for the use, benefit, or support of Iglesia ni Cristo, a religious entity, contrary to the provision
of Section 29(2), Article VI, of the 1987 Constitution.5 Petitioners sought, in the meanwhile, a suspension
in the implementation of the 03rd August 1989 order of the trial court.

On 15 February 1990, following the filing by respondent Republic of its reply to petitioners' motion
seeking the dismissal of the case, the trial court issued its denial of said motion to dismiss. 6 Five (5) days
later, or on 20 February 1990,7 another order was issued by the trial court, declaring moot and academic
the motion for reconsideration and/or suspension of the order of 03 August 1989 with the rejection of
petitioners' motion to dismiss. Petitioners' motion for the reconsideration of the 20th February 1990 order
was likewise denied by the trial court in its 16th April 1991 order. 8

Petitioners then lodged a petition for certiorari and prohibition with the Court of Appeals. In its now
disputed 15th January 1992 decision, the appellate court dismissed the petition on the ground that the
remedy of appeal in the ordinary course of law was an adequate remedy and that the petition itself, in
any case, had failed to show any grave abuse of discretion or lack of jurisdictional competence on the part
of the trial court. A motion for the reconsideration of the decision was denied in the 23rd July 1992
resolution of the appellate court.

We begin, in this present recourse of petitioners, with a few known postulates.

Eminent domain, also often referred to as expropriation and, with less frequency, as condemnation, is,
like police power and taxation, an inherent power of sovereignty. It need not be clothed with any
constitutional gear to exist; instead, provisions in our Constitution on the subject are meant more to
regulate, rather than to grant, the exercise of the power. Eminent domain is generally so described as
"the highest and most exact idea of property remaining in the government" that may be acquired for
some public purpose through a method in the nature of a forced purchase by the State. 9 It is a right to
take or reassert dominion over property within the state for public use or to meet a public exigency. It is
said to be an essential part of governance even in its most primitive form and thus inseparable from
sovereignty. 10 The only direct constitutional qualification is that "private property shall not be taken for
public use without just compensation." 11 This proscription is intended to provide a safeguard against
possible abuse and so to protect as well the individual against whose property the power is sought to be
enforced.

Petitioners assert that the expropriation has failed to meet the guidelines set by this Court in the case of
Guido v. Rural Progress Administration, 12 to wit: (a) the size of the land expropriated; (b) the large
number of people benefited; and, (c) the extent of social and economic reform.13 Petitioners suggest that
we confine the concept of expropriation only to the following public uses, 14 i.e., the —

. . . taking of property for military posts, roads, streets, sidewalks, bridges, ferries, levees,
wharves, piers, public buildings including schoolhouses, parks, playgrounds, plazas, market places,
artesian wells, water supply and sewerage systems, cemeteries, crematories, and railroads.

This view of petitioners is much too limitative and restrictive.

The court, in Guido, merely passed upon the issue of the extent of the President's power under
Commonwealth Act No. 539 to, specifically, acquire private lands for subdivision into smaller home lots or
farms for resale to bona fide tenants or occupants. It was in this particular context of the statute that the
Court had made the pronouncement. The guidelines in Guido were not meant to be preclusive in nature
and, most certainly, the power of eminent domain should not now be understood as being confined only
to the expropriation of vast tracts of land and landed estates. 15
The term "public use," not having been otherwise defined by the constitution, must be considered in its
general concept of meeting a public need or a public exigency. 16 Black summarizes the characterization
given by various courts to the term; thus:

Public Use. Eminent domain. The constitutional and statutory basis for taking property by eminent
domain. For condemnation purposes, "public use" is one which confers same benefit or advantage
to the public; it is not confined to actual use by public. It is measured in terms of right of public to
use proposed facilities for which condemnation is sought and, as long as public has right of use,
whether exercised by one or many members of public, a "public advantage" or "public benefit"
accrues sufficient to constitute a public use. Montana Power Co. vs. Bokma, Mont. 457 P. 2d 769,
772, 773.

Public use, in constitutional provisions restricting the exercise of the right to take private property
in virtue of eminent domain, means a use concerning the whole community as distinguished from
particular individuals. But each and every member of society need not be equally interested in
such use, or be personally and directly affected by it; if the object is to satisfy a great public want
or exigency, that is sufficient. Rindge Co. vs. Los Angeles County, 262 U.S. 700, 43 S.Ct. 689,
692, 67 L.Ed. 1186. The term may be said to mean public usefulness, utility, or advantage, or
what is productive of general benefit. It may be limited to the inhabitants of a small or restricted
locality, but must be in common, and not for a particular individual. The use must be a needful one
for the public, which cannot be surrendered without obvious general loss and inconvenience. A
"public use" for which land may be taken defies absolute definition for it changes with varying
conditions of society, new appliances in the sciences, changing conceptions of scope and functions
of government, and other differing circumstances brought about by an increase in population and
new modes of communication and transportation. Katz v. Brandon, 156 Conn., 521, 245 A.2d
579,586. 17

The validity of the exercise of the power of eminent domain for traditional purposes is beyond question; it
is not at all to be said, however, that public use should thereby be restricted to such traditional uses. The
idea that "public use" is strictly limited to clear cases of "use by the public" has long been discarded. This
Court in Heirs of Juancho Ardona v. Reyes,18 quoting from Berman v. Parker (348 U.S. 25; 99 L. ed. 27),
held:

We do not sit to determine whether a particular housing project is or is not desirable. The concept
of the public welfare is broad and inclusive. See DayBrite Lighting, Inc. v. Missouri, 342 US 421,
424, 96 L. Ed. 469, 472, 72 S Ct 405. The values it represents are spiritual as well as physical,
aesthetic as well as monetary. It is within the power of the legislature to determine that the
community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well
as carefully patrolled. In the present case, the Congress and its authorized agencies have made
determinations that take into account a wide variety of values. It is no for us to reappraise them. If
those who govern the District of Columbia decide that the Nation's Capital should be beautiful as
well as sanitary, there is nothing in the Fifth Amendment that stands in the way.

Once the object is within the authority of Congress, the right to realize it through the exercise of
eminent domain is clear. For the power of eminent domain is merely the means to the end. See
Luxton v. North River Bridge Co. 153 US 525, 529, 530, 38 L. ed. 808, 810, 14 S Ct 891; United
States v. Gettysburg Electric R. Co. 160 US 668, 679, 40 L. ed. 576, 580, 16 S Ct 427.

19
It has been explained as early as Seña v. Manila Railroad Co., that:

. . . A historical research discloses the meaning of the term "public use" to be one of constant
growth. As society advances, its demands upon the individual increase and each demand is a new
use to which the resources of the individual may be devoted. . . . for "whatever is beneficially
employed for the community is a public use.

Chief Justice Enrique M. Fernando states:

The taking to be valid must be for public use. There was a time when it was felt that a literal
meaning should be attached to such a requirement. Whatever project is undertaken must be for
the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It
is not so any more. As long as the purpose of the taking is public, then the power of eminent
domain comes into play. As just noted, the constitution in at least two cases, to remove any doubt,
determines what is public use. One is the expropriation of lands to be subdivided into small lots for
 resale at cost to individuals. The other is the transfer, through the exercise of this power, of
utilities and other private enterprise to the government. It is accurate to state then that at present
whatever may be beneficially employed for the general welfare satisfies the requirement of public
use. 20

Chief Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land Tenure Administration, 21 has
viewed the Constitution a dynamic instrument and one that "is not to be construed narrowly or
pedantically" so as to enable it "to meet adequately whatever problems the future has in store." Fr.
Joaquin Bernas, a noted constitutionalist himself, has aptly observed that what, in fact, has ultimately
emerged is a concept of public use which is just as broad as "public welfare." 22

Petitioners ask: But "(w)hat is the so-called unusual interest that the expropriation of (Felix Manalo's)
birthplace become so vital as to be a public use appropriate for the exercise of the power of eminent
domain" when only members of the Iglesia ni Cristo would benefit? This attempt to give some religious
perspective to the case deserves little consideration, for what should be significant is the principal
objective of, not the casual consequences that might follow from, the exercise of the power. The purpose
in setting up the marker is essentially to recognize the distinctive contribution of the late Felix Manalo to
the culture of the Philippines, rather than to commemorate his founding and leadership of the Iglesia ni
Cristo.

The practical reality that greater benefit may be derived by members of the Iglesia ni Cristo than
by most others could well be true but such a peculiar advantage still remains to be merely
incidental and secondary in nature. Indeed, that only a few would actually benefit from the
expropriation of property does not necessarily diminish the essence and character of public use. 23

Petitioners contend that they have been denied due process in the fixing of the provisional value of their
property. Petitioners need merely to be reminded that what the law prohibits is the lack of opportunity to
be heard;24 contrary to petitioners' argument, the records of this case are replete with pleadings 25 that
could have dealt, directly or indirectly, with the provisional value of the property.

Petitioners, finally, would fault respondent appellate court in sustaining the trial court's order which
considered inapplicable the case of Noble v. City of Manila. 26 Both courts held correctly. The Republic was
not a party to the alleged contract of exchange between the Iglesia ni Cristo and petitioners which (the
contracting parties) alone, not the Republic, could properly be bound.

All considered, the Court finds the assailed decision to be in accord with law and jurisprudence.

WHEREFORE, the petition is DENIED.

G.R. No. 176625              

MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY and AIR TRANSPORTATION OFFICE, Petitioners,

vs.
BERNARDO L. LOZADA, SR., and the HEIRS OF ROSARIO MERCADO, namely, VICENTE LOZADA, MARIO
M. LOZADA, MARCIA L. GODINEZ, VIRGINIA L. FLORES, BERNARDO LOZADA, JR., DOLORES GACASAN,
SOCORRO CAFARO and ROSARIO LOZADA, represented by MARCIA LOZADA GODINEZ, Respondents.

DECISION

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse, annul,
and set aside the Decision1 dated February 28, 2006 and the Resolution2 dated February 7, 2007 of the
Court of Appeals (CA) (Cebu City), Twentieth Division, in CA-G.R. CV No. 65796.

The antecedent facts and proceedings are as follows:

Subject of this case is Lot No. 88-SWO-25042 (Lot No. 88), with an area of 1,017 square meters, more or
less, located in Lahug, Cebu City. Its original owner was Anastacio Deiparine when the same was subject
to expropriation proceedings, initiated by the Republic of the Philippines (Republic), represented by the
then Civil Aeronautics Administration (CAA), for the expansion and improvement of the Lahug Airport. The
case was filed with the then Court of First Instance of Cebu, Third Branch, and docketed as Civil Case No.
R-1881.

As early as 1947, the lots were already occupied by the U.S. Army. They were turned over to the Surplus
Property Commission, the Bureau of Aeronautics, the National Airport Corporation and then to the CAA.

During the pendency of the expropriation proceedings, respondent Bernardo L. Lozada, Sr. acquired Lot
No. 88 from Deiparine. Consequently, Transfer Certificate of Title (TCT) No. 9045 was issued in Lozada’s
name.

On December 29, 1961, the trial court rendered judgment in favor of the Republic and ordered the latter
to pay Lozada the fair market value of Lot No. 88, adjudged at P3.00 per square meter, with
consequential damages by way of legal interest computed from November 16, 1947—the time when the
lot was first occupied by the airport. Lozada received the amount of P3,018.00 by way of payment.

The affected landowners appealed. Pending appeal, the Air Transportation Office (ATO), formerly CAA,
proposed a compromise settlement whereby the owners of the lots affected by the expropriation
proceedings would either not appeal or withdraw their respective appeals in consideration of a
commitment that the expropriated lots would be resold at the price they were expropriated in the event
that the ATO would abandon the Lahug Airport, pursuant to an established policy involving similar cases.
Because of this promise, Lozada did not pursue his appeal. Thereafter, Lot No. 88 was transferred and
registered in the name of the Republic under TCT No. 25057.

The projected improvement and expansion plan of the old Lahug Airport, however, was not pursued.

Lozada, with the other landowners, contacted then CAA Director Vicente Rivera, Jr., requesting to
repurchase the lots, as per previous agreement. The CAA replied that there might still be a need for the
Lahug Airport to be used as an emergency DC-3 airport. It reiterated, however, the assurance that
"should this Office dispose and resell the properties which may be found to be no longer necessary as an
airport, then the policy of this Office is to give priority to the former owners subject to the approval of the
President."

On November 29, 1989, then President Corazon C. Aquino issued a Memorandum to the Department of
Transportation, directing the transfer of general aviation operations of the Lahug Airport to the Mactan
International Airport before the end of 1990 and, upon such transfer, the closure of the Lahug Airport.

Sometime in 1990, the Congress of the Philippines passed Republic Act (R.A.) No. 6958, entitled "An Act
Creating the Mactan-Cebu International Airport Authority, Transferring Existing Assets of the Mactan
International Airport and the Lahug Airport to the Authority, Vesting the Authority with Power to
Administer and Operate the Mactan International Airport and the Lahug Airport, and For Other Purposes."

From the date of the institution of the expropriation proceedings up to the present, the public purpose of
the said expropriation (expansion of the airport) was never actually initiated, realized, or implemented.
Instead, the old airport was converted into a commercial complex. Lot No. 88 became the site of a jail
known as Bagong Buhay Rehabilitation Complex, while a portion thereof was occupied by squatters. 3 The
old airport was converted into what is now known as the Ayala I.T. Park, a commercial area.1avvphi1

Thus, on June 4, 1996, petitioners initiated a complaint for the recovery of possession and reconveyance
of ownership of Lot No. 88. The case was docketed as Civil Case No. CEB-18823 and was raffled to the
Regional Trial Court (RTC), Branch 57, Cebu City. The complaint substantially alleged as follows:

(a) Spouses Bernardo and Rosario Lozada were the registered owners of Lot No. 88 covered by
TCT No. 9045;

(b) In the early 1960’s, the Republic sought to acquire by expropriation Lot No. 88, among others,
in connection with its program for the improvement and expansion of the Lahug Airport;

(c) A decision was rendered by the Court of First Instance in favor of the Government and against
the land owners, among whom was Bernardo Lozada, Sr. appealed therefrom;
 (d) During the pendency of the appeal, the parties entered into a compromise settlement to the
effect that the subject property would be resold to the original owner at the same price when it
was expropriated in the event that the Government abandons the Lahug Airport;

(e) Title to Lot No. 88 was subsequently transferred to the Republic of the Philippines (TCT No.
25057);

(f) The projected expansion and improvement of the Lahug Airport did not materialize;

(g) Plaintiffs sought to repurchase their property from then CAA Director Vicente Rivera. The latter
replied by giving as assurance that priority would be given to the previous owners, subject to the
approval of the President, should CAA decide to dispose of the properties;

(h) On November 29, 1989, then President Corazon C. Aquino, through a Memorandum to the
Department of Transportation and Communications (DOTC), directed the transfer of general
aviation operations at the Lahug Airport to the Mactan-Cebu International Airport Authority;

(i) Since the public purpose for the expropriation no longer exists, the property must be returned
to the plaintiffs.4

In their Answer, petitioners asked for the immediate dismissal of the complaint. They specifically denied
that the Government had made assurances to reconvey Lot No. 88 to respondents in the event that the
property would no longer be needed for airport operations. Petitioners instead asserted that the judgment
of condemnation was unconditional, and respondents were, therefore, not entitled to recover the
expropriated property notwithstanding non-use or abandonment thereof.

After pretrial, but before trial on the merits, the parties stipulated on the following set of facts:

(1) The lot involved is Lot No. 88-SWO-25042 of the Banilad Estate, situated in the City of Cebu,
containing an area of One Thousand Seventeen (1,017) square meters, more or less;

(2) The property was expropriated among several other properties in Lahug in favor of the
Republic of the Philippines by virtue of a Decision dated December 29, 1961 of the CFI of Cebu in
Civil Case No. R-1881;

(3) The public purpose for which the property was expropriated was for the purpose of the Lahug
Airport;

(4) After the expansion, the property was transferred in the name of MCIAA; [and]

(5) On November 29, 1989, then President Corazon C. Aquino directed the Department of
Transportation and Communication to transfer general aviation operations of the Lahug Airport to
the Mactan-Cebu International Airport Authority and to close the Lahug Airport after such
transfer[.]5

During trial, respondents presented Bernardo Lozada, Sr. as their lone witness, while petitioners
presented their own witness, Mactan-Cebu International Airport Authority legal assistant Michael
Bacarisas.

On October 22, 1999, the RTC rendered its Decision, disposing as follows:

WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in favor of the plaintiffs,
Bernardo L. Lozada, Sr., and the heirs of Rosario Mercado, namely, Vicente M. Lozada, Marcia L. Godinez,
Virginia L. Flores, Bernardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro and Rosario M. Lozada,
represented by their attorney-in-fact Marcia Lozada Godinez, and against defendants Cebu-Mactan
International Airport Authority (MCIAA) and Air Transportation Office (ATO):

1. ordering MCIAA and ATO to restore to plaintiffs the possession and ownership of their land, Lot
No. 88 Psd-821 (SWO-23803), upon payment of the expropriation price to plaintiffs; and

2. ordering the Register of Deeds to effect the transfer of the Certificate of Title from defendant[s]
to plaintiffs on Lot No. [88], cancelling TCT No. 20357 in the name of defendant MCIAA and to
 issue a new title on the same lot in the name of Bernardo L. Lozada, Sr. and the heirs of Rosario
Mercado, namely: Vicente M. Lozada, Mario M. Lozada, Marcia L. Godinez, Virginia L. Flores,
Bernardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro and Rosario M. Lozada.

No pronouncement as to costs.

SO ORDERED.6

Aggrieved, petitioners interposed an appeal to the CA. After the filing of the necessary appellate briefs,
the CA rendered its assailed Decision dated February 28, 2006, denying petitioners’ appeal and affirming
in toto the Decision of the RTC, Branch 57, Cebu City. Petitioners’ motion for reconsideration was,
likewise, denied in the questioned CA Resolution dated February 7, 2007.

Hence, this petition arguing that: (1) the respondents utterly failed to prove that there was a repurchase
agreement or compromise settlement between them and the Government; (2) the judgment in Civil Case
No. R-1881 was absolute and unconditional, giving title in fee simple to the Republic; and (3) the
respondents’ claim of verbal assurances from government officials violates the Statute of Frauds.

The petition should be denied.

Petitioners anchor their claim to the controverted property on the supposition that the Decision in the
pertinent expropriation proceedings did not provide for the condition that should the intended use of Lot
No. 88 for the expansion of the Lahug Airport be aborted or abandoned, the property would revert to
respondents, being its former owners. Petitioners cite, in support of this position, Fery v. Municipality of
Cabanatuan,7 which declared that the Government acquires only such rights in expropriated parcels of
land as may be allowed by the character of its title over the properties—

If x x x land is expropriated for a particular purpose, with the condition that when that purpose is ended
or abandoned the property shall return to its former owner, then, of course, when the purpose is
terminated or abandoned the former owner reacquires the property so expropriated. If x x x land is
expropriated for a public street and the expropriation is granted upon condition that the city can only use
it for a public street, then, of course, when the city abandons its use as a public street, it returns to the
former owner, unless there is some statutory provision to the contrary. x x x. If, upon the contrary,
however, the decree of expropriation gives to the entity a fee simple title, then, of course, the land
becomes the absolute property of the expropriator, whether it be the State, a province, or municipality,
and in that case the non-user does not have the effect of defeating the title acquired by the expropriation
proceedings. x x x.

When land has been acquired for public use in fee simple, unconditionally, either by the exercise of
eminent domain or by purchase, the former owner retains no right in the land, and the public use may be
abandoned, or the land may be devoted to a different use, without any impairment of the estate or title
acquired, or any reversion to the former owner. x x x.8

Contrary to the stance of petitioners, this Court had ruled otherwise in Heirs of Timoteo Moreno and Maria
Rotea v. Mactan-Cebu International Airport Authority,9 thus—

Moreover, respondent MCIAA has brought to our attention a significant and telling portion in the Decision
in Civil Case No. R-1881 validating our discernment that the expropriation by the predecessors of
respondent was ordered under the running impression that Lahug Airport would continue in operation—

As for the public purpose of the expropriation proceeding, it cannot now be doubted. Although Mactan
Airport is being constructed, it does not take away the actual usefulness and importance of the Lahug
Airport: it is handling the air traffic both civilian and military. From it aircrafts fly to Mindanao and Visayas
and pass thru it on their flights to the North and Manila. Then, no evidence was adduced to show how
soon is the Mactan Airport to be placed in operation and whether the Lahug Airport will be closed
immediately thereafter. It is up to the other departments of the Government to determine said matters.
The Court cannot substitute its judgment for those of the said departments or agencies. In the absence of
such showing, the Court will presume that the Lahug Airport will continue to be in operation (emphasis
supplied).

While in the trial in Civil Case No. R-1881 [we] could have simply acknowledged the presence of public
purpose for the exercise of eminent domain regardless of the survival of Lahug Airport, the trial court in
its Decision chose not to do so but instead prefixed its finding of public purpose upon its understanding
that "Lahug Airport will continue to be in operation." Verily, these meaningful statements in the body of
the Decision warrant the conclusion that the expropriated properties would remain to be so until it was
confirmed that Lahug Airport was no longer "in operation." This inference further implies two (2) things:
(a) after the Lahug Airport ceased its undertaking as such and the expropriated lots were not being used
for any airport expansion project, the rights vis-à-vis the expropriated Lots Nos. 916 and 920 as between
the State and their former owners, petitioners herein, must be equitably adjusted; and (b) the foregoing
unmistakable declarations in the body of the Decision should merge with and become an intrinsic part of
the fallo thereof which under the premises is clearly inadequate since the dispositive portion is not in
accord with the findings as contained in the body thereof.10

Indeed, the Decision in Civil Case No. R-1881 should be read in its entirety, wherein it is apparent that
the acquisition by the Republic of the expropriated lots was subject to the condition that the Lahug Airport
would continue its operation. The condition not having materialized because the airport had been
abandoned, the former owner should then be allowed to reacquire the expropriated property. 11

On this note, we take this opportunity to revisit our ruling in Fery, which involved an expropriation suit
commenced upon parcels of land to be used as a site for a public market. Instead of putting up a public
market, respondent Cabanatuan constructed residential houses for lease on the area. Claiming that the
municipality lost its right to the property taken since it did not pursue its public purpose, petitioner Juan
Fery, the former owner of the lots expropriated, sought to recover his properties. However, as he had
admitted that, in 1915, respondent Cabanatuan acquired a fee simple title to the lands in question,
judgment was rendered in favor of the municipality, following American jurisprudence, particularly City of
Fort Wayne v. Lake Shore & M.S. RY. Co.,12 McConihay v. Theodore Wright,13 and Reichling v. Covington
Lumber Co.,14 all uniformly holding that the transfer to a third party of the expropriated real property,
which necessarily resulted in the abandonment of the particular public purpose for which the property was
taken, is not a ground for the recovery of the same by its previous owner, the title of the expropriating
agency being one of fee simple.

Obviously, Fery was not decided pursuant to our now sacredly held constitutional right that private
property shall not be taken for public use without just compensation.15 It is well settled that the taking of
private property by the Government’s power of eminent domain is subject to two mandatory
requirements: (1) that it is for a particular public purpose; and (2) that just compensation be paid to the
property owner. These requirements partake of the nature of implied conditions that should be complied
with to enable the condemnor to keep the property expropriated. 16

More particularly, with respect to the element of public use, the expropriator should commit to use the
property pursuant to the purpose stated in the petition for expropriation filed, failing which, it should file
another petition for the new purpose. If not, it is then incumbent upon the expropriator to return the said
property to its private owner, if the latter desires to reacquire the same. Otherwise, the judgment of
expropriation suffers an intrinsic flaw, as it would lack one indispensable element for the proper exercise
of the power of eminent domain, namely, the particular public purpose for which the property will be
devoted. Accordingly, the private property owner would be denied due process of law, and the judgment
would violate the property owner’s right to justice, fairness, and equity.

In light of these premises, we now expressly hold that the taking of private property, consequent to the
Government’s exercise of its power of eminent domain, is always subject to the condition that the
property be devoted to the specific public purpose for which it was taken. Corollarily, if this particular
purpose or intent is not initiated or not at all pursued, and is peremptorily abandoned, then the former
owners, if they so desire, may seek the reversion of the property, subject to the return of the amount of
just compensation received. In such a case, the exercise of the power of eminent domain has become
improper for lack of the required factual justification.17

Even without the foregoing declaration, in the instant case, on the question of whether respondents were
able to establish the existence of an oral compromise agreement that entitled them to repurchase Lot No.
88 should the operations of the Lahug Airport be abandoned, we rule in the affirmative.

It bears stressing that both the RTC, Branch 57, Cebu and the CA have passed upon this factual issue and
have declared, in no uncertain terms, that a compromise agreement was, in fact, entered into between
the Government and respondents, with the former undertaking to resell Lot No. 88 to the latter if the
improvement and expansion of the Lahug Airport would not be pursued. In affirming the factual finding of
the RTC to this effect, the CA declared—
Lozada’s testimony is cogent. An octogenarian widower-retiree and a resident of Moon Park, California
since 1974, he testified that government representatives verbally promised him and his late wife while the
expropriation proceedings were on-going that the government shall return the property if the purpose for
the expropriation no longer exists. This promise was made at the premises of the airport. As far as he
could remember, there were no expropriation proceedings against his property in 1952 because the first
notice of expropriation he received was in 1962. Based on the promise, he did not hire a lawyer. Lozada
was firm that he was promised that the lot would be reverted to him once the public use of the lot ceases.
He made it clear that the verbal promise was made in Lahug with other lot owners before the 1961
decision was handed down, though he could not name the government representatives who made the
promise. It was just a verbal promise; nevertheless, it is binding. The fact that he could not supply the
necessary details for the establishment of his assertions during cross-examination, but that "When it will
not be used as intended, it will be returned back, we just believed in the government," does not dismantle
the credibility and truthfulness of his allegation. This Court notes that he was 89 years old when he
testified in November 1997 for an incident which happened decades ago. Still, he is a competent witness
capable of perceiving and making his perception known. The minor lapses are immaterial. The decision of
the competency of a witness rests primarily with the trial judge and must not be disturbed on appeal
unless it is clear that it was erroneous. The objection to his competency must be made before he has
given any testimony or as soon as the incompetency becomes apparent. Though Lozada is not part of the
compromise agreement,18 he nevertheless adduced sufficient evidence to support his claim. 19

As correctly found by the CA, unlike in Mactan Cebu International Airport Authority v. Court of Appeals, 20
cited by petitioners, where respondent therein offered testimonies which were hearsay in nature, the
testimony of Lozada was based on personal knowledge as the assurance from the government was
personally made to him. His testimony on cross-examination destroyed neither his credibility as a witness
nor the truthfulness of his words.

Verily, factual findings of the trial court, especially when affirmed by the CA, are binding and conclusive
on this Court and may not be reviewed. A petition for certiorari under Rule 45 of the Rules of Court
contemplates only questions of law and not of fact.21 Not one of the exceptions to this rule is present in
this case to warrant a reversal of such findings.

As regards the position of petitioners that respondents’ testimonial evidence violates the Statute of
Frauds, suffice it to state that the Statute of Frauds operates only with respect to executory contracts,
and does not apply to contracts which have been completely or partially performed, the rationale thereof
being as follows:

In executory contracts there is a wide field for fraud because unless they be in writing there is no palpable
evidence of the intention of the contracting parties. The statute has precisely been enacted to prevent
fraud. However, if a contract has been totally or partially performed, the exclusion of parol evidence
would promote fraud or bad faith, for it would enable the defendant to keep the benefits already delivered
by him from the transaction in litigation, and, at the same time, evade the obligations, responsibilities or
liabilities assumed or contracted by him thereby.22

In this case, the Statute of Frauds, invoked by petitioners to bar the claim of respondents for the
reacquisition of Lot No. 88, cannot apply, the oral compromise settlement having been partially
performed. By reason of such assurance made in their favor, respondents relied on the same by not
pursuing their appeal before the CA. Moreover, contrary to the claim of petitioners, the fact of Lozada’s
eventual conformity to the appraisal of Lot No. 88 and his seeking the correction of a clerical error in the
judgment as to the true area of Lot No. 88 do not conclusively establish that respondents absolutely
parted with their property. To our mind, these acts were simply meant to cooperate with the government,
particularly because of the oral promise made to them.

The right of respondents to repurchase Lot No. 88 may be enforced based on a constructive trust
constituted on the property held by the government in favor of the former. On this note, our ruling in
Heirs of Timoteo Moreno is instructive, viz.:

Mactan-Cebu International Airport Authority is correct in stating that one would not find an express
statement in the Decision in Civil Case No. R-1881 to the effect that "the [condemned] lot would return to
[the landowner] or that [the landowner] had a right to repurchase the same if the purpose for which it
was expropriated is ended or abandoned or if the property was to be used other than as the Lahug
Airport." This omission notwithstanding, and while the inclusion of this pronouncement in the judgment of
condemnation would have been ideal, such precision is not absolutely necessary nor is it fatal to the cause
of petitioners herein. No doubt, the return or repurchase of the condemned properties of petitioners could
be readily justified as the manifest legal effect or consequence of the trial court’s underlying presumption
that "Lahug Airport will continue to be in operation" when it granted the complaint for eminent domain
and the airport discontinued its activities.

The predicament of petitioners involves a constructive trust, one that is akin to the implied trust referred
to in Art. 1454 of the Civil Code, "If an absolute conveyance of property is made in order to secure the
performance of an obligation of the grantor toward the grantee, a trust by virtue of law is established. If
the fulfillment of the obligation is offered by the grantor when it becomes due, he may demand the
reconveyance of the property to him." In the case at bar, petitioners conveyed Lots No. 916 and 920 to
the government with the latter obliging itself to use the realties for the expansion of Lahug Airport; failing
to keep its bargain, the government can be compelled by petitioners to reconvey the parcels of land to
them, otherwise, petitioners would be denied the use of their properties upon a state of affairs that was
not conceived nor contemplated when the expropriation was authorized.

Although the symmetry between the instant case and the situation contemplated by Art. 1454 is not
perfect, the provision is undoubtedly applicable. For, as explained by an expert on the law of trusts: "The
only problem of great importance in the field of constructive trust is to decide whether in the numerous
and varying fact situations presented to the courts there is a wrongful holding of property and hence a
threatened unjust enrichment of the defendant." Constructive trusts are fictions of equity which are bound
by no unyielding formula when they are used by courts as devices to remedy any situation in which the
holder of legal title may not in good conscience retain the beneficial interest.

In constructive trusts, the arrangement is temporary and passive in which the trustee’s sole duty is to
transfer the title and possession over the property to the plaintiff-beneficiary. Of course, the "wronged
party seeking the aid of a court of equity in establishing a constructive trust must himself do equity."
Accordingly, the court will exercise its discretion in deciding what acts are required of the plaintiff-
beneficiary as conditions precedent to obtaining such decree and has the obligation to reimburse the
trustee the consideration received from the latter just as the plaintiff-beneficiary would if he proceeded on
the theory of rescission. In the good judgment of the court, the trustee may also be paid the necessary
expenses he may have incurred in sustaining the property, his fixed costs for improvements thereon, and
the monetary value of his services in managing the property to the extent that plaintiff-beneficiary will
secure a benefit from his acts.

The rights and obligations between the constructive trustee and the beneficiary, in this case, respondent
MCIAA and petitioners over Lots Nos. 916 and 920, are echoed in Art. 1190 of the Civil Code, "When the
conditions have for their purpose the extinguishment of an obligation to give, the parties, upon the
fulfillment of said conditions, shall return to each other what they have received x x x In case of the loss,
deterioration or improvement of the thing, the provisions which, with respect to the debtor, are laid down
in the preceding article shall be applied to the party who is bound to return x x x."23

On the matter of the repurchase price, while petitioners are obliged to reconvey Lot No. 88 to
respondents, the latter must return to the former what they received as just compensation for the
expropriation of the property, plus legal interest to be computed from default, which in this case runs
from the time petitioners comply with their obligation to respondents.

Respondents must likewise pay petitioners the necessary expenses they may have incurred in maintaining
Lot No. 88, as well as the monetary value of their services in managing it to the extent that respondents
were benefited thereby.

Following Article 118724 of the Civil Code, petitioners may keep whatever income or fruits they may have
obtained from Lot No. 88, and respondents need not account for the interests that the amounts they
received as just compensation may have earned in the meantime.

In accordance with Article 119025 of the Civil Code vis-à-vis Article 1189, which provides that "(i)f a thing
is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor x x x,"
respondents, as creditors, do not have to pay, as part of the process of restitution, the appreciation in
value of Lot No. 88, which is a natural consequence of nature and time.26

WHEREFORE, the petition is DENIED. The February 28, 2006 Decision of the Court of Appeals, affirming
the October 22, 1999 Decision of the Regional Trial Court, Branch 87, Cebu City, and its February 7, 2007
Resolution are AFFIRMED with MODIFICATION as follows:
 1. Respondents are ORDERED to return to petitioners the just compensation they received for the
expropriation of Lot No. 88, plus legal interest, in the case of default, to be computed from the
time petitioners comply with their obligation to reconvey Lot No. 88 to them;

2. Respondents are ORDERED to pay petitioners the necessary expenses the latter incurred in
maintaining Lot No. 88, plus the monetary value of their services to the extent that respondents
were benefited thereby;

3. Petitioners are ENTITLED to keep whatever fruits and income they may have obtained from Lot
No. 88; and

4. Respondents are also ENTITLED to keep whatever interests the amounts they received as just
compensation may have earned in the meantime, as well as the appreciation in value of Lot No.
88, which is a natural consequence of nature and time;

In light of the foregoing modifications, the case is REMANDED to the Regional Trial Court, Branch 57,
Cebu City, only for the purpose of receiving evidence on the amounts that respondents will have to pay
petitioners in accordance with this Court’s decision.

G.R. No. 143173       March 28, 2001

SPS. PEDRO ONG AND VERONICA ONG, petitioners,

vs.
SOCORRO PAREL AND HON. COURT OF APPEALS, respondents.

GONZAGA-REYES, J.:

The instant petition for review on certiorari seeks the annulment of the decision of the respondent Court
of Appeals1 dated December 14, 1999 affirming the decision of the Regional Trial Court which reversed
and set aside the judgment of the Metropolitan Trial Court of Manila, Branch 15, for forcible entry, as well
as the resolution dated May 4, 2000 denying petitioners' motion for reconsideration. 2

Spouses Pedro and Veronica Ong are the registered, owners of Lot No.18, Block 2 of the subdivision plan
II of Rizal Park subdivision, situated in Sta Cruz, Manila covered by TCT No. 218597, having purchased
the property from the spouses Emilio Magbag and Norma B. Pascual in 1994. Adjacent to Lot No.18 is Lot
No.17 consisting of about 109 sq. meters covered by TCT No. 125063 registered under the name of
Visitacion Beltran, grandmother of respondent Socorro Parel.1âwphi1.nêt

On May 25, 1995, the Ong spouses filed an action for forcible entry against defendant Parel before the
Metropolitan Trial Court of Manila, Branch 15, docketed as Civil Case No. 148332, alleging among other
things that defendant Parel through strategy and stealth constructed an overhang and hollow block wall
along the common boundary of the parties' adjoining lot, i.e., beyond Lot No. 17 owned by Parel and
inside Lot No. 18 owned by plaintiffs Spouses Ong, thereby illegally depriving plaintiffs of possession of
the said portion of their lot; that plaintiffs discovered respondent's illegal possession of their lot on August
23, 1994 when they had the boundaries of their lot resurveyed; that plaintiffs made various demands
from the defendants to remove the constructions they introduced in the said lot of the plaintiffs and
vacate the same, the last of which demands having been made on December 19, 1994.

Defendant Parel denied the material allegations of the complaint and alleged that the overhang and hollow
block wall had already been in existence since 1956 and that these structures are within the boundary of
lot 17 owned by him.

The parties moved for an ocular inspection of the subject lot which was granted by the trial court. The
trial court designated the Branch Clerk of Court as Commissioner while defendant Parel employed the
services of Geodetic Engr. Mariano V. Flotildes who made the relocation survey on November 28, 1995 in
the presence of both parties. Thereafter, the Commissioner reported that defendant's wall protrudes 1½
meters into plaintiffs' property and a window sill overhangs by about ½ meter deep into plaintiffs
premises and the eaves of the main residential building extends into the plaintiffs premises. The Geodetic
Engineer's Report, confirmed that the house of the defendant encroached plaintiffs' property by an area of
2.7 sq. m., and the adobe and hollow block wall by an area of 1.59 sq. m., respectively, resulting to a
total encroachment of 4.29 sq. m., more or less into the plaintiffs' property.
On April 12, 1996, the Metropolitan Trial Court rendered judgment in favor of the plaintiffs spouses Ong;
the dispositive portion reads:3

"WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiffs and against
the defendants ordering: (a) the defendants and all persons claiming rights under her to remove
the overhang constructions measuring 2.70 sq. m. and the adobe block wall measuring 1.59 sq. m.
respectively on lot 18 of the plaintiffs and to peacefully surrender its possession to the plaintiffs;
(b) ordering the defendants to pay the plaintiffs the sum of Ten Thousand Pesos (P10,000.00) as
and by way of attorney's fees; plus the costs of suit.

SO ORDERED."

Respondent Parel filed an appeal with the Regional Trial Court, docketed as Civil Case No.96-78666. On
October 3, 1996, the regional trial court4 dismissed the case for failure of the Ong spouses to prove prior
physical possession of the subject lot, the dispositive portion reads:5

"WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and SET
ASIDE. This case is hereby DISMISSED, without prejudice to the filing of the appropriate actions,
without costs.

SO ORDERED."

Spouses Ong moved for a reconsideration which was also denied in a resolution dated August 1, 1997. 6

Aggrieved by the above decision, petitioners spouses Ong elevated the matter to the Court of Appeals by
way of a petition for review. The respondent Court of Appeals in a decision dated December 14, 1999
denied the petition. The appellate court adopted the lower court's findings that the alleged encroachments
were made by the late Visitacion Beltran at a time when she still owned both lots or when she had all the
right and the power to introduce the improvements; thus the introduction of the said construction could
not be equated with strategy and stealth giving rise to forcible entry. It added that what is involved in a
forcible entry case is merely the issue of material possession or possession de facto which the petitioner
miserably proved in their favor. It further pointed out that it was admitted by the petitioners in their
petition that this case involves a boundary dispute and not lot 18 in its entirety, and the encroachment
was discovered only upon a relocation survey of the property; such controversy could not be threshed out
in an ejectment suit in view of the summary nature of the action, and the MTC, accordingly, is without
jurisdiction to entertain the same. Petitioners moved for a reconsideration which was also denied in a
resolution dated May 4, 2000. Hence, this petition.

Petitioners assign the following issues for consideration: 7

1. WHETHER OR NOT GAINING ENTRY WITHOUT THE KNOWLEDGE OR CONSENT OF THE OWNER
OR REMAINING RESIDENT OF ANOTHER WITHOUT PERMISSION IS DISPOSSESSION BY STEALTH;

2. WHETHER OR NOT ENTRY SECURED BY STRATEGY OR STEALTH BECOMES UNLAWFUL AND DE

FACTO POSSESSION COMMENCES ONLY UPON DEMAND;

3. WHETHER OR NOT THERE IS A DISTINCTION BETWEEN FORCIBLE ENTRY BY MEANS OF

STEALTH AND FORCIBLE ENTRY BY MEANS OF FORCE, INTIMIDATION OR THREAT;

4. WHETHER OR NOT PETITIONER CAN INVOKE SUPREME COURT RULINGS IN UNLAWFUL

DETAINER CASES;

5. WHETHER OR NOT THE PRIVATE RESPONDENT IS THE AUTHORIZED PARTY IN THE CASE OF
CO-OWNERSHIP AS OBTAINED IN THIS CASE;

6. WHETHER OR NOT THE CHARACTER OF THE POSSESSION ACQUIRED IN BAD FAITH WAS
INHERITED BY THE PRIVATE RESPONDENT AND DID NOT CHANGE;

7. WHETHER OR NOT THE DECISION OF THE RESPONDENT COURT OF APPEALS IS BASED ON

SPECULATION SURMISE OR CONJECTURE OR MISAPPREHENSION OF FACTS.
Petitioners essentially allege that the act of entering and trespassing upon a parcel of land, or of
constructing improvements upon a parcel of land without the knowledge or permission of the person who
owns or administers it is an act of dispossession and usurpation of real property by means of strategy or
stealth; that private respondent is a usurper or encroacher who constructed a portion of her house and
adobe and hollow block wall on the land of the petitioners with no bona fide claim and without the consent
of the owner.

The petition has no merit.

Section 1, Rule 70 of the Rules of Court requires that in actions for forcible entry the plaintiff is allegedly
deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth and
that the action is filed any time within one year from the time of such unlawful deprivation of possession.
This requirement implies that in such cases, the possession of the land by the defendant is unlawful from
the beginning as he acquires possession thereof by unlawful means. The plaintiff must allege and prove
that he was in prior physical possession of the property in litigation until he was deprived thereof by the
defendant. The one year period within which to bring an action for forcible entry is generally counted from
the date of actual entry on the land,8 except that when entry was made through stealth, the one year
period is counted from the time the plaintiff learned thereof.9 If the alleged dispossession did not occur by
any of the means stated in section 1, Rule 70, the proper recourse is to file a plenary action to recover
possession with the regional trial court.10

In their complaint, petitioners Ong spouses aver that through stealth and strategy respondent constructed
the controversial overhang and. hollow block wall along the common boundary of the parties' adjoining
lots which encroached on petitioners' Lot No. 18. Stealth is defined as any secret, sly, or clandestine act
to avoid discovery and to gain entrance into or remain within residence of another without permission. 11
However, petitioners failed to establish that respondents encroached upon their property through stealth
as it was not shown when and how the alleged entry was made on the portion of their lot.

On the other hand, respondent's claim that the said structures were already existing on the lot at the time
petitioners brought the same from the Magbag spouses in 1994, was sustained by the lower court since
petitioners admitted in their petition that they discovered such encroachment only after a relocation
survey on their lot on August 23, 1994. We find no reason to disturb the respondent court's factual
conclusion that the alleged encroachments were made by the late Visitacion Beltran at a time when she
still owned both lots nos. 17 and 18 or when she had all the right and power to do so. Private respondent
in her affidavit submitted before the court had affirmed that her grandmother, Visitacion Beltran, was the
registered owner of the parcel of land covered by TCT No. 125163 (Lot No. 17) with improvements which
include the window sill overhang and the old adobe wall which were constructed as early as 1956 and
these improvements are adjacent to the private alley from Elias Street which has to be opened and
maintained as long as there exists building thereon; that the maintenance of such alley was made as an
encumbrance in petitioners' title (TCT No. 218597) when they bought the adjacent Lot no. 18. Petitioners
failed to present evidence to the contrary.

It becomes clear that this is not a proper case for forcible entry wherein one party unlawfully deprives
another of possession of the property subject of the litigation; it is a boundary dispute wherein the adobe
wall, overhang and window grill on the respondents' side of the property encroach a total of 4.29 meters,
more or less, upon the petitioners' side of the property. We affirm with approval of the observations of the
Regional Trial Court, in this wise:

"Let it be emphasized that the matter subject of the present action is that portion only of Lot No.18
allegedly encroached by the defendant-appellant and not Lot 18 in its entirety.

While there was a finding of encroachment on Lot No. 18 as per the Commissioner's Report and
Engineer's Report dated December 27, 1995 and December 29, 1995, respectively, plaintiff-
appellees failed to recount the circumstances as to how and when defendant-appellant allegedly
forcibly entered Lot No. 18. Neither was there any evidence ever proffered by them to prove that
defendant-appellant made or at least ordered the introduction of the said improvements or
construction. According to them, the Magbag spouses gave them the right to administer, occupy
and to have physical possession in the concept of an owner, Lot No.18 on June 17, 1994 until the
title to the said lot was transferred to their names on October 28, 1994 and they have just
discovered the encroachment on Lot No. 18 only on August 23, 1994 when they had the
boundaries of Lots Nos. 17 and 18 resurveyed. Defendant-appellant, on the other hand, averred
that the questioned improvements and constructions encroaching on Lot No.18 were already there
since 1956, and this averment was not controverted by the plaintiff-appellees at all. Thus, the
 truth is that, when defendant-appellant acquired Lot No. 18, the adobe wall, overhang and window
grill were already there encroaching on Lot No.18 as it was the late Salvacion (sic) 12 Beltran who
built the same. In fact, even up to the present, defendant-appellant is still in possession of the
herein questioned premises which means that plaintiff-appellees were never in possession of the
same. The latter, therefore, cannot be said to be in prior physical possession. The demand made
on the defendant-appellant is here of no moment as it is a well-entrenched jurisprudence that
demand to vacate is not necessary in forcible entry cases (Menez vs. Militante, 41 Phil. 44).

Consequently, for failure of the plaintiff-appellees to circumstantiate prior physical possession on

the herein subject premises and the fact of entry on the same by the defendant-appellant by force,
intimidation, violence or stealth, the present action for forcible entry must exigently fail. Moreover
this Court notes that at the time the improvements were made, the late Salvacion (sic) Beltran
was still the registered owner of both Lots Nos. 17 and 18. Thus while it may be true that,
defendant-appellant is now the administrator of Lot No. 17, defendant-appellant cannot be made
to answer for the encroachments on Lot No.18 for the same were done by the late Salvacion (sic)
Beltran who had all the right and power to introduce the improvements as she was then the
registered owner of both Lots Nos. 17 and 18 at the time the same were made. While plaintiff-
appellees can recover possession of the herein questioned premises, they cannot do so in the guise
of an action for forcible entry. For where the complaint fails to specifically aver facts constitutive of
forcible entry or unlawful detainer, as where it does not state how entry was effected or how and
when dispossession started, the action should either be ACCION PUBLICIANA or ACCION
REINVINDICATORIA for which the lower court has no jurisdiction (See Sarona, et a1. vs. Villegas,
et al., March 27, 1968, Banayos vs. Susana Realty, Inc. L-30336, June 30, 1976)."

In view of the failure of the petitioners to allege, much less prove, with specificity that the respondents
unlawfully entered their portion of the lot either by force, intimidation, threat, strategy, or stealth this
action for forcible entry must necessarily fall. We declared in the case of Sarmiento vs. Court of Appeals: 13

"The jurisdictional facts must appear on the face of the complaint. When the complaint fails to aver
facts constitutive of forcible entry or unlawful detainer, as where it does not state how entry was
effected or how and when dispossession started, as in the case at bar, the remedy should either be
an accion publiciana or an accion reivindicatoria in the proper regional trial court.

If private respondent is indeed the owner of the premises subject of this suit and she was
unlawfully deprived of the real right of possession or the ownership thereof, she should present her
claim before the regional trial court in an accion publiciana or an accion reivindicatoria, and not
before the municipal trial court in a summary proceeding of unlawful detainer or forcible entry. For
even if one is the owner of the property, the possession thereof cannot be wrested from another
who had been in the physical or material possession of the same for more than one year by
resorting to a summary action for ejectment. This is especially true where his possession thereof
was not obtained through the means or held under the circumstances contemplated by the rules
on summary ejectment.

We have held that in giving recognition to the action for forcible entry and unlawful detainer, the
purpose of the law is to protect the person who in fact has actual possession, and in case of a
controverted proprietary right, the law requires the parties to preserve the status quo until one or
the other sees fit to invoke the decision of a court of competent jurisdiction upon the question of
ownership."

Petitioners contention that although they denominated their complaint as one for forcible entry based on
the ground of stealth, the allegations in the body of the complaint sufficiently established a cause of
action for unlawful detainer does not persuade us. In unlawful detainer, one unlawfully withholds
possession thereof after the expiration or termination of his right to hold possession under any contract,
express or implied. In the instant case, the complaint does not allege that the possession of respondent
ever changed from illegal to legal anytime from their alleged illegal entry before plaintiffs made the
demand to vacate. There was no averment in the complaint which recites as a fact any overt act on the
part of the petitioners which showed that they permitted or tolerated respondent to occupy a portion of
their property.

After a finding that the petitioners failed to make a case for ejectment, we find it unnecessary to dwell on
the other assignments of error.
WHEREFORE, the petition is DENIED and the assailed decision of respondent Court of Appeals is hereby
AFFIRMED.

G.R. No. 166964 October 11, 2005

PATRICIA L. TIONGSON, PACITA L. GO, ROBERTO LAPERAL III, ROSA R. MANOTOK, GEORGE M.
BOCANEGRA, PHILIP L. MANOTOK, MARIA TERESA M. ESCALER, JOSE CLEMENTE L. MANOTOK, RAMON
SEVERINO L. MANOTOK, THELMA R. MANOTOK, JOSE MA. MANOTOK, JESUS JUDE MANOTOK, JR., MA.
THELMA R. MANOTOK, SEVERINO MANOTOK III, MA. MAMERTA MANOTOK, fernando manotok, froilan
manotok, SEVERINO MANOTOK IV, FAUSTO MANOTOK, FAUSTO MANOTOK III, MILAGROS M. DORMIDO,
IGNACIO V. MANOTOK, JR., FELISA MYLENE V. MANOTOK, MARY ANNE V. MANOTOK, MICHAEL
MARSHALL V. MANOTOK, MA. CRISTINA E. SISON AND MIGUEL A.B. SISON, represented by their
Attorney-in-fact, ROSA R. MANOTOK, Petitioners,
vs.
NATIONAL HOUSING AUTHORITY, Respondent.

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari seeks to set aside the March 25, 2004 Decision 1 of the Court of
Appeals in CA-G.R. CV No. 70209, and its February 4, 2005 Resolution, 2 which denied petitioners’ motion
for reconsideration.

The facts show that on April 3, 1987, respondent National Housing Authority (NHA) filed a complaint for
eminent domain with the Regional Trial Court of Manila, Branch 35, against petitioners who are owners of
several lots located in Tondo, Manila with a total area of 66,783.40 square meters and an aggregate value
of P21,024,136.50. Instead of an answer, petitioners filed motions to dismiss with prayer for actual, moral
and exemplary damages and attorney’s fees.

On March 11, 1988, NHA deposited the amount of P21,107,485.07 with the Philippine National Bank
(PNB) as provisional just compensation for the subject lots, as evidenced by Certificate of Time Deposit
No. 233991-B. The deposit is now under PNB (Escolta Branch) Fiduciary Account No. 068-576012-6.

On March 11, 1991, the trial court rendered a Decision, the dispositive portion of which states:

WHEREFORE, the prayer of the defendants in their motion to dismiss is GRANTED, and the complaint of
the plaintiff is DISMISSED.

The counterclaims of the defendants are also ordered DISMISSED.

No pronouncement as to costs.3

The Court of Appeals affirmed the lower court in a Decision dated February 26, 1993. On petition before
this Court, we resolved to declare the case terminated for failure of NHA to file the petition on time. The
resolution became final and executory on July 26, 1993.

Thus, NHA filed on September 7, 2000 a motion for leave of court to withdraw deposit but failed to specify
a date for hearing. On October 30, 2000, NHA filed a second motion for leave to withdraw deposit which
set the hearing on November 10, 2000.

On November 8, 2000, the trial court issued an Order4 expunging the first motion from the records. It also
declared that the amount sought to be withdrawn by NHA constitutes advance payment if the
expropriation proceeds, and as indemnity for damages should the proceedings not succeed, as in the
instant case. The trial court noted that petitioners might have sustained damages in the course of the
expropriation proceedings which they could pursue or waive. The motion being litigious, the trial court
declared that the same be set for hearing.

NHA’s motion for reconsideration was denied on December 8, 2000.5

On appeal, the Court of Appeals held that the dismissal of petitioners’ counterclaim barred them from
presenting evidence to prove damages. It ruled that the trial court’s assessment that they suffered
damages is conjectural and inconsistent with the dismissal of the counterclaim.

The dispositive portion of the Court of Appeals’ Decision reads:

WHEREFORE, the order of the Regional Trial Court of Manila (Branch 35) dated November 8, 2000 is
REVERSED and SET ASIDE and that Court is directed to release to the National Housing Authority the
amount of P21,107,485.07, represented by PNB (Escolta branch) Fiduciary Account No. 068-576012-6,
including accrued interest thereon.

SO ORDERED.6

Petitioners’ motion for reconsideration was denied, hence, the instant petition based on the following
issues:

I. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO

LACK OR IN EXCESS OF JURISDICTION IN ACTING AND GRANTING THE MOTION FILED BY RESPONDENT
NHA FOR WITHDRAWAL OF ITS DEPOSIT IN QUESTION ALTHOUGH SAID MOTION SHOULD HAVE BEEN
TREATED AS A MERE SCRAP OF PAPER FOR LACK OF NOTICE OF HEARING.

II. THE HONORABLE COURT OF APPEALS HAD ALSO COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN GRANTING THE MOTION OF RESPONDENT
NHA TO WITHDRAW ITS DEPOSIT IN QUESTION EVEN BEFORE A HEARING ON SAID ISSUE CAN BE HELD
TO DETERMINE THE AMOUNT OF DAMAGES SUFFERED BY PETITIONERS MANOTOK RESULTING FROM THE
FINAL DISMISSAL OF THE COMPLAINT FOR EXPROPRIATION OF THEIR SUBJECT LOTS.

The petition lacks merit.

Expropriation proceedings, or the procedure to enforce the state’s right of eminent domain, are governed
by Rule 67 of the Rules of Court. There are two stages in every action for expropriation: first,
condemnation of the property after determination that its acquisition is for public purpose; and, second,
the ascertainment of just compensation.7

During the condemnation stage, the court may either issue 1) an order of expropriation, declaring that the
plaintiff has a lawful right to take the property sought to be condemned for public use or purpose, or 2)
an order of dismissal, if it appears that the expropriation is not for some public use.

In the case at bar, the trial court dismissed NHA’s complaint for expropriation upon determination that its
acquisition is not for public purpose. Along with the dismissal of the complaint, the trial court also
dismissed the counterclaim interposed by petitioners. The Court of Appeals correctly held that this
counterclaim for actual, moral and exemplary damages and attorney’s fees is compulsory. As such, it is
auxiliary to the proceeding in the original suit and derives its jurisdictional support therefrom. In the case
of Financial Building Corp. v. Forbes Park Assoc., Inc.,8 we stated:

... A counterclaim presupposes the existence of a claim against the party filing the counterclaim. Hence,
where there is no claim against the counterclaimant, the counterclaim is improper and it must be
dismissed, more so where the complaint is dismissed at the instance of the counterclaimant. In other
words, if the dismissal of the main action results in the dismissal of the counterclaim already filed, it
stands to reason that the filing of a motion to dismiss the complaint is an implied waiver of the
compulsory counterclaim because the grant of the motion ultimately results in the dismissal of the
counterclaim.9

The aforementioned doctrine is in consonance with the primary objective of a counterclaim which is to
avoid and prevent circuity of action by allowing the entire controversy between the parties to be litigated
and finally determined in one action, wherever this can be done with justice to all parties concerned. 10

It is true that we held in National Power Corporation v. Court of Appeals11 (NAPOCOR) that when the
defendant claims that his land suffered damage because of the expropriation, the dismissal of the action
should not foreclose the defendant’s right to have the damages ascertained either in the same case or in a
separate action.12 However, this pronouncement is not applicable in the instant case.
In the NAPOCOR case, the motion to dismiss was filed not only by the property owner, Pobre, but also by
the expropriating authority. In the instant case, only the property owners moved to dismiss the complaint.
When the trial court granted NAPOCOR’s motion to dismiss, it also allowed Pobre to adduce evidence on
his claim for damages. In effect, the trial court made a reservation to allow Pobre to recover damages.
Thereafter, Pobre presented evidence and recounted in detail the scope of damage caused by NAPOCOR.
In contrast, the court below dismissed petitioners’ counterclaim without reservation as to their claim for
damages. Petitioners did not adduce evidence as to the extent of damage caused by NHA. NHA appealed
the dismissal of the complaint while petitioners opted not to appeal the dismissal of their counterclaim.
The dismissal of the complaint for expropriation became final and executory on July 26, 1993. Plainly, the
same is already beyond review.

Thus, on September 7, 2000 or after seven years from the finality of the dismissal of the complaint for
expropriation, NHA filed a motion for leave to withdraw the deposit. Petitioners did not oppose the motion.
In fact, the records are bereft of evidence that petitioners took action to pursue their claim for damages
during the entire seven years. They did not file a motion or pleading in court to ask for a hearing or to
claim the damages they now seek. Clearly, they cannot claim to have been deprived of due process as
they had the time and opportunity to pursue their claim for the damages they may have sustained as a
result of the filing of the complaint for expropriation.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals dated March 25,
2004 and February 4, 2005 in CA-G.R. CV No. 70209, respectively, are hereby AFFIRMED in toto.

G.R. No. 169453             December 6, 2006

CAPITOL STEEL CORPORATION, petitioner,

vs.
PHIVIDEC INDUSTRIAL AUTHORITY, respondent.

DECISION

CARPIO MORALES, J.:

Capitol Steel Corporation (Capitol Steel) challenges the Court of Appeals Decision 1 of February 7, 2005 in
CA-G.R. SP No. 84067 as well as its Resolution 2 dated August 24, 2005 ordering the Presiding Judge of
Branch 20, Regional Trial Court (RTC) of Misamis Oriental to issue a writ of possession in favor of Phividec
Industrial Authority (PHIVIDEC).

Petitioner, Capitol Steel, is a domestic corporation which owns 65 parcels of land 3 with a total land area of
337,733 square meters (the properties) located in the barrios of Sugbongcogon and Casinglot,
Municipality of Tagoloan, Province of Misamis Oriental.

Respondent, PHIVIDEC, is a government-owned and controlled corporation organized and existing under
Presidential Decree No. 538,4 as amended, which is vested with governmental and proprietary functions 5
including the power of eminent domain for the purpose of acquiring rights of way or any property for the
establishment or expansion of the Phividec Industrial Areas.6

The properties of Capitol Steel were identified as the most ideal site for the Mindanao International
Container Terminal Project (MICTP), a PHIVIDEC project which involves the phased production of an 800-
meter berth and the acquisition of port equipment7 to handle the volume of seaborne break-bulk and
container traffic in Mindanao.8

On August 24, 1999, PHIVIDEC filed an expropriation case before the RTC of Misamis Oriental, 9 docketed
as Civil Case No. 99-477, and raffled to Branch 38 thereof.

On September 1, 1999, Branch 38 of the Misamis Oriental RTC issued a writ of possession in favor of
PHIVIDEC.10 Due, however, to the unauthorized engagement by PHIVIDEC of the legal services of a
private lawyer, the expropriation case was dismissed, without prejudice to the filing of a similar petition
through a proper legal officer or counsel.11
In the meantime, Capitol Steel requested the Technical Committee on Real Property Valuation (TCRPV) of
the Bureau of Internal Revenue (BIR), by letter of March 27, 2001, for a revaluation of its properties. The
TCRPV thereafter issued Resolution No. 36-200112 (TCRPV Resolution) dated December 11, 2001 fixing
the "reasonable and realistic zonal valuation" of the properties at P700 per square meter.

This Court in "Phividec Industrial Authority v. Capitol Steel Corporation,"13 annulled the entire proceedings
in Civil Case No. 99-477, by Decision of October 23, 2003.

By letter14 of November 21, 2003, PHIVIDEC informed Capitol Steel that it would file anew an
expropriation case and that it had deposited the amount of P116,563,500 in the name of Capitol Steel,
P51,818,641 of which was deposited at the Landbank of the Philippines (Landbank) and P64,744,859 at
the Development Bank of the Philippines (DBP). PHIVIDEC further informed Capitol Steel that the total
amount deposited represents the zonal value of the properties, and may be withdrawn at any time.

Subsequently, PHIVIDEC, represented by the Government Corporate Counsel, re-filed on November 24,
2003 an expropriation case, docketed as Civil Case No. 2003-346, and raffled to Branch 20 of RTC of
Misamis Oriental.

And on December 8, 2003, PHIVIDEC filed an Urgent Motion for the Issuance of a Writ of Possession 15 to
which it attached a Certificate of Availability of Funds, 16 and Certifications from the Landbank17 and the
DBP18 that it deposited the total amount of P116,563,500 required under Republic Act No. 8974 (R.A.
8974), "AN ACT TO FACILITATE THE ACQUISITION OF RIGHT-OF-WAY, SITE OR LOCATION FOR
NATIONAL GOVERNMENT INFRASTRUCTURE PROJECTS AND FOR OTHER PURPOSES."

The total amount deposited represents one hundred percent (100%) of the value of the properties based
on the schedule of zonal valuation for real properties under Department Order No. 40-97 19 (D.O. 40-97)
fixing the zonal valuation of the properties at Sugbongcogon and Casinglot at P300 and P500 per square
meter, respectively.

Capitol Steel opposed the application of D.O. 40-97, claiming instead that under the TCRPV Resolution,
the properties have been revalued at P700 per square meter.20

By Order21 of February 3, 2004, the trial court denied PHIVIDEC's Motion for the Issuance of a Writ of
Possession, noting that the amount deposited was "seemingly inadequate" 22 and was made simply out of
PHIVIDEC's "interpretation of the prevailing zonal valuation and was not mutually agreed" 23 upon.

In view of the conflicting zonal valuations, the trial court found it necessary to first make a "judicial
interpretation" to determine the prevailing market value of the properties on the basis of the zonal
valuation through a full-blown trial where the parties would be afforded the opportunity to present their
respective evidence.24

PHIVIDEC thus presented the Assistant Revenue District Officer of Revenue District 98 of the BIR in
Cagayan de Oro City, Bernadette H. Honculada (Bernadette). Bernadette testified that barangays
Sugbungcogon and Casinglot in Tagoloan are within the jurisdiction of Revenue District 98 25 and that
under D.O. 40-97, the zonal valuations of the properties are P300 and P500 per square meter,
respectively.26

Bernadette further testified that her office continues to use the zonal valuations provided in D.O. No. 40-
97 in computing internal revenue taxes.27

For its part, Capitol Steel presented a representative of the Philippine Association of Realty Appraisers to
the TCRPV, Victor T. Salinas (Salinas), who testified that TCRPV is authorized under Revenue Delegation
of Authority Order No. 4-2001 to conduct reappraisals of the zonal valuation of properties on a "case to
case level"28 upon the request of any taxpayer.29

Salinas further testified that he was sent together with a representative from the Bureau of Local
Government Finance to inspect the properties, and to prepare a report and submit the same to the TCRPV
for deliberation;30 that after deliberation, the TCRPV issued a resolution fixing the zonal valuation of the
properties at P700 per square meter, which was thereafter approved by the Chairman of the TCRPV, Nora
Tamayo, who then transmitted the resolution to the parties concerned – the Revenue District Officer and
the "taxpayer who requested for the adjustment" or Capitol Steel.31
Salinas furthermore testified that the valuation was arrived at after comparing the "values of same
features of some of the lands in the area and also the neighboring cities like Cagayan de Oro City" and
that TCRPV "ma[d]e use of the report[s] of the two independent appraisers" and also "the valuation [of]
the Assessor's Office."32

By Order33 of April 15, 2004, the RTC denied PHIVIDEC's motion for reconsideration 34 of its February 3,
2004 Order denying its Motion for the Issuance of a Writ of Possession, it sustaining the TCRPV's fair
market valuation of the properties at P700 per square meter, and accordingly ordering PHIVIDEC to
"immediately deposit the total amount" to call for the issuance of the writ.

It is the finding of this Court that indubitably the Technical Committee on Real Property
Valuation (TCRPV), is the body tasked to fix the valuation of the property sought to be
appropriated and, hence, there is no sustainable evidence to merit the reconsideration of
the Court's order dated February 4, 2004, the motion thereof is hereby denied and taking
into account the preponderance of evidence proffered by defendant in arriving at the
prevailing zonal valuation based in the evidence adduced, this Court hereby sustains the
fair market value of defendant's property at Seven hundred (P700.00) Pesos per square
meter, thereby plaintiff is ordered to immediately deposit the total amount in defendant's
name for this Court to issue the writ of possession as mandated by Republic Act 8974. 35

Claiming that the RTC acted without or in excess of jurisdiction and with grave abuse of discretion in
issuing its Orders dated February 3, 2004 and April 24, 2004, PHIVIDEC filed before the appellate court a
petition for certiorari with a prayer for the issuance of a writ of preliminary mandatory injunction. 36

The appellate court, by Decision37 of February 7, 2005, holding that the zonal valuation established under
D.O. 40-97 should be the basis in computing the provisional value of the properties, and that the
valuation made by the TCRPV was neither binding nor effective for failure to comply with the guidelines
relative to the establishment of zonal values of real properties under Revenue Memorandum Order No.
56-89,38 as amended by Revenue Memorandum Order No. 56-94,39 granted PHIVIDEC's petition and
accordingly directed the RTC to issue a writ of possession in favor of PHIVIDEC.

Capitol Steel filed a motion for reconsideration of the appellate court's February 7, 2005 decision, claiming
that Revenue Memorandum Order No. 56-89, as amended by Revenue Memorandum Order No. 56-94,
applies only when all the properties in a province or a city are revalued, not when the properties of a
single taxpayer40 are revalued.

Acting on Capitol Steel's motion for reconsideration, 41 the appellate court conducted a hearing following
which it ordered the parties to submit their respective memoranda and position papers.

In the meantime, the RTC, by Order42 of June 6, 2005, granted the supplemental motion for execution of
Capitol Steel and allowed it to withdraw from the Landbank and the DBP the total amount of
P116,563,500.

The appellate court eventually denied Capitol Steel's motion for reconsideration of its Decision of February
7, 2005, by Resolution43 of August 24, 2005.

Capitol Steel (petitioner) now comes before this Court on a petition for review, positing the following
arguments:

1. THE PETITION FOR CERTIORARI [BEFORE THE COURT OF APPEALS] SHOULD BE

DISMISSED OUTRIGHT BECAUSE IT IS FATALLY DEFECTIVE FOR SUPPRESSION OF
NECESSARY AND RELEVANT DOCUMENTS.

2. THE ORDERS OF FEBRUARY 3, 2004 AND APRIL 15, 2004 OF THE REGIONAL TRIAL
COURT OF MISAMIS ORIENTAL CANNOT BE THE SUBJECT OF A PETITION FOR CERTIORARI.

3. THE REGIONAL TRIAL COURT OF MISAMIS ORIENTAL CORRECTLY USED THE ZONAL
VALUATION OF THE PROPERTIES SOUGHT TO BE EXPROPRIATED MADE IN 2001 AS BASIS
FOR THE ISSUANCE OF A WRIT OF POSSESSION. 44 (Underscoring supplied)

Respondent's failure to attach to its petition before the appellate court these documents, to wit: the
Urgent Motion for the Issuance of the Writ of Possession, the Opposition thereto, the Reply, the Rejoinder,
the transcript of the testimony of Salinas and the documents-exhibits of petitioner did not suffice to merit
the dismissal of the petition.

As the appellate court found, respondent's omission did not detract from the substantial completeness of
its petition. Neither, held the appellate court, did it deprive its authority to hear and decide the petition.

Additionally, petitioner failed to show that it was prejudiced in any way by respondent's failure to append
the said documents.

Petitioner contends that the trial court's determination of the provisional value of the properties, having
been arrived at after a hearing and evaluation of the parties' evidence, cannot, being factual, be assailed
in a petition for certiorari before the appellate court.45

Petitioner's contention fails.

While the correctness of the RTC's determination of the zonal valuation was assailed by respondent before
the appellate court, the same was merely appurtenant to the principal issue of whether the RTC has the
authority, for purposes of denying or granting a writ of possession, to vary the zonal valuation of the
properties as established by the BIR46 under D.O. 40-97.

On the main issue raised – whether the appellate court erred in ordering the RTC to issue a writ of
possession in favor of respondent:

Significantly, after a writ of possession was issued in favor of respondent on September 1, 1999 in the
first expropriation case-Civil Case No. 99-477, respondent commenced the construction of infrastructure
buildings and container port terminals. Possession of the properties has since remained with respondent,
with the MICTP now complete and fully operational.47

When the second expropriation case was re-filed, R.A. 8974, which provides for substantive requirements
before a writ of possession is issued, was already in force and in effect.

SECTION 4. Guidelines for Expropriation Proceedings. — Whenever it is necessary to

acquire real property for the right-of-way, site or location for any national government
infrastructure project through expropriation, the appropriate implementing agency shall
initiate the expropriation proceedings before the proper court under the following
guidelines:

(a) Upon the filing of the complaint, and after due notice to the defendant, the
implementing agency shall immediately pay the owner of the property the amount
equivalent to the sum of one hundred percent (100%) of the value of the property based on
the current relevant zonal valuation of the Bureau of Internal Revenue (BIR); and (2) the
value of the improvements and/or structures as determined under Section 7 hereof;

(b) In provinces, cities, municipalities and other areas where there is no zonal valuation,
the BIR is hereby mandated within the period of sixty (60) days from the date of filing of
the expropriation case, to come up with a zonal valuation for said area; and

(c) In case the completion of a government infrastructure project is of utmost urgency and
importance, and there is no existing valuation of the area concerned, the implementing
agency shall immediately pay the owner of the property its proffered value taking into
consideration the standards prescribed in Section 5 hereof.

Upon compliance with the guidelines abovementioned, the court shall immediately issue to
the implementing agency an order to take possession of the property and start the
implementation of the project.

Before the court can issue a Writ of Possession, the implementing agency shall present to
the court a certificate of availability of funds from the proper official concerned.

In the event that the owner of the property contests the implementing agency's proffered
value, the court shall determine the just compensation to be paid the owner within sixty
(60) days from the date of filing of the expropriation case. When the decision of the court
 becomes final and executory, the implementing agency shall pay the owner the difference
between the amount already paid and the just compensation as determined by the court.
(Emphasis and underscoring supplied)

Under R.A. 8974, the requirements for authorizing immediate entry in expropriation proceedings involving
real property are: (1) the filing of a complaint for expropriation sufficient in form and substance; (2) due
notice to the defendant; (3) payment of an amount equivalent to 100% of the value of the property based
on the current relevant zonal valuation of the BIR including payment of the value of the improvements
and/or structures if any, or if no such valuation is available and in cases of utmost urgency, the payment
of the proffered value of the property to be seized; and (4) presentation to the court of a certificate of
availability of funds from the proper officials.

Upon compliance with the requirements, a petitioner in an expropriation case, in this case respondent, is
entitled to a writ of possession as a matter of right and it becomes the ministerial duty of the trial court to
forthwith issue the writ of possession. No hearing is required48 and the court neither exercises its
discretion or judgment in determining the amount of the provisional value of the properties to be
expropriated as the legislature has fixed the amount under Section 4 of R.A. 8974.

To clarify, the payment of the provisional value as a prerequisite to the issuance of a writ of possession
differs from the payment of just compensation for the expropriated property. While the provisional value
is based on the current relevant zonal valuation, just compensation is based on the prevailing fair market
value of the property. As the appellate court explained:

The first refers to the preliminary or provisional determination of the value of the property.
It serves a double-purpose of pre-payment if the property is fully expropriated, and of an
indemnity for damages if the proceedings are dismissed. It is not a final determination of
just compensation and may not necessarily be equivalent to the prevailing fair market value
of the property. Of course, it may be a factor to be considered in the determination of just
compensation.

Just compensation, on the other hand, is the final determination of the fair market value of
the property. It has been described as "the just and complete equivalent of the loss which
the owner of the thing expropriated has to suffer by reason of the expropriation." Market
values, has also been described in a variety of ways as the "price fixed by the buyer and
seller in the open market in the usual and ordinary course of legal trade and competition;
the price and value of the article established as shown by sale, public or private, in the
ordinary way of business; the fair value of the property between one who desires to
purchase and one who desires to sell; the current price; the general or ordinary price for
which property may be sold in that locality.49 (Emphasis and underscoring supplied)

There is no need for the determination with reasonable certainty of the final amount of just compensation
before the writ of possession may be issued.50 The trial court, however, failed to distinguish the
"provisional value of the property" from "just compensation" when it ruled, viz:

The Court is of the sound observation that the propriety of the granting of the writ of
possession will greatly depend on the just compensation mandated by Republic Act No.
8974, hence, it will follow that any deposit to be made therein, in compliance with said law,
should be the prevailing fair market value on the basis of the zonal valuation within the
locality and virtually agreed upon by both parties. This Court, therefore, opted to rule and
so holds that considering the conflicting zonal valuation, a judicial interpretation must first
be held to determine the prevailing market value on the basis of the zonal valuation
approved by the government agency tasked to fix the same.51 (Underscoring supplied)

Petitioner insists that the RTC was correct in ruling that the P700 per square meter valuation should be used in computing the provisional value of the property as the valuation under

D.O. 40-97 has been "effectively superseded" by the TCRPV Resolution.

Petitioner's proposition fails.

The "current relevant zonal valuation" under Section 4 of R.A. 8974 pertains to the values reflected in the schedule of zonal values embodied in a Department Order issued pursuant to

Revenue Memorandum Order (RMO) No. 56-89 issued by the Commissioner of Internal Revenue.52

RMO 56-89 provides for the procedures for the establishment of the zonal values of real properties, viz:
 (1). The submission or review by the Revenue District Offices Sub-Technical Committee of the schedule of recommended zonal values to the TCRPV;

(2) The evaluation by TCRPV of the submitted schedule of recommended zonal values of real properties;

(3) Except in cases of correction or adjustment, the TCRPV finalizes the schedule and submits the same to the Executive Committee on Real Property

Valuation (ECRPV);

(4) Upon approval of the schedule of zonal values by the ECRPV, the same is embodied in a Department Order for implementation and signed by the Secretary

of Finance. Thereafter, the schedule takes effect (15) days after its publication in the Official Gazette53 or in any newspaper of general circulation.

This Court finds that the determination of P300 and P500 per square meter zonal values were, along with the zonal values of other real properties located in all municipalities under

the jurisdiction of Revenue District Office No. 98 (Cagayan de Oro City), Revenue Region No. 16 (Cagayan de Oro City), the subject of a public hearing on February 5, 1996. On March

19, 1997, the zonal values were approved by both the TCRPV and the ECRPV and on even date, the Secretary of Finance, upon the recommendation of the BIR, issued D.O. 40-97 to

implement the schedule of zonal values. D.O. 40-97 thereafter took effect on October 21, 1997, 15 days after its publication in The Philippine Journal.

In contrast, the P700 per square meter zonal value provided for under TCRPV Resolution was not approved by the ECRPV, was not embodied in a Department Order, and did not

undergo the required public hearing and publication required under RMO 56-89.

As reflected in the TCRP Resolution, the revaluation was based on a letter-request dated March 27, 2001 of Berck Y. Cheng, Executive Assistant of Capitol Steel. While the resolution

took into account the investigation, analysis and evaluation conducted by the two private appraisers hired by Capitol Steel, the Saromo Realty and Valueworld Appraisers, Inc., 54

PHIVIDEC, as the implementing expropriating agency, was not notified55 and afforded the opportunity to participate in the revaluation.

The revaluation under the TCRPV Resolution having failed to comply with the requirements under RMO 12-89, the disregard by the RTC of the zonal valuation under D.O. 40-97 is

impermissible. Petitioner's argument that TCRPV Resolution effectively superseded D.O. 40-97 does not thus impress.

The TCRPV was created under Ministry Order No. 20-86 for the purpose of assisting the Commissioner of Internal Revenue in prescribing real property values for purposes of

computing any internal revenue tax. Ministry Order No. 20-86 was later amended by Department Order 12-89 (D.O. 12-89) providing for the composition of the TCRPV, with the

Assistant Commissioner of the Assessment Service of the BIR as Chairman.56 Under D.O. 12-89, the task of TCRPV and the Sub-Technical Committees on Real Property Valuation

(STCRPV) is limited to the study and preparation of the schedules of zonal values for the purpose of computing internal revenue taxes, viz:

Under the direct supervision of the Commissioner of Internal Revenue, the Committee shall study and prepare zonal schedules of fair market values on real

properties to be used as basis for the computation of any internal revenue tax.

All provincial, city and municipal assessors are hereby directed to render assistance to the Committee in the DETERMINATION OF THE REALISTIC VALUATION

OF REAL PROPERTIES IN THEIR RESPECTIVE AREAS OF JURISDICTION.57

On October 24, 1989, RMO 56-89 was issued to "guide and facilitate the goal/activities of the Sub-Technical Committee on Real Property Valuation (STCRPV) pursuant to Department

Order No. 12-89 dated February 27, 1989 relative to the establishment of zonal values of real properties situated within the jurisdiction of Revenue District Offices." 58 Verily, while the

TCRPV and the STCRPV are vested with authority to study and prepare the schedule of zonal values, the valuation can only be implemented if it is later embodied in a Department

Order and is rendered effective only upon its publication in the Official Gazette as provided under RMO 56-89.

Petitioner nevertheless claims that TCRPV Resolution was issued pursuant to Revenue Delegation Authority No. 4-2001 (RDAO 4-2001), hence, it need not comply with RMO 56-89.

The claim is bereft of merit.

A revaluation pursuant to RDAO 4-2001 cannot be used to determine the provisional value of the properties in view of the specific and limited objectives by which said order was

issued. Pertinent portions of RDAO 4-2001 are hereunder reproduced:

SUBJECT : Delegation of Authority to Approve and Sign Resolutions by the Technical Committee on Real Property Valuation Involving Case-to-Case Requests

for Revaluation of Established Zonal Values of Real Properties

TO : All Internal Revenue Officers and Employees and Others Concerned

I. OBJECTIVES

1. To update the delineation of authority and responsibility of the revenue official who shall approve and sign the resolutions by the Technical Committee on

Real Property Valuation (TCRPV) involving case-to-case requests for revaluation of established zonal values of real properties pursuant to Section 7 of the

National Internal Revenue Code of 1997; and

2. To facilitate action on taxpayers' requests for such revaluation in accordance with Section 6(E) of the Tax Code in order to expedite the issuance of

appropriate clearances relative to the covered real property transactions.

 II. DELEGATED SIGNING AUTHORITY

The authority to sign the aforementioned TCRPV resolutions is hereby delegated to the Assistant Commissioner, Assessment Service.

xxxx

The specific and limited objective of RDAO 4-2001 is to facilitate action on taxpayers' requests for revaluation in accordance with Section 6(E)59 of the 1997 National Internal Revenue

Code "in order to expedite the issuance of appropriate clearances relative to the covered real property transactions." For this purpose, the Commissioner of Internal Revenue delegated

to the Assistant Commissioner of the Assessment Service the authority to approve and sign TCRPV resolutions issued pursuant to such requests.

The "appropriate clearances" under RDAO 4-2001 refer to the Tax Clearance (TCL) or Certificate Authorizing Registration (CAR), which are issued by the BIR after the taxpayer pays

the proper capital gains and documentary stamp taxes.60

Admittedly, the revaluation was not sought by petitioner for the purpose of computing any internal revenue taxes in order to secure the appropriate clearances from the BIR, but for

the purpose of computing the provisional valuation of the properties sought to be expropriated.61

Clearly, while the law grants to the Commissioner of Internal Revenue the power to determine zonal values, including the authority to delegate to the Assistant Commissioner of the

Assessment Service the authority to approve and sign TCRPV resolutions involving requests for revaluation of established zonal values of real properties, the same is for the purpose of

computing internal revenue taxes.

The revaluation under RDAO 4-2001 is, as correctly held by the appellate court, "a specific rather than a zonal valuation," and is "not a revaluation of the schedule of zonal values

[under D.O. 40-97] but merely the fine tuning of the value of a specific property of an individual taxpayer in order to reflect fair market values."62

It is the movant's thesis that a concerned property owner may invoke Department order No. 12-89 and Revenue Delegation of Authority Order No. 4-2001 to

challenge the current relevant zonal valuation of his property as the basis for preliminary or provisional payment in the proceedings below.

x x x We cannot accept the contention that "revaluation", as understood in Revenue Delegation of Authority Order No. 4-200[1] constitutes a revision of the

schedule of zonal values.

First, such a theory raises the possibility that all zonal valuations duly published will be rendered inutile for the intention of merely establishing a preliminary

or provisional valuation for purposes of the expropriating agency's entry into the property.

Secondly, movant's thesis will erase the distinction between preliminary payment based on zonal valuation and the final determination by the court of fair

market value or just compensation. This We are not prepared to do especially since that distinction lies at the heart of Republic Act No, 8974. We are not

prepared to hold that by means of Department Order No. 12-89 or Revenue Delegation of Authority Order No. 4-2001 the property owner can truncate the

expropriation process under the Rules and impel the trial court to proceed directly into the issue of the final determination of just compensation. Recourse to

these…urges the trial court prematurely to a full-blown trial on the determination of the fair market value which is contrary to the obvious intent of Republic

Act No. 8974.

Finally, this theory is rife with mischievous consequences and will place the state or the expropriating agency at the mercy of the property owner. It raises the

specter of unwarranted delays in infrastructure and other important projects of the government. For the avowed purpose of Republic Act No. 8974 is precisely

to provide the court in expropriation proceedings with a ready reference or standard upon which to base the preliminary or provisional payment to the

property owner allowing the said court to proceed with dispatch to the final phase of the proceeding which is the final determination of just compensation.63

Moreover, there is nothing under Republic Act No. 8974 which can be read to allow an owner of the properties to be expropriated recourse to a "case to case" revaluation "when it

disagrees with the zonal valuation by the BIR."64 Resort to this procedure would undeniably cause delay in government infrastructure projects, and leave the determination of the

provisional value of the expropriated properties to the property owner and the TCRPV, without the participation from the implementing expropriating agency. Such is contrary to R.A.

8974 which permits, in cases of utmost urgency and importance and when there is no existing valuation of the area concerned, an expedited means by which the government can

immediately take possession of the property without having to await precise determination of the valuation, by paying the property owner the implementing government agency's

proffered value of the property.65

Petitioner finally posits that considering that the properties contain several favorable features which no other lots in the vicinity possess, and that the zonal valuation relied upon by

respondent was made way back in 1996, the P700 per square meter valuation made in 2001 is reasonable.

Again, the provisional character of the payment means that it is not final, albeit sufficient under the law to entitle the government to the writ of possession over the expropriated

property.66 For purposes of a writ of possession, there is no need to look into the peculiar and favorable features of the properties to be expropriated, the court is being statutorily

bound to rely only on the current relevant zonal valuation of the BIR. Petitioner, however, may in the determination of just compensation, properly present and introduce evidence

bearing on the properties' fair market value.67

Thus Section 5 of Republic Act No. 8974 provides:

 SECTION 5. Standards for the Assessment of the Value of the Land Subject of Expropriation Proceedings or Negotiated Sale. — In order to facilitate the

determination of just compensation, the court may consider, among other well-established factors, the following relevant standards:

(a) The classification and use for which the property is suited;

(b) The developmental costs for improving the land;

(c) The value declared by the owners;

(d) The current selling price of similar lands in the vicinity;

(e) The reasonable disturbance compensation for the removal and/or demolition of certain improvements on the land and for the value of improvements

thereon;

(f) The size, shape or location, tax declaration and zonal valuation of the land;

(g) The price of the land as manifested in the ocular findings, oral as well as documentary evidence presented; and

(h) Such facts and events as to enable the affected property owners to have sufficient funds to acquire similarly-situated lands of approximate areas as those

required from them by the government, and thereby rehabilitate themselves as early as possible.

In fine, all the requirements set forth under Section 4 of R.A. 8974 have been satisfactorily complied with, there is no legal impediment to the issuance of a writ of possession in favor

of respondent.

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution dated February 7, 2005 and August 24, 2005 of the Court of Appeals are AFFIRMED.

G.R. No. 146979             July 27, 2006

HIKOI SUZUKI, RAMON DEL ROSARIO and TAKAYUKI SATO, petitioners,

vs.
DIANA DE GUZMAN, respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure
assailing the Decision1 dated January 26, 2000 of the Court of Appeals (CA) in CA-G.R. SP No. 52030
which dismissed petitioners' petition for certiorari and prohibition, and the CA Resolution dated February
2, 2001 which denied petitioners' motion for reconsideration.

The procedural antecedents and factual background of the case are as follows:

On January 10, 1996, the Suzuki Beach Hotel, Inc. (SBHI) located at 1 Samar Street, Bo. Barretto,
Olongapo City was registered with the Securities and Exchange Commission (SEC), with Diana de Guzman
(respondent) and Editha Taborda (Taborda) as two of the incorporators. Respondent subscribed to 29,800
shares with a total par value of P2,980,000.00 and paid her subscription in the amount of P745,000.00.
Taborda subscribed to 100 shares with a total par value of P10,000.00 and paid P2,500.00 on her
subscription.

On December 12, 1997, Hikoi Suzuki, Ramon del Rosario, Takayuki Sato (petitioners), acting as Board of
Directors of SBHI, issued a Resolution declaring due and demandable all unpaid shares of stock and gave
the stockholders until December 30, 1997 to pay their unpaid subscription. Notice of the call for payment
was sent to respondent and Taborda2 but they failed to pay their respective unpaid subscriptions.

On January 9, 1998, petitioners scheduled a meeting of the Board on January 12, 1998 to discuss the sale
of delinquent shares of stocks. On January 10, 1998, notice of the meeting was sent to respondent and
Taborda.3 On January 12, 1998, petitioners approved a Resolution to sell all delinquent shares of stock at
a public auction set on January 30, 1998.
On January 30, 1998, the auction sale was conducted. Petitioner Ramon del Rosario and Agnes Rodriguez
(Rodriguez) submitted the winning bids for the shares of stock of respondent and Taborda, respectively. 4
On the same day, respondent and Taborda filed an Affidavit of Protest on the auction sale of their shares
of stock.5

On March 4, 1998, respondent and Taborda filed with the SEC a Petition for Calling Special Stockholders
Meetings and for Election of Directors and Officers, Declaration of Nullity of the Call of Sale of Unpaid
Stock Subscription with Writ of Preliminary Injunction and Temporary Restraining Order, docketed as SEC
Case No. 03-98-5924.

On March 23, 1998, petitioners filed a Motion to Dismiss on the ground of lack of jurisdiction, alleging that
jurisdiction over the case was lodged with the civil courts. On April 7, 1998, SEC Hearing Officer C.A.
Gerard M. Lukban denied petitioners' Motion to Dismiss. 6 He held that the controversy involves intra-
corporate matters which falls within the jurisdiction of the SEC, pursuant to Section 5 of Presidential
Decree (P.D.) No. 902-A.

Respondent and Taborda filed an Amended Petition. Petitioners again filed a Motion to Dismiss, invoking
the same ground of lack of jurisdiction raised in their first Motion to Dismiss. On May 22, 1998, the SEC
denied petitioners' Motion to Dismiss. Thus, petitioners filed their Answer.

Meanwhile, on June 13, 1998, during the pendency of the case, petitioners issued another Resolution
calling for payment of delinquent shares of stock, to give respondent and Taborda a second chance to pay
their unpaid subscriptions.7 Letters, dated June 16, 1998, were sent to respondent and Taborda informing
them that, to obviate further legal questions on the validity of the call for payment, petitioners gave them
a second chance, until June 30, 1998, to pay their unpaid subscriptions.8 Respondent and Taborda again
failed to heed the call for payment.

On July 6, 1998, petitioners set a meeting of the Board on July 12, 1998 to discuss the delinquent shares
of stock. On July 8, 1998, notice of the meeting was sent to respondent and Taborda. 9 On July 12, 1998,
petitioners approved a Resolution to sell all delinquent shares at a public auction set on August 12,
1998.10

Respondent and Taborda filed with the SEC an Urgent Ex-Parte Motion for the Issuance of a Temporary
Restraining Order and Writ of Preliminary Injunction but the SEC denied it in its Order dated July 30,
1998.11 Thus, the auction sale proceeded on August 12, 1998. Again, petitioner del Rosario and Rodriguez
submitted the winning bids for the shares of stock of respondent and Taborda, respectively. 12

On August 31, 1998 respondents filed with the SEC a Supplemental Pleading seeking to nullify the August
12, 1998 auction sale.13 On September 19, 1998, petitioners filed a Motion to Dismiss Supplemental
Pleading on the ground of lack of jurisdiction, claiming once again that the case is cognizable by civil
courts.

On November 13, 1998, the SEC issued its Order denying petitioners Motion to Dismiss the Supplemental
Pleading.14 The SEC held that the cause of action raised in the supplemental pleading is but an incident
arising out of the original controversy between the parties over which it has jurisdiction; that the auction
sale, subject of the supplemental petition, proceeds from the notice of delinquency which is the very same
notice of delinquency based on the December 12, 1997 call for payment by the Board of Directors of
SBHI, the validity of which is the issue raised in the original petition; that such a dispute, being an
offshoot of an intra-corporate relationship existing between the parties, undisputedly falls within the
jurisdiction of the SEC.

Petitioners filed a Motion for Reconsideration but the SEC denied it in its Order dated March 2, 1999. 15

Thereafter, on March 29, 1999, the petitioners filed a petition for certiorari and prohibition with the CA,
assailing Orders of the SEC dated November 13, 1998 and March 2, 1999.16 They maintain that the case
falls within the jurisdiction of civil courts, not the SEC, since respondent and Taborda are no longer
stockholders of SBHI for failure to pay their delinquent shares of stock. They further allege that
respondent and Taborda failed to comply with the condition precedent under Section 69 of the
Corporation Code.17

On January 26, 2000, the CA rendered the assailed Decision dismissing the petition for being insufficient
in form and substance. The CA held that the petition is procedurally deficient because: (a) it failed to
indicate the date when the motion for reconsideration was filed with the SEC; (b) the attached material
portions of the record are not certified copies; (c) the certification of non-forum shopping was signed by
counsel, not by petitioners themselves; and, (d) there was no written explanation as to why personal
service was not effected. As to the merits of the petition, the CA ruled that since the controversy arose
out of an intra-corporate dispute, it is within the jurisdiction of the SEC; and the supplemental pleading
did not raise a new cause of action to warrant dismissal. 18

On March 14, 2000, petitioners filed a motion for reconsideration 19 but the CA denied it in its Resolution
dated February 2, 2001.20

Hence, the present petition anchored on the following grounds:

I. THE PUBLIC RESPONDENT COURT OF APPEALS GRIEVOUSLY ERRED IN RESOLVING THE

PETITION ON THE BASIS OF MERE TECHNICALITIES.

II. THE PUBLIC RESPONDENT COURT OF APPEALS SERIOUSLY AND GRAVELY ERRED IN RULING
THAT SECTION 69 OF THE CORPORATION CODE IS NOT APPLICABLE TO THIS CASE. 21

Following the submission of respondent's Comment,22 the Court gave due course to the petition; and in
compliance with the Court's order, both parties submitted their respective memoranda. 23

Petitioners pose three issues for resolution, to wit: (1) whether petitioners failed to comply with the
requirements provided by the Rules cited in the CA Decision; (2) whether Section 69 of the Corporation
Law is applicable to the instant case; and (3) whether the SEC has jurisdiction over the case. 24

Petitioners contend that the CA erred when it dismissed the petition on grounds of pure technicality.
Regarding the failure to indicate the date when the motion for reconsideration was filed, they aver that
the CA misquoted Section 3, par. 2, Rule 46 of the 1997 Rules of Civil Procedure; that the requirement to
indicate said date is not found in said provision; that it is not necessary to indicate said date since what is
important in determining the timeliness of the filing of the petition is the date of receipt of the order
denying the motion for reconsideration.

As to the attached documents which are not certified copies, they allege that the attached documents
need not be certified since they are not material portions of the records but mere documents of
petitioners attached to substantiate the allegations.

With respect to the certification of non-forum shopping, they argue that the CA should have noted that
there were three petitioners such that the signing of counsel substantially complies with the Rule.

As to the absence of a written explanation, they point out that the explanation is found in page 14 of the
petition.

In any event, petitioners strongly assert that the CA's strict adherence to procedure undermines the oft-
repeated doctrine by this Court that the rules of procedure are used only to help secure, not override,
substantial justice.

Petitioners maintain that respondent failed to comply with the condition precedent set forth in Section 69
of the Corporation Code, in which the party seeking to maintain action to question the auction sale is
required to pay the party holding the stock the sum for which the same was sold.

Petitioners also insist that the SEC has no jurisdiction over the dispute since Section 5 of P.D. 902-A has
been repealed by Section 5.2 of Republic Act No. 8799 (RA 8799), the Securities Regulation Code, which
transferred jurisdiction over intra-corporate disputes from the SEC to the Regional Trial Courts.

Respondent, for her part, staunchly maintains that petitioners' wanton disregard of the Rules of Court
warrant the outright dismissal of their petition. As to the question of jurisdiction, P.D. 902-A vests upon
the SEC jurisdiction to hear intra-corporate cases and not Section 69 of the Corporation Code.

The Court shall first dispose of the procedural issues raised in the petition.

Section 325 of Rule 46 of the 1997 Rules of Civil Procedure provides that there are three material dates
that must be stated in a petition for certiorari brought under Rule 65: (a) the date when notice of the
judgment or final order or resolution was received, (b) the date when a motion for new trial or for
reconsideration when one such was filed, and, (c) the date when notice of the denial thereof was received.
This requirement is for the purpose of determining the timeliness of the petition, since the perfection of an
appeal in the manner and within the period prescribed by law is jurisdictional and failure to perfect an
appeal as required by law renders the judgment final and executory.26

Section 3 also requires the pleader to submit a certificate of non-forum shopping to be executed by the
plaintiff or principal party. Obviously, it is the plaintiff or principal party, and not the counsel whose
professional services have been retained for a particular case, who is in the best position to know whether
he or it actually filed or caused the filing of a petition in that case.27

As a general rule, these requirements are mandatory, meaning, non-compliance therewith is a sufficient
ground for the dismissal of the petition.28 While the Court is not unmindful of exceptional cases where this
Court has set aside procedural defects to correct a patent injustice, concomitant to a liberal application of
the rules of procedure should be an effort on the part of the party invoking liberality to at least explain his
failure to comply with the rules.29 There must be at least a reasonable attempt at compliance with the
Rules. Utter disregard of the Rules cannot justly be rationalized by harking on the policy of liberal
construction.30

In the present case, the petition was bereft of any persuasive explanation as to why petitioners failed to
observe procedural rules properly. The date of filing of the motion for reconsideration cannot simply be
ascertained from the attached documents. The Order dated March 2, 1999 of

the SEC even presents an impossible situation – the stated date of the Motion for Reconsideration
(October 4, 1998) is one month ahead of the Order of the SEC it seeks to have reconsidered (November
13, 1998).31

The argument raised by petitioners' counsel that the CA misquoted the Rules is utterly bereft of merit.
Supreme Court Circular No. 39-9832 which amended Section 3, Rule 46 of the 1997 Rules of Civil
Procedure added the paragraph requiring the statement of material dates. The Circular was published in
several newspapers of general circulation in the country on July 26, 1998, and took effect on September
1, 1998. Thus, the amendments were introduced more than six months prior to the filing of the petition
before the CA.

The Court also cannot accept the signature of petitioners' counsel as substantial compliance with the
Rules. The attestation contained in the certification on non-forum shopping requires personal knowledge
by the party who executed the same. The fact that there are three petitioners is not valid excuse or
exception to the requirement. A certification against forum shopping signed by counsel is a defective
certification that is equivalent to non-compliance with the requirement and constitutes a valid cause for
the dismissal of the petition.33

Thus, the CA was correct in dismissing the petition on grounds of non-compliance with rules on material
date and certification of non-forum shopping.

The Court, however, takes exception from the other procedural grounds for dismissal. As to the failure to
attach certified copies of material portions of the record, the Court held in Cadayona v. Court of Appeals,34
that supporting documents to the petition are not required to be certified true copies, it being enough that
the assailed judgment, order or resolution is a certified true copy.35 With respect to the absence of a
written explanation, a perusal of the petition reveals that the explanation is found in page 14 thereof. 36

It is an elementary principle in law that negligence of counsel binds the client. 37 This is based on the rule
that any act performed by a lawyer within the scope of his general or implied authority is regarded as an
act of his client.38 Thus, the invocation of "the interest of substantial justice" is not a magic wand that
automatically compels courts to suspend procedural rules. Except only for the most persuasive of reasons
when they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of
thoughtlessness in not complying with the procedure prescribed, procedural rules must be followed. 39

To determine whether there is persuasive reason to relax the application of the rules, the Court shall now
look into the substance of the petition.

Petitioners' argument that the supplemental pleading should be dismissed for non-compliance with the
alleged condition precedent under Section 69 of the Corporation Code is unavailing. The Court notes that
this issue was never alleged or raised in the proceedings before the SEC. It was raised for the first time in
petitioners' petition for certiorari and prohibition in the CA. It is settled that points of law, theories, issues
and arguments not adequately brought to the attention of the lower court need not be, and ordinarily will
not be, considered by a reviewing court as they cannot be raised for the first time on appeal. 40 Basic
considerations of due process impel this rule.41 This principle equally applies to special civil actions for
certiorari under Rule 65.42 Thus, petitioners are deemed to have waived such issue for their failure to raise
the same before the SEC.

As to the question of jurisdiction, at the time the CA promulgated the assailed Decision on January 26,
2000, the SEC was still empowered, under Section 5 of P.D. 902-A, to hear and decide cases involving
intra-corporate disputes, thus:

SEC. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange
Commission over corporations, partnerships and other forms of association registered with it as
expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction
to hear and decide cases involving:…

b) Controversies arising out of intra-corporate or partnership relations, between and among

stockholders, members or associates; between any or all of them and the corporation, partnership
or association of which they are the stockholders, members or associates, respectively; and
between such corporation, partnership or association and the state insofar as it concerns their
individual franchise or right to exist as such entity; x x x (Emphasis supplied)

However, on August 9, 2000, during the pendency of petitioners' Motion for Reconsideration of the CA
Decision, R.A. No. 8799 took effect. Section 5.2 of R.A. No. 8799, provides:

5.2. The Commission's jurisdiction over all cases enumerated under Section 5 of Presidential
Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate
Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may
designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. The
Commission shall retain jurisdiction over pending cases involving intra-corporate disputes
submitted for final resolution which should be resolved within one (1) year from the enactment of
this Code. The Commission shall retain jurisdiction over pending suspension of
payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. (Emphasis supplied)

Thus, original and exclusive jurisdiction to hear and decide cases involving intra-corporate controversies
have been transferred to courts of general jurisdiction or the appropriate Regional Trial Court. 43 The case
involving herein parties has not been submitted for final resolution on the merits in the SEC. Only the
issue on jurisdiction was dealt with by the SEC which is the subject of herein petition. Thus, herein case
does not fall within the exception adverted to in the aforequoted Section 5.2.

All the foregoing considered, the CA should have noted that R.A. No. 8799 was already in force and effect,
for more than five months, and therefore applicable at the time of the promulgation of the herein assailed
Resolution on February 2, 2001. Although the petition filed with the CA was procedurally deficient for non-
compliance with the rules on material date and certification of non-forum shopping, the CA should have
reconsidered its Decision on the question of jurisdiction in view of the advent of R.A. No. 8799
transferring cases originally cognizable by the SEC to the Regional Trial Courts. Technicalities must give
way to the realities of the situation. It is elementary that jurisdiction over the subject matter, or the
jurisdiction to hear and decide a case, is conferred by law44 and it is not within the courts, let alone the
parties, to themselves determine and

conveniently set aside.45

Pursuant to Section 5.2 of R.A. No. 8799, this Court designated specific branches of the Regional Trial
Courts to try and decide cases formerly cognizable by the SEC. For the Third Judicial Region, specifically in
the Province of Zambales, the RTC of Olongapo City, Branch 72, is the designated court. 46

WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 52030 are REVERSED and SET ASIDE and SEC Case No. 03-98-5924 is ordered
remanded to the Regional Trial Court of Olongapo City, Branch 72, for further proceedings and proper
disposition.
G.R. No. 143442 August 29, 2006

PLACIDO O. URBANES, JR., doing business under the name and style of LAGING QLEAN JANITORIAL
SERVICES, Petitioner,
vs.
LOCAL WATER UTILITIES ADMINISTRATION, represented by its Administrator, ANTONIO R. DE VERA,
*
Deputy Administrator, RODOLFO S. DE JESUS, JESUS CAPUYOC, as Chairman, and ELIZABETH P. BASA,
DITAS ICALINA, YOLANDA ZARAGOZA and REBECCA A. BARBO of Prequalification, Bids and Awards
Committee (PBAC), ** Respondents.

DECISION

CARPIO MORALES, J.:

In August 1980, 1 Laging Qlean Janitorial Services (Laging Qlean) started rendering janitorial services for
the Local Water Utilities Administration (LWUA).

In April 24, 1989, Laging Qlean and LWUA forged a contract (the contract), the material stipulation of
which reads:

8. This Agreement shall cover services rendered since January 1988 and shall continue to be in full force
and effect for the period of one (1) year from [the] signing hereof unless sooner terminated upon notice
of one party to the other; provided, that should there be no notice of termination within thirty (30) days
before the expiry date, the same shall be deemed renewed; and provided further that the party desiring
to terminate the contract before the expiry date, shall give thirty (30) days prior written notice to the
other party[.] 2 (Underscoring supplied)

Since April 1992, the contract had been extended on a monthly basis, however.

On September 25, 1992, LWUA through its In-House Procurement Bidding Committee (IHPBC) conducted
a public bidding for Janitorial Services for a period of one (1) year. 3

Twelve bidders, including petitioner, participated and submitted their respective bids. Fast Manpower,
with a bid of P974,738.90, gave the lowest bid. Laging Qlean, with a bid of P1,027,174.90, lagged behind
as sixth in the list of lowest bidders..

By letter of October 20, 1992, Rodolfo S. De Jesus, Deputy Administrator for Administrative Services of
LWUA, advised Laging Qlean’s General Manager Susana U. Lazaro (Susana) that:

Pending completion of bids for the proposed contract for janitorial maintenance services, we are hereby
extending our contract with you for another month to take effect [on] October 24, 1992.

Should this extension be acceptable to you, please sign the "CONFORME" space provided below and return
this letter to us for our file. 4 (Emphasis and underscoring supplied)

Susana affixed her signature below the word "CONFORME."

As a result of the bidding process, LWUA represented by De Jesus, and Fast Manpower Services
represented by its General Manager Josefina C. Rosillo, 5 forged on December 22, 1992 a contract for
janitorial services for a period of one year. 6 On even date, De Jesus sent Susana of Laging Qlean a letter
reading:

xxxx

This is to inform you that we are extending your contract with LWUA for 12 calendar days (last extension)
to take effect [on] December 24, 1992 until January 04, 1993.

In this connection, may we request your Janitor Supervisor to turn over to us all equipment and tools
earlier issued to him for proper inventory and accounting, on or before the 23rd of December 1992. The
cost of any unaccounted tools and equipment will be deducted from whatever billings you may have with
this office.
Should this extension be acceptable to you, please sign the "CONFORME" space provided below and return
this letter to us for our file.

7
xxxx (Emphasis and underscoring supplied)

On this letter, Susana did not affix her signature below the word "CONFORME."

Alleging that the bids of the first five lowest bidders should have been rejected for not being in conformity
with the mandatory requirement of the Minimum Wage Law, the policy laid down by the Secretary of
Labor and Employment, and the opinion of the Chairman of the Commission on Audit (COA) dated
October 27, 1988, 8 petitioner filed on December 28, 1992 a complaint before the Regional Trial Court
(RTC) of Quezon City for damages, injunction with special prayer for temporary restraining order and
mandamus against herein respondents LWUA, its Administrator Antonio R. de Vera, Deputy Administrator
Rodolfo S. de Jesus, Jesus Capuyoc as Chairman of the Prequalification, Bids and Awards Committee
(PBAC), together with the members of said committee, namely, Elizabeth P. Basa, Ditas Icalina, Yolanda
Zaragoza and Rebecca A. Barbo.

Petitioner posited that the bid of Laging Qlean of P1,027,174.90 for a total of 21 janitors for a one-year
contract of janitorial maintenance services was the lowest complying bid and most advantageous to the
government, hence, the contract should have been awarded to it. 9

Further, petitioner contended that the December 22, 1992 notice of last extension sent by LWUA violated
the earlier quoted paragraph 8 of the contract as Laging Qlean was in effect merely given a 12-day notice
of termination. 10

By Order of January 18, 1993, the trial court directed the issuance of a Writ of Preliminary Mandatory
Injunction, the decretal portion of which reads:

WHEREFORE, premises above considered, upon filing of a bond in the sum of P50,000.00 duly approved
by the Court, let a writ of preliminary mandatory injunction be issued enjoining the defendants, their
agents and/or representatives to cancel the contract of janitorial services in favor of Fast Manpower and
reinstate and award the contract of janitorial services in favor of Laging Qlean Janitorial Services, the
latter being the lowest complying bidder. 11 (Emphasis and underscoring supplied)

A Writ of Preliminary Mandatory Injunction was accordingly issued.

Petitioner later twice moved to cite respondents for contempt of court 12 for allegedly disobeying the writ
when its janitors were barred from doing janitorial services on January 19, 1993. Petitioner and
respondents, however, agreed to proceed with the trial on the merits to fully apprise the court of the facts
of the case before resolving the motion. 13

After trial on the merits, Branch 98 of the Quezon City RTC dismissed the complaint by Decision of March
11, 1994, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing consideration, judgment is hereby rendered in favor of the
defendants, ordering the dismissal of the herein complaint. The writ of preliminary mandatory injunction
earlier issued by the court is hereby ordered lifted, and the contract for janitorial maintenance services
between the Fast Manpower Services and the [L]ocal Water Utilities Administration (LWUA) shall be
reinstated and be enforceable between the parties. With costs against the plaintiff. 14 (Emphasis and
underscoring supplied)

On appeal, the Court of Appeals narrowed down the main issue to whether the award of the contract for
janitorial services to Fast Manpower was legal. 15 It, however, passed on the failure of the trial court to
cite respondents in contempt of court in this wise:

The contract having expired by its terms on January 4, 1993, and the same can’t be extended by
injunction, the defendants are therefore not liable for contempt for they did not violate the injunction
because the defendants did not terminate the contract but it was terminated by its own terms. 16

By Decision of May 30, 2000, 17 the appellate court affirmed the decision of the trial court. Hence, the
Petition for Review 18 at bar faulting the appellate court of having
 I

x x x COMMITTED A SERIOUS REVERSIBLE ERROR, AMOUNTING TO GRAVE ABUSE OF DISCRETION, IN

NOT HOLDING RESPONDENTS GUILTY OF CONTEMPT OF COURT FOR DISOBEYING THE TEMPORARY
RESTRAINING ORDER AND WRIT OF PRELIMINARY INJUNCTION ISSUED BY BRANCH 98 OF THE
REGIONAL TRIAL COURT OF QUEZON CITY.

II

x x x COMMITTED A SERIOUS REVERSIBLE ERROR, AMOUNTING TO GRAVE ABUSE OF DISCRETION, IN

AFFIRMING THE DECISION OF BRANCH 98 OF THE REGIONAL TRIAL COURT OF QUEZON CITY DESPITE
THE SERIOUS ERRORS AND APPLICATION OF LAWS, WHICH IF NOT RECTIFIED, WOULD CAUSE GRAVE
IRREPARABLE INJURY AND DAMAGE TO HEREIN PETITIONER. 19 (Underscoring supplied)

The first assigned error relative to the failure of the trial court as well as of the appellate court to cite
respondents in contempt of court fails.

Without passing on the propriety of the issuance of the writ of preliminary mandatory injunction by the
trial court, it bears noting that the parties agreed to defer the resolution of the motion to cite respondents
in contempt until after trial on the merits. Since the complaint was dismissed, resolution of the motion
was rendered unnecessary.

At all events, the appellate court or even this Court cannot, on behalf of the trial court, cite respondents in
contempt of court. Igot v. Court of Appeals, teaches:

The court that granted the preliminary injunction or temporary restraining order preserving the status quo
is vested with the power to hear and determine the sufficiency and merit of the contempt charge. Only
the court which issued the injunction can impose a sanction for contempt of that injunction, and a court
without subject matter jurisdiction cannot transfer the case to another court. 20(Emphasis and
underscoring supplied; italics in the original),

as does the earlier case of San Luis v. Court of Appeals:

"In whatever context it may arise, contempt of court involves the doing of an act, or the failure to do an
act, in such a manner as to create an affront to the court and the sovereign dignity with which it is
clothed. As a matter of practical judicial administration, jurisdiction has been felt to properly rest in only
one tribunal at a time with respect to a given controversy." Only the court which rendered the order
commanding the doing of a certain act is vested with the right to determine whether or not the order has
been complied with, or whether a sufficient reason has been given for noncompliance, and, therefore,
whether a contempt has been committed. It is a well-established rule that the power to determine the
existence of contempt of court rests exclusively with the court contemned. No court is authorized to
punish a contempt against another. 21 (Emphasis and underscoring supplied)

As regards the second issue, petitioner posits that the "notice of last extension" was in reality a notice of
termination which violated the earlier quoted paragraph 8 of the contract providing for a 30-day prior
notice of termination.

Petitioner’s position does not persuade.

Petitioner had, as early as April 1992, become aware that the LWUA was going to conduct a bidding and
that it was on that account that the contract had since been renewed on a monthly basis. And by
participating in the September 25, 1992 bidding, it was fully aware that a new contract for janitorial
maintenance services would be forged as a result thereof. Furthermore, it was advised, by letter of
October 20, 1992, that its contract was being extended (not renewed) for one month, to which extension,
it through Susana affixed its conformity.

Petitioner further posits that the award of the contract to Fast Manpower also violated the law on public
bidding, its sole objective of which is to be fair, just and competitive. This too does not persuade.

From the Memorandum dated November 23, 1992 22 prepared by the IHPBC, all the necessary factors
were taken into account in choosing a contract which is most advantageous to the government. Consider
the following:
2.0 COMMITTEE EVALUATION AND FINDINGS

2.1 "Labor" Bid Portion

All the twelve (12) bidders conformed with the minimum wage (@P118.00 per day for non-agricultural
sector of the NCR) set by law. The Villaseran Maintenance Services had the lowest bid for the "Labor"
portion, followed by both Fast Manpower Services and Ultimate Care Services. The Laging Qlean Janitorial
Services, on the other hand, quoted the highest when it comes to labor. This is attributable, as can be
seen in the attached Abstract of Bids, to the higher rate of monthly SSS employer’s contribution used by
the Laging Qlean Janitorial Services compared to the rate used by the rest of the bidders (P177.30 vs.
P152.00). Laging Qlean apparently opted to include the 13th month pay in computing the SSS premium,
which the other bidders did not.

To verify the correct amount of monthly SSS premium contribution a private employer should remit, a
letter of inquiry dated October 19, 1992, was sent by the IHPBC Chairman to the Social Security System
(ANNEX C). From the response of the Chief, Correspondence Section of the Member Assistance Group of
the SSS, Mr. Jovenito F. Tagoc dated October 21, 1992 (ANNEX D), the right amount for monthly SSS
employer’s contribution should have been P152.

xxxx

2.4 Total Bid Price

In totality, Fast Manpower Services is the lowest complying bidder from among the twelve (12)
prequalified contractors. As part of the post-qualification evaluation, the Committee sent letters to the
present government clients of Fast Manpower Services to verify its latest annual performance with other
companies. From among the list of Fast Manpower’s clients, the Committee chose four (4) government
agencies for this purpose, namely: (1) the Bureau of Fisheries and Aquatic Resources, (2) Philippine Heart
Center, (3) Lung Center of the Philippines, and (4) the Social Security System, all of which gave very
satisfactory remarks on the Fast Manpower’s performance (refer to ANNEX G). The same proves the
credibility Fast Manpower Services has established with their present clients.

3. 0 COMMITTEE RECOMMENDATIONS

3.1 The LWUA Janitorial Services Contract for one year is hereby recommended for award to the FAST
MANPOWER SERVICES for the following reasons:

3.1.1 Fast Manpower Services has the most economical bid that is most advantageous to LWUA among
the twelve (12) bidders, in the amount of NINE HUNDRED SEVENTY FOUR THOUSAND SEVEN HUNDRED
THIRTY NINE AND 30/100 PESOS ONLY (P974,739.30), including taxes, subject to compliance with the
usual administrative and legal requirements; and

3.1.2 Fast Manpower Services has proven to be a responsive (i.e., in the sense that it has a record of
complying with its contractual commitments) and credible contractor, based on the results of a
postqualification inquiry with four (4) big government institutions as respondents.

23
xxxx (Emphasis in the original; Underscoring supplied)

Further, LWUA made a reservation to reject bids as the Invitation to Prequalify and Bid published in the
June 6, 1992 issue of the Philippine Daily Inquirer 24 shows:

LWUA reserves the right to reject any or all the bids, to waive any formality found therein and to accept
such bid or a part thereof as may be deemed most advantageous to LWUA. 25 (Emphasis and underscoring
supplied)

The discourse in his "A Treatise On Government Contracts Under Philippine Law" of former Commissioner
of the Commission on Audit Bartolome C. Fernandez, Jr. is enlightening:

It is a settled rule that where the invitation to bid contains a reservation for the Government to reject any
or all bids, the lowest or highest bidder, as the case may be, is not entitled to an award as a matter of
right for it does not become the ministerial duty of the Government to make such award. Thus, it has
been held that where the right to reject is so reserved, the lowest bid or any bid for that matter may be
rejected on a mere technicality, that all bids may be rejected, even if arbitrarily and unwisely, or under a
mistake, and that in the exercise of a sound discretion, the award may be made to another than the
lowest bidder. And so, where the Government as advertiser, availing itself of that right, makes its choice
in rejecting any or all bids, the losing bidder has no cause to complain nor right to dispute that choice,
unless an unfairness or injustice is shown. Accordingly, he has no ground of action to compel the
Government to award the contract in his favor, nor to compel it to accept his bid.

Verily, a reservation in the advertisement for bids of the right to reject any bid generally vests in the
authorities a wide discretion as to who is the best and most advantageous bidder. The exercise of such
discretion involves inquiry, investigation, comparison, deliberation and decision, which are quasi-judicial
functions, and when honestly performed, may not be reviewed by the courts. In such cases, there is no
binding obligation to award the contract to any bidder and in the exercise of such discretion the award
may be made validly to whoever among the participating bidders has submitted the most advantageous
bid. 26 (Citations omitted) (Emphasis and underscoring supplied)

Contrary then to the assertion of petitioner, the bidding was carried out in accordance with its purpose of
protecting public interest by giving the public the best possible advantages through open competition. 27

WHEREFORE, the Petition is DENIED. The assailed Decision of the Court of Appeals is, in light of the
foregoing disquisition, AFFIRMED.

G.R. No. 168732              June 29, 2007

NATIONAL POWER CORPORATION, petitioner,

vs.
LUCMAN G. IBRAHIM, OMAR G. MARUHOM, ELIAS G.MARUHOM, BUCAY G. MARUHOM, FAROUK G.
MARUHOM, HIDJARA G. MARUHOM, ROCANIA G. MARUHOM, POTRISAM G. MARUHOM, LUMBA G.
MARUHOM, SINAB G. MARUHOM, ACMAD G. MARUHOM, SOLAYMAN G. MARUHOM, MOHAMAD M.
IBRAHIM, and CAIRONESA M. IBRAHIM, respondents.

DECISION

AZCUNA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul the
Decision1 dated June 8, 2005 rendered by the Court of Appeals (CA) in C.A.-G.R. CV No. 57792.

The facts are as follows:

On November 23, 1994, respondent Lucman G. Ibrahim, in his personal capacity and in behalf of his co-
heirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G.
Maruhom, Hidjara G. Maruhom, Rocania G. Maruhom, Potrisam G. Maruhom, Lumba G. Maruhom, Sinab
G. Maruhom, Acmad G. Maruhom, Solayman G. Maruhom, Mohamad M. Ibrahim and Caironesa M.
Ibrahim, instituted an action against petitioner National Power Corporation (NAPOCOR) for recovery of
possession of land and damages before the Regional Trial Court (RTC) of Lanao del Sur.

In their complaint, Ibrahim and his co-heirs claimed that they were owners of several parcels of land
described in Survey Plan FP (VII-5) 2278 consisting of 70,000 square meters, divided into three (3) lots,
i.e. Lots 1, 2, and 3 consisting of 31,894, 14,915, and 23,191 square meters each respectively. Sometime
in 1978, NAPOCOR, through alleged stealth and without respondents’ knowledge and prior consent, took
possession of the sub-terrain area of their lands and constructed therein underground tunnels. The
existence of the tunnels was only discovered sometime in July 1992 by respondents and then later
confirmed on November 13, 1992 by NAPOCOR itself through a memorandum issued by the latter’s Acting
Assistant Project Manager. The tunnels were apparently being used by NAPOCOR in siphoning the water of
Lake Lanao and in the operation of NAPOCOR’s Agus II, III, IV, V, VI, VII projects located in Saguiran,
Lanao del Sur; Nangca and Balo-i in Lanao del Norte; and Ditucalan and Fuentes in Iligan City.

On September 19, 1992, respondent Omar G. Maruhom requested the Marawi City Water District for a
permit to construct and/or install a motorized deep well in Lot 3 located in Saduc, Marawi City but his
request was turned down because the construction of the deep well would cause danger to lives and
property. On October 7, 1992, respondents demanded that NAPOCOR pay damages and vacate the sub-
terrain portion of their lands but the latter refused to vacate much less pay damages. Respondents further
averred that the construction of the underground tunnels has endangered their lives and properties as
Marawi City lies in an area of local volcanic and tectonic activity. Further, these illegally constructed
tunnels caused them sleepless nights, serious anxiety and shock thereby entitling them to recover moral
damages and that by way of example for the public good, NAPOCOR must be held liable for exemplary
damages.

Disputing respondents’ claim, NAPOCOR filed an answer with counterclaim denying the material
allegations of the complaint and interposing affirmative and special defenses, namely that (1) there is a
failure to state a cause of action since respondents seek possession of the sub-terrain portion when they
were never in possession of the same, (2) respondents have no cause of action because they failed to
show proof that they were the owners of the property, and (3) the tunnels are a government project for
the benefit of all and all private lands are subject to such easement as may be necessary for the same. 2

On August 7, 1996, the RTC rendered a Decision, the decretal portion of which reads as follows:

WHEREFORE, judgment is hereby rendered:

1. Denying plaintiffs’ [private respondents’] prayer for defendant [petitioner] National Power Corporation
to dismantle the underground tunnels constructed between the lands of plaintiffs in Lots 1, 2, and 3 of
Survey Plan FP (VII-5) 2278;

2. Ordering defendant to pay to plaintiffs the fair market value of said 70,000 square meters of land
covering Lots 1, 2, and 3 as described in Survey Plan FP (VII-5) 2278 less the area of 21,995 square
meters at P1,000.00 per square meter or a total of P48,005,000.00 for the remaining unpaid portion of
48,005 square meters; with 6% interest per annum from the filing of this case until paid;

3. Ordering defendant to pay plaintiffs a reasonable monthly rental of P0.68 per square meter of the total
area of 48,005 square meters effective from its occupancy of the foregoing area in 1978 or a total of
P7,050,974.40.

4. Ordering defendant to pay plaintiffs the sum of P200,000.00 as moral damages; and

5. Ordering defendant to pay the further sum of P200,000.00 as attorney’s fees and the costs.

SO ORDERED.3

On August 15, 1996, Ibrahim, joined by his co-heirs, filed an Urgent Motion for Execution of Judgment
Pending Appeal. On the other hand, NAPOCOR filed a Notice of Appeal by registered mail on August 19,
1996. Thereafter, NAPOCOR filed a vigorous opposition to the motion for execution of judgment pending
appeal with a motion for reconsideration of the Decision which it had received on August 9, 1996.

On August 26, 1996, NAPOCOR filed a Manifestation and Motion withdrawing its Notice of Appeal
purposely to give way to the hearing of its motion for reconsideration.

On August 28, 1996, the RTC issued an Order granting execution pending appeal and denying NAPOCOR’s
motion for reconsideration, which Order was received by NAPOCOR on September 6, 1996.

On September 9, 1996, NAPOCOR filed its Notice of Appeal by registered mail which was denied by the
RTC on the ground of having been filed out of time. Meanwhile, the Decision of the RTC was executed
pending appeal and funds of NAPOCOR were garnished by respondents Ibrahim and his co-heirs.

On October 4, 1996, a Petition for Relief from Judgment was filed by respondents Omar G. Maruhom, Elias
G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom,
Potrisam G. Maruhom and Lumba G. Maruhom asserting as follows:

1) they did not file a motion to reconsider or appeal the decision within the reglementary period of fifteen
(15) days from receipt of judgment because they believed in good faith that the decision was for damages
and rentals and attorney’s fees only as prayed for in the complaint:

2) it was only on August 26, 1996 that they learned that the amounts awarded to the plaintiffs
represented not only rentals, damages and attorney’s fees but the greatest portion of which was payment
of just compensation which in effect would make the defendant NPC the owner of the parcels of land
involved in the case;

3) when they learned of the nature of the judgment, the period of appeal has already expired;

4) they were prevented by fraud, mistake, accident, or excusable negligence from taking legal steps to
protect and preserve their rights over their parcels of land in so far as the part of the decision decreeing
just compensation for petitioners’ properties;

5) they would never have agreed to the alienation of their property in favor of anybody, considering the
fact that the parcels of land involved in this case were among the valuable properties they inherited from
their dear father and they would rather see their land crumble to dust than sell it to anybody. 4

The RTC granted the petition and rendered a modified judgment dated September 8, 1997, thus:

WHEREFORE, a modified judgment is hereby rendered:

1) Reducing the judgment award of plaintiffs for the fair market value of P48,005,000.00 by 9,526,000.00
or for a difference by P38,479,000.00 and by the further sum of P33,603,500.00 subject of the execution
pending appeal leaving a difference of 4,878,500.00 which may be the subject of execution upon the
finality of this modified judgment with 6% interest per annum from the filing of the case until paid.

2) Awarding the sum of P1,476,911.00 to herein petitioners Omar G. Maruhom, Elias G. Maruhom, Bucay
G. Maruhom, Mahmod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Portrisam G. Maruhom and
Lumba G. Maruhom as reasonable rental deductible from the awarded sum of P7,050,974.40 pertaining to
plaintiffs.

3) Ordering defendant embodied in the August 7, 1996 decision to pay plaintiffs the sum of P200,000.00
as moral damages; and further sum of P200,000.00 as attorney’s fees and costs.

SO ORDERED.5

Subsequently, both respondent Ibrahim and NAPOCOR appealed to the CA.

In the Decision dated June 8, 2005, the CA set aside the modified judgment and reinstated the original
Decision dated August 7, 1996, amending it further by deleting the award of moral damages and reducing
the amount of rentals and attorney’s fees, thus:

WHEREFORE, premises considered, herein Appeals are hereby partially GRANTED, the Modified Judgment
is ordered SET ASIDE and rendered of no force and effect and the original Decision of the court a quo
dated 7 August 1996 is hereby RESTORED with the MODIFICATION that the award of moral damages is
DELETED and the amounts of rentals and attorney’s fees are REDUCED to P6,888,757.40 and P50,000.00,
respectively.

In this connection, the Clerk of Court of RTC Lanao del Sur is hereby directed to reassess and determine
the additional filing fee that should be paid by Plaintiff-Appellant IBRAHIM taking into consideration the
total amount of damages sought in the complaint vis-à-vis the actual amount of damages awarded by this
Court. Such additional filing fee shall constitute a lien on the judgment.

SO ORDERED.6

Hence, this petition ascribing the following errors to the CA:

(a) RESPONDENTS WERE NOT DENIED THE BENEFICIAL USE OF THEIR SUBJECT PROPERTIES TO ENTITLE
THEM TO JUST COMPENSATION BY WAY OF DAMAGES;

(b) ASSUMING THAT RESPONDENTS ARE ENTITLED TO JUST COMPENSATION BY WAY OF DAMAGES, NO
EVIDENCE WAS PRESENTED ANENT THE VALUATION OF RESPONDENTS’ PROPERTY AT THE TIME OF ITS
TAKING IN THE YEAR 1978 TO JUSTIFY THE AWARD OF ONE THOUSAND SQUARE METERS (P1000.00/SQ.
M.) EVEN AS PAYMENT OF BACK RENTALS IS ITSELF IMPROPER.
This case revolves around the propriety of paying just compensation to respondents, and, by extension,
the basis for computing the same. The threshold issue of whether respondents are entitled to just
compensation hinges upon who owns the sub-terrain area occupied by petitioner.

Petitioner maintains that the sub-terrain portion where the underground tunnels were constructed does
not belong to respondents because, even conceding the fact that respondents owned the property, their
right to the subsoil of the same does not extend beyond what is necessary to enable them to obtain all
the utility and convenience that such property can normally give. In any case, petitioner asserts that
respondents were still able to use the subject property even with the existence of the tunnels, citing as an
example the fact that one of the respondents, Omar G. Maruhom, had established his residence on a part
of the property. Petitioner concludes that the underground tunnels 115 meters below respondents’
property could not have caused damage or prejudice to respondents and their claim to this effect was,
therefore, purely conjectural and speculative.7

The contention lacks merit.

Generally, in an appeal by certiorari under Rule 45 of the Rules of Court, the Court does not pass upon
questions of fact. Absent any showing that the trial and appellate courts gravely abused their discretion,
the Court will not examine the evidence introduced by the parties below to determine if they correctly
assessed and evaluated the evidence on record.8 The jurisdiction of the Court in cases brought to it from
the CA is limited to reviewing and revising the errors of law imputed to it, its findings of fact being as a
rule conclusive and binding on the Court.

In the present case, petitioner failed to point to any evidence demonstrating grave abuse of discretion on
the part of the CA or to any other circumstances which would call for the application of the exceptions to
the above rule. Consequently, the CA’s findings which upheld those of the trial court that respondents
owned and possessed the property and that its substrata was possessed by petitioner since 1978 for the
underground tunnels, cannot be disturbed. Moreover, the Court sustains the finding of the lower courts
that the sub-terrain portion of the property similarly belongs to respondents. This conclusion is drawn
from Article 437 of the Civil Code which provides:

ART. 437. The owner of a parcel of land is the owner of its surface and of everything under it, and he can
construct thereon any works or make any plantations and excavations which he may deem proper,
without detriment to servitudes and subject to special laws and ordinances. He cannot complain of the
reasonable requirements of aerial navigation.

Thus, the ownership of land extends to the surface as well as to the subsoil under it. In Republic of the
Philippines v. Court of Appeals,9 this principle was applied to show that rights over lands are indivisible
and, consequently, require a definitive and categorical classification, thus:

The Court of Appeals justified this by saying there is "no conflict of interest" between the owners of the
surface rights and the owners of the sub-surface rights. This is rather strange doctrine, for it is a well-
known principle that the owner of a piece of land has rights not only to its surface but also to everything
underneath and the airspace above it up to a reasonable height. Under the aforesaid ruling, the land is
classified as mineral underneath and agricultural on the surface, subject to separate claims of title. This is
also difficult to understand, especially in its practical application.

Under the theory of the respondent court, the surface owner will be planting on the land while the mining
locator will be boring tunnels underneath. The farmer cannot dig a well because he may interfere with the
mining operations below and the miner cannot blast a tunnel lest he destroy the crops above. How deep
can the farmer, and how high can the miner go without encroaching on each others rights? Where is the
dividing line between the surface and the sub-surface rights?

The Court feels that the rights over the land are indivisible and that the land itself cannot be half
agricultural and half mineral. The classification must be categorical; the land must be either completely
mineral or completely agricultural.

Registered landowners may even be ousted of ownership and possession of their properties in the event
the latter are reclassified as mineral lands because real properties are characteristically indivisible. For the
loss sustained by such owners, they are entitled to just compensation under the Mining Laws or in
appropriate expropriation proceedings.10
Moreover, petitioner’s argument that the landowners’ right extends to the sub-soil insofar as necessary
for their practical interests serves only to further weaken its case. The theory would limit the right to the
sub-soil upon the economic utility which such area offers to the surface owners. Presumably, the
landowners’ right extends to such height or depth where it is possible for them to obtain some benefit or
enjoyment, and it is extinguished beyond such limit as there would be no more interest protected by
law.11

In this regard, the trial court found that respondents could have dug upon their property motorized deep
wells but were prevented from doing so by the authorities precisely because of the construction and
existence of the tunnels underneath the surface of their property. Respondents, therefore, still had a legal
interest in the sub-terrain portion insofar as they could have excavated the same for the construction of
the deep well. The fact that they could not was appreciated by the RTC as proof that the tunnels
interfered with respondents’ enjoyment of their property and deprived them of its full use and enjoyment,
thus:

Has it deprived the plaintiffs of the use of their lands when from the evidence they have already existing
residential houses over said tunnels and it was not shown that the tunnels either destroyed said houses or
disturb[ed] the possession thereof by plaintiffs? From the evidence, an affirmative answer seems to be in
order. The plaintiffs and [their] co-heirs discovered [these] big underground tunnels in 1992. This was
confirmed by the defendant on November 13, 1992 by the Acting Assistant Project Manager, Agus 1
Hydro Electric Project (Exh. K). On September 16, 1992, Atty. Omar Maruhom (co-heir) requested the
Marawi City Water District for permit to construct a motorized deep well over Lot 3 for his residential
house (Exh. Q). He was refused the permit "because the construction of the deep well as (sic) the parcels
of land will cause danger to lives and property." He was informed that "beneath your lands are
constructed the Napocor underground tunnel in connection with Agua Hydroelectric plant" (Exh. Q-2).
There in fact exists ample evidence that this construction of the tunnel without the prior consent of
plaintiffs beneath the latter’s property endangered the lives and properties of said plaintiffs. It has been
proved indubitably that Marawi City lies in an area of local volcanic and tectonic activity. Lake Lanao has
been formed by extensive earth movements and is considered to be a drowned basin of volcano/tectonic
origin. In Marawi City, there are a number of former volcanoes and an extensive amount of faulting. Some
of these faults are still moving. (Feasibility Report on Marawi City Water District by Kampsa-Kruger,
Consulting Engineers, Architects and Economists, Exh. R). Moreover, it has been shown that the
underground tunnels [have] deprived the plaintiffs of the lawful use of the land and considerably reduced
its value. On March 6, 1995, plaintiffs applied for a two-million peso loan with the Amanah Islamic Bank
for the expansion of the operation of the Ameer Construction and Integrated Services to be secured by
said land (Exh. N), but the application was disapproved by the bank in its letter of April 25, 1995 (Exh. O)
stating that:

"Apropos to this, we regret to inform you that we cannot consider your loan application due to the
following reasons, to wit:

That per my actual ocular inspection and verification, subject property offered as collateral has an existing
underground tunnel by the NPC for the Agus I Project, which tunnel is traversing underneath your
property, hence, an encumbrance. As a matter of bank policy, property with an existing encumbrance
cannot be considered neither accepted as collateral for a loan."

All the foregoing evidence and findings convince this Court that preponderantly plaintiffs have established
the condemnation of their land covering an area of 48,005 sq. meters located at Saduc, Marawi City by
the defendant National Power Corporation without even the benefit of expropriation proceedings or the
payment of any just compensation and/or reasonable monthly rental since 1978.12

In the past, the Court has held that if the government takes property without expropriation and devotes
the property to public use, after many years, the property owner may demand payment of just
compensation in the event restoration of possession is neither convenient nor feasible. 13 This is in
accordance with the principle that persons shall not be deprived of their property except by competent
authority and for public use and always upon payment of just compensation.14

Petitioner contends that the underground tunnels in this case constitute an easement upon the property of
respondents which does not involve any loss of title or possession. The manner in which the easement
was created by petitioner, however, violates the due process rights of respondents as it was without
notice and indemnity to them and did not go through proper expropriation proceedings. Petitioner could
have, at any time, validly exercised the power of eminent domain to acquire the easement over
respondents’ property as this power encompasses not only the taking or appropriation of title to and
possession of the expropriated property but likewise covers even the imposition of a mere burden upon
the owner of the condemned property.15 Significantly, though, landowners cannot be deprived of their
right over their land until expropriation proceedings are instituted in court. The court must then see to it
that the taking is for public use, that there is payment of just compensation and that there is due process
of law.16

In disregarding this procedure and failing to recognize respondents’ ownership of the sub-terrain portion,
petitioner took a risk and exposed itself to greater liability with the passage of time. It must be
emphasized that the acquisition of the easement is not without expense. The underground tunnels impose
limitations on respondents’ use of the property for an indefinite period and deprive them of its ordinary
use. Based upon the foregoing, respondents are clearly entitled to the payment of just compensation. 17
Notwithstanding the fact that petitioner only occupies the sub-terrain portion, it is liable to pay not merely
an easement fee but rather the full compensation for land. This is so because in this case, the nature of
the easement practically deprives the owners of its normal beneficial use. Respondents, as the owners of
the property thus expropriated, are entitled to a just compensation which should be neither more nor less,
whenever it is possible to make the assessment, than the money equivalent of said property. 18

The entitlement of respondents to just compensation having been settled, the issue now is on the manner
of computing the same. In this regard, petitioner claims that the basis for the computation of the just
compensation should be the value of the property at the time it was taken in 1978. Petitioner also
impugns the reliance made by the CA upon National Power Corporation v. Court of Appeals and
Macapanton Mangondato19 as the basis for computing the amount of just compensation in this action. The
CA found that "the award of damages is not excessive because the P1000 per square meter as the fair
market value was sustained in a case involving a lot adjoining the property in question which case
involved an expropriation by [petitioner] of portion of Lot 1 of the subdivision plan (LRC) PSD 116159
which is adjacent to Lots 2 and 3 of the same subdivision plan which is the subject of the instant
controversy."20

Just compensation has been understood to be the just and complete equivalent of the loss21 and is
ordinarily determined by referring to the value of the land and its character at the time it was taken by
the expropriating authority.22 There is a "taking" in this sense when the owners are actually deprived or
dispossessed of their property, where there is a practical destruction or a material impairment of the
value of their property, or when they are deprived of the ordinary use thereof. There is a "taking" in this
context when the expropriator enters private property not only for a momentary period but for more
permanent duration, for the purpose of devoting the property to a public use in such a manner as to oust
the owner and deprive him of all beneficial enjoyment thereof.23 Moreover, "taking" of the property for
purposes of eminent domain entails that the entry into the property must be under warrant or color of
legal authority.24

Under the factual backdrop of this case, the last element of taking mentioned, i.e., that the entry into the
property is under warrant or color of legal authority, is patently lacking. Petitioner justified its
nonpayment of the indemnity due respondents upon its mistaken belief that the property formed part of
the public dominion.

This situation is on all fours with that in the Mangondato case. NAPOCOR in that case took the property of
therein respondents in 1979, using it to build its Aqua I Hydroelectric Plant Project, without paying any
compensation, allegedly under the mistaken belief that it was public land. It was only in 1990, after more
than a decade of beneficial use, that NAPOCOR recognized therein respondents’ ownership and negotiated
for the voluntary purchase of the property.

In Mangondato, this Court held:

The First Issue: Date of Taking or Date of Suit?

The general rule in determining "just compensation" in eminent domain is the value of the property as of
the date of the filing of the complaint, as follows:

"Sec. 4. Order of Condemnation. When such a motion is overruled or when any party fails to defend as
required by this rule, the court may enter an order of condemnation declaring that the plaintiff has a
lawful right to take the property sought to be condemned, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the date of the filing of the
complaint. x x x" (Italics supplied).
Normally, the time of the taking coincides with the filing of the complaint for expropriation. Hence, many
ruling of this Court have equated just compensation with the value of the property as of the time of filing
of the complaint consistent with the above provision of the Rules. So too, where the institution of the
action precedes entry to the property, the just compensation is to be ascertained as of the time of filing of
the complaint.

The general rule, however, admits of an exception: where this Court fixed the value of the property as of
the date it was taken and not the date of the commencement of the expropriation proceedings.

In the old case of Provincial Government of Rizal vs. Caro de Araullo, the Court ruled that "x x x the
owners of the land have no right to recover damages for this unearned increment resulting from the
construction of the public improvement (lengthening of Taft Avenue from Manila to Pasay) from which the
land was taken. To permit them to do so would be to allow them to recover more than the value of the
land at the time it was taken, which is the true measure of the damages, or just compensation, and would
discourage the construction of important public improvements."

In subsequent cases, the Court, following the above doctrine, invariably held that the time of taking is the
critical date in determining lawful or just compensation. Justifying this stance, Mr. Justice (later Chief
Justice) Enrique Fernando, speaking for the Court in Municipality of La Carlota vs. The Spouses Felicidad
Baltazar and Vicente Gan, said, "x x x the owner as is the constitutional intent, is paid what he is entitled
to according to the value of the property so devoted to public use as of the date of taking. From that time,
he had been deprived thereof. He had no choice but to submit. He is not, however, to be despoiled of
such a right. No less than the fundamental law guarantees just compensation. It would be injustice to him
certainly if from such a period, he could not recover the value of what was lost. There could be on the
other hand, injustice to the expropriator if by a delay in the collection, the increment in price would accrue
to the owner. The doctrine to which this Court has been committed is intended precisely to avoid either
contingency fraught with unfairness."

Simply stated, the exception finds the application where the owner would be given undue incremental
advantages arising from the use to which the government devotes the property expropriated -- as for
instance, the extension of a main thoroughfare as was in the case in Caro de Araullo. In the instant case,
however, it is difficult to conceive of how there could have been an extra-ordinary increase in the value of
the owner’s land arising from the expropriation, as indeed the records do not show any evidence that the
valuation of P1,000.00 reached in 1992 was due to increments directly caused by petitioner’s use of the
land. Since the petitioner is claiming an exception to Rule 67, Section 4, it has the burden in proving its
claim that its occupancy and use -- not ordinary inflation and increase in land values -- was the direct
cause of the increase in valuation from 1978 to 1992.

Side Issue: When is there "Taking" of Property?

But there is yet another cogent reason why this petition should be denied and why the respondent Court
should be sustained. An examination of the undisputed factual environment would show that the "taking"
was not really made in 1978.

This Court has defined the elements of "taking" as the main ingredient in the exercise of power of eminent
domain, in the following words:

"A number of circumstances must be present in "taking" of property for purposes of eminent domain: (1)
the expropriator must enter a private property; (2) the entrance into private property must be for more
than a momentary period; (3) the entry into the property should be under warrant or color of legal
authority; (4) the property must be devoted to a public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for public use must be in such a way to oust
the owner and deprive him of all beneficial enjoyment of the property."(Italics supplied)

In this case, the petitioner’s entrance in 1978 was without intent to expropriate or was not made under
warrant or color of legal authority, for it believed the property was public land covered by Proclamation
No. 1354. When the private respondent raised his claim of ownership sometime in 1979, the petitioner
flatly refused the claim for compensation, nakedly insisted that the property was public land and wrongly
justified its possession by alleging it had already paid "financial assistance" to Marawi City in exchange for
the rights over the property. Only in 1990, after more than a decade of beneficial use, did the petitioner
recognize private respondent’s ownership and negotiate for the voluntary purchase of the property. A
Deed of Sale with provisional payment and subject to negotiations for the correct price was then
executed. Clearly, this is not the intent nor the expropriation contemplated by law. This is a simple
attempt at a voluntary purchase and sale. Obviously, the petitioner neglected and/or refused to exercise
the power of eminent domain.

Only in 1992, after the private respondent sued to recover possession and petitioner filed its Complaint to
expropriate, did petitioner manifest its intention to exercise the power of eminent domain. Thus the
respondent Court correctly held:

"If We decree that the fair market value of the land be determined as of 1978, then We would be
sanctioning a deceptive scheme whereby NAPOCOR, for any reason other than for eminent domain would
occupy another’s property and when later pressed for payment, first negotiate for a low price and then
conveniently expropriate the property when the land owner refuses to accept its offer claiming that the
taking of the property for the purpose of the eminent domain should be reckoned as of the date when it
started to occupy the property and that the value of the property should be computed as of the date of
the taking despite the increase in the meantime in the value of the property."

In Noble vs. City of Manila, the City entered into a lease-purchase agreement of a building constructed by
the petitioner’s predecessor-in-interest in accordance with the specifications of the former. The Court held
that being bound by the said contract, the City could not expropriate the building. Expropriation could be
resorted to "only when it is made necessary by the opposition of the owner to the sale or by the lack of
any agreement as to the price." Said the Court:

"The contract, therefore, in so far as it refers to the purchase of the building, as we have interpreted it, is
in force, not having been revoked by the parties or by judicial decision. This being the case, the city being
bound to buy the building at an agreed price, under a valid and subsisting contract, and the plaintiff being
agreeable to its sale, the expropriation thereof, as sought by the defendant, is baseless. Expropriation lies
only when it is made necessary by the opposition of the owner to the sale or by the lack of any agreement
as to the price. There being in the present case a valid and subsisting contract, between the owner of the
building and the city, for the purchase thereof at an agreed price, there is no reason for the
expropriation." (Italics supplied)

In the instant case, petitioner effectively repudiated the deed of sale it entered into with the private
respondent when it passed Resolution No. 92-121 on May 25, 1992 authorizing its president to negotiate,
inter alia, that payment "shall be effective only after Agus I HE project has been placed in operation." It
was only then that petitioner’s intent to expropriate became manifest as private respondent disagreed
and, barely a month, filed suit.25

In the present case, to allow petitioner to use the date it constructed the tunnels as the date of valuation
would be grossly unfair. First, it did not enter the land under warrant or color of legal authority or with
intent to expropriate the same. In fact, it did not bother to notify the owners and wrongly assumed it had
the right to dig those tunnels under their property. Secondly, the "improvements" introduced by
petitioner, namely, the tunnels, in no way contributed to an increase in the value of the land. The trial
court, therefore, as affirmed by the CA, rightly computed the valuation of the property as of 1992, when
respondents discovered the construction of the huge underground tunnels beneath their lands and
petitioner confirmed the same and started negotiations for their purchase but no agreement could be
reached.26

As to the amount of the valuation, the RTC and the CA both used as basis the value of the adjacent
property, Lot 1 (the property involved herein being Lots 2 and 3 of the same subdivision plan), which was
valued at P1,000 per sq. meter as of 1990, as sustained by this Court in Mangondato, thus:

The Second Issue: Valuation

We now come to the issue of valuation.

The fair market value as held by the respondent Court, is the amount of P1,000.00 per square meter. In
an expropriation case where the principal issue is the determination of just compensation, as is the case
here, a trial before Commissioners is indispensable to allow the parties to present evidence on the issue of
just compensation. Inasmuch as the determination of just compensation in eminent domain cases is a
judicial function and factual findings of the Court of Appeals are conclusive on the parties and reviewable
only when the case falls within the recognized exceptions, which is not the situation obtaining in this
petition, we see no reason to disturb the factual findings as to valuation of the subject property. As can be
gleaned from the records, the court-and-the-parties-appointed commissioners did not abuse their
authority in evaluating the evidence submitted to them nor misappreciate the clear preponderance of
evidence. The amount fixed and agreed to by the respondent appellate Court is not grossly exorbitant. To
quote:

"Commissioner Ali comes from the Office of the Register of Deeds who may well be considered an expert,
with a general knowledge of the appraisal of real estate and the prevailing prices of land in the vicinity of
the land in question so that his opinion on the valuation of the property cannot be lightly brushed aside.

"The prevailing market value of the land is only one of the determinants used by the commissioners’
report the other being as herein shown:

xxx

xxx

"Commissioner Doromal’s report, recommending P300.00 per square meter, differs from the 2
commissioners only because his report was based on the valuation as of 1978 by the City Appraisal
Committee as clarified by the latter’s chairman in response to NAPOCOR’s general counsel’s query."

In sum, we agree with the Court of Appeals that petitioner has failed to show why it should be granted an
exemption from the general rule in determining just compensation provided under Section 4 of Rule 67.
On the contrary, private respondent has convinced us that, indeed, such general rule should in fact be
observed in this case.27

Petitioner has not shown any error on the part of the CA in reaching such a valuation. Furthermore, these
are factual matters that are not within the ambit of the present review.

WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals in C.A.-G.R. CV No. 57792
dated June 8, 2005 is AFFIRMED.

G.R. No. 170916             April 27, 2007

CGR CORPORATION herein represented by its President ALBERTO RAMOS, III, HERMAN M. BENEDICTO
and ALBERTO R. BENEDICTO, Petitioners,
vs.
ERNESTO L. TREYES, JR., Respondent

DECISION

CARPIO MORALES, J.:

Assailed via petition for review are issuances of the Regional Trial Court (RTC), Branch 43, Bacolod City,
in Civil Case No. 04-12284, to wit: Order1 dated August 26, 2005 which dismissed petitioners’ complaint
for damages on the ground of prematurity, and Order2 dated January 2, 2006 which denied petitioners’
motion for reconsideration.

In issue is one of law – whether a complainant in a forcible entry case can file an independent action for
damages arising after the act of dispossession had occurred.

CGR Corporation, Herman M. Benedicto and Alberto R. Benedicto (petitioners) claimed to have occupied
37.3033 hectares of public land in Barangay Bulanon, Sagay City, Negros Occidental even before the
notarized separate Fishpond Lease Agreement Nos. 5674,3 56944 and 56955 in their respective favor were
approved in October 2000 by the Secretary of Agriculture for a period of twenty-five (25) years or until
December 31, 2024.

On November 18, 2000, Ernesto L. Treyes, Jr. (respondent) allegedly forcibly and unlawfully entered the
leased properties and once inside barricaded the entrance to the fishponds, set up a barbed wire fence
along the road going to petitioners’ fishponds, and harvested several tons of milkfish, fry and fingerlings
owned by petitioners.

On November 22, 2000, petitioners promptly filed with the Municipal Trial Court (MTC) in Sagay City
separate complaints for Forcible Entry With Temporary Restraining Order And/Or Preliminary Injunction
And Damages, docketed as Civil Case Nos. 1331,6 13327 and 1333,8 against Ernesto M. Treyes, Sr. and
respondent.

In a separate move, petitioners filed in March 2004 with the Bacolod RTC a complaint for damages against
respondent, docketed as Civil Case No, 04-12284, alleging, inter alia,

xxxx

That prior to the issuance of the fishpond lease agreement in favor of the plaintiffs, they had
already been in open and continuous possession of the same parcel of land;

VI

As lessee and in possession of the above[-]described fishpond, plaintiffs have continuously

occupied, cultivated and developed the said fishpond and since then, had been regularly harvesting
milkfish, shrimps, mud crabs and other produce of the fishponds;1a\^/phi1.net

VII

That the yearly income of the fishpond of the plaintiff corporation is at least P300,000.00 more or
less, while the yearly income of the fishpond of plaintiff Herman Benedicto, Sr. is at least
P100,000.00 more or less, and the yearly income of the fishpond of plaintiff Alberto Benedicto is at
least P100,000.00 more or less;

VIII

That sometime last November 18, 2000 or thereabout, defendant Ernesto L. Treyes, Jr. and his
armed men and with the help of the blue guards from the Negros Veterans Security Agency
forcibly and unlawfully entered the fishponds of the plaintiffs and once inside barricaded the
entrance of the fishpond and set up barb wire fence along the road going to plaintiffs fishpond and
harvested the milkfish and carted away several tons of milkfish owned by the plaintiffs;

IX

That on succeeding days, defendant’s men continued their forage on the fishponds of the plaintiffs
by carting and taking away the remaining full grown milkfish, fry and fingerlings and other marine
products in the fishponds. NOT ONLY THAT, even the chapel built by plaintiff CGR Corporation was
ransacked and destroyed and the materials taken away by defendant’s men. Religious icons were
also stolen and as an extreme act of sacrilege, even decapitated the heads of some of these icons;

xxxx

XIII

That the unlawful, forcible and illegal intrusion/destruction of defendant Ernesto Treyes, Jr. and his
men on the fishpond leased and possessed by the plaintiffs is without any authority of law and in
violation of Article 539 of the New Civil Code which states:

"Art. 539. Every possessor has a right to be respected in his possession; and should he be disturbed
therein he shall be protected in or restored to said possession by the means established by the laws and
rules of the Court."9 (Underscoring supplied) and praying for the following reliefs:

1) Ordering the defendant to pay plaintiff CGR Corporation the sum of at least P900,000.00 and to
plaintiffs Herman and Alberto Benedicto, the sum of at least P300,000.00 each by way of actual
damages and such other amounts as proved during the trial;

2) Ordering the defendant to pay the plaintiffs the sum of P100,000.00 each as moral damages;
 3) Ordering the defendant to pay the plaintiffs the sum of P100,000.00 each as exemplary
damages;

4) Ordering the defendant to pay the plaintiffs the sum of P200,000.00 as attorney’s fees, and to
reimburse plaintiffs with all such sums paid to their counsel by way of appearance fees.10
(Underscoring supplied)

Respondent filed a Motion to Dismiss11 petitioners’ complaint for damages on three grounds – litis
pendentia, res judicata and forum shopping.

By the assailed Order12 of August 26, 2005, Branch 43 of the Bacolod RTC dismissed petitioners’ complaint
on the ground of prematurity, it holding that a complaint for damages may only be maintained "after a
final determination on the forcible entry cases has been made."

Hence, the present petition for review.

The only issue is whether, during the pendency of their separate complaints for forcible entry, petitioners
can independently institute and maintain an action for damages which they claim arose from incidents
occurring after the dispossession by respondent of the premises.

Petitioners meet the issue in the affirmative. Respondents assert otherwise.

The petition is impressed with merit.

Section 17, Rule 70 of the Rules of Court provides:

SEC. 17. Judgment. – If after trial the court finds that the allegations of the complaint are true, it shall
render judgment in favor of the plaintiff for the restitution of the premises, the sum justly due as arrears
of rent or as reasonable compensation for the use and occupation of the premises, attorney’s fees and
costs. If it finds that said allegations are not true, it shall render judgment for the defendant to recover
his costs. If a counterclaim is established, the court shall render judgment for the sum found in arrears
from either party and award costs as justice requires. (Emphasis supplied)

The recoverable damages in forcible entry and detainer cases thus refer to "rents" or "the reasonable
compensation for the use and occupation of the premises" or "fair rental value of the property" and
attorney’s fees and costs.13

The 2006 case of Dumo v. Espinas14 reiterates the long-established rule that the only form of damages
that may be recovered in an action for forcible entry is the fair rental value or the reasonable
compensation for the use and occupation of the property:

Lastly, we agree with the CA and the RTC that there is no basis for the MTC to award actual, moral, and
exemplary damages in view of the settled rule that in ejectment cases, the only damage that can be
recovered is the fair rental value or the reasonable compensation for the use and occupation of the
property. Considering that the only issue raised in ejectment is that of rightful possession, damages which
could be recovered are those which the plaintiff could have sustained as a mere possessor, or those
caused by the loss of the use and occupation of the property, and not the damages which he may have
suffered but which have no direct relation to his loss of material possession. x x x15 (Emphasis,
underscoring and italics supplied; citations omitted)

Other damages must thus be claimed in an ordinary action.16

In asserting the negative of the issue, respondent cites the 1999 case of Progressive Development
Corporation, Inc. v. Court of Appeals.17 In this case, Progressive Development Corporation, Inc.
(Progressive), as lessor, repossessed the leased premises from the lessee allegedly pursuant to their
contract of lease whereby it was authorized to do so if the lessee failed to pay monthly rentals. The lessee
filed a case for forcible entry with damages against Progressive before the Metropolitan Trial Court (MeTC)
of Quezon City. During the pendency of the case, the lessee filed an action for damages before the RTC,
drawing Progressive to file a motion to dismiss based on litis pendentia. The RTC denied the motion.

On appeal by Progressive, the Court of Appeals sustained the RTC order denying the motion to dismiss.
Progressive brought the case to this Court. Citing Section 1, Rule 70 of the Rules of Court, this Court
reversed the lower courts’ ruling, it holding that "all cases for forcible entry or unlawful detainer shall be
filed before the Municipal Trial Court which shall include not only the plea for restoration of possession but
also all claims for damages and costs therefrom." In other words, this Court held that "no claim for
damages arising out of forcible entry or unlawful detainer may be filed separately and independently of
the claim for restoration of possession."18 (Underscoring supplied)

In thus ruling, this Court in Progressive made a comparative study of the therein two complaints, thus:

A comparative study of the two (2) complaints filed by private respondent against petitioner before the
two (2) trial courts shows that not only are the elements of res adjudicata present, at least insofar as the
claim for actual and compensatory damages is concerned, but also that the claim for damages–moral and
exemplary in addition to actual and compensatory–constitutes splitting a single cause of action. Since this
runs counter to the rule against multiplicity of suits, the dismissal of the second action becomes
imperative.

The complaint for forcible entry contains the following pertinent allegations –

2.01 On 02 January 1989, plaintiff entered into a contract of lease with defendant PDC over a property
designated as Ground Floor, Seafood Market (hereinafter "Subject Premises") situated at the corner of
EDSA corner MacArthur Street, Araneta Center, Cubao, Quezon City, for a period of ten (10) years from
02 January 1989 to 30 April 1998.

2.02 Immediately after having acquired actual physical possession of the Subject Premises, plaintiff
established and now operates thereon the now famous Seafood Market Restaurant. Since then, plaintiff
had been in actual, continuous, and peaceful physical possession of the Subject Premises until 31 October
1992.

xxxx

3.02 Plaintiff, being the lessee of the Subject Premises, is entitled to the peaceful occupation and
enjoyment of the Subject Premises to the exclusion of all others, including defendants herein.

3.03 Defendants’ resort to strong arms tactics to forcibly wrest possession of the Subject Premises from
plaintiff and maintain possession thereof through the use of force, threat, strategy and intimidation by the
use of superior number of men and arms amounts to the taking of the law into their own hands.

3.04 Thus, defendants’ act of unlawfully evicting out plaintiff from the Subject Premises it is leasing from
defendant PDC and depriving it of possession thereof through the use of force, threat, strategy and
intimidation should be condemned and declared illegal for being contrary to public order and policy.

3.05 Consequently, defendants should be enjoined from continuing with their illegal acts and be ordered
to vacate the Subject Premises and restore possession thereof, together with its contents to plaintiff.

xxxx

4.07 Considering that defendants’ act of forcibly grabbing possession of the Subject Premises from
plaintiff is illegal and null and void, defendant should be adjudged liable to plaintiff for all the
aforedescribed damages which plaintiff incurred as a result thereof.

The amended complaint for damages filed by private respondent alleges basically the same factual
circumstances and issues as bases for the relief prayed for, to wit:

4. On May 28, 1991, plaintiff and defendant PDC entered into a Contract of Lease for a period of ten years
or from January 2, 1989 up to April 30, 1998 over a property designated as Ground Floor, Seafood Market
(hereinafter referred to as Subject Premises) situated at the corner of EDSA corner McArthur Street,
Araneta Center, Cubao, Quezon City. A copy of the lease contract is attached hereto as Annex "A."

5. Immediately thereafter, plaintiff took over actual physical possession of Subject Premises, and
established thereon the now famous "Seafood Market Restaurant."

xxxx
7. On October 31, 1992 at around 8:30 p.m., defendant PDC, without the benefit of any writ of possession
or any lawful court order and with the aid of approximately forty (40) armed security guards and
policemen under the supervision of defendant Tejam, forcibly entered the subject premises through force,
intimidation, threats and stealth and relying on brute force and in a thunderboltish manner and against
plaintiff’s will, unceremoniously drew away all of plaintiffs men out of the subject premises, thereby
depriving herein plaintiff of its actual, physical and natural possession of the subject premises. The illegal
high-handed manner of gestapo like take-over by defendants of subject premises is more particularly
described as follows: x x x x

8. To date, defendants continue to illegally possess and hold the Subject Premises, including all the multi-
million improvements, fixtures and equipment therein owned by plaintiff, all to the damage and prejudice
of plaintiff. The actuations of defendants constitute an unlawful appropriation, seizure and taking of
property against the will and consent of plaintiff. Worse, defendants are threatening to sell at public
auction and without the consent, of plaintiff and without lawful authority, the multi-million fixtures and
equipment of plaintiff and at prices way below the market value thereof. Plaintiff hereby attaches as
Annex "B" the letter from defendants dated August 6, 1993 addressed to plaintiff, informing the latter
that the former intends to sell at an auction on August 19, 1993 at 2:00 p.m. properties of the plaintiff
presently in defendants’ possession.

xxxx

12. Defendant’s unlawful takeover of the premises constitutes a violation of its obligation under Art. 1654
of the New Civil Code requiring the lessor to maintain the lessee in peaceful and adequate enjoyment of
the lease for the entire duration of the contract. Hence, plaintiff has filed the present suit for the recovery
of damages under Art. 1659 of the New Civil Code x x x x19 (Emphasis in the original; underscoring
supplied)

Analyzing the two complaints, this Court, still in Progressive, observed:

Restated in its bare essentials, the forcible entry case has one cause of action, namely, the alleged
unlawful entry by petitioner into the leased premises out of which three (3) reliefs (denominated by
private respondent as its causes of action) arose: (a) the restoration by the lessor (petitioner herein) of
the possession of the leased premises to the lessee, (b) the claim for actual damages due to the losses
suffered by private respondent such as the deterioration of perishable foodstuffs stored inside the
premises and the deprivation of the use of the premises causing loss of expected profits; and, (c) the
claim for attorney’s fees and costs of suit.

