DUE PROCESS AND EMINENT DOMAIN

G.R. No. 181562-63

October 2, 2009

SPOUSES CIRIACO and ARMINDA ORTEGA, Petitioners,

vs.
CITY OF CEBU, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 181583-84
CITY OF CEBU, Petitioner,
vs.
SPOUSES CIRIACO and ARMINDA ORTEGA, Respondents.
DECISION
NACHURA, J.:
These are consolidated petitions for review on certiorari filed by petitioners Ciriaco and
Arminda Ortega (Spouses Ortega) in G.R. Nos. 181562-63 and petitioner City of Cebu
(Cebu City) in G.R. Nos. 181583-84 assailing the Decision of the Court of Appeals (CA) in
the similarly consolidated petitions docketed as CA-G.R. SP No. 80187 and CA-G.R. SP
No. 00147, respectively.1
The facts, summarized by the CA, follow.
Spouses Ciriaco and Arminda Ortega x x x are the registered owners of a parcel of land
known as Lot No. 310-B, situated in Hipodromo, Cebu City, with an area of 5,712 square
meters and covered by Transfer Certificate of Title No. 113311, issued by the Register of
Deeds of the City of Cebu.
One-half of the above described land is occupied by squatters. On September 24, 1990,
[the Spouses Ortega] filed an ejectment case against the squatters before the Municipal
Trial Court in Cities (MTCC) of Cebu City, which rendered decision in favor of [the spouses
Ortega]. The case eventually reached the Supreme Court, which affirmed the decision of
the MTCC. The decision of the MTCC became final and executory, and a writ of execution
was issued on February 1, 1994.
On May 23, 1994, the Sangguniang Panglungsod of [Cebu City] enacted City Ordinance
No. 1519, giving authority to the City Mayor to expropriate one-half (1/2) portion (2,856
square meters) of [the spouses Ortegas] land (which is occupied by the squatters), and
appropriating for that purpose the amount of P3,284,400.00 or at the price of ONE
THOUSAND ONE HUNDRED FIFTY PESOS (P1,150.00) per square meter. The amount
will be charged against Account No. 8-93-310, Continuing Appropriation, Account No. 1018918-334, repurchase of lots for various projects. The value of the land was determined by

the Cebu City Appraisal Committee in Resolution No. 19, series of 1994, dated April 15,
1994.
Pursuant to said ordinance, [Cebu City] filed a Complaint for Eminent Domain [before the
Regional Trial Court (RTC), Branch 23, Cebu City] against [the spouses Ortega], docketed
as Civil Case No. CEB-16577.
On March 13, 1998, the [RTC] issued an order declaring that [Cebu City] "has the lawful
right to take the property subject of the instant case, for public use or purpose described in
the complaint upon payment of just compensation."
Based on the recommendation of the appointed Commissioners (one of whom was the City
Assessor of [Cebu City], the [RTC] issued another Order dated May 21, 1999, fixing the
value of the land subject to expropriation at ELEVEN THOUSAND PESOS (P11,000.00) per
square meter and ordering [Cebu City] to pay [Spouses Ortega] the sum of THIRTY ONE
MILLION AND FOUR HUNDRED SIXTEEN THOUSAND PESOS (P31,416,000.00) as just
compensation for the expropriated portion of Lot No. 310-B.
The Decision of the [RTC] became final and executory because of [Cebu Citys] failure to
perfect an appeal on time, and a Writ of Execution was issued on September 17, 1999 to
enforce the courts judgment. Upon motion of [the Spouses Ortega], the [RTC] issued an
Order dated March 11, 2002, quoted as follows:
"Reading of the aforestated resolution shows that the City Council of Cebu approved
Ordinance No. 1519 appropriating the sum of P3,284,400.00 for payment of the subject lot
chargeable to Account No. 101-8918-334.
"In view thereof, the above-mentioned sum is now subject for execution or garnishment for
the same is no longer exempt from execution."
[Cebu City] filed an Omnibus Motion to Stay Execution, Modification of Judgment and
Withdrawal of the Case, contending that the price set by the [RTC] as just compensation to
be paid to [the Spouses Ortega] is way beyond the reach of its intended beneficiaries for its
socialized housing program. The motion was denied by the [RTC]. [Cebu Citys] Motion for
Reconsideration was likewise denied.
By virtue of the Order of the [RTC], dated July 2, 2003, x x x Sheriff Benigno B. Reas[,] Jr.
served a Notice of Garnishment to Philippine Postal Bank, P. del Rosario and Junquera
Branch Cebu City, garnishing [Cebu Citys] bank deposit therein.
Hence, [Cebu City] filed the instant Petition for Certiorari before [the CA] (CA-G.R. SP NO.
80187).
During the pendency of x x x CA-G.R. SP NO. 80187, [Cebu City] filed before the [RTC] a
Motion to Dissolve, Quash or Recall the Writ of Garnishment, contending that Account No.
101-8918-334 mentioned in Ordinance No. 1519 is not actually an existing bank account
and that the garnishment of [Cebu Citys] bank account with Philippine Postal Bank was
illegal, because government funds and properties may not be seized under writ of execution

or garnishment to satisfy such judgment, on obvious reason of public policy. The [RTC]
issued an Order dated March 8, 2004, denying said motion. [Cebu Citys] Motion for
Reconsideration was also denied.
[The Spouses Ortega] filed an Ex-Parte Motion to Direct the New Manager of Philippine
Postal Bank to Release to the Sheriff the Garnished Amount, which was granted by the
[RTC]. [Cebu City] filed a Motion for Reconsideration, but the same was denied.
Hence, [Cebu City] filed another Petition for Certiorari (CA-G.R. SP NO. 00147) [with the
Court of Appeals].2
Ruling on the petitions for certiorari, the CA disposed of the cases, to wit:
WHEREFORE, all the foregoing premises considered, the instant Petitions for Certiorari are
hereby PARTIALLY GRANTED. The assailed Orders of the [RTC] [Assailed Orders dated
March 11, 2002 and July 2, 2003, respectively, in CA-G.R SP NO. 80187] are hereby
ANNULLED AND SET ASIDE insofar as they denied [Cebu Citys] Motion to Stay Execution,
but they are hereby AFFIRMED insofar as they denied [Cebu Citys] Motion to Modify
Judgment and Withdraw from the Expropriation Proceedings. Furthermore, the assailed
Orders of the [RTC dated March 8, 2004 in CA-G.R. SP NO. 00147] are hereby ANNULLED
AND SET ASIDE. Let the Decision of the [RTC] be executed in a manner prescribed by
applicable law and jurisprudence.
SO ORDERED.3
Hence, these consolidated appeals by petitioners Cebu City and the Spouses Ortega
positing the following issues:
1. Whether the CA erred in affirming the RTCs denial of Cebu Citys Omnibus
Motion to Modify Judgment and to be Allowed to Withdraw from the Expropriation
Proceedings.
2. Whether the deposit of Cebu City with the Philippine Postal Bank, appropriated for
a different purpose by its Sangguniang Panglungsod, can be subject to garnishment
as payment for the expropriated lot covered by City Ordinance No. 1519.
We deny both petitions.
On the first issue, the CA did not err in affirming the RTCs Order that the expropriation case
had long been final and executory. Consequently, both the Order of expropriation and the
Order fixing just compensation by the RTC can no longer be modified. In short, Cebu City
cannot withdraw from the expropriation proceedings.
Section 4, Rule 67 of the Rules of Court on Expropriation provides:
SEC. 4. Order of expropriation. If the objections to and the defenses against the right of
the plaintiff to expropriate the property are overruled, or when no party appears to defend as
required by this Rule, the court may issue an order of expropriation declaring that the

plaintiff has a lawful right to take the property sought to be expropriated, 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 taking of the property or the filing of the complaint,
whichever came first.
A final order sustaining the right to expropriate the property may be appealed by any party
aggrieved thereby. Such appeal, however, shall not prevent the court from determining the
just compensation to be paid.
After the rendition of such an order, the plaintiff shall not be permitted to dismiss or
discontinue the proceeding except on such terms as the court deems just and equitable.
Plainly, from the aforequoted provision, expropriation proceedings speak of two (2) stages,
i.e.:
1. 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. This ends with an order, if not of dismissal of the action, of condemnation [or
order of expropriation] declaring that the plaintiff has the 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; and
2. Determination by the court of the just compensation for the property sought to be
taken.4
We held in the recent case of Republic v. Phil-Ville Development and Housing
Corporation5 that:
[A]n order of expropriation denotes the end of the first stage of expropriation. Its end then
paves the way for the second stagethe determination of just compensation, and,
ultimately, payment. An order of expropriation puts an end to any ambiguity regarding the
right of the petitioner to condemn the respondents properties. Because an order of
expropriation merely determines the authority to exercise the power of eminent domain and
the propriety of such exercise, its issuance does not hinge on the payment of just
compensation. After all, there would be no point in determining just compensation if, in the
first place, the plaintiffs right to expropriate the property was not first clearly established. 6
Conversely, as is evident from the foregoing, an order by the trial court fixing just
compensation does not affect a prior order of expropriation. As applied to the case at bar,
Cebu City can no longer ask for modification of the judgment, much less, withdraw its
complaint, after it failed to appeal even the first stage of the expropriation proceedings.
Cebu City is adamant, however, that it should be allowed to withdraw its complaint as the
just compensation fixed by the RTC is too high, and the intended expropriation of the
Spouses Ortegas property is dependent on whether Cebu City would have sufficient funds
to pay for the same.

We cannot subscribe to Cebu Citys ridiculous contention.

It is well-settled in jurisprudence that the determination of just compensation is a judicial
prerogative.7 In Export Processing Zone Authority v. Dulay,8 we declared:
The determination of "just compensation" in eminent domain cases is a judicial function.
The executive department or the legislature may make the initial determinations but when a
party claims a violation of the guarantee in the Bill of Rights that private property may not be
taken for public use without just compensation, no statute, decree, or executive order can
mandate that its own determination shall prevail over the courts findings. Much less can the
courts be precluded from looking into the "just-ness" of the decreed compensation.
We, therefore, hold that P.D. No. 1533, which eliminates the courts discretion to appoint
commissioners pursuant to Rule 67 of the Rules of Court, is unconstitutional and void. To
hold otherwise would be to undermine the very purpose why this Court exists in the first
place.
Likewise, in the recent cases of National Power Corporation v. dela Cruz 9 and Forfom
Development Corporation v. Philippine National Railways, 10 we emphasized the primacy of
judicial prerogative in the ascertainment of just compensation as aided by the appointed
commissioners, to wit:
Though the ascertainment of just compensation is a judicial prerogative, the appointment of
commissioners to ascertain just compensation for the property sought to be taken is a
mandatory requirement in expropriation cases. While it is true that the findings of
commissioners may be disregarded and the trial court may substitute its own estimate of
the value, it may only do so for valid reasons; that is, where the commissioners have
applied illegal principles to the evidence submitted to them, where they have disregarded a
clear preponderance of evidence, or where the amount allowed is either grossly inadequate
or excessive. Thus, "trial with the aid of the commissioners is a substantial right that may
not be done away with capriciously or for no reason at all."
As regards the second issue raised by the Spouses Ortega, we quote with favor the CAs
disquisition thereon, to wit:
While the claim of [the Spouses Ortega] against [Cebu City] is valid, the [RTC] cannot, by
itself, order the City Council of [Cebu City] to enact an appropriation ordinance in order to
satisfy its judgment.
The proper remedy of [the Spouses Ortega] is to file a mandamus case against [Cebu City]
in order to compel its Sangguniang Panglungsod to enact an appropriation ordinance for the
satisfaction of [the Spouses Ortegas] claim. This remedy is provided in the case of
Municipality of Makati v. Court of Appeals, which provides:
Nevertheless, this is not to say that private respondent and PSB are left with no legal
recourse. Where a municipality fails or refuses, without justifiable reason[s], to effect
payment of a final money judgment rendered against it, the claimant may avail of the
remedy of mandamus in order to compel the enactment and approval of the necessary

appropriation ordinance, and the corresponding disbursement of municipal funds therefor. x

x x.
xxxx
The Sangguniang Panglungsod of [Cebu City] enacted Ordinance No. 1519, appropriating
the sum ofP3,284,400.00 for payment of just compensation for the expropriated land,
chargeable to Account No. 101-8918-334.
Pursuant to such ordinance, the [RTC] issued an order dated March 11, 2002, which was
the basis for the issuance of the Writ of Garnishment, garnishing [Cebu Citys] bank account
with Philippine Postal Bank.
However, Philippine Postal Bank issued a Certification dated February 7, 2005, certifying
that Account No. 8-93-310 (Continuing Account) and Account No. 101-8918-334 intended
for purchase of lot for various projects are not bank account numbers with Philippine Postal
Bank.
It is a settled rule that government funds and properties may not be seized under writs of
execution or garnishment to satisfy judgments, based on obvious consideration of public
policy. Disbursements of public funds must be covered by the corresponding appropriation
as required by law. The functions and public services rendered by the State cannot be
allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate
and specific objects, as appropriated by law.
In Municipality of Makati v. Court of Appeals, x x x where the Municipality of Makati enacted
an ordinance appropriating certain sum of money as payment for the land the municipality
expropriated, chargeable to Account No. S/A 265-537154-3 deposited in PNB Buendia
Branch, the Supreme Court held that the trial court has no authority to garnish the
Municipalitys other bank account (Account No. S/A 263-530850-7) in order to cover the
deficiency in Account No. S/A 265-537154-3, even if both accounts are in the same branch
of the PNB. In said case, the Supreme Court held:
Absent any showing that the municipal council of Makati has passed an ordinance
appropriating from its public funds an amount corresponding to the balance due under the
RTC decision dated June 4, 1987, less the sum ofP99,743.94 deposited in Account No. S/A
265-537154-3, no levy under execution may be validly effected on the public funds of
petitioner deposited in Account No. S/A 263-530850-7.
The foregoing rules find application in the case at bar. While the Sangguniang Panglungsod
of petitioner enacted Ordinance No. 1519 appropriating the sum of P3,284,400.00 for
payment of just compensation for the expropriated land, such ordinance cannot be
considered as a source of authority for the [RTC] to garnish [Cebu Citys] bank account with
Philippine Postal Bank, which was already appropriated for another purpose. [Cebu Citys]
account with Philippine Postal Bank was not specifically opened for the payment of just
compensation nor was it specifically appropriated by Ordinance No. 1519 for such purpose.
Said account, therefore, is exempt from garnishment.
1avvphi1

Since the [RTC] has no authority to garnish [Cebu Citys] other bank accounts in order to
satisfy its judgment, consequently, it has no authority to order the release of [Cebu Citys]
other deposits with Philippine Postal Bank x x x. 11
Even assuming that Cebu City Ordinance No. 1519 actually appropriated the amount
of P3,284,400.00 for payment of just compensation thus, within the reach of a writ of
garnishment issued by the trial court 12 there remains the inescapable fact that the
Philippine Postal Bank account referred to in the ordinance does not actually exist, as
certified to by the Bank. Accordingly, no writ of garnishment may be validly issued against
such non-existent account with Philippine Postal Bank. This circumstance translates to a
situation where there is no valid appropriation ordinance.
WHEREFORE, the petitions in G.R. Nos. 181562-63 and 181583-84 are hereby DENIED.
The Decision of the Court of Appeals in CA-G.R. SP Nos. 80187 and 00147 is AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

LAND BANK OF THE PHILIPPINES,

Petitioner,
- versus JOSE MARIE M. RUFINO, NILO M. RESURRECCION, ARNEL M.
ATANACIO and SUZETTE G. MATEO,
Respondents,
DEPARTMENT OF AGRARIAN REFORM, represented by OICSECRETARY NASSER C. PANGANDAMAN,
Petitioner,
- versus JOSE MARIE M. RUFINO, NILO M. RESURRECCION, ARNEL M.
ATANACIO and SUZETTE G. MATEO,
Respondents

CARPIO MORALES, J.:

Challenged in these consolidated Petitions for Review is the December 15,
2005 Decision of the Court of Appeals [1] in CA-G.R. CV No. 69640 affirming with
modification that of Branch 52 of the Regional Trial Court (RTC) of Sorsogon
in Civil Case No. 98-6438 setting the valuation of respondents 138.4018-hectare

land taken under the Comprehensive Agrarian Reform Program (CARP)

at P29,926,000, exclusive of the value of secondary crops thereon.
Respondents Jose Marie M. Rufino (Rufino), Nilo M. Resurreccion
(Resureccion), Arnel M. Atanacio (Atanacio), and Suzette G. Mateo (Suzette) are
the registered owners in equal share of a parcel of agricultural land situated in
Barangay San Benon, Irosin, Sorsogon, with an area of 239.7113 hectares covered
by Transfer Certificate of Title (TCT) No. T-22934.[2]
By respondents claim, in 1989, they voluntarily offered the aforesaid
property to the government for CARP coverage at P120,000 per hectare. Acting
thereon, petitioner Department of Agrarian Reform (DAR) issued a Notice of Land
Valuation and Acquisition dated October 21, 1996 declaring that out of the total
area indicated in the title, 138.4018 hectares was subject to immediate
acquisition at a valuation of P8,736,270.40 based on the assessment of petitioner
Land Bank of the Philippines (LBP).
Respondents having found the valuation unacceptable, the matter was
referred by the provincial agrarian reform officer of Sorsogon to the DAR
Adjudication Board (DARAB) for the conduct of summary administrative
proceedings to determine just compensation.[3]
By Decision of November 21, 1997,[4] the DARAB sustained LBPs
valuation upon respondents failure to present any evidence to warrant an increase
thereof.
Meanwhile, upon the DARs application, accompanied with LBPs
certification of deposit of payment, the Register of Deeds of Sorsogon partially
cancelled TCT No. T-22934 corresponding to the 138.4018-hectare covered area
(hereafter the property) and issued TCT No. T-47571 in the name of the Republic
of the Philippines (the Republic). The Republic thereupon subdivided the property

into 85 lots for distribution to qualified farmer-beneficiaries under Republic Act

No. 6657 (RA 6657) or the Comprehensive Agrarian Reform Law of 1988.[5]
On February 23, 1998, respondents lodged with Branch 52 of the Sorsogon
RTC (acting as a Special Agrarian Court) a complaint for determination of just
compensation against Ernesto Garilao, in his capacity as then DAR Secretary, and
LBP. Respondents contended that LBPs valuation was not the full and fair
equivalent of the property at the time of its taking, the same having been offered in
1989 at P120,000 per hectare.[6]
LBP countered that the property was acquired by the DAR for CARP
coverage in 1993 by compulsory acquisition and not by respondents voluntary
offer to sell; and that it determined the valuation thereof in accordance with RA
6657 and pertinent DAR regulations.[7]
The DAR Secretary argued that LBPs valuation was properly based on
DAR issuances.[8]
The trial court appointed the parties respective nominated commissioners to
appraise the property.
Commissioner Jesus S. Empleo, LBPs nominee, appraised the property
based on, among other things, the applicable DAR issuances, average gross
production, and prevailing selling prices of the crops planted thereon which
included coconut, abaca, coffee, and rice. He arrived at a valuation
of P13,449,579.08.[9]
Commissioner Amando Chua of Cuervo Appraisers, Inc., respondents
nominee, used the market data approach which relies primarily on sales and
listings of comparable lots in the neighborhood. Excluding the secondary crops
planted thereon, he valued the property at P29,925,725.[10]

At the witness stand, Eugenio Mateo, Sr. (Mateo), attorney-in-fact of

respondents Rufino, Resurreccion, and Atanacio, declared that Commissioner Chua
erroneously considered the secondary crops as merely enhancing the demand for
the property without them significantly increasing its value; and that the coffee
intercropping on the property which yielded an estimated profit of P3,000,000,
spread over a 12-year period, should be considered in the determination of just
compensation.[11]
By Decision of July 4, 2000,[12] the trial court found the market data
approach to be more realistic and consistent with law and jurisprudence on the full
and fair equivalent of the property. Applying the average rate of P216,226 per
hectare, it arrived at a valuation of the 138.4018-hectare property
at P29,926,000, to which it added P8,000,000 representing 50% of the value of
trees, plants, and other improvements thereon, bringing the total to P37,926,000. It
disposed thus:
WHEREFORE, premises considered, judgment is hereby rendered to
wit:
a) Fixing the Just Compensation of the entire 138.4018 hectares for
acquisition covered by TCT No. T-22934 in the total amount of
THIRTY SEVEN MILLION NINE HUNDRED TWENTY-SIX
THOUSAND (Php37,926,000.00) Pesos Philippine Currency, less
the amount previously deposited in trust with the Land Bank which
was already received by the plaintiffs.
b) The Land Bank of the Philippines is hereby ordered to pay the
landowners-plaintiffs the afore-cited amount less the amount
previously paid to them in the manner provided by law.
c) Without pronouncement as to costs.

LBP filed a Motion for Reconsideration, while the DAR filed a Notice of
Appeal. By Order dated August 21, 2000, the trial court denied the motion of LBP,
[13]
prompting it to also file a Notice of Appeal.[14]
By consolidated Decision of December 15, 2005,[15] the Court of Appeals
sustained the trial courts valuation of P29,926,000 as just compensation.
The appellate court found that, among other things, it would be specious to
rely on the DARs computation in ostensible compliance with its own issuances;
that Commissioner Empleo failed to consider available sales data of comparable
properties in the locality; and that the value of secondary crops should be excluded
as the same is inconclusive in view of conflicting evidence.
Petitioners and respondents filed their respective Motions for
Reconsideration which were denied by the appellate court by Resolution of
November 28, 2006.[16] Hence, petitioners LBP and DAR separately sought
recourse to this Court through the present Petitions for Review, which were
consolidated in the interest of uniformity of rulings on related cases.
In G.R. No. 175644, LBP maintains that its valuation of the property
at P13,449,579.08 was based on the factors mentioned in RA 6657 and formula
prescribed by the DAR; that its determination should be given weight as it has the
expertise to do the same; and that the taking of private property for agrarian reform
is not a traditional exercise of the power of eminent domain as it also involves the
exercise of police power, hence, part of the loss is not compensable.[17]
In G.R. No. 175702, the DAR avers that the valuation sustained by the
appellate court was determined in contravention of the criteria set by RA 6657 and
relevant jurisprudence.[18]
Respondents, for their part, posit in their consolidated Comment [19] that
factual findings of the trial court, when affirmed by the appellate court, are

conclusive; and that the just compensation due them should be equivalent to the
market value of the property.
In determining the just compensation due owners of lands taken for CARP
coverage, the RTC, acting as a Special Agrarian Court, should take into account the
factors enumerated in Section 17 of RA 6657, as amended, to wit:
Sec. 17.
Determination of Just Compensation. In
determining just compensation, the cost of acquisition of the land,
the current value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax declarations, and
the assessment made by government assessors shall be considered.
The social and economic benefits contributed by the farmers and the
farmworkers and by the Government to the property as well as
the non-payment of taxes or loans secured from any government
financing institution on the said land shall be considered as additional
factors to determine its valuation. (Emphasis supplied)

The DAR, being the government agency primarily charged with the
implementation of the CARP, issued Administrative Order No. 6, Series of 1992
(DAR AO 6-92), as amended by DAR Administrative Order No. 11, Series of 1994
(DAR AO 11-94), translating the factors mentioned in Section 17 of RA 6657 into
a basic formula, presented as follows:
LV = (CNI x 0.6) + ( CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three factors are present,
relevant, and applicable.
A.1. When the CS factor is not present and CNI and MV are applicable,
the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)

A.2. When the CNI factor is not present, and CS and MV are applicable,
the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A.3. When both the CS and CNI are not present and only MV is
applicable, the formula shall be:
LV = MV x 2

The threshold issue then is whether the appellate court correctly upheld the
valuation by the trial court of the property on the basis of the market data
approach, in disregard of the formula prescribed by DAR AO 6-92, as amended.
The petitions are partly meritorious.
While the determination of just compensation is essentially a judicial
function which is vested in the RTC acting as a Special Agrarian Court, the Court,
in LBP v. Banal,[20] LBP v. Celada,[21] and LBP v. Lim,[22] nonetheless disregarded
the RTCs determination thereof when, as in the present case, the judge did not
fully consider the factors specifically identified by law and implementing rules.
In LBP v. Banal,[23] the Court ruled that the factors laid down in Section 17
of RA 6657 and the formula stated in DAR AO 6-92, as amended, must be adhered
to by the RTC in fixing the valuation of lands subjected to agrarian reform:
In determining just compensation, the RTC is required to consider
several factors enumerated in Section 17 of R.A. 6657, as amended,
thus:
xxxx
These factors have been translated into a basic formula in [DAO
6-92], as amended by [DAO 11-94], issued pursuant to the DAR's rulemaking power to carry out the object and purposes of R.A. 6657, as
amended.

xxxx
While the determination of just compensation involves the
exercise of judicial discretion, however, such discretion must be
discharged within the bounds of the law. Here, the RTC wantonly
disregarded R.A. 6657, as amended, and its implementing rules and
regulations. ([DAO 6-92], as amended by [DAO 11-94]).
xxxx
WHEREFORE, . . . The trial judge is directed to observe strictly
the procedures specified above in determining the proper valuation of
the subject property. (Underscoring supplied)

And in LBP v. Celada,[24] the Court was emphatic that the RTC is not at liberty to
disregard the DAR valuation formula which filled in the details of Section 17 of
RA 6657, it being elementary that rules and regulations issued by administrative
bodies to interpret the law they are entrusted to enforce have the force of law.
In fixing the just compensation in the present case, the trial court, adopting
the market data approach on which Commissioner Chua relied,[25] merely put
premium on the location of the property and the crops planted thereon which are
not among the factors enumerated in Section 17 of RA 6657. And the trial court
did not apply the formula provided in DAR AO 6-92, as amended. This is a clear
departure from the settled doctrine regarding the mandatory nature of Section 17 of
RA 6657 and the DAR issuances implementing it.
Not only did Commissioner Chua not consider Section 17 of RA 6657 and
DAR AO 6-92, as amended, in his appraisal of the property. His conclusion that
the market data approach conformed with statutory and regulatory requirements is
bereft of basis.
Resolving in the negative the issue of whether the RTC can resort to any
other means of determining just compensation, aside from Section 17 of RA 6657

and DAR AO 6-92, as amended, this Court, in LBP v. Lim,[26] held that Section 17
of RA 6657 and DAR AO 6-92, as amended, are mandatory and not mere guides
that the RTC may disregard.
Petitioners maintain that the correct valuation
is P13,449,579.08 as computed by Commissioner Empleo.

of

the

property

The pertinent provisions of Item II of DAR AO 6-92, as amended by DAR

AO 11-94, read:
A.
There shall be one basic formula for the valuation of lands
covered by [Voluntary Offer to Sell] or [Compulsory Acquisition]
regardless of the date of offer or coverage of the claim:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three factors are
present, relevant and applicable.
A.1. When the CS factor is not present and CNI and MV are
applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
xxxx
A.5
For purposes of this Administrative Order, the date of
receipt of claimfolder by LBP from DAR shall mean the date
when the claimfolder is determined by the LBP to be complete
with all the required documents and valuation inputs duly verified
and validated, and is ready for final computation/processing.
A.6
The basic formula in the grossing-up of valuation inputs
such as . . . Market Value per Tax Declaration (MV) shall be:

Grossed-up
=
Valuation Input

Valuation input x
Regional Consumer Price
Index (RCPI) Adjustment
Factor

The RCPI Adjustment Factor shall refer to the ratio of RCPI for the
month issued by the National Statistics Office as of the date when the
claimfolder (CF) was received by LBP from DAR for processing or, in
its absence, the most recent available RCPI for the month issued prior to
the date of receipt of CF from DAR and the RCPI for the month as of
the date/effectivity/registration of the valuation input. Expressed in
equation form:

RCPI
Adjustment
Factor

RCPI for the Month as of the

Date of Receipt of Claimfolder
by LBP from DAR or the Most
recent RCPI for the Month
Issued Prior to the Date of
Receipt of CF

RCPI for the Month Issued as of

the Date/Effectivity/Registration
of the Valuation Input

B.
Capitalized Net Income (CNI) This shall refer to the
difference between the gross sales (AGP x SP) and total cost of
operations (CO) capitalized at 12%.
Expressed in equation form:
CNI =

(AGP x SP) - CO

.12
Where: CNI =
Capitalized Net Income
AGP = Latest available 12-month's gross production
immediately preceding the date of offer in case of
VOS or date of notice of coverage in case of CA.
SP

The average of the latest available 12month's selling prices prior to the date of receipt
of the claimfolder by LBP for processing, such
prices to be secured from the Department of

Agriculture (DA) and other appropriate regulatory

bodies or, in their absence, from the Bureau of
Agricultural Statistics. If possible, SP data shall be
gathered from the barangay or municipality where
the property is located. In the absence thereof, SP
may be secured within the province or region.
CO

.12

Cost of Operations
Whenever the cost of operations could not be
obtained or verified, an assumed net income rate
(NIR) of 20% shall be used. Landholdings planted to
coconut which are productive at the time of
offer/coverage shall continue to use the 70% NIR.
DAR and LBP shall continue to conduct joint
industry studies to establish the applicable NIR for
each crop covered under CARP.
Capitalization Rate
xxxx

D.

In the computation of Market Value per Tax Declaration (MV),

the most recent Tax Declaration (TD) and Schedule of Unit
Market Value (SMV) issued prior to receipt of claimfolder by
LBP shall be considered. The Unit Market Value (UMV) shall be
grossed up from the date of its effectivity up to the date of receipt
of claimfolder by LBP from DAR for processing, in accordance
with item II.A.A.6. (Emphasis and italics supplied)

In thus computing Capitalized Net Income (CNI), the Average Gross

Production (AGP) of the latest available 12 months immediately preceding
the date of offer in case of voluntary offer to sell or date of notice of coverage in
case of compulsory acquisition, and the average Selling Price (SP) of the latest
available 12 months prior to the date of receipt of the claimfolder by LBP for
processing, should be used.
While these dates-bases of computation are not clearly indicated in the
records (as the mode of acquisition is in fact disputed), the date of offer (assuming
the acquisition was by voluntary offer to sell) would have to be sometime in 1989,

the alleged time of voluntary offer to sell; whereas the date of notice of
coverage (assuming the acquisition was compulsory) would be sometime prior to
October 21, 1996, which is the date of the Notice of Land Valuation and
Acquisition, because under DAR Administrative Order No. 9, series of 1990, [27] as
amended by DAR Administrative Order No. 1, series of 1993, the notice of
coverage precedes the Notice of Land Valuation and Acquisition.
And the claimfolder would have been received by LBP in or before 1997,
the year the property was distributed to agrarian reform beneficiaries, [28] because
land distribution is the last step in the procedure prescribed by the above-said DAR
administrative orders. Hence, the data for the AGP should pertain to a period in
1989 (in case of voluntary offer to sell) or prior to October, 1996 (in case of
compulsory acquisition),while the data for the SP should pertain to 1997 or earlier.
Commissioner Empleo, however, instead used available data within the 12month period prior to his ocular inspection in October 1998 for the AGP,[29] and the
average selling price for the period January 1998 to December 1998 for the SP,
[30]
contrary to DAR AO 6-92, as amended.
Furthermore, the Regional Consumer Price Index (RCPI) Adjustment Factor,
which is used in computing the market value of the property, is the ratio of the
RCPI for the month when the claimfolder was received by LBP, to the RCPI for
the month of the registration of the most recent Tax Declaration and Schedule of
Unit Market Value[31] issued prior to receipt of claimfolder by LBP. Consistent
with the previous discussion, the applicable RCPIs should therefore be dated 1997
or earlier.
Again, Commissioner Empleo instead used RCPI data for January 1999 in
computing the RCPI Adjustment Factor,[32] contrary to DAR AO 6-92, as amended.
Parenthetically, Commissioner Empleo testified[33] that his computations
were based on DAR Administrative Order No. 5, series of 1998.[34] This

Administrative Order took effect only on May 11, 1998, however, hence, the
applicable valuation rules in this case remain to be those prescribed by DAR AO 692, as amended by DAR AO 11-94.
But even if the 1998 valuation rules were applied, the data for the AGP
would still pertain to a period prior to October 1996, the revised reference date
being the date of the field investigation which precedes the Notice of Land
Valuation and Acquisition; while the data for the SP and the RCPIs would still
pertain to 1997 or earlier, there being no substantial revisions in their reference
dates.
Finally, as reflected earlier, Commissioner Empleo did not consider in his
computation the secondary crops planted on the property (coffee, pili, cashew,
etc.), contrary to DAR AO 6-92, as amended, which provides that the [t]otal
income shall be computed from the combination of crops actually produced on the
covered land whether seasonal or permanent.[35]

IN FINE, the valuation asserted by petitioners does not lie.