On the other hand, the complaint for damages prays for a monetary award consisting of (a) moral
damages of P500,000.00 and exemplary damages of another P500,000.00; (b) actual damages of
P20,000.00 and compensatory damages of P1,000,000.00 representing unrealized profits; and, (c)
P200,000.00 for attorney’s fees and costs, all based on the alleged forcible takeover of the leased
premises by petitioner. Since actual and compensatory damages were already prayed for in the forcible
entry case before the MeTC, it is obvious that this cannot be relitigated in the damage suit before the RTC
by reason of res adjudicata.

The other claims for moral and exemplary damages cannot also succeed considering that these sprung
from the main incident being heard before the MeTC. x x x20 (Italics in the original; Emphasis and
underscoring supplied)

It bears noting, however, that as reflected in the earlier-quoted allegations in the complaint for damages
of herein petitioners, their claim for damages have no direct relation to their loss of possession of the
premises. It had to do with respondent’s alleged harvesting and carting away several tons of milkfish and
other marine products in their fishponds, ransacking and destroying of a chapel built by petitioner CGR
Corporation, and stealing religious icons and even decapitating the heads of some of them, after the act of
dispossession had occurred.

Surely, one of the elements of litis pendentia - that the identity between the pending actions, with respect
to the parties, rights asserted and reliefs prayed for, is such that any judgment rendered on one action
will, regardless of which is successful, amount to res judicata in the action under consideration - is not
present, hence, it may not be invoked to dismiss petitioners’ complaint for damages. 21

Res judicata may not apply because the court in a forcible entry case has no jurisdiction over claims for
damages other than the use and occupation of the premises and attorney’s fees. 22
Neither may forum-shopping justify a dismissal of the complaint for damages, the elements of litis
pendentia not being present, or where a final judgment in the forcible entry case will not amount to res
judicata in the former.23

Petitioners’ filing of an independent action for damages other than those sustained as a result of their
dispossession or those caused by the loss of their use and occupation of their properties could not thus be
considered as splitting of a cause of action.

WHEREFORE, the Orders dated August 26, 2005 and January 2, 2006 issued by the Regional Trial Court,
Branch 43, Bacolod City, in Civil Case No. 04-12284 are REVERSED and SET ASIDE.

The Regional Trial Court, Branch 43, Bacolod City, is directed to REINSTATE Civil Case No. 04-12284 to its
docket and to conduct proceedings thereon with dispatch.

G.R. No. 171989             July 4, 2007

FIRST CORPORATION, petitioner,

vs.
FORMER SIXTH DIVISION OF THE COURT OF APPEALS, BRANCH 218 OF THE REGIONAL TRIAL COURT OF
QUEZON CITY,** EDUARDO M. SACRIS, and CESAR A. ABILLAR, respondents.

DECISION

CHICO-NAZARIO, J.:

This is a Special Civil Action for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure
seeking to annul, on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction,
the Decision1 of the Regional Trial Court (RTC) of Quezon City in Civil Case No. Q01-44599 dated 28 June
2004, as affirmed by the Court of Appeals in its Decision2 and Resolution3 dated 29 November 2005 and
14 February 2006, respectively, in CA-G.R. CV No. 84660 entitled, Eduardo M. Sacris v. First Corporation
and First Corporation v. Cesar A. Abillar.

Herein petitioner First Corporation is a corporation duly organized and existing under Philippine laws and
engaged primarily in trade. Herein private respondent Eduardo M. Sacris (Sacris) is the alleged creditor of
the petitioner corporation, while private respondent Cesar A. Abillar (Abillar) had served as the President
and Chairman of the Board of the petitioner corporation from 1993 until 26 February 1998.

The controversy of the present case arose from the following generative facts:

In 1991, the corporate officers of the petitioner corporation namely: Vicente C. Esmeralda, Edgardo C.
Cerbo, Nicolas E. Esposado, Rafael P. La Rosa and herein private respondent Abillar, convinced private
respondent Sacris to invest in their business as the petitioner corporation needed a fresh equity infusion,
particularly in its Rema Tip Top Division, to make viable its continuous operation. The petitioner
corporation made a promise of turning such equity into shareholding in the petitioner corporation. While
the conversion of such investment into shareholding was still pending, private respondent Sacris and the
petitioner corporation agreed to consider the same as a loan which shall earn an interest of one percent
per month. Accordingly, from the year 1991 up to 1994, private respondent Sacris had already extended
a P1.2 million loan to the Rema Tip Top Division of the petitioner corporation.

In 1997, private respondent Sacris extended another P1 million loan to the petitioner corporation. Thus,
from 1991 up to 1997, the total loan extended by private respondent Sacris to the petitioner corporation
reached a total amount of P2.2 million. All loans were given by private respondent Sacris to herein private
respondent Abillar, as the latter was then the President and Chairman of the Board of Directors of the
petitioner corporation. The receipts for the said loans were issued by the petitioner corporation in the
name of private respondent Abillar. Petitioner corporation failed to convert private respondent Sacris’s
investment/loan into equity or shareholding in the petitioner corporation. In its place, petitioner
corporation agreed to pay a monthly interest of 2.5% on the amount of the loan extended to it by private
respondent Sacris. Petitioner corporation likewise made partial payments of P400,000.00 on the principal
obligation and interest payment in the amounts of P33,750.27 and P23,250.00, thus, leaving an
outstanding balance of P1.8 million.
In the meantime or on 27 February 1998, a Special Stockholders’ Meeting of the petitioner corporation
was held to elect the members of the Board of Directors and also to elect a new set of officers. The
stockholders of the petitioner corporation no longer re-elected private respondent Abillar as President and
member of the Board of Directors because they had already lost their confidence in him for having been
involved in various anomalies and irregularities during his tenure. Thereby, private respondent Abillar was
ousted from the petitioner corporation.

On 13 March 1998, private respondent Sacris, for a valuable consideration, executed a Deed of
Assignment4 in favor of private respondent Abillar, assigning and transferring to private respondent Abillar
his remaining collectibles due from the petitioner corporation in the amount of P1.8 million. As
consideration for the execution of the aforesaid Deed of Assignment, private respondent Abillar shall pay
private respondent Sacris the outstanding balance of P1.8 million due from the petitioner corporation on
or before 30 July 1998.

On 10 April 1998, private respondent Abillar, by virtue of the Deed of Assignment, filed a Complaint for
Sum of Money with Prayer for a Writ of Preliminary Attachment and Damages before the RTC of Pasig City
against the petitioner corporation. The said case was docketed as Civil Case No. 66757. While the case
was still pending, both private respondents agreed to rescind the Deed of Assignment that they had
executed on 13 March 1998 for failure of private respondent Abillar to comply with his undertaking to pay
private respondent Sacris the amount of P1.8 million on or before 30 July 1998. Thus, on 27 August 1998,
private respondents Sacris and Abillar executed a Deed of Rescission5 of the Deed of Assignment dated 13
March 1998. Consequently, private respondent Sacris himself made a demand upon the petitioner
corporation to pay its outstanding obligation of P1.8 million but the latter refused to do so.

Hence, before pre-trial of the aforesaid Civil Case No. 66757, private respondent Sacris filed a Motion for
Intervention attaching thereto his Complaint in Intervention. At first, the RTC of Pasig City denied the said
Motion for Intervention. Subsequently, however, the trial court admitted the Complaint in Intervention
filed by private respondent Sacris and dismissed the Complaint originally filed by private respondent
Abillar against the petitioner corporation. The admission of the Complaint in Intervention prompted
petitioner corporation to file a Petition for Certiorari and Prohibition before the Court of Appeals, docketed
as CA-G.R. SP No. 54322 entitled, First Corporation v. Hon. Jose R. Hernandez, Presiding Judge of Branch
158 of the Regional Trial Court of Pasig City and Mr. Eduardo Sacris. In a Decision6 dated 31 May 2001,
the Third Division of the Court of Appeals granted the Petition filed by the petitioner corporation and
issued a Writ of Certiorari, as a result of which, the Orders of the RTC of Pasig City dated 27 April 1999
and 21 July 19997 in Civil Case No. 66757 were set aside. The appellate court directed Judge Jose R.
Hernandez8 to dismiss the Complaint with prejudice and to deny the Motion in Intervention without
prejudice. The dispositive portion of the aforesaid Decision reads:

WHEREFORE, finding merit in the [P]etition, the Court issues the writ of certiorari and sets aside
the Orders dated 27 April 1999 and 21 July 1999 in Civil Case No. 66757. The respondent judge is
directed to dismiss the Complaint with prejudice and deny the Motion in Intervention without
prejudice. Resultantly, if they are so minded, the [herein] petitioner First Corporation may institute
an action in pursuit of its claims against [herein private respondent] Cesar A. Abillar; and [herein
private respondent] Eduardo Sacris may sue the [petitioner] First Corporation on his claims
embodied in his rejected Complaint in Intervention. 9

Based on the aforesaid Decision of the Court of Appeals, private respondent Sacris filed a Complaint for
Sum of Money with Damages before the RTC of Quezon City against the petitioner corporation, docketed
as Civil Case No. Q01-44599, to recover his alleged collectible amount of P1.8 million due from the
petitioner corporation. Petitioner corporation filed its Answer denying the material allegations stated in the
Complaint. Petitioner corporation denied having liability to private respondent Sacris, as it had no
knowledge of or consent to the purported transactions or dealings that private respondent Sacris may
have had with private respondent Abillar. Subsequently, petitioner corporation filed a Third-Party
Complaint against private respondent Abillar alleging that the investment/loan transactions of private
respondent Sacris, the basis of his cause of action against the petitioner corporation, were all entered into
by private respondent Abillar without the knowledge, consent, authority and/or approval of the petitioner
corporation or of the latter’s Board of Directors. The aforesaid transactions were not even ratified by the
petitioner corporation or by its Board of Directors. Private respondent Abillar filed his Answer to the said
Third-Party Complaint raising therein the same allegations found in the Complaint filed by private
respondent Sacris. Pre-trial ensued followed by the trial on the merits.

On 28 June 2004, the RTC of Quezon City rendered a Decision in Civil Case No. Q01-44599 in favor of the
private respondents. The decretal portion of which reads:
 WHEREFORE, premises considered, the court renders judgment in favor of [herein private
respondents] EDUARDO M. SACRIS and CESAR A. ABILLAR but against [herein petitioner] FIRST
CORPORATION, as follows:

1. Ordering [petitioner] corporation to pay the balance of P1,800,000.00 plus an interest of

twenty-four percent (24%) per annum computed from the time this action was filed until fully
paid;

2. Ordering [petitioner] corporation to pay [private respondent Abillar] P20,000.00 as and by way
of attorney’s fees;

3. Ordering [petitioner] corporation to pay [private respondent Sacris] P50,000.00 as and by way
of attorney’s fees; and

4. Ordering [petitioner] corporation to pay the cost of suit.10

Feeling aggrieved, the petitioner corporation appealed the above-quoted Decision of the court a quo to
the appellate court where it was docketed as CA-G.R. CV No. 84660. On 29 November 2005, the Court of
Appeals rendered a Decision dismissing the appeal filed by the petitioner corporation because it did not
find any reversible error in the Decision of the RTC of Quezon City dated 28 June 2004. The petitioner
corporation moved for the reconsideration of the said Decision but it was denied by the Court of Appeals
in its Resolution dated 14 February 2005 because the issues raised therein had already been passed upon
by the appellate court.

Hence, this Petition for Certiorari under Rule 65.

Petitioner corporation comes before this Court alleging grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the RTC of Quezon City in rendering its Decision dated 28 June 2004
in Civil Case No. Q01-44599, as affirmed by the Court of Appeals in its Decision and Resolution dated 29
November 2005 and 14 February 2006, respectively, in CA-G.R. CV No. 84660. Thus, petitioner
corporation now presents the following issues for this Court’s resolution:

I. PUBLIC RESPONDENTS COMMITTED GRAVE ABUSE OF DISCRETION AND ACTED WITHOUT

AND/OR IN EXCESS OF THEIR JURISDICTION IN HOLDING THAT PRIVATE RESPONDENT
[SACRIS’S] CLAIMS OF A PURPORTED LOAN ARE SUPPORTED BY PREPONDERANCE OF EVIDENCE.

II. PUBLIC RESPONDENTS COMMITTED GRAVE ABUSE OF DISCRETION AND ACTED CONTRARY TO
LAW AND EVIDENCE IN HOLDING THAT PETITIONER BENEFITED FROM THE PURPORTED LOAN
FROM PRIVATE RESPONDENT [SACRIS].

III. PUBLIC RESPONDENTS COMMITTED GRAVE ABUSE OF DISCRETION AND/OR ACTED WITHOUT
AND/OR IN EXCESS OF THEIR JURISDICTION IN NOT FINDING THAT PRIVATE RESPONDENT
ABILLAR WAS NOT AUTHORIZED BY PETITIONER TO BORROW MONEY FROM PRIVATE
REPSONDENT SACRIS.

IV. PUBLIC RESPONDENTS COMMITTED GRAVE ABUSE OF DISCRETION AND WITHOUT AND/OR IN
EXCESS OF JURISDICTION IN NOT AWARDING DAMAGES TO PETITIONER AND IN DISMISSING
THE THIRD-PARTY COMPLAINT FILED BY PETITIONER AGAINST [PRIVATE RESPONDENT] CESAR
ABILLAR.

In the Memorandum11 filed by the petitioner corporation, it avers that the RTC of Quezon City and the
appellate court erred in holding that private respondents’ claim of the existence of the purported loans
was supported by a preponderance of evidence, despite the fact that the pieces of documentary evidence
presented by the private respondents were tainted with irregularities. Thus, the RTC and the appellate
court committed grave abuse of discretion amounting to excess of their jurisdiction in giving credence to
these pieces of documentary evidence presented by the private respondents. The aforesaid pieces of
documentary evidence are the following: (1) the certifications and official receipts to prove petitioner
corporation’s indebtedness to private respondent Sacris; (2) Exhibits "G"-"FF," inclusive, consisting of
check vouchers which allegedly proved petitioner corporation’s loans from private respondent Sacris which
was subject to 2.5% interest; (3) deposit slips and official receipts, supposedly evidence of deposit
payments made by private respondent Abillar to the petitioner corporation; (4) Exhibit "GG," to show that
the amount of P150,000.00 given in the form of a loan was used by the petitioner corporation in paying
its employees’ 13th month pay; and (5) Exhibit "RR," which consists of a handwritten note to prove
petitioner corporation’s offer to settle amicably its account with private respondent Sacris.

Petitioner corporation further argues that the conclusion made by the RTC of Quezon City and the
appellate court that it benefited from the loans obtained from private respondent Sacris had no basis in
fact and in law. More so, it was grave abuse of discretion on the part of the RTC of Quezon City and the
Court of Appeals to conclude that the alleged loans were reflected in its financial statements. Petitioner
corporation points out that its financial statements covering the period 1992-1997 revealed that only its
financial statements for the years 1992 and 1993 reflected entries of "loans payable." The other financial
statements following the year 1993 no longer had any entries of outstanding loan due from the petitioner
corporation. Thus, the RTC of Quezon City and the appellate court had no basis for claiming that the
alleged loans from private respondent Sacris were reflected in its financial statements.

Also, petitioner corporation alleges that it was grave abuse of discretion for the RTC and the appellate
court to hold that private respondent Abillar was authorized by the petitioner corporation to borrow
money from private respondent Sacris, deliberately ignoring the provisions of the by-laws of petitioner
corporation which only authorized private respondent Abillar, as President, to act as its signatory of
negotiable instruments and contracts. The by-laws clearly authorized private respondent Abillar to
perform only the ministerial act of "signing," and never gave private respondent Abillar a blanket
authority to bind the petitioner corporation in any kind of contract, regardless of its nature and its legal
consequences or effects on the petitioner corporation and its stockholders.

Lastly, petitioner corporation contends that the RTC and the Court of Appeals likewise acted with grave
abuse of discretion in not awarding damages in its favor and in dismissing its Third-Party Complaint
against private respondent Abillar.

On the other hand, private respondents argue that the grounds enumerated by the petitioner corporation
for the allowance of its Petition for Certiorari before this Court clearly call for the review of the factual
findings of the RTC of Quezon City. Private respondents further avow that the petitioner corporation is
simply using the remedy of certiorari provided for under Rule 65 of the Revised Rules of Civil Procedure as
a substitute for an ordinary appeal. They claim that certiorari under Rule 65 of the aforesaid Rules cannot
be used for the review of the findings of fact and evidence. Neither is it the proper remedy to cure errors
in proceedings nor to correct erroneous conclusions of law or fact. Thus, private respondents maintain
that the petitioner corporation is merely using the remedy of certiorari as a delaying tool to prevent the
Decision of the RTC of Quezon City from immediately becoming final and executory.

Likewise, private respondents aver that for failure of the petitioner corporation to allege in its appeal
before the Court of Appeals that the RTC of Quezon City committed grave abuse of discretion, petitioner
corporation cannot now make the said allegation in its Petition before this Court so as to justify its
availment of the remedy of certiorari to annul the Decision of the RTC of Quezon City dated 28 June 2004.

The Petition is unmeritorious.

Petitioner corporation evidently availed itself of the wrong mode of appeal. Although petitioner corporation
ascribes grave abuse of discretion amounting to lack or excess of jurisdiction on the part of both the RTC
of Quezon City and the appellate court in rendering their respective Decisions, a closer look on the
grounds relied upon by the petitioner corporation in its present Petition for Certiorari will clearly reveal
that the petitioner corporation seeks a review of the factual findings and evidence of the instant case.

It is a well-entrenched rule that this Court is not a trier of facts. 12 This Court will not pass upon the
findings of fact of the trial court, especially if they have been affirmed on appeal by the appellate court. 13
Unless the case falls under the recognized exceptions, 14 the rule should not be disturbed.

In the case at bar, the findings of the RTC of Quezon City as well as the appellate court are properly
supported by evidence on record. Both courts found that the alleged loans extended to the petitioner
corporation by private respondent Sacris were reflected in the petitioner corporation’s financial
statements, particularly in the years 1992-1993, were contrary to the claim of petitioner corporation. The
said financial statements of the petitioner corporation were not the sole bases used by the RTC of Quezon
City and by the appellate court in its findings of liability against the petitioner corporation. The RTC of
Quezon City also took into consideration the pieces of documentary evidence 15 which likewise became the
grounds for its findings that indeed, private respondent Sacris had extended a loan to petitioner
corporation, and that the same was given to private respondent Abillar, and received by the petitioner
corporation. Those pieces of documentary evidence very well supported the claim of private respondent
Sacris that the petitioner corporation received money from him through its former President, private
respondent Abillar. Thus, petitioner corporation cannot claim that it never consented to the act of private
respondent Abillar of entering into a loan/investment transaction with private respondent Sacris, for there
are documents that would prove that the money was received by the petitioner corporation, and the latter
acknowledged receipt of said money. The same pieces of evidence likewise confirm the findings of the RTC
of Quezon City that the petitioner corporation benefited from the said transaction; therefore, it should be
held liable for the same amount of its unpaid obligation to private respondent Sacris. As the findings of
the RTC of Quezon City and the appellate court are supported by evidence, this Court finds no reason to
deviate from the heretofore cited rule.

It is a fundamental aphorism in law that a review of facts and evidence is not the province of the
extraordinary remedy of certiorari, which is extra ordinem - beyond the ambit of appeal.16 In certiorari
proceedings, judicial review does not go as far as to examine and assess the evidence of the parties and
to weigh the probative value thereof.17 It does not include an inquiry as to the correctness of the
evaluation of evidence.18 Any error committed in the evaluation of evidence is merely an error of
judgment that cannot be remedied by certiorari. An error of judgment is one which the court may commit
in the exercise of its jurisdiction. An error of jurisdiction is one where the act complained of was issued by
the court without or in excess of jurisdiction, or with grave abuse of discretion, which is tantamount to
lack or in excess of jurisdiction and which error is correctible only by the extraordinary writ of certiorari.
Certiorari will not be issued to cure errors of the trial court in its appreciation of the evidence of the
parties, or its conclusions anchored on the said findings and its conclusions of law. 19 It is not for this Court
to re-examine conflicting evidence, re-evaluate the credibility of the witnesses or substitute the findings of
fact of the court a quo.20

Since the issues raised by the petitioner corporation in its Petition for Certiorari are mainly factual, as it
would necessitate an examination and re-evaluation of the evidence on which the RTC of Quezon City and
the appellate court based their Decisions, the Petition should not be given due course. Thus, the remedy
of certiorari will not lie to annul or reverse the Decision of the RTC of Quezon City dated 28 June 2004, as
affirmed by the Court of Appeals in its Decision and Resolution dated 29 November 2005 and 14 February
2006, respectively.

Settled is the rule that the proper remedy from an adverse decision of the Court of Appeals is an appeal
under Rule 45 and not a Petition for Certiorari under Rule 65.21 Hence, petitioner corporation could have
raised the Court of Appeals Decision dated 29 November 2005 and Resolution dated 14 February 2006,
affirming the assailed Decision dated 28 June 2004 of the RTC of Quezon City, to this Court via an
ordinary appeal under Rule 45 of the 1997 Revised Rules of Civil Procedure. It should be emphasized that
the extraordinary remedy of certiorari will not lie when there are other remedies available to the
petitioner.22 Therefore, in availing itself of the extraordinary remedy of certiorari, the petitioner
corporation resorted to a wrong mode of appeal.

While it is true that this Court, in accordance with the liberal spirit which pervades the Rules of Court and
in the interest of justice, may treat a Petition for Certiorari as having been filed under Rule 45, more so if
the same was filed within the reglementary period for filing a Petition for Review,23 however, in the
present case, this Court finds no compelling reason to justify a liberal application of the rules, as this
Court did in the case of Delsan Transport Lines, Inc. v. Court of Appeals.24 In the said case, this Court
treated the Petition for Certiorari filed by the petitioner therein as having been filed under Rule 45,
because said Petition was filed within the 15-day reglementary period for filing a Petition for Review on
Certiorari. Petitioner’s counsel therein received the Court of Appeals Resolution denying their Motion for
Reconsideration on 26 October 1993 and filed the Petition for Certiorari on 8 November 1993, which was
within the 15-day reglementary period for filing a Petition for Review on Certiorari. It cannot therefore be
claimed that the Petition was used as a substitute for appeal after that remedy had been lost through the
fault of the petitioner.25 Conversely, such was not the situation in the present case.

In the instant case, petitioner corporation received on 23 February 2006 the Resolution of the appellate
court dated 14 February 2006 denying its Motion for Reconsideration. Upon receipt of the said Resolution,
the petitioner corporation had 15-days or until 10 March 2006 within which to file an appeal by way of
Petition for Review under Rule 45. Instead of doing so, they inexplicably allowed the 15-day period to
lapse, and then on 6 April 2006 or on the 42nd day from receipt of the Resolution denying their Motion for
Reconsideration, they filed this Petition for Certiorari under Rule 65 alleging grave abuse of discretion on
the part of both the RTC of Quezon City and the appellate court. Hence, this case cannot be treated as an
appeal under Rule 45, primarily because it was filed way beyond the 15-day reglementary period within
which to file the Petition for Review. Petitioner corporation will not be allowed to use the remedy of
certiorari as a substitute for the lapsed or lost remedy of appeal.26
Finally, even if this case will be treated as having been filed under Rule 45, still it will be dismissed for
utter lack of merit because this case does not fall under the recognized exceptions 27 wherein this Court is
authorized to resolve factual issues.

WHEREFORE, premises considered, the instant Petition is hereby DISMISSED.

G.R. No. 150025               July 23, 2008

SPS. NARCISO BARNACHEA and JULITA BARNACHEA (now heirs of deceased Julita Barnachea),
Petitioners,
vs.
HON. COURT OF APPEALS, HON. OSCAR C. HERRERA, JR., Presiding Judge, RTC Branch 20, Malolos,
Bulacan, HON., HORACIO T. VIOLA, Presiding Judge, MTC Pulilan, Bulacan, and SPS. AVELINO and
PRISCILLA IGNACIO, Respondents.

DECISION

BRION, J.:

Before us is the Petition for Review by Certiorari filed by the spouses Narciso and Julita Barnachea 1
(petitioners) against the spouses Avelino and Priscilla Ignacio (respondents), rooted in the ejectment
complaint the respondents filed against the petitioners before the Municipal Trial Court (MTC) of Pulilan,
Bulacan. The petition prays that we nullify the Decision2 of the Court of Appeals (CA) and its Resolution 3
denying the motion for reconsideration, and that we suspend the ejectment proceedings in light of a
pending action for quieting of title involving the disputed property.

BACKGROUND FACTS

The respondents filed their complaint for ejectment against the petitioners before the MTC on October 20,
1998. The subject matter of the complaint were lots titled in respondent Avelino Ignacio’s name
(Subdivision Lot 16 covered by TCT No. 86821, and Subdivision Lot 17 covered by TCT No. 86822), which
lots are adjacent to the property that the petitioners own and occupy. These properties were originally
part of a piece of land owned by a certain Luis Santos and subsequently inherited by his daughter
Purificacion Santos Imperial. The land was subdivided and transferred to tenant-farmers Santiago Isidro
(EP No. A-050545 with TCT No. T-188-EP) and Procopio de Guzman (EP No. 445440 with TCT No. T-185-
EP). The property that the petitioners own and occupy was derived from the land transferred to Santiago
Isidro. Respondent Ignacio’s properties were derived, on the other hand, from the land originally
transferred to Procopio de Guzman.

The complaint was dismissed on December 8, 1999, but was revived on April 5, 2000. The petitioners
received summons on April 13, 2000 and, instead of filing a new Answer, filed on April 18, 2000 a Motion
for Extension of Time to File Answer which the MTC denied on May 5, 2000. The petitioners responded to
this denial by filing a motion for reconsideration on May 23, 2000. Meanwhile, the respondents filed a
Motion for the Issuance of a Writ of Execution dated May 24, 2000, which the petitioners received on May
26, 2000.

To avert the implementation of the writ of execution, the petitioners filed a Notice of Appeal. The MTC
issued a subpoena dated June 5, 2000 setting the hearing on the petitioners’ Motion for Reconsideration
and the respondents’ Motion for Issuance of Writ of Execution on June 19, 2000. The petitioners
subsequently filed a Compliance that prayed, among others, that the pending resolution on the incident
and the Notice of Appeal be deemed to have been filed ex abundanti cautela. The respondents, for their
part, filed a Manifestation and Motion praying, among others, that the petitioner’s Motion for
Reconsideration of the May 5, 2000 Order be denied for being moot and academic.

On July 21, 2000, the MTC issued an order declaring the petitioners’ Motion for Reconsideration
abandoned because of the Notice of Appeal they previously filed. Thereafter, the MTC forwarded the entire
record of Civil Case No. 818 to the Regional Trial Court, Branch 20 (RTC Branch 20), Malolos, Bulacan. On
August 24, 2000, petitioners submitted their Appeal Memorandum to the RTC Branch 20 which affirmed
the MTC decision on September 20, 2000.

On October 5, 2000, the petitioner Julita's sister, Leticia, representing herself to be the sole owner of EP
No. A-050545 (TCT No. T-188-EP), filed a Petition for Quieting of Title with the Regional Trial Court,
Branch 19 (RTC Branch 19), Malolos, Bulacan, docketed as Civil Case No. 694-M-2000. On October 9,
2000, prior to their receipt of the RTC Branch 20’s September 20, 2000 decision, the petitioners filed an
Urgent Motion for the Suspension of Proceedings (referred to for purposes of this decision as the urgent
motion).

RTC Branch 20 denied on October 17, 2000 the petitioners’ urgent motion and their subsequent Motion for
Reconsideration. The petitioners brought the denials to the CA via a petition for certiorari under Rule 65 of
the Rules of Court on the issue of "whether the pendency of an action involving the issue of ownership is
sufficient basis for [the] suspension of an ejectment proceeding between the same parties and relating to
the same subject matter".

THE CA’S DECISION

The CA denied the petition and the petitioners' subsequent motion for reconsideration, essentially on the
grounds that (1) the issue in an ejectment suit is limited to the physical possession of real property and is
separate and distinct from the issue of ownership and possession de jure that either party may set forth
in his or her pleading; (2) the pendency of an action for reconveyance of title over the same property or
for annulment of deed of sale does not divest the MTC of its jurisdiction to try the forcible entry or
unlawful detainer case before it, and that ejectment actions generally cannot be suspended pending the
resolution of a case for quieting of title between the same parties over the same subject property; and (3)
the case does not fall under the exception provided by the case of Amagan v. Marayag 4, where the Court
allowed the suspension of ejectment proceedings because of strong reasons of equity applicable to the
case – the demolition of the petitioner’s house unless the proceedings would be suspended. The CA ruled
that the petitioners’ reliance on Amagan was inappropriate because the said case only applies to unlawful
detainer actions while the petitioners’ ejectment suit is an action for forcible entry. To the CA, the initial
tolerance on the part of the private respondents did not convert the nature of their ejectment suit from
forcible entry into unlawful detainer, following the reasoning this Court applied in Munoz v. Court of
Appeals.5

ASSIGMENT OF ERRORS

The petitioners impute the following error to the CA:

[T]he Honorable Court of Appeals erred when it ruled that the said ejectment proceeding was not a suit
for illegal detainer but one of forcible entry, thus, denied application to the exceptional rule on suspension
of ejectment proceedings, at any stage thereof, until the action on ownership is finally settled. 6

From this general assignment of error, the petitioners submitted in their memorandum the following
specific issues for our resolution:

1) whether or not the ejectment case filed by the respondents against petitioners with the MTC of
Pulilan is for unlawful detainer or for forcible entry;

2) whether the MTC of Pulilan had validly acquired and exercised jurisdiction over the ejectment
case considering that the complaint was filed beyond one year from the demand to vacate the
subject premises; and

3) whether or not the ejectment proceedings should be suspended at any stage until the action on
ownership of the disputed portion of the subject property is finally settled.

OUR RULING

We find the petition without merit.

1. Nature of the Action before the MTC.

The best indicator of what the plaintiff in an ejectment case intends with respect to the nature of his or
her complaint can be found in the complaint itself. In this case, the complaint states:7

"That plaintiffs are the registered owners in fee simple of several residential lots identified as lots 16 and
17 covered by Certificate of Title Nos. 86821 and 86822 issued in the name of the spouses by the
Register of Deeds of Bulacan, with a total aggregate area of 254 square meters situated at Cutcut, Pulilan,
Bulacan. Copy of the said titles are hereto attached and marked as Annex "A" and "A-1"

"That in a portion of the lots 16 and 17, a portion of the house of the defendants was erected and built
thus usurping the said portion and this was made known to the defendants when the plaintiffs caused the
relocation of the subject lots, however, considering that the latter were not yet in need of that portion,
they allowed the former to stay on the portion by tolerance;

"That last July 1998, when the plaintiffs were in the process of fencing the boundary of their lots, to their
surprise, they were not allowed by the defendants to extend the fence up to the portions they illegally
occupied;

"That despite the advice given to them by several Geodetic Engineers commissioned by both the plaintiffs
and the herein defendants, for them to give way and allow the plaintiffs to fence their lot, same proved
futile as they stubbornly refused to surrender possession of the subject portion;

The actions for forcible entry and unlawful detainer are similar because they are both summary actions
where the issue is purely physical possession.8 Other than these commonalities, however, they possess
dissimilarities that are clear, distinct, and well established in law.9

In forcible entry, (1) the plaintiff must prove that he was in prior physical possession of the property until
he was deprived of possession by the defendant; (2) the defendant secures possession of the disputed
property from the plaintiff by means of force, intimidation, threat, strategy or stealth; hence, his
possession is unlawful from the beginning; (3) the law does not require a previous demand by the plaintiff
for the defendant to vacate the premises; and (4) the action can be brought only within one-year from
the date the defendant actually and illegally entered the property.10

In marked contrast, unlawful detainer is attended by the following features: (1) prior possession of the
property by the plaintiff is not necessary; (2) possession of the property by the defendant at the start is
legal but the possession becomes illegal by reason of the termination of his right to possession based on
his or her contract or other arrangement with the plaintiff; (3) the plaintiff is required by law to make a
demand as a jurisdictional requirement; and (4) the one-year period to bring the complaint is counted
from the date of the plaintiff’s last demand on the defendant. 11

Under these standards, we do not hesitate to declare the Court of Appeals in error when it held that the
present case involves forcible entry rather than unlawful detainer. A plain reading of the complaint shows
the respondents’ positions that the petitioners were in prior possession of the disputed property; that the
respondents allowed them to occupy the disputed property by tolerance; that the respondents eventually
made a demand that the petitioners vacate the property (on August 26, 1998, which demand the
petitioners received on August 31, 1998); and that the petitioners refused to vacate the property in light
of the defenses they presented. Separately from the complaint, the respondents characterized the action
they filed against the petitioners in the MTC as an unlawful detainer when they stated in their
memorandum that "as alleged in the complaint, what was filed by the respondents [was] an ejectment
suit for unlawful detainer."12

A critical point for us in arriving at our conclusion is the complete absence of any allegation of force,
intimidation, strategy or stealth in the complaint with respect to the petitioners’ possession of the
respondents’ property. While admittedly no express contract existed between the parties regarding the
petitioners’ possession, the absence does not signify an illegality in the entry nor an entry by force,
intimidation, strategy or stealth that would characterize the entry as forcible. It has been held that a
person who occupies land of another at the latter’s tolerance or permission, without any contract between
them, is necessarily bound by an implied promise that he will vacate upon demand, failing which a
summary action for ejectment is the proper remedy. The status of the defendant is analogous to that of a
lessee or tenant whose terms has expired but whose occupancy continues by tolerance of the owner. 13

To be sure, we are aware of the Munoz v. Court of Appeals 14 ruling that the CA relied upon to reach the
conclusion that the present case involves forcible entry, not unlawful detainer. What the CA apparently
misread in Munoz was the allegation of stealth in the complaint; anchored on this finding, the Court
concluded that the defendant’s possession was illegal from the beginning so that there could be no
possession by tolerance. The allegation of stealth, of course, is not present in the present case. On the
contrary, tolerance was alleged in the ejectment complaint itself. Thus, there is no reason for the Munoz
ruling to apply to the present case; there is no basis nor occasion to conclude that the respondents filed a
forcible entry case.
2. The Jurisdictional Issue –
Was the Ejectment Complaint
Seasonably Filed?

We point out at the outset that what the petitioners directly appealed to this Court is the appellate court’s
affirmation of the RTC’s refusal to suspend the ejectment proceedings based on the quieting of title case
the petitioners cited. Hence, we are not reviewing the merits of the main ejectment case, particularly the
question of the MTC’s jurisdiction, as these aspects of the case were not appealed to us. If we touch the
jurisdictional aspect of the case at all, it is only for purposes of fully responding to the parties’ arguments.

The petitioners’ jurisdictional argument cannot succeed as the respondents’ ejectment complaint was filed
within the one-year period for bringing an action for unlawful detainer or forcible entry that Section 1,
Rule 70 of the Rules of Court requires. Section 1 specifically states:

Section 1. Who may institute proceedings, and when.

Subject to the provisions of the next succeeding section, a person deprived of the possession of any land
or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person
against whom the possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any contract, express or implied, or the legal
representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any time within
one (1) year after such unlawful deprivation or withholding of possession, bring an action in the proper
Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or
any person or persons claiming under them, for the restitution of such possession, together with damages
and costs.

On the basis of this provision, the petitioners argue that the respondents’ cause of action – whether for
forcible entry or for unlawful detainer – had prescribed when the ejectment complaint was filed on April 5,
2000. They point out that the last demand letter (the reckoning date for unlawful detainer 15) was dated
Aug. 26, 1998 and was received by the petitioners on August 31, 1998; the complaint was only filed on
April 5, 2000 or more than 1 year after August 31, 1998. On the other hand, if the action had been for
forcible entry, the prescriptive period commenced on the discovery of the usurpation and the computation
period would have commenced either during the relocation survey of the lots or in July 1998 when the
respondents were prevented from fencing the disputed property.

The one-year period within which to commence an ejectment proceeding is a prescriptive period as well
as a jurisdictional requirement. Hence, Article 1155 of the Civil Code on the manner of reckoning the
prescriptive period must necessarily come into play. Under this Article, the filing of a complaint in court
interrupts the running of prescription of actions. As an action for unlawful detainer, the one-year
prescription period started running after August 31, 1998 – the date of receipt of the respondents’
demand letter. The period ran for almost two months until it was interrupted on October 20, 1998 when
the respondents filed their ejectment complaint. This complaint, however, was dismissed on December 8,
1999. Upon this dismissal, the prescriptive period again began to run for about four months when another
interruption intervened – the revival of the complaint on April 5, 2000. Evidently, under these undisputed
facts, the period when the prescriptive period effectively ran does not add up to the one-year prescriptive
period that would jurisdictionally bar the ejectment case.

3. Suspension of the Ejectment

Proceedings until Resolution
of the Ownership Issue.

The issue in an unlawful detainer case is limited to physical possession. When a claim of ownership is used
as a basis for de facto possession or to assert a better possessory right, the court hearing the case may
provisionally rule on the issue of ownership. As a rule, however, a pending civil action involving ownership
of the same property does not justify the suspension of the ejectment proceedings. Only in rare cases has
this Court allowed a suspension of the ejectment proceedings and one of these is in the case of Amagan
v. Marayag16 that the petitioners cite. To quote from Amagan –

[i]ndisputably, the execution of the MCTC Decision would have resulted in the demolition of the house
subject of the ejectment suit; thus, by parity of reasoning, considerations of equity require suspension of
the ejectment proceedings. xxx [L]ike Vda. de Legaspi, the respondent’s suit is one of unlawful detainer
and not of forcible entry, and most certainly, the ejectment of petitioners would mean a demolition of
their house, a matter that is likely to create "confusion, disturbance, inconvenience and expenses"
mentioned in the said exceptional case.

Necessarily, the affirmance of the MCTC Decision would cause the respondent to go through the whole
gamut of enforcing it by physically removing the petitioners from the premises they claim to have been
occupying since 1937. (Respondent is claiming ownership only of the land, not of the house) Needlessly,
the litigants as well as the courts will be wasting much time and effort by proceeding at a stage wherein
the outcome is at best temporary, but the result of enforcement is permanent, unjust and probably
irreparable.17

However, we do not find these same circumstances present in this case for the reasons we shall discuss in
detail below.

First. In Amagan, the party refusing to vacate the disputed premises (or the deforciant in the action for
unlawful detainer) was the same party seeking to quiet his title. In the present case, the petitioners are
not parties to the civil action (for quieting of title) whose result they seek to await; the plaintiff in the
quieting of title case is Leticia, the petitioner Julita’s sister. No proof whatsoever was offered to show that
petitioner Julita is asserting her own title to the property; there is only the allegation that Leticia was
appointed as the representative of Julita and the other heirs of Isidro in their various recourses at law to
vindicate their landowners’ rights.18 The respondents in fact actively disputed petitioner Julita’s
identification with the quieting of title case in their Comment since Leticia claimed to be the sole owner of
TCT No. T-188-EP in her action to quiet title. The respondents also pointed to the document entitled
"Kasulatan ng Pagmamana ng Lupa sa Labas ng Hukuman na May Pagtalikod sa Bahagi" executed on May
27, 1995, showing that Julita had relinquished her share over TCT No. T-188-EP in favor of her sister
Leticia. A desperation argument the petitioners advanced in their Memorandum is that the Kasulatan was
only executed "pursuant to the agrarian reform policy proscribing the parceling of the awarded
landholding into smaller units to preserve its viability".19 In other words, the petitioners are disavowing,
for purposes of this case, the representation they made in completing their submission before the
agrarian reform authorities. We cannot of course recognize this line of argument as justification for the
suspension of the ejectment proceedings as the petitioners are bound by their representations before the
agrarian reform authorities and cannot simply turn their back on these representations as their
convenience requires. No less decisive against the petitioners’ argument for suspension is the decision
itself of RTC Branch 19 that the respondents attached to their Comment. This decision shows that Civil
Case No. 694-M-2000, instead of being a case for quieting of title, is in fact a mere boundary dispute. 20

Second. In Amagan, the MCTC decision involved the demolition of the petitioners’ house – a result that
this Court found to be "permanent, unjust and probably irreparable"; in the present case, only a portion of
the petitioners’ house is apparently affected as the petitioners occupy the lot adjoining the disputed
property. Significantly, the height, width and breadth of the portion of the house that would be affected
by the execution of the RTC Branch 20 decision does not appear anywhere in the records, thus,
unavoidably inviting suspicion that the potential damage to the petitioners is not substantial. More
important than the fact of omission is its implication; the omission constitutes a missing link in the chain
of equitable reasons for suspension that the petitioners wish to establish. Thus, the equitable
consideration that drove us to rule as we did in Amagan does not obtain in the present case.

In the absence of a concrete showing of compelling equitable reasons at least comparable and under
circumstances analogous to Amagan, we cannot override the established rule that a pending civil action
for ownership shall not ipso facto suspend an ejectment proceeding. Additionally, to allow a suspension on
the basis of the reasons the petitioners presented in this case would create the dangerous precedent of
allowing an ejectment suit to be suspended by an action filed in another court by parties who are not
involved or affected by the ejectment suit.

WHEREFORE, premises considered, we hereby DISMISS the petition for lack of merit.

G.R. No. 162874               November 23, 2007

LUCIO S. COLLADO, Petitioner,

vs.
HEIRS OF ALEJANDRO TRIUNFANTE, SR., represented by ALEJANDRO TRIUNFANTE, JR., Respondents.

DECISION

NACHURA, J.:
Before the Court is a petition for review on certiorari of the Decision dated January 21, 2003 and the
Resolution dated October 27, 2003 of the Court of Appeals (CA) in CA-G.R. SP No. 68541.

On July 15, 1998, the heirs of Alejandro Triunfante, Sr. (The Triunfantes) filed a case for forcible entry
and damages with application for a writ of preliminary mandatory injunction and temporary restraining
order against Guillermo Telan and Bruno Telan (The Telans) before the Municipal Trial Court (MTC),
Branch 2, Tuguegarao, Cagayan. The case was docketed as Civil Case No. 2011. The Triunfantes sought
to recover material possession of Cadastral Lot No. 3192-A, consisting of 7,852.50 square meters, located
at Capatan, Tuguegarao, Cagayan.

The Triunfantes claimed that their father Alejandro Triunfante, Sr. (Alejandro) is the owner of the subject
land, having acquired the same by virtue of a Deed of Absolute Sale of Unregistered Land executed on
January 30, 1946; that from the date of sale, Alejandro and his family cultivated the land, introduced
improvements thereon and their possession of the land was continuous and peaceful; that in May 1998,
the Telans, through force and intimidation, illegally entered the subject property, prohibited the
Triunfantes from cultivating the same, constructed fences made of barbed wire, and prohibited them and
their representatives from entering the property.

The Telans claimed that their father, Pedro, is the owner of the land; that during Pedro’s lifetime, he was
in open, public, continuous and undisturbed possession of the land until his death in 1992, when his heirs
took possession of the land and remained in possession thereof up to the present.

Both contending parties claimed ownership over the land, asserting acquisition through intestate
succession.

The MTC made a provisional declaration of the Triunfantes’ ownership over the land. On November 26,
1998, the MTC rendered a Decision,1 the dispositive portion of which reads:

Wherefore, judgment is hereby rendered as follows:

a) Ordering the defendants and any or all persons claiming right or authority under them to vacate
the possession of the subject land;

b) Ordering the defendants to pay jointly and severally the plaintiffs the following:

1) P10,000.00 per cropping season for the use and occupation of the premises commencing
the first week of May 1998 until the possession of the land in question is restored to the
plaintiffs;

2) P10,000.00 as attorney’s fees;

c) Ordering the defendants to pay the costs of this suit.

SO ORDERED.2

For failure of the Telans to file an appeal on time, the MTC Decision became final and executory.3 On
January 6, 2000, the MTC issued a Writ of Execution. However, the judgment was not executed because a
certain Lucio Collado (Collado) had built a perimeter fence of concrete hollow blocks on the land. 4 On
August 3, 2000, the MTC issued an Alias Writ of Execution, 5 directing the Provincial Sheriff, or any of his
deputies, to execute the November 26, 1998 MTC Decision.

On October 18, 2000, the Triunfantes filed a Motion for the Issuance of a Writ of Demolition for Collado’s
failure to comply with the MTC Decision. On December 5, 2000, the MTC issued a Writ of Demolition, 6
commanding the Sheriff of Cagayan, or any of his deputies, to demolish the improvements erected on the
land.

On April 3, 2001, Collado filed a civil case for damages with prayer for issuance of writ of preliminary
mandatory injunction against the Triunfantes and the Office of the Ex-Officio Sheriff, through Sheriffs
Cipriano Verbo, Jr. and Silvino Malana, Jr. The case was docketed as Civil Case No. 5818 before the
Regional Trial Court (RTC), Branch 3, Tuguegarao City. Collado claims that his property right was violated
when the Triunfantes and the Sheriffs, with threat, violence and intimidation, entered the enclosed
premises of the property.7 Collado asserts that he is the absolute owner and actual occupant of the land
by virtue of a Deed of Absolute Sale executed between him and the Telans on June 19, 1998, involving
5,000 square meters of the disputed property, and he bought the other 2,000 square meters from
Restituto Allam, who acquired the same from the heirs of Pedro Telan by way of waiver of rights on
January 11, 2000.8 He maintains that although the property is still unregistered, he has been in open,
public, notorious, uninterrupted and continuous possession of the property in the concept of an owner
through his predecessor-in-interest for a period of not less than sixty (60) years and up to the present. 9

On June 25, 2001, the RTC issued an Order10 dismissing the case with prejudice. The RTC declared that
Collado violated the rule on non-forum shopping when he filed the case for damages. It was proven that
there was a pending administrative protest before the Department of Environment and Natural Resources
(DENR) involving the same parties, same subject matter, same issues, and the final outcome of the said
administrative case is definitive of the outcome of the case for damages. The RTC further ruled that:

This Court could not give credence to plaintiff Collado’s arguments through his counsel that "There was a
willful and unlawful invasion of plaintiff’s property" on March 22, 2001. As gleaned from the records, the
property herein was executed by a lawful order of the Municipal Trial Court including a lawful "Writ of
Demolition." There was an implementation of a lawful Court Order where the strong arm of the law has to
take its course. Otherwise, a contempt Order can be issued. If the plaintiff herein was not a party as
alleged, then he can be considered as a "successor-in-interest" of the real parties to the civil cases at the
Municipal Trial Court, being a buyer of said property under litigation.1âwphi1

If there are no identities of causes of action in these cases pending, then the plaintiff must consider the
primordial aim why these cases were filed one over another (sic). Is it not to gain and recover the same
property from the defendants? If so, then all these cases have the same cause of action, to recover real
property.11

Collado filed a Motion for Reconsideration of the aforesaid Decision. On September 28, 2001, the RTC
issued an Order12 denying the same.

Aggrieved, Collado filed a petition for certiorari before the Court of Appeals (CA) contending the following:

a) The action for damages under Civil Case No. 5818 is entirely independent, separate and distinct
from Civil Case No. 2001 which is an action for forcible entry. Hence, the principles of litis
pendencia, res judicata and forum shopping are not applicable;13

b) There is no need for exhaustion of administrative remedies since the issues involved in the
Protest before the DENR and the civil case for damages in the RTC are entirely separate and
distinct;14

c) The forcible entry case did not resolve the issue of ownership;15 and

d) The acts complained of in the case for damages before the RTC are wrongful, even though made
pursuant to a court order.16

On January 21, 2003, the CA rendered a Decision17 in favor of the Triunfantes. The CA declared that the
RTC did not commit grave abuse of discretion in dismissing the civil case for damages, viz.:

Under Section 19, Rule 70 of the 1997 Rules on Civil Procedure, "(i)f judgment is rendered against the
defendant, execution shall issue immediately, unless an appeal has been perfected and the defendant to
stay execution files a sufficient supersedeas bond, approved by the Municipal Trial Court and executed in
favor of the plaintiff x x x. In the absence of a contract, he shall deposit with the Regional Trial Court the
reasonable value of the use and occupation of the premises for the preceding month or period at the rate
determined by the judgment of the lower court on or before the tenth day of each succeeding month or
period. x x x."

To stay the immediate execution of judgment in ejectment proceedings, the above-quoted provision
require that the defendant:

1. perfect his appeal,

2. file a supersedeas bond, and

 3. periodically deposit the rentals falling due during the pendency of the appeal.

The original defendants in Civil Case No. 2011, the predecessors-in-interest of petitioner, did nothing of
the above. Since immediate execution shall issue so long as the above requirements are not complied
with, the execution being a mandatory and ministerial duty of the court, the more should the judgment be
executed should the same become final and executory. A writ of execution and later, a demolition order,
were issued by the court. The judgment of the Municipal Court in an ejectment case is res judicata as to
the issue of possession de facto. The possession and ownership of a parcel of land may be held by
different persons. The winning party is entitled to the execution of the Municipal Court’s final judgment as
to possession. The officer charged with the execution of judgment in the absence of restraining order is
enjoined to act with considerable dispatch so as not to unduly delay the administration of justice. The
party which prevails after going through the full course of litigation is entitled to a writ of execution and to
the energetic service and enforcement thereof upon the losing party. The acts complained of which
transpired on 22 March 2001 were merely in pursuance of a lawful order of the court. Petitioner cannot
claim exception thereto. A judgment of eviction can be executed against a third party who has derived his
right of possession of the premises from the defendant, particularly when such right was acquired only
after the filing of the ejectment suit.

In the instant case, 5,000 square meters of the disputed lot were acquired from the heirs of Pedro S.
Telan on 19 June 1998, and 2,000 square meters from Restituto Allam on 26 January 2000, both by way
of absolute sale. While the first acquisition was made barely a month before the complaint for ejectment
was filed before Branch 02, MTC of Tuguegarao City, the latter acquisition was made after the Decision in
Civil Case No. 2011 was rendered and the corresponding writ of execution therefore, issued. Moreover,
the Sheriff’s Report anent the execution of the order was dated 06 April 2001, made after the case before
the court a quo was filed on 03 April 2001. A case in which an execution has been issued is thus regarded
as still pending so that all proceedings on the execution are proceedings in the suit. There is no question
that the court which rendered the judgment has a general supervisory control over its process of
execution, and this power carries with it the right to determine every question of fact and law which may
be involved in the execution. The jurisdiction to correct errors and mistakes in the execution properly
belongs to the court which issued the execution. The Court should first be given the opportunity to correct
the errors of its ministerial officers and to control its own process. This Court is thus of the considered
opinion that the action for damages by petitioner should have been filed before Branch 02, MTC of
Tuguegarao City, and not before the court a quo. This being the case, the court a quo has no jurisdiction
over the case filed before it.

The CA further elucidated that:

In the case below, the eviction of petitioner as the vendee of the original defendants was pursuant to the
fact that he derived his possession of the premises from them and because the judgment of the MTC in
the ejectment case is res judicata as to the issue of possession de facto. There arises therefore the
malady that though the issue of ownership may have been only provisionally determined before the
inferior court, its judgment as to possession de facto became final and is res judicata due to the failure of
the original defendants to perfect their appeal on time or to pursue other remedies to recover the same.
An independent complaint for damages, actual, punitive, exemplary and moral, being consequent to the
execution of the judgment in Civil Case No. 2011 should therefore be threshed out before the court which
ordered the execution of the judgment, the appeal therefrom having been foreclosed and the petition for
certiorari therefore having been futile. An action against the plaintiffs would lie for the recovery of
ownership thereof or for the quieting of title. However, the issue of damages arising out of the
implementation of the order of execution and demolition remains within the jurisdiction of Branch 02, MTC
of Tuguegarao City.19

The Triunfantes filed a Motion for Reconsideration because the fallo of the CA Decision conflicts with the
racio in the body of the Decision.20 On October 27, 2003, the CA granted the motion of the Triunfantes
and, accordingly, amended the dispositive portion of the Decision dated January 21, 2003, viz.:

Foregoing premises considered, the instant petition is hereby DENIED. Branch 3, RTC of Tuguegarao City
is hereby declared without jurisdiction over Civil Case No. 5818.

SO ORDERED.

On March 15, 2004, Collado filed the present petition for review on certiorari giving these lone assignment
of error:
WHETHER OR NOT A SEPARATE AND INDEPENDENT ACTION FOR DAMAGES ARISING OUT OF THE
IMPLEMENTATION OF A WRIT OF EXECUTION IN AN EJECTMENT CASE IS NOT COGNIZABLE BY THE
REGIONAL TRIAL COURT.21

The petition is bereft of merit. An independent action for damages based on the implementation of a writ
of execution cannot be sustained.

The court which rendered the judgment has control over the processes of execution. The power carries
with it the right to determine every question of fact and law which may be involved in the execution. 22
Thus, the MTC which issued the Decision in the forcible entry case retains general jurisdiction over
matters arising from the execution of the said Decision. If the officers who executed the writ of execution
committed any irregularity or exceeded their authority in the enforcement of the writ, the proper recourse
of Collado would have been to file a motion with or an application for relief from the same court which
issued the Decision, not from any other court.

It should also be borne in mind that the action for damages arose from a lawful order of a competent
court which had become final and executory. The writ of execution and the writ of demolitions issued by
the MTC to enforce its Decision in the forcible entry case are proper in the ordinary course of law. Collado
cannot claim that, not being a party to the action in the forcible entry case, his rights should not be
prejudiced by the Decision therein. As adjudged by the RTC and sustained by the CA, Collado bought the
property while it was still under litigation. He is the successor-in-interest of one of the real parties in the
ejectment case. He acquired only the interest and stepped into the shoes of his predecessor who was a
party. As such, he is bound by the ruling therein.

The damages sustained by Collado as a result of the enforcement of the writ of execution should have
been raised as a claim in an appeal from the Decision of the MTC. However, due to inadvertence, his
predecessor-in-interest filed a belated appeal which was properly denied.

A perusal of the allegations of Collado in the complaint for damages with the RTC reveals that what he
wanted was for the RTC to nullify the Decision of the MTC and declare him as the owner of the property.
Since his aim is to recover possession and ultimately ownership of the property, Collado should have filed
the appropriate remedy under the law for the recovery of ownership of real property. The MTC ruled only
on the issue of ownership in order to ascertain the issue of possession and its ruling is only provisional as
to the issue of ownership. Collado’s action for damages is inappropriate, because the basis for the suit is
his alleged ownership of the property. That issue should first be resolved before a claim for damages can
be sustained.

WHEREFORE, in view of the foregoing, the instant petition is DENIED for lack of merit.

G.R. No. 168350             January 31, 2008

PERCIVAL A. CENDAÑA, petitioner,

vs.
CIRILO A. AVILA, respondent.

RESOLUTION

QUISUMBING, J.:

For review on certiorari is the Resolution1 dated June 2, 2005 of the Court of Appeals in CA-G.R. SP No.
89750, which dismissed the petition for certiorari with prayer for the issuance of a temporary restraining
order and/or a writ of preliminary injunction filed by herein petitioner.

The facts are undisputed.

On January 7, 2003, herein respondent, Cirilo A. Avila, joined the Land Transportation Office (LTO) as
Director II of its Law Enforcement Service. While in office, Avila was conferred a Certificate of Career
Service Executive Eligibility by the Civil Service Commission.

On January 11, 2005, petitioner Percival A. Cendaña was appointed to the same position by President
Gloria Macapagal-Arroyo. Cendaña took his oath of office and assumed the duties of Director II of the
LTO’s Law Enforcement Service. The LTO immediately issued an order directing Avila to formally turn over
his post to Cendaña. The LTO likewise issued a memorandum to all LTO officials announcing the new
appointment.

Aggrieved, Avila filed in the Regional Trial Court (RTC) of Quezon City, Branch 222 a petition 2 for quo
warranto with a prayer for the issuance of a writ of preliminary injunction. The RTC granted the injunctive
relief applied for, thus:

WHEREFORE, premises considered, let a Writ of Preliminary Injunction issue directing respondent
Percival A. Cendaña, and all persons acting for and his own behalf, to immediately cease and desist
from taking over and assuming the functions and/or duties and responsibilities of the Office of the
Director II for Law Enforcement Service of the Land Transportation Office or from otherwise
exercising any and/or all acts exclusively to petitioner and from further disturbing or interfering
with his functions as such until further orders from this Court and/or unless restrained by higher
judicial authority, upon the filing of a bond in the amount of FIVE HUNDRED THOUSAND PESOS
(P500,000.00) executed in favor of the said respondent to answer for all damages to be sustained
by the latter by reason of the injunction, should the Court finally determine that the petitioner is
not entitled thereto.

Let the writ and a copy of this Order be served on the defendant by Sheriff IV Neri G. Loy of this
Branch, at petitioner’s expense.

SO ORDERED.3

Cendaña filed in the Court of Appeals a petition for certiorari with a prayer for the issuance of a temporary
restraining order and/or a writ of preliminary injunction. The appellate court dismissed the said petition,
to wit:

WHEREFORE, for being procedurally flawed, at the very least, this petition for certiorari, with prayer for
the issuance of a temporary restraining order and/or writ of preliminary injunction, must be as it hereby
is, DENIED DUE COURSE and consequently DISMISSED.

Needless to say, since the prayer for the issuance of a temporary restraining order and/or writ of
preliminary injunction is merely an adjunct to the main suit, the same must be pro tanto DENIED.

SO ORDERED.4

Undaunted, petitioner Cendaña then filed the instant petition for review on certiorari anchored on the
following grounds:

I.

THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN DISMISSING THE PETITION BEFORE
IT ON THE GROUNDS THAT (1) PETITIONER DID NOT STATE THE "ACTUAL" ADDRESSES OF THE
PARTIES; (2) PETITIONER DID NOT MANIFEST HIS WILLINGNESS TO POST BOND IN HIS PRAYER
FOR A TEMPORARY RESTRAINING ORDER AND WRIT OF PRELIMINARY INJUNCTION; AND (3)
PETITIONER DID NOT FILE A MOTION FOR RECONSIDERATION BEFORE FILING THE PETITION FOR
CERTIORARI UNDER RULE 65 OF THE RULES OF COURT.

II.

THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN DISMISSING THE PETITION BEFORE
IT IN COMPLETE DISREGARD OF THE RULE THAT CASES SHOULD BE DETERMINED ON THE
MERITS, NOT ON TECHNICALITIES.5

Petitioner contends there was no need to state his address in the petition for certiorari because notice to
his counsel, the Office of the Solicitor General, is notice to him. Petitioner argues, his failure to manifest
willingness to post a bond in his prayer for the issuance of a temporary restraining order and/or a writ of
preliminary injunction should not adversely affect the merits of his petition. Petitioner stresses, immediate
recourse to the Court of Appeals through a petition for certiorari is justified because the questioned RTC
Order is a patent nullity. Petitioner insists that the appellate court erred in dismissing the petition for
certiorari on a technicality instead of ruling on its merits.
Respondent, however, counters that the subject Resolution of the appellate court, which dismissed the
petition for certiorari, cannot be the subject of a petition for review. Respondent maintains the petition for
certiorari filed in the Court of Appeals and the instant petition for review are both frivolous and intended
merely for delay. Respondent stresses that the addresses of the parties must be stated in initiatory
pleadings to determine venue and jurisdiction. Respondent points out that petitioner failed to prove the
alleged patent nullity of the RTC Order to justify immediate recourse to a petition for certiorari.

After a thorough consideration of submissions by the parties, we are in agreement that the petition is
without merit.

Under Section 3, Rule 46 in relation to Section 1, Rule 65 of the Rules of Court, a petition for certiorari
shall contain the actual addresses of all the petitioners and the respondents, thus:

SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. – The petition
shall contain the full names and actual addresses of all the petitioners and respondents, a concise
statement of the matters involved, the factual background of the case, and the grounds relied
upon for the relief prayed for.

xxxx

It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the
respondent with the original copy intended for the court indicated as such by the petitioner, and
shall be accompanied by a clearly legible duplicate original or certified true copy of the judgment,
order, resolution, or ruling subject thereof, such material portions of the record as are referred to
therein, and other documents relevant or pertinent thereto. The certification shall be accomplished
by the proper clerk of court or by his duly authorized representative, or by the proper officer of the
court, tribunal, agency or office involved or by his duly authorized representative. The other
requisite number of copies of the petition shall be accompanied by clearly legible plain copies of all
documents attached to the original.

The petitioner shall also submit together with the petition a sworn certification that he has not
theretofore commenced any other action involving the same issues in the Supreme Court, the
Court of Appeals or different divisions thereof, or any other tribunal or agency; if there is such
other action or proceeding, he must state the status of the same; and if he should thereafter learn
that a similar action or proceeding has been filed or is pending before the Supreme Court, the
Court of Appeals, or different divisions thereof, or any other tribunal or agency, he undertakes to
promptly inform the aforesaid courts and other tribunal or agency thereof within five (5) days
therefrom.

The petitioner shall pay the corresponding docket and other lawful fees to the clerk of court and
deposit the amount of P500.00 for costs at the time of the filing of the petition.

The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient
ground for the dismissal of the petition. (Emphasis supplied.)

The requirement that a petition for certiorari must contain the actual addresses of all the petitioners and
the respondents is mandatory.6 Petitioner’s failure to comply with the said requirement is sufficient ground
for the dismissal of his petition. Thus, the Court of Appeals correctly dismissed the petition for certiorari
on the ground that the parties’ actual addresses were not indicated therein.

However, petitioner’s failure to manifest willingness to post a bond, in his petition for certiorari with
prayer for the issuance of a writ of preliminary injunction and/or a temporary restraining order, is not a
fatal defect. This omission would, at the most, only result in the denial of his application for a writ of
preliminary injunction and/or a temporary restraining order, not in the dismissal of his petition for
certiorari.7 The Court of Appeals’ unqualified dismissal of the petition for certiorari on the ground that
petitioner failed to manifest willingness to post a bond is clearly inappropriate.

Nevertheless, the Court of Appeals correctly dismissed the petition for certiorari on the ground that
petitioner failed to file a motion for reconsideration of the questioned RTC Order. The filing of a motion for
reconsideration to give the court a quo a chance to correct itself is a jurisdictional and mandatory
requirement which must be strictly complied with. Although there are exceptions 8 to this general rule, the
instant case presents no valid and compelling reason to deviate from the said rule.
Procedural rules illumine the path of the law and rationalize the pursuit of justice. 9 Hence, every case
must be prosecuted in accordance with the prescribed procedure to insure proper dispensation of justice. 10
The liberal interpretation and application of the rules apply only in exceptional circumstances, none of
which obtains in the present case.

Hence, the Court of Appeals could not be faulted for dismissing the petition for certiorari for non-
compliance with jurisdictional and mandatory procedural requirements.

WHEREFORE, the petition is DENIED for lack of merit. The assailed Resolution dated June 2, 2005 of the
Court of Appeals in CA-G.R. SP No. 89750, which dismissed the petition for certiorari filed by herein
petitioner, is AFFIRMED.

G.R. No. 177703             January 28, 2008

VILMA G. ARRIOLA and ANTHONY RONALD G. ARRIOLA, petitioners,

vs.
JOHN NABOR C. ARRIOLA, respondent.

DECISION

AUS TRIA-MARTINEZ, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
November 30, 2006 Decision1 and April 30, 2007 Resolution2 of the Court of Appeals in CA-G.R. SP No.
93570.

The relevant facts are culled from the records.

John Nabor C. Arriola (respondent) filed Special Civil Action No. 03-0010 with the Regional Trial Court,
Branch 254, Las Piñas City (RTC) against Vilma G. Arriola and Anthony Ronald G. Arriola (petitioners) for
judicial partition of the properties of decedent Fidel Arriola (the decedent Fidel). Respondent is the son of
decedent Fidel with his first wife Victoria C. Calabia, while petitioner Anthony is the son of decedent Fidel
with his second wife, petitioner Vilma.

On February 16, 2004, the RTC rendered a Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Ordering the partition of the parcel of land covered by Transfer Certificate of Title No. 383714
(84191) left by the decedent Fidel S. Arriola by and among his heirs John Nabor C. Arriola, Vilma
G. Arriola and Anthony Ronald G. Arriola in equal shares of one-third (1/3) each without prejudice
to the rights of creditors or mortgagees thereon, if any;

2. Attorney's fees in the amount of TEN THOUSAND (P10,000.00) PESOS is hereby awarded to be
reimbursed by the defendants to the plaintiff;

3. Costs against the defendants.

SO ORDERED.3

The decision became final on March 15, 2004.4

As the parties failed to agree on how to partition among them the land covered by TCT No. 383714
(subject land), respondent sought its sale through public auction, and petitioners acceded to it. 5
Accordingly, the RTC ordered the public auction of the subject land. 6 The public auction sale was
scheduled on May 31, 2003 but it had to be reset when petitioners refused to include in the auction the
house (subject house) standing on the subject land. 7 This prompted respondent to file with the RTC an
Urgent Manifestation and Motion for Contempt of Court,8 praying that petitioners be declared in contempt.

The RTC denied the motion in an Order9 dated August 30, 2005, for the reason that petitioners were
justified in refusing to have the subject house included in the auction, thus:
 The defendants [petitioners] are correct in holding that the house or improvement erected on the
property should not be included in the auction sale.

A cursory reading of the aforementioned Decision and of the evidence adduced during the ex-parte
hearing clearly show that nothing was mentioned about the house existing on the land subject
matter of the case. In fact, even plaintiff's [respondent's] initiatory Complaint likewise did not
mention anything about the house. Undoubtedly therefore, the Court did not include the house in
its adjudication of the subject land because it was plaintiff himself who failed to allege the same. It
is a well-settled rule that the court can not give a relief to that which is not alleged and prayed for
in the complaint.

To hold, as plaintiff argued, that the house is considered accessory to the land on which it is built is
in effect to add to plaintiff's [a] right which has never been considered or passed upon during the
trial on the merits.

In the absence of any other declaration, obvious or otherwise, only the land should be partitioned
in accordance to[sic] the aforementioned Decision as the house can not be said to have been
necessarily adjudicated therein. Thus, plaintiff can not be declared as a co-owner of the same
house without evidence thereof and due hearing thereon.

The Decision of the Court having attained its finality, as correctly pointed out, judgment must
stand even at the risk that it might be erroneous.

WHEREFORE, the Urgent Manifestation and Motion for Contempt of Court filed by plaintiff is hereby
DENIED for lack of merit.

SO ORDERED.10

The RTC, in its Order dated January 3, 2006, denied respondent's Motion for Reconsideration. 11

Respondent filed with the CA a Petition for Certiorari12 where he sought to have the RTC Orders set aside,
and prayed that he be allowed to proceed with the auction of the subject land including the subject house.

In its November 30, 2006 Decision, the CA granted the Petition for Certiorari, to wit:

WHEREFORE, the petition is GRANTED. The assailed orders dated August 30, 2005 and January 3,
2006 issued by the RTC, in Civil Case No. SCA 03-0010, are REVERSED and SET ASIDE, and the
sheriff is ordered to proceed with the public auction sale of the subject lot covered by TCT No.
383714, including the house constructed thereon.

SO ORDERED.13 (Emphasis supplied.)

Petitioners filed a motion for reconsideration but the CA denied the same in its Resolution 14 of April 30,
2007.

Hence, the present petition on the sole ground that the CA erred in holding that the RTC committed grave
abuse of discretion in denying the motion for contempt of court.

The assailed CA Decision and Resolution must be modified for reasons other than those advanced by
petitioners.

The contempt proceeding initiated by respondent was one for indirect contempt. Section 4, Rule 71 of the
Rules of Court prescribes the procedure for the institution of proceedings for indirect contempt, viz:

Sec. 4. How proceedings commenced. – Proceedings for indirect contempt may be initiated motu
proprio by the court against which the contempt was committed by an order or any other formal
charge requiring the respondent to show cause why he should not be punished for contempt.

In all other cases, charges for indirect contempt shall be commenced by a verified petition with
supporting particulars and certified true copies of documents or papers involved therein, and upon
full compliance with the requirements for filing initiatory pleadings for civil actions in the court
concerned. If the contempt charges arose out of or are related to a principal action pending in the
 court, the petition for contempt shall allege that fact but said petition shall be docketed, heard and
decided separately, unless the court in its discretion orders the consolidation of the contempt
charge and the principal action for joint hearing and decision. (Emphases supplied.)

Under the aforecited second paragraph of the Rules, the requirements for initiating an indirect contempt
proceeding are a) that it be initiated by way of a verified petition and b) that it should fully comply with
the requirements for filing initiatory pleadings for civil actions. In Regalado v. Go,15 we held:

As explained by Justice Florenz Regalado, the filing of a verified petition that has complied with the
requirements for the filing of initiatory pleading, is mandatory x x x:

This new provision clarifies with a regularity norm the proper procedure for commencing
contempt proceedings. While such proceeding has been classified as special civil action
under the former Rules, the heterogenous practice tolerated by the courts, has been for any
party to file a motion without paying any docket or lawful fees therefore and without
complying with the requirements for initiatory pleadings, which is now required in the
second paragraph of this amended section.

xxxx

Henceforth, except for indirect contempt proceedings initiated motu propio by order of or a
formal charge by the offended court, all charges shall be commenced by a verified petition
with full compliance with the requirements therefore and shall be disposed in accordance
with the second paragraph of this section.

xxxx

Even if the contempt proceedings stemmed from the main case over which the court
already acquired jurisdiction, the rules direct that the petition for contempt be treated
independently of the principal action. Consequently, the necessary prerequisites for the
filing of initiatory pleadings, such as the filing of a verified petition, attachment of a
certification on non-forum shopping, and the payment of the necessary docket fees, must
be faithfully observed.

xxxx

The provisions of the Rules are worded in very clear and categorical language. In case where the
indirect contempt charge is not initiated by the courts, the filing of a verified petition which fulfills
the requirements on initiatory pleadings is a prerequisite. Beyond question now is the mandatory
requirement of a verified petition in initiating an indirect contempt proceeding. Truly, prior to the
amendment of the 1997 Rules of Civil Procedure, mere motion without complying with the
requirements for initiatory pleadings was tolerated by the courts. At the onset of the 1997 Revised
Rules of Civil Procedure, however, such practice can no longer be countenanced. 16 (Emphasis
ours.)

The RTC erred in taking jurisdiction over the indirect contempt proceeding initiated by respondent. The
latter did not comply with any of the mandatory requirements of Section 4, Rule 71. He filed a mere
Urgent Manifestation and Motion for Contempt of Court, and not a verified petition. He likewise did not
conform with the requirements for the filing of initiatory pleadings such as the submission of a
certification against forum shopping and the payment of docket fees. Thus, his unverified motion should
have been dismissed outright by the RTC.

It is noted though that, while at first the RTC overlooked the infirmities in respondent's unverified motion
for contempt, in the end, it dismissed the motion, albeit on substantive grounds. The trouble is that, in
the CA decision assailed herein, the appellate court committed the same oversight by delving into the
merits of respondent's unverified motion and granting the relief sought therein. Thus, strictly speaking,
the proper disposition of the present petition ought to be the reversal of the CA decision and the dismissal
of respondent's unverified motion for contempt filed in the RTC for being in contravention of Section 4,
Rule 71.

However, such simplistic disposition will not put an end to the dispute between the parties. A seed of
litigation has already been sown that will likely sprout into another case between them at a later time. We
refer to the question of whether the subject house should be included in the public auction of the subject
land. Until this question is finally resolved, there will be no end to litigation between the parties. We must
therefore deal with it squarely, here and now.

The RTC and the CA differed in their views on whether the public auction should include the subject
house. The RTC excluded the subject house because respondent never alleged its existence in his
complaint for partition or established his co-ownership thereof. 17 On the other hand, citing Articles 440,18
44519 and 44620 of the Civil Code, the CA held that as the deceased owned the subject land, he also
owned the subject house which is a mere accessory to the land. Both properties form part of the estate of
the deceased and are held in co-ownership by his heirs, the parties herein. Hence, the CA concludes that
any decision in the action for partition of said estate should cover not just the subject land but also the
subject house.21 The CA further pointed out that petitioners themselves implicitly recognized the inclusion
of the subject house in the partition of the subject land when they proposed in their letter of August 5,
2004, the following swapping-arrangement:

Sir:

Thank you very much for accommodating us even if we are only poor and simple people. We are
very much pleased with the decision of Presiding Judge Manuel B. Fernandez, Jr., RTC Br. 254, Las
Piñas, on the sharing of one-third (1/3) each of a land covered by Transfer Certificate of Title No.
383714 (84191) in Las Piñas City.

However, to preserve the sanctity of our house which is our residence for more than twenty (20)
years, we wish to request that the 1/3 share of John Nabor C. Arriola be paid by the defendants
depending on the choice of the plaintiff between item (1) or item (2), detailed as follows:

(1) Swap with a 500-square meters [sic] lot located at Baras Rizal x x x.

(2) Cash of P205,700.00 x x x.

x x x x.22

We agree that the subject house is covered by the judgment of partition for reasons postulated by the CA.
We qualify, however, that this ruling does not necessarily countenance the immediate and actual partition
of the subject house by way of public auction in view of the suspensive proscription imposed under Article
159 of The Family Code which will be discussed forthwith.

It is true that the existence of the subject house was not specifically alleged in the complaint for partition.
Such omission notwithstanding, the subject house is deemed part of the judgment of partition for two
compelling reasons.

First, as correctly held by the CA, under the provisions of the Civil Code, the subject house is deemed part
of the subject land. The Court quotes with approval the ruling of the CA, to wit:

The RTC, in the assailed Order dated August 30, 2005 ratiocinated that since the house
constructed on the subject lot was not alleged in the complaint and its ownership was not passed
upon during the trial on the merits, the court cannot include the house in its adjudication of the
subject lot. The court further stated that it cannot give a relief to[sic] which is not alleged and
prayed for in the complaint.

We are not persuaded.

To follow the foregoing reasoning of the RTC will in effect render meaningless the pertinent rule on
accession. In general, the right to accession is automatic (ipso jure), requiring no prior act on the
part of the owner or the principal. So that even if the improvements including the house were not
alleged in the complaint for partition, they are deemed included in the lot on which they stand,
following the principle of accession. Consequently, the lot subject of judicial partition in this case
includes the house which is permanently attached thereto, otherwise, it would be absurd to divide
the principal, i.e., the lot, without dividing the house which is permanently attached thereto. 23
(Emphasis supplied)
Second, respondent has repeatedly claimed that the subject house was built by the deceased. 24
Petitioners never controverted such claim. There is then no dispute that the subject house is part of the
estate of the deceased; as such, it is owned in common by the latter's heirs, the parties herein, 25 any one
of whom, under Article 49426 of the Civil Code, may, at any time, demand the partition of the subject
house.27 Therefore, respondent's recourse to the partition of the subject house cannot be hindered, least
of all by the mere technical omission of said common property from the complaint for partition.

That said notwithstanding, we must emphasize that, while we treat the subject house as part of the co-
ownership of the parties, we stop short of authorizing its actual partition by public auction at this time. It
bears emphasis that an action for partition involves two phases: first, the declaration of the existence of a
state of co-ownership; and second, the actual termination of that state of co-ownership through the
segregation of the common property.28 What is settled thus far is only the fact that the subject house is
under the co-ownership of the parties, and therefore susceptible of partition among them.

Whether the subject house should be sold at public auction as ordered by the RTC is an entirely different
matter, depending on the exact nature of the subject house.

Respondent claims that the subject house was built by decedent Fidel on his exclusive property. 29
Petitioners add that said house has been their residence for 20 years. 30 Taken together, these averments
on record establish that the subject house is a family home within the contemplation of the provisions of
The Family Code, particularly:

Article 152. The family home, constituted jointly by the husband and the wife or by an unmarried
head of a family, is the dwelling house where they and their family reside, and the land on which it
is situated.

Article 153. The family home is deemed constituted on a house and lot from the time it is occupied
as a family residence. From the time of its constitution and so long as any of its beneficiaries
actually resides therein, the family home continues to be such and is exempt from execution,
forced sale or attachment except as hereinafter provided and to the extent of the value allowed by
law. (Emphasis supplied.)

One significant innovation introduced by The Family Code is the automatic constitution of the family home
from the time of its occupation as a family residence, without need anymore for the judicial or
extrajudicial processes provided under the defunct Articles 224 to 251 of the Civil Code and Rule 106 of
the Rules of Court. Furthermore, Articles 152 and 153 specifically extend the scope of the family home not
just to the dwelling structure in which the family resides but also to the lot on which it stands. Thus,
applying these concepts, the subject house as well as the specific portion of the subject land on which it
stands are deemed constituted as a family home by the deceased and petitioner Vilma from the moment
they began occupying the same as a family residence 20 years back.31

It being settled that the subject house (and the subject lot on which it stands) is the family home of the
deceased and his heirs, the same is shielded from immediate partition under Article 159 of The Family
Code, viz:

Article 159. The family home shall continue despite the death of one or both spouses or of the
unmarried head of the family for a period of ten years or for as long as there is a minor
beneficiary, and the heirs cannot partition the same unless the court finds compelling reasons
therefor. This rule shall apply regardless of whoever owns the property or constituted the family
home. (Emphasis supplied.)

The purpose of Article 159 is to avert the disintegration of the family unit following the death of its head.
To this end, it preserves the family home as the physical symbol of family love, security and unity by
imposing the following restrictions on its partition: first, that the heirs cannot extra-judicially partition it
for a period of 10 years from the death of one or both spouses or of the unmarried head of the family, or
for a longer period, if there is still a minor beneficiary residing therein; and second, that the heirs cannot
judicially partition it during the aforesaid periods unless the court finds compelling reasons therefor. No
compelling reason has been alleged by the parties; nor has the RTC found any compelling reason to order
the partition of the family home, either by physical segregation or assignment to any of the heirs or
through auction sale as suggested by the parties.

More importantly, Article 159 imposes the proscription against the immediate partition of the family home
regardless of its ownership. This signifies that even if the family home has passed by succession to the co-
ownership of the heirs, or has been willed to any one of them, this fact alone cannot transform the family
home into an ordinary property, much less dispel the protection cast upon it by the law. The rights of the
individual co-owner or owner of the family home cannot subjugate the rights granted under Article 159 to
the beneficiaries of the family home.

Set against the foregoing rules, the family home -- consisting of the subject house and lot on which it
stands -- cannot be partitioned at this time, even if it has passed to the co-ownership of his heirs, the
parties herein. Decedent Fidel died on March 10, 2003.32 Thus, for 10 years from said date or until March
10, 2013, or for a longer period, if there is still a minor beneficiary residing therein, the family home he
constituted cannot be partitioned, much less when no compelling reason exists for the court to otherwise
set aside the restriction and order the partition of the property.

The Court ruled in Honrado v. Court of Appeals33 that a claim for exception from execution or forced sale
under Article 153 should be set up and proved to the Sheriff before the sale of the property at public
auction. Herein petitioners timely objected to the inclusion of the subject house although for a different
reason.

To recapitulate, the evidence of record sustain the CA ruling that the subject house is part of the
judgment of co-ownership and partition. The same evidence also establishes that the subject house and
the portion of the subject land on which it is standing have been constituted as the family home of
decedent Fidel and his heirs. Consequently, its actual and immediate partition cannot be sanctioned until
the lapse of a period of 10 years from the death of Fidel Arriola, or until March 10, 2013.

It bears emphasis, however, that in the meantime, there is no obstacle to the immediate public auction of
the portion of the subject land covered by TCT No. 383714, which falls outside the specific area of the
family home.

WHEREFORE, the petition is PARTLY GRANTED and the November 30, 2006 Decision and April 30, 2007
Resolution of the Court of Appeals are MODIFIED in that the house standing on the land covered by
Transfer Certificate of Title No. 383714 is DECLARED part of the co-ownership of the parties John Nabor
C. Arriola, Vilma G. Arriola and Anthony Ronald G. Arriola but EXEMPTED from partition by public auction
within the period provided for in Article 159 of the Family Code.

G.R. No. 150806             January 28, 2008

EUFEMIA ALMEDA and ROMEL ALMEDA, petitioners,

vs.
BATHALA MARKETING INDUSTRIES, INC., respondent.

DECISION

NACHURA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, of the Decision1 of the Court
of Appeals (CA), dated September 3, 2001, in CA-G.R. CV No. 67784, and its Resolution 2 dated November
19, 2001. The assailed Decision affirmed with modification the Decision 3 of the Regional Trial Court (RTC),
Makati City, Branch 136, dated May 9, 2000 in Civil Case No. 98-411.

Sometime in May 1997, respondent Bathala Marketing Industries, Inc., as lessee, represented by its
president Ramon H. Garcia, renewed its Contract of Lease4 with Ponciano L. Almeda (Ponciano), as lessor,
husband of petitioner Eufemia and father of petitioner Romel Almeda. Under the said contract, Ponciano
agreed to lease a portion of the Almeda Compound, located at 2208 Pasong Tamo Street, Makati City,
consisting of 7,348.25 square meters, for a monthly rental of P1,107,348.69, for a term of four (4) years
from May 1, 1997 unless sooner terminated as provided in the contract. 5 The contract of lease contained
the following pertinent provisions which gave rise to the instant case:

SIXTH - It is expressly understood by the parties hereto that the rental rate stipulated is based on
the present rate of assessment on the property, and that in case the assessment should hereafter
be increased or any new tax, charge or burden be imposed by authorities on the lot and building
where the leased premises are located, LESSEE shall pay, when the rental herein provided
becomes due, the additional rental or charge corresponding to the portion hereby leased;
provided, however, that in the event that the present assessment or tax on said property should
 be reduced, LESSEE shall be entitled to reduction in the stipulated rental, likewise in proportion to
the portion leased by him;

SEVENTH - In case an extraordinary inflation or devaluation of Philippine Currency should

supervene, the value of Philippine peso at the time of the establishment of the obligation shall be
the basis of payment;6

During the effectivity of the contract, Ponciano died. Thereafter, respondent dealt with petitioners. In a
letter7 dated December 29, 1997, petitioners advised respondent that the former shall assess and collect
Value Added Tax (VAT) on its monthly rentals. In response, respondent contended that VAT may not be
imposed as the rentals fixed in the contract of lease were supposed to include the VAT therein,
considering that their contract was executed on May 1, 1997 when the VAT law had long been in effect. 8

On January 26, 1998, respondent received another letter from petitioners informing the former that its
monthly rental should be increased by 73% pursuant to condition No. 7 of the contract and Article 1250 of
the Civil Code. Respondent opposed petitioners' demand and insisted that there was no extraordinary
inflation to warrant the application of Article 1250 in light of the pronouncement of this Court in various
cases.9

Respondent refused to pay the VAT and adjusted rentals as demanded by petitioners but continued to pay
the stipulated amount set forth in their contract.

On February 18, 1998, respondent instituted an action for declaratory relief for purposes of determining
the correct interpretation of condition Nos. 6 and 7 of the lease contract to prevent damage and
prejudice.10 The case was docketed as Civil Case No. 98-411 before the RTC of Makati.

On March 10, 1998, petitioners in turn filed an action for ejectment, rescission and damages against
respondent for failure of the latter to vacate the premises after the demand made by the former. 11 Before
respondent could file an answer, petitioners filed a Notice of Dismissal.12 They subsequently refiled the
complaint before the Metropolitan Trial Court of Makati; the case was raffled to Branch 139 and was
docketed as Civil Case No. 53596.

Petitioners later moved for the dismissal of the declaratory relief case for being an improper remedy
considering that respondent was already in breach of the obligation and that the case would not end the
litigation and settle the rights of the parties. The trial court, however, was not persuaded, and
consequently, denied the motion.

After trial on the merits, on May 9, 2000, the RTC ruled in favor of respondent and against petitioners.
The pertinent portion of the decision reads:

WHEREFORE, premises considered, this Court renders judgment on the case as follows:

1) declaring that plaintiff is not liable for the payment of Value-Added Tax (VAT) of 10% of the
rent for [the] use of the leased premises;

2) declaring that plaintiff is not liable for the payment of any rental adjustment, there being no
[extraordinary] inflation or devaluation, as provided in the Seventh Condition of the lease contract,
to justify the same;

3) holding defendants liable to plaintiff for the total amount of P1,119,102.19, said amount
representing payments erroneously made by plaintiff as VAT charges and rental adjustment for the
months of January, February and March, 1999; and

4) holding defendants liable to plaintiff for the amount of P1,107,348.69, said amount representing
the balance of plaintiff's rental deposit still with defendants.

SO ORDERED.13

The trial court denied petitioners their right to pass on to respondent the burden of paying the VAT since
it was not a new tax that would call for the application of the sixth clause of the contract. The court,
likewise, denied their right to collect the demanded increase in rental, there being no extraordinary
inflation or devaluation as provided for in the seventh clause of the contract. Because of the payment
made by respondent of the rental adjustment demanded by petitioners, the court ordered the restitution
by the latter to the former of the amounts paid, notwithstanding the well-established rule that in an action
for declaratory relief, other than a declaration of rights and obligations, affirmative reliefs are not sought
by or awarded to the parties.

Petitioners elevated the aforesaid case to the Court of Appeals which affirmed with modification the RTC
decision. The fallo reads:

WHEREFORE, premises considered, the present appeal is DISMISSED and the appealed decision in
Civil Case No. 98-411 is hereby AFFIRMED with MODIFICATION in that the order for the return of
the balance of the rental deposits and of the amounts representing the 10% VAT and rental
adjustment, is hereby DELETED.

No pronouncement as to costs.

SO ORDERED.14

The appellate court agreed with the conclusions of law and the application of the decisional rules on the
matter made by the RTC. However, it found that the trial court exceeded its jurisdiction in granting
affirmative relief to the respondent, particularly the restitution of its excess payment.

Petitioners now come before this Court raising the following issues:

I.

WHETHER OR NOT ARTICLE 1250 OF THE NEW CIVIL CODE IS APPLICABLE TO THE CASE AT BAR.

II.

WHETHER OR NOT THE DOCTRINE ENUNCIATED IN FILIPINO PIPE AND FOUNDRY CORP. VS.
NAWASA CASE, 161 SCRA 32 AND COMPANION CASES ARE (sic) APPLICABLE IN THE CASE AT
BAR.

III.

WHETHER OR NOT IN NOT APPLYING THE DOCTRINE IN THE CASE OF DEL ROSARIO VS. THE
SHELL COMPANY OF THE PHILIPPINES, 164 SCRA 562, THE HONORABLE COURT OF APPEALS
SERIOUSLY ERRED ON A QUESTION OF LAW.

IV.

WHETHER OR NOT THE FINDING OF THE HONORABLE COURT OF APPEALS THAT RESPONDENT IS
NOT LIABLE TO PAY THE 10% VALUE ADDED TAX IS IN ACCORDANCE WITH THE MANDATE OF RA
7716.

V.

WHETHER OR NOT DECLARATORY RELIEF IS PROPER SINCE PLAINTIFF-APPELLEE WAS IN BREACH

WHEN THE PETITION FOR DECLARATORY RELIEF WAS FILED BEFORE THE TRIAL COURT.

In fine, the issues for our resolution are as follows: 1) whether the action for declaratory relief is proper;
2) whether respondent is liable to pay 10% VAT pursuant to Republic Act (RA) 7716; and 3) whether the
amount of rentals due the petitioners should be adjusted by reason of extraordinary inflation or
devaluation.

Declaratory relief is defined as an action by any person interested in a deed, will, contract or other written
instrument, executive order or resolution, to determine any question of construction or validity arising
from the instrument, executive order or regulation, or statute, and for a declaration of his rights and
duties thereunder. The only issue that may be raised in such a petition is the question of construction or
validity of provisions in an instrument or statute. Corollary is the general rule that such an action must be
justified, as no other adequate relief or remedy is available under the circumstances. 15
Decisional law enumerates the requisites of an action for declaratory relief, as follows: 1) the subject
matter of the controversy must be a deed, will, contract or other written instrument, statute, executive
order or regulation, or ordinance; 2) the terms of said documents and the validity thereof are doubtful
and require judicial construction; 3) there must have been no breach of the documents in question; 4)
there must be an actual justiciable controversy or the "ripening seeds" of one between persons whose
interests are adverse; 5) the issue must be ripe for judicial determination; and 6) adequate relief is not
available through other means or other forms of action or proceeding. 16

It is beyond cavil that the foregoing requisites are present in the instant case, except that petitioners
insist that respondent was already in breach of the contract when the petition was filed.

We do not agree.

After petitioners demanded payment of adjusted rentals and in the months that followed, respondent
complied with the terms and conditions set forth in their contract of lease by paying the rentals stipulated
therein. Respondent religiously fulfilled its obligations to petitioners even during the pendency of the
present suit. There is no showing that respondent committed an act constituting a breach of the subject
contract of lease. Thus, respondent is not barred from instituting before the trial court the petition for
declaratory relief.

Petitioners claim that the instant petition is not proper because a separate action for rescission, ejectment
and damages had been commenced before another court; thus, the construction of the subject
contractual provisions should be ventilated in the same forum.

We are not convinced.

It is true that in Panganiban v. Pilipinas Shell Petroleum Corporation17 we held that the petition for
declaratory relief should be dismissed in view of the pendency of a separate action for unlawful detainer.
However, we cannot apply the same ruling to the instant case. In Panganiban, the unlawful detainer case
had already been resolved by the trial court before the dismissal of the declaratory relief case; and it was
petitioner in that case who insisted that the action for declaratory relief be preferred over the action for
unlawful detainer. Conversely, in the case at bench, the trial court had not yet resolved the
rescission/ejectment case during the pendency of the declaratory relief petition. In fact, the trial court,
where the rescission case was on appeal, itself initiated the suspension of the proceedings pending the
resolution of the action for declaratory relief.

We are not unmindful of the doctrine enunciated in Teodoro, Jr. v. Mirasol18 where the declaratory relief
action was dismissed because the issue therein could be threshed out in the unlawful detainer suit. Yet,
again, in that case, there was already a breach of contract at the time of the filing of the declaratory relief
petition. This dissimilar factual milieu proscribes the Court from applying Teodoro to the instant case.

Given all these attendant circumstances, the Court is disposed to entertain the instant declaratory relief
action instead of dismissing it, notwithstanding the pendency of the ejectment/rescission case before the
trial court. The resolution of the present petition would write finis to the parties' dispute, as it would settle
once and for all the question of the proper interpretation of the two contractual stipulations subject of this
controversy.

Now, on the substantive law issues.

Petitioners repeatedly made a demand on respondent for the payment of VAT and for rental adjustment
allegedly brought about by extraordinary inflation or devaluation. Both the trial court and the appellate
court found no merit in petitioners' claim. We see no reason to depart from such findings.

As to the liability of respondent for the payment of VAT, we cite with approval the ratiocination of the
appellate court, viz.:

Clearly, the person primarily liable for the payment of VAT is the lessor who may choose to pass it
on to the lessee or absorb the same. Beginning January 1, 1996, the lease of real property in the
ordinary course of business, whether for commercial or residential use, when the gross annual
receipts exceed P500,000.00, is subject to 10% VAT. Notwithstanding the mandatory payment of
the 10% VAT by the lessor, the actual shifting of the said tax burden upon the lessee is clearly
optional on the part of the lessor, under the terms of the statute. The word "may" in the statute,
 generally speaking, denotes that it is directory in nature. It is generally permissive only and
operates to confer discretion. In this case, despite the applicability of the rule under Sec. 99 of the
NIRC, as amended by R.A. 7716, granting the lessor the option to pass on to the lessee the 10%
VAT, to existing contracts of lease as of January 1, 1996, the original lessor, Ponciano L. Almeda
did not charge the lessee-appellee the 10% VAT nor provided for its additional imposition when
they renewed the contract of lease in May 1997. More significantly, said lessor did not actually
collect a 10% VAT on the monthly rental due from the lessee-appellee after the execution of the
May 1997 contract of lease. The inevitable implication is that the lessor intended not to avail of the
option granted him by law to shift the 10% VAT upon the lessee-appellee. x x x.19

In short, petitioners are estopped from shifting to respondent the burden of paying the VAT.

Petitioners' reliance on the sixth condition of the contract is, likewise, unavailing. This provision clearly
states that respondent can only be held liable for new taxes imposed after the effectivity of the contract of
lease, that is, after May 1997, and only if they pertain to the lot and the building where the leased
premises are located. Considering that RA 7716 took effect in 1994, the VAT cannot be considered as a
"new tax" in May 1997, as to fall within the coverage of the sixth stipulation.

Neither can petitioners legitimately demand rental adjustment because of extraordinary inflation or
devaluation.

Petitioners contend that Article 1250 of the Civil Code does not apply to this case because the contract
stipulation speaks of extraordinary inflation or devaluation while the Code speaks of extraordinary
inflation or deflation. They insist that the doctrine pronounced in Del Rosario v. The Shell Company, Phils.
Limited20 should apply.

Essential to contract construction is the ascertainment of the intention of the contracting parties, and such
determination must take into account the contemporaneous and subsequent acts of the parties. This
intention, once ascertained, is deemed an integral part of the contract.21

While, indeed, condition No. 7 of the contract speaks of "extraordinary inflation or devaluation" as
compared to Article 1250's "extraordinary inflation or deflation," we find that when the parties used the
term "devaluation," they really did not intend to depart from Article 1250 of the Civil Code. Condition No.
7 of the contract should, thus, be read in harmony with the Civil Code provision.

That this is the intention of the parties is evident from petitioners' letter22 dated January 26, 1998, where,
in demanding rental adjustment ostensibly based on condition No. 7, petitioners made explicit reference
to Article 1250 of the Civil Code, even quoting the law verbatim. Thus, the application of Del Rosario is
not warranted. Rather, jurisprudential rules on the application of Article 1250 should be considered.

Article 1250 of the Civil Code states:

In case an extraordinary inflation or deflation of the currency stipulated should supervene, the
value of the currency at the time of the establishment of the obligation shall be the basis of
payment, unless there is an agreement to the contrary.

Inflation has been defined as the sharp increase of money or credit, or both, without a corresponding
increase in business transaction. There is inflation when there is an increase in the volume of money and
credit relative to available goods, resulting in a substantial and continuing rise in the general price level. 23
In a number of cases, this Court had provided a discourse on what constitutes extraordinary inflation,
thus:

[E]xtraordinary inflation exists when there is a decrease or increase in the purchasing power of the
Philippine currency which is unusual or beyond the common fluctuation in the value of said
currency, and such increase or decrease could not have been reasonably foreseen or was
manifestly beyond the contemplation of the parties at the time of the establishment of the
obligation.24

The factual circumstances obtaining in the present case do not make out a case of extraordinary inflation
or devaluation as would justify the application of Article 1250 of the Civil Code. We would like to stress
that the erosion of the value of the Philippine peso in the past three or four decades, starting in the mid-
sixties, is characteristic of most currencies. And while the Court may take judicial notice of the decline in
the purchasing power of the Philippine currency in that span of time, such downward trend of the peso
cannot be considered as the extraordinary phenomenon contemplated by Article 1250 of the Civil Code.
Furthermore, absent an official pronouncement or declaration by competent authorities of the existence of
extraordinary inflation during a given period, the effects of extraordinary inflation are not to be applied. 25

WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals in CA-
G.R. CV No. 67784, dated September 3, 2001, and its Resolution dated November 19, 2001, are
AFFIRMED.

Adm. Matter No. MTJ-04-1533             January 28, 2008

VICKY C. MABANTO, petitioner,

vs.
Judge MAMERTO Y. COLIFLORES, respondent.

DECISION

AZCUNA, J.:

This is an administrative complaint filed by Vicky Mabanto against Judge Mamerto Y. Coliflores of the
Municipal Trial Court in Cities (MTCC), Branch 1, Cebu City, charging him with Serious Misconduct,
Inefficiency, Gross Ignorance of the Law and Violation of Section 3(e) of the Anti-Graft and Corrupt
Practices Act (R.A. No. 3019) in connection with her supersedeas bond in Civil Case No. R-35618.

The antecedents are as follows:1

Complainant was the defendant in Civil Case No. R-35618 for ejectment. Judgment was rendered against
her and she appealed the decision to the Regional Trial Court (RTC) of Cebu City. She posted a
supersedeas bond in the amount of P45,000 to stay the execution of the judgment.

On February 17, 1997, the RTC resolved the appeal and remanded the case to the MTCC for re-trial.
Complainant’s counsel filed a motion to withdraw the supersedeas bond.

On May 19, 1997, complainant learned from the Clerk of Court of MTCC, Cebu City that respondent, in an
Order dated September 23, 1996, granted plaintiffs’ ex-parte motion to withdraw rental deposit under the
bond and release the same to plaintiff, hence, the latter withdrew it on said date. Complainant claimed
that respondent concealed from her and her counsel plaintiffs’ motion to release the deposit under the
supersedeas bond as they were not notified of the motion or the approval of the same.

Respondent, in his Comment,2 denied having concealed from complainant and her counsel his Order dated
September 23, 2006. Respondent stated that complainant’s counsel, Atty. Cynthia M. Matural, was
furnished a copy of the Order. He likewise explained that he directed the release of the bond upon
plaintiffs’ ex-parte motion because the bond would be applied to the back rentals owing to the latter. He
added that from the amount of P45,000 withdrawn, P15,000 was returned to the court by plaintiffs on
September 25, 1996, which amount remained as complainant’s supersedeas bond.

Complainant replied that she and her counsel never received a copy of the aforestated motion and order.
Her counsel filed several motions for the release of the supersedeas bond expecting that the same was
still intact. Complainant likewise insisted that respondent had no basis for issuing the assailed order
because the purpose of the supersedeas bond is to guarantee the performance of the judgment appealed
from if affirmed by the appellate court, and this did not happen in this case because the RTC remanded
the case for re-trial.

On January 10, 2005, the case was referred to the Office of the Court Administrator (OCA).

In a Memorandum dated July 12, 2005, the OCA recommended that respondent be fined in the amount of
P2,000 to be deducted from his retirement benefits. The OCA considered the fact that no malice attended
respondent’s action, and that the offense took place prior to the amendment of Rule 140 of the Rules of
Court by A.M. No. 01-8-10-SC which imposes a heavier penalty for gross ignorance of the law.

The Court finds the recommendation of the OCA to be well taken.

A supersedeas bond in ejectment cases is conditioned upon the performance of the judgment or order
appealed from in case it be affirmed wholly or in part by the appellate court. It should therefore subsist as
security for the liability of the defendant to the plaintiff.3

Section 19(2) (3), Rule 70 of the Rules of Court requires that all moneys deposited by the defendant to
stay execution of the judgment shall be held until the final disposition of the appeal, and shall be disposed
of in accordance with the provisions of the judgment. It likewise provides that the plaintiff will be allowed
to withdraw the money when the defendant agrees or fails to oppose plaintiff’s petition. The purpose of
this is to avoid damage that the defendant may suffer if plaintiff should be allowed to withdraw the money
deposited when the plaintiff’s right to collect the money is in issue. 4

Here, complainant failed to oppose the motion because of the lower court’s failure to inform her. Indeed,
Mr. Jose Legaspi, Clerk of Court of MTCC, Branch 1, Cebu City, stated that complainant was not notified
about the motion to release the supersedeas bond and the Order allowing the release of the bond. The
court interpreter, Ms. Rebecca L. Alesna, also confirmed that she prepared the notice for complainant
upon the instruction of respondent but due to inadvertence, she was not able to send the same to the
parties.5

Section 4, Rule 13 of the Rules of Court requires that adverse parties be served copies of pleadings and
processes. A motion without a notice of hearing addressed to the parties is a mere scrap of paper. 6 In Cui
v. Madayag,7 this Court held that motions that do not contain proof of service of notice to the other party
are not entitled to judicial cognizance.

Without any proof of service having been made upon complainant, respondent erred in granting the
motion to withdraw the deposit under the bond, and is, thus, guilty of gross ignorance of the law.

Gross ignorance of the law is a serious charge which is penalized with either dismissal from service,
suspension for three (3) months without salary and benefits or a fine of not less than P20,000 but not
more than P40,000.

The administrative offense, however, took place prior to the amendment of Rule 140 of the Rules of Court
by A.M. No. 01-8-10-SC on September 11, 2001. In Dayawon v. Judge Maximino A. Badilla,8 Padua v.
Judge Eufemio R. Molina,9 Dizon v. Judge Demetrio D. Calimag,10 and Prosecutor Contreras v. Judge Eddie
P. Monserate,11 citing gross ignorance of the law but taking into account that no nefarious motive on the
part of respondents had been shown, this Court imposed a fine of P2,000 with a warning.

Thus, consistent with the sanctions imposed in the aforementioned cases, this Court agrees with the
recommendation of the OCA.

WHEREFORE, respondent Judge Mamerto Y. Coliflores is found GUILTY OF GROSS IGNORANCE OF THE
LAW for which he is FINED P2,000 to be deducted from his retirement benefits.

G.R. No. 171315             February 26, 2008

ANTONIO ARBIZO, petitioner,

vs.
SPS. ANTONIO SANTILLAN and ROSARIO L. SANTILLAN, respondents.

x----------------------x

ANTONIO ARBIZO, petitioner,

vs.
SPS. JOHN WASSMER and LUZ MARCELO-WASSMER, respondents.

x----------------------x

ANTONIO ARBIZO, petitioner,

vs.
PACITA MARCELO, respondent.

DECISION
CHICO-NAZARIO, J.:

For review on certiorari under Rule 451 of the 1997 Rules of Civil Procedure filed by petitioner Antonio
Arbizo is the Decision2 of the Court of Appeals dated 31 January 2006. The Court of Appeals ordered
petitioner to vacate the properties subject of this case. The assailed Decision reversed and set aside the
Decision3 dated 20 February 2004 of the Regional Trial Court (RTC) of Iba, Zambales, which affirmed in
toto the Decision4 dated 18 August 2003 of the 3rd Municipal Circuit Trial Court (MCTC) of Botolan-
Cabangan, Cabangan, Zambales, in Civil Cases No. 833, No. 834, No. 835 and No. 836.

Central to this controversy is the possession of the above three adjoining parcels of land (subject
properties) which are all situated in Barangay San Isidro, Cabangan, Zambales, with an area of 1,200
square meters each. The subject properties are being claimed by petitioner to be part of the property
described under Tax Declaration No. 16-0032 in the name of his deceased father, Celestino Arbizo.
Respondents, on the other hand, assert ownership over the same based on separate titles in their names,
particularly: (a) Transfer Certificate of Title (TCT) No. T-50723 in the names of the spouses John and Luz
Marie Wassmer;5 (b) TCT No. 50722 in the name of Pacita Marcelo;6 and (c) TCT No. T-50725 in the
names of the spouses Antonio and Rosario Santillan.7

The records show that on 27 June 2001, the respondents filed with the MCTC three separate Complaints
for Ejectment against the petitioner. Finding similarity in the issues involved, the MCTC jointly heard the
three Complaints under the Rules on Summary Procedure.

In their Complaints, the respondents averred that right after they purchased the subject properties in
1998, they immediately enclosed the same with a wooden perimeter fence with barbed wire. Sometime in
September 2000, the petitioner, without their knowledge, much less consent, unlawfully occupied the
subject properties by removing and destroying the fence they had installed, and later replacing it with his
own concrete fence. Despite repeated demands to vacate the subject properties, petitioner vehemently
refused to do so. Thus, respondents prayed that the petitioner be ordered to vacate the subject
properties, and to pay each of them: (1) the amount of P1,000.00 per month from September 2000 until
the subject properties are vacated, as actual damages in the form of reasonable compensation for the use
and occupation thereof; (2) the amount of P25,000,00 as attorney’s fees plus P800.00 per court
appearance; and (3) the amount of P10,000.00 as moral and exemplary damages.

In response, the petitioner countered that the subject lots formed part of the 29,345-square meter
property previously owned by his father, Celestino Arbizo, who occupied the same during his lifetime as
early as 1921. At the time of his father’s death on 11 May 1956, he left the entire property as part of his
estate to his forced and compulsory heirs; namely, Maria Facelo Arbizo (the petitioner’s mother), Carolina
Arbizo-Noceda, Aurora Arbizo-Ecdao, Anacleto Arbizo and Ma. Agrifina Arbizo-Mendigorin (the children of
Celestino Arbizo by the first and second marriages).8 Petitioner’s wife, Dominga Arbizo, bought the
undivided shares of Anacleto Arbizo and Ma. Agrifina Arbizo-Mendigorin in the said property on 15 August
1976 and 16 November 1976, respectively. Since then, petitioner claimed to have been in peaceful,
continuous and uninterrupted possession of the 11,230-square meter parcel of land which included the
subject properties. By way of counterclaim, the petitioner prayed that the respondents be ordered to pay
him the amount of P100,000.00 per court appearance as attorney’s fees.

On 18 August 2003, on the basis of the position papers and documentary evidence adduced by the
parties, the MCTC rendered a Decision dismissing the three Complaints for Ejectment filed by the
respondents after finding that the petitioner had preferred possession over the subject properties. The
fallo of the said Decision is quoted hereunder:

WHEREFORE, in view of the preponderance of evidence submitted by the [herein petitioner],

judgment is hereby rendered dismissing the complaints against him for lack of merit. 9

In sustaining the petitioner’s position, the MCTC explained at length its disposition as follows:

From the evidence on record, it appears that the [herein respondents] obtained their respective
title over the lots in the year 1998. If their and their witnesses’ word were to be given credit, the
[respondents] entered the land when they thereupon enclosed/fenced the same with wooden posts
and barbed wire but were removed, destroyed and later replaced by the [herein petitioner] in
September, 2000 with concrete fences (sic).

The relocation survey report and sketch plan of the geodetic engineer meantime reveal that the
disputed adjoining lots (having an approximate area of 1,200 square meters each) are part of the
 11,230 square-meter land (sic) held and occupied by the [petitioner]. Likewise, extant in the
technical report and plan are the other recorded improvements consisting of huts belonging to the
[petitioner] and found standing inside his occupied property. The Court itself confirmed the
existence of these improvements during the ocular inspection of the property.

Equally evident from the documents presented is the fact that the large stretch of land being
occupied by the [petitioner] came from his father the late Celestino Arbizo in whose name the tax
declaration for the land for the year 1985 was issued. That two (2) of the Arbizo’s sibling, Anacleto
Arbizo and Agrifina Arbizo-Mendigorin, conveyed and sold their respective 1/5 shares from (sic) the
property to Dominga P. Arbizo [petitioner’s] wife is doubtlessly established by the two (2) deeds of
sale executed by the former in the year 1976. This logically explains why [petitioner] Antonio
Arbizo and his wife are as seen in the engineer’s documents occupying an approximate area of
11,230 square meters out of the 2.9 hectare-property (sic) tax declared in the name of Celestino
Arbizo who at the time of his death appeared to have left five (5) heirs. x x x.

Moreover, the corroborated declarations of [petitioner’s] witnesses (one of whom [Jesus Paredes]
is 81 years old and a long-time friend of [petitioner’s] father convincingly prove that [petitioner]
has already been occupying the Arbizo property including the controverted [three] parcels of land
much long before the [respondents] bought, registered, and fenced them in the year 1998. Proof
that the [petitioner] has preferred possession is the testimony of Conrado Santos, [respondents’]
own witness, to the effect that said [petitioner] was at the area and that the laborers even took
their refreshment at the nearby resthouse of the Arbizo’s during their fencing of [respondents’]
properties. On this point, [petitioner’s] possession becomes even more superior if the span of
years that his father and predecessor-in-interest had held the property were to be tacked to his
own possession.

Over-all, the unrefuted documentary evidence brought to light by the [petitioner] indubitably
proves that his physical occupation and exercise of acts of possession antedate that of the
[respondents]. Clearly, since it is [petitioner’s] possession that enjoys priority of time, he is, under
the law, entitled to continue possessing the lands in question. (De Luna vs. Court of Appeals, 212
SCRA 276).10

Dissatisfied, the respondents then elevated the matter to the RTC. On 20 February 2004, the RTC
sustained the dismissal by the MCTC of the respondents’ Complaints for Ejectment, holding that the
petitioner had a better right of possession over the subject properties for having been in possession of the
same long before they were acquired by the respondents in 1998. The respondents then sought the
reconsideration of the Decision, but the RTC denied the same for lack of merit in the Order dated 17
March 2004.11

Herein respondents then raised the case to the Court of Appeals. In its Decision dated 31 January 2006, it
held:

WHEREFORE, the foregoing premises considered, the instant Petition is hereby GRANTED. The
Decision dated February 20, 2004 of Branch 71 of the Regional Trial Court of Iba, Zambales,
affirming in toto the Decision dated August 18, 2003 of the 3rd Municipal Circuit Trial Court of
Botolan-Cabangan, Cabangan, Zambales in Civil Case Nos. 834, 835 and 836 is hereby REVERSED
and SET ASIDE. A new one is being entered ORDERING the [herein petitioner] (1) to vacate the
subject lots and peacefully surrender the possession thereof to the [herein respondents]; and (2)
to pay each of the [respondents] the amount of P1,000.00 per month from September 2000 until
the possession of the subject lots shall have been completely restored to the [respondents] as
reasonable compensation for the use and occupation thereof, and the amount of P10,000.00 as
attorney’s fees.12

To support its contrary conclusion reversing the MCTC and the RTC, the Court of Appeals declared:

The records of the case reveal that prior to 1998, the possession of the subject lots was
undoubtedly in the hands of the [herein petitioner]. To substantiate his allegation that he had prior
possession of the subject lots, the [petitioner] adduced in evidence Tax Declaration No. 16-0032
which was issued in 1985, and the two (2) deeds of sale in 1976 executed in favor of his wife,
Dominga Arbizo, by Anacleto Arbizo and Agrifina Arbizo-Mendigorin. In addition, the [petitioner]
presented the affidavits of his witnesses, Jesus Paredes and Rosario Corpuz, both stating therein
that he remained in possession of the subject lots even up to the present time. However, We find
that these pieces of evidence do not successfully debunk the claim of the [herein respondents] that
 they were able to wrest physical possession of the subject lots in 1998 when they installed a fence
enclosing the same. Furthermore, the fact that the MCTC found [petitioner’s] several huts standing
on the subject lots during the ocular inspection does not necessarily establish that the [petitioner]
had been in peaceful, continuous and uninterrupted possession of the subject lots. As the records
disclose, the ocular inspection was conducted in 2003 which was approximately three (3) years
after the unlawful intrusion by the [petitioner]. Hence, We cannot readily conclude that the huts
were already there when the [respondents] took actual possession of the subject lots in 1998 as
these huts could be easily constructed.

Upon the other hand, the [respondents] presented their respective certificates of title and tax
declarations to prove that they had been the registered owners of the subject lots since 1998.
While it is admitted that tax declarations and certificates of title evidencing their ownership over
the subject lots did not squarely address the issue of prior actual possession raised in a forcible
entry case (German Management Services, Inc. vs. Court of Appeals, 177 SCRA 495, 499 [1989]),
they nevertheless bolstered the stance of the [respondents] that they took physical possession of
the subject lots by virtue of such ownership. Significantly, to further corroborate their claim that
they were the actual possessors of the subject property at the time of the illegal dispossession,
they submitted the affidavit of Conrado Santos establishing that he and his son constructed a
wooden fence enclosing the subject lots bought by the [respondents], and that of Gloria Dalisaymo
confirming that this wooden fence was later destroyed and replaced with a concrete fence by the
[petitioner] in September 2000. Clearly from the foregoing, they sufficiently established by
preponderance of evidence that they were able to take material or physical possession of the
subject lots from 1998 to September 2000. It must be stressed that the fencing of the subject lots
by the [respondents] in 1998 without any objection or protest from the [petitioner] for nearly two
(2) years is deemed sufficient to confer upon them actual possession thereof.13

Not to be stymied, petitioner is now before this Court raising the issue of whether the Decision of the
Court of Appeals is supported by evidence on record and in accordance with laws and jurisprudence
established by the Supreme Court.14

The pertinent point of inquiry is whether or not private respondents have a valid ground to evict petitioner
from the subject properties.

A complaint for forcible entry may be instituted in accordance with Section 1, Rule 70 of the 1997 Rules of
Court:

SECTION 1. Who may institute proceedings, and when. – Subject to the provisions of the next
succeeding section, a person deprived of the possession of any land or building by force,
intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against
whom the possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any contract, express or implied, or the
legal representatives or assigns of any such lessor, vendor, vendee, or other person may at any
time within (1) one year after such unlawful deprivation or withholding of possession, bring an
action in the proper Municipal Trial Court against the person or persons unlawfully withholding or
depriving of possession, or any person or persons claiming under them, for the restitution of such
possession, together with damages and costs.

The summary remedies of forcible entry and unlawful detainer under Section 1, Rule 70 of the 1997 Rules
of Court are distinguished from each other as follows:

In forcible entry, one is deprived of physical possession of land or building by means of force,
intimidation, threat, strategy, or stealth. In unlawful detainer, one unlawfully withholds possession
thereof after the expiration or termination of his right to hold possession under any contract,
express or implied. In forcible entry, the possession is illegal from the beginning and the basic
inquiry centers on who has the prior possession de facto. In unlawful detainer, the possession was
originally lawful but became unlawful by the expiration or termination of the right to possess,
hence the issue of rightful possession is decisive for, in such action, the defendant is in actual
possession and the plaintiff’s cause of action is the termination of the defendant’s right to continue
in possession.

What determines the cause of action is the nature of defendant’s entry into the land. If the entry is
illegal, then the action which may be filed against the intruder within one year therefrom is forcible
entry. If, on the other hand, the entry is legal but the possession thereafter became illegal, the
 case is one of unlawful detainer which must be filed within one year from the date of the last
demand.15

It is a basic rule in civil cases that the party having the burden of proof must establish his case by a
preponderance of evidence, which simply means "evidence which is of greater weight or more convincing
than that which is offered in opposition to it."16

In filing forcible entry cases, the law tells us that two allegations are mandatory for the municipal court to
acquire jurisdiction: first, the plaintiff must allege prior physical possession of the property, and second,
he must also allege that he was deprived of his possession by any of the means provided for in Section 1,
Rule 70 of the Rules of Court, i.e., by force, intimidation, threat, strategy or stealth. It is also settled that
in the resolution of such a case, what is material is the determination of who is entitled to the physical
possession of the property. Indeed, any of the parties who can prove prior possession de facto may
recover such possession even from the owner himself since such cases proceed independently of any
claim of ownership and the plaintiff needs merely to prove prior possession de facto and undue
deprivation thereof. The question of possession is primordial while the issue of ownership is unessential. 17

Verily, in ejectment cases, the word "possession" means nothing more than actual physical possession,
not legal possession, in the sense contemplated in civil law. The only issue in such cases is who is entitled
to the physical or material possession of the property involved, independent of any claim of ownership set
forth by any of the party-litigants.18 It does not even matter if the party’s title to property is
questionable.19

The Court of Appeals, in its assailed Decision, found that (1) respondents had prior physical possession of
the subject properties, and (2) they were deprived thereof by petitioner by means of force, intimidation,
threat, strategy or stealth.

We agree in the conclusion of the Court of Appeals.

On the issue of who has prior possession, respondents’ prior physical possession of the subject properties
and deprivation thereof are clear from the allegation that they are the owners of the subject properties
which petitioner forcibly entered, of which they were unlawfully turned out of possession and for which
they pray to be restored in possession.

In ejectment cases, the plaintiff merely needs to prove prior de facto possession and undue deprivation
thereof. Respondents in their complaint averred that after they purchased the lots in 1998 they
immediately enclosed the same with a fence. This prior possession of respondents is buttressed by the
"Salaysay" of their witness Conrado Santos who stated:

SALAYSAY

Ako, CONRADO SANTOS, sapat ang gulang, Pilipino at naninirahan sa Cabangan, Zambales,
matapos na makapanumpa ng sang-ayon sa pinag-uutos ng batas ay kusang loob na dito ay
nagsasalaysay:

1. Kaming dalawa ng aking anak na si Edmund Santos ay inupahan nina Atty. at Mrs. Reynaldo
Dantes upang magbakod sa lupang nabili ng kanilang mga kamag anak at kaibigan sa Brgy. San
Isidro, Cabangan, Zambales.

2. Binakuran namin ang lupang nasasakupan ng apat na titulo.

3. Ang ginamit naming pambakod ay kawayan, boho, posteng kahoy at barbed wire.

4. Nang kami’y kasalukuyang nagbabakod nakamasid si Antonio Arbizo. Sa katunayan sa

Resthouse pa ni Tony Arbizo kami kumain ng aming meryenda sa tabi ng nasabing lupa.

5. Nang kami ay kasalukuyang nagbabakod, wala namang nagbawal o tumanggi sa aming

ginagawa at maayos at mapayapa naming nabakuran ang lupang nasasakupan ng apat na titulo.

6. Sa katunayan nagtagal ang aming ibinakod hanggang sa ito’y sinira at pinalitan ng konkreto sa
pag-uutos ni Antonio Arbizo.20
Irrefragably, the above affidavit fortifies respondents’ claim that they possessed the subject properties in
1998 earlier than the petitioner who came to the premises later on in the year 2000. Notably, petitioner
failed to rebut the contents of the above affidavit. Thus it should be given evidentiary value. The Rule on
Summary Procedure precisely provides for the submission by the parties of affidavits and position papers
and enjoins courts to hold hearings only when it is necessary to do so to clarify factual matters. This
procedure is in keeping with the objective of the Rule: to promote the expeditious and inexpensive
determination of cases.21 Worthy of note is that an action for forcible entry is a quieting process that is
summary in nature. It is designed to recover physical possession through speedy proceedings that are
restrictive in nature, scope and time limits.22

As to whether respondents were deprived of possession by force, intimidation, strategy or stealth, the
acts of the petitioner in unlawfully entering the subject properties, erecting a structure thereon and
excluding therefrom the prior possessor would necessarily imply the use of force. In order to constitute
force, the trespasser does not have to institute a state of war. As expressly stated in David v. Cordova23:

The words "by force, intimidation, threat, strategy or stealth" include every situation or condition
under which one person can wrongfully enter upon real property and exclude another, who has had
prior possession therefrom. If a trespasser enters upon land in open daylight, under the very eyes
of the person already clothed with lawful possession, but without the consent of the latter, and
there plants himself and excludes such prior possessor from the property, the action of forcible
entry and detainer can unquestionably be maintained, even though no force is used by the
trespasser other than such as is necessarily implied from the mere acts of planting himself on the
ground and excluding the other party.

All told, after due consideration of the evidence presented by the parties in this case and the applicable
jurisprudence, we hold that the Court of Appeals correctly found respondents to have a superior right of
possession over the subject properties.

We emphasize that our disquisition in this case is provisional and only to the extent necessary to
determine who between the parties has the better right of possession. 24 In an appropriate proceeding
before the court having jurisdiction, petitioner may still have the sale of the subject property to
respondents annulled, and the latter’s title cancelled if petitioner’s case is truly meritorious.

Additionally, it must also be remembered that the subject property is registered under the Torrens
System in the names of the respondents whose title to the property is presumed legal and cannot be
collaterally attacked, less so in an action for forcible entry.

In passing, it must be stressed that the jurisdiction of Supreme Court in cases brought before it from the
Court of Appeals via Rule 45, as in this case, is limited to reviewing errors or questions of law. Where
factual matters are involved, it is well-settled that a question of fact is to be determined by the evidence
to support the particular contention. As found by the Court of Appeals, the evidence adduced on this score
are in respondents’ favor. Whether such conclusion of the Court of Appeals was supported by the evidence
presented before it is also factual in nature. It is the burden of the party seeking review of a decision of
the Court of Appeals or other lower tribunals to distinctly set forth in his petition for review, not only the
existence of questions of law fairly and logically arising therefrom, but also questions substantial enough
to merit consideration, or show that there are special and important reasons warranting the review that
he seeks. If these are not shown prima facie in his petition, this Court will be justified in summarily
spurning the petition as lacking in merit.

Admittedly, there are recognized exceptions to this rule when the evidence presented during the trial may
be examined and the factual matters resolved by this Court. Among these exceptional circumstances is
when the findings of fact of the appellate court differ from those of the trial court.25

Nonetheless, the exception is not applied unqualifiedly. In Bank of Commerce v. Serrano,26 we held that
this Court does not, of itself, automatically delve into the record of a case to determine the facts anew
where there is disagreement between the findings of fact by the trial court and by the Court of Appeals.
When the disagreement is merely on the probative value of the evidence, i.e., which is more credible of
two versions, we limit our review to only ascertaining if the findings of the Court of Appeals are supported
by the records. So long as the findings of the appellate court are consistent with and not palpably contrary
to the evidence on record, we shall decline to make a review on the probative value of such evidence. The
findings of fact of the Court of Appeals, and not those of the trial court, will be considered final and
conclusive, even in this Court. In this case, we find no cogent reason to disturb the foregoing factual
findings of the Court of Appeals holding respondents entitled to the possession of the subject properties.
WHEREFORE, premises considered, the instant Petition is DENIED for lack of merit. The Decision of the
Court of Appeals dated 31 January 2006 in CA-G.R. SP No. 86456 is AFFIRMED.

G.R. No. 171098             February 26, 2008

JUAN G. GARCIA, JR. and DOROTEO C. GAERLAN, petitioners,

vs.
HON. COURT OF APPEALS and GARCIA PASION DEVELOPMENT CORPORATION(GPDC), represented by
RAMONA G. AYESA and MARCELO F. AYESA, respondents.

DECISION

CHICO-NAZARIO, J.:

In this Petition for Certiorari, petitioners seek to set aside the Resolutions of the Court of Appeals, dated
29 June 20051 and 13 January 2006,2 which dismissed their Petition in CA-G.R. SP No. 90178 for failure to
comply with the requirements of Section 1, Rule 65 of the 1997 Rules of Civil Procedure. 3

From the records, it appears that petitioners are stockholders of private respondent Garcia Pasion
Development Corp. (GPDC), a family corporation duly registered with the Securities and Exchange
Commission (SEC). Petitioners are defendants in SP. Proc. No. 03-106410, a stockholders’ derivative suit
with prayer for attachment and receivership filed by GPDC, represented by Ramona G. Ayesa and Marcelo
F. Ayesa, with the Regional Trial Court (RTC) of Manila, Branch 24. Furthermore, GPDC is a stockholder of
Kenram Philippines, Inc. and Kenram Industrial Development, Inc. On 22 February 2005, petitioners and
private respondents filed a Joint Motion4 with the RTC, praying, thus:

WHEREFORE, plaintiff and defendants respectfully pray that the Honorable Court issue an Order as
follows:

(a) Directing that all the dividends declared or to be declared in the future to plaintiff Garcia Pasion
Development Corporation by Kenram Philippines, Inc. and Kenram Industrial Development, Inc., or
other corporations, including those still in the custody of the latter two corporations, be delivered
to the Branch Clerk of Court;

(b) Directing the Branch Clerk of Court to open an account in the name of Garcia Pasion
Development Corporation [GPDC], with a bank designated by the Honorable Court, in which
account shall be deposited all funds received by said Branch Clerk of Court as and by way of
dividends due to GPDC; and

(c) Directing that no withdrawal shall be made from the bank account except upon motion of the
parties approved by the Court.5

The RTC issued an Order6 of even date which partially granted the parties’ prayer, directing that the
dividends be delivered to the Office of the Clerk of Court, RTC, Manila. Hence:

As prayed for, all the dividends declared or to be declared in the future to [private respondent]
Garcia Pasion Development Corporation [GPDC], by Kenram Philippines, Inc. and Kenram
Industrial Development, Inc., or other corporations, including those still in the custody of the latter
two corporations, are hereby directed to be delivered not to the Branch Clerk of Court but to the
Office of the Clerk of Court, Regional Trial Court, Manila. 7

Unsatisfied, the parties filed a Joint Motion to Amend the Order dated 22 February 2005, praying that the
RTC modify the same by directing that all the dividends of GPDC delivered to the Office of the Clerk of
Court, RTC of Manila, be deposited in an account to be opened in the name of GPDC with a bank
designated by the RTC, and that no withdrawal shall be made except upon joint motion of the parties
approved by the court.8

Acting on the said Joint Motion, the RTC issued an Order9 dated 7 April 2005, denying the same. It
directed thus:

x x x considering that under Section 2.1.2 of [T]he 2002 Revised Manual for Clerks of Court,
particularly the provisions that "only one depository bank shall be maintained, that deposits shall
 be made in the name of the court and that the clerk of Court shall be the custodian of the
passbook to be issued by the depository bank x x x," the joint motion is hereby denied. 10

On 20 June 2005, petitioners filed a Petition for Certiorari with the Court of Appeals, which dismissed it
outright for failure to attach therewith certified true copies of the assailed Orders of the RTC, dated 22
February 2005 and 7 April 2005 in contravention of Section 1, Rule 65 of the 1997 Rules of Civil
Procedure.

On 15 July 2005, petitioners filed a Joint Motion for Reconsideration, 11 but it was denied. The Court of
Appeals held that while the attachment of a duplicate original copy of the assailed order is sufficient
compliance with the mandate of Section 1, Rule 65 of the 1997 Rules of Civil Procedure, petitioners
merely appended machine copies of the assailed orders.

Hence, the instant Petition alleging that the Court of Appeals erred in dismissing the Petition for Certiorari
on mere technicality.

Private respondent GPDC in its Comment12 joins petitioners in their prayer that this Court give due course
to the Petition.

We dismiss the Petition.

The acceptance of a petition for certiorari, as well as the grant of due course thereto is, in general,
addressed to the sound discretion of the court.13 It must be stressed that certiorari, being an
extraordinary remedy,14 the party who seeks to avail of the same must strictly observe the rules laid down
by the law15 and non-observance thereof may not be brushed aside as mere technicality. 16

In the matter of the requirement that a petition for certiorari be accompanied by a certified true copy of
the judgment, order or resolution subject thereof, Section 1, Rule 65 of the 1997 Rules of Civil Procedure,
as amended, provides:

SECTION 1. Petition for certiorari.-

xxxx

The petition shall be accompanied by a certified true copy of the judgment, order or resolution
subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn
certification of non-forum shopping as provided in the third paragraph of Section 3, Rule 46.

Significantly, Section 3, Rule 46 of the same Rules, provides:

SECTION 3. Contents and filing of petition; effect of non-compliance with requirements. –

xxxx

It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the
respondent with the original copy intended for the court indicated as such by the petitioner, and
shall be accompanied by a clearly legible duplicate original or certified true copy of the judgment,
order, resolution, or ruling subject thereof, such material portions of the record as are referred to
therein, and other documents relevant or pertinent thereto. The certification shall be accomplished
by the proper clerk of court or by his duly authorized representative, or by the proper officer of the
court, tribunal, agency or office involved or by his duly authorized representative. The other
requisite number of copies of the petition shall be accompanied by clearly legible plain copies of all
documents attached to the original.

xxxx

The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient
ground for the dismissal of the petition."

It is true that Section 3 of Rule 46 does not require that all supporting papers and documents
accompanying a petition be duplicate originals or certified true copies.17 However, it explicitly directs that
all cases originally filed in the Court of Appeals shall be accompanied by a clearly legible duplicate original
or certified true copy of the judgment, order, resolution or ruling subject thereof. 18 Similarly, under Rule
65, which covers certiorari, prohibition and mandamus, petitions need to be accompanied only by
duplicate originals or certified true copies of the questioned judgment, order or resolution. 19 Other
relevant documents and pleadings attached to it may be mere machine copies thereof. 20 In the case at
bar, petitioners failed to attach duplicate originals or certified true copies of the assailed Orders of the
RTC, dated 22 February 2005 and 7 April 2005. What they affixed were machine or xerox copies of the
same. Plainly put, petitioners contravened the obvious rudiments of the rules.

In Circular No. 3-96, we made the following clarifications and supplemental rules on what is a duplicate
original or certified true copy:

1. The "duplicate original copy" shall be understood to be that copy of the decision, judgment,
resolution or order which is intended for and furnished to a party in the case or proceeding in the
court or adjudicative body which rendered and issued the same. The "certified true copy" thereof
shall be such other copy furnished to a party at his instance or in his behalf, duly authenticated by
the authorized officers or representatives of the issuing entity as hereinbefore specified.

2. The duplicate original copy must be duly signed or initialed by the authorities or the
corresponding officer or representative of the issuing entity, or shall at least bear the dry seal
thereof or any other official indication of the authenticity and completeness of such copy. For this
purpose, all courts, offices or agencies furnishing such copies which may be used in accordance
with Paragraph (3) of Revised Circular No. 1-88 shall make arrangements for and designate the
personnel who shall be charged with the implementation of this requirement.

3. The certified true copy must further comply with all the regulations therefor of the issuing entity
and it is the authenticated original of such certified true copy, and not a mere xerox copy thereof,
which shall be utilized as an annex to the petition or other initiatory pleading.

4. Regardless of whether a duplicate original copy or a certified true copy of the adjudicatory
document is annexed to the petition or initiatory pleading, the same must be exact and complete
copy of the original and all the pages thereof must be clearly legible and printed on white bond or
equivalent paper of good quality with the same dimensions as the original copy. Either of the
aforesaid copies shall be annexed to the original copy of the petition or initiatory pleading filed in
court, while plain copies thereof may be attached to the other copies of the pleading.

5. It shall be the duty and responsibility of the party using documents required by Paragraph (3) of
Circular No. 1-88 to verify and ensure compliance with all the requirements thereof as detailed in
the proceeding paragraphs. Failure to do so shall result in the rejection of such annexes and the
dismissal of the case. Subsequent compliance shall not warrant any reconsideration unless the
court is fully satisfied that the noncompliance was not in any way attributable to the party despite
due diligence on his part, and that there are highly justifiable and compelling reasons for the court
to make such other disposition as it may deem just and equitable.

Based on the foregoing, it is incontrovertible that a certified true copy is not a mere xerox copy. Further,
it is imperative that the duplicate original copy required by the rules must be duly signed or initialed by
the authorities or the corresponding officer or representative of the issuing entity, or shall at least bear
the dry seal thereof or any other official indication of the authenticity and completeness of such copy.
Petitioners’ xerox copies are wanting in this respect.

Petitioners seek a liberal application of the procedural rules. For their failure to attach certified true copies
of the assailed orders of the RTC, petitioners place the blame on the appellate court. Petitioners brazenly
suggest that what the Court of Appeals should have done was to issue an Order directing them to comply
with the rule on attaching certified true copies, instead of dismissing the case on its face. We do not see
reason to grant liberality in the application of the rules. It must be emphasized that the liberality in the
interpretation and application of the rules applies only in proper cases and under justifiable causes and
circumstances.21 While it is true that litigation is not a game of technicalities, it is equally true that every
case must be prosecuted in accordance with the prescribed procedure to insure an orderly and speedy
administration of justice.22 Only strong considerations of equity, which are wanting in this case, will lead
us to allow an exception to the procedural rule in the interest of substantial justice. 23 To further suggest
petitioners’ impervious attitude towards rules, they even failed to attach certified true copies or duplicate
original copies of the assailed Orders in their Motion for Reconsideration filed with the Court of Appeals.
Concomitant to a liberal application of the rules of procedure should be an effort on the party invoking
liberality to at least explain its failure to comply with the rules.24 Circular No. 3-96 is also unequivocal that
it shall be the duty and responsibility of the party to verify and ensure compliance with all the
requirements detailed therein. In fact, failure to do so shall result in the rejection of such annexes and the
dismissal of the case.25

Petitioners’ contention that the Court of Appeals ought to have issued an Order directing them to file the
certified true copies of the assailed RTC orders is hardly a plausible explanation. They have everything
within their power to ensure compliance with all the requirements laid down by the rules. As parties who
wish to seek the aid of the courts and avail of the extraordinary remedy of certiorari, petitioners should
have taken the duty and the responsibility to observe the rules.

At any rate, we do not find merit in the Petition. Petitioners’ prayer that the Branch Clerk of Court be
directed to open an account in the name of GPDC, with a bank designated by the RTC may not be
granted. The guidelines to be observed in making deposits or withdrawals of all collections from bailbonds,
rental deposits and other fiduciary collections, or moneys received in trust are enumerated in Supreme
Court Circular No. 13-92, dated 1 March 1992, to wit:

CIRCULAR NO. 13-92

To : All Executive Judges and Clerks of Court of the Regional Trial Courts and Shari’a District
Courts.

Subject: Court Fiduciary Funds

xxxx

x x x The following procedure is, therefore, prescribed in the administration of Court Fiduciary
Funds:

"Guidelines in Making Deposits:

"1) Deposits shall be made under a savings account. Current account can also be maintained
provided that it is on automatic transfer of account from savings.

"2) Deposits shall be made in the name of the Court.

"3) The Clerk of Court shall be the custodian of the Passbook to be issued by the depository bank
and shall advise the Executive Judge of the bank’s name, branch and savings/current account
number.

"Guidelines in Making Withdrawals

"1) Withdrawal slips shall be signed by the Executive Judge and countersigned by the Clerk of
Court.

"2) In maintaining a current account, withdrawals shall be made by checks. Signatories on the
checks shall likewise be the Executive Judge and the Clerk of Court.

"All collections from bailbonds, rental deposits and other fiduciary collections shall be deposited
immediately by the Clerk of Court concerned, upon receipt thereof, with an authorized government
depository bank.26

The same rule is also embodied in the 2002 Revised Manual for Clerks of Court. 27 Pertinently, the rule is
that deposits shall be made in the name of the Court. Perforce, the instant Petition is without merit.

WHEREFORE, premises considered, the instant Petition is hereby DISMISSED. The Resolutions of the
Court of Appeals, dated 29 June 2005 and 13 January 2006 in CA-G.R. SP No. 90178, are AFFIRMED.

G.R. No. 169712               March 14, 2008

MA. WENELITA TIRAZONA, Petitioner,

vs.
COURT OF APPEALS, PHILIPPINE EDS-TECHNO SERVICE INC. (PET INC.) AND/OR KEN KUBOTA, MAMORU
ONO and JUNICHI HIROSE, Respondents.

DECISION

CHICO-NAZARIO, J.:

Assailed in this Special Civil Action for Certiorari1 under Rule 65 of the Rules of Court are the Decision2 and
Resolution3 of the Court of Appeals dated 24 May 2005 and 7 September 2005, respectively, in CA-G.R.
SP No. 85065. The appellate court’s Decision dismissed petitioner Ma. Wenelita Tirazona’s Special Civil
Action for Certiorari and affirmed the Decision4 dated 30 January 2004 of the National Labor Relations
Commission (NLRC) in NLRC CA No. 034872-03, which ruled that petitioner’s dismissal from employment
was legal; and its Resolution which denied petitioner’s Motion for Reconsideration.

The factual and procedural antecedents of the case are as follows:

Private respondent Philippine EDS-Techno Services Inc. (PET) is a corporation duly registered under
Philippine laws and is engaged in the business of designing automotive wiring harnesses for automobile
manufacturers. Private respondents Ken Kubota, Mamoru Ono and Junichi Hirose are all Japanese
nationals, the first being the President and the latter two being the directors of PET.

On 21 July 1999, PET employed Ma. Wenelita S. Tirazona (Tirazona) as Administrative Manager. Being the
top-ranking Filipino Manager, she acted as the liaison between the Japanese management and the Filipino
staff.

On 15 January 2002, Fe Balonzo, a rank-and-file employee, wrote a letter 5 that was addressed to nobody
in particular, but was later acquired by PET management. In her letter, Balonzo complained that Tirazona
humiliated her while she was reporting back to work after recuperating from a bout of tuberculosis.
Balonzo explained that Tirazona insinuated, in a manner loud enough to be heard from the outside, that
Balonzo still had the disease. This allegedly occurred despite Balonzo’s possession of a medical clearance
that proved her fitness to return to work. Balonzo thus requested that the necessary action be undertaken
to address the said incident.

Upon receiving the letter, the PET management directed Tirazona to file her comment. Tirazona replied
accordingly in a letter6 wherein she denied the accusations against her. Tirazona stated that her only
intention was to orient Balonzo about the latter’s rights as a sick employee, i.e., that under the law, if the
latter planned to resign, the company can give her separation pay. Tirazona likewise asked for an
independent investigation and threatened to file a libel case against Balonzo for allegedly trying to destroy
her reputation and credibility.

After weighing the situation, PET director Ono sent a memorandum to Tirazona, which reads:

February 8, 2002

To: Mrs. W. Tirazona

Re: Letter-Complaint of Fe S. Balonzo

This is to advise you that Management is satisfied that you did not intend to humiliate or embarrass Ms.
Balonzo during the incident on January 14, 2002. It also appreciates the concern you profess for the
welfare of PET employees.

Nonetheless, Management finds your handling of the situation less than ideal. Considering the sensitive
nature of the issue, a little more circumspection could have readily avoided the incident which it cannot be
denied caused unnecessary discomfort and hurt feelings to Ms. Balonzo. Certainly, you could have
discussed the matter in private and allowed her to first deliver her piece rather than pre-empt her
declaration. As it turned out, your assumption (that Ms. Balonzo would request for a leave extension) was
in fact wrong and she had a medical certificate attesting her fitness to return to work.

Management therefore would like to remind you of the high expectations of your position.
Management considers this matter closed, and finds it appropriate to convey to you that it does not view
with favor your notice to file legal action. Management believes that you share the idea that issues
regarding employee relations are best threshed out within the Company. Resorting to legal action is
unlikely to solve but on the contrary would only exacerbate such problems.

We trust that, after emotions have calmed down, you would still see it that way.

(Sgd.)
Mamoru Ono
Director7

On 6 March 2002, Tirazona’s counsels sent demand letters8 to PET’s business address, directed separately
to Ono and Balonzo. The letter to Ono states:

February 27, 2002

MR. MAMORU ONO

Director
PET, Inc.
20/F 6788 Ayala Avenue
Oledan Square, Makati City

Dear Mr. Ono:

We are writing in [sic] behalf of our client, Ms. MA. WENELITA S. TIRAZONA, Administrative Manager of
your corporation.

We regret that on February 8, 2002, you delivered to our client a letter containing among others, your
conclusion that Ms. Tirazona was guilty of the unfounded and baseless charges presented by Ms. Fe
Balonzo in her letter-complaint dated January 15, 2002. You may please recall that in Ms. Tirazona’s letter
to Mr. Junichi Hirose, she presented point by point, her side on the allegations made by the complainant.
In the same letter, Ms. Tirazona requested for an independent investigation of the case in order to thresh
out all issues, ferret out the truth and give her the opportunity to be heard and confront her accuser.
These were all denied our client.

As a result of the foregoing, Ms. Tirazona’s constitutional right to due process was violated and judgment
was rendered by you on mere allegations expressed in a letter-complaint to an unknown addressee.

Considering the position and stature of Mrs. Tirazona in the community and business circles, we are
constrained to formally demand payment of P2,000,000.00 in damages, injured feelings, serious anxiety
and besmirched reputation that she is now suffering.

We are giving you five (5) days from receipt hereof to make favorable response, otherwise, much to our
regret, we will institute legal procedures to protect our client’s interests.

Please give this matter the attention it deserves.

Very truly yours,

PRINCIPE, VILLANO, VILLACORTA & CLEMENTE

By:

(Sgd.)
PEDRO S. PRINCIPE

(Sgd.)
GLICERIO E. VILLANO

The letter sent to Balonzo likewise sought the same amount of damages for her allegedly baseless and
unfounded accusations against Tirazona.
Because of Tirazona’s obstinate demand for compensation, PET sent her a Notice of Charge, 9 which
informed her that they were considering her termination from employment by reason of serious
misconduct and breach of trust. According to the management, they found her letter libelous, since it
falsely accused the company of finding her guilty of the charges of Balonzo and depriving her of due
process.

On 26 March 2002, Tirazona explained in a letter10 that her counsels’ demand letter was brought about by
the denial of her repeated requests for reinvestigation of the Balonzo incident, and that the same was
personally addressed to Mamoru Ono and not to the company. She also reiterated her request for an
investigation and/or an open hearing to be conducted on the matter.

The PET management replied11 that the Balonzo incident was already deemed a closed matter, and that
the only issue for consideration was Tirazona’s "ill-advised response to the Management’s disposition to
the Fe Balonzo incident," for which an administrative hearing was scheduled on 4 April 2002.

On 3 April 2002, Tirazona submitted a written demand12 to PET that the Balonzo incident be included in
the scheduled hearing. She further stated that since the management had already prejudged her case,
she would only participate in the proceedings if the investigating panel would be composed of three
employees, one each from the rank-and-file, supervisory, and managerial levels, plus a representative
from the Department of Labor and Employment (DOLE).

The PET management rejected Tirazona’s demands in a letter 13 and informed her that the hearing was
reset to 10 April 2002, which would be presided by PET’s external counsel.

On 10 April 2002, Tirazona and her counsel did not appear at the administrative hearing. The PET
management informed them through a memorandum14 dated 12 April 2002 that the hearing was carried
out despite their absence. Nevertheless, Tirazona was granted a final chance to submit a supplemental
written explanation or additional documents to substantiate her claims.

Tirazona’s written explanation15 dated 17 April 2002 merely reiterated, without further details, her
previous claims, to wit: that Balonzo’s charges were unfounded and baseless; that she had been denied
due process; and that she would not submit herself to an investigating panel that had already prejudged
her case. Tirazona also stated that her claim for damages would be justified at the proper forum, and that
she admitted to reading a confidential letter addressed to PET directors Ono and Fukuoka, containing the
legal opinion of PET’s counsel regarding her case.

After finding the explanations unsatisfactory, PET sent Tirazona a Notice of Termination, 16 which found her
guilty of serious misconduct and breach of trust because of her demand against the company and her
invasion of PET’s right to privileged communication.

Tirazona then instituted with the NLRC a complaint for illegal dismissal, non-payment of salaries, and
damages against PET, docketed as NLRC-CA No. 034872-03.

In the Decision17 dated 22 January 2003, Labor Arbiter Veneranda C. Guerrero ruled in favor of Tirazona,
holding that the latter’s termination from employment was illegal.

The Arbiter declared that there was no breach of trust when Tirazona sent the demand letter, as the same
was against Ono in his personal capacity, not against the company. The decision also ruled that PET failed
to discharge the burden of proving that the alleged breach of trust was fraudulent and willful, and that the
company was careless in handling its communications. The Arbiter further stated that Tirazona was
deprived of her right to due process when she was denied a fair hearing.

On appeal by PET, the NLRC reversed the rulings of the Labor Arbiter in a Decision dated 30 January
2004, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered SETTING ASIDE the Decision of the Labor Arbiter dated
January 27, 2003 and a new one is entered DISMISSING the complaint for lack of merit. 18

Contrary to the Labor Arbiter’s findings, the NLRC concluded that Tirazona’s termination from employment
was in accordance with law. It ruled that Tirazona’s demand letter addressed to Ono constituted a just
cause for dismissal, as the same was "an openly hostile act" by a high-ranking managerial employee
against the company.19 The NLRC likewise found that PET complied with the notice and hearing
requirements of due process, inasmuch as Tirazona’s demand for a special panel was without any legal
basis. Furthermore, petitioner breached the company’s trust when she read the confidential legal opinion
of PET’s counsel without permission.

The Motion for Reconsideration filed by Tirazona was denied by the NLRC in a Resolution dated 31 May
2004, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, Complainant-Appellee’s Motion for Reconsideration is hereby

DISMISSED for lack of merit and our Decision dated 30 January 2004 is thus AFFIRMED with finality. 20

Aggrieved, Tirazona instituted with the Court of Appeals a Special Civil Action for Certiorari under Rule 65,
alleging grave abuse of discretion on the part of the NLRC, docketed as CA-G.R. SP No. 85065.

In a Decision dated 24 May 2005, the appellate court affirmed the NLRC and ruled thus:

WHEREFORE, in consideration of the foregoing, the petition is perforce dismissed. 21

Her Motion for Reconsideration having been denied by the appellate court in a Resolution dated 7
September 2005, Tirazona now impugns before this Court the Court of Appeals Decision dated 24 May
2005, raising the following issues:

I.

WHETHER THERE WAS BREACH OF TRUST ON THE PART OF PETITIONER TIRAZONA WHEN SHE WROTE
THE TWO MILLION PESO DEMAND LETTER FOR DAMAGES, WARRANTING HER DISMISSAL FROM
EMPLOYMENT.

II.

WHETHER DUE PROCESS WAS SUFFICIENTLY AND FAITHFULLY OBSERVED BY RESPONDENTS IN THE
DISMISSAL OF PETITIONER TIRAZONA FROM EMPLOYMENT.

In essence, the issue that has been brought before this Court for consideration is whether or not Tirazona
was legally dismissed from employment.

Prefatorily, the Court notes that Tirazona elevated her case to this Court via a Petition for Certiorari under
Rule 65 of the Rules of Court. The appropriate remedy would have been for Tirazona to file an appeal
through a Petition for Review on Certiorari under Rule 45.

For a Petition for Certiorari under Rule 65 of the Rules of Court to prosper, the following requisites must
be present: (1) the writ is directed against a tribunal, a board or an officer exercising judicial or quasi-
judicial functions: (2) such tribunal, board or officer has acted without or in excess of jurisdiction or with
grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any
plain, speedy and adequate remedy in the ordinary course of law.22

There is grave abuse of discretion "when there is a capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, such as where the power is exercised in an arbitrary or despotic manner
by reason of passion or personal hostility, and it must be so patent and gross so as to amount to an
evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in
contemplation of law."23

The Petition for Certiorari shall be filed not later than sixty (60) days from notice of the judgment, order
or resolution. In case a motion for reconsideration is timely filed, the sixty (60)-day period shall be
counted from notice of the denial of the said motion.24

On the other hand, Rule 45 of the Rules of Court pertains to a Petition for Review on Certiorari whereby "a
party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals x
x x may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise
only questions of law which must be distinctly set forth."25
The petition shall be filed within fifteen (15) days from notice of the judgment or final order or resolution
appealed from, or of the denial of the petitioner’s motion for new trial or reconsideration filed in due time
after notice of the judgment.26

In the present case, the assailed Decision is the dismissal by the Court of Appeals of Tirazona’s Petition
for Certiorari under Rule 65. Said Decision partakes of the nature of a judgment or final order, thus, is
reviewable only through an appeal by certiorari under Rule 45.

As aptly declared by the Court in National Irrigation Administration v. Court of Appeals 27:

[s]ince the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged errors
committed by it in the exercise of its jurisdiction would be errors of judgment which are reviewable by
timely appeal and not by a special civil action of certiorari. If the aggrieved party fails to do so within the
reglementary period, and the decision accordingly becomes final and executory, he cannot avail himself of
the writ of certiorari, his predicament being the effect of his deliberate inaction. [Emphasis ours.]

Even just a cursory glance at the issues raised by Tirazona before this Court readily reveals that these
pertain to purported errors of judgment committed by the appellate court in its appreciation of the
allegations, evidence, and arguments presented by the parties. There is no question here of the Court of
Appeals acting on Tirazona’s Petition in CA-G.R. No. 85065 without or in excess of jurisdiction or with
grave abuse of discretion amounting to lack or excess of jurisdiction.

A review of the rollo of the Petition at bar divulges even further that Tirazona’s resort to a wrong remedy
was not an innocent mistake but a deliberate choice.

On 5 October 2005, Tirazona filed with this Court a Petition for Extension of Time to File a Petition for
Review on Certiorari.28 Tirazona stated therein that she received the notice of the Court of Appeals
Resolution denying her Motion for Reconsideration on 23 September 2005. Since she only had fifteen (15)
days after the said date to file a Petition for Review on Certiorari, or until 8 October 2005, Tirazona
prayed for an extension of thirty (30) days, with her counsel citing extreme pressures of work.

In a Resolution29 dated 19 October 2005, the Court granted Tirazona’s Motion for Extension. The extended
period was to end on 7 November 2005. However, Tirazona failed to file a Petition for Review on Certiorari
within the said period. Instead, she filed the present Petition for Certiorari on 5 December 2005, seventy-
three (73) days after notice of the Court of Appeals Resolution denying her Motion for Reconsideration.

From the foregoing, it is fairly obvious that Tirazona was aware that she was supposed to file an appeal
through a Petition for Review on Certiorari under Rule 45. That she filed the instant Petition for Certiorari
under Rule 65 and only after an inexplicably long period of time leads to the inescapable conclusion that
the same was merely an afterthought, nothing more than a desperate attempt to revive a lost appeal.

The special civil action of certiorari under Rule 65 is an independent action that cannot be availed of as a
substitute for the lost remedy of an ordinary appeal, including that under Rule 45, especially if such loss
or lapse was occasioned by one’s own neglect or error in the choice of remedies. 30 It also bears to stress
the well-settled principle that the remedies of appeal and certiorari are mutually exclusive and not
alternative or successive. Under Rule 56, Sec. 5(f) of the Revised Rules of Court, a wrong or inappropriate
mode of appeal merits an outright dismissal.31

Tirazona, in her Reply32 before this Court, even admits that although the instant Petition is one of special
civil action of certiorari under Rule 65, her petition is in reality an appeal under Rule 45 as her petition
raises pure questions of law. Tirazona herself acknowledges the formal defects of her own Petition and
attributes the same to the haste and inadvertence of her former counsel, who allegedly prepared the
instant Petition without her participation. 33 She thus urges this Court to suspend the application of its own
rules on grounds of equity and substantial justice, considering that it is her employment that is at stake in
this case.

In this regard, it needs to be emphasized that before the Court may treat the present petition as having
been filed under Rule 45, the same must comply with the reglementary period for filing an appeal. This
requirement is not only mandatory but also jurisdictional such that failure to do so renders the assailed
decision final and executory, and deprives this Court of jurisdiction to alter the final judgment, much less
to entertain the appeal.34 Since the instant petition was filed after the lapse of the extended period for
filing an appeal, the same should be dismissed outright.
Nevertheless, the Court finds it essential that we discuss the case on its merits, bearing in mind that the
paramount consideration in this case is an employee’s right to security of tenure, and in order to provide
Tirazona the amplest opportunity to know how the Court arrived at a proper and just determination of her
case.

Even if the Court were to ignore the conspicuous procedural defects committed by Tirazona and treat her
Petition as an appeal under Rule 45, it still finds that the Petition must be denied for lack of merit.

Petitioner contends that, contrary to the findings of the Court of Appeals, her dismissal from employment
was illegal for having lacked both a legal basis and the observance of due process.

In employee termination cases, the well-entrenched policy is that no worker shall be dismissed except for
a just or authorized cause provided by law and after due process. Clearly, dismissals have two facets:
first, the legality of the act of dismissal, which constitutes substantive due process; and second, the
legality in the manner of dismissal, which constitutes procedural due process.35

Under Article 282(c)36 of the Labor Code, loss of trust and confidence is one of the just causes for
dismissing an employee. It is an established principle that loss of confidence must be premised on the fact
that the employee concerned holds a position of trust and confidence. This situation obtains where a
person is entrusted with confidence on delicate matters, such as care and protection, handling or custody
of the employer’s property. But, in order to constitute a just cause for dismissal, the act complained of
must be "work-related" such as would show the employee concerned to be unfit to continue working for
the employer. Besides, for loss of confidence to be a valid ground for dismissal, such loss of confidence
must arise from particular proven facts.37

Tirazona claims that her demand letter was merely an expression of indignation by a disgruntled
employee against a director, not against the company and, by itself, cannot constitute a breach of trust
and confidence. The company’s notice of charge allegedly insinuated Tirazona’s guilt in the Balonzo
incident; hence, the need to defend herself. Tirazona likewise asserts that she is an ordinary rank-and-file
employee as she is not vested with the powers and prerogatives stated in Article 212(m) 38 of the Labor
Code. As such, her alleged hostility towards her co-workers and the PET management is not a violation of
trust and confidence that would warrant her termination from employment.

At the outset, the Court notes that the issues set forth above are factual in nature. As the Court is asked
to consider the instant Petition as an appeal under Rule 45, then only pure questions of law will be
entertained.39

A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is
a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a question to be
one of law, the same must not involve an examination of the probative value of the evidence presented
by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on
the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented,
the question posed is one of fact.40

In the instant case, Tirazona would have the Court examine the actual wording, tenor, and contextual
background of both her demand letter and the PET’s notice of charge against her. Similarly, the
determination of whether Tirazona is a managerial or rank-and-file employee would require the Court to
review the evidence that pertains to Tirazona’s duties and obligations in the company. Also, in order to
ascertain whether the breach of trust was clearly established against Tirazona, the Court will have to sift
through and evaluate the respective evidence of the parties as well. These tasks are not for the Court to
accomplish.

The Court is not a trier of facts. It is not the function of this Court to analyze or weigh evidence all over
again, unless there is a showing that the findings of the lower court are totally devoid of support or are
glaringly erroneous as to constitute palpable error or grave abuse of discretion. 41

In its assailed decision, the Court of Appeals affirmed the ruling of the NLRC and adopted as its own the
latter’s factual findings. Long established is the doctrine that findings of fact of quasi-judicial bodies like
the NLRC are accorded with respect, even finality, if supported by substantial evidence. When passed
upon and upheld by the Court of Appeals, they are binding and conclusive upon the Supreme Court and
will not normally be disturbed.42 Though this doctrine is not without exceptions,43 the Court finds that
none are applicable to the present case.
Thus, on the matter of Tirazona’s demand letter, this Court is bound by the following findings of the Court
of Appeals:

Clearly, petitioner Tirazona’s letter to respondent Ono dated 27 February 2002, as DIRECTOR of PET was
addressed to an officer and representative of the corporation. The accusations in the aforesaid demand
letter were directed against respondent Ono’s official act as a representative of respondent PET. Suffice it
to stress, an attack on the integrity of his (Ono) corporate act is necessarily aimed at respondent PET
because a corporation can only act through its officers, agents and representatives.

xxxx

A thorough and judicious examination of the facts and evidence obtaining in the instant case as could be
found in the records, would clearly show that petitioner Tirazona has absolutely no basis for a P2 million
demand, coupled with lawsuit if the same was not paid within the five (5) days [sic] period. Her
justification for the demand of money is that she was allegedly found by the respondent PET through
respondent Ono guilty of the charges filed by Ms. Balonzo. As the records would indubitably show,
petitioner Tirazona was never charged of any offense with respect to the Fe Balonzo’s [sic] incident. She
was never issued a Notice of Charge, much less a Notice of Disciplinary Action. What was issued to her by
respondent Ono in his letter x x x was a gentle and sound reminder to be more circumspect in handling
the incident or situation like this [sic]. As fully evidenced in the last paragraph of the said letter, it states
that:

xxxx

Management considers this matter closed, and finds it appropriate to convey to you that it does not view
with favor your notice to file legal action. Management believes that you share the idea that issues
regarding employee relations are best threshed out within the Company. Resorting to legal action is
unlikely to solve but on the contrary would only exacerbate such problems.

But for reasons only known to petitioner Tirazona, she treated respondent Ono’s letter as an affront to her
honor and dignity. This, instead of seeking a dialogue with respondent PET on her felt grievance,
petitioner Tirazona through her lawyer sent the questioned demand letter to respondent Ono. Suffice it to
state, this act of petitioner bared animosity in the company and was definitely not a proper response of a
top level manager like her over a trivial matter.

xxxx

In fine, the confluence of events and circumstances surrounding the petitioner Tirazona’s actions or
omissions affecting her employer’s rights and interest, would undoubtedly show that she is no longer
worthy of being a recipient of the trust and confidence of her employer. x x x.44

Likewise conclusive upon this Court is the Court of Appeals’ pronouncement that Tirazona is in fact a
managerial employee, to wit:

The records would indubitably show that it is only now that petitioner Tirazona is asserting that she is not
a managerial employee of respondent PET. From the very start, her dismissal was premised on the fact
that she is a managerial and confidential employee, and she never denied that fact. It was never an issue
at all before the Labor Arbiter and the public respondent NLRC. Therefore, she is estopped to claim now
that she is [just a] rank and file employee of respondent PET, especially that she herself admitted in her
pleading that she is a managerial employee:

xxxx

If the respondent Company has to protect Respondent Mamoru Ono, the Complainant [petitioner] has also
the right to be protected from the baseless accusations of a Rank and File Employee for she [petitioner] is
a part of the management like Mr. Mamoru Ono" (par. 5, Complainant’s Rejoinder [to Respondent’s Reply]
dated 2 September 2002 (note: unattached to the petitioner [sic]) [attached as Annex "1" hereof]. (p.
263, Rollo).45

Tirazona next argues that she was deprived of procedural due process as she was neither served with two
written notices, nor was she afforded a hearing with her participation prior to her dismissal.
Tirazona’s arguments are baseless.

Procedural due process is simply defined as giving an opportunity to be heard before judgment is
rendered. The twin requirements of notice and hearing constitute the essential elements of due process,
and neither of those elements can be eliminated without running afoul of the constitutional guaranty. 46

The employer must furnish the employee two written notices before termination may be effected. The first
notice apprises the employee of the particular acts or omissions for which his dismissal is sought, while
the second notice informs the employee of the employer’s decision to dismiss him. 47

It is fairly obvious in this case that Tirazona was served with the required twin notices. The first was
embodied in the Notice of Charge dated 25 March 2002 where PET informed Tirazona that it was
considering her termination from employment and required her to submit a written explanation. In the
said Notice, PET apprised Tirazona of the ground upon which it was considering her dismissal: (1) her
letter that contained false accusations against the company, and (2) her demand for two million pesos in
damages, with a threat of a lawsuit if the said amount was not paid. The Notice of Termination dated 22
April 2002 given to Tirazona constitutes the second notice whereby the company informed her that it
found her guilty of breach of trust warranting her dismissal from service.

Equally bereft of merit is Tirazona’s allegation that she was not given the benefit of a fair hearing before
she was dismissed.

It needs to be pointed out that it was Tirazona herself and her counsel who declined to take part in the
administrative hearing set by PET 10 April 2002. Tirazona rejected the company’s appointment of its
external counsel as the investigating panel’s presiding officer, because her own demands on the panel’s
composition were denied. As correctly held by the NLRC and the Court of Appeals, Tirazona’s stance is
without any legal basis. On the contrary, this Court’s ruling in Foster Parents Plan International/Bicol v.
Demetriou48 is controlling:

The right to dismiss or otherwise impose disciplinary sanctions upon an employee for just and valid cause,
pertains in the first place to the employer, as well as the authority to determine the existence of said
cause in accordance with the norms of due process. In the very nature of things, any investigation by the
employer of any alleged cause for disciplinary punishment of an employee will have to be conducted by
the employer himself or his duly designated representative; and the investigation cannot be thwarted or
nullified by arguing that it is the employer who is accuser, prosecutor and judge at the same time. x x x
Of course, the decision of the employer meting out sanctions against an employee and the evidentiary
and procedural bases thereof may subsequently be passed upon by the corresponding labor arbiter (and
the NLRC on appeal) upon the filing by the aggrieved employee of the appropriate complaint. [Emphasis
ours.]1avvphi1

This Court has held that there is no violation of due process even if no hearing was conducted, where the
party was given a chance to explain his side of the controversy. What is frowned upon is the denial of the
opportunity to be heard.49 Tirazona in this case has been afforded a number of opportunities to defend her
actions. Even when Tirazona failed to attend the scheduled hearing, PET still informed Tirazona about
what happened therein and gave her the chance to submit a supplemental written explanation. Only when
Tirazona again failed to comply with the same did PET terminate her employment.

As a final plea for her case, Tirazona asserts that her dismissal from employment was too harsh and
arbitrary a penalty to mete out for whatever violation that she has committed, if indeed there was one.

Tirazona ought to bear in mind this Court’s pronouncement in Metro Drug Corporation v. NLRC 50 that:

When an employee accepts a promotion to a managerial position or to an office requiring full trust and
confidence, she gives up some of the rigid guaranties available to ordinary workers. Infractions which if
committed by others would be overlooked or condoned or penalties mitigated may be visited with more
severe disciplinary action. A company’s resort to acts of self-defense would be more easily justified. x x x.

Tirazona, in this case, has given PET more than enough reasons to distrust her. The arrogance and
hostility she has shown towards the company and her stubborn, uncompromising stance in almost all
instances justify the company’s termination of her employment. Moreover, Tirazona’s reading of what was
supposed to be a confidential letter between the counsel and directors of the PET, even if it concerns her,
only further supports her employer’s view that she cannot be trusted. In fine, the Court cannot fault the
actions of PET in dismissing petitioner.

WHEREFORE, premises considered, the instant petition is hereby DENIED for lack of merit and the
Decision of the Court of Appeals dated 24 May 2005 is hereby AFFIRMED.

G.R. No. 136409               March 14, 2008

SUBHASH C. PASRICHA and JOSEPHINE A. PASRICHA, Petitioners,

vs.
DON LUIS DISON REALTY, INC., Respondent.

DECISION

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the
Decision1 of the Court of Appeals (CA) dated May 26, 1998 and its Resolution 2 dated December 10, 1998
in CA-G.R. SP No. 37739 dismissing the petition filed by petitioners Josephine and Subhash Pasricha.

The facts of the case, as culled from the records, are as follows:

Respondent Don Luis Dison Realty, Inc. and petitioners executed two Contracts of Lease 3 whereby the
former, as lessor, agreed to lease to the latter Units 22, 24, 32, 33, 34, 35, 36, 37 and 38 of the San Luis
Building, located at 1006 M.Y. Orosa cor. T.M. Kalaw Streets, Ermita, Manila. Petitioners, in turn, agreed
to pay monthly rentals, as follows:

For Rooms 32/35:

From March 1, 1991 to August 31, 1991 – P5,000.00/P10,000.00

From September 1, 1991 to February 29, 1992 – P5,500.00/P11,000.00

From March 1, 1992 to February 28, 1993 – P6,050.00/P12,100.00

From March 1, 1993 to February 28, 1994 – P6,655.00/P13,310.00

From March 1, 1994 to February 28, 1995 – P7,320.50/P14,641.00

From March 1, 1995 to February 28, 1996 – P8,052.55/P16,105.10

From March 1, 1996 to February 29, 1997 – P8,857.81/P17,715.61

From March 1, 1997 to February 28, 1998 – P9,743.59/P19,487.17

From March 1, 1998 to February 28, 1999 – P10,717.95/P21,435.89

From March 1, 1999 to February 28, 2000 – P11,789.75/P23,579.484

For Rooms 22 and 24:

Effective July 1, 1992 – P10,000.00 with an increment of 10% every two years.5

For Rooms 33 and 34:

Effective April 1, 1992 – P5,000.00 with an increment of 10% every two years.6

For Rooms 36, 37 and 38:

Effective when tenants vacate said premises – P10,000.00 with an increment of 10% every two years.7
Petitioners were, likewise, required to pay for the cost of electric consumption, water bills and the use of
telephone cables.8

The lease of Rooms 36, 37 and 38 did not materialize leaving only Rooms 22, 24, 32, 33, 34 and 35 as
subjects of the lease contracts.9 While the contracts were in effect, petitioners dealt with Francis Pacheco
(Pacheco), then General Manager of private respondent. Thereafter, Pacheco was replaced by Roswinda
Bautista (Ms. Bautista).10 Petitioners religiously paid the monthly rentals until May 1992.11 After that,
however, despite repeated demands, petitioners continuously refused to pay the stipulated rent.
Consequently, respondent was constrained to refer the matter to its lawyer who, in turn, made a final
demand on petitioners for the payment of the accrued rentals amounting to P916,585.58.12 Because
petitioners still refused to comply, a complaint for ejectment was filed by private respondent through its
representative, Ms. Bautista, before the Metropolitan Trial Court (MeTC) of Manila. 13 The case was raffled
to Branch XIX and was docketed as Civil Case No. 143058-CV.

Petitioners admitted their failure to pay the stipulated rent for the leased premises starting July until
November 1992, but claimed that such refusal was justified because of the internal squabble in
respondent company as to the person authorized to receive payment.14 To further justify their non-
payment of rent, petitioners alleged that they were prevented from using the units (rooms) subject
matter of the lease contract, except Room 35. Petitioners eventually paid their monthly rent for December
1992 in the amount of P30,000.00, and claimed that respondent waived its right to collect the rents for
the months of July to November 1992 since petitioners were prevented from using Rooms 22, 24, 32, 33,
and 34.15 However, they again withheld payment of rents starting January 1993 because of respondent’s
refusal to turn over Rooms 36, 37 and 38.16 To show good faith and willingness to pay the rents,
petitioners alleged that they prepared the check vouchers for their monthly rentals from January 1993 to
January 1994.17 Petitioners further averred in their Amended Answer18 that the complaint for ejectment
was prematurely filed, as the controversy was not referred to the barangay for conciliation.

For failure of the parties to reach an amicable settlement, the pre-trial conference was terminated.
Thereafter, they submitted their respective position papers.

On November 24, 1994, the MeTC rendered a Decision dismissing the complaint for ejectment. 19 It
considered petitioners’ non-payment of rentals as unjustified. The court held that mere willingness to pay
the rent did not amount to payment of the obligation; petitioners should have deposited their payment in
the name of respondent company. On the matter of possession of the subject premises, the court did not
give credence to petitioners’ claim that private respondent failed to turn over possession of the premises.
The court, however, dismissed the complaint because of Ms. Bautista’s alleged lack of authority to sue on
behalf of the corporation.

Deciding the case on appeal, the Regional Trial Court (RTC) of Manila, Branch 1, in Civil Case No. 94-
72515, reversed and set aside the MeTC Decision in this wise:

WHEREFORE, the appealed decision is hereby reversed and set aside and another one is rendered
ordering defendants-appellees and all persons claiming rights under them, as follows:

(1) to vacate the leased premised (sic) and restore possession thereof to plaintiff-appellant;

(2) to pay plaintiff-appellant the sum of P967,915.80 representing the accrued rents in arrears as
of November 1993, and the rents on the leased premises for the succeeding months in the
amounts stated in paragraph 5 of the complaint until fully paid; and

(3) to pay an additional sum equivalent to 25% of the rent accounts as and for attorney’s fees plus
the costs of this suit.

SO ORDERED.20

The court adopted the MeTC’s finding on petitioners’ unjustified refusal to pay the rent, which is a valid
ground for ejectment. It, however, faulted the MeTC in dismissing the case on the ground of lack of
capacity to sue. Instead, it upheld Ms. Bautista’s authority to represent respondent notwithstanding the
absence of a board resolution to that effect, since her authority was implied from her power as a general
manager/treasurer of the company.21
Aggrieved, petitioners elevated the matter to the Court of Appeals in a petition for review on certiorari. 22
On March 18, 1998, petitioners filed an Omnibus Motion23 to cite Ms. Bautista for contempt; to strike
down the MeTC and RTC Decisions as legal nullities; and to conduct hearings and ocular inspections or
delegate the reception of evidence. Without resolving the aforesaid motion, on May 26, 1998, the CA
affirmed24 the RTC Decision but deleted the award of attorney’s fees.25

Petitioners moved for the reconsideration of the aforesaid decision. 26 Thereafter, they filed several
motions asking the Honorable Justice Ruben T. Reyes to inhibit from further proceeding with the case
allegedly because of his close association with Ms. Bautista’s uncle-in-law.27

In a Resolution28 dated December 10, 1998, the CA denied the motions for lack of merit. The appellate
court considered said motions as repetitive of their previous arguments, irrelevant and obviously
dilatory.29 As to the motion for inhibition of the Honorable Justice Reyes, the same was denied, as the
appellate court justice stressed that the decision and the resolution were not affected by extraneous
matters.30 Lastly, the appellate court granted respondent’s motion for execution and directed the RTC to
issue a new writ of execution of its decision, with the exception of the award of attorney’s fees which the
CA deleted.31

Petitioners now come before this Court in this petition for review on certiorari raising the following issues:

I.

Whether this ejectment suit should be dismissed and whether petitioners are entitled to damages
for the unauthorized and malicious filing by Rosario (sic) Bautista of this ejectment case, it being
clear that [Roswinda] – whether as general manager or by virtue of her subsequent designation by
the Board of Directors as the corporation’s attorney-in-fact – had no legal capacity to institute the
ejectment suit, independently of whether Director Pacana’s Order setting aside the SEC revocation
Order is a mere scrap of paper.

II.

Whether the RTC’s and the Honorable Court of Appeals’ failure and refusal to resolve the most
fundamental factual issues in the instant ejectment case render said decisions void on their face by
reason of the complete abdication by the RTC and the Honorable Justice Ruben Reyes of their
constitutional duty not only to clearly and distinctly state the facts and the law on which a decision
is based but also to resolve the decisive factual issues in any given case.

III.

Whether the (1) failure and refusal of Honorable Justice Ruben Reyes to inhibit himself, despite his
admission – by reason of his silence – of petitioners’ accusation that the said Justice enjoyed a
$7,000.00 scholarship grant courtesy of the uncle-in-law of respondent "corporation’s" purported
general manager and (2), worse, his act of ruling against the petitioners and in favor of the
respondent "corporation" constitute an unconstitutional deprivation of petitioners’ property without
due process of law.32

In addition to Ms. Bautista’s lack of capacity to sue, petitioners insist that respondent company has no
standing to sue as a juridical person in view of the suspension and eventual revocation of its certificate of
registration.33 They likewise question the factual findings of the court on the bases of their ejectment from
the subject premises. Specifically, they fault the appellate court for not finding that: 1) their non-payment
of rentals was justified; 2) they were deprived of possession of all the units subject of the lease contract
except Room 35; and 3) respondent violated the terms of the contract by its continued refusal to turn
over possession of Rooms 36, 37 and 38. Petitioners further prayed that a Temporary Restraining Order
(TRO) be issued enjoining the CA from enforcing its Resolution directing the issuance of a Writ of
Execution. Thus, in a Resolution34 dated January 18, 1999, this Court directed the parties to maintain the
status quo effective immediately until further orders.

The petition lacks merit.

We uphold the capacity of respondent company to institute the ejectment case. Although the Securities
and Exchange Commission (SEC) suspended and eventually revoked respondent’s certificate of
registration on February 16, 1995, records show that it instituted the action for ejectment on December
15, 1993. Accordingly, when the case was commenced, its registration was not yet revoked. 35 Besides, as
correctly held by the appellate court, the SEC later set aside its earlier orders of suspension and
revocation of respondent’s certificate, rendering the issue moot and academic. 36

We likewise affirm Ms. Bautista’s capacity to sue on behalf of the company despite lack of proof of
authority to so represent it. A corporation has no powers except those expressly conferred on it by the
Corporation Code and those that are implied from or are incidental to its existence. In turn, a corporation
exercises said powers through its board of directors and/or its duly authorized officers and agents.
Physical acts, like the signing of documents, can be performed only by natural persons duly authorized for
the purpose by corporate by-laws or by a specific act of the board of directors.37 Thus, any person suing
on behalf of the corporation should present proof of such authority. Although Ms. Bautista initially failed to
show that she had the capacity to sign the verification and institute the ejectment case on behalf of the
company, when confronted with such question, she immediately presented the Secretary’s Certificate 38
confirming her authority to represent the company.

There is ample jurisprudence holding that subsequent and substantial compliance may call for the
relaxation of the rules of procedure in the interest of justice.39 In Novelty Phils., Inc. v. Court of Appeals,40
the Court faulted the appellate court for dismissing a petition solely on petitioner’s failure to timely submit
proof of authority to sue on behalf of the corporation. In Pfizer, Inc. v. Galan, 41 we upheld the sufficiency
of a petition verified by an employment specialist despite the total absence of a board resolution
authorizing her to act for and on behalf of the corporation. Lastly, in China Banking Corporation v.
Mondragon International Philippines, Inc,42 we relaxed the rules of procedure because the corporation
ratified the manager’s status as an authorized signatory. In all of the above cases, we brushed aside
technicalities in the interest of justice. This is not to say that we disregard the requirement of prior
authority to act in the name of a corporation. The relaxation of the rules applies only to highly meritorious
cases, and when there is substantial compliance. While it is true that rules of procedure are intended to
promote rather than frustrate the ends of justice, and while the swift unclogging of court dockets is a
laudable objective, we should not insist on strict adherence to the rules at the expense of substantial
justice.43 Technical and procedural rules are intended to help secure, not suppress, the cause of justice;
and a deviation from the rigid enforcement of the rules may be allowed to attain that prime objective, for,
after all, the dispensation of justice is the core reason for the existence of courts. 44

As to the denial of the motion to inhibit Justice Reyes, we find the same to be in order. First, the motion
to inhibit came after the appellate court rendered the assailed decision, that is, after Justice Reyes had
already rendered his opinion on the merits of the case. It is settled that a motion to inhibit shall be denied
if filed after a member of the court had already given an opinion on the merits of the case, the rationale
being that "a litigant cannot be permitted to speculate on the action of the court x x x (only to) raise an
objection of this sort after the decision has been rendered."45 Second, it is settled that mere suspicion that
a judge is partial to one of the parties is not enough; there should be evidence to substantiate the
suspicion. Bias and prejudice cannot be presumed, especially when weighed against a judge’s sacred
pledge under his oath of office to administer justice without regard for any person and to do right equally
to the poor and the rich. There must be a showing of bias and prejudice stemming from an extrajudicial
source, resulting in an opinion on the merits based on something other than what the judge learned from
his participation in the case.46 We would like to reiterate, at this point, the policy of the Court not to
tolerate acts of litigants who, for just about any conceivable reason, seek to disqualify a judge (or justice)
for their own purpose, under a plea of bias, hostility, prejudice or prejudgment. 47

We now come to the more substantive issue of whether or not the petitioners may be validly ejected from
the leased premises.

Unlawful detainer cases are summary in nature. In such cases, the elements to be proved and resolved
are the fact of lease and the expiration or violation of its terms.48 Specifically, the essential requisites of
unlawful detainer are: 1) the fact of lease by virtue of a contract, express or implied; 2) the expiration or
termination of the possessor’s right to hold possession; 3) withholding by the lessee of possession of the
land or building after the expiration or termination of the right to possess; 4) letter of demand upon
lessee to pay the rental or comply with the terms of the lease and vacate the premises; and 5) the filing
of the action within one year from the date of the last demand received by the defendant. 49

It is undisputed that petitioners and respondent entered into two separate contracts of lease involving
nine (9) rooms of the San Luis Building. Records, likewise, show that respondent repeatedly demanded
that petitioners vacate the premises, but the latter refused to heed the demand; thus, they remained in
possession of the premises. The only contentious issue is whether there was indeed a violation of the
terms of the contract: on the part of petitioners, whether they failed to pay the stipulated rent without
justifiable cause; while on the part of respondent, whether it prevented petitioners from occupying the
leased premises except Room 35.

This issue involves questions of fact, the resolution of which requires the evaluation of the evidence
presented. The MeTC, the RTC and the CA all found that petitioners failed to perform their obligation to
pay the stipulated rent. It is settled doctrine that in a civil case, the conclusions of fact of the trial court,
especially when affirmed by the Court of Appeals, are final and conclusive, and cannot be reviewed on
appeal by the Supreme Court.50 Albeit the rule admits of exceptions, not one of them obtains in this
case.51

To settle this issue once and for all, we deem it proper to assess the array of factual findings supporting
the court’s conclusion.

The evidence of petitioners’ non-payment of the stipulated rent is overwhelming. Petitioners, however,
claim that such non-payment is justified by the following: 1) the refusal of respondent to allow petitioners
to use the leased properties, except room 35; 2) respondent’s refusal to turn over Rooms 36, 37 and 38;
and 3) respondent’s refusal to accept payment tendered by petitioners.

Petitioners’ justifications are belied by the evidence on record. As correctly held by the CA, petitioners’
communications to respondent prior to the filing of the complaint never mentioned their alleged inability
to use the rooms.52 What they pointed out in their letters is that they did not know to whom payment
should be made, whether to Ms. Bautista or to Pacheco.53 In their July 26 and October 30, 1993 letters,
petitioners only questioned the method of computing their electric billings without, however, raising a
complaint about their failure to use the rooms.54 Although petitioners stated in their December 30, 1993
letter that respondent failed to fulfill its part of the contract, 55 nowhere did they specifically refer to their
inability to use the leased rooms. Besides, at that time, they were already in default on their rentals for
more than a year.

If it were true that they were allowed to use only one of the nine (9) rooms subject of the contract of
lease, and considering that the rooms were intended for a business purpose, we cannot understand why
they did not specifically assert their right. If we believe petitioners’ contention that they had been
prevented from using the rooms for more than a year before the complaint for ejectment was filed, they
should have demanded specific performance from the lessor and commenced an action in court. With the
execution of the contract, petitioners were already in a position to exercise their right to the use and
enjoyment of the property according to the terms of the lease contract. 56 As borne out by the records, the
fact is that respondent turned over to petitioners the keys to the leased premises and petitioners, in fact,
renovated the rooms. Thus, they were placed in possession of the premises and they had the right to the
use and enjoyment of the same. They, likewise, had the right to resist any act of intrusion into their
peaceful possession of the property, even as against the lessor itself. Yet, they did not lift a finger to
protect their right if, indeed, there was a violation of the contract by the lessor.

What was, instead, clearly established by the evidence was petitioners’ non-payment of rentals because
ostensibly they did not know to whom payment should be made. However, this did not justify their failure
to pay, because if such were the case, they were not without any remedy. They should have availed of
the provisions of the Civil Code of the Philippines on the consignation of payment and of the Rules of
Court on interpleader.

Article 1256 of the Civil Code provides:

Article 1256. If the creditor to whom tender of payment has been made refuses without just cause to
accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due.

Consignation alone shall produce the same effect in the following cases:

xxxx

(4) When two or more persons claim the same right to collect;

x x x x.
Consignation shall be made by depositing the things due at the disposal of a judicial authority, before
whom the tender of payment shall be proved in a proper case, and the announcement of the consignation
in other cases.57

In the instant case, consignation alone would have produced the effect of payment of the rentals. The
rationale for consignation is to avoid the performance of an obligation becoming more onerous to the
debtor by reason of causes not imputable to him. 58 Petitioners claim that they made a written tender of
payment and actually prepared vouchers for their monthly rentals. But that was insufficient to constitute a
valid tender of payment. Even assuming that it was valid tender, still, it would not constitute payment for
want of consignation of the amount. Well-settled is the rule that tender of payment must be accompanied
by consignation in order that the effects of payment may be produced.59

Moreover, Section 1, Rule 62 of the Rules of Court provides:

Section 1. When interpleader proper. – Whenever conflicting claims upon the same subject matter are or
may be made against a person who claims no interest whatever in the subject matter, or an interest
which in whole or in part is not disputed by the claimants, he may bring an action against the conflicting
claimants to compel them to interplead and litigate their several claims among themselves.

Otherwise stated, an action for interpleader is proper when the lessee does not know to whom payment of
rentals should be made due to conflicting claims on the property (or on the right to collect). 60 The remedy
is afforded not to protect a person against double liability but to protect him against double vexation in
respect of one liability.61

Notably, instead of availing of the above remedies, petitioners opted to refrain from making payments.

Neither can petitioners validly invoke the non-delivery of Rooms 36, 37 and 38 as a justification for non-
payment of rentals. Although the two contracts embraced the lease of nine (9) rooms, the terms of the
contracts - with their particular reference to specific rooms and the monthly rental for each - easily raise
the inference that the parties intended the lease of each room separate from that of the others.lavvphil
There is nothing in the contract which would lead to the conclusion that the lease of one or more rooms
was to be made dependent upon the lease of all the nine (9) rooms. Accordingly, the use of each room by
the lessee gave rise to the corresponding obligation to pay the monthly rental for the same. Notably,
respondent demanded payment of rentals only for the rooms actually delivered to, and used by,
petitioners.

It may also be mentioned that the contract specifically provides that the lease of Rooms 36, 37 and 38
was to take effect only when the tenants thereof would vacate the premises. Absent a clear showing that
the previous tenants had vacated the premises, respondent had no obligation to deliver possession of the
subject rooms to petitioners. Thus, petitioners cannot use the non-delivery of Rooms 36, 37 and 38 as an
excuse for their failure to pay the rentals due on the other rooms they occupied.1avvphil

In light of the foregoing disquisition, respondent has every right to exercise his right to eject the erring
lessees. The parties’ contracts of lease contain identical provisions, to wit:

In case of default by the LESSEE in the payment of rental on the fifth (5th) day of each month, the
amount owing shall as penalty bear interest at the rate of FOUR percent (4%) per month, to be paid,
without prejudice to the right of the LESSOR to terminate his contract, enter the premises, and/or eject
the LESSEE as hereinafter set forth;62

Moreover, Article 167363 of the Civil Code gives the lessor the right to judicially eject the lessees in case of
non-payment of the monthly rentals. A contract of lease is a consensual, bilateral, onerous and
commutative contract by which the owner temporarily grants the use of his property to another, who
undertakes to pay the rent therefor.64 For failure to pay the rent, petitioners have no right to remain in
the leased premises.

WHEREFORE, premises considered, the petition is DENIED and the Status Quo Order dated January 18,
1999 is hereby LIFTED. The Decision of the Court of Appeals dated May 26, 1998 and its Resolution dated
December 10, 1998 in CA-G.R. SP No. 37739 are AFFIRMED.

G.R. No. 174011             April 14, 2008

AIR TRANSPORTATION OFFICE, DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS and MACTAN-CEBU
INTERNATIONAL AIRPORT AUTHORITY, petitioners,
vs.
ANGELES URGELLO TONGOY and the HEIRS OF PILAR U. ARCENAS, namely, ENRIQUE ARCENAS,
MONETTE ARCENAS SANCHEZ, RENATO U. ARCENAS, PATRICIA ARCENAS TING, ROY U. ARCENAS,
VICTOR U. ARCENAS and ROSENDO U. ARCENAS,** respondents.

RESOLUTION

CORONA, J.:

This is a petition for review on certiorari1 of the March 31, 2004 decision and August 2, 2006 resolution 2 of
the Court of Appeals (CA) in CA-G.R. CV No. 55114.

In 1963, the Republic of the Philippines instituted expropriation proceedings for the improvement and
expansion of the Lahug Airport in Cebu City. Among the properties affected were Lot Nos. 913-F and 913-
G belonging to respondents.3 The trial court ruled in favor of the government. The respondents filed an
appeal.4

Pending the appeal, the parties entered into a verbal compromise agreement whereby the owners of the
affected lots agreed to withdraw their appeal in consideration of a commitment that, pursuant to an
established policy involving similar cases, the subject lots would be resold to them at the same price at
which they were expropriated in the event that the Civil Aeronautics Administration (CAA), predecessor of
petitioner Air Transportation Office (ATO),5 later abandoned the Lahug Airport.6 Consequently, the
respondents withdrew their appeal.7

In accordance with the expropriation, the subject properties were registered in the name of the
government. However, the projected improvement and expansion plan did not materialize as ATO decided
to move its operations to the Mactan Airbase and to instead lease out the area of the Lahug Airport.
Petitioner Department of Public Works and Highways constructed a building on a portion of the subject
properties.8

In 1964 or a year after the expropriation, respondents requested the repurchase of the lots in accordance
with the commitment of the CAA. On August 10, 1964, the CAA responded that there could still be a need
to use the Lahug Airport as an emergency DC-3 airport. It reiterated, however, that "should this office
dispose and resell the properties which may be found out to be no longer necessary as an airport, then
the policy of this office is to give priority to the former owners subject to the approval of the President." 9

On January 7, 1967, respondents reiterated their offer to repurchase the properties, referring to an
executive order of President Ferdinand Marcos which directed the closure of the Lahug Airport and
transferred all aviation operations to Mactan Airbase. The Director of the CAA, in a letter dated Mach 28,
1967, informed respondents that their office had no plans yet of abandoning Lahug Airport. 10

In a memorandum dated November 29, 1989 to the Secretary of the Department of Transportation, 11
President Corazon Aquino directed the transfer of general aviation operations of the Lahug Airport to the
Mactan International Airport before the end of 1990, and upon such transfer, to close the Lahug Airport.
By virtue of RA 6958,12 the management and aeronautics operations of Lahug Airport were transferred to
petitioner Mactan-Cebu International Airport Authority (MCIAA). 13

In 1992, respondents filed an action for recovery of possession and reconveyance of ownership of
properties with damages in the Regional Trial Court (RTC), Cebu City, Branch 21 against petitioners. 14
Petitioners did not present any testimonial or documentary evidence. Neither did they cross-examine the
witness presented by respondents. They also failed to submit any memorandum despite the ample time
given to file it.15

The RTC rendered a decision on December 27, 1995 ordering petitioners to restore possession and
ownership of Lot Nos. 913-F and 913-G to respondents and to remove all improvements thereon upon
reimbursement of the just compensation paid to respondents at the time of expropriation. It also ordered
the Register of Deeds of Cebu City to issue new transfer certificates of title in the name of respondents,
upon payment of the proper fees.16 It held that respondents were able to prove the oral agreement that
the lots could be repurchased by their previous owners for the same price at which they were
expropriated in case the CAA abandoned Lahug Airport.
Aggrieved, petitioners filed an appeal in the CA. In a decision dated March 31, 2004, the CA affirmed the
RTC judgment. It denied reconsideration in a resolution promulgated on August 2, 2006.

Hence this petition which boils down to one core issue: whether the respondents were able to prove that
there was an oral compromise agreement that entitled them to repurchase the expropriated lots.

The issue raised by petitioners is factual. Both the RTC and CA found that there was such an agreement
and that petitioners failed to rebut the evidence presented by respondents. We find no reason to disturb
their findings.

Moreover, in Heirs of Timoteo Moreno and Maria Rotea v. MCIAA17 involving lots similarly expropriated for
the expansion of the same Lahug Airport, we recognized the right of the previous owners who were able
to prove the commitment of the government to allow them to repurchase their land:

The indisputable certainty in the present case is that there was a prior promise by the predecessor
of the respondent that the expropriated properties may be recovered by the former owners once
the airport is transferred to Mactan, Cebu. In fact, the witness for the respondent testified that 15
lots were already reconveyed to their previous owners.18

MCIAA v. CA19 and ATO v. Gopuco20 cited by petitioners are not applicable here. In MCIAA, the previous
owner failed to prove that there was a compromise settlement. 21 In ATO, the previous owner was not a
party to the compromise agreements.22

WHEREFORE, the petition is hereby DENIED.

G.R. No. 172410             April 14, 2008

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE TOLL REGULATORY BOARD (TRB), petitione,
vs.
HOLY TRINITY REALTY DEVELOPMENT CORP., respondent.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to set aside the
Decision1 dated 21 April 2006 of the Court of Appeals in CA-G.R. SP No. 90981 which, in turn, set aside
two Orders2 dated 7 February 20053 and 16 May 20054 of the Regional Trial Court (RTC) of Malolos,
Bulacan, in Civil Case No. 869-M-2000.

The undisputed factual and procedural antecedents of this case are as follows:

On 29 December 2000, petitioner Republic of the Philippines, represented by the Toll Regulatory Board
(TRB), filed with the RTC a Consolidated Complaint for Expropriation against landowners whose properties
would be affected by the construction, rehabilitation and expansion of the North Luzon Expressway. The
suit was docketed as Civil Case No. 869-M-2000 and raffled to Branch 85, Malolos, Bulacan. Respondent
Holy Trinity Realty and Development Corporation (HTRDC) was one of the affected landowners.

On 18 March 2002, TRB filed an Urgent Ex-Parte Motion for the issuance of a Writ of Possession,
manifesting that it deposited a sufficient amount to cover the payment of 100% of the zonal value of the
affected properties, in the total amount of P28,406,700.00, with the Land Bank of the Philippines, South
Harbor Branch (LBP-South Harbor), an authorized government depository. TRB maintained that since it
had already complied with the provisions of Section 4 of Republic Act No. 8974 5 in relation to Section 2 of
Rule 67 of the Rules of Court, the issuance of the writ of possession becomes ministerial on the part of the
RTC.

The RTC issued, on 19 March 2002, an Order for the Issuance of a Writ of Possession, as well as the Writ
of Possession itself. HTRDC thereafter moved for the reconsideration of the 19 March 2002 Order of the
RTC.

On 7 October 2002, the Sheriff filed with the RTC a Report on Writ of Possession stating, among other
things, that since none of the landowners voluntarily vacated the properties subject of the expropriation
proceedings, the assistance of the Philippine National Police (PNP) would be necessary in implementing
the Writ of Possession. Accordingly, TRB, through the Office of the Solicitor General (OSG), filed with the
RTC an Omnibus Motion praying for an Order directing the PNP to assist the Sheriff in the implementation
of the Writ of Possession. On 15 November 2002, the RTC issued an Order directing the landowners to file
their comment on TRB’s Omnibus Motion.

On 3 March 2003, HTRDC filed with the RTC a Motion to Withdraw Deposit, praying that the respondent or
its duly authorized representative be allowed to withdraw the amount of P22,968,000.00, out of TRB’s
advance deposit of P28,406,700.00 with LBP-South Harbor, including the interest which accrued thereon.
Acting on said motion, the RTC issued an Order dated 21 April 2003, directing the manager of LBP-South
Harbor to release in favor of HTRDC the amount of P22,968,000.00 since the latter already proved its
absolute ownership over the subject properties and paid the taxes due thereon to the government.
According to the RTC, "(t)he issue however on the interest earned by the amount deposited in the bank, if
there is any, should still be threshed out."6

On 7 May 2003, the RTC conducted a hearing on the accrued interest, after which, it directed the issuance
of an order of expropriation, and granted TRB a period of 30 days to inquire from LBP-South Harbor
"whether the deposit made by DPWH with said bank relative to these expropriation proceedings is earning
interest or not."7

The RTC issued an Order, on 6 August 2003, directing the appearance of LBP Assistant Vice-President
Atty. Rosemarie M. Osoteo and Department Manager Elizabeth Cruz to testify on whether the Department
of Public Works and Highways’ (DPWH’s) expropriation account with the bank was earning interest. On 9
October 2003, TRB instead submitted a Manifestation to which was attached a letter dated 19 August
2003 by Atty. Osoteo stating that the DPWH Expropriation Account was an interest bearing current
account.

On 11 March 2004, the RTC issued an Order resolving as follows the issue of ownership of the interest
that had accrued on the amount deposited by DPWH in its expropriation current account with LBP-South
Harbor:

WHEREFORE, the interest earnings from the deposit of P22,968,000.00 respecting one hundred
(100%) percent of the zonal value of the affected properties in this expropriation proceedings
under the principle of accession are considered as fruits and should properly pertain to the herein
defendant/property owner [HTRDC]. Accordingly, the Land Bank as the depositary bank in this
expropriation proceedings is (1) directed to make the necessary computation of the accrued
interest of the amount of P22,968,000.00 from the time it was deposited up to the time it was
released to Holy Trinity Realty and Development Corp. and thereafter (2) to release the same to
the defendant Holy Trinity Development Corporation through its authorized representative. 8

TRB filed a Motion for Reconsideration of the afore-quoted RTC Order, contending that the payment of
interest on money deposited and/or consigned for the purpose of securing a writ of possession was
sanctioned neither by law nor by jurisprudence.

TRB filed a Motion to Implement Order dated 7 May 2003, which directed the issuance of an order of
expropriation. On 5 November 2004, the RTC issued an Order of Expropriation.

On 7 February 2005, the RTC likewise granted TRB’s Motion for Reconsideration. The RTC ruled that the
issue as to whether or not HTRDC is entitled to payment of interest should be ventilated before the Board
of Commissioners which will be created later for the determination of just compensation.

Now it was HTRDC’s turn to file a Motion for Reconsideration of the latest Order of the RTC. The RTC,
however, denied HTRDC’s Motion for Reconsideration in an Order dated 16 May 2005.

HTRDC sought recourse with the Court of Appeals by filing a Petition for Certiorari, docketed as CA-G.R.
SP No. 90981. In its Decision, promulgated on 21 April 2006, the Court of Appeals vacated the Orders
dated 7 February 2005 and 16 May 2005 of the RTC, and reinstated the Order dated 11 March 2004 of the
said trial court wherein it ruled that the interest which accrued on the amount deposited in the
expropriation account belongs to HTRDC by virtue of accession. The Court of Appeals thus declared:
 WHEREFORE, the foregoing premises considered, the assailed Orders dated 07 February and 16
May 2005 respectively of the Regional Trial Court of Malolos, Bulacan (Branch 85) are hereby
VACATED and SET ASIDE. Accordingly, the Order dated 11 March 2004 is hereby reinstated. 9

From the foregoing, the Republic, represented by the TRB, filed the present Petition for Review on
Certiorari, steadfast in its stance that HTRDC is "entitled only to an amount equivalent to the zonal value
of the expropriated property, nothing more and nothing less."10 According to the TRB, the owner of the
subject properties is entitled to an exact amount as clearly defined in both Section 4 of Republic Act No.
8974, which reads:

Section 4. Guidelines for Expropriation Proceedings. – Whenever it is necessary to acquire real

property for the right-of-way, site or location for any national government infrastructure project
through expropriation, the appropriate implementing agency shall initiate the expropriation
proceedings before the proper court under the following guidelines:

(a) Upon the filing of the complaint, and after due notice to the defendant, the implementing
agency shall immediately pay the owner of the property the amount equivalent to the sum of (1)
one hundred (100%) percent of the value of the property based on the current relevant zonal
valuation of the Bureau of Internal Revenue (BIR); and (2) the value of the improvements and/or
structures as determined under Section 7 hereof.

and Section 2, Rule 67 of the Rules of Court, which provides:

Sec. 2. Entry of plaintiff upon depositing value with authorized government depositary. – Upon the
filing of the complaint or at anytime thereafter and after due notice to the defendant, the plaintiff
shall have the right to take or enter upon the possession of the real property involved if he
deposits with the authorized government depositary an amount equivalent to the assessed value of
the property for purposes of taxation to be held by such bank subject to the orders of the court.
Such deposit shall be in money, unless in lieu thereof the court authorizes the deposit of a
certificate of deposit of a government bank of the Republic of the Philippines payable on demand to
the authorized government depositary.

The TRB reminds us that there are two stages11 in expropriation proceedings, the determination of the
authority to exercise eminent domain and the determination of just compensation. The TRB argues that it
is only during the second stage when the court will appoint commissioners and determine claims for
entitlement to interest, citing Land Bank of the Philippines v. Wycoco12 and National Power Corporation v.
Angas.13

The TRB further points out that the expropriation account with LBP-South Harbor is not in the name of
HTRDC, but of DPWH. Thus, the said expropriation account includes the compensation for the other
landowners named defendants in Civil Case No. 869-M-2000, and does not exclusively belong to
respondent.

At the outset, we call attention to a significant oversight in the TRB’s line of reasoning. It failed to
distinguish between the expropriation procedures under Republic Act No. 8974 and Rule 67 of the Rules of
Court. Republic Act No. 8974 and Rule 67 of the Rules of Court speak of different procedures, with the
former specifically governing expropriation proceedings for national government infrastructure projects.
Thus, in Republic v. Gingoyon,14 we held:

There are at least two crucial differences between the respective procedures under Rep. Act No.
8974 and Rule 67. Under the statute, the Government is required to make immediate payment to
the property owner upon the filing of the complaint to be entitled to a writ of possession, whereas
in Rule 67, the Government is required only to make an initial deposit with an authorized
government depositary. Moreover, Rule 67 prescribes that the initial deposit be equivalent to the
assessed value of the property for purposes of taxation, unlike Rep. Act No. 8974 which provides,
as the relevant standard for initial compensation, the market value of the property as stated in the
tax declaration or the current relevant zonal valuation of the Bureau of Internal Revenue (BIR),
whichever is higher, and the value of the improvements and/or structures using the replacement
cost method.

xxxx
 Rule 67 outlines the procedure under which eminent domain may be exercised by the Government.
Yet by no means does it serve at present as the solitary guideline through which the State may
expropriate private property. For example, Section 19 of the Local Government Code governs as to
the exercise by local government units of the power of eminent domain through an enabling
ordinance. And then there is Rep. Act No. 8974, which covers expropriation proceedings intended
for national government infrastructure projects.

Rep. Act No. 8974, which provides for a procedure eminently more favorable to the property owner
than Rule 67, inescapably applies in instances when the national government expropriates property
"for national government infrastructure projects." Thus, if expropriation is engaged in by the
national government for purposes other than national infrastructure projects, the assessed value
standard and the deposit mode prescribed in Rule 67 continues to apply.

There is no question that the proceedings in this case deal with the expropriation of properties intended
for a national government infrastructure project. Therefore, the RTC correctly applied the procedure laid
out in Republic Act No. 8974, by requiring the deposit of the amount equivalent to 100% of the zonal
value of the properties sought to be expropriated before the issuance of a writ of possession in favor of
the Republic.

The controversy, though, arises not from the amount of the deposit, but as to the ownership of the
interest that had since accrued on the deposited amount.

Whether the Court of Appeals was correct in holding that the interest earned by the deposited amount in
the expropriation account would accrue to HRTDC by virtue of accession, hinges on the determination of
who actually owns the deposited amount, since, under Article 440 of the Civil Code, the right of accession
is conferred by ownership of the principal property:

Art. 440. The ownership of property gives the right by accession to everything which is produced
thereby, or which is incorporated or attached thereto, either naturally or artificially.

The principal property in the case at bar is part of the deposited amount in the expropriation account of
DPWH which pertains particularly to HTRDC. Such amount, determined to be P22,968,000.00 of the
P28,406,700.00 total deposit, was already ordered by the RTC to be released to HTRDC or its authorized
representative. The Court of Appeals further recognized that the deposit of the amount was already
deemed a constructive delivery thereof to HTRDC:

When the [herein petitioner] TRB deposited the money as advance payment for the expropriated
property with an authorized government depositary bank for purposes of obtaining a writ of
possession, it is deemed to be a "constructive delivery" of the amount corresponding to the 100%
zonal valuation of the expropriated property. Since [HTRDC] is entitled thereto and undisputably
the owner of the principal amount deposited by [herein petitioner] TRB, conversely, the interest
yield, as accession, in a bank deposit should likewise pertain to the owner of the money
deposited.15

Since the Court of Appeals found that the HTRDC is the owner of the deposited amount, then the latter
should also be entitled to the interest which accrued thereon.

We agree with the Court of Appeals, and find no merit in the instant Petition.

The deposit was made in order to comply with Section 4 of Republic Act No. 8974, which requires nothing
less than the immediate payment of 100% of the value of the property, based on the current zonal
valuation of the BIR, to the property owner. Thus, going back to our ruling in Republic v. Gingoyon16:

It is the plain intent of Rep. Act No. 8974 to supersede the system of deposit under Rule 67 with
the scheme of "immediate payment" in cases involving national government infrastructure
projects. The following portion of the Senate deliberations, cited by PIATCO in its Memorandum, is
worth quoting to cogitate on the purpose behind the plain meaning of the law:

THE CHAIRMAN (SEN. CAYETANO). "x x x Because the Senate believes that, you know, we
have to pay the landowners immediately not by treasury bills but by cash.
 Since we are depriving them, you know, upon payment, ‘no, of possession, we might as
well pay them as much, ‘no, hindi lang 50 percent.

xxxx

THE CHAIRMAN (REP. VERGARA). Accepted.

xxxx

THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really in favor of the landowners, e.

THE CHAIRMAN (REP. VERGARA). That’s why we need to really secure the availability of
funds.

xxxx

THE CHAIRMAN (SEN. CAYETANO). No, no. It’s the same. It says here: iyong first
paragraph, diba? Iyong zonal – talagang magbabayad muna. In other words, you know,
there must be a payment kaagad. (TSN, Bicameral Conference on the Disagreeing
Provisions of House Bill 1422 and Senate Bill 2117, August 29, 2000, pp. 14-20)

xxxx

THE CHAIRMAN (SEN. CAYETANO). Okay, okay, ‘no. Unang-una, it is not deposit, ‘no. It’s
payment."

REP. BATERINA. It’s payment, ho, payment."

The critical factor in the different modes of effecting delivery which gives legal effect to the act is the
actual intention to deliver on the part of the party making such delivery.17 The intention of the TRB in
depositing such amount through DPWH was clearly to comply with the requirement of immediate payment
in Republic Act No. 8974, so that it could already secure a writ of possession over the properties subject
of the expropriation and commence implementation of the project. In fact, TRB did not object to HTRDC’s
Motion to Withdraw Deposit with the RTC, for as long as HTRDC shows (1) that the property is free from
any lien or encumbrance and (2) that respondent is the absolute owner thereof.18

A close scrutiny of TRB’s arguments would further reveal that it does not directly challenge the Court of
Appeals’ determinative pronouncement that the interest earned by the amount deposited in the
expropriation account accrues to HTRDC by virtue of accession. TRB only asserts that HTRDC is "entitled
only to an amount equivalent to the zonal value of the expropriated property, nothing more and nothing
less."

We agree in TRB’s statement since it is exactly how the amount of the immediate payment shall be
determined in accordance with Section 4 of Republic Act No. 8974, i.e., an amount equivalent to 100% of
the zonal value of the expropriated properties. However, TRB already complied therewith by depositing
the required amount in the expropriation account of DPWH with LBP-South Harbor. By depositing the said
amount, TRB is already considered to have paid the same to HTRDC, and HTRDC became the owner
thereof. The amount earned interest after the deposit; hence, the interest should pertain to the owner of
the principal who is already determined as HTRDC. The interest is paid by LBP-South Harbor on the
deposit, and the TRB cannot claim that it paid an amount more than what it is required to do so by law.

Nonetheless, we find it necessary to emphasize that HTRDC is determined to be the owner of only a part
of the amount deposited in the expropriation account, in the sum of P22,968,000.00. Hence, it is entitled
by right of accession to the interest that had accrued to the said amount only.

We are not persuaded by TRB’s citation of National Power Corporation v. Angas and Land Bank of the
Philippines v. Wycoco, in support of its argument that the issue on interest is merely part and parcel of
the determination of just compensation which should be determined in the second stage of the
proceedings only. We find that neither case is applicable herein.

The issue in Angas is whether or not, in the computation of the legal rate of interest on just compensation
for expropriated lands, the applicable law is Article 2209 of the Civil Code which prescribes a 6% legal
interest rate, or Central Bank Circular No. 416 which fixed the legal rate at 12% per annum. We ruled in
Angas that since the kind of interest involved therein is interest by way of damages for delay in the
payment thereof, and not as earnings from loans or forbearances of money, Article 2209 of the Civil Code
prescribing the 6% interest shall apply. In Wycoco, on the other hand, we clarified that interests in the
form of damages cannot be applied where there is prompt and valid payment of just compensation.

The case at bar, however, does not involve interest as damages for delay in payment of just
compensation. It concerns interest earned by the amount deposited in the expropriation account.

Under Section 4 of Republic Act No. 8974, the implementing agency of the government pays just
compensation twice: (1) immediately upon the filing of the complaint, where the amount to be paid is
100% of the value of the property based on the current relevant zonal valuation of the BIR (initial
payment); and (2) when the decision of the court in the determination of just compensation becomes final
and executory, where the implementing agency shall pay the owner the difference between the amount
already paid and the just compensation as determined by the court (final payment).19

HTRDC never alleged that it was seeking interest because of delay in either of the two payments
enumerated above. In fact, HTRDC’s cause of action is based on the prompt initial payment of just
compensation, which effectively transferred the ownership of the amount paid to HTRDC. Being the owner
of the amount paid, HTRDC is claiming, by the right of accession, the interest earned by the same while
on deposit with the bank.

That the expropriation account was in the name of DPWH, and not of HTRDC, is of no moment. We quote
with approval the following reasoning of the Court of Appeals:

Notwithstanding that the amount was deposited under the DPWH account, ownership over the
deposit transferred by operation of law to the [HTRDC] and whatever interest, considered as civil
fruits, accruing to the amount of Php22,968,000.00 should properly pertain to [HTRDC] as the
lawful owner of the principal amount deposited following the principle of accession. Bank interest
partake the nature of civil fruits under Art. 442 of the New Civil Code. And since these are
considered fruits, ownership thereof should be due to the owner of the principal. Undoubtedly,
being an attribute of ownership, the [HTRDC’s] right over the fruits (jus fruendi), that is the bank
interests, must be respected.20

Considering that the expropriation account is in the name of DPWH, then, DPWH should at most be
deemed as the trustee of the amounts deposited in the said accounts irrefragably intended as initial
payment for the landowners of the properties subject of the expropriation, until said landowners are
allowed by the RTC to withdraw the same.

As a final note, TRB does not object to HTRDC’s withdrawal of the amount of P22,968,000.00 from the
expropriation account, provided that it is able to show (1) that the property is free from any lien or
encumbrance and (2) that it is the absolute owner thereof.21 The said conditions do not put in abeyance
the constructive delivery of the said amount to HTRDC pending the latter’s compliance therewith. Article
118722 of the Civil Code provides that the "effects of a conditional obligation to give, once the condition
has been fulfilled, shall retroact to the day of the constitution of the obligation." Hence, when HTRDC
complied with the given conditions, as determined by the RTC in its Order 23 dated 21 April 2003, the
effects of the constructive delivery retroacted to the actual date of the deposit of the amount in the
expropriation account of DPWH.

WHEREFORE, the Petition is DENIED. The Court of Appeals Decision dated 21 April 2006 in CA-G.R. SP No.
90981, which set aside the 7 February 2005 and 16 May 2005 Orders of the Regional Trial Court of
Malolos, Bulacan, is AFFIRMED.

G.R. No. 156421             April 14, 2008

HON. JOSE FERNADEZ, RTC of PASIG CITY, BR. 158 and UNITED OVERSEAS BANK PHILS., petitioners,
vs.
SPS. GREGORIO ESPINOZA and JOJI GADOR-ESPINOZA, respondent.

DECISION

CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by
petitioner United Overseas Bank1 (UOB) seeking to reverse and set aside the Decision2 of the Court of
Appeals dated 25 June 2002 and its Resolution 3 dated 28 November 2002 in CA-G.R. SP No. 60865. The
assailed Decision of the Court of Appeals reversed the Orders4 dated 10 May 2000, 10 July 2000, 13 July
2000 and 25 August 2000 of the Regional Trial Court (RTC) of Pasig City, Branch 158, in LRC Case No. R-
5792.

The dispositive portion of the Court of Appeals Decision reads:

WHEREFORE, premises considered the assailed Orders dated May 10, 2000, July 10, 2000, July 13,
2000 and August 25, 2000 are hereby ANNULED and SET ASIDE. LRC Case No. R-5792 is hereby
ordered to be consolidated with Civil Case No. 66256 of Branch 164 of the Regional Trial Court of
Pasig City. No Costs.5

The 10 May 2000 and 10 July 2000 Orders of the RTC denied the motion filed by respondent spouses
Gregorio Espinoza and Joji Gador-Espinoza (spouses Espinoza) for the consolidation of the Ex-Parte
Petition for the Issuance of Writ of Possession filed by UOB, docketed as LRC Case No. R-5792, with their
Complaint for Nullification of Extrajudicial Proceedings and Certificate of Sale, docketed as Civil Case No.
66256, pending with the RTC, Branch 164. The 13 July 2000 and 25 August 2000 Orders of the RTC
granted the Petition of UOB in LRC Case No. R-5792, and ordered the issuance of a writ of possession in
favor of UOB over the real property covered by Transfer Certificate of Title (TCT) No. PT-108565.

UOB is a banking institution duly organized and existing as such under the Philippine laws; while Firematic
Philippines, Inc. (FPI) is a domestic corporation duly organized and existing under Philippine laws
represented by its President, Gregorio Espinoza.

On 24 March 1996, FPI was granted a revolving credit line by UOB in the amount of P11,000,000.00.
Using the said credit line, FPI obtained on several occasions from UOB loans in different amounts,
reaching the total sum of P4,000,000.00, as evidenced by promissory notes executed by Gregorio
Espinoza. Likewise drawn against the credit line of FPI were trust receipts in the sum of P6,325,588.71.

As a security for the loan obligations of FPI, the spouses Espinoza executed a Deed of Real Estate
Mortgage over a parcel of land located in Pasig City, with an area of 200 square meters, and covered by
TCT No. PT-84838 in their names, with an area of 200 square meters and registered by the Registry of
Deeds of Pasig City (subject property).6

Subsequently, FPI defaulted in the payment of the promissory notes and trust receipts drawn against its
credit line, which prompted UOB to cause the extrajudicial foreclosure of its mortgage on the subject
property, and the public auction sale thereof. The UOB was the highest bidder at the auction sale as
evidenced by the Certificate of Sale7 dated 29 July 1996.

For failure of FPI and the spouses Espinoza to redeem the subject property within the redemption period,
UOB filed an Affidavit of Consolidation before the Register of Deeds of Pasig. Consequently, a new TCT
covering the subject property was issued in the name of UOB, particularly, TCT No. PT-108565.

In order to retain possession of the subject property, FPI and the spouses Espinoza instituted an action for
nullification of the extrajudicial foreclosure proceedings and certificate of sale, before the RTC, Branch
164, docketed as Civil Case No. 66256. In their Amended Complaint, FPI and the spouses Espinoza
alleged that there was bad faith on the part of UOB who made them sign the Deed of Real Estate
Mortgage in blank. In addition, FPI and the spouses Espinoza averred that there was already an
agreement entered into by the parties to restructure the loan, but for unknown reasons, the agreement
was unilaterally rescinded by UOB. Finally, FPI and the spouses Espinoza claimed that at the time they
filed their complaint, FPI already paid UOB the sum of P5,275,012.43. Despite their repeated requests,
however, UOB still failed to give them proper accounting of their outstanding loan obligations and the
payments they made thereon.

For its part, UOB filed an Ex-Parte Petition for Issuance of a Writ of Possession before the RTC, Branch
158, docketed as LRC Case No. R-5792. The spouses Espinoza opposed LRC Case No. R-5792 in view of
the pendency of Civil Case No. 66256 and moved, instead, for the consolidation of the two cases

In its Order dated 10 May 2000, the RTC, Branch 158, in LRC Case No. R-5792, denied the opposition to
the Petition and the motion for consolidation interposed by the spouses Espinoza, to wit:
 This resolves the opposition to the ex-parte issuance of writ of possession with motion for
consolidation together with the reply to the opposition and the opposition to the motion.

Since [UOB] has already consolidated a title in its name, the pendency of separate civil action is
not a bar to the issuance of writ of possession because the same is a ministerial act of the trial
court (Vaca v. Court of Appeals, et. al., G.R. No. 1109672, July 14, 1994). Being so, the
proceedings of this petition is ex-parte that does not require the appearance nor the intervention
of the [spouses Espinoza].

Consequently, [the spouses Espinoza’s] opposition to the issuance of writ of possession and its
motion for consolidation are denied.8

The Motion for Reconsideration of the afore-quoted 10 May 2000 Order filed by the spouses Espinoza was
denied by the RTC, Branch 158, in its subsequent Order dated 10 July 2000, which reads:

This resolves [the spouses Espinoza’s] Motion for Reconsideration, Addendum to Motion for
Reconsideration together with the opposition to the motion.

The motion is denied. It is merely a reiteration of their earlier opposition to their Ex-parte Petition
for Issuance of Writ of Possession.9

On 13 July 2000, another Order was issued by the RTC, Branch 158, in LRC Case No. R-5792 granting
UOB’s Ex-Parte Petition for the Issuance of Writ of Possession over the subject property. The lower court
decreed that UOB became the absolute owner of the subject property being the highest bidder in the
public auction sale, and since the spouses Espinoza failed to redeem the subject property within one year
from the registration of the certificate of sale, UOB is now entitled to possession of the same as the
confirmed owner. According to the decretal portion of RTC Order:

WHEREFORE, let a writ of possession be issued in favor of petitioner United Overseas Bank Phils.,
directing the spouses Gregorio Espinoza and Joji Gador-Espinoza and all persons claiming rights
under them to vacate the premises of the property covered by Transfer Certificate of Title No. PT-
108565 under [UOB’s] name and to turn to it over [UOB] within ten (10) days from receipt of this
Order.10

A motion was filed by the spouses Espinoza seeking reconsideration and clarification of the 13 July 2000
Order of the RTC, Branch 158, underscoring the alleged irregularities in the procurement of the mortgage,
accounting of the loan obligations, and conduct of the foreclosure proceedings.

The Motion for Clarification of the spouses Espinoza, however, was denied by the RTC, Branch 158, in its
Order dated 25 August 2000, which states:

The motion is denied. There is really nothing to clarify on the Order of this Court dated July 13,
2000. It is an Order for the issuance of a writ of possession over a property covered by Transfer
Certificate of Title No. PT-108565 formerly Transfer Certificate of Title No. PT-84838. It is an Order
directing Spouses Gregorio Espinoza and Joji Gador-Espinoza and all persons claiming rights under
them to vacate the premises and turn it over to [UOB].

Consequently, this Order of July 13, 2000 stays and the motion of the [the spouses Espinoza] for
the consolidation of its (sic) petition with Civil Case No. 66256 pending before Branch 164, also of
this Court is denied.11

Dissatisfied, the spouses Espinoza filed before the Court of Appeals a Petition for Certiorari under Rule 65
of the Rules of Court, docketed as CA-G.R. SP No. 60865, averring that the foregoing RTC Orders were
issued by the RTC in grave abuse of discretion and, thus, must be nullified and set aside.

On 25 March 2002, the Court of Appeals rendered a Decision in favor of the spouses Espinoza and
reversed the four RTC Orders. The appellate court stressed that the duty of the trial court to issue the writ
of possession after the expiration of the one-year redemption period ceased to be ministerial in view of
the pressing peculiar and equitable circumstances in the instant case.

In a Resolution dated 28 November 2002, the Court of Appeals denied UOB’s Motion for Reconsideration
of its Decision.
Petitioner is now before this Court assailing the 25 March 2002 Decision and 28 November 2002
Resolution of the Court of Appeals via a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, raising the following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS COMMITTED GROSS AND REVERSIBLE ERROR IN
GIVING DUE COURSE TO THE SPOUSES ESPINOZA’S PETITION.

II.

WHETHER OR NOT THE COURT OF APPEALS COMMITTED GROSS AND REVERSIBLE ERROR IN NOT
DECLARING THAT [UOB] IS ENTITLED TO THE ISSUANCE OF THE WRIT OF POSSESSION

At the outset, it must be emphasized that what is on appeal before us is only the issuance of the writ of
possession over the subject property issued by the RTC, Branch 158, in LRC Case No. R-5792.

A writ of possession is an order whereby the sheriff is commanded to place a person in possession of a
real or personal property. It may be issued under the following instances: (1) land registration
proceedings under Sec. 17 of Act No. 49612; (2) judicial foreclosure, provided the debtor is in possession
of the mortgaged realty and no third person, not a party to the foreclosure suit, had intervened; and (3)
extrajudicial foreclosure of a real estate mortgage under Sec. 7 of Act No. 3135 13 as amended by Act No.
4118.14 The case at bar falls under the third instance.

The issuance of a writ of possession is explicitly authorized by Act No. 3135, as amended by Act No. 4118,
which regulates the manner of effecting an extrajudicial foreclosure of mortgage.

In case of default of the mortgagor in the payment of the loan obligations, the mortgagee may foreclose
the mortgaged property by filing a Petition for Extrajudicial Foreclosure of Mortgage following the
procedure laid down in A.M. No. 99-10-05-0.15 The mortgagor or his successor-in-interest may redeem
the foreclosed property within one year from the registration of the sale with the Register of Deeds. 16
During the redemption period, the buyer at public auction may file, with the RTC in the province or place
where the property or portion thereof is located, an ex parte motion for the issuance of a writ of
possession within one year from the registration of the Sheriff’s Certificate of Sale, and the court shall
grant the said motion upon the petitioner’s posting a bond in an amount equivalent to the use of the
property for a period of twelve (12) months. 17

A writ of possession may be issued during the redemption period in favor of the purchaser of the
mortgaged property in the foreclosure sale. Section 7 of Act No. 3135, as amended by Act No. 4118,
provides:

Section 7. Possession during redemption period. – In any sale made under the provisions of this
Act, the purchaser may petition the [Regional Trial Court] where the property or any part thereof is
situated, to give him possession thereof during the redemption period, furnishing bond in an
amount equivalent to the use of the property for a period of twelve months, to indemnify the
debtor in case it be shown that the sale was made without violating the mortgage or without
complying with the requirements of this Act. Such petition shall be made under oath and filed in
form of an ex parte motion in the registration or cadastral proceedings if the property is registered,
or in special proceedings in the case of property registered under the Mortgage Law or under
section one hundred and ninety-four of the Administrative Code, or of any other real property
encumbered with a mortgage duly registered in the office of any register of deeds in accordance
with any existing law, and in each case the clerk of the court shall, upon the filing of such petition,
collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered
Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six,
and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to
the sheriff of the province in which the property is situated, who shall execute said order
immediately.

The above-quoted provision explicitly allows the purchaser in a foreclosure sale to apply for a writ of
possession during the redemption period by filing a petition in the form of an ex parte motion under oath
for that purpose. Upon the filing of such motion with the RTC having jurisdiction over the subject property
and the approval of the corresponding bond, the law also in express terms directs the court to issue the
order for a writ of possession.18

Upon the expiration of the redemption period, the right of the purchaser to the possession of the
foreclosed property becomes absolute. The basis of this right to possession is the purchaser’s ownership
of the property. Mere filing of an ex parte motion for the issuance of the writ of possession would suffice,
and the bond required is no longer necessary, since possession becomes an absolute right of the
purchaser as the confirmed owner.19

Under the foregoing judicial pronouncement, it is clear that UOB has an absolute right to take possession
of the subject property since it was the highest bidder in the foreclosure sale, and the spouses Espinoza
failed to redeem the said property even after the redemption period. Act No. 3135, as amended by Act
No. 4118, is categorical in stating that the purchaser must first be placed in possession of the mortgaged
property pending proceedings assailing the issuance of the writ of possession. 20

Consequently, the RTC under which the application for the issuance of a writ of possession over the
subject property is pending cannot defer the issuance of the said writ in view of the pendency of an action
for annulment of mortgage and foreclosure sale. The judge with whom an application for a writ of
possession is filed need not look into the validity of the mortgage or the manner of its foreclosure. 21

Any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for the
refusal to issue a writ of possession. Regardless of whether or not there is a pending suit for the
annulment of the mortgage or the foreclosure itself, the purchaser is entitled to a writ of possession,
without prejudice, of course, to the eventual outcome of the pending annulment case. 22

The spouses Espinoza’s position that the issuance of the writ of possession must be deferred pending
resolution of Civil Case No. 66256 is therefore unavailing. As we have recounted above, this Court has
long settled that a pending action for annulment of mortgage or foreclosure sale does not stay the
issuance of the writ of possession.23

Indeed, the proceeding in a petition for a writ of possession is ex parte and summary in nature. It is a
judicial proceeding brought for the benefit of one party only and without notice by the court to any person
adverse of interest. It is a proceeding wherein relief is granted without affording the person against whom
the relief is sought the opportunity to be heard.24 Hence, the RTC may grant the petition in the absence of
the mortgagors, who are, in this case, the spouses Espinoza.

The RTC, Branch 158, which issued the writ of possession cannot be adjudged to have committed grave
abuse of discretion, nor can its order directing the issuance of said writ be considered patently illegal for,
a fortiori, there is no discretion involved in its issuance of such an order, it being the ministerial duty of
the trial court under the circumstances.

In Mamerto Maniquiz Foundation, Inc. v. Pizarro,25 we emphasized the principle that the issuance of a writ
of possession in favor of the purchaser in a foreclosure sale is a ministerial act and does not entail the
exercise of discretion:

This Court has consistently held that the duty of the trial court to grant a writ of possession is
ministerial. Such writ issues as a matter of course upon the filing of the proper motion and the
approval of the corresponding bond. No discretion is left to the trial court. Any question regarding
regularity and validity of the sale, as well as the consequent cancellation of the writ, is to be
determined in a subsequent proceeding as outlined in Section 8 of Act 3135. Such question cannot
be raised to oppose the issuance of the writ, since the proceeding is ex parte. The recourse is
available even before the expiration of the redemption period provided by law and the Rules of
Court.

The purchaser, who has a right to possession that extends after the expiration of the redemption
period, becomes the absolute owner of the property when no redemption is made. Hence, at any
time following the consolidation of ownership and the issuance of a new transfer certificate of title
in the name of the purchaser, he or she is even more entitled to possession of the property. In
such a case, the bond required under Section 7 of Act 3135 is no longer necessary, since
possession becomes an absolute right of the purchaser as the confirmed owner. (Emphases
supplied.)
The order for a writ of possession issues as a matter of course upon the filing of the proper motion and
the approval of the corresponding bond, if applied for by the purchaser during the redemption period; and
upon the filing of the proper motion, with no more need for a bond, if applied for by the purchaser after
the lapse of the redemption period. The judge issuing the order, following the express provisions of law
and settled jurisprudence, cannot be charged with having acted with grave abuse of discretion. 26

Hence, certiorari does not lie in instances where the RTC granted the Petition for the Issuance of the Writ
of Possession, for he is mandated by the law to issue such writ and the buyer in the foreclosure sale is
entitled to it as a matter of right. A special civil action for certiorari could be availed of only if the lower
tribunal has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction; and if there is no appeal or any other plain, speedy, and adequate remedy in the
ordinary course of law. However, where the assailed Order was forthwith issued by the RTC pursuant to
its ministerial duty, and in the absence of any showing that the said Order is tainted with illegality, as in
the case at bar, certiorari is not the proper remedy.27

In sum, We have established that LRC Case No. R-5792 is ex-parte and summary in nature, and it can
proceed independently of Civil Case No. 66256. The writ of possession shall be issued in favor of the
purchaser of the mortgaged property in the foreclosure sale, despite the pendency, but without prejudice
to the subsequent outcome, of the case for annulment of the mortgage or the foreclosure proceedings.
Hence, RTC, Branch 158 also did not commit grave abuse of discretion amounting to lack or excess of
jurisdiction when it issued its Orders dated 10 May 2000 and 10 July 2000 denying the spouses Espinoza’s
Motion for Consolidation of LRC Case No. R-5792 with Civil Case No. 66256.

The Court of Appeals reversed the 13 July 2000 Order of the RTC, Branch 158, granting the issuance of a
writ of possession over the subject property to UOB, on the ground that there are peculiar and equitable
circumstances attendant in the case which no longer made the issuance of said writ a mere ministerial
duty of the trial court.

Apparently, the appellate court relied on Cometa v. Intermediate Appellate Court28 and Barican v.
Intermediate Appellate Court29 cited in Vaca v. Court of Appeals30 in holding that the issuance of writ of
possession had ceased to be ministerial. In Cometa, which actually involved execution of judgment for the
prevailing party in a damages suit, the subject properties were sold at the public auction at an unusually
lower price, while in Barican, the mortgagee bank took five years from the time of foreclosure before filing
the petition for the issuance of writ of possession. We have considered these equitable and peculiar
circumstances in Cometa and Barican to justify the relaxation of the otherwise absolute rule. None of
these exceptional circumstances, however, attended herein so as to place the instant case in the same
stature as that of Cometa and Barican. Instead, the ruling in Vaca v. Court of Appeals on all fours with the
present petition. In Vaca, there is no dispute that the property was not redeemed within one year from
the registration of the extrajudicial foreclosure sale; thus, the mortgagee bank acquired an absolute right,
as purchaser, to the issuance of the writ of possession. Similarly, UOB, as the purchaser at the auction
sale in the instant case, is entitled as a matter of right, to the issuance of the writ of possession.

The Court of Appeals evidently committed reversible error in finding otherwise.

WHEREFORE, IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The Decision dated 25 June
2002, and the Resolution dated 28 November 2002, rendered by the Court of Appeals in CA-G.R. SP No.
60865, are hereby REVERSED and SET ASIDE. The Orders dated 10 May 2000, 10 July 2000, 13 July
2000 and 25 August 2000 of the Regional Trial Court of Pasig City, Branch 158, in LRC Case No. R-5792
are hereby REINSTATED.

G.R. No. 174672             April 16, 2008

MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA), petitioner,

vs.
HEIRS OF MARCELINA L. SERO, SUPREMO S. ANCAJAS, MAXIMA S. ANCAJAS-NUÑEZ, HRS. OF JULIAN L.
ANCAJAS, AGRIPINO ANCAJAS, MARIA ORBISO, MIGUELA ANCAJAS, INESIA ANCAJAS, PACENCIA
ANCAJAS, CLAUDIA DOBLE, HEIRS OF ERACLEO S. ANCAJAS, MARCIANO ANCAJAS, LUCIA ANCAJAS,
HEIRS OF ANASTACIO S. ANCAJAS, MARIA A. AMAMANGPANG, JOSE S. ANCAJAS, AMADO S.
ANCAJAS,HEIRS OF PORCESO S. ANCAJAS, CRISOLOGO ANCAJAS,HEIRS OF SILVESTRA ANCAJAS,
ANICETO A. INVENTO, ENRIQUIETA I. GIER, NORMA PACHO, EDGARDO A. INVENTO, PROCOLO A.
INVENTO, ESTRELLA I. MAGLASANG, HEIRS OF GERMOGENA S. ANCAJAS, NENITA ANCAJAS-OSTIA,
PAULA A. AMADEO, NEMESIO A. AMADEO, PASTORA A. RUSTIA, CONCEPCION A. ORBISO, BALBINA A.
AMADEO,ANASTACIA A. AMADEO, RUFINO AMADEO, VALERIANO AMADEO, HERMOGENIS AMADEO,
PEDRO AMADEO, OPING AMADEO,HEIRS OF CRESENCIA AMADEO,EDITHO A. SERTEMO, HEIRS OF
DEMETRIO L. SERO, AURELIA L. SERO, MONICA S. YUBAL, HEIRS OF SOLEDAD SERO-VILLACSE,
PAQUITA S. VILLACSE, CONCEPCION VILLARIN, JOSE S. OSTIA, HEIRS OF BASILISA S. SERO, HEIRS OF
TOMAS S. CUNA, FERNANDO CUNA, HEIRS OF MARGARITO S. CUNA, LEONARDO CUNA, CONSOLACION
CUNA, SALOME CUNA, HEIRS OF PEREGRINA SERO CUNA, CARMEN CUNA, HEIRS OF ALEJANDRO SERO
CUNA, LETICIA CUNA, HEIRS OF SENANDO SERO CUNA, SONIA CUNA, ANTONIO S. CUNA, COLOMBA
SERO CUNA, All represented by their attorney-in-fact- ANECITO INVENTO, respondents.

DECISION

YNARES-SANTIAGO, J.:

This petition assails the May 12, 2006 Decision1 of the Court of Appeals in CA-G.R. CV No. 73159, which
reversed the June 14, 2001 and August 10, 2001 Orders of the Regional Trial Court (RTC) of Cebu City,
Branch 8, in Civil Case No. CEB-24012. Also assailed is the September 12, 2006 Resolution denying the
motion for reconsideration.

The facts of the case are as follows:

On July 6, 1999, respondents, through their attorney-in-fact Anecito Invento, filed a complaint against
several defendants for recovery of ownership and declaration of nullity of several Transfer Certificates of
Title (TCTs), four of which are registered in the names of the petitioner Mactan-Cebu International Airport
Authority (MCIAA) and the Republic. They alleged that the subject properties were owned by their
predecessor Ysabel Limbaga, but the Original Certificates of Title were lost during the Second World War.
Respondents alleged that the mother of therein defendants Ricardo Inocian, Emilia I. Bacalla, Olympia I.
Esteves and Restituta I. Montana pretended to be "Isabel Limbaga" and fraudulently succeeded in
reconstituting the titles over the subject properties to her name and in selling some of them to the other
defendants.2

It will be recalled that the subject properties were acquired by the Civil Aeronautics Administration (CAA)
through expropriation proceedings for the expansion and improvement of the Lahug Airport, 3 which was
granted by the Court of First Instance (CFI) of Cebu City, Branch 3, in Civil Case No. R-1881, on
December 29, 1961. Subsequently, however, Lahug airport was ordered closed on November 29, 1989, 4
and all its functions and operations were transferred to petitioner MCIAA 5 after its creation in 1990
pursuant to Republic Act (R.A.) No. 6958, otherwise known as the Charter of the Mactan-Cebu
International Airport Authority.

In its Answer, petitioner denied the allegations in the complaint and by way of special and affirmative
defenses moved for the dismissal of the complaint. Likewise, defendants Ricardo Inocian, Haide Sun and
spouses Victor Arcinas and Marilyn Dueñas filed their separate motions to dismiss.

On June 14, 2001, the RTC dismissed the complaint on the grounds that the respondents had no cause of
action, and that the action was barred by prescription and laches.6 Respondents filed a motion for
reconsideration which was denied; hence, they filed an appeal with the Court of Appeals which reversed
the Orders of the RTC. The appellate court held that the complaint alleged "ultimate facts" constituting
respondents' cause of action; that the respondents cannot be faulted for not including therein "evidentiary
facts," thus causing confusion or doubt as to the existence of a cause of action; and assuming the
complaint lacked some definitive statements, the proper remedy for the petitioner and other defendants
should have been a motion for bill of particulars, not a motion to dismiss. Further, the determination of
whether respondents have a right to recover the ownership of the subject properties, or whether their
action is barred by prescription or laches requires evidentiary proof which can be threshed out, not in a
motion to dismiss, but in a full-blown trial.7 The dispositive portion of the Decision reads:

WHEREFORE, the assailed orders dated 14 June 2001 and 10 August 2001, both issued by the
Regional Trial Court of Cebu City, Branch 8 in Civil Case No. CEB-24012, are hereby REVERSED
and SET ASIDE. Accordingly, we REMAND the case to the court a quo for further proceedings. We
are also directing the RTC of Cebu City, Branch 8 to REINSTATE the case, and to conduct a TRIAL
ON THE MERITS and thereafter render a decision.

SO ORDERED.8
Petitioner moved for reconsideration, however, it was denied in a Resolution dated September 12, 2006. 9
Hence, this petition for review based on the following grounds:

THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT RESPONDENTS HAVE A CAUSE OF
ACTION AGAINST PETITIONER IN CIVIL CASE NO. CEB-24012.

THE COURT OF APPEALS GRAVELY ERRED IN NOT AFFIRMING THE LOWER COURT'S FINDING
THAT RESPONDENTS ARE GUILTY OF LACHES AND THAT THEIR CAUSE OF ACTION, IF ANY, HAS
PRESCRIBED.10

Respondents argue that the properties which were expropriated in connection with the operation of the
Lahug Airport should be reconveyed to the real owners considering that the purpose for which the
properties were expropriated is no longer relevant in view of the closure of the Lahug Airport. 11

A cause of action is an act or omission of one party in violation of the legal right of the other. Its elements
are the following: (1) the legal right of plaintiff; (2) the correlative obligation of the defendant, and (3)
the act or omission of the defendant in violation of said legal right.12 The existence of a cause of action is
determined by the allegations in the complaint. 13 Thus, in the resolution of a motion to dismiss based on
failure to state a cause of action, only the facts alleged in the complaint must be considered. The test in
cases like these is whether a court can render a valid judgment on the complaint based upon the facts
alleged and pursuant to the prayer therein. Hence, it has been held that a motion to dismiss generally
partakes of the nature of a demurrer which hypothetically admits the truth of the factual allegations made
in a complaint.14

However, while a trial court focuses on the factual allegations in a complaint, it cannot disregard statutes
and decisions material and relevant to the proper appreciation of the questions before it. In resolving a
motion to dismiss, every court must take judicial notice of decisions this Court has rendered as provided
by Section 1 of Rule 129 of the Rules of Court,15 to wit:

SECTION 1. Judicial notice, when mandatory. - A court shall take judicial notice, without the
introduction of evidence, of the existence and territorial extent of states, their political history,
forms of government and symbols of nationality, the law of nations, the admiralty and maritime
courts of the world and their seals, the political constitution and history of the Philippines, the
official acts of the legislative, executive and judicial departments of the Philippines, laws of nature,
the measure of time, and the geographical divisions.

In reversing the Orders of the RTC, the Court of Appeals failed to consider the decision of this Court in
Mactan-Cebu International Airport v. Court of Appeals,16 rendered on November 27, 2000, which settled
the issue of whether the properties expropriated under Civil Case No. R-1881 will be reconveyed to the
original owners if the purpose for which it was expropriated is ended or abandoned or if the property was
to be used other than the expansion or improvement of the Lahug airport.

In said case, the Court held that the terms of the judgment in Civil Case No. R-1881 were clear and
unequivocal. It granted title over the expropriated land to the Republic of the Philippines in fee simple
without any condition that it would be returned to the owners or that the owners had a right to
repurchase the same if the purpose for which it was expropriated is ended or abandoned or if the property
was to be used other than as the Lahug airport.17 When land has been acquired for public use in fee
simple, unconditionally, either by the exercise of eminent domain or by purchase, the former owner
retains no rights in the land, and the public use may be abandoned, or the land may be devoted to a
different use, without any impairment of the estate or title acquired, or any reversion to the former
owner.18

Had the appellate court considered the import of the ruling in Mactan-Cebu International Airport v. Court
of Appeals, it would have found that respondents can invoke no right against the petitioner since the
subject lands were acquired by the State in fee simple. Thus, the first element of a cause of action, i.e.,
plaintiff's legal right, is not present in the instant case.

We are not unaware of the ruling in Heirs of Timoteo Moreno v. Mactan-Cebu International Airport
Authority,19 concerning still another set of owners of lands which were declared expropriated in the
judgment in Civil Case No. R-1881, but were ordered by the Court to be reconveyed to their previous
owners because there was preponderant proof of the existence of the right of repurchase. However, we
qualified our Decision in that case, thus:
 We adhere to the principles enunciated in Fery and in Mactan-Cebu International Airport Authority,
and do not overrule them. Nonetheless the weight of their import, particularly our ruling as regards
the properties of respondent Chiongbian in Mactan-Cebu International Airport Authority, must be
commensurate to the facts that were established therein as distinguished from those extant in the
case at bar. Chiongbian put forth inadmissible and inconclusive evidence, while in the instant case
we have preponderant proof as found by the trial court of the existence of the right of repurchase
in favor of petitioners.20 (Emphasis provided)

Thus, the determination of the rights and obligations of landowners whose properties were expropriated
but the public purpose for which eminent domain was exercised no longer subsist, must rest on the
character by which the titles thereof were acquired by the government. If the land is expropriated for a
particular purpose with the condition that it will be returned to its former owner once that purpose is
ended or abandoned, then the property shall be reconveyed to its former owner when the purpose is
terminated or abandoned. If, on the contrary, the decree of expropriation gives to the entity a fee simple
title, as in this case, then the land becomes the absolute property of the expropriator. Non-use of the
property for the purpose by which it was acquired does not have the effect of defeating the title acquired
in the expropriation proceedings.21

Even assuming that respondents have a right to the subject properties being the heirs of the alleged real
owner Ysabel Limbaga, they still do not have a cause of action against the petitioner because such right
has been foreclosed by prescription, if not by laches. Respondents failed to take the necessary steps
within a reasonable period to recover the properties from the parties who caused the alleged fraudulent
reconstitution of titles.

Respondents' action in the court below is one for reconveyance based on fraud committed by Isabel
Limbaga in reconstituting the titles to her name. It was filed on July 6, 1999, or 38 years after the trial
court in Civil Case No. R-1881 granted the expropriation, or even longer if we reckon from the time of the
fraudulent reconstitution of titles, which date is not stated in the complaint but presumably before the
complaint for expropriation was filed by CAA on April 16, 1952.22

An action for reconveyance is a legal remedy granted to a landowner whose property has been wrongfully
or erroneously registered in another's name.23 However, such action must be filed within 10 years from
the issuance of the title since the issuance operates as a constructive notice.24 Thus, the cause of action
which respondents may have against the petitioner is definitely barred by prescription.

Rule 9, Section 1 of the Rules of Court provides that when it appears from the pleadings or the evidence
on record that the action is already barred by statute of limitations, the court shall dismiss the claim.
Further, contrary to respondents' claim that a complaint may not be dismissed based on prescription
without trial, an allegation of prescription can effectively be used in a motion to dismiss when the
complaint on its face shows that indeed the action has prescribed25 at the time it was filed.

Thus, in Gicano v. Gegato:26

We have ruled that trial courts have authority and discretion to dismiss an action on the ground of
prescription when the parties' pleadings or other facts on record show it to be indeed time-barred;
and it may do so on the basis of a motion to dismiss, or an answer which sets up such ground as
an affirmative defense; or even if the ground is alleged after judgment on the merits, as in a
motion for reconsideration; or even if the defense has not been asserted at all, as where no
statement thereof is found in the pleadings, or where a defendant has been declared in default.
What is essential only, to repeat, is that the facts demonstrating the lapse of the prescriptive
period, be otherwise sufficiently and satisfactorily apparent on the record: either in the averments
of the plaintiffs complaint, or otherwise established by the evidence.27 (Citations omitted)

In the instant case, although the complaint did not state the date when the alleged fraud in the
reconstitution of titles was perpetuated, it is however clear from the allegations in the complaint that the
properties sought to be recovered were acquired by the petitioner in Civil Case No. R-1881 which was
granted by the trial court on December 29, 1961. Clearly, the filing of the action in 1999 is way beyond
the ten 10 year prescriptive period.

Further, while it is by express provision of law that no title to registered land in derogation of that of the
registered owner shall be acquired by prescription or adverse possession, it is likewise an enshrined rule
that even a registered owner may be barred from recovering possession of property by virtue of laches.28
The negligence or omission to assert a right within a reasonable time warrants a presumption that the
party entitled to assert it had either abandoned it or declined to assert it also casts doubt on the validity
of the claim of ownership. Such neglect to assert a right taken in conjunction with the lapse of time, more
or less great, and other circumstances causing prejudice to the adverse party, operates as a bar in a court
of equity.29

Respondents' inaction for a period of 38 years to vindicate their alleged rights had converted their claim
into a stale demand. The allegation that petitioner employed threat or intimidation is an afterthought
belatedly raised only in the Court of Appeals. As such it deserves scant attention.

WHEREFORE, in view of the foregoing, the petition for review is GRANTED. The May 12, 2006 Decision
and September 12, 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 73159 are REVERSED and
SET ASIDE. The Orders of the Regional Trial Court of Cebu City, Branch 8 dated June 14, 2001 and
August 10, 2001 in Civil Case No. CEB-24012, dismissing respondent's complaint for reconveyance on
grounds of lack of cause of action, prescription and laches and denying the motion for reconsideration,
respectively, are REINSTATED and AFFIRMED.

G.R. No. 176150             June 25, 2008

IBARRA P. ORTEGA, petitioner,

vs.
SOCIAL SECURITY COMMISSION, and SOCIAL SECURITY SYSTEM, respondents.

DECISION

CARPIO MORALES, J.:

Petitioner Ibarra P. Ortega assails the Court of Appeals’ August 7, 2006 Decision 1 dismissing his petition
for review and upholding the denial by respondent Social Security Commission (SSC) of his application for
total permanent disability benefits, and the Resolution 2 of January 16, 2007 denying his motions for
reconsideration and inhibition.

Petitioner, a member of respondent Social Security System (SSS), filed claims for partial permanent
disability benefits on account of his condition of Generalized Arthritis and Partial Ankylosis, 3 which claims
the SSS granted for a total monthly pension of 23 months.4

After the expiration of his disability pension, petitioner filed with the SSS Malabon Branch Office on April
26, 2000 a claim for total permanent disability benefits. 5 His application, docketed as BO-0000-1755, was
denied, however, on the ground that he was already granted disability benefits for the same illness and
physical examination showed no progression of illness.6 Dr. Juanillo Descalzo III, SSS Malabon Branch
senior physician, observed that petitioner merely had a "slight limitation of grasping movement for both
hands."7

Aggrieved, petitioner filed before the SSC an unverified Petition of June 19, 2000,8 alleging that the SSS
denied his application despite the fact that his attending physician, Dr. Rafael Recto, Jr., diagnosed him to
be suffering from Trigger finger 4th (L) and thumb (L)9 while another private medical practitioner, Dr. Flo
dela Cruz, diagnosed him to be also suffering from Bronchial Asthma, Hypertension and Gastro-
Esophageal Reflux Disease.10

Further claiming to be afflicted with rheumatoid arthritis of both hands affecting all fingers and both
palms,11 petitioner contended that the medical opinion of the SSS physician who interviewed him for less
than three minutes cannot prevail over the findings of his physicians who have been treating him over a
long period of time.

Before taking cognizance of his appeal, the SSC directed the exhaustion of administrative remedies, by
letter of June 30, 2000. The matter was thus referred to the SSS Office of the Medical Program Director
for review of petitioner’s disability claim. 12

Meanwhile, by letter of July 17, 2000, the SSS Legal Department denied a reconsideration of the denial of
his claim,13 prompting petitioner to submit a letter-opposition of August 15, 2000.14

Upon referral of the SSC, the SSS Medical Program Department, through Dr. Carlota A. Cruz-Tutaan and
Dr. Jesus S. Tan, confirmed that, upon examination of petitioner, there was no progression of his illness, 15
prompting petitioner to submit a letter-opposition of November 11, 2000 charging the SSS medical
officers of issuing fraudulent medical findings.16 Unperturbed, the SSS Medical Program Department stood
its ground and denied with finality petitioner’s claim, by letter of November 22, 2000. 17

On January 29, 2001, SSC finally docketed petitioner’s June 19, 2000 petition as SSC Case No. 1-15115-
2001,18 after petitioner complied with SSC’s directives19 to verify the petition and submit certain
document-annexes. SSS then filed its Answer of May 31, 2001,20 to which petitioner submitted a Reply of
June 25, 2001.21 After the August 10, 2001 pre-hearing conference,22 the SSS filed its Position Paper of
September 7, 2001 while petitioner submitted his Reply of October 19, 2001.

By Resolution of April 3, 2002,23 the SSC denied petitioner’s claim for entitlement to total permanent
disability for lack of merit. And it opined that, considering that he had reached the retirement age of 60,
on March 19, 1998, with 41 contributions to his name, petitioner may opt:

(a) [t]o continue paying to the SSS monthly contributions (including employer’s share) on his own
to complete the required 120 monthly contributions in order to avail of the retirement pension
benefit;

(b) [to] leave his monthly contributions with the SSS for his and his family’s future benefits; or

(c) [to a]vail of the lump sum retirement benefit.24

Petitioner moved for reconsideration of the Resolution. The SSC thus directed the SSS to file its
comment25 and, by a subsequent order, to conduct a domiciliary visit and physical examination on
petitioner to ascertain whether he could already qualify for such benefit. 26 In compliance therewith, Dr.
Rebecca Sison, SSS senior physician, examined petitioner on August 29, 2002 and found no sufficient
basis to warrant the granting of total permanent disability benefits to him.27

Petitioner’s motion for reconsideration having been denied by Order28 of January 29, 2003, petitioner
appealed via Rule 43 to the Court of Appeals 29 which promulgated in CA-G.R. SP No. 75653 the assailed
issuances affirming in toto the SSC Resolution and Order.

There is at the outset a need to thresh out procedural issues attending the petition drafted by petitioner
himself, apparently without the aid of counsel. While the petition was admittedly filed as a petition for
certiorari under Rule 65, it contains a rider averring that it was filed also as a petition for review on
certiorari under Rule 45.30

In not granting imprimatur to this type of unorthodox strategy, the Court ruled, in a similar case, 31 that a
party should not join both petitions in one pleading. A petition cannot be subsumed simultaneously under
Rule 45 and Rule 65 of the Rules of Court, nor may it delegate upon the court the task of determining
under which rule the petition should fall. 32 It is a firm judicial policy that the remedies of appeal and
certiorari are mutually exclusive and not alternative or successive.33

Palpably, petitioner crafted this unconventional two-headed petition under no other pretext but to second-
guess at the appropriate remedy. His apparent bewilderment led him to later rectify a supposed
typographical error in the caption such that instead of "petition for review," the title be read as a "petition
for certiorari."34 The subsequent filing of the Correction of Clerical Errors served no redeeming purpose as
it only evinced petitioner’s decision to consider the petition as a special civil action for certiorari, which is
an improper remedy.

It bears stressing that Rule 45 and Rule 65 pertain to different remedies and have distinct applications. 35
It is axiomatic that the remedy of certiorari is not available where the petitioner has the remedy of appeal
or some other plain, speedy and adequate remedy in the course of law.36 The petition for review under
Rule 45 covers the mode of appeal from a judgment, final order, resolution or one which completely
disposes of the case, like the herein assailed Decision and Resolution of the appellate court. There being
already a final judgment at the time of the filing of the petition, a petition for review under Rule 45 is the
appropriate remedy.

Petitioner failed to carve out an exception to this rule, as he did not– and could not– illustrate the
inadequacy of an appeal as a remedy that could promptly relieve him from the injurious effects of the
assailed judgment.37 In fact, by seeking the same kind of reliefs via two remedies rolled into one pleading,
he implicitly admits that an appeal suffices. Moreover, the probability of divergent rulings, a scenario
transpiring in G & S Transport Corp. v. CA,38 is far from obtaining in this case since the assailed issuances
emanated from only one court and cannot be elevated separately in different fora.

While the Court may dismiss a petition outright for being an improper remedy, 39 it may, in certain
instances where a petition was filed on time both under Rules 45 and 65 and in the interest of justice,
proceed to review the substance of the petition and treat it as having been filed under Rule 45.40 Either
way, however, the present petition just the same merits dismissal since it puts to issue questions of fact
rather than questions of law which are appropriate for review under a Rule 45 petition.

It is settled that the Court is not a trier of facts and accords great weight to the factual findings of lower
courts or agencies whose function is to resolve factual matters.41 It is not for the Court to weigh evidence
all over again.42 Moreover, findings of fact of administrative agencies and quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not
only respect but finality when affirmed by the Court of Appeals. 43

The requisite quantum of proof in cases filed before administrative or quasi-judicial bodies is neither proof
beyond reasonable doubt nor preponderance of evidence. In this type of cases, a fact may be deemed
established if it is supported by substantial evidence, or that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion.44 In this case, substantial evidence
abounds.

The conclusion that petitioner is not entitled to total permanent disability benefits under the Social
Security Law was reached after petitioner was examined not just by one but four SSS physicians, namely,
Dr. Juanillo Descalzo III, Dr. Carlota A. Cruz-Tutaan, Dr. Jesus S. Tan and Dr. Rebecca Sison.

The initial physical examination and interview revealed that petitioner had slight limitation of grasping
movement for both hands. According to Dr. Descalzo, this finding was not enough to grant an extension of
benefit since petitioner had already received benefits equivalent to 30% of the body. Responding to the
allegation that the April 2000 physical examination was performed in a short period of time, the doctor
credibly explained that petitioner’s movements were already being monitored and evaluated from a
distance as part of the examination of his extremities in order to minimize malingering and overacting. 45

Meanwhile, the medical findings of Dr. Carlota A. Cruz-Tutaan and Dr. Jesus S. Tan in August and
September 2000 were summarized as follows:

Heart:

- manifest regular rhythm

- no murmurs

Lungs:

- on ausculation showed no evidence of wheezing

- breath sounds are normal and;

- he is not in a state of respiratory distress

Hypertension:

- Blood Pressure is 140/80, hence, under control

Extremities: (Hands)

- No deformities noted except for the right small finger, the distal interphalangeal joint is
bent at about 30°. No abnormal limitation of movement noted on all the fingers, grasping
has improved.46

Contrary to petitioner’s asseverations, the SSC did not ignore the certifications of petitioner’s attending
physicians as, in fact, it ordered the SSS in June 2001 to conduct an investigation as to the medical
findings and final diagnosis by his attending physicians. 47 It was surfaced that petitioner’s medical records
in the custody of Dr. Flo dela Cruz could not be found as they were allegedly destroyed by inundation. 48
And it was found that the July 10, 2001 letter-certification by Dr. Rafael Recto, Jr. only narrated the
recurring condition of petitioner’s trigger finger, the administration to him of local steroid injections, and
the performance of surgical release on his left 4th trigger finger on June 16, 1998; and that he was
diagnosed on August 28, 2000 with mallet finger (R, 5th), for which he was advised to undergo
reconstructive surgery.49

Adopting a liberal attitude and exercising sound discretion, the SSC even directed the conduct of another
physical examination on petitioner to judiciously resolve his motion for reconsideration. Pursuant thereto,
Dr. Sison physically examined petitioner in August 2002, the results of which were reflected in a medical
report, viz:

Physical Examination:

General Survey: well nourished, well developed, conscious, coherent but talks with sarcasm
and arrogance.

EENT: normocephalic, pinkish conjunctiva, anicteric sclerae; negative tonsillo-pharyngeal

congestion

C/L: clear breath sounds, no wheezes; (-) dyspnea

Heart: normal rate, regular rhythm.

Abdomen: negative tenderness

Extremeties: no neurological and sensory deficit

no gross deformity, (+) scar, 4th finger (L)

no loss of grasping power for large and small objects

no loss of opposition between thumb and forefingers

can bend fully to reach toes

can bend both knees fully without pain or difficulty

can raise both arms above shoulder level without pain and difficulty

can bend both elbows without limitation

The member was requested to submit recent ECG, x-rays and other laboratory work-up results but
he could not locate them during visit and would still look for the said medical documents and mail
them to SSS.

He was then advised to come to SSS, Diliman Branch for ECG and x-ray, however he refused.

He also refused to affix his signature on the medical field service form to confirm the visit of our
Medical Officer.

Based on these recent physical examination findings and functional assessment and the medical
certificate (Form MMD 102) with final diagnosis of Trigger Finger, there is no sufficient basis that
warrants the granting of Total Permanent disability. 50 (Underscoring supplied)

Dr. Sison subsequently noted that petitioner’s Electrocardiograph, Chest X-ray, Kidney and Urinary
Bladder Ultrasound indicated his condition as normal,51 which conclusion was arrived at by going through
the same medical documents presented by petitioner following a series of tests conducted on him by
hospitals of his choice.
From the foregoing recital of petitioner’s medical history, the SSC concluded that petitioner is not entitled
to total permanent disability benefits under the Social Security Law, the pertinent provisions of which
read:

xxxx

(d) The following disabilities shall be deemed permanent total:

1. Complete loss of sight of both eyes;

2. Loss of two limbs at or above the ankle or wrists;

3. Permanent complete paralysis of two limbs;

4. Brain injury resulting to incurable imbecility or insanity; and

5. Such cases as determined and approved by the SSS.

xxxx

(f) If the disability is permanent partial and such disability occurs after thirty-six (36) monthly
contributions have been paid prior to the semester of disability, the benefit shall be the monthly
pension for permanent total disability payable not longer than the period designated in the
following schedule:

COMPLETE AND NUMBER

PERMANENT LOSS OF OF
USE OF MONTHS
One thumb 10
One index finger 8
One middle finger 6
One ring finger 5
One little finger 3
One big toe 6
One hand 39
One arm 50
One foot 31
One leg 46
One ear 10
Both ears 20
Hearing of one ear 10
Hearing of both ears 50
Sight of one eye 25

(g) The percentage degree of disability which is equivalent to the ratio that the designated number
of months of compensability bears to seventy-five (75), rounded to the next higher integer, shall
not be additive for distinct, separate and unrelated permanent partial disabilities, but shall be
additive for deteriorating and related permanent partial disabilities to a maximum of one hundred
percent (100%), in which case, the member shall be deemed as permanently totally disabled. 52

Indeed, the evidence indicates that petitioner’s condition at the time material to the case does not fall
under the enumeration in the above-quoted provisions of the Social Security Law. Moreover, as correctly
held by the appellate court, the proviso of such provisions on the percentage degree of disability applies
when there is a related deterioration of the illness previously considered as partial permanent disability. In
this case, there is dearth of evidence on the proposition that petitioner’s array of illnesses is related to
Generalized Arthritis and Partial Ankylosis of the specific body parts.
Petitioner’s reliance on jurisprudence53 on work-connected disability claims insofar as it relates to a
demonstration of disability to perform his trade and profession 54 is misplaced.

Claims under the Labor Code for compensation and under the Social Security Law for benefits are not the
same as to their nature and purpose. On the one hand, the pertinent provisions of the Labor Code govern
compensability of work-related disabilities or when there is loss of income due to work-connected or work-
aggravated injury or illness.55 On the other hand, the benefits under the Social Security Law are intended
to provide insurance or protection against the hazards or risks of disability, sickness, old age or death,
inter alia, irrespective of whether they arose from or in the course of the employment. 56 And unlike under
the Social Security Law, a disability is total and permanent under the Labor Code if as a result of the
injury or sickness the employee is unable to perform any gainful occupation for a continuous period
exceeding 120 days regardless of whether he loses the use of any of his body parts. 57

The Court notes that the main issue petitioner proffers is whether he is entitled to total permanent
disability benefits from the SSS given his "angioplasty operation of the heart, coronary artery disease,
ischemic heart disease, severe hypertension and a host of other serious illnesses filed with the SSS[.]" 58

A perusal of the records shows that when the case was already submitted for decision before the appellate
court, petitioner manifested that he suffered a heart attack on February 25, 2004,59 for which he claimed
to have undergone a coronary angiogram on March 9, 2005 and a coronary angioplasty on September 27,
2005 at the Philippine Heart Center.60

Unfortunate as these events were, the appellate court correctly ruled that it could not consider such
allegation of subsequent events since "a factual question may not be raised for the first time on appeal[,]
and documents forming no part of the proofs before the appellate court will not be considered in disposing
of the issues of an action."61

The issues in every case are limited to those presented in the pleadings. The object of the pleadings is to
draw the lines of battle between the litigants and to indicate fairly the nature of the claims or defenses of

both parties.62 A change of theory on appeal is not allowed.63 In this case, the matter of petitioner’s
serious heart condition was not raised in his application before the SSS or in his June 19, 2000 petition
before the SSC.

Fair play dictates that the SSS be afforded the opportunity to properly meet the issue 64 with respect to the
new ailments besetting petitioner, in line with the actual practice that only qualified government
physicians, by virtue of their oath as civil service officials, are competent to examine persons and issue
medical certificates which will be used by the government for a specific official purpose. 65 This holds
greater significance where there exist differences or doubts as to the medical condition of the person.

In this case, the SSS medical examiners are tasked by law to analyze the extent of personal incapacity
resulting from disease or injury. Oftentimes, a physician who is adequately versed in the knowledge of
anatomy and physiology will find himself deficient when called upon to express an opinion on the
permanent changes resulting from a disability. Unlike the general practitioner who merely concerns
himself with the examination of his patient for purposes of diagnosis and treatment, the medical examiner
has to consider varied factors and ascertain the claimant’s related history and subjective complaints. 66 The
members of this Court cannot strip their judicial robe and don the physician’s gown, so to speak, in a
pretense to correlate variances in medical findings.

Finding no cogent reason to discuss the ancillary issues, the Court dismisses the petition, without
prejudice to the filing of a new application by petitioner who is not left without any recourse in his legal
bout respecting his supervening claims anchored mainly on Coronary Artery Disease 1VD and Diabetes
Mellitus Type 2, these illnesses having been found to be dissimilar from the subject matter of the present
action.67

WHEREFORE, the petition is, in light of the foregoing disquisitions, DENIED.

G.R. No. 174929             June 27, 2008

ENGR. RANULFO C. FELICIANO, petitioner,

vs.
NESTOR P. VILLASIN, respondent.
 DECISION

CHICO-NAZARIO, J.:

This is a Petition for Certiorari under Rule 65 of the Revised Rules of Court assailing the following: (1) the
Order1 dated 28 July 2006 of Branch 6 of the Regional Trial Court (RTC) of Tacloban City, Leyte,
dismissing petitioner Ranulfo C. Feliciano’s Petition for Quo Warranto against respondent Nestor P. Villasin
in Civil Case No. 2006-03-29; and (2) the Order2 dated 8 September 2006 of the same court denying
petitioner’s Motion for Reconsideration.

The following are the antecedent facts of this case:

Petitioner Feliciano was appointed General Manager (GM) of Leyte Metropolitan Water District (LMWD) on
11 June 1975 by the LMWD Board of Directors through Resolution No. 14, Series of 1975. 3

On 6 March 1990, the Local Water Utilities Administration (LWUA) took over the management and policy-
making functions of LMWD owing to LMWD’s default on the payment of its obligations to LWUA. Said move
was made pursuant to Presidential Decree No. 198, otherwise known as THE PROVINCIAL WATER
UTILITIES ACT OF 1973,4 issued on 25 May 1973. The LWUA appointed an Interim General Manager and
Chairman of the Board of Directors, as well as its members.

After the LWUA took over the management and policy-making functions of the LMWD in March 1990,
Engineer (Engr.) Cayo U. Emnas was appointed as take-over General Manager. Emnas thereafter filed
administrative charges against Feliciano for Grave Misconduct, Dishonesty and Conduct Unbecoming an
LMWD Official, docketed as Administrative Case No. LMWD-OGCC-01-01.5 Feliciano was accused of
authorizing payment of his backwages amounting to P134,721.64, for the period 6 March 1990 up to 23
October 1990, although he did not report for work during said period.

The Office of the Government Corporate Counsel (OGCC) handled the investigation of the charges against
Feliciano. In a Resolution dated 16 September 1991, the OGCC found Feliciano guilty as charged and
recommended the penalty of dismissal. Pertinent portions of the OGCC Resolution reads:

The action of respondent in authorizing, causing and receiving the aforesaid disbursement of
P134,721.64 in payment obstensibly of his backwages for the period starting 6 March 1990 up to
and until 23 October 1990, knowing that during the said period he did not report for work nor
rendered service to LMWD as testified to by complainants witnesses, is not only irregular but
unlawful. Worse, respondent being the General Manager, necessarily had taken advantage of his
position and abused the confidence reposed in his office in the perpetration of the said rank
dishonesty. As a consequence thereof, LMWD was defrauded and suffered damage in the sum of
P134,721.64.

Accordingly, undersigned finds respondent Ranulfo C. Feliciano guilty, as charged, of GRAVE

MISCONDUCT, DISHONESTY, AND CONDUCT UNBECOMING OF AN LMWD OFFICIAL.

In view of the grave nature of the offense committed by respondent, the large sum which LMWD
has been defrauded of, and the existence of aggravating circumstances occasioned by respondent’s
taking undue advantage of his position and abusing the confidence of his office, undersigned
recommends the imposition of the penalty of DISMISSAL on respondent.6

On 11 November 1991, the Interim LMWD Board of Directors approved in toto the findings of the OGCC
including its recommendation to dismiss Feliciano.7

On 1 October 1993, the Civil Service Commission (CSC) issued Memorandum Circular No. 41, Series of
1993, directing Board Chairpersons and GMs of water districts to submit personnel appointments for
approval by the CSC.

On 20 July 1998, the take-over of the management and operations of the LMWD by the LWUA was lifted
by the LWUA Board of Trustees in its Resolution No. 138, Series of 1998.8

On 25 September 1998, the new regular LMWD Board of Directors unanimously approved Resolution No.
98-002 ordering Feliciano to re-assume9 the post he had vacated as GM of LMWD. The position was
accepted by Feliciano on 27 September 1998.10
As GM, Feliciano appointed Edgar R. Nedruda, Milagros A. Majadillas and Edgar B. Ortega as Division
Manager, Quality Control Assurance Officer and Plant Equipment Operator E, respectively, at the LMWD. 11
In compliance with CSC Memorandum Circular No. 41, Series of 1993, Feliciano submitted the same to
the CSC Regional Office (CSCRO) for approval. The CSCRO, however, disapproved Feliciano’s LMWD
personnel appointments in its Order issued on 8 June 1999 since GM Feliciano did not possess the
required CSC-approved appointment pursuant to CSC Memorandum Circular No. 41, S. 1993.12 Feliciano
appealed the Order to the CSC.

On 8 September 2000, the CSC through its Chairperson Corazon Alma G. de Leon, issued CSC Resolution
No. 002107 denying Feliciano’s appeal of his disapproved LMWD personnel appointments on the ground
that he was only a de facto officer.13 It found that Feliciano had no authority to make appointments since
he himself lacked the required CSC-approved appointment pursuant to CSC Memorandum Circular No. 40,
Series of 1998, and Memorandum Circular No. 41, Series of 1993.14 The CSC thus resolved:

WHEREFORE, the Order issued by the Civil Service Commission (CSCRO) Regional Office No. VIII,
Palo, Leyte, disapproving the appointments of Nedruda, Majadillas and Ortega on the ground that
Ranulfo Feliciano lacks the authority to appoint, is hereby affirmed.

Accordingly, the Human Resource Management Officer/Personnel Officer of the Leyte Metro Water
District (LMWD) may re-submit the appointment of Ranulfo Feliciano to the position of General
Manager of the LMWD, to the CSC Leyte Field Office for attestation.

Feliciano may likewise re-appoint Nedruda, Majadillas and Ortega to the same positions.
(Emphases ours.)

Feliciano filed a Motion for Reconsideration citing as main argument the fact that the LMWD was not a
government-owned and controlled corporation, but a special type of non-stock, non-profit private
corporation imbued with public interest, and therefore, not covered by the civil service rules.

The CSC denied Feliciano’s Motion for Reconsideration in its Resolution No. 010218, issued on 22 January
2001, which reiterated that Feliciano’s argument on the private character of water districts had long been
put to rest in Davao City Water District v. Civil Service Commission, which declared water districts to be
government-owned or controlled corporations with original charter, falling under the jurisdiction of the
CSC and Commission on Audit (COA).

Not satisfied, Feliciano appealed CSC Resolutions No. 002107 and 010218 to the Court of Appeals via
Petition for Certiorari. The case was docketed as CA-G.R. No. 63325. On 1 September 2005, the Court of
Appeals in Cebu City, through Associate Justice Ramon M. Bato, Jr., denied the petition. 15 Feliciano filed a
Motion for Reconsideration but the same was denied per Resolution dated 15 August 2006.16 Feliciano
thereafter appealed to this Court on 15 August 2006 via petition for review on certiorari in G.R. No.
174178. In an en banc Decision issued on 17 October 2006, this Court denied the petition for its failure to
sufficiently show that the CSC committed any reversible error in issuing the challenged decision and
resolution. Feliciano’s Motion for Reconsideration thereof was denied on 23 January 2007.

On 12 January 2005, the CSC issued a Memorandum directing its Regional Director (for Region 8) Rodolfo
Encajonado (RD Encajonado) to submit an update on the status of Feliciano’s appointment as GM of
LMWD.

In his Memorandum submitted to the CSC on 14 January 2005, RD Encajonado reported that the LMWD
Board of Directors had not yet submitted the required appointment of Feliciano as GM of LMWD for
attestation, as required by CSC Resolutions No. 002107 and No. 010218. On account thereof, the CSC,
through its Chairperson Karina Constantino-David, issued on 28 February 2005 CSC Resolution No.
050307, declaring Feliciano to be a mere de facto officer of LMWD and ordering him to vacate the position
of GM, to wit:

With the promulgation on September 13, 1991 of the above-mentioned Supreme Court decision, 17
the issuance on October 1, 1993 of the aforestated CSC Memorandum Circular, and the adoption
on January 22, 2001 of CSC Resolution No. 01-2018 denying Feliciano’s motion for
reconsideration, Feliciano is under legal obligation to comply by submitting his appointment to the
Commission for attestation/approval. This, he did not do. He instead stubbornly maintained his
personal stand that water districts are private corporations, not government-owned or controlled
corporations with original charter. For all legal intents and purposes, effective upon his receipt on
February 6, 2001 of CSC Resolution No. 01-0218 denying his motion for reconsideration, Feliciano
 is a mere usurper or intruder who has no right or title whatsoever to the position/office of General
Manager. His further occupancy of the position after said date holds him criminally liable for
usurpation of authority.

xxxx

WHEREFORE, the Commission resolves as follows:

1. Between June 8, 1999 (the date when the Civil Service Commission Regional Office No. VIII
issued an Order disapproving the appointments of Edgar R. Nedruda, Milagros A. Majadillas and
Edgar B. Ortega on the ground that Ranulfo C. Feliciano does not possess a CSC-approved
appointment) and February 6, 2001 (the date when Feliciano received a copy of CSC Resolution
No. 01-0218 denying his motion for reconsideration and affirming CSC Resolution No. 00-2107),
Feliciano shall be treated as a de facto officer whose acts are valid and binding only as regards
innocent third persons. Insofar as Feliciano himself is concerned, his acts are void, hence, he is not
entitled to the emoluments of the office. Regarding the three (3) issued appointments, the same
are all void, since Feliciano has no authority to issue the same.

2. Starting February 6, 2001, Feliciano is a mere usurper or intruder without any right or title to
the office/position of General Manager of the Leyte Metropolitan Water District (LMWD). His further
occupancy of the position of General Manager after February 6, 2001 holds him criminally liable for
usurpation of authority. Effective upon receipt of this Resolution, he is ordered to vacate the
position of LMWD General Manager.18

On 22 March 2005, Feliciano again sought recourse at the Court of Appeals where he filed a Petition for
Certiorari and Prohibition with application for Temporary Restraining Order (TRO) and Writ of Injunction,
seeking to enjoin the implementation of CSC Resolution No. 050307, Series of 2005. The case was
docketed as CA-G.R. SP No. 00489.19

On 30 March 2005, while CA-G.R. SP No. 00489 was still pending with the Court of Appeals, with no
injunction having been issued by the appellate court, the LMWD Board of Directors declared the GM
position occupied by Feliciano vacant by virtue of LMWD Resolution No. 050307.20

The Court of Appeals subsequently issued on 12 April 2005 a Resolution in CA-G.R. SP No. 00489 granting
a TRO effective for sixty days. After the lapse of the TRO, the LMWD Board of Directors appointed Villasin
as the new GM of LMWD on 14 June 2005. On 16 September 2005, the Court of Appeals dismissed CA-
G.R. SP No. 00489 which reached this Court via petition for review in G.R. No. 172141. This was
eventually denied by this Court and entry of judgment was made on 14 November 2006. On 28 December
2005, the LMWD Board of Directors unanimously approved LMWD Resolution No. 05-145 certifying that
Villasin was the GM of LMWD pursuant to the provisions of Presidential Decree No. 198 and the CSC Rules
and Regulations.

On 28 March 2006, Feliciano thus filed with the RTC a Petition for Quo Warranto against Villasin under
Rule 66 of the 1997 Rules of Civil Procedure, docketed as Civil Case No. 2006-03-29.

Feliciano asked the RTC to restore him to his position as GM of LMWD, and to remove Villasin therefrom.
In particular, he prayed for the following in his Petition for Quo Warranto:

1. To order [Villasin] to vacate the Office of General Manager of LMWD and for [Feliciano] to be
seated to such office;

2. To mandate [Villasin] to pay the salaries and other emoluments of [Feliciano] which as of this
date amounts to more than One Million Two Hundred Thousand Pesos (P1,200,000.00);

3. To direct [Villasin] to pay [Feliciano] attorney’s fees comprised of Two Hundred Thousand Pesos
(P200,000.00) as acceptance fees and Five Thousand Pesos (P5,000.00) appearance per hearing;

4. To command [Villasin] to pay the cost of herein Petition for Quo Warranto.

[Feliciano] also prays for such other reliefs as may be necessary under the circumstances. 21
Citing the Court’s ruling in Villaluz v. Zaldivar,22 Feliciano argued that since the LWUA had no power to
remove a GM appointed by a regular Board of Directors, it should follow then that an interim Board of
Directors neither had the power to discipline or remove a regular GM of LMWD.

Villasin countered by filing a Comment/Answer with Motion to Dismiss the Petition for Quo Warranto, on
the following grounds:

(a) Forum shopping;

(b) Feliciano is disqualified from government service due to his dismissal from office on 11
November 1991;

(c) Petitioner’s claim that LMWD is a private entity defeats his petition since quo warranto is a
remedy of a person claiming a public office;

(d) Quo warranto case was filed more than a year from the time the cause of action arose or
beyond the reglementary period;

(e) The Court of Appeals had already denied his petition for Review on Certiorari on CSC Resolution
No. 050307.

A hearing with notice to the parties was set for 2 June 2006 but Feliciano failed to attend the same. 23 The
RTC then ordered Civil Case No. 2006-03-29 submitted for Resolution.

On 28 July 2006, the RTC issued an Order dismissing Feliciano’s Petition for Quo Warranto, finding that:

The scope of the remedy of quo warranto instituted by an individual is that he, the petitioner, has
prior right to the position or office held by the respondent. Where there is no legal ground or where
the fundamental basis of the petition is none or destroyed, it becomes unnecessary to pass upon
the right of the respondent.

xxxx

WHEREFORE, in view of the aforegoing (sic), for lack of cause of action amounting to want of
jurisdiction, this petition shall be, as it is hereby ordered, dismissed. 24

Feliciano filed his Motion for Reconsideration alleging that the Order issued by the RTC was conjectural,
presumptuous and specious. However, the Motion for Reconsideration was denied by the RTC in an Order
dated 8 September 2006. According to the RTC, the Quo Warranto Petition was prematurely filed
considering that Feliciano’s Petition for Review on Certiorari with the Court of Appeals, involving CSC
Resolutions No. 002107 and No. 010218, was still pending with the Court of Appeals. Hence, the issue of
whether Feliciano is holding the GM position in a de facto or a de jure capacity is yet to be resolved. The
RTC therefore decreed:

WHEREFORE, with prematurity in the institution of the present petition as duly admitted by herein
petitioner-movant coupled with the fact that the rest of the arguments raised in the motion have
already been considered and rejected by this court in the order dated, July 28, 2006, the motion
for reconsideration is hereby denied.25

On 14 October 2006, Feliciano went directly to this Court via the instant Petition for Certiorari under Rule
65 of the Revised Rules of Court, raising the following arguments:

I.

RESPONDENT COURT HAS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR

EXCESS OF JURISDICTION AS ITS DISMISSAL OF THE PETITION IS SO WHIMSICAL, CAPRICIOUS
AND ARBITRARY AMOUNTING THEREFORE TO A PATENT AND GROSS EVASION OF A POSITIVE
DUTY OR VIRTUAL REFUSAL TO PERFORM JUDICIAL DUTY.

II.
 RESPONDENT COURT HAS COMMITTED GRAVE ABUSE OF DISCRETION AS ITS DISMISSAL OF THE
PETITION, BASED ON GROUNDS NOT SOUGHT AND PRAYED FOR IN THE MOTION TO DISMISS,
CONSTITUTES A DENIAL OF DUE PROCESS.

As hereinbefore stated, CA-G.R. SP No. 00489, Feliciano’s Petition for Certiorari and Prohibition seeking to
enjoin the implementation of CSC Resolution No. 050307, was dismissed by the Court of Appeals in a
Decision dated 16 September 2005. Feliciano appealed said Court of Appeals Decision before this Court
through a Petition for Review on Certiorari, docketed as G.R. No. 172141. This Court, however, in an En
Banc Resolution dated 6 June 2006, ruled to:

b) DENY the petition for failure thereof to sufficiently show that the Court of Appeals committed
any reversible error in issuing the challenged decision and resolution as to warrant the exercise by
this Court of its discretionary appellate jurisdiction.26

The Court En Banc denied with finality Feliciano’s Motion for Reconsideration on 22 August 2006, and
entry of judgment was made in G.R. No. 172141 on 14 November 2006.

In the instant Petition, which actually arose from the appointment by the LMWD Board of Directors of
Villasin as the new GM of LMWD after the CSC ordered Feliciano to vacate the same in its Resolution No.
050307, Feliciano prays that this Court set aside and declare null and void the Orders dated 28 July 2006
and 8 September 2006 of the RTC dismissing his Petition for Quo Warranto in Civil Case No. 2006-03-29.

Petitioner raises several issues in this Petition, which all boil down to the sole question of whether the RTC
committed grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing Feliciano’s
Petition for Quo Warranto.

Worthy to note is the failure of Feliciano to implead herein the RTC, the tribunal that rendered the
assailed Orders, as a nominal party (public respondent) in the instant Petition for Certiorari. One of the
requisites of an independent civil action for Certiorari is that it must be directed against a tribunal, a
board, or an officer exercising judicial or quasi-judicial functions. Feliciano failed to comply with said
requirement and this failure is sufficient to dismiss this Petition.

Under Rule 65 of the Rules of Court, failure to comply with any of the aforesaid requirements for filing an
independent civil action for Certiorari is sufficient ground for the dismissal of the petition. This rule
accords sufficient discretion to the court hearing the special civil action whether or not to dismiss the
petition outright for failure to comply with said requirement.

Evidently, the function of this Court is merely to check whether the RTC committed grave abuse of
discretion amounting to lack or excess of jurisdiction in dismissing Feliciano’s Petition for Quo Warranto
before it.

In a petition for certiorari under Section 1, Rule 65 of the Rules of Court, the following essential requisites
must be present, to wit: (1) the writ is directed against a tribunal, a board, or an officer exercising judicial
or quasi-judicial functions; (2) such tribunal, board, or officer has acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is
no appeal or any plain, speedy, and adequate remedy in the ordinary course of law. 27

Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to
lack of jurisdiction, or, in other words, where the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility,28 and it must be so patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. 29

A petition for certiorari under Rule 65 of the Rules of Court will prosper only if there is a showing of grave
abuse of discretion or an act without or in excess of jurisdiction on the part of respondent tribunal. In the
absence of such a showing, there is no reason for this Court to annul the decision of the respondent
tribunal or to substitute it with its own judgment, for the simple reason that it is not the office of a
petition for Certiorari to inquire into the correctness of the assailed decision.

Nonetheless, even as this Court delves into the merits of the present Petition, it still must fail.

Feliciano’s Petition for Quo Warranto centers on his alleged right as the one legally entitled to occupy the
position of GM of LMWD. He presented two main issues therein:
 (1) Whether or not the LMWD Board of Directors, through Resolution No. 05-037, legally and
validly ousted him; and

(2) Whether or not the LMWD Board of Directors legally and validly appointed Villasin.

Contending that his appointment as GM on 11 June 1975 by the LMWD Board of Directors and subsequent
assumption of office bestowed on him a legal right to the said position, Feliciano argues that Republic Act
No. 9286,30 which further amended Presidential Decree No. 198, and was approved on 2 April 2004,
vested him with security of tenure. Feliciano adds that the Interim LMWD Board of Directors, in fact, had
no power to dismiss him when he was dismissed on 11 November 1991.

It is well-established that Quo Warranto proceedings determine the right of a person to the use or
exercise of a franchise or an office and to oust the holder from its enjoyment, if the latter’s claim is not
well-founded, or if he has forfeited his right to enjoy the privilege. According to the Rules of Procedure:

The action may be commenced for the Government by the Solicitor General or the fiscal against a
person who usurps, intrudes into, or unlawfully holds or exercises a public office, position or
franchise; a public officer whose acts constitute a ground for the forfeiture of his office; or against
an association which acts as a corporation without being legally incorporated or without lawful
authority to so act.31

The action may also be instituted by an individual in his own name who claims to be entitled to the
public office or position usurped or unlawfully held or exercised by another.32 (Emphasis supplied.)

The possible outcome of a Petition for Quo Warranto can be any of the following:

If the court finds for the respondent, the judgment should simply state that the respondent is
entitled to the office. If, however, the court finds for the petitioner and declares the respondent
guilty of usurping, intruding into, or unlawfully holding or exercising the office, judgment may be
rendered as follows:

"Sec. 10. Judgment where usurpation found.-- When the defendant is found guilty of
usurping, intruding into, or unlawfully holding or exercising an office, position, right,
privilege, or franchise, judgment shall be rendered that such defendant be ousted and
altogether excluded therefrom, and that the plaintiff or relator, as the case may be, recover
his costs. Such further judgment may be rendered determining the respective rights in and
to the office, position, right, privilege, or franchise of all the parties to the action as justice
requires."

If it is found that the respondent or defendant is usurping or intruding into the office, or
unlawfully holding the same, the court may order:

(1) The ouster and exclusion of the defendant from office;

(2) The recovery of costs by plaintiff or relator;

(3) The determination of the respective rights in and to the office, position, right, privilege
or franchise of all the parties to the action as justice requires.33

In the instance in which the Petition for Quo Warranto is filed by an individual in his own name, he must
be able to prove that he is entitled to the controverted public office, position, or franchise; otherwise, the
holder of the same has a right to the undisturbed possession thereof. In actions for Quo Warranto to
determine title to a public office, the complaint, to be sufficient in form, must show that the plaintiff is
entitled to the office.34 In Garcia v. Perez,35 this Court ruled that the person instituting Quo Warranto
proceedings on his own behalf, under Section 5, Rule 66 of the Rules of Court, must aver and be able to
show that he is entitled to the office in dispute. Without such averment or evidence of such right, the
action may be dismissed at any stage.36

Due to the recent turn of events, Feliciano lost any legal standing to pursue via Quo Warranto proceedings
his claim to the position of GM of LMWD considering this Court’s En Banc Resolutions dated 6 June 2006
and 22 August 2006 in G.R. No. 172141 which denied with finality his Petition for Review on Certiorari of
the Court of Appeals Decision dated 16 September 2005 and Resolution dated 31 March 2006 in CA-G.R.
SP No. 00489 upholding the legality of CSC Resolution No. 050307. To recall, CSC Resolution No. 050307
treated Feliciano as a de facto officer with regard to his acts as GM of LMWD; and declared him to be a
usurper of or an intruder to the said position beginning 6 February 2001, and thus ordered him to vacate
the same.

Considering that entry of judgment was already made in G.R. No. 172141 as of 14 November 2006, there
is therefore no more obstacle to the appointment by the LMWD Board of Directors of Villasin as the new
GM of LMWD.

Feliciano imputes grave abuse of discretion on the part of the RTC for allegedly failing to afford him due
process, since his Petition for Quo Warranto was dismissed based on its face and without having been
heard. In granting Villasin’s Motion to Dismiss the Petition for Quo Warranto, the RTC ratiocinated:

Inferred, in the year 1999, petitioner herein already knew that his appointment as General
Manager of LMWD was placed in doubt and declared ineffective. So his acts as such since then
were void. Petitioner, in fact was ordered by the Civil Service Commission to vacate the position of
LMWD General Manager since he assumed the position without completed appointment (General
Manager, Philippine Ports Authority, et al. vs. Julieta Monserat, 381 SCRA 200.)

x x x As of the moment, without the CSC approved appointment, he is, the law points, a de facto
officer. He held the position of General Manager of LMWD without the completed appointment.
Over this, but for the creed petitioner avows, the court believes that while the necessary intent is
there, the sporting idea of fair play, is not sufficient for the petition to succeed. Petitioner surely is
a de facto officer.37

The Court emphasizes that an action for Quo Warranto may be dismissed at any stage when it becomes
apparent that the plaintiff is not entitled to the disputed pubic office, position or franchise. 38 Hence, the
RTC is not compelled to still proceed with the trial when it is already apparent on the face of the Petition
for Quo Warranto that it is insufficient. The RTC may already dismiss said petition at this point.

Feliciano presents as an alternative argument the fact that as GM of LMWD, he is not part of the
personnel of the water district, arguing that his appointment does not need CSC attestation. He explains
that:

[E]ven granting that the CSC can declare him a de facto officer and usurper, the same has already
prescribed, since as early as September 8, 2000 in its Resolution No. 002107 or four (4) years
before its Resolution No. 050307, it has already known about petitioner being a de facto officer,
that being the GM of LMWD, he is not part of the personnel of LMWD, thus, his appointment is not
subject to attestation under CSC Resolution No. 41, S. 1993 x x x. 39

We find his argument untenable.

To determine whether personnel of the LMWD, particularly the GM, are subject to CSC Rules and
Regulations, we must delve into the pertinent laws affecting the management and policy-making functions
of the LMWD.

The provisions of Presidential Decree No. 198 read:

Chapter VI
Officers and Employees

Section 23. Additional Officers. - At the first meeting of the board, or as soon thereafter as
practicable, the board shall appoint, by a majority vote, a general manager, an auditor, and an
attorney, and shall define their duties and fix their compensation. Said officers shall service at the
pleasure of the board.

xxxx

Section 25. Exemption from Civil Service. - The district and its employees, being engaged in a
proprietary function, are hereby exempt from the provisions of the Civil Service Law. x x x.
On 15 August 1975, Presidential Decree No. 768 amended Section 23 of Presidential Decree No. 198 to
read:

SEC. 23. The General Manager. - At the first meeting of the board, or as soon thereafter as
practicable, the board shall appoint, by a majority vote, a general manager and shall define his
duties and fix his compensation. Said officer shall serve at the pleasure of the board.

On 11 June 1978, Presidential Decree No. 147940 amended Presidential Decree No. 198, as amended by
Presidential Decree No. 768, removing Section 25 of the latter, which had exempted the district and its
employees from the coverage of the Civil Service. Thus, with such amendment, officers and employees of
water districts were put under the mantle of Civil Service Rules and Regulations.

On 2 April 2004, Republic Act No. 9286 further amended Section 23 of Presidential Decree No. 198, to
read:

Sec. 23. The General Manager. – At the first meeting of the Board, or as soon thereafter as
practicable, the Board shall appoint, by a majority vote, a general manager and shall define his
duties and fix his compensation. Said officer shall not be removed from office, except for cause and
after due process.

From the foregoing, as early as the issuance of Presidential Decree No. 1479 on 11 June 1978, it is clear
that the LMWD GM is covered by Civil Service Rules and Regulations.

As we have held in Tanjay Water District v. Gabaton,41 Davao City Water District v. Civil Service
Commission,42 and Hagonoy Water District v. National Labor Relations Commission,43 water districts are
government instrumentalities44 whose officers and employees belong to the civil service. These rulings are
in consonance with the provisions of Article IX-B, Section 2 of the Constitution, whose provisions read:

The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the
Government, including government-owned or controlled corporations with original charters.

The position of General Manager being unequivocally part of the personnel of the water district whose
officers and employees are covered under the civil service, an appointment thereto requires the
attestation of the CSC for it to be valid.

Moreover, this Court cannot ignore the fact that petitioner Feliciano violated the rule on forum shopping 45
in his quest for a favorable opinion on his cause of action.

Forum shopping exists when a party repetitively avails himself of several judicial remedies in different
courts, simultaneously or successively, all substantially founded on the same transactions and the same
essential facts and circumstances, and all raising substantially the same issues either pending in, or
already resolved adversely by, some other court.46

The following elements of forum shopping have been established:

(a) identity of parties, or at least such parties as represent the same interests in both actions;

(b) identity of rights asserted and relief prayed for, the relief being founded on the same set of
facts; and

(c) the identity of the two preceding particulars, such that any judgment rendered in the other
action will, regardless of which party is successful, amount to res judicata in the action under
consideration.47

The prohibition on forum shopping is embodied in Rule 7 of the Rules of Court, which provides, viz:

Sec. 5. Certification against forum shopping.—The plaintiff or principal party shall certify under
oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore
commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-
judicial agency and, to the best of his knowledge, no such other action or claim is pending therein;
(b) if there is such other pending action or claim, a complete statement of the present status
 thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed
or is pending, he shall report that fact within five (5) days therefrom to the court wherein his
aforesaid complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall constitute indirect
contempt of court, without prejudice to the corresponding administrative and criminal actions. If
the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the
same shall be ground for summary dismissal with prejudice and shall constitute direct contempt,
as well as a cause for administrative sanctions.

What is pivotal to consider in determining whether forum shopping exists or not is the vexation caused to
courts and the parties-litigants by a party who asks appellate courts and/or administrative entities to rule
on the same or related causes and/or to grant the same or substantially the same reliefs, in the process
creating the possibility of conflicting decisions being rendered by the different courts upon the same
issues.48

Feliciano has evidently trifled with the courts and abused their processes in improperly instituting several
cases and filing multiple petitions, cases or proceedings, and splitting causes of action – all of which
focused on the legality of his termination as LMWD GM. While a party may avail himself of the remedies
prescribed by the Rules of Court for the myriad reliefs from the court, such party is not free to resort to
them simultaneously or at his pleasure or caprice.

It is pertinent to note that at the time Feliciano filed G.R. No. 174929 on 14 October 2006, the legality of
his termination as LMWD GM has, in fact, been resolved with finality with the entry of judgment in G.R.
No. 172141. To recall, this Court En Banc denied G.R. No. 172141 and affirmed CA-G.R. SP No. 00489
which upheld CSC Resolution No. 050307. With the denial of G.R. No. 172141, the validity of CSC
Resolution No. 050307 declaring Feliciano to be a de facto officer from 8 June 1999 to 6 February 2001,
and a mere usurper thereafter, has been laid to rest.

Feliciano, however, insisted on pursuing this petition for certiorari, being fully aware of the finality of G.R.
No. 172141 and the consequences resulting therefrom.

This Court reiterates the raison d’etre for the proscription against forum shopping. The grave evil sought
to be avoided by the rule against forum shopping is the rendition by two competent tribunals of two
separate and contradictory decisions – unscrupulous party litigants, taking advantage of a variety of
competent tribunals, may repeatedly try their luck in several fora until a favorable result is reached. 49

IN ALL, we find that the RTC committed no grave abuse of discretion in dismissing Feliciano’s Petition for
Quo Warranto.

WHEREFORE, premises considered, this Petition for Certiorari is DISMISSED, and the Orders dated 8 July
2006 and 8 September 2006 issued by Branch 6 of the Regional Trial Court in Tacloban, Leyte, in Civil
Case No. 2006-03-29, dismissing petitioner Ranulfo C. Feliciano’s Petition for Quo Warranto, are hereby
AFFIRMED.

Feliciano and his counsel are hereby REPRIMANDED for FORUM SHOPPING, with a WARNING that a
repetition of the same or similar act will be dealt with more severely.

G.R. No. L-28184 September 11, 1980

PURIFICACION V. GARCIA, petitioner-appellant,

vs.
ANGELO PEREZ, respondent-appellee.

DE CASTRO, J.:
Purificacion V. Garcia appeals on pure questions of law, 1 from a decision dated 29 June 1967 of the Court
of First Instance of Manila, Branch XXII, in Civil Case No. 67679 entitled "Purificacion V. Garcia, Petitioner,
versus Angelo Perez, Respondent", which dismissed the petition for quo warranto instituted by petitioner-
appellant questioning the authority of respondent-appellee to occupy and discharge the duties of the
position of Senior Clerk in the Fiscal Management and Budget Division, Court of Appeals, Identified as
Item No. 104, Page No. 2473, Republic Act No, 4164 for FY 1964-65.

2
The antecedent facts which led to this suit are set forth in the decision of the court a quo, thus:

In September 1964, the position of Senior Clerk in the Fiscal Management and Budget
Division of the Court of Appeals with an authorized s of P4,800 per annum, became vacant.
The petitioner, Purificacion V. Garcia, who was then occupying another position of Senior
Clerk in the same division but with compensation at the rate of P3,400 per annum, filed
with the Presiding Justice of the Court of Appeals a written application for the vacant
position stating therein her qualifications.

On September 12, 1964, upon the recommendation of the Clerk of Court of Appeals, the
Presiding Justice of said Court, appointed respondent Angelo Perez to the vacant position,
with compensation at the rate of P4,200 per annum, effective on September 14, 1964. At
that time, the respondent was holding the position of Cash and Payroll Clerk in the same
division, with compensation at the rate of P3,960 per annum.

On September 21, 1964, the petitioner filed with the Civil Service Commission, a protest
against the appointment of the respondent on the ground that she was next in rank, better
qualified and entitled to preferential appointment to the position. The Commissioner of Civil
Service indorsed the petitioner's protest to the Court of Appeals for comment. In a second
endorsement, the Presiding Justice of the Court of Appeals, recommended approval of the
appointment of the respondent. In a separate communication to the Commissioner of Civil
Service, the Chief of the Fiscal Management and Budget Division of the Court of Appeal
stated that the recommendation for the approval of the appointment of the respondent was
made "after carefully studying the records and efficiency ratings of the ranking employees
in said division where the vacancy exists" and that while the herein petitioner occupies an
item in his division, she never worked therein and "has no knowledge or experience about
the nature or kind of work being performed" in said division. The first Deputy Clerk of Court
and Administrative Officer of the Court of Appeals also informed the Commissioner of Civil
Service that the position of Cash and Payroll Clerk, was considered next in rank to the
position of Senior Clerk to which the respondent was appointed and this ranking was based
in the "hierarchical organization of the Fiscal Department and Budget Division to which the
two above-mentioned positions belong, the degree of relationship between these two
positions and the similarity in the nature of the duties inherent in them."

On August 8, 1966, the Commissioner of Civil Service approved the appointment of the
respondent as Senior Clerk with compensation at the rate of P4,200 per annum.

Upon being informed of the approval of respondent's appointment, the petitioner filed a
motion for the reconsideration of the decision of the Commissioner of Civil Service denying
her protest. On October 7, 1966, the petitioner's motion for reconsideration was denied by
the Commissioner of Civil Service.

To the position of Cash and Payroll Clerk vacated by the respondent, the Presiding Justice of
the Court of Appeals appointed Virginia Soriano thereto. On November 23, 1966, the
petitioner sent to the Commissioner of Civil Service her protest against said appointment on
the ground that it violated the Civil Service Rules on Promotion, with the statement that the
formal protest would be sent later.

On November 25, 1966, the petitioner commenced the present action but three days later,
or on November 28, 1966, she went her formal protest against the appointment of Mrs.
Soriano, with a prayer that it be disapproved and to cause the appointment of the petitioner
to said position.

The court a quo dismissed the complaint on the ground that: "A careful reading of the plaintiff's complaint
and the stipulation of facts submitted by the parties disclose that the petitioner does not claim to be
entitled to the position but she merely asserted a preferential right' to be appointed thereto. Considering
that she has not been appointed to the position in question, she cannot, therefore, be placed and made to
occupy it. Under the situation, the petitioner has no cause of action against the respondent." 3 The court a
quo further noted that: "Another circumstance which militates against the present action is that it was
commenced beyond the period of one year from the time the alleged right of the petitioner to hold the
office in question arose. The respondent was appointed Senior Clerk effective September 14, 1964, and
since then, he immediately discharged the duties of the position. Considering that the petitioner contends
that the appointment, of the respondent to said position and his exercise. of its functions was unlawful
and prejudicial to petitioner's rights, she should have commenced her action (assuming that she has the
right to do so) within a period of one year from said appointment, as she was in effect deprived of a right
to occupy the position, The complaint in this case was filed only on November 25, 1966 and accordingly, it
is already barred." 4

5
Hence, this appeal wherein petitioner-appellant has assigned four (4) errors of the court a quo, thus:

THE LOWER COURT ERRED IN DENYING APPELLANTS' RIGHT TO INSTITUTE THE INSTANT
QUO WARRANTO PETITION.

II

THE LOWER COURT ERRED IN HOLDING THAT APPELLANT SHOULD HAVE COMMENCED
THIS ACTION WITHIN ONE (1) YEAR FROM THE APPOINTMENT OF APPELLEE.

III

THE LOWER COURT ERRED IN NOT DECLARING NULL AND VOID APPELLEE'S APPOINTMENT
TO THE CONTESTED POSITION AND IN NOT DECLARING APPELLANT AS THE EMPLOYEE
NEXT IN RANK TO SAID POSITION AND ELIGIBLE AND QUALIFIED FOR APPOINTMENT
THERETO.

IV

THE LOWER COURT ERRED IN DISMISSING APPELLANT'S PETITION, INSTEAD OF

GRANTING APPELLANT'S PRAYER THEREIN.

The pivotal question thus presented, to which all others are subordinated, is whether the petitioner-
appellant has the right to bring a quo warranto proceeding questioning the legality of the appointment of
the respondent.

Nothing is better settled than that a petitioner, in a quo warranto proceeding to try title to a public office,
must be able to show that he is entitled to said office. Absent such an element, the petition must be
dismissed. This is a principle that goes back to Acosta v. Flor, 6 a 1905 decision. There, the doctrine has
been laid down that: "No individual can bring a civil action relating to usurpation of a public office without
averring that he has a right to the same; and at any stage of the proceedings, if it be shown that such
individual has no right, the action may be dismissed because there is no legal ground upon which it may
proceed when the fundamental basis of such action is destroyed. " This has been the exacting rule, since
then, 7 followed with stricter firmness in Cuyegkeng v. Cruz, 8 where this Court held that one who does
not claim to be entitled to the office allegedly usurped or unlawfully held or exercised by another, but who
"merely asserts a right to be appointed" thereto, cannot question the latter's title to the same by quo
warranto. In other words, one whose claim is predicated solely upon a more or less remoted possibility,
that he may be the recipient of the appointment, has no cause of action against the office holder. This is
precisely the situation in the case at hand, and there is no cogent reason to change the rule. Perforce, the
instant appeal may be dismissed, even on this ground alone.

Should greater liberality be accorded to appellant by considering her action as one for mandamus
whereby she would seek the appointing power to be compelled to withdraw the appointment of appellee
and issue in its place one for appellant, a procedural obstacle stands on the way, the appointing power,
the Presiding Justice of the Court of Appeals, not having been impleaded as a party. This on the
assumption that appellant has a clear legal right to the contested position, which she has not.
The observation just made finds relevance to the issue raised in appellant's second assignment of error,
relative to the fatal consequence of her failure to institute the present quo warranto proceedings within
the reglementary period of one year from the accrual of the cause of action (Sec. 16, Rule 66, Rules of
Court). In said assignment of error, 9 petitioner-appellant maintains that the lower court erred in holding
that this action should have been commenced within one (1) year from the appointment of appellee and
argues that her cause of action arose only after notice of the denial of her motion for reconsideration of
the decision of the Commissioner of Civil Service on her protest against the appointment of respondent-
appellee. Moreover,' she insists that the pendency of the protest in the Civil Service Commission
suspended the running of the one-year period, citing the Supreme Court's ruling on the finality of
appointment in the case of Grospe v. Sec. of Public Works and Communication, L-11090, January 31,
1959, 10 the dissenting opinion of Justice Perfecto in the case of Tumulak v. Egay, 82 Phil. 828 concerning
the one-year period, 11 and the ruling in the case of Agcaoile v. Saguitan, 48 Phil. 676. 12

The authorities relied upon by appellant are, however, not in point and do not apply in this case. The first
case is one of mandamus — and the case at bar cannot be considered as one, as already shown — asking
for the reinstatement of an employee who was ordered dismissed for cause by the Commission on Civil
Service. The second is a dissenting opinion which is not binding, as it is a mere expression of the
individual view of the dissenting justice from the conclusion held by the majority of the court. The last was
expressly abandoned in Torres v. Quintos, 88 Phil. 436, 439 (195 1), in the following tenor:

... We denied said supplemental action in a minute resolution, the effect of which is of
course to reject the theory that the pendency of an administrative remedy suspends the
period within which a petition for quo warranto should be filed.

The reason is obvious. While it may be desirable that administrative remedies be first
resorted to, no one is compelled or bound to do so; and as said remedies neither are
prerequisite to nor bar the institution of quo warranto proceedings: it follows that he who
claims the right to hold a public office allegedly usurped by another and who desires to seek
redress in the courts, should file the proper judicial action within the reglementary period.
Public interest requires that the right of public office should be determined as speedily as
practicable ...

This ruling has been reiterated with consistent strictness in a long line of cases, including Sison v.
Pangramoyen, L-40295, 31 July 1978. 13

As applied to the instant case, the admitted facts show that the appointment in controversy was made on
12 September 1964, effective 14 September 1964; respondent-appellee assumed office on the strength
thereof, and received the salary corresponding to said position. The petition herein was filed only on 25
November 1966, clearly more than one year after the pretended right of petitioner-appellant to hold the
office in question arose. This circumstance has close the door for any judicial remedy in her favor.

This makes it unnecessary to take up in detail the other assignment of errors advanced by petitioner-
appellant. Suffice it to state that petitioner-appellant has not overcome the presumption of regularity and
legality in official actions anent the extension of the appointment in question by the Presiding Justice of
the Court of Appeals and the approval thereof, by the Commissioner of Civil Service. Even if viewed only
as a matter of equity, we cannot disregard, as if they were totally irrelevant, the facts that appellee was
at the time of the issuance of the disputed appointment, receiving a higher salary than appellant; and that
he, as cash and payroll clerk, had always worked in the division to which the contested position pertains,
while appellant has never worked therein, although her item is that of a senior clerk of the same division,
thereby giving appellee higher potentiality for, if not actually greater, competence for the duties and
responsibilities of the position in question.

Likewise, three days after filing the instant petition, appellant protested with the Commissioner of Civil
Service the appointment of one Mrs. Virginia Soriano to the position of cash and payroll clerk, the position
vacated by appellee, praying that she (appellant) be appointed to said position. This theory of
abandonment, as advanced by appellee 14 and raised in appellee's Motion to Dismiss, 15 was not refuted by
appellant, as she could have done by filing a reply brief which she did not. Undeniably, there is obvious
validity in this contention, at least insofar as it tends to show appellant's own conviction in the weakness
of her claim to be entitled to the position in dispute, which constitutes the real and actual foundation of
the action of quo warranto which she has instituted.

ACCORDINGLY, the instant petition for quo warranto is hereby DISMISSED.

G.R. No. 171442             June 17, 2008

ADING QUIZON, BEN ZABLAN, PETER SIMBULAN and SILVESTRE VILLANUEVA, petitioners,
vs.
LANIZA D. JUAN, respondent.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Revised Rules of Court filed
by petitioners Ading Quizon (Quizon), Ben Zablan (Zablan), Peter Simbulan (Simbulan) and Silvestre
Villanueva (Villanueva), seeking the reversal and the setting aside of the Decision 2 dated 15 March 2005
and the Resolution3 dated 24 January 2006 of the Court of Appeals in CA-G.R. SP No. 72921. The
appellate court, in its assailed Decision, found that petitioners forcibly entered and dispossessed
respondent Laniza Juan (Juan) of her property. Thus, the Court of Appeals affirmed the Resolution 4 dated
8 August 2002 of the Regional Trial Court (RTC) of Capas, Tarlac, Branch 66, in Civil Case No. 527-(01),
reversing the Decision5 dated 14 March 2001 of the Municipal Circuit Trial Court (MCTC) of Capas, Tarlac,
in Civil Case No. 2207, which dismissed respondent’s complaint for ejectment on the ground that
petitioners have established prior physical possession over the disputed property. In its assailed
Resolution, the Court of Appeals refused to reconsider its earlier Decision

In her Complaint, respondent alleged that she acquired a parcel of land situated in Sitio Bullhorn,
Aranguen, Capas, Tarlac, with an area of 10.2 hectares from Melencio Nuguid (Nuguid) by virtue of a
Deed of Sale executed on 11 December 1996. Respondent claimed that on 9 August 2000, petitioners,
conspiring and confederating with each other and through the use of force and intimidation, entered a
portion of her property without her knowledge and consent. On 21 August 2000, petitioners once again
went back to the premises and destroyed the wooden fence set up by respondent, as well as the fruit-
bearing trees and rice plantation found therein. Four days later, petitioners supplanted respondent’s
wooden fence with an iron fence, enclosing an area of about one hectare (subject property), over which
they maintained control and possession up to the time of filing of respondent’s Complaint with the MCTC.

In their Answer, petitioners countered that the Complaint in Civil Case No. 2207 lacks cause of action, for
respondent does not have any legal right over the subject property. Petitioners Quizon and Zablan
insisted that they are the lawful owners and possessors of the subject property and it was the respondent
who, without any authority from petitioners Quizon and Zablan, invaded and occupied the property.

During the Pre-Trial Conference held on 22 January 2001, the parties stipulated that the houses of
petitioners Quizon and Zablan were located outside the respondent’s property. The parties likewise agreed
that petitioners Simbulan and Villanueva have no possession or interest over the subject property, but
they were with petitioners Quizon and Zablan when the alleged encroachment over respondent’s property
took place.

On 14 March 2001, the MCTC rendered a Decision dismissing Civil Case No. 2207, since respondent failed
to establish that petitioners forcibly entered the subject property. The MCTC observed that petitioners
Quizon and Zablan occupied the subject property long before the alleged sale occurred between Nuguid
and respondent. Hence, petitioners Quizon and Zablan had sufficiently proved prior possession of the
subject property. More importantly, upon ocular inspection, the MCTC found that the subject property
occupied by petitioners Quizon and Zablan were outside the property sold by Nuguid to respondent. The
dispositive portion of the MCTC Decision reads:

IN VIEW THEREOF, decision is hereby rendered DISMISSING the complaint with cost de officio.

[Petitioners] counterclaim is also dismissed.6

On appeal, docketed as Civil Case No. 527-C-2001, the RTC initially affirmed the dismissal of Civil Case
No. 2207 in its Decision dated 16 November 2001, ruling that the appealed MCTC Decision was based on
facts and law on the matter.

Upon respondent’s Motion for Reconsideration, however, the RTC reversed its Decision dated 16
November 2001. In its Resolution dated 20 May 2002, the RTC underscored the stipulations made by
petitioners Simbulan and Villanueva during the Pre-Trial Conference before the MCTC that they were with
petitioners Quizon and Zablan when the incident that led to the filing of Civil Case No. 2207 occurred, and
construed such stipulation as admission that petitioners did unlawfully take over possession of the subject
property, as alleged by respondent. Thus, the RTC disposed:

WHEREFORE, finding the [petitioners] to have ousted [respondent] of her possession of her one
hectare land at Bullhorn, Aranguren, Capas, Tarlac and the destruction of her plants therein, the
Court hereby reconsiders its decision on November 16, 2001 which affirmed in toto the decision of
the 2nd Municipal Circuit Trial Court of Capas-Bamban-Concepcion, Capas, Tarlac; thereby reversing
said decision and hereby: orders [petitioners] to restore [respondent] to the possession of the one
hectare land she had been dispossessed; ordering the defendants to pay the amount of
P50,000.00 for the destruction of the [respondent’s] fence, crops and fruit bearing trees; ordering
the defendants to reimburse the attorney’s fees and appearance fees paid by [respondent] to her
counsel and to pay the cost.7

The Motion for Reconsideration filed by petitioners was denied by the RTC in its Resolution dated 8 August
2002.

Dissatisfied, petitioners filed a Petition for Review with the Court of Appeals where it was docketed as CA-
G.R. SP No. 72921, arguing that the RTC erred in not upholding the dismissal by the MCTC of the
respondent’s complaint in Civil Case No. 2207 for its utter lack of merit. Petitioners asserted that the RTC
gravely abused its discretion in reversing the MCTC Decision in Civil Case No. 2207, asserting that they
had a better right over the subject property. Petitioners likewise averred that the amount of P50,000.00
adjudged by the RTC as their liability for destroying the vegetables planted on the subject property was
excessive.

On 15 March 2005, the Court of Appeals rendered a Decision, affirming the RTC Resolution dated 20 May
2002. The Court of Appeals declared that petitioners did commit forcible entry of the subject property
since the parties already made a stipulation to that effect during the Pre-Trial Conference before the
MCTC, to wit:

[Respondent] bought on December 11, 1996 from [Nuguid] a parcel of land consisting of 52,000
(sic) sq. meters situated at Bullhorn, Brgy. Aranguren, Capas, Tarlac; it was also stipulated upon
proposal of the [petitioners] that [Simbulan] and [Villanueva] have no possession over the subject
parcel of land but they were with petitioners [Quizon] and [Zablan] when forcible entry was made
leading to the ouster of [respondent’s] possession and destruction [respondent’s] plants. That
[petitioner Quizon] house is outside the portion bought by [respondent] from [Nuguid]. 8

The appellate court further ruled that having voluntarily stipulated in the Pre-Trial Agreement that they
forcibly entered the subject property, petitioners can no longer deny the same. Once validly entered into,
stipulations will not be set aside unless for good cause. The party who validly made them can be relieved
therefrom only upon showing of collusion, duress, fraud, misrepresentation as to facts, undue influence or
such other sufficient cause as will serve justice in a particular case. There is no showing in this case of any
cause or ground which could be the basis for relieving petitioners of the quicksand of admission which
they voluntarily wallowed into. According to the decretal portion of the Court of Appeals Decision:

WHEREFORE, the petition is DENIED DUE COURSE and DISMISSED. 9

In a Resolution dated 24 January 2006, the Court of Appeals denied the Motion for Reconsideration
interposed by petitioners, for it raised the same issues which were already considered and passed upon by
the appellate court in its assailed Decision.

Petitioners are now before this Court via the Petition at bar raising the sole issue of whether the Court of
Appeals erred in affirming the RTC Decision dated 16 November 2001, awarding possession of the subject
property to respondent.

Section 1, Rule 7010 of the Revised Rules of Court requires that in actions for forcible entry, the plaintiff
must allege that he has been deprived of the possession of any land or building by force, intimidation,
threat, strategy, or stealth and the action must have been filed within one year from the time of such
unlawful deprivation of possession. This requirement implies that in such cases, the possession of the land
by the defendant is unlawful from the beginning, as he acquires possession thereof by unlawful means.
The plaintiff must allege and prove that he was in prior physical possession of the property in litigation
until he was deprived thereof by the defendant.11
In Cajayon v. Batuyong,12 this Court elucidated:

x x x [T]he complaint must allege that one in physical possession of a land or building has been
deprived of that possession by another through force, intimidation, threat, strategy or stealth. It is
not essential, however, that the complaint should expressly employ the language of the law. It
would be sufficient that facts are set up showing that dispossession took place under said
conditions.

The words "by force, intimidation, threat, strategy or stealth" include every situation or condition
under which one person can wrongfully enter upon real property and exclude another, who has had
prior possession thereof. To constitute the use of "force" as contemplated in the above-mentioned
provision, the trespasser does not have to institute a state of war. Nor is it even necessary that he
use violence against the person of the party in possession. The act of going on the property and
excluding the lawful possessor therefrom necessarily implies the exertion of force over the
property, and this is all that is necessary.

Hence, in actions for forcible entry, two allegations are mandatory for the municipal court to acquire
jurisdiction. First, the plaintiff must allege his prior physical possession of the property. Second, he must
also allege that he was deprived of his possession by any of the means provided for in Section 1, Rule 70
of the Revised Rules of Court, namely: force, intimidation, threats, strategy, and stealth.

There is no dispute that respondent sufficiently alleged in her complaint the material facts constituting
forcible entry, as she explicitly claimed that she had prior possession of the subject property since its
purchase, and upon it built a wooden fence. She also particularly described in her Complaint how
petitioners encroached upon the subject property and dispossessed her of the same. Respondent’s
complaint contains the allegations that petitioners, abetting and conspiring with one another, without
respondent’s knowledge and consent and through the use of force and intimidation, entered a portion of
her land; thereafter pulled out and destroyed the fence she had erected, including the fruit-bearing trees
planted thereon; and put their own iron fence enclosing an area of about one hectare. Petitioners Quizon
and Zablan then purportedly took possession and control of the subject property up to the time Civil Case
No. 2207 was filed with the MCTC. It is thus irrefutable that respondent sufficiently alleged that the
possession of the subject property was wrested from her through violence and force.

However, despite the sufficiency of her complaint, respondent miserably failed to prove her allegations
therein, most significantly the fact of her prior possession. Allegation is not tantamount to proof. 13 It must
be stressed that one who alleged a fact has the burden of proving it. 14 And mere allegation without
supporting evidence is not sufficient to establish a prima facie case of prior physical possession.

We emphasize that absence of prior physical possession by the plaintiff in a forcible entry case warrants
the dismissal of his complaint.15

In a long line of cases,16 this Court reiterated that the fact of prior physical possession is an indispensable
element in forcible entry cases. The plaintiff must prove that they were in prior physical possession of the
premises long before they were deprived thereof by the defendant. 17

Possession can be acquired not only by material occupation, but also by the fact that a thing is subject to
the action of one’s will or by the proper acts and legal formalities established for acquiring such right. 18
Possession can be acquired by juridical acts. "These are acts to which the law gives the force of acts of
possession. Examples of these are donations, succession, x x x execution and registration of public
instruments, and the inscription of possessory information titles." For one to be considered in possession,
one need not have actual or physical occupation of every square inch of the property at all times. 19

During the ocular inspection, the MCTC had the opportunity to inquire from Nuguid the location of the land
he supposedly sold to respondent. Upon Nuguid’s representation, the court found that the lot upon which
the two adjacent houses of petitioner Quizon stood was not included in the property Nuguid sold to
respondent. On the same occasion, the MCTC also learned that petitioners Quizon and Zablan were
already occupying the subject premises long before the alleged sale between respondent and Nuguid took
place. It was based on the aforementioned finding that the MCTC dismissed Civil Case No. 2207 for failure
of respondent to establish prior physical possession of the subject property.

The findings of the RTC and the Court of Appeals were largely anchored on the stipulation of facts, made
during the Pre-Trial Conference, that petitioners Simbulan and Villanueva were with petitioners Quizon
and Zablan when the latter two forcibly entered the subject property and destroyed respondent’s plants.
This is implying too much from a poorly worded stipulation of facts. If petitioners already did admit to
having forcibly entered the subject property, then there would have been no more need for a trial. The
reasonable interpretation of such stipulation of facts at the pre-trial would be that petitioners Simbulan
and Villanueva were with petitioners Quizon and Zablan when the latter two purportedly destroyed the
fence and plants of respondent found on the subject property, and surrounded the subject property with
an iron fence. Far from being an admission by the petitioners that respondent had prior possession of the
subject property, petitioners’ actuations are only consistent with the claim of petitioners Quizon and
Zablan that they were already in possession of the subject property and they were only protecting the
same from respondent’s repeated attempts to appropriate it to herself.

Based on the foregoing, it is clear that there was no ouster or dispossession that took place in the instant
case. Petitioner Quizon’s material possession of the subject property preceded the alleged sale between
respondent and Nuguid. It was never proven that the subject property occupied by petitioners Quizon and
Zablan encroached upon or overlapped the property bought by respondent from Nuguid. Quite interesting,
was the testimony of Nuguid, a disinterested party, who had competent knowledge of the metes and
bounds of the property he ceded via sale to respondent. The testimony undeniably established that the
property subject of said sale is different from the subject property possessed and occupied by petitioner
Quizon.

This Court will not disturb the findings of the MCTC, which had the opportunity to physically inspect the
subject property, and personally hear the witnesses and examine their demeanor in the course of the
hearing. It is worthy to note that the appellate court should only delve into a recalibration of the evidence
on appeal if the findings of the trial court are not anchored on the witnesses’ credibility and testimonies,
but on the assessment of the documents that are available to appellate magistrates and subject to their
scrunity.20 Regrettably, the instant case does not fall under this exception.

Verily, petitioners Quizon and Zablan’s possession of the subject property cannot be disturbed. We have
long settled that the only question that the courts must resolve in ejectment proceedings is - who is
entitled to the physical possession of the premises, that is, to the possession de facto and not to the
possession de jure? Regardless of the actual condition of the title to the property, the party in peaceable
quiet possession shall not be thrown out by a strong hand, violence or terror. Neither is the unlawful
withholding of property allowed. Courts will always uphold respect for prior possession. 21

Hence, a party who can prove prior possession can recover such possession even against the owner
himself. Whatever may be the character of his possession, if he has in his favor prior possession in time,
he has the security that entitles him to remain on the property until a person with a better right lawfully
ejects him. To repeat, the only issue that the court has to settle in an ejectment suit is the right to
physical possession.22 While it may be true that the issue of ownership may incidentally be looked into in
an ejectment case to determine who has a better right to possession, 23 yet, it is crystal clear in this case
that the issue of ownership over the subject property has not been seriously and successfully intertwined
with the issue of possession. It has definitely been established by the testimony of Nuguid, the vendor of
the property, and by ocular inspection of the MCTC of Capas, Tarlac, that the subject land is outside or
not part of the lot sold to respondent.

WHEREFORE, premises considered, the instant Petition is GRANTED. The Decision dated 15 March 2005 of
the Court of Appeals and its Resolution dated 24 January 2006 in CA-G.R. SP No. 72921 are hereby
REVERSED and SET ASIDE. The Decision dated 14 March 2001 of the Municipal Circuit Trial Court of
Capas Tarlac, in Civil Case No. 2207, dismissing respondent’s complaint for ejectment is hereby
REINSTATED.

G.R. Nos. 171947-48             December 18, 2008

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, DEPARTMENT OF ENVIRONMENT AND NATURAL

RESOURCES, DEPARTMENT OF EDUCATION, CULTURE AND SPORTS,1 DEPARTMENT OF HEALTH,
DEPARTMENT OF AGRICULTURE, DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, DEPARTMENT OF
BUDGET AND MANAGEMENT, PHILIPPINE COAST GUARD, PHILIPPINE NATIONAL POLICE MARITIME
GROUP, and DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, petitioners,
vs.
CONCERNED RESIDENTS OF MANILA BAY, represented and joined by DIVINA V. ILAS, SABINIANO
ALBARRACIN, MANUEL SANTOS, JR., DINAH DELA PEÑA, PAUL DENNIS QUINTERO, MA. VICTORIA
LLENOS, DONNA CALOZA, FATIMA QUITAIN, VENICE SEGARRA, FRITZIE TANGKIA, SARAH JOELLE
LINTAG, HANNIBAL AUGUSTUS BOBIS, FELIMON SANTIAGUEL, and JAIME AGUSTIN R. OPOSA,
respondents.
 DECISION

VELASCO, JR., J.:

The need to address environmental pollution, as a cause of climate change, has of late gained the
attention of the international community. Media have finally trained their sights on the ill effects of
pollution, the destruction of forests and other critical habitats, oil spills, and the unabated improper
disposal of garbage. And rightly so, for the magnitude of environmental destruction is now on a scale few
ever foresaw and the wound no longer simply heals by itself. 2 But amidst hard evidence and clear signs of
a climate crisis that need bold action, the voice of cynicism, naysayers, and procrastinators can still be
heard.

This case turns on government agencies and their officers who, by the nature of their respective offices or
by direct statutory command, are tasked to protect and preserve, at the first instance, our internal
waters, rivers, shores, and seas polluted by human activities. To most of these agencies and their official
complement, the pollution menace does not seem to carry the high national priority it deserves, if their
track records are to be the norm. Their cavalier attitude towards solving, if not mitigating, the
environmental pollution problem, is a sad commentary on bureaucratic efficiency and commitment.

At the core of the case is the Manila Bay, a place with a proud historic past, once brimming with marine
life and, for so many decades in the past, a spot for different contact recreation activities, but now a dirty
and slowly dying expanse mainly because of the abject official indifference of people and institutions that
could have otherwise made a difference.