While the Court is minded to write finis to this protracted litigation by itself
computing the just compensation due respondents, the evidence on record is not
sufficient for the purpose. The Court is thus constrained to remand the case for
determination of the valuation of the property by the trial court, which is mandated
to consider the factors provided under Section 17 of RA 6657, as amended, and as
translated into the formula prescribed in DAR AO 6-92, as amended by DAR AO
11-94.
The trial court may, motu proprio or at the instance of any of the parties,
again appoint one or more commissioners to ascertain facts relevant to the dispute
and file a written report thereof. The amount determined by the trial court would
then be the basis of interest income on the cash and bond deposits due respondents

from the time of the taking of the property up to the time of actual payment of just
compensation.[36]
WHEREFORE,
the
challenged Decision
of
the
Court
of
Appeals is REVERSED and SET
ASIDE. Civil
Case
No.
98-6438 is
REMANDED to Branch 52 of the Sorsogon RTC which is directed to determine
with dispatch the just compensation due respondents strictly in accordance with the
procedures specified above.
SO ORDERED.

G.R. No. 162474

October 13, 2009

HON. VICENTE P. EUSEBIO, LORNA A. BERNARDO, VICTOR ENDRIGA, and the CITY
OF PASIG, Petitioners,
vs.
JOVITO M. LUIS, LIDINILA LUIS SANTOS, ANGELITA CAGALINGAN, ROMEO M. LUIS,
and VIRGINIA LUIS-BELLESTEROS,* Respondents.
DECISION
PERALTA, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court,
praying that the Decision1of the Court of Appeals (CA) dated November 28, 2003, affirming
the trial court judgment, and the CA Resolution 2dated February 27, 2004, denying
petitioners motion for reconsideration, be reversed and set aside.
The antecedent facts are as follows:
Respondents are the registered owners of a parcel of land covered by Transfer Certificate
of Title Nos. 53591 and 53589 with an area of 1,586 square meters. Said parcel of land was
taken by the City of Pasig sometime in 1980 and used as a municipal road now known as A.
Sandoval Avenue, Barangay Palatiw, Pasig City. On February 1, 1993, the Sanggunian of
Pasig City passed Resolution No. 15 authorizing payments to respondents for said parcel of
land. However, the Appraisal Committee of the City of Pasig, in Resolution No. 93-13 dated
October 19, 1993, assessed the value of the land only at P150.00 per square meter. In a
letter dated June 26, 1995, respondents requested the Appraisal Committee to
consider P2,000.00 per square meter as the value of their land.

One of the respondents also wrote a letter dated November 25, 1994 to Mayor Vicente P.
Eusebio calling the latters attention to the fact that a property in the same area, as the land
subject of this case, had been paid for by petitioners at the price of P2,000.00 per square
meter when said property was expropriated in the year 1994 also for conversion into a
public road. Subsequently, respondents counsel sent a demand letter dated August 26,
1996 to Mayor Eusebio, demanding the amount of P5,000.00 per square meter, or a total
of P7,930,000.00, as just compensation for respondents property. In response, Mayor
Eusebio wrote a letter dated September 9, 1996 informing respondents that the City of
Pasig cannot pay them more than the amount set by the Appraisal Committee.
Thus, on October 8, 1996, respondents filed a Complaint for Reconveyance and/or
Damages (Civil Case No. 65937) against herein petitioners before the Regional Trial Court
(RTC) of Pasig City, Branch 155. Respondents prayed that the property be returned to them
with payment of reasonable rental for sixteen years of use atP500.00 per square meter,
or P793,000.00, with legal interest of 12% per annum from date of filing of the complaint
until full payment, or in the event that said property can no longer be returned, that
petitioners be ordered to pay just compensation in the amount of P7,930,000.00 and rental
for sixteen years of use at P500.00 per square meter, or P793,000.00, both with legal
interest of 12% per annum from the date of filing of the complaint until full payment. In
addition, respondents prayed for payment of moral and exemplary damages, attorneys fees
and costs.
After trial, the RTC rendered a Decision 3 dated January 2, 2001, the dispositive portion of
which reads as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the
plaintiffs and against the defendants:
1. Declaring as ILLEGAL and UNJUST the action of the defendants in taking the
properties of plaintiffs covered by Transfer Certificates of Title Nos. 53591 and 53589
without their consent and without the benefit of an expropriation proceedings
required by law in the taking of private property for public use;
2. Ordering the defendants to jointly RETURN the subject properties to plaintiffs with
payment of reasonable rental for its use in the amount of P793,000.00 with legal
interest at the rate of 6% per annum from the filing of the instant Complaint until full
payment is made;
3. In the event that said properties can no longer be returned to the plaintiffs as the
same is already being used as a public road known as A. Sandoval Avenue, Pasig
City, the defendants are hereby ordered to jointly pay the plaintiffs the fair and
reasonable value therefore at P5,000.00 per square meter or a total ofP7,930,000.00
with payment of reasonable rental for its use in the amount of P500.00 per square
meter or a total of P793,000.00, both with legal interest at the rate of 6% per annum
from the filing of the instant Complaint until full payment is made; and
4. Ordering the defendants to jointly pay the plaintiffs attorneys fees in the amount
of P200,000.00.

No pronouncement as to costs.
SO ORDERED.
Petitioners then appealed the case to the CA, but the CA affirmed the RTC judgment in its
Decision dated November 28, 2003.
1avvphi1

Petitioners motion for reconsideration of the CA Decision was denied per Resolution dated
February 27, 2004.
Hence, this petition where it is alleged that:
I. PUBLIC RESPONDENT COURT ERRED IN UPHOLDING THE RULING OF THE
LOWER COURT DESPITE THE APPARENT LACK OF JURISDICTION BY
REASON OF PRESCRIPTION OF PRIVATE RESPONDENTS CLAIM FOR JUST
COMPENSATION;
II. PUBLIC RESPONDENT COURT ERRED IN FIXING THE FAIR AND
REASONABLE COMPENSATION FOR RESPONDENTS PROPERTY AT P5,000.00
PER SQUARE METER DESPITE THE GLARING FACT THAT AT THE TIME OF
TAKING IN THE YEAR 1980 THE FAIR MARKET VALUE WAS PEGGED BY AN
APPRAISAL COMMITTEE AT ONE HUNDRED SIXTY PESOS (PHP160.00);
III. PUBLIC RESPONDENT COURT ERRED IN UPHOLDING THE JUDGMENT OF
THE LOWER COURT AWARDING THE AMOUNT OF P793,000.00 AS
REASONABLE RENTAL FOR THE USE OF RESPONDENTS PROPERTY IN
SPITE OF THE FACT THAT THE SAME WAS CONVERTED INTO A PUBLIC ROAD
BY A PREVIOUSLY ELECTED MUNICIPAL MAYOR WITHOUT RESPONDENTS
REGISTERING ANY COMPLAINT OR PROTEST FOR THE TAKING AND DESPITE
THE FACT THAT SUCH TAKING DID NOT PERSONALLY BENEFIT THE
PETITIONERS BUT THE PUBLIC AT LARGE; AND
IV. PUBLIC RESPONDENT COURT OF APPEALS ERRED IN AFFIRMING
THE P200,000.00 AWARD FOR ATTORNEYS FEES TO THE PRIVATE
RESPONDENTS COUNSEL DESPITE THE ABSENCE OF NEGLIGENCE OR
INACTION ON THE PART OF PETITIONERS RELATIVE TO THE INSTANT CLAIM
FOR JUST COMPENSATION.4
At the outset, petitioners must be disabused of their belief that respondents action for
recovery of their property, which had been taken for public use, or to claim just
compensation therefor is already barred by prescription. In Republic of the Philippines v.
Court of Appeals,5 the Court emphasized "that where private property is taken by the
Government for public use without first acquiring title thereto either through expropriation or
negotiated sale, the owners action to recover the land or the value thereof does not
prescribe." The Court went on to remind government agencies not to exercise the power of
eminent domain with wanton disregard for property rights as Section 9, Article III of the
Constitution provides that "private property shall not be taken for public use without just
compensation." 6

The remaining issues here are whether respondents are entitled to regain possession of
their property taken by the city government in the 1980s and, in the event that said property
can no longer be returned, how should just compensation to respondents be determined.
These issues had been squarely addressed in Forfom Development Corporation v.
Philippine National Railways, 7which is closely analogous to the present case. In said earlier
case, the Philippine National Railways (PNR) took possession of the private property in
1972 without going through expropriation proceedings. The San Pedro-Carmona Commuter
Line Project was then implemented with the installation of railroad facilities on several
parcels of land, including that of petitioner Forfom. Said owner of the private property then
negotiated with PNR as to the amount of just compensation. No agreement having been
reached, Forfom filed a complaint for Recovery of Possession of Real Property and/or
Damages with the trial court sometime in August 1990.
In said case, the Court held that because the landowner did not act to question the lack of
expropriation proceedings for a very long period of time and even negotiated with the PNR
as to how much it should be paid as just compensation, said landowner is deemed to have
waived its right and is estopped from questioning the power of the PNR to expropriate or the
public use for which the power was exercised. It was further declared therein that:
x x x recovery of possession of the property by the landowner can no longer be allowed on
the grounds of estoppel and, more importantly, of public policy which imposes upon the
public utility the obligation to continue its services to the public. The non-filing of the case for
expropriation will not necessarily lead to the return of the property to the landowner. What is
left to the landowner is the right of compensation.
x x x It is settled that non-payment of just compensation does not entitle the private
landowners to recover possession of their expropriated lot. 8
Just like in the Forfom case, herein respondents also failed to question the taking of their
property for a long period of time (from 1980 until the early 1990s) and, when asked during
trial what action they took after their property was taken, witness Jovito Luis, one of the
respondents, testified that "when we have an occasion to talk to Mayor Caruncho we always
asked for compensation."9 It is likewise undisputed that what was constructed by the city
government on respondents property was a road for public use, namely, A. Sandoval
Avenue in Pasig City. Clearly, as in Forfom, herein respondents are also estopped from
recovering possession of their land, but are entitled to just compensation.
Now, with regard to the trial courts determination of the amount of just compensation to
which respondents are entitled, the Court must strike down the same for being contrary to
established rules and jurisprudence.
The prevailing doctrine on judicial determination of just compensation is that set forth in
Forfom.10 Therein, the Court ruled that even if there are no expropriation proceedings
instituted to determine just compensation, the trial court is still mandated to act in
accordance with the procedure provided for in Section 5, Rule 67 of the 1997 Rules of Civil
Procedure, requiring the appointment of not more than three competent and disinterested
commissioners to ascertain and report to the court the just compensation for the subject

property. The Court reiterated its ruling in National Power Corporation v. Dela Cruz 11 that
"trial with the aid of commissioners is a substantial right that may not be done away with
capriciously or for no reason at all." 12 It was also emphasized therein that although
ascertainment of just compensation is a judicial prerogative, the commissioners findings
may only be disregarded or substituted with the trial courts own estimation of the propertys
value only if the commissioners have applied illegal principles to the evidence submitted to
them, where they have disregarded a clear preponderance of evidence, or where the
amount allowed is either grossly inadequate or excessive. Thus, the Court concluded in
Forfom that:
The judge should not have made a determination of just compensation without first having
appointed the required commissioners who would initially ascertain and report the just
compensation for the property involved. This being the case, we find the valuation made by
the trial court to be ineffectual, not having been made in accordance with the procedure
provided for by the rules.13
Verily, the determination of just compensation for property taken for public use must be
done not only for the protection of the landowners interest but also for the good of the
public. In Republic v. Court of Appeals,14 the Court explained as follows:
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. 15
It is quite clear that the Court, in formulating and promulgating the procedure provided for in
Sections 5 and 6, Rule 67, found this to be the fairest way of arriving at the just
compensation to be paid for private property taken for public use.
With regard to the time as to when just compensation should be fixed, it is settled
jurisprudence that where property was taken without the benefit of expropriation
proceedings, and its owner files an action for recovery of possession thereof before the
commencement of expropriation proceedings, it is the value of the property at the time of
taking that is controlling.16 Explaining the reason for this rule in Manila International Airport
Authority v. Rodriguez,17 the Court, quoting Ansaldo v. Tantuico, Jr.,18 stated, thus:
The reason for the rule, as pointed out in Republic v. Lara, 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. 19

In this case, the trial court should have fixed just compensation for the property at its value
as of the time of taking in 1980, but there is nothing on record showing the value of the
property at that time. The trial court, therefore, clearly erred when it based its valuation for
the subject land on the price paid for properties in the same location, taken by the city
government only sometime in the year 1994.
However, in taking respondents property without the benefit of expropriation proceedings
and without payment of just compensation, the City of Pasig clearly acted in utter disregard
of respondents proprietary rights. Such conduct cannot be countenanced by the Court. For
said illegal taking, the City of Pasig should definitely be held liable for damages to
respondents. Again, in Manila International Airport Authority v. Rodriguez, 20 the Court held
that the government agencys illegal occupation of the owners property for a very long
period of time surely resulted in pecuniary loss to the owner. The Court held as follows:
Such pecuniary loss entitles him to adequate compensation in the form of actual or
compensatory damages, which in this case should be the legal interest (6%) on the value of
the land at the time of taking, from said point up to full payment by the MIAA. This is based
on the principle that interest "runs as a matter of law and follows from the right of the
landowner to be placed in as good position as money can accomplish, as of the date of the
taking."
The award of interest renders unwarranted the grant of back rentals as extended by the
courts below. In Republic v. Lara, et al., the Court ruled that the indemnity for rentals is
inconsistent with a property owners right to be paid legal interest on the value of the
property, for if the condemnor is to pay the compensation due to the owners from the time of
the actual taking of their property, the payment of such compensation is deemed to retroact
to the actual taking of the property; and, hence, there is no basis for claiming rentals from
the
time
of
actual
taking.http://127.0.0.1:7860/source/2006.zip%3e17e,df|
2006/FEB2006/161836.htm - _ftn#_ftn More explicitly, the Court held in Republic v.
Garcellano that:
The uniform rule of this Court, however, is that this compensation must be, not in the form of
rentals, but by way of 'interest from the date that the company [or entity] exercising the right
of eminent domain take possession of the condemned lands, and the amounts granted by
the court shall cease to earn interest only from the moment they are paid to the owners or
deposited in court x x x.
xxxx
For more than twenty (20) years, the MIAA occupied the subject lot without the benefit of
expropriation proceedings and without the MIAA exerting efforts to ascertain ownership of
the lot and negotiating with any of the owners of the property. To our mind, these are wanton
and irresponsible acts which should be suppressed and corrected. Hence, the award of
exemplary damages and attorneys fees is in order. However, while Rodriguez is entitled to
such exemplary damages and attorneys fees, the award granted by the courts below
should be equitably reduced. We hold that Rodriguez is entitled only to P200,000.00 as
exemplary damages, and attorneys fees equivalent to one percent (1%) of the amount
due.21

Lastly, with regard to the liability of petitioners Vicente P. Eusebio, Lorna A. Bernardo, and
Victor Endriga all officials of the city government the Court cannot uphold the ruling
that said petitioners are jointly liable in their personal capacity with the City of Pasig for
payments to be made to respondents. There is a dearth of evidence which would show that
said petitioners were already city government officials in 1980 or that they had any
involvement whatsoever in the illegal taking of respondents property. Thus, any liability to
respondents is the sole responsibility of the City of Pasig.
IN VIEW OF THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision of the
Court of Appeals dated November 28, 2003 is MODIFIED to read as follows:
1. The valuation of just compensation and award of back rentals made by the
Regional Trial Court of Pasig City, Branch 155 in Civil Case No. 65937 are hereby
SET ASIDE. The City of Pasig, represented by its duly-authorized officials, is
DIRECTED to institute the appropriate expropriation action over the subject parcel of
land within fifteen (15) days from finality of this Decision, for the proper determination
of just compensation due to respondents, with interest at the legal rate of six (6%)
percent per annum from the time of taking until full payment is made.
2. The City of Pasig is ORDERED to pay respondents the amounts of P200,000.00
as exemplary damages and P200,000.00 as attorneys fees.
No costs.
SO ORDERED.

G.R. No. 168967

February 12, 2010

CITY OF ILOILO represented by HON. JERRY P. TREAS, City Mayor, Petitioner,

vs.
HON. LOLITA CONTRERAS-BESANA, Presiding Judge, Regional Trial Court, Branch
32, and ELPIDIO JAVELLANA, Respondents.
DECISION
DEL CASTILLO, J.:
It is arbitrary and capricious for the government to initiate expropriation proceedings, seize a
persons property, allow the order of expropriation to become final, but then fail to justly
compensate the owner for over 25 years. This is government at its most high-handed and
irresponsible, and should be condemned in the strongest possible terms. For its failure to
properly compensate the landowner, the City of Iloilo is liable for damages.