This case started when, on January 29, 1999, respondents Concerned Residents of Manila Bay filed a
complaint before the Regional Trial Court (RTC) in Imus, Cavite against several government agencies,
among them the petitioners, for the cleanup, rehabilitation, and protection of the Manila Bay. Raffled to
Branch 20 and docketed as Civil Case No. 1851-99 of the RTC, the complaint alleged that the water
quality of the Manila Bay had fallen way below the allowable standards set by law, specifically Presidential
Decree No. (PD) 1152 or the Philippine Environment Code. This environmental aberration, the complaint
stated, stemmed from:

x x x [The] reckless, wholesale, accumulated and ongoing acts of omission or commission [of the
defendants] resulting in the clear and present danger to public health and in the depletion and
contamination of the marine life of Manila Bay, [for which reason] ALL defendants must be held
jointly and/or solidarily liable and be collectively ordered to clean up Manila Bay and to restore its
water quality to class B waters fit for swimming, skin-diving, and other forms of contact
recreation.3

In their individual causes of action, respondents alleged that the continued neglect of petitioners in
abating the pollution of the Manila Bay constitutes a violation of, among others:

(1) Respondents’ constitutional right to life, health, and a balanced ecology;

(2) The Environment Code (PD 1152);

(3) The Pollution Control Law (PD 984);

(4) The Water Code (PD 1067);

(5) The Sanitation Code (PD 856);

(6) The Illegal Disposal of Wastes Decree (PD 825);

(7) The Marine Pollution Law (PD 979);

(8) Executive Order No. 192;

(9) The Toxic and Hazardous Wastes Law (Republic Act No. 6969);

(10) Civil Code provisions on nuisance and human relations;

 (11) The Trust Doctrine and the Principle of Guardianship; and

(12) International Law

Inter alia, respondents, as plaintiffs a quo, prayed that petitioners be ordered to clean the Manila Bay and
submit to the RTC a concerted concrete plan of action for the purpose.

The trial of the case started off with a hearing at the Manila Yacht Club followed by an ocular inspection of
the Manila Bay. Renato T. Cruz, the Chief of the Water Quality Management Section, Environmental
Management Bureau, Department of Environment and Natural Resources (DENR), testifying for
petitioners, stated that water samples collected from different beaches around the Manila Bay showed
that the amount of fecal coliform content ranged from 50,000 to 80,000 most probable number (MPN)/ml
when what DENR Administrative Order No. 34-90 prescribed as a safe level for bathing and other forms of
contact recreational activities, or the "SB" level, is one not exceeding 200 MPN/100 ml. 4

Rebecca de Vera, for Metropolitan Waterworks and Sewerage System (MWSS) and in behalf of other
petitioners, testified about the MWSS’ efforts to reduce pollution along the Manila Bay through the Manila
Second Sewerage Project. For its part, the Philippine Ports Authority (PPA) presented, as part of its
evidence, its memorandum circulars on the study being conducted on ship-generated waste treatment
and disposal, and its Linis Dagat (Clean the Ocean) project for the cleaning of wastes accumulated or
washed to shore.

The RTC Ordered Petitioners to Clean Up and Rehabilitate Manila Bay

On September 13, 2002, the RTC rendered a Decision5 in favor of respondents. The dispositive portion
reads:

WHEREFORE, finding merit in the complaint, judgment is hereby rendered ordering the
abovenamed defendant-government agencies, jointly and solidarily, to clean up and rehabilitate
Manila Bay and restore its waters to SB classification to make it fit for swimming, skin-diving and
other forms of contact recreation. To attain this, defendant-agencies, with defendant DENR as the
lead agency, are directed, within six (6) months from receipt hereof, to act and perform their
respective duties by devising a consolidated, coordinated and concerted scheme of action for the
rehabilitation and restoration of the bay.

In particular:

Defendant MWSS is directed to install, operate and maintain adequate [sewerage] treatment
facilities in strategic places under its jurisdiction and increase their capacities.

Defendant LWUA, to see to it that the water districts under its wings, provide, construct and
operate sewage facilities for the proper disposal of waste.

Defendant DENR, which is the lead agency in cleaning up Manila Bay, to install, operate and
maintain waste facilities to rid the bay of toxic and hazardous substances.

Defendant PPA, to prevent and also to treat the discharge not only of ship-generated wastes but
also of other solid and liquid wastes from docking vessels that contribute to the pollution of the
bay.

Defendant MMDA, to establish, operate and maintain an adequate and appropriate sanitary landfill
and/or adequate solid waste and liquid disposal as well as other alternative garbage disposal
system such as re-use or recycling of wastes.

Defendant DA, through the Bureau of Fisheries and Aquatic Resources, to revitalize the marine life
in Manila Bay and restock its waters with indigenous fish and other aquatic animals.

Defendant DBM, to provide and set aside an adequate budget solely for the purpose of cleaning up
and rehabilitation of Manila Bay.

Defendant DPWH, to remove and demolish structures and other nuisances that obstruct the free
flow of waters to the bay. These nuisances discharge solid and liquid wastes which eventually end
 up in Manila Bay. As the construction and engineering arm of the government, DPWH is ordered to
actively participate in removing debris, such as carcass of sunken vessels, and other non-
biodegradable garbage in the bay.

Defendant DOH, to closely supervise and monitor the operations of septic and sludge companies
and require them to have proper facilities for the treatment and disposal of fecal sludge and
sewage coming from septic tanks.

Defendant DECS, to inculcate in the minds and hearts of the people through education the
importance of preserving and protecting the environment.

Defendant Philippine Coast Guard and the PNP Maritime Group, to protect at all costs the Manila
Bay from all forms of illegal fishing.

No pronouncement as to damages and costs.

SO ORDERED.

The MWSS, Local Water Utilities Administration (LWUA), and PPA filed before the Court of Appeals (CA)
individual Notices of Appeal which were eventually consolidated and docketed as CA-G.R. CV No. 76528.

On the other hand, the DENR, Department of Public Works and Highways (DPWH), Metropolitan Manila
Development Authority (MMDA), Philippine Coast Guard (PCG), Philippine National Police (PNP) Maritime
Group, and five other executive departments and agencies filed directly with this Court a petition for
review under Rule 45. The Court, in a Resolution of December 9, 2002, sent the said petition to the CA for
consolidation with the consolidated appeals of MWSS, LWUA, and PPA, docketed as CA-G.R. SP No.
74944.

Petitioners, before the CA, were one in arguing in the main that the pertinent provisions of the
Environment Code (PD 1152) relate only to the cleaning of specific pollution incidents and do not cover
cleaning in general. And apart from raising concerns about the lack of funds appropriated for cleaning
purposes, petitioners also asserted that the cleaning of the Manila Bay is not a ministerial act which can
be compelled by mandamus.

The CA Sustained the RTC

By a Decision6 of September 28, 2005, the CA denied petitioners’ appeal and affirmed the Decision of the
RTC in toto, stressing that the trial court’s decision did not require petitioners to do tasks outside of their
usual basic functions under existing laws.7

Petitioners are now before this Court praying for the allowance of their Rule 45 petition on the following
ground and supporting arguments:

THE [CA] DECIDED A QUESTION OF SUBSTANCE NOT HERETOFORE PASSED UPON BY THE
HONORABLE COURT, I.E., IT AFFIRMED THE TRIAL COURT’S DECISION DECLARING THAT
SECTION 20 OF [PD] 1152 REQUIRES CONCERNED GOVERNMENT AGENCIES TO REMOVE ALL
POLLUTANTS SPILLED AND DISCHARGED IN THE WATER SUCH AS FECAL COLIFORMS.

ARGUMENTS

[SECTIONS] 17 AND 20 OF [PD] 1152 RELATE ONLY TO THE CLEANING OF SPECIFIC POLLUTION
INCIDENTS AND [DO] NOT COVER CLEANING IN GENERAL

II

THE CLEANING OR REHABILITATION OF THE MANILA BAY IS NOT A MINISTERIAL ACT OF

PETITIONERS THAT CAN BE COMPELLED BY MANDAMUS.
The issues before us are two-fold. First, do Sections 17 and 20 of PD 1152 under the headings, Upgrading
of Water Quality and Clean-up Operations, envisage a cleanup in general or are they limited only to the
cleanup of specific pollution incidents? And second, can petitioners be compelled by mandamus to clean
up and rehabilitate the Manila Bay?

On August 12, 2008, the Court conducted and heard the parties on oral arguments.

Our Ruling

We shall first dwell on the propriety of the issuance of mandamus under the premises.

The Cleaning or Rehabilitation of Manila Bay

Can be Compelled by Mandamus

Generally, the writ of mandamus lies to require the execution of a ministerial duty. 8 A ministerial duty is
one that "requires neither the exercise of official discretion nor judgment." 9 It connotes an act in which
nothing is left to the discretion of the person executing it. It is a "simple, definite duty arising under
conditions admitted or proved to exist and imposed by law." 10 Mandamus is available to compel action,
when refused, on matters involving discretion, but not to direct the exercise of judgment or discretion one
way or the other.

Petitioners maintain that the MMDA’s duty to take measures and maintain adequate solid waste and liquid
disposal systems necessarily involves policy evaluation and the exercise of judgment on the part of the
agency concerned. They argue that the MMDA, in carrying out its mandate, has to make decisions,
including choosing where a landfill should be located by undertaking feasibility studies and cost estimates,
all of which entail the exercise of discretion.

Respondents, on the other hand, counter that the statutory command is clear and that petitioners’ duty to
comply with and act according to the clear mandate of the law does not require the exercise of discretion.
According to respondents, petitioners, the MMDA in particular, are without discretion, for example, to
choose which bodies of water they are to clean up, or which discharge or spill they are to contain. By the
same token, respondents maintain that petitioners are bereft of discretion on whether or not to alleviate
the problem of solid and liquid waste disposal; in other words, it is the MMDA’s ministerial duty to attend
to such services.

We agree with respondents.

First off, we wish to state that petitioners’ obligation to perform their duties as defined by law, on one
hand, and how they are to carry out such duties, on the other, are two different concepts. While the
implementation of the MMDA’s mandated tasks may entail a decision-making process, the enforcement of
the law or the very act of doing what the law exacts to be done is ministerial in nature and may be
compelled by mandamus. We said so in Social Justice Society v. Atienza11 in which the Court directed the
City of Manila to enforce, as a matter of ministerial duty, its Ordinance No. 8027 directing the three big
local oil players to cease and desist from operating their business in the so-called "Pandacan Terminals"
within six months from the effectivity of the ordinance. But to illustrate with respect to the instant case,
the MMDA’s duty to put up an adequate and appropriate sanitary landfill and solid waste and liquid
disposal as well as other alternative garbage disposal systems is ministerial, its duty being a statutory
imposition. The MMDA’s duty in this regard is spelled out in Sec. 3(c) of Republic Act No. (RA) 7924
creating the MMDA. This section defines and delineates the scope of the MMDA’s waste disposal services
to include:

Solid waste disposal and management which include formulation and implementation of policies,
standards, programs and projects for proper and sanitary waste disposal. It shall likewise include
the establishment and operation of sanitary land fill and related facilities and the implementation of
other alternative programs intended to reduce, reuse and recycle solid waste. (Emphasis added.)

The MMDA is duty-bound to comply with Sec. 41 of the Ecological Solid Waste Management Act (RA 9003)
which prescribes the minimum criteria for the establishment of sanitary landfills and Sec. 42 which
provides the minimum operating requirements that each site operator shall maintain in the operation of a
sanitary landfill. Complementing Sec. 41 are Secs. 36 and 37 of RA 9003,12 enjoining the MMDA and local
government units, among others, after the effectivity of the law on February 15, 2001, from using and
operating open dumps for solid waste and disallowing, five years after such effectivity, the use of
controlled dumps.

The MMDA’s duty in the area of solid waste disposal, as may be noted, is set forth not only in the
Environment Code (PD 1152) and RA 9003, but in its charter as well. This duty of putting up a proper
waste disposal system cannot be characterized as discretionary, for, as earlier stated, discretion
presupposes the power or right given by law to public functionaries to act officially according to their
judgment or conscience.13 A discretionary duty is one that "allows a person to exercise judgment and
choose to perform or not to perform."14 Any suggestion that the MMDA has the option whether or not to
perform its solid waste disposal-related duties ought to be dismissed for want of legal basis.

A perusal of other petitioners’ respective charters or like enabling statutes and pertinent laws would yield
this conclusion: these government agencies are enjoined, as a matter of statutory obligation, to perform
certain functions relating directly or indirectly to the cleanup, rehabilitation, protection, and preservation
of the Manila Bay. They are precluded from choosing not to perform these duties. Consider:

(1) The DENR, under Executive Order No. (EO) 192,15 is the primary agency responsible for the
conservation, management, development, and proper use of the country’s environment and natural
resources. Sec. 19 of the Philippine Clean Water Act of 2004 (RA 9275), on the other hand, designates the
DENR as the primary government agency responsible for its enforcement and implementation, more
particularly over all aspects of water quality management. On water pollution, the DENR, under the Act’s
Sec. 19(k), exercises jurisdiction "over all aspects of water pollution, determine[s] its location, magnitude,
extent, severity, causes and effects and other pertinent information on pollution, and [takes] measures,
using available methods and technologies, to prevent and abate such pollution."

The DENR, under RA 9275, is also tasked to prepare a National Water Quality Status Report, an
Integrated Water Quality Management Framework, and a 10-year Water Quality Management Area Action
Plan which is nationwide in scope covering the Manila Bay and adjoining areas. Sec. 19 of RA 9275
provides:

Sec. 19 Lead Agency.––The [DENR] shall be the primary government agency responsible for the
implementation and enforcement of this Act x x x unless otherwise provided herein. As such, it
shall have the following functions, powers and responsibilities:

a) Prepare a National Water Quality Status report within twenty-four (24) months from the
effectivity of this Act: Provided, That the Department shall thereafter review or revise and publish
annually, or as the need arises, said report;

b) Prepare an Integrated Water Quality Management Framework within twelve (12) months
following the completion of the status report;

c) Prepare a ten (10) year Water Quality Management Area Action Plan within 12 months following
the completion of the framework for each designated water management area. Such action plan
shall be reviewed by the water quality management area governing board every five (5) years or
as need arises.

The DENR has prepared the status report for the period 2001 to 2005 and is in the process of completing
the preparation of the Integrated Water Quality Management Framework. 16 Within twelve (12) months
thereafter, it has to submit a final Water Quality Management Area Action Plan. 17 Again, like the MMDA,
the DENR should be made to accomplish the tasks assigned to it under RA 9275.

Parenthetically, during the oral arguments, the DENR Secretary manifested that the DENR, with the
assistance of and in partnership with various government agencies and non-government organizations,
has completed, as of December 2005, the final draft of a comprehensive action plan with estimated
budget and time frame, denominated as Operation Plan for the Manila Bay Coastal Strategy, for the
rehabilitation, restoration, and rehabilitation of the Manila Bay.

The completion of the said action plan and even the implementation of some of its phases should more
than ever prod the concerned agencies to fast track what are assigned them under existing laws.
(2) The MWSS, under Sec. 3 of RA 6234,18 is vested with jurisdiction, supervision, and control over all
waterworks and sewerage systems in the territory comprising what is now the cities of Metro Manila and
several towns of the provinces of Rizal and Cavite, and charged with the duty:

(g) To construct, maintain, and operate such sanitary sewerages as may be necessary for the
proper sanitation and other uses of the cities and towns comprising the System; x x x

(3) The LWUA under PD 198 has the power of supervision and control over local water districts. It can
prescribe the minimum standards and regulations for the operations of these districts and shall monitor
and evaluate local water standards. The LWUA can direct these districts to construct, operate, and furnish
facilities and services for the collection, treatment, and disposal of sewerage, waste, and storm water.
Additionally, under RA 9275, the LWUA, as attached agency of the DPWH, is tasked with providing
sewerage and sanitation facilities, inclusive of the setting up of efficient and safe collection, treatment,
and sewage disposal system in the different parts of the country.19 In relation to the instant petition, the
LWUA is mandated to provide sewerage and sanitation facilities in Laguna, Cavite, Bulacan, Pampanga,
and Bataan to prevent pollution in the Manila Bay.

(4) The Department of Agriculture (DA), pursuant to the Administrative Code of 1987 (EO 292), 20 is
designated as the agency tasked to promulgate and enforce all laws and issuances respecting the
conservation and proper utilization of agricultural and fishery resources. Furthermore, the DA, under the
Philippine Fisheries Code of 1998 (RA 8550), is, in coordination with local government units (LGUs) and
other concerned sectors, in charge of establishing a monitoring, control, and surveillance system to
ensure that fisheries and aquatic resources in Philippine waters are judiciously utilized and managed on a
sustainable basis.21 Likewise under RA 9275, the DA is charged with coordinating with the PCG and DENR
for the enforcement of water quality standards in marine waters.22 More specifically, its Bureau of
Fisheries and Aquatic Resources (BFAR) under Sec. 22(c) of RA 9275 shall primarily be responsible for the
prevention and control of water pollution for the development, management, and conservation of the
fisheries and aquatic resources.

(5) The DPWH, as the engineering and construction arm of the national government, is tasked under EO
29223 to provide integrated planning, design, and construction services for, among others, flood control
and water resource development systems in accordance with national development objectives and
approved government plans and specifications.

In Metro Manila, however, the MMDA is authorized by Sec. 3(d), RA 7924 to perform metro-wide services
relating to "flood control and sewerage management which include the formulation and implementation of
policies, standards, programs and projects for an integrated flood control, drainage and sewerage
system."

On July 9, 2002, a Memorandum of Agreement was entered into between the DPWH and MMDA, whereby
MMDA was made the agency primarily responsible for flood control in Metro Manila. For the rest of the
country, DPWH shall remain as the implementing agency for flood control services. The mandate of the
MMDA and DPWH on flood control and drainage services shall include the removal of structures,
constructions, and encroachments built along rivers, waterways, and esteros (drainages) in violation of RA
7279, PD 1067, and other pertinent laws.

(6) The PCG, in accordance with Sec. 5(p) of PD 601, or the Revised Coast Guard Law of 1974, and Sec. 6
of PD 979,24 or the Marine Pollution Decree of 1976, shall have the primary responsibility of enforcing
laws, rules, and regulations governing marine pollution within the territorial waters of the Philippines. It
shall promulgate its own rules and regulations in accordance with the national rules and policies set by the
National Pollution Control Commission upon consultation with the latter for the effective implementation
and enforcement of PD 979. It shall, under Sec. 4 of the law, apprehend violators who:

a. discharge, dump x x x harmful substances from or out of any ship, vessel, barge, or any other
floating craft, or other man-made structures at sea, by any method, means or manner, into or
upon the territorial and inland navigable waters of the Philippines;

b. throw, discharge or deposit, dump, or cause, suffer or procure to be thrown, discharged, or

deposited either from or out of any ship, barge, or other floating craft or vessel of any kind, or
from the shore, wharf, manufacturing establishment, or mill of any kind, any refuse matter of any
kind or description whatever other than that flowing from streets and sewers and passing
therefrom in a liquid state into tributary of any navigable water from which the same shall float or
be washed into such navigable water; and
 c. deposit x x x material of any kind in any place on the bank of any navigable water or on the
bank of any tributary of any navigable water, where the same shall be liable to be washed into
such navigable water, either by ordinary or high tides, or by storms or floods, or otherwise,
whereby navigation shall or may be impeded or obstructed or increase the level of pollution of such
water.

(7) When RA 6975 or the Department of the Interior and Local Government (DILG) Act of 1990 was
signed into law on December 13, 1990, the PNP Maritime Group was tasked to "perform all police
functions over the Philippine territorial waters and rivers." Under Sec. 86, RA 6975, the police functions of
the PCG shall be taken over by the PNP when the latter acquires the capability to perform such functions.
Since the PNP Maritime Group has not yet attained the capability to assume and perform the police
functions of PCG over marine pollution, the PCG and PNP Maritime Group shall coordinate with regard to
the enforcement of laws, rules, and regulations governing marine pollution within the territorial waters of
the Philippines. This was made clear in Sec. 124, RA 8550 or the Philippine Fisheries Code of 1998, in
which both the PCG and PNP Maritime Group were authorized to enforce said law and other fishery laws,
rules, and regulations.25

(8) In accordance with Sec. 2 of EO 513, the PPA is mandated "to establish, develop, regulate, manage
and operate a rationalized national port system in support of trade and national development." 26
Moreover, Sec. 6-c of EO 513 states that the PPA has police authority within the ports administered by it
as may be necessary to carry out its powers and functions and attain its purposes and objectives, without
prejudice to the exercise of the functions of the Bureau of Customs and other law enforcement bodies
within the area. Such police authority shall include the following:

xxxx

b) To regulate the entry to, exit from, and movement within the port, of persons and vehicles, as
well as movement within the port of watercraft.27

Lastly, as a member of the International Marine Organization and a signatory to the International
Convention for the Prevention of Pollution from Ships, as amended by MARPOL 73/78, 28 the Philippines,
through the PPA, must ensure the provision of adequate reception facilities at ports and terminals for the
reception of sewage from the ships docking in Philippine ports. Thus, the PPA is tasked to adopt such
measures as are necessary to prevent the discharge and dumping of solid and liquid wastes and other
ship-generated wastes into the Manila Bay waters from vessels docked at ports and apprehend the
violators. When the vessels are not docked at ports but within Philippine territorial waters, it is the PCG
and PNP Maritime Group that have jurisdiction over said vessels.

(9) The MMDA, as earlier indicated, is duty-bound to put up and maintain adequate sanitary landfill and
solid waste and liquid disposal system as well as other alternative garbage disposal systems. It is
primarily responsible for the implementation and enforcement of the provisions of RA 9003, which would
necessary include its penal provisions, within its area of jurisdiction. 29

Among the prohibited acts under Sec. 48, Chapter VI of RA 9003 that are frequently violated are dumping
of waste matters in public places, such as roads, canals or esteros, open burning of solid waste, squatting
in open dumps and landfills, open dumping, burying of biodegradable or non- biodegradable materials in
flood-prone areas, establishment or operation of open dumps as enjoined in RA 9003, and operation of
waste management facilities without an environmental compliance certificate.

Under Sec. 28 of the Urban Development and Housing Act of 1992 (RA 7279), eviction or demolition may
be allowed "when persons or entities occupy danger areas such as esteros, railroad tracks, garbage
dumps, riverbanks, shorelines, waterways, and other public places such as sidewalks, roads, parks and
playgrounds." The MMDA, as lead agency, in coordination with the DPWH, LGUs, and concerned agencies,
can dismantle and remove all structures, constructions, and other encroachments built in breach of RA
7279 and other pertinent laws along the rivers, waterways, and esteros in Metro Manila. With respect to
rivers, waterways, and esteros in Bulacan, Bataan, Pampanga, Cavite, and Laguna that discharge
wastewater directly or eventually into the Manila Bay, the DILG shall direct the concerned LGUs to
implement the demolition and removal of such structures, constructions, and other encroachments built in
violation of RA 7279 and other applicable laws in coordination with the DPWH and concerned agencies.

(10) The Department of Health (DOH), under Article 76 of PD 1067 (the Water Code), is tasked to
promulgate rules and regulations for the establishment of waste disposal areas that affect the source of a
water supply or a reservoir for domestic or municipal use. And under Sec. 8 of RA 9275, the DOH, in
coordination with the DENR, DPWH, and other concerned agencies, shall formulate guidelines and
standards for the collection, treatment, and disposal of sewage and the establishment and operation of a
centralized sewage treatment system. In areas not considered as highly urbanized cities, septage or a mix
sewerage-septage management system shall be employed.

In accordance with Sec. 7230 of PD 856, the Code of Sanitation of the Philippines, and Sec. 5.1.131 of
Chapter XVII of its implementing rules, the DOH is also ordered to ensure the regulation and monitoring
of the proper disposal of wastes by private sludge companies through the strict enforcement of the
requirement to obtain an environmental sanitation clearance of sludge collection treatment and disposal
before these companies are issued their environmental sanitation permit.

(11) The Department of Education (DepEd), under the Philippine Environment Code (PD 1152), is
mandated to integrate subjects on environmental education in its school curricula at all levels. 32 Under
Sec. 118 of RA 8550, the DepEd, in collaboration with the DA, Commission on Higher Education, and
Philippine Information Agency, shall launch and pursue a nationwide educational campaign to promote the
development, management, conservation, and proper use of the environment. Under the Ecological Solid
Waste Management Act (RA 9003), on the other hand, it is directed to strengthen the integration of
environmental concerns in school curricula at all levels, with an emphasis on waste management
principles.33

(12) The Department of Budget and Management (DBM) is tasked under Sec. 2, Title XVII of the
Administrative Code of 1987 to ensure the efficient and sound utilization of government funds and
revenues so as to effectively achieve the country’s development objectives. 34

One of the country’s development objectives is enshrined in RA 9275 or the Philippine Clean Water Act of
2004. This law stresses that the State shall pursue a policy of economic growth in a manner consistent
with the protection, preservation, and revival of the quality of our fresh, brackish, and marine waters. It
also provides that it is the policy of the government, among others, to streamline processes and
procedures in the prevention, control, and abatement of pollution mechanisms for the protection of water
resources; to promote environmental strategies and use of appropriate economic instruments and of
control mechanisms for the protection of water resources; to formulate a holistic national program of
water quality management that recognizes that issues related to this management cannot be separated
from concerns about water sources and ecological protection, water supply, public health, and quality of
life; and to provide a comprehensive management program for water pollution focusing on pollution
prevention.

Thus, the DBM shall then endeavor to provide an adequate budget to attain the noble objectives of RA
9275 in line with the country’s development objectives.

All told, the aforementioned enabling laws and issuances are in themselves clear, categorical, and
complete as to what are the obligations and mandate of each agency/petitioner under the law. We need
not belabor the issue that their tasks include the cleanup of the Manila Bay.

Now, as to the crux of the petition. Do Secs. 17 and 20 of the Environment Code encompass the cleanup
of water pollution in general, not just specific pollution incidents?

Secs. 17 and 20 of the Environment Code

Include Cleaning in General

The disputed sections are quoted as follows:

Section 17. Upgrading of Water Quality.––Where the quality of water has deteriorated to a degree
where its state will adversely affect its best usage, the government agencies concerned shall take
such measures as may be necessary to upgrade the quality of such water to meet the prescribed
water quality standards.

Section 20. Clean-up Operations.––It shall be the responsibility of the polluter to contain, remove
and clean-up water pollution incidents at his own expense. In case of his failure to do so, the
government agencies concerned shall undertake containment, removal and clean-up operations
and expenses incurred in said operations shall be charged against the persons and/or entities
responsible for such pollution.
When the Clean Water Act (RA 9275) took effect, its Sec. 16 on the subject, o, amended the counterpart
provision (Sec. 20) of the Environment Code (PD 1152). Sec. 17 of PD 1152 continues, however, to be
operational.

The amendatory Sec. 16 of RA 9275 reads:

SEC. 16. Cleanup Operations.––Notwithstanding the provisions of Sections 15 and 26 hereof, any
person who causes pollution in or pollutes water bodies in excess of the applicable and prevailing
standards shall be responsible to contain, remove and clean up any pollution incident at his own
expense to the extent that the same water bodies have been rendered unfit for utilization and
beneficial use: Provided, That in the event emergency cleanup operations are necessary and the
polluter fails to immediately undertake the same, the [DENR] in coordination with other
government agencies concerned, shall undertake containment, removal and cleanup operations.
Expenses incurred in said operations shall be reimbursed by the persons found to have caused
such pollution under proper administrative determination x x x. Reimbursements of the cost
incurred shall be made to the Water Quality Management Fund or to such other funds where said
disbursements were sourced.

As may be noted, the amendment to Sec. 20 of the Environment Code is more apparent than real since
the amendment, insofar as it is relevant to this case, merely consists in the designation of the DENR as
lead agency in the cleanup operations.

Petitioners contend at every turn that Secs. 17 and 20 of the Environment Code concern themselves only
with the matter of cleaning up in specific pollution incidents, as opposed to cleanup in general. They aver
that the twin provisions would have to be read alongside the succeeding Sec. 62(g) and (h), which defines
the terms "cleanup operations" and "accidental spills," as follows:

g. Clean-up Operations [refer] to activities conducted in removing the pollutants discharged or

spilled in water to restore it to pre-spill condition.

h. Accidental Spills [refer] to spills of oil or other hazardous substances in water that result from
accidents such as collisions and groundings.

Petitioners proffer the argument that Secs. 17 and 20 of PD 1152 merely direct the government agencies
concerned to undertake containment, removal, and cleaning operations of a specific polluted portion or
portions of the body of water concerned. They maintain that the application of said Sec. 20 is limited only
to "water pollution incidents," which are situations that presuppose the occurrence of specific, isolated
pollution events requiring the corresponding containment, removal, and cleaning operations. Pushing the
point further, they argue that the aforequoted Sec. 62(g) requires "cleanup operations" to restore the
body of water to pre-spill condition, which means that there must have been a specific incident of either
intentional or accidental spillage of oil or other hazardous substances, as mentioned in Sec. 62(h).

As a counterpoint, respondents argue that petitioners erroneously read Sec. 62(g) as delimiting the
application of Sec. 20 to the containment, removal, and cleanup operations for accidental spills only.
Contrary to petitioners’ posture, respondents assert that Sec. 62(g), in fact, even expanded the coverage
of Sec. 20. Respondents explain that without its Sec. 62(g), PD 1152 may have indeed covered only
pollution accumulating from the day-to-day operations of businesses around the Manila Bay and other
sources of pollution that slowly accumulated in the bay. Respondents, however, emphasize that Sec.
62(g), far from being a delimiting provision, in fact even enlarged the operational scope of Sec. 20, by
including accidental spills as among the water pollution incidents contemplated in Sec. 17 in relation to
Sec. 20 of PD 1152.

To respondents, petitioners’ parochial view on environmental issues, coupled with their narrow reading of
their respective mandated roles, has contributed to the worsening water quality of the Manila Bay.
Assuming, respondents assert, that petitioners are correct in saying that the cleanup coverage of Sec. 20
of PD 1152 is constricted by the definition of the phrase "cleanup operations" embodied in Sec. 62(g),
Sec. 17 is not hobbled by such limiting definition. As pointed out, the phrases "cleanup operations" and
"accidental spills" do not appear in said Sec. 17, not even in the chapter where said section is found.

Respondents are correct. For one thing, said Sec. 17 does not in any way state that the government
agencies concerned ought to confine themselves to the containment, removal, and cleaning operations
when a specific pollution incident occurs. On the contrary, Sec. 17 requires them to act even in the
absence of a specific pollution incident, as long as water quality "has deteriorated to a degree where its
state will adversely affect its best usage." This section, to stress, commands concerned government
agencies, when appropriate, "to take such measures as may be necessary to meet the prescribed water
quality standards." In fine, the underlying duty to upgrade the quality of water is not conditional on the
occurrence of any pollution incident.

For another, a perusal of Sec. 20 of the Environment Code, as couched, indicates that it is properly
applicable to a specific situation in which the pollution is caused by polluters who fail to clean up the mess
they left behind. In such instance, the concerned government agencies shall undertake the cleanup work
for the polluters’ account. Petitioners’ assertion, that they have to perform cleanup operations in the
Manila Bay only when there is a water pollution incident and the erring polluters do not undertake the
containment, removal, and cleanup operations, is quite off mark. As earlier discussed, the complementary
Sec. 17 of the Environment Code comes into play and the specific duties of the agencies to clean up come
in even if there are no pollution incidents staring at them. Petitioners, thus, cannot plausibly invoke and
hide behind Sec. 20 of PD 1152 or Sec. 16 of RA 9275 on the pretext that their cleanup mandate depends
on the happening of a specific pollution incident. In this regard, what the CA said with respect to the
impasse over Secs. 17 and 20 of PD 1152 is at once valid as it is practical. The appellate court wrote: "PD
1152 aims to introduce a comprehensive program of environmental protection and management. This is
better served by making Secs. 17 & 20 of general application rather than limiting them to specific
pollution incidents."35

Granting arguendo that petitioners’ position thus described vis-à-vis the implementation of Sec. 20 is
correct, they seem to have overlooked the fact that the pollution of the Manila Bay is of such magnitude
and scope that it is well-nigh impossible to draw the line between a specific and a general pollution
incident. And such impossibility extends to pinpointing with reasonable certainty who the polluters are.
We note that Sec. 20 of PD 1152 mentions "water pollution incidents" which may be caused by polluters
in the waters of the Manila Bay itself or by polluters in adjoining lands and in water bodies or waterways
that empty into the bay. Sec. 16 of RA 9275, on the other hand, specifically adverts to "any person who
causes pollution in or pollutes water bodies," which may refer to an individual or an establishment that
pollutes the land mass near the Manila Bay or the waterways, such that the contaminants eventually end
up in the bay. In this situation, the water pollution incidents are so numerous and involve nameless and
faceless polluters that they can validly be categorized as beyond the specific pollution incident level.

Not to be ignored of course is the reality that the government agencies concerned are so undermanned
that it would be almost impossible to apprehend the numerous polluters of the Manila Bay. It may
perhaps not be amiss to say that the apprehension, if any, of the Manila Bay polluters has been few and
far between. Hence, practically nobody has been required to contain, remove, or clean up a given water
pollution incident. In this kind of setting, it behooves the Government to step in and undertake cleanup
operations. Thus, Sec. 16 of RA 9275, previously Sec. 20 of PD 1152, covers for all intents and purposes a
general cleanup situation.

The cleanup and/or restoration of the Manila Bay is only an aspect and the initial stage of the long-term
solution. The preservation of the water quality of the bay after the rehabilitation process is as important
as the cleaning phase. It is imperative then that the wastes and contaminants found in the rivers, inland
bays, and other bodies of water be stopped from reaching the Manila Bay. Otherwise, any cleanup effort
would just be a futile, cosmetic exercise, for, in no time at all, the Manila Bay water quality would again
deteriorate below the ideal minimum standards set by PD 1152, RA 9275, and other relevant laws. It thus
behooves the Court to put the heads of the petitioner-department-agencies and the bureaus and offices
under them on continuing notice about, and to enjoin them to perform, their mandates and duties
towards cleaning up the Manila Bay and preserving the quality of its water to the ideal level. Under what
other judicial discipline describes as "continuing mandamus," 36 the Court may, under extraordinary
circumstances, issue directives with the end in view of ensuring that its decision would not be set to
naught by administrative inaction or indifference. In India, the doctrine of continuing mandamus was used
to enforce directives of the court to clean up the length of the Ganges River from industrial and municipal
pollution.37

The Court can take judicial notice of the presence of shanties and other unauthorized structures which do
not have septic tanks along the Pasig-Marikina-San Juan Rivers, the National Capital Region (NCR)
(Parañaque-Zapote, Las Piñas) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, the Meycuayan-
Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay,
and other minor rivers and connecting waterways, river banks, and esteros which discharge their waters,
with all the accompanying filth, dirt, and garbage, into the major rivers and eventually the Manila Bay. If
there is one factor responsible for the pollution of the major river systems and the Manila Bay, these
unauthorized structures would be on top of the list. And if the issue of illegal or unauthorized structures is
not seriously addressed with sustained resolve, then practically all efforts to cleanse these important
bodies of water would be for naught. The DENR Secretary said as much. 38

Giving urgent dimension to the necessity of removing these illegal structures is Art. 51 of PD 1067 or the
Water Code,39 which prohibits the building of structures within a given length along banks of rivers and
other waterways. Art. 51 reads:

The banks of rivers and streams and the shores of the seas and lakes throughout their entire
length and within a zone of three (3) meters in urban areas, twenty (20) meters in agricultural
areas and forty (40) meters in forest areas, along their margins, are subject to the easement of
public use in the interest of recreation, navigation, floatage, fishing and salvage. No person shall
be allowed to stay in this zone longer than what is necessary for recreation, navigation, floatage,
fishing or salvage or to build structures of any kind. (Emphasis added.)

Judicial notice may likewise be taken of factories and other industrial establishments standing along or
near the banks of the Pasig River, other major rivers, and connecting waterways. But while they may not
be treated as unauthorized constructions, some of these establishments undoubtedly contribute to the
pollution of the Pasig River and waterways. The DILG and the concerned LGUs, have, accordingly, the
duty to see to it that non-complying industrial establishments set up, within a reasonable period, the
necessary waste water treatment facilities and infrastructure to prevent their industrial discharge,
including their sewage waters, from flowing into the Pasig River, other major rivers, and connecting
waterways. After such period, non-complying establishments shall be shut down or asked to transfer their
operations.

At this juncture, and if only to dramatize the urgency of the need for petitioners-agencies to comply with
their statutory tasks, we cite the Asian Development Bank-commissioned study on the garbage problem in
Metro Manila, the results of which are embodied in the The Garbage Book. As there reported, the garbage
crisis in the metropolitan area is as alarming as it is shocking. Some highlights of the report:

1. As early as 2003, three land-filled dumpsites in Metro Manila - the Payatas, Catmon and
Rodriquez dumpsites - generate an alarming quantity of lead and leachate or liquid run-off.
Leachate are toxic liquids that flow along the surface and seep into the earth and poison the
surface and groundwater that are used for drinking, aquatic life, and the environment.

2. The high level of fecal coliform confirms the presence of a large amount of human waste in the
dump sites and surrounding areas, which is presumably generated by households that lack
alternatives to sanitation. To say that Manila Bay needs rehabilitation is an understatement.

3. Most of the deadly leachate, lead and other dangerous contaminants and possibly strains of
pathogens seeps untreated into ground water and runs into the Marikina and Pasig River systems
and Manila Bay.40

Given the above perspective, sufficient sanitary landfills should now more than ever be established as
prescribed by the Ecological Solid Waste Management Act (RA 9003). Particular note should be taken of
the blatant violations by some LGUs and possibly the MMDA of Sec. 37, reproduced below:

Sec. 37. Prohibition against the Use of Open Dumps for Solid Waste.––No open dumps shall be
established and operated, nor any practice or disposal of solid waste by any person, including LGUs
which [constitute] the use of open dumps for solid waste, be allowed after the effectivity of this
Act: Provided, further that no controlled dumps shall be allowed (5) years following the effectivity
of this Act. (Emphasis added.)

RA 9003 took effect on February 15, 2001 and the adverted grace period of five (5) years which ended on
February 21, 2006 has come and gone, but no single sanitary landfill which strictly complies with the
prescribed standards under RA 9003 has yet been set up.

In addition, there are rampant and repeated violations of Sec. 48 of RA 9003, like littering, dumping of
waste matters in roads, canals, esteros, and other public places, operation of open dumps, open burning
of solid waste, and the like. Some sludge companies which do not have proper disposal facilities simply
discharge sludge into the Metro Manila sewerage system that ends up in the Manila Bay. Equally unabated
are violations of Sec. 27 of RA 9275, which enjoins the pollution of water bodies, groundwater pollution,
disposal of infectious wastes from vessels, and unauthorized transport or dumping into sea waters of
sewage or solid waste and of Secs. 4 and 102 of RA 8550 which proscribes the introduction by human or
machine of substances to the aquatic environment including "dumping/disposal of waste and other marine
litters, discharge of petroleum or residual products of petroleum of carbonaceous materials/substances
[and other] radioactive, noxious or harmful liquid, gaseous or solid substances, from any water, land or
air transport or other human-made structure."

In the light of the ongoing environmental degradation, the Court wishes to emphasize the extreme
necessity for all concerned executive departments and agencies to immediately act and discharge their
respective official duties and obligations. Indeed, time is of the essence; hence, there is a need to set
timetables for the performance and completion of the tasks, some of them as defined for them by law and
the nature of their respective offices and mandates.

The importance of the Manila Bay as a sea resource, playground, and as a historical landmark cannot be
over-emphasized. It is not yet too late in the day to restore the Manila Bay to its former splendor and
bring back the plants and sea life that once thrived in its blue waters. But the tasks ahead, daunting as
they may be, could only be accomplished if those mandated, with the help and cooperation of all civic-
minded individuals, would put their minds to these tasks and take responsibility. This means that the
State, through petitioners, has to take the lead in the preservation and protection of the Manila Bay.

The era of delays, procrastination, and ad hoc measures is over. Petitioners must transcend their
limitations, real or imaginary, and buckle down to work before the problem at hand becomes
unmanageable. Thus, we must reiterate that different government agencies and instrumentalities cannot
shirk from their mandates; they must perform their basic functions in cleaning up and rehabilitating the
Manila Bay. We are disturbed by petitioners’ hiding behind two untenable claims: (1) that there ought to
be a specific pollution incident before they are required to act; and (2) that the cleanup of the bay is a
discretionary duty.

RA 9003 is a sweeping piece of legislation enacted to radically transform and improve waste
management. It implements Sec. 16, Art. II of the 1987 Constitution, which explicitly provides that the
State shall protect and advance the right of the people to a balanced and healthful ecology in accord with
the rhythm and harmony of nature.

So it was that in Oposa v. Factoran, Jr. the Court stated that the right to a balanced and healthful ecology
need not even be written in the Constitution for it is assumed, like other civil and political rights
guaranteed in the Bill of Rights, to exist from the inception of mankind and it is an issue of transcendental
importance with intergenerational implications.41 Even assuming the absence of a categorical legal
provision specifically prodding petitioners to clean up the bay, they and the men and women representing
them cannot escape their obligation to future generations of Filipinos to keep the waters of the Manila Bay
clean and clear as humanly as possible. Anything less would be a betrayal of the trust reposed in them.

WHEREFORE, the petition is DENIED. The September 28, 2005 Decision of the CA in CA-G.R. CV No.
76528 and SP No. 74944 and the September 13, 2002 Decision of the RTC in Civil Case No. 1851-99 are
AFFIRMED but with MODIFICATIONS in view of subsequent developments or supervening events in the
case. The fallo of the RTC Decision shall now read:

WHEREFORE, judgment is hereby rendered ordering the abovenamed defendant-government

agencies to clean up, rehabilitate, and preserve Manila Bay, and restore and maintain its waters to
SB level (Class B sea waters per Water Classification Tables under DENR Administrative Order No.
34 [1990]) to make them fit for swimming, skin-diving, and other forms of contact recreation.

In particular:

(1) Pursuant to Sec. 4 of EO 192, assigning the DENR as the primary agency responsible for the
conservation, management, development, and proper use of the country’s environment and natural
resources, and Sec. 19 of RA 9275, designating the DENR as the primary government agency responsible
for its enforcement and implementation, the DENR is directed to fully implement its Operational Plan for
the Manila Bay Coastal Strategy for the rehabilitation, restoration, and conservation of the Manila Bay at
the earliest possible time. It is ordered to call regular coordination meetings with concerned government
departments and agencies to ensure the successful implementation of the aforesaid plan of action in
accordance with its indicated completion schedules.

(2) Pursuant to Title XII (Local Government) of the Administrative Code of 1987 and Sec. 25 of the Local
Government Code of 1991,42 the DILG, in exercising the President’s power of general supervision and its
duty to promulgate guidelines in establishing waste management programs under Sec. 43 of the
Philippine Environment Code (PD 1152), shall direct all LGUs in Metro Manila, Rizal, Laguna, Cavite,
Bulacan, Pampanga, and Bataan to inspect all factories, commercial establishments, and private homes
along the banks of the major river systems in their respective areas of jurisdiction, such as but not limited
to the Pasig-Marikina-San Juan Rivers, the NCR (Parañaque-Zapote, Las Piñas) Rivers, the Navotas-
Malabon-Tullahan-Tenejeros Rivers, the Meycauayan-Marilao-Obando (Bulacan) Rivers, the Talisay
(Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other minor rivers and waterways that
eventually discharge water into the Manila Bay; and the lands abutting the bay, to determine whether
they have wastewater treatment facilities or hygienic septic tanks as prescribed by existing laws,
ordinances, and rules and regulations. If none be found, these LGUs shall be ordered to require non-
complying establishments and homes to set up said facilities or septic tanks within a reasonable time to
prevent industrial wastes, sewage water, and human wastes from flowing into these rivers, waterways,
esteros, and the Manila Bay, under pain of closure or imposition of fines and other sanctions.

(3) As mandated by Sec. 8 of RA 9275,43 the MWSS is directed to provide, install, operate, and maintain
the necessary adequate waste water treatment facilities in Metro Manila, Rizal, and Cavite where needed
at the earliest possible time.

(4) Pursuant to RA 9275,44 the LWUA, through the local water districts and in coordination with the DENR,
is ordered to provide, install, operate, and maintain sewerage and sanitation facilities and the efficient and
safe collection, treatment, and disposal of sewage in the provinces of Laguna, Cavite, Bulacan, Pampanga,
and Bataan where needed at the earliest possible time.

(5) Pursuant to Sec. 65 of RA 8550,45 the DA, through the BFAR, is ordered to improve and restore the
marine life of the Manila Bay. It is also directed to assist the LGUs in Metro Manila, Rizal, Cavite, Laguna,
Bulacan, Pampanga, and Bataan in developing, using recognized methods, the fisheries and aquatic
resources in the Manila Bay.

(6) The PCG, pursuant to Secs. 4 and 6 of PD 979, and the PNP Maritime Group, in accordance with Sec.
124 of RA 8550, in coordination with each other, shall apprehend violators of PD 979, RA 8550, and other
existing laws and regulations designed to prevent marine pollution in the Manila Bay.

(7) Pursuant to Secs. 2 and 6-c of EO 51346 and the International Convention for the Prevention of
Pollution from Ships, the PPA is ordered to immediately adopt such measures to prevent the discharge
and dumping of solid and liquid wastes and other ship-generated wastes into the Manila Bay waters from
vessels docked at ports and apprehend the violators.

(8) The MMDA, as the lead agency and implementor of programs and projects for flood control projects
and drainage services in Metro Manila, in coordination with the DPWH, DILG, affected LGUs, PNP Maritime
Group, Housing and Urban Development Coordinating Council (HUDCC), and other agencies, shall
dismantle and remove all structures, constructions, and other encroachments established or built in
violation of RA 7279, and other applicable laws along the Pasig-Marikina-San Juan Rivers, the NCR
(Parañaque-Zapote, Las Piñas) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, and connecting
waterways and esteros in Metro Manila. The DPWH, as the principal implementor of programs and projects
for flood control services in the rest of the country more particularly in Bulacan, Bataan, Pampanga,
Cavite, and Laguna, in coordination with the DILG, affected LGUs, PNP Maritime Group, HUDCC, and other
concerned government agencies, shall remove and demolish all structures, constructions, and other
encroachments built in breach of RA 7279 and other applicable laws along the Meycauayan-Marilao-
Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and
other rivers, connecting waterways, and esteros that discharge wastewater into the Manila Bay.

In addition, the MMDA is ordered to establish, operate, and maintain a sanitary landfill, as prescribed by
RA 9003, within a period of one (1) year from finality of this Decision. On matters within its territorial
jurisdiction and in connection with the discharge of its duties on the maintenance of sanitary landfills and
like undertakings, it is also ordered to cause the apprehension and filing of the appropriate criminal cases
against violators of the respective penal provisions of RA 9003,47 Sec. 27 of RA 9275 (the Clean Water
Act), and other existing laws on pollution.

(9) The DOH shall, as directed by Art. 76 of PD 1067 and Sec. 8 of RA 9275, within one (1) year from
finality of this Decision, determine if all licensed septic and sludge companies have the proper facilities for
the treatment and disposal of fecal sludge and sewage coming from septic tanks. The DOH shall give the
companies, if found to be non-complying, a reasonable time within which to set up the necessary facilities
under pain of cancellation of its environmental sanitation clearance.
(10) Pursuant to Sec. 53 of PD 1152,48 Sec. 118 of RA 8550, and Sec. 56 of RA 9003,49 the DepEd shall
integrate lessons on pollution prevention, waste management, environmental protection, and like subjects
in the school curricula of all levels to inculcate in the minds and hearts of students and, through them,
their parents and friends, the importance of their duty toward achieving and maintaining a balanced and
healthful ecosystem in the Manila Bay and the entire Philippine archipelago.

(11) The DBM shall consider incorporating an adequate budget in the General Appropriations Act of 2010
and succeeding years to cover the expenses relating to the cleanup, restoration, and preservation of the
water quality of the Manila Bay, in line with the country’s development objective to attain economic
growth in a manner consistent with the protection, preservation, and revival of our marine waters.

(12) The heads of petitioners-agencies MMDA, DENR, DepEd, DOH, DA, DPWH, DBM, PCG, PNP Maritime
Group, DILG, and also of MWSS, LWUA, and PPA, in line with the principle of "continuing mandamus,"
shall, from finality of this Decision, each submit to the Court a quarterly progressive report of the
activities undertaken in accordance with this Decision.

G.R. No. 156052             March 7, 2007

SOCIAL JUSTICE SOCIETY (SJS), VLADIMIR ALARIQUE T. CABIGAO, and BONIFACIO S. TUMBOKON,
Petitioners,
vs.
HON. JOSE L. ATIENZA, JR., in his capacity as Mayor of the City of Manila, Respondent.

DECISION

CORONA, J.:

In this original petition for mandamus,1 petitioners Social Justice Society (SJS), Vladimir Alarique T.
Cabigao and Bonifacio S. Tumbokon seek to compel respondent Hon. Jose L. Atienza, Jr., mayor of the
City of Manila, to enforce Ordinance No. 8027.

The antecedents are as follows.

On November 20, 2001, the Sangguniang Panlungsod of Manila enacted Ordinance No. 8027.2 Respondent
mayor approved the ordinance on November 28, 2001.3 It became effective on December 28, 2001, after
its publication.4

Ordinance No. 8027 was enacted pursuant to the police power delegated to local government units, a
principle described as the power inherent in a government to enact laws, within constitutional limits, to
promote the order, safety, health, morals and general welfare of the society. 5 This is evident from
Sections 1 and 3 thereof which state:

SECTION 1. For the purpose of promoting sound urban planning and ensuring health, public safety, and
general welfare of the residents of Pandacan and Sta. Ana as well as its adjoining areas, the land use of
[those] portions of land bounded by the Pasig River in the north, PNR Railroad Track in the east, Beata St.
in the south, Palumpong St. in the southwest, and Estero de Pancacan in the west[,] PNR Railroad in the
northwest area, Estero de Pandacan in the [n]ortheast, Pasig River in the southeast and Dr. M.L. Carreon
in the southwest. The area of Punta, Sta. Ana bounded by the Pasig River, Marcelino Obrero St., Mayo 28
St., and F. Manalo Street, are hereby reclassified from Industrial II to Commercial I.

xxx xxx xxx

SEC. 3. Owners or operators of industries and other businesses, the operation of which are no longer
permitted under Section 1 hereof, are hereby given a period of six (6) months from the date of effectivity
of this Ordinance within which to cease and desist from the operation of businesses which are hereby in
consequence, disallowed.

Ordinance No. 8027 reclassified the area described therein from industrial to commercial and directed the
owners and operators of businesses disallowed under Section 1 to cease and desist from operating their
businesses within six months from the date of effectivity of the ordinance. Among the businesses situated
in the area are the so-called "Pandacan Terminals" of the oil companies Caltex (Philippines), Inc., Petron
Corporation and Pilipinas Shell Petroleum Corporation.
However, on June 26, 2002, the City of Manila and the Department of Energy (DOE) entered into a
memorandum of understanding (MOU)6 with the oil companies in which they agreed that "the scaling
down of the Pandacan Terminals [was] the most viable and practicable option." Under the MOU, the oil
companies agreed to perform the following:

Section 1. - Consistent with the objectives stated above, the OIL COMPANIES shall, upon signing of this
MOU, undertake a program to scale down the Pandacan Terminals which shall include, among others, the
immediate removal/decommissioning process of TWENTY EIGHT (28) tanks starting with the LPG spheres
and the commencing of works for the creation of safety buffer and green zones surrounding the Pandacan
Terminals. xxx

Section 2. – Consistent with the scale-down program mentioned above, the OIL COMPANIES shall
establish joint operations and management, including the operation of common, integrated and/or shared
facilities, consistent with international and domestic technical, safety, environmental and economic
considerations and standards. Consequently, the joint operations of the OIL COMPANIES in the Pandacan
Terminals shall be limited to the common and integrated areas/facilities. A separate agreement covering
the commercial and operational terms and conditions of the joint operations, shall be entered into by the
OIL COMPANIES.

Section 3. - The development and maintenance of the safety and green buffer zones mentioned therein,
which shall be taken from the properties of the OIL COMPANIES and not from the surrounding
communities, shall be the sole responsibility of the OIL COMPANIES.

The City of Manila and the DOE, on the other hand, committed to do the following:

Section 1. - The City Mayor shall endorse to the City Council this MOU for its appropriate action with the
view of implementing the spirit and intent thereof.

Section 2. - The City Mayor and the DOE shall, consistent with the spirit and intent of this MOU, enable
the OIL COMPANIES to continuously operate in compliance with legal requirements, within the limited
area resulting from the joint operations and the scale down program.

Section 3. - The DOE and the City Mayor shall monitor the OIL COMPANIES’ compliance with the
provisions of this MOU.

Section 4. - The CITY OF MANILA and the national government shall protect the safety buffer and green
zones and shall exert all efforts at preventing future occupation or encroachment into these areas by
illegal settlers and other unauthorized parties.

The Sangguniang Panlungsod ratified the MOU in Resolution No. 97.7 In the same resolution, the
Sanggunian declared that the MOU was effective only for a period of six months starting July 25, 2002.8
Thereafter, on January 30, 2003, the Sanggunian adopted Resolution No. 139 extending the validity of
Resolution No. 97 to April 30, 2003 and authorizing Mayor Atienza to issue special business permits to the
oil companies. Resolution No. 13, s. 2003 also called for a reassessment of the ordinance. 10

Meanwhile, petitioners filed this original action for mandamus on December 4, 2002 praying that Mayor
Atienza be compelled to enforce Ordinance No. 8027 and order the immediate removal of the terminals of
the oil companies.11

The issues raised by petitioners are as follows:

1. whether respondent has the mandatory legal duty to enforce Ordinance No. 8027 and order the
removal of the Pandacan Terminals, and

2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend or repeal Ordinance
No. 8027.12

Petitioners contend that respondent has the mandatory legal duty, under Section 455 (b) (2) of the Local
Government Code (RA 7160),13 to enforce Ordinance No. 8027 and order the removal of the Pandacan
Terminals of the oil companies. Instead, he has allowed them to stay.
Respondent’s defense is that Ordinance No. 8027 has been superseded by the MOU and the resolutions. 14
However, he also confusingly argues that the ordinance and MOU are not inconsistent with each other and
that the latter has not amended the former. He insists that the ordinance remains valid and in full force
and effect and that the MOU did not in any way prevent him from enforcing and implementing it. He
maintains that the MOU should be considered as a mere guideline for its full implementation. 15

Under Rule 65, Section 316 of the Rules of Court, a petition for mandamus may be filed when any tribunal,
corporation, board, officer or person unlawfully neglects the performance of an act which the law
specifically enjoins as a duty resulting from an office, trust or station. Mandamus is an extraordinary writ
that is employed to compel the performance, when refused, of a ministerial duty that is already imposed
on the respondent and there is no other plain, speedy and adequate remedy in the ordinary course of law.
The petitioner should have a well-defined, clear and certain legal right to the performance of the act and it
must be the clear and imperative duty of respondent to do the act required to be done.17

Mandamus will not issue to enforce a right, or to compel compliance with a duty, which is questionable or
over which a substantial doubt exists. The principal function of the writ of mandamus is to command and
to expedite, not to inquire and to adjudicate; thus, it is neither the office nor the aim of the writ to secure
a legal right but to implement that which is already established. Unless the right to the relief sought is
unclouded, mandamus will not issue.18

To support the assertion that petitioners have a clear legal right to the enforcement of the ordinance,
petitioner SJS states that it is a political party registered with the Commission on Elections and has its
offices in Manila. It claims to have many members who are residents of Manila. The other petitioners,
Cabigao and Tumbokon, are allegedly residents of Manila.

We need not belabor this point. We have ruled in previous cases that when a mandamus proceeding
concerns a public right and its object is to compel a public duty, the people who are interested in the
execution of the laws are regarded as the real parties in interest and they need not show any specific
interest.19 Besides, as residents of Manila, petitioners have a direct interest in the enforcement of the
city’s ordinances. Respondent never questioned the right of petitioners to institute this proceeding.

On the other hand, the Local Government Code imposes upon respondent the duty, as city mayor, to
"enforce all laws and ordinances relative to the governance of the city.">20 One of these is Ordinance No.
8027. As the chief executive of the city, he has the duty to enforce Ordinance No. 8027 as long as it has
not been repealed by the Sanggunian or annulled by the courts.21 He has no other choice. It is his ministerial duty to do so. In
Dimaporo v. Mitra, Jr.,22 we stated the reason for this:

These officers cannot refuse to perform their duty on the ground of an alleged invalidity of the statute imposing the duty. The reason for this is obvious. It might seriously hinder the

transaction of public business if these officers were to be permitted in all cases to question the constitutionality of statutes and ordinances imposing duties upon them and which have

not judicially been declared unconstitutional. Officers of the government from the highest to the lowest are creatures of the law and are bound to obey it.23

The question now is whether the MOU entered into by respondent with the oil companies and the subsequent resolutions passed by the Sanggunian have made the respondent’s duty

to enforce Ordinance No. 8027 doubtful, unclear or uncertain. This is also connected to the second issue raised by petitioners, that is, whether the MOU and Resolution Nos. 97, s.

2002 and 13, s. 2003 of the Sanggunian can amend or repeal Ordinance No. 8027.

We need not resolve this issue. Assuming that the terms of the MOU were inconsistent with Ordinance No. 8027, the resolutions which ratified it and made it binding on the City of

Manila expressly gave it full force and effect only until April 30, 2003. Thus, at present, there is nothing that legally hinders respondent from enforcing Ordinance No. 8027.24

Ordinance No. 8027 was enacted right after the Philippines, along with the rest of the world, witnessed the horror of the September 11, 2001 attack on the Twin Towers of the World

Trade Center in New York City. The objective of the ordinance is to protect the residents of Manila from the catastrophic devastation that will surely occur in case of a terrorist

attack25 on the Pandacan Terminals. No reason exists why such a protective measure should be delayed.

WHEREFORE, the petition is hereby GRANTED. Respondent Hon. Jose L. Atienza, Jr., as mayor of the City of Manila, is directed to immediately enforce Ordinance No. 8027.

G.R. No. 168061               October 12, 2009

BANK OF THE PHILIPPINE ISLANDS, Petitioner,

vs.
TEOFILO P. ICOT, ANOLITA ICOT PILAPIL, LENNIE P. ICOT, VILMA ICOT CUYOS, RESTITUTO C. ICOT,
FLORIDO A. CUYOS, CAYETANO GARBO, TEODULA P. ICOT, YOLA P. ICOT, and HEIRS OF GENARO ICOT,
namely: AMANCIO P. ICOT, HERMELINA ICOT, EVELYN ICOT GARBO, CARLOS P. ICOT, RENATO P. ICOT,
JOSEPHINE A. ICOT, AMELIA I. GARBO, and ROMMEL ICOT, Respondents.
 DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the Court of Appeals’ Decision2 dated 7 January 2005 and Resolution dated
3 May 2005 in CA-G.R. SP No. 81495. The Court of Appeals reversed the Decision 3 dated 21 December
2001 and Order dated 29 July 2003 of the Regional Trial Court (RTC) of Mandaue City, Branch 56.

The Antecedent Facts

On 6 July 1976, spouses Vicente and Trinidad Velasco (spouses Velasco) obtained from petitioner Bank of
the Philippine Islands (petitioner) a loan amounting to P50,000, secured by a real estate mortgage over a
parcel of land located in Liloan, Cebu. The parcel of land was covered by Transfer Certificate of Title (TCT)
No. 675, issued in the name of Vicente Velasco, and was particularly described as follows:

Lot No. 958, Pls-823; x x x containing an area of SEVEN THOUSAND ONE HUNDRED EIGHTY-NINE (7,189)
SQUARE METERS x x x Bounded on the SE., along line 1-2-3 by Lot 980; Pls-823; along lines 3-4-5-6-7
by Lot 992; Pls-823; on the SW., along line 7-8 by Lot 957, Pls 823; on the NW., along line 8-9 by Road;
and on the NE., along line 9-1 by Lot 993, Pls 823. x x x4

The spouses Velasco failed to pay the loan, resulting in petitioner foreclosing the mortgaged property.
During the auction sale held on 6 July 1979, petitioner was the highest bidder. The spouses Velasco failed
to redeem the property during the one-year redemption period; hence, petitioner’s ownership was
consolidated, and a Definite Deed of Sale was issued in its favor. TCT No. 675 was cancelled, and on 14
October 1982, a new title, TCT No. P-1619, was issued in the name of petitioner.

Meanwhile, Teofilo Icot (respondent) and the late Genaro and Felimon Icot (predecessors-in-interest of
the other respondents) claimed to have been in quiet, open and continuous possession of the subject real
property which they allegedly acquired from their father, Roberto Icot, through an extrajudicial settlement
of estate in 1964. Upon learning of the mortgage of the subject real property, respondents filed separate
cases for quieting of title against Velasco. These cases were docketed as Civil Case Nos. CEB-14935 and
CEB-14946 in RTC Branch XXI of Cebu City, and were later consolidated.

On 22 November 1985, RTC Branch XXI of Cebu City issued an Order stating thus:

The defendant Vicente Velasco was given 60 days from September 23, 1985 within which to expedite the
repurchase of the properties which plaintiffs herein seek to recover. x x x

However, defendant Vicente Velasco informed the Court that the Bank of Philippine Islands, Cebu Branch,
to whom he made the offer to repurchase the properties mortgaged by him for the sum of P50,000.00 has
reportedly indorsed his offer to Manila Office of said bank but up to the present no action has been
received whether to accept or reject his offer.

x x x the defendant Vicente Velasco is hereby directed to expedite the negotiation and to inform the Court
of the result thereof within 30 days from today.

The Bank of Philippine Islands, Cebu Branch, thru its manager is hereby requested for (sic) comment on
the aforementioned negotiation for confirmation of said negotiation to the satisfaction of the plaintiffs and
the Court. Furnish copy of this order to parties thru their respective counsel and the manager of the bank
of Philippine Islands, Cebu Branch.

SO ORDERED.7 (Emphasis supplied)

In compliance with the above RTC Order, petitioner BPI filed a Manifestation 8 stating that it has favorably
endorsed Velasco’s proposal to repurchase the real property to its Head Office, but the latter had yet to
act on the recommendation.

On 14 August 1986, RTC Branch XXI of Cebu City rendered Judgment based on a Compromise Agreement
entered into by the parties, stating thus:
The parties assisted by their respective counsel (sic) submitted the above-entitled two civil cases for
judgment based on the following compromise agreement, viz:

1. That the defendant recognizes the ownership and title of the plaintiffs in Civil Case No. CEB-
1493 – Teofilo Icot and Genaro Icot – and the plaintiff Filemon Icot in Civil Case No. CEB-1494
over the lands described in their respective complaints;

2. That these lands are among real properties purchased by the defendant from plaintiffs’
predecessor-in-interest, unknowing that it had already been partitioned, hence, the defendant
mortgaged the real properties purchased to the Bank of the Philippine Islands for P50,000.00;

3. That the whole property mortgaged was foreclosed and remains foreclosed to the present time,
but with the awareness brought about by these cases that the properties claimed in the complaints
had been included in the mortgage, the defendant had to negotiate with the bank to repurchase
the foreclosed collateral to the end that the lands of the plaintiffs, as described in their complaints,
would be freed from the encumbrance and plaintiffs’ title thereto quieted and restored;

4. That the Bank has agreed at last to have the mortgaged property repurchased in five (5)
installments at P10,000.00 an installment, the first installment for the month of July, 1986, having
been paid on July 14, 1986, as evidenced by Bank of P.I. Miscellaneous receipt No. 273616 and by
the month of November, 1986, the whole repurchase price shall have been paid and the
mortgaged-foreclosed property will be freed from any and all encumbrance, including the parcels
claimed by the plaintiffs in their complaints;

5. That the defendant had never been in possession of the parcels claimed by the plaintiffs and he
executed the mortgage in good faith, without in the least intending to prejudice anyone by said
mortgage;

6. That the plaintiffs acknowledge the good faith of the defendant and the fact that the latter had
never bothered them in their possession of the lands subject-matter of these cases and factually
had not prejudiced their possession thereof, except the doubt created by the mortgage to the
bank;

7. That with the repurchase of the subject land in these cases by the defendant and the latter’s
acknowledgment of the ownership and title over the same in (sic) the individual plaintiffs in these
cases, the Parties hereto would pray for a judgment based on the foregoing facts, with the
plaintiffs waiving any and all damages alleged and claimed in their complaint.

WHEREFORE, finding the compromise agreement to be not contrary to law, morals, good customs, public
order and public policy, the same is hereby approved and judgment is hereby rendered on the basis
thereof, with the terms of the compromise agreement constituting as dispositive part thereof and the
parties are hereby enjoined to comply therewith in good faith.

SO ORDERED.9

On 17 October 1988, petitioner and Velasco entered into a Contract to Sell wherein the former agreed to
sell to the latter the subject real property for P60,387, payable within a year on installment basis. Velasco
failed to pay the amount due, prompting petitioner to cancel the Contract to Sell. In a letter dated 10
June 1993, petitioner reiterated its cancellation of the contract and requested Velasco to peacefully
surrender possession of the subject property.10

On 23 February 1994, respondents Amancio P. Icot and Florido A. Cuyos wrote petitioner a letter offering
to purchase the subject property for the amount of P150,000. The amount was later increased to
P250,000, but the same was rejected by petitioner for being too low.11

On 26 October 1999, petitioner filed with the RTC of Mandaue City a Petition for the Issuance of a Writ of
Possession, docketed as LRC Case No. 3.

The Trial Court’s Ruling

On 21 December 2001, the RTC rendered a Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, and finding the Petition meritorious, the same is hereby granted.
Accordingly, let a Writ of Possession be issued to petitioner.

SO ORDERED.12

Respondents filed a Motion for Reconsideration, but this was denied by the RTC in its Order dated 29 July
2003.

The Court of Appeals’ Ruling

Respondents filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the 1997 Revised
Rules of Civil Procedure. On 7 January 2005, the Court of Appeals rendered judgment granting the
petition and reversing the RTC decision. We quote the dispositive portion of the Court of Appeals’ decision
below.

WHEREFORE, premises considered, finding the petition meritorious, the same is hereby granted and the
assailed Decision of the trial court dated December 21, 2001 as well as its Order dated July 29, 2003 are
hereby reversed and set aside.

SO ORDERED.13

Petitioner’s Motion for Reconsideration was denied by the Court of Appeals in its Resolution of 3 May
2005.14

Hence, this appeal.

The Issue

The sole issue for resolution in this case is whether petitioner is entitled to the issuance of a writ of
possession of the subject property.

The Court’s Ruling

We find the appeal without merit.

A writ of possession is generally understood to be an order whereby the sheriff is commanded to place a
person in possession of a real or personal property.15 A writ of possession may be issued under the
following instances: (1) land registration proceedings under Section 17 of Act 496; (2) judicial foreclosure,
provided the debtor is in possession of the mortgaged realty and no third person, not a party to the
foreclosure suit, had intervened; and (3) extrajudicial foreclosure of a real estate mortgage under Section
7 of Act 3135, as amended by Act 4118 (Act 3135).16 This case involves the third instance. Under Section
7 of Act 3135, a writ of possession may be issued either (1) within the one year redemption period, upon
the filing of a bond, or (2) after the lapse of the redemption period, without need of a bond 17 or of a
separate and independent action.18 This is founded on the purchaser’s right of ownership over the
property which he bought at the auction sale and his consequent right to be placed in possession
thereof.19 However, this rule admits of an exception, that is, Section 33 (former Section 35) of Rule 39 of
the Revised Rules of Court, which provides that the possession of the mortgaged property shall be given
to the purchaser "unless a third party is actually holding the property adversely to the judgment
obligor."20 We quote section 33, to wit:

Sec. 33. Deed and possession to be given at expiration of redemption period; by whom executed or given.
—If no redemption be made within one (1) year from the date of the registration of the certificate of sale,
the purchaser is entitled to a conveyance and possession of the property; or, if so redeemed whenever
sixty (60) days have elapsed and no other redemption has been made, and notice thereof given, and the
time for redemption has expired, the last redemptioner is entitled to the conveyance and possession; but
in all cases the judgment obligor shall have the entire period of one (1) year from the date of the
registration of the sale to redeem the property. The deed shall be executed by the officer making the sale
or by his successor in office, and in the latter case shall have the same validity as though the officer
making the sale had continued in office and executed it.

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and
acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the
levy. The possession of the property shall be given to the purchaser or last redemptioner by the same
officer unless a third party is actually holding the property adversely to the judgment obligor. (Emphasis
supplied)

In the recent case of Development Bank of the Philippines v. Prime Neighborhood Association, 21 we
reiterated our previous ruling in Philippine National Bank v. Court of Appeals22 that "the obligation of a
court to issue an ex parte writ of possession in favor of the purchaser in an extrajudicial foreclosure sale
ceases to be ministerial once it appears that there is a third party in possession of the property who is
claiming a right adverse to that of the debtor/mortgagor." We further held, thus:

Under [Article 433 of the Civil Code],23 one who claims to be the owner of a property possessed by
another must bring the appropriate judicial action for its physical recovery. The term "judicial process"
could mean no less than an ejectment suit or reivindicatory action in which ownership claims of the
contending parties may be properly heard and adjudicated.

An ex parte petition for issuance of a possessory writ under Section 7 of Act 3135[, as amended,] is not,
strictly speaking, a "judicial process" as contemplated above. Even if the same may be considered a
judicial proceeding for the enforcement of one's right of possession as purchaser in a foreclosure sale, it is
not an ordinary suit filed in court by which one party "sues another for the enforcement or protection of a
right, or the prevention or redress of a wrong."

It should be emphasized that an ex parte petition for issuance of a writ of possession is a non-litigious
proceeding authorized in an extrajudicial foreclosure of mortgage pursuant to Act 3135, as amended.
Unlike a judicial foreclosure of real estate mortgage under Rule 68 of the Rules of Court, any property
brought within the ambit of the act is foreclosed by the filing of a petition, not with any court of justice,
but with the office of the sheriff of the province where the sale is to be made.

As such, a third person in possession of an extrajudicially foreclosed realty, who claims a right superior to
that of the original mortgagor, will have no opportunity to be heard on his claim in a proceeding of this
nature. It stands to reason, therefore, that such third person may not be dispossessed on the strength of
a mere ex parte possessory writ, since to do so would be tantamount to his summary ejectment, in
violation of the basic tenets of due process.

Besides, as earlier stressed, Article 433 of the Civil Code, cited above, requires nothing less that an action
for ejectment to be brought even by the true owner. After all, the actual possessor of a property enjoys a
legal presumption of just title in his favor, which must be overcome by the party claiming otherwise.24

We also held in Tan Soo Huat v. Ongwico,25 that:

There is no law in this jurisdiction whereby the purchaser at a sheriff’s sale of real property is obliged to
bring a separate and independent suit for possession after the one-year period for redemption has expired
and after he has obtained the sheriff’s final certificate of sale. There is neither legal ground nor reason of
public policy precluding the court from ordering the sheriff in this case to yield possession of the property
purchased at public auction where it appears that the judgment debtor is the one in possession thereof
and no rights of third persons are involved. (Emphasis supplied)

Thus, the right of possession by a purchaser in an extrajudicial foreclosure of real property is recognized
only as against the judgment debtor and his successor-in-interest, but not as against persons whose right
of possession is adverse to the latter.26 In this case, respondents are third parties in possession of the
subject real property, holding the same under a title adverse to that of the mortgagor/judgment obligor,
Velasco. Respondents are claiming title by virtue of an extrajudicial settlement of their father’s estate
executed in 1964. Upon learning of the mortgage of the real property by Velasco to petitioner,
respondents filed a case for quieting of title against Velasco. The latter later acknowledged or "recognized"
respondents’ ownership of the real property in the Compromise Agreement executed by the parties in the
quieting of title case. Velasco even agreed to undertake restitution of the subject property by contracting
anew with and repurchasing the foreclosed property from petitioner.1avvphi1

Moreover, respondents are not parties to the mortgage contract between the spouses Velasco and
petitioner. As correctly ruled by the appellate court, the mere mention of the mortgage of the real
property in the Compromise Agreement did not make respondents privies to the mortgage contract
between the spouses Velasco and petitioner. Moreover, respondents’ offer to repurchase the foreclosed
property from petitioner is not tantamount to stepping into the shoes of Velasco, nor would such offer
qualify respondents as Velasco’s successors-in-interest. Rather, the offer may be considered as
respondents’ last ditch effort to avoid being deprived of the property they claim to have possessed since
time immemorial.

Petitioner’s right to issuance of a writ of possession cannot be invoked against respondents. Respondents’
possession of the subject real property is legally presumed to be pursuant to a just title which petitioner
may endeavor to overcome in a judicial proceeding for recovery of property.

WHEREFORE, we DENY the petition. We AFFIRM the Court of Appeals’ Decision dated 7 January 2005 and
Resolution dated 3 May 2005 in CA-G.R. SP No. 81495.

G.R. No. 178527               November 27, 2009

JOVEN YUKI, JR., Petitioner,

vs.
WELLINGTON CO, Respondent.

DECISION

DEL CASTILLO, J.:

The lessee-petitioner’s attempt to hold on to the property subject of the instant unlawful detainer case, by
resorting to fraudulent machinations such as refusing to receive the notices to vacate, must not be
countenanced. His stubborn refusal to receive the notices to vacate should not prejudice the right of the
lessor-respondent, to use and enjoy the fruits of his property.

This Petition for Review on Certiorari1 assails the November 23, 2008 Decision2 of the Court of Appeals
(CA) in CA-G.R. SP No. 89228 granting respondent’s Petition for Review 3 and setting aside the March 7,
2005 Decision4 of the Regional Trial Court (RTC), Branch 14, Manila. The RTC reversed and set aside the
Decision5 dated September 21, 2004 of the Metropolitan Trial Court (MeTC), Branch 15, Manila, granting
respondent’s Complaint for unlawful detainer6 and ordering petitioner to vacate the premises subject
matter of this case.

Factual Antecedents

Mr. Joseph Chua was the registered owner of a parcel of land, together with a commercial building erected
thereon, situated at the corner of España and Instruccion Sts., Sampaloc, Manila. In 1981, he leased a
portion of the building to petitioner Joven Yuki, Jr., who put up a business therein under the name and
style "Supersale Auto Supply." The contract of lease between Mr. Chua and petitioner had a term of five
years but was not reduced into writing. Thereafter, the lease was renewed through a series of verbal and
written agreements,7 the last of which was a written Contract of Lease8 covering the period of January 1,
2003 to December 31, 2003 at a monthly rental of P7,000.00.

In November 2003, Mr. Chua informed petitioner that he sold the property to respondent Wellington Co
and instructed petitioner to thenceforth pay the rent to the new owner.

Proceedings before the Metropolitan Trial Court

After the expiration of the lease contract, petitioner refused to vacate and surrender the leased premises.
Thus, respondent filed a Complaint for unlawful detainer 9 before the MeTC of Manila. The material
allegations of the complaint read as follows:

xxxx

3. Plaintiff [herein respondent] is the registered owner of that parcel of land together with the building
existing thereon situated at 2051 España St. cor. Instruccion St., Sampaloc, Manila. Plaintiff’s title to said
property is evidenced by the Transfer Certificate of Title No. 261682 of the Registry of Deeds of Manila,
photocopy of which is attached hereto as Annex "A" and the tax declarations for the lot and improvement
are attached hereto as Annexes "B" and "B-1", respectively;

xxxx
5. Prior to the sale of the lot and building by the previous owner to herein plaintiff, Joseph Chua sent a
notice to defendant [herein petitioner] informing him that the property is for sale giving the defendant the
opportunity to exercise his pre-emptive right. Copy of said Notice is attached hereto as Annex "D";

6. Defendant waived his right to exercise his pre-emptive right and the real property was eventually sold
to herein plaintiff;

7. Plaintiff, being the new owner of the lot and building, informed defendant that his Contract of Lease
with the former lessor-owner Joseph Chua will no longer be renewed as per letter dated November 3,
2003, copy of which was left at defendant’s store, for his refusal to acknowledge the receipt of the same.
A copy of said Notice is attached hereto and made an integral part hereof as Annex "E";

8. For failure and refusal of the defendant to vacate and surrender the leased unit to plaintiff, plaintiff’s
counsel in turn sent a formal demand upon defendant to vacate the leased premises within ten (10) days
from receipt of the formal demand in view of the expiration of the contract of lease. Copy of said letter
dated January 13, 2004 is attached hereto as Annex "F". A copy was sent by registered mail but
defendant failed to claim the same as evidenced by the Certification from the Central Post Office, copy of
which is attached hereto as Annex "G". Another copy of the same demand letter was personally served at
defendant’s address as attested by the sworn statement of Wilberto Co who served the said formal
demand as well as the notice earlier sent by plaintiff. Copy of the Affidavit of Wilberto Co is attached
hereto as Annex "H";

xxxx

Respondent prayed that petitioner’s possession of subject premises be declared unlawful and that
petitioner be ordered to vacate it. He also sought reasonable compensation for the use of the property
until such time that it is surrendered to him and for the petitioner to pay him moral damages and
attorney’s fees.

In his Answer with Counterclaim,10 petitioner denied having been served with copies of the alleged notice
of sale and notice to vacate. By way of affirmative defenses, he claimed that the complaint should be
dismissed for being premature as there was no allegation therein of prior referral to the barangay.
Petitioner also asserted that since he was not notified by the former owner of the sale, he was deprived of
his preemptive rights. Moreover, respondent has no cause of action against him because respondent is
not the true owner of the property but merely acts as a representative of persons whom respondent
refused to disclose. Further, petitioner argued that there was an implied renewal of lease considering that
a) he did not receive a notice to vacate, b) the two months deposit and one month advance payment he
gave to Mr. Chua were never returned to him, and c) respondent accepted his payments for the months of
January and February 2004.

Petitioner also asserted that his property rights would be violated if he is evicted because he has been
operating his business in the premises for more than 20 years and has established goodwill in the area.
He thus proposed that he be compensated the amount of not less than P1 million or be allowed to dispose
of his stocks within a reasonable period of time, before he vacates the premises.

On September 21, 2004, the MeTC-Branch 15 rendered a Decision 11 in favor of the respondent, the
dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant ordering the
defendant and all persons claiming right under him:

1. to VACATE and surrender the subject property peacefully to plaintiff;

2. to PAY the plaintiff reasonable compensation for the use and occupancy of the subject premises in the
amount of eight thousand (P8,000.00) pesos per month from January 1, 2004 until such time that he and
all persons claiming rights under him have fully vacated the premises;

3. to PAY the plaintiff thirty thousand (P30,000.00) pesos as attorney’s fees and litigation expenses.

SO ORDERED.12

Proceedings before the Regional Trial Court

In time, petitioner went on appeal to the RTC contending that –

A. THE LOWER COURT ERRED WHEN IT RULED THAT THE PLAINTIFF-APPELLEE [herein respondent] HAD
A CAUSE OF ACTION TO EVICT HEREIN DEFENDANT-APPELLANT [herein petitioner] FROM THE PREMISES.

B. THE LOWER COURT ERRED WHEN IT RULED THAT THERE WAS NO IMPLIED NEW LEASE CREATED BY
PLAINTIFF-APPELLEE’S ACCEPTANCE OF THE RENTALS MADE BY DEFENDANT-APPELLANT.

C. THE LOWER COURT ERRED WHEN IT RULED THAT VALID NOTICE [TO] VACATE WAS SERVED UPON
DEFENDANT-APPELLANT BY THE PLAINTIFF-APPELLEE.

D. THE LOWER COURT GRAVELY ERRED WHEN IT RULED THAT DEFENDANT-APPELLANT WAS NOT
DENIED HIS PREEMPTIVE RIGHT TO PURCHASE THE PROPERTY HE HAS BEEN OCCUPYING.

E. THE LOWER COURT GRAVELY ERRED WHEN IT DENIED THE MOTION FOR CLARIFICATORY HEARING
FILED BY DEFENDANT-APPELLANT AS WELL AS HAVING DENIED THE MOTION FOR VOLUNTARY
INHIBITION.

F. THE LOWER COURT ERRED WHEN IT AWARDED ATTORNEY’S FEES AMOUNTING TO THIRTY THOUSAND
(P30,000.00) IN FAVOR OF PLAINTIFF-APPELLEE.

On March 7, 2005, the RTC-Branch 14 rendered a Decision13 with the following disposition:

WHEREFORE, all premises considered, the Court finds and so holds preponderance of evidence on the part
of the defendant-appellant. Accordingly, the Decision appealed from is hereby REVERSED, and the
complaint for Unlawful Detainer is dismissed.

Finally, there is on record a defendant-appellant’s Motion for Reconsideration as regards the amount of
the supersedeas bond. By the dismissal of the case, the resolution thereof is thereby rendered moot and
academic.

SO ORDERED.14

In reversing the ruling of the MeTC, the RTC found no proof on record that petitioner actually received the
notice to vacate, thereby making the Complaint fatally defective. The RTC likewise opined that the
resolution of the case hinges on the existence of implied new lease, a question which is incapable of
pecuniary estimation and, therefore, beyond the MeTC’s jurisdiction.

Proceedings before the Court of Appeals

Respondent filed with the CA a Petition for Review15 under Rule 42 of the Rules of Court assailing the RTC
Decision. On November 23, 2006, the CA promulgated the now assailed Decision16 granting the petition.
Its fallo reads:

WHEREFORE, the instant petition is hereby GRANTED. The Decision dated 7 March 2005 rendered by the
Regional Trial Court (RTC) of Manila, Branch 14 is SET ASIDE and the Decision dated 21 September 2004
of the Metropolitan Trial Court (MeTC) of Manila, Branch 15 is REINSTATED.

SO ORDERED.17

Issues

Petitioner interposed the present recourse imputing upon the CA the following errors:

A. x x x THE COURT OF APPEALS COMMITTED GRAVE ERROR WHEN IT RULED NOT TO DISMISS THE
PETITION INTERPOSED BY RESPONDENT AND INSTEAD PROCEEDED TO REVERSE THE DECISION DATED
MARCH 7, 2005 OF THE REGIONAL TRIAL COURT, BRANCH 14 DESPITE RESPONDENT (THEN
PETITIONER) HAVING FAILED TO COMPLY WITH THE PROCEDURAL REQUIREMENTS UNDER RULE 42 OF
THE 1997 RULES OF CIVIL PROCEDURE.18
B. THE COURT OF APPEALS ERRED WHEN IT FOUND ERRORS COMMITTED BY THE RTC IN REVERSING
THE DECISION OF THE MTC.19

Our Ruling

The petition lacks merit.

The allegations in respondent’s petition are supported by material portions of the record.

Petitioner contends that the Petition for Review20 filed by the respondent with the CA is procedurally
infirmed and that the appellate court should have outrightly dismissed the same. Specifically, petitioner
points out that while respondent attached to the petition the parties’ respective position papers, he failed
to attach to said position papers the annexes thereto. This, petitioner insists, warrants the dismissal of
respondent’s petition per Section 2, Rule 42 of the Rules of Court,21 in relation to Section 322 of the same
Rule.

We do not agree. Section 2 of Rule 42 does not require that all the pleadings and documents filed before
the lower courts must be attached as annexes to the petition. Aside from clearly legible duplicate originals
or true copies of the judgments or final orders of both lower courts, it merely requires that the petition be
accompanied by copies of pleadings and other material portions of the record as would support the
allegations of the petition. As to what these pleadings and material portions of the record are, the Rules
grants the petitioner sufficient discretion to determine the same. This discretion is of course subject to
CA’s evaluation whether the supporting documents are sufficient to make out a prima facie case.23 Thus,
Section 3 empowers the CA to dismiss the petition where the allegations contained therein are utterly
bereft of evidentiary foundation. Since in this case the CA gave due course to respondent’s Petition for
Review and proceeded to decide it on the merits, it can be fairly assumed that the appellate court is
satisfied that respondent has sufficiently complied with Section 2 of Rule 42.

Besides, our own examination of the CA rollo reveals that the annexes to the position papers can be found
somewhere else in the petition. The annexes to the parties’ respective position papers are the same
annexes attached to the Complaint and the Answer. In fact, Annexes "A" to "H" of the Complaint
respectively pertain to the same documents marked as Annexes "A" to "H" of respondent’s Position Paper.
And while respondent’s Position Paper as attached to the petition does not contain any annexes, said
annexes are nonetheless appended to the Complaint which is also attached to the petition.

The same is true with Annexes "1" to "6" of petitioner’s Position Paper. Annexes "1", "2", and "3" are
attached to the Petition for Review as Annexes "3", "4", and "5", respectively, of the Answer. Annex "4" of
petitioner’s Position Paper is the Contract of Lease marked as Annex "C" of the Complaint, while Annexes
"5" and "6" are marked and attached as Annexes "1" and "2", respectively, of the Answer. To our mind,
these are more than substantial compliance with the requirements of the rules. Indeed, if we are to apply
the rules of procedure in a very rigid and technical sense as what the petitioner suggests in this case, the
ends of justice would be defeated. In Lanaria v. Planta, 24 we emphasized that courts should not be so
strict about procedural lapses that do not really impair the proper administration of justice, for rules of
procedure are intended to promote, and not to defeat, substantial justice. 25

Allegations of implied new lease or tacita reconduccion cannot oust the MeTC of jurisdiction over unlawful
detainer cases.

Petitioner also contends that the CA grievously erred in reversing the Decision of the RTC. He maintains
that the RTC correctly held that the key issue to be resolved in this case is the existence of an implied
new lease, a matter which is incapable of pecuniary estimation and, therefore, beyond the MeTC’s
jurisdiction.

The argument is bereft of merit. The allegation of existence of implied new lease or tacita reconduccion
will not divest the MeTC of jurisdiction over the ejectment case. It is an elementary rule that the
jurisdiction of the court in ejectment cases is determined by the allegations pleaded in the complaint 26 and
cannot be made to depend upon the defenses set up in the answer or pleadings filed by the defendant. 27
This principle holds even if the facts proved during trial do not support the cause of action alleged in the
complaint.28 In connection with this, it is well to note that in unlawful detainer cases the elements to be
proved and resolved are the facts of lease and expiration or violation of its terms. 29
Here, no interpretative exercise is needed to conclude that respondent has complied with such
requirement. In respondent’s Complaint, he specifically alleged that (1) the former owner, Mr. Chua, and
petitioner entered into a contract of lease; (2) subsequently, respondent purchased the leased premises
from Mr. Chua and became the owner thereof; (3) thereafter, the lease contract between Mr. Chua and
petitioner expired; and (4) petitioner refused to vacate the premises despite the expiration and non-
renewal of the lease.

Besides, we do not agree with the RTC that the MeTC does not have jurisdiction to resolve the issue of
existence of implied new lease in the unlawful detainer case. Tacita reconduccion refers to the right of the
lessee to continue enjoying the material or de facto possession of the thing leased within a period of time
fixed by law. During its existence, the lessee can prevent the lessor from evicting him from the disputed
premises. On the other hand, it is too well-settled to require a citation that the question to be resolved in
unlawful detainer cases is, who is entitled to de facto possession. Therefore, since tacita reconduccion is
determinative of who between the parties is entitled to de facto possession, the MeTC has jurisdiction to
resolve and pass upon the issue of implied new lease in unlawful detainer case. In Mid-Pasig Land
Development Corporation v. Court of Appeals, 30 we ruled that the MeTC is clothed with exclusive original
jurisdiction over an unlawful detainer case even if the same would entail compelling the plaintiff therein to
recognize an implied lease agreement.

Respondent did not acquiesce to petitioner’s continued possession of subject premises.

Petitioner likewise claims that the RTC correctly held that there was no sufficient evidence on record that
he received the alleged notice to vacate. While he admits that a notice to vacate is no longer necessary
when the ground for unlawful detainer is the expiration of the lease, proof that he actually received said
notice is still important in this case in view of his allegation of implied new lease. Citing Article 1670 of the
Civil Code,31 petitioner contends that if at the expiration of the contract of lease the lessee continued to
enjoy the leased property for 15 days with the acquiescence of the lessor, there is an implied new lease.
In this case, the determination of whether or not his continued stay in the leased premises is with the
acquiescence of the lessor hinges on whether or not he received the notice to vacate. And, as correctly
found by the RTC, he did not receive any notice to vacate.

We are not swayed. Under Article 1670, an implied new lease will set in if it is shown that: (a) the term of
the original contract of lease has expired; (b) the lessor has not given the lessee a notice to vacate; and
(c) the lessee continued enjoying the thing leased for 15 days with the acquiescence of the lessor. This
acquiescence may be inferred from the failure of the lessor to serve notice to vacate upon the lessee. 32

In the instant case, however, the MeTC and the CA correctly found that there was a valid demand to
vacate. Thus:

Prior to the sale of the property by previous owner Joseph Chua to herein plaintiff, defendant was formally
notified by the previous owner in a letter dated September 1, 2003 (Annex "D" of Complaint, Records, p.
12) of his intention to sell the property but herein defendant failed to exercise his pre-emptive right to
purchase the property.

Thus, the subject premises was sold to plaintiff who became the registered owner thereof as evidenced by
TCT No. 261682 (Annex "A," Complaint, Records, p. 7). Plaintiff, as new owner/vendee, informed
defendant through a letter dated November 3, 2003 (Annex "E," Complaint, Records, p. 13), even prior to
the expiration of the contract that he will be needing the premises thus the contract will not be renewed
or no contract will be executed, and directed defendant to vacate the premises by January 1, 2004. The
said notice was sent by registered mail and by personal service. The notice sent by registered mail was
returned to sender for failure of the defendant to claim the same at the post office. The unclaimed letter is
attached to the plaintiff’s position paper as Annex "F" (Records, p. 93). Despite notice given to him,
defendant failed to vacate and a formal demand letter dated January 13, 2004 was served to him
personally on January 21, 2004 which he refused to acknowledge that he received the same. A copy of
that same letter was sent by registered mail but defendant refused to claim the same for which it was
returned to sender. The unclaimed letter which was returned to sender is attached to the plaintiff’s
position paper as Annex "G-1" (Records, p. 96) and the certification from the post office attesting to the
fact that defendant failed to claim the same is attached to the plaintiff’s position paper as Annex "G"
(Records, p. 95). The demand letter dated January 13, 2004 pertains to the premises presently occupied
by defendant. The Contract of Lease (Annex "C," of Complaint, Records, pp. 10-11) which expired on
December 31, 2003 speaks of only one (1) unit which is the subject matter of this case. Defendant failed
to show that the portion being occupied by him which is the subject matter of this case is covered by
another lease contract.
The Court therefore finds that there was a valid demand to vacate. 33

This finding of the MeTC, which was affirmed by the CA, is a factual matter that is not ordinarily
reviewable in a petition for review on certiorari filed under Rule 45 of the Rules of Court. It is settled that
in a petition for review on certiorari, only questions of law may be raised by the parties and passed upon
by this court.1awphi1

Besides, even if we do review the case, there is no cogent reason to disturb the finding of said courts.
Under the rules, if the addressee refuses to accept delivery, service by registered mail is deemed
complete if the addressee fails to claim the mail from the postal office after five days from the date of first
notice of the postmaster.34 Further, the absence of personal service of notice to vacate in this case could
only be attributed to petitioner’s unexplainable refusal to receive the same. In Co Keng Kian v.
Intermediate Appellate Court,35 we held that "[t]he Court cannot countenance an unfair situation where
the plaintiff in an eviction case suffers further injustice by the unwarranted delay resulting from the
obstinate refusal of the defendant to acknowledge the existence of a valid demand."

The formal demands to vacate sent to petitioner, coupled with the filing of an ejectment suit, are
categorical acts on the part of respondent showing that he is not amenable to another renewal of the
lease contract. Therefore, petitioner’s contention that his stay in the subject premises is with the
acquiescence of the respondent, has no leg to stand on.

Petitioner’s alleged preferential right to buy subject premises has no basis.

In view of the above disquisition, petitioner’s claim that he was deprived of his preemptive rights because
he was not notified of the intended sale, likewise crumbles. Besides, the right of first refusal, also referred
to as the preferential right to buy, is available to lessees only if there is a stipulation thereto in the
contract of lease or where there is a law granting such right to them (i.e., Presidential Decree No. 1517
(1978),36 which vests upon urban poor dwellers37 who merely lease the house where they have been
residing for at least ten years, preferential right to buy the property located within an area proclaimed as
an urban land reform zone). Unlike co-owners and adjacent lot owners,38 there is no provision in the Civil
Code which grants to lessees preemptive rights. Nonetheless, the parties to a contract of lease may
provide in their contract that the lessee has the right of first refusal.

In this case, there is nothing in the Contract of Lease which grants petitioner preferential right to buy the
subject premises. We are likewise unaware of any applicable law which vests upon him priority right to
buy the commercial building subject matter of this case. In fact, aside from the sweeping statement that
his preferential right to buy was violated, petitioner failed to cite in his Petition, 39 Reply,40 or
Memorandum41 any specific provision of a law granting him such right. In other words, petitioner failed to
lay the basis for his claim that he enjoys a preferential right to buy.

And even assuming that he has, the same will not prevent the ejectment case filed by the respondent
from taking its due course. A contract of sale entered into in violation of preemptive right is merely
rescissible and the remedy of the aggrieved party whose right was violated is to file an appropriate action
to rescind the sale and compel the owner to execute the necessary deed of sale in his favor. In Wilmon
Auto Supply Corp. v. Court of Appeals,42 we categorically held that an action for unlawful detainer cannot
be abated or suspended by an action filed by the defendant-lesseee to judicially enforce his right of
preemption.

WHEREFORE, the petition is DENIED.

G.R. No. 179756               October 2, 2009

RIZAL COMMERCIAL BANKING CORPORATION, Petitioner,

vs.
ROYAL CARGO CORPORATION, Respondent.

DECISION

CARPIO MORALES, J.:

Terrymanila, Inc.1 (Terrymanila) filed a petition for voluntary insolvency with the Regional Trial Court
(RTC) of Bataan on February 13, 1991.2 One of its creditors was Rizal Commercial Banking Corporation
(petitioner) with which it had an obligation of P3 Million that was secured by a chattel mortgage executed
on February 16, 1989. The chattel mortgage was duly recorded in the notarial register of Amado Castano,
a notary public for and in the Province of Bataan.3

Royal Cargo Corporation (respondent), another creditor of Terrymanila, filed an action before the RTC of
Manila for collection of sum of money and preliminarily attached "some" of Terrymanila’s personal
properties on March 5, 1991 to secure the satisfaction of a judgment award of P296,662.16, exclusive of
interests and attorney’s fees.4

On April 12, 1991, the Bataan RTC declared Terrymanila insolvent.

On June 11, 1991,5 the Manila RTC, by Decision of even date, rendered judgment in the collection case in
favor of respondent.

In the meantime, petitioner sought in the insolvency proceedings at the Bataan RTC permission to
extrajudicially foreclose the chattel mortgage which was granted by Order of February 3, 1992.6 It
appears that respondent, together with its employees’ union, moved to have this Order reconsidered but
the motion was denied by Order of March 20, 1992 Order.7

The provincial sheriff of Bataan thereupon scheduled on June 16, 1992 the public auction sale of the
mortgaged personal properties at the Municipal Building of Mariveles, Bataan. At the auction sale,
petitioner, the sole bidder of the properties, purchased them for P1.5 Million. Eventually, petitioner sold
the properties to Domingo Bondoc and Victoriano See.8

Respondent later filed on July 30, 1992 a petition before the RTC of Manila, docketed as Civil Case No. 92-
62106, against the Provincial Sheriff of the RTC Bataan and petitioner, for annulment of the auction sale
(annulment of sale case). Apart from questioning the inclusion in the auction sale 9 of some of the
properties which it had attached, respondent questioned the failure to duly notify it of the sale at least 10
days before the sale, citing Section 14 of Act No. 1508 or the Chattel Mortgage Law which reads:

Sec. 14. The mortgagee, his executor, administrator or assign, may, after thirty days, from the time of
condition broken, cause the mortgaged property, or any part thereof, to be sold at public auction by a
public officer at a public place in the municipality where the mortgagor resides, or where the property is
situated, provided at least ten days notice of the time, place, and purpose of such sale has been posted at
two or more public places in such municipality, and the mortgagee, his executor, administrator or
assignee shall notify the mortgagor or person holding under him and the persons holding subsequent
mortgages of the time and place of sale, either by notice in writing directed to him or left at his abode, if
within the municipality, or sent by mail if he does not reside in such municipality, at least ten days
previous to the date. (Emphasis and underscoring supplied),

it claiming that its counsel received a notice only on the day of the sale.10

Petitioner, alleging that the annulment of sale case filed by respondent stated no cause of action, filed on
December 3, 1992 a Motion to Dismiss 11 which was, however, denied by Branch 16 of the Manila RTC.12

Petitioner appealed the denial of the Motion to Dismiss via certiorari to the Court of Appeals, docketed as
CA-G.R. SP No. 31125. The appellate court dismissed the petition, by Decision of February 21, 1994, it
holding that respondent’s petition for annulment "prima facie states a sufficient cause of action and that
the [trial court] in denying [herein petitioner RCBC’s] motion to dismiss, had acted advisedly and well
within its powers and authority."13

Petitioner thereupon filed before the Manila RTC its Answer Ex Abundante Cautelam 14 in the annulment of
sale case in which it lodged a Compulsory Counterclaim by seeking P1 Million for moral damages,
P500,000 for exemplary damages, and P250,000 for attorney’s fees. It thereafter elevated the case to
this Court via petition for review on certiorari, docketed as G.R. 115662. This Court by minute Resolution
of November 7, 1994,15 denied the petition for failure to show that a reversible error was committed by
the appellate court.16

Trial on the merits of the annulment of sale case thereupon ensued. By Decision 17 of October 15, 1997,
Branch 16 of the Manila RTC rendered judgment in favor of respondent, disposing as follows:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:

 1. ORDERING . . . RCBC to pay plaintiff [heein respondent Royal Cargo] the amount of
P296,662.16 and P8,000.00 as reasonable attorney’s fees.

2. No pronouncement as to costs.

3. DISMISSING the petition as to respondents Provincial Sheriff of Balanga, Bataan RTC;

SO ORDERED.

Both parties appealed to the Court of Appeals which, by Decision 18 of April 17, 2007, denied herein
petitioner’s appeal and partly granted herein respondent’s by increasing to P50,000 the attorney’s fees
awarded to it and additionally awarding it exemplary damages and imposing interest on the principal
amount payable to it. Thus it disposed:

WHEREFORE, the foregoing considered, the appeal instituted by appellant RCBC is hereby DENIED for lack
of merit while the appeal of appellant Royal Cargo is PARTLY GRANTED in that the amount of attorney’s
fees awarded by the RTC is increased to P50,000.00.

In addition, RCBC is ordered to pay Royal Cargo the amount of P100,000.00 as exemplary damages. The
principal amount of P296,662.18 [sic] to be paid by RCBC to Royal Cargo shall likewise earn 12% interest
per annum from the time the petition was filed in the court a quo until fully paid. The rest of the decision
is AFFIRMED.

SO ORDERED. (Emphasis and underscoring supplied)

In partly granting respondent’s appeal from the Decision of Br. 16 of RTC Manila, the appellate court
ratiocinated that respondent had a right to be "timely informed" of the foreclosure sale.

RCBC’s citations [sic] of numerous rulings on the matter more than supports the fact that as mortgagee,
it had preferential right over the chattels subject of the foreclosure sale. This however is not at issue in
this case. What is being contested is the right of Royal Cargo to be timely informed of the foreclosure sale
as it too had interests over the mortgagee Terrymanila, Inc.’s assets. We note that this matter had
already been passed upon by this Court on February 21, 1994 in CA-G.R. SP No. 31125 as well as by the
Supreme Court on November 7, 1994 in G.R. No. [1]15662. RCBC, by arguing about its preferential right
as mortgagee in the instant appeal merely reiterates what had already been considered and ruled upon in
earlier proceedings.

xxxx

Moreover, Section 14 of the Chattel Mortgage Law pertaining to the procedure in the foreclosure of chattel
mortgages provides, to wit:

xxxx

The above-quoted provision clearly requires that the mortgagee should notify in writing the mortgagor or
person holding under him of the time and place of the sale by personal delivery of the notice. Thus,
RCBC’s failure to comply with this requirement warranted a ruling against it by the RTC. (Italics in the
original; emphasis partly in the original; underscoring supplied)

Its motion for reconsideration having been denied by the appellate court, 19 petitioner lodged the present
petition for review which raises the following issues:

WHETHER OR NOT RESPONDENT SHOULD HAVE BEEN GIVEN A TEN(10)-DAY PRIOR NOTICE OF THE
JUNE 16, 1992 FORECLOSURE SALE

II
WHETHER OR NOT THE TRIAL COURT AND THE COURT OF APPEALS GRAVELY ERRED IN DECLARING
PETITIONER GUILTY OF CONSTRUCTIVE FRAUD IN FAILING TO PROVIDE RESPONDENT A TEN (10)-DAY
PRIOR NOTICE OF THE FORECLOSURE SALE.

III

WHETHER OR NOT THE PETITIONER WAS CORRECTLY HELD LIABLE TO PAY RESPONDENT P296,662.[16]
PLUS INTEREST THEREON, EXEMPLARY DAMAGES AND ATTORNEY’S FEES.

IV

WHETHER OR NOT PETITIONER IS ENTITLED TO AN AWARD OF ATTORNEY’S FEES. 20 (Underscoring

supplied)

Petitioner faults the appellate court in applying res judicata by holding that respondent’s entitlement to
notice of the auction sale had already been settled in its Decision in CA G.R. SP No. 31125 and in this
Court’s Decision in G.R. No. 115662. For, so it contends, the decisions in these cases dealt on
interlocutory issues, viz: the issue of whether respondent’s petition for annulment of the sale stated a
cause of action, and the issue of whether petitioner’s motion to dismiss was properly denied. 21

Arguing against respondent’s position that it was entitled to notice of the auction sale, petitioner cites the
Chattel Mortgage Law which enumerates who are entitled to be notified under Section 14 thereof. It posits
that "[h]ad the law intended to include in said Section an attaching creditor or a judgment creditor [like
herein respondent], it could have so specifically stated therein, since in the preceding section, Section 13,
it already mentioned that a subsequent attaching creditor may redeem." 22

Petitioner goes on to fault the appellate court in echoing its ruling in CA-G.R. SP No. 31125 that Sections
1323 and 14 of the Chattel Mortgage Law should be read in tandem since the right given to the attaching
creditor under Section 13 "would not serve its purpose if we were to exclude the subsequent attaching
creditor from those who under Section 14 need to be notified of the foreclosure sale ten days before it is
held."24

Petitioner likewise posits that Section 13 permits a subsequent attaching creditor to "redeem" the
mortgage only before the holding of the auction sale, drawing attention to Paray v. Rodriguez 25 which
instructs that no right of redemption exists over personal property as the Chattel Mortgage Law is silent
thereon.26

Even assuming arguendo, petitioner contends, that there exists an obligation to furnish respondent a
notice of the auction sale 10 days prior thereto, "respondent’s judgment award of P296,662.16 with
interest thereon at the legal rate from the date of filing of the [c]omplaint and P10,000.00 as reasonable
attorney’s fees is very much less than the P1.5 [m]illion bid of petitioner…" 27

As for the issue of constructive fraud-basis of the award of damages to respondent, petitioner maintains
that both the trial and appellate courts erred in concluding that it (petitioner) was the one which sent the
notice of sheriff’s sale to, which was received on the day of the sale by, the counsel for respondent for, so
it contends, it had absolutely no participation in the preparation and sending of such notice. 28

In its Comment,29 respondent reiterates that the respective decisions of the appellate court and this Court
in CA G.R. SP No. 31125 and G.R. No. 115662 are conclusive between the parties, hence, "the right of
[respondent] to a [ten-day] notice has a binding effect and must be adopted in any other controversy
between the same parties in which the very same question is raised."30

And respondent maintains that the obligation to notify the mortgagor or person holding under him and the
persons holding subsequent mortgages falls upon petitioner as the mortgagee.

The petition is MERITORIOUS.

The respective decisions of the appellate court in CA G.R. SP No. 31125 and this Court in G.R. No. 115662
did not conclusively settle the issue on the need to give a 10-day notice to respondent of the holding of
the public auction sale of the chattels.
The elements of res judicata are: (1) the judgment sought to bar the new action must be final; (2) the
decision must have been rendered by a court having jurisdiction over the subject matter and the parties;
(3) the disposition of the case must be a judgment on the merits; and (4) there must be as between the
first and second action, identity of parties, subject matter, and causes of action. 31

Res judicata has two concepts: (1) bar by prior judgment as enunciated in Rule 39, Section 47 (b) of the
Rules of Civil Procedure; and (2) conclusiveness of judgment in Rule 39, Section 47 (c). 32

There is bar by prior judgment when, as between the first case where the judgment was rendered, and
the second case that is sought to be barred, there is identity of parties, subject matter, and causes of
action. Where there is identity of parties and subject matter in the first and second cases, but no identity
of causes of action, there is conclusiveness of judgment.33 The first judgment is conclusive only as to
those matters actually and directly controverted and determined, not as to matters merely involved
therein.

The Court of Appeals, in CA G.R. SP No. 31125, resolved only the interlocutory issue of whether the trial
court’s Order of April 12, 1993 denying petitioner’s motion to dismiss respondent’s petition for annulment
was attended by grave abuse of discretion. The appellate court did not rule on the merits of the petition
as to establish a controlling legal rule which has to be subsequently followed by the parties in the same
case. It merely held that respondent’s petition in the trial court stated a sufficient cause of action. Its
determination of respondent’s entitlement to notice of the public auction sale was at best prima facie.
Thus, the appellate court held:

In view of the above, We are of the considered view that the private respondent’s petition in the court a
quo prima facie states a sufficient cause of action and that the public respondent in denying the
petitioner’s motion to dismiss, had acted advisedly and well within its powers and authority. We,
therefore, find no cause to annul the challenged order issued by the respondent court in Civil Case No.
92-62106. (Underscoring in the original; emphasis and italics supplied)34

An order denying a motion to dismiss is merely interlocutory and cannot give rise to res judicata, hence, it
is subject to amendments until the rendition of the final judgment. 35

On respondent’s contention that petitioner, as mortgagee, had the duty to notify it of the public auction
sale, the Court finds the same immaterial to the case.

Section 13 of the Chattel Mortgage Law allows the would-be redemptioner thereunder to redeem the
mortgaged property only before its sale. Consider the following pronouncement in Paray: 36

[T]here is no law in our statute books which vests the right of redemption over personal property. Act No.
1508, or the Chattel Mortgage Law, ostensibly could have served as the vehicle for any legislative intent
to bestow a right of redemption over personal property, since that law governs the extrajudicial sale of
mortgaged personal property, but the statute is definitely silent on the point. And Section 39 of the 1997
Rules of Civil Procedure, extensively relied upon by the Court of Appeals, starkly utters that the right of
redemption applies to real properties, not personal properties, sold on execution. (Emphasis, italics and
underscoring supplied)

Unmistakably, the redemption cited in Section 13 partakes of an equity of redemption, which is the right
of the mortgagor to redeem the mortgaged property after his default in the performance of the conditions
of the mortgage but before the sale of the property37 to clear it from the encumbrance of the mortgage.38
It is not the same as right of redemption which is the right of the mortgagor to redeem the mortgaged
property after registration of the foreclosure sale,39 and even after confirmation of the sale.40

While respondent had attached some of Terrymanila’s assets to secure the satisfaction of a P296,662.16
judgment rendered in another case, what it effectively attached was Terrymanila’s equity of redemption.
That respondent’s claim is much lower than the P1.5 million actual bid of petitioner at the auction sale
does not defeat respondent’s equity of redemption. Top Rate International Services, Inc. v. IAC41
enlightens:

It is, therefore, error on the part of the petitioner to say that since private respondents’ lien is only a total
of P343,227.40, they cannot be entitled to the equity of redemption because the exercise of such right
would require the payment of an amount which cannot be less than P40,000,000.00.
When herein private respondents prayed for the attachment of the properties to secure their respective
claims against Consolidated Mines, Inc., the properties had already been mortgaged to the consortium of
twelve banks to secure an obligation of US$62,062,720.66. Thus, like subsequent mortgagees, the
respondents’ liens on such properties became inferior to that of banks, which claims in the event of
foreclosure proceedings, must first be satisfied. The appellate court, therefore, was correct in holding that
in reality, what was attached by the respondents was merely Consolidated Mines’ . . . equity of
redemption. x x x x

xxxx

We, therefore, hold that the appellate court did not commit any error in ruling that there was no over-levy
on the disputed properties. What was actually attached by respondents was Consolidated Mines’ right or
equity of redemption, an incorporeal and intangible right, the value of which can neither be quantified nor
equated with the actual value of the properties upon which it may be exercised. 42 (Emphasis, italics and
underscoring supplied)

Having thus attached Terrymanila’s equity of redemption, respondent had to be informed of the date of
sale of the mortgaged assets for it to exercise such equity of redemption over some of those foreclosed
properties, as provided for in Section 13.

Recall, however, that respondent filed a motion to reconsider the February 3, 1992 Order of the RTC
Bataan-insolvency court which granted leave to petitioner to foreclose the chattel mortgage, which motion
was denied. Notably, respondent failed to allege this incident in his annulment of sale case before the RTC
of Manila.

Thus, even prior to receiving, through counsel, a mailed notice of the auction sale on the date of the
auction sale itself on June 16, 1992, respondent was already put on notice of the impending foreclosure
sale of the mortgaged chattels. It could thus have expediently exercised its equity of redemption, at the
earliest when it received the insolvency court’s Order of March 20, 1992 denying its Motion for
Reconsideration of the February 3, 1992 Order.

Despite its window of opportunity to exercise its equity of redemption, however, respondent chose to be
technically shrewd about its chances, preferring instead to seek annulment of the auction sale, which was
the result of the foreclosure of the mortgage, permission to conduct which it had early on opposed before
the insolvency court. Its negligence or omission to exercise its equity of redemption within a reasonable
time, or even on the day of the auction sale, warrants a presumption that it had either abandoned it or
opted not to assert it.43 Equitable considerations thus sway against it.

It is also not lost on the Court that as early as April 12, 1991, Terrymanila had been judicially declared
insolvent. Respondent’s recourse was thus to demand the satisfaction of its judgment award before the
insolvency court as its judgment award is a preferred credit under Article 2244 44 of the Civil Code. To now
allow respondent have its way in annulling the auction sale and at the same time let it proceed with its
claims before the insolvency court would neither rhyme with reason nor with justice.

Parenthetically, respondent has not shown that it was prejudiced by the auction sale since the insolvency
court already determined that even if the mortgaged properties were foreclosed, there were still sufficient,
unencumbered assets of Terrymanila to cover the obligations owing to other creditors, including that of
respondent’s.45

In any event, even if respondent would have participated in the auction sale and matched petitioner’s bid,
the superiority of petitioner’s lien over the mortgaged assets would preclude respondent from recovering
the chattels.1avvphi1

It has long been settled by this Court that "the right of those who acquire said properties should not and
can not be superior to that of the creditor who has in his favor an instrument of mortgage executed with
the formalities of the law, in good faith, and without the least indication of fraud. x x x. In purchasing it,
with full knowledge that such circumstances existed, it should be presumed that he did so, very much
willing to respect the lien existing thereon, since he should not have expected that with the purchase, he
would acquire a better right than that which the vendor then had. (Emphasis and underscoring supplied) 46

It bears noting that the chattel mortgage in favor of petitioner was registered more than two years before
the issuance of a writ of attachment over some of Terrymanila’s chattels in favor of respondent. This is
significant in determining who between petitioner and respondent should be given preference over the
subject properties. Since the registration of a chattel mortgage is an effective and binding notice to other
creditors of its existence and creates a real right or lien that follows the property wherever it may be, 47
the right of respondent, as an attaching creditor or as purchaser, had it purchased the mortgaged chattel
at the auction sale, is subordinate to the lien of the mortgagee who has in his favor a valid chattel
mortgage.48

Contrary then to the appellate court’s ruling, petitioner is not liable for constructive fraud for proceeding
with the auction sale. Nor for subsequently selling the chattel. For foreclosure suits may be initiated even
during insolvency proceedings, as long as leave must first be obtained from the insolvency court49 as what
petitioner did.

The appellate court’s award of exemplary damages and attorney’s fees for respondent, given petitioner’s
good faith, is thus not warranted.

As for petitioner’s prayer for attorney’s fees in its Compulsory Counterclaim, the same is in order, the
dismissal of respondent’s Complaint nowithstanding. 50 Perkin Elmer Singapore v. Dakila Trading,51 citing
Pinga v. Heirs of German Santiago,52 enlightens:

It bears to emphasize that petitioner’s counterclaim against respondent is for damages and attorney’s
fees arising from the unfounded suit. While respondent’s Complaint against petitioner is already
dismissed, petitioner may have very well incurred damages and litigation expenses such as attorney’s
fees since it was forced to engage legal representation in the Philippines to protect its rights and to assert
lack of jurisdiction of the courts over its person by virtue of the improper service of summons upon it.
Hence, the cause of action of petitioner’s counterclaim is not eliminated by the mere dismissal of
respondent’s complaint.53 (Underscoring supplied)

To the Court, the amount of P250,000 prayed for by petitioner in its Counterclaim is just and equitable,
given the nature and extent of legal services employed in controverting respondent’s unfounded claim.

WHEREFORE, the petition for review is GRANTED. The challenged Decision and Resolution of the Court of
Appeals are REVERSED and SET ASIDE. Civil Case No. 92-62106 lodged before the Regional Trial Court of
Manila, Branch 16, is DISMISSED for lack of merit.

Respondent, Royal Cargo Corporation, is ORDERED to pay petitioner, Rizal Commercial Banking
Corporation, P250,000 as and for attorney’s fees.

G.R. No. 152614               September 30, 2009

SALVADOR A. FERNANDEZ, Petitioner,

vs.
CRISTINA D. AMAGNA, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure
which seeks to set aside and annul the Decision1 dated May 25, 2001 and the Resolution2 dated March 14,
2002 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 46910.

The CA decision affirmed the decision3 of the Regional Trial Court (RTC) of Manila, Branch 16, which
ordered petitioner to vacate the premises owned by respondent and to pay the unpaid rentals thereon in
Civil Case No. 97-85824.

The facts may be succinctly stated as follows:

On September 23, 1996, a complaint for unlawful detainer4 was filed by respondent Cristina Amagna
against petitioner Salvador Fernandez in the Metropolitan Trial Court (MeTC) of Manila, Branch 11,
docketed as Civil Case No. 153177-CV. In her complaint, respondent, plaintiff in the trial court, alleged
that she is a co-owner and administratrix of a property located at 1901-K Int. 34, Zamora St., Pandacan,
Manila. The property is covered by OCT No. 7369 in the name of siblings Aurelio Restua (married to Clara
Bautista) and Trinidad Restua (married to Felipe Dalmacio), with a total area of 3,271 square meters.
Respondent, being the heir of Trinidad, owns in common with her brothers and sisters, one-half of the
property. A portion of the property was leased by petitioner on a month-to-month basis at the rate of
P1,300.00. In July 1995, petitioner failed to pay the monthly rentals, prompting respondent to send a
demand letter dated April 11, 1996 to pay and vacate but petitioner refused. Respondent also alleged that
she and her siblings needed the leased premises as they were also renting.

In his Answer,5 petitioner averred that he had been renting the premises for over fifty (50) years and had,
in fact, already constructed substantial improvements on the lot; that he was one of several lessees of the
property represented by their association known as "Barangay 843 Neighborhood Association"; that the
monthly rental was only P420.00 and not P1,300.00 as claimed by respondent; that respondent had been
transacting business with him through the association and respondent acknowledged payments made
through the said association; that there was no agreement with respondent regarding the period for the
lease; that he was surprised to receive a demand letter from respondent because he was sure that he had
no arrears; and that on May 15, 1997, he filed a Petition for Consignation before the MeTC, Manila,
Branch 3 and deposited his arrears in rent computed at the rate of P420.00 per month.

On October 13, 1997, the MeTC, Manila rendered its decision in favor of respondent, the dispositive
portion of which stated:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff [herein respondent] and against the
defendant [herein petitioner] ordering:

1. The defendant and all persons claiming rights under him to immediately vacate the premises
known as 1901-K Int. 34, Zamora St., Pandacan, Manila, and surrender its peaceful possession to
the plaintiff;

2. To remove and demolish the structure he built on the premises;

3. To pay the plaintiff the sum of P1,300.00 monthly beginning July 1995 and every month
thereafter until he shall have finally and actually vacated the subject premises;

4. To pay the plaintiff the sum of P5,000.00 for and as attorney’s fees; and

5. To pay the costs of the suit.

SO ORDERED.6 (Words in bracket ours)

Thereafter, petitioner appealed the case to the RTC which rendered a decision on February 4, 1998
affirming the decision of the MeTC, thus:

WHEREFORE, PREMISES CONSIDERED, except with the qualification that any demolition of the structures
introduced by the defendant should be made only after the procedures mandated under Rule 39, Section
10(d)7 is observed, the MTC Manila decision is hereby AFFIRMED, with costs against defendant. 8

Aggrieved with the ruling of the RTC, petitioner elevated the matter to the CA. On May 25, 2001, the CA
promulgated its assailed decision dismissing petitioner’s appeal and affirming the RTC decision. The CA
held:

Thus, the Court has ruled that lease agreements with no specified period, but where monthly rentals are
paid monthly are considered to be on a month-to-month basis. They are for a definite period and expire at
the last day of any given thirty-day period, upon proper demand, and a notice by the lessor to vacate.

In the case at bar, it was found by the two lower courts that the lease over the subject property was on a
month-to-month basis, and there was a proper demand to vacate the premises made by the respondent-
appellee on petitioner-appellant. Consequently, the verbal lease agreement entered into by the parties
has been validly terminated on April 11, 1996, when respondent-appellee gave a written demand on the
petitioner-appellant to pay his back rentals, and to vacate the premises.

xxx xxx xxx

Respondent-appellee claims that from July 1995 up to the filing of the complaint, the petitioner-appellant
has refused to heed the demand to settle his unpaid rentals and to vacate the leased premises. On the
other hand, petitioner-appellant argues that the monthly rentals from July 1995 to January 1997 at P420
per month were paid in consignation case filed before Branch 3 of Metropolitan Trial Court of Manila.

When petitioner-appellant filed a consignation case, a fact was established that there was really an unpaid
rental commencing from July 1995. A closer examination of the records reveals that the complaint for
ejectment was filed on September 23, 1996, while the consignation case was commenced on May 15,
1997. Hence, when the petitioner-appellant paid the back rentals, the respondent-appellee had already
filed the ejectment case. Case law is to the effect that the acceptance by the lessor of the payment by
lessee of rentals in arrears does not constitute a waiver of the default of the payment of rentals as a valid
cause of action for ejectment. xxx.9

Petitioner’s subsequent motion for reconsideration was likewise denied by the CA in its Resolution dated
March 14, 2002. Hence, petitioner filed the instant petition anchored on the following grounds:

A. THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THE ORDINANCE NO. 8020
ENACTED BY THE CITY OF MANILA ON MARCH 12, 2001 AUTHORIZING ACQUISITION OF THE SUBJECT
PROPERTY, FOR RESALE TO THE BONAFIDE TENANT THEREAT, UNDER THE LAND-FOR-THE-LANDLESS
PROGRAM OF THE CITY OF MANILA.

B. THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO CONSIDER OR TAKE JUDICIAL NOTICE OF
THE FACT THAT THE SUBJECT PROPERTY IS UNDER EXPROPRIATION BY THE CITY OF MANILA AND
THEREFORE PETITIONER BY FORCE OF P.D. NO. 1517 IS A BENEFICIARY OF "NO EVICTION RULE" UNDER
THE SAME.

C. THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THE RENT CONTROL LAW (BP
BLG. 877) INSOFAR AS ALLOWABLE INCREASE OF RENTAL OF THE SUBJECT PROPERTY IS CONCERNED,
I.E. FROM P480.00/PER MONTH TO P1,300.00/PER MONTH.

D. THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO REVERSE THE ASSAILED DECISION
(ANNEX "A") IN FAVOR OF THE PETITIONER.10

Petitioner argues that the decision rendered by the MeTC of Manila, Branch 11, must be voided on
account of the approval of Ordinance No. 8020 by the City Council of Manila on March 12, 2001 which
authorized the acquisition of the subject property for resale to qualified tenants under the land-for-the-
landless program of the City of Manila. He also maintains that the property is within the area for Priority
Development Zone pursuant to Section 6 of Presidential Decree No. 1517 (P.D. No. 1517) or the Urban
Land Reform Act. Petitioner claims that he is qualified under the so called "no eviction rule" considering
that he has resided on the leased premises for more than ten (10) years already.

Likewise, petitioner insists that the agreed monthly rental is not P1,300.00 but P420.00 only. According to
petitioner, the monthly rental had been increased from P420.00 to P1,300.00 which was a clear violation
of the allowable increase under Batas Pambansa Blg. 877 (B.P. Blg. 877) or the Rent Control Law.
Nevertheless, petitioner paid the said increase albeit under protest but when respondent did not accept
his payments, he was forced to file a consignation case where the back rentals for the period July 1995-
April 1996 had been deposited in court. These payments were withdrawn by respondent from the court,
thus, respondent no longer had a cause of action against him.

In her Comment,11 respondent asserts that Ordinance No. 8020 does not apply in this case because the
said ordinance did not indicate that the subject property had been acquired by the City of Manila from the
heirs of the late spouses Restua for distribution to petitioner. Moreover, the ordinance was approved only
on March 12, 2001 while the ejectment case was filed on September 23, 1996. The ordinance cannot
belatedly affect the outcome of the instant case. Inasmuch as expropriation proceedings have not been
instituted, respondent and her siblings remain the owners of the subject property and the leased
premises.

Respondent also avers in her Memorandum12 that she was able to prove that grounds exist for the
ejectment of petitioner when the latter failed to pay the rent for over three (3) months. She further
asserts that her acceptance of the rents paid by petitioner by way of consignation will not legitimize
petitioner’s unlawful possession of the premises.
As to petitioner’s claim that he is entitled to the benefits of P.D. No. 1517, respondent asseverates that
under it, only legitimate tenants can take advantage of its beneficent provisions. By reason of petitioner’s
failure to pay the rents, his possession became unlawful and he could not be considered a bona fide
tenant of the property.

We agree with the findings of all the three (3) lower courts that the verbal lease agreement between
petitioner and respondent was on a monthly basis. It is settled that if the rent is paid monthly, the lease
is on a month-to-month basis and may be terminated at the end of each month. Article 1687 of the Civil
Code is in point, thus:

Art. 1687. If the period for the lease has not been fixed, it is understood to be from year to year, if the
rent agreed upon is annual; from month to month, if it is monthly; from week to week, if the rent is
weekly; and from day to day, if the rent is to be paid daily. However, even though a monthly rent is paid,
and no period for the lease has been set, the courts may fix a longer term for the lease after the lessee
has occupied the premises for over one year. If the rent is weekly, the courts may likewise determine a
longer period after the lessee has been in possession for over six months. In case of daily rent, the courts
may also fix a longer period after the lessee has stayed in the place for over one month.

In the case at bar, it is undisputed that the lease was verbal, that the period for the lease had not been
fixed, that the rentals were paid monthly, and that proper demand and notice by the lessor to vacate
were given. In the case of Acab v. Court of Appeals,13 this Court held:

…lease agreements with no specified period, but in which rentals are paid monthly, are considered to be
on a month-to-month basis. They are for a definite period and expire after the last day of any given
thirty-day period, upon proper demand and notice by the lessor to vacate. 14

A lease on a month-to-month basis provides for a definite period and may be terminated at the end of
any month, hence, by the failure of the lessees to pay the rents due for a particular month, the lease
contract is deemed terminated as of the end of that month.15 Applying this principle, the lease contract in
the instant case was deemed terminated at the end of the month when the petitioner, as lessee, failed to
pay the rents due.

B.P. Blg. 87716 was the rent control law in force at the time the complaint for unlawful detainer was filed.
Sec. 5 thereof allows for judicial ejectment of a lessee on the following grounds:

Section 5. Grounds for Judicial Ejectment. ― Ejectment shall be allowed on the following grounds:

(b) Arrears in payment of rent for a total of three (3) months: Provided, that in case of refusal by the
lessor to accept payment of the rental agreed upon, the lessee may either deposit, by way of
consignation, the amount in court, or with the city or municipal treasurer, as the case may be, or in a
bank in the name of and with notice to the lessor, within one month after the refusal of the lessor to
accept payment.

The lessee shall thereafter deposit the rental within ten days of every current month. Failure to deposit
rentals for three months shall constitute a ground for ejectment. If an ejectment case is already pending,
the court upon proper motion may order the lessee or any person or persons claiming under him to
immediately vacate the leased premises without prejudice to the continuation of the ejectment
proceedings. At any time, the lessor may, upon authority of the court, withdraw the rentals deposited.

The lessor, upon authority of the court in case of consignation and upon joint affidavit by him and the
lessee to be submitted to the city or municipal treasurer and to the bank where deposit was made, shall
be allowed to withdraw the deposits.

x x x           x x x          x x x

(f) Expiration of the period of the lease contract. No lessor or his successor-in-interest shall be entitled to
eject the lessee upon the ground that the leased premises has been sold or mortgaged to a third person
regardless of whether the lease or mortgage is registered or not.

Clearly, grounds for ejectment exist in this case and respondent could lawfully ask for petitioner’s eviction
from the premises. As already discussed, the month-to-month lease contract of the parties expired when
petitioner failed to pay the rentals and the lease was not renewed by respondent. Likewise, respondent
sufficiently proved that from July 1995 up to the filing of the complaint for ejectment, petitioner has failed
to pay his monthly rentals for over three (3) months and even refused to settle his unpaid rentals and
vacate the leased premises despite demand to do so. The subsequent payment by petitioner of his arrears
by way of consignation and the acceptance by respondent of said payments will not operate to bar the
eviction of petitioner. The evidence on record reveals that the ejectment case was instituted on
September 23, 1996 while the petition for consignation was filed only on May 15, 1997 which means that
when petitioner paid the back rentals, respondent had already filed the ejectment case. The subsequent
acceptance by the lessor of rental payments does not, absent any circumstance that may dictate a
contrary conclusion, legitimize the unlawful character of the possession.17 Hence, the respondent acted
well within her right to file a complaint for unlawful detainer.

As to the petitioner’s contention that the monthly rental is only P420.00 and not P1,300.00, we quote with
approval the ruling of the CA, thus:

We have gone through the records and We have no reason to depart from the factual finding of the RTC
that the petitioner-appellant failed to show any receipt to establish his claim that the monthly rental is
only P420. The rule is well-settled that he who alleges a fact has the burden of proving it and a mere
allegation is not evidence. The Official Receipts No. 1698 and 1759 are not competent proofs to show that
the true rental is P420. Those receipts are for rentals paid for December 1993 and February 1994. The
bone of contention here is the rental starting from July 1995. On the other hand, as shown by the
records, the respondent-appellee was able to establish that the agreed rental since March 1995 is
P1,300.18

Petitioner having failed to prove his claim that the amount of rental starting July 1995 was just P420.00,
the findings of the trial courts, as affirmed by the CA, stand. Likewise, petitioner’s argument that the
increase in the monthly rental from P420.00 to P1,300.00 contravenes the allowable increase under B.P.
Blg. 877,19 the following disquisition of the CA is relevant:

Further, We cannot allow the petitioner-appellant to belatedly question the validity of the increase of the
rental and issue of payment under protest. Jurisprudence is replete with the rule that no new issues shall
be raised for the first time on appeal.20

In the case of Ulep v. Court of Appeals,21 the Court made the following pronouncement:

Points of law, theories, issues and arguments not brought to the attention of the lower court need not be,
and ordinarily will not be, considered by a reviewing court, as these cannot be raised for the first time on
appeal. Basic considerations of fair play, justice and due process underlie the rule. It would be unfair to
the adverse party who would have no opportunity to present evidence in contra to the new theory, which
it could have done had it been aware of it at the time of the hearing before the trial court.22

We cannot take an opposite stance in the present case. The issue of the validity of the alleged increase in
rent was not a litigated issue in the trial courts. To allow petitioner to do so on appeal would be utterly
unfair to respondent. The CA correctly opted not to resolve the issue in its decision of May 25, 2001.

Moreover, petitioner did not mention the supposed valid increase in rental authorized by law, which he
should have paid nor did he offer to pay or deposit the same within the period of time mandated by law.

In the same vein, the issues concerning petitioner’s entitlement to the benefits of Ordinance No. 8020
were raised by petitioner only in his motion for reconsideration of the CA decision, "the effect of which is
as if it was never duly raised in that court at all,"23 while the issue on the applicability of P.D. No. 1517
was only raised before this Court. Nevertheless, even if we delve into the merits of petitioner’s
contentions on the matter, the same must be rejected.

Petitioner cannot capitalize on Ordinance No. 8020 passed by the City Council of Manila which authorized
the City to acquire the lot owned by the late spouses Aurelio and Clara Restua for resale to its qualified
and bona fide tenants/occupants under the land-for-the-landless program of the City. It should be noted
that the Ordinance was approved and took effect only on March 12, 2001 or almost five (5) years after
the case for ejectment was filed by respondent on September 23, 1996. Basic is the rule that no statute,
decree, ordinance, rule or regulation (and even policies) shall be given retrospective effect unless
explicitly stated so.24 We find no provision in Ordinance No. 8020 which expressly gives it retroactive
effect to those tenants with pending ejectment cases against them. Rather, what the said Ordinance
provides is that it "shall take effect upon its approval," which was on March 12, 2001.
Further, no proof was presented which showed that the property being leased by petitioner has been
acquired by the City of Manila for resale to him. Ordinance No. 8020 merely stated that the lot owned by
the late spouses Restua shall be acquired by the City for resale to its qualified and bona fide
tenants/occupants. Section 4 of the Ordinance provides that the bona fide tenants/occupants shall be
determined under the existing rules and procedures of the Urban Settlements Office of the City of Manila.
It was therefore presumptuous of petitioner to assume that he was qualified as a bona fide
tenant/occupant considering that his possession of the leased premises was the subject of litigation at
that time. Indeed, he cannot take refuge in the Ordinance so as to forestall his eviction from the
property.1avvphi1

Petitioner also asserts that he cannot be evicted from the premises pursuant to the so-called "no eviction
rule" under Section 6 of P.D. No. 151725 which reads:

Sec. 6. Land Tenancy in Urban Land Reform Areas. — Within the Urban Zones legitimate tenants who
have resided on the land for ten years or more who have built their homes on the land and residents who
have legally occupied the lands by contract, continuously for the last ten years shall not be dispossessed
of the land and shall be allowed the right of first refusal to purchase the same within a reasonable time
and at reasonable prices, under terms and conditions to be determined by the Urban Zone Expropriation
and Land Management Committee created by Section 8 of this Decree.

To be entitled to the benefits of P.D. No. 1517, a party must provide prima facie evidence of the following
facts: a) that the property being leased falls within an Area for Priority Development and Urban Land
Reform Zone; b) that the party is a tenant on said property as defined under Section 3(f) of P.D. No.
1517; c) that the party built a house on said property; and d) that the party has been residing on the
property continuously for the last ten (10) years or more, reckoned from 1968.26

While there is no dispute that petitioner was able to establish the third and fourth requisites, i.e., that he
built a house on said property and that he has been residing on the property continuously for more than
ten (10) years, no convincing evidence was offered to prove the first and second requisites, i.e., that the
property being leased falls within an Area for Priority Development and Urban Land Reform Zone and that
he is a tenant on said property as defined under Section 3(f) of said decree.

The case of Heirs of Antonio Bobadilla v. Castillo27 declared as follows:

As the decree (P.D. No. 1517) is not self-executing, Proclamation No. 1967 (issued on May 14, 1980) was
issued identifying 244 specific sites in Metropolitan Manila as Areas for Priority Development (APD) and
Urban Land Reform Zones (ULRZ). It amended Proclamation No. 1893 (issued on September 11, 1979) by
expressly limiting the operation and narrowing the coverage of PD No. 1517 from the entire Metropolitan
Manila to the specific areas declared as APD/ULRZ.28

Petitioner failed to show that Zamora Street, the place where the subject property is situated, was
identified as APD/ULRZ by Proclamation No. 1967. Except for his allegation ― which respondent refutes ―
that the property is within the area for priority development zone, 29 petitioner presented no concrete proof
to substantiate said claim. The law requires in civil cases that the party who alleges a fact has the burden
of proving it.30 There being no showing that the property being leased by petitioner is located within any
of the APD/ULRZ, the right not to be dispossessed and the right of first refusal could not have accrued in
petitioner’s favor.

Likewise, petitioner could not be considered a tenant as defined under Section 3(f) of P.D. No. 1517, thus:

(f) Tenant refers to the rightful occupant of land and its structures, but does not include those whose
presence on the land is merely tolerated and without the benefit of contract, those who enter the land by
force or deceit, or those whose possession is under litigation.

Petitioner had a month-to-month lease contract with respondent, which expired when he failed to pay the
rentals. When petitioner opted to stay after the expiration of the lease contract, he had become an
unlawful occupant of the place. Thus, he could not avail of the benefits of P.D. No. 1517, "because its
intended beneficiaries are legitimate tenants, not usurpers or occupants by tolerance."31 Besides,
petitioner’s possession over the property is obviously under litigation, thus, his insistence that he was a
"tenant" within the contemplation of P.D. No. 1517 was nothing more than a ludicrous attempt to bring
himself into the scope of the decree.
Another factor which militates against petitioner’s claim is the fact that there is no intention on the part of
respondent to sell the property. P. D. No. 1517 applies where the owner of the property intends to sell it
to a third party.32 As alleged in her complaint, respondent merely intended to use the leased premises for
herself and her siblings. Petitioner, therefore, cannot invoke P.D. No. 1517 to abatement of the complaint
for ejectment.

All told, petitioner failed to show why the actions of the three courts which have passed upon the same
issues should be reversed.

WHEREFORE, the petition for review is hereby DENIED. The assailed decision of the CA in CA-G.R. SP No.
46910 is hereby AFFIRMED.

G.R. No. 160379               August 14, 2009

REPUBLIC OF THE PHILIPPINES THROUGH THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS,
Petitioner,
vs.
COURT OF APPEALS and ROSARIO RODRIGUEZ REYES, Respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the Court of Appeals’ Decision2 dated 15 November 2002 and Resolution
dated 17 September 2003 in CA-G.R. CV No. 50358. The Court of Appeals affirmed with modifications the
Amended Decision of the Regional Trial Court of Cagayan de Oro City, Branch 19 (RTC).

The Antecedent Facts

Private respondent Rosario Rodriguez Reyes is the absolute owner of a parcel of land identified as Lot
849-B and covered by TCT No. T-7194. The 1,043-square meter lot is situated on Claro M. Recto and
Osmeña Streets, Cagayan de Oro City.

On 6 November 1990, private respondent received a letter from petitioner Republic of the Philippines,
through the Department of Public Works and Highways (DPWH), requesting permission to enter into a
portion of private respondent’s lot consisting of 663 square meters, and to begin construction of the
Osmeña Street extension road. On 20 December 1990, petitioner took possession of private respondent’s
property without initiating expropriation proceedings. Consequently, on 4 and 7 January 1991, private
respondent sent letters to the DPWH stating her objection to the taking of her property. On 16 May 1991,
private respondent sent a letter to the City Appraisal Committee (CAC) rejecting the latter’s appraisal of
the subject property, to wit:3

Declared Tax Market Value Recommended Description

Owner Declaration 1981 Schedule Appraised Value
No.

Rosario 90066 P400/sq.m. P4,000/sq.m. 1 to 20 meters from

Reyes Claro M. Recto Super
Highway

      P3,200/sq.m. 21 to 40 meters from

Claro M. Recto Super
Highway

      P2,400/sq.m. 41 to 60 meters from

Claro M. Recto Super
 Highway

In the same letter, private respondent requested the City Assessor for a reappraisal of her property, but
said request was denied.4

On 17 March 1992 , private respondent filed with the Regional Trial Court (RTC) of Cagayan de Oro City a
complaint claiming just compensation and damages against petitioner.

On 30 June 1993, the RTC appointed three commissioners5 to determine the subject property’s fair
market value, as well as the consequential benefits and damages of its expropriation. On 15 September
1993, one of the three commissioners, Provincial Assessor Corazon Beltran, submitted to the RTC a
separate report, the dispositive portion of which reads:

WHEREFORE, the undersigned deems it only to be just, fair and reasonable to adopt the market value of
FOUR THOUSAND PESOS (P4,000.00) per square meter as the highest price obtaining and prevailing in
1990, the time of the taking of the property subject of the above entitled case, and fairly reasonable also
to impose an additional value equivalent to 5% of the market value as fixed for severance fee. 6

On 13 April 1994, the scheduled hearing was reset to 19 May 1994, to give private respondent (plaintiff)
time to consider the offer of petitioner (defendant) to amicably settle the case and to accept the just
compensation of P3,200 per square meter, or a total of P2,212,600, for the 663-square meter portion of
private respondent’s lot.7

On 16 May 1994, private respondent filed with the RTC an "Urgent Motion to Deposit The Amount of
P2,121,600 in Court," alleging that petitioner’s counsel previously manifested in open court that the
amount of P2,121,600 was ready for release should the amount be acceptable to private respondent, and
praying that said amount of P2,121,600 be deposited by petitioner with the trial court. 8 The RTC granted
the motion in an Order dated 16 June 1994.9 However, it was only on 21 October 1994 that petitioner
deposited with the RTC Clerk of Court a Landbank check amounting to P2,121,600 as just compensation.10

On 16 June 1994, the RTC ordered the commissioners to submit their report as soon as possible, but until
the scheduled hearing on 15 July 1994, the commissioners still failed to submit their report. Upon motion
of private respondent, the RTC issued an order appointing a new set of commissioners. 11

On 11 October 1994, the new commissioners submitted their report, the pertinent portions of which
provide, thus:

COMMISSIONERS’ REPORT

xxx

The property litigated upon is strategically located along Recto Avenue (National Highway) which is a
commercial district. Fronting it across the national highway is the Cagayan Coca Cola Plant and the Shell
Gasoline Station. It adjoins an establishment known as the Palana Grocery Store and after it is the
Northern Mindanao Development Bank. Three Hundred (300) meters to the west of plaintiff’s property is
the gigantic structure of the Gaisano City department store along Recto Avenue and Corrales Avenue
Extension. Towards the eastern direction of the property are banking institution buildings and the
Ororama Superstore along the national highway (Recto Avenue) and the Limketkai Commercial Complex.

For purpose of affording a fair assessment of the market value of plaintiff’s property, the herein
Commissioners have divided the whole parcel of land into three parts, viz:

1. Front portion along Recto Avenue measuring 21.52 meters from south to north 347.66
------------- SQM

2. Middle portion with a measurement of 21.52 meters 347.66

---------------------------------------------- SQM
 3. Rear/back portion with a measurement of 21.52 meters 347.66
------------------------------------- SQM

TOTAL AREA: ------- 1,043 SQM

Taking into consideration, among others, the location of the property and a research of the prevailing
prices of lots proximate to and/or near the vicinity of plaintiff's property, the undersigned Commissioners
respectfully recommend to the Honorable Court the following valuation, to wit:

(CURRENT VALUE)

1. Front portion along Recto Avenue with a measurement of 21.52 meters from south to north with
an area of 347.66 square meters at P18,000.00 to P20,000.00 per square meter;

2. Middle portion with a measurement of 21.52 meters containing an area of 347.66 square meters
at P16,000.00 to P18,000.00 per square meter;

3. Rear/back portion measuring 21.52 meters with an area of 347.66 square meters at P14,000.00
to P16,000.00 per square meter;

VALUATION AS OF 1990

1. Front Portion - P10,000.00 to P12,000.00 per square meter;

2. Middle Portion- P8,000.00 to P10,000.00 per square meter;

3. Rear Portion - P6,000.00 to P8,000.00 per square meter;

The undersigned Commissioners would however like to bring to the attention of the Honorable Court that
in the subdivision plan prepared by the City Engineer’s Office, the whole of plaintiff’s property was
subdivided into three (3) lots designated as follows:

Lot 849-B-1 (Road Lot)-83 square meters;

Lot 849-B-2 (Road Lot traversed by the RCDP Osmeña Extension Street)-663 SQM;

Lot 849-B-3 remaining portion with an area of 297 square meters;

In effect, what has been taken over and used by the defendant is not only 663 square meters but 746
square meters, more or less, which includes Lot No. 849-B-1.

On the other hand, the remaining portion left to the plaintiff, Lot No. 849-B-3 will not actually be 297
square meters. If we deduct the setback area from Osmeña Extension Street, the usable/buildable area
left to the plaintiff would only be a little over 50 square meters. This portion would not command a good
price if sold. Neither is it ideal for purposes of any building construction because aside from its being a
very small strip of land, the shape is triangular.12

The Trial Court’s Ruling

On 2 June 1995, the RTC rendered a Decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants, declaring
the former as having the right to retain 590 square meters of the property covered by TCT No. T-7194,
and ordering the latter to return 210 square meters of the 663 square meters taken; that defendants are
solidarily liable to pay the sum of P5,526,000.00, the fair market value of 1990 (sic), as just
compensation for the 536 square meters taken for the Osmeña street extension; to pay P185,000.00
representing damages for 37 months computed at the rate of P5,000.00 per month from the filing of this
case; and Attorney’s fees of P10,000.00 plus costs of suit.
Plaintiff herein is ordered to forthwith defray the expenses to be incurred in undertaking the road
construction of the 210 square meters which the defendants will later on provide along the right portion of
her property.

SO ORDERED.13

On 15 June 1995, the RTC rendered an Amended Decision with the following dispositive portion, thus:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants, declaring
the former as having the right to retain 590 square meters of the property covered by TCT No. T-7194,
and ordering the latter to return 293 square meters of the 746 square meters taken; that defendants are
solidarily liable to pay the sum of P4,696,000.00, the fair market value of 1990 (sic), as just
compensation for the 453 square meters taken for the Osmeña Street extension; to pay P185,000.00
representing damages for 37 months computed at the rate of P5,000.00 per month from the filing of this
case; and Attorney’s fees of P10,000.00 plus costs of suit.

Plaintiff herein is ordered to forthwith defray the expenses to be incurred in undertaking the road
construction of the 293 square meters which the defendants will later on provide along the right portion of
her property.

SO ORDERED.14

The Court of Appeals’ Ruling

On appeal by petitioner, the Court of Appeals rendered judgment,15 affirming with modifications the
decision of the RTC. The Court of Appeals found that the commissioners’ recommendations on just
compensation were not supported by valid documents. Also, it was unclear in the RTC decision whether
the trial court merely adopted the commissioners’ recommendations or the court made its own
independent valuation of the subject property. Thus, the Court of Appeals held that a reconvening of the
commissioners or an appointment of new commissioners to determine just compensation was necessary.
The appellate court further held that the trial court’s order for petitioner’s return of the 293-square meter
lot had no legal basis and was no longer feasible since the lot was already part of the completed Sergio
Osmeña extension road. Moreover, consequential damages should be awarded in lieu of actual damages
for private respondent’s alleged loss of income from the remaining 297-square meter lot. We quote the
dispositive portion of the Court of Appeals’ decision below.

WHEREFORE , the appealed judgment is hereby MODIFIED.

1. The case is REMANDED to the trial court which is ordered to reconvene the commissioners or
appoint new commissioners to determine, in accordance with this Decision, the amount of just
compensation due to plaintiff-appellee Rosario Rodriguez Reyes for the 746 square meters of land
taken from her and consequential damages to the 297-square meter portion left.

2. Defendant-appellant DWPH16 is ordered to pay plaintiff-appellee the following amounts:

a. the balance, if any, of just compensation to be finally determined after deducting the
amount of P2,161,600.0017 DPWH previously advanced and deposited with the trial court;

b. 6% legal interest per annum on the amount it provisionally deposited from the time of
taking up to the time it is deposited with the trial court on October 21, 1994; and on the
balance, if any, from the time of taking on December 20, 1990 until fully paid;

c. attorney’s fees of P20,000.00.

3. Defendant-appellant City Government of Cagayan de Oro is relieved from any liability;

4. The award of P185,000.00 as actual damages is deleted;

5. No pronouncement as to costs.

SO ORDERED.18
Petitioner filed a Motion for Reconsideration, but this was denied by the Court of Appeals in its Resolution
of 17 September 2003.19

Hence, this appeal.

The Issues

Petitioner raises the following issues:

1. Whether the Court of Appeals erred in ordering the remand of the case to the trial court, to
order the reconvening of the commissioners or appointment of new commissioners to determine
the consequential damages for the remaining 297- square meter lot; and

2. Whether the Court of Appeals erred in ordering petitioner to pay attorney’s fees.

The Court’s Ruling

We find the appeal unmeritorious.

On whether the Court of Appeals erred in ordering the

remand of the case to the trial court to order the reconvening
of the commissioners or appointment of new commissioners
to determine the consequential damages for the remaining
297-square meter lot

Eminent domain is the authority and right of the State, as sovereign, to take private property for public
use upon observance of due process of law and payment ofjust compensation.20 The Constitution provides
that, "[p]rivate property shall not be taken for public use without just compensation." 21

Just compensation is the full and fair equivalent of the property sought to be expropriated. 22 Among the
factors to be considered in arriving at the fair market value of the property are the cost of acquisition, the
current value of like properties, its actual or potential uses, and in the particular case of lands, their size,
shape, location, and the tax declarations thereon.23 The measure is not the taker’s gain but the owner’s
loss.24 To be just, the compensation must be fair not only to the owner but also to the taker.25

J ust compensation is based on the price or value of the property at the time it was taken from the owner
and appropriated by the government.26 However, if the government takes possession before the
institution of expropriation proceedings, the value should be fixed as of the time of the taking of said
possession, not of the filing of the complaint. The value at the time of the filing of the complaint should be
the basis for the determination of the value when the taking of the property involved coincides with or is
subsequent to the commencement of the proceedings.27

The procedure for determining just compensation is set forth in Rule 67 of the 1997 Rules of Civil
Procedure. Section 5 of Rule 67 partly states that "[u]pon the rendition of the order of expropriation, the
court shall appoint not more than three (3) competent and disinterested persons as commissioners to
ascertain and report to the court the just compensation for the property sought to be taken." However,
we held in Republic v. Court of Appeals28 that Rule 67 presupposes a prior filing of complaint for eminent
domain with the appropriate court by the expropriator. If no such complaint is filed, the expropriator is
considered to have violated procedural requirements, and hence, waived the usual procedure prescribed
in Rule 67, including the appointment of commissioners to ascertain just compensation. 29 In National
Power Corporation v. Court of Appeals,30 we clarified that when there is no action for expropriation and
the case involves only a complaint for damages or just compensation, the provisions of the Rules of Court
on ascertainment of just compensation (i.e., provisions of Rule 67) are no longer applicable, and a trial
before commissioners is dispensable, thus:

In this case, NPC appropriated Pobre’s Property without resort to expropriation proceedings. NPC
dismissed its own complaint for the second expropriation. At no point did NPC institute expropriation
proceedings for the lots outside the 5,554 square-meter portion subject of the second expropriation. The
only issues that the trial court had to settle were the amount of just compensation and damages that NPC
had to pay Pobre.
This case ceased to be an action for expropriation when NPC dismissed its complaint for expropriation.
Since this case has been reduced to a simple case of recovery of damages, the provisions of the Rules of
Court on the ascertainment of the just compensation to be paid were no longer applicable. A trial before
commissioners, for instance, was dispensable.31

In this case, petitioner took possession of the subject property without initiating expropriation
proceedings. Consequently, private respondent filed the instant case for just compensation and damages.
To determine just compensation, the trial court appointed three commissioners pursuant to Section 5 of
Rule 67 of the 1997 Rules of Civil Procedure. None of the parties objected to such appointment.

The trial court’s appointment of commissioners in this particular case is not improper. The appointment
was done mainly to aid the trial court in determining just compensation, and it was not opposed by the
parties. Besides, the trial court is not bound by the commissioners’ recommended valuation of the subject
property. The court has the discretion on whether to adopt the commissioners’ valuation or to substitute
its own estimate of the value as gathered from the records.32

However, we agree with the appellate court that the trial court’s decision is not clear as to its basis for
ascertaining just compensation. The trial court mentioned in its decision the valuations in the reports of
the City Appraisal Committee and of the commissioners appointed pursuant to Rule 67. But whether the
trial court considered these valuations in arriving at the just compensation, or the court made its own
independent valuation based on the records, was obscure in the decision. The trial court simply gave the
total amount of just compensation due to the property owner without laying down its basis. Thus, there is
no way to determine whether the adjudged just compensation is based on competent evidence. For this
reason alone, a remand of the case to the trial court for proper determination of just compensation is in
order. In National Power Corporation v. Bongbong, 33 we held that although the determination of just
compensation lies within the trial court’s discretion, it should not be done arbitrarily or capriciously. The
decision of the trial court must be based on all established rules, correct legal principles, and competent
evidence.34 The court is proscribed from basing its judgment on speculations and surmises. 35

Petitioner questions the appellate court’s decision to remand the case to determine the consequential
damages for the remaining 297-square meter lot of private respondent. Petitioner contends that no
consequential damages may be awarded as the remaining lot was "not actually taken" by the DPWH, and
to award consequential damages for the lot which was retained by the owner is tantamount to unjust
enrichment on the part of the latter.

Petitioner’s contention is unmeritorious.

No actual taking of the remaining portion of the real property is necessary to grant consequential
damages. If as a result of the expropriation made by petitioner, the remaining lot (i.e., the 297-square
meter lot) of private respondent suffers from an impairment or decrease in value, consequential damages
may be awarded to private respondent. On the other hand, if the expropriation results to benefits to the
remaining lot of private respondent, these consequential benefits 36 may be deducted from the awarded
consequential damages, if any, or from the market value of the expropriated property. We held in B.H.
Berkenkotter & Co. v. Court of Appeals37 that:

To determine just compensation, the trial court should first ascertain the market value of the property, to
which should be added the consequential damages after deducting therefrom the consequential benefits
which may arise from the expropriation. If the consequential benefits exceed the consequential damages,
these items should be disregarded altogether as the basic value of the property should be paid in every
case.

Section 6 of Rule 67 of the Rules of Civil Procedure provides:

x x x The commissioners shall assess the consequential damages to the property not taken and deduct
from such consequential damages the consequential benefits to be derived by the owner from the public
use or purpose of the property taken, the operation of its franchise by the corporation or the carrying on
of the business of the corporation or person taking the property. But in no case shall the consequential
benefits assessed exceed the consequential damages assessed, or the owner be deprived of the actual
value of his property so taken.

An award of consequential damages for property not taken is not tantamount to unjust enrichment of the
property owner.1awphi1 There is unjust enrichment "when a person unjustly retains a benefit to the loss
of another, or when a person retains money or property of another against the fundamental principles of
justice, equity and good conscience."38 Article 22 of the Civil Code provides that "[e]very person who
through an act of performance by another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall return the same to him." The
principle of unjust enrichment under Article 22 requires two conditions: (1) that a person is benefited
without a valid basis or justification, and (2) that such benefit is derived at another’s expense or
damage.39 There is no unjust enrichment when the person who will benefit has a valid claim to such
benefit.40

As stated, consequential damages are awarded if as a result of the expropriation, the remaining property
of the owner suffers from an impairment or decrease in value. Thus, there is a valid basis for the grant of
consequential damages to the property owner, and no unjust enrichment can result therefrom.

On whether the Court of Appeals erred

in ordering petitioner to pay attorney’s fees.

The Court of Appeals did not err in granting attorney’s fees to private respondent. Article 2208(2) of the
New Civil Code provides that attorney’s fees may be awarded:

xxx

(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interest.

xxx

Attorney’s fees may be awarded by a court if one who claims it is compelled to litigate with third persons
or to incur expenses to protect one’s interest by reason of an unjustified act or omission on the part of the
party from whom it is sought.41 In this case, petitioner took possession of private respondent’s real
property without initiating expropriation proceedings, and over the latter’s objection. As a result, private
respondent was compelled to litigate and incur expenses to protect her interests over her property. Thus,
the appellate court’s award of attorney’s fees is proper, viz:

We find, however, the award of attorney’s fees in plaintiff-appellee’s favor justified. x x x It is admitted
that defendant-appellant DPWH neglected to file the appropriate expropriation proceedings before taking
over plaintiff-appellee’s land. That their road contractor no longer has any portion to work on except on
plaintiff-appellee’s property is no justification for the precipitate taking of her lot. It is incumbent upon
defendant-appellant DPWH to foresee whether private lands will be affected by their project and to file
appropriate expropriation proceedings if necessary. They did not do so. Thus, plaintiff-appellee was
constrained to institute the instant suit to protect her rights.42

WHEREFORE, we DENY the petition. We AFFIRM the Court of Appeals’ Decision dated 15 November 2002
and Resolution dated 17 September 2003 in CA-G.R. CV No. 50358.

G.R. No. 172547               June 30, 2009

PRECY BUNYI and MILA BUNYI, Petitioners,

vs.
FE S. FACTOR, Respondent.

DECISION

QUISUMBING, J.:

For review on certiorari are the Decision1 dated January 16, 2006 and Resolution2 dated April 26, 2006 of
the Court of Appeals in CA-G.R. SP No. 90397, which had affirmed the Decision 3 dated March 7, 2005 of
the Regional Trial Court (RTC) of Las Piñas City, Branch 198 in Civil Case No. LP-04-0160.

The antecedent facts are as follows:

Respondent Fe S. Factor is one of the co-owners of an 18-hectare piece of land located in Almanza, Las
Piñas City. The ownership of the land originated from respondent’s paternal grandparents Constantino
Factor and Maura Mayuga-Factor who had been in actual, continuous, peaceful, public, adverse and
exclusive possession and occupation of the land even before 1906.4

On December 9, 1975, the children of Constantino Factor and Maura Mayuga-Factor filed a Petition for
Original Registration and Confirmation of Imperfect Title to the said parcel of land, or Lots 1, 2, 3 and 4 of
Psu-253567, before the RTC of Pasig City, Branch 71.5 On December 8, 1994, the trial court granted the
petition in LRC Case No. N-9049 and declared the children of Constantino Factor and Maura Mayuga-
Factor as co-owners of the property. 6 The children of Constantino Factor and Maura Mayuga-Factor
thereafter sold seven (7) hectares of the Factor family property during the same year. The siblings,
except Enrique Factor, respondent’s father, shared and divided the proceeds of the sale among
themselves, with the agreement that Enrique would have as his share the portion of the property located
in Antioch Street, Pilar Executive Village, Almanza I, Las Piñas City, known as the Factor compound.

Following his acquisition thereof, Enrique caused the construction of several houses in the compound
including the subject property, a rest house, where members of the Factor family stayed during get-
togethers and visits.7 Petitioners Precy Bunyi and her mother, Mila Bunyi, were tenants in one of the
houses inside the compound, particularly in No. 8 Antioch St., Pilar Village, Almanza, Las Piñas City since
1999.8

When Enrique Factor died on August 7, 1993, the administration of the Factor compound including the
subject rest house and other residential houses for lease was transferred and entrusted to Enrique’s eldest
child, Gloria Factor-Labao.

Gloria Factor-Labao, together with her husband Ruben Labao and their son Reggie F. Labao, lived in
Tipaz, Taguig, Metro Manila but visited and sometimes stayed in the rest house because Gloria collected
the rentals of the residential houses and oversaw the Factor compound. When Gloria died on January 15,
2001, the administration and management of the Factor compound including the subject rest house,
passed on to respondent Fe S. Factor as co-owner of the property. As an act of goodwill and compassion,
considering that Ruben Labao was sickly and had no means of income, respondent allowed him to stay at
the rest house for brief, transient and intermittent visits as a guest of the Factor family.

On May 31, 2002, Ruben Labao married petitioner Precy Bunyi. On November 10, 2002, Ruben Labao
died.

At about this time, respondent discovered that petitioners forcibly opened the doors of the rest house and
stole all the personal properties owned by the Factor family and then audaciously occupied the premises.
Respondent alleged that petitioners unlawfully deprived her and the Factor family of the subject property’s
lawful use and possession. Respondent also added that when she tried to enter the rest house on
December 1, 2002, an unidentified person who claimed to have been authorized by petitioners to occupy
the premises, barred, threatened and chased her with a jungle bolo. Thus, on September 12, 2003,
respondent Fe S. Factor filed a complaint9 for forcible entry against herein petitioners Precy Bunyi and Mila
Bunyi.

Petitioners, for their part, questioned Fe’s claim of ownership of the subject property and the alleged prior
ownership of her father Enrique Factor. They asserted that the subject property was owned by Ruben
Labao, and that petitioner Precy with her husband moved into the subject property, while petitioner Mila
Bunyi, mother of Precy, remained in No. 8 Antioch St.

On July 13, 2004, the Metropolitan Trial Court (MeTC) of Las Piñas City, Branch 79 ruled in favor of Fe S.
Factor. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants ordering
the latter and all persons claiming rights under them to:

1. To immediately vacate the subject premises and surrender possession thereof to the plaintiff.

2. To pay the monthly rental of P2,000.00 from December 1, 2002 up to the time they finally
vacate the premises.

3. To pay attorney’s fee of Php 10,000.00.

The counter-claim is dismissed for lack of merit.

SO ORDERED.10

Petitioners appealed the decision to the RTC of Las Piñas City, Branch 198, which, however, affirmed in
toto the decision of the MeTC and later denied their motion for reconsideration. 11 Undaunted, petitioners
filed a petition for review before the Court of Appeals but it was denied also. Hence, the instant petition
before us.

Petitioners submit the following issues for the Court’s consideration:

I.

[WHETHER] THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN LAW AND JURISPRUDENCE
WHEN IT AFFIRMED THE DECISION OF THE REGIONAL TRIAL COURT THAT FORCE, THREAT,
INTIMIDATION AND STEALTH HAD BEEN COMMITTED BY THE PETITIONERS IN OCCUPYING THE SUBJECT
RESIDENTIAL HOUSE;

II.

[WHETHER] THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT MISAPPRECIATED THE
FACT THAT THE RESPONDENT HAS A BETTER RIGHT OF PHYSICAL AND MATERIAL POSSESSION OF THE
SUBJECT PROPERTY;

III.

[WHETHER] THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE FINDING OF
THE REGIONAL [TRIAL] COURT HOLDING PETITIONERS LIABLE TO PAY THE MONTHLY RENTAL OF
P2,000.00 FROM DECEMBER 1, 2002 UP TO THE TIME THEY FINALLY VACATE PREMISES. 12

The resolution of the first issue raised by petitioners requires us to inquire into the sufficiency of the
evidence presented below, a course of action which this Court will not do, consistent with our repeated
holding that the Supreme Court is not a trier of facts.13 The resolution of factual issues is the function of
lower courts, whose findings on these matters are received with respect and considered binding by the
Supreme Court subject only to certain exceptions, none of which is present in the instant petition. 14
Noteworthy, in this case, the cited findings of the RTC have been affirmed by the Court of Appeals.

As to the second issue, the resolution thereof boils down to a determination of who, between petitioners
and respondent, would be entitled to the physical possession of the subject property.

Both parties anchor their right of material possession of the disputed property on their respective claims
of ownership. Petitioners insist that petitioner Precy has a better right of possession over the subject
property since she inherited the subject property as the surviving spouse and sole heir of Ruben Labao,
who owned the property before his death.

Respondent, on the other hand, hinges her claim of possession on the fact that her predecessor-in-
interest had prior possession of the property as early as 1975.

After careful consideration, we find in favor of the respondent.

In ejectment cases, the only issue for resolution is who is entitled to the physical or material possession of
the property involved, independent of any claim of ownership set forth by any of the party-litigants. The
one who can prove prior possession de facto may recover such possession even from the owner himself. 15
Possession de facto is the physical possession of real property. Possession de facto and not possession de
jure is the only issue in a forcible entry case.16 This rule holds true regardless of the character of a party’s
possession, provided, that he has in his favor priority of time which entitles him to stay on the property
until he is lawfully ejected by a person having a better right by either accion publiciana or accion
reivindicatoria.17

Petitioners argue that respondent was never in possession of the subject property since the latter never
occupied the same. They claim that they have been in actual possession of the disputed property from the
time petitioner Precy married Ruben Labao in 2002.

In this instance, however, petitioners’ contention is unconvincing.

For one to be considered in possession, one need not have actual or physical occupation of every square
inch of the property at all times.18 Possession can be acquired not only by material occupation, but also by
the fact that a thing is subject to the action of one’s will or by the proper acts and legal formalities
established for acquiring such right.19 Possession can be acquired by juridical acts. These are acts to which
the law gives the force of acts of possession. Examples of these are donations, succession, execution and
registration of public instruments, and the inscription of possessory information titles. 20

While petitioners claim that respondent never physically occupied the subject property, they failed to
prove that they had prior possession of the subject property. On record, petitioner Precy Bunyi admitted
that Gloria Factor-Labao and Ruben Labao, as spouses, resided in Tipaz, Taguig, Metro Manila and used
the subject property whenever they visit the same.21 Likewise, as pointed out by the MeTC and the RTC,
Ruben and petitioner Precy’s marriage certificate revealed that at the time of their marriage, Ruben was
residing at 123 A. Lake St., San Juan, Metro Manila. Even Ruben’s death certificate showed that his place
of death and residence was at #4 Labao St., Tipaz, Taguig, Metro Manila. Considering that her husband
was never a resident of the subject property, petitioner Precy failed to explain convincingly how she was
able to move in with Ruben Labao in the subject property during their marriage.

On the other hand, it was established that respondent’s grandparents, Constantino Factor and Maura
Mayuga-Factor, had been the occupants and in possession of various agricultural parcel of lands situated
in Almanza, Las Piñas City, in the concept of owners, for more than thirty years prior to 1975. In fact, the
RTC in its Decision dated December 8, 1994 in LRC Case No. N-9049 has confirmed the rights of
respondent’s predecessors over the subject property and ordered the issuance of the corresponding
certificate of title in their favor.22

The right of respondent’s predecessors over the subject property is more than sufficient to uphold
respondent’s right to possession over the same. Respondent’s right to the property was vested in her
along with her siblings from the moment of their father’s death.23 As heir, respondent had the right to the
possession of the property, which is one of the attributes of ownership. Such rights are enforced and
protected from encroachments made or attempted before the judicial declaration since respondent
acquired hereditary rights even before judicial declaration in testate or intestate proceedings. 24

After the death of Enrique Factor, it was his eldest child, Gloria Factor-Labao who took over the
administration of the subject property. And as a consequence of co-ownership, 25 soon after the death of
Gloria, respondent, as one of the surviving co-owners, may be subrogated to the rights of the deceased
co-owner, which includes the right to the administration and management of the subject property.

As found by the Court of Appeals, petitioners’ unsupported claim of possession must yield to that of the
respondent who traces her possession of the subject property to her predecessors-in-interest who have
always been in possession of the subject property. Even assuming that respondent was never a resident
of the subject property, she could legally continue possessing the property. Visiting the property on
weekends and holidays is evidence of actual or physical possession.26 The fact of her residence
somewhere else, by itself, does not result in loss of possession of the subject property. The law does not
require one in possession of a house to reside in the house to maintain his possession. 27 For, again,
possession in the eyes of the law does not mean that a man has to have his feet on every square meter of
the ground before he is deemed in possession.28 There is no cogent reason to deviate from this doctrine.

All things considered, this Court finds that respondent Fe S. Factor successfully proved the extent and
character of her possession over the disputed property. As a consequence of her ownership thereof,
respondent is entitled to its possession, considering petitioners’ failure to prove prior possession. The
Court stresses, however, that its determination of ownership in the instant case is not final. It is only a
provisional determination for the sole purpose of resolving the issue of possession. It would not bar or
prejudice a separate action between the same parties involving the quieting of title to the subject
property.29

As regards the means upon which the deprivation took effect, it is not necessary that the respondent
must demonstrate that the taking was done with force, intimidation threat, strategy or stealth. The
Supreme Court, in Bañes v. Lutheran Church in the Philippines,30 explained:

In order to constitute force that would justify a forcible entry case, the trespasser does not have to
institute a state of war. The act of going to the property and excluding the lawful possessor therefrom
necessarily implies the exertion of force over the property which is all that is necessary and sufficient to
show that the action is based on the provisions of Section 1, Rule 70 of the Rules of Court. 31
As expressly stated in David v. Cordova:32

The words ‘by force, intimidation, threat, strategy or stealth’ include every situation or condition under
which one person can wrongfully enter upon real property and exclude another, who has had prior
possession therefrom. If a trespasser enters upon land in open daylight, under the very eyes of the
person already clothed with lawful possession, but without the consent of the latter, and there plants
himself and excludes such prior possessor from the property, the action of forcible entry and detainer can
unquestionably be maintained, even though no force is used by the trespasser other than such as is
necessarily implied from the mere acts of planting himself on the ground and excluding the other party. 33

Respondent, as co-owner, has the control of the subject property even if she does not stay in it. So when
petitioners entered said property without the consent and permission of the respondent and the other co-
owners, the latter were deprived of its possession. Moreover, the presence of an unidentified man
forbidding respondent from entering the subject property constitutes force contemplated by Section 1, 34
Rule 70 of the Rules of Court.1avvphi1

As to the last issue, we have previously ruled that while the courts may fix the reasonable amount of rent
for the use and occupation of a disputed property, they could not simply rely on their own appreciation of
land values without considering any evidence. The reasonable amount of any rent could not be
determined by mere judicial notice but by supporting evidence.35 In the instant case, we find no evidence
on record to support the MeTC’s award of rent.

On the matter of attorney’s fees awarded to the respondent, we are in agreement to delete it. It is a well-
settled rule that where attorney’s fees are granted, the court must explicitly state in the body of the
decision, and not only in the dispositive portion thereof, the legal reason for the award.36 Again, nothing in
the body of both decisions of RTC and MeTC explicitly stated the reasons for the award of attorney’s fees.

WHEREFORE, the instant petition is DENIED. The challenged Decision dated January 16, 2006 and
Resolution dated April 26, 2006 of the Court of Appeals in CA-G.R. SP No. 90397 are AFFIRMED with
MODIFICATION that the award of rentals and attorney’s fees are DELETED.

G.R. No. 178908               February 4, 2010

SPOUSES EULOGIO N. ANTAZO and NELIA C. ANTAZO, Petitioners,

vs.
LEONIDES DOBLADA, DIOSDADO CELESTRA, LEOPOLDO CELESTRA, FERDINAND CELESTRA, and
ROBERTO DOBLADA, Respondents.

DECISION

NACHURA, J.:

This is a petition for review on certiorari of the Court of Appeals (CA) Decision 1 dated February 28, 2007
and Resolution2 dated July 18, 2007, which affirmed the order directing petitioners to vacate the subject
property.

The case arose from the following antecedents:

Respondents, Leonides Doblada, Diosdado Celestra, Leopoldo Celestra, Ferdinand Celestra, and Roberto
Doblada, filed a complaint for forcible entry against petitioners, spouses Eulogio N. Antazo and Nelia C.
Antazo. The complaint alleged that respondents have been in open and peaceful possession of a parcel of
land, identified as Assessor’s Lot Nos. 112 and 113, located in Barangay Pila-Pila, Binangonan, Rizal, with
an area of, approximately, 551.87 square meters.3

Respondents narrated that, in May 2003, they received a letter from petitioners, through the Panganiban
Law Office, informing them that the latter had bought the property. It was made to appear in the said
letter that respondents forcibly took possession of the property from petitioners. Respondents replied that
they could not have wrested possession of the property from petitioners, as they were in possession
thereof and that, in fact, on June 11, 2003, petitioners evicted them therefrom, destroyed respondents’
bamboo fence, and constructed a concrete perimeter fence thereon.4
In their Answer, petitioners admitted that they sent a letter to respondents through the Panganiban Law
Office, but they denied that respondents had been in possession of the property since time immemorial.
They averred that respondents failed to show their right to recover possession of the property. On the
contrary, petitioners claimed that they are the ones entitled to possess the property considering that they
purchased it from a certain Carmencita S. Anciano, registered it for taxation purposes in their names, and
paid the real property tax thereon.

The records reveal that the subject property is part of the parcel of land owned by Eduardo Paralejas,
respondents’ great grandfather, who died in 1939. Paralejas had three daughters: Matea, Eufemia and
Leoncia. On April 12, 1983, Eufemia and Atanacio Buesa, Matea’s son, purportedly executed an
Extrajudicial Settlement and Sale,5 adjudicating to themselves the entire parcel of land and, at the same
time, selling it to Guadalupe Morales Sevillano. The document bears the thumbprints of Eufemia and
Atanacio, which, respondents claim, are not genuine. After Sevillano died on November 24, 1995, her sole
heir, Carmencita S. Anciano, petitioners’ predecessor-in-interest, executed a document, denominated as
Sinumpaang Salaysay ng Paglilipat sa Sarili ng Mga Lupang Naiwan ng Namatay, 6 adjudicating to herself
the properties that Sevillano left, which included the subject property. On April 21, 2003, Anciano sold the
subject property to petitioners.7

On July 2, 2004, the Municipal Trial Court (MTC) dismissed the complaint because respondents failed to
prove by preponderance of evidence that they had prior possession of the subject property. The court a
quo found that ownership and possession of the subject property was transferred to petitioners when they
purchased the same from Anciano. 8

On appeal, the Regional Trial Court (RTC) initially affirmed the MTC Decision. 9 Upon respondents’ motion
for reconsideration, the RTC, in an Order dated May 29, 2006, reversed its previous decision and ruled in
favor of respondents, thus:

Wherefore, this Court reconsiders the Decision of Judge Bernelito R. Fernandez, dated August 18, 2005,
and the Decision of the Municipal Trial Court of Binangonan dated July 2, 2004 is hereby reversed as
follows:

A. That the complaint which was dismissed by the Lower Court is hereby reinstated.

B. That this Court finds that the plaintiffs-appellants were in prior possession of lot 112 and 113,
subject of this case, before defendants-appellees Eulogio Antazo and Nelia Antazo forcibly seized
possession of the aforementioned property from the plaintiffs-appellants.

C. That defendants-appellees, Eulogio Antazo, and Nelia Antazo are hereby ordered to vacate lots
112, 113 situated at Barrio Pila-Pila, Binangonan, Rizal, covered by Tax Declaration No. 17-0765
consisting of 787.87 square meters.

D. That there was a substantial compliance of the Katarungan Pambarangay Law.

E. That the defendants-appellees are hereby ordered to pay 1,000.00 a month as reasonable
compensation for the occupancy of the lots from the time they purchased the property on April 21,
2003 up to the present.

F. The defendants-appellees are hereby ordered to pay attorney’s fees in the amount of 20,000.00
pesos.

G. To pay the costs of suit.

SO ORDERED.10

Petitioners moved for reconsideration, but the motion was denied by the RTC on August 1, 2006. 11

Unrelenting, petitioners filed a petition for review with the CA. On February 28, 2007, the CA affirmed the
RTC decision with modification, thus:

WHEREFORE, premises considered, the petition is DENIED. The assailed Orders are hereby AFFIRMED with
MODIFICATION deleting the award of P1,000.00 as reasonable compensation for the use and occupation
of the land from April 21, 2003 up to the present.
SO ORDERED.12

According to the CA, petitioners may not eject respondents from the subject property since it appears
that, as between them, the latter had prior possession thereof. Assuming that petitioners have the legal
title to the property and that respondents are mere usurpers thereof, the latter are nonetheless entitled to
stay until they are lawfully ejected therefrom.13 The CA also deleted the amount of reasonable
compensation awarded to respondents for the use and occupation of the property, ratiocinating that the
latter can recover only the damages they have sustained as mere possessors. 14

Both petitioners and respondents moved for the partial reconsideration of the decision. In a Resolution
dated July 18, 2007, the CA denied both motions.15

Petitioners filed this petition for review on certiorari, ascribing the following errors to the CA:

I. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE REGIONAL TRIAL COURT ERRED IN
REVERSING ITS EARLIER DECISION DATED AUGUST 18, 2005 AND IN ORDERING THE EJECTMENT OF
PETITIONERS FROM LOTS 112 AND 113;

II. THE COURT OF APPEALS ERRED IN NOT RULING THAT PETITIONERS HAVE PRIORITY IN POSSESSION
OF THE SUBJECT PROPERTY.16

Petitioners contend that respondents’ claim is not supported by competent evidence. They aver that when
they bought the property from Anciano, the latter transferred to them possession and ownership of the
subject property. They point out that, after they purchased the property from Anciano, they declared it in
their names for taxation purposes and paid real property tax thereon.

The petition is without merit.

Petitioners’ argument is misplaced, considering that this is a forcible entry case. They are apparently
referring to "possession" flowing from ownership of the property, as opposed to actual possession. In
ejectment cases, possession means nothing more than actual physical possession, not legal possession in
the sense contemplated in civil law.17

Prior physical possession is the primary consideration in a forcible entry case. A party who can prove prior
possession can recover such possession even against the owner himself. Whatever may be the character
of his possession, if he has in his favor prior possession in time, he has the security that entitles him to
remain on the property until a person with a better right lawfully ejects him. 18 The party in peaceable
quiet possession shall not be thrown out by a strong hand, violence or terror.19

We are convinced that respondents were in prior possession of the property and that petitioners deprived
them of such possession by means of force.

In the Letter dated May 26, 2003, Atty. Jimmy R. Panganiban of Panganiban Law Office, on behalf of
petitioners, wrote to respondents:

According to my clients, they bought the above-mentioned property from the true and absolute owner
sometime in April 2003. Immediately upon the sale of said land in their favor, they took possession
thereof in the concept of an owner. They reported to me that they are now fencing said property. They
were surprise[d] that through force, violence, threat, strategy, and stealth you deprived them of
possession. The saddest part of it is that you timed the deprivation after they have already paid a worker
for one week fencing activity. They have already bought fencing construction materials such as gravel[,]
sand, steel, wires, and others. They could not understand why you are doing this thing to them because
they know that you have no legal basis [for] putting up a bamboo fence at the frontage portion of the said
property.

Accordingly, FINAL DEMAND is hereby made upon all of you to remove the bamboo fence and to restore
my clients’ possession within five (5) days from receipt of this letter. If you [fail] to comply with this
demand, I shall take it that I am at liberty to file an ejectment case against all of you in order to protect
the rights and interests of my clients.201avvph!1
The RTC correctly concluded that it would have been unnecessary to write the letter if petitioners were
already in possession of the property. The contents of the letter are clear—petitioners are demanding that
respondents restore possession of the property to them.

We also note that petitioners did not deny in their Answer respondents’ allegation that they constructed a
concrete fence on the subject property. Failure to specifically deny the allegation amounts to a judicial
admission. Unlawfully entering the subject property, erecting a structure thereon and excluding therefrom
the prior possessor would necessarily imply the use of force. In order to constitute force, the trespasser
does not have to institute a state of war.21 No other proof is necessary.

While the Letter intimates that petitioners were in possession of the property prior to respondents and
that the latter were the ones who forcibly evicted them therefrom, such statement is clearly self-serving
and unsupported by other evidence. Verily, this information, assuming that it is true, is not relevant to the
resolution of this case. This case involves respondents’ cause of action against petitioners for evicting
them from the subject property which was in their possession. It is immaterial how respondents came into
such possession or by what right they did so. Even usurpers of land owned by another are entitled to
remain on it until they are lawfully ejected therefrom.22

Granting that petitioners had earlier possession and respondents were the ones who first forcibly
dispossessed them of the property, this circumstance would not have given petitioners license to recover
possession in the same way. Such course of action is precisely what is sought to be avoided by the rule on
ejectment. The underlying philosophy behind ejectment suits is to prevent breach of the peace and
criminal disorder and to compel the party out of possession to respect and resort to the law alone to
obtain what he claims is his. The party deprived of possession must not take the law into his own hands. 23
Petitioners would have had a right of action against respondents to file an ejectment suit, but they
evidently let the chance pass and chose the easier and faster way. Unfortunately for them, this time, their
opponents chose to resort to appropriate judicial measures.

WHEREFORE, the petition is DENIED DUE COURSE. The CA Decision dated February 28, 2007 and
Resolution dated July 18, 2007 are AFFIRMED.

G.R. No. 157659  Petitioner,             January 25, 2010

ELIGIO P. MALLARI,
vs.
GOVERNMENT SERVICE INSURANCE SYSTEM and THE PROVINCIAL SHERIFF OF PAMPANGA,
Respondents.

DECISION

BERSAMIN, J.:

By petition for review on certiorari, the petitioner appeals the decision promulgated on March 17, 2003,
whereby the Court of Appeals (CA) dismissed his petition for certiorari.

Antecedents

In 1968, the petitioner obtained two loans totaling P34,000.00 from respondent Government Service
Insurance System (GSIS). To secure the performance of his obligations, he mortgaged two parcels of land
registered under his and his wife Marcelina Mallari’s names. However, he paid GSIS about ten years after
contracting the obligations only P10,000.00 on May 22, 1978 and P20,000.00 on August 11, 1978.1

What followed thereafter was the series of inordinate moves of the petitioner to delay the efforts of GSIS
to recover on the debt, and to have the unhampered possession of the foreclosed property.

After reminding the petitioner of his unpaid obligation on May 2, 1979, GSIS sent on November 2, 1981 a
telegraphic demand to him to update his account. On November 10, 1981, he requested a final
accounting, but did not do anything more. Nearly three years later, on March 21, 1984, GSIS applied for
the extrajudicial foreclosure of the mortgage by reason of his failure to settle his account. On November
22, 1984, he requested an updated computation of his outstanding account. On November 29, 1984, he
persuaded the sheriff to hold the publication of the foreclosure notice in abeyance, to await action on his
pending request for final accounting (that is, taking his payments of P30,000.00 made in 1978 into
account). On December 13, 1984, GSIS responded to his request and rendered a detailed explanation of
the account. On May 30, 1985, it sent another updated statement of account. On July 21, 1986, it finally
commenced extrajudicial foreclosure proceedings against him because he had meanwhile made no further
payments.

On August 22, 1986, the petitioner sued GSIS and the Provincial Sheriff of Pampanga in the Regional Trial
Court (RTC), Branch 44, in San Fernando, Pampanga, docketed as Civil Case No. 7802, 2 ostensibly to
enjoin them from proceeding against him for injunction (with an application for preliminary injunction).
The RTC ultimately decided Civil Case No. 7802 in his favor, nullifying the extrajudicial foreclosure and
auction sale; cancelling Transfer Certificate of Title (TCT) No. 284272-R and TCT No. 284273-R already
issued in the name of GSIS; and reinstating TCT No. 61171-R and TCT No. 54835-R in his and his wife’s
names.3

GSIS appealed the adverse decision to the CA, which reversed the RTC on March 27, 1996.4

The petitioner elevated the CA decision to this Court via petition for review on certiorari (G.R. No.
124468).5

On September 16, 1996, this Court denied his petition for review. 6 On January 15, 1997, this Court turned
down his motion for reconsideration.7

As a result, the CA decision dated March 27, 1996 became final and executory, rendering unassailable
both the extrajudicial foreclosure and auction sale held on September 22, 1986, and the issuance of TCT
No. 284272-R and TCT No. 284273-R in the name of GSIS.

GSIS thus filed an ex parte motion for execution and for a writ of possession on September 2, 1999.8
Granting the ex parte motion on October 8, 1999,9 the RTC issued a writ of execution cum writ of
possession on October 21, 1999,10 ordering the sheriff to place GSIS in possession of the properties.

The sheriff failed to serve the writ, however, partly because of the petitioner’s request for an extension of
time within which to vacate the properties. It is noted that GSIS acceded to the request. 111avvphi1

Yet, the petitioner did not voluntarily vacate the properties, but instead filed a motion for reconsideration
and/or to quash the writ of execution on March 27, 2000.12 Also, the petitioner commenced a second case
against GSIS and the provincial sheriff in the RTC in San Fernando, Pampanga (Civil Case No. 12053),
ostensibly for consignation (coupled with a prayer for a writ of preliminary injunction or temporary
restraining order). However, the RTC dismissed Civil Case No. 12053 on November 10, 2000 on the
ground of res judicata, impelling him to appeal the dismissal to the CA (C.A.-G.R. CV No. 70300).13

In the meanwhile, the petitioner filed a motion dated April 5, 2000 in Civil Case No. 7802 to hold GSIS, et
al.14 in contempt of court for painting the fence of the properties during the pendency of his motion for
reconsideration and/or to quash the writ of execution.15 He filed another motion in the same case, dated
April 17, 2000, to hold GSIS and its local manager Arnulfo B. Cardenas in contempt of court for ordering
the electric company to cut off the electric services to the properties during the pendency of his motion for
reconsideration and/or to quash the writ of execution.16>

To prevent the Presiding Judge of Branch 44 of the RTC from resolving the pending incidents in Civil Case
No. 7802, GSIS moved to inhibit him for alleged partiality towards the petitioner as borne out by his
failure to act on the motion for reconsideration and/or to quash writ of execution, motions for contempt of
court, and motion for issuance of break open order for more than a year from their filing, praying that the
case be re-raffled to another branch of the RTC.17 Consequently, Civil Case No. 7802 was re-assigned to
Branch 48, whose Presiding Judge then denied the motions for contempt of court on July 30, 2001, and
directed the Branch Clerk of Court to cause the re-implementation of the writ of execution cum writ of
possession dated October 21, 1999.18

The petitioner sought reconsideration,19 but the Presiding Judge of Branch 48 denied his motion for
reconsideration on February 11, 2002.20

Ruling of the CA

By petition for certiorari dated March 15, 2002 filed in the CA, the petitioner assailed the orders of
February 11, 2002, July 30, 2001, October 21, 1999, and October 8, 1999.21
On March 17, 2003, however, the CA dismissed the petition for certiorari for lack of merit, 22 stating:

We find the instant petition patently devoid of merit. This Court is not unaware of the legal tactics and
maneuvers employed by the petitioner in delaying the disposition of the subject case (Civil Case No.
7802) which has already become final and executory upon the final resolution by the Supreme Court
affirming the judgment rendered by the Court of Appeals. We construe the actuation of the petitioner in
resorting to all kinds of avenues accorded by the Rules of Court, through the filing of several pleadings
and/or motions in litigating this case, as running counter to the intendment of the Rules to be utilized in
promoting the objective of securing a just, speedy and inexpensive disposition of every action and
proceeding.

The issues raised in the present controversy have already been settled in our existing jurisprudence on
the subject. In the case of De Jesus vs. Obnamia, Jr., the Supreme Court ruled that "generally, no notice
or even prior hearing of a motion for execution is required before a writ of execution is issued when a
decision has already become final."

The recent accretion to the corpus of our jurisprudence has established the principle of law, as enunciated
in Buaya vs. Stronghold Insurance Co., Inc. that "once a judgment becomes final and executory, the
prevailing party can have it executed as a matter of right, and the issuance of a Writ of Execution
becomes a ministerial duty of the court."

The rule is also firmly entrenched in the aforecited Buaya case that "the effective and efficient
administration of justice requires that once a judgment has become final, the prevailing party should not
be deprived of the fruits of the verdict by subsequent suits on the same issues filed by the same parties.
Courts are duty-bound to put an end to controversies. Any attempt to prolong, resurrect or juggle them
should be firmly struck down. The system of judicial review should not be misused and abused to evade
the operation of final and executory judgments."

As succinctly put in Tag Fibers, Inc. vs. National Labor Relations Commission, the Supreme Court is
emphatic in saying that "the finality of a decision is a jurisdictional event that cannot be made to depend
on the convenience of a party."

We find no cogent reason to discompose the findings of the court below. Thus, we sustain the assailed
Orders of the court a quo since no abuse of discretion has been found to have been committed by the
latter in their issuance. Moreover, this Court finds this petition to be part of the dilatory tactics of the
petitioner to stall the execution of a final and executory decision in Civil Case No. 7802 which has already
been resolved with finality by no less than the highest tribunal of the land.

WHEREFORE, premises considered, the instant petition is hereby DISMISSED for lack of merit. Costs
against the petitioner.

SO ORDERED.23

Issues

Hence, this appeal.

The petitioner insists herein that the CA gravely erred in refusing "to accept the nullity of the following
orders" of the RTC, to wit:

1. THE ORDER OF THE TRIAL COURT DATED OCTOBER 8, 1999, GRANTING THE EX-PARTE
MOTION FOR EXECUTION AND/OR ISSUANCE OF THE WRIT OF EXECUTION OF POSSESSION IN
FAVOR OF THE RESPONDENT GSIS;

2. THE ORDER OF THE TRIAL COURT DATED OCTOBER 21, 1999 GRANTING THE ISSUANCE AND
IMPLEMENTATION OF THE WRIT OF EXECUTION CUM WRIT OF POSSESSION IN FAVOR OF
RESPONDENT GSIS;

3. THE ORDER OF THE TRIAL COURT DATED JULY 30, 2001 DIRECTING TO CAUSE THE RE-
IMPLEMENTATION OF THE WRIT OF EXECUTION CUM WRIT OF POSSESSION IN FAVOR OF THE
RESPONDENT GSIS; and
 4. THE ORDER OF THE TRIAL COURT DATED FEBRUARY 11, 2002, DENYING THE MOTION FOR
RECONSIDERATION OF THE ORDER DATED SEPTEMBER 14, 2001, IN RELATION TO THE COURT
ORDER DATED JULY 30, 2001.24

Ruling of the Court

The petition for review on certiorari absolutely lacks merit.

Petition for Certiorari in CA

Was Filed Beyond Reglementary Period

The petition assailed before the CA on certiorari the following orders of the RTC, to wit:

1. The order dated October 8, 1999 (granting the ex parte motion for execution and/or issuance of
the writ of execution cum writ of possession of GSIS);25

2. The order dated October 21, 1999 (directing the issuance of the writ of execution cum writ of
possession in favor of GSIS);26

3. The order dated July 30, 2001 (requiring the Branch Clerk of Court to cause the re-
implementation of the writ of execution cum writ of possession, and dismissing the motions to hold
GSIS, et al. in contempt);27 and

4. The order dated February 11, 2002 (denying the motion for reconsideration dated August 17,
2001 seeking the reconsideration of the order dated July 30, 2001).28

The July 30, 2001 order denied the petitioner’s motion for reconsideration and/or to quash writ of
execution, and motion to hold GSIS, Tony Dimatulac, et al. and Arnulfo Cardenas in contempt; and
declared GSIS’s motion for issuance of break open order and for designation of special sheriff from GSIS
Legal Services Group as premature. In turn, the motion for reconsideration and/or to quash writ of
execution denied by the order of July 30, 2001 had merely challenged the orders of October 8, 1999 and
October 21, 1999 (granting the writ of execution cum writ of possession as a matter of course).

Considering that the motion for reconsideration dated August 17, 2001 denied by the order dated
February 11, 2002 was in reality and effect a prohibited second motion for reconsideration vis-à-vis the
orders dated October 21, 1999 and October 8, 1999, the assailed orders dated July 30, 2001, October 21,
1999, and October 8, 1999 could no longer be subject to attack by certiorari. Thus, the petition for
certiorari filed only in March 2002 was already improper and tardy for being made beyond the 60-day
limitation defined in Section 4, Rule 65, 1997 Rules of Civil Procedure, as amended, 29 which requires a
petition for certiorari to be filed "not later than sixty (60) days from notice of the judgment, order or
resolution," or, in case a motion for reconsideration or new trial is timely filed, whether such motion is
required or not, "the sixty (60) day period shall be counted from notice of the denial of the said motion."

It is worth emphasizing that the 60-day limitation is considered inextendible, because the limitation has
been prescribed to avoid any unreasonable delay that violates the constitutional rights of parties to a
speedy disposition of their cases.30

II

Nature of the Writ of Possession

and its Ministerial Issuance

The petitioner claims that he had not been notified of the motion seeking the issuance of the writ of
execution cum writ of possession; hence, the writ was invalid.

As earlier shown, the CA disagreed with him.

We sustain the CA, and confirm that the petitioner, as defaulting mortgagor, was not entitled under Act
3135, as amended, and its pertinent jurisprudence to any prior notice of the application for the issuance
of the writ of possession.
A writ of possession, which commands the sheriff to place a person in possession of real property, may be
issued in: (1) land registration proceedings under Section 17 of Act No. 496; (2) judicial foreclosure,
provided the debtor is in possession of the mortgaged property, and no third person, not a party to the
foreclosure suit, had intervened; (3) extrajudicial foreclosure of a real estate mortgage, pending
redemption under Section 7 of Act No. 3135, as amended by Act No. 4118; and (4) execution sales,
pursuant to the last paragraph of Section 33, Rule 39 of the Rules of Court. 31

Anent the redemption of property sold in an extrajudicial foreclosure sale made pursuant to the special
power referred to in Section 132 of Act No. 3135,33 as amended, the debtor, his successor-in-interest, or
any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property
subsequent to the mortgage or deed of trust under which the property is sold has the right to redeem the
property at anytime within the term of one year from and after the date of the sale, such redemption to
be governed by the provisions of Section 464 to Section 466 of the Code of Civil Procedure, to the extent
that said provisions were not inconsistent with the provisions of Act 3135. 34

In this regard, we clarify that the redemption period envisioned under Act 3135 is reckoned from the date
of the registration of the sale, not from and after the date of the sale, as the text of Act 3135 shows.
Although the original Rules of Court (effective on July 1, 1940) incorporated Section 464 to Section 466 of
the Code of Civil Procedure as its Section 25 (Section 464); Section 26 (Section 465); and Section 27
(Section 466) of Rule 39, with Section 27 still expressly reckoning the redemption period to be "at any
time within twelve months after the sale;" and although the Revised Rules of Court (effective on January
1, 1964) continued to provide in Section 30 of Rule 39 that the redemption be made from the purchaser
"at any time within

twelve (12) months after the sale,"35 the 12-month period of redemption came to be held as beginning "to
run not from the date of the sale but from the time of registration of the sale in the Office of the Register
of Deeds."36 This construction was due to the fact that the sheriff’s sale of registered (and unregistered)
lands did not take effect as a conveyance, or did not bind the land, until the sale was registered in the
Register of Deeds.37

Desiring to avoid any confusion arising from the conflict between the texts of the Rules of Court (1940
and 1964) and Act No. 3135, on one hand, and the jurisprudence clarifying the reckoning of the
redemption period in judicial sales of real property, on the other hand, the Court has incorporated in
Section 28 of Rule 39 of the current Rules of Court (effective on July 1, 1997) the foregoing judicial
construction of reckoning the redemption period from the date of the registration of the certificate of sale,
to wit:

Sec. 28. Time and manner of, and amounts payable on, successive redemptions; notice to be given and
filed. — The judgment obligor, or redemptioner, may redeem the property from the purchaser, at any
time within one (1) year from the date of the registration of the certificate of sale, by paying the
purchaser the amount of his purchase, with one per centum per month interest thereon in addition, up to
the time of redemption, together with the amount of any assessments or taxes which the purchaser may
have paid thereon after purchase, and interest on such last named amount at the same rate; and if the
purchaser be also a creditor having a prior lien to that of the redemptioner, other than the judgment
under which such purchase was made, the amount of such other lien, with interest.

Property so redeemed may again be redeemed within sixty (60) days after the last redemption upon
payment of the sum paid on the last redemption, with two per centum thereon in addition, and the
amount of any assessments or taxes which the last redemptioner may have paid thereon after redemption
by him, with interest on such last-named amount, and in addition, the amount of any liens held by said
last redemptioner prior to his own, with interest. The property may be again, and as often as a
redemptioner is so disposed, redeemed from any previous redemptioner within sixty (60) days after the
last redemption, on paying the sum paid on the last previous redemption, with two per centum thereon in
addition, and the amounts of any assessments or taxes which the last previous redemptioner paid after
the redemption thereon, with interest thereon, and the amount of any liens held by the last redemptioner
prior to his own, with interest.

Written notice of any redemption must be given to the officer who made the sale and a duplicate filed with
the registry of deeds of the place, and if any assessments or taxes are paid by the redemptioner or if he
has or acquires any lien other than that upon which the redemption was made, notice thereof must in like
manner be given to the officer and filed with the registry of deeds; if such notice be not filed, the property
may be redeemed without paying such assessments, taxes, or liens. (30a) (Emphasis supplied).
Accordingly, the mortgagor or his successor-in-interest must redeem the foreclosed property within one
year from the registration of the sale with the Register of Deeds in order to avoid the title from
consolidating in the purchaser. By failing to redeem thuswise, the mortgagor loses all interest over the
foreclosed property.38 The purchaser, who has a right to possession that extends beyond the expiration of
the redemption period, becomes the absolute owner of the property when no redemption is made, 39 that it
is no longer necessary for the purchaser to file the bond required under Section 7 of Act No. 3135, as
amended, considering that the possession of the land becomes his absolute right as the land’s confirmed
owner.40 The consolidation of ownership in the purchaser’s name and the issuance to him of a new TCT
then entitles him to demand possession of the property at any time, and the issuance of a writ of
possession to him becomes a matter of right upon the consolidation of title in his name.

The court can neither halt nor hesitate to issue the writ of possession. It cannot exercise any discretion to
determine whether or not to issue the writ, for the issuance of the writ to the purchaser in an extrajudicial
foreclosure sale becomes a ministerial function.41 Verily, a marked distinction exists between a
discretionary act and a ministerial one. A purely ministerial act or duty is one that an officer or tribunal
performs in a given state of facts, in a prescribed manner, in obedience to the mandate of a legal
authority, without regard to or the exercise of his own judgment upon the propriety or impropriety of the
act done. If the law imposes a duty upon a public officer and gives him the right to decide how or when
the duty shall be performed, such duty is discretionary, not ministerial. The duty is ministerial only when
its discharge requires neither the exercise of official discretion nor the exercise of judgment. 42

The proceeding upon an application for a writ of possession is ex parte and summary in nature, brought
for the benefit of one party only and without notice being sent by the court to any person adverse in
interest. The relief is granted even without giving an opportunity to be heard to the person against whom
the relief is sought.43 Its nature as an ex parte petition under Act No. 3135, as amended, renders the
application for the issuance of a writ of possession a non-litigious proceeding. 44

It is clear from the foregoing that a non-redeeming mortgagor like the petitioner had no more right to
challenge the issuance of the writ of execution cum writ of possession upon the ex parte application of
GSIS. He could not also impugn anymore the extrajudicial foreclosure, and could not undo the
consolidation in GSIS of the ownership of the properties covered by TCT No. 284272-R and TCT No.
284273-R, which consolidation was already irreversible. Hence, his moves against the writ of execution
cum writ of possession were tainted by bad faith, for he was only too aware, being his own lawyer, of the
dire consequences of his non-redemption within the period provided by law for that purpose.

III

Dismissal of Petitioner’s Motion for Indirect Contempt

Was Proper and In Accord with the Rules of Court

The petitioner insists that the RTC gravely erred in dismissing his charges for indirect contempt against
GSIS, et al.; and that the CA should have consequently granted his petition for certiorari.

The petitioner’s insistence is plainly unwarranted.

First of all, Section 4, Rule 71, 1997 Rules of Civil Procedure, provides as follows:

Section 4. How proceedings commenced. — Proceedings for indirect contempt may be initiated motu
proprio by the court against which the contempt was committed by an order or any other formal charge
requiring the respondent to show cause why he should not be punished for contempt.

In all other cases, charges for indirect contempt shall be commenced by a verified petition with supporting
particulars and certified true copies of documents or papers involved therein, and upon full compliance
with the requirements for filing initiatory pleadings for civil actions in the court concerned. If the contempt
charges arose out of or are related to a principal action pending in the court, the petition for contempt
shall allege that fact but said petition shall be docketed, heard and decided separately, unless the court in
its discretion orders the consolidation of the contempt charge and the principal action for joint hearing and
decision. (n) (Emphasis supplied).

Indeed, a person may be charged with indirect contempt only by either of two alternative ways, namely:
(1) by a verified petition, if initiated by a party; or (2) by an order or any other formal charge requiring
the respondent to show cause why he should not be punished for contempt, if made by a court against
which the contempt is committed. In short, a charge of indirect contempt must be initiated through a
verified petition, unless the charge is directly made by the court against which the contemptuous act is
committed.

Justice Regalado has explained why the requirement of the filing of a verified petition for contempt is
mandatory:45

1. This new provision clarifies with a regulatory norm the proper procedure for commencing contempt
proceedings. While such proceeding has been classified as a special civil action under the former Rules,
the heterogeneous practice, tolerated by the courts, has been for any party to file a mere motion without
paying any docket or lawful fees therefor and without complying with the requirements for initiatory
pleadings, which is now required in the second paragraph of this amended section. Worse, and as a
consequence of unregulated motions for contempt, said incidents sometimes remain pending for
resolution although the main case has already been decided. There are other undesirable aspects but, at
any rate, the same may now be eliminated by this amendatory procedure.

Henceforth, except for indirect contempt proceedings initiated motu proprio by order of or a formal charge
by the offended court, all charges shall be commenced by a verified petition with full compliance with the
requirements therefor and shall be disposed of in accordance with the second paragraph of this section.
(Emphasis supplied).

Clearly, the petitioner’s charging GSIS, et al. with indirect contempt by mere motions was not permitted
by the Rules of Court.

And, secondly, even assuming that charges for contempt could be initiated by motion, the petitioner
should have tendered filing fees. The need to tender filing fees derived from the fact that the procedure
for indirect contempt under Rule 71, Rules of Court was an independent special civil action. Yet, the
petitioner did not tender and pay filing fees, resulting in the trial court not acquiring jurisdiction over the
action. Truly, the omission to tender filing fees would have also warranted the dismissal of the charges.

It seems to be indubitable from the foregoing that the petitioner initiated the charges for indirect
contempt without regard to the requisites of the Rules of Court simply to vex the adverse party. He
thereby disrespected the orderly administration of justice and committed, yet again, an abuse of
procedures.

IV

Petitioner Was Guilty of

Misconduct As A Lawyer

The CA deemed it unavoidable to observe that the petition for certiorari brought by the petitioner to the
CA was "part of the dilatory tactics of the petitioner to stall the execution of a final and executory decision
in Civil Case No. 7802 which has already been resolved with finality by no less than the highest tribunal of
the land."46

The observation of the CA deserves our concurrence.

Verily, the petitioner wittingly adopted his aforedescribed worthless and vexatious legal maneuvers for no
other purpose except to delay the full enforcement of the writ of possession, despite knowing, being
himself a lawyer, that as a non-redeeming mortgagor he could no longer impugn both the extrajudicial
foreclosure and the ex parte issuance of the writ of execution cum writ of possession; and that the
enforcement of the duly-issued writ of possession could not be delayed. He thus deliberately abused court
procedures and processes, in order to enable himself to obstruct and stifle the fair and quick
administration of justice in favor of mortgagee and purchaser GSIS.

His conduct contravened Rule 10.03, Canon 10 of the Code of Professional Responsibility, by which he was
enjoined as a lawyer to "observe the rules of procedure and xxx not [to] misuse them to defeat the ends
of justice." By his dilatory moves, he further breached and dishonored his Lawyer’s Oath, particularly: 47

xxx I will not wittingly or willingly promote or sue any groundless, false or unlawful suit, nor give aid nor
consent to the same; I will delay no man for money or malice, and will conduct myself as a lawyer
according to the best of my knowledge and discretion with all good fidelity as well to the courts as to my
clients xxx

We stress that the petitioner’s being the party litigant himself did not give him the license to resort to
dilatory moves. His zeal to defend whatever rights he then believed he had and to promote his perceived
remaining interests in the property already lawfully transferred to GSIS should not exceed the bounds of
the law, for he remained at all times an officer of the Court burdened to conduct himself "with all good
fidelity as well to the courts as to [his] clients." 48 His true obligation as a lawyer should not be warped by
any misplaced sense of his rights and interests as a litigant, because he was, above all, bound not to
unduly delay a case, not to impede the execution of a judgment, and not to misuse Court processes.49
Consequently, he must be made to account for his misconduct as a lawyer.

WHEREFORE, we deny the petition for review on certiorari for lack of merit, and affirm the decision of the
Court of Appeals promulgated on March 17, 2003, with the costs of suit to be paid by the petitioner.

The Committee on Bar Discipline of the Integrated Bar of the Philippines is directed to investigate the
petitioner for what appear to be (a) his deliberate disregard of the Rules of Court and jurisprudence
pertinent to the issuance and implementation of the writ of possession under Act No. 3135, as amended;
and (b) his witting violations of the Lawyer’s Oath and the Code of Professional Responsibility.

G.R. No. 169190               February 11, 2010

CUA LAI CHU, CLARO G. CASTRO, and JUANITA CASTRO, Petitioners,

vs.
HON. HILARIO L. LAQUI, Presiding Judge, Regional Trial Court, Branch 218, Quezon City and PHILIPPINE
BANK OF COMMUNICATION, Respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the 29 April 2005 and 4 August 2005 Resolutions 2 of the Court of Appeals
in CA-G.R. SP No. 88963. In its 29 April 2005 Resolution, the Court of Appeals dismissed the petition for
certiorari3 of petitioner spouses Claro G. Castro and Juanita Castro and petitioner Cua Lai Chu
(petitioners). In its 4 August 2005 Resolution, the Court of Appeals denied petitioners’ motion for
reconsideration.

The Facts

In November 1994, petitioners obtained a loan in the amount of P3,200,000 from private respondent
Philippine Bank of Communication. To secure the loan, petitioners executed in favor of private respondent
a Deed of Real Estate Mortgage4 over the property of petitioner spouses covered by Transfer Certificate of
Title No. 22990. In August 1997, petitioners executed an Amendment to the Deed of Real Estate
Mortgage5 increasing the amount of the loan by P1,800,000, bringing the total loan amount to
P5,000,000.

For failure of petitioners to pay the full amount of the outstanding loan upon demand, 6 private respondent
applied for the extrajudicial foreclosure of the real estate mortgage.7 Upon receipt of a notice8 of the
extrajudicial foreclosure sale, petitioners filed a petition to annul the extrajudicial foreclosure sale with a
prayer for temporary restraining order (TRO). The petition for annulment was filed in the Regional Trial
Court of Quezon City and docketed as Q-02-46184.9

The extrajudicial foreclosure sale did not push through as originally scheduled because the trial court
granted petitioners’ prayer for TRO. The trial court subsequently lifted the TRO and reset the extrajudicial
foreclosure sale on 29 May 2002. At the foreclosure sale, private respondent emerged as the highest
bidder. A certificate of sale10 was executed on 4 June 2002 in favor of private respondent. On 7 June
2002, the certificate of sale was annotated as Entry No. 185511 on TCT No. 22990 covering the foreclosed
property.
After the lapse of the one-year redemption period, private respondent filed in the Registry of Deeds of
Quezon City an affidavit of consolidation to consolidate its ownership and title to the foreclosed property.
Forthwith, on 8 July 2003, the Register of Deeds cancelled TCT No. 22990 and issued in its stead TCT No.
25183512 in the name of private respondent.

On 18 August 2004, private respondent applied for the issuance of a writ of possession of the foreclosed
property.13 Petitioners filed an opposition.14 The trial court granted private respondent’s motion for a
declaration of general default and allowed private respondent to present evidence ex parte. The trial court
denied petitioners’ notice of appeal.

Undeterred, petitioners filed in the Court of Appeals a petition for certiorari. The appellate court dismissed
the petition. It also denied petitioners’ motion for reconsideration.

The Orders of the Trial Court

The 8 October 2004 Order15 granted private respondent’s motion for a declaration of general default and
allowed private respondent to present evidence ex parte. The 6 January 2005 Order16 denied petitioners’
motion for reconsideration of the prior order. The 24 February 2005 Order 17 denied petitioners’ notice of
appeal.

The Ruling of the Court of Appeals

The Court of Appeals dismissed on both procedural and substantive grounds the petition for certiorari filed
by petitioners. The appellate court noted that the counsel for petitioners failed to indicate in the petition
the updated PTR Number, a ground for outright dismissal of the petition under Bar Matter No. 1132.
Ruling on the merits, the appellate court held that a proceeding for the issuance of a writ of possession is
ex parte in nature. As such, petitioners’ right to due process was not violated even if they were not given
a chance to file their opposition. The appellate court also ruled that there was no violation of the rule
against forum shopping since the application for the issuance of a writ of possession is not affected by a
pending case questioning the validity of the extrajudicial foreclosure sale.

The Issue

Petitioners raise the question of whether the writ of possession was properly issued despite the pendency
of a case questioning the validity of the extrajudicial foreclosure sale and despite the fact that petitioners
were declared in default in the proceeding for the issuance of a writ of possession.

The Court’s Ruling

The petition has no merit.

Petitioners contend they were denied due process of law when they were declared in default despite the
fact that they had filed their opposition to private respondent’s application for the issuance of a writ of
possession. Further, petitioners point out that the issuance of a writ of possession will deprive them not
only of the use and possession of their property, but also of its ownership. Petitioners cite Bustos v. Court
of Appeals18 and Vda. De Legaspi v. Avendaño19 in asserting that physical possession of the property
should not be disturbed pending the final determination of the more substantial issue of ownership.
Petitioners also allege forum shopping on the ground that the application for the issuance of a writ of
possession was filed during the pendency of a case questioning the validity of the extrajudicial foreclosure
sale.

Private respondent, on the other hand, maintains that the application for the issuance of a writ of
possession in a foreclosure proceeding is ex parte in nature. Hence, petitioners’ right to due process was
not violated even if they were not given a chance to file their opposition. Private respondent argues that
the issuance of a writ of possession may not be stayed by a pending case questioning the validity of the
extrajudicial foreclosure sale. It contends that the former has no bearing on the latter; hence, there is no
violation of the rule against forum shopping. Private respondent asserts that there is no judicial
determination involved in the issuance of a writ of possession; thus, the same cannot be the subject of an
appeal.

At the outset, we must point out that the authorities relied upon by petitioners are not in point and have
no application here. In Bustos v. Court of Appeals,20 the Court simply ruled that the issue of possession
was intertwined with the issue of ownership in the consolidated cases of unlawful detainer and accion
reinvindicatoria. In Vda. De Legaspi v. Avendaño,21 the Court merely stated that in a case of unlawful
detainer, physical possession should not be disturbed pending the resolution of the issue of ownership.
Neither case involved the right to possession of a purchaser at an extrajudicial foreclosure of a mortgage.

Banco Filipino Savings and Mortgage Bank v. Pardo22 squarely ruled on the right to possession of a
purchaser at an extrajudicial foreclosure of a mortgage. This case involved a real estate mortgage as
security for a loan obtained from a bank. Upon the mortgagor’s default, the bank extrajudicially foreclosed
the mortgage. At the auction sale, the bank was the highest bidder. A certificate of sale was duly issued
and registered. The bank then applied for the issuance of a writ of possession, which the lower court
dismissed. The Court reversed the lower court and held that the purchaser at the auction sale was entitled
to a writ of possession pending the lapse of the redemption period upon a simple motion and upon the
posting of a bond.1avvphi1

In Navarra v. Court of Appeals,23 the purchaser at an extrajudicial foreclosure sale applied for a writ of
possession after the lapse of the one-year redemption period. The Court ruled that the purchaser at an
extrajudicial foreclosure sale has a right to the possession of the property even during the one-year
redemption period provided the purchaser files an indemnity bond. After the lapse of the said period with
no redemption having been made, that right becomes absolute and may be demanded by the purchaser
even without the posting of a bond. Possession may then be obtained under a writ which may be applied
for ex parte pursuant to Section 7 of Act No. 3135,24 as amended by Act No. 4118,25 thus:

SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First
Instance of the province or place where the property or any part thereof is situated, to give him
possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of
the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was
made without violating the mortgage or without complying with the requirements of this Act. Such
petition shall be made under oath and filed in form of an ex parte motion x x x and the court shall, upon
approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in
which the property is situated, who shall execute said order immediately. (Emphasis supplied)

In the present case, the certificate of sale of the foreclosed property was annotated on TCT No. 22990 on
7 June 2002. The redemption period thus lapsed on 7 June 2003, one year from the registration of the
sale.26 When private respondent applied for the issuance of a writ of possession on 18 August 2004, the
redemption period had long lapsed. Since the foreclosed property was not redeemed within one year from
the registration of the extrajudicial foreclosure sale, private respondent had acquired an absolute right, as
purchaser, to the writ of possession. It had become the ministerial duty of the lower court to issue the
writ of possession upon mere motion pursuant to Section 7 of Act No. 3135, as amended.

Moreover, once ownership has been consolidated, the issuance of the writ of possession becomes a
ministerial duty of the court, upon proper application and proof of title. 27 In the present case, when
private respondent applied for the issuance of a writ of possession, it presented a new transfer certificate
of title issued in its name dated 8 July 2003. The right of private respondent to the possession of the
property was thus founded on its right of ownership. As the purchaser of the property at the foreclosure
sale, in whose name title over the property was already issued, the right of private respondent over the
property had become absolute, vesting in it the corollary right of possession.

Petitioners are wrong in insisting that they were denied due process of law when they were declared in
default despite the fact that they had filed their opposition to the issuance of a writ of possession. The
application for the issuance of a writ of possession is in the form of an ex parte motion. It issues as a
matter of course once the requirements are fulfilled. No discretion is left to the court. 28

Petitioners cannot oppose or appeal the court’s order granting the writ of possession in an ex parte
proceeding. The remedy of petitioners is to have the sale set aside and the writ of possession cancelled in
accordance with Section 8 of Act No. 3135, as amended, to wit:

SEC. 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty
days after the purchaser was given possession, petition that the sale be set aside and the writ of
possession cancelled, specifying the damages suffered by him, because the mortgage was not violated or
the sale was not made in accordance with the provisions hereof. x x x

Any question regarding the validity of the extrajudicial foreclosure sale and the resulting cancellation of
the writ may be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135, as
amended. Such question should not be raised as a justification for opposing the issuance of a writ of
possession since under Act No. 3135, as amended, the proceeding for this is ex parte.

Further, the right to possession of a purchaser at an extrajudicial foreclosure sale is not affected by a
pending case questioning the validity of the foreclosure proceeding. The latter is not a bar to the former.
Even pending such latter proceeding, the purchaser at a foreclosure sale is entitled to the possession of
the foreclosed property.29

Lastly, we rule that petitioners’ claim of forum shopping has no basis. Under Act No. 3135, as amended, a
writ of possession is issued ex parte as a matter of course upon compliance with the requirements. It is
not a judgment on the merits that can amount to res judicata, one of the essential elements in forum
shopping.30

The Court of Appeals correctly dismissed the petition for certiorari filed by petitioners for lack of merit.

WHEREFORE, we DENY the petition for review. We AFFIRM the 29 April 2005 and 4 August 2005
Resolutions of the Court of Appeals in CA-G.R. SP No. 88963.

G.R. No. 167891               January 15, 2010

SPOUSES JESUS FAJARDO and EMER FAJARDO, Petitioners,

vs.
ANITA R. FLORES, assisted by her husband, BIENVENIDO FLORES, Respondent.

DECISION

NACHURA, J.:

Before us is a petition for review of the Decision1 of the Court of Appeals (CA) dated October 28, 2004 and
its Resolution dated April 19, 2005, denying the motion for reconsideration thereof.

The facts are as follows:

Leopoldo delos Reyes owned a parcel of land, denominated as Lot No. 2351 (Cad. 320-D), with an area of
25,513 square meters (sq m), located in Barangay Sumandig in Hacienda Buenavista, San Ildefonso,
Bulacan. In 1963, he allowed petitioner Jesus Fajardo to cultivate said land. The net harvests were divided
equally between the two until 1975 when the relationship was converted to leasehold tenancy. Per Order 2
from the Department of Agrarian Reform (DAR), Regional Office, Region III, San Fernando, Pampanga,
rent was provisionally fixed at 27.42 cavans per year, which Jesus Fajardo religiously complied with. From
the time petitioner cultivated the land, he was allowed by Leopoldo delos Reyes to erect a house for his
family on the stony part of the land, which is the subject of controversy.

On January 26, 1988, Leopoldo delos Reyes died. His daughter and sole heir, herein respondent Anita
Flores, inherited the property. On June 28, 1991, Anita Flores and Jesus Fajardo executed an agreement,
denominated as "KASUNDUAN NG PAGHAHATI NG LUPA AT PAGTATALAGA NG DAAN UKOL SA
MAGKABILANG PANIG."3 This was followed by another agreement, "KASUNDUAN SA HATIAN SA LUPA,"
executed on July 10, 1991, wherein the parties agreed to deduct from Lot No. 2351 an area of 10,923 sq
m, allotting the same to petitioner. Apparently, there was a conflict of claims in the interpretation of the
Kasunduan between Anita Flores and Jesus Fajardo, which was referred to the DAR, Provincial Agrarian
Reform Office, Baliuag, Bulacan.4 In the Report and Recommendation dated May 3, 2000, the Legal
Officer advised the parties to ventilate their claims and counterclaims with the Department of Agrarian
Reform Adjudication Board (DARAB), Malolos, Bulacan.5

On December 22, 2000, a complaint for ejectment was filed by herein respondent Anita Flores, assisted
by her husband Bienvenido Flores, against petitioners with the Municipal Trial Court (MTC), San Ildefonso,
Bulacan. In the complaint, she alleged that, as the sole heir of the late Leopoldo delos Reyes, she
inherited a parcel of land consisting of stony land, not devoted to agriculture, and land suitable and
devoted to agriculture located in Barangay Sumandig, San Ildefonso, Bulacan; that, sometime in the
1960s, during the lifetime of Leopoldo delos Reyes, Jesus Fajardo requested the former to allow him to
work and cultivate that portion of land devoted to agriculture; that Jesus Fajardo was then allowed to
erect a house on the stony part of the land, and that the use and occupation of the stony part of the land
was by mere tolerance only; and that the land, which was divided equally between the two parties,
excluded the stony portion. In February 1999, respondent approached petitioners and verbally informed
them of her intention to repossess the stony portion, but petitioners refused to heed the request.

Petitioners filed a Motion to Dismiss, alleging that Lot No. 2351, with an area of 25,513 sq m, was
agricultural land; that they had been continuously, uninterruptedly, and personally cultivating the same
since 1960 up to the present; that the MTC had no jurisdiction over the case, considering that the dispute
between the parties, regarding the Kasunduan, was referred to the DARAB; and that the assumption by
the DARAB of jurisdiction over the controversy involving the lot in question therefore precluded the MTC
from exercising jurisdiction over the case.

Resolving the Motion to Dismiss, the MTC ruled that, while at first glance, the court did not have
jurisdiction over the case, considering that it was admitted that petitioner was allowed to cultivate the
land, a closer look at the Kasunduan, however, revealed that what was divided was only the portion being
tilled. By contrast, the subject matter of the complaint was the stony portion where petitioners’ house was
erected. Thus, the court ruled that it had jurisdiction over the subject matter. 6

On April 25, 2001, the MTC rendered judgment in favor of respondent. The dispositive portion reads as
follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff (respondent),

ORDERING defendants (petitioners) –

1) and all persons claiming rights under them to VACATE the subject premises where they have
erected their house, which is a portion of Lot No. 2351, Cad-320-D situated [in] Barangay
Sumandig, San Ildefonso, Bulacan;

2) to DEMOLISH their house on the subject premises;

3) to PAY plaintiff the sum of P400.00 a month by way of reasonable compensation for their use
and occupation of the subject premises starting [in] June 2000 and every month thereafter until
they finally vacate the same; and

4) to PAY attorney’s fees of P10,000.00 and the cost of suit.7

On appeal, the Regional Trial Court (RTC), Branch 16, Third Judicial Region, Malolos, Bulacan, affirmed
the MTC Decision in toto upon a finding that no reversible error was committed by the court a quo in its
Decision8 dated August 29, 2002.

On motion for reconsideration, however, the RTC issued an Order on December 10, 2002, reversing its
decision dated August 29, 2002. The RTC found that the issue involved appeared to be an agrarian
dispute, which fell within the contemplation of Republic Act (R.A.) No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988, and thus ordered the dismissal of the case for lack of
jurisdiction.

A petition for review was then filed by respondents with the CA to annul the Order of the RTC dated
December 10, 2002.

On October 28, 2004, the CA rendered the assailed decision, which reinstated the MTC decision. It
disagreed with the findings of the RTC and ruled that the part of Lot No. 2351 where petitioners’ house
stood was stony and residential in nature, one that may not be made to fall within the ambit of the
operation of Philippine agrarian laws, owing to its non-agriculture character. The CA explained that, on the
strength of the two instruments, the parties made a partition and divided the agricultural portion of Lot
No. 2351 equally among themselves. By virtue of said division, the parties effectively severed and
terminated the agricultural leasehold/tenancy relationship between them; thus, there was no longer any
agrarian dispute to speak of. Fajardo had already acquired the benefits under the Comprehensive Agrarian
Reform Law when one-half of the agricultural portion of Lot No. 2351 was allotted to him. Petitioners
cannot, therefore, be allowed to continue possession of a part of the stony portion, which was not
included in the land he was cultivating.9 The dispositive portion of the CA Decision reads as follows:

WHEREFORE, premises considered, finding that the court a quo seriously erred when it reversed itself, its
Order dated December 10, 2002 is REVERSED and SET ASIDE. Accordingly, the Decision dated April 25,
2001 of the MTC of San Ildefonso, Bulacan is hereby REINSTATED.10
The subsequent motion for reconsideration was denied; hence, this petition.

The issue in this case is whether it is MTC or the DARAB which has jurisdiction over the case.

There is no dispute that, on June 28, 1991, the parties executed an agreement, denominated as
"KASUNDUAN NG PAGHAHATI NG LUPA AT PAGTATALAGA NG DAAN UKOL SA MAGKABILANG PANIG."
Therein, it was admitted that Jesus Fajardo was the tiller of the land. This Kasunduan was subsequently
followed by another agreement, "KASUNDUAN SA HATIAN SA LUPA," whereby an area of 10,923 sq m of
Lot No. 2351 was given to petitioners. The portion of the land where petitioners’ house is erected is the
subject of the instant case for unlawful detainer. Respondent argues that this portion is not included in the
deed of partition, while petitioners insist that it is.

We agree with the RTC when it clearly pointed out in its Order dated December 10, 2002 that the
resolution of this case hinges on the correct interpretation of the contracts executed by the parties. The
issue of who has a better right of possession over the subject land cannot be determined without
resolving first the matter as to whom the subject property was allotted. Thus, this is not simply a case for
unlawful detainer, but one that is incapable of pecuniary estimation, definitely beyond the competence of
the MTC.11

More importantly, the controversy involves an agricultural land, which petitioners have continuously and
personally cultivated since the 1960s. In the Kasunduan, it was admitted that Jesus Fajardo was the tiller
of the land. Being agricultural lessees, petitioners have a right to a home lot and a right to exclusive
possession thereof by virtue of Section 24, R.A. No. 3844 of the Agricultural Land Reform Code. 12
Logically, therefore, the case involves an agrarian dispute, which falls within the contemplation of R.A. No.
6657, or the Comprehensive Agrarian Reform Law.

An agrarian dispute13 refers to any controversy relating to tenurial arrangements, whether leasehold,
tenancy, stewardship, or otherwise, over lands devoted to agriculture, including disputes concerning
farmworkers’ associations or representation of persons in negotiating, fixing, maintaining, changing, or
seeking to arrange terms or conditions of such tenurial arrangements. It includes any controversy relating
to compensation of lands acquired under this Act and other terms and conditions of transfer of ownership
from landowner to farmworkers, tenants, and other agrarian reform beneficiaries, whether the disputants
stand in the proximate relation of farm operator and beneficiary, landowner and tenant, or lessor and
lessee. It relates to any controversy relating to, inter alia, tenancy over lands devoted to agriculture. 14

Undeniably, the instant case involves a controversy regarding tenurial arrangements. The contention that
the Kasunduans, which allegedly terminated the tenancy relationship between the parties and, therefore,
removed the case from the ambit of R.A. No. 6657, is untenable. There still exists an agrarian dispute
because the controversy involves the home lot of petitioners, an incident arising from the landlord-tenant
relationship.

 Amurao v. Villalobos is quite instructive:

The instant case undeniably involves a controversy involving tenurial arrangements because the Kasulatan
will definitely modify, nay, terminate the same. Even assuming that the tenancy relationship between the
parties had ceased due to the Kasulatan, there still exists an agrarian dispute because the action involves
an incident arising from the landlord and tenant relationship.

In Teresita S. David v. Agustin Rivera, this Court held that:

[I]t is safe to conclude that the existence of prior agricultural tenancy relationship, if true, will divest the
MCTC of its jurisdiction the previous juridical tie compels the characterization of the controversy as an
"agrarian dispute." x x x Even if the tenurial arrangement has been severed, the action still involves an
incident arising from the landlord and tenant relationship. Where the case involves the dispossession by a
former landlord of a former tenant of the land claimed to have been given as compensation in
consideration of the renunciation of the tenurial rights, there clearly exists an agrarian dispute. On this
point the Court has already ruled:

"Indeed, section 21 of the Republic Act No. 1199, provides that ‘all cases involving the dispossession of a
tenant by the landlord or by a third party and/or the settlement and disposition of disputes arising from
the relationship of landlord and tenant . . . shall be under the original and exclusive jurisdiction of the
Court of Agrarian Relations.’ This jurisdiction does not require the continuance of the relationship of
landlord and tenant—at the time of the dispute. The same may have arisen, and often times arises,
precisely from the previous termination of such relationship. If the same existed immediately, or shortly,
before the controversy and the subject-matter thereof is whether or not said relationship has been
lawfully terminated, or if the dispute springs or originates from the relationship of landlord and tenant, the
litigation is (then) cognizable by the Court of Agrarian Relations . . ."

In the case at bar, petitioners’ claim that the tenancy relationship has been terminated by the Kasulatan
is of no moment. As long as the subject matter of the dispute is the legality of the termination of the
relationship, or if the dispute originates from such relationship, the case is cognizable by the DAR, through
the DARAB. The severance of the tenurial arrangement will not render the action beyond the ambit of an
agrarian dispute.15

Furthermore, the records disclose that the dispute between the parties, regarding the interpretation of the
Kasunduan, was, in fact, raised and referred to the DAR, which in turn referred the case to the DARAB. 16
In view of the foregoing, we reiterate Hilario v. Prudente,17 that:

The doctrine of primary jurisdiction precludes the courts from resolving a controversy over which
jurisdiction has initially been lodged with an administrative body of special competence. For agrarian
reform cases, jurisdiction is vested in the Department of Agrarian Reform (DAR); more specifically, in the
Department of Agrarian Reform Adjudication Board (DARAB).

WHEREFORE, the Decision dated October 28, 2004 of the Court of Appeals is REVERSED and SET ASIDE.
The Order of the Regional Trial Court dated December 10, 2002 is REINSTATED.

G.R. No. 171201               June 18, 2010

SPOUSES BENEDICT and MARICEL DY TECKLO, Petitioners,

vs.
RURAL BANK OF PAMPLONA, INC. represented by its President/Manager, JUAN LAS, Respondent.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the 17 May 2005 Decision2 and the 14 December 2005 Resolution3 of the
Court of Appeals in CA-G.R. CV No. 59769. In its 17 May 2005 Decision, the Court of Appeals affirmed
with modification the 22 May 1998 Decision4 of the Regional Trial Court (Branch 61) of Naga City in Civil
Case No. RTC 96-3521. In its 14 December 2005 Resolution, the Court of Appeals denied petitioners’
motion for reconsideration.

The Antecedent Facts

On 20 January 1994, spouses Roberto and Maria Antonette Co obtained from respondent Rural Bank of
Pamplona, Inc. a P100,000.00 loan5 due in three months or on 20 April 1994. The loan was secured by a
real estate mortgage6 on a 262-square meter residential lot owned by spouses Co located in San Felipe,
Naga City and covered by Transfer Certificate of Title (TCT) No. 24196.

The mortgage was registered in the Register of Deeds of Naga City on 21 January 1994 and duly
annotated on the TCT of the mortgaged property as Entry No. 58182. 7

One of the stipulations in the mortgage contract was that the mortgaged property would also answer for
the future loans of the mortgagor. Pursuant to this provision, spouses Co obtained on 4 March 1994 a
second loan8 from respondent bank in the amount of P150,000.00 due in three months or on 2 June
1994.1avvphi1

Petitioners, spouses Benedict and Maricel Dy Tecklo, meanwhile instituted an action for collection of sum
of money against spouses Co. The case, docketed as Civil Case No. 94-3161, was assigned to the
Regional Trial Court (Branch 25) of Naga City. In the said case, petitioners obtained a writ of attachment
on the mortgaged property of spouses Co. The notice of attachment was annotated on the TCT of the
mortgaged property as Entry No. 58941.9
When the two loans remained unpaid after becoming due and demandable, respondent bank instituted
extrajudicial foreclosure proceedings. In its 5 September 1994 petition for extrajudicial foreclosure,
respondent bank sought the satisfaction solely of the first loan although the second loan had also become
due.10 At the public auction scheduled on 19 December 1994, respondent bank offered the winning bid of
P142,000.00, which did not include the second loan.11 The provisional certificate of sale to respondent
bank was annotated on the TCT of the mortgaged property as Entry No. 60794. 12

Petitioners then exercised the right of redemption as successors-in-interest of the judgment debtor.
Stepping into the shoes of spouses Co, petitioners tendered on 9 August 1995 the amount of
P155,769.50, based on the computation made by the Office of the Provincial Sheriff, as follows:

Bid price …..................................................... P142,000.00

Interest on the bid price from

December 19, 1994 to August 9, 1995

at 1% per month …........................................ 10,934.00

Expenses incurred in connection with

the registration of the Provisional
Certificate of Sale ….................................... 2,647.00

Interest on the expenses …........................... 188.50

P155,769.50

Respondent bank objected to the non-inclusion of the second loan. It also claimed that the applicable
interest rate should be the rate fixed in the mortgage, which was 24% per annum plus 3% service charge
per annum and 18% penalty per annum. However, the Provincial Sheriff insisted that the interest rate
should only be 12% per annum. Respondent bank then sought annulment of the redemption, injunction,
and damages in the Regional Trial Court (Branch 61) of Naga City docketed as Civil Case No. RTC 96-
3521.

The Ruling of the Trial Court

The trial court ruled, among others, that the second loan, not having been annotated on the TCT of the
mortgaged property, could not bind third persons such as petitioners. Applying the 24% per annum
interest rate fixed in the mortgage, the trial court computed the redemption price as follows:

Bid price …............................................................... P142,000.00

Interest rate on the bid price for 233 days ….......... 22,057.33

Expenses of registration of the Prov. Sale…........... 2,647.00

Interest on the expenses for 211 days..................... 372.24

P 167,076.5713
In its 22 May 1998 Decision, the trial court dismissed respondent bank’s complaint for annulment of
redemption and ordered petitioners to pay respondent bank the deficiency of P11,307.07 on the
redemption amount, to wit:

WHEREFORE, premises considered, this Civil Case No. RTC-96-3521 is hereby dismissed and defendants
Dy Tecklos are hereby ordered to pay herein plaintiff the insufficiency of the redemption price in the
amount of P11,307.07, and thereafter, upon receipt of said amount, the Rural Bank of Pamplona is also
ordered to surrender to said defendants Dy Tecklos TCT No. 24196. No pronouncement as to costs. 14

Respondent bank elevated the case to the Court of Appeals insisting that the foreclosed mortgage also
secured the second loan of P150,000.00.

The Ruling of the Court of Appeals

The appellate court ruled that the redemption amount should have included the second loan even though
it was not annotated on the TCT of the mortgaged property. In its 17 May 2005 Decision, the Court of
Appeals affirmed the trial court’s decision with the modification that petitioners pay respondent bank the
deficiency amounting P204,407.18, with interest at the rate of 24% per annum from 22 May 1998 until
fully paid, thus:

WHEREFORE, premises considered, in continued exercise of liberality in redemption, the dismissal of Civil
Case No. RTC-96-3521 is AFFIRMED and defendants Dy Tecklo are hereby ordered to pay plaintiff the
deficiency of the redemption price in the amount of P204,407.18 with interest at the rate of 24% per
annum from May 22, 1998 until fully paid. Upon receipt of the full amount inclusive of interest the Rural
Bank of Pamplona, Inc. is ordered to surrender to defendants-spouses Dy Tecklo the owner’s duplicate of
TCT No. 24196.15

Aggrieved, petitioners filed a motion for reconsideration, which the Court of Appeals denied. Hence, the
present petition for review.

The Issue

The sole issue is whether the redemption amount includes the second loan in the amount of P150,000.00
even if it was not included in respondent bank’s application for extrajudicial foreclosure.

The Court’s Ruling

The Court finds the petition meritorious.

Petitioners pointed out that the second loan was not annotated as an additional loan on the TCT of the
mortgaged property. Petitioners argued that the second loan was just a private contract between
respondent bank and spouses Co, which could not bind third parties unless duly registered. Petitioners
stressed that respondent bank’s application for extrajudicial foreclosure referred solely to the first loan.

Respondent bank insisted that the mortgage secured not only the first loan but also future loans spouses
Co might obtain from respondent bank. According to respondent bank, this was specifically provided in
the mortgage contract. Respondent bank contended that petitioners, as redemptioner by virtue of the
preliminary attachment they obtained against spouses Co, should assume all the debts secured by the
mortgaged property.

The mortgage contract in this case contains the following blanket mortgage clause:

1. That as security for the payment of the loan or advance in the principal sum of ONE HUNDRED
THOUSAND PESOS ONLY (P100,000.00) PESOS, Philippine Currency, and such other loans or advances
already obtained and/or still to be obtained by the MORTGAGOR/S, either as MAKER/S, CO-MAKER/S,
SURETY/IES OR GUARANTOR/S from the MORTGAGEE payable on the date/s stated in the corresponding
promissory note/s and subject to the payment of interest, other bank charges, and to other conditions
mentioned thereon, x x x.16 (Emphasis supplied)

A blanket mortgage clause, which makes available future loans without need of executing another set of
security documents, has long been recognized in our jurisprudence. It is meant to save time, loan closing
charges, additional legal services, recording fees, and other costs. A blanket mortgage clause is designed
to lower the cost of loans to borrowers, at the same time making the business of lending more profitable
to banks. Settled is the rule that mortgages securing future loans are valid and legal contracts. 17

Presidential Decree No. 1529, otherwise known as the Property Registration Decree, mandates:

SEC. 51. Conveyance and other dealings by registered owner. – x x x x

The act of registration shall be the operative act to convey or affect the land insofar as third persons are
concerned, and in all cases under this Decree, the registration shall be made in the office of the Register
of Deeds for the province or city where the land lies.

SEC. 52. Constructive notice upon registration. – Every conveyance, mortgage, lease, lien, attachment,
order, judgment, instrument, or entry affecting registered land shall, if registered, filed, or entered in the
office of the Register of Deeds for the province or city where the land to which it relates lies, be
constructive notice to all persons from the time of such registering, filing, or entering.

It is the act of registration which creates a constructive notice to the whole world and binds third persons.
By definition, registration is the ministerial act by which a deed, contract, or instrument is inscribed in the
records of the office of the Register of Deeds and annotated on the back of the TCT covering the land
subject of the deed, contract, or instrument. 18

A person dealing with registered land is not required to go beyond the TCT to determine the liabilities
attaching to the property. He is only charged with notice of such burdens on the property as are duly
annotated on the TCT. To require him to do more is to defeat one of the primary objects of the Torrens
system.19

As to whether the second loan should have been annotated on the TCT of the mortgaged property in order
to bind third parties, the case of Tad-Y v. Philippine National Bank20 is in point. The case involved a
mortgage contract containing a provision that future loans would also be secured by the mortgage. This
Court ruled that since the mortgage contract containing the blanket mortgage clause was already
annotated on the TCT of the mortgaged property, subsequent loans need not be separately annotated on
the said TCT in order to bind third parties. We quote the pertinent portion of this Court’s discussion in
Tad-Y v. Philippine National Bank:21

Petitioner-appellant advances the argument that the latter loans should have also been noted on TCT
2417. But We believe there was no necessity for such a notation because it already appears in the said
title that aside from the amount of P840 first borrowed by the mortgagors, other obligations would also be
secured by the mortgage. As already stated, it was incumbent upon any subsequent mortgagee or
encumbrancer of the property in question to have examined the books or records of the PNB, as first
mortgagee, the credit standing of the debtors.22

Records of the present case show that the mortgage contract, containing the provision that future loans
would also be secured by the mortgage, is duly annotated on the TCT of the mortgaged property. This
constitutes sufficient notice to the world that the mortgage secures not only the first loan but also future
loans the mortgagor may obtain from respondent bank. Applying the doctrine laid down in Tad-Y v.
Philippine National Bank,23 the second loan need not be separately annotated on the said TCT in order to
bind third parties such as petitioners.

However, we note the curious fact that respondent bank’s petition for extrajudicial foreclosure was solely
for the satisfaction of the first loan although the second loan had also become due and demandable. 24 In
its Appellant’s Brief filed in the Court of Appeals, respondent bank even admitted that the second loan was
not included in its bid at the public auction sale. To quote from page 5 of the Appellant’s Brief filed by
respondent bank:

For failure to pay the first loan, the mortgage was foreclosed and the property covered by TCT No. 24196
was sold at public auction on December 19, 1994, for P142,000, which was the bid of the mortgagee
bank. The bank did not include in its bid the second loan of P150,000.25 (Emphasis supplied)

For its failure to include the second loan in its application for extrajudicial foreclosure as well as in its bid
at the public auction sale, respondent bank is deemed to have waived its lien on the mortgaged property
with respect to the second loan. Of course, respondent bank may still collect the unpaid second loan, and
the interest thereon, in an ordinary collection suit before the right to collect prescribes.
After the foreclosure of the mortgaged property, the mortgage is extinguished and the purchaser at
auction sale acquires the property free from such mortgage.26 Any deficiency amount after foreclosure
cannot constitute a continuing lien on the foreclosed property, but must be collected by the mortgagee-
creditor in an ordinary action for collection. In this case, the second loan from the same mortgage deed is
in the nature of a deficiency amount after foreclosure.

In order to effect redemption, the judgment debtor or his successor -in-interest need only pay the
purchaser at the public auction sale the redemption amount composed of (1) the price which the
purchaser at the public auction sale paid for the property and (2) the amount of any assessment or taxes
which the purchaser may have paid on the property after the purchase, plus the applicable interest. 27
Respondent bank’s demand that the second loan be added to the actual amount paid for the property at
the public auction sale finds no basis in law or jurisprudence.

Coming now to the computation of the redemption amount, Section 78 of Republic Act No. 337, otherwise
known as the General Banking Act, governs in cases where the mortgagee is a bank. 28 It provides:

Sec. 78. x x x In the event of foreclosure, whether judicially or extrajudicially, of any mortgage on real
estate which is security for any loan granted before the passage of this Act or under the provisions of this
Act, the mortgagor or debtor whose real property has been sold at public auction, judicially or
extrajudicially, for the full or partial payment of an obligation to any bank, banking or credit institution,
within the purview of this Act shall have the right, within one year after the sale of the real estate as a
result of the foreclosure of the respective mortgage, to redeem the property by paying the amount fixed
by the court in the order of execution, or the amount due under the mortgage deed, as the case may be,
with interest thereon at the rate specified in the mortgage, and all the costs, and judicial and other
expenses incurred by the bank or institution concerned by reason of the execution and sale and as a
result of the custody of said property less the income received from the property. x x x x (Emphasis
supplied)

Applying Section 78 of the General Banking Act, the 24% per annum interest rate specified in the
mortgage should apply. Thus, the redemption amount should be computed as follows:

P 142,000.00 = winning bid at auction sale

P 2,647.00 = registration expenses for

provisional certificate of sale

19 Dec. 1994 - 9 Aug. 1995 = 233 days from date of auction to

date of tender

12 Jan. 1995 - 9 Aug. 1995 = 211 days from date of

registration of provisional
sale to date of tender

P142,000.00 x 24% x 233/360 = P 22,057.33

2,647.00 x 24% x 211/360 = 372.35

P 22,429.68

Plus winning bid 142,000.00

Plus registration expenses 2,647.00

 Total P 167,076.68

After deducting petitioners’ tender of P155,769.50, there is a deficiency of P11,307.18 on the redemption
amount, as computed above. Petitioners should thus pay respondent bank the deficiency amounting to
P11,307.18, with interest at the rate of 24% per annum from 22 May 1998 until fully paid.

WHEREFORE, we GRANT the petition. We SET ASIDE the 17 May 2005 Decision and the 14 December
2005 Resolution of the Court of Appeals in CA-G.R. CV No. 59769. Petitioners Benedict and Maricel Dy
Tecklo are ordered to pay respondent Rural Bank of Pamplona, Inc. the deficiency of P11,307.18 on the
redemption amount, with interest at the rate of 24% per annum from 22 May 1998 until fully paid. Upon
receipt of the full amount inclusive of interest, respondent Rural Bank of Pamplona, Inc. is ordered to
surrender to petitioners Benedict and Maricel Dy Tecklo the owner’s duplicate of TCT No. 24196.

G.R. No. 170375               July 7, 2010

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
HON. MAMINDIARA P. MANGOTARA, in his capacity as Presiding Judge of the Regional Trial Court, Branch
1, Iligan City, Lanao del Norte, and MARIA CRISTINA FERTILIZER CORPORATION, and the PHILIPPINE
NATIONAL BANK, Respondents,

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 170505

LAND TRADE REALTY CORPORATION, Petitioner,

vs.
NATIONAL POWER CORPORATION and NATIONAL TRANSMISSION CORPORATION (TRANSCO),
Respondents,

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. Nos. 173355-56

NATIONAL POWER CORPORATION, Petitioner,

vs.
HON. COURT OF APPEALS (Special Twenty-Third Division, Cagayan de Oro City), and LAND TRADE
REALTY CORPORATION, Respondents,

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 173401

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
DEMETRIA CACHO, represented by alleged Heirs DEMETRIA CONFESOR VIDAL and/or TEOFILO CACHO,
AZIMUTH INTERNATIONAL DEVELOPMENT CORPORATION and LAND TRADE REALTY CORPORATION,
Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. Nos. 173563-64

NATIONAL TRANSMISSION CORPORATION, Petitioner,

vs.
HON. COURT OF APPEALS (Special Twenty-Third Division, Cagayan de Oro City), and LAND TRADE
REALTY CORPORATION as represented by Atty. Max C. Tabimina, Respondents,
x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 178779

LAND TRADE REALTY CORPORATION, Petitioner,

vs.
DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL DEVELOPMENT CORPORATION,
Respondents,

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 178894

TEOFILO CACHO and/or ATTY. GODOFREDO CABILDO, Petitioner,

vs.
DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL DEVELOPMENT CORPORATION,
Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court are seven consolidated Petitions for Review on Certiorari and a Petition for Certiorari
under Rules 45 and 65 of the Rules of Court, respectively, arising from actions for quieting of title,
expropriation, ejectment, and reversion, which all involve the same parcels of land.

In G.R. No. 170375, the Republic of the Philippines (Republic), by way of consolidated Petitions for Review
on Certiorari and for Certiorari under Rules 45 and 65 of the Rules of Court, respectively, seeks to set
aside the issuances of Judge Mamindiara P. Mangotara (Judge Mangotara) of the Regional Trial Court,
Branch 1 (RTC-Branch 1) of Iligan City, Lanao del Norte, in Civil Case No. 106, particularly, the: (1)
Resolution1 dated July 12, 2005 which, in part, dismissed the Complaint for Expropriation of the Republic
for the latter’s failure to implead indispensable parties and forum shopping; and (2) Resolution 2 dated
October 24, 2005, which denied the Partial Motion for Reconsideration of the Republic.

G.R. Nos. 178779 and 178894 are two Petitions for Review on Certiorari under Rule 45 of the Rules of
Court, where Landtrade Realty Corporation (LANDTRADE), Teofilo Cacho, and/or Atty. Godofredo Cabildo
assail the Decision3 dated January 19, 2007 and Resolution 4 dated July 4, 2007 of the Court of Appeals in
CA-G.R. CV No. 00456. The Court of Appeals affirmed the Decision 5 dated July 17, 2004 of the Regional
Trial Court, Branch 3 (RTC-Branch 3) of Iligan City, Lanao del Norte, in Civil Case No. 4452, granting the
Petition for Quieting of Title, Injunction and Damages filed by Demetria Vidal and Azimuth International
Development Corporation (AZIMUTH) against Teofilo Cacho and Atty. Godofredo Cabildo.

G.R. No. 170505 is a Petition for Review on Certiorari under Rule 45 of the Rules of Court in which
LANDTRADE urges the Court to reverse and set aside the Decision 6 dated November 23, 2005 of the Court
of Appeals in CA-G.R. SP Nos. 85714 and 85841. The appellate court annulled several issuances of the
Regional Trial Court, Branch 5 (RTC-Branch 5) of Iligan City, Lanao del Norte, and its sheriff, in Civil Case
No. 6613, specifically, the: (1) Order7 dated August 9, 2004 granting the Motion for Execution Pending
Appeal of LANDTRADE; (2) Writ of Execution 8 dated August 10, 2004; (3) two Notices of Garnishment9
both dated August 11, 2004, and (4) Notification10 dated August 11, 2004. These issuances of the RTC-
Branch 5 allowed and/or enabled execution pending appeal of the Decision 11 dated February 17, 2004 of
the Municipal Trial Court in Cities (MTCC), Branch 2 of Iligan City, Lanao del Norte, favoring LANDTRADE
in Civil Case No. 11475-AF, the ejectment case said corporation instituted against the National Power
Corporation (NAPOCOR) and the National Transmission Corporation (TRANSCO).

G.R. Nos. 173355-56 and 173563-64 are two Petitions for Certiorari and Prohibition under Rule 65 of the
Rules of Court with prayer for the immediate issuance of a Temporary Restraining Order (TRO) and/or
Writ of Preliminary Injunction filed separately by NAPOCOR and TRANSCO. Both Petitions seek to annul
the Resolution12 dated June 30, 2006 of the Court of Appeals in the consolidated cases of CA-G.R. SP Nos.
00854 and 00889, which (1) granted the Omnibus Motion of LANDTRADE for the issuance of a writ of
execution and the designation of a special sheriff for the enforcement of the Decision 13 dated December
12, 2005 of the RTC-Branch 1 in Civil Case No. 6613, and (2) denied the applications of NAPOCOR and
TRANSCO for a writ of preliminary injunction to enjoin the execution of the same RTC Decision. The
Decision dated December 12, 2005 of RTC-Branch 1 in Civil Case No. 6613 affirmed the Decision dated
February 17, 2004 of the MTCC in Civil Case No. 11475-AF, favoring LANDTRADE.

G.R. No. 173401 involves a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by
the Republic, which raises pure questions of law and seeks the reversal of the following issuances of the
Regional Trial Court, Branch 4 (RTC-Branch 4) of Iligan City, Lanao del Norte, in Civil Case No. 6686, an
action for cancellation of titles and reversion: (1) Order14 dated December 13, 2005 dismissing the
Complaint in Civil Case No. 6686; and (2) Order15 dated May 16, 2006, denying the Motion for
Reconsideration of the Republic.

I
THE PRECEDING CASES

The consolidated seven cases have for their common genesis the 1914 case of Cacho v. Government of
the United States16 (1914 Cacho case).

The 1914 Cacho Case

Sometime in the early 1900s, the late Doña Demetria Cacho (Doña Demetria) applied for the registration
of two parcels of land: (1) Lot 1 of Plan II-3732, the smaller parcel with an area of 3,635 square meters
or 0.36 hectares (Lot 1); and (2) Lot 2 of Plan II-3732, the larger parcel with an area of 378,707 square
meters or 37.87 hectares (Lot 2). Both parcels are situated in what was then the Municipality of Iligan,
Moro Province, which later became Sitio Nunucan, then Brgy. Suarez, in Iligan City, Lanao del Norte.
Doña Demetria’s applications for registration were docketed as GLRO Record Nos. 6908 and 6909.

The application in GLRO Record No. 6908 covered Lot 1, the smaller parcel of land. Doña Demetria
allegedly acquired Lot 1 by purchase from Gabriel Salzos (Salzos). Salzos, in turn, bought Lot 1 from
Datto Darondon and his wife Alanga, evidenced by a deed of sale in favor of Salzos signed solely by
Alanga, on behalf of Datto Darondon.

The application in GLRO Record No. 6909 involved Lot 2, the bigger parcel of land. Doña Demetria
purportedly purchased Lot 2 from Datto Bunglay. Datto Bunglay claimed to have inherited Lot 2 from his
uncle, Datto Anandog, who died without issue.

Only the Government opposed Doña Demetria’s applications for registration on the ground that the two
parcels of land were the property of the United States and formed part of a military reservation, generally
known as Camp Overton.

On December 10, 1912, the land registration court (LRC) rendered its Decision in GLRO Record Nos. 6908
and 6909.

Based on the evidence, the LRC made the following findings in GLRO Record No. 6908:

6th. The court is convinced from the proofs that the small parcel of land sold by the Moro woman Alanga
was the home of herself and her husband, Darondon, and was their conjugal property; and the court so
finds.

xxxx

As we have seen, the deed on which applicant’s title to the small parcel rests, is executed only by the
Moro woman Alanga, wife of Datto Darondon, which is not permitted either by the Moro laws or the Civil
Code of the Philippine Islands. It appears that the husband of Alanga, Datto Darondon, is alive yet, and
before admitting this parcel to registration it is ordered that a deed from Datto Darondon, husband of
Alanga, be presented, renouncing all his rights in the small parcel of land object of Case No. 6908, in
favor of the applicant.17 (Emphases supplied.)

In GLRO Record No. 6909, the LRC observed and concluded that:

A tract of land 37 hectares in area, which is the extent of the land under discussion, is larger than is
cultivated ordinarily by the Christian Filipinos. In the Zamboanga cadastral case of thousands of parcels
now on trial before this court, the average size of the parcels is not above 3 or 4 hectares, and the court
doubts very much if a Moro with all his family could cultivate as extensive a parcel of land as the one in
question. x x x

xxxx

The court is also convinced from the proofs that the small portion in the southern part of the larger parcel,
where, according to the proofs, Datto Anandog had his house and where there still exist some cocos and
fruit trees, was the home of the said Moro Datto Anandog; and the court so finds. As to the rest of the
large parcel the court does not find the title of Datto Bunglay established. According to his own
declaration his residence on this land commenced only a few days before the sale. He admitted that the
coco trees he is supposed to have planted had not yet begun to bear fruit at the time of the sale, and
were very small. Datto Duroc positively denies that Bunglay lived on the land, and it clearly appears that
he was not on the land when it was first occupied by the military. Nor does Datto Bunglay claim to have
planted the three mango trees by the roadside near point 25 of the plan. The court believes that all the
rest of this parcel, not occupied nor cultivated by Datto Anandog, was land claimed by Datto Duroc and
also by Datto Anandog and possibly by other dattos as a part of their general jurisdiction, and that it is
the class of land that Act No. 718 prohibits the sale of, by the dattos, without the express approval of the
Government.

It is also found that Datto Bunglay is the nephew of Dato Anandog, and that the Moro woman Alanga,
grantor of the small parcel, is the sister of Datto Anandog, and that he died without issue.

xxxx

It appears also that according to the provisions of the Civil Code as also the provisions of the ‘Luwaran
Code’ of the Moros, the Moro woman Alanga has an interest in the portion of land left by her deceased
brother, Datto Anandog. By article LXXXV, section 3, of the ‘Luwaran Code,’ it will be seen that the
brothers and sisters of a deceased Moro inherit his property to the exclusion of the more distant relatives.
Therefore Datto Bunglay had no legal interest whatever in the land to sell to the applicant, Doña Demetria
Cacho. But the Moro woman, Alanga, having appeared as a witness for the applicant without having made
any claim to the land, the court finds from this fact that she has ratified the sale made by her nephew.

The court therefore finds that the applicant Doña Demetria Cacho is owner of the portion of land occupied
and planted by the deceased Datto Anandog in the southern part of the large parcel object of expediente
No. 6909 only; and her application as to all the rest of the land solicited in said case is denied. And it is
ordered that a new survey of the land be made and a corrected plan be presented, excluding all the land
not occupied and cultivated by Datto Anandog; that said survey be made and the corrected plan
presented on or before the 30th day of March, 1913, with previous notice to the commanding general of
the Division of the Philippines.

On the 8th day of December, the court was at Camp Overton and had another ocular inspection of the
land for the purpose of fixing the limits of the part cultivated by Datto Anandog, so often mentioned
herein, with previous notice to the applicant and her husband and representative, Señor Dionisio Vidal.
Having arrived late, Señor Vidal did not assist in the ocular inspection, which was fixed for 3 o’clock, p.m.
of the day mentioned. But the court, nevertheless, set stakes marking the N.E., S.E., and S.W. corners of
the land found to have been cultivated by the deceased Anandog. The N.E. limit of said land is a brook,
and the N.W. corner is the point where the brook intersects the shore line of the sea, the other corners
mentioned being marked with pine stakes. And it is ordered that the new survey be made in accordance
with the points mentioned, by tracing four straight lines connecting these four points. Between the portion
cultivated by Datto Anandog and the mouth of the River Agus there is a high steep hill and the court does
not believe it possible to cultivate said hill, it being covered with rocks and forest. 18 (Emphases supplied.)

The LRC additionally decreed at the end of its December 10, 1912 Decision:

It is further ordered that one-half of the costs of the new survey be paid by the applicant and the other
half by the Government of the United States, and that the applicant present the corresponding deed from
Datto Darondon on or before the above-mentioned 30th day of March, 1913. Final decision in these cases
is reserved until the presentation of the said deed and the new plan. 19

Apparently dissatisfied with the foregoing LRC judgment, Doña Demetria appealed to this Court. In its
Decision dated December 10, 1914, the Court affirmed in toto the LRC Decision of December 10, 1912,
well satisfied that the findings of fact of the court below were fully sustained by the evidence adduced
during trial.
Eighty-three years later, in 1997, the Court was again called upon to settle a matter concerning the
registration of Lots 1 and 2 in the case of Cacho v. Court of Appeals 20 (1997 Cacho case).

The 1997 Cacho Case

On June 29, 1978, Teofilo Cacho (Teofilo), claiming to be the late Doña Demetria’s son and sole heir, filed
before the RTC a petition for reconstitution of two original certificates of title (OCTs), docketed under the
original GLRO Record Nos. 6908 and 6909.

Teofilo’s petition was opposed by the Republic, National Steel Corporation (NSC), and the City of Iligan.

Acting on the motion for judgment on demurrer to evidence filed by the Republic and NSC, the RTC
initially dismissed Teofilo’s petition for reconstitution of titles because there was inadequate evidence to
show the prior existence of the titles sought to be restored. According to the RTC, the proper remedy was
a petition for the reconstitution of decrees since "it is undisputed that in Cases No. 6908 and 6909,
Decrees No. 10364 and 18969, respectively, were issued." Teofilo sought leave of court for the filing and
admission of his amended petition, but the RTC refused. When elevated to this Court in Cacho v.
Mangotara, docketed as G.R. No. 85495, the Court resolved to remand the case to the RTC, with an order
to the said trial court to accept Teofilo’s amended petition and to hear it as one for re-issuance of decrees.

In opposing Teofilo’s petition, the Republic and NSC argued that the same suffered from jurisdictional
infirmities; that Teofilo was not the real party-in-interest; that Teofilo was guilty of laches; that Doña
Demetria was not the registered owner of the subject parcels of land; that no decrees were ever issued in
Doña Demetria’s name; and that the issuance of the decrees was dubious and irregular.

After trial, on June 9, 1993, the RTC rendered its Decision granting Teofilo’s petition and ordering the
reconstitution and re-issuance of Decree Nos. 10364 and 18969. The RTC held that the issuance of Decree
No. 10364 in GLRO No. 6908 on May 9, 1913 and Decree No. 18969 in GLRO Record No. 6909 on July 8,
1915 was sufficiently established by the certifications and testimonies of concerned officials. The original
issuance of these decrees presupposed a prior judgment that had become final.

On appeal, the Court of Appeals reversed the RTC Decision dated June 9, 1993 and dismissed the petition
for re-issuance of Decree Nos. 10364 and 18969 because: (1) re-issuance of Decree No. 18969 in GLRO
Record No. 6909 could not be made in the absence of the new survey ordered by this Court in the 1914
Cacho case; (2) the heir of a registered owner may lose his right to recover possession of the property
and title thereto by laches; and (3) Teofilo failed to establish his identity and existence and that he was a
real party-in-interest.

Teofilo then sought recourse from this Court in the 1997 Cacho case. The Court reversed the judgment of
the Court of Appeals and reinstated the decision of the RTC approving the re-issuance of Decree Nos.
10364 and 18969. The Court found that such decrees had in fact been issued and had attained finality, as
certified by the Acting Commissioner, Deputy Clerk of Court III, Geodetic Engineer, and Chief of
Registration of the then Land Registration Commission, now National Land Titles and Deeds Registration
Administration (NALTDRA). The Court further reasoned that:

[T]o sustain the Court of Appeals ruling as regards requiring petitioners to fulfill the conditions set forth in
Cacho vs. U.S. would constitute a derogation of the doctrine of res judicata. Significantly, the issuance of
the subject decrees presupposes a prior final judgment because the issuance of such decrees is a mere
ministerial act on part of the Land Registration Commission (now the NALTDRA), upon presentation of a
final judgment. It is also worth noting that the judgment in Cacho vs. U.S. could not have acquired finality
without the prior fulfillment of the conditions in GLRO Record No. 6908, the presentation of the
corresponding deed of sale from Datto Dorondon on or before March 30, 1913 (upon which Decree No.
10364 was issued on May 9, 1913); and in GLRO Record No. 6909, the presentation of a new survey per
decision of Judge Jorge on December 10, 1912 and affirmed by this Court on December 10, 1914 (upon
which Decree No. 18969 was issued on July 8, 1915).

Requiring the submission of a new plan as a condition for the re-issuance of the decree would render the
finality attained by the Cacho vs. U.S. case nugatory, thus, violating the fundamental rule regarding res
judicata. It must be stressed that the judgment and the resulting decree are res judicata, and these are
binding upon the whole world, the proceedings being in the nature of proceedings in rem. Besides, such a
requirement is an impermissible assault upon the integrity and stability of the Torrens System of
registration because it also effectively renders the decree inconclusive. 21
As to the issue of laches, the Court referred to the settled doctrine that laches cannot bar the issuance of
a decree. A final decision in land registration cases can neither be rendered inefficacious by the statute of
limitations nor by laches.

Anent the issue of the identity and existence of Teofilo and he being a real party-in-interest, the Court
found that these were sufficiently established by the records. The Court relied on Teofilo’s Affidavit of
Adjudication as Doña Demetria’s sole heir, which he executed before the Philippine Consulate General in
Chicago, United States of America (U.S.A.); as well as the publication in the Times Journal of the fact of
adjudication of Doña Demetria’s estate. Teofilo also appeared personally before the Vice Consul of the
Philippine Consulate General in Chicago to execute a Special Power of Attorney in favor of Atty. Godofredo
Cabildo (Atty. Cabildo) who represented him in this case. The Court stressed that the execution of public
documents is entitled to the presumption of regularity and proof is required to assail and controvert the
same.

In the Resolution dated July 28, 1997,22 the Court denied the Motions for Reconsideration of the Republic
and NSC.

As a result of the 1997 Cacho case, the decrees of registration were re-issued bearing new numbers and
OCTs were issued for the two parcels of land in Doña Demetria’s name. OCT No. 0-1200 (a.f.) was based
on re-issued Decree No. N-219464 in GLRO Record No. 6908, while OCT No. 0-1201 (a.f.) was based on
re-issued Decree No. N-219465 in GLRO Record No. 6909.

The dispute over Lots 1 and 2 did not end with the termination of the 1997 Cacho case. Another four
cases involving the same parcels of land were instituted before the trial courts during and after the
pendency of the 1997 Cacho case. These cases are: (1) the Expropriation Case, G.R. No. 170375; (2) the
Quieting of Title Case, G.R. Nos. 178779 and 178894; (3) the Ejectment or Unlawful Detainer Case, G.R.
No. 170505 (execution pending appeal before the RTC) and G.R. Nos. 173355-56 and 173563-64
(execution pending appeal before the Court of Appeals); and (4) the Cancellation of Titles and Reversion
Case, G.R. No. 173401. These cases proceeded independently of each other in the courts a quo until they
reached this Court via the present Petitions. In the Resolution 23 dated October 3, 2007, the Court
consolidated the seven Petitions considering that they either originated from the same case or involved
similar issues.

Expropriation Case

(G.R. No. 170375)

The Complaint for Expropriation was originally filed on August 15, 1983 by the Iron and Steel Authority
(ISA), now the NSC, against Maria Cristina Fertilizer Corporation (MCFC), and the latter’s mortgagee, the
Philippine National Bank (PNB). The Complaint was docketed as Civil Case No. 106 and raffled to RTC-
Branch 1, presided over by Judge Mangotara.

ISA was created pursuant to Presidential Decree No. 272924 dated August 9, 1973, to strengthen,
develop, and promote the iron and steel industry in the Philippines. Its existence was extended until
October 10, 1988.

On November 16, 1982, during the existence of ISA, then President Ferdinand E. Marcos issued
Presidential Proclamation No. 2239,25 reserving in favor of ISA a parcel of land in Iligan City, measuring
302,532 square meters or 30.25 hectares, to be devoted to the integrated steel program of the
Government. MCFC occupied certain portions of this parcel of land. When negotiations with MCFC failed,
ISA was compelled to file a Complaint for Expropriation.

When the statutory existence of ISA expired during the pendency of Civil Case No. 106, MCFC filed a
Motion to Dismiss the case alleging the lack of capacity to sue of ISA. The RTC-Branch 1 granted the
Motion to Dismiss in an Order dated November 9, 1988. ISA moved for reconsideration or, in the
alternative, for the substitution of the Republic as plaintiff in Civil Case No. 106, but the motion was
denied by RTC-Branch 1. The dismissal of Civil Case No. 106 was affirmed by the Court of Appeals, thus,
ISA appealed to this Court. In Iron and Steel Authority v. Court of Appeals 26 (ISA case), the Court
remanded the case to RTC-Branch 1, which was ordered to allow the substitution of the Republic for ISA
as plaintiff. Entry of Judgment was made in the ISA case on August 31, 1998. In an Order27 dated
November 16, 2001, the RTC-Branch 1 allowed the substitution of the Republic for ISA as plaintiff in Civil
Case No. 106.
Alleging that Lots 1 and 2 involved in the 1997 Cacho case encroached and overlapped the parcel of land
subject of Civil Case No. 106, the Republic filed with the RTC-Branch 1 a Motion for Leave to File
Supplemental Complaint dated October 7, 2004 and to Admit the Attached Supplemental Complaint dated
September 28, 200428 seeking to implead in Civil Case No. 106 Teofilo Cacho and Demetria Vidal and their
respective successors-in-interest, LANDTRADE and AZIMUTH.

MCFC opposed the Motion for leave to file and to admit the Supplemental Complaint on the ground that
the Republic was without legal personality to file the same because ISA was the plaintiff in Civil Case No.
106. MCFC argued that the Republic failed to move for the execution of the decision in the ISA case within
the prescriptive period of five years, hence, the only remedy left was for the Republic to file an
independent action to revive the judgment. MCFC further pointed out that the unreasonable delay of more
than six years of the Republic in seeking the substitution and continuation of the action for expropriation
effectively barred any further proceedings therein on the ground of estoppel by laches.

In its Reply, the Republic referred to the Order dated November 16, 2001 of the RTC-Branch 1 allowing
the substitution of the Republic for ISA.

In an Order dated April 4, 2005, the RTC-Branch 1 denied the Motion of the Republic for leave to file and
to admit its Supplemental Complaint. The RTC-Branch 1 agreed with MCFC that the Republic did not file
any motion for execution of the judgment of this Court in the ISA case. Since no such motion for
execution had been filed, the RTC-Branch 1 ruled that its Order dated November 16, 2001, which effected
the substitution of the Republic for ISA as plaintiff in Civil Case No. 106, was an honest mistake. The
Republic filed a Motion for Reconsideration of the April 4, 2005 Order of the RTC-Branch 1.

MCFC then filed a Motion to Dismiss Civil Case No. 106 for: (1) failure of the Republic to implead
indispensable parties because MCFC insisted it was not the owner of the parcels of land sought to be
expropriated; and (2) forum shopping considering the institution by the Republic on October 13, 2004 of
an action for the reversion of the same parcels subject of the instant case for expropriation.

Judge Mangotara of RTC-Branch 1 issued a Resolution 29 on July 12, 2005, denying for lack of merit the
Motion for Reconsideration of the Order dated April 4, 2005 filed by the Republic, and granting the Motion
to Dismiss Civil Case No. 106 filed by MCFC. Judge Mangotara justified the dismissal of the Expropriation
Case thus:

What the Republic seeks [herein] is the expropriation of the subject parcels of land. Since the exercise of
the power of eminent domain involves the taking of private lands intended for public use upon payment of
just compensation to the owner x x x, then a complaint for expropriation must, of necessity, be directed
against the owner of the land subject thereof. In the case at bar, the decision of the Supreme Court in
Cacho v. Government of the United States x x x, decreeing the registration of the subject parcels of land
in the name of the late Doña Demetria Cacho has long attained finality and is conclusive as to the
question of ownership thereof. Since MCFC, the only defendant left in this case, is not a proper party
defendant in this complaint for expropriation, the present case should be dismissed.

This Court notes that the Republic [has filed reversion proceedings] dated September 27, 2004, involving
the same parcels of land, docketed as Case No. 6686 pending before the Regional Trial Court of Lanao del
Norte, Iligan City Branch 4. [The Republic], however, did not state such fact in its "Verification and
Certification of Non-Forum Shopping" attached to its Supplemental Complaint dated September 28, 2004.
[It is therefore] guilty of forum shopping. Moreover, considering that in the Reversion case, [the Republic]
asserts ownership over the subject parcels of land, it cannot be allowed to take an inconsistent position in
this expropriation case without making a mockery of justice. 30

The Republic filed a Motion for Reconsideration of the Resolution dated July 12, 2005, insofar as it
dismissed Civil Case No. 106, but said Motion was denied by Judge Mangatora in a Resolution 31 dated
October 24, 2005.

On January 16, 2006, the Republic filed with this Court the consolidated Petition for Review on Certiorari
and Petition for Certiorari under Rules 45 and 65 of the Rules of Court, respectively, docketed as G.R. No.
170375.

The Quieting of Title Case

(G.R. Nos. 178779 and 178894)
Demetria Vidal (Vidal) and AZIMUTH filed on November 18, 1998, a Petition 32 for Quieting of Title against
Teofilo, Atty. Cabildo, and the Register of Deeds of Iligan City, which was docketed as Civil Case No. 4452
and raffled to RTC-Branch 3.

In the Petition, Vidal claimed that she, and not Teofilo, was the late Doña Demetria’s sole surviving heir,
entitled to the parcels of land covered by OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.). She averred that she
is the daughter of Francisco Cacho Vidal (Francisco) and Fidela Arellano Confesor. Francisco was the only
child of Don Dionisio Vidal and Doña Demetria.

AZIMUTH, for its part, filed the Petition as Vidal’s successor-in-interest with respect to a 23-hectare
portion of the subject parcels of land pursuant to the Memorandum of Agreement dated April 2, 1998 and
Deed of Conditional Conveyance dated August 13, 2004, which Vidal executed in favor of AZIMUTH.

Teofilo opposed the Petition contending that it stated no cause of action because there was no title being
disturbed or in danger of being lost due to the claim of a third party, and Vidal had neither legal nor
beneficial ownership of the parcels of land in question; that the matter and issues raised in the Petition
had already been tried, heard, and decided by the RTC of Iligan City and affirmed with finality by this
Court in the 1997 Cacho case; and that the Petition was barred by the Statute of Limitations and laches.

LANDTRADE, among other parties, was allowed by the RTC-Branch 3 to intervene in Civil Case No. 4452.
LANDTRADE alleged that it is the owner of a portion of the subject parcels of land, measuring 270,255
square meters or about 27.03 hectares, which it purportedly acquired through a Deed of Absolute Sale
dated October 1, 1996 from Teofilo, represented by Atty. Cabildo. LANDTRADE essentially argued that
Vidal's right as heir should be adjudicated upon in a separate and independent proceeding and not in the
instant Quieting of Title Case.

During the pre-trial conference, the parties manifested that there was no possibility of any amicable
settlement among them.

Vidal and AZIMUTH submitted testimonial and documentary evidence during the trial before the RTC-
Branch 3. Teofilo and Atty. Cabildo failed to present any evidence as they did not appear at all during the
trial, while LANDTRADE was declared by the RTC-Branch 3 to have waived its right to present evidence on
its defense and counterclaim.

On July 17, 2004, the RTC-Branch 3 rendered its Decision33 in Civil Case No. 4452 in favor of Vidal and
AZIMUTH, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the petitioners and against the respondents and
intervenors:

1) DECLARING:

a.) Petitioner Demetria C. Vidal the sole surviving heir of the late Doña Demetria Cacho;

b.) Petitioner Demetria C. Vidal alone has the hereditary right to and interest in the Subject
Property;

c.) Petitioner Azimuth International Development Corporation is the successor-in-interest of

petitioner Demetria C. Vidal to a portion of the Subject Property to the extent provided in their 2
April 1998 Memorandum of Agreement and 13 August 1998 Deed of Conditional Conveyance;

d.) Respondent Teofilo Cacho is not a son or heir of the late Dona Demetria Cacho; and

e.) Respondent Teofilo Cacho, Godofredo Cabildo and any of their transferees/assignees have no
valid right to or interest in the Subject Property.

2) ORDERING:

a.) Respondent Register of Deeds of Iligan City, and any other person acting in his behalf, stop,
cease and desist:
 i) From accepting or registering any affidavit of self- adjudication or any other document
executed by respondents Teofilo Cacho, Godofredo Cabildo and/or any other person which
in any way transfers the title to the Subject Property from Dona Demetria Cacho to
respondent Teofilo Cacho, Godofredo Cabildo and/or any of their transferees/assignees,
including the intervenors.

ii) From cancelling the OCTs or any certificate of title over the Subject Property in the name
of Demetria Cacho or any successor certificate of title, and from issuing new certificates of
title in the name of respondents Teofilo Cacho, Godofredo Cabildo their
transferees/assignees, including the intervenors.

b) Respondents Teofilo Cacho, Godofredo Cabildo, their transferees/assignees, and any other
person acting in their behalf, to stop, cease and desist:

i) From executing, submitting to any Register of Deeds, or registering or causing to be

registered therein, any affidavit of self-adjudication or any other document which in any
way transfers title to the Subject Property from Demetria Cacho to respondents Teofilo
Cacho, Godofredo Cabildo and/or any of their transferees/assignees, including the
intervenors.

ii) From canceling or causing the cancellation of OCTs or any certificate of title over the
Subject Property in the name of Demetria Cacho or any successor certificate of title, and
from issuing new certificates of title in the name of respondent Teofilo Cacho, Godofredo
Cabildo and/or any of their transferees/assignees, including the intervenors.

iii) From claiming or representing in any manner that respondent Teofilo Cacho is the son or
heir of Demetria Cacho or has rights to or interest in the Subject Property.

3) ORDERING respondents Teofilo Cacho and Atty. Godofredo Cabildo to pay petitioners, jointly and
severally, the following:

a) For temperate damages - P 80,000.00

b) For nominal damages - P 60,000.00

c) For moral damages - P500,000.00

d) For exemplary damages - P 500,000.00

e) For attorney's fees (ACCRA Law)-P1,000,000.00

f) For Attorney's fees - P500,000.00

(Atty. Voltaire Rovira)

g) For litigation expenses - P300,000.00

For lack of factual and legal basis, the counterclaim of Teofilo Cacho and Atty. Godofredo Cabildo is
hereby dismissed.

Likewise, the counterclaim of intervenor IDD/Investa is dismissed for lack of basis as the petitioners
succeeded in proving their cause of action.

On the cross-claim of intervenor IDD/Investa, respondents Teofilo Cacho and Atty. Godofredo Cabildo are
ORDERED to pay IDD/Investa, jointly and severally, the principal sum of P5,433,036 with 15% interest
per annum.

For lack of legal basis, the counterclaim of Intervenor Landtrade Realty Development Corporation is
dismissed.

Likewise, Intervenor Manguera's counterclaim is dismissed for lack of legal basis. 34

The joint appeal filed by LANDTRADE, Teofilo, and Atty. Cabildo with the Court of Appeals was docketed
as CA-G.R. CV No. 00456. The Court of Appeals, in its Decision35 of January 19, 2007, affirmed in toto the
Decision dated July 17, 2004 of the RTC-Branch 3.

According to the Court of Appeals, the RTC-Branch 3 did not err in resolving the issue on Vidal’s status,
filiation, and hereditary rights as it is determinative of the issue on ownership of the subject properties. It
was indubitable that the RTC-Branch 3 had jurisdiction over the person of Teofilo and juridical personality
of LANDTRADE as they both filed their Answers to the Petition for Quieting of Title thereby voluntarily
submitting themselves to the jurisdiction of said trial court. Likewise, the Petition for Quieting of Title is in
itself within the jurisdiction of the RTC-Branch 3. Hence, where there is jurisdiction over the person and
subject matter, the resolution of all other questions arising in the case is but an exercise by the court of
its jurisdiction. Moreover, Teofilo and LANDTRADE were guilty of estoppel by laches for failing to assail the
jurisdiction of the RTC-Branch 3 at the first opportunity and even actively participating in the trial of the
case and seeking affirmative reliefs.

In addition, the Court of Appeals held that the 1997 Cacho case only determined the validity and efficacy
of the Affidavit of Adjudication that Teofilo executed before the Philippine Consulate General in the U.S.A.
The decision of this Court in the 1997 Cacho case, which had become final and executory, did not vest
upon Teofilo ownership of the parcels of land as it merely ordered the re-issuance of a lost duplicate
certificate of title in its original form and condition.

The Court of Appeals agreed in the finding of the RTC-Branch 3 that the evidence on record
preponderantly supports Vidal’s claim of being the granddaughter and sole heiress of the late Doña
Demetria. The appellate court further adjudged that Vidal did not delay in asserting her rights over the
subject parcels of land. The prescriptive period for real actions over immovables is 30 years. Vidal’s rights
as Doña Demetria’s successor-in-interest accrued upon the latter’s death in 1974, and only 24 years
thereafter, in 1998, Vidal already filed the present Petition for Quieting of Title. Thus, Vidal’s cause of
action had not yet prescribed. And, where the action was filed within the prescriptive period provided by
law, the doctrine of laches was also inapplicable.

LANDTRADE, Teofilo, and Atty. Cabildo filed separate Motions for Reconsideration of the January 19, 2007
Decision of the Court of Appeals, which were denied in the July 4, 2007 Resolution 36 of the same court.

On August 24, 2007, LANDTRADE filed with this Court a Petition for Review on Certiorari under Rule 45 of
the Rules of Court, which was docketed as G.R. No. 178779. On September 6, 2007, Teofilo and Atty.
Cabildo filed their own Petition for Review on Certiorari under Rule 45 of the Rules of Court, which was
docketed as G.R. No. 178894.

The Ejectment or Unlawful Detainer Case

(G.R. Nos. 170505, 173355-56, and 173563-64)

Three Petitions before this Court are rooted in the Unlawful Detainer Case instituted by LANDTRADE
against NAPOCOR and TRANSCO.

On August 9, 1952, NAPOCOR took possession of two parcels of land in Sitio Nunucan, Overton, Fuentes,
Iligan City, denominated as Lots 2029 and 2043, consisting of 3,588 square meters (or 0.36 hectares)
and 3,177 square meters (or 0.32 hectares), respectively. On Lot 2029, NAPOCOR constructed its power
sub-station, known as the Overton Sub-station, while on Lot 2043, it built a warehouse, known as the
Agus 7 Warehouse, both for the use of its Agus 7 Hydro-Electric Power Plant. For more than 30 years,
NAPOCOR occupied and possessed said parcels of land pursuant to its charter, Republic Act No. 6395. 37
With the enactment in 2001 of Republic Act No. 9136, otherwise known as the Electric Power Industry
Reform Act (EPIRA), TRANSCO assumed the functions of NAPOCOR with regard to electrical transmissions
and took over possession of the Overton Sub-station.

Claiming ownership of the parcels of land where the Overton Sub-station and Agus 7 Warehouse are
located, LANDTRADE filed with the MTCC on April 9, 2003 a Complaint for Unlawful Detainer against
NAPOCOR and TRANSCO, which was docketed as Civil Case No. 11475-AF.

In its Complaint, LANDTRADE alleged that it acquired from Teofilo, through Atty. Cabildo, two parcels of
land at Sitio Nunucan, Overton, Fuentes, Brgy. Maria Cristina, Iligan City, with a combined area of
270,255 square meters or around 27.03 hectares, as evidenced by a Deed of Absolute Sale 38 dated
October 1, 1996. Certain portions of said parcels of land were being occupied by the Overton Sub-station
and Agus 7 Warehouse of NAPOCOR and TRANSCO, through the tolerance of LANDTRADE. Upon failure of
NAPOCOR and TRANSCO to pay rentals or to vacate the subject properties after demands to do so,
LANDTRADE filed the present Complaint for Unlawful Detainer, plus damages in the amount of
P450,000.00 as yearly rental from date of the first extra-judicial demand until NAPOCOR and TRANSCO
vacate the subject properties.

In their separate Answers, NAPOCOR and TRANSCO denied the material allegations in the Complaint and
countered, by way of special and affirmative defenses, that the Complaint was barred by res judicata;
that the MTCC has no jurisdiction over the subject matter of the action; and that LANDTRADE lacked the
legal capacity to sue.

On February 17, 2004, the MTCC rendered its Decision39 in favor of LANDTRADE. The MTCC disposed:

WHEREFORE, premises considered, judgment is hereby rendered in favor of Plaintiff Land Trade Realty
Corporation represented by Atty. Max C. Tabimina and against defendant National Power Corporation
represented by its President, Mr. Rogelio M. Murga and co-defendant TRANSCO represented by its
President Dr. Allan T. Ortiz and Engr. Lorrymir A. Adaza, Manager, NAPOCOR-Mindanao, Regional Center,
Ma. Cristina, Iligan City, ordering:

1. Defendants National Power Corporation and TRANSCO, their agents or representatives or any
person/s acting on its behalf or under its authority to vacate the premises;

2. Defendants NAPOCOR and TRANSCO to pay Plaintiff jointly and solidarily:

a. Php500,000.00 a month representing fair rental value or compensation since June 29,
1978 until defendant shall have vacated the premises;

b. Php20,000.00 for and as attorney’s fees and

c. Cost of suit.

Execution shall issue immediately upon motion, unless an appeal has been perfected and the defendant to
stay execution files a sufficient supersedeas bond, approved by this Court and executed in favor of the
plaintiff, to pay the rents, damages, and costs accruing down to the time of judgment appealed from, and
unless, during the pendency of the appeal, defendants deposit with the appellate court the amount of
P500,000.00 per month, as reasonable value of the use and occupancy of the premises for the preceding
month or period on or before the tenth day of each succeeding month or period. 40

NAPOCOR and TRANSCO seasonably filed a Joint Notice of Appeal. Their appeal, docketed as Civil Case
No. 6613, was initially assigned to the RTC-Branch 5, presided over by Judge Maximino Magno Libre
(Judge Libre).

LANDTRADE filed on June 24, 2004 a Motion for Execution, asserting that NAPOCOR and TRANSCO had
neither filed a supersedeas bond with the MTCC nor periodically deposited with the RTC the monthly rental
for the properties in question, so as to stay the immediate execution pending appeal of the MTCC
judgment. However, the said Motion failed to comply with the required notice of hearing under Rule 15,
Section 5 of the Rules of Court. LANDTRADE then filed a Motion to Withdraw and/or Replace Notice of
Hearing.

NAPOCOR and TRANSCO filed on July 13, 2004 a Joint Motion to Suspend Proceedings citing Amagan v.
Marayag,41 in which the Court ruled that if circumstances should require, the proceedings in an ejectment
case may be suspended in whatever stage it may be found. Since LANDTRADE anchors its right to
possession of the subject parcels of land on the Deed of Sale executed in its favor by Teofilo on October 1,
1996, the ejectment case should be held in abeyance pending the resolution of other cases in which title
over the same properties are in issue, i.e., (1) Civil Case No. 6600, the action for the annulment of the
Deed of Sale dated October 1, 1996 filed by Teofilo against LANDTRADE pending before the RTC-Branch
4; and (2) Civil Case No. 4452, the Quieting of Title Case filed by Vidal and AZIMUTH against Teofilo and
Atty. Cabildo pending before the RTC-Branch 3.

LANDTRADE filed on July 19, 2004 another Motion for Execution, which was heard together with the Joint
Motion to Suspend Proceedings of NAPOCOR and TRANSCO. After said hearing, the RTC-Branch 5 directed
the parties to file their memoranda on the two pending Motions.
LANDTRADE, in its Memorandum, maintained that the pendency of Civil Case No. 4452, the Quieting of
Title Case, should not preclude the execution of the MTCC judgment in the Unlawful Detainer Case
because the issue involved in the latter was only the material possession or possession de facto of the
parcels of land in question. LANDTRADE also reported that Civil Case No. 6600, the action for annulment
of the Deed of Sale dated October 1, 1996 instituted by Teofilo, was already dismissed given that the
RTC-Branch 4 had approved the Compromise Agreement executed between LANDTRADE and Teofilo.

NAPOCOR and TRANSCO likewise filed their respective Memoranda. Subsequently, NAPOCOR filed a
Supplement to its Memorandum to bring to the attention of the RTC-Branch 5 the Decision rendered on
July 17, 2004 by the RTC-Branch 3 in Civil Case No. 4452, the Quieting of Title Case, categorically
declaring Teofilo, the predecessor-in-interest of LANDTRADE, as having no right at all to the subject
parcels of land. Resultantly, the right of LANDTRADE to the two properties, which merely emanated from
Teofilo, was effectively declared as non-existent too.

On August 4, 2004, the RTC-Branch 5 issued an Order42 denying the Joint Motion to Suspend Proceedings
of NAPOCOR and TRANSCO. The RTC held that the pendency of other actions involving the same parcels
of land could not stay execution pending appeal of the MTCC judgment because NAPOCOR and TRANSCO
failed to post the required bond and pay the monthly rentals.

Five days later, on August 9, 2004, the RTC-Branch 5 issued another Order43 granting the Motion of
LANDTRADE for execution of the MTCC judgment pending appeal.

The next day, on August 10, 2004, the Acting Clerk of Court, Atty. Joel M. Macaraya, Jr., issued a Writ of
Execution Pending Appeal44 which directed Sheriff IV Alberto O. Borres (Sheriff Borres) to execute the
MTCC Decision dated February 17, 2004.

A day later, on August 11, 2004, Sheriff Borres issued two Notices of Garnishment 45 addressed to PNB and
Land Bank of the Philippines in Iligan City, garnishing all the goods, effects, stocks, interests in stocks and
shares, and any other personal properties belonging to NAPOCOR and TRANSCO which were being held by
and under the possession and control of said banks. On even date, Sheriff Borres also issued a
Notification46 to NAPOCOR and TRANSCO for them to vacate the subject parcels of land; and to pay
LANDTRADE the sums of (a) P156,000,000.00, representing the total fair rental value for the said
properties, computed at P500,000.00 per month, beginning June 29, 1978 until June 29, 2004, or for a
period of 26 years, and (b) P20,000.00 as attorney's fees.

Thereafter, NAPOCOR and TRANSCO each filed before the Court of Appeals in Cagayan de Oro City a
Petition for Certiorari, under Rule 65 of the Rules of Court, with prayer for the issuance of a TRO and writ
of preliminary injunction. The Petitions, docketed as CA-G.R. SP Nos. 85174 and 85841, were eventually
consolidated.

The Court of Appeals issued on August 18, 2004 a TRO47 enjoining the enforcement and implementation of
the Order of Execution and Writ of Execution Pending Appeal of the RTC-Branch 5 and Notices of
Garnishment and Notification of Sheriff Borres.

The Court of Appeals, in its Decision48 dated November 23, 2005, determined that public respondents did
commit grave abuse of discretion in allowing and/or effecting the execution of the MTCC judgment
pending appeal, since NAPOCOR and TRANSCO were legally excused from complying with the
requirements for a stay of execution specified in Rule 70, Section 19 of the Rules of Court, particularly,
the posting of a supersedeas bond and periodic deposits of rental payments. The decretal portion of said
appellate court Decision states:

ACCORDINGLY, the two petitions at bench are GRANTED; the Order dated 9 August 2004, the Writ of
Execution Pending Appeal dated 10 August 2004, the two Notices of Garnishment dated 11 August 2004,
and the Notification dated 11 August 2004, are ANNULLED and SET ASIDE.49

Displeased, LANDTRADE elevated the case to this Court on January 10, 2006 via a Petition for Review on
Certiorari under Rule 45 of the Rules of Court, which was docketed as G.R. No. 170505.

In the meantime, with the retirement of Judge Libre and the inhibition 50 of Judge Oscar Badelles, the new
presiding judge of RTC-Branch 5, Civil Case No. 6613 was re-raffled to the RTC-Branch 1, presided over
by Judge Mangotara. The RTC-Branch 1 promulgated on December 12, 2005 a Decision 51 in Civil Case No.
6613 which affirmed in toto the February 17, 2004 Decision of the MTCC in Civil Case No. 11475-AF
favoring LANDTRADE.

NAPOCOR and TRANSCO filed with the RTC-Branch 1 twin Motions, namely: (1) Motion for
Reconsideration of the Decision dated December 12, 2005; and (2) Motion for Inhibition of Judge
Mangotara. The RTC-Branch 1 denied both Motions in a Resolution dated January 30, 2006.

NAPOCOR and TRANSCO filed with the Court of Appeals separate Petitions for Review with prayer for TRO
and/or a writ of preliminary injunction, which were docketed as CA-G.R. SP Nos. 00854 and 00889,
respectively. In a Resolution dated March 24, 2006, the Court of Appeals granted the prayer for TRO of
NAPOCOR and TRANSCO.

With the impending lapse of the effectivity of the TRO on May 23, 2006, NAPOCOR filed on May 15, 2006
with the Court of Appeals a Manifestation and Motion praying for the resolution of its application for
preliminary injunction.

On May 23, 2006, the same day the TRO lapsed, the Court of Appeals granted the motions for extension
of time to file a consolidated comment of LANDTRADE. Two days later, LANDTRADE filed an Omnibus
Motion seeking the issuance of (1) a writ of execution pending appeal, and (2) the designation of a special
sheriff in accordance with Rule 70, Section 21 of the Rules of Court.

In a Resolution52 dated June 30, 2006, the Court of Appeals granted the Omnibus Motion of LANDTRADE
and denied the applications for the issuance of a writ of preliminary injunction of NAPOCOR and
TRANSCO. In effect, the appellate court authorized the execution pending appeal of the judgment of the
MTCC, affirmed by the RTC-Branch 1, thus:

IN LIGHT OF THE ABOVE DISQUISITIONS, this Court resolves to grant the [LANDRADE]’s omnibus motion
for execution pending appeal of the decision rendered in its favor which is being assailed in these
consolidated petitions for review. Accordingly, the [NAPOCOR and TRANSCO’s] respective applications for
issuance of writ of preliminary injunction are both denied for lack of factual and legal bases. The Municipal
Trial Court in Cities, Branch 2, Iligan City, which at present has the custody of the records of the case a
quo, is hereby ordered to cause the immediate issuance of a writ of execution relative to its decision
dated 17 February 2004 in Civil Case No. 11475-AF. 53

On July 20, 2006, NAPOCOR filed with this Court a Petition for Certiorari and Prohibition under Rule 65 of
the Rules of Court with an urgent plea for a TRO, docketed as G.R. No. 173355-56. On August 2, 2006,
TRANSCO filed with this Court its own Petition for Certiorari, docketed as G.R. No. 173563-64.

On July 21, 2006, NAPOCOR filed an Urgent Motion for the Issuance of a TRO in G.R. No. 173355-56. In a
Resolution54 dated July 26, 2006, the Court granted the Motion of NAPOCOR and issued a TRO,55 effective
immediately, which enjoined public and private respondents from implementing the Resolution dated June
30, 2006 of the Court of Appeals in CA-G.R. SP Nos. 00854 and 00889 and the Decision dated February
17, 2004 of the MTCC in Civil Case No. 11475-AF.

On July 31, 2006, Vidal and AZIMUTH filed a Motion for Leave to Intervene and to Admit Attached
Comment-in-Intervention, contending therein that Vidal was the lawful owner of the parcels of land
subject of the Unlawful Detainer Case as confirmed in the Decision dated July 17, 2004 of the RTC-Branch
3 in Civil Case No. 4452. In a Resolution dated September 30, 2006, the Court required the parties to
comment on the Motion of Vidal and AZIMUTH, and deferred action on the said Motion pending the
submission of such comments.

The Cancellation of Titles and Reversion Case

(G.R. No. 173401)

On October 13, 2004, the Republic filed a Complaint for the Cancellation of OCT Nos. 0-1200 (a.f.) and 0-
1201 (a.f.) and Reversion against the late Doña Demetria, represented by her alleged heirs, Vidal and/or
Teofilo, together with AZIMUTH and LANDTRADE. The Complaint, docketed as Civil Case No. 6686, was
raffled to the RTC-Branch 4.
The Republic sought the cancellation of OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) and the reversion of the
parcels of land covered thereby to the Government based on the following allegations in its Complaint,
under the heading "Cause of Action":

5. On October 15, 1998, Original Certificates of Title (OCTs) Nos. 0-1200 (a.f.) and 0-1201 (a.f.) were
issued in the name of "Demetria Cacho, widow, now deceased…" consisting of a total area of Three
Hundred Seventy-Eight Thousand Seven Hundred and Seven (378,707) square meters and Three
Thousand Seven Hundred Thirty-Five (3,635) square meters, respectively, situated in Iligan City, x x x

xxxx

6. The afore-stated titles were issued in implementation of a decision rendered in LRC (GLRO) Record Nos.
6908 and 6909 dated December 10, 1912, as affirmed by the Honorable Supreme Court in Cacho v.
Government of the United States, 28 Phil. 616 (December 10, 1914),

7. The decision in LRC (GLRO) Record Nos. 6908 and 6909, upon which the titles were issued, did not
grant the entire area applied for therein. x x x

xxxx

9. As events turned out, the titles issued in connection with LRC (GLRO) Record Nos. 6908 and 6909 – i.e.
OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) – cover property MUCH LARGER in area than that granted by the
land registration court in its corresponding decision, supra.

10. While the LRC Decision, as affirmed by the Honorable Supreme Court, granted only the southern part
of the 37.87 hectare land subject of LRC (GLRO) Record Case No. 6909, the ENTIRE 37.87 hectares is
indicated as the property covered by OCT 0-1200 (a.f.). Worse, OCT No. 0-1200 (a.f.) made reference to
Case No. 6908 as basis thereof, yet, the decision in said case is clear:

(i) The parcel "object of Case No. 6908 is small" (Cacho vs. Government of the United States, 28 Phil.
616, p. 619)

(ii) "The parcel of land claimed by the applicant in Case No. 6909 is the bigger of two parcels and contains
37.87 hectares…"

11. More significantly, the technical description in Original Certificate of Title No. 0-1200 (a.f.) specifies
the date of survey as "August 31 to September 1, 1910," which is EARLIER than the date the Supreme
Court, in Cacho supra, resolved LRC (GLRO) Record No. 6909 (involving 37.87 hectares). In resolving the
application involving the 37.87 hectares, the Honorable Supreme Court declared that only the southern
part of the 37.87 hectare property applied for is granted and that a new survey specifying the "southern
part" thereof should be submitted. Accordingly, any survey involving the "granted southern part" should
bear a date subsequent to the December 10, 1914 Supreme Court decision. x x x

xxxx

12. The Honorable Supreme Court further declared that the Decision in LRC (GLRO) Record No. 6909 was
reserved:

"Final decision in these case is reserved until the presentation of the … new plan." (28 Phil. 616, p. 631;
Underscoring supplied)

In other words, as of December 10, 1914, when the Honorable Supreme Court rendered its Decision on
appeal in LRC (GLRO) Record No. 6909, "final decision" of the case was still reserved until the
presentation of a new plan. The metes and bounds of OCT No. 0-1200 (a.f.) could not have been the
technical description of the property granted by the court – described as "the southern part of the large
parcel object of expediente 6909 only" (Cacho vs. Government of the United States, 28 Phil. 617, 629).
As earlier stated, the technical description appearing in said title was the result of a survey conducted in
1910 or before the Supreme Court decision was rendered in 1914.

13. In the same vein, Original Certificate of Title No. 0-1201 (a.f.) specifies LRC (GLRO) Record No. 6909
as the basis thereof (see front page of OCT No. 0-1201 (a.f.)). Yet, the technical description makes, as its
reference, Lot 1, Plan II-3732, LR Case No. 047, LRC (GLRO) Record No. 6908 (see page 2 of said title). A
title issued pursuant to a decision may only cover the property subject of the case. A title cannot properly
be issued pursuant to a decision in Case 6909, but whose technical description is based on Case 6908.

14. The decision in LRC (GLRO) Record Nos. 6908 and 6909 has become final and executory, and it
cannot be modified, much less result in an increased area of the property decreed therein.

xxxx

16. In sum, Original Certificates of Title Nos. 0-1200 (a.f.) and 0-1201 (a.f.), as issued, are null and void
since the technical descriptions vis-à-vis the areas of the parcels of land covered therein went beyond the
areas granted by the land registration court in LRC (GLRO) Record Nos. 6908 and 6909. 56

Vidal and AZIMUTH filed a Motion to Dismiss dated December 23, 2004 on the grounds that (1) the
Republic has no cause of action; (2) assuming arguendo that the Republic has a cause of action, its
Complaint failed to state a cause of action; (3) assuming arguendo that the Republic has a cause of
action, the same is barred by prior judgment; (4) assuming further that the Republic has a cause of
action, the same was extinguished by prescription; and (4) the Republic is guilty of forum shopping.

Upon motion of the Republic, the RTC-Branch 4 issued an Order57 dated October 4, 2005, declaring
LANDTRADE and Teofilo, as represented by Atty. Cabildo, in default since they failed to submit their
respective answers to the Complaint despite the proper service of summons upon them.

LANDTRADE subsequently filed its Answer with Compulsory Counterclaim dated September 28, 2005. It
also moved for the setting aside and reconsideration of the Order of Default issued against it by the RTC-
Branch 4 on October 20, 2005.

On December 13, 2005, the RTC-Branch 4 issued an Order58 dismissing the Complaint of the Republic in
Civil Case No. 6686, completely agreeing with Vidal and AZIMUTH.

The RTC-Branch 4 reasoned that the Republic had no cause of action because there was no showing that
the late Doña Demetria committed any wrongful act or omission in violation of any right of the Republic.
Doña Demetria had sufficiently proven her ownership over the parcels of land as borne in the ruling of the
LRC in GLRO Record Nos. 6908 and 6909. On the other hand, the Republic had no more right to the said
parcels of land. The Regalian doctrine does not apply in this case because the titles were already issued to
Doña Demetria and segregated from the mass of the public domain.

The RTC-Branch 4 likewise held that the Republic failed to state a cause of action in its Complaint. The
arguments of the Republic – i.e., the absence of a new survey plan and deed, the titles covered properties
with much larger area than that granted by the LRC – had been answered squarely in the 1997 Cacho
case. Also, the Complaint failed to allege that fraud had been committed in having the titles registered
and that the Director of Lands requested the reversion of the subject parcels of land.

The RTC-Branch 4 was convinced that the Complaint was barred by res judicata because the 1914 Cacho
case already decreed the registration of the parcels of land in the late Doña Demetria’s name and the
1997 Cacho case settled that there was no merit in the argument that the conditions imposed in the first
case have not been complied with.

The RTC-Branch 4 was likewise persuaded that the cause of action or remedy of the Republic was lost or
extinguished by prescription pursuant to Article 1106 of the Civil Code and Section 32 of Presidential
Decree No. 1529, otherwise known as the Land Registration Decree, which prescribes a one-year period
within which to file an action for the review of a decree of registration.

Finally, the RTC-Branch 4 found the Republic guilty of forum shopping because there is between this case,
on one hand, and the 1914 and 1997 Cacho cases, on the other, identity of parties, as well as rights
asserted and reliefs prayed for, as the contending parties are claiming rights of ownership over the same
parcels of land.

The Republic filed a Motion for Reconsideration of the dismissal of its Complaint but the same was denied
by the RTC-Branch 4 in its Order59 dated May 16, 2006.
Assailing the Orders dated December 13, 2005 and May 16, 2006 of the RTC-Branch 4, the Republic filed
on August 11, 2006 a Petition for Review on Certiorari under Rule 45 of the Rules of Court, which was
docketed as G.R. No. 173401.

III
ISSUES AND DISCUSSIONS

Expropriation Case
(G.R. No. 170375)

The Republic, in its consolidated Petitions challenging the Resolutions dated July 12, 2005 and October
24, 2005 of the RTC-Branch 1 in Civil Case No. 106, made the following assignment of errors:

RESPONDENT JUDGE GRAVELY ERRED IN ORDERING THE DISMISSAL OF THE EXPROPRIATION

COMPLAINT IN CIVIL CASE NO. 106 CONSIDERING THAT:

(a) THE NON-JOINDER OF PARTIES IS NOT A GROUND FOR THE DISMISSAL OF AN ACTION
PURSUANT TO SECTION 11, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE;

(b) AN EXPROPRIATION PROCEEDING IS AN ACTION QUASI IN REM WHEREIN THE FACT THAT
THE OWNER OF THE PROPERTY IS MADE A PARTY TO THE ACTION IS NOT ESSENTIALLY
INDISPENSABLE;

(c) PETITIONER DID NOT COMMIT ANY FORUM SHOPPING WITH THE FILING OF THE REVERSION
COMPLAINT DOCKETED AS CIVIL CASE NO. 6686 WHICH IS PENDING BEFORE BRANCH 4 OF THE
REGIONAL TRIAL COURT OF ILIGAN CITY.60

Filing of consolidated petitions under both Rules 45 and 65

At the outset, the Court notes that the Republic filed a pleading with the caption Consolidated Petitions for
Review on Certiorari (Under Rule 45) and Certiorari (Under Rule 65) of the Rules of Court. The Republic
explains that it filed the Consolidated Petitions pursuant to Metropolitan Waterworks and Sewerage
System (MWSS) v. Court of Appeals61 (MWSS case).

The reliance of the Republic on the MWSS case to justify its mode of appeal is misplaced, taking the
pronouncements of this Court in said case out of context.

The issue in the MWSS case was whether a possessor in good faith has the right to remove useful
improvements, and not whether consolidated petitions under both Rules 45 and 65 of the Rules of Court
can be filed. Therein petitioner MWSS simply filed an appeal by certiorari under Rule 45 of the Rules of
Court, but named the Court of Appeals as a respondent. The Court clarified that the only parties in an
appeal by certiorari under Rule 45 of the Rules of Court are the appellant as petitioner and the appellee as
respondent. The court which rendered the judgment appealed from is not a party in said appeal. It is in
the special civil action of certiorari under Rule 65 of the Rules of Court where the court or judge is
required to be joined as party defendant or respondent. The Court, however, also acknowledged that
there may be an instance when in an appeal by certiorari under Rule 45, the petitioner-appellant would
also claim that the court that rendered the appealed judgment acted without or in excess of its jurisdiction
or with grave abuse of discretion, in which case, such court should be joined as a party-defendant or
respondent. While the Court may have stated that in such an instance, "the petition for review on
certiorari under Rule 45 of the Rules of Court is at the same time a petition for certiorari under Rule 65,"
the Court did not hold that consolidated petitions under both Rules 45 and 65 could or should be filed.

The Court, in more recent cases, had been stricter and clearer on the distinction between these two
modes of appeal. In Nunez v. GSIS Family Bank,62 the Court elucidated:

In Ligon v. Court of Appeals where the therein petitioner described her petition as "an appeal under Rule
45 and at the same time as a special civil action of certiorari under Rule 65 of the Rules of Court," this
Court, in frowning over what it described as a "chimera," reiterated that the remedies of appeal and
certiorari are mutually exclusive and not alternative nor successive.
To be sure, the distinctions between Rules 45 and 65 are far and wide. However, the most apparent is
that errors of jurisdiction are best reviewed in a special civil action for certiorari under Rule 65 while
errors of judgment can only be corrected by appeal in a petition for review under Rule 45.

But in the same case, the Court also held that:

This Court, x x x, in accordance with the liberal spirit which pervades the Rules of Court and in the
interest of justice may treat a petition for certiorari as having been filed under Rule 45, more so if the
same was filed within the reglementary period for filing a petition for review. 63

It is apparent in the case at bar that the Republic availed itself of the wrong mode of appeal by filing
Consolidated Petitions for Review under Rule 45 and for Certiorari under Rule 65, when these are two
separate remedies that are mutually exclusive and neither alternative nor successive. Nevertheless, the
Court shall treat the Consolidated Petitions as a Petition for Review on Certiorari under Rule 45 and the
allegations therein as errors of judgment. As the records show, the Petition was filed on time under Rules
45. Before the lapse of the 15-day reglementary period to appeal under Rule 45, the Republic filed with
the Court a motion for extension of time to file its petition. The Court, in a Resolution 64 dated January 23,
2006, granted the Republic a 30-day extension, which was to expire on December 29, 2005. The Republic
was able to file its Petition on the last day of the extension period.

Hierarchy of courts

The direct filing of the instant Petition with this Court did not violate the doctrine of hierarchy of courts.

According to Rule 41, Section 2(c)65 of the Rules of Court, a decision or order of the RTC may be appealed
to the Supreme Court by petition for review on certiorari under Rule 45, provided that such petition raises
only questions of law.66

A question of law exists when the doubt or controversy concerns the correct application of law or
jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative
value of the evidence presented, the truth or falsehood of facts being admitted. 67 A question of fact exists
when the doubt or difference arises as to the truth or falsehood of facts or when the query invites
calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and
relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole,
and the probability of the situation.68

Here, the Petition of the Republic raises pure questions of law, i.e., whether Civil Case No. 106 should
have been dismissed for failure to implead indispensable parties and for forum shopping. Thus, the direct
resort by the Republic to this Court is proper.

The Court shall now consider the propriety of the dismissal by the RTC-Branch 1 of the Complaint for
Expropriation of the Republic.

The proper parties in the expropriation proceedings

The right of the Republic to be substituted for ISA as plaintiff in Civil Case No. 106 had long been affirmed
by no less than this Court in the ISA case. The dispositive portion of the ISA case reads:

WHEREFORE, for all the foregoing, the Decision of the Court of Appeals dated 8 October 1991 to the
extent that it affirmed the trial court’s order dismissing the expropriation proceedings, is hereby
REVERSED and SET ASIDE and the case is REMANDED to the court a quo which shall allow the
substitution of the Republic of the Philippines for petitioner Iron Steel Authority for further proceedings
consistent with this Decision. No pronouncement as to costs.69

The ISA case had already become final and executory, and entry of judgment was made in said case on
August 31, 1998. The RTC-Branch 1, in an Order dated November 16, 2001, effected the substitution of
the Republic for ISA.

The failure of the Republic to actually file a motion for execution does not render the substitution void. A
writ of execution requires the sheriff or other proper officer to whom it is directed to enforce the terms of
the writ.70 The November 16, 2001 Order of the RTC-Branch 1 should be deemed as voluntary compliance
with a final and executory judgment of this Court, already rendering a motion for and issuance of a writ of
execution superfluous.

Besides, no substantive right was violated by the voluntary compliance by the RTC-Branch 1 with the
directive in the ISA case even without a motion for execution having been filed. To the contrary, the RTC-
Branch 1 merely enforced the judicially determined right of the Republic to the substitution. While it is
desirable that the Rules of Court be faithfully and even meticulously observed, courts should not be so
strict about procedural lapses that do not really impair the administration of justice. If the rules are
intended to insure the orderly conduct of litigation it is because of the higher objective they seek which is
the protection of the substantive rights of the parties.71

The Court also observes that MCFC did not seek any remedy from the Order dated November 16, 2001 of
the RTC-Branch 1. Consequently, the said Order already became final, which even the RTC-Branch 1 itself
cannot reverse and set aside on the ground of "honest mistake."

The RTC-Branch 1 dismissed the Complaint in Civil Case No. 106 on another ground: that MCFC is not a
proper party to the expropriation proceedings, not being the owner of the parcels of land sought to be
expropriated. The RTC-Branch 1 ratiocinated that since the exercise of the power of eminent domain
involves the taking of private land intended for public use upon payment of just compensation to the
owner, then a complaint for expropriation must be directed against the owner of the land sought to be
expropriated.

The Republic insists, however, that MCFC is a real party-in-interest, impleaded as a defendant in the
Complaint for Expropriation because of its possessory or occupancy rights over the subject parcels of
land, and not by reason of its ownership of the said properties. In addition, the Republic maintains that
non-joinder of parties is not a ground for the dismissal of an action.

Rule 67, Section 1 of the then Rules of Court72 described how expropriation proceedings should be
instituted:

Section 1. The complaint. – The right of eminent domain shall be exercised by the filing of a complaint
which shall state with certainty the right and purpose of condemnation, describe the real or personal
property sought to be condemned, and join as defendants all persons owning or claiming to own, or
occupying, any part thereof or interest therein, showing, so far as practicable, the interest of each
defendant separately. If the title to any property sought to be condemned appears to be in the Republic of
the Philippines, although occupied by private individuals, or if the title is otherwise obscure or doubtful so
that the plaintiff cannot with accuracy or certainty specify who are the real owners, averment to that
effect may be made in the complaint.73 (Emphases supplied.)

For sure, defendants in an expropriation case are not limited to the owners of the property to be
expropriated, and just compensation is not due to the property owner alone. As this Court held in De
Knecht v. Court of Appeals74:

The defendants in an expropriation case are not limited to the owners of the property condemned. They
include all other persons owning, occupying or claiming to own the property. When [property] is taken by
eminent domain, the owner x x x is not necessarily the only person who is entitled to compensation. In
the American jurisdiction, the term ‘owner’ when employed in statutes relating to eminent domain to
designate the persons who are to be made parties to the proceeding, refer, as is the rule in respect of
those entitled to compensation, to all those who have lawful interest in the property to be condemned,
including a mortgagee, a lessee and a vendee in possession under an executory contract. Every person
having an estate or interest at law or in equity in the land taken is entitled to share in the award. If a
person claiming an interest in the land sought to be condemned is not made a party, he is given the right
to intervene and lay claim to the compensation. (Emphasis supplied.)

At the time of the filing of the Complaint for Expropriation in 1983, possessory/occupancy rights of MCFC
over the parcels of land sought to be expropriated were undisputed. In fact, Letter of Instructions No.
127775 dated November 16, 1982 expressly recognized that portions of the lands reserved by Presidential
Proclamation No. 2239, also dated November 16, 1982, for the use and immediate occupation by the
NSC, were then occupied by an idle fertilizer plant/factory and related facilities of MCFC. It was ordered in
the same Letter of Instruction that:

(1) NSC shall 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 lands at an amount of Thirty
 (P30.00) Pesos per square meter or equivalent to the assessed value thereof (as determined by
the City Assessor of Iligan), whichever is higher. NSC shall give MCFC the option to either remove
its aforesaid plant, structures, equipment, machinery and other facilities from the lands or to sell
or cede ownership thereof to NSC at a price equivalent to the fair market value thereof as
appraised by the Asian Appraisal Inc. as may be mutually agreed upon by NSC and MCFC.

(2) In the event that NSC and MCFC fail to agree on the foregoing within sixty (60) days from the
date hereof, the Iron and Steel Authority (ISA) shall exercise its authority under Presidential
Decree (PD) No. 272, as amended, to initiate the expropriation of the aforementioned occupancy
rights of MCFC on the subject lands as well as the plant, structures, equipment, machinery and
related facilities, for and on behalf of NSC, and thereafter cede the same to NSC. During the
pendency of the expropriation proceedings, NSC shall take possession of the properties, subject to
bonding and other requirements of P.D. 1533. (Emphasis supplied.)

Being the occupant of the parcel of land sought to be expropriated, MCFC could very well be named a
defendant in Civil Case No. 106. The RTC-Branch 1 evidently erred in dismissing the Complaint for
Expropriation against MCFC for not being a proper party.

Also erroneous was the dismissal by the RTC-Branch 1 of the original Complaint for Expropriation for
having been filed only against MCFC, the occupant of the subject land, but not the owner/s of the said
property.

Dismissal is not the remedy for misjoinder or non-joinder of parties. According to Rule 3, Section 11 of
the Rules of Court:

SEC. 11. Misjoinder and non-joinder of parties. – Neither misjoinder nor non-joinder of parties is ground
for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party
or on its own initiative at any stage of the action and on such terms as are just. Any claim against a
misjoined party may be severed and proceeded with separately. (Emphasis supplied.)

MCFC contends that the aforequoted rule does not apply in this case where the party not joined, i.e., the
owner of the property to be expropriated, is an indispensable party.

An indispensable party is a party-in-interest without whom no final determination can be had of an

action.76

Now, is the owner of the property an indispensable party in an action for expropriation? Not necessarily.
Going back to Rule 67, Section 1 of the Rules of Court, expropriation proceedings may be instituted even
when "title to the property sought to be condemned appears to be in the Republic of the Philippines,
although occupied by private individuals." The same rule provides that a complaint for expropriation shall
name as defendants "all persons owning or claiming to own, or occupying, any part thereof or interest" in
the property sought to be condemned. Clearly, when the property already appears to belong to the
Republic, there is no sense in the Republic instituting expropriation proceedings against itself. It can still,
however, file a complaint for expropriation against the private persons occupying the property. In such an
expropriation case, the owner of the property is not an indispensable party.

To recall, Presidential Proclamation No. 2239 explicitly states that the parcels of land reserved to NSC are
part of the public domain, hence, owned by the Republic. Letter of Instructions No. 1277 recognized only
the occupancy rights of MCFC and directed NSC to institute expropriation proceedings to determine the
just compensation for said occupancy rights. Therefore, the owner of the property is not an indispensable
party in the original Complaint for Expropriation in Civil Case No. 106.

Assuming for the sake of argument that the owner of the property is an indispensable party in the
expropriation proceedings, the non-joinder of said party would still not warrant immediate dismissal of the
complaint for expropriation. In Vda. De Manguerra v. Risos,77 the Court applied Rule 3, Section 11 of the
Rules of Court even in case of non-joinder of an indispensable party, viz:

[F]ailure to implead an indispensable party is not a ground for the dismissal of an action. In such a case,
the remedy is to implead the non-party claimed to be indispensable. Parties may be added by order of the
court, on motion of the party or on its own initiative at any stage of the action and/or such times as are
just. If the petitioner/plaintiff refuses to implead an indispensable party despite the order of the court, the
latter may dismiss the complaint/petition for the petitioner's/plaintiff's failure to comply. (Emphasis
supplied.)

In this case, the RTC-Branch 1 did not first require the Republic to implead the alleged owner/s of the
parcel of land sought to be expropriated. Despite the absence of any order from the Court, the Republic –
upon becoming aware that the parcels of land involved in the 1914 Cacho case and 1997 Cacho case,
claimed by Teofilo and LANDTRADE, and Vidal and AZIMUTH, encroached into and overlapped with the
parcel of land subject of Civil Case No. 106 – sought leave of court to file a Supplemental Complaint to
implead these four parties. The RTC-Branch 1 did not take the Supplemental Complaint of the Republic
into consideration. Instead, it dismissed outright the original Complaint for Expropriation against MCFC.

Forum shopping

The RTC-Branch 1 further erred in finding that the Republic committed forum shopping by (1)
simultaneously instituting the actions for expropriation (Civil Case No. 106) and reversion (Civil Case No.
6686) for the same parcels of land; and (2) taking inconsistent positions when it conceded lack of
ownership over the parcels of land in the expropriation case but asserted ownership of the same
properties in the reversion case.

There is no dispute that the Republic instituted reversion proceedings (Civil Case No. 6686) for the same
parcels of land subject of the instant Expropriation Case (Civil Case No. 106). The Complaint for
Cancellation of Titles and Reversion78 dated September 27, 2004 was filed by the Republic with the RTC
on October 13, 2004. The records, however, do not show when the Supplemental Complaint for
Expropriation79 dated September 28, 2004 was filed with the RTC. Apparently, the Supplemental
Complaint for Expropriation was filed after the Complaint for Cancellation of Titles and Reversion since the
Republic mentioned in the former the fact of filing of the latter.80 Even then, the Verification and
Certification of Non-Forum Shopping81 attached to the Supplemental Complaint for Expropriation did not
disclose the filing of the Complaint for Cancellation of Titles and Reversion. Notwithstanding such non-
disclosure, the Court finds that the Republic did not commit forum shopping for filing both Complaints.

In NBI-Microsoft Corporation v Hwang,82 the Court laid down the circumstances when forum shopping
exists:

Forum-shopping takes place when a litigant files multiple suits involving the same parties, either
simultaneously or successively, to secure a favorable judgment. Thus, it exists where the elements of litis
pendentia are present, namely: (a) identity of parties, or at least such parties who represent the same
interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on
the same facts; and (c) the identity with respect to the two preceding particulars in the two cases is such
that any judgment that may be rendered in the pending case, regardless of which party is successful,
would amount to res judicata in the other case. Forum-shopping is an act of malpractice because it abuses
court processes. x x x.

Here, the elements of litis pendencia are wanting. There is no identity of rights asserted and reliefs prayed
for in Civil Case No. 106 and Civil Case No. 6686.

Civil Case No. 106 was instituted against MCFC to acquire, for a public purpose, its possessory/occupancy
rights over 322,532 square meters or 32.25 hectares of land which, at the time of the filing of the original
Complaint in 1983, was not yet covered by any certificate of title. On the other hand, Civil Case No. 6686
sought the cancellation of OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), which was entered into registration
on December 4, 1998 in Doña Demetria’s name, on the argument that the parcels of land covered by said
certificates exceeded the areas granted by the LRC to Doña Demetria in GLRO Record Nos. 6908 and
6909, as affirmed by this Court in the 1914 Cacho case.

Expropriation vis-à-vis reversion

The Republic is not engaging in contradictions when it instituted both expropriation and reversion
proceedings for the same parcels of land. The expropriation and reversion proceedings are distinct
remedies that are not necessarily exclusionary of each other.

The filing of a complaint for reversion does not preclude the institution of an action for expropriation. Even
if the land is reverted back to the State, the same may still be subject to expropriation as against the
occupants thereof.
Also, Rule 67, Section 1 of the Rules of Court allows the filing of a complaint for expropriation even when
"the title to any property sought to be condemned appears to be in the Republic of the Philippines,
although occupied by private individuals, or if the title is otherwise obscure or doubtful so that the plaintiff
cannot with accuracy or certainty specify who are the real owners." Rule 67, Section 9 of the Rules of
Court further provides:

SEC. 9. Uncertain ownership; conflicting claims. – If the ownership of the property taken is uncertain, or
there are conflicting claims to any part thereof, the court may order any sum or sums awarded as
compensation for the property to be paid to the court for the benefit of the person adjudged in the same
proceeding to be entitled thereto. But the judgment shall require the payment of the sum or sums
awarded to either the defendant or the court before the plaintiff can enter upon the property, or retain it
for the public use or purpose if entry has already been made. (Emphasis supplied.)

Hence, the filing by the Republic of the Supplemental Complaint for Expropriation impleading Teofilo,
Vidal, LANDTRADE, and AZIMUTH, is not necessarily an admission that the parcels of land sought to be
expropriated are privately owned. At most, the Republic merely acknowledged in its Supplemental
Complaint that there are private persons also claiming ownership of the parcels of land. The Republic can
still consistently assert, in both actions for expropriation and reversion, that the subject parcels of land
are part of the public domain.

In sum, the RTC-Branch 1 erred in dismissing the original Complaint and disallowing the Supplemental
Complaint in Civil Case No. 106. The Court reverses and sets aside the Resolutions dated July 12, 2005
and October 24, 2005 of the RTC-Branch 1 in Civil Case 106, and reinstates the Complaint for Reversion
of the Republic.

The Quieting of Title Case

(G.R. Nos. 178779 and 178894)

Essentially, in their Petitions for Review on Certiorari under Rule 45 of the Rules of Court, LANDTRADE
and Teofilo, and/or Atty. Cabildo are calling upon this Court to determine whether the Court of Appeals, in
its Decision dated January 19, 2007 in CA-G.R. CV No. 00456, erred in (1) upholding the jurisdiction of
the RTC-Branch 3 to resolve the issues on Vidal's status, filiation, and heirship in Civil Case No. 4452, the
action for quieting of title; (2) not holding that Vidal and AZIMUTH have neither cause of action nor legal
or equitable title or interest in the parcels of land covered by OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.);
(3) finding the evidence sufficient to establish Vidal’s status as Doña Demetria’s granddaughter and sole
surviving heir; and (4) not holding that Civil Case No. 4452 was already barred by prescription.

In their Comment, Vidal and AZIMUTH insisted on the correctness of the Court of Appeals Decision dated
January 19, 2007, and questioned the propriety of the Petition for Review filed by LANDTRADE as it
supposedly raised only factual issues.

The Court rules in favor of Vidal and AZIMUTH.

Petitions for review under Rule 45

A scrutiny of the issues raised, not just in the Petition for Review of LANDTRADE, but also those in the
Petition for Review of Teofilo and/or Atty. Cabildo, reveals that they are both factual and legal.

The Court has held in a long line of cases that in a petition for review on certiorari under Rule 45 of the
Rules of Court, only questions of law may be raised as the Supreme Court is not a trier of facts. It is
settled that as a rule, the findings of fact of the Court of Appeals especially those affirming the trial court
are final and conclusive and cannot be reviewed on appeal to the Supreme Court. The exceptions to this
rule are: (a) when the conclusion is a finding grounded entirely on speculations, surmises or conjectures;
(b) when the inference made is manifestly mistaken, absurd or impossible; (c) when there is grave abuse
of discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the findings of fact
are conflicting; (f) when the Court of Appeals, in making its findings, went beyond the issues of the case
and the same is contrary to the admissions of both appellant and appellee; (g) where the Court of Appeals
manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion; and (h) where the findings of fact of the Court of Appeals are contrary
to those of the trial court, or are mere conclusions without citation of specific evidence, or where the facts
set forth by the petitioner are not disputed by the respondent, or where the findings of fact of the Court of
Appeals are premised on absence of evidence but are contradicted by the evidence on record.83 None of
these exceptions exists in the Petitions at bar.