This Petition for Certiorari under Rule 65 of the Rules of Court with a prayer for the issuance
of a temporary restraining order seeks to overturn the three Orders issued by Regional Trial
Court (RTC) of Iloilo City, Branch 32 on the following dates: December 12, 2003 (the First
Assailed Order),1 June 15, 2004 (the Second Assailed Order), 2 and March 9, 2005 (the Third
Assailed Order) (the three aforementioned Orders are collectively referred to as the
Assailed Orders).3
Factual Antecedents
The essential facts are not in dispute.
On September 18, 1981, petitioner filed a Complaint 4 for eminent domain against private
respondent Elpidio T. Javellana (Javellana) and Southern Negros Development Bank, the
latter as mortgagee. The complaint sought to expropriate two parcels of land known as Lot
Nos. 3497-CC and 3497-DD registered in Javellanas name under Transfer Certificate of
Title (TCT) No. T-44894 (the Subject Property) to be used as a school site for Lapaz High
School.5 Petitioner alleged that the Subject Property was declared for tax purposes in Tax
Declaration No. 40080 to have a value of P60.00 per square meter, or a total value
of P43,560.00. The case was docketed as Civil Case No. 14052 and raffled to then Court of
First Instance of Iloilo, Branch 7.
On December 9, 1981, Javellana filed his Answer6 where he admitted ownership of the
Subject Property but denied the petitioners avowed public purpose of the sought-for
expropriation, since the City of Iloilo already had an existing school site for Lapaz High
School. Javellana also claimed that the true fair market value of his property was no less
than P220.00 per square meter. 7
On May 11, 1982, petitioner filed a Motion for Issuance of Writ of Possession, alleging that it
had deposited the amount of P40,000.00 with the Philippine National Bank-Iloilo Branch.
Petitioner claimed that it was entitled to the immediate possession of the Subject Property,
citing Section 1 of Presidential Decree No. 1533, 8 after it had deposited an amount
equivalent to 10% of the amount of compensation. Petitioner attached to its motion a
Certification issued by Estefanio C. Libutan, then Officer-in-Charge of the Iloilo City
Treasurers Office, stating that said deposit was made. 9
Javellana filed an Opposition to the Motion for the Issuance of Writ of Possession 10 citing
the same grounds he raised in his Answer that the city already had a vast tract of land
where its existing school site was located, and the deposit of a mere 10% of the Subject
Propertys tax valuation was grossly inadequate.
On May 17, 1983, the trial court issued an Order 11 which granted petitioners Motion for
Issuance of Writ of Possession and authorized the petitioner to take immediate possession
of the Subject Property. The court ruled:
Premises considered, the Motion for the Issuance of a Writ of Possession dated May 10,
1982, filed by plaintiff is hereby granted. Plaintiff is hereby allowed to take immediate
possession, control and disposition of the properties known as Lot Nos. 3497-CC and 3497DD x x x.12

Thereafter, a Writ of Possession13 was issued in petitioners favor, and petitioner was able to
take physical possession of the properties sometime in the middle of 1985. At no time has
Javellana ever denied that the Subject Property was actually used as the site of Lapaz
National High School. Aside from the filing by the private respondent of his Amended
Answer on April 21, 1984,14 the expropriation proceedings remained dormant.
Sixteen years later, on April 17, 2000, Javellana filed an Ex Parte Motion/Manifestation,
where he alleged that when he finally sought to withdraw the P40,000.00 allegedly
deposited by the petitioner, he discovered that no such deposit was ever made. In support
of this contention, private respondent presented a Certification from the Philippine National
Bank stating that no deposit was ever made for the expropriation of the Subject
Property.15Private respondent thus demanded his just compensation as well as interest.
Attempts at an amicable resolution and a negotiated sale were unsuccessful. It bears
emphasis that petitioner could not present any evidence whether documentary or
testimonial to prove that any payment was actually made to private respondent.
Thereafter, on April 2, 2003, private respondent filed a Complaint 16 against petitioner for
Recovery of Possession, Fixing and Recovery of Rental and Damages. The case was
docketed as Civil Case No. 03-27571, and raffled to Branch 28 of the Iloilo City Regional
Trial Court. Private respondent alleged that since he had not been compensated for the
Subject Property, petitioners possession was illegal, and he was entitled to recovery of
possession of his lots. He prayed that petitioner be ordered to vacate the Subject Property
and pay rentals amounting to P15,000.00 per month together with moral, exemplary, and
actual damages, as well as attorneys fees.
1avvphi1

On May 15, 2003, petitioner filed its Answer,17 arguing that Javellana could no longer bring
an action for recovery since the Subject Property was already taken for public use. Rather,
private respondent could only demand for the payment of just compensation. Petitioner also
maintained that the legality or illegality of petitioners possession of the property should be
determined in the eminent domain case and not in a separate action for recovery of
possession.
Both parties jointly moved to consolidate the expropriation case (Civil Case No. 14052) and
the case for recovery of possession (Civil Case No. 03-27571), 18 which motion was granted
by the trial court in an Order dated August 26, 2003. 19 On November 14, 2003, a
commission was created to determine the just compensation due to Javellana. 20
On November 20, 2003, private respondent filed a Motion/Manifestation dated November
19, 2003 claiming that before a commission is created, the trial court should first order the
condemnation of the property, in accordance with the Rules of Court. Javellana likewise
insisted that the fair market value of the Subject Property should be reckoned from the date
when the court orders the condemnation of the property, and not the date of actual taking,
since petitioners possession of the property was questionable. 21 Before petitioner could file
its Comment, the RTC issued an Order dated November 21, 2003 denying the Motion. 22
Undeterred, Javellana filed on November 25, 2003, an Omnibus Motion to Declare Null and
Void the Order of May 17, 1983 and to Require Plaintiff to Deposit 10% or P254,000.00.
Javellana claimed that the amount is equivalent to the 10% of the fair market value of the

Subject Property, as determined by the Iloilo City Appraisal Committee in 2001, at the time
when the parties were trying to negotiate a settlement. 23
First Assailed Order
On December 12, 2003, the RTC issued the First Assailed Order, which nullified the Order
dated May 17, 1983 (concerning the issuance of a writ of possession over the Subject
Property). The trial court ruled:
x x x the Order dated May 17, 1983 is hereby declared null and void and the plaintiff [is]
hereby ordered to immediately deposit with the PNB the 10% of the just compensation after
the Commission shall have rendered its report and have determined the value of the
property not at the time it was condemned but at the time the complaint was filed in
court.24 (Emphasis ours)
Second Assailed Order
Neither party sought reconsideration of this Order.25 Nonetheless, about six months later,
the RTC issued the Second Assailed Order, which it denominated as an "Amended Order".
The Second Assailed Order was identical to the first, except that the reckoning point for just
compensation was now the "time this order was issued," which is June 15, 2004.
x x x the Order dated May 17, 1983 is hereby declared null and void and the plaintiff [is]
hereby ordered to immediately deposit with the PNB the 10% of the just compensation after
the Commission shall have rendered its report and have determined the value of the
property not at the time it was condemned but at the time this order was
issued. (Underscoring in original text)
This time, petitioner filed a Motion for Reconsideration claiming that there was no legal
basis for the issuance of the Second Assailed Order.26 Javellana opposed, arguing that
since the May 17, 1983 Order and the Second Assailed Order were interlocutory in
character, they were always subject to modification and revision by the court anytime. 27
Third Assailed Order
After the parties were able to fully ventilate their respective positions, 28 the public
respondent issued the Third Assailed Order, denying the Motion for Reconsideration, and
ruling as follows:
The Order dated June 15, 2004 among other things stated that parties and counsels must
be bound by the Commissioners Report regarding the value of the property not at the time
it was condemned but at the time this order was issued.
This is true inasmuch as there was no deposit at the PNB and their taking was illegal.
The plaintiff thru [sic] Atty. Laurea alleged that this Court had a change of heart and issued
an Amended Order with the same wordings as the order of December 12, 2003 but this time
stated not at the time it was condemned but at the time the order was issued. Naturally, this

Court in the interest of justice, can amend its order because there was no deposit by
plaintiff.
The jurisprudence cited by plaintiff that the just compensation must be determined as of the
date of the filing of the complaint is true if there was a deposit. Because there was none the
filing was not in accordance with law, hence, must be at the time the order was issued.
The allegation of defendant thru [sic] counsel that the orders attacked by plaintiff thru [sic]
counsel saying it has become final and executory are interlocutory orders subject to the
control of the Judge until final judgment is correct. Furthermore, it is in the interes[t] of
justice to correct errors.29
In the meantime, on April 15, 2004, the Commission submitted its Report, providing the
following estimates of value, but without making a proper recommendation: 30
Reckoning
Point

Value per
square meter

Fair Market Value

Basis

1981 - at the
time the
complaint was
filed

P110.00/sqm

P79,860.00

based on three or more recorded

sales of similar types of land in
the vicinity in the same year

1981 at the
time the
complaint was
filed

P686.81/sqm

P498,625.22

Appraisal by Southern Negros

Development Bank based on
market value, zonal value,
appraised value of other banks,
recent selling price of
neighboring lots

2002

P3,500.00/sqm

P2,541,000.00

Appraisal by the City Appraisal

Committee, Office of the City
Assessor

2004

P4,200.00/sqm

Private Appraisal Report (Atty.

PhP3,049,200.00 Roberto Cal Catolico dated April
6, 2004)

Hence, the present petition.

Petitioners Arguments
Petitioner is before us claiming that (1) the trial court gravely abused its discretion
amounting to lack or excess of jurisdiction in overturning the Order dated May 17, 1983,
which was already a final order; and (2) just compensation for the expropriation should be
based on the Subject Propertys fair market value either at the time of taking or filing of the
complaint.

Private Respondents Arguments

Private respondent filed his Comment on October 3, 2005, 31 arguing that (1) there was no
error of jurisdiction correctible by certiorari; and (2) that the Assailed Orders were
interlocutory orders that were subject to amendment and nullification at the discretion of the
court.
Issues
There are only two questions we need answer, and they are not at all novel. First, does an
order of expropriation become final? Second, what is the correct reckoning point for the
determination of just compensation?
Our Ruling
Expropriation proceedings have two stages. The first phase ends with an order of dismissal,
or a determination that the property is to be acquired for a public purpose. 32 Either order will
be a final order that may be appealed by the aggrieved party.33 The second phase consists
of the determination of just compensation. 34 It ends with an order fixing the amount to be
paid to the landowner. Both orders, being final, are appealable. 35
An order of condemnation or dismissal is final, resolving the question of whether or not the
plaintiff has properly and legally exercised its power of eminent domain. 36 Once the first
order becomes final and no appeal thereto is taken, the authority to expropriate and its
public use can no longer be questioned.37
1avvphi1

Javellana did not bother to file an appeal from the May 17, 1983 Order which granted
petitioners Motion for Issuance of Writ of Possession and which authorized petitioner to
take immediate possession of the Subject Property. Thus, it has become final, and the
petitioners right to expropriate the property for a public use is no longer subject to review.
On the first question, therefore, we rule that the trial court gravely erred in nullifying the May
17, 1983 Order.
We now turn to the reckoning date for the determination of just compensation. Petitioner
claims that the computation should be made as of September 18, 1981, the date when the
expropriation complaint was filed. We agree.
In a long line of cases, we have constantly affirmed that:
x x x just compensation is to be ascertained as of the time of the taking, which usually
coincides with the commencement of the expropriation proceedings. Where the institution of
the action precedes entry into the property, the just compensation is to be ascertained as of
the time of the filing of the complaint. 38
When the taking of the property sought to be expropriated coincides with the
commencement of the expropriation proceedings, or takes place subsequent to the filing of
the complaint for eminent domain, the just compensation should be determined as of the
date of the filing of the complaint.39 Even under Sec. 4, Rule 67 of the 1964 Rules of

Procedure, under which the complaint for expropriation was filed, just compensation is to be
determined "as of the date of the filing of the complaint." Here, there is no reason to depart
from the general rule that the point of reference for assessing the value of the Subject
Property is the time of the filing of the complaint for expropriation. 40
Private respondent claims that the reckoning date should be in 2004 because of the "clear
injustice to the private respondent who all these years has been deprived of the beneficial
use of his properties."
We commiserate with the private respondent. The school was constructed and has been in
operation since 1985. Petitioner and the residents of Iloilo City have long reaped the
benefits of the property. However, non-payment of just compensation does not entitle the
private landowners to recover possession of their expropriated lot. 41
Concededly, Javellana also slept on his rights for over 18 years and did not bother to check
with the PNB if a deposit was actually made by the petitioner. Evidently, from his inaction in
failing to withdraw or even verify the amounts purportedly deposited, private respondent not
only accepted the valuation made by the petitioner, but also was not interested enough to
pursue the expropriation case until the end. As such, private respondent may not recover
possession of the Subject Property, but is entitled to just compensation. 42 It is high time that
private respondent be paid what was due him after almost 30 years.
We stress, however, that the City of Iloilo should be held liable for damages for taking
private respondents property without payment of just compensation. In Manila International
Airport Authority v. Rodriguez, 43 the Court held that a government agencys prolonged
occupation of private property without the benefit of expropriation proceedings undoubtedly
entitled the landowner to damages:
Such pecuniary loss entitles him to adequate compensation in the form of actual or
compensatory damages, which in this case should be the legal interest (6%) on the
value of the land at the time of taking, from said point up to full payment by the
MIAA. This is based on the principle that interest "runs as a matter of law and follows from
the right of the landowner to be placed in as good position as money can accomplish, as of
the date of the taking x x x.
xxxx
For more than twenty (20) years, the MIAA occupied the subject lot without the benefit of
expropriation proceedings and without the MIAA exerting efforts to ascertain ownership of
the lot and negotiating with any of the owners of the property. To our mind, these are
wanton and irresponsible acts which should be suppressed and corrected.
Hence, the award of exemplary damages and attorneys fees is in order. x x
x.44 (Emphasis supplied)
WHEREFORE, the petition is GRANTED. The Orders of the Regional Trial Court of Iloilo
City, Branch 32 in Civil Case No. 14052 and Civil Case No. 03-27571 dated December 12,
2003, June 15, 2004, and March 9, 2005 are hereby ANNULLED and SET ASIDE.

The Regional Trial Court of Iloilo City, Branch 32 is DIRECTED to immediately determine
the just compensation due to private respondent Elpidio T. Javellana based on the fair
market value of the Subject Property at the time Civil Case No. 14052 was filed, or on
September 18, 1981 with interest at the legal rate of six percent (6%) per annum from the
time of filing until full payment is made.
The City of Iloilo is ORDERED to pay private respondent the amount of P200,000.00 as
exemplary damages.
SO ORDERED.

REPUBLIC OF THE PHILIPPINES,

Petitioner,
- versus 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,
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) Resolution [1]dated July 12,
2005 which, in part, dismissed the Complaint for Expropriation of
the Republic for the latters 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 Cabildoassail the Decision[3] 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) Order [7] 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 Garnishment[9] both dated August 11, 2004, and (4)
Notification[10] 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 Resolution[12] 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 RTCBranch 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) Order[14] dated December 13, 2005 dismissing the Complaint
in Civil Case No. 6686; and (2) Order [15] 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
States[16] (1914 Cacho case).

The 1914 Cacho Case

Sometime in the early 1900s, the late Doa Demetria Cacho

(Doa 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, MoroProvince, which
later became Sitio Nunucan, then Brgy. Suarez, in Iligan City,
Lanao del Norte. Doa Demetrias 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. Doa
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. Doa 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 Doa Demetrias 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 applicants 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
concluded that:

No.

6909,

the

LRC

observed

and

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, Doa 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

Doa 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, Seor Dionisio Vidal. Having arrived
late, Seor Vidal did not assist in the ocular inspection,
which was fixed for 3 oclock, 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 30 th 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,

Doa 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 Doa Demetrias 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.

Teofilos 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 Teofilos
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
Teofilos amended petition and to hear it as one for re-issuance of
decrees.

In opposing Teofilos 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 Doa Demetria was not the registered owner of the subject
parcels of land; that no decrees were ever issued in Doa

Demetrias name; and that the issuance of the decrees was

dubious and irregular.

After trial, on June 9, 1993, the RTC rendered its Decision

granting Teofilos petition and ordering the reconstitution and reissuance 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 reissuance 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
inconclusive.[21]

effectively

renders

the

decree

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
Teofilos Affidavit of Adjudication as Doa Demetrias 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 Doa
Demetrias 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 Doa Demetrias 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.

II
THE ANTECENT FACTS
OF THE PETITIONS AT BAR

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
latters mortgagee, the Philippine National Bank (PNB). The
Complaint was docketed as Civil Case No. 106 and raffled to RTCBranch 1, presided over by Judge Mangotara.

ISA was created pursuant to Presidential Decree No.

2729[24] 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 RTCBranch 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
Order[27] 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, 2004[28] seeking to implead in Civil Case No. 106
Teofilo Cacho and Demetria Vidal and their respective successorsin-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 Doa 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 Doa Demetrias 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 Doa Demetria.

AZIMUTH, for its part, filed the Petition as Vidals successorin-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 Cachocase;
and that the Petition was barred by the Statute of Limitations and
laches.

LANDTRADE, among other parties, was allowed by the RTCBranch 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

Decision[33] 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 Doa 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-ininterest 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
damages
b) For
damages
c) For
damages
d) For
damages
-

temperate
-

P 80,000.00
nominal

P 60,000.00
moral
-

P500,000.00
exemplary
P 500,000.00

e) For
P1,000,000.00

attorney's

fees

f) For
fees

(ACCRA

Law)-

Attorney's
-

P500,000.00
(Atty. Voltaire Rovira)

g) For
expenses
-

litigation
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 Decision [35] of January 19,
2007, affirmed in toto the Decision dated July 17, 2004 of the RTCBranch 3.

According to the Court of Appeals, the RTC-Branch 3 did not

err in resolving the issue on Vidals 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 RTCBranch 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 RTCBranch 3 that the evidence on record preponderantly supports
Vidals claim of being the granddaughter and sole heiress of the
late Doa 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. Vidals rights as Doa Demetrias successor-ininterest accrued upon the latters death in 1974, and only 24
years thereafter, in 1998, Vidal already filed the present Petition
for Quieting of Title. Thus, Vidals 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 Decision [39] 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 codefendant TRANSCO represented by its President Dr. Allan
T. Ortiz and Engr. Lorrymir A. Adaza, Manager, NAPOCORMindanao, 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 attorneys 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 RTCBranch 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

Order[42] 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 Order[43] 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

Appeal[44] 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 Notification [46] 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

TRO[47] 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 Decision [48] 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
asupersedeas 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 RTCBranch 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 Resolution[52] 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
TRANSCOs] 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. 17335556. 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 Resolution[54] 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-inIntervention, 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 Doa 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. 01200 (a.f.) and 0-1201 (a.f.), as issued, are null and void
since the technical descriptions vis--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

Order[57] 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

Order[58] 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 Doa

Demetria committed any wrongful act or omission in violation of

any right of the Republic. Doa 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 Doa 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 Doa
Demetrias name and the1997 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 RTCBranch 4 in its Order[59] 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 RTCBranch 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
[60]
THE REGIONAL TRIAL COURT OF ILIGAN CITY.

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 Appeals[61] (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 certiorariunder 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
ofcertiorari 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 30day 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

expropriation proceedings

the

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 courts 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-ininterest, 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 nonjoinder of parties is not a ground for the dismissal of an action.

Rule 67, Section 1 of the then Rules of Court [72] 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 Appeals[74]:

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. 1277[75] 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
supplied.)

failure

to

comply.

(Emphasis

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
[78]
Reversion
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 Expropriation [79] 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
Shopping[81] attached to the Supplemental Complaint for
Expropriation did not disclose the filing of the Complaint for
Cancellation of Titles and Reversion. Notwithstanding such nondisclosure, 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 pen
dentia 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 01201 (a.f.), which was entered into registration on December 4,
1998 in Doa Demetrias name, on the argument that the parcels
of land covered by said certificates exceeded the areas granted
by the LRC to Doa Demetria in GLRO Record Nos. 6908 and
6909, as affirmed by this Court in the 1914 Cacho case.

Expropriation vis--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 RTCBranch 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 Vidals status as Doa
Demetrias 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 RTCBranch 3 and the Court of Appeals, with which the Court fully
concurs.

Jurisdiction vis--vis
of jurisdiction

exercise

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.
Palang[84] (Agapay case) and Heirs of Guido Yaptinchay and Isabel
Yaptinchay v. Del Rosario[85] (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 Vidals 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 Vidals status,
filiation, and heirship, in exercise of its jurisdiction. Any alleged
erroneous finding by the RTC-Branch 3 concerning Vidals 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 Vidals 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 Miguels 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, Miguels 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 Erlindas 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 Palangs

status and claim as an illegitimate son and heir to
Miguels estate is here resolved in favor of respondent
courts correct assessment that the trial court erred in
making pronouncements regarding Kristophers 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 ExtraJudicial 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. GoldenBay 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. Rivera[91] 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.

[94]

The Court, in Heirs of Eugenio Lopez, Sr. v. Enriquez,

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 anothers 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
Cristobal[96] that:

expounded

further

in Spouses

Portic

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 remjudgment 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.)

v.

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 thedeclaration of the
petitioners 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 persons name. OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.),
covering the subject properties, are still in Doa Demetrias
name. Vidal and Teofilo each claims to have inherited the two
parcels of land from the late Doa Demetria as said decedents
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
Doa Demetrias sole heir. The cloud on Vidals title, which she
sought to have removed, was Teofilos adverse claim of title to the
same properties, also as Doa Demetrias 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 Doa Demetrias 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-Beltran[99] (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 casesubject
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
Portugals 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

Appeals[102] (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 Appeals[103] (Fidel case), therein

respondents, the heirs of the late Vicente Espineli (Vicente) from
his first marriage, instituted an action to annul the sale of
Vicentes property to therein petitioners, the spouses Fidel. The
subject property was sold to petitioners by Vicentes heirs from
his second marriage. Even though ones 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 Vicentes 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 Doa 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 Vidals 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, Teofilos title to the same properties, as Doa
Demetrias 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
petitioners 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 indeedDoa Demetrias 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 Doa Demetrias sole heir. They failed
to appreciate that the1997 Cacho case involved Teofilos petition
for reconstitution of title, treated as a petition for the reissuance of Decree Nos. 10364 and 18969. The grant by the
RTC of Teofilos 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 Teofilos 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 Teofilos legal interest in filing a petition for the reissuance of the lost decrees. The Court merely found therein that
Teofilos Affidavit of Adjudication, executed in the U.S.A. before
the Philippine Consulate General, enjoyed the presumption of
regularity and, thus, sufficiently established Teofilos legal
interest. The 1997 Cacho case, however, did not conclusively
settle that Teofilo is indeed Doa Demetrias only heir and the
present owner, by right of succession, of the subject properties.

Factual findings of the RTCBranch 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
Doa Demetria. LANDTRADE, Teofilo, and/or Atty. Cabildo
particularly challenged the reliance of the RTC-Branch 3 on
Vidals baptismal certificate, arguing that it has no probative
value and is not conclusive proof of filiation.

Alternative means of proving an individuals 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 Sampayos collateral relatives, filed a petition for
partition of the subject property, plus damages. To prove that
they were collaterally related to Sampayo through the latters
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
Sampayos 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 parents admission of
such legitimate filiation in a public or private document

duly signed by the parent. Such other proof of ones

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, Vidals 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 Vidals
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 Doa Demetria Cacho. To prove
that, indeed, she is the sole surviving heir of the late
Doa 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 Drivers 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 Vidals 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 Doa 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, Seor 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 Vidals own

testimony that at the time of Doa 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 Vidals father
died during the war. Petitioners 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 Doa Demetria Cacho. The following facts and
circumstances negate the impression that he is the son,
as he claims to be, of Doa Demetria Cacho. Thus:

a)

Doa Demetria Cacho was married to Don

Dionisio Vidal, and thus her full name was
Doa 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 Doa Demetria Cacho was already 50
years old).

c)

The Cacho Family Tree (Exh. D) (that is,

the Cacho Family to which Doa 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 Doa 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 Doa 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 Doa 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 Doa 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 Doa
Demetria Cacho Vidal, has no hereditary rights to the
Subject Property left by Doa Demetria Cacho Vidal. He
failed to show any evidence that he is the son of the late
Doa 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 Doa Demetria
Cacho Vidal, respondent Cacho committed false
pretenses and fraudulent acts in representing himself as
son and sole heir of Doa Demetria Cacho (Vidal) in his
petition in court, which eventually led to the
reconstitution of the titles of Doa 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
Teofilos attack on the factual findings of the trial court:

[T]he material facts sought to be established by the aforementioned 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 DOA 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, TEOFILOs
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 DOA 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 Kings
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 DOA 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. Doa
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 Teofilos adverse claim to the same properties, supposedly, also
as Doa Demetrias 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.

Acquisitive prescription of dominion and real rights may be

ordinary or extraordinary. [116]

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 Doa
Demetrias 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 Doa Demetrias estate, is not even
annotated on the OCTs. Worse, LANDTRADE is not dealing directly
with Teofilo, but only with the latters 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 dueo, 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
occupants 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 Doa
Demetria, who alone has rights to and interest in the subject
parcels of land; (b) AZIMUTH is Vidals 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 Doa 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 17356364 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 supersedeasbonds
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 nonprofit and shall devote all its returns from its capital
investment, as well as excess revenues from its
operation, for expansionthe 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 Sheriffs 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
courts
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 courts 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 formers 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.
Santiago[128] 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 esseand 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 Appeals[130] sets forth the following

elucidation on the applicability of Rule 58 vis--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. Avendao 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 RTCBranch 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
Borress 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 Doa Demetrias sole heir, who
alone inherits Doa Demetrias 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
Doa 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 PETITIONERS 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 PETITIONERS 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 RTCBranch 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 Doa 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 Doa Demetrias
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
defendants 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. [134] In Estate of the
Late Jesus S. Yujuico v. Republic[135] (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
land[137] 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 01201 (a.f.), issued in Doa Demetrias 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 Doa Demetrias name were privately owned even
prior to their registration. While the Republic does not dispute
that that two parcels of land were awarded to Doa 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 Doa Demetrias name 84 years later. If, indeed, the parcels of
land covered by said OCTs were not those granted to Doa
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 Doa Demetrias

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 Doa 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
Doa Demetrias 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

Nio 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. Nio
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 Doa 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 Doa Demetrias 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 Doa
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 Doa 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 Doa
Demetrias 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 Doa Demetrias 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 Doa
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 Doa 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 fullblown 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 courts 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 officers 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 judicatain
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

Appeals[159] the
indefeasibility
of
a
decree
of
registration/certificate of title vis--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
Justice Relova declared for the Court:

in Republic

v. Mina, where

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 Piero, 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 Piero 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 registrants
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.

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
grantees 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 Doa Demetrias
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 01201 (a.f.), in Doa Demetrias 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. No costs.
SO ORDERED.
LAND
BANK
OF
PHILIPPINES,
Petitioner,

- versus -

THE

G.R. No. 170685

Present:
CORONA, C. J., Chairperson,
CARPIO MORALES,
VELASCO, JR.,
DEL CASTILLO, and
PEREZ, JJ.

ENRIQUE LIVIOCO,
Respondent.

Promulgated:

DEL CASTILLO, J.
When the evidence received by the trial court are irrelevant to the issue of just
compensation and in total disregard of the requirements provided under Section 17 of the
Comprehensive Agrarian Reform Law, the Court is left with no evidence on record that
could aid in the proper resolution of the case. While remand is frowned upon for
obviating the speedy dispensation of justice, it becomes necessary to ensure compliance
with the law and to give everyone the landowner, the farmers, and the State their due.
This is a Petition for Review under Rule 45, assailing the August 30, 2005
Decision[1] of the Court of Appeals (CA), as well as its December 5, 2005 Resolution[2] in
CA-GR SP No. 83138. The dispositive portion of the assailed Decision reads as follows:
WHEREFORE, premises considered, the petition is
DENIED. The Decision dated January 29, 2004 and the Order dated March
16, 2004 of the RTC, Branch 56, Angeles City in Civil Case No. 10405 are
hereby AFFIRMED.[3]

Factual Antecedents
Petitioner Land Bank of the Philippines (LBP) is the government financial
institution[4] established to aid in the implementation of the Comprehensive Agrarian
Reform Program (CARP) as well as to act as financial intermediary of the Agrarian
Reform Fund.[5]
Respondent Enrique Livioco (Livioco) was the owner of 30.6329 hectares of
sugarland[6] located in Dapdap, Mabalacat, Pampanga. Sometime between 1987 and
1988,[7] Livioco offered his sugarland to the Department of Agrarian Reform (DAR) for
acquisition under the CARP at P30.00 per square meter, for a total

of P9,189,870.00. The voluntary-offer-to-sell (VOS) form[8] he submitted to the DAR

indicated that his property is adjacent to residential subdivisions and to an international
paper mill.[9]
The DAR referred Liviocos offer to the LBP for valuation.[10] Following Section
17 of Republic Act (RA) No. 6657 and DAR Administrative Order No. 17, series of
1989,[11] as amended by Administrative Order No. 3, series of 1991, [12] the LBP set the
price at P3.21 per square meter or a total of P827,943.48 for 26 hectares.[13] Livioco was
then promptly informed of the valuation [14] and that the cash portion of the claim
proceeds have been kept in trust pending [his] submission of the [ownership
documentary] requirements.[15] It appears however that Livioco did not act upon the
notice given to him by both government agencies. On September 20, 1991, LBP issued a
certification to the Register of Deeds of Pampanga that it has earmarked the amount
of P827,943.48 as compensation for Liviocos 26 hectares.[16]
It was only two years later[17] that Livioco requested for a reevaluation of the
compensation on the ground that its value had already appreciated from the time it was
first offered for sale.[18] The request was denied by Regional Director Antonio Nuesa on
the ground that there was already a perfected sale.[19]
The DAR proceeded to take possession of Liviocos property. In 1994, the DAR
awarded Certificates of Land Ownership Award (CLOAs) covering Liviocos property to
26 qualified farmer-beneficiaries.[20]
Livioco filed separate complaints to cancel the CLOAs and to recover his
property but the same proved futile. The first case he filed in 1995 was for quieting of
title, recovery of possession and damages against the DAR, LBP, Register of Deeds, and
the farmer-beneficiaries.[21] In its final and executory Decision,[22] the CA sustained the
validity of the CLOAs.[23] The relevant portions of the Decision read:
What matters most is the fact that the requirements for Compulsory
Acquisition of private lands, especially the indispensable ones, to wit: (1) valuation of
the subject property by the proper government agency which is the LBP; (2) DARs

Notice of Land Valuation to petitioner and; (3) most importantly, the deposit of the
amount of land valuation in the name of petitioner after he rejected the said amount, were
substantially complied with in the instant case.
Considering therefore that there was material and substantial compliance with
the requirements for the Compulsory Acquisition of the subject land, the acquisition of
the same is indubitably in order and in accordance with law.[24]

Livioco then filed in 1998 a petition for reconveyance before the DAR Regional
Office.[25] The case eventually reached the CA, which dismissed the petition on the
ground that the validity of the compulsory acquisition had already been decided with
finality in the earlier CA case, to wit:
As the disputed property was eventually acquired through
Compulsory Acquisition, its reconveyance to the petitioners was properly
disallowed by the DAR. The certifications by other government agencies that
the land was identified as a resettlement area [are] of no avail as the DAR is
vested with primary jurisdiction to determine and adjudicate agrarian reform
matters and has exclusive original jurisdiction over all matters involving the
implementation of agrarian reform.
xxxx
Indeed, it is to the best interest of the public that the litigation
regarding the reconveyance of the disputed property between the same parties
for the same grounds must come to an end, the matter having [been] already
fully and fairly adjudicated by the DAR, this Court and the Supreme Court
which had declined to disturb the judgment of this Court.[26]