Be that as it may, the Court shall address in full-length all the issues tendered in the instant Petitions for
Review, even when factual, if only to bolster the conclusions reached by the RTC-Branch 3 and the Court
of Appeals, with which the Court fully concurs.

Jurisdiction vis-à-vis exercise of jurisdiction

LANDTRADE, Teofilo, and/or Atty. Cabildo argue that the RTC-Branch 3 had no jurisidiction to resolve the
issues of status, filiation, and heirship in an action for quieting of title as said issues should be ventilated
and adjudicated only in special proceedings under Rule 90, Section 1 of the Rules of Court, pursuant to
the ruling of this Court in Agapay v. Palang84 (Agapay case) and Heirs of Guido Yaptinchay and Isabel
Yaptinchay v. Del Rosario85 (Yaptinchay case). Even on the assumption that the RTC-Branch 3 acquired
jurisdiction over their persons, LANDTRADE, Teofilo, and/or Atty. Cabildo maintain that the RTC-Branch 3
erred in the exercise of its jurisdiction by adjudicating and passing upon the issues on Vidal’s status,
filiation, and heirship in the Quieting of Title Case. Moreover, LANDTRADE, Teofilo, and/or Atty. Cabildo
aver that the resolution of issues regarding status, filiation, and heirship is not merely a matter of
procedure, but of jurisdiction which cannot be waived by the parties or by the court.

The aforementioned arguments fail to persuade.

In the first place, jurisdiction is not the same as the exercise of jurisdiction. The Court distinguished
between the two, thus:

Jurisdiction is not the same as the exercise of jurisdiction. As distinguished from the exercise of
jurisdiction, jurisdiction is the authority to decide a cause, and not the decision rendered therein. Where
there is jurisdiction over the person and the subject matter, the decision on all other questions arising in
the case is but an exercise of the jurisdiction. And the errors which the court may commit in the exercise
of jurisdiction are merely errors of judgment which are the proper subject of an appeal. 86 (Emphasis
supplied.)

Here, the RTC-Branch 3 unmistakably had jurisdiction over the subject matter and the parties in Civil
Case No. 4452.

Jurisdiction over the subject matter or nature of the action is conferred only by the Constitution or by law.
Once vested by law on a particular court or body, the jurisdiction over the subject matter or nature of the
action cannot be dislodged by anybody other than by the legislature through the enactment of a law. The
power to change the jurisdiction of the courts is a matter of legislative enactment, which none but the
legislature may do. Congress has the sole power to define, prescribe and apportion the jurisdiction of the
courts.87

The RTC has jurisdiction over an action for quieting of title under the circumstances described in Section
19(2) of Batas Pambansa Blg. 129, as amended:

SEC. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original jurisdiction:

xxxx

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein,
where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or, for
civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except actions
for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is
conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts.

Records show that the parcels of land subject of Civil Case No. 4452 have a combined assessed value of
P35,398,920.00,88 undisputedly falling within the jurisdiction of the RTC-Branch 3.

The RTC-Branch 3 also acquired jurisdiction over the person of Teofilo when he filed his Answer to the
Complaint of Vidal and AZIMUTH; and over the juridical personality of LANDTRADE when the said
corporation was allowed to intervene in Civil Case No. 4452.
Considering that the RTC-Branch 3 had jurisdiction over the subject matter and parties in Civil Case No.
4452, then it can rule on all issues in the case, including those on Vidal’s status, filiation, and heirship, in
exercise of its jurisdiction. Any alleged erroneous finding by the RTC-Branch 3 concerning Vidal’s status,
filiation, and heirship in Civil Case No. 4452, is merely an error of judgment subject to the affirmation,
modification, or reversal by the appellate court when appealed.

The Agapay and Yaptinchay cases

LANDTRADE, Teofilo, and/or Atty. Cabildo cannot rely on the cases of Agapay and Yaptinchay to support
their position that declarations on Vidal’s status, filiation, and heirsip, should be made in special
proceedings and not in Civil Case No. 4452.

In the Agapay case, the deceased Miguel Agapay (Miguel) contracted two marriages. Miguel married
Carlina (sometimes referred to as Cornelia) in 1949, and they had a daughter named Herminia, who was
born in 1950. Miguel left for Hawaii a few months after his wedding to Carlina. When Miguel returned to
the Philippines in 1972, he did not live with Carlina and Herminia. He married Erlinda in 1973, with whom
he had a son named Kristopher, who was born in 1977. Miguel died in 1981. A few months after Miguel’s
death, Carlina and Herminia filed a complaint for recovery of ownership and possession with damages
against Erlinda over a riceland and house and lot in Pangasinan, which were allegedly purchased by
Miguel during his cohabitation with Erlinda. The RTC dismissed the complaint, finding little evidence that
the properties pertained to the conjugal property of Miguel and Carlina. The RTC went on to provide for
the intestate shares of the parties, particularly of Kristopher, Miguel’s illegitimate son. On appeal, the
Court of Appeals: (1) reversed the RTC judgment; (2) ordered Erlinda to vacate and deliver the properties
to Carlina and Herminia; and (3) ordered the Register of Deeds to cancel the Transfer Certificates of Title
(TCTs) over the subject property in the name of Erlinda and to issue new ones in the names of Carlina
and Herminia. Erlinda filed a Petition for Review with this Court.

In resolving Erlinda’s Petition, the Court held in the Agapay case that Article 148 of the Family Code
applied to Miguel and Erlinda. Article 148 specifically governs the property relations of a man and a
woman who are not capacitated to marry each other and live exclusively with each other as husband and
wife without the benefit of marriage or under a void marriage. Under said provision, only the properties
acquired by both parties through their actual joint contribution of money, property, or industry shall be
owned by them in common in proportion to their respective contributions. In this case, the Court found
that the money used to buy the subject properties all came from Miguel.

The Court then proceeded to address another issue in the Agapay case, more relevant to the one at bar:

The second issue concerning Kristopher Palang’s status and claim as an illegitimate son and heir to
Miguel’s estate is here resolved in favor of respondent court’s correct assessment that the trial court erred
in making pronouncements regarding Kristopher’s heirship and filiation "inasmuch as questions as to who
are the heirs of the decedent, proof of filiation of illegitimate children and the determination of the estate
of the latter and claims thereto should be ventilated in the proper probate court or in a special proceeding
instituted for the purpose and cannot be adjudicated in the instant ordinary civil action which is for
recovery of ownership and possession."89

The Yaptinchay case involved two parcels of land in Cavite which were supposedly owned by Guido and
Isabel Yaptinchay (spouses Yaptinchay). Upon the death of the spouses Yaptinchay, their heirs
(Yaptinchay heirs) executed an Extra-Judicial Settlement of the deceased spouses’ estate. However, the
Yaptinchay heirs discovered that the properties were already covered by TCTs in the name of Golden Bay
Realty Corporation (Golden Bay), prompting the Yaptinchay heirs to file with the RTC a complaint against
Golden Bay for the annulment and/or declaration of nullity of TCT Nos. 493363 to 493367 and all their
derivatives, or in the alternative, the reconveyance of realty with a prayer for a writ of preliminary
injunction and/or restraining order with damages. The Yaptinchay heirs later filed an amended complaint
to include additional defendants to whom Golden Bay sold portions of the subject properties. The RTC
initially dismissed the amended complaint, but acting on the motion for reconsideration of the Yaptinchay
heirs, eventually allowed the same. Golden Bay and its other co-defendants presented a motion to dismiss
the amended complaint, which was granted by the RTC. The Yaptinchay heirs came before this Court via a
Petition for Certiorari.

The Court first observed in the Yaptinchay case that the Yaptinchay heirs availed themselves of the wrong
remedy. An order of dismissal is the proper subject of an appeal, not a petition for certiorari. Next, the
Court affirmed the dismissal of the amended complaint, thus:
Neither did the respondent court commit grave abuse of discretion in issuing the questioned Order
dismissing the Second Amended Complaint of petitioners, x x x.

xxxx

In Litam, etc., et al. v. Rivera, this court opined that the declaration of heirship must be made in an
administration proceeding, and not in an independent civil action. This doctrine was reiterated in Solivio v.
Court of Appeals where the court held:

"In Litam, et al. v. Rivera, 100 Phil. 364, where despite the pendency of the special proceedings for the
settlement of the intestate estate of the deceased Rafael Litam, the plaintiffs-appellants filed a civil action
in which they claimed that they were the children by a previous marriage of the deceased to a Chinese
woman, hence, entitled to inherit his one-half share of the conjugal properties acquired during his
marriage to Marcosa Rivera, the trial court in the civil case declared that the plaintiffs-appellants were not
children of the deceased, that the properties in question were paraphernal properties of his wife, Marcosa
Rivera, and that the latter was his only heir. On appeal to this Court, we ruled that ‘such declarations
(that Marcosa Rivera was the only heir of the decedent) is improper, in Civil Case No. 2071, it being
within the exclusive competence of the court in Special Proceedings No. 1537, in which it is not as yet, in
issue, and, will not be, ordinarily, in issue until the presentation of the project of partition.’ (p. 378)."

The trial court cannot make a declaration of heirship in the civil action for the reason that such a
declaration can only be made in a special proceeding. Under Section 3, Rule 1 of the 1997 Revised Rules
of Court, a civil action is defined as "one by which a party sues another for the enforcement or protection
of a right, or the prevention or redress of a wrong’ while a special proceeding is "a remedy by which a
party seeks to establish a status, a right, or a particular fact." It is then decisively clear that the
declaration of heirship can be made only in a special proceeding inasmuch as the petitioners here are
seeking the establishment of a status or right.90

LANDTRADE, Teofilo, and/or Atty. Cabildo missed one vital factual distinction between the Agapay and
Yaptinchay cases, on one hand, and the present Petitions, on the other, by reason of which, the Court
shall not apply the prior two to the last.

The Agapay and Yaptinchay cases, as well as the cases of Litam v. Rivera91 and Solivio v. Court of
Appeals,92 cited in the Yaptinchay case, all arose from actions for reconveyance; while the instant Petitions
stemmed from an action for quieting of title. The Court may have declared in previous cases that an
action for reconveyance is in the nature of an action for quieting of title, 93 but the two are distinct
remedies.

Ordinary civil action for reconveyance vis-a-vis special proceeding for quieting of title

The action for reconveyance is based on Section 55 of Act No. 496, otherwise known as the Land
Registration Act, as amended, which states "[t]hat in all cases of registration procured by fraud the owner
may pursue all his legal and equitable remedies against the parties to such fraud, without prejudice,
however, to the rights of any innocent holder for value of a certificate of title."

The Court, in Heirs of Eugenio Lopez, Sr. v. Enriquez,94 described an action for reconveyance as follows:

An action for reconveyance is an action in personam available to a person whose property has been
wrongfully registered under the Torrens system in another’s name. Although the decree is recognized as
incontrovertible and no longer open to review, the registered owner is not necessarily held free from liens.
As a remedy, an action for reconveyance is filed as an ordinary action in the ordinary courts of justice and
not with the land registration court. Reconveyance is always available as long as the property has not
passed to an innocent third person for value. x x x (Emphases supplied.)

On the other hand, Article 476 of the Civil Code lays down the circumstances when a person may institute
an action for quieting of title:

ART. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth
and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action
may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein.

In Calacala v. Republic,95 the Court elucidated on the nature of an action to quiet title:

Regarding the nature of the action filed before the trial court, quieting of title is a common law remedy for
the removal of any cloud upon or doubt or uncertainty with respect to title to real property. Originating in
equity jurisprudence, its purpose is to secure ‘x x x an adjudication that a claim of title to or an interest in
property, adverse to that of the complainant, is invalid, so that the complainant and those claiming under
him may be forever afterward free from any danger of hostile claim.’ In an action for quieting of title, the
competent court is tasked to determine the respective rights of the complainant and other claimants, ‘x x
x not only to place things in their proper place, to make the one who has no rights to said immovable
respect and not disturb the other, but also for the benefit of both, so that he who has the right would see
every cloud of doubt over the property dissipated, and he could afterwards without fear introduce the
improvements he may desire, to use, and even to abuse the property as he deems best x x x . (Emphases
supplied.)

The Court expounded further in Spouses Portic v. Cristobal96 that:

Suits to quiet title are characterized as proceedings quasi in rem. Technically, they are neither in rem nor
in personam. In an action quasi in rem, an individual is named as defendant. However, unlike suits in
rem, a quasi in rem judgment is conclusive only between the parties.

Generally, the registered owner of a property is the proper party to bring an action to quiet title. However,
it has been held that this remedy may also be availed of by a person other than the registered owner
because, in the Article reproduced above, "title" does not necessarily refer to the original or transfer
certificate of title. Thus, lack of an actual certificate of title to a property does not necessarily bar an
action to quiet title. x x x (Emphases supplied.)

The Court pronounced in the Agapay and Yaptinchay cases that a declaration of heirship cannot be made
in an ordinary civil action such as an action for reconveyance, but must only be made in a special
proceeding, for it involves the establishment of a status or right.

The appropriate special proceeding would have been the settlement of the estate of the decedent.
Nonetheless, an action for quieting of title is also a special proceeding, specifically governed by Rule 63 of
the Rules of Court on declaratory relief and similar remedies.97 Actions for declaratory relief and other
similar remedies are distinguished from ordinary civil actions because:

2. In declaratory relief, the subject-matter is a deed, will, contract or other written instrument, statute,
executive order or regulation, or ordinance. The issue is the validity or construction of these documents.
The relief sought is the declaration of the petitioner’s rights and duties thereunder.

The concept of a cause of action in ordinary civil actions does not apply to declaratory relief as this special
civil action presupposes that there has been no breach or violation of the instruments involved.
Consequently, unlike other judgments, the judgment in an action for declaratory relief does not
essentially entail any executional process as the only relief to be properly granted therein is a declaration
of the rights and duties of the parties under the instrument, although some exceptions have been
recognized under certain situations.98

Civil Case No. 4452 could not be considered an action for reconveyance as it is not based on the
allegation that the two parcels of land, Lots 1 and 2, have been wrongfully registered in another person’s
name. OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), covering the subject properties, are still in Doña
Demetria’s name. Vidal and Teofilo each claims to have inherited the two parcels of land from the late
Doña Demetria as said decedent’s sole heir, but neither Vidal nor Teofilo has been able to transfer
registration of the said properties to her/his name as of yet.

Instead, Civil Case No. 4452 is indisputably an action for quieting of title, a special proceeding wherein
the court is precisely tasked to determine the rights of the parties as to a particular parcel of land, so that
the complainant and those claiming under him/her may be forever free from any danger of hostile claim.
Vidal asserted title to the two parcels of land as Doña Demetria’s sole heir. The cloud on Vidal’s title,
which she sought to have removed, was Teofilo’s adverse claim of title to the same properties, also as
Doña Demetria’s only heir. For it to determine the rights of the parties in Civil Case No. 4452, it was
therefore crucial for the RTC-Branch 3 to squarely make a finding as to the status, filiation, and heirship
of Vidal in relation to those of Teofilo. A finding that one is Doña Demetria’s sole and rightful heir would
consequently exclude and extinguish the claim of the other.

Even assuming arguendo that the proscription in the Agapay and Yaptinchay cases against making
declarations of heirship in ordinary civil actions also extends to actions for quieting of title, the same is not
absolute.

In Portugal v. Portugal-Beltran99 (Portugal case), the Court recognized that there are instances when a
declaration of heirship need not be made in a separate special proceeding:

The common doctrine in Litam, Solivio and Guilas in which the adverse parties are putative heirs to the
estate of a decedent or parties to the special proceedings for its settlement is that if the special
proceedings are pending, or if there are no special proceedings filed but there is, under the circumstances
of the case, a need to file one, then the determination of, among other issues, heirship should be raised
and settled in said special proceedings. Where special proceedings had been instituted but had been
finally closed and terminated, however, or if a putative heir has lost the right to have himself declared in
the special proceedings as co-heir and he can no longer ask for its re-opening, then an ordinary civil
action can be filed for his declaration as heir in order to bring about the annulment of the partition or
distribution or adjudication of a property or properties belonging to the estate of the deceased. 100

In the Portugal case itself, the Court directed the trial court to already determine petitioners’ status as
heirs of the decedent even in an ordinary civil action, i.e., action for annulment of title, because:

It appearing x x x that in the present case the only property of the intestate estate of Portugal is the
Caloocan parcel of land, to still subject it, under the circumstances of the case, to a special proceeding
which could be long, hence, not expeditious, just to establish the status of petitioners as heirs is not only
impractical; it is burdensome to the estate with the costs and expenses of an administration proceeding.
And it is superfluous in light of the fact that the parties to the civil case—subject of the present case,
could and had already in fact presented evidence before the trial court which assumed jurisdiction over
the case upon the issues it defined during pre-trial.

In fine, under the circumstances of the present case, there being no compelling reason to still subject
Portugal’s estate to administration proceedings since a determination of petitioners’ status as heirs could
be achieved in the civil case filed by petitioners, the trial court should proceed to evaluate the evidence
presented by the parties during the trial and render a decision thereon upon the issues it defined during
pre-trial, x x x.101

Another case, Heirs of Teofilo Gabatan v. Court of Appeals102 (Gabatan case), involved an action for
recovery of ownership and possession of property with the opposing parties insisting that they are the
legal heirs of the deceased. Recalling the Portugal case, the Court ruled:

Similarly, in the present case, there appears to be only one parcel of land being claimed by the
contending parties as their inheritance from Juan Gabatan. It would be more practical to dispense with a
separate special proceeding for the determination of the status of respondent as the sole heir of Juan
Gabatan, specially in light of the fact that the parties to Civil Case No. 89-092, had voluntarily submitted
the issue to the RTC and already presented their evidence regarding the issue of heirship in these
proceeding. Also the RTC assumed jurisdiction over the same and consequently rendered judgment
thereon.

In Fidel v. Court of Appeals103 (Fidel case), therein respondents, the heirs of the late Vicente Espineli
(Vicente) from his first marriage, instituted an action to annul the sale of Vicente’s property to therein
petitioners, the spouses Fidel. The subject property was sold to petitioners by Vicente’s heirs from his
second marriage. Even though one’s legitimacy can only be questioned in a direct action seasonably filed
by the proper party, the Court held that it was necessary to pass upon respondents’ relationship to
Vicente in the action for annulment of sale so as to determine respondents’ legal rights to the subject
property. In fact, the issue of whether respondents are Vicente’s heirs was squarely raised by petitioners
in their Pre-Trial Brief. Hence, petitioners were estopped from assailing the ruling of the trial court on
respondents’ status.

In Civil Case No. 4452, Teofilo and/or Atty. Cabildo themselves asked the RTC-Branch 3 to resolve the
issue of Vidal's legal or beneficial ownership of the two parcels of land. 104 During trial, Vidal already
presented before the RTC-Branch 3 evidence to establish her status, filiation, and heirship. There is no
showing that Doña Demetria left any other property that would have required special administration
proceedings. In the spirit of the Portugal, Gabatan, and Fidel cases, the Court deems it more practical and
expeditious to settle the issue on Vidal’s status, filiation, and heirship in Civil Case No. 4452.

"Title" in quieting of title

LANDTRADE, Teofilo, and/or Atty. Cabildo further contend that Vidal and AZIMUTH have no cause of
action for quieting of title since Vidal has no title to the two parcels of land. In comparison, Teofilo’s title
to the same properties, as Doña Demetria’s only heir, was already established and recognized by this
Court in the 1997 Cacho case.

Again, the Court cannot sustain the foregoing contention of LANDTRADE, Teofilo, and/or Atty. Cabildo.

It must be borne in mind that the concept of a cause of action in ordinary civil actions does not apply to
quieting of title. In declaratory relief, the subject-matter is a deed, will, contract or other written
instrument, statute, executive order or regulation, or ordinance. The issue is the validity or construction of
these documents. The relief sought is the declaration of the petitioner’s rights and duties thereunder.
Being in the nature of declaratory relief, this special civil action presupposes that there has yet been no
breach or violation of the instruments involved. 105

In an action for quieting of title, the subject matter is the title sought to have quieted. "Title" is not
limited to the certificate of registration under the Torrens System (i.e., OCT or TCT). Pursuant to Article
477 of the Civil Code, the plaintiff must have legal or equitable title to, or interest in, the real property
subject of the action for quieting of title. The plaintiff need not even be in possession of the property. If
she is indeed Doña Demetria’s sole heir, Vidal already has equitable title to or interest in the two parcels
of land by right of succession, even though she has not yet secured certificates of title to the said
properties in her name.

LANDTRADE, Teofilo, and/or Atty. Cabildo mistakenly believe that the 1997 Cacho case had conclusively
settled Teofilo's identity and existence as Doña Demetria’s sole heir. They failed to appreciate that the
1997 Cacho case involved Teofilo’s petition for reconstitution of title, treated as a petition for the re-
issuance of Decree Nos. 10364 and 18969. The grant by the RTC of Teofilo’s petition, affirmed by this
Court, only conclusively established the prior issuance and existence and the subsequent loss of the two
decrees, thus, entitling Teofilo to the re-issuance of the said decrees in their original form and condition.

As the Court of Appeals pointed out in its assailed Decision dated January 19, 2007, the issue of Teofilo’s
heirship was not the lis mota of the 1997 Cacho case. It was addressed by the Court in the 1997 Cacho
case for the simple purpose of determining Teofilo’s legal interest in filing a petition for the re-issuance of
the lost decrees. The Court merely found therein that Teofilo’s Affidavit of Adjudication, executed in the
U.S.A. before the Philippine Consulate General, enjoyed the presumption of regularity and, thus,
sufficiently established Teofilo’s legal interest. The 1997 Cacho case, however, did not conclusively settle
that Teofilo is indeed Doña Demetria’s only heir and the present owner, by right of succession, of the
subject properties.

Factual findings of the RTC-Branch 3 and the Court of Appeals

LANDTRADE, Teofilo, and/or Atty. Cabildo additionally posit that the evidence presented by Vidal and
AZIMUTH were insufficient to prove the fact of Vidal's filiation and heirship to Doña Demetria.
LANDTRADE, Teofilo, and/or Atty. Cabildo particularly challenged the reliance of the RTC-Branch 3 on
Vidal’s baptismal certificate, arguing that it has no probative value and is not conclusive proof of filiation.

Alternative means of proving an individual’s filiation have been recognized by this Court in Heirs of Ignacio
Conti v. Court of Appeals.106 The property in litigation in said case was co-owned by Lourdes Sampayo
(Sampayo) and Ignacio Conti, married to Rosario Cuario (collectively referred to as the spouses Conti).
Sampayo died without issue. Therein respondents, claiming to be Sampayo’s collateral relatives, filed a
petition for partition of the subject property, plus damages. To prove that they were collaterally related to
Sampayo through the latter’s brothers and sisters, respondents submitted photocopies of the birth
certificates, certifications on the non-availability of records of births, and certified true copies of the
baptismal certificates of Sampayo’s siblings. The spouses Conti questioned the documentary evidence of
respondents’ filiation on the ground that these were incompetent and inadmissible, but the Court held
that:
Under Art. 172 of the Family Code, the filiation of legitimate children shall be proved by any other means
allowed by the Rules of Court and special laws, in the absence of a record of birth or a parent’s admission
of such legitimate filiation in a public or private document duly signed by the parent. Such other proof of
one’s filiation may be a baptismal certificate, a judicial admission, a family Bible in which his name has
been entered, common reputation respecting his pedigree, admission by silence, the testimonies of
witnesses and other kinds of proof admissible under Rule 130 of the Rules of Court. By analogy, this
method of proving filiation may also be utilized in the instant case.

xxxx

The admissibility of baptismal certificates offered by Lydia S. Reyes, absent the testimony of the
officiating priest or the official recorder, was settled in People v. Ritter, citing U.S. v. de Vera (28 Phil. 105
[1914]), thus -

x x x the entries made in the Registry Book may be considered as entries made in the course of the
business under Section 43 of Rule 130, which is an exception to the hearsay rule. The baptisms
administered by the church are one of its transactions in the exercise of ecclesiastical duties and recorded
in the book of the church during the course of its business.

It may be argued that baptismal certificates are evidence only of the administration of the sacrament, but
in this case, there were four (4) baptismal certificates which, when taken together, uniformly show that
Lourdes, Josefina, Remedios and Luis had the same set of parents, as indicated therein. Corroborated by
the undisputed testimony of Adelaida Sampayo that with the demise of Lourdes and her brothers Manuel,
Luis and sister Remedios, the only sibling left was Josefina Sampayo Reyes, such baptismal certificates
have acquired evidentiary weight to prove filiation. 107

Thus, Vidal’s baptismal certificate is not totally bereft of any probative value. It may be appreciated,
together with all the other documentary and testimonial evidence submitted on Vidal’s filiation, to wit:

The first issue proposed by petitioners for resolution is whether or not petitioner Demetria C. Vidal is the
sole surviving heir of the late Doña Demetria Cacho. To prove that, indeed, she is the sole surviving heir
of the late Doña Demetria Cacho, she testified in open court and identified the following documentary
evidence, to wit:

Exhibit "A" – Birth Certificate of Demetria C. Vidal

Exhibit "B" – Partida de Bautismo of Demetria C. Vidal

Exhibit "C" – Certificate of Baptism Demetria C. Vidal

Exhibit "D" – Cacho Family Tree

Exhibit "D-1" – Branch of Demetria Cacho

Exhibit "F" – Death Certificate of Demetria Cacho.

Exhibit "P" – Driver’s license of Demetria C. Vidal.

Exhibit "Q" to "Q5" – The book entitled "CACHO", the introductory page on March 1988 when the
data were compiled, page 58 on the Vidal branch of the Cacho family, page 62 on Demetria Cacho
and her descendants, page 69 on the family member with the then latest birth day 26 March 1988,
and page 77 with the picture of Demetria Cacho Vidal, Dionisio Vidal and Francisco Vidal. 108

In contrast, LANDTRADE, Teofilo, and/or Atty. Cabildo failed to present any evidence at all in support of
their claims. According to the RTC-Branch 3:

Landtrade was also declared to have waived its right to present evidence on its defense and counterclaim
in the above-entitled case in view of its failure to present evidence on their scheduled trial date.

xxxx
Since respondents Teofilo Cacho and Atty. Godofredo Cabildo opted not to adduce evidence in this case as
they failed to appear during the scheduled trial dates, the court shall decide on the basis of the evidence
for the respondents-intervenor and petitioners.109

Based on the evidence presented before it, the RTC-Branch 3 made the following factual findings:

From the evidence adduced, both testimonial and documentary, the court is convinced that petitioner
Vidal is the granddaughter of Demetria Cacho Vidal, the registered owner of the subject property covered
by decree Nos. 10364 & 18969, reissued as Decrees No. 19364 and No. 16869. Such being the case, she
is an heir of Demetria Cacho Vidal.

Petitioner Vidal’s Certificate of Birth (Exh. "A") shows that she was born on June 3, 1941, with the name
Demetria Vidal. [Her] father was Francisco Vidal and her mother was Fidela Confesor, Francisco Vidal is
the son of Dionisio Vidal and Demetria Cacho as shown by [his] Partida de Bautismo (Baptismal
Certificate). Moreover, it was shown in the same document that her godmother was Demetria Cacho. By
inference, this Demetria Cacho is actually Demetria Cacho Vidal because she was married to Dionisio
Vidal, the father of Francisco Vidal.

Now then, is Demetria Cacho Vidal the same person referred to in Cacho v. Government of the United
States (28 Phil. 616 [1914])? Page 618, Vol. 28 of the Philippine Reports would indicate that the applicant
for registration was Doña Demetria Cacho y Soriano (Exh. "R-1"). The Death Certificate of Demetria
Cacho Vidal shows that her mother was Candelaria Soriano (Exh. "F"). Necessarily, they are one and the
same person. This is further confirmed by the fact that the husband of Demetria Cacho Vidal, Señor
Dionisio Vidal, was quoted in pp. 629-630 of the aforecited decision as the husband of Demetria Cacho
(Exh. "R-3").

The book "CACHO" (Exhs. "Q" to "Q-5") and the Cacho Family Tree (Exhs. "D" to "D-1") further
strengthen the aforecited findings of this Court.

It was established by petitioner Vidal’s own testimony that at the time of Doña Demetria Cacho's death,
she left no heir other than petitioner Vidal. Her husband, Don Dionisio, died even before the war, while
her only child, Francisco Cacho Vidal – xxx Vidal’s father – died during the war. Petitioner’s only sibling –
Francisco Dionisio – died at childbirth.

xxxx

The next factual issue proposed by petitioners is whether or not respondent Teofilo Cacho is the son or
heir of the late Doña Demetria Cacho. The following facts and circumstances negate the impression that
he is the son, as he claims to be, of Doña Demetria Cacho. Thus:

a) Doña Demetria Cacho was married to Don Dionisio Vidal, and thus her full name was Doña
Demetria Cacho Vidal. Her only child, expectedly, carried the surname Vidal (Francisco Cacho
Vidal). Had Teofilo Cacho actually been a son of Demetria Cacho, he would and should have carried
the name "Teofilo Cacho Vidal", but he did not.

b) Teofilo Cacho admits to being married to one Elisa Valderrama in the Special Power of Attorney
he issued to Atty. Godofredo [Cabildo] (Exh. "O"). Teofilo Cacho married Elisa Valderrama on 27
May 1953, in the Parish of the Immaculate Conception, Bani, Pangasinan. The Certificate of
Marriage shows that Teofilo Cacho is the son of Agustin Cacho and Estefania Cordial, not Demetria
Cacho. In his Certificate of Baptism (Exh. "G"), he was born to Agustin Cacho and Estefania Cordial
on May 1930 (when Doña Demetria Cacho was already 50 years old).

c) The Cacho Family Tree (Exh. "D") (that is, the Cacho Family to which Doña Demetria Cacho
belonged) as well as the book on the Cacho Family (Exh. "Q") are bereft of any mention of Teofilo
Cacho or his wife Elisa Valderrama, or even his real father Agustin Cacho, or mother Estefania
Cordial. They are not known to be related to the Cacho family of Doña Demetria Cacho.

d) Paragraph 1.11 of the Petition charges respondent Teofilo Cacho of having falsely and
fraudulently claiming to be the son and sole heir of the late Doña Demetria Cacho. In his answer to
this particular paragraph, he denied the same for lack of knowledge or information to form a belief.
He should know whether this allegation is true or not because it concerns him. If true, he should
admit and if false, he opted to deny the charges for lack of knowledge or information to form a
 belief. The Court considers his denial as an admission of the allegation that he is falsely and
fraudulently claiming to be the son and sole heir of the late Doña Demetria Cacho.110

Considering the aforequoted factual findings, the RTC-Branch 3 arrived at the following legal conclusions,
quieting the titles of Vidal and AZIMUTH, viz:

The first proposed legal issue to be resolved had been amply discussed under the first factual issue.
Certainly, petitioner Vidal has hereditary rights, interest, or title not only to a portion of the Subject
Property but to the entire property left by the late Doña Demetria Cacho Vidal, subject, however, to the
Deed of Conditional Conveyance executed by petitioner Vidal of a portion of the Subject Property in favor
of petitioner Azimuth International Development Corporation (Exh. "J") executed pursuant to their
Memorandum of Agreement (Exh. "I"). Consequently, it goes without saying that petitioner Azimuth
International Development Corporation has a right, interest in, or title to a portion of the subject property.

As discussed earlier in this decision, Teofilo Cacho, not being the son, as he claims to be, of the late Doña
Demetria Cacho Vidal, has no hereditary rights to the Subject Property left by Doña Demetria Cacho Vidal.
He failed to show any evidence that he is the son of the late Doña Demetria Cacho Vidal as he and his co
respondent, Atty. Godofredo Cabildo, even failed to appear on the scheduled trial date.

It is, therefore, safe to conclude that respondents Teofilo Cacho and/or Atty. Godofredo Cabildo and their
transferees/assignees have no right, interest in, or title to the subject property.

Prescinding from the finding of this Court that respondent Teofilo Cacho is not the son of the registered
owner of the Subject Property, the late Doña Demetria Cacho Vidal, respondent Cacho committed false
pretenses and fraudulent acts in representing himself as son and sole heir of Doña Demetria Cacho (Vidal)
in his petition in court, which eventually led to the reconstitution of the titles of Doña Demetria Cacho
(Vidal). Certainly, his misrepresentation in the reconstitution case, which apparently is the basis of his
claim to the subject property, casts clouds on [respondents'] title to the subject property.

It is only right that petitioner Vidal should seek protection of her ownership from acts tending to cast
doubt on her title. Among the legal remedies she could pursue, is this petition for Quieting of Title under
Chapter 3, Title I, Book II of the Civil Code, Articles 476 to 481 inclusive. x x x. 111

The Court of Appeals affirmed in toto the judgment of the RTC-Branch 3. The appellate court even soundly
trounced Teofilo’s attack on the factual findings of the trial court:

[T]he material facts sought to be established by the afore-mentioned documentary evidence corroborated
by the testimony of VIDAL, whose testimony or credibility neither Teofilo and LANDTRADE even attempted
to impeach, only proves one thing, that she is the granddaughter of DOÑA DEMETRIA and the sole heiress
thereof.

xxxx

Hence, it is now too late for appellant TEOFILO to assail before Us the facts proven during the trial, which
he failed to refute in open court. Verily, TEOFILO’s lackadaisical attitude in the conduct of his defense only
shows that he has no proof to offer in refutation of the evidence advanced by appellee VIDAL.

Otherwise stated, appellant TEOFILO is an impostor, a pretender and bogus heir of DOÑA DEMETRIA.

xxxx

Besides, it is quite unnatural and against human nature for a rightful heir, if TEOFILO is really one, to
merely stand still with folded arms, while the accusing finger of VIDAL is right on his very nose. In all
likelihood, and with all his might and resources, a rightful heir may even be expected to cross continents
and reach distant shores to protect his interest over the subject properties, which in this case is arguably
worth more than a King’s ransom.

It stands on record that TEOFILO CACHO has all along even prior to executing his Affidavit of Adjudication
in 1985 in Chicago, United States of America, and in simultaneously executing a Special Power of Attorney
in favor of ATTY. CABILDO, had remained in the United States, and not for a single moment appeared in
court except through his agents or representatives. To Our mind, this fact alone adversely affects his
pretension in claiming to be an heir of DOÑA DEMETRIA.112
As a rule, the findings of fact of the trial court when affirmed by the Court of Appeals are final and
conclusive, and cannot be reviewed on appeal by this Court as long as they are borne out by the record or
are based on substantial evidence. It is not the function of the Court to analyze or weigh all over again
the evidence or premises supportive of such factual determination. The Court has consistently held that
the findings of the Court of Appeals and other lower courts are, as a rule, accorded great weight, if not
binding upon it, save for the most compelling and cogent reasons.113 There is no justification for the Court
to deviate from the factual findings of the RTC-Branch 3 and the Court of Appeals which are clearly
supported by the evidence on record.

Prescription

LANDTRADE finally asserts that the action for quieting of title of Vidal and AZIMUTH already prescribed
since LANDTRADE has been in possession of the two parcels of land in question. The prescriptive period
for filing said action lapsed in 1995, ten years from the time Teofilo executed his Affidavit of Adjudication
in 1985. Yet, Vidal and AZIMUTH instituted Civil Case No. 4452 only in 1998.

It is too late in the day for LANDTRADE to raise the issue of prescription of Civil Case No. 4452 for the
first time before this Court. In this jurisdiction, the defense of prescription cannot be raised for the first
time on appeal. Such defense may be waived, and if it was not raised as a defense in the trial court, it
cannot be considered on appeal, the general rule being that the Appellate Court is not authorized to
consider and resolve any question not properly raised in the lower court. 114

But even if the Court takes cognizance of the issue of prescription, it will rule against LANDTRADE.

A real action is one where the plaintiff seeks the recovery of real property or, as indicated in what is now
Rule 4, Section 1 of the Rules of Court, a real action is an action affecting title to or recovery of
possession of real property.115 An action for quieting of title to real property, such as Civil Case No. 4452,
is indubitably a real action.

Article 1141 of the Civil Code plainly provides that real actions over immovables prescribe after thirty
years. Doña Demetria died in 1974, transferring by succession, her title to the two parcels of land to her
only heir, Vidal. Teofilo, through Atty. Cabildo, filed a petition for reconstitution of the certificates of title
covering said properties in 1978. This is the first palpable display of Teofilo’s adverse claim to the same
properties, supposedly, also as Doña Demetria’s only heir. When Vidal and AZIMUTH instituted Civil Case
No. 4452 in 1998, only 20 years had passed, and the prescriptive period for filing an action for quieting of
title had not yet prescribed.

Nevertheless, the Court notes that Article 1411 of the Civil Code also clearly states that the 30-year
prescriptive period for real actions over immovables is without prejudice to what is established for the
acquisition of ownership and other real rights by prescription. Thus, the Court must also look into the
acquisitive prescription periods of ownership and other real rights.

116
Acquisitive prescription of dominion and real rights may be ordinary or extraordinary.

Ordinary acquisitive prescription requires possession of things in good faith and with just title for the time
fixed by law.117 In the case of ownership and other real rights over immovable property, they are acquired
by ordinary prescription through possession of 10 years.118

LANDTRADE cannot insist on the application of the 10-year ordinary acquisitive prescription period since it
cannot be considered a possessor in good faith. The good faith of the possessor consists in the reasonable
belief that the person from whom he received the thing was the owner thereof, and could transmit his
ownership.119

LANDTRADE came to possession of the two parcels of land after purchasing the same from Teofilo. The
Court stresses, however, that Teofilo is not the registered owner of the subject properties. The said
properties are still registered in Doña Demetria’s name under OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.).
The Affidavit of Adjudication, by which Teofilo declared himself to be the sole heir of Doña Demetria’s
estate, is not even annotated on the OCTs. Worse, LANDTRADE is not dealing directly with Teofilo, but
only with the latter’s attorney-in-fact, Atty. Cabildo. It is axiomatic that one who buys from a person who
is not a registered owner is not a purchaser in good faith. 120
Furthermore, in its Complaint for Unlawful Detainer against NAPOCOR and TRANSCO, which was docketed
as Civil Case No. 11475-AF before the MTCC, LANDTRADE itself alleged that when it bought the two
parcels of land from Teofilo, portions thereof were already occupied by the Overton Sub-station and Agus
7 Warehouse of NAPOCOR and TRANSCO. This is another circumstance which should have prompted
LANDTRADE to investigate or inspect the property being sold to it. It is, of course, expected from the
purchaser of a valued piece of land to inquire first into the status or nature of possession of the
occupants, i.e., whether or not the occupants possess the land en concepto de dueño, in concept of
owner. As is the common practice in the real estate industry, an ocular inspection of the premises
involved is a safeguard a cautious and prudent purchaser usually takes. Should he find out that the land
he intends to buy is occupied by anybody else other than the seller who, as in this case, is not in actual
possession, it would then be incumbent upon the purchaser to verify the extent of the occupant’s
possessory rights. The failure of a prospective buyer to take such precautionary steps would mean
negligence on his part and would thereby preclude him from claiming or invoking the rights of a
"purchaser in good faith."121

Since the ordinary acquisitive prescription period of 10 years does not apply to LANDTRADE, then the
Court turns its attention to the extraordinary acquisitive prescription period of 30 years set by Article
1137 of the Civil Code, which reads:

ART. 1137. Ownership and other real rights over immovables also prescribe through uninterrupted
adverse possession thereof for thirty years, without need of title or of good faith.

LANDTRADE adversely possessed the subject properties no earlier than 1996, when it bought the same
from Teofilo, and Civil Case No. 4452 was already instituted two years later in 1998. LANDTRADE cannot
tack its adverse possession of the two parcels of land to that of Teofilo considering that there is no proof
that the latter, who is already residing in the U.S.A., adversely possessed the properties at all.

Thus, the Court of Appeals did not err when it affirmed in toto the judgment of the RTC-Branch 3 which
declared, among other things, that (a) Vidal is the sole surviving heir of Doña Demetria, who alone has
rights to and interest in the subject parcels of land; (b) AZIMUTH is Vidal’s successor-in-interest to
portions of the said properties in accordance with the 1998 Memorandum of Agreement and 2004 Deed of
Conditional Conveyance; (c) Teofilo is not the son or heir of Doña Demetria; and (d) Teofilo, Atty.
Cabildo, and their transferees/assignees, including LANDTRADE, have no valid right to or interest in the
same properties.

The Ejectment or Unlawful Detainer Case

(G.R. Nos. 170505, 173355-56, and 173563-64)

The Petitions in G.R. Nos. 170505, 173355-56, and 173563-64 all concern the execution pending appeal
of the Decision dated February 17, 2004 of the MTCC in Civil Case No. 11475-AF, which ordered
NAPOCOR and TRANSCO to vacate the two parcels of land in question, as well as to pay rent for the time
they occupied said properties.

LANDTRADE filed its Petition for Review in G.R. No. 170505 when it failed to have the MTCC Decision
dated February 17, 2004 executed while Civil Case No. 6613, the appeal of the same judgment by
NAPOCOR and TRANSCO, was still pending before the RTC-Branch 5.

NAPOCOR and TRANSCO sought recourse from this Court through their Petitions for Certiorari and
Prohibition in G.R. Nos. 173355-56 and 173563-64 after the RTC-Branch 1 (to which Civil Case No. 6613
was re-raffled) already rendered a Decision dated December 12, 2005 in Civil Case No. 6613, affirming
the MTCC Decision dated February 17, 2004. Expectedly, NAPOCOR and TRANSCO appealed the judgment
of the RTC-Branch 1 to the Court of Appeals. The Court of Appeals granted the motion for execution
pending appeal of LANDTRADE, and denied the application for preliminary injunction of NAPOCOR and
TRANSCO.

The requirements of posting a supersedeas bond and depositing rent to stay execution

The pivotal issue in G.R. No. 170505 is whether LANDTRADE is entitled to the execution of the MTCC
Decision dated February 17, 2004 even while said judgment was then pending appeal before the RTC-
Branch 5. The RTC-Branch 5 granted the motion for immediate execution pending appeal of LANDTRADE
because of the failure of NAPOCOR and TRANSCO to comply with the requirements for staying the
execution of the MTCC judgment, as provided in Rule 70, Section 19 of the Rules of Court. The Court of
Appeals subsequently found grave abuse of discretion on the part of RTC-Branch 5 in issuing the Order
dated August 9, 2004 which granted execution pending appeal and the Writ of Execution Pending Appeal
dated August 10, 2004; and on the part of Sheriff Borres, in issuing the Notices of Garnishment and
Notification to vacate, all dated August 11, 2004. According to the appellate court, NAPOCOR and
TRANSCO are exempt from the requirements of filing a supersedeas bond and depositing rent in order to
stay the execution of the MTCC judgment.

Rule 70, Section 19 of the Rules of Court lays down the requirements for staying the immediate execution
of the MTCC judgment against the defendant in an ejectment suit:

SEC. 19. Immediate execution of judgment; how to stay same. – If judgment is rendered against the
defendant, execution shall issue immediately upon motion, unless an appeal has been perfected and the
defendant to stay execution files a sufficient supersedeas bond, approved by the Municipal Trial Court and
executed in favor of the plaintiff to pay the rents, damages, and costs accruing down to the time of the
judgment appealed from, and unless, during the pendency of the appeal, he deposits with the appellate
court the amount of rent due from time to time under the contract, if any, as determined by the judgment
of the Municipal Trial Court. In the absence of a contract, he shall deposit with the Regional Trial Court the
reasonable value of the use and occupation of the premises for the preceding month or period at the rate
determined by the judgment of the lower court on or before the tenth day of each succeeding month or
period. The supersedeas bond shall be transmitted by the Municipal Trial Court, with the other papers, to
the clerk of the Regional Trial Court to which the action is appealed.

All amounts so paid to the appellate court shall be deposited with said court or authorized government
depositary bank, and shall be held there until the final disposition of the appeal, unless the court, by
agreement of the interested parties, or in the absence of reasonable grounds of opposition to a motion to
withdraw, or for justifiable reasons, shall decree otherwise. Should the defendant fail to make the
payments above prescribed from time to time during the pendency of the appeal, the appellate court,
upon motion of the plaintiff, and upon proof of such failure, shall order the execution of the judgment
appealed from with respect to the restoration of possession, but such execution shall not be a bar to the
appeal taking its course until the final disposition thereof on the merits.

After the case is decided by the Regional Trial Court, any money paid to the court by the defendant for
purposes of the stay of execution shall be disposed of in accordance with the provisions of the judgment
of the Regional Trial Court. In any case wherein it appears that the defendant has been deprived of the
lawful possession of land or building pending the appeal by virtue of the execution of the judgment of the
Municipal Trial Court, damages for such deprivation of possession and restoration of possession may be
allowed the defendant in the judgment of the Regional Trial Court disposing of the appeal. (Emphases
supplied.)

The Court had previously recognized the exemption of NAPOCOR from filing a supersedeas bond. The
Court stated in Philippine Geothermal, Inc. v. Commissioner of Internal Revenue 122 that a chronological
review of the NAPOCOR Charter will show that it has been the lawmakers’ intention that said corporation
be completely exempt not only from all forms of taxes, but also from filing fees, appeal bonds, and
supersedeas bonds in any court or administrative proceedings. The Court traced the history of the
NAPOCOR Charter, thus:

Republic Act No. 6395 (10 September 1971) enumerated the details covered by the exemptions by stating
under Sec. 13 that "The Corporation shall be non-profit and shall devote all its returns from its capital
investment, as well as excess revenues from its operation, for expansion…the Corporation is hereby
declared exempt from the payment of all taxes, duties, fees, imposts, charges, costs and service fees in
any court or administrative proceedings in which it may be a party, restrictions and duties to the Republic
of the Philippines, its provinces, cities, municipalities and other government agencies and
instrumentalities . . ." Subsequently, Presidential Decree No. 380 (22 January 1974), Sec. 10 made even
more specific the details of the exemption of NPC to cover, among others, both direct and indirect taxes
on all petroleum products used in its operation. Presidential Decree No. 938 (27 May 1976), Sec. 13
amended the tax exemption by simplifying the same law in general terms. It succinctly exempts service
fees, including filing fees, appeal bonds, supersedeas bonds, in any court or administrative proceedings.
The use of the phrase "all forms" of taxes demonstrate the intention of the law to give NPC all the
exemption it has been enjoying before. The rationale for this exemption is that being non-profit, the NPC
"shall devote all its return from its capital investment as well as excess revenues from its operation, for
expansion.123 (Emphases supplied.)

As presently worded, Section 13 of Republic Act No. 6395, the NAPOCOR Charter, as amended, reads:
SEC. 13. Non-profit Character of the Corporation; Exemption from All Taxes, Duties, Fees, Imposts and
Other Charges by the Government and Government Instrumentalities. – The Corporation shall be non-
profit and shall devote all its returns from its capital investment as well as excess revenues from its
operation, for expansion. To enable the Corporation to pay its indebtedness and obligations and in
furtherance and effective implementation of the policy enunciated in Section One of this Act, the
Corporation, including its subsidiaries, is hereby declared exempt from the payment of all forms of taxes,
duties, fees, imposts as well as costs and service fees including filing fees, appeal bonds, supersedeas
bonds, in any court or administrative proceedings. (Emphasis supplied.)

In A.M. No. 05-10-20-SC, captioned In Re: Exemption of the National Power Corporation from Payment of
Filing/Docket Fees, the Court addressed the query of a Clerk of Court from the RTC of Urdaneta,
Pangasinan on whether NAPOCOR is exempt from the payment of filing fees and Sheriff’s Trust Fund. In
its Resolution dated December 6, 2005, the Court, upon the recommendation of the Court Administrator,
declared that NAPOCOR is still exempt from the payment of filing fees, appeal bonds, and supersedeas
bonds.

Consistent with the foregoing, the Court of Appeals rendered its Decision dated November 23, 2005 in CA-
G.R. SP Nos. 85714 and 85841 declaring that NAPOCOR was exempt from filing a supersedeas bond to
stay the execution of the MTCC judgment while the same was pending appeal before the RTC-Branch 5.
The appellate court also held that the exemption of NAPOCOR extended even to the requirement for
periodical deposit of rent, ratiocinating that:

On the whole, the posting of supersedeas bond and the making of the periodical deposit are designed
primarily to insure that the plaintiff would be paid the back rentals and the compensation for the use and
occupation of the premises should the municipal trial court’s decision be eventually affirmed on appeal.
Elsewise stated, both the posting of the supersedeas bond and the payment of monthly deposit are
required to accomplish one and the same purpose, namely, to secure the performance of, or to satisfy the
judgment appealed from in case it is affirmed on appeal by the appellate court.

xxxx

Thus viewed, the inescapable conclusion is, and so We hold, that although the term "making of monthly
deposit in ejectment cases" is not expressly or specifically mentioned in Section 13 of R.A. 6395,
however, inasmuch as it has the same or similar function, purpose, and essence as a supersedeas bond, it
should be deemed included in the enumeration laid down under the said provision. This accords well with
the principle of ejusdem generis which says that where a statute uses a general word followed by an
enumeration of specific words embraced within the general word merely as examples, the enumeration
does not restrict the meaning of the general word which should be construed to include others of the
same class although not enumerated therein; or where a general word or phrase follows an enumeration
of particular and specific words of the same class or where the latter follow the former, the general word
or phrase is to be construed to include persons, things or cases akin to, resembling, or of the same kind
or class as those specifically mentioned.

In a nutshell, We hold that petitioner NAPOCOR enjoys exemption not only from posting supersedeas
bond in courts in appealed ejectment cases, but also from periodically depositing the amount of the
monthly rental or the reasonable compensation of the use and occupancy of the property, as determined
in the municipal trial court’s decision.124

The Court of Appeals further adjudged that the exemptions of NAPOCOR similarly applied to TRANSCO
since "[i]t is all too obvious that the interests of NAPOCOR and TRANSCO over the premises in litigation
are so interwoven and dependent upon each other, such that whatever is adjudged in regard to the
former, whether favorable or adverse, would ineluctably and similarly affect the latter[;]" and
"[c]onsequently, x x x the stay of the execution of the appealed decision insofar as NAPOCOR is
concerned necessarily extends and inures to its co-defendant TRANSCO, not by virtue of the former’s
statutory exemption privilege from filing supersedeas bond and making periodic deposits, but by the
indisputably operative fact that the rights and liabilities in litis of BOTH defendants are so intimately
interwoven, interdependent, and indivisible." 125

Only recently, however, the Court reversed its stance on the exemption of NAPOCOR from filing fees,
appeal bonds, and supersedeas bonds. Revisiting A.M. No. 05-10-20-SC, the Court issued Resolutions
dated October 27, 2009 and March 10, 2010, wherein it denied the request of NAPOCOR for exemption
from payment of filing fees and court fees for such request appears to run counter to Article VIII, Section
5(5)126 of the Constitution, on the rule-making power of the Supreme Court over the rules on pleading,
practice and procedure in all courts, which includes the sole power to fix the filing fees of cases in courts.
The Court categorically pronounced that NAPOCOR can no longer invoke its amended Charter as basis for
exemption from the payment of legal fees.

Nevertheless, in this case, the RTC-Branch 1 already promulgated its Decision in Civil Case No. 6613 on
December 12, 2005, denying the appeal of NAPOCOR and TRANSCO and affirming the MTCC judgment
against said corporations. NAPOCOR and TRANSCO presently have pending appeals of the RTC-Branch 1
judgment before the Court of Appeals.

Rule 70, Section 19 of the Rules of Court applies only when the judgment of a Municipal Trial Court (and
any same level court such as the MTCC) in an ejectment case is pending appeal before the RTC. When the
RTC had already resolved the appeal and its judgment, in turn, is pending appeal before the Court of
Appeals, then Rule 70, Section 21 of the Rules of Court governs.

The Court already pointed out in Northcastle Properties and Estate Corporation v. Paas 127 that Section 19
applies only to ejectment cases pending appeal with the RTC, and Section 21 to those already decided by
the RTC. The Court again held in Uy v. Santiago128 that:

[I]t is only execution of the Metropolitan or Municipal Trial Courts’ judgment pending appeal with the
Regional Trial Court which may be stayed by a compliance with the requisites provided in Rule 70, Section
19 of the 1997 Rules on Civil Procedure. On the other hand, once the Regional Trial Court has rendered a
decision in its appellate jurisdiction, such decision shall, under Rule 70, Section 21 of the 1997 Rules on
Civil Procedure, be immediately executory, without prejudice to an appeal, via a Petition for Review,
before the Court of Appeals and/or Supreme Court. (Emphases supplied.)

According to Rule 70, Section 21 of the Rules of Court, "[t]he judgment of the Regional Trial Court against
the defendant shall be immediately executory, without prejudice to a further appeal that may be taken
therefrom." It no longer provides for the stay of execution at such stage.

Thus, subsequent events have rendered the Petition of LANDTRADE in G.R. No. 170505 moot and
academic. It will serve no more purpose for the Court to require NAPOCOR and TRANSCO to still comply
with the requirements of filing a supersedeas bond and depositing rent to stay execution pending appeal
of the MTCC judgment, as required by Rule 70, Section 19 of the Rules of Court, when the appeal had
since been resolved by the RTC.

Preliminary injunction to stay execution of RTC judgment against defendant in an ejectment case

The issues raised by NAPOCOR and TRANSCO in their Petitions in G.R. Nos. 173355-56 and 173563-64
boil down to the sole issue of whether the Court of Appeals committed grave abuse of discretion
amounting to lack or excess of jurisdiction in refusing to enjoin the execution of the Decision dated
December 12, 2005 of the RTC-Branch 1 in Civil Case No. 6613 while the same is pending appeal before
the appellate court.

The Court of Appeals granted the issuance of a writ of execution in favor of LANDTRADE and denied the
application for writ of preliminary injunction of NAPOCOR and TRANSCO because Rule 70, Section 21 of
the Rules of Court explicitly provides that the RTC judgment in an ejectment case, which is adverse to the
defendant and pending appeal before the Court of Appeals, shall be immediately executory and can be
enforced despite further appeal. Therefore, the execution of the RTC judgment pending appeal is the
ministerial duty of the Court of Appeals, specifically enjoined by law to be done.

NAPOCOR and TRANSCO argue that neither the rules nor jurisprudence explicitly declare that Rule 70,
Section 21 of the Rules of Court bars the application of Rule 58 on preliminary injunction. Regardless of
the immediately executory character of the RTC judgment in an ejectment case, the Court of Appeals,
before which said judgment is appealed, is not deprived of power and jurisdiction to issue a writ of
preliminary injunction when circumstances so warrant.

There is merit in the present Petitions of NAPOCOR and TRANSCO.

The Court expounded on the nature of a writ of preliminary injunction in Levi Strauss & Co. v. Clinton
Apparelle, Inc. 129:
Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an order granted at any stage
of an action prior to the judgment or final order requiring a party or a court, agency or a person to refrain
from a particular act or acts. Injunction is accepted as the strong arm of equity or a transcendent remedy
to be used cautiously as it affects the respective rights of the parties, and only upon full conviction on the
part of the court of its extreme necessity. An extraordinary remedy, injunction is designed to preserve or
maintain the status quo of things and is generally availed of to prevent actual or threatened acts until the
merits of the case can be heard. It may be resorted to only by a litigant for the preservation or protection
of his rights or interests and for no other purpose during the pendency of the principal action. It is
resorted to only when there is a pressing necessity to avoid injurious consequences, which cannot be
remedied under any standard compensation. The resolution of an application for a writ of preliminary
injunction rests upon the existence of an emergency or of a special recourse before the main case can be
heard in due course of proceedings.

Section 3, Rule 58, of the Rules of Court enumerates the grounds for the issuance of a preliminary
injunction:

SEC. 3. Grounds for issuance of preliminary injunction. – A preliminary injunction may be granted when it
is established:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief
consists in restraining the commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited period or perpetually;

(b) That the commission, continuance, or non-performance of the act or acts complained of during
the litigation would probably work injustice to the applicant; or

(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is
procuring or suffering to be done, some act or acts probably in violation of the rights of the
applicant respecting the subject of the action or proceeding, and tending to render the judgment
ineffectual.

Under the cited provision, a clear and positive right especially calling for judicial protection must be
shown. Injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not
issue to protect a right not in esse and which may never arise, or to restrain an act which does not give
rise to a cause of action. There must exist an actual right. There must be a patent showing by the
complaint that there exists a right to be protected and that the acts against which the writ is to be
directed are violative of said right.

Benedicto v. Court of Appeals130 sets forth the following elucidation on the applicability of Rule 58 vis-à-vis
Rule 70, Section 21 of the Rules of Court:

This section [Rule 70, Section 21] presupposes that the defendant in a forcible entry or unlawful detainer
case is unsatisfied with the judgment of the Regional Trial Court and decides to appeal to a superior court.
It authorizes the RTC to immediately issue a writ of execution without prejudice to the appeal taking its
due course. It is our opinion that on appeal the appellate court may stay the said writ should
circumstances so require.

In the case of Amagan v. Marayag, we reiterated our pronouncement in Vda. de Legaspi v. Avendaño that
the proceedings in an ejectment case may be suspended in whatever stage it may be found. We further
drew a fine line between forcible entry and unlawful detainer, thus:

Where the action, therefore, is one of illegal detainer, as distinguished from one of forcible entry, and the
right of the plaintiff to recover the premises is seriously placed in issue in a proper judicial proceeding, it
is more equitable and just and less productive of confusion and disturbance of physical possession, with
all its concomitant inconvenience and expenses. For the Court in which the issue of legal possession,
whether involving ownership or not, is brought to restrain, should a petition for preliminary injunction be
filed with it, the effects of any order or decision in the unlawful detainer case in order to await the final
judgment in the more substantive case involving legal possession or ownership. It is only where there has
been forcible entry that as a matter of public policy the right to physical possession should be immediately
set at rest in favor of the prior possession regardless of the fact that the other party might ultimately be
found to have superior claim to the premises involved thereby to discourage any attempt to recover
possession thru force, strategy or stealth and without resorting to the courts.
Patently, even if RTC judgments in unlawful detainer cases are immediately executory, preliminary
injunction may still be granted. There need only be clear showing that there exists a right to be protected
and that the acts against which the writ is to be directed violate said right. (Emphasis supplied.)

As in Benedicto, substantial considerations exist herein that compels the Court to issue a writ of
preliminary injunction enjoining the execution of the February 17, 2004 Decision of the MTCC, as affirmed
by the December 12, 2005 Decision of the RTC-Branch 1, until the appeal of latter judgment, sought by
NAPOCOR and TRANSCO, is finally resolved by the Court of Appeals.

First, the two parcels of land claimed by LANDTRADE are the subject of several other cases. In fact, Vidal
and AZIMUTH, who instituted the Quieting of Title Case against Teofilo and LANDTRADE (also presently
before the Court in G.R. Nos. 178779 and 178894) have filed a Motion For Leave to Intervene in the
instant case, thus, showing that there are other parties who, while strangers to the ejectment case, might
be greatly affected by its result and who want to protect their interest in the subject properties. And
although cases involving title to real property, i.e., quieting of title, accion publiciana, etc., are not
prejudicial to and do not suspend an ejectment case,131 the existence of such cases should have already
put the Court of Appeals on guard that the title of LANDTRADE to the subject properties – on which it
fundamentally based its claim of possessory right – is being fiercely contested.

Second, it is undisputed that TRANSCO and its predecessor, NAPOCOR, have been in possession of the
disputed parcels of land for more than 40 years. Upon said properties stand the TRANSCO Overton Sub-
station and Agus 7 Warehouse. The Overton Sub-station, in particular, is a crucial facility responsible for
providing the power requirements of a large portion of Iligan City, the two Lanao Provinces, and other
nearby provinces. Without doubt, having TRANSCO vacate its Overton Sub-station, by prematurely
executing the MTCC judgment of February 17, 2004, carries serious and irreversible implications,
primordial of which is the widespread disruption of the electrical power supply in the aforementioned
areas, contributing further to the electric power crisis already plaguing much of Mindanao.

Lastly, allowing execution pending appeal would result in the payment of an astronomical amount in
rentals which, per Sheriff Borres’s computation, already amounted to P156,000,000.00 by August 11,
2004, when he issued the Notices of Garnishment and Notification against NAPOCOR and TRANSCO; plus,
P500,000.0 each month thereafter. Payment of such an amount may seriously put the operation of a
public utility in peril, to the detriment of its consumers.

These circumstances altogether present a pressing necessity to avoid injurious consequences, not just to
NAPOCOR and TRANSCO, but to a substantial fraction of the consuming public as well, which cannot be
remedied under any standard compensation. The issuance by the Court of Appeals of a writ of preliminary
injunction is justified by the circumstances.

The Court must emphasize though that in so far as the Ejectment Case is concerned, it has only settled
herein issues on the propriety of enjoining the execution of the MTCC Decision dated February 17, 2004
while it was on appeal before the RTC, and subsequently, before the Court of Appeals. The Court of
Appeals has yet to render a judgment on the appeal itself. But it may not be amiss for the Court to also
point out that in G.R. Nos. 178779 and 178894 (Quieting of Title Case), it has already found that Vidal,
not Teofilo, is the late Doña Demetria’s sole heir, who alone inherits Doña Demetria’s rights to and
interests in the disputed parcels of land. This conclusion of the Court in the Quieting of Title Case will
inevitably affect the Ejectment Case still pending appeal before the Court of Appeals since LANDTRADE is
basing its right to possession in the Ejectment Case on its supposed title to the subject properties, which
it derived from Teofilo.

The Cancellation of Titles and Reversion Case

(G.R. No. 173401)

The Republic is assailing in its Petition in G.R. No. 173401 the (1) Order dated December 13, 2005 of the
RTC-Branch 4 dismissing Civil Case No. 6686, the Complaint for Cancellation of Titles and Reversion filed
by the Republic against the deceased Doña Demetria, Vidal and/or Teofilo, and AZIMUTH and/or
LANDTRADE; and (2) Order dated May 16, 2006 of the same trial court denying the Motion for
Reconsideration of the Republic, averring that:

With due respect, the trial court decided a question of substance contrary to law and jurisprudence in
ruling:
 (i) THAT PETITIONER HAD NO CAUSE OF ACTION IN INSTITUTING THE SUBJECT COMPLAINT FOR
CANCELLATION OF OCT NOS. 0-1200 (A.F.) AND 0-1201 (A.F.), INCLUDING ALL DERIVATIVE
TITLES, AND REVERSION.

(ii) THAT PETITIONER’S COMPLAINT FOR CANCELLATION OF OCT NOS. 0-1200 (A.F.) AND 0-1201
(A.F.) INCLUDING ALL DERIVATIVE TITLES, AND REVERSION IS BARRED BY THE DECISIONS IN
CACHO VS GOVERNMENT OF THE UNITED STATES (28 PHIL. 616 [1914] AND CACHO VS COURT
OF APPEALS (269 SCRA 159 [1997].

(iii) THAT PETITIONER’S CAUSE OF ACTION HAS PRESCRIBED; AND

(iv) THAT PETITIONER IS GUILTY OF FORUM SHOPPING.132

The Court finds merit in the present Petition.

Cause of action for reversion

The Complaint in Civil Case No. 6686 seeks the cancellation of OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.),
with all their derivative titles, and reversion. The Complaint was dismissed by the RTC-Branch 4 in its
Order dated December 13, 2005, upon Motion of Vidal and AZIMUTH, on the ground that the State does
not have a cause of action for reversion. According to the RTC-Branch 4, there was no showing that the
late Doña Demetria committed any wrongful act or omission in violation of any right of the Republic.
Additionally, the Regalian doctrine does not apply to Civil Case No. 6686 because said doctrine does not
extend to lands beyond the public domain. By the own judicial admission of the Republic, the two parcels
of land in question are privately owned, even before the same were registered in Doña Demetria’s name.

The Court disagrees.

Rule 2, Section 2 of the Rules of Court defines a cause of action as "the act or omission by which a party
violates a right of another." Its essential elements are the following: (1) a right in favor of the plaintiff;
(2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) such
defendant’s act or omission that is violative of the right of the plaintiff or constituting a breach of the
obligation of the former to the latter.133

Reversion is an action where the ultimate relief sought is to revert the land back to the government under
the Regalian doctrine. Considering that the land subject of the action originated from a grant by the
government, its cancellation is a matter between the grantor and the
grantee.134http://www.lawphil.net/judjuris/juri2005/may2005/gr_157536_2005.html - fnt30 In Estate of
the Late Jesus S. Yujuico v. Republic135 (Yujuico case), reversion was defined as an action which seeks to
restore public land fraudulently awarded and disposed of to private individuals or corporations to the mass
of public domain. It bears to point out, though, that the Court also allowed the resort by the Government
to actions for reversion to cancel titles that were void for reasons other than fraud, i.e., violation by the
grantee of a patent of the conditions imposed by law;136 and lack of jurisdiction of the Director of Lands to
grant a patent covering inalienable forest land137 or portion of a river, even when such grant was made
through mere oversight.138 In Republic v. Guerrero,139 the Court gave a more general statement that the
remedy of reversion can be availed of "only in cases of fraudulent or unlawful inclusion of the land in
patents or certificates of title."

The right of the Republic to institute an action for reversion is rooted in the Regalian doctrine. Under the
Regalian doctrine, all lands of the public domain belong to the State, and that the State is the source of
any asserted right to ownership in land and charged with the conservation of such patrimony. This same
doctrine also states that all lands not otherwise appearing to be clearly within private ownership are
presumed to belong to the State.140 It is incorporated in the 1987 Philippine Constitution under Article XII,
Section 2 which declares "[a]ll lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the State. x x x" No public land can be acquired by private persons
without any grant, express or implied, from the government; it is indispensable that there be a showing of
the title from the State.141

The reversion case of the Republic in Civil Case No. 6686 rests on the main argument that OCT Nos. 0-
1200 (a.f.) and 0-1201 (a.f.), issued in Doña Demetria’s name, included parcels of lands which were not
adjudicated to her by the Court in the 1914 Cacho case. Contrary to the statement made by the RTC-
Branch 4 in its December 13, 2005 Order, the Republic does not make any admission in its Complaint that
the two parcels of land registered in Doña Demetria’s name were privately owned even prior to their
registration. While the Republic does not dispute that that two parcels of land were awarded to Doña
Demetria in the 1914 Cacho case, it alleges that these were not the same as those covered by OCT Nos.
0-1200 (a.f.) and 0-1201 (a.f.) issued in Doña Demetria’s name 84 years later. If, indeed, the parcels of
land covered by said OCTs were not those granted to Doña Demetria in the 1914 Cacho case, then it can
be presumed, under the Regalian doctrine, that said properties still form part of the public domain
belonging to the State.

Just because OCTs were already issued in Doña Demetria’s name does not bar the Republic from
instituting an action for reversion. Indeed, the Court made it clear in Francisco v. Rodriguez 142 that Section
101 of the Public Land Act "may be invoked only when title has already vested in the individual, e.g.,
when a patent or a certificate of title has already been issued[,]" for the basic premise in an action for
reversion is that the certificate of title fraudulently or unlawfully included land of the public domain,
hence, calling for the cancellation of said certificate. It is actually the issuance of such a certificate of title
which constitutes the third element of a cause of action for reversion.

The Court further finds that the Complaint of the Republic in Civil Case No. 6686 sufficiently states a
cause of action for reversion, even though it does not allege that fraud was committed in the registration
or that the Director of Lands requested the reversion.

It is a well-settled rule that the existence of a cause of action is determined by the allegations in the
complaint. In the resolution of a motion to dismiss based on failure to state a cause of action, only the
facts alleged in the complaint must be considered. The test in cases like these is whether a court can
render a valid judgment on the complaint based upon the facts alleged and pursuant to the prayer
therein. Hence, it has been held that a motion to dismiss generally partakes of the nature of a demurrer
which hypothetically admits the truth of the factual allegations made in a complaint. 143 The hypothetical
admission extends to the relevant and material facts well pleaded in the complaint and inferences fairly
deducible therefrom. Hence, if the allegations in the complaint furnish sufficient basis by which the
complaint can be maintained, the same should not be dismissed regardless of the defense that may be
assessed by the defendants.144

In Vergara v. Court of Appeals,145 the Court additionally explained that:

In determining whether allegations of a complaint are sufficient to support a cause of action, it must be
borne in mind that the complaint does not have to establish or allege facts proving the existence of a
cause of action at the outset; this will have to be done at the trial on the merits of the case. To sustain a
motion to dismiss for lack of cause of action, the complaint must show that the claim for relief does not
exist, rather than that a claim has been defectively stated, or is ambiguous, indefinite or uncertain.

The Republic meticulously presented in its Complaint the discrepancies between the 1914 Cacho case, on
one hand, which granted Doña Demetria title to two parcels of land; and OCT Nos. 0-1200 (a.f.) and 0-
1201 (a.f.), on the other, which were supposedly issued pursuant to the said case. In paragraphs 9 and
16 of its Complaint, the Republic clearly alleged that OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) cover
properties much larger than or areas beyond those granted by the land registration court in GLRO Record
Nos. 6908 and 6909. Thus, the Republic was able to satisfactorily allege the unlawful inclusion, for lack of
an explicit grant from the Government, of parcels of public land into Doña Demetria’s OCTs, which, if true,
will justify the cancellation of said certificates and the return of the properties to the Republic.

That the Complaint in Civil Case No. 6686 does not allege that it had been filed by the Office of the
Solicitor General (OSG), at the behest of the Director of Lands, does not call for its dismissal on the
ground of failure to state a cause of action. Section 101 of Commonwealth Act No. 141, otherwise known
as the Public Land Act, as amended, simply requires that:

SEC. 101. All actions for the reversion to the Government of lands of the public domain or improvements
thereon shall be instituted by the Solicitor General or the officer acting in his stead, in the proper courts,
in the name of the Republic of the Philippines. (Emphasis supplied.)

Clear from the aforequoted provision that the authority to institute an action for reversion, on behalf of
the Republic, is primarily conferred upon the OSG. While the OSG, for most of the time, will file an action
for reversion upon the request or recommendation of the Director of Lands, there is no basis for saying
that the former is absolutely bound or dependent on the latter.
RTC-Branch 4 cited Sherwill Development Corporation v. Sitio Niño Residents Association, Inc. 146
(Sherwill case), to support its ruling that it is "absolutely necessary" that an investigation and a
determination of fraud should have been made by the Director of Lands prior to the filing of a case for
reversion. The Sherwill case is not in point and does not constitute a precedent for the case at bar. It does
not even involve a reversion case. The main issue therein was whether the trial court properly dismissed
the complaint of Sherwill Development Corporation for quieting of title to two parcels of land, considering
that a case for the declaration of nullity of its TCTs, instituted by the Sto. Niño Residents Association, Inc.,
was already pending before the Land Management Bureau (LMB). The Court recognized therein the
primary jurisdiction of the LMB over the dispute, and affirmed the dismissal of the quieting of title case on
the grounds of litis pendentia and forum shopping.

Res judicata

Public policy and sound practice enshrine the fundamental principle upon which the doctrine of res
judicata rests that parties ought not to be permitted to litigate the same issues more than once. It is a
general rule common to all civilized system of jurisprudence, that the solemn and deliberate sentence of
the law, pronounced by its appointed organs, upon a disputed fact or a state of facts, should be regarded
as a final and conclusive determination of the question litigated, and should forever set the controversy at
rest. Indeed, it has been well said that this maxim is more than a mere rule of law; more even than an
important principle of public policy; and that it is not too much to say that it is a fundamental concept in
the organization of every jural system. Public policy and sound practice demand that, at the risk of
occasional errors, judgments of courts should become final at some definite date fixed by law. The very
object for which courts were constituted was to put an end to controversies. 147

The doctrine of res judicata comprehends two distinct concepts - (1) bar by former judgment, and (2)
conclusiveness of judgment. For res judicata to serve as an absolute bar to a subsequent action, the
following requisites must concur: (1) the former judgment or order must be final; (2) the judgment or
order must be on the merits; (3) it must have been rendered by a court having jurisdiction over the
subject matter and parties; and (4) there must be between the first and second actions, identity of
parties, of subject matter, and of causes of action. When there is no identity of causes of action, but only
an identity of issues, there exists res judicata in the concept of conclusiveness of judgment. Although it
does not have the same effect as res judicata in the form of bar by former judgment which prohibits the
prosecution of a second action upon the same claim, demand, or cause of action, the rule on
conclusiveness of judgment bars the relitigation of particular facts or issues in another litigation between
the same parties on a different claim or cause of action. 148

The 1914 Cacho case does not bar the Complaint for reversion in Civil Case No. 6686 by res judicata in
either of its two concepts.

There is no bar by prior judgment because the 1914 Cacho case and Civil Case No. 6686 do not have the
same causes of action and, even possibly, they do not involve identical subject matters.

Land registration cases, such as GLRO Record Nos. 6908 and 6909, from which the 1914 Cacho case
arose, are special proceedings where the concept of a cause of action in ordinary civil actions does not
apply. In special proceedings, the purpose is to establish a status, condition or fact; in land registration
proceedings, the ownership by a person of a parcel of land is sought to be established. 149 Civil Case No.
6686 is an action for reversion where the cause of action is the alleged unlawful inclusion in OCT Nos. 0-
1200 (a.f.) and 0-1201 (a.f.) of parcels of public land that were not among those granted to Doña
Demetria in the 1914 Cacho case. Thus, Civil Case No. 6686 even rests on supposition that the parcels of
land covered by the certificates of title in Doña Demetria’s name, which the Republic is seeking to have
cancelled, are different from the parcels of land that were the subject matter of the 1914 Cacho case and
adjudged to Doña Demetria.

Res judicata in the concept of conclusiveness of judgment, likewise, does not apply as between the 1914
Cacho case and Civil Case No. 6686. A careful study of the Complaint in Civil Case No. 6686 reveals that
the Republic does not seek to re-litigate any of the issues resolved in the 1914 Cacho case. The Republic
no longer questions in Civil Case No. 6686 that Doña Demetria was adjudged the owner of two parcels of
land in the 1914 Cacho case. The Republic is only insisting on the strict adherence to the judgment of the
Court in the 1914 Cacho case, particularly: (1) the adjudication of a smaller parcel of land, consisting only
of the southern portion of the 37.87-hectare Lot 2 subject of Doña Demetria’s application in GLRO Record
No. 6909; and (2) the submission of a new technical plan for the adjudicated southern portion of Lot 2 in
GLRO Record No. 6909, and the deed executed by Datto Darondon, husband of Alanga, renouncing all his
rights to Lot 1, in GLRO Record No. 6908, in Doña Demetria’s favor.150
Similarly, the 1997 Cacho case is not an obstacle to the institution by the Republic of Civil Case No. 6686
on the ground of res judicata.

Bar by prior judgment does not apply for lack of identity of causes of action between the 1997 Cacho case
and Civil Case No. 6686. The 1997 Cacho case involves a petition for re-issuance of decrees of
registration. In the absence of principles and rules specific for such a petition, the Court refers to those on
reconstitution of certificates of title, being almost of the same nature and granting closely similar reliefs.

Reconstitution denotes a restoration of the instrument which is supposed to have been lost or destroyed
in its original form or condition. The purpose of the reconstitution of title or any document is to have the
same reproduced, after observing the procedure prescribed by law, in the same form they were when the
loss or destruction occurred.151 Reconstitution is another special proceeding where the concept of cause of
action in an ordinary civil action finds no application.

The Court, in the 1997 Cacho case, granted the reconstitution and re-issuance of the decrees of
registration considering that the NALTDRA, through then Acting Commissioner Santiago M. Kapunan, 152 its
Deputy Clerk of Court III, the Head Geodetic Engineer, and the Chief of Registration, certified that
"according to the Record Book of Decrees for Ordinary Land Registration Case, Decree No. 18969 was
issued in GLRO Record No. 6909 and Decree No. 10364 was issued in GLRO Record No. 6908[;]" 153 thus,
leaving no doubt that said decrees had in fact been issued.

The 1997 Cacho case only settled the issuance, existence, and subsequent loss of Decree Nos. 10364 and
18969. Consequently, said decrees could be re-issued in their original form or condition. The Court,
however, could not have passed upon in the 1997 Cacho case the issues on whether Doña Demetria truly
owned the parcels of land covered by the decrees and whether the decrees and the OCTs subsequently
issued pursuant thereto are void for unlawfully including land of the public domain which were not
awarded to Doña Demetria.

The following pronouncement of the Court in Heirs of Susana de Guzman Tuazon v. Court of Appeals 154 is
instructive:

Precisely, in both species of reconstitution under Section 109 of P.D. No. 1529 and R.A. No. 26, the nature
of the action denotes a restoration of the instrument which is supposed to have been lost or destroyed in
its original form and condition. The purpose of the action is merely to have the same reproduced, after
proper proceedings, in the same form they were when the loss or destruction occurred, and does not pass
upon the ownership of the land covered by the lost or destroyed title. It bears stressing at this point that
ownership should not be confused with a certificate of title. Registering land under the Torrens System
does not create or vest title because registration is not a mode of acquiring ownership. A certificate of title
is merely an evidence of ownership or title over the particular property described therein. Corollarily, any
question involving the issue of ownership must be threshed out in a separate suit, which is exactly what
the private respondents did when they filed Civil Case No. 95-3577 before Branch 74. The trial court will
then conduct a full-blown trial wherein the parties will present their respective evidence on the issue of
ownership of the subject properties to enable the court to resolve the said issue. x x x. (Emphases
supplied.)

Whatever findings the Court made on the issue of ownership in the 1997 Cacho case are mere obiter
dictum. As the Court held in Amoroso v. Alegre, Jr.155:

Petitioner claims in his petition that the 3 October 1957 Decision resolved the issue of ownership of the
lots and declared in the body of the decision that he had "sufficiently proven uncontroverted facts that he
had been in possession of the land in question since 1946 x x x [and] has been in possession of the
property with sufficient title." However, such findings made by the CFI in the said decision are mere
obiter, since the ownership of the properties, titles to which were sought to be reconstituted, was never
the issue in the reconstitution case. Ownership is not the issue in a petition for reconstitution of title. A
reconstitution of title does not pass upon the ownership of the land covered by the lost or destroyed title.

It may perhaps be argued that ownership of the properties was put in issue when petitioner opposed the
petition for reconstitution by claiming to be the owner of the properties. However, any ruling that the trial
court may make on the matter is irrelevant considering the court’s limited authority in petitions for
reconstitution. In a petition for reconstitution of title, the only relief sought is the issuance of a
reconstituted title because the reconstituting officer’s power is limited to granting or denying a
reconstituted title. As stated earlier, the reconstitution of title does not pass upon the ownership of the
land covered by the lost or destroyed title, and any change in the ownership of the property must be the
subject of a separate suit. (Emphases supplied.)

The Court concedes that the 1997 Cacho case, by reason of conclusiveness of judgment, prevents the
Republic from again raising as issues in Civil Case No. 6686 the issuance and existence of Decree Nos.
10364 and 18969, but not the validity of said decrees, as well as the certificates of title issued pursuant
thereto.

Forum shopping

Forum shopping is the filing of multiple suits involving the same parties for the same cause of action,
either simultaneously or successively, for the purpose of obtaining a favorable judgment. A party violates
the rule against forum shopping if the elements of litis pendentia are present; or if a final judgment in one
case would amount to res judicata in the other.156

There is forum shopping when the following elements are present: (a) identity of parties, or at least such
parties as represent the same interests in both actions; (b) identity of rights asserted and relief prayed
for, the relief being founded on the same facts; and (c) the identity of the two preceding particulars, is
such that any judgment rendered in the other action will, regardless of which party is successful, amount
to res judicata in the action under consideration; said requisites are also constitutive of the requisites for
auter action pendant or lis pendens.157

Given the preceding disquisition of the Court that the 1914 and 1997 Cacho cases do not constitute res
judicata in Civil Case No. 6686, then the Court also cannot sustain the dismissal by the RTC-Branch 4 of
the Complaint of the Republic in Civil Case No. 6686 for forum shopping.

Prescription

According to the RTC-Branch 4, the cause of action for reversion of the Republic was already lost or
extinguished by prescription, citing Section 32 of the Property Registration Decree, which provides:

SEC. 32. Review of decree of registration; Innocent purchaser for value. – The decree of registration shall
not be reopened or revised by reason of absence, minority, or other disability of any person adversely
affected thereby, nor by any proceeding in any court for reversing judgment, subject, however, to the
right of any person, including the government and the branches thereof, deprived of land or of any estate
or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the
proper Court of First Instance a petition for reopening and review of the decree of registration not later
than one year from and after the date of the entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser for value has acquired the land or an
interest therein, whose rights may be prejudiced. Whenever the phrase "innocent purchaser of value" or
an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee,
or other encumbrancer for value.

Upon the expiration of said period of one year, the decree of registration and the certificate of title issued
shall become incontrovertible. Any person aggrieved by such decree of registration in any case may
pursue his remedy by action for damages against the applicant or any other persons responsible for the
fraud.

Decree No. 10364 in GLRO Record No. 6908 was issued on May 9, 1913, while Decree No. 18969 in GLRO
Record No. 6909 was issued on July 8, 1915. In the course of eight decades, the decrees were lost and
subsequently reconstituted per order of this Court in the 1997 Cacho case. The reconstituted decrees
were issued on October 15, 1998 and transcribed on OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.). The
reconstituted decrees were finally entered into the Registration Book for Iligan City on December 4, 1998
at 10:00 a.m. Almost six years had elapsed from entry of the decrees by the time the Republic filed its
Complaint in Civil Case No. 6686 on October 13, 2004.

Nonetheless, elementary is the rule that prescription does not run against the State and its subdivisions.
When the government is the real party in interest, and it is proceeding mainly to assert its own right to
recover its own property, there can as a rule be no defense grounded on laches or prescription. Public
land fraudulently included in patents or certificates of title may be recovered or reverted to the State in
accordance with Section 101 of the Public Land Act. The right of reversion or reconveyance to the State is
not barred by prescription.158
The Court discussed lengthily in Republic v. Court of Appeals159 the indefeasibility of a decree of
registration/certificate of title vis-à-vis the remedy of reversion available to the State:

The petitioner invokes Republic v. Animas, where this Court declared that a title founded on fraud may be
cancelled notwithstanding the lapse of one year from the issuance thereof. Thus:

x x x The misrepresentations of the applicant that he had been occupying and cultivating the land and
residing thereon are sufficient grounds to nullify the grant of the patent and title under Section 91 of the
Public Land Law which provides as follows:

"The statements made in the application shall be considered as essential conditions or parts of any
concession, title or permit issued on the basis of such application, and any false statement thereon or
omission of facts, changing, or modifying the consideration of the facts set forth in such statement, and
any subsequent modification, alteration, or change of the material facts set forth in the application shall
ipso facto produce the cancellation of the concession, title or permit granted. x x x"

A certificate of title that is void may be ordered cancelled. A title will be considered void if it is procured
through fraud, as when a person applies for registration of the land under his name although the property
belongs to another. In the case of disposable public lands, failure on the part of the grantee to comply
with the conditions imposed by law is a ground for holding such title void. The lapse of the one year
period within which a decree of title may be reopened for fraud would not prevent the cancellation
thereof, for to hold that a title may become indefeasible by registration, even if such title had been
secured through fraud or in violation of the law, would be the height of absurdity. Registration should not
be a shield of fraud in securing title.

This doctrine was reiterated in Republic v. Mina, where Justice Relova declared for the Court:

A certificate of title that is void may be ordered cancelled. And, a title will be considered void if it is
procured through fraud, as when a person applies for registration of the land on the claim that he has
been occupying and cultivating it. In the case of disposable public lands, failure on the part of the grantee
to comply with the conditions imposed by law is a ground for holding such title void. x x x The lapse of
one (1) year period within which a decree of title may be reopened for fraud would not prevent the
cancellation thereof for to hold that a title may become indefeasible by registration, even if such title had
been secured through fraud or in violation of the law would be the height of absurdity. Registration should
not be a shield of fraud in securing title.

Justifying the above-quoted provision, the Court declared in Piñero, Jr. v. Director of Lands:

It is true that under Section 122 of the Land Registration Act, a Torrens title issued on the basis of a free
patent or a homestead patent is as indefeasible as one judicially secured. And in repeated previous
decisions of this Court that indefeasibility has been emphasized by Our holding that not even the
Government can file an action for annulment, but at the same time, it has been made clear that an action
for reversion may be instituted by the Solicitor General, in the name of the Republic of the Philippines. It
is to the public interest that one who succeeds in fraudulently acquiring title to a public land should not be
allowed to benefit therefrom, and the State should, therefore, have an even existing authority, thru its
duly authorized officers, to inquire into the circumstances surrounding the issuance of any such title, to
the end that the Republic, thru the Solicitor General or any other officer who may be authorized by law,
may file the corresponding action for the reversion of the land involved to the public domain, subject
thereafter to disposal to other qualified persons in accordance with law. In other words, the indefeasibility
of a title over land previously public is not a bar to an investigation by the Director of Lands as to how
such title has been acquired, if the purpose of such investigation is to determine whether or not fraud had
been committed in securing such title in order that the appropriate action for reversion may be filed by
the Government.

Private respondent PNB points out that Animas involved timberland, which is not alienable or disposable
public land, and that in Piñero the issue raised was whether the Director of Lands would be enjoined by a
writ of prohibition from investigating allegations of fraud that led to the issuance of certain free patents.
Nevertheless, we find that the doctrine above quoted is no less controlling even if there be some factual
disparities (which are not material here), especially as it has been buttressed by subsequent
jurisprudence.

In Director of Lands v. Jugado, upon which the appellate court based its ruling, the Court declared
meaningfully that:
There is, however, a section in the Public Land Law (Sec. 101 of Commonwealth Act 141), which affords a
remedy whereby lands of the public domain fraudulently awarded may be recovered or reverted back to
its original owner, the Government. But the provision requires that all such actions for reversion shall be
instituted by the Solicitor General or the officer acting in his stead, in the proper courts, in the name of
the Republic of the Philippines (See Director of Lands v. De Luna, supra). As the party in interest in this
case is the Director of Lands and not the Republic of the Philippines, the action cannot prosper in favor of
the appellant.

The reference was to the Public Land Law which authorizes the reversion suit under its Sec. 101, thus:

Sec. 101. All actions for the reversion to the Government of lands of the public domain or improvements
thereon shall be instituted by the Solicitor General or the officer acting in his stead, in the proper courts,
in the name of the Republic of the Philippines.

This remedy was recently affirmed by the Court in Heirs of Gregorio Tengco v. Heirs of Jose and Victoria
Aliwalas, thus:

x x x Title to the property having become incontrovertible, such may no longer be collaterally attacked. If
indeed there had been any fraud or misrepresentation in obtaining the title, an action for reversion
instituted by the Solicitor General would be the proper remedy.

It is evident from the foregoing jurisprudence that despite the lapse of one year from the entry of a
decree of registration/certificate of title, the State, through the Solicitor General, may still institute an
action for reversion when said decree/certificate was acquired by fraud or misrepresentation.
Indefeasibility of a title does not attach to titles secured by fraud and misrepresentation. Well-settled is
the doctrine that the registration of a patent under the Torrens system does not by itself vest title; it
merely confirms the registrant’s already existing one. Verily, registration under the Torrens system is not
a mode of acquiring ownership.160

But then again, the Court had several times in the past recognized the right of the State to avail itself of
the remedy of reversion in other instances when the title to the land is void for reasons other than having
been secured by fraud or misrepresentation. One such case is Spouses Morandarte v. Court of Appeals, 161
where the Bureau of Lands (BOL), by mistake and oversight, granted a patent to the spouses Morandarte
which included a portion of the Miputak River. The Republic instituted an action for reversion 10 years
after the issuance of an OCT in the name of the spouses Morandarte. The Court ruled:

Be that as it may, the mistake or error of the officials or agents of the BOL in this regard cannot be
invoked against the government with regard to property of the public domain. It has been said that the
State cannot be estopped by the omission, mistake or error of its officials or agents.

It is well-recognized that if a person obtains a title under the Public Land Act which includes, by oversight,
lands which cannot be registered under the Torrens system, or when the Director of Lands did not have
jurisdiction over the same because it is a public domain, the grantee does not, by virtue of the said
certificate of title alone, become the owner of the land or property illegally included. Otherwise stated,
property of the public domain is incapable of registration and its inclusion in a title nullifies that
title.1avvphi1

Another example is the case of Republic of the Phils. v. CFI of Lanao del Norte, Br. IV, 162 in which the
homestead patent issued by the State became null and void because of the grantee’s violation of the
conditions for the grant. The Court ordered the reversion even though the land subject of the patent was
already covered by an OCT and the Republic availed itself of the said remedy more than 11 years after
the cause of action accrued, because:

There is merit in this appeal considering that the statute of limitation does not lie against the State. Civil
Case No. 1382 of the lower court for reversion is a suit brought by the petitioner Republic of the
Philippines as a sovereign state and, by the express provision of Section 118 of Commonwealth Act No.
141, any transfer or alienation of a homestead grant within five (5) years from the issuance of the patent
is null and void and constitute a cause for reversion of the homestead to the State. In Republic vs. Ruiz,
23 SCRA 348, We held that "the Court below committed no error in ordering the reversion to plaintiff of
the land grant involved herein, notwithstanding the fact that the original certificate of title based on the
patent had been cancelled and another certificate issued in the names of the grantee heirs. Thus, where a
grantee is found not entitled to hold and possess in fee simple the land, by reason of his having violated
Section 118 of the Public Land Law, the Court may properly order its reconveyance to the grantor,
although the property has already been brought under the operation of the Torrens System. And, this
right of the government to bring an appropriate action for reconveyance is not barred by the lapse of
time: the Statute of Limitations does not run against the State." (Italics supplied). The above ruling was
reiterated in Republic vs. Mina, 114 SCRA 945.

If the Republic is able to establish after trial and hearing of Civil Case No. 6686 that the decrees and OCTs
in Doña Demetria’s name are void for some reason, then the trial court can still order the reversion of the
parcels of land covered by the same because indefeasibility cannot attach to a void decree or certificate of
title. The RTC-Branch 4 jumped the gun when it declared that the cause of action of the Republic for
reversion in Civil Case No. 6686 was already lost or extinguished by prescription based on the Complaint
alone.

All told, the Court finds that the RTC-Branch 4 committed reversible error in dismissing the Complaint for
Cancellation of Titles and Reversion of the Republic in Civil Case No. 6686. Resultantly, the Court orders
the reinstatement of said Complaint. Yet, the Court also deems it opportune to recall the following
statements in Saad-Agro Industries, Inc. v. Republic 163:

It has been held that a complaint for reversion involves a serious controversy, involving a question of
fraud and misrepresentation committed against the government and it is aimed at the return of the
disputed portion of the public domain. It seeks to cancel the original certificate of registration, and nullify
the original certificate of title, including the transfer certificate of title of the successors-in-interest
because the same were all procured through fraud and misrepresentation. Thus, the State, as the party
alleging the fraud and misrepresentation that attended the application of the free patent, bears that
burden of proof. Fraud and misrepresentation, as grounds for cancellation of patent and annulment of
title, should never be presumed but must be proved by clear and convincing evidence, mere
preponderance of evidence not even being adequate. It is but judicious to require the Government, in an
action for reversion, to show the details attending the issuance of title over the alleged inalienable land
and explain why such issuance has deprived the State of the claimed property. (Emphasis supplied.)

It may do well for the Republic to remember that there is a prima facie presumption of regularity in the
issuance of Decree Nos. 10364 and 18969, as well as OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), in Doña
Demetria’s name, and the burden of proof falls upon the Republic to establish by clear and convincing
evidence that said decrees and certificates of title are null and void.

IV
DISPOSITIVE PART

WHEREFORE, premises considered, the Court renders the following judgment in the Petitions at bar:

1) In G.R. No. 170375 (Expropriation Case), the Court GRANTS the Petition for Review of the
Republic of the Philippines. It REVERSES and SETS ASIDE the Resolutions dated July 12, 2005 and
October 24, 2005 of the Regional Trial Court, Branch 1 of Iligan City, Lanao del Norte. It further
ORDERS the reinstatement of the Complaint in Civil Case No. 106, the admission of the
Supplemental Complaint of the Republic, and the return of the original record of the case to the
court of origin for further proceedings. No costs.

2) In G.R. Nos. 178779 and 178894 (Quieting of Title Case), the Court DENIES the consolidated
Petitions for Review of Landtrade Realty Corporation, Teofilo Cacho, and/or Atty. Godofredo
Cabildo for lack of merit. It AFFIRMS the Decision dated January 19, 2007 and Resolution dated
July 4, 2007 of the Court of Appeals in CA-G.R. CV. No. 00456, affirming in toto the Decision dated
July 17, 2004 of the Regional Trial Court, Branch 3 of Iligan City, Lanao del Norte, in Civil Case No.
4452. Costs against Landtrade Realty Corporation, Teofilo Cacho, and Atty. Godofredo Cabildo.

3) In G.R. No. 170505 (The Ejectment or Unlawful Detainer Case – execution pending appeal
before the Regional Trial Court), the Court DENIES the Petition for Review of Landtrade Realty
Corporation for being moot and academic given that the Regional Trial Court, Branch 1 of Iligan
City, Lanao del Norte had already rendered a Decision dated December 12, 2005 in Civil Case No.
6613. No costs.

4) In G.R. Nos. 173355-56 and 173563-64 (The Ejectment or Unlawful Detainer Case – execution
pending appeal before the Court of Appeals), the Court GRANTS the consolidated Petitions for
Certiorari and Prohibition of the National Power Corporation and National Transmission
Corporation. It SETS ASIDE the Resolution dated June 30, 2006 of the Court of Appeals in CA-G.R.
 SP Nos. 00854 and 00889 for having been rendered with grave abuse of discretion amounting to
lack or excess of jurisdiction. It further ORDERS the Court of Appeals to issue a writ of preliminary
injunction enjoining the execution of the Decision dated December 12, 2005 of the Regional Trial
Court, Branch 1 of Iligan City, Lanao del Norte, in Civil Case No. 6613, while the same is pending
appeal before the Court of Appeals in CA-G.R. SP Nos. 00854 and 00889. It finally DIRECTS the
Court of Appeals to resolve without further delay the pending appeals before it, in CA-G.R. SP Nos.
00854 and 00889, in a manner not inconsistent with this Decision. No costs.

5) In G.R. No. 173401 (Cancellation of Titles and Reversion Case), the Court GRANTS the Petition
for Review of the Republic of the Philippines. It REVERSES and SETS ASIDE the Orders dated
December 13, 2005 and May 16, 2006 of the Regional Trial Court, Branch 4 of Iligan City in Civil
Case No. 6686. It further ORDERS the reinstatement of the Complaint in Civil Case No. 6686 and
the return of the original record of the case to the court of origin for further proceedings.

G.R. No. 137794               August 11, 2010

ERLINDA REYES and ROSEMARIE MATIENZO, Petitioners,

vs.
HON. JUDGE BELEN B. ORTIZ, Presiding, Branch 49, Metropolitan Trial Court, Caloocan City; SPOUSES
BERNARD and FLORENCIA PERL, represented by Attorney-in-Fact BENJAMIN MUCIO; HON. JUDGE
VICTORIA ISABEL A. PAREDES, Presiding, Branch 124, Regional Trial Court, Caloocan City and SEGUNDO
BAUTISTA, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 149664

SPS. ALBERTO EMBORES and LOURDES EMBORES, SPS. ROBERTO AND EVELYN PALAD, DENNIS HENOSA
and CORAZON LAURENTE, Petitioners,
vs.
HON. RAYMUNDO G. VALLEGA, Presiding Judge, Branch 52, Metropolitan Trial Court, Caloocan City; HON.
ELEANOR R. KWONG, Presiding Judge, Branch 51, Metropolitan Trial Court, Caloocan City; HON. JUDGE
BELEN B. ORTIZ, Presiding Judge, Branch 49, Metropolitan Trial Court, Caloocan City; VICTORIA C.
SALIRE-ALBIS, represented by her attorney-in-fact MR. MENELIO C. SALIRE; MA. FE R. ROCO, ALFREDO
TAN, MANUELITO ESTRELLA; and HON. JUDGE ANTONIO FINEZA, Presiding Judge, Branch 131, Regional
Trial Court, Caloocan City, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

The instant cases are consolidated Petitions1 for Declaratory Relief, Certiorari, and Prohibition. The
petitioners in G.R. No. 137794 seek to declare null and void the proceedings in Civil Case No. 23477, an
ejectment case, before the Metropolitan Trial Court (MeTC), Caloocan City, Branch 49, and Civil Case No.
C-17725, a complaint for Recovery of Possession and Ownership, filed with the Regional Trial Court (RTC),
Caloocan City, Branch 124;2 while the petitioners in G.R. No. 149664 pray for the nullity of the following
ejectment proceedings before the different branches of the Caloocan City MeTC: (1) Civil Case No. 99-
25011, Branch 52; (2) Civil Case No. 22559 and Civil Case No. 18575, Branch 49 and its appeal to the
RTC, Branch 131; (3) Civil Case No. 00-25892, Branch 51; and (4) Civil Case No. 00-25889, Branch 51. 3
G.R. No. 149664 was considered closed and terminated by the Court’s Resolution dated August 30, 2006. 4

The parcels of land which are the subject matter of these cases are part of the Tala Estate, situated
between the boundaries of Caloocan City and Quezon City and encompassing an area of 7,007.9515
hectares more or less.5

In G.R. No. 137794, respondents Segundo Bautista and spouses Bernard and Florencia Perl sought the
ouster from the contested lots of Erlinda Reyes, spouses Rene and Rosemarie Matienzo and Sergio
Abejero, who are occupants of separate home lots in Camarin, Caloocan City.

The first case was commenced on December 11, 1996, by respondent Segundo Bautista, a registered
owner of the parcel of land occupied by spouses Rene and Rosemarie Matienzo. The case was a complaint
for Recovery of Possession and/or Ownership of Real Property (Recovery case) against the latter spouses
with the RTC Caloocan City, Branch 124.6 This was docketed as Civil Case No. C-17725.7

Shortly thereafter, a separate but related action, was initiated by the Republic of the Philippines,
represented by the Director of Lands on December 27, 1996, before the Quezon City RTC, Branch 85 (re-
raffled to Branch 93).8 This was a complaint for Annulment of Title/Reversion (Annulment/Reversion case)
against Biyaya Corporation and the Register of Deeds of the Cities of Pasig, Caloocan, and Quezon, the
City of Manila, and the Administrator of the Land Registration Authority involving the Tala Estate. The
case, docketed as Civil Case No. Q-96-29810, sought to declare null and void the transfer certificates of
title issued in the name of Biyaya Corporation, and all derivative titles emanating therefrom, and to
declare the land in suit to be reverted to it as part of the patrimonial property of the State, and the same
be awarded to the actual occupants. One of the intervenors therein is Samahan ng Maliliit na
Magkakapitbahay (SAMAKABA) of which petitioners Erlinda Reyes and Rosemarie Matienzo are members.9

On May 28, 1997, the Quezon City RTC in the Annulment/Reversion case issued a Preliminary Injunction
(Injunction) freezing all ejectment cases involving the Tala Estate pending in the MeTCs of Quezon City
and Caloocan City.10

Believing that the Injunction issued by the Quezon City RTC can be beneficial to them in the Recovery
case pending before the Caloocan City RTC, on June 27, 1997, spouses Rene and Rosemarie Matienzo
filed a motion to suspend the proceedings of the Recovery case.11 On December 8, 1997, the Caloocan
City RTC, Branch 124 denied said motion.12 Spouses Matienzo moved for the reconsideration of the
motion, but the same was denied on May 14, 1998.13 The spouses received the order denying their motion
for reconsideration on June 9, 1998.14 Trial on the merits started on December 2, 1998.15

The second case, an ejectment complaint, was commenced by spouses Bernard and Florencia Perl on June
25, 1997, against Erlinda Reyes before the Caloocan City MeTC, Branch 49.16 It was docketed as Civil
Case No. 23477. Shortly thereafter, on July 8, 1997, spouses Perl filed the third case, an ejectment action
against Sergio Abejero. The case, which was raffled off to Branch 49 of the Caloocan City MeTC, was
docketed as Civil Case No. 23519.17 Subsequently, these two ejectment cases were consolidated
(Ejectment cases).18 In her Answer and during the preliminary conference, Erlinda Reyes moved for the
suspension of the proceedings and/or for the dismissal of these cases citing the Injunction issued in Civil
Case No. Q-96-29810.19 In its Order20 dated January 22, 1999, the MeTC did not entertain Reyes’s
motion, instead, it required her to submit a position paper. Erlinda Reyes received the order on March 11,
1999.21 On April 16, 1999, the trial court issued a Decision ordering Erlinda to vacate the contested
property.22

The Recovery case and the Ejectment cases converged when petitioners Rosemarie Matienzo and Erlinda
Reyes, joined on March 25, 1999 in filing directly with this Court the instant petition denominated as
"Declaratory Relief, Certiorari, and Prohibition," mainly assailing the denial of their respective motions for
suspension.23 Petitioners Matienzo and Reyes asked that the proceedings in the Ejectment cases and the
Recovery case be declared null and void for violating the Injunction order of the Quezon City RTC. This
case is docketed as G.R. No. 137794.

During the pendency of G.R. No. 137794, certain events supervened when the Ejectment cases ran their
course and petitioner Reyes appealed the MeTC decision to the RTC. In the RTC, the Ejectment cases
were docketed as Civil Cases Nos. C-18904-05.24 Apparently, respondent-spouses Perl moved for the
execution of the MeTC decision pending appeal, which the RTC granted as the Writ of Execution was
thereafter issued on October 20, 2000.25 Petitioner Erlinda Reyes and company, thus, filed with this Court
a motion to suspend the proceedings in the RTC. 26 On October 25, 2000, this Court issued a Temporary
Restraining Order restraining the implementation of the said writ of execution. 27

G.R. No. 149664, on the other hand, emanated from four distinct ejectment complaints filed against
petitioners Corazon Laurente, spouses Alberto and Lourdes Embores, spouses Roberto and Evelyn Palad,
and Dennis Henosa.28 The parcels of land from which petitioners were sought to be evicted were located in
Camarin, Caloocan City and within the Tala Estate.29 Petitioners were members of Alyansa Ng Mga
Naninirahan Sa Tala Friar Lands (ALNATFRAL), an intervenor in the Reversion case. 30 These ejectment
cases were all filed after the Injunction order was issued on May 28, 1997 by the Quezon City RTC in the
Annulment/Reversion case. Thus, petitioners separately invoked the said injunction in seeking the
dismissal or suspension of the four ejectment cases. Petitioners’ motions for suspension were dismissed
and the trial court proceeded to render judgments on these cases. Petitioners resorted directly to this
Court in seeking the declaration of nullity of the proceedings of these ejectment cases for violating the
prevailing injunction issued by the Quezon City RTC.
Meanwhile, on March 4, 2003, the petitioners in G.R. No. 149664 filed a motion for consolidation asking
that the said case be consolidated with G.R. No. 137794.

On April 28, 2003, this Court resolved to consolidate the two cases.

On July 28, 2006, petitioners in G.R. No. 149664 filed a Motion to Withdraw and/or Dismiss Instant
Petition31 stating that since a decision in the Annulment/Reversion case (Civil Case No. Q-96-29810) was
already issued (although they did not attach a copy thereof), the petition is therefore rendered moot and
academic as the injunction order was effective only pending determination of the merits.

On August 30, 2006, the Court granted the motion to withdraw petition in G.R. No. 149664 and
considered the same closed and terminated.32 On October 11, 2006, G.R. No. 149664 became final and
executory.

What remains to be resolved, therefore, are the issues raised in G.R. No. 137794.

In their bid to declare null and void the proceedings in the Recovery case and the Ejectment cases,
petitioners argued that the Caloocan City MeTC, where the Ejectment cases were filed, and the Caloocan
City RTC where the Recovery case was pending, were divested of jurisdiction since the Quezon City RTC
acquired jurisdiction over the subject matter.33 Petitioners specifically alleged that the MeTC’s refusal to
suspend the Ejectment cases despite the Injunction order is tantamount or amounting to lack of or excess
of jurisdiction. As to the Caloocan City RTC, its desistance to heed the Injunction is unjustified and
contrary to well-settled jurisprudence.34 Petitioners were of the view that the interference by the Quezon
City RTC was justified since no third-party claim is involved. 35

The Office of the Solicitor General (OSG) adopts the position of petitioners in praying that the orders
denying the motion to suspend proceedings and the proceedings that transpired in the Ejectment cases be
set aside for having been issued with grave abuse of discretion. 36 Citing Honda Giken Kogyo-Kabushiki
Kaisha v. San Diego,37 where it was held that a writ of injunction may be issued to a court by another
court superior in rank, the OSG maintains that the Injunction issued by the Quezon City RTC in Civil Case
No. Q-96-29810 covers all metropolitan trial courts including the Ejectment cases in Caloocan City MeTC,
Branch 49.38 The OSG also maintains that the Injunction was in accordance with the settled jurisprudence
where the reversion case is being filed by the State.

Respondent Segundo Bautista contends that petitioners resorted to a wrong remedy. He argues that the
action for declaratory relief can only prosper if the statute, deed, or contract has not been violated. 39
Hence, where the law or contract has already been breached prior to the filing of the declaratory relief,
courts can no longer assume jurisdiction since this action is not geared towards the settling of issues
arising from breach or violation of the rights and obligations of the parties under a statute, deed, and
contract, but rather it is intended to secure an authoritative statement for guidance in their enforcement
or compliance of the same.40 Since the Injunction order of the Quezon City RTC had already been violated
as early as December 8, 1997 by the Caloocan City RTC in the Recovery case, or before the filing of this
instant petition, resort to Rule 63 of the Rules of Court would not lie. Respondent Bautista insists that the
instant recourse of petitioner Matienzo was resorted to as a ploy to substitute the filing of certiorari under
Rule 65, which she already lost since the 60-day period had already expired. 41 Respondent points out that
direct resort to this Court violates the rule on the hierarchy of courts. Since it was the Caloocan City RTC
which denied petitioner Matienzo’s motion to suspend proceedings, the petition for declaratory relief
should have been filed with the Court of Appeals. Direct filing with this Court is not justified as, other than
making motherhood statements, petitioner Matienzo failed to state clearly the exceptional and compelling
circumstances to justify the exercise of this Court’s primary jurisdiction. 42 He likewise contends that the
Caloocan City RTC did not err in not suspending the proceedings in the Recovery case, notwithstanding
the Injunction issued by the Quezon City RTC, since the said injunction applied only to the MeTCs of
Quezon City and Caloocan City so the RTC was excluded from the injunction order. He avers that it is the
Caloocan City RTC which is vested with the jurisdiction to hear and decide the case until its final
conclusion since it had acquired the same ahead of the Quezon City RTC. He states that being co-equal,
the Quezon City RTC had no authority to stop by injunction the Caloocan City RTC and even though there
are instances where another court may exercise coordinate jurisdiction in cases where there are justifiable
grounds, here, petitioner Matienzo has not alleged any of those circumstances.

Petitioners insist that this is mainly a petition for declaratory relief. Section 1, Rule 63 of the 1997 Rules
of Court provides:
SECTION 1. Who may file petition. — Any person interested under a deed, will, contract or other written
instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any
other governmental regulation may, before breach or violation thereof, bring an action in the appropriate
Regional Trial Court to determine any question of construction or validity arising, and for a declaration of
his rights or duties, thereunder.

An action for the reformation of an instrument, to quiet title to real property or remove clouds therefrom,
or to consolidate ownership under Article 1607 of the Civil Code, may be brought under this Rule.

The foregoing section can be dissected into two parts. The first paragraph concerns declaratory relief,
which has been defined as a special civil action by any person interested under a deed, will, contract or
other written instrument or whose rights are affected by a statute, ordinance, executive order or
regulation to determine any question of construction or validity arising under the instrument, executive
order or regulation, or statute and for a declaration of his rights and duties thereunder. The second
paragraph pertains to (1) an action for the reformation of an instrument; (2) an action to quiet title; and
(3) an action to consolidate ownership in a sale with a right to repurchase. 43

The first paragraph of Section 1 of Rule 63 enumerates the subject matter to be inquired upon in a
declaratory relief namely, deed, will, contract or other written instrument, a statute, executive order or
regulation, or any government regulation. This Court, in Lerum v. Cruz,44 declared that the subject
matters to be tested in a petition for declaratory relief are exclusive, viz:

Under this rule, only a person who is interested "under a deed, will, contract or other written instrument,
and whose rights are affected by a statute or ordinance, may bring an action to determine any question of
construction or validity arising under the instrument or statute and for a declaration of his rights or duties
thereunder." This means that the subject matter must refer to a deed, will, contract or other written
instrument, or to a statute or ordinance, to warrant declaratory relief. Any other matter not mentioned
therein is deemed excluded. This is under the principle of expressio unius est exclussio alterius. (Emphasis
supplied.)

The foregoing holding was reiterated in Natalia Realty, Inc. v. Court of Appeals, 45 wherein this Court
stressed that court orders or decisions cannot be made the subject matter of a declaratory relief, thus:

Judge Querubin's query is not an action for declaratory relief. Section 1 of Rule 64 [now Rule 63] of the
Rules of Court provides the requisites of an action for declaratory relief. In interpreting these requisites,
the Court has ruled that:

xxxx

The letter of Judge Querubin pertained to final orders and decisions of the courts that are clearly not the
proper subjects of a petition for declaratory relief. Thus, the requisites prescribed by the Rules of Court in
an action for declaratory relief are not applicable to the letter of Judge Querubin. 46 (Emphasis supplied.)

Then again in a recent ruling of this Court, it was emphasized:

A petition for declaratory relief cannot properly have a court decision as its subject matter. In Tanda v.
Aldaya [98 Phil. 244 (1956)], we ruled that:

[A] court decision cannot be interpreted as included within the purview of the words "other written
instrument," as contended by appellant, for the simple reason that the Rules of Court already provide for
the ways by which an ambiguous or doubtful decision may be corrected or clarified without need of
resorting to the expedient prescribed by Rule 66 [now Rule 64].47 (Emphasis supplied.)

In the instant case, petitioners Erlinda Reyes and Rosemarie Matienzo assailed via Declaratory Relief
under Rule 63 of the Rules of Court, the orders of the trial courts denying their motions to suspend
proceedings. This recourse by petitioners, unfortunately, cannot be countenanced since a court order is
not one of those subjects to be examined under Rule 63.

The proper remedy that petitioner Erlinda Reyes could have utilized from the denial of her motion to
suspend proceedings in the Caloocan City MeTC was to file a motion for reconsideration and, if it is
denied, to file a petition for certiorari before the RTC pursuant to Rule 65 of the Rules of Court. On the
other hand, petitioner Matienzo should have filed a special civil action on certiorari also under Rule 65
with the Court of Appeals from the denial of her motion by the Caloocan City RTC. The necessity of filing
the petition to the RTC in the case of Erlinda Reyes and to the Court of Appeals in the case of Matienzo is
dictated by the principle of the hierarchy of courts.48 Both petitions must be filed within 60 days from the
receipt or notice of the denial of the motion to suspend proceedings or from the denial of the motion for
reconsideration. Section 4 of Rule 65 partly provides:

Sec. 4. When and where to file the petition. - The petition shall be filed not later than sixty (60) days from
notice of the judgment, order or resolution. In case a motion for reconsideration or new trial is timely
filed, whether such motion is required or not, the petition shall be filed not later than sixty (60) days
counted from the notice of the denial of said motion.

If the petition relates to an act or an omission of a municipal trial court x x x, it shall be filed with the
Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It
may also be filed with the Court of Appeals or with the Sandiganbayan, whether or not the same is in aid
of the court’s appellate jurisdiction.

Despite this procedural remedy available to them, petitioners, under the pretext that they were in a
quandary as to their rights under the Injunction order of the Quezon City RTC, directly filed the instant
case here. Petitioners did not bother to proffer a compelling reason for their direct resort to this Court.
This procedural faux pas proves fatal. The Court’s exhortation against taking a procedural shortcut cannot
be overemphasized. In Ortega v. The Quezon City Government, 49 the Court accentuated:

At all events, even if this petition delves on questions of law, there is no statutory or jurisprudential basis
for according to this Court original and exclusive jurisdiction over declaratory relief which advances only
questions of law.

Finally, while a petition for declaratory relief may be treated as one for prohibition if it has far reaching
implications and raises questions that need to be resolved, there is no allegation of facts by petitioner
tending to show that she is entitled to such a writ. The judicial policy must thus remain that this Court will
not entertain direct resort to it, except when the redress sought cannot be obtained in the proper courts
or when exceptional and compelling circumstances warrant availment of a remedy within and calling for
the exercise of this Court's primary jurisdiction. (Emphasis supplied.)

To make matters worse, petitioner Matienzo obviously availed of the instant declaratory relief to
substitute for a petition for certiorari, a remedy which she sadly lost by inaction. It must be recalled that
on December 8, 1997, the Caloocan City RTC, Branch 124 denied Matienzo’s motion to suspend
proceedings.50 She moved for reconsideration, but the same was denied on May 14, 1998.51 She received
the Order denying her motion for reconsideration on June 9, 1998.52 She had 60 days therefrom to
question the same before the Quezon City RTC. It was only on March 25, 1999 that petitioner Matienzo
assailed the order denying her motion for reconsideration, albeit wrongly before this Court. 53 From this, it
can be inferred that petitioner Matienzo’s recourse is a belated attempt designed to salvage her lost
opportunity to assail the order denying her motion to suspend proceedings.

Also unavailing are the contentions of petitioners that the Caloocan City RTC and MeTC committed grave
abuse of discretion when they denied petitioners’ motions to suspend proceedings. The pertinent portion
of the Injunction order of the Quezon City RTC reads:

WHEREFORE, premises considered, this Court has to grant, as it hereby grants the application for the
issuance of the writ of preliminary injunction. Let a writ of preliminary Injunction be issued ordering
defendant representing Biyaya Corporation, its agents, assigns, and transferees, as well as all other
persons representing themselves as owners of certain portions of the land in question, otherwise known
as the Tala Estate, to immediately cease and desist from doing or causing to do, further acts of disposition
of the lots subject of the present complaint, such as the filing of ejectment cases in the Municipal Trial
Courts of Quezon City and Caloocan City and, the demolition and ejectment therefrom of the members of
the herein Intervenors. Accordingly, the Metropolitan Trial Courts of Quezon City and Caloocan City are
specifically ordered to cease and desist from further conducting trials and proceedings in the ejectment
cases filed and to be filed involving the lots of the present complaint, until further orders from this
Court.54 (Emphasis supplied.)

The foregoing order is not addressed to the Caloocan City RTC. Neither can it be inferred from the
language thereof that the Quezon City RTC intended to enjoin the Caloocan City RTC from further
proceeding with the Recovery case. The order merely mentions the Caloocan City MeTCs. Nothing more.
But more importantly, the Quezon City RTC could not have validly enjoined the Caloocan City RTC without
violating the doctrine that no court has the power to interfere by injunction with the judgments or decrees
of a court of concurrent or coordinate jurisdiction.55 Spouses Ching v. Court of Appeals56 justifies this rule
in this manner:

Beginning with the case of Orais v. Escaño, down to the subsequent cases of Nuñez v. Low, Cabigao v. del
Rosario, Hubahib v. Insular Drug Co., Inc., National Power Corp. v. De Veyra, Luciano v. Provincial
Governor, De Leon v. Hon. Judge Salvador, Cojuangco v. Villegas, Darwin v. Tokonaga, we laid down the
long standing doctrine that no court has the power to interfere by injunction with the judgments or
decrees of a court of concurrent or coordinate jurisdiction. The various trial courts of a province or city,
having the same or equal authority, should not, cannot, and are not permitted to interfere with their
respective cases, much less with their orders or judgments. A contrary rule would obviously lead to
confusion and seriously hamper the administration of justice. (Emphasis supplied.)

In Compania General de Tabacos de Filipinas v. Court of Appeals,57 two civil cases with identical causes of
action were filed in different RTCs, one ahead of the other. The second RTC which acquired jurisdiction
over the case issued a preliminary injunction enjoining the proceedings in the RTC which first acquired
jurisdiction of the case. Ruling against the injunction issued by the RTC, this Court stressed:

Hence, nothing can be clearer than that Judge Rapatalo had indeed issued the questioned writ of
preliminary injunction with grave abuse of discretion amounting to excess or lack of jurisdiction for the
blatant disregard of the basic precept that no court has the power to interfere by injunction with the
judgments or orders of a co-equal and coordinate court of concurrent jurisdiction having the power to
grant the relief sought by injunction.

This Court explained in Parco vs. Court of Appeals that:

x x x Jurisdiction is vested in the court not in any particular branch or judge, and as a corollary rule, the
various branches of the Court of First Instance of a judicial district are a coordinate and co-equal courts
one branch stands on the same level as the other. Undue interference by one on the proceedings and
processes of another is prohibited by law. In the language of this Court, the various branches of the Court
of First Instance of a province or city, having as they have the same or equal authority and exercising as
they do concurrent and coordinate jurisdiction should not, cannot, and are not permitted to interfere with
their respective cases, much less with their orders or judgments x x x.

Needless to say, adherence to a different rule would sow confusion and wreak havoc on the orderly
administration of justice, and in the ensuing melee, hapless litigants will be at a loss as to where to
appear and plead their cause.1avvphi158 (Emphasis supplied.)

59
While there are recognized exceptions to the foregoing rule, other than citing said cases, petitioners did
not explain the applicability of said exceptional cases to their petition.

Bereft of merit too is petitioners’ argument that the Caloocan City MeTC cannot disregard the injunction
order of the Quezon City RTC hearing the Annulment/Reversion case. The established rule is that a
pending civil action for ownership such as annulment of title shall not ipso facto suspend an ejectment
proceeding.60 The Court explained that the rationale for this is that in an ejectment case, the issue is
possession, while in an annulment case the issue is ownership. 61 In fact, an ejectment case can be tried
apart from an annulment case.62 Although there is an exception to this rule, petitioners failed to justify
that this case falls within said exception. The words of the Court on this matter are instructive:

In the absence of a concrete showing of compelling equitable reasons at least comparable and under
circumstances analogous to Amagan, we cannot override the established rule that a pending civil action
for ownership shall not ipso facto suspend an ejectment proceeding. Additionally, to allow a suspension on
the basis of the reasons the petitioners presented in this case would create the dangerous precedent of
allowing an ejectment suit to be suspended by an action filed in another court by parties who are not
involved or affected by the ejectment suit.63 (Emphases supplied.)

Hence, petitioners’ posture that the Ejectment cases should be suspended due to the pendency of the
Annulment/Reversion case is not meritorious.

WHEREFORE, premises considered, the instant petition is hereby DISMISSED. The Temporary Restraining
Order dated October 25, 2000 issued by this Court is LIFTED.
G.R. No. 151168               August 25, 2010

CEBU AUTOMETIC MOTORS, INC. and TIRSO UYTENGSU III, Petitioners,

vs.
GENERAL MILLING CORPORATION, Respondent.

DECISION

BRION, J.:

We resolve the petition filed by Cebu Autometic Motors, Inc. (CAMI) to assail the decision 1 of the Court of
Appeals (CA) in CA-G.R. SP No. 64363. The CA decision:

a) reversed and set aside the decision of the Regional Trial Court of Cebu, Branch 16 (RTC) in Civil
Case No. CEB-25804 dismissing respondent General Milling Corporation’s (GMC) unlawful detainer
complaint against CAMI;2 and

b) reinstated the decision of the Municipal Trial Court in Cities (MTCC) in Civil Case no. R-41923 3
ordering: CAMI to vacate the subject property; and CAMI and Tirso Uytengsu III (Uytengsu) to pay
GMC actual damages in the amount of P20,000.00 a month from the date of demand until property
has been vacated, as well as P50,000.00 for attorney’s fees.

FACTUAL ANTECEDENTS

GMC, a domestic corporation, is the registered owner of the GMC Plaza Complex, a commercial building
on Legaspi Extension corner McArthur Boulevard, Cebu City. On February 2, 1998, GMC, represented by
its General Manager, Luis Calalang Jr. (Calalang), entered into a contract with CAMI, a domestic
corporation, for the lease of a 2,906 square meter commercial space within GMC’s building (leased
premises).

The lease contract was for a period of twenty (20) years, with the monthly rental fixed at P10,000.00. The
contract further stipulated that the property shall be used exclusively by CAMI as a garage and repair
shop for vehicles,4 and imposed upon CAMI the following terms and conditions:

C. The LESSEE shall upon the signing of this contract immediately deposit with the LESSOR the
following amounts:

a. The sum of PESOS: - TEN THOUSAND & 00/100 (P10,000.00) inclusive of VAT Philippine
currency, to be applied as rental for the last month;

b. The sum PESOS – TEN THOUSAND & 00/100 – (P10,000.00) as guarantee deposit to
defray the cost of the repairs necessary to keep the leased premises in a good state of
repair and to pay the LESSEE’S unpaid bills from the various utility services in the leased
premises; that this amount shall be refundable, if upon the termination of this contract, the
leased premises are in good state of repair and the various utility bills have been paid.

xxxx

H. The LESSEE shall not place or install any signboard, billboard, neon lights, or other form of
advertising signs on the leased premises or on any part thereof, except upon the prior written
consent of the LESSOR.

xxxx

M. Finally, the failure on the part of the LESSOR to insist upon a strict performance of any of the
terms, conditions and covenants hereof shall not be deemed a relinquishment or waiver of any
right or remedy that said LESSOR may have, nor shall it be construed as a waiver of any
subsequent breach or default of the terms, conditions and covenants herein contained, unless
expressed in writing and signed by the LESSOR or its duly authorized representative. 5

According to GMC, CAMI violated the provisions of the lease contract when: a) CAMI subleased a portion
of the leased premises without securing GMC’s prior written consent; b) CAMI introduced improvements to
the leased premises without securing GMC’s consent; and c) CAMI did not deliver the required advance
rental and deposit to GMC upon the execution of the lease contract.

On June 11, 1999, GMC sent CAMI a letter informing the latter that it was terminating the lease contract
and demanding that CAMI vacate the premises and settle all its unpaid accounts before the end of that
month.

On July 7, 1999, GMC filed a complaint for unlawful detainer with the MTCC against CAMI, asserting that it
terminated the lease contract on June 11, 1999 because CAMI violated the terms of the contract and
continued to do so despite GMC’s repeated demands and reminders for compliance; and that CAMI
refused to vacate the leased premises. GMC also impleaded Uytengsu, the General Manager of CAMI, in
his official and personal capacities.

In response, CAMI denied that it had subleased any portion of the leased premises. On the improvements
allegedly introduced without GMC’s consent, CAMI explained that these were introduced prior to the
execution of the present lease contract; in fact, these improvements were made with GMC’s knowledge
and were the reason why GMC decided to enter into the present lease contract with CAMI for 20 years at
the low rental of only P10,000.00 a month. On its alleged failure to deliver the advance rental and
deposit, CAMI pointed out that Calalang, GMC’s representative, had verbally waived this requirement.
Moreover, CAMI contended that a party is considered in default only if it fails to comply with the demand
to observe the terms and conditions of the contract. Since CAMI immediately deposited the amount of
P20,000.00 with the court as advance rental and deposit after it learned of the unlawful detainer
complaint, it could not be considered in default. Consequently, CAMI posits that it did not violate any of
the provisions of the lease contract, and GMC had no right to terminate the lease contract and to demand
CAMI’s ejectment from the leased premises.

On July 5, 2000, the MTCC rendered its decision in favor of GMC. The dispositive portion of its ruling
reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff [GMC] and against the defendant
[CAMI], to wit:

1. Ordering the defendants and all other person (sic) staying in the premises of the plaintiff to
vacate the property and remove all their temporary structure therein;

2. Ordering the defendants to pay plaintiff compensatory damages in the amount of P20,000.00 a
month from date (sic) demand until defendants vacate plaintiff property;

3. Ordering the defendants to pay plaintiff Attorney’s Fees in the amount of P50,000.00;

4. Ordering the defendants to pay the costs.

SO ORDERED.

The RTC reversed the MTCC decision and dismissed GMC’s complaint after finding that CAMI had not
violated the terms and conditions of the lease contract. The RTC learned that Calalang had waived
payment of the advance rental and deposit, and had given his consent to the introduction of
improvements, signboards and alterations on the leased premises. The RTC also held that CAMI did not
sublease the premises.

GMC sought relief from the RTC decision through a petition for review with the CA. GMC claimed that
Calalang’s waiver of the advance rental and deposit was void since it was not in writing. In response,
CAMI questioned whether GMC had complied with the requisites of Section 2, Rule 70 of the Rules of
Court prior to the filing of the unlawful detainer complaint – an issue that, according to GMC, was raised
for the first time before the CA.

In the assailed September 28, 2001 decision, the CA reversed the RTC decision and held that even though
the advance rental and deposit payments could be waived under the contract, the waiver had to be in
writing and signed by a duly authorized representative of GMC in order to be effective. Since Calalang’s
waiver was not contained in a written document, it could not bind GMC.
As to the contention that GMC failed to comply with the jurisdictional requirement found in Section 2, Rule
70 of the Rules of Court, the CA held that such a belated claim could no longer be entertained at that late
stage of the proceedings. Since CAMI freely litigated on the issues presented by GMC before the lower
courts without raising this issue, it cannot now raise the issue on the basis of estoppel.

THE PETITION

CAMI now comes to this Court via a petition for review on certiorari, 6 claiming that the CA committed
reversible error in its September 28, 2001 decision and November 22, 2001 resolution.

First, CAMI contends that the demand letter sent by GMC merely stated that it expected CAMI to vacate
the premises and pay all its unsettled accounts by the end of June 1999; the letter did not demand
compliance with the terms of the contract. Thus, CAMI could not be considered in default and GMC had no
cause to terminate the lease contract. The defective demand letter also failed to comply with the demand
required by Section 2, Rule 70 of the Rules of Court; pursuant to Arquelada v. Philippine Veterans Bank 7 –
which held that the demand from the lessor to pay or to comply with the conditions of the lease and to
vacate the premises must be alleged in the complaint for unlawful detainer for the MTCC to acquire
jurisdiction over the case – the MTCC thus failed to acquire jurisdiction over GMC’s complaint against it.

Next, CAMI assails the CA interpretation of paragraph M of the lease contract. 8 According to CAMI,
paragraph M only applies when the waiver refers to the right of GMC to take action for any violation of the
terms and conditions of the contract. Where the waiver relates to the performance of the term or
condition, such as waiver of the payment of advance rental and deposit, the waiver does not need to be in
writing.

Last, CAMI questions the reinstatement of the MTCC decision, which ordered CAMI and Uytengsu to pay
for actual damages to GMC in the amount of P20,000.00 per month from the time of demand until CAMI
actually vacated the property, and attorney’s fees in the amount of P50,000. CAMI assails the award of
damages for having no legal or factual basis.

GMC, on the other hand, contends that CAMI never raised the issue of GMC’s lack of demand before either
the MTCC or the RTC as one of its defenses; instead, this issue, as well as the corresponding issue of the
MTCC’s lack of jurisdiction, was raised for the first time on appeal before the CA. GMC also reiterates the
CA’s ruling that any waiver of the lease contract’s terms and conditions must be in writing in order to be
effective. Finally, GMC dismisses CAMI’s questions on the inclusion of Uytengsu, as well as the award of
actual damages and attorney’s fees, for not having been raised before the lower courts.

THE COURT’S RULING

We resolve to grant the petition.

Petition raises factual questions

In petitions for review on certiorari under Rule 45 of the Rules of Civil Procedure, only questions of law
may be raised and passed upon by this Court. As in any general rule, however, certain exceptions may
exist.9 In the present case, we are asked to either uphold GMC’s unlawful detainer complaint or dismiss it
outright under a situation where the findings of facts of the trial court and the appellate court conflict with
each other, which is one of the recognized exceptions to the requirement that Rule 45 petitions deal only
with questions of law. If necessary, therefore, we can examine the evidence on record in this case and
determine the truth or falsity of the parties’ submissions and allegations.

On the issue of demand

GMC claims that CAMI belatedly raised the issue of lack of demand. On the other hand, CAMI contends in
its Motion to Admit Reply10 that it raised this defense as early as its Answer before the MTCC.

We agree with CAMI. The MTCC decision, which quoted CAMI’s Answer extensively, clearly shows that
CAMI stated that it will be in default with respect to the advance rental and deposit only after GMC has
made a demand for the payment. CAMI also stated that it had already deposited the advance rental and
deposit with the Clerk of Court of the MTCC. Lastly, CAMI denied GMC’s claim in its complaint that a
demand had been made.11 These statements, taken together, clearly belie GMC’s claim that CAMI never
raised the lack of demand as an issue before the lower court.
Another issue raised, relating to demand, is whether GMC sent CAMI the required demand letter. Invoking
Article 1169 of the Civil Code,12 CAMI principally contends that it could not be considered in default
because GMC never sent a proper demand letter.

CAMI, in invoking Article 1169, apparently overlooked that what is involved is not a mere mora or delay in
the performance of a generic obligation to give or to do that would eventually lead to the remedy of
rescission or specific performance. What is involved in the case is a contract of lease and the twin
remedies of rescission and judicial ejectment after either the failure to pay rent or to comply with the
conditions of the lease. This situation calls for the application, not of Article 1169 of the Civil Code but, of
Article 1673 in relation to Section 2, Rule 70 of the Rules of Court. Article 1673 states:

Article 1673. The lessor may judicially eject the lessee for any of the following causes:

xxxx

(3) Violation of any of the conditions agreed upon in the contract; xxx

Based on this provision, a lessor may judicially eject (and thereby likewise rescind the contract of lease)
the lessee if the latter violates any of the conditions agreed upon in the lease contract. Implemented in
accordance with Section 2, Rule 70, the lessor is not required to first bring an action for rescission, but
may ask the court to do so and simultaneously seek the ejecment of the lessee in a single action for
unlawful detainer.13 Section 2, Rule 70 of the Rules of Court provides:

Sec. 2. Lessor to proceed against lessee only after demand.

Unless otherwise stipulated, such action by the lessor shall be commenced only after demand to pay or
comply with the conditions of the lease and to vacate is made upon the lessee, or by serving written
notice of such demand upon the person found on the premises, or by posting such notice on the premises
if no person be found thereon, and the lessee fails to comply therewith after fifteen (15) days in the case
of land or five (5) days in the case of buildings. [Emphasis supplied.]

GMC insists that it complied with the required demand when it sent CAMI the following letter:

June 11, 1999

CEBU AUTOMETIC MOTORS, INC.

GMC Plaza Complex
Legaspi Extension cor.
MacArthur Boulevard
Cebu City

ATTENTION: MR. TIRSO UYTENGSU III

Gentlemen:

We are informing you of the termination of the Contract of Lease over our clients, General Milling
Corporation premises at GMC Plaza Complex effective June 30, 1999.

Your repeated violations of the terms of the contract, failure to deposit the required amounts (equivalent
to two to three months rent) the subleasing of a portion of the leased premises without the required prior
written consent, the introduction of improvements and alterations and the installation of a signboard
without the prior written consent, leave us no choice.

It should be mentioned that the latest Contract of Lease was questionably entered by you and Mr. Luis
Calalang, Jr. hurriedly, knowing fully well that the same was completely one-sided in your favor and
totally disadvantageous to GMC. It was as if there was a plot or scheme to take advantage of the situation
at the time.

We expect you to vacate the premises, settle all your unpaid accounts on or before the end of June, 1999.
[Emphasis supplied.]
With this demand letter as evidence, we hold it undisputed that GMC did serve a prior demand on CAMI.
The question, however, is whether this is the demand that Section 2, Rule 70 of the Rules of Court
contemplates as a jurisdictional requirement before a lessor can undertake a judicial ejectment pursuant
to Article 1673 of the Civil Code.

Section 2, Rule 70, on its face, involves two demands that may be made in the same demand letter,
namely, (1) the demand for payment of the amounts due the lessor, or the compliance with the conditions
of the lease, and (2) the demand to vacate the premises. These demands, of course, are not intended to
be complied with at the same time; otherwise, the provision becomes contradictory as it is pointless to
demand payment or compliance if the demand to vacate is already absolute and must be heeded at the
same time as the demand to pay or to comply. It is only after the demands for payment or compliance
are made on the lessee and subsequently rejected or ignored that the basis for the unlawful detainer
action arises.

The twin aspects of the demand letter can best be understood when Section 2, Rule 70 is read and
understood as the specific implementing procedural rule to carry out the results that Article 1673
mandates – the rescission of the contract of lease and the judicial ejectment of the lessee. The judicial
rescission of a contract of lease is essentially governed by Article 1659 of the Civil Code, grounded on the
breach of the parties’ statutory obligations: in the case of the lessee, for its failure to pay the rent or to
use the property under lease for the purpose it was intended. Article 1673, read with Section 2, Rule 70 of
the Rules, does away with the need for an independent judicial action to rescind prior to ejectment by
combining these remedies in an unlawful detainer action.

The law of contracts (essentially, Articles 1191 of the Civil Code for judicial rescission and Article 1659 for
the judicial rescission of lease agreements) firmly establishes that the failure to pay or to comply with the
contractual term does not, by itself, give rise to a cause of action for rescission; the cause of action only
accrues after the lessee has been in default for its failure to heed the demand to pay or to comply. 14 With
the contract judicially rescinded, the demand to vacate finds full legal basis.

Article 1673, implemented pursuant to Section 2, Rule 70, does away with a separate judicial action for
rescission, and allows under a single complaint the judicial ejectment of the lessee after extrajudicial
rescission has taken place. These combined remedies account for the separate aspects of the demand
letter: the demand to pay rentals or to comply with the terms of the lease, and to vacate. The tenant's
refusal to heed the demand to vacate, coming after the demand to pay or to comply similarly went
unheeded, renders unlawful the continued possession of the leased premises; hence, the unlawful
detainer action.15

In Dio v. Concepcion, we ruled that:

Under Article 1673 of the Civil Code, the lessor may judicially eject the lessee for, among other causes:
(1) lack of payment of the price stipulated; or (2) violation of any of the conditions agreed upon in the
contract. Previous to the institution of such action, the lessor must make a demand upon the lessee to
pay or comply with the conditions of the lease and to vacate the premises. It is the owner’s demand for
the tenant to vacate the premises and the tenant’s refusal to do so which makes unlawful the withholding
of possession.16 Such refusal violates the owner’s right of possession giving rise to an action for unlawful
detainer. [Emphasis supplied.]

Mr. Justice Jose Vitug further explained the Court’s action in this case in his Separate Opinion when he
said:

I just would like to add, by way of clarification, that the principal remedies open to an obligee, upon the
breach of an obligation, are generally judicial in nature and must be independently sought in litigation,
i.e., an action for performance (specific, substitute or equivalent) or rescission (resolution) of a reciprocal
obligation. The right to rescind (resolve) is recognized in reciprocal obligations; it is implicit, however, in
third paragraph of Article 1191 of the Civil Code that the rescission there contemplated can only be
invoked judicially. Hence, the mere failure of a party to comply with what is incumbent upon him does not
ipso jure produce the rescission (resolution) of the obligation.

Exceptionally, under the law and, to a limited degree, by agreement of the parties, extrajudicial remedies
may become available such as, in the latter case, an option to rescind or terminate a contract upon the
violation of a resolutory facultative condition. In the case of lease agreements, despite the absence of an
explicit stipulation, that option has been reserved by law in favor of a lessee under Article 1673 of the
Civil Code by providing that the lessor may judicially eject the lessee for, among other grounds, a
violation of any of the conditions agreed upon in the contract. The provision, read in conjunction with
Section 2, Rule 70, of the 1997 Rules of Civil Procedure, would, absent a contrary stipulation, merely
require a written demand on the lessee to pay or to comply with the conditions of the lease and to vacate
the premises prior to the institution of an action for ejectment. The above provisions, in effect, authorizes
the lessor to terminate extrajudicially the lease (with the same effect as rescission) by simply serving due
notice to the lessee.

In this particular instance, therefore, the only relevant court jurisdiction involved is that of the first level
court in the action for ejectment, an independent judicial action for rescission being unnecessary.

Thus, as further clarified, an extrajudicial rescission gave rise to the demand to vacate that, upon being
refused, rendered the possession illegal and laid the lessee open to ejectment. The rescission, an
extrajudicial one, was triggered by the lessee’s refusal to pay the rent or to comply with the terms of the
lease. The Court put it in plainer terms in Arquelada v. Philippine Veterans Bank: 17 where it said:

As contemplated in Section 2, the demand required is the demand to pay or comply with the conditions of
the lease and not merely a demand to vacate. Consequently, both demands - either to pay rent or adhere
to the terms of the lease and vacate are necessary to make the lessee a deforciant in order that an
ejectment suit may be filed. It is the lessor's demand for the lessee to vacate the premises and the
tenant's refusal to do so which makes unlawful the withholding of the possession. Such refusal violates
the lessor's right of possession giving rise to an action for unlawful detainer. However, prior to the
institution of such action, a demand from the lessor to pay or comply with the conditions of the lease and
to vacate the premises is required under the aforequoted rule. Thus, mere failure to pay the rents due or
violation of the terms of the lease does not automatically render a person's possession unlawful.
Furthermore, the giving of such demands must be alleged in the complaint, otherwise the MTC cannot
acquire jurisdiction over the case. [Emphasis supplied.]

A close examination of GMC’s letter to CAMI tells us that the letter merely informed recipient CAMI that
GMC had terminated the lease based on the cited violations of the terms of the lease, and on the basis of
this termination, required CAMI to vacate the premises by the end of the month. In other words, the
letter did not demand compliance with the terms of the lease; GMC was past this point as it had rescinded
the contract of lease and was already demanding that the leased premises be vacated and the amounts
owing be paid. Thus, whether or not the amounts due were paid, the lease remained terminated because
of the cited violations.

From this perspective, GMC did not fully comply with the requirements of Section 2, Rule 70.1âwphi1
Technically, no extrajudicial rescission effectively took place as a result of the cited violations until the
demand to pay or comply was duly served and was rejected or disregarded by the lessee. This aspect of
the demand letter – missing in the demand letter and whose rejection would have triggered the demand
to vacate – gave GMC no effective cause of action to judicially demand the lessee’s ejectment. All these,
the appellate court unfortunately failed to appreciate.

Our above conclusion renders unnecessary any further ruling on the merits of the parties’ positions on the
existence of the substantive grounds for rescission and ejectment.

WHEREFORE, premises considered, we GRANT the petition and REVERSE and SET ASIDE the decision of
the Court of Appeals dated September 28, 2001 in CA-G.R. SP. No. 64363. We accordingly DECLARE
General Milling Corporation’s complaint for unlawful detainer, Civil Case No. R-41923 before the Municipal
Trial Court in Cities of Cebu City, DISMISSED for lack of cause of action. Costs against the respondent
General Milling Corporation.

G.R. No. 181672               September 20, 2010

SPS. ANTONIO & LETICIA VEGA, Petitioner,

vs.
SOCIAL SECURITY SYSTEM (SSS) & PILAR DEVELOPMENT CORPORATION, Respondents.

DECISION

ABAD, J.:
This case is about the lack of authority of a sheriff to execute upon a property that the judgment obligor
had long sold to another although the registered title to the property remained in the name of the former.

The Facts and the Case

Magdalena V. Reyes (Reyes) owned a piece of titled land1 in Pilar Village, Las Piñas City. On August 17,
1979 she got a housing loan from respondent Social Security System (SSS) for which she mortgaged her
land.2 In late 1979, however, she asked the petitioner spouses Antonio and Leticia Vega (the Vegas) to
assume the loan and buy her house and lot since she wanted to emigrate.3

Upon inquiry with the SSS, an employee there told the Vegas that the SSS did not approve of members
transferring their mortgaged homes. The Vegas could, however, simply make a private arrangement with
Reyes provided they paid the monthly amortizations on time. This practice, said the SSS employee, was
commonplace.4 Armed with this information, the Vegas agreed for Reyes to execute in their favor a deed
of assignment of real property with assumption of mortgage and paid Reyes P20,000.00 after she
undertook to update the amortizations before leaving the country. The Vegas then took possession of the
house in January 1981.5

But Reyes did not readily execute the deed of assignment. She left the country and gave her sister,
Julieta Reyes Ofilada (Ofilada), a special power of attorney to convey ownership of the property.
Sometime between 1983 and 1984, Ofilada finally executed the deed promised by her sister to the Vegas.
Ofilada kept the original and gave the Vegas two copies. The latter gave one copy to the Home
Development Mortgage Fund and kept the other.6 Unfortunately, a storm in 1984 resulted in a flood that
destroyed the copy left with them.7

In 1992, the Vegas learned that Reyes did not update the amortizations for they received a notice to
Reyes from the SSS concerning it.8 They told the SSS that they already gave the payment to Reyes but,
since it appeared indifferent, on January 6, 1992 the Vegas updated the amortization themselves and paid
P115,738.48 to the SSS, through Antonio Vega’s personal check.9 They negotiated seven additional
remittances and the SSS accepted P8,681.00 more from the Vegas.10

Meanwhile, on April 16, 1993 respondent Pilar Development Corporation (PDC) filed an action for sum of
money against Reyes before the Regional Trial Court (RTC) of Manila in Civil Case 93-6551. PDC claimed
that Reyes borrowed from Apex Mortgage and Loans Corporation (Apex) P46,500.00 to buy the lot and
construct a house on it.11 Apex then assigned Reyes’ credit to the PDC on December 29, 1992,12 hence,
the suit by PDC for the recovery of the unpaid debt. On August 26, 1993 the RTC rendered judgment,
ordering Reyes to pay the PDC the loan of P46,398.00 plus interest and penalties beginning April 11, 1979
as well as attorney’s fees and the costs.13 Unable to do so, on January 5, 1994 the RTC issued a writ of
execution against Reyes and its Sheriff levied on the property in Pilar Village. 14

On February 16, 1994 the Vegas requested the SSS to acknowledge their status as subrogees and to give
them an update of the account so they could settle it in full. The SSS did not reply. Meantime, the RTC
sheriff published a notice for the auction sale of the property on February 24, March 3 and 10, 1994. 15 He
also served on the Vegas notice of that sale on or about March 20, 1994. 16 On April 5, 1994, the Vegas
filed an affidavit of third party claimant and a motion for leave to admit a motion in intervention to quash
the levy on the property.17

Still, stating that Vegas’ remedy lay elsewhere, the RTC directed the sheriff to proceed with the
execution.18 Meantime, the Vegas got a telegram dated August 29, 1994, informing them that the SSS
intended to foreclose on the property to satisfy the unpaid housing debt of P38,789.58.19 On October 19,
1994 the Vegas requested the SSS in writing for the exact computation of the indebtedness and for
assurance that they would be entitled to the discharge of the mortgage and delivery of the proper
subrogation documents upon payment. They also sent a P37,521.95 manager’s check that the SSS
refused to accept.20

On November 8, 1994 the Vegas filed an action for consignation, damages, and injunction with application
for preliminary injunction and temporary restraining order against the SSS, the PDC, the sheriff of RTC
Branch 19, and the Register of Deeds before the RTC of Las Piñas in Civil Case 94-2943. Still, while the
case was pending, on December 27, 1994 the SSS released the mortgage to the PDC. 21 And on August
22, 1996 the Register of Deeds issued TCT T-56657 to the PDC. 22 A writ of possession subsequently
evicted the Vegas from the property.
On May 8, 2002 the RTC decided Civil Case 94-2943 in favor of the Vegas. It ruled that the SSS was
barred from rejecting the Vegas’ final payment of P37,521.95 and denying their assumption of Reyes’
debt, given the SSS’ previous acceptance of payments directly from them. The Vegas were subrogated to
the rights of Reyes and substituted her in the SSS housing loan and mortgage contract. That the Vegas
had the receipts show that they were the ones who made those payments. The RTC ordered the PDC to
deliver to the Vegas the certificate of title covering the property. It also held the SSS and PDC solidarily
liable to the Vegas for P300,000.00 in moral damages, P30,000.00 in exemplary damages, and
P50,000.00 in attorney’s fees and for costs of the suit.23

The SSS appealed to the Court of Appeals (CA) in CA G.R. CV 77582. On August 30, 2007 the latter court
reversed the RTC decision24 for the reasons that the Vegas were unable to produce the deed of
assignment of the property in their favor and that such assignment was not valid as to PDC. Their motion
for reconsideration having been denied, the Vegas filed this petition for review on certiorari under Rule
45.25

The Issues Presented

The issues in this case are:

1. Whether or not the Vegas presented adequate proof of Reyes’ sale of the subject property to
them;

2. In the affirmative, whether or not Reyes validly sold her SSS-mortgaged property to the Vegas;
and

3. In the affirmative, whether or not the sheriff validly sold the same at public auction to satisfy
Reyes’ debt to PDC.

The Rulings of the Court

One. The CA ruled that the Vegas were unable to prove that Reyes assigned the subject property to them,
given that they failed to present the deed of assignment in their favor upon a claim that they lost it. 26 But
the rule requiring the presentation of the original of that deed of assignment is not absolute. Secondary
evidence of the contents of the original can be adduced, as in this case, when the original has been lost
without bad faith on the part of the party offering it. 27

Here, not only did the Vegas prove the loss of the deed of assignment in their favor and what the same
contained, they offered strong corroboration of the fact of Reyes’ sale of the property to them. They took
possession of the house and lot after they bought it. Indeed, they lived on it and held it in the concept of
an owner for 13 years before PDC came into the picture. They also paid all the amortizations to the SSS
with Antonio Vega’s personal check, even those that Reyes promised to settle but did not. And when the
SSS wanted to foreclose the property, the Vegas sent a manager’s check to it for the balance of the loan.
Neither Reyes nor any of her relatives came forward to claim the property. The Vegas amply proved the
sale to them.

Two. Reyes acquired the property in this case through a loan from the SSS in whose favor she executed a
mortgage as collateral for the loan. Although the loan was still unpaid, she assigned the property to the
Vegas without notice to or the consent of the SSS. The Vegas continued to pay the amortizations
apparently in Reyes’ name. Meantime, Reyes apparently got a cash loan from Apex, which assigned the
credit to PDC. This loan was not secured by a mortgage on the property but PDC succeeded in getting a
money judgment against Reyes and had it executed on the property. Such property was still in Reyes’
name but, as pointed out above, the latter had disposed of it in favor of the Vegas more than 10 years
before PDC executed on it.

The question is: was Reyes’ disposal of the property in favor of the Vegas valid given a provision in the
mortgage agreement that she could not do so without the written consent of the SSS?

The CA ruled that, under Article 123728 of the Civil Code, the Vegas who paid the SSS amortizations
except the last on behalf of Reyes, without the latter’s knowledge or against her consent, cannot compel
the SSS to subrogate them in her rights arising from the mortgage. Further, said the CA, the Vegas’ claim
of subrogation was invalid because it was done without the knowledge and consent of the SSS as required
under the mortgage agreement.29
But Article 1237 cannot apply in this case since Reyes consented to the transfer of ownership of the
mortgaged property to the Vegas. Reyes also agreed for the Vegas to assume the mortgage and pay the
balance of her obligation to SSS. Of course, paragraph 4 of the mortgage contract covering the property
required Reyes to secure SSS’ consent before selling the property. But, although such a stipulation is valid
and binding, in the sense that the SSS cannot be compelled while the loan was unpaid to recognize the
sale, it cannot be interpreted as absolutely forbidding her, as owner of the mortgaged property, from
selling the same while her loan remained unpaid. Such stipulation contravenes public policy, being an
undue impediment or interference on the transmission of property. 30

Besides, when a mortgagor sells the mortgaged property to a third person, the creditor may demand from
such third person the payment of the principal obligation. The reason for this is that the mortgage credit
is a real right, which follows the property wherever it goes, even if its ownership changes. Article 2129 31
of the Civil Code gives the mortgagee, here the SSS, the option of collecting from the third person in
possession of the mortgaged property in the concept of owner.32 More, the mortgagor-owner’s sale of the
property does not affect the right of the registered mortgagee to foreclose on the same even if its
ownership had been transferred to another person. The latter is bound by the registered mortgage on the
title he acquired.1awphi1

After the mortgage debt to SSS had been paid, however, the latter had no further justification for
withholding the release of the collateral and the registered title to the party to whom Reyes had
transferred her right as owner. Under the circumstance, the Vegas had the right to sue for the
conveyance to them of that title, having been validly subrogated to Reyes’ rights.

Three. The next question is: was Reyes’ sale of the property to the Vegas binding on PDC which tried to
enforce the judgment credit in its favor on the property that was then still mortgaged to the SSS?

The CA ruled that Reyes’ assignment of the property to the Vegas did not bind PDC, which had a
judgment credit against Reyes, since such assignment neither appeared in a public document nor was
registered with the register of deeds as Article 1625 of the Civil Code required. Article 1625 reads:

Art. 1625. An assignment of a credit, right or action shall produce no effect as against third persons,
unless it appears in a public instrument, or the instrument is recorded in the Registry of Property in case
the assignment involves real property. (1526)

But Article 1625 referred to assignment of credits and other incorporeal rights. Reyes did not assign any
credit or incorporeal right to the Vegas. She sold the Vegas her house and lot. They became owner of the
property from the time she executed the deed of assignment covering the same in their favor. PDC had a
judgment for money against Reyes only. A court’s power to enforce its judgment applies only to the
properties that are indisputably owned by the judgment obligor.33 Here, the property had long ceased to
belong to Reyes when she sold it to the Vegas in 1981.

The PDC cannot take comfort in the fact that the property remained in Reyes’ name when it bought the
same at the sheriff sale. The PDC cannot assert that it was a buyer in good faith since it had notice of the
Vegas’ claim on the property prior to such sale.

Under the circumstances, the PDC must reconvey the subject property to the Vegas or, if this is no longer
possible, pay them its current market value as the trial court may determine with interest of 12 percent
per annum from the date of the determination of such value until it is fully paid. Further, considering the
distress to which the Vegas were subjected after the unlawful levy on their property, aggravated by their
subsequent ouster from it through a writ of possession secured by PDC, the RTC was correct in awarding
the Vegas moral damages of P300,000.00, exemplary damages of P30,000.00 and attorney’s fees of
P50,000.00 plus costs of the suit. But these are to be borne solely by PDC considering that the SSS had
nothing to do with the sheriff’s levy on the property. It released the title to the PDC simply because it had
a sheriff’s sale in its favor.

The PDC is, however, entitled to reimbursement from the Vegas of the sum of P37,820.15 that it paid to
the SSS for the release of the mortgaged title.

WHEREFORE, the Court GRANTS the petition, REVERSES the assailed decision of the Court of Appeals in
CA-G.R. CV 77582 dated August 30, 2007, and in its place DIRECTS respondent Pilar Development
Corporation:
 1. To convey to petitioner spouses Antonio and Leticia Vega the title to and possession of the
property subject of this case, covered by Transfer Certificate of Title 56657 of the Register of
Deeds of Las Piñas City, for the issuance of a new title in their names; and

2. To pay the same petitioner spouses moral damages of P300,000.00, exemplary damages of
P30,000.00, and attorney’s fees of P50,000.00.

On the other hand, the Court DIRECTS petitioner spouses to reimburse respondent Pilar Development
Corp. the sum of P37,820.15, representing what it paid the respondent SSS for the release of the
mortgaged certificate of title.

G.R. No. 160236               October 16, 2009

"G" HOLDINGS, INC., Petitioner,

vs.
NATIONAL MINES AND ALLIED WORKERS UNION Local 103 (NAMAWU); SHERIFFS RICHARD H. APROSTA
and ALBERTO MUNOZ, all acting Sheriffs; DEPARTMENT OF LABOR AND EMPLOYMENT, Region VI, Bacolod
District Office, Bacolod City, Respondents.

DECISION

NACHURA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the
October 14, 2003 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 75322.

The Facts

The petitioner, "G" Holdings, Inc. (GHI), is a domestic corporation primarily engaged in the business of
owning and holding shares of stock of different companies. 2 It was registered with the Securities and
Exchange Commission on August 3, 1992. Private respondent, National Mines and Allied Workers Union
Local 103 (NAMAWU), was the exclusive bargaining agent of the rank and file employees of Maricalum
Mining Corporation (MMC),3 an entity operating a copper mine and mill complex at Sipalay, Negros
Occidental.4

MMC was incorporated by the Development Bank of the Philippines (DBP) and the Philippine National Bank
(PNB) on October 19, 1984, on account of their foreclosure of Marinduque Mining and Industrial
Corporation’s assets. MMC started its commercial operations in August 1985. Later, DBP and PNB
transferred it to the National Government for disposition or privatization because it had become a non-
performing asset.5

On October 2, 1992, pursuant to a Purchase and Sale Agreement6 executed between GHI and Asset
Privatization Trust (APT), the former bought ninety percent (90%) of MMC’s shares and financial claims. 7
These financial claims were converted into three Promissory Notes8 issued by MMC in favor of GHI totaling
P500M and secured by mortgages over MMC’s properties. The notes, which were similarly worded except
for their amounts, read as follows:

PROMISSORY NOTE

AMOUNT - Php114,715,360.00 [Php186,550,560.00 in the second

note, and Php248,734,080.00 in the
third note.]

MAKATI, METRO MANILA, PHILIPPINES, October 2, 1992

For Value Received, MARICALUM MINING CORPORATION (MMC) with postal address at 4th Floor, Manila
Memorial Park Bldg., 2283 Pasong Tamo Extension, Makati, Metro Manila, Philippines, hereby promises to
pay "G" HOLDINGS, INC., at its office at Phimco Compound, F. Manalo Street, Punta, Sta. Ana, Manila,
the amount of PESOS ONE HUNDRED FOURTEEN MILLION, SEVEN HUNDRED FIFTEEN THOUSAND AND
THREE HUNDRED SIXTY (Php114,715,360.00) ["PESOS ONE HUNDRED EIGHTY SIX MILLION FIVE
HUNDRED FIFTY THOUSAND FIFE HUNDRED AND SIXTY (Php186,550,560.00)" in the second note, and
"PESOS TWO HUNDRED FORTY EIGHT MILLION, SEVEN HUNDRED THIRTY FOUR THOUSAND AND EIGHTY
(Php248,734,080.00)" in the third note], PHILIPPINE CURRENCY, on or before October 2, 2002. Interest
shall accrue on the amount of this Note at a rate per annum equal to the interest of 90-day Treasury Bills
prevailing on the Friday preceding the maturity date of every calendar quarter.

As collateral security, MMC hereby establishes and constitutes in favor of "G" HOLDINGS, INC., its
successors and/or assigns:

1. A mortgage over certain parcels of land, more particularly listed and described in the Sheriff’s
Certificate of Sale dated September 7, 1984 issued by the Ex-Officio Provincial Sheriff of Negros
Occidental, Rolando V. Ramirez, with office at Bacolod City following the auction sale conducted
pursuant to the provisions of Act 3135, a copy of which certificate of sale is hereto attached as
Annex "A" and made an integral part hereof;

2. A chattel mortgage over assets and personal properties more particularly listed and described in
the Sheriff’s Certificate of Sale dated September 7, 1984 issued by the Ex-Officio Provincial Sheriff
of Negros Occidental, Rolando V. Ramirez, with office at Bacolod City following the auction
conducted pursuant to the provisions of Act 1508, a copy of which Certificate of Sale is hereto
attached as Annex "B" and made an integral part hereof.

3. Mortgages over assets listed in APT Specific Catalogue GC-031 for MMC, a copy of which
Catalogue is hereby made an integral part hereof by way of reference, as well as assets presently
in use by MMC but which are not listed or included in paragraphs 1 and 2 above and shall include
all assets that may hereinafter be acquired by MMC.

MARICALUM MINING CORPORATION

(Maker)

x x x x9

Upon the signing of the Purchase and Sale Agreement and upon the full satisfaction of the stipulated down
payment, GHI immediately took physical possession of the mine site and its facilities, and took full control
of the management and operation of MMC.10

Almost four years thereafter, or on August 23, 1996, a labor dispute (refusal to bargain collectively and
unfair labor practice) arose between MMC and NAMAWU, with the latter eventually filing with the National
Conciliation and Mediation Board of Bacolod City a notice of strike.11 Then Labor Secretary, now Associate
Justice of this Court, Leonardo A. Quisumbing, later assumed jurisdiction over the dispute and ruled in
favor of NAMAWU. In his July 30, 1997 Order in OS-AJ-10-96-014 (Quisumbing Order), Secretary
Quisumbing declared that the lay-off (of workers) implemented on May 7, 1996 and October 7, 1996 was
illegal and that MMC committed unfair labor practice. He then ordered the reinstatement of the laid-off
workers, with payment of full backwages and benefits, and directed the execution of a new collective
bargaining agreement (CBA) incorporating the terms and conditions of the previous CBA providing for an
annual increase in the workers’ daily wage.12 In two separate cases─G.R. Nos. 133519 and 138996─filed
with this Court, we sustained the validity of the Quisumbing Order, which became final and executory on
January 26, 2000.13

On May 11, 2001, then Acting Department of Labor and Employment (DOLE) Secretary, now also an
Associate Justice of this Court, Arturo D. Brion, on motion of NAMAWU, directed the issuance of a partial
writ of execution (Brion Writ), and ordered the DOLE sheriffs to proceed to the MMC premises for the
execution of the same.14 Much later, in 2006, this Court, in G.R. Nos. 157696-97, entitled Maricalum
Mining Corporation v. Brion and NAMAWU,15 affirmed the propriety of the issuance of the Brion Writ.

The Brion Writ was not fully satisfied because MMC’s resident manager resisted its enforcement. 16 On
motion of NAMAWU, then DOLE Secretary Patricia A. Sto. Tomas ordered the issuance of the July 18,
2002 Alias Writ of Execution and Break-Open Order (Sto. Tomas Writ). 17 On October 11, 2002, the
respondent acting sheriffs, the members of the union, and several armed men implemented the Sto.
Tomas Writ, and levied on the properties of MMC located at its compound in Sipalay, Negros Occidental. 18

On October 14, 2002, GHI filed with the Regional Trial Court (RTC) of Kabankalan City, Negros Occidental,
Special Civil Action (SCA) No. 1127 for Contempt with Prayer for the Issuance of a Temporary Restraining
Order (TRO) and Writ of Preliminary Injunction and to Nullify the Sheriff’s Levy on Properties. 19 GHI
contended that the levied properties were the subject of a Deed of Real Estate and Chattel Mortgage,
dated September 5, 199620 executed by MMC in favor of GHI to secure the aforesaid P550M promissory
notes; that this deed was registered on February 24, 2000;21 and that the mortgaged properties were
already extrajudicially foreclosed in July 2001 and sold to GHI as the highest bidder on December 3,
2001, as evidenced by the Certificate of Sale dated December 4, 2001.22

The trial court issued ex parte a TRO effective for 72 hours, and set the hearing on the application for a
writ of injunction.23 On October 17, 2002, the trial court ordered the issuance of a Writ of Injunction
(issued on October 18, 2002)24 enjoining the DOLE sheriffs from further enforcing the Sto. Tomas Writ
and from conducting any public sale of the levied-on properties, subject to GHI’s posting of a P5M bond.25

Resolving, among others, NAMAWU’s separate motions for the reconsideration of the injunction order and
for the dismissal of the case, the RTC issued its December 4, 2002 Omnibus Order,26 the dispositive
portion of which reads:

WHEREFORE, premises considered, respondent NAMAWU Local 103’s Motion for Reconsideration dated
October 23, 2002 for the reconsideration of the Order of this Court directing the issuance of Writ of
Injunction prayed for by petitioner and the Order dated October 18, 2002 approving petitioner’s
Injunction Bond in the amount of P5,000,000.00 is hereby DENIED.

Respondent’s Motion to Dismiss as embodied in its Opposition to Extension of Temporary Restraining

Order and Issuance of Writ of Preliminary Injunction with Motion to Dismiss and Suspend Period to File
Answer dated October 15, 2002 is likewise DENIED.

Petitioner’s Urgent Motion for the return of the levied firearms is GRANTED. Pursuant thereto, respondent
sheriffs are ordered to return the levied firearms and handguns to the petitioner provided the latter puts
[up] a bond in the amount of P332,200.00.

Respondent’s lawyer, Atty. Jose Lapak, is strictly warned not to resort again to disrespectful and
contemptuous language in his pleadings, otherwise, the same shall be dealt with accordingly.

SO ORDERED.27

Aggrieved, NAMAWU filed with the CA a petition for certiorari under Rule 65, assailing the October 17, 18
and December 4, 2002 orders of the RTC.28

After due proceedings, on October 14, 2003, the appellate court rendered a Decision setting aside the RTC
issuances and directing the immediate execution of the Sto. Tomas Writ. The CA ruled, among others,
that the circumstances surrounding the execution of the September 5, 1996 Deed of Real Estate and
Chattel Mortgage yielded the conclusion that the deed was sham, fictitious and fraudulent; that it was
executed two weeks after the labor dispute arose in 1996, but surprisingly, it was registered only on
February 24, 2000, immediately after the Court affirmed with finality the Quisumbing Order. The CA also
found that the certificates of title to MMC’s real properties did not contain any annotation of a mortgage
lien, and, suspiciously, GHI did not intervene in the long drawn-out labor proceedings to protect its right
as a mortgagee of virtually all the properties of MMC.29

The CA further ruled that the subsequent foreclosure of the mortgage was irregular, effected precisely to
prevent the satisfaction of the judgment against MMC. It noted that the foreclosure proceedings were
initiated in July 2001, shortly after the issuance of the Brion Writ; and, more importantly, the basis for the
extrajudicial foreclosure was not the failure of MMC to pay the mortgage debt, but its failure "to satisfy
any money judgment against it rendered by a court or tribunal of competent jurisdiction, in favor of any
person, firm or entity, without any legal ground or reason." 30 Further, the CA pierced the veil of corporate
fiction of the two corporations.31 The dispositive portion of the appellate court’s decision reads:

WHEREFORE, in view of the foregoing considerations, the petition is GRANTED. The October 17, 2002 and
the December 4, 2002 Order of the RTC, Branch 61 of Kabankalan City, Negros Occidental are hereby
ANNULLED and SET ASIDE for having been issued in excess or without authority. The Writ of Preliminary
Injunction issued by the said court is lifted, and the DOLE Sheriff is directed to immediately enforce the
Writ of Execution issued by the Department of Labor and Employment in the case "In re: Labor Dispute in
Maricalum Mining Corporation" docketed as OS-AJ-10-96-01 (NCMB-RB6-08-96).32
 The Issues

Dissatisfied, GHI elevated the case to this Court via the instant petition for review on certiorari, raising
the following issues:

WHETHER OR NOT GHI IS A PARTY TO THE LABOR DISPUTE BETWEEN NAMAWU AND MMC.

II

WHETHER OR NOT, ASSUMING ARGUENDO THAT THE PERTINENT DECISION OR ORDER IN THE SAID
LABOR DISPUTE BETWEEN MMC AND NAMAWU MAY BE ENFORCED AGAINST GHI, THERE IS ALREADY A
FINAL DEETERMINATION BY THE SUPREME COURT OF THE RIGHTS OF THE PARTIES IN SAID LABOR
DISPUTE CONSIDERING THE PENDENCY OF G.R. NOS. 157696-97.

III

WHETHER OR NOT GHI IS THE ABSOLUTE OWNER OF THE PROPERTIES UNLAWFULLY GARNISHED BY
RESPONDENTS SHERIFFS.

IV

WHETHER OR NOT THE HONORABLE HENRY D. ARLES CORRECTLY ISSUED A WRIT OF INJUNCTION
AGAINST THE UNLAWFUL EXECUTIOIN ON GHI’S PROPERTIES.

WHETHER OR NOT THE VALIDITY OF THE DEED OF REAL AND CHATTEL MORTGAGE OVER THE SUBJECT
PROPERTIES BETWEEN MMC AND GHI MAY BE COLLATERALLY ATTACKED.

VI

WHETHER OR NOT, ASSUMING ARGUENDO THAT THE VALIDITY OF THE SAID REAL AND CHATTEL
MORTGAGE MAY BE COLLATERALLY ATTACKED, THE SAID MORTGAGE IS SHAM, FICTITIOUS AND
FRAUDULENT.

VII

WHETHER OR NOT GHI IS A DISTINCT AND SEPARATE CORPORATE ENTITY FROM MMC.

VIII

WHETHER OR NOT GHI CAN BE PREVENTED THROUGH THE ISSUANCE OF A RESTRAINING ORDER OR
INJUNCTION FROM TAKING POSSESSION OR BE DISPOSSESSED OF ASSETS PURCHASED BY IT FROM
APT.33

Stripped of non-essentials, the core issue is whether, given the factual circumstances obtaining, the RTC
properly issued the writ of injunction to prevent the enforcement of the Sto. Tomas Writ. The resolution of
this principal issue, however, will necessitate a ruling on the following key and interrelated questions:

1. Whether the mortgage of the MMC’s properties to GHI was a sham;

2. Whether there was an effective levy by the DOLE upon the MMC’s real and personal properties;
and

3. Whether it was proper for the CA to pierce the veil of corporate fiction between MMC and GHI.

Our Ruling
Before we delve into an extended discussion of the foregoing issues, it is essential to take judicial
cognizance of cases intimately linked to the present controversy which had earlier been elevated to and
decided by this Court.

Judicial Notice.

Judicial notice must be taken by this Court of its Decision in Maricalum Mining Corporation v. Hon. Arturo
D. Brion and NAMAWU,34 in which we upheld the right of herein private respondent, NAMAWU, to its labor
claims. Upon the same principle of judicial notice, we acknowledge our Decision in Republic of the
Philippines, through its trustee, the Asset Privatization Trust v. "G" Holdings, Inc., 35 in which GHI was
recognized as the rightful purchaser of the shares of stocks of MMC, and thus, entitled to the delivery of
the company notes accompanying the said purchase. These company notes, consisting of three (3)
Promissory Notes, were part of the documents executed in 1992 in the privatization sale of MMC by the
Asset Privatization Trust (APT) to GHI. Each of these notes uniformly contains stipulations "establishing
and constituting in favor of GHI" mortgages over MMC’s real and personal properties. The stipulations
were subsequently formalized in a separate document denominated Deed of Real Estate and Chattel
Mortgage on September 5, 1996. Thereafter, the Deed was registered on February 4, 2000. 36

We find both decisions critically relevant to the instant dispute. In fact, they should have guided the
courts below in the disposition of the controversy at their respective levels. To repeat, these decisions
respectively confirm the right of NAMAWU to its labor claims 37 and affirm the right of GHI to its financial
and mortgage claims over the real and personal properties of MMC, as will be explained below. The
assailed CA decision apparently failed to consider the impact of these two decisions on the case at bar.
Thus, we find it timely to reiterate that: "courts have also taken judicial notice of previous cases to
determine whether or not the case pending is a moot one or whether or not a previous ruling is applicable
to the case under consideration."38

However, the CA correctly assessed that the authority of the lower court to issue the challenged writ of
injunction depends on the validity of the third party’s (GHI’s) claim of ownership over the property subject
of the writ of execution issued by the labor department. Accordingly, the main inquiry addressed by the
CA decision was whether GHI could be treated as a third party or a stranger to the labor dispute, whose
properties were beyond the reach of the Writ of Execution dated December 18, 2001.39

In this light, all the more does it become imperative to take judicial notice of the two cases aforesaid, as
they provide the necessary perspective to determine whether GHI is such a party with a valid ownership
claim over the properties subject of the writ of execution. In Juaban v. Espina, 40 we held that "in some
instances, courts have also taken judicial notice of proceedings in other cases that are closely connected
to the matter in controversy. These cases may be so closely interwoven, or so clearly interdependent, as
to invoke a rule of judicial notice." The two cases that we have taken judicial notice of are of such
character, and our review of the instant case cannot stray from the findings and conclusions therein.

Having recognized these crucial Court rulings, situating the facts in proper perspective, we now proceed to
resolve the questions identified above.

The mortgage was not a sham.

Republic etc., v. "G" Holdings, Inc. acknowledged the existence of the Purchase and Sale Agreement
between the APT and the GHI, and recounts the facts attendant to that transaction, as follows:

The series of negotiations between the petitioner Republic of the Philippines, through the APT as its
trustee, and "G" Holdings culminated in the execution of a purchase and sale agreement on October 2,
1992. Under the agreement, the Republic undertook to sell and deliver 90% of the entire issued and
outstanding shares of MMC, as well as its company notes, to "G" Holdings in consideration of the purchase
price of P673,161,280. It also provided for a down payment of P98,704,000 with the balance divided into
four tranches payable in installment over a period of ten years."41

The "company notes" mentioned therein were actually the very same three (3) Promissory Notes
amounting to P550M, issued by MMC in favor of GHI. As already adverted to above, these notes uniformly
contained stipulations "establishing and constituting" mortgages over MMC’s real and personal properties.

It may be remembered that APT acquired the MMC from the PNB and the DBP. Then, in compliance with
its mandate to privatize government assets, APT sold the aforesaid MMC shares and notes to GHI. To
repeat, this Court has recognized this Purchase and Sale Agreement in Republic, etc., v. "G" Holdings,
Inc.

The participation of the Government, through APT, in this transaction is significant. Because the
Government had actively negotiated and, eventually, executed the agreement, then the transaction is
imbued with an aura of official authority, giving rise to the presumption of regularity in its execution. This
presumption would cover all related transactional acts and documents needed to consummate the
privatization sale, inclusive of the Promissory Notes. It is obvious, then, that the Government, through
APT, consented to the "establishment and constitution" of the mortgages on the assets of MMC in favor of
GHI, as provided in the notes. Accordingly, the notes (and the stipulations therein) enjoy the benefit of
the same presumption of regularity accorded to government actions. Given the Government consent
thereto, and clothed with the presumption of regularity, the mortgages cannot be characterized as sham,
fictitious or fraudulent.

Indeed, as mentioned above, the three (3) Promissory Notes, executed on October 2, 1992, "established
and constituted" in favor of GHI the following mortgages:

1. A mortgage over certain parcels of land, more particularly listed and described in the Sheriff’s
Certificate of Sale dated September 7, 1984 issued by the Ex-Officio Provincial Sheriff of Negros
Occidental, Rolando V. Ramirez, with office at Bacolod City following the auction sale conducted
pursuant to the provisions of Act 3135, a copy of which certificate of sale is hereto attached as
Annex "A" and made an integral part hereof;

2. A chattel mortgage over assets and personal properties more particularly listed and described in
the Sheriff’s Certificate of Sale dated September 7, 1984 issued by the Ex-Officio Provincial Sheriff
of Negros Occidental, Rolando V. Ramirez, with office at Bacolod City following the auction
conducted pursuant to the provision of Act 1508, a copy of which Certificate of Sale is hereto
attached as Annex "B" and made an integral part hereof.

3. Mortgages over assets listed in APT Specific catalogue GC-031 for MMC, a copy of which
Catalogue is hereby made an integral part hereof by way of reference, as well as assets presently
in use by MMC but which are not listed or included in paragraphs 1 and 2 above and shall include
all assets that may hereinafter be acquired by MMC.42

It is difficult to conceive that these mortgages, already existing in 1992, almost four (4) years before
NAMAWU filed its notice of strike, were a "fictitious" arrangement intended to defraud NAMAWU. After all,
they were agreed upon long before the seeds of the labor dispute germinated.

While it is true that the Deed of Real Estate and Chattel Mortgage was executed only on September 5,
1996, it is beyond cavil that this formal document of mortgage was merely a derivative of the original
mortgage stipulations contained in the Promissory Notes of October 2, 1992. The execution of this Deed in
1996 does not detract from, but instead reinforces, the manifest intention of the parties to "establish and
constitute" the mortgages on MMC’s real and personal properties.

Apparently, the move to execute a formal document denominated as the Deed of Real Estate and Chattel
Mortgage came about after the decision of the RTC of Manila in Civil Case No. 95-76132 became final in
mid-1996. This conclusion surfaces when we consider the genesis of Civil Case No. 95-76132 and
subsequent incidents thereto, as narrated in Republic, etc. v. "G" Holdings, Inc., viz:

Subsequently, a disagreement on the matter of when installment payments should commence arose
between the parties. The Republic claimed that it should be on the seventh month from the signing of the
agreement while "G" Holdings insisted that it should begin seven months after the fulfillment of the
closing conditions.

Unable to settle the issue, "G" Holdings filed a complaint for specific performance and damages with the
Regional Trial Court of Manila, Branch 49, against the Republic to compel it to close the sale in accordance
with the purchase and sale agreement. The complaint was docketed as Civil Case No. 95-76132.

During the pre-trial, the respective counsels of the parties manifested that the issue involved in the case
was one of law and submitted the case for decision. On June 11, 1996, the trial court rendered its
decision. It ruled in favor of "G" Holdings and held:
"In line with the foregoing, this Court having been convinced that the Purchase and Sale Agreement is
indeed subject to the final closing conditions prescribed by Stipulation No. 5.02 and conformably to Rule
39, Section 10 of the Rules of Court, accordingly orders that the Asset Privatization Trust execute the
corresponding Document of Transfer of the subject shares and financial notes and cause the actual
delivery of subject shares and notes to "G" Holdings, Inc., within a period of thirty (30) days from receipt
of this Decision, and after "G" Holdings Inc., shall have paid in full the entire balance, at its present value
of P241,702,122.86, computed pursuant to the prepayment provisions of the Agreement. Plaintiff shall
pay the balance simultaneously with the delivery of the Deed of Transfer and actual delivery of the shares
and notes.

SO ORDERED."

The Solicitor General filed a notice of appeal on behalf of the Republic on June 28, 1996. Contrary to the
rules of procedure, however, the notice of appeal was filed with the Court of Appeals (CA), not with the
trial court which rendered the judgment appealed from.

No other judicial remedy was resorted to until July 2, 1999 when the Republic, through the APT, filed a
petition for annulment of judgment with the CA. It claimed that the decision should be annulled on the
ground of abuse of discretion amounting to lack of jurisdiction on the part of the trial court. x x x

Finding that the grounds necessary for the annulment of judgment were inexistent, the appellate court
dismissed the petition. x x x x43

With the RTC decision having become final owing to the failure of the Republic to perfect an appeal, it
may have become necessary to execute the Deed of Real Estate and Chattel Mortgage on September 5,
1996, in order to enforce the trial court’s decision of June 11, 1996. This appears to be the most plausible
explanation for the execution of the Deed of Real Estate and Chattel Mortgage only in September 1996.
Even as the parties had already validly constituted the mortgages in 1992, as explicitly provided in the
Promissory Notes, a specific deed of mortgage in a separate document may have been deemed necessary
for registration purposes. Obviously, this explanation is more logical and more sensible than the strained
conjecture that the mortgage was executed on September 5, 1996 only for the purpose of defrauding
NAMAWU.

It is undeniable that the Deed of Real Estate and Chattel Mortgage was formally documented two weeks
after NAMAWU filed its notice of strike against MMC on August 23, 1996. However, this fact alone cannot
give rise to an adverse inference for two reasons. First, as discussed above, the mortgages had already
been "established and constituted" as early as October 2, 1992 in the Promissory Notes, showing the clear
intent of the parties to impose a lien upon MMC’s properties. Second, the mere filing of a notice of strike
by NAMAWU did not, as yet, vest in NAMAWU any definitive right that could be prejudiced by the
execution of the mortgage deed.

The fact that MMC’s obligation to GHI is not reflected in the former’s financial statements─a circumstance
made capital of by NAMAWU in order to cast doubt on the validity of the mortgage deed─is of no moment.
By itself, it does not provide a sufficient basis to invalidate this public document. To say otherwise, and to
invalidate the mortgage deed on this pretext, would furnish MMC a convenient excuse to absolve itself of
its mortgage obligations by adopting the simple strategy of not including the obligations in its financial
statements. It would ignore our ruling in Republic, etc. v. "G" Holdings, Inc., which obliged APT to deliver
the MMC shares and financial notes to GHI. Besides, the failure of the mortgagor to record in its financial
statements its loan obligations is surely not an essential element for the validity of mortgage agreements,
nor will it independently affect the right of the mortgagee to foreclose.

Contrary to the CA decision, Tanongon v. Samson44 is not "on all fours" with the instant case. There are
material differences between the two cases. At issue in Tanongon was a third-party claim arising from a
Deed of Absolute Sale executed between Olizon and Tanongon on July 29, 1997, after the NLRC decision
became final and executory on April 29, 1997. In the case at bar, what is involved is a loan with mortgage
agreement executed on October 2, 1992, well ahead of the union’s notice of strike on August 23, 1996.
No presumption of regularity inheres in the deed of sale in Tanongon, while the participation of APT in this
case clothes the transaction in 1992 with such a presumption that has not been successfully rebutted. In
Tanongon, the conduct of a full-blown trial led to the finding─duly supported by evidence─that the
voluntary sale of the assets of the judgment debtor was made in bad faith. Here, no trial was held, owing
to the motion to dismiss filed by NAMAWU, and the CA failed to consider the factual findings made by this
Court in Republic, etc. v. "G" Holdings, Inc. Furthermore, in Tanongon, the claimant did not exercise his
option to file a separate action in court, thus allowing the NLRC Sheriff to levy on execution and to
determine the rights of third-party claimants.45 In this case, a separate action was filed in the regular
courts by GHI, the third-party claimant. Finally, the questioned transaction in Tanongon was a plain,
voluntary transfer in the form of a sale executed by the judgment debtor in favor of a dubious third-party,
resulting in the inability of the judgment creditor to satisfy the judgment. On the other hand, this case
involves an involuntary transfer (foreclosure of mortgage) arising from a loan obligation that well-existed
long before the commencement of the labor claims of the private respondent.

Three other circumstances have been put forward by the CA to support its conclusion that the mortgage
contract is a sham. First, the CA considered it highly suspect that the Deed of Real Estate and Chattel
Mortgage was registered only on February 4, 2000, "three years after its execution, and almost one
month after the Supreme Court rendered its decision in the labor dispute." 46 Equally suspicious, as far as
the CA is concerned, is the fact that the mortgages were foreclosed on July 31, 2001, after the DOLE had
already issued a Partial Writ of Execution on May 9, 2001.47 To the appellate court, the timing of the
registration of the mortgage deed was too coincidental, while the date of the foreclosure signified that it
was "effected precisely to prevent the satisfaction of the judgment awards."48 Furthermore, the CA found
that the mortgage deed itself was executed without any consideration, because at the time of its
execution, all the assets of MMC had already been transferred to GHI.49

These circumstances provided the CA with sufficient justification to apply Article 1387 of the Civil Code on
presumed fraudulent transactions, and to declare that the mortgage deed was void for being simulated
and fictitious.50

We do not agree. We find this Court’s ruling in MR Holdings, Ltd. v. Sheriff Bajar51 pertinent and
instructive:

Article 1387 of the Civil Code of the Philippines provides:

"Art. 1387. All contracts by virtue of which the debtor alienates property by gratuitous title are presumed
to have been entered into in fraud of creditors, when the donor did not reserve sufficient property to pay
all debts contracted before the donation.

Alienations by onerous title are also presumed fraudulent when made by persons against whom some
judgment has been rendered in any instance or some writ of attachment has been issued. The decision or
attachment need not refer to the property alienated, and need not have been obtained by the party
seeking rescission.

In addition to these presumptions, the design to defraud creditors may be proved in any other manner
recognized by law and of evidence."

This article presumes the existence of fraud made by a debtor. Thus, in the absence of satisfactory
evidence to the contrary, an alienation of a property will be held fraudulent if it is made after a judgment
has been rendered against the debtor making the alienation. This presumption of fraud is not conclusive
and may be rebutted by satisfactory and convincing evidence. All that is necessary is to establish
affirmatively that the conveyance is made in good faith and for a sufficient and valuable consideration.

The "Assignment Agreement" and the "Deed of Assignment" were executed for valuable considerations.
Patent from the "Assignment Agreement" is the fact that petitioner assumed the payment of
US$18,453,450.12 to ADB in satisfaction of Marcopper’s remaining debt as of March 20, 1997. Solidbank
cannot deny this fact considering that a substantial portion of the said payment, in the sum of
US$13,886,791.06, was remitted in favor of the Bank of Nova Scotia, its major stockholder.

The facts of the case so far show that the assignment contracts were executed in good faith. The
execution of the "Assignment Agreement" on March 20, 1997 and the "Deed of Assignment" on December
8,1997 is not the alpha of this case. While the execution of these assignment contracts almost coincided
with the rendition on May 7, 1997 of the Partial Judgment in Civil Case No. 96-80083 by the Manila RTC,
however, there was no intention on the part of petitioner to defeat Solidbank’s claim. It bears reiterating
that as early as November 4, 1992, Placer Dome had already bound itself under a "Support and Standby
Credit Agreement" to provide Marcopper with cash flow support for the payment to ADB of its obligations.
When Marcopper ceased operations on account of disastrous mine tailings spill into the Boac River and
ADB pressed for payment of the loan, Placer Dome agreed to have its subsidiary, herein petitioner, pay
ADB the amount of US$18,453,450.12.
Thereupon, ADB and Marcopper executed, respectively, in favor of petitioner an "Assignment Agreement"
and a "Deed of Assignment." Obviously, the assignment contracts were connected with transactions that
happened long before the rendition in 1997 of the Partial Judgment in Civil Case No. 96-80083 by the
Manila RTC. Those contracts cannot be viewed in isolation. If we may add, it is highly inconceivable that
ADB, a reputable international financial organization, will connive with Marcopper to feign or simulate a
contract in 1992 just to defraud Solidbank for its claim four years thereafter. And it is equally incredible
for petitioner to be paying the huge sum of US$18,453,450.12 to ADB only for the purpose of defrauding
Solidbank of the sum of P52,970,756.89.

It is said that the test as to whether or not a conveyance is fraudulent is ― does it prejudice the rights of
creditors? We cannot see how Solidbank’s right was prejudiced by the assignment contracts considering
that substantially all of Marcopper’s properties were already covered by the registered "Deed of Real
Estate and Chattel Mortgage" executed by Marcopper in favor of ADB as early as November 11, 1992. As
such, Solidbank cannot assert a better right than ADB, the latter being a preferred creditor. It is basic that
mortgaged properties answer primarily for the mortgaged credit, not for the judgment credit of the
mortgagor’s unsecured creditor. Considering that petitioner assumed Marcopper’s debt to ADB, it follows
that Solidbank’s right as judgment creditor over the subject properties must give way to that of the
former.52

From this ruling in MR Holdings, we can draw parallel conclusions. The execution of the subsequent Deed
of Real Estate and Chattel Mortgage on September 5, 1996 was simply the formal documentation of what
had already been agreed in the seminal transaction (the Purchase and Sale Agreement) between APT and
GHI. It should not be viewed in isolation, apart from the original agreement of October 2, 1992. And it
cannot be denied that this original agreement was supported by an adequate consideration. The APT was
even ordered by the court to deliver the shares and financial notes of MMC in exchange for the payments
that GHI had made.

It was also about this time, in 1996, that NAMAWU filed a notice of strike to protest non-payment of its
rightful labor claims.53 But, as already mentioned, the outcome of that labor dispute was yet
unascertainable at that time, and NAMAWU could only have hoped for, or speculated about, a favorable
ruling. To paraphrase MR Holdings, we cannot see how NAMAWU’s right was prejudiced by the Deed of
Real Estate and Chattel Mortgage, or by its delayed registration, when substantially all of the properties of
MMC were already mortgaged to GHI as early as October 2, 1992. Given this reality, the Court of Appeals
had no basis to conclude that this Deed of Real Estate and Chattel Mortgage, by reason of its late
registration, was a simulated or fictitious contract.

The importance of registration and its binding effect is stated in Section 51 of the Property Registration
Decree or Presidential Decree (P.D.) No. 1529,54 which reads:

SECTION 51. Conveyance and other dealings by registered owner.—An owner of registered land may
convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He
may use such forms, deeds, mortgages, leases or other voluntary instrument as are sufficient in law. But
no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or effect
registered land, shall take effect as a conveyance or bind the land, but shall operate only as a contract
between the parties and as evidence of authority to the Registry of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons are
concerned, and in all cases under this Decree, the registration shall be made in the Office of the Register
of Deeds for the province or the city where the land lies.55

Under the Torrens system, registration is the operative act which gives validity to the transfer or creates a
lien upon the land. Further, entrenched in our jurisdiction is the doctrine that registration in a public
registry creates constructive notice to the whole world.56 Thus, Section 51 of Act No. 496, as amended by
Section 52 of P.D. No. 1529, provides:

SECTION 52. Constructive notice upon registration.—Every conveyance, mortgage, lease, lien,
attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or
entered in the Office of the Register of Deeds for the province or city where the land to which it relates
lies, be constructive notice to all persons from the time of such registering, filing or entering.

But, there is nothing in Act No. 496, as amended by P.D. No. 1529, that imposes a period within which to
register annotations of "conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or
entry affecting registered land." If liens were not so registered, then it "shall operate only as a contract
between the parties and as evidence of authority to the Registry of Deeds to make registration." If
registered, it "shall be the operative act to convey or affect the land insofar as third persons are
concerned." The mere lapse of time from the execution of the mortgage document to the moment of its
registration does not affect the rights of a mortgagee.

Neither will the circumstance of GHI’s foreclosure of MMC’s properties on July 31, 2001, or after the DOLE
had already issued a Partial Writ of Execution on May 9, 2001 against MMC, support the conclusion of the
CA that GHI’s act of foreclosing on MMC’s properties was "effected to prevent satisfaction of the judgment
award." GHI’s mortgage rights, constituted in 1992, antedated the Partial Writ of Execution by nearly ten
(10) years. GHI’s resort to foreclosure was a legitimate enforcement of a right to liquidate a bona fide
debt. It was a reasonable option open to a mortgagee which, not being a party to the labor dispute
between NAMAWU and MMC, stood to suffer a loss if it did not avail itself of the remedy of foreclosure.

The well-settled rule is that a mortgage lien is inseparable from the property mortgaged. 57 While it is true
that GHI’s foreclosure of MMC’s mortgaged properties may have had the "effect to prevent satisfaction of
the judgment award against the specific mortgaged property that first answers for a mortgage obligation
ahead of any subsequent creditors," that same foreclosure does not necessarily translate to having been
"effected to prevent satisfaction of the judgment award" against MMC.

Likewise, we note the narration of subsequent facts contained in the Comment of the Office of the
Solicitor General. Therein, it is alleged that after the Partial Writ of Execution was issued on May 9, 2001,
a motion for reconsideration was filed by MMC; that the denial of the motion was appealed to the CA; that
when the appeal was dismissed by the CA on January 24, 2002, it eventually became the subject of a
review petition before this Court, docketed as G.R. No. 157696; and that G.R. No. 157696 was decided by
this Court only on February 9, 2006.

This chronology of subsequent events shows that February 9, 2006 would have been the earliest date for
the unimpeded enforcement of the Partial Writ of Execution, as it was only then that this Court resolved
the issue. This happened four and a half years after July 31, 2001, the date when GHI foreclosed on the
mortgaged properties. Thus, it is not accurate to say that the foreclosure made on July 31, 2001 was
"effected [only] to prevent satisfaction of the judgment award."

We also observe the error in the CA’s finding that the 1996 Deed of Real Estate and Chattel Mortgage was
not supported by any consideration since at the time the deed was executed, "all the real and personal
property of MMC had already been transferred in the hands of G Holdings." 58 It should be remembered
that the Purchase and Sale Agreement between GHI and APT involved large amounts (P550M) and even
spawned a subsequent court action (Civil Case No. 95-76132, RTC of Manila). Yet, nowhere in the
Agreement or in the RTC decision is there any mention of real and personal properties of MMC being
included in the sale to GHI in 1992. These properties simply served as mortgaged collateral for the 1992
Promissory Notes.59 The Purchase and Sale Agreement and the Promissory Notes themselves are the best
evidence that there was ample consideration for the mortgage.

Thus, we must reject the conclusion of the CA that the Deed of Real Estate and Chattel Mortgage
executed in 1996 was a simulated transaction.

On the issue of whether there had been an effective levy upon the properties of GHI.

The well-settled principle is that the rights of a mortgage creditor over the mortgaged properties are
superior to those of a subsequent attaching creditor. In Cabral v. Evangelista,60 this Court declared that:

Defendants-appellants purchase of the mortgaged chattels at the public sheriff's sale and the delivery of
the chattels to them with a certificate of sale did not give them a superior right to the chattels as against
plaintiffs-mortgagees. Rule 39, Section 22 of the old Rules of Court (now Rule 39, Section 25 of the
Revised Rules), cited by appellants precisely provides that "the sale conveys to the purchaser all the right
which the debtor had in such property on the day the execution or attachment was levied." It has long
been settled by this Court that "The right of those who so acquire said properties should not and can not
be superior to that of the creditor who has in his favor an instrument of mortgage executed with the
formalities of the law, in good faith, and without the least indication of fraud. This is all the more true in
the present case, because, when the plaintiff purchased the automobile in question on August 22, 1933,
he knew, or at least, it is presumed that he knew, by the mere fact that the instrument of mortgage,
Exhibit 2, was registered in the office of the register of deeds of Manila, that said automobile was subject
to a mortgage lien. In purchasing it, with full knowledge that such circumstances existed, it should be
presumed that he did so, very much willing to respect the lien existing thereon, since he should not have
expected that with the purchase, he would acquire a better right than that which the vendor then had." In
another case between two mortgagees, we held that "As between the first and second mortgagees,
therefore, the second mortgagee has at most only the right to redeem, and even when the second
mortgagee goes through the formality of an extrajudicial foreclosure, the purchaser acquires no more
than the right of redemption from the first mortgagee." The superiority of the mortgagee's lien over that
of a subsequent judgment creditor is now expressly provided in Rule 39, Section 16 of the Revised Rules
of Court, which states with regard to the effect of levy on execution as to third persons that "The levy on
execution shall create a lien in favor of the judgment creditor over the right, title and interest of the
judgment debtor in such property at the time of the levy, subject to liens or encumbrances then existing."

Even in the matter of possession, mortgagees over chattel have superior, preferential and paramount
rights thereto, and the mortgagor has mere rights of redemption. 61

Similar rules apply to cases of mortgaged real properties that are registered. Since the properties were
already mortgaged to GHI, the only interest remaining in the mortgagor was its right to redeem said
properties from the mortgage. The right of redemption was the only leviable or attachable property right
of the mortgagor in the mortgaged real properties. We have held that —

The main issue in this case is the nature of the lien of a judgment creditor, like the petitioner, who has
levied an attachment on the judgment debtor's (CMI) real properties which had been mortgaged to a
consortium of banks and were subsequently sold to a third party, Top Rate.

xxxx

The sheriff's levy on CMI's properties, under the writ of attachment obtained by the petitioner, was
actually a levy on the interest only of the judgment debtor CMI on those properties. Since the properties
were already mortgaged to the consortium of banks, the only interest remaining in the mortgagor CMI
was its right to redeem said properties from the mortgage. The right of redemption was the only leviable
or attachable property right of CMI in the mortgaged real properties. The sheriff could not have attached
the properties themselves, for they had already been conveyed to the consortium of banks by mortgage
(defined as a "conditional sale"), so his levy must be understood to have attached only the mortgagor's
remaining interest in the mortgaged property — the right to redeem it from the mortgage. 62

xxxx

There appears in the record a factual contradiction relating to whether the foreclosure by GHI on July 13,
200163 over some of the contested properties came ahead of the levy thereon, or the reverse. NAMAWU
claims that the levy on two trucks was effected on June 22, 2001,64 which GHI disputes as a misstatement
because the levy was attempted on July 18, 2002, and not 200165 What is undisputed though is that the
mortgage of GHI was registered on February 4, 2000,66 well ahead of any levy by NAMAWU. Prior
registration of a lien creates a preference, as the act of registration is the operative act that conveys and
affects the land,67 even against subsequent judgment creditors, such as respondent herein. Its
registration of the mortgage was not intended to defraud NAMAWU of its judgment claims, since even the
courts were already judicially aware of its existence since 1992. Thus, at that moment in time, with the
registration of the mortgage, either NAMAWU had no properties of MMC to attach because the same had
been previously foreclosed by GHI as mortgagee thereof; or by virtue of the DOLE’s levy to enforce
NAMAWU’s claims, the latter’s rights are subject to the notice of the foreclosure on the subject properties
by a prior mortgagee’s right. GHI’s mortgage right had already been registered by then, and "it is basic
that mortgaged properties answer primarily for the mortgaged credit, not for the judgment credit of the
mortgagor’s unsecured creditor."68

On the issue of piercing the veil of corporate fiction.

The CA found that:

"Ordinarily, the interlocking of directors and officers in two different corporations is not a conclusive
indication that the corporations are one and the same for purposes of applying the doctrine of piercing the
veil of corporate fiction. However, when the legal fiction of the separate corporate personality is abused,
such as when the same is used for fraudulent or wrongful ends, the courts have not hesitated to pierce
the corporate veil (Francisco vs. Mejia, 362 SCRA 738). In the case at bar, the Deed of Real Estate and
Chattel Mortgage was entered into between MMC and G Holdings for the purpose of evading the
satisfaction of the legitimate claims of the petitioner against MMC. The notion of separate personality is
clearly being utilized by the two corporations to perpetuate the violation of a positive legal duty arising
from a final judgment to the prejudice of the petitioner’s right." 69

Settled jurisprudence70 has it that –

"(A) corporation, upon coming into existence, is invested by law with a personality separate and distinct
from those persons composing it as well as from any other legal entity to which it may be related. By this
attribute, a stockholder may not, generally, be made to answer for acts or liabilities of the said
corporation, and vice versa. This separate and distinct personality is, however, merely a fiction created by
law for convenience and to promote the ends of justice. For this reason, it may not be used or invoked for
ends subversive to the policy and purpose behind its creation or which could not have been intended by
law to which it owes its being. This is particularly true when the fiction is used to defeat public
convenience, justify wrong, protect fraud, defend crime, confuse legitimate legal or judicial issues,
perpetrate deception or otherwise circumvent the law. This is likewise true where the corporate entity is
being used as an alter ego, adjunct, or business conduit for the sole benefit of the stockholders or of
another corporate entity. In all these cases, the notion of corporate entity will be pierced or disregarded
with reference to the particular transaction involved.

Given this jurisprudential principle and the factual circumstances obtaining in this case, we now ask: Was
the CA correct in piercing the veil of corporate identity of GHI and MMC?

In our disquisition above, we have shown that the CA’s finding that there was a "simulated mortgage"
between GHI and MMC to justify a wrong or protect a fraud has struggled vainly to find a foothold when
confronted with the ruling of this Court in Republic v. "G" Holdings, Inc.

The negotiations between the GHI and the Government--through APT, dating back to 1992--culminating
in the Purchase and Sale Agreement, cannot be depicted as a contrived transaction. In fact, in the said
Republic, etc., v. "G" Holdings, Inc., this Court adjudged that GHI was entitled to its rightful claims─ not
just to the shares of MMC itself, or just to the financial notes that already contained the mortgage clauses
over MMCs disputed assets, but also to the delivery of those instruments. Certainly, we cannot impute to
this Court’s findings on the case any badge of fraud. Thus, we reject the CA’s conclusion that it was right
to pierce the veil of corporate fiction, because the foregoing circumstances belie such an inference.
Furthermore, we cannot ascribe to the Government, or the APT in particular, any undue motive to
participate in a transaction designed to perpetrate fraud. Accordingly, we consider the CA interpretation
unwarranted.

We also cannot agree that the presumption of fraud in Article 1387 of the Civil Code relative to property
conveyances, when there was already a judgment rendered or a writ of attachment issued, authorizes
piercing the veil of corporate identity in this case. We find that Article 1387 finds less application to an
involuntary alienation such as the foreclosure of mortgage made before any final judgment of a court. We
thus hold that when the alienation is involuntary, and the foreclosure is not fraudulent because the
mortgage deed has been previously executed in accordance with formalities of law, and the foreclosure is
resorted to in order to liquidate a bona fide debt, it is not the alienation by onerous title contemplated in
Article 1387 of the Civil Code wherein fraud is presumed.

Since the factual antecedents of this case do not warrant a finding that the mortgage and loan
agreements between MMC and GHI were simulated, then their separate personalities must be recognized.
To pierce the veil of corporate fiction would require that their personalities as creditor and debtor be
conjoined, resulting in a merger of the personalities of the creditor (GHI) and the debtor (MMC) in one
person, such that the debt of one to the other is thereby extinguished. But the debt embodied in the 1992
Financial Notes has been established, and even made subject of court litigation (Civil Case No. 95-76132,
RTC Manila). This can only mean that GHI and MMC have separate corporate personalities.

Neither was MMC used merely as an alter ego, adjunct, or business conduit for the sole benefit of GHI, to
justify piercing the former’s veil of corporate fiction so that the latter could be held liable to claims of
third-party judgment creditors, like NAMAWU. In this regard, we find American jurisprudence persuasive.
In a decision by the Supreme Court of New York71 bearing upon similar facts, the Court denied piercing
the veil of corporate fiction to favor a judgment creditor who sued the parent corporation of the debtor,
alleging fraudulent corporate asset-shifting effected after a prior final judgment. Under a factual
background largely resembling this case at bar, viz:

In this action, plaintiffs seek to recover the balance due under judgments they obtained against Lake
George Ventures Inc. (hereinafter LGV), a subsidiary of defendant that was formed to develop the Top O’
the World resort community overlooking Lake George, by piercing the corporate veil or upon the theory
that LGV's transfer of certain assets constituted fraudulent transfers under the Debtor and Creditor Law.
We previously upheld Supreme Court's denial of defendant's motion for summary judgment dismissing the
complaint (252 A.D.2d 609, 675 N.Y.S.2d 234) and the matter proceeded to a nonjury trial. Supreme
Court thereafter rendered judgment in favor of defendant upon its findings that, although defendant
dominated LGV, it did not use that domination to commit a fraud or wrong on plaintiffs. Plaintiffs
appealed.1avvphi1

The trial evidence showed that LGV was incorporated in November 1985. Defendant's principal, Francesco
Galesi, initially held 90% of the stock and all of the stock was ultimately transferred to defendant. Initial
project funding was provided through a $2.5 million loan from Chemical Bank, secured by defendant's
guarantee of repayment of the loan and completion of the project. The loan proceeds were utilized to
purchase the real property upon which the project was to be established. Chemical Bank thereafter loaned
an additional $3.5 million to LGV, again guaranteed by defendant, and the two loans were consolidated
into a first mortgage loan of $6 million. In 1989, the loan was modified by splitting the loan into a $1.9
term note on which defendant was primary obligor and a $4.1 million project note on which LGV was the
obligor and defendant was a guarantor.

Due to LGV's lack of success in marketing the project's townhouses and in order to protect itself from the
exercise of Chemical Bank's enforcement remedies, defendant was forced to make monthly installments of
principal and interest on LGV's behalf. Ultimately, defendant purchased the project note from Chemical
Bank for $3.1 million, paid the $1.5 million balance on the term note and took an assignment of the first
mortgage on the project's realty. After LGV failed to make payments on the indebtedness over the course
of the succeeding two years, defendant brought an action to foreclose its mortgage. Ultimately, defendant
obtained a judgment of foreclosure and sale in the amount of $6,070,246.50. Defendant bid in the
property at the foreclosure sale and thereafter obtained a deficiency judgment in the amount of
$3,070,246.50.

Following the foreclosure sale, LGV transferred to defendant all of the shares of Top of the World Water
Company, a separate entity that had been organized to construct and operate the water supply and
delivery system for the project, in exchange for a $950,000 reduction in the deficiency judgment.

the U.S. Supreme Court of New York held—

Based on the foregoing, and accepting that defendant exercised complete domination and control over
LGV, we are at a loss as to how plaintiffs perceive themselves to have been inequitably affected by
defendant's foreclosure action against LGV, by LGV's divestiture of the water company stock or the sports
complex property, or by defendant's transfer to LGV of a third party's uncollectible note, accomplished
solely for tax purposes. It is undisputed that LGV was, and for some period of time had been, unable to
meet its obligations and, at the time of the foreclosure sale, liens against its property exceeded the value
of its assets by several million dollars, even including the water company and sports complex at the
values plaintiffs would assign to them. In fact, even if plaintiffs' analysis were utilized to eliminate the
entire $3 million deficiency judgment, the fact remains that subordinate mortgages totaling nearly an
additional $2 million have priority over plaintiffs' judgments.

As properly concluded by Supreme Court, absent a finding of any inequitable consequence to plaintiffs,
both causes of action pleaded in the amended complaint must fail. Fundamentally, a party seeking to
pierce the corporate veil must show complete domination and control of the subsidiary by the parent and
also that such domination was used to commit a fraud or wrong against the plaintiff that resulted in the
plaintiff's injury ( 252 A.D.2d 609, 610, 675 N.Y.S.2d 234, supra; see, Matter of Morris v. New York
State Dept. of Taxation & Fin., 82 N.Y.2d 135, 141, 603 N.Y.S.2d 807, 623 N.E.2d 1157). Notably,
"[e]vidence of domination alone does not suffice without an additional showing that it led to inequity,
fraud or malfeasance" (TNS Holdings v. MKI Sec. Corp., 92 N.Y.2d 335, 339, 680 N.Y.S.2d 891, 703
N.E.2d 749).

xxxx

In reaching that conclusion, we specifically reject a number of plaintiffs' assertions, including the entirely
erroneous claims that our determination on the prior appeal (252 A.D.2d 609, 675 N.Y.S.2d 234, supra)
set forth a "roadmap" for the proof required at trial and mandated a verdict in favor of plaintiffs upon their
production of evidence that supported the decision's "listed facts". To the contrary, our decision was
predicated upon the existence of such evidence, absent which we would have granted summary judgment
in favor of defendant. We are equally unpersuaded by plaintiffs' continued reliance upon defendant's
December 1991 unilateral conversion of its intercompany loans with LGV from debt to equity, which
constituted nothing more than a "bookkeeping transaction" and had no apparent effect on LGV's
obligations to defendant or defendant's right to foreclose on its mortgage. 72

This doctrine is good law under Philippine jurisdiction.

In Concept Builders, Inc. v. National Labor Relations Commission,73 we laid down the test in determining
the applicability of the doctrine of piercing the veil of corporate fiction, to wit:

1. Control, not mere majority or complete control, but complete domination, not only of finances
but of policy and business practice in respect to the transaction attacked so that the corporate
entity as to this transaction had at the time no separate mind, will or existence of its own.

2. Such control must have been used by the defendant to commit fraud or wrong, to perpetuate
the violation of a statutory or other positive legal duty, or dishonest and, unjust act in
contravention of plaintiffs legal rights; and,

3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss
complained of.

xxxx

Time and again, we have reiterated that mere ownership by a single stockholder or by another
corporation of all or nearly all of the capital stock of a corporation is not, by itself, a sufficient ground for
disregarding a separate corporate personality. 74 It is basic that a corporation has a personality separate
and distinct from that composing it as well as from that of any other legal entity to which it may be
related. Clear and convincing evidence is needed to pierce the veil of corporate fiction. 75

In this case, the mere interlocking of directors and officers does not warrant piercing the separate
corporate personalities of MMC and GHI. Not only must there be a showing that there was majority or
complete control, but complete domination, not only of finances but of policy and business practice in
respect to the transaction attacked, so that the corporate entity as to this transaction had at the time no
separate mind, will or existence of its own. The mortgage deed transaction attacked as a basis for piercing
the corporate veil was a transaction that was an offshoot, a derivative, of the mortgages earlier
constituted in the Promissory Notes dated October 2, 1992. But these Promissory Notes with mortgage
were executed by GHI with APT in the name of MMC, in a full privatization process. It appears that if there
was any control or domination exercised over MMC, it was APT, not GHI, that wielded it. Neither can we
conclude that the constitution of the loan nearly four (4) years prior to NAMAWU’s notice of strike could
have been the proximate cause of the injury of NAMAWU for having been deprived of MMC’s corporate
assets.

On the propriety of injunction to prevent execution by the NLRC on the properties of third-party claimants

It is settled that a Regional Trial Court can validly issue a Temporary Restraining Order (TRO) and, later, a
writ of preliminary injunction to prevent enforcement of a writ of execution issued by a labor tribunal on
the basis of a third-party’s claim of ownership over the properties levied upon. 76 While, as a rule, no
temporary or permanent injunction or restraining order in any case involving or growing out of a labor
dispute shall be issued by any court--where the writ of execution issued by a labor tribunal is sought to be
enforced upon the property of a stranger to the labor dispute, even upon a mere prima facie showing of
ownership of such claimant--a separate action for injunctive relief against such levy may be maintained in
court, since said action neither involves nor grows out of a labor dispute insofar as the third party is
concerned.77 Instructively, National Mines and Allied Workers’ Union v. Vera78

Petitioners' reliance on the provision of Art. 254 of the New Labor Code (herein earlier quoted) which
prohibits injunctions or restraining orders in any case involving or growing out of a 'labor dispute' is not
well-taken. This has no application to the case at bar. Civil Case No. 2749 is one which neither "involves"
nor "grows out" of a labor dispute. What 'involves' or 'grows out' of a labor dispute is the NLRC case
between petitioners and the judgment debtor, Philippine Iron Mines. The private respondents are not
parties to the said NLRC case. Civil Case No. 2749 does not put in issue either the fact or validity of the
proceeding in theNLRC case nor the decision therein rendered, much less the writ of execution issued
thereunder. It does not seek to enjoin the execution of the decision against the properties of the
judgment debtor. What is sought to be tried in Civil Case No. 2749 is whether the NLRC's decision and
writ of execution, above mentioned, shall be permitted to be satisfied against properties of private
respondents, and not of the judgment debtor named in the NLRC decision and writ of execution. Such a
recourse is allowed under the provisions of Section 17, Rule 39 of the Rules of Court.

To sustain petitioners' theory will inevitably lead to disastrous consequences and lend judicial imprimatur
to deprivation of property without due process of law. Simply because a writ of execution was issued by
the NLRC does not authorize the sheriff implementing the same to levy on anybody's property. To deny
the victim of the wrongful levy, the recourse such as that availed of by the herein private respondents,
under the pretext that no court of general jurisdiction can interfere with the writ of execution issued in a
labor dispute, will be sanctioning a greater evil than that sought to be avoided by the Labor Code
provision in question. Certainly, that could not have been the intendment of the law creating the NLRC.
For well-settled is the rule that the power of a court to execute its judgment extends only over properties
unquestionably belonging to the judgment debtor."

Likewise, since the third-party claimant is not one of the parties to the action, he cannot, strictly
speaking, appeal from the order denying his claim, but he should file a separate reivindicatory action
against the execution creditor or the purchaser of the property after the sale at public auction, or a
complaint for damages against the bond filed by the judgment creditor in favor of the sheriff. 79

A separate civil action for recovery of ownership of the property would not constitute interference with the
powers or processes of the labor tribunal which rendered the judgment to execute upon the levied
properties. The property levied upon being that of a stranger is not subject to levy. Thus, a separate
action for recovery, upon a claim and prima facie showing of ownership by the petitioner, cannot be
considered as interference.80

Upon the findings and conclusions we have reached above, petitioner is situated squarely as such third-
party claimant. The questioned restraining order of the lower court, as well as the order granting
preliminary injunction, does not constitute interference with the powers or processes of the labor
department. The registration of the mortgage document operated as notice to all on the matter of the
mortgagee’s prior claims. Official proceedings relative to the foreclosure of the subject properties
constituted a prima facie showing of ownership of such claimant to support the issuance of injunctive
reliefs.

As correctly held by the lower court:

The subject incidents for TRO and/or Writ of Injunction were summarily heard and in resolving the same,
the Court believes, that the petitioner has a clear and unmistakable right over the levied properties. The
existence of the subject Deed of Real Estate and Chattel Mortgage, the fact that petitioner initiated a
foreclosure of said properties before the Clerk of Court and Ex-Officio Sheriff, RTC Branch 61, Kabankalan
City on July 13, 2001, the fact that said Ex-Officio Sheriff and the Clerk of Court issue a Notice of
Foreclosure, Possession and Control over said mortgaged properties on July 19, 2001 and the fact that a
Sheriff’s Certificate of Sale was issued on December 3, 2001 are the basis of its conclusion. Unless said
mortgage contract is annulled or declared null and void, the presumption of regularity of transaction must
be considered and said document must be looked [upon] as valid.

Notably, the Office of the Solicitor General also aptly observed that when the respondent maintained that
the Deed of Real Estate and Chattel mortgage was entered into in fraud of creditors, it thereby admitted
that the mortgage was not void, but merely rescissible under Article 1381(3) of the Civil Code; and,
therefore, an independent action is needed to rescind the contract of mortgage. 81 We, however, hold that
such an independent action cannot now be maintained, because the mortgage has been previously
recognized to exist, with a valid consideration, in Republic, etc., v. "G" Holdings, Inc.

A final word

The Court notes that the case filed with the lower court involves a principal action for injunction to
prohibit execution over properties belonging to a third party not impleaded in the legal dispute between
NAMAWU and MMC. We have observed, however, that the lower court and the CA failed to take judicial
notice of, or to consider, our Decisions in Republic, etc., v. "G" Holdings, Inc., and Maricalum Mining
Corporation v. Brion and NAMAWU, in which we respectively recognized the entitlement of GHI to the
shares and the company notes of MMC (under the Purchase and Sale Agreement), and the rights of
NAMAWU to its labor claims. At this stage, therefore, neither the lower court nor the CA, nor even this
Court, can depart from our findings in those two cases because of the doctrine of stare decisis.
From our discussion above, we now rule that the trial court, in issuing the questioned orders, did not
commit grave abuse of discretion, because its issuance was amply supported by factual and legal bases.

We are not unmindful, however, of the fact that the labor claims of NAMAWU, acknowledged by this Court
in Maricalum, still awaits final execution. As success fades from NAMAWU’s efforts to execute on the
properties of MMC, which were validly foreclosed by GHI, we see that NAMAWU always had, and may still
have, ample supplemental remedies found in Rule 39 of the Rules of Court in order to protect its rights
against MMC. These include the examination of the judgment obligor when judgment is unsatisfied, 82 the
examination of the obligors of judgment obligors,83 or even the resort to receivership. 841avvphi1

While, theoretically, this case is not ended by this decision, since the lower court is still to try the case
filed with it and decide it on the merits, the matter of whether the mortgage and foreclosure of the assets
that are the subject of said foreclosure is ended herein, for the third and final time. So also is the
consequential issue of the separate and distinct personalities of GHI and MMC. Having resolved these
principal issues with certainty, we find no more need to remand the case to the lower court, only for the

purpose of resolving again the matter of whether GHI owns the properties that were the subject of the
latter’s foreclosure.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals dated October 14, 2003 is
SET ASIDE. The Omnibus Order dated December 4, 2002 of the Regional Trial Court, Branch 61 of
Kabankalan City, Negros Occidental is AFFIRMED.

G.R. No. 178479               October 23, 2009

METROPOLITAN BANK & TRUST CO., Petitioner,

vs.
NIKKO SOURCES INTERNATIONAL CORP., and SUPERMAX PHILIPPINES, INC., Respondents.

DECISION

CARPIO MORALES, J.:

Respondent Supermax Philippines, Inc. (Supermax) obtained loans in 1999 from Metropolitan Bank and
Trust Company (petitioner) totaling P24,600,000.1 To secure the loans, its co-respondent Nikko Sources
International Corporation mortgaged a parcel of land covered by Transfer Certificate of Title No. T-763001
in its name.2

Supermax failed to pay the loans upon maturity, hence, petitioner filed a petition for extra-judicial
foreclosure of the mortgage before a notary public in Cavite.3 A Notice of Sale4 scheduled on August 4,
2000 was rescheduled to November 7, 2000 on petitioner’s request, 5 and finally to November 14, 2000 on
respondent’s request.

Four days before the finally rescheduled public auction sale or on November 10, 2000, respondents filed
before the Regional Trail Court (RTC) of Bacoor, Cavite a Complaint 6 against petitioner and the notary
public, docketed as Civil Case No. BCV 2000-146, for declaration of nullity of notice of sale and increase in
interest rates and damages, with prayer for the issuance of temporary restraining order (TRO) and/or writ
of preliminary injunction, alleging that their failure to pay the loans was due to the unilateral imposition of
exorbitant interest rate by petitioner from 16.453% to 18.5% in a matter of months; 7 and that petitioner
reset the auction sale to November 14, 2000 without complying with the posting and publication
requirements.8

Branch 19 of the Bacoor RTC issued a TRO and eventually a writ of preliminary injunction. 9 Petitioner filed
a Motion to Dissolve the writ10 which the trial court denied,11 it finding that, among other things, petitioner
did not comply with the requirements of the law on notice and publication of the auction sale. Its Motion
for Reconsideration12 having been denied,13 petitioner filed a petition14 for Certiorari before the Court of
Appeals.

By Decision15 of December 4, 2006, the Court of Appeals, finding that petitioner failed to comply with
Section 3 of Act No. 3135 (An Act to Regulate the Sale of Property Under Special Powers Inserted In or
Annexed to Real Estate Mortgages), as amended and Circular No. 7-2002 (Guidelines for the Enforcement
of Supreme Court Resolution of December 14, 1999 in Administrative Matter No. 99-10-05-0 (Re:
Procedure in Extra-Judicial Foreclosure of Mortgage), as Amended by the Resolutions dated January 30,
2001 and August 7, 2001)16 of this Court, dismissed the petition. Petitioner’s Motion for Reconsideration 17
having been denied,18 it filed the present Petition for Review,19 alleging that the Court of Appeals

x x x DECIDED A QUESTION IN A WAY NOT IN ACCORDANCE WITH LAW OR WITH THE APPLICABLE
DECISIONS OF THE HON. SUPREME COURT WHEN IT UPHELD THE ASSAILED ORDERS OF THE LOWER
COURT AND ENJOINED THE AUCTION SALE OF THE SUBJECT PROPERTY DESPITE THE EXISTENCE OF
VALID AND LEGAL GROUNDS [FOR] DISSOLVING THE WRIT OF PRELIMINARY INJUNCTION.

x x x DEPARTED FROM THE USUAL COURSE OF PROCEEDING OR SANCTIONED SUCH DEPARTURE BY THE
LOWER COURT IN THAT ACT NO. 3135, AS AMENDED, REQUIRES THE REPUBLICATION OF THE NOTICE
OF SALE DESPITE THE FACT THAT THE RESPONDENTS REQUESTED FOR THREE POSTPONEMENTS OF THE
AUCTION SALE AND WHICH WAS SCHEDULED LONG BEFORE THE EFFECTIVITY OF CIRCULAR NO. 7-
2002.20 (Emphasis in the original)

In the meantime, the trial court dismissed Civil Case No. BCV-2000-146 for failure of respondents and
their counsel to appear during pre-trial.21 Respondents’ Motion for Reconsideration 22 was denied,23 hence,
they filed a Notice of Appeal24 which the trial court gave due course to.25

Petitioner now contends that with the dismissal of Civil Case No. BV-2000-146, the Writ of Preliminary
Injunction being challenged by them in the present petition ipso facto ceased to exist. 26 Respondents
counter, however, that their Notice of Appeal of the dismissal of the case was given due course by the
trial court, hence, the writ stands.

On the merits, petitioner argues:

x x x [I]n deciding to uphold the ruling of the trial court, the Honorable Court of Appeals reasoned that,
under Circular No. 7-2002, which took effect on 22 April 2002, republication of a subsequent date of the
foreclosure sale is unnecessary, provided that the said subsequent date be indicated in the original Notice
of Sale. Hence, as the foreclosure sale in this instance was intended to be held on 14 November 2000,
before the said Circular took effect, there was a need for the Notice of Sale to be re-published and re-
posted.

However, prior to the effectivity of Circular No. 7-2002, there was neither any statute nor judicial
pronouncement from the Hon. Supreme Court requiring republication and reposting of a Notice of Sale in
the event foreclosure did not proceed on the date originally intended.

The Honorable Court of Appeals, however, anchored its Decision [on] the case of Philippine National Bank
vs. Nepomuceno Productions, Inc., 394 SCRA 405, which was, however, promulgated by the Hon.
Supreme Court on 27 December 2002 or more than two (2) years after the intended auction sale in the
instant case on 14 November 2000.27 (Emphasis and underscoring in the original; italics supplied)

The sale at public auction of the properties covered by the foreclosed mortgage in Philippine National Bank
v. Nepomuceno Productions, Inc.28 cited by petitioner took place in 1976, also prior to the effectivity on
April 22, 2002 of this Court’s Circular No. 7-2002. The Court therein held that under Act No. 3135, as
amended, republication as well as reposting of the notice of sale is required if the foreclosure does not
proceed on the date originally intended.1avvphi1

The principal object of a notice of sale in a foreclosure of mortgage is not so much to notify the mortgagor
as to inform the public generally of the nature and condition of the property to be sold, and of the time,
place, and terms of the sale. Notices are given to secure bidders and prevent a sacrifice of the property.
Clearly, the statutory requirements of posting and publication are mandated, not for the mortgagor’s
benefit, but for the public or third persons. In fact, personal notice to the mortgagor in extrajudicial
foreclosure proceedings is not even necessary, unless stipulated. As such, it is imbued with public policy
considerations and any waiver thereon would be inconsistent with the intent and letter of Act No. 3135.

Moreover, statutory provisions governing publication of notice of mortgage foreclosure sales must be
strictly complied with and slight deviations therefrom will invalidate the notice and render the sale at the
very least voidable.

xxxx
Thus, in the recent case of Development Bank of the Philippines v. Aguirre, 29 the foreclosure sale held
more than two (2) months after the published date of sale was considered void for lack of republication.
Similarly, in the instant case, the lack of republication of the notice of the December 20, 1976 foreclosure
sale renders it void.

The right of a bank to foreclose a mortgage upon the mortgagor’s failure to pay his obligation must be
exercised according to its clear mandate, and every requirement of the law must be complied with, lest
the valid exercise of the right would end. The exercise of a right ends when the right disappears, and it
disappears when it is abused especially to the prejudice of others.30 (Emphasis and underscoring supplied)

Petitioner not having republished the notice of the finally rescheduled auction sale, its petition must fail.

WHEREFORE, the petition is DENIED.

G.R. No. 154462               January 19, 2011

SPOUSES RUBEN and MYRNA LEYNES, Petitioners,

vs.
FORMER TENTH DIVISION OF THE COURT OF APPEALS, REGIONAL TRIAL COURT, BRANCH 21,
BANSALAN, DAVAO DEL SUR, MUNICIPAL CIRCUIT TRIAL COURT, BRANCH 1, BANSALAN, DAVAO DEL
SUR, and SPOUSES GUALBERTO & RENE CABAHUG-SUPERALES, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

This Petition for Certiorari under Rule 65 of the Rules of Court assails the (1) Resolution 1 dated December
20, 2001 of the Court of Appeals in CA-G.R. SP No. 4420-UDK, dismissing the Petition for Certiorari with
prayer for a temporary restraining order (TRO) and preliminary injunction of petitioners spouses Ruben
and Myrna Leynes (spouses Leynes); and (2) Resolution dated May 7, 2002 of the appellate court in the
same case, denying the spouses Leynes’ Motion for Reconsideration.

This case originated from a Complaint2 for forcible entry, damages, and attorney’s fees filed by
respondents spouses Gualberto and Rene Cabahug Superales (spouses Superales) against the spouses
Leynes before the Municipal Circuit Trial Court (MCTC), Branch 1 of Bansalan-Magsaysay, Davao del Sur,
and docketed as Civil Case No. 471 (2000)-B. The Complaint alleged the following material facts:

3. That the [spouses Superales] were the actual occupants and possessors, being lawful owners of
that certain parcel of a residential lot within the Nebrada Subd., Bansalan, Davao del Sur, known
as Lot No. 2423-B-5-K-2, Psd-11-050478, being a portion of lot 2423-B-5-K, Psd-11-008104,
covered by Transfer Certificate of Title No. T-41240, containing an area of Three Hundred Thirty
Six (336) Square Meters, more or less, and registered in the name of Rene Cabahug Superales, in
the Register of Deeds for the Province of Davao del Sur;

xxxx

4. That sometime in February 2000, the [spouses Leynes] through force, stealth and strategy
encroached upon and occupied a portion of the [spouses Superales’] titled property consisting of
76 square meters, more or less, dispossessed the [spouses Superales] and constructed therein a
comfort room as an extension of their house without first obtaining the required building permit
from the Municipal Engineer’s Office, of Bansalan, Davao del Sur;

5. That the [spouses Superales] promptly called the attention of the [spouses Leynes] and
protested their intrusion into their property but notwithstanding their protestations the [spouses
Leynes] continued on their construction and occupation of a portion of the [spouses Superales’]
property;

6. That the [spouses Superales] reported to the Barangay Captain of Brgy. Poblacion, Bansalan,
Davao del Sur, the [spouses Leynes’] encroachment on their titled property and the illegal
construction being made on a portion of their property and their complaint was docketed as Brgy.
Case No. 1649;
 7. That Amicable Settlement of the dispute was however, repudiated by the [spouses Leynes]
when they refused to recognized the relocation survey conducted on the property of the [spouses
Superales] and prevented the [spouses Superales’] surveyor from planting monuments on the
boundary between the [spouses Superales] and the [spouses Leynes’] lot;

xxxx

8. That as per relocation survey conducted, the [spouses Leynes] have encroached and occupied a
total of Seventy Six (76) Square Meters, of the [spouses Superales’] titled property, thereby
reducing the area of the [spouses Superales’] lot from 336 Square Meters, more or less to 260
Square Meters, more or less;

xxxx

9. That the [spouses Superales] also complained to the Municipal Engineer’s Office in order to stop
the illegal construction undertaken by the [spouses Leynes], but [spouses Superales’] complaint
fell on deaf ears as no action has been taken by the Municipal Engineer’s Office on the said illegal
construction;

xxxx

10. That the [spouses Leynes] have unlawfully occupied and are continuously occupying illegally a
portion of the [spouses Superales’] property consisting of 76 Square Meters, thereby denying the
[spouses Superales] the use and enjoyment of the said property being unlawfully withheld by the
[spouses Leynes];

11. That the [spouses Superales] must be promptly restored to the full and peaceful possession of
the portion of 76 Square Meters, of their property taken forcibly and illegally by the [spouses
Leynes], by ordering the [spouses Leynes] to remove and/or demolish their construction and
improvements erected on the lot of the [spouses Superales], and should they fail or refuse to do
so, [spouses Superales] be given the authority to cause the removal of the [spouses Leynes’]
improvements at the expense of the [spouses Superales];

12. That in the meantime that the [spouses Leynes] are occupying a portion of the [spouses
Superales’] property, [spouses Leynes] be made to pay the [spouses Superales] the amount of
P500.00 per month as reasonable rental for the property until they shall have restored the
property to the full and peaceful possession of the [spouses Superales]. 3

Summons together with a copy of the aforementioned Complaint was served on the spouses Leynes on
May 10, 2000, giving them ten (10) days from receipt within which to file their answer pursuant to
Section 6 of the Rules on Summary Procedure. The 10-day period for the filing of the spouses Leynes’
answer prescribed on May 20, 2000, a Saturday.

The spouses Leynes filed their Answer with Counterclaim on May 22, 2000, and their Motion to Admit
Belatedly Filed Answer with attached Answer with Counterclaim the day after, on May 23, 2000. The
spouses Leynes explained that they were not able to file their Answer with Counterclaim on May 20, 2000,
even though there were court employees on duty that Saturday, because they had to serve first a copy of
said pleading on the spouses Superales’ counsel, whose office was located in Davao City. Davao City is
approximately one-hour ride by bus from Digos City. The spouses Leynes added that they were not even
sure if the office of the spouses Superales’ counsel was open on Saturdays. 4

The spouses Superales opposed the spouses Leynes’ Motion to Admit Belatedly Filed Answer contending
that the answer should have been filed within 10 days from receipt of a copy of the complaint; and the
spouses Leynes’ motion to admit is in the nature of a motion for extension of time to file an answer, which
is a prohibited pleading in summary proceedings. The spouses Superales further pointed out that the
spouses Leynes’ motion to admit was not set for hearing and was, thus, a pro forma motion which should
be denied outright.

The spouses Superales subsequently filed an Ex Parte Motion for Judgment on May 23, 2000, in which
they prayed that since the spouses Leynes failed to file their answer to the Complaint within the
prescribed period, then judgment could now be rendered based on the evidence and allegations contained
in the Complaint.
On May 29, 2000, the MCTC rendered its Judgment denying the spouses Leynes’ Motion to Admit
Belatedly Filed Answer and resolving Civil Case No. 471 (2000)-B entirely in the spouses Superales’ favor.
Said MCTC judgment reads:

This treats the ex-parte motion for judgment filed by Atty. Rogelio E. Sarsaba, counsel for the [spouses
Superales] alleging in substance that the last day of filing of answer for the [spouses Leynes] was on May
20, 2000 and [the spouses Leynes] did not file any. Be it noted on such date although it was Saturday the
Court was opened and Court personnel, Benedicta Abagon and Anastacia Vale were present at that time
to receive cases and motions filed in Court. On May 22, 2000 [spouses Leynes] filed [their] answer which
answer was filed out of the time prescribed by law. Under Section 7 of Rule 70, 1997 Rules of Civil
Procedure, the law provides: "Should the defendants fail to answer the complaint within the period above
provided, the court, motu proprio or on motion of the plaintiff, shall render judgment as may be
warranted by the facts alleged in the complaint and limited to what is prayed for therein. The Court, may
in its discretion reduce the amount of damages and attorneys fees claimed for being excessive or
otherwise unconscionable, without prejudice to the applicability of Section 3 (c), Rule 9 if there are two or
more defendants."

From the foregoing facts, the [spouses Leynes] really failed to answer the complaint within the period
prescribed by law, which period under the rules cannot be extended.

WHEREFORE, the ex-parte motion for judgment filed by the [spouses Superales] is hereby APPROVED,
AND judgment is hereby rendered ordering the [spouses Leynes]:

1. To remove their construction and/or improvements on the 76 square meters lot belonging to the
[spouses Superales] and surrendered (sic) the same area promptly and peacefully to the [spouses
Superales];

2. To pay the [spouses Superales] the amount of P500.00 per month as reasonable rentals of the
76 square meters lot occupied by the [spouses Leynes] from February 2000 until the said area
shall have been delivered to the full possession and control of [the spouses Superales] in the
concept of damages;

3. To pay the [spouses Superales] the sum of P4,000.00 as reimbursement for the cost of the
survey and the relocation of [the spouses Superales’] property; and

4. To pay the [spouses Superales] the sum of P15,000.00 as reimbursement for attorney fees.5

Aggrieved, the spouses Leynes appealed the foregoing MCTC Judgment to the Regional Trial Court (RTC),
Branch 21 of Bansalan, Davao del Sur. Their appeal was docketed as Civil Case No. XXI-228 (00). In its
Decision dated July 9, 2001, the RTC affirmed the appealed MCTC Judgment, ruling thus:

The lower court was right when it did not allow or entertain the belatedly filed Answer with Counterclaim
of the [spouses Leynes]. The "Motion to Admit Belated Answer" partakes of a motion for extension of time
to file pleading which is not allowed as explicitly provided in Section 19 of the 1991 Revised Rules on
Summary Procedure. Since the law on this matter is unambiguous, unequivocal, its application is
imperative.

Wherefore, the judgment rendered by the Municipal Circuit Trial Court is hereby affirmed, with the sole
modification that the amount of monthly rental for the Seventy-Six (76) square meter-lot be reduced
from P500.00 to P200.00.6

The spouses Leynes filed with the RTC a Motion for Reconsideration in which they sought the recall of the
Decision dated July 9, 2001 and the remand of the case to the MCTC for trial on the merits. However, the
RTC, in a Resolution also "strangely" dated July 9, 2001, refused to reconsider its earlier decision. The
RTC stressed that:

This case falls under the "Rules on Summary Procedure". As such, the answer should be filed within ten
(10) days from the service of summons and must be served on the plaintiff.

The [spouses Leynes], in filing a "Motion to Admit Belated Answer" in effect admitted that their Answer
was filed out of time. Having made that admission, they may no longer be heard to claim otherwise.
Wherefore, premises considered, the motion for reconsideration is hereby denied. 7

On October 11, 2001, the spouses Superales filed with the RTC a Motion for Execution pursuant to Rule
70, Section 21 of the Revised Rules of Court8 which provides for the immediate execution of the RTC
judgment against the defendant notwithstanding further appeal of the same before the Court of Appeals
or the Supreme Court. Expectedly, the spouses Leynes opposed the spouses Superales’ Motion for
Execution.

The spouses Leynes then filed a Petition for Certiorari with Prayer for the Issuance of Temporary
Restraining Order and Preliminary Injunction with the Court of Appeals on November 17, 2001. The
petition was docketed as CA-G.R. SP No. 4420-UDK.

In its Resolution dated December 20, 2001, the Court of Appeals dismissed the spouses Leynes’ petition
outright for being the wrong remedy and for failure to state the material dates. The appellate court
explicated that:

(1) It is a wrong remedy. Under the heading "Timeliness Of This Petition" [spouses Leynes] alleged
that the petition is directed against "the decision of the Regional Trial Court, Branch 21 in
Bansalan, Davao del Sur in the exercise of its appellate jurisdiction. This case originated from the
Municipal Circuit Trial Court, Branch 1, Bansalan-Magsaysay, Davao del Sur (docketed as Civil Case
No. 471 [2000]-B where, herein Respondents, Spouses Gualberto and Rene Superales filed a
Complaint for Forcible Entry against Petitioners, Spouses Ruben and Myrna Leynes." If that be so,
then the correct and appropriate mode of review should be appeal by way of a petition for review
under Rule 42 of the 1997 Rules. Under paragraph 4 of Supreme Court Circular No. 2-90, an
appeal taken to either the Supreme Court or the Court of Appeals by the wrong or inappropriate
mode shall be dismissed.

(2) Upon the other hand, if the present petition for certiorari were to be regarded as the correct or
appropriate remedy – (which it is not) – still it is procedurally flawed because [the spouses Leynes]
violated the amendment introduced to Section 3, Rule 46 of the 1997 Rules, as amended, by
Supreme Court Circular No. 39-98, effective September 11, 1998, which states as follows ---

Section 3. Contents and filing of petition; effect of non-compliance with requirements ---

xxxx

In actions filed under Rule 65, the petition shall further indicate the material dates showing when notice of
judgment or final order or resolution subject thereof was received, when a motion for new trial or
reconsideration, if any, was filed, and when notice of the denial thereof was received.

xxxx

The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground
for the dismissal of the petition.

Here, [the spouses Leynes] did not indicate just when it was that they received the notice of the denial of
the motion for reconsideration that they allegedly filed with the RTC of Bansalan, Davao del Sur, Branch
21, on August 18, 2001, the resolution whereon, denying their motion for reconsideration was allegedly
"strangely" dated July 9, 2001.

WHEREFORE, the present petition must be denied due course and consequently DISMISSED. Needless to
say, inasmuch as the prayer for a temporary restraining order and preliminary injunction is merely an
adjunct to the main petition, the same must be pro tanto DENIED.9

On January 28, 2002, the RTC issued an Order granting the spouses Superales’ Motion for Execution. The
RTC observed that the Court of Appeals did not issue a TRO as prayed for by the spouses Leynes in their
petition in CA-G.R. SP No. 4420-UDK. Instead, the RTC referred to the Resolution dated December 20,
2001 of the Court of Appeals dismissing outright the spouses Leynes’ petition in CA-G.R. SP No. 4420-
UDK.

Subsequently, the RTC issued a Writ of Execution on February 2, 2002, for the satisfaction of its Decision
dated July 9, 2001.
On February 11, 2002, the spouses Leynes filed with the RTC a Manifestation with motion to hold in
abeyance the enforcement of the writ of execution, considering their pending Motion for Reconsideration
of the Resolution dated December 20, 2001 of the Court of Appeals in CA-G.R. SP No. 4420-UDK. In its
Order dated February 15, 2002, the RTC directed the Sheriff to hold in abeyance the implementation of
the Writ of Execution until said trial court has resolved the spouses Leynes’ latest motion.

In a Resolution dated May 7, 2002, the Court of Appeals found no reason to modify or overturn its earlier
Resolution dated December 20, 2001, which dismissed the spouses Leynes’ petition in CA-G.R. SP No.
4420-UDK. The dispositive portion of said Resolution states:

WHEREFORE, the motion for reconsideration, for lack of merit, must be as it hereby is DENIED.1âwphi1
Accordingly, the appended Petition for Certiorari is ordered expunged from the records, and the enclosed
Postal Money Orders Nos. J 7318284 and B 2678220, both dated 19 November 2001, in the amount of
P500.00 and P1,000.00, respectively, posted at the Ateneo University, Davao City, payable to the clerk of
court of this Court from a certain Ruben Leynes, are hereby ordered returned to the sender/payee. 10

Not long thereafter, on May 13, 2002, the RTC issued an Order resolving the issue of execution of its
Decision dated July 8, 2001. The RTC reasoned that:

[I]n an ejectment case, the appellate court which affirms a decision brought before it on appeal cannot
decree its execution in the guise of an execution of the affirmed decision. The only exception to that is
when said appellate court grants an execution pending appeal.

xxxx

Considering that this does not involve a motion for execution pending appeal, this Court (sitting as an
appellate court) cannot decree its execution. 11

Thus, the RTC decreed:

Wherefore, this case is hereby remanded to the court of origin, that is, the Municipal Circuit Trial Court
(Br. 001) Bansalan-Magsaysay with which the motion for execution shall be filed. 12

On May 17, 2002, the spouses Leynes received a copy of the Court of Appeals Resolution dated May 7,
2002 denying their Motion for Reconsideration of the dismissal of their petition in CA-G.R. SP No. 4420-
UDK. Thereafter, on July 17, 2002, the spouses Leynes filed the instant Petition for Certiorari charging the
Court of Appeals, as well as the RTC and the MCTC, with grave abuse of discretion, particularly committed
as follows:

IN DISMISSING [the spouses Leynes’] EARLIER PETITION, THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION CONSIDERING THAT IT DENIED THE PETITION ON A MERE
TECHNICALITY WITHOUT CONSIDERING THAT THE ISSUES RAISED ARE NOVEL AND HIGHLY
MERITORIOUS.

II

THE MCTC BRANCH 1 AND THE RTC BRANCH 21 BOTH COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DENIED TO ADMIT [the spouses
Leynes’] ANSWER AND RULING THAT SINCE THE LAST DAY FOR FILING [the spouses Leynes’]
ANSWER FELL ON A SATURDAY, THE SAME SHOULD HAVE BEEN FILED ON THE SAID DAY SINCE
THERE WERE COURT PERSONNEL ON DUTY.

III

THE MCTC BRANCH 1 AND THE RTC BRANCH 21 COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DECIDED TO ADMIT [the spouses
Superales’] COMPLAINT FOR FORCIBLE ENTRY NOTWITHSTANDING THAT THE SAME WAS FILED
MORE THAN ONE YEAR FROM ITS SUPPOSED HAPPENING.13

Procedural Matters
The Court of Appeals dismissed the spouses Leynes’ Petition for Certiorari in CA-G.R. SP No. 4420-UDK for
being the wrong mode of appeal and for failure to state a material date.

Supreme Court Circular No. 2-90 clearly lays down the proper modes of appeal to the Court of Appeals
from the RTCs:

3. Appeals to the Court of Appeals. – On the other hand, appeals by certiorari will not lie with the Court of
Appeals. Appeals to that Court from Regional Trial Courts may be taken:

a) by writ of error (ordinary appeal) – where the appealed judgment was rendered in a civil or
criminal action by the regional trial court in the exercise of its original jurisdiction; or

b) by petition for review – where the judgment was rendered by the regional trial court in the
exercise of its appellate jurisdiction.

The mode of appeal in either instance is entirely distinct from an appeal by certiorari to the Supreme
Court.

4. Erroneous Appeals. – An appeal taken to either the Supreme Court or the Court of Appeals by the
wrong or inappropriate mode shall be dismissed. (Emphases ours.)

The RTC decided Civil Case No. XXI-228 (00) in its appellate jurisdiction. Hence, the RTC Decision dated
July 9, 2001, which affirmed the MCTC Judgment of May 29, 2000 against the spouses Leynes, and
Resolution inadvertently also dated July 9, 2001, which denied the spouses Leynes’ Motion for
Reconsideration, should have been appealed to the Court of Appeals by means of a petition for review
under Rule 42 of the Rules of Court.

The spouses Leynes, however, went before the Court of Appeals via a Petition for Certiorari under Rule 65
of the Rules of Court. In Madrigal Transport, Inc. v. Lapanday Holdings Corp.,14 we presented the
following discourse distinguishing between an appeal (whether an ordinary appeal or a petition for review)
and a petition for certiorari, to wit:

A writ of certiorari may be issued only for the correction of errors of jurisdiction or grave abuse of
discretion amounting to lack or excess of jurisdiction. The writ cannot be used for any other purpose, as
its function is limited to keeping the inferior court within the bounds of its jurisdiction.

For certiorari to prosper, the following requisites must concur: (1) the writ is directed against a tribunal, a
board or any officer exercising judicial or quasi-judicial functions; (2) such tribunal, board or officer has
acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction; and (3) there is no appeal or any plain, speedy and adequate remedy in the ordinary course
of law.

"Without jurisdiction" means that the court acted with absolute lack of authority. There is "excess of
jurisdiction" when the court transcends its power or acts without any statutory authority. "Grave abuse of
discretion" implies such capricious and whimsical exercise of judgment as to be equivalent to lack or
excess of jurisdiction; in other words, power is exercised in an arbitrary or despotic manner by reason of
passion, prejudice, or personal hostility; and such exercise is so patent or so gross as to amount to an
evasion of a positive duty or to a virtual refusal either to perform the duty enjoined or to act at all in
contemplation of law.

Appeal and Certiorari Distinguished

Between an appeal and a petition for certiorari, there are substantial distinctions which shall be explained
below.

As to the Purpose. Certiorari is a remedy designed for the correction of errors of jurisdiction, not errors of
judgment. In Pure Foods Corporation v. NLRC, we explained the simple reason for the rule in this light:

"When a court exercises its jurisdiction, an error committed while so engaged does not deprive it of the
jurisdiction being exercised when the error is committed. If it did, every error committed by a court would
deprive it of its jurisdiction and every erroneous judgment would be a void judgment. This cannot be
allowed. The administration of justice would not survive such a rule. Consequently, an error of judgment
that the court may commit in the exercise of its jurisdiction is not correct[a]ble through the original civil
action of certiorari."

The supervisory jurisdiction of a court over the issuance of a writ of certiorari cannot be exercised for the
purpose of reviewing the intrinsic correctness of a judgment of the lower court – on the basis either of the
law or the facts of the case, or of the wisdom or legal soundness of the decision. Even if the findings of
the court are incorrect, as long as it has jurisdiction over the case, such correction is normally beyond the
province of certiorari. Where the error is not one of jurisdiction, but of an error of law or fact – a mistake
of judgment – appeal is the remedy.

As to the Manner of Filing. Over an appeal, the CA exercises its appellate jurisdiction and power of review.
Over a certiorari, the higher court uses its original jurisdiction in accordance with its power of control and
supervision over the proceedings of lower courts. An appeal is thus a continuation of the original suit,
while a petition for certiorari is an original and independent action that was not part of the trial that had
resulted in the rendition of the judgment or order complained of. The parties to an appeal are the original
parties to the action. In contrast, the parties to a petition for certiorari are the aggrieved party (who
thereby becomes the petitioner) against the lower court or quasi-judicial agency, and the prevailing
parties (the public and the private respondents, respectively).

As to the Subject Matter. Only judgments or final orders and those that the Rules of Court so declare are
appealable. Since the issue is jurisdiction, an original action for certiorari may be directed against an
interlocutory order of the lower court prior to an appeal from the judgment; or where there is no appeal
or any plain, speedy or adequate remedy.

As to the Period of Filing. Ordinary appeals should be filed within fifteen days from the notice of judgment
or final order appealed from. Where a record on appeal is required, the appellant must file a notice of
appeal and a record on appeal within thirty days from the said notice of judgment or final order. A petition
for review should be filed and served within fifteen days from the notice of denial of the decision, or of the
petitioner’s timely filed motion for new trial or motion for reconsideration. In an appeal by certiorari, the
petition should be filed also within fifteen days from the notice of judgment or final order, or of the denial
of the petitioner’s motion for new trial or motion for reconsideration.

On the other hand, a petition for certiorari should be filed not later than sixty days from the notice of
judgment, order, or resolution. If a motion for new trial or motion for reconsideration was timely filed, the
period shall be counted from the denial of the motion.

As to the Need for a Motion for Reconsideration. A motion for reconsideration is generally required prior to
the filing of a petition for certiorari, in order to afford the tribunal an opportunity to correct the alleged
errors. Note also that this motion is a plain and adequate remedy expressly available under the law. Such
motion is not required before appealing a judgment or final order.

Certiorari Not the Proper Remedy

if Appeal Is Available

Where appeal is available to the aggrieved party, the action for certiorari will not be entertained.
Remedies of appeal (including petitions for review) and certiorari are mutually exclusive, not alternative
or successive. Hence, certiorari is not and cannot be a substitute for an appeal, especially if one’s own
negligence or error in one’s choice of remedy occasioned such loss or lapse. One of the requisites of
certiorari is that there be no available appeal or any plain, speedy and adequate remedy. Where an
appeal is available, certiorari will not prosper, even if the ground therefor is grave abuse of discretion. 15

The remedy of appeal to the Court of Appeals was available to the spouses Leynes, only that they failed to
avail of it in time. This much is clear from the following explanation of the counsel for the spouses Leynes:

10. Until the proceedings before the Regional Trial Court Branch 21, [the spouses Leynes] were
represented by their former counsel of record, Atty. Christopher Abarilla. Aggrieved by the way their case
was handled by their former counsel of record, [the spouses Leynes] engaged the services of the
undersigned Counsel in the second week of November 2001 for the purpose of elevating their case to the
Court of Appeals. Since no other remedy under the Rules of Court was no longer available to [the spouses
Leynes] because the 15-day period within which to file a Certiorari under Rule 42 had already lapsed,
recourse under Rule 65 was instead resorted to as there was no appeal, or any plain, speedy and
adequate remedy in the ordinary course of law by which [the spouses Leynes] could question the assailed
decisions of both the lower court and the RTC Branch 21.16 (Emphasis ours.)

We reiterate the well-settled rule that certiorari is not available where the aggrieved party’s remedy of
appeal is plain, speedy and adequate in the ordinary course, the reason being that certiorari cannot co-
exist with an appeal or any other adequate remedy. The existence and availability of the right to appeal
are antithetical to the availment of the special civil action for certiorari. These two remedies are mutually
exclusive.17 The special civil action of certiorari cannot be used as a substitute for an appeal which the
petitioner already lost.18

Furthermore, as the Court of Appeals held, the spouses Leynes’ Petition for Certiorari in CA-G.R. SP No.
4420-UDK failed to comply with the requirement under Rule 46, Section 3 of the Rules of Court that a
petition for certiorari should indicate material dates, such as when notice of the judgment or final order or
resolution subject thereof was received, when a motion for new trial or reconsideration, if any, was filed,
and when notice of the denial thereof was received. The spouses Leynes did not refute that their Petition
for Certiorari before the Court of Appeals did not state the date they received a copy of the RTC
Resolution denying their Motion for Reconsideration. That the said Resolution was strangely dated July 9,
2001, the same date as the RTC Decision sought to be reconsidered, is immaterial. The timeliness of the
filing by the spouses Leynes of their petition before the Court of Appeals is determined from the date they
received the challenged RTC resolution and not the date the RTC issued the same.

Seeking recourse from this Court, the spouses Leynes once more filed a Petition for Certiorari under Rule
65 of the Rules of Court. The spouses Leynes yet again availed themselves of the wrong remedy.

The proper remedy of a party aggrieved by a decision of the Court of Appeals is a petition for review
under Rule 45 which is not similar to a petition for certiorari under Rule 65 of the Rules of Court. As
provided in Rule 45 of the Rules of Court, decisions, final orders or resolutions of the Court of Appeals in
any case, i.e., regardless of the nature of the action or proceedings involved, may be appealed to us by
filing a petition for review, which would be but a continuation of the appellate process over the original
case. A special civil action under Rule 65 is an independent action based on the specific grounds therein
provided and, as a general rule, cannot be availed of as a substitute for the lost remedy of an ordinary
appeal, including that under Rule 45. Accordingly, when a party adopts an improper remedy, his petition
may be dismissed outright.19

Nevertheless, we bear in mind that the acceptance of a petition for certiorari, as well as the grant of due
course thereto is, in general, addressed to the sound discretion of the court. The provisions of the Rules of
Court, which are technical rules, may be relaxed in certain exceptional situations. Where a rigid
application of the rule that certiorari cannot be a substitute for appeal will result in a manifest failure or
miscarriage of justice, it is within our power to suspend the rules or exempt a particular case from its
operation.20

We pronounced in Tanenglian v. Lorenzo21 that:

All things considered, however, we do not agree in the conclusion of the Court of Appeals dismissing
petitioner's Petition based on a procedural faux pax. While a petition for certiorari is dismissible for being
the wrong remedy, there are exceptions to this rule, to wit: (a) when public welfare and the advancement
of public policy dictates; (b) when the broader interest of justice so requires; (c) when the writs issued
are null and void; or (d) when the questioned order amounts to an oppressive exercise of judicial
authority.

In Sebastian v. Morales, we ruled that rules of procedure must be faithfully followed except only when, for
persuasive reasons, they may be relaxed to relieve a litigant of an injustice not commensurate with his
failure to comply with the prescribed procedure, thus:

[C]onsidering that the petitioner has presented a good cause for the proper and just determination of his
case, the appellate court should have relaxed the stringent application of technical rules of procedure and
yielded to consideration of substantial justice.

The Court has allowed some meritorious cases to proceed despite inherent procedural defects and lapses.
This is in keeping with the principle that rules of procedure are mere tools designed to facilitate the
attainment of justice and that strict and rigid application of rules which would result in technicalities that
tend to frustrate rather than promote substantial justice must always be avoided. It is a far better and
more prudent cause of action for the court to excuse a technical lapse and afford the parties a review of
the case to attain the ends of justice, rather than dispose of the case on technicality and cause grave
injustice to the parties, giving a false impression of speedy disposal of cases while actually resulting in
more delay, if not a miscarriage of justice.22 (Emphases ours.)

Given the peculiar circumstances extant in the case at bar, the dismissal of the spouses Leynes’ Petition
for Certiorari would result in the miscarriage of justice. The spouses Leynes were unjustly declared in
default by the MCTC and deprived of the opportunity to present arguments and evidence to counter the
spouses Superales’ Complaint. Hence, we are accepting and giving due course to the spouses Leynes’
petition in the interests of substantial justice and equity.

Reglementary Period

The MCTC rendered its Judgment dated May 29, 2000 ex parte, declaring the spouses Leynes in default
for their failure to file their answer to the spouses Superales’ Complaint within the reglementary period for
doing so. According to the MCTC, the spouses Leynes only had until May 20, 2000 to file an answer; and
although May 20, 2000 was a Saturday, the court was open and court personnel Benedicta Abagon and
Anastacia Vale were present at that time to receive cases and motions filed with the court.

We disagree.

Sections 6, Rule 70 of the 1991 Revised Rules on Summary Procedure gives a defendant 10 days from
service of summons to file his/her answer:

Section 6. Answer. - Within ten (10) days from service of summons, the defendant shall file his answer to
the complaint and serve a copy thereof on the plaintiff. Affirmative and negative defenses not pleaded
therein shall be deemed waived, except lack of jurisdiction over the subject matter. Cross-claims and
compulsory counterclaims not asserted in the answer shall be considered barred. The answer to
counterclaims or cross-claims shall be served and filed within ten (10) days from service of the answer in
which they are pleaded.

In computing said 10-day period, we resort to Rule 22, Section 1 of the Rules of Court, which reads:

Section 1. How to compute time. In computing any period of time prescribed or allowed by these Rules, or
by order of the court, or by any applicable statute, the day of the act or event from which the designated
period of time begins to run is to be excluded and the date of performance included. If the last day of the
period, as thus computed, falls on a Saturday, a Sunday, or a legal holiday in the place where the court
sits, the time shall not run until the next working day. (Emphases ours.)

We emphasized in Bank of the Philippine Islands v. Court of Appeals,23 that non-working days (Saturdays,
Sundays, and legal holidays) are excluded from the counting of the period only when the last day of the
period falls on such days. Rule 22 does not provide for any other circumstance in which non-working days
would affect the counting of a prescribed period.

The spouses Leynes were served with the summons on May 10, 2000. The last day of the 10-day period
within which the spouses Leynes should have filed their answer, May 20, 2000, fell on a Saturday. The
next working day was May 22, 2000, a Monday, on which the spouses Leynes did file their Answer with
Counterclaim. Based on the aforequoted rules, the spouses Leynes’ answer was filed within the
reglementary period, and they were not in default. The MCTC should not have rendered an ex parte
Judgment against them.

Court personnel were at the MCTC on May 20, 2000, a Saturday, in compliance with the Supreme Court
Administrative Circular No. 2-99, on Strict Observance of Working Hours and Disciplinary Action for
Absenteeism and Tardiness, which took effect on February 1, 1999. Pertinent provisions of said circular
are reproduced below:

A. Executive Judges of the Regional Trial Courts shall assign by rotation, Judges of the Municipal Trial
Courts and Municipal Circuit Trial Courts in multiple sala stations within their respective territorial areas,
to be on duty on Saturdays from 8:00 A.M. to 1:00 P.M., assisted by a skeletal force, also on rotation,
primarily to act on petitions for bail and other urgent matters.

xxxx
B. Court offices, (e.g., Office of the Clerk) and units which deal directly with the public, such as receiving,
process-serving and cashier’s units, shall maintain a skeletal force on Saturdays from 8:00 A.M. to noon,
and from 12:30 P.M. to 4:30 P.M. Those assigned to work on Saturdays shall be notified of their
assignment at least three days in advance. An employee so assigned shall have a full day-off the following
week, on a day to be specified by the Justice/Judge concerned. (Manual for Clerk of Courts, Chapter II,
Section A, 1) (Emphases ours.)

Administrative Circular No. 2-99 should not affect the manner by which periods set by the rules or the
courts are computed under Rule 22, Section 1 of the Rules of Court. Administrative Circular No. 2-99 is an
administrative issuance signed by then Chief Justice Hilario G. Davide to govern the attendance of
judiciary officials and employees. It cannot amend or take precedence over the Rules of Court, duly
approved by the Court en banc and published for the information of and compliance by the public. In fact,
Administrative Circular No. 2-99 itself states that "it supersedes and modifies accordingly any previous
Orders or Circulars on the matter," but not the Rules of Court.

Moreover, Administrative Circular No. 2-99 requires certain trial court judges and employees to be present
on Saturdays "primarily to act on petitions for bail and other urgent matters." We fail to see an answer to
a complaint for forcible entry as among such urgent matters that would have required filing by the party
and action by the court not a day later. In addition, Administrative Circular No. 2-99 directs the Office of
the Clerk of Court to maintain a skeletal force on Saturdays. Civil Case No. 471 (2000)-B, the spouses
Superales’ complaint for forcible entry against the spouses Leynes, was already raffled to and pending
before the MCTC-Branch 1 of Bansalan-Magsaysay, Davao del Sur; thus, the answer and other pleadings
in said case should already be filed with the said Branch and not with the Office of the Clerk of Court.
There is no showing that the Office of the Branch Clerk of Court was also open on May 20, 2000.

MCTC Jurisdiction

We do not subscribe, however, to the spouses Leynes’ argument that the spouses Superales’ Complaint
for forcible entry had already prescribed.

Rule 70, Section 1 of the Rules of Court provides:

Sec. 1. Who may institute proceedings, and when. – Subject to the provisions of the next succeeding
section, a person deprived of the possession of any land or building by force, intimidation, threat,
strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land
or building is unlawfully withheld after the expiration or termination of the right to hold possession, by
virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor,
vendor, vendee or other person, may, at any time within one (1) year after such unlawful deprivation or
withholding of possession, bring an action in the proper Municipal Trial Court against the person or
persons unlawfully withholding or depriving of possession, or any person or persons claiming under them,
for the restitution of such possession, together with damages and costs. (Emphasis ours.)

In forcible entry cases, the action must be brought within one year from the date of actual entry on the
land. In paragraph 4 of their Complaint, the spouses Superales alleged that the spouses Leynes, through
force, stealth, and strategy, encroached upon and occupied a portion of the spouses Superales’ titled
property, consisting of 76 square meters, sometime in February 2000. The spouses Superales already
filed their Complaint for forcible entry, damages, and attorney’s fees, three months thereafter, in May
2000.

Even so, the MCTC rendered judgment against the spouses Leynes ex parte. The spouses Leynes’ Answer
with Counterclaim was not admitted by the MCTC and they had no opportunity to present evidence in
support of their defenses.

The spouses Leynes averred before us that:

48. It is clear from the language of the law that [the spouses Superales’] cause of action accrued from the
very moment they found in 1995 that [the spouses Leynes’] buildings allegedly intruded into their
supposed property when they acquired title over the same. But for the next five years or so, [the spouses
Superales] never raised a howl of protest over the alleged encroachment. Not having acted on their rights
within the limits stipulated under the law, then the complaint for Forcible Entry should also be considered
as belatedly filed before the MCTC Branch.
49. [The spouses Superales], however, have been very careful to allege that [the spouses Leynes’]
structures were built in the year 2000 to enable them to get around the prescriptive period imposed by
the Rules. But the truth is, and the same could have been very well established had a trial on the merits
proceeded, the comfort rooms were built in 1985 and the bunkhouse followed two years later. [The
spouses Superales] then were not yet claimants or possessors of the land they now say is theirs. In 1995
when they surreptitiously acquired title over Jose Cabahug’s property, they contested for the first time,
the location of [the spouses Leynes’] buildings. Yet, after having done so, [the spouses Superales] never
filed the complaint for Forcible Entry within the one (1) year period as mandated. At the onset therefore,
[the spouses Superales’] cause of action was already tainted with a serious congenital infirmity which, had
a trial been convened, would have necessarily resulted in the unwarranted complaint against [the spouses
Leynes].24

These averments obviously involve factual matters which the spouses Leynes must back up with evidence.
We cannot rule on the same since this Court is not a trier of facts. Consequently, it is only prudent that
the case be remanded to the MCTC for further proceedings.

WHEREFORE, the Petition is GRANTED. The ex parte Judgment dated May 29, 2000 of the Municipal
Circuit Trial Court, Branch 1 of Bansalan-Magsaysay, Davao del Sur, in Civil Case No. 471 (2000)-B, is
ANNULLED and SET ASIDE. The case is REMANDED to the same court which is DIRECTED to admit the
Answer with Counterclaim of the spouses Ruben and Myrna Leynes and accordingly conduct further
proceedings.

G.R. No. 160923               January 24, 2011

MOISES TINIO, JR. and FRANCIS TINIO, Petitioners,

vs.
NATIONAL POWER CORPORATION, Respondent.

x---------------x

G.R. No. 161093

NATIONAL POWER CORPORATION, Petitioner,

vs.
MOISES TINIO, JR. and Francis Tinio, Respondent.

DECISION

PERALTA, J.:

Before the Court are two consolidated petitions for review on certiorari under Rule 45 of the Rules of
Court both seeking the reversal and setting aside of the Decision 1 of the Court of Appeals (CA) in CA-G.R.
CV No. 70252, dated November 19, 2003. The assailed CA Decision modified the Resolution 2 dated
January 22, 2001, of the Regional Trial Court (RTC) of Urdaneta, Pangasinan, Branch 48 in Civil Case No.
U-6938.

The pertinent factual and procedural antecedents of the case are as follows:

The National Power Corporation (NPC) is a government-owned and controlled corporation created and
existing by virtue of Republic Act No. 6395,3 as amended by Presidential Decree No. 938. The main
purpose of the NPC, as stated in its charter, is to undertake the development of hydroelectric generation
of power and the production of electricity from nuclear, geothermal and other sources, as well as the
transmission of electric power on a nationwide basis. In order to accomplish its objectives, the NPC is
granted the power, among others, to exercise the right of eminent domain.

For purposes of constructing and maintaining its San Roque Multi-Purpose Project, which is one of the
major undertakings of the government for North Luzon, the NPC filed on October 13, 1999 a complaint for
eminent domain with the RTC of Urdaneta, Pangasinan against Moises Tinio, Jr. and Francis Tinio
(hereafter collectively referred to as the Tinios) for the purpose of expropriating a parcel of land owned by
the Tinios. The subject property, consisting of 52,710 square meters, denominated as Lot 14556-A and
covered by Transfer Certificate of Title (TCT) No. T-5775, is located at Barangay San Roque, San Manuel,
Pangasinan.
Prior to filing its complaint, the NPC took possession of the subject land on February 9, 1998 by virtue of a
Permit to Enter signed by Moises.

During the pre-trial conference, one of the stipulations proposed by the NPC and admitted by the Tinios is
the authority of the NPC to expropriate the subject lot. Thus, the parties agreed that the only issue left for
determination by the trial court is the just compensation to be paid to the Tinios.

Commissioners were then appointed to appraise the value of the subject property and, thereafter, to
make a recommendation to the RTC. Subsequently, the commissioners made separate reports and
recommendations.

On January 22, 2001, the trial court issued a Resolution disposing of the case as follows:

WHEREFORE, PREMISES CONSIDERED, the Court hereby orders the National Power Corporation to pay
defendants Moises Tinio, Jr. and Francis Tinio the amount of P12,850,400.00, plus legal interest until fully
paid as just compensation for Lot No. 14556 under TCT No. T-5775 with a total area of 52,710 sq.m.

Costs against the plaintiff.

SO ORDERED.4

NPC filed a Motion for Reconsideration,5 but the same was denied by the RTC in an Order6 dated February
20, 2001.

Thereafter, the NPC appealed the January 22, 2001 Resolution and February 20, 2001 Order of the RTC
with the CA.

On November 19, 2003, the CA rendered its presently assailed Decision, with the following dispositive
portion:

In view of the Foregoing, the resolution appealed from is MODIFIED, in that the NPC is ordered to pay the
defendants as just compensation for the land taken from them, the amount of P2,343,900 with legal
interest of 6 percent [per] annum from February 9, 1998 until paid.

SO ORDERED.7

Feeling aggrieved, both the NPC and the Tinios are now before this Court arguing that the CA committed
error in its judgment.

Praying that the judgment of the RTC be reinstated, the Tinios contend that the CA erred in affirming the
findings of the RTC that the NPC took possession of, or entered upon, the subject property on February 9,
1998.

They also argue that the CA erred in arriving at a lower amount of just compensation than that arrived at
by the RTC on the ground that before the NPC made improvements on the subject property, the same
was already classified as industrial or commercial land. The Tinios claim that in 1997, the NPC declared its
properties in Barangay San Roque, San Manuel, Pangasinan, as commercial lands with a value of P250.00
per square meter. They aver that the subject lot is within the vicinity of the NPC properties. As such, any
increase in the value of the NPC properties should also redound to the benefit of the lands which are
located within the same locality.

On its part, the NPC's main asseveration is that the CA erred in relying on the present state and character
of the subject land as commercial in determining just compensation. It prayed for the reduction of the just
compensation awarded by the CA.

The issues raised by the parties boil down to the question of whether the CA was correct in its
determination of just compensation as based on its findings on the time of taking of the subject property
and the nature and character of the subject property at the time of such taking.

The Court finds no error in the assailed Decision of the CA.

With respect to the time of the taking of the subject property, the findings of fact of the CA and the RTC
with respect to this issue shall no longer be disturbed. It is axiomatic that this Court will not review, much
less reverse, the factual findings of the CA, especially where, as in this case, such findings coincide with
those of the trial court and that these findings are supported by sufficient evidence. Both the RTC and the
CA are one in finding that the NPC took possession of the subject lot on February 9, 1998 as evidenced by
a Permit to Enter Land/Property8 signed by Moises on even date. While the Tinios aver that Moises was
deceived into signing the said permit, no evidence was presented to prove this allegation.

As to the nature and character of the subject lot at the time of its taking, the Court takes exception to the
contention of the NPC that the CA determined the value of just compensation on the basis of the subject
lot's classification as industrial.

A perusal of the disputed decision of the CA would clearly show that the appellate court's determination of
just compensation is based on its finding that 12,710 square meters of the subject property was
considered residential and that the remaining 40,000 square meter portion thereof was classified as
agricultural land at the time of taking of the said lot. This finding is based on a certification dated March
10, 1998 issued by the Municipal Assessor of San Manuel, Pangasinan, attesting to the fact that the
disputed property was indeed partly residential and largely agricultural prior to its possession by the NPC.
In this respect, the Court agrees with the following findings of the CA:

x x x The four government offices which gave their contemporaneous findings at the time were one in
saying that of the total area of 5.2 hectares, 4 were for agricultural use. About 1.2 hectares had been
traversed by the hydro highway, and an area of this size was specifically determined by the municipal
assessor to be residential in character. x x x9

In fact, an examination of the evidence on record, to wit: a subsequent certification issued by the
Municipal Assessor, dated August 11, 1998, and the Tinios' Tax Declaration for 1999, would show that the
subject lot was classified as industrial only after six months upon the NPC's entry into and development of
the said land.

It is settled that the nature and character of the land at the time of its taking is the principal criterion for
determining how much just compensation should be given to the landowner.10

Hence, the argument of the Tinios that the subject property should benefit from the subsequent
classification of its adjoining properties as industrial lands is, likewise, untenable. The Court, in a number
of cases,11 has enunciated the principle that it would be injustice on the part of the expropriator where the
owner would be given undue incremental advantages arising from the use to which the government
devotes the property expropriated.1âwphi1

In the instant case, it cannot be denied that prior to the NPC's introduction of improvements in the area
where the subject parcel of land is located, the properties therein, including the disputed lot, remained
agricultural and residential. It was only upon entry of the NPC in Barangay San Roque, and after
constructing buildings and other facilities and bringing in various equipment for its multi-purpose project,
that the lands in the said locality were later classified as commercial or industrial.

Stated differently, to allow the Tinios to ask compensation on the basis of the subsequent classification of
the contested lot as industrial would be to allow them to recover more than the value of the land at the
time when it was taken, which is the true measure of the damages or just compensation.

WHEREFORE, the petitions are DENIED. The Decision of the Court of Appeals, dated November 19, 2003,
in CA-G.R. CV No. 70252, is AFFIRMED.

G.R. No. 165423               January 19, 2011

NILO PADRE, Petitioner,

vs.
FRUCTOSA BADILLO, FEDILA BADILLO, PRESENTACION CABALLES, EDWINA VICARIO (d) represented by
MARY JOY VICARIO-ORBETA and NELSON BADILLO, Respondents.

DECISION

DEL CASTILLO, J.:

"A void judgment is no judgment at all. It cannot be the source of any right nor the creator of any
obligation. All acts performed pursuant to it and all claims emanating from it have no legal effect." 1

This petition for review on certiorari assails the Orders dated July 21 and September 20, 2004 2 issued by
the Regional Trial Court (RTC) of Allen, Northern Samar, Branch 23 in Special Civil Action No. A-927,
which affirmed the ruling of the Municipal Trial Court (MTC) of San Isidro, Northern Samar that it has
jurisdiction to try Civil Case No. 104.

Factual Antecedents

On October 13, 1986, the RTC of Allen, Northern Samar, Branch 23, rendered judgment 3 in Civil Case No.
A-514 for Ownership and Recovery of Possession with Damages in favor of therein plaintiffs Fructosa
Badillo, Fedila Badillo, Edwina Badillo, Presentacion Badillo and Nelson Badillo and against therein
defendants, including Consesa Padre. The dispositive portion of the said Decision reads:

WHEREFORE, on preponderance of evidence, the Court hereby renders judgment in favor of the plaintiffs
and against the defendants, declaring and ordering as follows:

1. That the herein plaintiffs are the lawful owners of the five-sixth (5/6) portion of Lot No. 4080,
Pls-54, registered in Original Certificate of Title No. 736, more particularly, the said five-sixth
portion is described, delineated and/or indicated in the Sketch Plan which is now marked as Exhibit
"B-1";

2. That the said five-sixth (5/6) portion which [is] herein adjudged as being owned by the herein
plaintiffs, include the portions of land presently being occupied by defendants x x x, Concesa
Padre, x x x;

3. Ordering the defendants mentioned in No. 2 hereof to vacate x x x the lots respectively
occupied by them and restore to [the herein plaintiffs] the material possessions thereof;

4. Condemning and ordering each of the same defendants herein above-named to pay plaintiffs
the amount of P100.00 per month, as monthly rental, starting from January 19, 1980, until the
lots in question shall have been finally restored to the plaintiffs; and

5. Condemning and ordering the herein defendants named above to jointly and severally pay the
plaintiffs the amount of P5,000.00 representing attorney’s fees and P2,000.00 as litigation
expenses, and to pay the costs of suit.

SO ORDERED.4

This Decision became final and executory on November 5, 1986.5

On December 29, 1997, the Badillo family filed another complaint against those who occupy their property
which included some of the defendants in Civil Case No. A-514.6 The case was filed with the MTC of San
Isidro, Northern Samar and was docketed as Civil Case No. 104.7 As Consesa Padre had already died in
1989, her heir, Nilo Padre (Nilo), was impleaded as one of the defendants. While some of the defendants
filed their respective answers, Nilo was one of those who were declared in default for failure to file their
answer to the complaint.8

Although denominated as one for "Ownership and Possession," the Badillo family alleged in their
complaint in Civil Case No. 104 viz:

4. That plaintiffs are the joint owners of Lot No. 4080. Pls-54, with a total area of 10,167 square
meters, covered by OCT No. 736 in the name of Eutequio Badillo, deceased husband of plaintiff
Fructosa Badillo and father of the rest of the other plaintiffs, covered by Tax Declaration No. 9160
and assessed at P26,940.00;

5. That plaintiffs in Civil Case No. A-514, entitled Fructosa Badillo versus Celso Castillo, et. al.,
were the prevailing parties in the aforesaid case as evidenced by the hereto attached copy of the
decision rendered by the Regional Trial Court in the above-entitled case and marked as Annex "A"
and made integral part of this complaint;
 6. That after the judgment in the above-mentioned case became final, the same was executed as
evidenced by a copy of the writ of execution hereto attached as Annex "B" and made integral part
hereof;

7. That despite the service of the writ of execution and vacating the properties x x x illegally
occupied by the afore-mentioned defendants, [said defendants] re-entered the property in 1990
after the execution and refused to vacate the same [thereby] reasserting their claims of ownership
x x x despite repeated demands;

8. That all attempts towards a peaceful settlement of the matter outside of Court to avoid a civil
suit, such as referring the matter of the Brgy. Captain and the Brgy. Lupon of Brgy. Alegria, San
Isidro, N. Samar were of no avail as the defendants refused to heed lawful demands of plaintiffs to
x x x vacate the premises[. I]nstead, defendants claimed ownership of the property in question
[and] refused to vacate the same despite repeated demands [such] that having lost all peaceful
remedies, plaintiffs were constrained to file this suit. Certificate to file Action is hereby attached
and marked as Annex "C" and made integral part hereof;9 (Emphasis supplied.)

Ruling of the Municipal Trial Court

The MTC rendered judgment10 on July 17, 2003. Interpreting the suit of the Badillo family as an action to
revive the dormant judgment in Civil Case No. A-514, the court recognized the right of the plaintiffs to
finally have such judgment enforced. The MTC disposed of the case as follows:

WHEREFORE, judgment is ordered reviving the previous judgment of the Regional Trial Court there being,
and still, preponderance of evidence in favor of plaintiffs, as follows:

1. That the herein plaintiffs are the lawful owners of the five-sixth (5/6) portion of Lot No. 4080,
Pls-54, registered in Original Certificate of Title No. 730, more particularly x x x described,
delineated and/or indicated in the Sketch Plan which is now marked as Exhibit "B-1";

2. That the said five-sixth portion which is herein adjudged as being owne[d] by herein plaintiffs,
includes the portions of land presently being occupied by defendants Victor Eulin, Consesa Padre,
Celso Castillo, Leo Atiga, Santos Corollo, Iñego Armogela, Salustiano Millano, Milagros Gile, Pusay
Enting, Galeleo Pilapil, more particularly indicated in Exhibit "B-1" and marked as Exhibits "B-3",
"B-4", "B-5," "B-6," "B-7," "B-8," "B-9," "B-10," "B-11," "B-12," and "B-13", respectively;

3. Ordering the defendants mentioned in No. 2, hereof and THOSE PRESENTLY NAMED AS PARTY-
DEFENDANTS IN THIS REVIVAL OF JUDGMENT AND THOSE ACTING IN PRIVITY to vacate from the
lots respectively occupied by them and restore [to] the herein plaintiff x x x the material
possession thereof;

4. Condemning and ordering each of the same defendants named in the previous civil case and
those NAMED ANEW to jointly and severally pay the plaintiffs the amount of P5,000.00,
representing attorney’s fees, and P2,000.00 as litigation expenses;

5. CONDEMNING ALL DEFENDANTS HEREIN TO PAY EXEMPLARY DAMAGES FOR OBSTINATELY

VIOLATING THE DECISION OF THE COURT JOINTLY AND SEVERALLY X X X THE AMOUNT OF
P5,000.00, and to pay the costs of the suit.

SO ORDERED.11

Nilo thereafter appeared and moved to reconsider 12 the MTC judgment. He argued that the MTC is without
jurisdiction over the case, opining that the action for revival of judgment is a real action and should be
filed with the same court, i.e., the RTC, which rendered the decision sought to be revived. Or, assuming
arguendo that the MTC has jurisdiction over real actions, it must be noted that the subject property is
assessed at P26,940.00, an amount beyond the P20,000.00 limit for the MTC to have jurisdiction over real
actions, in accordance with Republic Act (RA) No. 7691.13 Nilo also contended that the action is dismissible
for a) lack of certificate of non-forum shopping in the complaint and b) prescription, the complaint for
revival of judgment having been filed beyond the 10-year reglementary period14 from the time the
judgment sought to be revived became final and executory in November 1986.
The MTC denied the motion for reconsideration.15 It held that the case is an action for revival of judgment
and not an action for ownership and possession, which had already long been settled. To the MTC, the
former is a personal action under Section 2, Rule 4 of the Rules of Court which may be filed, at the
election of plaintiffs, either at the court of the place where they reside or where the defendants reside.
The court found excusable the absence of the certification against forum shopping, justifying that the
action filed before it is merely a continuation of the previous suit for ownership. Moreover, the counsel for
the Badillo family, a nonagenarian, may not yet have been familiar with the rule when Civil Case No. 104
was filed. To it, this mistake should not prejudice the Badillo family who deserve to possess and enjoy
their properties.

Ruling of the Regional Trial Court

By way of a special civil action for certiorari, Nilo elevated the case to the RTC to question the MTC’s
jurisdiction,16 reiterating the same grounds he had raised before the MTC. The case was docketed as
Special Civil Action No. A-927.

On July 21, 2004, however, the RTC dismissed said petition17 on the ground that it was filed late.
Moreover, the RTC upheld the MTC’s jurisdiction over the case, affirming the MTC’s ratiocination that an
action for enforcement of a dormant judgment is a personal action, and hence may be filed either at the
court of the place where plaintiffs reside or where the defendants reside.

In his Motion for Reconsideration,18 Nilo contended that his petition with the RTC was timely filed as
shown by the registry receipt dated March 1, 2004,19 stamped on the mailing envelope he used in filing
said petition. He argued that this date of mailing is also the date of filing. He also contended that the
RTC’s Decision was bereft of any explanation as to why it ruled that the case is a personal action. He
further alleged that the RTC failed to discuss the issues of prescription and non-compliance with the rule
against forum shopping.

In its Order dated September 20, 2004, the RTC denied the motion for reconsideration. It said:

Assuming that the date of posting was March 1, 2004, as shown in the registry

receipts, still the 60-day reglementary period had already lapsed with December 30, 2003 as the
reckoning period when petitioner received the December 9, 2003 Order of Hon. Judge Jose A. Benesisto.
With the month of February, 2004 having 29 days, it is now clear that the petition was filed sixty one (61)
days after; hence, there is no timeliness of the petition to speak of.

Civil Case No. 104 is an ordinary action to enforce a dormant judgment filed by plaintiffs against
defendants. Being an action for the enforcement of dormant judgment for damages is a personal one and
should be brought in any province where the plaintiff or defendant resides, at the option of the plaintiff.
As regards prescription, the present rule now is, the prescriptive period commences to run anew from the
finality of the revived judgment. A revived judgment is enforceable again by motion within five years and
thereafter by another action within ten years from the finality of the revived judgment. There is,
therefore, no prescription or beyond the statute of limitations to speak [sic] in the instant case.
Petitioner’s contention must therefore fail.

It is but proper and legal that the plaintiffs in Civil Case No. 514 of which they are the prevailing parties to
institute for the enforcement of a dormant judgment [which right] they have failed to exercise x x x for
more than a decade. Being an ordinary action to enforce a dormant judgment, not even testimonial
evidence is necessary to enforce such judgment because the decision had long obtained its finality.

x x x x20

Hence, this petition.

Petitioner’s Arguments

Nilo finds the RTC’s adverse ruling as wanting in sufficient explanation as to the factual and legal bases for
upholding the MTC. He also highlights the failure of the Badillo family to attach to their complaint a
certificate of non-forum shopping. Petitioner also argues that the date of mailing of his petition with the
RTC is the date of his filing. He stressed that the filing of his petition on March 1, 2004 was well within the
prescriptive period. As the 60th day from December 30, 2003 fell on a Saturday, he maintains that the
Rules of Court allows him to file his petition on the next working day, which is March 1, 2004, a Monday.

As have already been raised in the courts below, Nilo mentions the

following grounds for the dismissal of the action against him before the MTC:

a) The MTC lacks jurisdiction. Nilo reiterates that the prime objective of the Badillo family in Civil
Case No. 104 is to recover real property, which makes it a real action. Citing the case of Aldeguer
v. Gemelo,21 he contends that this suit must be brought before the RTC of Allen, Northern Samar.
Besides, the assessed value of the land in controversy, i.e., P26,940.00, divests the MTC of
jurisdiction.

b) Prescription. Nilo claims that the Badillo family’s suit had already lapsed as they allowed 11
years to pass without resorting to any legal remedy before filing the action for revival of judgment.
Although the Badillo family moved for the issuance of a writ of execution in Civil Case No. A-514,
the same did not interrupt the running of the period to have the judgment enforced by motion or
by action.

Respondents’ Arguments

While impliedly acknowledging that Nilo seasonably filed his petition for certiorari with the RTC, the Badillo
family note that he should have filed an appeal before the RTC. They claim that they properly filed their
case, a personal action, with the MTC of San Isidro, Northern Samar as they are allowed under Section 2,
Rule 4 of the Rules of Court to elect the venue as to where to file their case.

Granting that their action is considered a revival of judgment, the Badillos claim that they filed their suit
within the 10-year period. They contend that in filing Civil Case No. 104 in December 1997, the
prescriptive period should not be counted from the finality of judgment in Civil Case No. A-514, but should
be reckoned from August 22, 1989, when the RTC issued an Order that considered as abandoned the
motion to declare the defendants in default in the contempt proceedings.

Issue

The question that should be settled is whether the RTC correctly affirmed the MTC ruling that it has
jurisdiction over Civil Case No. 104.

Our Ruling

Indeed, "[t]he existence and availability of the right of appeal proscribes a resort to certiorari." 22 The
court a quo could have instead dismissed Nilo’s petition on the ground that this question should have been
raised by way of an appeal.23 This rule is subject to exceptions, such as "when the writs issued are null
and void or when the questioned order amounts to an oppressive exercise of judicial authority." 24 As will
be later on discussed, the RTC, although it ultimately erred in its judgment, was nevertheless correct in
entertaining the special civil action for certiorari. The exceptions we mentioned apply in the case at bar,
as it turns out that petitioner’s jurisdictional objection has compelling basis.

Timeliness of the petition for certiorari

The petition for certiorari before the RTC was timely filed. If the pleading filed was not done personally,
the date of mailing, as stamped on the envelope or the registry receipt, is considered as the date of
filing.25 By way of registered mail, Nilo filed his petition for certiorari with the RTC on March 1, 2004, as
indicated in the date stamped on its envelope. From the time Nilo received on December 30, 2003 the
MTC’s denial of his motion for reconsideration, the last day for him to file his petition with the RTC fell on
February 28, 2004, a Saturday. Under the Rules, should the last day of the period to file a pleading fall on
a Saturday, a Sunday, or a legal holiday, a litigant is allowed to file his or her pleading on the next
working day,26 which in the case at bar, fell on a Monday, i.e., March 1, 2004.

Jurisdiction over Civil Case No. 104

We shall now look into the core argument of Nilo anent the MTC’s lack of jurisdiction over the case and
the alleged prescription of the action.
"[W]hat determines the nature of the action and which court has jurisdiction over it are the allegations in
the complaint and the character of the relief sought."27 In their complaint in Civil Case No. 104, some of
the allegations of the Badillo family, which petitioner never opposed and are thus deemed admitted by
him, states:

4. That plaintiffs are the joint owners of Lot No. 4080. Pls-54, with a total area of 10,167 square
meters, covered by OCT No. 736 in the name of Eutequio Badillo, deceased husband of plaintiff
Fructosa Badillo and father of the rest of the other plaintiffs, covered by Tax Declaration No. 9160
and assessed at P26,940.00;

5. That plaintiffs in Civil Case No. A-514, entitled Fructosa Badillo versus Celso Castillo, et. al.,
were the prevailing parties in the aforesaid case as evidenced by the hereto attached copy of the
decision rendered by the Regional Trial Court in the above-entitled case and marked as Annex "A"
and made integral part of this complaint;

6. That after the judgment in the above-mentioned case became final, the same was executed as
evidenced by a copy of the writ of execution hereto attached as Annex "B" and made integral part
hereof;

7. That despite the service of the writ of execution and vacating the properties x x x illegally
occupied by the afore-mentioned defendants, the latter re-entered the property in 1990 after the
execution and refused to vacate the same [thereby] reasserting their claims of ownership over [the
disputed properties] and refused to vacate the same despite repeated demands;

8. That all attempts towards a peaceful settlement of the matter outside of Court to avoid a civil
suit, such as referring the matter of the Brgy. Captain and the Brgy. Lupon of Brgy. Alegria, San
Isidro, N. Samar were of no avail as the defendants refused to heed lawful demands of plaintiffs to
x x x vacate the premises[. I]nstead, defendants claimed ownership of the property in question
refused to vacate the same despite repeated demands [such] that having lost all peaceful
remedies, plaintiffs were constrained to file this suit. Certificate to file Action is hereby attached
and marked as Annex "C" and made integral part hereof;28 (Emphasis supplied.)

Under paragraph 6 of their complaint, the Badillos alleged that judgment in Civil Case No. A-514 had
become final and had been executed. Further, in paragraph 7, they alleged that in 1990, the defendants
re-entered the property and despite repeated demands they refused to vacate the same. Thus, the
Badillos were not at all seeking a revival of the judgment. In reality, they were asking the MTC to legally
oust the occupants from their lots.

The Badillo family would have been correct in seeking judicial recourse from the MTC had the case been
an action for ejectment, i.e., one of forcible entry under Rule 70 of the Rules of Court wherein essential
facts constituting forcible entry29 have been averred and the suit filed within one year from the time of
unlawful deprivation or withholding of possession, as the MTC has exclusive original jurisdiction over such
suit.30 However, as the alleged dispossession occurred in 1990, the one-year period to bring a case for
forcible entry had expired since the Badillos filed their suit only in December 1997. We thus construe that
the remedy they availed of is the plenary action of accion publiciana, which may be instituted within 10
years.31 "It is an ordinary civil proceeding to determine the better right of possession of realty
independently of title. It also refers to an ejectment suit filed after the expiration of one year from the
accrual of the cause of action or from the unlawful withholding of possession of the realty." 32

Whether the case filed by the Badillo family is a real or a personal action is irrelevant. Determining
whether an action is real or personal is for the purpose only of determining venue. In the case at bar, the
question raised concerns jurisdiction, not venue.

Although the Badillo family correctly filed a case for accion publiciana, they pleaded their case before the
wrong court. In civil cases involving realty or interest therein not within Metro Manila, the MTC has
exclusive original jurisdiction only if the assessed value of the subject property or interest therein does
not exceed P20,000.00.33 As the assessed value of the property subject matter of this case is P26,940.00,
and since more than one year had expired after the dispossession, jurisdiction properly belongs to the
RTC.34 Hence, the MTC has no judicial authority at all to try the case in the first place. "A decision of the
court without jurisdiction is null and void; hence, it could never logically become final and executory. Such
a judgment may be attacked directly or collaterally." 35
Based on the foregoing discussion, it is not anymore necessary to discuss the issue raised concerning the
failure to include a certification of non-forum shopping.

Although we are compelled to dismiss respondents’ action before the MTC, they are nonetheless not
precluded from filing the necessary judicial remedy with the proper court.lawphi1

WHEREFORE, the petition is GRANTED. The Orders dated July 21 and September 20, 2004 of the Regional
Trial Court of Allen, Northern Samar, Branch 23 in Special Civil Action No. A-927 are hereby SET ASIDE.
The Municipal Trial Court of San Isidro, Northern Samar is DIRECTED to dismiss Civil Case No. 104 for
lack of jurisdiction.

G.R. No. 176389               January 18, 2011

ANTONIO LEJANO, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES, Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 176864

PEOPLE OF THE PHILIPPINES, Appellee,

vs.
HUBERT JEFFREY P. WEBB, ANTONIO LEJANO, MICHAEL A. GATCHALIAN, HOSPICIO FERNANDEZ, MIGUEL
RODRIGUEZ, PETER ESTRADA and GERARDO BIONG, Appellants.

RESOLUTION

ABAD, J.:

On December 14, 2010 the Court reversed the judgment of the Court of Appeals (CA) and acquitted the
accused in this case, Hubert Jeffrey P. Webb, Antonio Lejano, Michael A. Gatchalian, Hospicio Fernandez,
Miguel Rodriguez, Peter Estrada, and Gerardo Biong of the charges against them on the ground of lack of
proof of their guilt beyond reasonable doubt.

On December 28, 2010 complainant Lauro G. Vizconde, an immediate relative of the victims, asked the
Court to reconsider its decision, claiming that it "denied the prosecution due process of law; seriously
misappreciated the facts; unreasonably regarded Alfaro as lacking credibility; issued a tainted and
erroneous decision; decided the case in a manner that resulted in the miscarriage of justice; or committed
grave abuse in its treatment of the evidence and prosecution witnesses." 1

But, as a rule, a judgment of acquittal cannot be reconsidered because it places the accused under double
jeopardy. The Constitution provides in Section 21, Article III, that:

Section 21. No person shall be twice put in jeopardy of punishment for the same offense. x x x

To reconsider a judgment of acquittal places the accused twice in jeopardy of being punished for the crime
of which he has already been absolved. There is reason for this provision of the Constitution. In criminal
cases, the full power of the State is ranged against the accused. If there is no limit to attempts to
prosecute the accused for the same offense after he has been acquitted, the infinite power and capacity of
the State for a sustained and repeated litigation would eventually overwhelm the accused in terms of
resources, stamina, and the will to fight.

As the Court said in People of the Philippines v. Sandiganbayan:2

[A]t the heart of this policy is the concern that permitting the sovereign freely to subject the citizen to a
second judgment for the same offense would arm the government with a potent instrument of oppression.
The provision therefore guarantees that the State shall not be permitted to make repeated attempts to
convict an individual for an alleged offense, thereby subjecting him to embarrassment, expense, and
ordeal and compelling him to live in a continuing state of anxiety and insecurity, as well as enhancing the
possibility that even though innocent he may be found guilty. Society’s awareness of the heavy personal
strain which a criminal trial represents for the individual defendant is manifested in the willingness to limit
the government to a single criminal proceeding to vindicate its very vital interest in the enforcement of
criminal laws.3

Of course, on occasions, a motion for reconsideration after an acquittal is possible. But the grounds are
exceptional and narrow as when the court that absolved the accused gravely abused its discretion,
resulting in loss of jurisdiction, or when a mistrial has occurred. In any of such cases, the State may assail
the decision by special civil action of certiorari under Rule 65.4

Here, although complainant Vizconde invoked the exceptions, he has been unable to bring his pleas for
reconsideration under such exceptions. For instance, he avers that the Court "must ensure that due
process is afforded to all parties and there is no grave abuse of discretion in the treatment of witnesses
and the evidence."5 But he has not specified the violations of due process or acts constituting grave abuse
of discretion that the Court supposedly committed. His claim that "the highly questionable and suspicious
evidence for the defense taints with serious doubts the validity of the decision" 6 is, without more, a mere
conclusion drawn from personal perception.

Complainant Vizconde cites the decision in Galman v. Sandiganbayan 7 as authority that the Court can set
aside the acquittal of the accused in the present case. But the government proved in Galman that the
prosecution was deprived of due process since the judgment of acquittal in that case was "dictated,
coerced and scripted."8 It was a sham trial. Here, however, Vizconde does not allege that the Court held a
sham review of the decision of the CA. He has made out no case that the Court held a phony deliberation
in this case such that the seven Justices who voted to acquit the accused, the four who dissented, and the
four who inhibited themselves did not really go through the process.

Ultimately, what the complainant actually questions is the Court’s appreciation of the evidence and
assessment of the prosecution witnesses’ credibility. He ascribes grave error on the Court’s finding that
Alfaro was not a credible witness and assails the value assigned by the Court to the evidence of the
defense. In other words, private complainant wants the Court to review the evidence anew and render
another judgment based on such a re-evaluation. This is not constitutionally allowed as it is merely a
repeated attempt to secure Webb, et al’s conviction. The judgment acquitting Webb, et al is final and can
no longer be disturbed.

WHEREFORE, the Court DENIES for lack of merit complainant Lauro G. Vizconde’s motion for
reconsideration dated December 28, 2010.

For essentially the same reason, the Court DENIES the motions for leave to intervene of Fr. Robert P.
Reyes, Sister Mary John R. Mananzan, Bishop Evangelio L. Mercado, and Dante L.A. Jimenez, representing
the Volunteers Against Crime and Corruption and of former Vice President Teofisto Guingona, Jr.

No further pleadings shall be entertained in this case.

G.R. No. 185535               January 31, 2011

MANILA INTERNATIONAL AIRPORT AUTHORITY, Petitioner,

vs.
REYNALDO (REYMUNDO1 ) AVILA, CALIXTO AGUIRRE, and SPS. ROLANDO and ANGELITA QUILANG,
Respondents.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 filed by the Manila International Airport Authority
(MIAA) seeking to reverse and set aside the June 16, 2008 Decision2 of the Court of Appeals (CA) in CA-
G.R. SP No. 97536 which annulled the August 7, 20063 and the November 13, 20064 Resolutions of the
Regional Trial Court of Pasay City, Branch 117 (RTC), in Civil Case No. 05-0399-CFM.

From the records, it appears that in June 1968, the late Tereso Tarrosa (Tarrosa) leased a 4,618 square
meter parcel of land located along the MIAA Road in Pasay City from its owner, MIAA. Before the
expiration of the lease sometime in 1993, Tarrosa filed a case against MIAA to allow him to exercise his
pre-emptive right to renew the lease contract. Finding that Tarrosa violated certain provisions of its
contract with MIAA, the trial court dismissed the case. Tarrosa appealed before the CA but to no avail.
When Tarrosa passed away, he was substituted by his estate represented by his heirs’ attorney-in-fact,
Annie Balilo (Balilo). On June 9, 1998, the CA decision became final and executory. 5

Thereafter, MIAA sent letters of demand to the heirs asking them to vacate the subject land. Unheeded,
MIAA instituted an ejectment suit against the Estate of Tarrosa (Estate) before the Metropolitan Trial
Court of Pasay City, Branch 47 (MeTC), docketed as Civil Case No. 64-04-CFM. On February 18, 2005, the
MeTC rendered its decision6 ordering the Estate and all persons claiming rights under it to vacate the
premises, peacefully return possession thereof to MIAA and pay rentals, attorney’s fees and costs of suit.

The Estate, through Balilo, appealed the case to the RTC, where it was docketed as Civil Case No. 05-
0399-CFM. In its July 22, 2005 Decision,7 the RTC gave due course to the appeal and affirmed the MeTC
decision in toto.

The Estate then filed a motion for reconsideration while MIAA sought the correction of a clerical error in
the MeTC decision as well as the issuance of a writ of execution. On September 20, 2005, the RTC issued
an omnibus order8 denying the Estate’s motion for reconsideration, granting MIAA’s motion to correct a
clerical error and granting the motion for the issuance of a writ of execution.

On the strength of the writ of execution issued by the RTC, a notice to vacate was served on the
occupants of the subject premises. The RTC Sheriff partially succeeded in evicting the Estate, Balilo and
some other occupants. Still, others remained in the premises.9

Among the remaining occupants were respondents Calixto E. Aguirre (Aguirre), Reymundo Avila (Avila),
and spouses Rolando and Angelita Quilang (Quilangs), who filed separate special appearances with
motions to quash the writ of execution. 10 In essence, all of them interposed that they were not covered by
the writ of execution because they did not derive their rights from the Estate since they entered the
subject premises only after the expiration of the lease contract between MIAA and Tarrosa. They further
stated that the subject premises had already been set aside as a government housing project by virtue of
Presidential Proclamation No. 595 (Proclamation No. 595).11

On May 5, 2006, the RTC granted the motion to quash filed by the remaining occupants, including Avila
and the Quilangs.

On August 4, 2006, the RTC denied the motion to quash filed by Aguirre. In its August 4, 2006
Resolution,12 the RTC stated:

It is important to emphasize at this juncture that during the ocular inspection conducted by this court
(Thru Presiding Judge, Henrick F. Gingoyon), records reveal that the area occupied by Mr. Calixto Aguirre,
as he claimed, is more or less 1,000 square meters. Thus, citing the provision of the law pertaining to
qualified occupants or beneficiaries who can avail of the privilege, the area alone possessed by Mr. Calixto
Aguirre will not qualify as beneficiary under Republic Act 7279. Moreover, the result of the ocular
inspection revealed that the area is used by Mr. Calixto Aguirre as business establishment and in fact
some of them were even subject for lease.

Therefore, from the very nature of the utilization of the property the same is beyond doubt not covered
and the same is contrary to the letter and spirit of the aforementioned Presidential Proclamation No. 595.

WHEREFORE, premises considered, the instant Motion to Quash Writ of Execution and Set Aside Judgment
filed by Mr. Calixto Aguirre is hereby DENIED for lack of merit.

SO ORDERED. (underscoring supplied)13

On August 7, 2006, a similar finding was made with regard to Avila and the Quilangs when the RTC
resolved MIAA’s motion for reconsideration. In its August 7, 2006 Resolution, the RTC likewise wrote:

Unfortunately, however, the result of the ocular inspection revealed that some of the 28 Oppositors,
namely: Mr. REYMUNDO AVILA; SPS. ROLANDO QUILANG AND ANGELITA QUILANG; ROMEO CAGAS;
JEANETTE LOPEZ, are using the property subject to this case not as family dwelling but rather utilized as
business establishments. Thus, the said occupancy is not covered under Republic Act 7279 in order to be
considered qualified beneficiaries. Relatedly, therefore that the Writ of Execution cannot be implemented
against the afore-named persons on the ground that they are qualified beneficiaries under Presidential
Proclamation No. 595 in relation to the provision of Republic Act 7279 is unwarranted under the
circumstances.

It is important to emphasize at this juncture that during the ocular inspection conducted by this court
(Thru Presiding Judge, Henrick F. Gingoyon), records reveal that the area occupied by Mr. REYNALDO
(REYMUNDO) AVILA, is occupying more or less 500 square meters and the same is actually use[d] as an
apartment for lease/ rent; Sps. ROLANDO AND ANGELITA QUILANG; is occupying the premises by virtue
of the rights vested by their father, Calixto Aguirre, and also utilizing the property for rent; ROMEO
CAGAS AND JEANNETE LOPEZ are tenants of Calixto Aguirre.

Thus, citing the provision of the law pertaining to qualified occupants or beneficiaries who can avail of the
privilege, the area alone possessed by Mr. Reynaldo (Reymundo) Avila; Sps. Rolando and Angelita Quilang
will not qualify as beneficiaries under Republic Act 7279. Moreover, the area as shown in the result of the
ocular inspection is used by them as business establishment and in fact some of them were even subject
for lease.

Therefore, from the very nature of the utilization of the property the same is beyond doubt not covered
and the same is contrary to the letter and spirit of the aforementioned Presidential Proclamation No. 595
in relation to Republic Act 7279.

WHEREFORE, premises considered, the Order dated May 5, 2006 is hereby MODIFIED in so far as
Oppositors REYNALDO (REYMUNDO) AVILA; Sps. ROLANDO QUILANG and ANGELITA QUILANG; ROMEO
CAGAS AND JEANETTE LOPEZ are concerned. Let the corresponding Writ of Execution against the afore-
mentioned persons be issued.

SO ORDERED. (underscoring supplied)14

The above findings were reiterated in the assailed RTC’s Joint Resolution dated November 13, 2006 which
denied the separate motions for reconsideration of the respondents.

On account of this, Aguirre, Avila and the Quilangs went to the CA on certiorari questioning the propriety
of the RTC’s disposition, more particularly, its finding that they were not qualified beneficiaries under
Proclamation No. 595.

On June 16, 2008, the CA rendered the subject decision annulling the RTC resolutions dated August 7,
2006 and November 13, 2006. According to the CA, there was a grave abuse of discretion on the part of
the RTC in ruling that respondents could not invoke Proclamation No. 595 because the mandate to
determine the same rested with the National Housing Authority (NHA). Thus:

X x x. As provided in said Proclamation No. 595, the National Housing Authority (NHA), under the
supervision of the Housing and Urban Development Coordinating Council (HUDCC) and in coordination
with the MIAA, shall be the agency primarily responsible for the administration and disposition of the lots
subject thereof in favor of the bona fide occupants therein, pursuant to the provisions of Sections 8, 9 and
12 of Republic Act 7279 and other pertinent laws.15

In a related case, MIAA also went to the CA on certiorari questioning the RTC’s grant of another motion to
quash its writ of execution filed by other remaining occupants. Said occupants are not parties in this case.
The case was docketed as CA-G.R. SP No. 96477.16 In said case, taking note that the occupants
themselves admitted that they had entered the subject premises without the permission of either the
MIAA or the Estate, the CA ruled that the said occupants were mere trespassers or squatters who had no
right to possess the same. Accordingly, the writ of execution issued in the ejectment case could be
enforced against them even though they were not named parties in the ejectment suit. Some of the
occupants/aggrieved parties therein, namely, Alejandro Aguirre (son of Calixto Aguirre) and Norberto
Aguirre (brother of Calixto Aguirre), came to this Court via a petition for review but it was summarily
denied for having been filed out of time and for their failure to show any reversible error on the part of
the CA. The denial became final and executory on July 23, 2009.17

Going back to the June 16, 2008 CA Decision, MIAA comes now to this Court questioning its annulment of
the RTC resolutions by raising the following:

ISSUES:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT PUBLIC RESPONDENT JUDGE
ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION
WHEN HE ARROGATED UPON HIMSELF THE DETERMINATION THAT PRIVATE RESPONDENTS ARE NOT
QUALIFIED BENEFICIARIES UNDER PROCLAMATION NO. 595

WHETHER OR NOT A NAKED CLAIM OF POTENTIAL QUALIFIED BENEFICIARIES OF A SOCIALIZED

HOUSING PROGRAM PREVAIL OVER THE RIGHTS OF THE PERSON WITH PRIOR PHYSICAL POSSESSION
AND A BETTER RIGHT OVER THE DISPUTED REAL PROPERTY18

The Court finds the petition meritorious.

As mentioned earlier, the controversy stemmed from an ejectment suit filed by MIAA against the Estate
represented by Balilo wherein the MeTC ordered the eviction of the Estate, Balilo and all those claiming
rights under them.

The MeTC decision was affirmed by the RTC. Eventually, the Estate, Balilo and some occupants were
evicted.19 Respondents Aguirre, Avila and the Quilangs, together with some other remaining occupants,
filed their separate special appearances and sought to quash the RTC’s writ of execution. They claimed
that they did not derive their right to occupy the premises from the Estate or from Balilo but rather from
Proclamation No. 595 as they were potential beneficiaries of the same. In its opposition, the MIAA
submitted documents prepared and signed by Balilo showing that the respondents were tenants of
Tarrosa or Balilo.20 The RTC, through its then Presiding Judge, the late Henrick F. Gingoyon (Judge
Gingoyon), conducted an ocular inspection on the premises.1âwphi1 Judge Jesus B. Mupas, who took over
from Judge Gingoyon, reproduced the findings of the latter in his August 4, 2006 Resolution. 21

The same finding was reached with respect to Avila and the Quilangs in the August 7, 2006 Resolution of
the RTC22 and reiterated in its Joint Resolution dated November 13, 2006 which dismissed the separate
motions for reconsideration of the respondents.

Going over the RTC’s findings and disposition, the Court is of the considered view that it acted well within
its jurisdiction. It is settled in ejectment suits that a defendant’s claim of ownership over a disputed
property will not divest the first level courts of their summary jurisdiction. Thus, even if the pleadings
raise the issue of ownership, the court may still pass on the same although only for the purpose of
determining the question of possession. Any adjudication with regard to the issue of ownership is only
provisional and will not bar another action between the same parties which may involve the title to the
land. This doctrine is but a necessary consequence of the nature of ejectment cases where the only issue
up for adjudication is the physical or material possession over the real property. 23

Granting that their occupation of the subject premises was not derived from either Tarrosa or Balilo, the
postulation of the respondents makes them mere trespassers or squatters acquiring no vested right
whatsoever to the subject property.24 Thus, to thwart the decision of the court, they claim that they were
potential beneficiaries of Proclamation No. 595. Certainly, this bare anticipation on their part should not
be permitted to defeat the right of possession by the owner, MIAA. Juxtaposed against the evidence
adduced by the MIAA showing that respondents were once tenants of either Tarrosa or Balilo,
respondents’ bare claim that they could be beneficiaries of Proclamation No. 595 cannot be given any
consideration.

At any rate, as earlier stated, the ruling on the inapplicability of Proclamation No. 595 is only provisional
and will certainly not bar the NHA or any other agency of the government tasked to implement
Proclamation No. 595, from making a determination of respondents’ qualifications as beneficiaries, 25 in
another action.

In Pajuyo v. CA,26 the very case relied upon by the respondents and later cited by the CA in its assailed
decision, the Court reiterated that the determination of the rights of claimants to public lands is distinct
from the determination of who has better right of physical possession. While it was held therein that the
CA erred in making a premature determination of the rights of the parties under Proclamation No. 137, it
was emphasized that the courts should expeditiously resolve the issue of physical possession to prevent
disorder and breaches of peace.

WHEREFORE, the petition is GRANTED. The June 16, 2008 Decision of the CA in CA-G.R. SP No. 97536 is
hereby REVERSED and SET ASIDE and another judgment entered reinstating the August 7, 2006 and the
November 13, 2006 Resolutions of the Regional Trial Court of Pasay City, Branch 117, in Civil Case No.
05-0399-CFM.
G.R. No. 146364             June 3, 2004

COLITO T. PAJUYO, petitioner,

vs.
COURT OF APPEALS and EDDIE GUEVARRA, respondents.

DECISION

CARPIO, J.:

The Case

Before us is a petition for review1 of the 21 June 2000 Decision2 and 14 December 2000 Resolution of the
Court of Appeals in CA-G.R. SP No. 43129. The Court of Appeals set aside the 11 November 1996
decision3 of the Regional Trial Court of Quezon City, Branch 81,4 affirming the 15 December 1995
decision5 of the Metropolitan Trial Court of Quezon City, Branch 31.6

The Antecedents

In June 1979, petitioner Colito T. Pajuyo ("Pajuyo") paid P400 to a certain Pedro Perez for the rights over
a 250-square meter lot in Barrio Payatas, Quezon City. Pajuyo then constructed a house made of light
materials on the lot. Pajuyo and his family lived in the house from 1979 to 7 December 1985.

On 8 December 1985, Pajuyo and private respondent Eddie Guevarra ("Guevarra") executed a Kasunduan
or agreement. Pajuyo, as owner of the house, allowed Guevarra to live in the house for free provided
Guevarra would maintain the cleanliness and orderliness of the house. Guevarra promised that he would
voluntarily vacate the premises on Pajuyo’s demand.

In September 1994, Pajuyo informed Guevarra of his need of the house and demanded that Guevarra
vacate the house. Guevarra refused.

Pajuyo filed an ejectment case against Guevarra with the Metropolitan Trial Court of Quezon City, Branch
31 ("MTC").

In his Answer, Guevarra claimed that Pajuyo had no valid title or right of possession over the lot where
the house stands because the lot is within the 150 hectares set aside by Proclamation No. 137 for
socialized housing. Guevarra pointed out that from December 1985 to September 1994, Pajuyo did not
show up or communicate with him. Guevarra insisted that neither he nor Pajuyo has valid title to the lot.

On 15 December 1995, the MTC rendered its decision in favor of Pajuyo. The dispositive portion of the
MTC decision reads:

WHEREFORE, premises considered, judgment is hereby rendered for the plaintiff and against
defendant, ordering the latter to:

A) vacate the house and lot occupied by the defendant or any other person or persons
claiming any right under him;

B) pay unto plaintiff the sum of THREE HUNDRED PESOS (P300.00) monthly as reasonable
compensation for the use of the premises starting from the last demand;

C) pay plaintiff the sum of P3,000.00 as and by way of attorney’s fees; and

D) pay the cost of suit.

SO ORDERED.7

Aggrieved, Guevarra appealed to the Regional Trial Court of Quezon City, Branch 81 ("RTC").

On 11 November 1996, the RTC affirmed the MTC decision. The dispositive portion of the RTC decision
reads:
 WHEREFORE, premises considered, the Court finds no reversible error in the decision appealed
from, being in accord with the law and evidence presented, and the same is hereby affirmed en
toto.

SO ORDERED.8

Guevarra received the RTC decision on 29 November 1996. Guevarra had only until 14 December 1996 to
file his appeal with the Court of Appeals. Instead of filing his appeal with the Court of Appeals, Guevarra
filed with the Supreme Court a "Motion for Extension of Time to File Appeal by Certiorari Based on Rule
42" ("motion for extension"). Guevarra theorized that his appeal raised pure questions of law. The
Receiving Clerk of the Supreme Court received the motion for extension on 13 December 1996 or one day
before the right to appeal expired.

On 3 January 1997, Guevarra filed his petition for review with the Supreme Court.

On 8 January 1997, the First Division of the Supreme Court issued a Resolution 9 referring the motion for
extension to the Court of Appeals which has concurrent jurisdiction over the case. The case presented no
special and important matter for the Supreme Court to take cognizance of at the first instance.

On 28 January 1997, the Thirteenth Division of the Court of Appeals issued a Resolution 10 granting the
motion for extension conditioned on the timeliness of the filing of the motion.

On 27 February 1997, the Court of Appeals ordered Pajuyo to comment on Guevara’s petition for review.
On 11 April 1997, Pajuyo filed his Comment.

On 21 June 2000, the Court of Appeals issued its decision reversing the RTC decision. The dispositive
portion of the decision reads:

WHEREFORE, premises considered, the assailed Decision of the court a quo in Civil Case No. Q-96-
26943 is REVERSED and SET ASIDE; and it is hereby declared that the ejectment case filed against
defendant-appellant is without factual and legal basis.

SO ORDERED.11

Pajuyo filed a motion for reconsideration of the decision. Pajuyo pointed out that the Court of Appeals
should have dismissed outright Guevarra’s petition for review because it was filed out of time. Moreover,
it was Guevarra’s counsel and not Guevarra who signed the certification against forum-shopping.

On 14 December 2000, the Court of Appeals issued a resolution denying Pajuyo’s motion for
reconsideration. The dispositive portion of the resolution reads:

WHEREFORE, for lack of merit, the motion for reconsideration is hereby DENIED. No costs.

SO ORDERED.12

The Ruling of the MTC

The MTC ruled that the subject of the agreement between Pajuyo and Guevarra is the house and not the
lot. Pajuyo is the owner of the house, and he allowed Guevarra to use the house only by tolerance. Thus,
Guevarra’s refusal to vacate the house on Pajuyo’s demand made Guevarra’s continued possession of the
house illegal.

The Ruling of the RTC

The RTC upheld the Kasunduan, which established the landlord and tenant relationship between Pajuyo
and Guevarra. The terms of the Kasunduan bound Guevarra to return possession of the house on
demand.

The RTC rejected Guevarra’s claim of a better right under Proclamation No. 137, the Revised National
Government Center Housing Project Code of Policies and other pertinent laws. In an ejectment suit, the
RTC has no power to decide Guevarra’s rights under these laws. The RTC declared that in an ejectment
case, the only issue for resolution is material or physical possession, not ownership.

The Ruling of the Court of Appeals

The Court of Appeals declared that Pajuyo and Guevarra are squatters. Pajuyo and Guevarra illegally
occupied the contested lot which the government owned.

Perez, the person from whom Pajuyo acquired his rights, was also a squatter. Perez had no right or title
over the lot because it is public land. The assignment of rights between Perez and Pajuyo, and the
Kasunduan between Pajuyo and Guevarra, did not have any legal effect. Pajuyo and Guevarra are in pari
delicto or in equal fault. The court will leave them where they are.

The Court of Appeals reversed the MTC and RTC rulings, which held that the Kasunduan between Pajuyo
and Guevarra created a legal tie akin to that of a landlord and tenant relationship. The Court of Appeals
ruled that the Kasunduan is not a lease contract but a commodatum because the agreement is not for a
price certain.

Since Pajuyo admitted that he resurfaced only in 1994 to claim the property, the appellate court held that
Guevarra has a better right over the property under Proclamation No. 137. President Corazon C. Aquino
("President Aquino") issued Proclamation No. 137 on 7 September 1987. At that time, Guevarra was in
physical possession of the property. Under Article VI of the Code of Policies Beneficiary Selection and
Disposition of Homelots and Structures in the National Housing Project ("the Code"), the actual occupant
or caretaker of the lot shall have first priority as beneficiary of the project. The Court of Appeals concluded
that Guevarra is first in the hierarchy of priority.

In denying Pajuyo’s motion for reconsideration, the appellate court debunked Pajuyo’s claim that
Guevarra filed his motion for extension beyond the period to appeal.

The Court of Appeals pointed out that Guevarra’s motion for extension filed before the Supreme Court was
stamped "13 December 1996 at 4:09 PM" by the Supreme Court’s Receiving Clerk. The Court of Appeals
concluded that the motion for extension bore a date, contrary to Pajuyo’s claim that the motion for
extension was undated. Guevarra filed the motion for extension on time on 13 December 1996 since he
filed the motion one day before the expiration of the reglementary period on 14 December 1996. Thus,
the motion for extension properly complied with the condition imposed by the Court of Appeals in its 28
January 1997 Resolution. The Court of Appeals explained that the thirty-day extension to file the petition
for review was deemed granted because of such compliance.

The Court of Appeals rejected Pajuyo’s argument that the appellate court should have dismissed the
petition for review because it was Guevarra’s counsel and not Guevarra who signed the certification
against forum-shopping. The Court of Appeals pointed out that Pajuyo did not raise this issue in his
Comment. The Court of Appeals held that Pajuyo could not now seek the dismissal of the case after he
had extensively argued on the merits of the case. This technicality, the appellate court opined, was clearly
an afterthought.

The Issues

Pajuyo raises the following issues for resolution:

WHETHER THE COURT OF APPEALS ERRED OR ABUSED ITS AUTHORITY AND DISCRETION
TANTAMOUNT TO LACK OF JURISDICTION:

1) in GRANTING, instead of denying, Private Respondent’s Motion for an Extension of thirty

days to file petition for review at the time when there was no more period to extend as the
decision of the Regional Trial Court had already become final and executory.

2) in giving due course, instead of dismissing, private respondent’s Petition for Review even
though the certification against forum-shopping was signed only by counsel instead of by
petitioner himself.

3) in ruling that the Kasunduan voluntarily entered into by the parties was in fact a
commodatum, instead of a Contract of Lease as found by the Metropolitan Trial Court and in
 holding that "the ejectment case filed against defendant-appellant is without legal and
factual basis".

4) in reversing and setting aside the Decision of the Regional Trial Court in Civil Case No. Q-
96-26943 and in holding that the parties are in pari delicto being both squatters, therefore,
illegal occupants of the contested parcel of land.

5) in deciding the unlawful detainer case based on the so-called Code of Policies of the
National Government Center Housing Project instead of deciding the same under the
Kasunduan voluntarily executed by the parties, the terms and conditions of which are the
laws between themselves.13

The Ruling of the Court

The procedural issues Pajuyo is raising are baseless. However, we find merit in the substantive issues
Pajuyo is submitting for resolution.

Procedural Issues

Pajuyo insists that the Court of Appeals should have dismissed outright Guevarra’s petition for review
because the RTC decision had already become final and executory when the appellate court acted on
Guevarra’s motion for extension to file the petition. Pajuyo points out that Guevarra had only one day
before the expiry of his period to appeal the RTC decision. Instead of filing the petition for review with the
Court of Appeals, Guevarra filed with this Court an undated motion for extension of 30 days to file a
petition for review. This Court merely referred the motion to the Court of Appeals. Pajuyo believes that
the filing of the motion for extension with this Court did not toll the running of the period to perfect the
appeal. Hence, when the Court of Appeals received the motion, the period to appeal had already expired.

We are not persuaded.

Decisions of the regional trial courts in the exercise of their appellate jurisdiction are appealable to the
Court of Appeals by petition for review in cases involving questions of fact or mixed questions of fact and
law.14 Decisions of the regional trial courts involving pure questions of law are appealable directly to this
Court by petition for review.15 These modes of appeal are now embodied in Section 2, Rule 41 of the 1997
Rules of Civil Procedure.

Guevarra believed that his appeal of the RTC decision involved only questions of law. Guevarra thus filed
his motion for extension to file petition for review before this Court on 14 December 1996. On 3 January
1997, Guevarra then filed his petition for review with this Court. A perusal of Guevarra’s petition for
review gives the impression that the issues he raised were pure questions of law. There is a question of
law when the doubt or difference is on what the law is on a certain state of facts. 16 There is a question of
fact when the doubt or difference is on the truth or falsity of the facts alleged. 17

In his petition for review before this Court, Guevarra no longer disputed the facts. Guevarra’s petition for
review raised these questions: (1) Do ejectment cases pertain only to possession of a structure, and not
the lot on which the structure stands? (2) Does a suit by a squatter against a fellow squatter constitute a
valid case for ejectment? (3) Should a Presidential Proclamation governing the lot on which a squatter’s
structure stands be considered in an ejectment suit filed by the owner of the structure?

These questions call for the evaluation of the rights of the parties under the law on ejectment and the
Presidential Proclamation. At first glance, the questions Guevarra raised appeared purely legal. However,
some factual questions still have to be resolved because they have a bearing on the legal questions raised
in the petition for review. These factual matters refer to the metes and bounds of the disputed property
and the application of Guevarra as beneficiary of Proclamation No. 137.

The Court of Appeals has the power to grant an extension of time to file a petition for review. In
Lacsamana v. Second Special Cases Division of the Intermediate Appellate Court,18 we declared that the
Court of Appeals could grant extension of time in appeals by petition for review. In Liboro v. Court of
Appeals,19 we clarified that the prohibition against granting an extension of time applies only in a case
where ordinary appeal is perfected by a mere notice of appeal. The prohibition does not apply in a petition
for review where the pleading needs verification. A petition for review, unlike an ordinary appeal, requires
preparation and research to present a persuasive position.20 The drafting of the petition for review entails
more time and effort than filing a notice of appeal.21 Hence, the Court of Appeals may allow an extension
of time to file a petition for review.

In the more recent case of Commissioner of Internal Revenue v. Court of Appeals,22 we held that Liboro’s
clarification of Lacsamana is consistent with the Revised Internal Rules of the Court of Appeals and
Supreme Court Circular No. 1-91. They all allow an extension of time for filing petitions for review with
the Court of Appeals. The extension, however, should be limited to only fifteen days save in exceptionally
meritorious cases where the Court of Appeals may grant a longer period.

A judgment becomes "final and executory" by operation of law. Finality of judgment becomes a fact on
the lapse of the reglementary period to appeal if no appeal is perfected. 23 The RTC decision could not have
gained finality because the Court of Appeals granted the 30-day extension to Guevarra.

The Court of Appeals did not commit grave abuse of discretion when it approved Guevarra’s motion for
extension. The Court of Appeals gave due course to the motion for extension because it complied with the
condition set by the appellate court in its resolution dated 28 January 1997. The resolution stated that the
Court of Appeals would only give due course to the motion for extension if filed on time. The motion for
extension met this condition.

The material dates to consider in determining the timeliness of the filing of the motion for extension are
(1) the date of receipt of the judgment or final order or resolution subject of the petition, and (2) the date
of filing of the motion for extension.24 It is the date of the filing of the motion or pleading, and not the
date of execution, that determines the timeliness of the filing of that motion or pleading. Thus, even if the
motion for extension bears no date, the date of filing stamped on it is the reckoning point for determining
the timeliness of its filing.

Guevarra had until 14 December 1996 to file an appeal from the RTC decision. Guevarra filed his motion
for extension before this Court on 13 December 1996, the date stamped by this Court’s Receiving Clerk
on the motion for extension. Clearly, Guevarra filed the motion for extension exactly one day before the
lapse of the reglementary period to appeal.

Assuming that the Court of Appeals should have dismissed Guevarra’s appeal on technical grounds,
Pajuyo did not ask the appellate court to deny the motion for extension and dismiss the petition for review
at the earliest opportunity. Instead, Pajuyo vigorously discussed the merits of the case. It was only when
the Court of Appeals ruled in Guevarra’s favor that Pajuyo raised the procedural issues against Guevarra’s
petition for review.