Upon the request of DAR, LBP made two amendments to the valuation. At first,
they reduced the acquired area from 30.6329 hectares to 23.9191 hectares. Later, they
increased the acquired area to 24.2088 hectares. The remaining 6.4241 hectares of the
property was determined as not compensable because this comprised a residential area, a
creek, road, and a chapel.[27] The total value for 24.2088 hectares
wasP770,904.54. Livioco was informed on August 8, 2001 that the payment was

already deposited in cash and agrarian reform bonds and may be withdrawn upon
submission of the documentary requirements.[28]
Unable to recover his property but unwilling to accept what he believes was an
outrageously low valuation of his property, Livioco finally filed a petition for judicial
determination of just compensation against DAR, LBP, and the CLOA holders before
Branch 56 of the Regional Trial Court (RTC) of Angeles City on December 18, 2001.
[29]
He maintained that between 1990 and 2000, the area where his property is located has
become predominantly residential hence he should be paid his propertys value as
such. To prove that his property is now residential, Livioco presented a Certification
from the Office of the Municipal Planning and Development Coordinator of the
Municipality of Mabalacat that, as per zoning ordinance, Liviocos land is located in an
area where the dominant land use is residential.[30] He also presented certifications from
the Housing and Land Use Regulatory Board,[31] the Mt. Pinatubo Commission,[32] and
the National Housing Authority[33] that his property is suitable for a resettlement area or
for socialized housing. None of these plans pushed through.
Livioco then presented evidence to prove the value of his property as of
2002. According to his sworn valuation, his property has a market value
of P700.00/square meter.[34] He also presented the Bureau of Internal Revenue (BIR)
zonal value for residential lands in Dapdap, as ranging from P150.00 to P200.00/square
meter.[35] He then presented Franklin Olay (Olay), chief appraiser of the Rural Bank of
Mabalacat, who testified[36] and certified[37] that he valued the property at P800.00 per
square meter, whether or not the property is residential. Olay explained that he arrived at
the said value by asking the buyers of adjacent residential properties as to the prevailing
selling price in the area.[38] There was also a certification from the Pinatubo Project
Management Office that Liviocos property was valued at P300.00/square meter.
[39]
Livioco prayed that just compensation be computed at P700.00/square meter.[40]
Only LBP filed its Answer[41] and participated in the trial. It justified
the P3.21/square meter valuation of the property on the ground that it was made pursuant
to the guidelines in RA 6657 and DAR Administrative Order No. 3, series of 1991. LBP

objected to respondents theory that his property should be valued as a residential

land because the same was acquired for agricultural purposes, not for its potential for
conversion to other uses.[42] LBP presented its agrarian affairs specialist who
testified[43] that, due to the increase in the acquired area, she was assigned to amend the
claim of Livioco. She computed the total value thereof at P770,904.54, using the DAR
Administrative Order No. 3, series of 1991.[44] The only other witness of LBP was its
lawyer, who explained the legal basis for the DAR administrative orders and the factors
for land valuation provided in Section 17 of RA 6657.[45]
Ruling of the Regional Trial Court
Apparently aware that neither party presented relevant evidence for the proper
computation of the just compensation, the trial court issued its April 2, 2003 Order
requiring the reception of additional evidence:
A perusal of the record of this case as well as the evidence adduced
by the parties shows that the facts required for the proper computation and/or
determination of just compensation for the plaintiffs property i.e., land value
of the property in accordance with the Listasaka, capitalized net income,
comparable sales and market value pursuant to the corresponding tax
declaration, are unavailable and insufficient.
WHEREFORE, for the Court to properly determine and fix the just
compensation to be accorded to [respondents] property, the reopening of this
case for the purpose of the presentation of additional evidence is hereby
ordered.
Let the reception of aforesaid additional evidence be set on April
22, 2003 at 8:30 am.
x x x x[46]

Based on the records, the next hearing took place on July 10, 2003 where none of the
parties presented additional evidence, whether testimonial or documentary.
[47]
Nevertheless, the trial court proceeded to rule in favor of Livioco:

WHEREFORE, premises considered, the Court hereby renders

judgment in favor of the [respondent], Enrique Livioco, and against the
Department of Agrarian Reform and the Land Bank of the Philippines with a
determination that the just compensation of Liviocos property, consisting of
24.2088 hectares located at Mabalacat, Pampanga is worth Php700.00 per
square meter.
Defendants Department of Agrarian Reform and Land Bank of the
Philippines are, therefore, ordered to pay [respondent] the amount of
Php700.00 per square meter multiplied by 24.2088 hectares representing the
entire area taken by the government from the plaintiff.[48]

The trial court was of the opinion that Livioco was able to prove the higher valuation of
his property with a preponderance of evidence. In contrast, there was a dearth of
evidence to support LBPs P3.21 per square meter valuation of the property. Not a single
documentary evidence was presented to substantiate its valuation.
LBP sought a reconsideration[49] of the adverse decision arguing that the court
should have considered the factors appearing in Section 17. It stressed that in failing to
consider the propertys productive capacity (capitalized net income), the court placed the
farmer-beneficiaries in a very difficult position. They would not be able to pay off the
just compensation for their lands because it is valued way beyond its productive
capacity. The same was denied by the trial court.[50]
Upon respondents motion, the lower court ordered LBP on March 29, 2004 to
release as initial cash down payment the amount of P827,943.48, inclusive of legal
interest accruing from the time of taking on September 20, 1991 (the date when LBP
informed the Register of Deeds that it has earmarked the said amount in favor of
Livioco).[51]
LBP sought a reconsideration of the said order. It clarified that the just
compensation deposited by LBP in the account of respondent was only P770,904.54 for
the 24.2088 hectares. It likewise asked that the release of the deposit be subject to

respondents compliance with the release requirements of the ownership documents.

[52]
The records are silent as to the courts action on the motion as well as to the execution
of this order.
Ruling of the Court of Appeals[53]
Petitioner turned to the CA to no avail. The CA affirmed the trial courts
decision in toto. First it held that factual findings of the trial courts are entitled to
respect. It held that the factors for determining just compensation, set out in Section 17
of RA 6657, were all considered by the trial court in arriving at its decision. It stated that
among the relevant evidence considered were Liviocos sworn valuation, tax
declarations, zonal value, actual use of the property, and the socio-economic benefits
contributed by the government to the property. It likewise noted that the taking of
Liviocos property coincided with the Mt. Pinatubo eruption in 1991, which event
affected its valuation.[54] Pursuant to Section 18(1)(b) of RA 6657, the CA ordered LBP
to pay 30% of the purchase price in cash, while the balance may be paid in government
financial instruments negotiable at any time.[55]
A motion for reconsideration[56] was filed on September 29, 2005, which was
denied in a Resolution[57] dated December 5, 2005.
Hence, this petition.
Petitioners arguments
In this Petition before us, LBP assails the CAs assent to the valuation of
Liviocos property as a residential land. It maintains that it is not the States policy to
purchase residential land. Since the property was acquired under the CARP, it had to be
valued as an agricultural land.[58] Moreover, the assumption that Liviocos property has a
residential use is entirely speculative and baseless because none of the government plans
to use it as a residential land was carried out.[59]

LBP also assails the Decision of the trial court which valued the land as of 1997
when the rule is that just compensation must be valued at the time of taking, which in this
case was in 1988. By considering events that transpired after 1988, the court obviously
relied on factors that were not in existence at the time of taking.[60]
LBP further argues that the trial court should have given more weight to its land
valuation because it is the authorized agency recognized by the legislature as having
expertise on the matter.[61]
LBP insists that the Claim Valuation and Processing Form that it presented before
the appellate court clearly established the area covered, the land use or crop planted, the
average price/hectare and the total value of the subject land. LBP describes this
document as clear and convincing evidence of the correctness of its valuation.[62]
LBP likewise assails the lower courts valuation on the ground that they
disregarded the factors set out in Section 17 of RA 6657 for the determination of just
compensation. It argues that the factors stated in that provision are exclusive and the
courts cannot consider factors that are not included therein.[63]
Respondents arguments
Respondent argues that by seeking a review of the just compensation, LBP is
raising a question of fact, which entails an examination of the probative value of the
evidence presented by the parties.[64] He points out that LBP is merely reiterating the
arguments already presented in its motion for reconsideration before the CA, which
makes the instant petition dilatory.[65]
Respondent then argues that, with respect to the determination of just
compensation, courts are not bound by the findings of administrative agencies such as
LBP. Courts are the final authority in this matter. LBPs valuation is only preliminary
and it has the duty to prove to the trial courts the veracity of its valuation. In the instant

case, the trial court decided based on the evidence presented but found LBPs valuation
unsubstantiated.[66] He then prays for the dismissal of the instant petition for review.[67]
Issue
Was the compensation for respondents property
determined in accordance with law?
Our Ruling
For purposes of just compensation, the fair market value of an expropriated
property is determined by its character and its price at the time of taking. [68] There are
three important concepts in this definition the character of the property, its price, and
the time of actual taking. Did the appellate court properly consider these three concepts
when it affirmed the trial courts decision? We find that it did not.
As to the character of the property
The trial and appellate courts valued respondents property as a residential land
worth P700.00 per square meter. They considered the use for the property as having
changed from agricultural in 1988 (when Livioco offered it to DAR) to residential by
2002 (allegedly due to the eruption of Mt. Pinatubo). Both courts erred in treating the
land as residential and accepting the change in the character of the property, without any
proof that authorized land conversion had taken place.
In expropriation cases (including cases involving lands for agrarian reform), the
propertys character refers to its actual use at the time of taking, [69] not its potential uses.
[70]
Respondent himself admitted that his property was agricultural at the time he offered
it for sale to DAR in 1988. In his letter to the DAR in 1988, respondent manifested that
his land is agricultural and suitable for agricultural purposes, although it stood adjacent to
residential properties.[71] Moreover, it has been conclusively decided by final judgment in
the earlier cases[72] filed by respondent that his property was validly acquired under RA

6657 and validly distributed to agrarian reform beneficiaries. Since the coverage of RA
6657 only extends to agricultural lands, respondents property should be conclusively
treated as an agricultural land and valued as such.
The lower courts erred in ruling that the character or use of the property has
changed from agricultural to residential, because there is no allegation or proof that the
property was approved for conversion to other uses by DAR. It is the DAR that is
mandated by law to evaluate and to approve land use conversions [73] so as to prevent
fraudulent evasions from agrarian reform coverage. Even reclassification [74] and plans for
expropriation[75] by local government units (LGUs) will not ipso facto convert an
agricultural property to residential, industrial or commercial. Thus, in the absence of any
DAR approval for the conversion of respondents property or an actual expropriation by
an LGU, it cannot be said that the character or use of said property changed from
agricultural to residential. Respondents property remains agricultural and should be
valued as such. Hence, the CA and the trial court had no legal basis for considering the
subject propertys value as residential.
Respondents evidence of the value of his land as residential property (which the
lower courts found to be preponderant) could, at most, refer to the potential use of the
property. While the potential use of an expropriated property is sometimes considered in
cases where there is a great improvement in the general vicinity of the expropriated
property,[76] it should never control the determination of just compensation (which
appears to be what the lower courts have erroneously done). The potential use of a
property should not be the principal criterion for determining just compensation for this
will be contrary to the well-settled doctrine that the fair market value of an expropriated
property is determined by its character and its price at the time of taking, not its potential
uses. If at all, the potential use of the property or its adaptability for conversion in the
future is a factor, not the ultimate in determining just compensation.[77]
The proper approach should have been to value respondents property as
an agricultural land, which value may be adjusted in light of the improvements in the
Municipality of Mabalacat. Valuing the property as aresidential land (as the lower courts

have done) is not the correct approach, for reasons explained above. It would also be
contrary to the social policy of agrarian reform, which is to free the tillers of the land
from the bondage of the soil without delivering them to the new oppression of exorbitant
land valuations. Note that in lands acquired under RA 6657, it is the farmer-beneficiaries
who will ultimately pay the valuations paid to the former land owners (LBP merely
advances the payment).[78] If the farmer-beneficiaries are made to pay for lands valued as
residential lands (the valuation for which is substantially higher than the valuation for
agricultural lands), it is not unlikely that such farmers, unable to keep up with payment
amortizations, will be forced to give up their landholdings in favor of the State or be
driven to sell the property to other parties. This may just bring the State right back to the
starting line where the landless remain landless and the rich acquire more landholdings
from desperate farmers.
The CA also erroneously considered the Mt. Pinatubo eruption in 1991 as
converting the use for respondents property from agricultural to residential. We find no
basis for the appellate courts conclusion. First, as already explained, there was no
conversion order from DAR, or even an application for conversion with DAR, to justify
the CAs decision to treat the property as residential. Second, respondent himself testified
that his property was not affected by the volcanic ashfall, [79] which can only mean that its
nature as an agricultural land was not drastically affected. The Mt. Pinatubo eruption
only served to make his property attractive to government agencies as a resettlement area,
but none of these government plans panned out; hence, his property remained
agricultural. Third, the circumstance that respondents property was surrounded by
residential subdivisions was already in existence when he offered it for sale sometime
between 1987 and 1988. The VOS form that respondent accomplished described his
property as being located adjacent to residential subdivisions. It was not therefore a
drastic change caused by volcanic eruption. All together, these circumstances negate the
CAs ruling that the subject property should be treated differently because of the natural
calamity.
As to the price: Applying Section 17 of RA 6657

The trial and appellate courts also erred in disregarding Section 17 of RA

6657 in their determination of just compensation. Section 17 of RA 6657 provides:
Sec. 17. Determination of Just Compensation. In determining just
compensation, the cost of acquisition of the land, the current value of the like
properties, its nature, actual use and income, the sworn valuation by the owner,
the tax declarations, and the assessments made by government assessors shall
be considered. The social and economic benefits contributed by the farmers
and the farmworkers and by the Government to the property as well as the
non-payment of taxes or loans secured from any government financing
institution on the said land shall be considered as additional factors to
determine its valuation.
[80]

Jurisprudence is replete with reminders to special agrarian courts to strictly adhere to the
factors set out in Section 17 of RA 6657.[81]
By issuing its April 2, 2003 Order requiring the reception of additional evidence,
the trial court revealed its awareness of the importance of adhering to Section 17 of RA
6657. It recognized that the evidence presented by the parties were insufficient to arrive
at the just compensation and that the necessary evidence were unavailable for its
consideration. For some reason, however, the trial court proceeded to rule on the case
without actually receiving such relevant evidence. Instead, the trial court, as affirmed by
the CA, ruled in favor of respondent based on preponderance of evidence, regardless of
the fact that the evidence presented by respondent were not really relevant to the factors
mentioned in section 17 of RA 6657.
The CA ruled that the trial court took into account all the factors in Section 17 of
RA 6657. We disagree. Going over the factors in Section 17, it is clear that almost all
were not properly considered and some positively ignored. For instance: (a) The cost of
acquisition was not even inquired into. It would not have been difficult to require
respondent to present evidence of the propertys price when he acquired the same. (b) As
to the nature of the property, it has already been explained that the lower courts
erroneously treated it as residential rather than agricultural. (c) Also, no heed was given
to the current value of like properties. Since respondents property is agricultural in

nature, like properties in this case would be agricultural lands, preferably also
sugarcane lands, within the municipality or adjacent municipalities. But the chief
appraiser of the Rural Bank of Mabalacat testified that he considered the value of
adjacent residential properties, not like properties as required under the law.
Comparing respondents agricultural property to residential properties is not what the law
envisioned. (d) The factor of actual use and income of the property was also
ignored; what was instead considered was the propertys potential use.
Thus, we cannot accept the valuation by the lower courts, as it is not in
accordance with Section 17 of RA 6657. It was based on respondents evidence which
were irrelevant or off-tangent to the factors laid down by Section 17.
However, we also cannot accept the valuation proffered by LBP for lack of proper
substantiation.
LBP argues that its valuation should be given more weight because it is the
recognized agency with expertise on the matter, but this same argument had been struck
down in Landbank of the Philippines v. Luciano.[82] The Court ruled that LBPs
authority is only preliminary and the landowner who disagrees with the LBPs valuation
may bring the matter to court for a judicial determination of just compensation. The
RTCs, organized as special agrarian courts, are the final adjudicators on the issue of just
compensation.[83]
We have ruled in several cases that in determining just compensation, LBP must
substantiate its valuation. In Luciano, the Court held:
LAND BANKs valuation of lands covered by CARL is considered only as an
initial determination, which is not conclusive, as it is the RTC, sitting as a
SAC, that should make the final determination of just compensation, taking
into consideration the factors enumerated in Section 17 of RA 6657 and the
applicable DAR regulations. Land Banks valuation had to be
substantiated during the hearing before it could be considered sufficient
in accordance with Section 17 of RA 6657 and DAR AO No. x x x[84]

It is not enough that the landowner fails to prove a higher valuation for the property; LBP
must still prove the correctness of its claims.[85] In the absence of such substantiation, the
case may have to be remanded for the reception of evidence.[86]
In the case at bar, we find that LBP did not sufficiently substantiate its
valuation. While LBP insists that it strictly followed the statutory provision and its
relevant implementing guidelines in arriving at its valuation, the Court notes the lack of
evidence to prove the veracity of LBPs claims. LBP merely submitted its computation
to the court without any evidence on record, whether documentary or testimonial, that
would support the correctness of the values or data used in such computation.
LBP presented two of its officials, but their testimonies were hardly of any
use. The first witness only testified that she prepared the documents, computed the
value, and had the same approved by her superior. The other testified that LBP follows
Section 17 of RA 6657 and the relevant administrative orders in arriving at its
valuations. LBP also offered in evidence the Claims Valuation and Processing Form to
show the total valuation[87] of the property. The effort was however futile because LBP
did not prove the correctness of the values or data contained in the said Form. The
computation in the Form may be mathematically correct, but there is no way of knowing
if the values or data used in the computation are true. For this Court to accept such
valuation would be jumping to a conclusion without anything to support it.[88]
Remand of the case
Given that both parties failed to adduce evidence of the propertys value as an
agricultural land at the time of taking, it is premature for the Court to make a final
decision on the matter. The barren records of this case leave us in no position to resolve
the dispute. Not being a trier of facts, the Court cannot also receive new evidence from
the parties that would aid in the prompt resolution of this case. We are thus constrained
to remand the case to the trial court for the reception of evidence and determination of
just compensation in accordance with Section 17 of RA 6657.