A party who, after voluntarily submitting a dispute for resolution, receives an adverse decision on the
merits, is estopped from attacking the jurisdiction of the court.25 Estoppel sets in not because the
judgment of the court is a valid and conclusive adjudication, but because the practice of attacking the
court’s jurisdiction after voluntarily submitting to it is against public policy. 26

In his Comment before the Court of Appeals, Pajuyo also failed to discuss Guevarra’s failure to sign the
certification against forum shopping. Instead, Pajuyo harped on Guevarra’s counsel signing the
verification, claiming that the counsel’s verification is insufficient since it is based only on "mere
information."

A party’s failure to sign the certification against forum shopping is different from the party’s failure to sign
personally the verification. The certificate of non-forum shopping must be signed by the party, and not by
counsel.27 The certification of counsel renders the petition defective. 28

On the other hand, the requirement on verification of a pleading is a formal and not a jurisdictional
requisite.29 It is intended simply to secure an assurance that what are alleged in the pleading are true and
correct and not the product of the imagination or a matter of speculation, and that the pleading is filed in
good faith.30 The party need not sign the verification. A party’s representative, lawyer or any person who
personally knows the truth of the facts alleged in the pleading may sign the verification. 31

We agree with the Court of Appeals that the issue on the certificate against forum shopping was merely
an afterthought. Pajuyo did not call the Court of Appeals’ attention to this defect at the early stage of the
proceedings. Pajuyo raised this procedural issue too late in the proceedings.
Absence of Title over the Disputed Property will not Divest the Courts of Jurisdiction to Resolve the Issue
of Possession

Settled is the rule that the defendant’s claim of ownership of the disputed property will not divest the
inferior court of its jurisdiction over the ejectment case.32 Even if the pleadings raise the issue of
ownership, the court may pass on such issue to determine only the question of possession, especially if
the ownership is inseparably linked with the possession.33 The adjudication on the issue of ownership is
only provisional and will not bar an action between the same parties involving title to the land. 34 This
doctrine is a necessary consequence of the nature of the two summary actions of ejectment, forcible entry
and unlawful detainer, where the only issue for adjudication is the physical or material possession over
the real property.35

In this case, what Guevarra raised before the courts was that he and Pajuyo are not the owners of the
contested property and that they are mere squatters. Will the defense that the parties to the ejectment
case are not the owners of the disputed lot allow the courts to renounce their jurisdiction over the case?
The Court of Appeals believed so and held that it would just leave the parties where they are since they
are in pari delicto.

We do not agree with the Court of Appeals.

Ownership or the right to possess arising from ownership is not at issue in an action for recovery of
possession. The parties cannot present evidence to prove ownership or right to legal possession except to
prove the nature of the possession when necessary to resolve the issue of physical possession. 36 The
same is true when the defendant asserts the absence of title over the property. The absence of title over
the contested lot is not a ground for the courts to withhold relief from the parties in an ejectment case.

The only question that the courts must resolve in ejectment proceedings is - who is entitled to the
physical possession of the premises, that is, to the possession de facto and not to the possession de
jure.37 It does not even matter if a party’s title to the property is questionable, 38 or when both parties
intruded into public land and their applications to own the land have yet to be approved by the proper
government agency.39 Regardless of the actual condition of the title to the property, the party in
peaceable quiet possession shall not be thrown out by a strong hand, violence or terror.40 Neither is the
unlawful withholding of property allowed. Courts will always uphold respect for prior possession.

Thus, a party who can prove prior possession can recover such possession even against the owner
himself.41 Whatever may be the character of his possession, if he has in his favor prior possession in time,
he has the security that entitles him to remain on the property until a person with a better right lawfully
ejects him.42 To repeat, the only issue that the court has to settle in an ejectment suit is the right to
physical possession.

In Pitargue v. Sorilla,43 the government owned the land in dispute. The government did not authorize
either the plaintiff or the defendant in the case of forcible entry case to occupy the land. The plaintiff had
prior possession and had already introduced improvements on the public land. The plaintiff had a pending
application for the land with the Bureau of Lands when the defendant ousted him from possession. The
plaintiff filed the action of forcible entry against the defendant. The government was not a party in the
case of forcible entry.

The defendant questioned the jurisdiction of the courts to settle the issue of possession because while the
application of the plaintiff was still pending, title remained with the government, and the Bureau of Public
Lands had jurisdiction over the case. We disagreed with the defendant. We ruled that courts have
jurisdiction to entertain ejectment suits even before the resolution of the application. The plaintiff, by
priority of his application and of his entry, acquired prior physical possession over the public land applied
for as against other private claimants. That prior physical possession enjoys legal protection against other
private claimants because only a court can take away such physical possession in an ejectment case.

While the Court did not brand the plaintiff and the defendant in Pitargue44 as squatters, strictly speaking,
their entry into the disputed land was illegal. Both the plaintiff and defendant entered the public land
without the owner’s permission. Title to the land remained with the government because it had not
awarded to anyone ownership of the contested public land. Both the plaintiff and the defendant were in
effect squatting on government property. Yet, we upheld the courts’ jurisdiction to resolve the issue of
possession even if the plaintiff and the defendant in the ejectment case did not have any title over the
contested land.
Courts must not abdicate their jurisdiction to resolve the issue of physical possession because of the
public need to preserve the basic policy behind the summary actions of forcible entry and unlawful
detainer. The underlying philosophy behind ejectment suits is to prevent breach of the peace and criminal
disorder and to compel the party out of possession to respect and resort to the law alone to obtain what
he claims is his.45 The party deprived of possession must not take the law into his own hands. 46 Ejectment
proceedings are summary in nature so the authorities can settle speedily actions to recover possession
because of the overriding need to quell social disturbances.47

We further explained in Pitargue the greater interest that is at stake in actions for recovery of possession.
We made the following pronouncements in Pitargue:

The question that is before this Court is: Are courts without jurisdiction to take cognizance of
possessory actions involving these public lands before final award is made by the Lands
Department, and before title is given any of the conflicting claimants? It is one of utmost
importance, as there are public lands everywhere and there are thousands of settlers, especially in
newly opened regions. It also involves a matter of policy, as it requires the determination of the
respective authorities and functions of two coordinate branches of the Government in connection
with public land conflicts.

Our problem is made simple by the fact that under the Civil Code, either in the old, which was in
force in this country before the American occupation, or in the new, we have a possessory action,
the aim and purpose of which is the recovery of the physical possession of real property,
irrespective of the question as to who has the title thereto. Under the Spanish Civil Code we had
the accion interdictal, a summary proceeding which could be brought within one year from
dispossession (Roman Catholic Bishop of Cebu vs. Mangaron, 6 Phil. 286, 291); and as early as
October 1, 1901, upon the enactment of the Code of Civil Procedure (Act No. 190 of the Philippine
Commission) we implanted the common law action of forcible entry (section 80 of Act No. 190),
the object of which has been stated by this Court to be "to prevent breaches of the peace and
criminal disorder which would ensue from the withdrawal of the remedy, and the reasonable hope
such withdrawal would create that some advantage must accrue to those persons who, believing
themselves entitled to the possession of property, resort to force to gain possession rather than to
some appropriate action in the court to assert their claims." (Supia and Batioco vs. Quintero and
Ayala, 59 Phil. 312, 314.) So before the enactment of the first Public Land Act (Act No. 926) the
action of forcible entry was already available in the courts of the country. So the question to be
resolved is, Did the Legislature intend, when it vested the power and authority to alienate and
dispose of the public lands in the Lands Department, to exclude the courts from entertaining the
possessory action of forcible entry between rival claimants or occupants of any land before award
thereof to any of the parties? Did Congress intend that the lands applied for, or all public lands for
that matter, be removed from the jurisdiction of the judicial Branch of the Government, so that
any troubles arising therefrom, or any breaches of the peace or disorders caused by rival
claimants, could be inquired into only by the Lands Department to the exclusion of the courts? The
answer to this question seems to us evident. The Lands Department does not have the means to
police public lands; neither does it have the means to prevent disorders arising therefrom, or
contain breaches of the peace among settlers; or to pass promptly upon conflicts of possession.
Then its power is clearly limited to disposition and alienation, and while it may decide conflicts of
possession in order to make proper award, the settlement of conflicts of possession which is
recognized in the court herein has another ultimate purpose, i.e., the protection of actual
possessors and occupants with a view to the prevention of breaches of the peace. The power to
dispose and alienate could not have been intended to include the power to prevent or settle
disorders or breaches of the peace among rival settlers or claimants prior to the final award. As to
this, therefore, the corresponding branches of the Government must continue to exercise power
and jurisdiction within the limits of their respective functions. The vesting of the Lands Department
with authority to administer, dispose, and alienate public lands, therefore, must not be understood
as depriving the other branches of the Government of the exercise of the respective functions or
powers thereon, such as the authority to stop disorders and quell breaches of the peace by the
police, the authority on the part of the courts to take jurisdiction over possessory actions arising
therefrom not involving, directly or indirectly, alienation and disposition.

Our attention has been called to a principle enunciated in American courts to the effect that courts
have no jurisdiction to determine the rights of claimants to public lands, and that until the
disposition of the land has passed from the control of the Federal Government, the courts will not
interfere with the administration of matters concerning the same. (50 C. J. 1093-1094.) We have
no quarrel with this principle. The determination of the respective rights of rival claimants to public
lands is different from the determination of who has the actual physical possession or occupation
 with a view to protecting the same and preventing disorder and breaches of the peace. A judgment
of the court ordering restitution of the possession of a parcel of land to the actual occupant, who
has been deprived thereof by another through the use of force or in any other illegal manner, can
never be "prejudicial interference" with the disposition or alienation of public lands. On the other
hand, if courts were deprived of jurisdiction of cases involving conflicts of possession, that threat of
judicial action against breaches of the peace committed on public lands would be eliminated, and a
state of lawlessness would probably be produced between applicants, occupants or squatters,
where force or might, not right or justice, would rule.

It must be borne in mind that the action that would be used to solve conflicts of possession
between rivals or conflicting applicants or claimants would be no other than that of forcible entry.
This action, both in England and the United States and in our jurisdiction, is a summary and
expeditious remedy whereby one in peaceful and quiet possession may recover the possession of
which he has been deprived by a stronger hand, by violence or terror; its ultimate object being to
prevent breach of the peace and criminal disorder. (Supia and Batioco vs. Quintero and Ayala, 59
Phil. 312, 314.) The basis of the remedy is mere possession as a fact, of physical possession, not a
legal possession. (Mediran vs. Villanueva, 37 Phil. 752.) The title or right to possession is never in
issue in an action of forcible entry; as a matter of fact, evidence thereof is expressly banned,
except to prove the nature of the possession. (Second 4, Rule 72, Rules of Court.) With this nature
of the action in mind, by no stretch of the imagination can conclusion be arrived at that the use of
the remedy in the courts of justice would constitute an interference with the alienation, disposition,
and control of public lands. To limit ourselves to the case at bar can it be pretended at all that its
result would in any way interfere with the manner of the alienation or disposition of the land
contested? On the contrary, it would facilitate adjudication, for the question of priority of
possession having been decided in a final manner by the courts, said question need no longer
waste the time of the land officers making the adjudication or award. (Emphasis ours)

The Principle of Pari Delicto is not Applicable to Ejectment Cases

The Court of Appeals erroneously applied the principle of pari delicto to this case.

Articles 1411 and 1412 of the Civil Code48 embody the principle of pari delicto. We explained the principle
of pari delicto in these words:

The rule of pari delicto is expressed in the maxims ‘ex dolo malo non eritur actio’ and ‘in pari
delicto potior est conditio defedentis.’ The law will not aid either party to an illegal agreement. It
leaves the parties where it finds them.49

The application of the pari delicto principle is not absolute, as there are exceptions to its application. One
of these exceptions is where the application of the pari delicto rule would violate well-established public
policy.50

In Drilon v. Gaurana,51 we reiterated the basic policy behind the summary actions of forcible entry and
unlawful detainer. We held that:

It must be stated that the purpose of an action of forcible entry and detainer is that, regardless of
the actual condition of the title to the property, the party in peaceable quiet possession shall not
be turned out by strong hand, violence or terror. In affording this remedy of restitution the object
of the statute is to prevent breaches of the peace and criminal disorder which would ensue from
the withdrawal of the remedy, and the reasonable hope such withdrawal would create that some
advantage must accrue to those persons who, believing themselves entitled to the possession of
property, resort to force to gain possession rather than to some appropriate action in the courts to
assert their claims. This is the philosophy at the foundation of all these actions of forcible entry and
detainer which are designed to compel the party out of possession to respect and resort to the law
alone to obtain what he claims is his.52

Clearly, the application of the principle of pari delicto to a case of ejectment between squatters is fraught
with danger. To shut out relief to squatters on the ground of pari delicto would openly invite mayhem and
lawlessness. A squatter would oust another squatter from possession of the lot that the latter had illegally
occupied, emboldened by the knowledge that the courts would leave them where they are. Nothing would
then stand in the way of the ousted squatter from re-claiming his prior possession at all cost.
Petty warfare over possession of properties is precisely what ejectment cases or actions for recovery of
possession seek to prevent.53 Even the owner who has title over the disputed property cannot take the
law into his own hands to regain possession of his property. The owner must go to court.

Courts must resolve the issue of possession even if the parties to the ejectment suit are squatters. The
determination of priority and superiority of possession is a serious and urgent matter that cannot be left
to the squatters to decide. To do so would make squatters receive better treatment under the law. The
law restrains property owners from taking the law into their own hands. However, the principle of pari
delicto as applied by the Court of Appeals would give squatters free rein to dispossess fellow squatters or
violently retake possession of properties usurped from them. Courts should not leave squatters to their
own devices in cases involving recovery of possession.

Possession is the only Issue for Resolution in an Ejectment Case

The case for review before the Court of Appeals was a simple case of ejectment. The Court of Appeals
refused to rule on the issue of physical possession. Nevertheless, the appellate court held that the pivotal
issue in this case is who between Pajuyo and Guevarra has the "priority right as beneficiary of the
contested land under Proclamation No. 137."54 According to the Court of Appeals, Guevarra enjoys
preferential right under Proclamation No. 137 because Article VI of the Code declares that the actual
occupant or caretaker is the one qualified to apply for socialized housing.

The ruling of the Court of Appeals has no factual and legal basis.

First. Guevarra did not present evidence to show that the contested lot is part of a relocation site under
Proclamation No. 137. Proclamation No. 137 laid down the metes and bounds of the land that it declared
open for disposition to bona fide residents.

The records do not show that the contested lot is within the land specified by Proclamation No. 137.
Guevarra had the burden to prove that the disputed lot is within the coverage of Proclamation No. 137. He
failed to do so.

Second. The Court of Appeals should not have given credence to Guevarra’s unsubstantiated claim that he
is the beneficiary of Proclamation No. 137. Guevarra merely alleged that in the survey the project
administrator conducted, he and not Pajuyo appeared as the actual occupant of the lot.

There is no proof that Guevarra actually availed of the benefits of Proclamation No. 137. Pajuyo allowed
Guevarra to occupy the disputed property in 1985. President Aquino signed Proclamation No. 137 into law
on 11 March 1986. Pajuyo made his earliest demand for Guevarra to vacate the property in September
1994.

During the time that Guevarra temporarily held the property up to the time that Proclamation No. 137
allegedly segregated the disputed lot, Guevarra never applied as beneficiary of Proclamation No. 137.
Even when Guevarra already knew that Pajuyo was reclaiming possession of the property, Guevarra did
not take any step to comply with the requirements of Proclamation No. 137.

Third. Even assuming that the disputed lot is within the coverage of Proclamation No. 137 and Guevarra
has a pending application over the lot, courts should still assume jurisdiction and resolve the issue of
possession. However, the jurisdiction of the courts would be limited to the issue of physical possession
only.

In Pitargue,55 we ruled that courts have jurisdiction over possessory actions involving public land to
determine the issue of physical possession. The determination of the respective rights of rival claimants to
public land is, however, distinct from the determination of who has the actual physical possession or who
has a better right of physical possession.56 The administrative disposition and alienation of public lands
should be threshed out in the proper government agency.57

The Court of Appeals’ determination of Pajuyo and Guevarra’s rights under Proclamation No. 137 was
premature. Pajuyo and Guevarra were at most merely potential beneficiaries of the law. Courts should not
preempt the decision of the administrative agency mandated by law to determine the qualifications of
applicants for the acquisition of public lands. Instead, courts should expeditiously resolve the issue of
physical possession in ejectment cases to prevent disorder and breaches of peace.58
 Pajuyo is Entitled to Physical Possession of the Disputed Property

Guevarra does not dispute Pajuyo’s prior possession of the lot and ownership of the house built on it.
Guevarra expressly admitted the existence and due execution of the Kasunduan. The Kasunduan reads:

Ako, si COL[I]TO PAJUYO, may-ari ng bahay at lote sa Bo. Payatas, Quezon City, ay nagbibigay pahintulot
kay G. Eddie Guevarra, na pansamantalang manirahan sa nasabing bahay at lote ng "walang bayad."
Kaugnay nito, kailangang panatilihin nila ang kalinisan at kaayusan ng bahay at lote.

Sa sandaling kailangan na namin ang bahay at lote, sila’y kusang aalis ng walang reklamo.

Based on the Kasunduan, Pajuyo permitted Guevarra to reside in the house and lot free of rent, but
Guevarra was under obligation to maintain the premises in good condition. Guevarra promised to vacate
the premises on Pajuyo’s demand but Guevarra broke his promise and refused to heed Pajuyo’s demand
to vacate.

These facts make out a case for unlawful detainer. Unlawful detainer involves the withholding by a person
from another of the possession of real property to which the latter is entitled after the expiration or
termination of the former’s right to hold possession under a contract, express or implied.59

Where the plaintiff allows the defendant to use his property by tolerance without any contract, the
defendant is necessarily bound by an implied promise that he will vacate on demand, failing which, an
action for unlawful detainer will lie.60 The defendant’s refusal to comply with the demand makes his
continued possession of the property unlawful.61 The status of the defendant in such a case is similar to
that of a lessee or tenant whose term of lease has expired but whose occupancy continues by tolerance of
the owner.62

This principle should apply with greater force in cases where a contract embodies the permission or
tolerance to use the property. The Kasunduan expressly articulated Pajuyo’s forbearance. Pajuyo did not
require Guevarra to pay any rent but only to maintain the house and lot in good condition. Guevarra
expressly vowed in the Kasunduan that he would vacate the property on demand. Guevarra’s refusal to
comply with Pajuyo’s demand to vacate made Guevarra’s continued possession of the property unlawful.

We do not subscribe to the Court of Appeals’ theory that the Kasunduan is one of commodatum.

In a contract of commodatum, one of the parties delivers to another something not consumable so that
the latter may use the same for a certain time and return it.63 An essential feature of commodatum is that
it is gratuitous. Another feature of commodatum is that the use of the thing belonging to another is for a
certain period.64 Thus, the bailor cannot demand the return of the thing loaned until after expiration of the
period stipulated, or after accomplishment of the use for which the commodatum is constituted.65 If the
bailor should have urgent need of the thing, he may demand its return for temporary use.66 If the use of
the thing is merely tolerated by the bailor, he can demand the return of the thing at will, in which case
the contractual relation is called a precarium.67 Under the Civil Code, precarium is a kind of
commodatum.68

The Kasunduan reveals that the accommodation accorded by Pajuyo to Guevarra was not essentially
gratuitous. While the Kasunduan did not require Guevarra to pay rent, it obligated him to maintain the
property in good condition. The imposition of this obligation makes the Kasunduan a contract different
from a commodatum. The effects of the Kasunduan are also different from that of a commodatum. Case
law on ejectment has treated relationship based on tolerance as one that is akin to a landlord-tenant
relationship where the withdrawal of permission would result in the termination of the lease. 69 The
tenant’s withholding of the property would then be unlawful. This is settled jurisprudence.

Even assuming that the relationship between Pajuyo and Guevarra is one of commodatum, Guevarra as
bailee would still have the duty to turn over possession of the property to Pajuyo, the bailor. The
obligation to deliver or to return the thing received attaches to contracts for safekeeping, or contracts of
commission, administration and commodatum.70 These contracts certainly involve the obligation to deliver
or return the thing received.71

Guevarra turned his back on the Kasunduan on the sole ground that like him, Pajuyo is also a squatter.
Squatters, Guevarra pointed out, cannot enter into a contract involving the land they illegally occupy.
Guevarra insists that the contract is void.
Guevarra should know that there must be honor even between squatters. Guevarra freely entered into the
Kasunduan. Guevarra cannot now impugn the Kasunduan after he had benefited from it. The Kasunduan
binds Guevarra.

The Kasunduan is not void for purposes of determining who between Pajuyo and Guevarra has a right to
physical possession of the contested property. The Kasunduan is the undeniable evidence of Guevarra’s
recognition of Pajuyo’s better right of physical possession. Guevarra is clearly a possessor in bad faith.
The absence of a contract would not yield a different result, as there would still be an implied promise to
vacate.

Guevarra contends that there is "a pernicious evil that is sought to be avoided, and that is allowing an
absentee squatter who (sic) makes (sic) a profit out of his illegal act." 72 Guevarra bases his argument on
the preferential right given to the actual occupant or caretaker under Proclamation No. 137 on socialized
housing.

We are not convinced.

Pajuyo did not profit from his arrangement with Guevarra because Guevarra stayed in the property
without paying any rent. There is also no proof that Pajuyo is a professional squatter who rents out
usurped properties to other squatters. Moreover, it is for the proper government agency to decide who
between Pajuyo and Guevarra qualifies for socialized housing. The only issue that we are addressing is
physical possession.

Prior possession is not always a condition sine qua non in ejectment.73 This is one of the distinctions
between forcible entry and unlawful detainer.74 In forcible entry, the plaintiff is deprived of physical
possession of his land or building by means of force, intimidation, threat, strategy or stealth. Thus, he
must allege and prove prior possession.75 But in unlawful detainer, the defendant unlawfully withholds
possession after the expiration or termination of his right to possess under any contract, express or
implied. In such a case, prior physical possession is not required.76

Pajuyo’s withdrawal of his permission to Guevarra terminated the Kasunduan. Guevarra’s transient right
to possess the property ended as well. Moreover, it was Pajuyo who was in actual possession of the
property because Guevarra had to seek Pajuyo’s permission to temporarily hold the property and
Guevarra had to follow the conditions set by Pajuyo in the Kasunduan. Control over the property still
rested with Pajuyo and this is evidence of actual possession.

Pajuyo’s absence did not affect his actual possession of the disputed property. Possession in the eyes of
the law does not mean that a man has to have his feet on every square meter of the ground before he is
deemed in possession.77 One may acquire possession not only by physical occupation, but also by the fact
that a thing is subject to the action of one’s will.78 Actual or physical occupation is not always necessary.79

Ruling on Possession Does not Bind Title to the Land in Dispute

We are aware of our pronouncement in cases where we declared that "squatters and intruders who
clandestinely enter into titled government property cannot, by such act, acquire any legal right to said
property."80 We made this declaration because the person who had title or who had the right to legal
possession over the disputed property was a party in the ejectment suit and that party instituted the case
against squatters or usurpers.

In this case, the owner of the land, which is the government, is not a party to the ejectment case. This
case is between squatters. Had the government participated in this case, the courts could have evicted
the contending squatters, Pajuyo and Guevarra.

Since the party that has title or a better right over the property is not impleaded in this case, we cannot
evict on our own the parties. Such a ruling would discourage squatters from seeking the aid of the courts
in settling the issue of physical possession. Stripping both the plaintiff and the defendant of possession
just because they are squatters would have the same dangerous implications as the application of the
principle of pari delicto. Squatters would then rather settle the issue of physical possession among
themselves than seek relief from the courts if the plaintiff and defendant in the ejectment case would both
stand to lose possession of the disputed property. This would subvert the policy underlying actions for
recovery of possession.
Since Pajuyo has in his favor priority in time in holding the property, he is entitled to remain on the
property until a person who has title or a better right lawfully ejects him. Guevarra is certainly not that
person. The ruling in this case, however, does not preclude Pajuyo and Guevarra from introducing
evidence and presenting arguments before the proper administrative agency to establish any right to
which they may be entitled under the law.81

In no way should our ruling in this case be interpreted to condone squatting. The ruling on the issue of
physical possession does not affect title to the property nor constitute a binding and conclusive
adjudication on the merits on the issue of ownership.82 The owner can still go to court to recover lawfully
the property from the person who holds the property without legal title. Our ruling here does not diminish
the power of government agencies, including local governments, to condemn, abate, remove or demolish
illegal or unauthorized structures in accordance with existing laws.

Attorney’s Fees and Rentals

The MTC and RTC failed to justify the award of P3,000 attorney’s fees to Pajuyo. Attorney’s fees as part of
damages are awarded only in the instances enumerated in Article 2208 of the Civil Code. 83 Thus, the
award of attorney’s fees is the exception rather than the rule.84 Attorney’s fees are not awarded every
time a party prevails in a suit because of the policy that no premium should be placed on the right to
litigate.85 We therefore delete the attorney’s fees awarded to Pajuyo.

We sustain the P300 monthly rentals the MTC and RTC assessed against Guevarra. Guevarra did not
dispute this factual finding of the two courts. We find the amount reasonable compensation to Pajuyo. The
P300 monthly rental is counted from the last demand to vacate, which was on 16 February 1995.

WHEREFORE, we GRANT the petition. The Decision dated 21 June 2000 and Resolution dated 14
December 2000 of the Court of Appeals in CA-G.R. SP No. 43129 are SET ASIDE. The Decision dated 11
November 1996 of the Regional Trial Court of Quezon City, Branch 81 in Civil Case No. Q-96-26943,
affirming the Decision dated 15 December 1995 of the Metropolitan Trial Court of Quezon City, Branch 31
in Civil Case No. 12432, is REINSTATED with MODIFICATION. The award of attorney’s fees is deleted.

G.R. Nos. 187912-14               January 31, 2011

JOEY P. MARQUEZ, Petitioner,

vs.
THE SANDIGANBAYAN 5th DIVISION and THE OFFICE OF THE SPECIAL PROSECUTOR, Respondents.

DECISION

MENDOZA, J.:

Through this petition for certiorari, prohibition and mandamus with prayer for the issuance of temporary
restraining order and/or writ of preliminary injunction, 1 petitioner Joey P. Marquez (Marquez) assails the
1] February 11, 2009 Resolution 2 of the 5th Division of the Sandiganbayan (SB-5th Division) in Criminal
Case Nos. 27903, 27904 and 27905; and its 2] May 20, 2009 Resolution 3 denying his motion for
reconsideration.

In the assailed issuances, the SB-5th Division denied Marquez’s Motion to Refer Prosecution’s Evidence for
Examination by the Questioned Documents Section of the National Bureau of Investigation (NBI).

From the records, it appears that as a result of the Report on the Audit of Selected Transactions and Walis
Ting-ting for the City of Parañaque for the years 1996 to 1998, conducted by the Special Audit Team of
the Commission on Audit (COA), several anomalies were discovered involving Marquez, then City Mayor
and Chairman of the Bids and Awards committee of Parañaque City; and Ofelia C. Caunan (Caunan), Head
of the General Services Office of said city.

It was found that, through personal canvass and without public bidding, Marquez and Caunan secured the
procurement of several thousand rounds of bullets of different calibers that were grossly overpriced from
VMY Trading, a company not registered as an arms and ammunitions dealer with either the Firearms and
Explosives Division of the Philippine National Police (PNP) or the Department of Trade and Industry (DTI).
Finding the transactions anomalous, the COA Special Audit Team issued Notices of Disallowances for the
overpriced ammunitions. Marquez and Caunan sought reconsideration of the findings of the team, but
their plea was denied. Aggrieved, they elevated the matter to the COA but their appeal was denied.

At the Office of the Ombudsman (OMB), in answer to the charges filed against them, Marquez and Caunan
filed their Joint Counter Affidavit4 with the Evaluation and Preliminary Investigation Bureau of said office.
In the said affidavit, the two insisted on the propriety of the transactions and raised the pendency of their
appeal with the COA.

Having found probable cause to indict them for violation of Section 3 (e) of Republic Act (R.A.) No. 3019,
the OMB, through the Office of the Special Prosecutor (OSP), filed three (3) informations5 against Marquez
and Caunan. The cases were raffled to the Fourth Division of the Sandiganbayan (SB-4th Division).

Before arraignment, on November 24, 2003, alleging discovery of the forged signatures, Marquez sought
referral of the disbursement vouchers, purchase requests and authorization requests to the NBI and the
reinvestigation of the cases against him.6 These were denied by the OSP.

Before the SB-4th Division, to prove its case, the prosecution presented five (5) witnesses, namely: 1]
COA State Auditor IV Fatima Valera Bermudez; 2] Elenita Pracale, Chief, Business Permit and Licensing
Office, Parañaque City; 3] Benjamin Cruz; 4] P/Insp. Rolando C. Columna, Legal Officer, PNP Firearms
and Explosive Division; and 5] Emerito L. Lejano, President, Guns Empire. Documentary evidence
consisting of disbursement vouchers, purchase requests and authorization requests were also adduced.

On January 13, 2006, the prosecution filed its Formal Offer of Evidence consisting of Exhibits "A" to
"FFFF," and their sub-markings. All of the evidence offered were admitted by the anti-graft court on March
22, 2006.

After the prosecution rested, Caunan testified and partly presented evidence for her defense.

Marquez, on the other hand, in his Omnibus Motion dated April 1, 2008, moved, among others, for the
inhibition of Associate Justice Gregory Ong (Justice Ong) and Associate Justice Jose Hernandez (Justice
Hernandez) and for the referral of the disbursement vouchers, purchase requests and authorization to the
NBI. Associate Justice Hernandez and Associate Justice Ong inhibited themselves but the request of
Marquez that the questioned documents be referred to the NBI was not acted upon.

On May 20, 2008, Justice Ong and Justice Hernandez recused themselves from further participating in the
cases. The cases were then raffled to the SB-5th Division.

Thereafter, on July 4, 2008, Marquez filed the subject Motion to Refer Prosecution’s Evidence for
Examination by the Questioned Documents Section of the National Bureau of Investigation. In his motion,
he again insisted that his purported signatures on the vouchers were forged.

By way of Comment/Opposition to the motion, the prosecution argued that its documentary exhibits had
already been formally offered in January 2006 and had been duly admitted by the anti-graft court. The
prosecution added that, when confronted with the questioned transactions during the COA audit
investigation, Marquez never raised the defense of forgery. Instead, he insisted on the propriety of the
transactions. He did not claim forgery either when he filed his Joint Counter-Affidavit with the OMB. Also,
in his verified Motion for Reconsideration dated May 29, 2003 and Supplemental Motion dated July 1,
2003 filed with the COA, no allegation of forgery was made.

The prosecution pointed to Section 4, Rule 129 of the Revised Rules of Court7 and posited that since
Marquez alleged in his pleadings that he had relied on the competence of his subordinates, there could be
no "palpable mistake," thus, he was estopped from alleging that his signatures on the subject documents
were forged. The prosecution accused Marquez of filing the motion merely to delay the proceedings. 8

In his Reply, Marquez insisted that he never admitted that his signatures on the disbursement vouchers,
purchase requests and authorization requests were his and that his motion was not intended to delay the
proceedings.

In its Rejoinder, the prosecution reiterated its earlier arguments and added that Caunan testified and
identified the signatures of Marquez in the subject vouchers. It further noted that Marquez moved to refer
the documents to the NBI only two and a half (2 ½) years after the formal offer of said documents.
In the subject February 11, 2009 Resolution, the anti-graft court denied the motion of Marquez. Citing
Section 22 of Rule 132 of the Rules of Court,9 it was of the view that while resort to the expert opinion of
handwriting experts would be helpful in the examination of alleged forged documents, the same was
neither mandatory nor indispensable, since the court can determine forgery from its own independent
examination.

The motion for reconsideration of Marquez was likewise denied.

Aggrieved, Marquez interposed this petition for certiorari raising this lone

ISSUE

THAT THE PUBLIC RESPONDENT SANDIGANBAYAN - 5th DIVISION COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT ISSUED ITS
RESOLUTIONS RESPECTIVELY DATED FEBRUARY 11, 2009 AND MAY 20, 2009 DENYING THE
PETITIONER’S MOTION TO REFER PROSECUTION’S EVIDENCE FOR EXAMINATION BY THE
QUESTIONED DOCUMENTS SECTION OF THE NATIONAL BUREAU OF INVESTIGATION WHICH
DENIAL IS IN VIOLATION OF HIS RIGHT TO PRESENT EVIDENCE AND HIS TWIN CONSTITUTIONAL
RIGHTS TO DUE PROCESS AND EQUAL PROTECTION OF LAW.

Those availing of the remedy of certiorari must clearly show that the trial court acted without jurisdiction
or with grave abuse of discretion amounting to lack or excess of jurisdiction. By grave abuse of discretion,
it means such capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. The
abuse of discretion must be patent and gross as to amount to an evasion of a positive duty or a virtual
refusal to perform a duty enjoined by law, or to act at all in contemplation of law as where the power is
exercised in an arbitrary and despotic manner by reason of passion and hostility. In sum, for the
extraordinary writ of certiorari to lie, there must be capricious, arbitrary or whimsical exercise of power.10

Such circumstance exists in this case.

One of the most vital and precious rights accorded to an accused by the Constitution is due process, which
includes a fair and impartial trial and a reasonable opportunity to present one’s defense. Under Section
14, Article III of the 1987 Constitution, it is provided that:

(1) No person shall be held to answer for a criminal offense without due process of law.

(2) In all criminal prosecutions, the accused shall be presumed innocent until the contrary is
proved, and shall enjoy the right to be heard by himself and counsel, to be informed of the nature
and cause of the accusation against him, to have a speedy, impartial, and public trial, to meet the
witnesses face to face, and to have compulsory process to secure the attendance of witnesses and
the production of evidence in his behalf. However, after arraignment, trial may proceed
notwithstanding the absence of the accused provided that he has been duly notified and his failure
to appear is unjustifiable. (emphasis supplied)

In this connection, it is well settled that due process in criminal proceedings requires that (a) the court or
tribunal trying the case is properly clothed with judicial power to hear and determine the matter before it;
(b) that jurisdiction is lawfully acquired by it over the person of the accused; (c) that the accused is given
an opportunity to be heard; and (d) that judgment is rendered only upon lawful hearing.

While the Constitution does not specify the nature of this opportunity, by necessary implication, it means
that the accused should be allowed reasonable freedom to present his defense if the courts are to give
form and substance to this guaranty. Should the trial court fail to accord an accused reasonable
opportunity to submit evidence in his defense, the exercise by the Court of its certiorari jurisdiction is
warranted as this amounts to a denial of due process.

In this case, the defense interposed by the accused Marquez was that his signatures in the disbursement
vouchers, purchase requests and authorizations were forged. It is hornbook rule that as a rule, forgery
cannot be presumed and must be proved by clear, positive and convincing evidence11 and the burden of
proof lies on the party alleging forgery.12

Thus, Marquez bears the burden of submitting evidence to prove the fact that his signatures were indeed
forged. In order to be able to discharge his burden, he must be afforded reasonable opportunity to
present evidence to support his allegation. This opportunity is the actual examination of the signatures he
is questioning by no less than the country’s premier investigative force – the NBI. If he is denied such
opportunity, his only evidence on this matter is negative testimonial evidence which is generally
considered as weak. And, he cannot submit any other examination result because the signatures are on
the original documents which are in the control of either the prosecution or the graft court.

At any rate, any finding of the NBI will not be binding on the graft court. It will still be subject to its
scrutiny and evaluation in line with Section 22 of Rule 132. Nevertheless, Marquez should not be deprived
of his right to present his own defense. How the prosecution, or even the court, perceives his defense to
be is irrelevant. To them, his defense may seem feeble and his strategy frivolous, but he should be
allowed to adduce evidence of his own choice. The court should not control how he will defend himself as
long as the steps to be taken will not be in violation of the rules.

Contrary to the assertion of the prosecution, this move of Marquez is not a mere afterthought to delay the
prosecution of the case. From the records, it appears that as early as November 24, 2003, even before
arraignment, upon his alleged discovery of the forged signatures, Marquez already sought referral of the
disbursement vouchers, purchase requests and authorization requests to the NBI and reinvestigation of
the cases against him.13 At that stage, his plea was already denied by the OSP.

Apparently, he did not abandon his quest. In his Omnibus Motion dated April 1, 2008 filed with the SB-4th
Division, Marquez did not only move for the inhibition of Justice Ong and Justice Hernandez, but also
moved for the referral of the disbursement vouchers, purchase requests and authorization to the NBI.
Since the latter was not acted upon, he filed the subject Motion to Refer Prosecution’s Evidence for
Examination by the Questioned Documents Section of the National Bureau of Investigation reiterating his
plea, this time with the SB-5th Division.

If this case has been delayed, it is because of the denial of the simple request of Marquez. If it was
granted in the first instance, the trial of the case would have proceeded smoothly and would have been
over by now. If the Court were to deny this petition and Marquez would be convicted for having failed to
prove forgery, he could not be prevented from crying that he was prevented from presenting evidence in
his defense.

The fact that Marquez did not raise this issue with the COA is immaterial and irrelevant.1âwphi1 His
failure or omission to do so may affect the appreciation and weight of his defense, but it should not bar
him from insisting on it during his turn to adduce evidence.

In denying said motion, the SB-5th Division offered no valid explanation other than the fact that, being
the trial court, it may validly determine forgery from its own independent examination of the documentary
evidence. While it is true that the appreciation of whether the signatures of Marquez are genuine or not is
subject to the discretion of the graft court, this discretion, by the very nature of things, may rightly be
exercised only after the evidence is submitted to the court at the hearing. Evidence cannot properly be
weighed if not exhibited or produced before the court.14 Only after evidence is offered and admitted that
the court can appreciate and evaluate it. The prosecution had already offered its evidence on the matter.
The court should not deny the same right to the defense.

The fact that the documentary exhibits were already formally offered and duly admitted by the anti-graft
court cannot preclude an examination of the signatures thereon by the defense. With proper handling by
court personnel, this can easily be accomplished by the NBI expert examiners.

In the conduct of its proceedings, a court is given discretion in maintaining the delicate balance between
the demands of due process and the strictures of speedy trial on the one hand, and the right of the State
to prosecute crimes and rid society of criminals on the other. Indeed, both the State and the accused are
entitled to due process. However, the exercise of such discretion must be exercised judiciously, bearing in
mind the circumstances of each case, and the interests of substantial justice.

Thus, for having denied Marquez the opportunity to be heard and to produce evidence of his choice in his
defense, the SB-5th Division committed grave abuse of discretion warranting intervention from the Court.
The anti-graft court should allow him to refer the evidence of the prosecution to the Questioned
Documents Section of the NBI for examination at the soonest time possible and for the latter to
immediately conduct such examination and to submit the results to the court within a reasonable time.

WHEREFORE, the petition is GRANTED. The February 11, 2009 and May 20, 2009 Resolutions of the 5th
Division of the Sandiganbayan in Criminal Case Nos. 27903, 27904 and 27905 are hereby REVERSED and
SET ASIDE. The 5th Division of the Sandiganbayan is hereby ordered to allow the petitioner Joey P.
Marquez to refer the evidence of the prosecution to the Questioned Documents Section of the National
Bureau of Investigation for examination as soon as possible and, after submission of the results to the
court and proper proceedings, to act on the case with dispatch.

G. R. No. 177790               January 17, 2011

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
CARLOS R. VEGA, MARCOS R. VEGA, ROGELIO R. VEGA, LUBIN R. VEGA, HEIRS OF GLORIA R. VEGA,
NAMELY: FRACISCO L. YAP, MA. WINONA Y. RODRIGUEZ, MA. WENDELYN V. YAP and FRANCISCO V. YAP,
JR., Respondents,

ROMEA G. BUHAY-OCAMPO, FRANCISCO G. BUHAY, ARCELI G. BUHAY-RODRIGUEZ, ORLANDO G. BUHAY,

SOLEDAD G. BUHAY-VASQUEZ, LOIDA G. BUHAY-SENADOSA, FLORENDO G. BUHAY, OSCAR G. BUHAY,
ERLYN BUHAY-GINORGA, EVELYN BUHAY-GRANETA, and EMILIE BUHAY-DALLAS, Respondents-
Intervenors.

DECISION

SERENO, J.:

This is a Rule 45 Petition filed by the Republic of the Philippines (petitioner Republic), through the Office of
the Solicitor General (OSG), questioning the Decision of the Court of Appeals, 1 which affirmed a lower
court’s grant of an application for original registration of title covering a parcel of land located in Los
Baños, Laguna.

The facts of the case as culled from the records of the trial court and the appellate court are
straightforward and without much contention from the parties.

On 26 May 1995, respondents Carlos R. Vega, Marcos R. Vega, Rogelio R. Vega, Lubin R. Vega and Heirs
of Gloria R. Vega – namely, Francisco L. Yap, Ma. Winona Y. Rodriguez, Ma. Wendelyn V. Yap and
Francisco V. Yap, Jr. (respondents Vegas) – filed an application for registration of title. The application
covered a parcel of land, identified as Lot No. 6191, Cadastre 450 of Los Baños, Laguna, with a total area
of six thousand nine hundred two (6,902) square meters (the subject land). The case was docketed as
Land Registration Case No. 103-95-C and raffled to the Regional Trial Court of Calamba, Laguna, Branch
92.

Respondents Vegas alleged that they inherited the subject land from their mother, Maria Revilleza Vda. de
Vega, who in turn inherited it from her father, Lorenzo Revilleza. Their mother’s siblings (two brothers and
a sister) died intestate, all without leaving any offspring.

On 21 June 1995, petitioner Republic filed an opposition to respondents Vegas’ application for registration
on the ground, inter alia, that the subject land or portions thereof were lands of the public domain and, as
such, not subject to private appropriation.

During the trial court hearing on the application for registration, respondents Vegas presented several
exhibits in compliance with the jurisdictional requirements, as well as witnesses to prove respondents
Vegas’ ownership, occupation and possession of the land subject of the registration. Significant was the
testimony of Mr. Rodolfo Gonzales, a Special Investigator of the Community Environment and Natural
Resources Office (CENRO) of Los Baños, Laguna, under the Department of Environment and Natural
Resources (DENR). He attested to having conducted an inspection of the subject land 2 and identified the
corresponding Report dated 13 January 1997, which he had submitted to the Regional Executive Director,
Region IV. The report stated that the area subject of the investigation was entirely within the alienable
and disposable zone, and that there was no public land application filed for the same land by the applicant
or by any other person.3

During the trial, respondents-intervenors Romea G. Buhay-Ocampo, Francisco G. Buhay, Arceli G. Buhay-
Rodriguez, Orlando G. Buhay, Soledad G. Buhay-Vasquez, Loida G. Buhay-Senadosa, Florendo G. Buhay,
Oscar G. Buhay, Erlyn Buhay-Ginorga, Evelyn Buhay-Grantea and Emilie Buhay-Dallas (respondents-
intervenors Buhays) entered their appearance and moved to intervene in respondents Vegas’ application
for registration.4 Respondents-intervenors Buhays claimed a portion of the subject land consisting of eight
hundred twenty-six (826) square meters, purportedly sold by respondents Vegas’ mother (Maria Revilleza
Vda. de Vega) to the former’s predecessors-in-interest - the sisters Gabriela Gilvero and Isabel Gilverio -
by virtue of a "Bilihan ng Isang Bahagi ng Lupang Katihan" dated 14 January 1951.5 They likewise
formally offered in evidence Subdivision Plan Csd-04-024336-D, which indicated the portion of the subject
land, which they claimed was sold to their predecessors-in-interest. 6

In a Decision dated 18 November 2003, the trial court granted respondents Vegas’ application and
directed the Land Registration Authority (LRA) to issue the corresponding decree of registration in the
name of respondents Vegas and respondents-intervenors Buhays’ predecessors, in proportion to their
claims over the subject land.

Petitioner Republic appealed the Decision of the trial court, arguing that respondents Vegas failed to prove
that the subject land was alienable and disposable, since the testimony of Mr. Gonzales did not contain
the date when the land was declared as such. Unpersuaded by petitioner Republic’s arguments, the Court
of Appeals affirmed in toto the earlier Decision of the trial court. Aggrieved by the ruling, petitioner filed
the instant Rule 45 Petition with this Court.

Respondents Vegas, who are joined by respondents-intervenors Buhays (collectively, respondents), raise
procedural issues concerning the filing of the instant Petition, which the Court shall resolve first. Briefly,
respondents found, in the instant Petition, procedural deficiencies that ought to warrant its outright
dismissal. These deficiencies are as follows: (a) petitioner Republic failed to include the pertinent portions
of the record that would support its arguments under Rule 45, Section 4 (d) of the Rules of Court,
specifically the Appellee’s Brief of respondents Vegas in the appellate proceedings; and (b) it raised
questions of fact, which are beyond the purview of a Rule 45 Petition. 7

The Court is not persuaded by respondents’ arguments concerning the purported defects of the Petition.

First, petitioner Republic’s failure to attach a copy of respondents Vegas’ Appellee’s Brief to the instant
Petition is not a fatal mistake, which merits the immediate dismissal of a Rule 45 Petition. The
requirement that a petition for review on certiorari should be accompanied by "such material portions of
the record as would support the petition" is left to the discretion of the party filing the petition. 8 Except for
the duplicate original or certified true copy of the judgment sought to be appealed from, 9 there are no
other records from the court a quo that must perforce be attached before the Court can take cognizance
of a Rule 45 petition.

Respondents cannot fault petitioner Republic for excluding pleadings, documents or records in the lower
court, which to their mind would assist this Court in deciding whether the Decision appealed from is
sound. Petitioner Republic is left to its own estimation of the case in deciding which records would support
its Petition and should thus be attached thereto. In any event, respondents are not prevented from
attaching to their pleadings pertinent portions of the records that they deem necessary for the Court’s
evaluation of the case, as was done by respondents Vegas in this case when they attached their
Appellee’s Brief to their Comment. In the end, it is the Court, in finally resolving the merits of the suit that
will ultimately decide whether the material portions of the records attached are sufficient to support the
Petition.

Second, the Petition raises a question of law, and not a question of fact. Petitioner Republic simply takes
issue against the conclusions made by the trial and the appellate courts regarding the nature and
character of the subject parcel of land, based on the evidence presented. When petitioner asks for a
review of the decisions made by a lower court based on the evidence presented, without delving into their
probative value but simply on their sufficiency to support the legal conclusions made, then a question of
law is raised.

In New Rural Bank of Guimba (N.E.) Inc. v. Fermina S. Abad and Rafael Susan,10 the Court reiterated the
distinction between a question of law and a question of fact in this wise:

We reiterate the distinction between a question of law and a question of fact. A question of law exists
when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of
facts; or when the issue does not call for an examination of the probative value of the evidence
presented, the truth or falsehood of the facts being admitted. A question of fact exists when a doubt or
difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole
evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific
surrounding circumstances, as well as their relation to each other and to the whole, and the probability of
the situation. (Emphasis supplied)
Petitioner Republic is not calling for an examination of the probative value or truthfulness of the evidence
presented, specifically the testimony of Mr. Gonzales. It, however, questions whether the evidence on
record is sufficient to support the lower court’s conclusion that the subject land is alienable and
disposable. Otherwise stated, considering the evidence presented by respondents Vegas in the
proceedings below, were the trial and the appellate courts justified under the law and jurisprudence in
their findings on the nature and character of the subject land? Undoubtedly, this is a pure question of law,
which calls for a resolution of what is the correct and applicable law to a given set of facts.

Going now to the substantial merits, petitioner Republic places before the Court the question of whether,
based on the evidence on record, respondents Vegas have sufficiently established that the subject land is
alienable and disposable. Was it erroneous for the Court of Appeals to have affirmed the trial court’s grant
of registration applied for by respondents Vegas over the subject land? We find no reversible error on the
part of either the trial court or the Court of Appeals.

Presidential Decree No. 1529, otherwise known as the Property Registration Decree, provides for the
instances when a person may file for an application for registration of title over a parcel of land:

Section 14. Who May Apply. — The following persons may file in the proper Court of First Instance an
application for registration of title to land, whether personally or through their duly authorized
representatives:

Those who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of alienable and disposable lands of the public domain
under a bona fide claim of ownership since June 12, 1945, or earlier. x x x.

Thus, pursuant to the afore-quoted provision of law, applicants for registration of title must prove the
following: (1) that the subject land forms part of the disposable and alienable lands of the public domain;
and (2) that they have been in open, continuous, exclusive and notorious possession and occupation of
the land under a bona fide claim of ownership since 12 June 1945 or earlier.11 Section 14 (1) of the law
requires that the property sought to be registered is already alienable and disposable at the time the
application for registration is filed.12

Raising no issue with respect to respondents Vegas’ open, continuous, exclusive and notorious possession
of the subject land in the present Petition, the Court will limit its focus on the first requisite: specifically,
whether it has sufficiently been demonstrated that the subject land is alienable and disposable.

Unless a land is reclassified and declared alienable and disposable, occupation of the same in the concept
of an owner - no matter how long -cannot ripen into ownership and result in a title; public lands not
shown to have been classified as alienable and disposable lands remain part of the inalienable domain and
cannot confer ownership or possessory rights.13

Matters of land classification or reclassification cannot be assumed; they call for proof. 14 To prove that the
land subject of an application for registration is alienable, an applicant must conclusively establish the
existence of a positive act of the government, such as any of the following: a presidential proclamation or
an executive order; other administrative actions; investigation reports of the Bureau of Lands
investigator; or a legislative act or statute.15 The applicant may also secure a certification from the
government that the lands applied for are alienable and disposable. 16

Previously, a certification from the DENR that a lot was alienable and disposable was sufficient to establish
the true nature and character of the property and enjoyed the presumption of regularity in the absence of
contradictory evidence.17

However, in Republic v. T.A.N. Properties, Inc.,18 the Supreme Court overturned the grant by the lower
courts of an original application for registration over a parcel of land in Batangas and ruled that a CENRO
certification is not enough to certify that a land is alienable and disposable:

Further, it is not enough for the PENRO or CENRO to certify that a land is alienable and disposable. The
applicant for land registration must prove that the DENR Secretary had approved the land classification
and released the land of the public domain as alienable and disposable, and that the land subject of the
application for registration falls within the approved area per verification through survey by the PENRO or
CENRO. In addition, the applicant for land registration must present a copy of the original classification
approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records.
These facts must be established to prove that the land is alienable and disposable. Respondent failed to
do so because the certifications presented by respondent do not, by themselves, prove that the land is
alienable and disposable. (Emphasis supplied)

Thus, as it now stands, aside from a CENRO certification, an application for original registration of title
over a parcel of land must be accompanied by a copy of the original classification approved by the DENR
Secretary and certified as a true copy by the legal custodian of the official records in order to establish
that the land indeed is alienable and disposable.19

To comply with the first requisite for an application for original registration of title under the Property
Registration Decree, respondents Vegas should have submitted a CENRO certification and a certified true
copy of the original classification by the DENR Secretary that the land is alienable and disposable,
together with their application. However, as pointed out by the Court of Appeals, respondents Vegas failed
to submit a CENRO certification -- much less an original classification by the DENR Secretary -- to prove
that the land is classified as alienable and disposable land of the public domain.20 If the stringent rule
imposed in Republic v. T.A.N. Properties, Inc., is to be followed, the absence of these twin certifications
justifies a denial of an application for registration. Significantly, however, the Court’s pronouncement in
Republic v. T.A.N. Properties, Inc., was issued after the decisions of the trial court 21 and the appellate
court22 in this case.

Recently, however, in Republic v. Serrano,23 the Court affirmed the findings of the trial and the appellate
courts that the parcel of land subject of registration was alienable and disposable. The Court held that a
DENR Regional Technical Director’s certification, which is annotated on the subdivision plan submitted in
evidence, constitutes substantial compliance with the legal requirement:

While Cayetano failed to submit any certification which would formally attest to the alienable and
disposable character of the land applied for, the Certification by DENR Regional Technical Director Celso V.
Loriega, Jr., as annotated on the subdivision plan submitted in evidence by Paulita, constitutes substantial
compliance with the legal requirement. It clearly indicates that Lot 249 had been verified as belonging to
the alienable and disposable area as early as July 18, 1925.

The DENR certification enjoys the presumption of regularity absent any evidence to the contrary. It bears
noting that no opposition was filed or registered by the Land Registration Authority or the DENR to contest
respondents' applications on the ground that their respective shares of the lot are inalienable. There being
no substantive rights which stand to be prejudiced, the benefit of the Certification may thus be equitably
extended in favor of respondents. (Emphasis supplied)

Indeed, the best proofs in registration proceedings that a land is alienable and disposable are a
certification from the CENRO or Provincial Environment and Natural Resources Office (PENRO) and a
certified true copy of the DENR’s original classification of the land. The Court, however, has nonetheless
recognized and affirmed applications for land registration on other substantial and convincing evidence
duly presented without any opposition from the LRA or the DENR on the ground of substantial compliance.

Applying these precedents, the Court finds that despite the absence of a certification by the CENRO and a
certified true copy of the original classification by the DENR Secretary, there has been substantial
compliance with the requirement to show that the subject land is indeed alienable and disposable based
on the evidence on record.

First, respondents Vegas were able to present Mr. Gonzales of the CENRO who testified that the subject
land is alienable and disposable, and who identified his written report on his inspection of the subject
land.

In the Report,24 Mr. Gonzales attested under oath that (1) the "area is entirely within the alienable and
disposable zone" as classified under Project No. 15, L.C. Map No. 582, certified on 31 December 1925; 25
(2) the land has never been forfeited in favor of the government for non-payment of taxes; (3) the land is
not within a previously patented/decreed/titled property;26 (4) there are no public land application/s filed
by the applicant for the same land;27 and (5) the land is residential/commercial.28 That Mr. Gonzales
appeared and testified before an open court only added to the reliability of the Report, which classified the
subject land as alienable and disposable public land. The Court affirms the Court of Appeals’ conclusion
that Mr. Gonzales’ testimony and written report under oath constituted substantial evidence to support
their claim as to the nature of the subject land.
Second, Subdivision Plan Csd-04-02433-6, formally offered as evidence by respondents-intervenors
Buhays,29 expressly indicates that the land is alienable and disposable. Similar to Republic v. Serrano, Mr.
Samson G. de Leon, the officer-in-charge of the Office of the Assistant Regional Executive Director for
Operations of the DENR, approved the said subdivision plan, which was annotated with the following
proviso: "[T]his survey is inside alienable and disposable area as per Project No. 15, L.C. Map No. 582,
certified on Dec. 31, 1925." Notably, Mr. De Leon’s annotation pertaining to the identification of the land
as alienable and disposable coincides with the investigation report of Mr. Gonzales.

Finally, upon being informed of respondents Vegas’ application for original registration, the LRA never
raised the issue that the land subject of registration was not alienable and disposable. In the
Supplementary Report submitted during the trial court proceedings, 30 the LRA did not interpose any
objection to the application on the basis of the nature of the land. It simply noted that the subject
subdivision plan (Psu-51460) had also been applied for in Case No. 1469, GLRO Record No. 32505, but
that there was no decree of registration issued therefor. Thus, the LRA recommended that "should the
instant case be given due course, the application in Case No. 1469, GLRO Record No. 32505 with respect
to plan Psu-51460 be dismissed." In addition, not only did the government fail to cross-examine Mr.
Gonzales, it likewise chose not to present any countervailing evidence to support its opposition. In
contrast to the other cases brought before this Court,31 no opposition was raised by any interested
government body, aside from the pro forma opposition filed by the OSG.

The onus in proving that the land is alienable and disposable still remains with the applicant in an original
registration proceeding; and the government, in opposing the purported nature of the land, need not
adduce evidence to prove otherwise.32 In this case though, there was no effective opposition, except the
pro forma opposition of the OSG, to contradict the applicant’s claim as to the character of the public land
as alienable and disposable. The absence of any effective opposition from the government, when coupled
with respondents’ other pieces of evidence on record persuades this Court to rule in favor of respondents.

In the instant Petition, petitioner Republic also assails the failure of Mr. Gonzales to testify as to when the
land was declared as alienable and disposable. Indeed, his testimony in open court is bereft of any detail
as to when the land was classified as alienable and disposable public land, as well as the date when he
conducted the investigation. However, these matters could have been dealt with extensively during cross-
examination, which petitioner Republic waived because of its repeated absences and failure to present
counter evidence.33 In any event, the Report, as well as the Subdivision Plan, readily reveals that the
subject land was certified as alienable and disposable as early as 31 December 1925 and was even
classified as residential and commercial in nature.

Thus, the Court finds that the evidence presented by respondents Vegas, coupled with the absence of any
countervailing evidence by petitioner Republic, substantially establishes that the land applied for is
alienable and disposable and is the subject of original registration proceedings under the Property
Registration Decree. There was no reversible error on the part of either the trial court or the appellate
court in granting the registration.

Respondents-intervenors Buhays’ title to that portion of the subject land is likewise affirmed, considering
that the joint claim of respondents-intervenors Buhays over the land draws its life from the same title of
respondents Vegas, who in turn failed to effectively oppose the claimed sale of that portion of the land to
the former’s predecessors-in-interest.

It must be emphasized that the present ruling on substantial compliance applies pro hac vice.1âwphi1 It
does not in any way detract from our rulings in Republic v. T.A.N. Properties, Inc., and similar cases which
impose a strict requirement to prove that the public land is alienable and disposable, especially in this
case when the Decisions of the lower court and the Court of Appeals were rendered prior to these
rulings.34 To establish that the land subject of the application is alienable and disposable public land, the
general rule remains: all applications for original registration under the Property Registration Decree must
include both (1) a CENRO or PENRO certification and (2) a certified true copy of the original classification
made by the DENR Secretary.

As an exception, however, the courts - in their sound discretion and based solely on the evidence
presented on record - may approve the application, pro hac vice, on the ground of substantial compliance
showing that there has been a positive act of government to show the nature and character of the land
and an absence of effective opposition from the government. This exception shall only apply to
applications for registration currently pending before the trial court prior to this Decision and shall be
inapplicable to all future applications.
WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals’ Decision dated
30 April 2007 and the trial court’s Decision dated 18 November 2003 are hereby AFFIRMED.

G.R. No. 179428               January 26, 2011

PRIMO E. CAONG, JR., ALEXANDER J. TRESQUIO, and LORIANO D. DALUYON, Petitioners,

vs.
AVELINO REGUALOS, Respondent.

DECISION

NACHURA, J.:

Is the policy of suspending drivers pending payment of arrears in their boundary obligations reasonable?
The Court of Appeals (CA) answered the question in the affirmative in its Decision 1 dated December 14,
2006 and Resolution dated July 16, 2007. In this petition for review on certiorari, we take a second look
at the issue and determine whether the situation at bar merits the relaxation of the application of the said
policy.

Petitioners Primo E. Caong, Jr. (Caong), Alexander J. Tresquio (Tresquio), and Loriano D. Daluyon
(Daluyon) were employed by respondent Avelino Regualos under a boundary agreement, as drivers of his
jeepneys. In November 2001, they filed separate complaints 2 for illegal dismissal against respondent who
barred them from driving the vehicles due to deficiencies in their boundary payments.

Caong was hired by respondent in September 1998 and became a permanent driver sometime in 2000. In
July 2001, he was assigned a brand- new jeepney for a boundary fee of P550.00 per day. He was
suspended on October 9-15, 2001 for failure to remit the full amount of the boundary. Consequently, he
filed a complaint for illegal suspension. Upon expiration of the suspension period, he was readmitted by
respondent, but he was reassigned to an older jeepney for a boundary fee of P500.00 per day. He claimed
that, on November 9, 2001, due to the scarcity of passengers, he was only able to remit P400.00 to
respondent. On November 11, 2001, he returned to work after his rest day, but respondent barred him
from driving because of the deficiency in the boundary payment. He pleaded with respondent but to no
avail.3

Tresquio was employed by respondent as driver in August 1996. He became a permanent driver in 1997.
In 1998, he was assigned to drive a new jeepney for a boundary fee of P500.00 per day. On November 6,
2001, due to the scarcity of passengers, he was only able to remit P450.00. When he returned to work on
November 8, 2001 after his rest day, he was barred by respondent because of the deficiency of P50.00.
He pleaded with respondent but the latter was adamant.4

On the other hand, Daluyon started working for respondent in March 1998. He became a permanent
driver in July 1998. He was assigned to a relatively new jeepney for a boundary fee of P500.00 per day.
On November 7, 2001, due to the scarcity of passengers, he was only able to pay P470.00 to respondent.
The following day, respondent barred him from driving his jeepney. He pleaded but to no avail. 5

During the mandatory conference, respondent manifested that petitioners were not dismissed and that
they could drive his jeepneys once they paid their arrears. Petitioners, however, refused to do so.

Petitioners averred that they were illegally dismissed by respondent without just cause. They maintained
that respondent did not comply with due process requirements before terminating their employment, as
they were not furnished notice apprising them of their infractions and another informing them of their
dismissal. Petitioners claimed that respondent’s offer during the mandatory conference to reinstate them
was an insincere afterthought as shown by the warning given by respondent that, if they fail to remit the
full amount of the boundary yet again, they will be barred from driving the jeepneys. Petitioners
questioned respondent’s policy of automatically dismissing the drivers who fail to remit the full amount of
the boundary as it allegedly (a) violates their right to due process; (b) does not constitute a just cause for
dismissal; (c) disregards the reality that there are days when they could not raise the full amount of the
boundary because of the scarcity of passengers.

In his Position Paper, respondent alleged that petitioners were lessees of his vehicles and not his
employees; hence, the Labor Arbiter had no jurisdiction. He claimed that he noticed that some of his
lessees, including petitioners, were not fully paying the daily rental of his jeepneys. In a list which he
attached to the Position Paper, it was shown that petitioners had actually incurred arrears since they
started working. The list showed that Caong’s total arrears amounted to P10,315.00, that of Tresquio was
P10,760.00, while that of Daluyon was P6,890.00. He made inquiries and discovered that his lessees
contracted loans with third parties and used the income of the jeepneys in paying the loans. Thus, on
November 4, 2001, he gathered all the lessees in a meeting and informed them that, effective November
5, 2001, those who would fail to fully pay the daily rental would not be allowed to rent a jeepney on the
following day. He explained to them that the jeepneys were acquired on installment basis, and that he
was paying the monthly amortizations through the lease income. Most of the lessees allegedly accepted
the condition and paid their arrears. Petitioners, however, did not settle their arrears. Worse, their
remittances were again short of the required boundary fee. Petitioner Daluyon’s rent payment was short
of P20.00 on November 5, 2001 and P80.00 on November 7, 2001. On November 6, 2001, it was Tresquio
who incurred an arrear of P100.00. On November 7 and 9, 2001, petitioner Caong was in arrear of P50.00
and P100.00, respectively. Respondent stressed that, during the mandatory conference, he manifested
that he would renew his lease with petitioners if they would pay the arrears they incurred during the said
dates.6

On March 31, 2003, the Labor Arbiter decided the case in favor of respondent, thus:

WHEREFORE, judgment is hereby rendered, DISMISSING the above-entitled cases for lack of merit.
However, respondent Regualos is directed to accept back complainants Caong, Tresquio and Daluyon, as
regular drivers of his passenger jeepneys, after complainants have paid their respective arrearages they
have incurred in the remittance of their respective boundary payments, in the amount of P150.00,
P100.00 and P100.00. Complainants, if still interested to work as drivers, are hereby ordered to report to
respondent Regualos within fifteen (15) days from the finality of this decision. Otherwise, failure to do so
means forfeiture of their respective employments.

Other claims of complainants are dismissed for lack of merit.

SO ORDERED.7

According to the Labor Arbiter, an employer-employee relationship existed between respondent and
petitioners. The latter were not dismissed considering that they could go back to work once they have
paid their arrears. The Labor Arbiter opined that, as a disciplinary measure, it is proper to impose a
reasonable sanction on drivers who cannot pay their boundary payments. He emphasized that respondent
acquired the jeepneys on loan or installment basis and relied on the boundary payments to comply with
his monthly amortizations.8

Petitioners appealed the decision to the National Labor Relations Commission (NLRC). In its resolution 9
dated March 31, 2004, the NLRC agreed with the Labor Arbiter and dismissed the appeal. It also denied
petitioners’ motion for reconsideration. 10

Forthwith, petitioners filed a petition for certiorari with the CA.

In its Decision11 dated December 14, 2006, the CA found no grave abuse of discretion on the part of the
NLRC. According to the CA, the employer-employee relationship of the parties has not been severed, but
merely suspended when respondent refused to allow petitioners to drive the jeepneys while there were
unpaid boundary obligations. The CA pointed out that the fact that it was within the power of petitioners
to return to work is proof that there was no termination of employment. The condition that petitioners
should first pay their arrears only for the period of November 5-9, 2001 before they can be readmitted to
work is neither impossible nor unreasonable if their total unpaid boundary obligations and the need to
sustain the financial viability of the employer’s enterprise—which would ultimately redound to the benefit
of the employees—are taken into consideration.12

The CA went on to rule that petitioners were not denied their right to due process. It pointed out that the
case does not involve a termination of employment; hence, the strict application of the twin-notice rule is
not warranted. According to the CA, what is important is that petitioners were given the opportunity to be
heard. The meeting conducted by respondent on November 4, 2001 served as sufficient notice to
petitioners. During the said meeting, respondent informed his employees, including petitioners, to strictly
comply with the policy regarding remittances and warned them that they would not be allowed to take out
the jeepneys if they did not remit the full amount of the boundary.13

Dissatisfied, petitioners filed a motion for reconsideration, but the CA denied the motion in its Resolution
dated July 16, 2007.14
Petitioners are now before this Court resolutely arguing that they were illegally dismissed by respondent,
and that such dismissal was made in violation of the due process requirements of the law.

The petition is without merit.

In an action for certiorari, petitioner must prove not merely reversible error, but grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of respondent. Mere abuse of discretion is not
enough. It must be shown that public respondent exercised its power in an arbitrary or despotic manner
by reason of passion or personal hostility, and this must be so patent and so gross as to amount to an
evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in
contemplation of law.15

As correctly held by the CA, petitioners failed to establish that the NLRC committed grave abuse of
discretion in affirming the Labor Arbiter’s ruling, which is supported by the facts on record.

It is already settled that the relationship between jeepney owners/operators and jeepney drivers under
the boundary system is that of employer-employee and not of lessor-lessee. The fact that the drivers do
not receive fixed wages but only get the amount in excess of the so-called "boundary" that they pay to
the owner/operator is not sufficient to negate the relationship between them as employer and employee. 16

The Labor Arbiter, the NLRC, and the CA uniformly declared that petitioners were not dismissed from
employment but merely suspended pending payment of their arrears. Findings of fact of the CA,
particularly where they are in absolute agreement with those of the NLRC and the Labor Arbiter, are
accorded not only respect but even finality, and are deemed binding upon this Court so long as they are
supported by substantial evidence.17

We have no reason to deviate from such findings. Indeed, petitioners’ suspension cannot be categorized
as dismissal, considering that there was no intent on the part of respondent to sever the employer-
employee relationship between him and petitioners. In fact, it was made clear that petitioners could put
an end to the suspension if they only pay their recent arrears. As it was, the suspension dragged on for
years because of petitioners’ stubborn refusal to pay. It would have been different if petitioners complied
with the condition and respondent still refused to readmit them to work. Then there would have been a
clear act of dismissal. But such was not the case. Instead of paying, petitioners even filed a complaint for
illegal dismissal against respondent.

Respondent’s policy of suspending drivers who fail to remit the full amount of the boundary was fair and
reasonable under the circumstances. Respondent explained that he noticed that his drivers were getting
lax in remitting their boundary payments and, in fact, herein petitioners had already incurred a
considerable amount of arrears. He had to put a stop to it as he also relied on these boundary payments
to raise the full amount of his monthly amortizations on the jeepneys. Demonstrating their obstinacy,
petitioners, on the days immediately following the implementation of the policy, incurred deficiencies in
their boundary remittances.

It is acknowledged that an employer has free rein and enjoys a wide latitude of discretion to regulate all
aspects of employment, including the prerogative to instill discipline on his employees and to impose
penalties, including dismissal, if warranted, upon erring employees. This is a management prerogative.
Indeed, the manner in which management conducts its own affairs to achieve its purpose is within the
management’s discretion. The only limitation on the exercise of management prerogative is that the
policies, rules, and regulations on work-related activities of the employees must always be fair and
reasonable, and the corresponding penalties, when prescribed, commensurate to the offense involved and
to the degree of the infraction.18

Petitioners argue that the policy is unsound as it does not consider the times when passengers are scarce
and the drivers are not able to raise the amount of the boundary.

Petitioners’ concern relates to the implementation of the policy, which is another matter. A company
policy must be implemented in such manner as will accord social justice and compassion to the employee.
In case of noncompliance with the company policy, the employer must consider the surrounding
circumstances and the reasons why the employee failed to comply. When the circumstances merit the
relaxation of the application of the policy, then its noncompliance must be excused.
In the present case, petitioners merely alleged that there were only few passengers during the dates in
question. Such excuse is not acceptable without any proof or, at least, an explanation as to why
passengers were scarce at that time. It is simply a bare allegation, not worthy of belief. We also find the
excuse unbelievable considering that petitioners incurred the shortages on separate days, and it appears
that only petitioners failed to remit the full boundary payment on said dates.

Under a boundary scheme, the driver remits the "boundary," which is a fixed amount, to the
owner/operator and gets to earn the amount in excess thereof. Thus, on a day when there are many
passengers along the route, it is the driver who actually benefits from it. It would be unfair then if, during
the times when passengers are scarce, the owner/operator will be made to suffer by not getting the full
amount of the boundary. Unless clearly shown or explained by an event that irregularly and negatively
affected the usual number of passengers within the route, the scarcity of passengers should not excuse
the driver from paying the full amount of the boundary.

Finally, we sustain the CA’s finding that petitioners were not denied the right to due process. We thus
quote with approval its discussion on this matter:

Having established that the case at bench does not involve termination of employment, We find that the
strict, even rigid, application of the twin-notice rule is not warranted.

But the due process safeguards are nonetheless still available to petitioners.

Due process is not a matter of strict or rigid or formulaic process.1âwphi1 The essence of due process is
simply the opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain
one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. A formal or
trial-type hearing is not at all times and in all instances essential, as the due process requirements are
satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the
controversy at hand. x x x.

xxxx

In the case at bench, private respondent, upon finding that petitioners had consistently failed to remit the
full amount of the boundary, conducted a meeting on November 4, 2001 informing them to strictly comply
with the policy regarding their remittances and warned them to discontinue driving if they still failed to
remit the full amount of the boundary.19

WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated December
14, 2006 and Resolution dated July 16, 2007 are AFFIRMED.

G.R. No. 173085               January 19, 2011

PHILIPPINE VETERANS BANK, Petitioner,

vs.
BASES CONVERSION DEVELOPMENT AUTHORITY, LAND BANK OF THE PHILIPPINES, ARMANDO SIMBILLO,
CHRISTIAN MARCELO, ROLANDO DAVID, RICARDO BUCUD, PABLO SANTOS, AGRIFINA ENRIQUEZ,
CONRADO ESPELETA, CATGERUBE CASTRO, CARLITO MERCADO and ALFREDO SUAREZ, Respondents.

DECISION

ABAD, J.:

This case is about the authority of the court in an expropriation case to adjudicate questions of ownership
of the subject properties where such questions involve the determination of the validity of the issuance to
the defendants of Certificates of Land Ownership Awards (CLOAs) and Emancipation Patents (EPs),
questions that fall within the jurisdiction of the Department of Agrarian Reform Adjudication Board
(DARAB).

The Facts and the Case

In late 2003 respondent Bases Conversion Development Authority (BCDA), a government corporation,
filed several expropriation actions before the various branches of the Regional Trial Court (RTC) of
Angeles City, for acquisition of lands needed for the construction of the Subic-Clark-Tarlac Expressway
Project. Ten of these cases were raffled to Branch 58 of the court1 and it is these that are the concern of
the present petition.

The defendants in Branch 58 cases were respondents Armando Simbillo, Christian Marcelo, Rolando
David, Ricardo Bucud, Pablo Santos, Agrifina Enriquez, Conrado Espeleta, Catgerube Castro, Carlito
Mercado, and Alfredo Suarez. They were the registered owners of the expropriated lands that they
acquired as beneficiaries of the comprehensive agrarian reform program. Another defendant was Land
Bank of the Philippines, the mortgagee of the lands by virtue of the loans it extended for their acquisition.
The lands in these cases were located in Porac and Floridablanca, Pampanga.

On learning of the expropriation cases before Branch 58, petitioner Philippine Veterans Bank (PVB) filed
motions to intervene in all the cases with attached complaints-in-intervention, a remedy that it adopted in
similar cases with the other branches. PVB alleged that the covered properties actually belonged to
Belmonte Agro-Industrial Development Corp. which mortgaged the lands to PVB in 1976. PVB had since
foreclosed on the mortgages and bought the same at public auction in 1982. Unfortunately, the bank had
been unable to consolidate ownership in its name.

But, in its order of August 18, 2004,2 Branch 58 denied PVB’s motion for intervention on the ground that
the intervention amounts to a third-party complaint that is not allowed in expropriation cases and that the
intervention would delay the proceedings in the cases before it. Besides, said Branch 58, PVB had a
pending action for annulment of the titles issued to the individual defendants and this was pending before
Branch 62 of the court.

PVB filed its motion for reconsideration but Branch 58 denied the same, prompting the bank to file a
petition for certiorari with the Court of Appeals (CA).3 On January 26, 2006 the CA rendered a decision,
dismissing the petition for lack of merit.4 It also denied in a resolution dated June 2, 20065 PVB’s motion
for reconsideration.

Meanwhile, on April 3, 2006 Branch 58 issued separate decisions in all 10 cases before it, granting the
expropriation of the subject properties. The court noted the uncertainty as to the ownership of such
properties but took no action to grant BCDA’s prayer in its complaint that it determine the question of
ownership of the same pursuant to Section 9, Rule 67 of the Revised Rules of Civil Procedure. 6

The Issue Presented

The issue presented in this case is whether or not the CA erred in holding that PVB was not entitled to
intervene in the expropriation cases before Branch 58 of the Angeles City RTC.

The Court’s Ruling

PVB maintains that in deciding the case, the RTC and the CA ignored Section 9, Rule 67 of the 1997 Rules
of Civil Procedure, which authorizes the court adjudicating the expropriation case to hear and decide
conflicting claims regarding the ownership of the properties involved while the compensation for the
expropriated property is in the meantime deposited with the court. Section 9 provides:

Sec. 9. Uncertain ownership; conflicting claims. – If the ownership of the property taken is uncertain, or
there are conflicting claims to any part thereof, the court may order any sum or sums awarded as
compensation for the property to be paid to the court for the benefit of the person adjudged in the same
proceeding to be entitled thereto. But the judgment shall require the payment of the sum or sums
awarded to either the defendant or the court before the plaintiff can enter upon the property, or retain it
for the public use or purpose if entry has already been made.

PVB’s point regarding the authority of the court in expropriation cases to hear and adjudicate conflicting
claims over the ownership of the lands involved in such cases is valid. But such rule obviously cannot
apply to PVB for the following reasons:

1. At the time PVB tried to intervene in the expropriation cases, its conflict with the farmer beneficiaries
who held CLOAs, EPs, or TCTs emanating from such titles were already pending before Angeles City RTC
Branch 62, a co-equal branch of the same court. Branch 58 had no authority to pre-empt Branch 62 of its
power to hear and adjudicate claims that were already pending before it.
2. Of course, subsequently, after the CA dismissed PVB’s petition on January 26, 2006, the latter filed a
motion for reconsideration, pointing out that it had in the meantime already withdrawn the actions it filed
with Branch 62 after learning from the decision of the Supreme Court in Department of Agrarian Reform
v. Cuenca,7 that jurisdiction over cases involving the annulment of CLOAs and EPs were vested by
Republic Act 6657 in the DARAB.8

PVB now points out that, since there was no longer any impediment in RTC Branch 58 taking cognizance
of its motion for intervention and adjudicating the parties’ conflicting claims over the expropriated
properties, the CA was in error in not reconsidering its decision.

But PVB’s withdrawal of its actions from Branch 62 cannot give Branch 58 comfort. As PVB itself insists,
jurisdiction over the annulment of the individual defendants’ CLOAs and EPs (which titles if annulled would
leave PVB’s titles to the lands unchallenged) lies with the DARAB. Branch 58 would still have no power to
adjudicate the issues of ownership presented by the PVB’s intervention.

Actually, PVB’s remedy was to secure an order from Branch 58 to have the proceeds of the expropriation
deposited with that branch in the meantime, pending adjudication of the issues of ownership of the
expropriated lands by the DARAB. Section 9 above empowers the court to order payment to itself of the
proceeds of the expropriation whenever questions of ownership are yet to be settled. There is no reason
why this rule should not be applied even where the settlement of such questions is to be made by another
tribunal.1avvphi1

WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals dated
January 26, 2006 and its resolution dated June 2, 2006 in CA-G.R. SP 88144.

G.R. No. 176019               January 12, 2011

BPI FAMILY SAVINGS BANK, INC., Petitioner,

vs.
GOLDEN POWER DIESEL SALES CENTER, INC. and RENATO C. TAN, Respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the 13 March 2006 Decision2 and 19 December 2006 Resolution 3 of the
Court of Appeals in CA-G.R. SP No. 78626. In its 13 March 2006 Decision, the Court of Appeals denied
petitioner BPI Family Savings Bank, Inc.ʼs (BPI Family) petition for mandamus and certiorari. In its 19
December 2006 Resolution, the Court of Appeals denied BPI Familyʼs motion for reconsideration.

The Facts

On 26 October 1994, CEDEC Transport, Inc. (CEDEC) mortgaged two parcels of land covered by Transfer
Certificate of Title (TCT) Nos. 134327 and 134328 situated in Malibay, Pasay City, including all the
improvements thereon (properties), in favor of BPI Family to secure a loan of P6,570,000. On the same
day, the mortgage was duly annotated on the titles under Entry No. 94-2878. On 5 April and 27
November 1995, CEDEC obtained from BPI Family additional loans of P2,160,000 and P1,140,000,
respectively, and again mortgaged the same properties. These latter mortgages were duly annotated on
the titles under Entry Nos. 95-6861 and 95-11041, respectively, on the same day the loans were
obtained.

Despite demand, CEDEC defaulted in its mortgage obligations. On 12 October 1998, BPI Family filed with
the ex-officio sheriff of the Regional Trial Court of Pasay City (RTC) a verified petition for extrajudicial
foreclosure of real estate mortgage over the properties under Act No. 3135, as amended. 4

On 10 December 1998, after due notice and publication, the sheriff sold the properties at public auction.
BPI Family, as the highest bidder, acquired the properties for P13,793,705.31. On 14 May 1999, the
Certificate of Sheriffʼs Sale, dated 24 February 1999, was duly annotated on the titles covering the
properties.
On 15 May 1999, the one-year redemption period expired without CEDEC redeeming the properties. Thus,
the titles to the properties were consolidated in the name of BPI Family. On 13 September 2000, the
Registry of Deeds of Pasay City issued new titles, TCT Nos. 142935 and 142936, in the name of BPI
Family.

However, despite several demand letters, CEDEC refused to vacate the properties and to surrender
possession to BPI Family. On 31 January 2002, BPI Family filed an Ex-Parte Petition for Writ of Possession
over the properties with Branch 114 of the Regional Trial Court of Pasay City (trial court). In its 27 June
2002 Decision, the trial court granted BPI Familyʼs petition.5 On 12 July 2002, the trial court issued the
Writ of Possession.

On 29 July 2002, respondents Golden Power Diesel Sales Center, Inc. and Renato C. Tan6 (respondents)
filed a Motion to Hold Implementation of the Writ of Possession.7 Respondents alleged that they are in
possession of the properties which they acquired from CEDEC on 10 September 1998 pursuant to the
Deed of Absolute Sale with Assumption of Mortgage (Deed of Sale). 8 Respondents argued that they are
third persons claiming rights adverse to CEDEC, the judgment obligor and they cannot be deprived of
possession over the properties. Respondents also disclosed that they filed a complaint before Branch 111
of the Regional Trial Court of Pasay City, docketed as Civil Case No. 99-0360, for the cancellation of the
Sheriffʼs Certificate of Sale and an order to direct BPI Family to honor and accept the Deed of Absolute
Sale between CEDEC and respondents.9

On 12 September 2002, the trial court denied respondents’ motion. 10 Thereafter, the trial court issued an
alias writ of possession which was served upon CEDEC and all other persons claiming rights under them.

However, the writ of possession expired without being implemented. On 22 January 2003, BPI Family filed
an Urgent Ex-Parte Motion to Order the Honorable Branch Clerk of Court to Issue Alias Writ of Possession.
In an Order dated 27 January 2003, the trial court granted BPI Familyʼs motion.

Before the alias writ could be implemented, respondent Renato C. Tan filed with the trial court an Affidavit
of Third Party Claim11 on the properties. Instead of implementing the writ, the sheriff referred the matter
to the trial court for resolution.

On 11 February 2003, BPI Family filed an Urgent Motion to Compel Honorable Sheriff and/or his Deputy to
Enforce Writ of Possession and to Break Open the properties. In its 7 March 2003 Resolution, the trial
court denied BPI Familyʼs motion and ordered the sheriff to suspend the implementation of the alias writ
of possession.12 According to the trial court, "the order granting the alias writ of possession should not
affect third persons holding adverse rights to the judgment obligor." The trial court admitted that in
issuing the first writ of possession it failed to take into consideration respondents’ complaint before
Branch 111 claiming ownership of the property. The trial court also noted that respondents were in actual
possession of the properties and had been updating the payment of CEDECʼs loan balances with BPI
Family. Thus, the trial court found it necessary to amend its 12 September 2002 Order and suspend the
implementation of the writ of possession until Civil Case No. 99-0360 is resolved.

BPI Family filed a motion for reconsideration. In its 20 June 2003 Resolution, the trial court denied the
motion.13

BPI Family then filed a petition for mandamus and certiorari with application for a temporary restraining
order or preliminary injunction before the Court of Appeals. BPI Family argued that the trial court acted
with grave abuse of discretion amounting to lack or excess of jurisdiction when it ordered the suspension
of the implementation of the alias writ of possession. According to BPI Family, it was the ministerial duty
of the trial court to grant the writ of possession in its favor considering that it was now the owner of the
properties and that once issued, the writ should be implemented without delay.

The Court of Appeals dismissed BPI Familyʼs petition. The dispositive portion of the 13 March 2006
Decision reads:

WHEREFORE, the instant Petition for Writ of Mandamus and Writ of Certiorari with Application for a TRO
and/or Preliminary Injunction is hereby DENIED. The twin Resolutions dated March 7, 2003 and June 20,
2003, both issued by the public respondent in LRC Case No. 02-0003, ordering the sheriff to suspend the
implementation of the Alias Writ of Possession issued in favor of the petitioner, and denying its Urgent
Omnibus Motion thereof, respectively, are hereby AFFIRMED.
SO ORDERED.14

BPI Family filed a motion for reconsideration. In its 19 December 2006 Resolution, the Court of Appeals
denied the motion.

The Ruling of the Court of Appeals

The Court of Appeals ruled that the trial court did not commit grave abuse of discretion in suspending the
implementation of the alias writ of possession because respondents were in actual possession of the
properties and are claiming rights adverse to CEDEC, the judgment obligor. According to the Court of
Appeals, the principle that the implementation of the writ of possession is a mere ministerial function of
the trial court is not without exception. The Court of Appeals held that the obligation of the court to issue
an ex parte writ of possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be
ministerial once it appears that there is a third party in possession of the property who is claiming a right
adverse to that of the debtor or mortgagor.

The Issues

BPI Family raises the following issues:

A.

The Honorable Court of Appeals seriously erred in upholding the finding of the Honorable Regional Trial
Court that despite the fact that private respondents merely stepped into the shoes of mortgagor CEDEC,
being the vendee of the properties in question, they are categorized as third persons in possession thereof
who are claiming a right adverse to that of the debtor/mortgagor CEDEC.

B.

The Honorable Court of Appeals gravely erred in sustaining the aforementioned twin orders suspending
the implementation of the writ of possession on the ground that the annulment case filed by private
respondents is still pending despite the established ruling that pendency of a case questioning the legality
of a mortgage or auction sale cannot be a ground for the non-issuance and/or non-implementation of a
writ of possession.15

The Ruling of the Court

The petition is meritorious.

BPI Family argues that respondents cannot be considered "a third party who is claiming a right adverse to
that of the debtor or mortgagor" because respondents, as vendee, merely stepped into the shoes of
CEDEC, the vendor and judgment obligor. According to BPI Family, respondents are mere extensions or
successors-in-interest of CEDEC. BPI Family also argues that the pendency of an action questioning the
validity of a mortgage or auction sale cannot be a ground to oppose the implementation of a writ of
possession.

On the other hand, respondents insist that they are third persons who claim rights over the properties
adverse to CEDEC. Respondents argue that the obligation of the court to issue an ex parte writ of
possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once it
appears that there is a third party in possession of the property who is claiming a right adverse to that of
the judgment obligor.

In extrajudicial foreclosures of real estate mortgages, the issuance of a writ of possession is governed by
Section 7 of Act No. 3135, as amended, which provides:

SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of
First Instance (Regional Trial Court) of the province or place where the property or any part thereof is
situated, to give him possession thereof during the redemption period, furnishing bond in an amount
equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be
shown that the sale was made without violating the mortgage or without complying with the requirements
of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the
registration or cadastral proceedings if the property is registered, or in special proceedings in the case of
property registered under the Mortgage Law or under section one hundred and ninety-four of the
Administrative Code, or of any other real property encumbered with a mortgage duly registered in the
office of any register of deeds in accordance with any existing law, and in each case the clerk of the court
shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred
and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight
hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession
issue, addressed to the sheriff of the province in which the property is situated, who shall execute said
order immediately.

This procedure may also be availed of by the purchaser seeking possession of the foreclosed property
bought at the public auction sale after the redemption period has expired without redemption having been
made.16

In China Banking Corporation v. Lozada,17 we ruled:

It is thus settled that the buyer in a foreclosure sale becomes the absolute owner of the property
purchased if it is not redeemed during the period of one year after the registration of the sale. As such, he
is entitled to the possession of the said property and can demand it at any time following the
consolidation of ownership in his name and the issuance to him of a new transfer certificate of title. The
buyer can in fact demand possession of the land even during the redemption period except that he has to
post a bond in accordance with Section 7 of Act No. 3135, as amended. No such bond is required after the
redemption period if the property is not redeemed. Possession of the land then becomes an absolute right
of the purchaser as confirmed owner. Upon proper application and proof of title, the issuance of the writ
of possession becomes a ministerial duty of the court.18 (Emphasis supplied)

Thus, the general rule is that a purchaser in a public auction sale of a foreclosed property is entitled to a
writ of possession and, upon an ex parte petition of the purchaser, it is ministerial upon the trial court to
issue the writ of possession in favor of the purchaser.

There is, however, an exception. Section 33, Rule 39 of the Rules of Court provides:

Section 33. Deed and possession to be given at expiration of redemption period; by whom executed or
given. - x x x

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and
acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the
levy. The possession of the property shall be given to the purchaser or last redemptioner by the same
officer unless a third party is actually holding the property adversely to the judgment obligor. (Emphasis
supplied)

Therefore, in an extrajudicial foreclosure of real property, when the foreclosed property is in the
possession of a third party holding the same adversely to the judgment obligor, the issuance by the trial
court of a writ of possession in favor of the purchaser of said real property ceases to be ministerial and
may no longer be done ex parte.19 The procedure is for the trial court to order a hearing to determine the
nature of the adverse possession.20 For the exception to apply, however, the property need not only be
possessed by a third party, but also held by the third party adversely to the judgment obligor.

In this case, BPI Family invokes the general rule that they are entitled to a writ of possession because
respondents are mere successors-in-interest of CEDEC and do not possess the properties adversely to
CEDEC. Respondents, on the other hand, assert the exception and insist that they hold the properties
adversely to CEDEC and that their possession is a sufficient obstacle to the ex parte issuance of a writ of
possession in favor of BPI Family.

Respondentsʼ argument fails to persuade the Court. It is clear that respondents acquired possession over
the properties pursuant to the Deed of Sale which provides that for P15,000,000 CEDEC will "sell, transfer
and convey" to respondents the properties "free from all liens and encumbrances excepting the mortgage
as may be subsisting in favor of the BPI FAMILY SAVINGS BANK."21 Moreover, the Deed of Sale provides
that respondents bind themselves to assume "the payment of the unpaid balance of the mortgage
indebtedness of the VENDOR (CEDEC) amounting to P7,889,472.48, as of July 31, 1998, in favor of the
aforementioned mortgagee (BPI Family) by the mortgage instruments and does hereby further agree to
be bound by the precise terms and conditions therein contained." 22
In Roxas v. Buan,23 we ruled:

It will be recalled that Roxasʼ possession of the property was premised on its alleged sale to him by
Valentin for the amount of P100,000.00. Assuming this to be true, it is readily apparent that Roxas holds
title to and possesses the property as Valentinʼs transferee. Any right he has to the property is necessarily
derived from that of Valentin. As transferee, he steps into the latterʼs shoes. Thus, in the instant case,
considering that the property had already been sold at public auction pursuant to an extrajudicial
foreclosure, the only interest that may be transferred by Valentin to Roxas is the right to redeem it within
the period prescribed by law. Roxas is therefore the successor-in-interest of Valentin, to whom the latter
had conveyed his interest in the property for the purpose of redemption. Consequently, Roxasʼ occupancy
of the property cannot be considered adverse to Valentin.24

In this case, respondentsʼ possession of the properties was premised on the sale to them by CEDEC for
the amount of P15,000,000. Therefore, respondents hold title to and possess the properties as CEDECʼs
transferees and any right they have over the properties is derived from CEDEC. As transferees of CEDEC,
respondents merely stepped into CEDEC’s shoes and are necessarily bound to acknowledge and respect
the mortgage CEDEC had earlier executed in favor of BPI Family. 25 Respondents are the successors-in-
interest of CEDEC and thus, respondentsʼ occupancy over the properties cannot be considered adverse to
CEDEC.

Moreover, in China Bank v. Lozada,26 we discussed the meaning of "a third party who is actually holding
the property adversely to the judgment obligor." We stated:

The exception provided under Section 33 of Rule 39 of the Revised Rules of Court contemplates a
situation in which a third party holds the property by adverse title or right, such as that of a co-owner,
tenant or usufructuary. The co-owner, agricultural tenant, and usufructuary possess the property in their
own right, and they are not merely the successor or transferee of the right of possession of another co-
owner or the owner of the property.27

In this case, respondents cannot claim that their right to possession over the properties is analogous to
any of these.1avvphi1 Respondents cannot assert that their right of possession is adverse to that of
CEDEC when they have no independent right of possession other than what they acquired from CEDEC.
Since respondents are not holding the properties adversely to CEDEC, being the latterʼs successors-in-
interest, there was no reason for the trial court to order the suspension of the implementation of the writ
of possession.

Furthermore, it is settled that a pending action for annulment of mortgage or foreclosure sale does not
stay the issuance of the writ of possession.28 The trial court, where the application for a writ of possession
is filed, does not need to look into the validity of the mortgage or the manner of its foreclosure. 29 The
purchaser is entitled to a writ of possession without prejudice to the outcome of the pending annulment
case.30

In this case, the trial court erred in issuing its 7 March 2003 Order suspending the implementation of the
alias writ of possession. Despite the pendency of Civil Case No. 99-0360, the trial court should not have
ordered the sheriff to suspend the implementation of the writ of possession. BPI Family, as purchaser in
the foreclosure sale, is entitled to a writ of possession without prejudice to the outcome of Civil Case No.
99-0360.

WHEREFORE, we GRANT the petition. We SET ASIDE the 13 March 2006 Decision and the 19 December
2006 Resolution of the Court of Appeals in CA-G.R. SP No. 78626. We SET ASIDE the 7 March and 20
June 2003 Resolutions of the Regional Trial Court, Branch 114, Pasay City. We ORDER the sheriff to
proceed with the implementation of the writ of possession without prejudice to the outcome of Civil Case
No. 99-0360.

G.R. No. 181930               January 10, 2011

MILAGROS SALTING, Petitioner,

vs.
JOHN VELEZ and CLARISSA R. VELEZ, Respondents.

DECISION
NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to annul and set
aside the Court of Appeals (CA) Decision1 dated November 29, 2007 and Resolution2 dated February 27,
2008 in CA-G.R. SP No. 97618.

The factual and procedural antecedents leading to the instant petition are as follows:

On October 7, 2003, respondents John Velez and Clarissa Velez filed a complaint 3 for ejectment against
petitioner Milagros Salting involving a property covered by Transfer Certificate of Title (TCT) No. 38079.
The case was docketed as Civil Case No. 2524. On March 28, 2006, respondents obtained a favorable
decision4 when the Metropolitan Trial Court (MeTC), Branch LXXIV, of Taguig City, Metro Manila, ordered
petitioner to vacate the subject parcel of land and to pay attorney’s fees and costs of suit. The decision
became final and executory, after which respondents filed a motion for execution which was opposed by
petitioner.

Thereafter, petitioner instituted an action before the Regional Trial Court (RTC), Branch 153, for
Annulment of Sale of the Property covered by TCT No. 38079, with prayer for the issuance of a Temporary
Restraining Order (TRO) and/or Writ of Preliminary Injunction against respondents, Hon. Ma. Paz Yson,
Deputy Sheriff Ernesto G. Raymundo, Jr., Teresita Diokno-Villamena, and Heirs of Daniel B. Villamena
(Heirs of Villamena).5 The case was docketed as Civil Case No. 70859-TG. Petitioner claimed that she
purchased the subject parcel of land from Villamena as evidenced by a notarized document known as Sale
of Real Estate. She further explained that respondents were able to obtain title to the subject property
through the fraudulent acts of the heirs of Villamena. Finally, she averred that the decision in Civil Case
No. 2524 had not attained finality as she was not properly informed of the MeTC decision. Petitioner thus
prayed that a TRO be issued, restraining respondents and all persons acting for and in their behalf from
executing the MeTC decision dated March 28, 2006. She further sought the declaration of nullity of the
sale by the heirs of Villamena to respondents involving the subject parcel of land, and, consequently, the
cancellation of the title to the property in the name of respondents.

Finding that petitioner would suffer grave and irreparable damage if respondents would not be enjoined
from executing the March 28, 2006 MeTC decision while respondents would not suffer any prejudice, the
RTC, in an Order dated October 26, 2006, granted the writ of preliminary injunction applied for. 6
Aggrieved, respondents filed a special civil action for certiorari under Rule 65 of the Rules of Court before
the CA, raising the sole issue of whether or not the RTC committed grave abuse of discretion amounting
to lack or excess of jurisdiction in issuing the writ of preliminary injunction against the execution of a
judgment for ejectment.

In a Decision7 dated November 29, 2007, the CA resolved the issue in the affirmative. The CA noted that
the principal action in Civil Case No. 70859-TG is the annulment of the deed of sale executed between
respondents and the heirs of Villamena, while the subject of the ancillary remedy of preliminary injunction
is the execution of the final judgment in a separate proceeding for ejectment in Civil Case No. 2524. The
appellate court concluded that petitioner had no clear and unmistakable right to possession over the
subject parcel of land in view of the March 28, 2006 MeTC decision. Hence, contrary to the conclusion of
the RTC, the CA opined that petitioner was not entitled to the writ of preliminary injunction. The CA thus
set aside the October 26, 2006 Order of the RTC.

Petitioner now comes before this Court in this petition for review on certiorari under Rule 45 of the Rules
of Court, claiming that:

In rendering the assailed Decision and Resolution, the Court of Appeals has decided in a way probably not
in accord with law or with the applicable decisions of the Supreme Court. (Section 6 (a), Rule 45, 1997
Rule[s] of Civil Procedure). The Court of Appeals disregarded the rule that service of decision to a
deceased lawyer is invalid and that the party must be duly served by the final judgment in order that the
final judgment will become final and executory. The Court of Appeals, likewise, disregarded the existence
of a clear and existing right of the petitioner which should be protected by an injunctive relief and the rule
that the pendency of an action assailing the right of a party to eject will justify the suspension of the
proceedings of the ejectment case.8

Petitioner claims that she was denied her right to appeal when the March 28, 2006 MeTC decision was
declared final and executory despite the fact that the copy of the decision was served on her deceased
counsel. She further claims that the MeTC decision had not attained finality due to improper service of the
decision. Moreover, petitioner avers that she has a clear and existing right and interest over the subject
property which should be protected by injunction. Finally, petitioner argues that jurisprudence allows the
suspension of proceedings in an ejectment case at whatever stage when warranted by the circumstances
of the case.

In their Comment,9 respondents allege that the petition is already moot and academic in view of the
execution of the MeTC decision. They claim that it is not proper to restrain the execution of the MeTC
decision as the case instituted before the RTC was for the annulment of the sale executed between
respondents and the heirs of Villamena, and not an action for annulment of judgment or mandamus to
compel the MeTC to entertain her belated appeal. Respondents add that the finality of the ejectment case
is not a bar to the case instituted for the annulment of the sale and the eventual recovery of ownership of
the subject property. The actions for ejectment and for annulment of sale are two different cases that
may proceed independently, especially when the judgment in the ejectment case had attained finality, as
in the instant case. Finally, respondents fault the petitioner herself for not informing the MeTC of the
death of her former counsel the moment she learned of such death.

We find no merit in the petition.

We first determine the validity of the service of the March 28, 2006 MeTC decision on petitioner’s counsel
who, as of that date, was already deceased. If a party to a case has appeared by counsel, service of
pleadings and judgments shall be made upon his counsel or one of them, unless service upon the party
himself is ordered by the court.10 Thus, when the MeTC decision was sent to petitioner’s counsel, such
service of judgment was valid and binding upon petitioner, notwithstanding the death of her counsel. It is
not the duty of the courts to inquire, during the progress of a case, whether the law firm or partnership
continues to exist lawfully, the partners are still alive, or its associates are still connected with the firm. 11
Litigants, represented by counsel, cannot simply sit back, relax, and await the outcome of their case.12 It
is the duty of the party-litigant to be in contact with her counsel from time to time in order to be informed
of the progress of her case.13 It is likewise the duty of the party to inform the court of the fact of her
counsel’s death. Her failure to do so means that she is negligent in the protection of her cause, and she
cannot pass the blame to the court which is not tasked to monitor the changes in the circumstances of the
parties and their counsels.

It is noteworthy that when petitioner came to know of the death of her counsel and upon obtaining the
services of a new counsel, petitioner instituted another action for the annulment of the deed of sale
between her and the heirs of Villamena, instead of questioning the MeTC decision through an action for
annulment of judgment. Obviously, the annulment case instituted by petitioner is separate and distinct
from the ejectment case filed by respondents. She cannot, therefore, obtain relief through the second
case for alleged errors and injustices committed in the first case.

With the foregoing disquisition, we find that the March 28, 2006 MeTC decision had, indeed, become final
and executory. A final and executory decision can only be annulled by a petition to annul the same on the
ground of extrinsic fraud and lack of jurisdiction, or by a petition for relief from a final order or judgment
under Rule 38 of the Rules of Court. However, no petition to that effect was filed. 14 Well-settled is the rule
that once a judgment becomes final and executory, it can no longer be disturbed, altered, or modified in
any respect except to correct clerical errors or to make nunc pro tunc entries. Nothing further can be done
to a final judgment except to execute it.15

In the present case, the finality of the March 28, 2006 decision with respect to possession de facto cannot
be affected by the pendency of the annulment case where the ownership of the property is being
contested.16 We are inclined to adhere to settled jurisprudence that suits involving ownership may not be
successfully pleaded in abatement of the enforcement of the final decision in an ejectment suit. The
rationale of the rule has been explained in this wise:

This rule is not without good reason. If the rule were otherwise, ejectment cases could easily be frustrated
through the simple expedient of filing an action contesting the ownership over the property subject of the
controversy. This would render nugatory the underlying philosophy of the summary remedy of ejectment
which is to prevent criminal disorder and breaches of the peace and to discourage those who, believing
themselves entitled to the possession of the property, resort to force rather than to some appropriate
action in court to assert their claims.17

Unlawful detainer and forcible entry suits under Rule 70 of the Rules of Court are designed to summarily
restore physical possession of a piece of land or building to one who has been illegally or forcibly deprived
thereof, without prejudice to the settlement of the parties’ opposing claims of juridical possession in
appropriate proceedings.18
Finally, as aptly held by the CA, petitioner is not entitled to a writ of preliminary injunction to restrain the
execution of the MeTC decision. Section 3, Rule 58 of the Rules of Court enumerates the grounds for the
issuance of preliminary injunction, viz.:

SEC. 3. Grounds for issuance of preliminary injunction. – A preliminary injunction may be granted when it
is established:

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief
consists in restraining the commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited period or perpetually;

(b) That the commission, continuance or non-performance of the act or acts complained of during
the litigation would probably work injustice to the applicant; or

(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is
procuring or suffering to be done, some act or acts probably in violation of the rights of the
applicant respecting the subject of the action or proceeding, and tending to render the judgment
ineffectual.

And as clearly explained in Ocampo v. Sison Vda. de Fernandez19 3/4

To be entitled to the injunctive writ, the applicant must show that there exists a right to be protected
which is directly threatened by an act sought to be enjoined. Furthermore, there must be a showing that
the invasion of the right is material and substantial and that there is an urgent and paramount necessity
for the writ to prevent serious damage. The applicant’s right must be clear and unmistakable. In the
absence of a clear legal right, the issuance of the writ constitutes grave abuse of discretion. Where the
applicant’s right or title is doubtful or disputed, injunction is not proper. The possibility of irreparable
damage without proof of an actual existing right is not a ground for injunction.

A clear and positive right especially calling for judicial protection must be shown. Injunction is not a
remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not
in esse and which may never arise, or to restrain an act which does not give rise to a cause of action.
There must exist an actual right. There must be a patent showing by the applicant that there exists a
right to be protected and that the acts against which the writ is to be directed are violative of said right. 20

In this case, the enforcement of the writ of execution which would evict petitioner from her residence is
manifestly prejudicial to her interest. However, she possesses no legal right that merits the protection of
the courts through the writ of preliminary injunction. Her right to possess the property in question has
been declared inferior or inexistent in relation to respondents in the ejectment case in the MeTC decision
which has become final and executory.211avvphi1

In any event, as manifested by respondents, the March 28, 2006 MeTC decision has already been
executed. Hence, there is nothing more to restrain.

WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of Appeals Decision
dated November 29, 2007 and Resolution dated February 27, 2008 in CA-G.R. SP No. 97618 are
AFFIRMED.

G.R. No. 187677               April 17, 2013

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
(DPWH), Petitioner,
vs.
HON. ROSA SAMSON-TATAD, as Presiding Judge of the Regional Trial Court, Branch 105, Quezon City,
and SPOUSES WILLIAM AND REBECCA GENATO, Respondents.

DECISION

SERENO, CJ.:

This is an appeal via a Petition for Review on Certiorari1 dated 19 June 2009 assailing the Decision2 and
Resolution3of the Court of Appeals (CA) in C.A. G.R. SP No. 93227 which affirmed the Orders 4 of the
Regional Trial Court (RTC), Branch 105, Quezon City in Civil Case No. Q-01-44595.The RTC barred
petitioner from presenting evidence to prove its claim of ownership over the subject property, as the
presentation thereof would constitute a collateral attack on private respondents' title.

The antecedent facts are as follows:

On 13 July 2001, petitioner Republic of the Philippines, represented by the Department of Public Works
and Highways (DPWH), filed a Complaint against several defendants, including private respondents, for
the expropriation of several parcels of land affected by the construction of the EDSA-Quezon Avenue
Flyover.5 Private respondents, Spouses William and Rebecca Genato, are the registered owners of a piece
of land ("subject property") covered by Transfer Certificate of Title (TCT) No. RT-11603 (383648) 6 and
having an area of 460 square meters.

During the pendency of the proceedings, petitioner received a letter dated 14 June 2002 from Engr.
Patrick B. Gatan, Project Manager IV of the DPWH-NCR, reporting that the subject property was
"government land and that the transfer certificate of title of the said claimant respondent x x x is of
dubious origin and of fabrication as it encroached or overlapped on a government property." 7 As a result,
petitioner filed an Amended Complaint on 24 June 2002,8 seeking to limit the coverage of the proceedings
to an area conforming to the findings of the DPWH:

4. To accomplish said project, which is to be undertaken by the Department of Public Works and Highways
[DPWH], it is necessary and urgent for plaintiff to acquire in fee simple portions of the following parcels of
land belonging to, occupied, possessed, and/or the ownership of which are being claimed by the
defendants, to wit:

xxxx

[c] Defendants William O. Genato and Rebecca G. Genato. –

xxxx

5. The portion of the above properties that are affected by the project and shaded green in the sketch
plan hereto attached and made integral part hereof as Annex E, consisting of an area of: x x x [c] 460
square meters of the aforedescribed property registered in the name of defendants spouses William and
Rebecca Genato; x x x. (Emphasis in the original)

On 18 July 2002, petitioner filed a Manifestation and Motion9 to have the subject property "declared or
considered of uncertain ownership or subject to conflicting claims."

In an Order dated 10 December 2002,10 the RTC admitted petitioner’s Amended Complaint, deferred the
release to respondents the amount of eighteen million four hundred thousand pesos (P18,400,000)
deposited in the bank, equivalent to the current zonal valuation of the land, and declared the property as
the subject of conflicting claims.

While petitioner was presenting evidence to show that the subject property actually belonged to the
Government, private respondents interposed objections saying that petitioner was barred from presenting
the evidence, as it constituted a collateral attack on the validity of their TCT No. RT-11603 (383648). The
RTC then required the parties to submit their respective Memoranda.

Upon receipt of the Memoranda, the trial court issued on 12 July 2005 an Order 11 as follows:

WHEFEFORE, premises considered, the Court finds that the issue of the validity of the TCT No. 11603
(383648) can only be raised in an action expressly instituted for that purpose and not in this instant
proceeding. Accordingly, plaintiff is barred from presenting evidence as they [sic] constitute collateral
attack on the validity of the title to the subject lot in violation of Sec. 48 of P. D. 1529.

On 4 August 2005, petitioner seasonably filed a Motion for Reconsideration, 12 but the motion was denied
by the RTC in an Order dated 17 November 2005.13

On 4 January 2006, private respondents filed a Motion for the payment of just compensation amounting
to twenty million seven hundred thousand pesos (₱20,700,000) and for the release of eighteen million
four hundred thousand pesos (₱P18,400,000) deposited in the Land Bank–South
Harbor Branch as partial payment.14 This Motion remains pending in the RTC to date.

On 9 February 2006, petitioner filed with the CA a Petition for Certiorari with Prayer for the Issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction.15

The appellate court ruled that since the subject property was covered by a Torrens title, Presidential
Decree No. 1529, or the Property Registration Decree (P. D. 1529), necessarily finds significance. Thus, it
held that the RTC rightly applied Sec. 48. Accordingly, the CA issued its 29 September 2008 Decision, 16
the dispositive portion of which reads:

WHEREFORE, the Petition for Certiorari is DISMISSED. The prayer for the issuance of a Writ of Preliminary
Injunction is accordingly DENIED.

On 29 October 2008, petitioner filed a Motion for Reconsideration, 17 but the motion was also denied in a
Resolution dated 27 April 2009.18

Hence, the instant Petition.

A Comment19 on the Petition was filed by private respondents on 1 September 2009, and a Reply 20 thereto
by petitioner on 27 January 2010.

ISSUE

From the foregoing, the sole issue submitted for resolution before this Court is whether petitioner may be
barred from presenting evidence to assail the validity of respondents’ title under TCT No. RT-11603
(383648).

The Court’s Ruling

Petitioner argues that under Section 9, Rule 67 of the Rules of Court, if the ownership of a property to be
expropriated is uncertain, the court in the same expropriation proceeding is also given authority to make
a proper adjudication of the matter. Section 9 of Rule 67 reads:

SECTION 9. Uncertain Ownership. Conflicting Claims. — If the ownership of the property taken is
uncertain, or there are conflicting claims to any part thereof, the court may order any sum or sums
awarded as compensation for the property to be paid to the clerk of the court for the benefit of the
persons adjudged in the same proceeding to be entitled thereto. But the judgment shall require the
payment of the sum or sums awarded to either the defendant or the clerk before the plaintiff can enter
upon the property, or retain it for the public use or purpose if entry has already been made.

This view is allegedly supported by Republic v. Court of First Instance of Pampanga, presided formerly by
Judge L. Pasicolan21(Republic) in which the trial court hearing the expropriation proceeding was also
allowed to resolve the issue of ownership.

Petitioner further argues that the original Complaint was amended "precisely to reflect the fact that herein
private respondents, albeit ostensibly appearing as registered owners, are to be considered as mere
claimants of one of the properties subject of the expropriation." This is the reason why the RTC issued an
Order declaring the property subject of conflicting claims.

Moreover, this being an in rem proceeding, "plaintiff Republic of the Philippines seeks the relief, both in
the original and amended complaints, to transfer to plaintiff the titles to said parcels of land together with
their improvements free from all liens and encumbrances. For this particular purpose, the expropriation
suit is essentially a direct proceeding."22

Private respondents, on the other hand, invoke Section 48 of P. D. 1529, viz:

SECTION 48. Certificate Not Subject to Collateral Attack. — A certificate of title shall not be subject to
collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance
with law.

It is their contention that by allowing petitioner to present adversarial evidence, the court is in effect
allowing respondents’ Torrens title to be collaterally attacked – an action prohibited by P. D. 1529.
We rule that petitioner may be allowed to present evidence to assert its ownership over the subject
property, but for the sole purpose of determining who is entitled to just compensation.

Proper interpretation of Section 9, Rule 67

Proceeding from the principle of jus regalia, the right to eminent domain has always been considered as a
fundamental state power that is inseparable from sovereignty. 23 It is described as the State’s inherent
power that need not be granted even by the Constitution,24 and as the government's right to appropriate,
in the nature of compulsory sale to the State, private property for public use or purpose.25

Expropriation, or the exercise of the State’s right to eminent domain, is proscribed by the restraints of
public use and just compensation.26It is governed by Rule 67 of the Rules of Court, which presents
procedural guidelines for the court to ensure that due process is observed and just compensation rightly
paid to the private owners.

Indeed, this Court first had the occasion to interpret Section 9, Rule 67 in the case of Republic. In
addressing the issue of "whether or not the court that hears the expropriation case has also jurisdiction to
determine, in the same proceeding, the issue of ownership of the land sought to be condemned," the
Court answered in the affirmative:

The sole issue in this case, i.e., whether or not the court that hears the expropriation case has also
jurisdiction to determine, in the same proceeding, the issue of ownership of the land sought to be
condemned, must be resolved in the affirmative. That the court is empowered to entertain the conflicting
claims of ownership of the condemned or sought to be condemned property and adjudge the rightful
owner thereof, in the same expropriation case, is evident from Section 9 of the Revised Rule 69, which
provides:

SEC. 9. Uncertain ownership. Conflicting claims. — If the ownership of the property taken is uncertain, or
there are conflicting claims to any part thereof, the court may order any sum or sums awarded as
compensation for the property to be paid to the clerk of court for the benefit of the persons adjudged in
the same proceeding to be entitled thereto. But the judgment shall require the payment of the sum or
sums awarded to either the defendant or the clerk before the plaintiff can enter upon the property, or
retain it for the public use or purpose if entry has already been made.

In fact, the existence of doubt or obscurity in the title of the person or persons claiming ownership of the
properties to be expropriated would not preclude the commencement of the action nor prevent the court
from assuming jurisdiction thereof. The Rules merely require, in such eventuality, that the entity
exercising the right of eminent domain should state in the complaint that the true ownership of the
property cannot be ascertained or specified with accuracy.27

We arrived at the same conclusion in Republic v. Rural Bank of Kabacan, Inc.,28 in which we held thus:

The trial court should have been guided by Rule 67, Section 9 of the 1997 Rules of Court, which provides
thus:

SEC. 9. Uncertain ownership; conflicting claims. — If the ownership of the property taken is uncertain, or
there are conflicting claims to any part thereof, the court may order any sum or sums awarded as
compensation for the property to be paid to the court for the benefit of the person adjudged in the same
proceeding to be entitled thereto. But the judgment shall require the payment of the sum or sums
awarded to either the defendant or the court before the plaintiff can enter upon the property, or retain it
for the public use or purpose if entry has already been made.

Hence, the appellate court erred in affirming the trial court’s Order to award payment of just
compensation to the defendants-intervenors. There is doubt as to the real owner of Lot No. 3080.

Despite the fact that the lot was covered by TCT No. T-61963 and was registered under its name, the
Rural Bank of Kabacan manifested that the owner of the lot was no longer the bank, but the defendants-
intervenors; however, it presented no proof as to the conveyance thereof. In this regard, we deem it
proper to remand this case to the trial court for the reception of evidence to establish the present owner
of Lot No. 3080 who will be entitled to receive the payment of just compensation.1âwphi1 (Emphases
supplied)

However, the authority to resolve ownership should be taken in the proper context. The discussion in
Republic was anchored on the question of who among the respondents claiming ownership of the property
must be indemnified by the Government:

Now, to determine the person who is to be indemnified for the expropriation of Lot 6, Block 6, Psd-2017,
the court taking cognizance of the expropriation must necessarily determine if the sale to the Punzalan
spouses by Antonio Feliciano is valid or not. For if valid, said spouses must be the ones to be paid by the
condemnor; but if invalid, the money will be paid to someone else. x x x. 29

Thus, such findings of ownership in an expropriation proceeding should not be construed as final and
binding on the parties. By filing an action for expropriation, the condemnor (petitioner), merely serves
notice that it is taking title to and possession of the property, and that the defendant is asserting title to
or interest in the property, not to prove a right to possession, but to prove a right to compensation for the
taking.30

If at all, this situation is akin to ejectment cases in which a court is temporarily authorized to determine
ownership, if only to determine who is entitled to possession. This is not conclusive, and it remains open
to challenge through proper actions.31 The consequences of Sec. 9, Rule 67 cannot be avoided, as they
are due to the intimate relationship of the issue of ownership with the claim for the expropriation
payment.32

II

Inapplicability of Section 48, P. D. 1529

Verily, our interpretation of Sec. 9, Rule 67 does not run counter to Section 48 of P.D. 1529. Under Sec.
48, collateral attacks on a Torrens title are prohibited. We have explained the concept in Oño v. Lim, 33 to
wit:

An action or proceeding is deemed an attack on a title when its objective is to nullify the title, thereby
challenging the judgment pursuant to which the title was decreed. The attack is direct when the objective
is to annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect
or collateral when, in an action to obtain a different relief, an attack on the judgment is nevertheless
made as an incident thereof.

In several instances, we have considered an Answer praying for the cancellation of the plaintiff's Torrens
title as a form of a collateral attack.34 We have afforded the similar treatment in a petition questioning the
validity of a deed of sale for a registered land,35 and in a reformation of a deed of sale to include areas
registered under the name of another party.36 But a resolution on the issue of ownership in a partition
case was deemed neither to be a direct or collateral attack, for "until and unless this issue of co-
ownership is definitely and finally resolved, it would be premature to effect a partition of the disputed
properties."37

Here, the attempt of petitioner to present evidence cannot be characterized as an "attack." It must be
emphasized that the objective of the case is to appropriate private property, and the contest on private
respondents' title arose only as an incident to the issue of whom should be rightly compensated.

Contrary to petitioner's allegations, the Complaint and Amended Complaint cannot also be considered as a
direct attack. The amendment merely limited the coverage of the expropriation proceedings to the
uncontested portion of the subject property. The RTC's Order declaring the property as subject of
conflicting claims is a recognition that there are varying claimants to the sums to be awarded as just
compensation. This serves as an authority for the court to conduct a limited inquiry on the property's
ownership.

WHEREFORE, the Court GRANTS the Petition for Review on Certiorari and the prayer for a Writ of
Preliminary Injunction. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
93227, as well as the Decision of the Regional Trial Court, Branch 105, Quezon City in Civil Case No. Q-
01-44595, are hereby REVERSED and SET ASIDE. This case is REMANDED to the RTC to hear the issue of
ownership for the purpose of just compensation.
G.R. No. 197725               July 31, 2013

MARK ANTHONY ESTEBAN (in substitution of the deceased GABRIEL O. ESTEBAN), Petitioner,
vs.
SPOUSES RODRIGO C. MARCELO and CARMEN T. MARCELO, Respondents.

DECISION

BRION, J.:

Before the Court is a petition for review on certiorari,1 filed under Rule 45 of the Rules of Court, assailing
the decision2 dated January 17, 2011 and the resolution3 dated July 15, 2011 of the Court of Appeals (CA)
in CA G.R. SP No. 112609.

The Facts

The late Gabriel O. Esteban, substituted by his son, petitioner Mark Anthony Esteban, 4 had been in
possession of a piece of land located at 702 Tiaga St., Barangka Drive, Mandaluyong City, since the
1950s.5 In the 1960s, the late Esteban's sister constructed a foundry shop at the property. In the 1970s,
after the foundry operations had proven unproductive, the respondents-spouses Rodrigo and Carmen
Marcelo were allowed to reside therein, for a monthly rental fee of P50.00. Since March 2001, the
respondents-spouses have stopped paying the rental fee (which by that time amounted to P160.00). On
October 31, 2005, the late Esteban, through a lawyer, sent the respondents-spouses a demand letter
requiring them to settle their arrears and to vacate within five (5) days from receipt thereof.6 For failure
to comply with the demand to pay and to vacate, the late Esteban instituted an unlawful detainer case
against the respondents-spouses on December 6, 2005.

The MeTC’s and RTC’s Rulings

In its April 23, 2009 decision,7 the Metropolitan Trial Court (MeTC) ruled that there was a valid ground for
ejectment; with the jurisdictional demand to vacate complied with, the respondents-spouses must vacate
the property, pursuant to paragraphs 1 and 2, Article 1673 of the New Civil Code, 8 on the grounds of
expiration of the lease and nonpayment of monthly rentals. The MeTC likewise ordered the respondents-
spouses to pay back rentals and rentals, plus legal interest until they shall have vacated the property,
attorney’s fees and cost of the suit. On appeal, the Regional Trial Court (RTC) fully affirmed the MeTC
ruling.9

The CA Ruling

The respondents-spouses appealed the RTC’s ruling to the CA.

In its January 17, 2011 decision,10 the CA reversed the RTC. The CA ruled that from the year of
dispossession in 2001 when the respondents-spouses stopped paying rent, until the filing of the complaint
for ejectment in 2005, more than a year had passed; hence, the case no longer involved an accion
interdictal11 cognizable by the MeTC, but an accion publiciana12 that should have been filed before the
RTC.13 Therefore, the MeTC had no jurisdiction over the case so that its decision was a nullity. Likewise,
the Court ruled that the respondents-spouses cannot be evicted as they are protected by Section 6 of
Presidential Decree No. (P.D.) 1517.14 Finally, the CA ruled that the respondents-spouses qualifies as
beneficiary under Section 16 of Republic Act No. (RA) 7279.15

In its July 15, 2011 resolution, the CA denied the respondents-spouses’ partial motion for reconsideration
anchored on the petitioner’s failure to effect a substitution of parties upon the death of the late Esteban.
The CA reasoned out that mere failure to substitute a deceased party is not a sufficient ground to nullify a
trial court’s decision.16 The CA also reiterated its finding against the petitioner that since the time of
dispossession, more than one year had passed; hence, the case was an accion publiciana that should have
been commenced before the RTC.17

The Parties’ Arguments

The petitioner filed the present petition for review on certiorari to assail the CA rulings. The petitioner
argues that the case has been properly filed as an accion interdictal cognizable by the MeTC and was filed
on December 6, 2005, or within the one-year prescriptive period counted from the date of the last
demand on October 31, 2005; hence, the MeTC had proper jurisdiction over the case.

The petitioner further argues that contrary to the CA’s findings, the failure to pay did not render the
possession unlawful; it was the failure or refusal to vacate after demand and failure to pay that rendered
the occupancy unlawful.18

The petitioner likewise points out that the respondents-spouses are not covered by P.D. 1517 as there
was no showing that the subject lot had been declared an area for priority development or for urban land
reform.

Finally, the petitioner avers that it was improper for the CA to rule that the respondents-spouses are
qualified beneficiaries under the RA 7279 as this point was not in issue and should not have been covered
by the appellate review.

In their comment to the petition,19 the respondents-spouses claim that the substitution of petitioner was
irregular as the other compulsory heirs of the late Esteban had not been made parties to the present
case.

The Court’s Ruling

The Court finds the petition meritorious.

The one-year prescription period
is counted from the last demand
to pay and vacate

As correctly pointed out by the petitioner, there should first be a demand to pay or to comply with the
terms of the lease and a demand to vacate before unlawful detainer arises. The Revised Rules of Court
clearly so state.20

Since 1947, case law has consistently upheld this rule. "Mere failure to pay rents does not ipso facto make
unlawful tenant's possession of the premises. It is the owner's demand for tenant to vacate the premises,
when the tenant has failed to pay the rents on time, and tenant’s refusal or failure to vacate, which make
unlawful withholding of possession." In 2000, we reiterated this rule when we declared: "It is therefore
clear that before the lessor may institute such action, he must make a demand upon the lessee to pay or
comply with the conditions of the lease and to vacate the premises. It is the owner’s demand for the
tenant to vacate the premises and the tenant’s refusal to do so which makes unlawful the withholding of
possession. Such refusal violates the owner’s right of possession giving rise to an action for unlawful
detainer."22

Furthermore, in cases where there were more than one demand to pay and vacate, the reckoning point of
one year for filing the unlawful detainer is from the last demand as the lessor may choose to waive his
cause of action and let the defaulting lessee remain in the premises.23

P.D. 1517 does not apply: in the

absence of showing that the
subject land has been declared
and classified as an Area for
Priority Development and as a
Land Reform Zone

It was an error for the CA to rule that the respondents-spouses could not be ousted because they were
protected by P.D. 1517. This decree, in fact, does not apply to them.

In Sps. Frilles v. Sps. Yambao,24 the Court traced the purpose, development and coverage of P.D. 1517.
The Court declared in this case that the purpose of the law is to protect the rights of legitimate tenants
who have resided for 10 years or more on specific parcels of land situated in declared Urban Land Reform
Zones or Urban Zones, and who have built their homes thereon. These legitimate tenants have the right
not to be dispossessed and to have the right of first refusal to purchase the property under reasonable
terms and conditions to be determined by the appropriate government agency. 25
Subsequent to P.D. 1517, then President Ferdinand Marcos issued Proclamation No. 1893 on September
11, 1979, declaring the entire Metropolitan Manila area an Urban Land Reform Zone for purposes of urban
land reform. On May 14, 1980, he issued Proclamation No. 1967, amending Proclamation No. 1893 and
identifying 244 sites in Metropolitan Manila as Areas for Priority Development and Urban Land Reform
Zones. The Proclamation pointedly stated that: "the provisions of P.D. Nos. 1517, 1640 and 1642 and of
LOI No. 935 shall apply only to the above-mentioned Areas for Priority Development and Urban Land
Reform Zones."

"Thus, a legitimate tenant's right of first refusal to purchase the leased property under P.D. No. 1517
depends on whether the disputed property in Metropolitan Manila is situated in an area specifically
declared to be both an Area for Priority Development and Urban Land Reform Zone." 26

Based on the cited issuances, we find it clear that for P.D. 1517 to apply, the tenants must have been a
legitimate tenant for ten (10) years who have built their homes on the disputed property. These
circumstances do not obtain in the present case as it was not the respondents-spouses who built their
dwelling on the land; it was the late Esteban’s sister who had the foundry shop built in the 1960s and
eventually leased the property to the respondents-spouses in the 1970s. Even assuming that these two
requirements have been complied with, P.D. 1517 still will not apply as the issue raised in the present
petition is not the right of first refusal of the respondents-spouses, but their non-payment of rental fees
and refusal to vacate. In fact, it was their non-payment of rental fees and refusal to vacate which caused
the petitioner’s predecessor to file the action for unlawful detainer.1âwphi1

Finally, even assuming that the aforementioned circumstances were present, the respondents-spouses
still cannot qualify under P.D. 1517 in the absence of any showing that the subject land had been declared
an area for priority development and urban land reform zone.

Issues not raised may not be

considered and ruled upon

The rule on the propriety of resolving issues not raised before the lower courts cannot be raised on
appeal: "points of law, theories, issues and arguments not brought to the attention of the trial court will
not be and ought not to be considered by a reviewing court, as these cannot be raised for the first time on
appeal. Basic consideration of due process impels this rule." 27

As the petitioner correctly observed, the respondents-spouses never intimated, directly or indirectly, that
they were seeking the protection of RA 7279. Therefore, the CA did not have any authority to rule that the
respondents-spouses qualified as beneficiaries under RA 7279.

Any one of the co-owners may

bring an action for ejectment

We see no merit in the respondents-spouses’ observation that the present petition is irregular because the
other compulsory heirs (or co-owners) have not been impleaded. The present petition has been properly
filed under the express provision of Article 487 of the Civil Code.28

In the recent case of Rey Catigador Catedrilla v. Mario and Margie Lauron, 29 we explained that while all
co-owners are real parties in interest in suits to recover properties, anyone of them may bring an action
for the recovery of co-owned properties. Only the co-owner who filed the suit for the recovery of the co-
owned property becomes an indispensable party thereto; the other co-owners are neither indispensable
nor necessary parties.

WHEREFORE, in view of the foregoing, the Court GRANTS the petition for review on certiorari. The
decision dated January 1 7, 2011 and the resolution dated July 15, 20 II of the Court of Appeals in CA-
G.R. SP No. 112609 are hereby REVERSED and SET ASIDE. The decision dated January 13, 2010 of the
Regional Trial Court, Branch 211, Mandaluyong City, in Civil Case No. 20270, is hereby REINSTATED.

A.M. No. RTJ-11-2666               February 15, 2011

[Formerly A.M. OCA IPI No. 09-3320-RTJ]

JOSEPHINE JAZMINES TAN, Complainant,

vs.
JUDGE SIBANAH E. USMAN, Regional Trial Court, Branch 29, Catbalogan, Samar, Respondent.
 DECISION

CARPIO MORALES, J.:

By a verified November 22, 2009 Complaint,1 Josephine Jazmines Tan (complainant) charges Judge
Sibanah E. Usman (respondent), Presiding Judge of Branch 28,2 Regional Trial Court, Catbalogan, Samar,
with abuse of power and authority, conduct unbecoming a judicial officer, mental dishonesty, grave
misconduct, gross ignorance of the law and knowingly rendering an unjust order, and bribery and
corruption, in connection with Civil Case No. 76813 and Criminal Case No. 6536.4

It appears that complainant, together with his co-plaintiffs in the civil case/co-accused in the criminal
case, filed a Motion for Inhibition5 against respondent. The movants attached to their motion the Affidavit6
of complainant.

Complainant claims that during the hearing of the Motion for Inhibition, respondent became very
emotional, coerced her to testify without the assistance of counsel and demanded a public apology from
her; and that while she requested to refer the motion to the Executive Judge, respondent interrogated her
relentlessly following which he issued an Order7 of August 28, 2009 finding her guilty of Direct Contempt
and ordered her detention. Thus respondent disposed in his Order:

IN VIEW THEREOF, premises considered, in order to set as an example for anyone not to make fabricated
charges against the Court employees and judges, and also to restore the integrity of the Court, the
affiant, Josephine Jazmines Tan is hereby cited of Direct Contempt of Court and thus ordered detained at
the Samar Provincial Jail until she divulges the name of the informant/employee of the Court or publicly
apologize to the employees of the Court, the Presiding Judge and the Executive Judge, but the period of
detention shall not exceed more than thirty (30) days beginning from her service of confinement. Mrs.
Perla Santiago, PO3 Marlon Villanueva and PO3 Doroteo Montejo are hereby directed to escort the affiant,
Josephine Jazmines Tan, to the Samar Provincial Jail for detention.8 (emphasis supplied; underscoring
partly in the original, partly supplied)

Complainant was in fact detained from August 28, 2009 until September 16, 20099 or for a total of 19
days.

In his January 14, 2010 Answer10 to the complaint, respondent explained that during the hearing of the
Motion for Inhibition, the employees of the court appeared before complainant but she failed to name any
of them as having allegedly told her that Jaime Cui, Jr. "was bragging that they have disbursed a
substantial amount of money" to him (respondent); that Atty. Lee M. Zosa, the private prosecutor in the
criminal case, and Atty. Benly Frederick Bergonio, counsel for the PNB in the civil case, moved that
complainant be cited for Direct Contempt of Court and that she be detained until she divulges the name of
her informant; and that Atty. Jose M. Mendiola, complainant’s lawyer, failed to give any comment
because, according to him, complainant did not consult him about the filing of the Motion for Inhibition. 11

Respondent went on to explain that since he issued his August 28, 2009 Order in an official capacity, the
remedy of complainant was to file a motion for reconsideration or an appeal, not an administrative case;
that he gave complainant a maximum of 30 days detention to give her "a wider opportunity to either
apologize or divulge the name of her informant, so that even before the expiration of the period, the court
can lift the Order of Contempt." 12

By Report of November 25, 2010,13 the Office of the Court Administrator (OCA) came up with the
following evaluation of the Complaint:

The instant administrative case is partly meritorious.

Complainant Tan failed to prove that respondent Judge Usman committed an Act Unbecoming a Judge by
shouting at her at the hearing on the Motion for Inhibition. Aside from her allegation, there is nothing on
record to support her claim. The TSN did not contain any inappropriate language. Neither did it reflect any
observation/manifestation from the lawyers present, (who are presumably aware and vigilant of their
duties as officers of the court) of any untoward incident. Complainant Tan countered that given the
limitations of the TSN, i.e., its inability to capture the nuance of speech and project emotions vividly, the
fact that respondent Judge Usman shouted expletives cannot be erased or rendered inexistent by this
limitation. Downplaying the TSN’s significance by highlighting its limitation is not the same as saying that
respondent Judge Usman did in fact shout at her. In other words, she cannot rely on the TSN’s limitation
and present it as proof that respondent Judge Usman shouted at her.

The charge of Mental Dishonesty has no merit. When respondent Judge Usman included other court
employees and the Executive Judge in his discourse on the charge of bribery/corruption against him, he
was not twisting the facts but was merely discussing the projected overall effect of the complainant Tan’s
accusation. The perception that a particular employee of the judiciary is corrupt, eventually, engulfs the
entire institution.

Hence, complainant Tan failed to prove by substantial evidence her charge of Knowingly Rendering an
Unjust Order. The records bear nothing to show that a competent court had previously adjudged
respondent Judge Usman guilty of the crime of Knowingly Rendering an Unjust Order in Civil Case No.
7681 and/or Criminal Case No. 6536.

Complainant Tan likewise failed to prove the charge of Bribery/Corruption. Bare allegation alone is
insufficient to hold respondent Judge Usman liable. Complainant Tan admitted the deficiency of her proof
when, at the outset, she reserved her right to submit other proofs in support of this particular charge.

Based on the evidence presented, respondent Judge Usman gravely abused his authority and is grossly
ignorant of the rule on Direct Contempt of Court….

xxxx

. . . [I]n the Order dated 28 August 2009, respondent Judge Usman directed that complainant Tan be
detained for a period not exceeding thirty (30) days. No amount of rationalization can reconcile the limit
of the 10-day period of imprisonment for Direct Contempt of Court set in section 1, Rule 71 of the Rules
of Court with the 30-day (maximum period of) imprisonment that respondent Judge Usman fixed in the
Order. This Office finds nothing in the rule, which suggests, however remotely, the theory that the 10-day
period of imprisonment in Section 1, Rule 71 is pliable enough to validly stretch to 30 days. By virtue of
his office, respondent Judge Usman knows or should have known this so basic a rule. The glaring clarity of
the rule tripped respondent Judge Usman to commit a glaring error, which was made even more flagrant
by the fact that complainant Tan was actually imprisoned for 19 days.

Further, respondent Judge Usman failed to indicate in the Order the amount of bond as required under
Section 2, Rule 71 of the Rules of Court. Due to this omission, complainant Tan’s option to stay the
execution of the judgment had been rendered nugatory, and a result thereof caused her immediate
detention. An order of direct contempt is not immediately executory.1avvphi1 Respondent Judge Usman’s
error, however, made it so.

Respondent Judge Usman wielded power abusively by depriving complainant Tan her liberty for nine (9)
days without due process of law. Lest any misperception of this institution thrive, this regretful incident
must be decisively addressed.14 (emphasis partly in the original, partly supplied; italics in the original;
underscoring supplied)

In its Report, the OCA also listed the other administrative complaints filed against respondent 15 and their
respective status, viz:

x x x Per Alphalist as of 30, June 2010, respondent Judge Usman was the subject of other administrative
complaints, to wit:

RTJ-91-777 Irregular Financial Support Complaint

Dismissed
(3.23.93) Fine 2
mos. Salary
(3.5.02)

03-1744-RTJ w/ RTJ-02-1713 Violation of R.A. No. 3019, Suspension 2

knowingly rendering unjust orders, mos. & Fine 10T
bias and partiality, etc. (10.25.05)
 RTJ-08-2098 (05-2170-RTJ) Falsification of Certificate of Service Fine 2T (1.16.08)
and Dishonesty

RTJ-07-2053 (05-2171-RTJ) Grave abuse of discretion, Suspension 1 mo.

dishonesty (11.27.08)

RTJ-02-1713 (01-1257-RTJ) Graft and Corruption, Suspension 2

incompetence, gross ignorance of mos. & Fine 10T
the law, dishonesty, and partiality, (10.25.05)
absenteeism

RTJ-05-1922 (02-12-18-SC) (per instruction of Court En Banc) Suspension 2

mos. & Fine 10T
(10.25.05)

RTJ-05-1923 (03-3-157-RTC) (per instruction of Court En Banc) Suspension 2

mos. & Fine 10T
(10.25.05)

Thus, the OCA recommended that this case be re-docketed as a regular administrative matter and that

a. the administrative complaint . . . for Conduct Unbecoming a Judicial Officer, Mental Dishonesty,
Grave Misconduct, Knowingly Rendering an Unjust Order and/or Bribery/Corruption be DISMISSED
for lack of merit;

b. respondent Judge Usman be found guilty of Gross Ignorance of the Law for which he should be
ordered to pay a FINE in the amount of TWENTY ONE THOUSAND PESOS (P21,000.00) to be paid
within fifteen (15) days from finality of the Resolution of the Court[.] 16 (underscoring supplied)

Rule 71 of the Rules of Court provides:

SECTION. 1. Direct contempt punished summarily. ─ A person guilty of misbehavior in the presence of or
so near a court as to obstruct or interrupt the proceedings before the same, including disrespect toward
the court, offensive personalities toward others, or refusal to be sworn or to answer as a witness, or to
subscribe an affidavit or deposition when lawfully required to do so, may be summarily adjudged in
contempt by such court and punished by a fine not exceeding two thousand pesos or imprisonment not
exceeding ten (10) days, or both, if it be a Regional Trial Court or a court of equivalent or higher rank; or
by a fine not exceeding two hundred pesos or imprisonment not exceeding (1) day, or both, if it be a
lower court.

SEC. 2. Remedy therefrom. ─ The person adjudged in direct contempt by any court may not appeal
therefrom, but may avail himself of the remedies of certiorari or prohibition. The execution of the
judgment shall be suspended pending resolution of such petition, provided such person file a bond fixed
by the court which rendered the judgment and conditioned that he will abide by and perform the
judgment should the petition be decided against him. (emphasis and underscoring supplied)

Failure to follow basic legal commands as prescribed by law and the rules is tantamount to gross
ignorance of the law. By accepting the exalted position of a judge, respondent ought to have been familiar
with the legal norms and precepts as well as the procedural rules. 17

Contrary to respondent’s claim, complainant has no remedy of appeal, as the above-quoted Section 2 of
Rule 71 shows. And the penalty for direct contempt if imprisonment is imposed should not, as Section 1 of
Rule 71 provides, exceed 10 days. As stated earlier, complainant was detained for 19 days or 9 days more
than the limit imposed by the Rules.
More. Respondent did not fix the bond, in violation of the same Section 2 of Rule 71, which complainant
could have posted had she desired to challenge the order. And on the same day the Order was issued,
respondent ordered the confinement of complainant to the provincial jail.

Oclarit v. Paderanga18 instructs:

… [A]n order of direct contempt is not immediately executory or enforceable. The contemner must be
afforded a reasonable remedy to extricate or purge himself of the contempt. Thus, in the 1997 Rules of
Civil Procedure, as amended, the Court introduced a new provision granting a remedy to a person
adjudged in direct contempt by any court. Such person may not appeal therefrom, but may avail himself
of certiorari or prohibition. In such case, the execution of the judgment shall be suspended pending
resolution of such petition provided the contemner files a bond fixed by the court which rendered the
judgment and conditioned that he will abide by and perform the judgment should the petition be decided
against him.19 (underscoring supplied)

Under Section 8 (of Rule 140, gross ignorance of the law or procedure is classified as a serious charge
which is, under Section 11(A), punishable by:

1. Dismissal from the service, forfeiture of all or part of the benefits as the Court may determine,
and disqualification from reinstatement or appointment to any public office, including government-
owned or –controlled corporations. Provided, however, That the forfeiture of benefits shall in no
case include accrued leave credits;

2. Suspension from office without salary and other benefits for more than three (3) but not
exceeding six (6) months; or

3. A fine of more than P20,000.00 but not exceeding P40,000.00

Respondent having been repeatedly penalized by this Court, with suspension and fine, as shown by the
above-listed administrative charges, the recommended penalty of P21,000 should be increased to
P30,000.

WHEREFORE, for gross ignorance of the law and procedure, Judge Sibanah Usman is FINED in the amount
of Thirty Thousand (P30,000) Pesos, with a WARNING that a repetition of the same or similar act shall be
dealt with more severely.

A.M. No. RTJ-11-2666               February 15, 2011

[Formerly A.M. OCA IPI No. 09-3320-RTJ]

JOSEPHINE JAZMINES TAN, Complainant,

vs.
JUDGE SIBANAH E. USMAN, Regional Trial Court, Branch 29, Catbalogan, Samar, Respondent.

DECISION

CARPIO MORALES, J.:

By a verified November 22, 2009 Complaint,1 Josephine Jazmines Tan (complainant) charges Judge
Sibanah E. Usman (respondent), Presiding Judge of Branch 28,2 Regional Trial Court, Catbalogan, Samar,
with abuse of power and authority, conduct unbecoming a judicial officer, mental dishonesty, grave
misconduct, gross ignorance of the law and knowingly rendering an unjust order, and bribery and
corruption, in connection with Civil Case No. 76813 and Criminal Case No. 6536.4

It appears that complainant, together with his co-plaintiffs in the civil case/co-accused in the criminal
case, filed a Motion for Inhibition5 against respondent. The movants attached to their motion the Affidavit6
of complainant.

Complainant claims that during the hearing of the Motion for Inhibition, respondent became very
emotional, coerced her to testify without the assistance of counsel and demanded a public apology from
her; and that while she requested to refer the motion to the Executive Judge, respondent interrogated her
relentlessly following which he issued an Order7 of August 28, 2009 finding her guilty of Direct Contempt
and ordered her detention. Thus respondent disposed in his Order:
IN VIEW THEREOF, premises considered, in order to set as an example for anyone not to make fabricated
charges against the Court employees and judges, and also to restore the integrity of the Court, the
affiant, Josephine Jazmines Tan is hereby cited of Direct Contempt of Court and thus ordered detained at
the Samar Provincial Jail until she divulges the name of the informant/employee of the Court or publicly
apologize to the employees of the Court, the Presiding Judge and the Executive Judge, but the period of
detention shall not exceed more than thirty (30) days beginning from her service of confinement. Mrs.
Perla Santiago, PO3 Marlon Villanueva and PO3 Doroteo Montejo are hereby directed to escort the affiant,
Josephine Jazmines Tan, to the Samar Provincial Jail for detention.8 (emphasis supplied; underscoring
partly in the original, partly supplied)

Complainant was in fact detained from August 28, 2009 until September 16, 20099 or for a total of 19
days.

In his January 14, 2010 Answer10 to the complaint, respondent explained that during the hearing of the
Motion for Inhibition, the employees of the court appeared before complainant but she failed to name any
of them as having allegedly told her that Jaime Cui, Jr. "was bragging that they have disbursed a
substantial amount of money" to him (respondent); that Atty. Lee M. Zosa, the private prosecutor in the
criminal case, and Atty. Benly Frederick Bergonio, counsel for the PNB in the civil case, moved that
complainant be cited for Direct Contempt of Court and that she be detained until she divulges the name of
her informant; and that Atty. Jose M. Mendiola, complainant’s lawyer, failed to give any comment
because, according to him, complainant did not consult him about the filing of the Motion for Inhibition. 11

Respondent went on to explain that since he issued his August 28, 2009 Order in an official capacity, the
remedy of complainant was to file a motion for reconsideration or an appeal, not an administrative case;
that he gave complainant a maximum of 30 days detention to give her "a wider opportunity to either
apologize or divulge the name of her informant, so that even before the expiration of the period, the court
can lift the Order of Contempt." 12

By Report of November 25, 2010,13 the Office of the Court Administrator (OCA) came up with the
following evaluation of the Complaint:

The instant administrative case is partly meritorious.

Complainant Tan failed to prove that respondent Judge Usman committed an Act Unbecoming a Judge by
shouting at her at the hearing on the Motion for Inhibition. Aside from her allegation, there is nothing on
record to support her claim. The TSN did not contain any inappropriate language. Neither did it reflect any
observation/manifestation from the lawyers present, (who are presumably aware and vigilant of their
duties as officers of the court) of any untoward incident. Complainant Tan countered that given the
limitations of the TSN, i.e., its inability to capture the nuance of speech and project emotions vividly, the
fact that respondent Judge Usman shouted expletives cannot be erased or rendered inexistent by this
limitation. Downplaying the TSN’s significance by highlighting its limitation is not the same as saying that
respondent Judge Usman did in fact shout at her. In other words, she cannot rely on the TSN’s limitation
and present it as proof that respondent Judge Usman shouted at her.

The charge of Mental Dishonesty has no merit. When respondent Judge Usman included other court
employees and the Executive Judge in his discourse on the charge of bribery/corruption against him, he
was not twisting the facts but was merely discussing the projected overall effect of the complainant Tan’s
accusation. The perception that a particular employee of the judiciary is corrupt, eventually, engulfs the
entire institution.

Hence, complainant Tan failed to prove by substantial evidence her charge of Knowingly Rendering an
Unjust Order. The records bear nothing to show that a competent court had previously adjudged
respondent Judge Usman guilty of the crime of Knowingly Rendering an Unjust Order in Civil Case No.
7681 and/or Criminal Case No. 6536.

Complainant Tan likewise failed to prove the charge of Bribery/Corruption. Bare allegation alone is
insufficient to hold respondent Judge Usman liable. Complainant Tan admitted the deficiency of her proof
when, at the outset, she reserved her right to submit other proofs in support of this particular charge.

Based on the evidence presented, respondent Judge Usman gravely abused his authority and is grossly
ignorant of the rule on Direct Contempt of Court….
xxxx

. . . [I]n the Order dated 28 August 2009, respondent Judge Usman directed that complainant Tan be
detained for a period not exceeding thirty (30) days. No amount of rationalization can reconcile the limit
of the 10-day period of imprisonment for Direct Contempt of Court set in section 1, Rule 71 of the Rules
of Court with the 30-day (maximum period of) imprisonment that respondent Judge Usman fixed in the
Order. This Office finds nothing in the rule, which suggests, however remotely, the theory that the 10-day
period of imprisonment in Section 1, Rule 71 is pliable enough to validly stretch to 30 days. By virtue of
his office, respondent Judge Usman knows or should have known this so basic a rule. The glaring clarity of
the rule tripped respondent Judge Usman to commit a glaring error, which was made even more flagrant
by the fact that complainant Tan was actually imprisoned for 19 days.

Further, respondent Judge Usman failed to indicate in the Order the amount of bond as required under
Section 2, Rule 71 of the Rules of Court. Due to this omission, complainant Tan’s option to stay the
execution of the judgment had been rendered nugatory, and a result thereof caused her immediate
detention. An order of direct contempt is not immediately executory.1avvphi1 Respondent Judge Usman’s
error, however, made it so.

Respondent Judge Usman wielded power abusively by depriving complainant Tan her liberty for nine (9)
days without due process of law. Lest any misperception of this institution thrive, this regretful incident
must be decisively addressed.14 (emphasis partly in the original, partly supplied; italics in the original;
underscoring supplied)

In its Report, the OCA also listed the other administrative complaints filed against respondent 15 and their
respective status, viz:

x x x Per Alphalist as of 30, June 2010, respondent Judge Usman was the subject of other administrative
complaints, to wit:

RTJ-91-777 Irregular Financial Support Complaint

Dismissed
(3.23.93) Fine 2
mos. Salary
(3.5.02)

03-1744-RTJ w/ RTJ-02-1713 Violation of R.A. No. 3019, Suspension 2

knowingly rendering unjust orders, mos. & Fine 10T
bias and partiality, etc. (10.25.05)

RTJ-08-2098 (05-2170-RTJ) Falsification of Certificate of Service Fine 2T (1.16.08)

and Dishonesty

RTJ-07-2053 (05-2171-RTJ) Grave abuse of discretion, Suspension 1 mo.

dishonesty (11.27.08)

RTJ-02-1713 (01-1257-RTJ) Graft and Corruption, Suspension 2

incompetence, gross ignorance of mos. & Fine 10T
the law, dishonesty, and partiality, (10.25.05)
absenteeism

RTJ-05-1922 (02-12-18-SC) (per instruction of Court En Banc) Suspension 2

mos. & Fine 10T
(10.25.05)

RTJ-05-1923 (03-3-157-RTC) (per instruction of Court En Banc) Suspension 2

mos. & Fine 10T
 (10.25.05)

Thus, the OCA recommended that this case be re-docketed as a regular administrative matter and that

a. the administrative complaint . . . for Conduct Unbecoming a Judicial Officer, Mental Dishonesty,
Grave Misconduct, Knowingly Rendering an Unjust Order and/or Bribery/Corruption be DISMISSED
for lack of merit;

b. respondent Judge Usman be found guilty of Gross Ignorance of the Law for which he should be
ordered to pay a FINE in the amount of TWENTY ONE THOUSAND PESOS (P21,000.00) to be paid
within fifteen (15) days from finality of the Resolution of the Court[.] 16 (underscoring supplied)

Rule 71 of the Rules of Court provides:

SECTION. 1. Direct contempt punished summarily. ─ A person guilty of misbehavior in the presence of or
so near a court as to obstruct or interrupt the proceedings before the same, including disrespect toward
the court, offensive personalities toward others, or refusal to be sworn or to answer as a witness, or to
subscribe an affidavit or deposition when lawfully required to do so, may be summarily adjudged in
contempt by such court and punished by a fine not exceeding two thousand pesos or imprisonment not
exceeding ten (10) days, or both, if it be a Regional Trial Court or a court of equivalent or higher rank; or
by a fine not exceeding two hundred pesos or imprisonment not exceeding (1) day, or both, if it be a
lower court.

SEC. 2. Remedy therefrom. ─ The person adjudged in direct contempt by any court may not appeal
therefrom, but may avail himself of the remedies of certiorari or prohibition. The execution of the
judgment shall be suspended pending resolution of such petition, provided such person file a bond fixed
by the court which rendered the judgment and conditioned that he will abide by and perform the
judgment should the petition be decided against him. (emphasis and underscoring supplied)

Failure to follow basic legal commands as prescribed by law and the rules is tantamount to gross
ignorance of the law. By accepting the exalted position of a judge, respondent ought to have been familiar
with the legal norms and precepts as well as the procedural rules. 17

Contrary to respondent’s claim, complainant has no remedy of appeal, as the above-quoted Section 2 of
Rule 71 shows. And the penalty for direct contempt if imprisonment is imposed should not, as Section 1 of
Rule 71 provides, exceed 10 days. As stated earlier, complainant was detained for 19 days or 9 days more
than the limit imposed by the Rules.

More. Respondent did not fix the bond, in violation of the same Section 2 of Rule 71, which complainant
could have posted had she desired to challenge the order. And on the same day the Order was issued,
respondent ordered the confinement of complainant to the provincial jail.

Oclarit v. Paderanga18 instructs:

… [A]n order of direct contempt is not immediately executory or enforceable. The contemner must be
afforded a reasonable remedy to extricate or purge himself of the contempt. Thus, in the 1997 Rules of
Civil Procedure, as amended, the Court introduced a new provision granting a remedy to a person
adjudged in direct contempt by any court. Such person may not appeal therefrom, but may avail himself
of certiorari or prohibition. In such case, the execution of the judgment shall be suspended pending
resolution of such petition provided the contemner files a bond fixed by the court which rendered the
judgment and conditioned that he will abide by and perform the judgment should the petition be decided
against him.19 (underscoring supplied)

Under Section 8 (of Rule 140, gross ignorance of the law or procedure is classified as a serious charge
which is, under Section 11(A), punishable by:

1. Dismissal from the service, forfeiture of all or part of the benefits as the Court may determine,
and disqualification from reinstatement or appointment to any public office, including government-
owned or –controlled corporations. Provided, however, That the forfeiture of benefits shall in no
case include accrued leave credits;
 2. Suspension from office without salary and other benefits for more than three (3) but not
exceeding six (6) months; or

3. A fine of more than P20,000.00 but not exceeding P40,000.00

Respondent having been repeatedly penalized by this Court, with suspension and fine, as shown by the
above-listed administrative charges, the recommended penalty of P21,000 should be increased to
P30,000.

WHEREFORE, for gross ignorance of the law and procedure, Judge Sibanah Usman is FINED in the amount
of Thirty Thousand (P30,000) Pesos, with a WARNING that a repetition of the same or similar act shall be
dealt with more severely.

G.R. No. 139519        January 24, 2001

CONCHITO J. OCLARIT, petitioner,

vs.
HONORABLE MAXIMO G. W. PADERANGA, Judge, Regional Trial Court, Misamis Orietal, respondent.

PARDO, J.:

The Case

The Case before the Court is a special civil act6ion of certiorari assailing the order 1 of responent judge
declaring petitioner guilty of direct contempt of court, sentencing him to pay a fine of P1,000.00 and also
serve one (1) day in jail.1âwphi1.nêt

The Facts

Petitioner is a lawyer engaged in the private practice of law principally in the City of Cagayan de Oro and
the province of Misamis Oriental.2

At times material hereto, petitioner was counsel for the plaintiffs in the case entitled, spouses Gregorio
and Pelegrina Babatido v. Elnora and Teodora Abella, et al., Civil Case No. 99-194, Regional trial Court,
Misamis Oriental, Branch 38, Cagayan de Oro City. Judge Maximo G. W. Paderanga was the presiding
judge, Regional Trial Court, Misamis Oriental Branch 38.3

On June 1, 1999, the aforecited case was scheduled for continuation of pre-trial before the lower court.
The case was first heard on pre-trial on April 30, 1999. In that hearing, petitioner filed a motion to
approve compromise agreement entered into by the parties pointing out that the compromise agreement
was reached before a barangay captain.4 Counsel for the defendants opposed the motion5 because the
defendants were placed in a disadvantageous condition, arguing that the case was before the court, not
before the barangay. The court ruled that the compromise agreement was not before the barangay
captain but before the court. The parties settled before the barangay captain. At this point, petitioner
informed the court that the compromise agreement was signed and was explaining further when the court
told him repeatedly to "shut up." Then petitioner requested the court to stop shouting at him. The court
rhetorically asked: "why should the court precisely not cite you for contempt for doing that," that is, for
settling the case before the barangay captain.6

Consequently, the presiding judge cited petitioner in contempt of court and imposed on him a fine of
P1,000.00. Petitioner remarked that the presiding judge was becoming very arrogant. In reply to that,
respondent judge declared: "I will put you in jail. Get a policeman." At that moment, the court issued a
verbal order holding petitioner for direct contempt of court and sentencing petitioner to serve one (1) day
in jail and to pay a fine of P1,000.00. Petitioner indicated that he would challenge the ruling. 7 Then,
respondent judge issued a "detention commitment" to the Jail Warden, City Jail, Cagayan de Oro City,
committing the person of petitioner Conchito J. Oclarit for direct contempt. 8

The next day, with petitioner in jail, he received a copy of the written order declaring him in direct
contempt of court and sentencing him to pay a fine of P1,000.00 and also to serve one (1) day in jail. 9 He
was released after serving one (1) day in jail. 10 apparently, he also paid the fine of P1,000.00.11

On July 30, 1999, petitioner filed the instant petition. 12

 The Issues

The questions presented are (1) whether petitioner was guilty of direct contempt of court; (2) if guilty,
may the respondent judge declare him guilty by an order without stating the facts on which it is based
and imposing upon him the corresponding penalty; and finally (3) if the court could do so, is the order
finding petitioner guilty of direct contempt of court immediately executory?

The Court's Ruling

In the first place, there was nothing contumacious in the submission to the court of a motion for approval
of compromise agreement reached before a barangay captain in a case pending before the court. It is not
required that a compromise agreement be executed before the court. It may be executed before anyone
or even among the parties themselves and then submitted to the court for approval.

In the second place, the presiding judge must state expressly in the order the facts constituting the
contemptuous behavior of petitioner and declaring him in direct contempt of court.

In this case, the court did not state the specific cause for declaring petitioner guilty of direct contempt of
court. Indeed, it would seem that the court cited petitioner for direct contempt of court for submitting
such compromise was reached before a barangay captain.13 As we said, there is noting contumacious in
such act. However, the impression of lawyers in the courtroom at that time was that the presiding judge
was irked because petitioner shouted back and banged the table as petitioner charged the presiding judge
with arrogance.14 This incident is not recorded in the transcript, leaving us in doubt if it occurred. It is
apparent, however, that the presiding judge continuously ordered petitioner to "shut up."

Even then, an order of direct contempt is not immediately executory or enforceable. The contemner must
be afforded a reasonable remedy to extricate or purge himself of the contempt. Thus, in the 1997 Rules of
Civil Procedure, as amended, the Court introduced a new provision granting a remedy to a person
adjudged in direct contempt by any court. Such person may not appeal thereform, but may avail himself
of certiorari or prohibition, In such case, the execution of the judgment shall be suspended pending
resolution of such petition provided the contemner files a bond fixed by the court which rendered the
judgment should the petition be decided against him.15

In fact, petitioner asked the court presided over by respondent judge to fix a bail for his temporary liberty
pending the filing of a petition for certiorari.16 This written motion was filed on the first hour the very next
day. It was timely filed because the written order of contempt was issued only the next day and given to
petitioner when he was in jail.17 The respondent judge did not act on the motion. 18 By such inaction,
respondent judge deprived petitioner of an effective relief from an order of direct contempt of court. This
is a violation of the Rules on contempt of court.19 Under Rule 65, 1997 Rules of Civil Procedure, as
amended, petitioner had sixty (60) days within which to file his petition. 20

We find that respondent judge gravely abused his discretion in declaring petitioner guilty of direct
contempt of court, sentencing him to pay a fine of P1,000.00 and to serve one day in jail. It was the
respondent judge who first shouted successively at petitioner to "shut up." When petitioner persisted in
making his explanation, the court declared him in direct contempt, to the extent of stating that the judge
had "absolute power."21 The lawyer's remarks explaining his position in the case under consideration do
not necessarily assume the level of contumely that justifies the court to exercise the power of contempt. 22
Courts must be slow to punish for direct contempt. This drastic power must be used sparingly in cases of
clearly contumacious behavior in facie curiae.23 The salutary rule is that the power to punish for contempt
must be exercised on the preservative, not vindictive principle, 24 and on the corrective and not retaliatory
idea of punishment,25 The Courts must exercise the power to punish for contempt for purposes that are
impersonal, because that power is intended as a safeguard not for the judges as persons but for the
functions that they exercise.26

The Fallo

IN VIEW WHEREFOR, the Court GRANTS the petition and renders judgment declaring VOID the order
finding petitioner guilty of direct contempt of court in Civil Case No. 99-194, and sentencing him to pay a
fine of P1,000.00 and to serve one (1) day in jail. The Court orders respondent judge to reimburse
petitioner the sum of P1,000.00, not out of the amount paid by petitioner to the court but from his own
funds. The Court regrets that petitioner had to serve time in jail by a despotic act of respondent
judge.1âwphi1.nêt
The Court orders the Court Administrator, Supreme Court, to file an administrative charge against
respondent Judge Maximo G. W. Paderanga, Regional Trial Judge, Regional Trial Court, Misamis Oriental,
branch 38, Cagayan de Oro City, for gross misconduct and grave abuse of authority, within fifteen (15)
days from notice.