Guidelines in the remand of the case

The trial court should value the property as an agricultural land.
It is reminded to adhere strictly to the doctrine that just compensation must be
valued at the time of taking. The time of taking[89] is the time when the landowner was
deprived of the use and benefit of his property, such as when title is transferred to the
Republic. In the instant case, the records are silent as to the date when title was
transferred to the Republic. However, we can take guidance from the findings contained
in the final and executory decision in CA-GR SP No. 45486, which ruled on the validity
of the DAR acquisition and is binding on both Livioco and LBP. The said Decision
states that between 1993 and 1994, the Republic[,] through DAR[,] took possession of
the subject portion of [Liviocos] land and awarded the same to [agrarian reform
beneficiaries] who were issued Certificates of Land Ownership Award sometime in
1994.[90]
So as not to lose time in resolving this issue, the Court declares that
the evidence to be presented by the parties before the trial court for the valuation of the
property must be based on the values prevalent in 1994 for like agricultural lands. The
evidence must conform to Section 17 of RA 6657 and, as far as practicable, to DAR
Administrative Order No. 6, series of 1992, as amended by DAR Administrative Order
No. 11, series of 1994.[91]
Given the expertise of the DAR on the matter, due reliance on DAR
Administrative Orders is encouraged; but, as the Administrative Orders themselves
recognize, there are situations where their application is not practicable or possible. If the
cited factors in the DAR Administrative Order are absent, irrelevant, or unavailable, the
trial court should exercise judicial discretion and make its own computation of the just
compensation based on the factors set in Section 17 of RA 6657.
The trial court may impose interest on the just compensation [92] as may be
warranted by the circumstances of the case and based on prevailing jurisprudence.

The trial court is reminded that the practice of earmarking funds and opening
trust accounts has been rejected by the Court for purposes of effecting payment; [93] hence,
it must not be considered as valid payment.
In the event that the respondent had already withdrawn the amount deposited in
the LBP as required by the trial courts March 29, 2004 Order,[94] the withdrawn amount
should be deducted from the final land valuation to be paid by LBP.
In case the release required by the trial courts March 29, 2004 Order has not yet
been effected, the trial courts first order of business should be to require LBPs
immediate compliance therewith.[95]
WHEREFORE, premises considered, the petition is DENIED insofar as it
seeks to have the Land Bank of the Philippines valuation of the subject property
sustained. The assailed August 30, 2005 Decision of the Court of Appeals and its
December 5, 2005 Resolution in CA-G.R. SP No. 83138 are REVERSED and SET
ASIDE for lack of factual and legal basis. Civil Case No. 10405 is REMANDED to
Branch 56 of the Regional Trial Court[96] of Angeles City for reception of evidence on the
issue of just compensation. The trial court is directed to determine the just compensation
in accordance with the guidelines set in this Decision. The trial court is further directed
to conclude the proceedings and to submit to this Court a report on its findings and
recommended conclusions within sixty (60) days from notice of this Decision.[97]
SO ORDERED.
APO FRUITS CORPORATION and HIJO PLANTATION, INC.,
Petitioners,
- versus LAND BANK OF THE PHILIPPINES,
Respondent
BRION, J.:

We resolve the petitioners motion for reconsideration addressing our

Resolution of December 4, 2009 whose dispositive portion directs:
WHEREFORE, the Court denies the petitioners second motion
for reconsideration (with respect to the denial of the award of legal
interest and attorneys fees), and reiterates the decision dated February 6,
2007 and the resolution dated December 19, 2007 of the Third Division.

For a fuller and clearer presentation and appreciation of this Resolution, we hark
back to the roots of this case.
Factual Antecedents
Apo Fruits Corporation (AFC) and Hijo Plantation, Inc. (HPI), together also
referred to as petitioners, were registered owners of vast tracks of land; AFC
owned 640.3483 hectares, while HPI owned 805.5308 hectares. On October 12,
1995, they voluntarily offered to sell these landholdings to the
government via Voluntary Offer to Sell applications filed with the Department of
Agrarian Reform (DAR).
On October 16, 1996, AFC and HPI received separate notices of land
acquisition and valuation of their properties from the DARs Provincial Agrarian
Reform Officer (PARO). At the assessed valuation ofP165,484.47 per hectare,
AFCs land was valued at P86,900,925.88, while HPIs property was valued
at P164,478,178.14. HPI and AFC rejected these valuations for being very low.
In its follow through action, the DAR requested the Land Bank of the
Philippines (LBP) to deposit P26,409,549.86 in AFCs bank account
and P45,481,706.76 in HPIs bank account, which amounts the petitioners then
withdrew. The titles over AFC and HPIs properties were thereafter cancelled, and
new ones were issued on December 9, 1996 in the name of the Republic of
the Philippines.

On February 14, 1997, AFC and HPI filed separate petitions for
determination of just compensation with the DAR Adjudication Board (DARAB).
When the DARAB failed to act on these petitions for more than three years, AFC
and HPI filed separate complaints for determination and payment of just
compensation with the Regional Trial Court (RTC) of Tagum City, acting as
a Special Agrarian Court. These complaints were subsequently consolidated.
On September 25, 2001, the RTC resolved the consolidated cases, fixing the
just
compensation
for
the
petitioners 1,338.6027
hectares
of
land[1] at P1,383,179,000.00, with interest on this amount at the prevailing market
interest rates, computed from the taking of the properties on December 9, 1996
until fully paid, minus the amounts the petitioners already received under the initial
valuation. The RTC also awarded attorneys fees.
LBP moved for the reconsideration of the decision. The RTC, in its order of
December 5, 2001, modified its ruling and fixed the interest at the rate of 12%
per annum from the time the complaint was filed until finality of the
decision. The Third Division of this Court, in its Decision of February 6, 2007,
affirmed this RTC decision.
On motion for reconsideration, the Third Division issued its Resolution of
December 19, 2007, modifying its February 6, 2007 Decision by deleting the 12%
interest due on the balance of the awarded just compensation. The Third Division
justified the deletion by the finding that the LBP did not delay the payment of just
compensation as it had deposited the pertinent amounts due to AFC and HPI
within fourteen months after they filed their complaints for just compensation with
the RTC. The Court also considered that AFC had already collected
approximately P149.6
million,
while
HPI
had
already
collected
approximately P262 million from the LBP. The Third Division also deleted the
award of attorneys fees.

All parties moved for the reconsideration of the modified ruling. The Court
uniformly denied all the motions in its April 30, 2008 Resolution. Entry of
Judgment followed on May 16, 2008.
Notwithstanding the Entry of Judgment, AFC and HPI filed the following
motions on May 28, 2008: (1) Motion for Leave to File and Admit Second Motion
for Reconsideration; (2) Second Motion for Reconsideration, with respect to the
denial of the award of legal interest and attorneys fees; and (3) Motion to Refer
the Second Motion for Reconsideration to the Honorable Court En Banc.
The Third Division found the motion to admit the Second Motion for
Reconsideration and the motion to refer this second motion to the Court En
Banc meritorious, and accordingly referred the case to the Court En Banc. On
September 8, 2009, the Court En Banc accepted the referral.
The Court En Banc Resolution
On December 4, 2009, the Court En Banc, by a majority vote, denied the
petitioners second motion for reconsideration based on two considerations.
First, the grant of the second motion for reconsideration runs counter to the
immutability of final decisions. Moreover, the Court saw no reason to recognize
the case as an exception to the immutability principle as the petitioners private
claim for the payment of interest does not qualify as either a substantial or
transcendental matter or an issue of paramount public interest.
Second, on the merits, the petitioners are not entitled to recover interest on
the just compensation and attorneys fees because they caused the delay in the
payment of the just compensation due them; they erroneously filed their
complaints with the DARAB when they should have directly filed these with the
RTC acting as an agrarian court. Furthermore, the Court found it significant that
the LBP deposited the pertinent amounts in the petitioners favor within fourteen

months after the petitions were filed with the RTC. Under these circumstances, the
Court found no unreasonable delay on the part of LBP to warrant the award of 12%
interest.
The Chico-Nazario Dissent
Justice Minita V. Chico-Nazario,[2] the ponente of the original December
19, 2007 Resolution (deleting the 12% interest), dissented from the Court En
Bancs December 4, 2009 Resolution.
On the issue of immutability of judgment, Justice Chico-Nazario pointed out
that under extraordinary circumstances, this Court has recalled entries of judgment
on the ground of substantial justice. Given the special circumstances involved in
the present case, the Court En Banc should have taken a second hard look at the
petitioners positions in their second motion for reconsideration, and acted to
correct the clearly erroneous December 19, 2007 Resolution.
Specifically, Justice Chico-Nazario emphasized the obligation of the State,
in the exercise of its inherent power of eminent domain, to pay just compensation
to the owner of the expropriated property. To be just, the compensation must not
only be the correct amount to be paid; it must also be paid within a reasonable time
from the time the land is taken from the owner. If not, the State must pay the
landowner interest, by way of damages, from the time the property was taken until
just compensation is fully paid. This interest, deemed a part of just compensation
due, has been established by prevailing jurisprudence to be 12% per annum.
On these premises, Justice Nazario pointed out that the government deprived
the petitioners of their property on December 9, 1996, and paid the balance of the
just compensation due them only on May 9, 2008. The delay of almost twelve
years earned the petitioners interest in the total amount of P1,331,124,223.05.

Despite this finding, Justice Chico-Nazario did not see it fit to declare the
computed interest to be totally due; she found it unconscionable to apply the full
force of the law on the LBP because of the magnitude of the amount due. She thus
reduced the awarded interest to P400,000,000.00, or approximately 30% of the
computed interest.

The Present Motion for Reconsideration

In their motion to reconsider the Court En Bancs December 4, 2009
Resolution (the present Motion for Reconsideration), the petitioners principally
argue that: (a) the principle of immutability of judgment does not apply since the
Entry of Judgment was issued even before the lapse of fifteen days from the
parties receipt of the April 30, 2008 Resolution and the petitioners timely filed
their second motion for reconsideration within fifteen days from their receipt of
this resolution; (b) the April 30, 2008 Resolution cannot be considered immutable
considering the special and compelling circumstances attendant to the present case
which fall within the exceptions to the principle of immutability of judgments; (c)
the legal interest due is at 12% per annum, reckoned from the time of the taking of
the subject properties and this rate is not subject to reduction. The power of the
courts to equitably reduce interest rates applies solely to liquidated damages under
a contract and not to interest set by the Honorable Court itself as due and owing in
just compensation cases; and (d) the Honorable Courts fears that the interest
payments due to the petitioners will produce more harm than good to the system of
agrarian reform are misplaced and are based merely on conjectures.

The Comment of the Land Bank of the Philippines

The LBP commented on the petitioners motion for reconsideration on April
28, 2010. It maintained that: (a) the doctrine of immutability of the decisions of
the Supreme Court clearly applies to the present case; (b) the LBP is not guilty of

undue delay in the payment of just compensation as the petitioners were promptly
paid once the Court had determined the final value of the properties expropriated;
(c) the Supreme Court rulings invoked by the petitioners are inapplicable to the
present case; (d) since the obligation to pay just compensation is not a forbearance
of money, interest should commence only after the amount due becomes
ascertainable or liquidated, and the 12% interest per annum applies only to the
liquidated amount, from the date of finality of judgment; (e) the imposition of 12%
interest on the balance of P971,409,831.68 is unwarranted because there was no
unjustified refusal by LBP to pay just compensation, and no contractual breach is
involved; (f) the deletion of the attorneys fees equivalent to 10% of the amount
finally awarded as just compensation is proper; (g) this case does not involve a
violation of substantial justice to justify the alteration of the immutable resolution
dated December 19, 2007 that deleted the award of interest and attorneys fees.
The Courts Ruling
We find the petitioners arguments meritorious and accordingly
GRANT the present motion for reconsideration.
Just compensation a Basic Limitation on
the States
Power of Eminent Domain

At the heart of the present controversy is the Third Divisions December 19,
2007 Resolution which held that the petitioners are not entitled to 12% interest on
the balance of the just compensation belatedly paid by the LBP. In the presently
assailed December 4, 2009 Resolution, we affirmed the December 19, 2007
Resolutions findings that: (a) the LBP deposited pertinent amounts in favor of
the petitioners within fourteen months after they filed their complaint for
determination of just compensation; and (b) the LBP had already paid the
petitioners P411,769,168.32. We concluded then that these circumstances refuted
the petitioners assertion of unreasonable delay on the part of the LBP.

A re-evaluation of the circumstances of this case and the parties arguments,

viewed in light of the just compensation requirement in the exercise of the States
inherent power of eminent domain, compels us to re-examine our findings and
conclusions.
Eminent domain is the power of the State to take private property for public
use.[3] It is an inherent power of State as it is a power necessary for the States
existence; it is a power the State cannot do without. [4]As an inherent power, it does
not need at all to be embodied in the Constitution; if it is mentioned at all, it is
solely for purposes of limiting what is otherwise an unlimited power. The
limitation is found in the Bill of Rights [5] that part of the Constitution whose
provisions all aim at the protection of individuals against the excessive exercise of
governmental powers.
Section 9, Article III of the 1987 Constitution (which reads No private
property shall be taken for public use without just compensation.) provides two
essential limitations to the power of eminent domain, namely, that (1) the purpose
of taking must be for public use and (2) just compensation must be given to the
owner of the private property.
It is not accidental that Section 9 specifies that compensation should be
just as the safeguard is there to ensure a balance property is not to be taken for
public use at the expense of private interests; the public, through the State, must
balance the injury that the taking of property causes through compensation for
what is taken, value for value.
Nor is it accidental that the Bill of Rights is interpreted liberally in favor of
the individual and strictly against the government. The protection of the individual
is the reason for the Bill of Rights being; to keep the exercise of the powers of
government within reasonable bounds is what it seeks.[6]

The concept of just compensation is not new to Philippine constitutional

law, but is not original to the Philippines; it is a transplant from the American
Constitution.[8] It found fertile application in this country particularly in the area of
agrarian reform where the taking of private property for distribution to landless
farmers has been equated to the public use that the Constitution
requires. In Land Bank of the Philippines v. Orilla,[9] a valuation case under our
agrarian reform law, this Court had occasion to state:
[7]

Constitutionally, "just compensation" is the sum equivalent to the

market value of the property, broadly described as 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 the one who
receives and the one who desires to sell, it being fixed at the time of the
actual taking by the government. Just compensation is defined as the
full and fair equivalent of the property taken from its owner by the
expropriator. It has been repeatedly stressed by this Court that the true
measure is not the taker's gain but the owner's loss. The word "just" is
used to modify the meaning of the word "compensation" to convey the
idea thatthe equivalent to be given for the property to be taken shall
be real, substantial, full and ample.[10] [Emphasis supplied.]

In the present case, while the DAR initially valued the petitioners
landholdings at a total of P251,379,104.02,[11] the RTC, acting as a special agrarian
court, determined the actual value of the petitioners landholdings to
be P1,383,179,000.00. This valuation, a finding of fact, has subsequently been
affirmed by this Court, and is now beyond question. In eminent domain terms, this
amount is the real, substantial, full and ample compensation the government
must pay to be just to the landowners.
Significantly, this final judicial valuation is far removed from the initial
valuation made by the DAR; their values differ by P1,131,799,897.00 in itself a
very substantial sum that is roughly four times the original DAR valuation. We
mention these valuations as they indicate to us how undervalued the petitioners
lands had been at the start, particularly at the time the petitioners landholdings

were taken. This reason apparently compelled the petitioners to relentlessly

pursue their valuation claims all they way up to the level of this Court.
While the LBP deposited the total amount of P71,891,256.62 into the
petitioners accounts (P26,409,549.86 for AFC and P45,481,706.76 for HPI) at the
time the landholdings were taken, these amounts were mere partial payments that
only amounted to 5% of the P1,383,179,000.00 actual value of the expropriated
properties. We point this aspect out to show that the initial payments made by the
LBP when the petitioners landholdings were taken, although promptly withdrawn
by the petitioners, could not by any means be considered a fair exchange of values
at the time of taking; in fact, the LBPs actual deposit could not be said to be
substantial even from the original LBP valuation of P251,379,103.90.
Thus, the deposits might have been sufficient for purposes of the immediate
taking of the landholdings but cannot be claimed as amounts that would excuse the
LBP from the payment of interest on the unpaid balance of the compensation due.
As discussed at length below, they were not enough to compensate the petitioners
for the potential income the landholdings could have earned for them if no
immediate taking had taken place. Under the circumstances, the State acted
oppressively and was far from just in their position to deny the petitioners of the
potential income that the immediate taking of their properties entailed.
Just Compensation from the
Prism of the Element of Taking.
Apart from the requirement that compensation for expropriated land must be
fair and reasonable, compensation, to be just, must also be made without
delay.[12] Without prompt payment, compensation cannot be considered "just" if the
property is immediately taken as the property owner suffers the immediate
deprivation of both his land and its fruits or income.

This is the principle at the core of the present case where the petitioners
were made to wait for more than a decade after the taking of their property before
they actually received the full amount of the principal of the just compensation due
them.[13] What they have not received to date is the income of their
landholdings corresponding to what they would have received had no
uncompensated taking of these lands been immediately made. This income, in
terms of the interest on the unpaid principal, is the subject of the current
litigation.
We recognized in Republic v. Court of Appeals[14] the need for prompt
payment and the necessity of the payment of interest to compensate for any delay
in the payment of compensation for property already taken. We ruled in this case
that:
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,
i[f] 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 interest[s] 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
interest[s] 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.[15] [Emphasis supplied.]

Aside from this ruling, Republic notably overturned the Courts previous
ruling in National Power Corporation v. Angas[16] which held that just
compensation due for expropriated properties is not a loan or forbearance of
money but indemnity for damages for the delay in payment; since the interest

involved is in the nature of damages rather than earnings from loans, then Art.
2209 of the Civil Code, which fixes legal interest at 6%, shall apply.
In Republic, the Court recognized that the just compensation due to the
landowners for their expropriated property amounted to an effective
forbearance on the part of the State. Applying the Eastern Shipping
Lines ruling,[17] the Court fixed the applicable interest rate at 12% per annum,
computed from the time the property was taken until the full amount of just
compensation was paid, in order to eliminate the issue of the constant fluctuation
and inflation of the value of the currency over time. In the Courts own words:
The Bulacan trial court, in its 1979 decision, was correct in
imposing interest[s] on the zonal value of the property to be computed
from the time petitioner instituted condemnation proceedings and took
the property in September 1969.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. [18] [Emphasis
supplied.]

We subsequently upheld Republics 12% per annum interest rate on the

unpaid expropriation compensation in the following cases: Reyes v. National
Housing Authority,[19] Land Bank of the Philippines v. Wycoco,[20] Republic v. Court
of Appeals,[21] Land Bank of the Philippines v. Imperial,[22] Philippine Ports
Authority v. Rosales-Bondoc,[23] and Curata v. Philippine Ports Authority.[24]
These were the established rulings that stood before this Court issued the
currently assailed Resolution of December 4, 2009. These would be the rulings
this Court shall reverse and de-establish if we maintain and affirm our ruling
deleting the 12% interest on the unpaid balance of compensation due for
properties already taken.

Under the circumstances of the present case, we see no compelling reason to

depart from the rule that Republic firmly established. Let it be remembered that
shorn of its eminent domain and social justice aspects, what the agrarian land
reform program involves is the purchase by the government, through the LBP, of
agricultural lands for sale and distribution to farmers. As a purchase, it involves an
exchange of values the landholdings in exchange for the LBPs payment. In
determining the just compensation for this exchange, however, the measure to
be borne in mind is not the taker's gain but the owner's loss [25] since what is
involved is the takeover of private property under the States coercive
power. As mentioned above, in the value-for-value exchange in an eminent
domain situation, the State must ensure that the individual whose property is taken
is not shortchanged and must hence carry the burden of showing that the just
compensation requirement of the Bill of Rights is satisfied.
The owners loss, of course, is not only his property but also its incomegenerating potential. Thus, when property is taken, full compensation of its value
must immediately be paid to achieve a fair exchange for the property and the
potential income lost. The just compensation is made available to the property
owner so that he may derive income from this compensation, in the same manner
that he would have derived income from his expropriated property. If full
compensation is not paid for property taken, then the State must make up for the
shortfall in the earning potential immediately lost due to the taking, and the
absence of replacement property from which income can be derived; interest on the
unpaid compensation becomes due as compliance with the constitutional mandate
on eminent domain and as a basic measure of fairness.
In the context of this case, when the LBP took the petitioners landholdings
without the corresponding full payment, it became liable to the petitioners for the
income the landholdings would have earned had they not immediately been taken
from the petitioners. What is interesting in this interplay, under the developments
of this case, is that the LBP, by taking landholdings without full payment while
holding on at the same time to the interest that it should have paid, effectively

used or retained funds that should go to the landowners and thereby took
advantage of these funds for its own account.
From this point of view, the December 19, 2007 Resolution deleting the
award of 12% interest is not only patently and legally wrong, but is also morally
unconscionable for being grossly unfair and unjust. If the interest on the just
compensation due in reality the equivalent of the fruits or income of the
landholdings would have yielded had these lands not been taken would be
denied, the result is effectively a confiscatory action by this Court in favor of the
LBP. We would be allowing the LBP, for twelve long years, to have free use of the
interest that should have gone to the landowners. Otherwise stated, if we continue
to deny the petitioners present motion for reconsideration, we would
illogically and without much thought to the fairness that the situation
demands uphold the interests of the LBP, not only at the expense of the
landowners but also that of substantial justice as well.
Lest this Court be a party to this monumental unfairness in a social program
aimed at fostering balance in our society, we now have to ring the bell that we have
muted in the past, and formally declare that the LBPs position is legally and
morally wrong. To do less than this is to leave the demands of the constitutional
just compensation standard (in terms of law) and of our own conscience (in terms
of morality) wanting and unsatisfied.
The Delay in Payment Issue
Separately from the demandability of interest because of the failure to fully
pay for property already taken, a recurring issue in the case is the attribution of the
delay.
That delay in payment occurred is not and cannot at all be disputed. While
the LBP claimed that it made initial payments of P411,769,168.32 (out of the
principal sum due of P1,383,179,000.00), the undisputed fact is that the

petitioners were deprived of their lands on December 9, 1996 (when titles to

their landholdings were cancelled and transferred to the Republic of the
Philippines), and received full payment of the principal amount due them only
on May 9, 2008.
In the interim, they received no income from their landholdings because
these landholdings had been taken. Nor did they receive adequate income from
what should replace the income potential of their landholdings because the LBP
refused to pay interest while withholding the full amount of the principal of the just
compensation due by claiming a grossly low valuation. This sad state continued
for more than a decade. In any language and by any measure, a lengthy delay in
payment occurred.
An important starting point in considering attribution for the delay is that
the petitioners voluntarily offered to sell their landholdings to the
governments land reform program; they themselves submitted their Voluntary
Offer to Sell applications to the DAR, and they fully cooperated with the
governments program. The present case therefore is not one where substantial
conflict arose on the issue of whether expropriation is proper; the petitioners
voluntarily submitted to expropriation and surrendered their landholdings, although
they contested the valuation that the government made.
Presumably, had the landholdings been properly valued, the petitioners
would have accepted the payment of just compensation and there would have been
no need for them to go to the extent of filing a valuation case. But, as borne by the
records, the petitioners lands were grossly undervalued by the DAR, leaving the
petitioners with no choice but to file actions to secure what is justly due them.
The DARs initial gross undervaluation started the cycle of court actions that
followed, where the LBP eventually claimed that it could not be faulted for seeking
judicial recourse to defend the governments and its own interests in light of the
petitioners valuation claims. This LBP claim, of course, conveniently forgets that

at the root of all these valuation claims and counterclaims was the initial gross
undervaluation by DAR that the LBP stoutly defended. At the end, this
undervaluation was proven incorrect by no less than this Court; the petitioners
were proven correct in their claim, and the correct valuation more than five-fold
the initial DAR valuation was decreed and became final.
All these developments cannot now be disregarded and reduced to
insignificance. In blunter terms, the government and the LBP cannot now be heard
to claim that they were simply protecting their interests when they stubbornly
defended their undervalued positions before the courts. The more apt and accurate
statement is that they adopted a grossly unreasonable position and the adverse
developments that followed, particularly the concomitant delay, should be directly
chargeable to them.
To be sure, the petitioners were not completely correct in the legal steps they
took in their valuation claims. They initially filed their valuation claim before the
DARAB instead of immediately seeking judicial intervention. The DARAB,
however, contributed its share to the petitioners error when it failed or refused to
act on the valuation petitions for more than three (3) years. Thus, on top of the
DAR undervaluation was the DARAB inaction after the petitioners landholdings
had been taken. This Courts Decision of February 6, 2007 duly noted this and
observed:
It is not controverted that this case started way back on 12
October 1995, when AFC and HPI voluntarily offered to sell the
properties to the DAR. In view of the failure of the parties to agree on
the valuation of the properties, the Complaint for Determination of Just
Compensation was filed before the DARAB on 14 February 1997.
Despite the lapse of more than three years from the filing of the
complaint, the DARAB failed to render a decision on the valuation of
the land. Meantime, the titles over the properties of AFC and HPI had
already been cancelled and in their place a new certificate of title was
issued in the name of the Republic of the Philippines, even as far back as
9 December 1996. A period of almost 10 years has lapsed. For this
reason, there is no dispute that this case has truly languished for a long

period of time, the delay being mainly attributable to both official

inaction and indecision, particularly on the determination of the amount
of just compensation, to the detriment of AFC and HPI, which to date,
have yet to be fully compensated for the properties which are already in
the hands of farmer-beneficiaries, who, due to the lapse of time, may
have already converted or sold the land awarded to them.
Verily, these two cases could have been disposed with dispatch
were it not for LBPs counsel causing unnecessary delay. At the
inception of this case, DARAB, an agency of the DAR which was
commissioned by law to determine just compensation, sat on the cases
for three years, which was the reason that AFC and HPI filed the cases
before the RTC. We underscore the pronouncement of the RTC that the
delay by DARAB in the determination of just compensation could
only mean the reluctance of the Department of Agrarian Reform
and the Land Bank of the Philippines to pay the claim of just
compensation by corporate landowners.
To allow the taking of landowners properties, and to leave them
empty-handed while government withholds compensation is
undoubtedly oppressive. [Emphasis supplied.]

These statements cannot but be true today as they were when we originally
decided the case and awarded 12% interest on the balance of the just compensation
due. While the petitioners were undisputedly mistaken in initially seeking recourse
through the DAR, this agency itself hence, the government committed a graver
transgression when it failed to act at all on the petitioners complaints for
determination of just compensation.
In sum, in a balancing of the attendant delay-related circumstances of this
case, delay should be laid at the doorsteps of the government, not at the
petitioners. We conclude, too, that the government should not be allowed to
exculpate itself from this delay and should suffer all the consequences the delay
caused.
The LBPs arguments on the applicability
of cases imposing

12% interest
The LBP claims in its Comment that our rulings in Republic v. Court of
Appeals,[26] Reyes v. National Housing Authority,[27] and Land Bank of the
Philippines v. Imperial,[28] cannot be applied to the present case.
According to the LBP, Republic is inapplicable because, first, the
landowners in Republic remained unpaid, notwithstanding the fact that the award
for just compensation had already been fixed by final judgment; in the present
case, the Court already acknowledged that pertinent amounts were deposited in
favor of the landowners within 14 months from the filing of their
complaint. Second, while Republic involved an ordinary expropriation case, the
present case involves expropriation for agrarian reform. Finally, the just
compensation in Republic remained unpaid notwithstanding the finality of
judgment, while the just compensation in the present case was immediately paid in
full after LBP received a copy of the Courts resolution
We find no merit in these assertions.
As we discussed above, the pertinent amounts allegedly deposited by LBP
were mere partial payments that amounted to a measly 5% of the actual value of
the properties expropriated. They could be the basis for the immediate taking of the
expropriated property but by no stretch of the imagination can these nominal
amounts be considered pertinent enough to satisfy the full requirement of just
compensation i.e., the full and fair equivalent of the expropriated property, taking
into account its income potential and the foregone income lost because of the
immediate taking.

We likewise find no basis to support the LBPs theory that Republic and the
present case have to be treated differently because the first involves a regular
expropriation case, while the present case involves expropriation pursuant to the

countrys agrarian reform program. In both cases, the power of eminent domain
was used and private property was taken for public use. Why one should be
different from the other, so that the just compensation ruling in one should not
apply to the other, truly escapes us. If there is to be a difference, the treatment of
agrarian reform expropriations should be stricter and on a higher plane because of
the governments societal concerns and objectives. To be sure, the government
cannot attempt to remedy the ills of one sector of society by sacrificing the
interests of others within the same society.
Finally, we note that the finality of the decision (that fixed the value of just
compensation) in Republic was not a material consideration for the Court in
awarding the landowners 12% interest. The Court, inRepublic, simply affirmed the
RTC ruling imposing legal interest on the amount of just compensation due. In the
process, the Court determined that the legal interest should be 12% after
recognizing that the just compensation due was effectively a forbearance on the
part of the government. Had the finality of the judgment been the critical factor,
then the 12% interest should have been imposed from the time the RTC decision
fixing just compensation became final. Instead, the 12% interest was imposed
from the time that the Republic commenced condemnation proceedings and took
the property.
The LBP additionally asserts that the petitioners erroneously relied on the
ruling in Reyes v. National Housing Authority. The LBP claims that we cannot
apply Reyes because it involved just compensation that remained unpaid despite
the finality of the expropriation decision. LBPs point of distinction is that just
compensation was immediately paid in the present case upon the Courts
determination of the actual value of the expropriated properties. LBP claims, too,
that in Reyes, the Court established that the refusal of the NHA to pay just
compensation was unfounded and unjustified, whereas the LBP in the present case
clearly demonstrated its willingness to pay just compensation. Lastly, in Reyes, the
records showed that there was an outstanding balance that ought to be paid, while
the element of an outstanding balance is absent in the present case.

Contrary to the LBPs opinion, the imposition of the 12% interest

in Reyes did not depend on either the finality of the decision of the expropriation
court, or on the finding that the NHAs refusal to pay just compensation was
unfounded and unjustified. Quite clearly, the Court imposed 12% interest based on
the ruling in Republic v. Court of Appeals that x x x if property is taken for
public use before compensation is deposited with the court having jurisdiction over
the case, the final compensation must include interest[s] 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 interest[s] 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.[29] This is the same legal principle applicable to the present
case, as discussed above.
While the LBP immediately paid the remaining balance on the just
compensation due to the petitioners after this Court had fixed the value of the
expropriated properties, it overlooks one essential fact from the time that the
State took the petitioners properties until the time that the petitioners were fully
paid, almost 12 long years passed. This is the rationale for imposing the 12%
interest in order to compensate the petitioners for the income they would have
made had they been properly compensated for their properties at the time of the
taking.
Finally, the LBP insists that the petitioners quoted our ruling in Land Bank
of the Philippines v. Imperial out of context. According to the LBP, the Court
imposed legal interest of 12% per annum only after December 31, 2006, the date
when the decision on just compensation became final.
The LBP is again mistaken. The Imperial case involved land that was
expropriated pursuant to Presidential Decree No. 27, [30] and fell under the coverage
of DAR Administrative Order (AO) No. 13. [31] This AO provided for the payment

of a 6% annual interest if there is any delay in payment of just compensation.

However, Imperial was decided in 2007 and AO No. 13 was only effective up to
December 2006. Thus, the Court, relying on our ruling in the Republic case,
applied the prevailing 12% interest ruling to the period when the just compensation
remained unpaid after December 2006. It is for this reason that December 31, 2006
was important, not because it was the date of finality of the decision on just
compensation.
The 12% Interest Rate and
the Chico-Nazario Dissent
To fully reflect the concerns raised in this Courts deliberations on the
present case, we feel it appropriate to discuss the Justice Minita Chico-Nazarios
dissent from the Courts December 4, 2009 Resolution.
While Justice Chico-Nazario admitted that the petitioners were entitled to
the 12% interest, she saw it appropriate to equitably reduce the interest charges
from P1,331,124,223.05 to P400,000,000.00. In support of this proposal, she
enumerated various cases where the Court, pursuant to Article 1229 of the Civil
Code,[32] equitably reduced interest charges.
We differ with our esteemed colleagues views on the application of equity.
While we have equitably reduced the amount of interest awarded in
numerous cases in the past, those cases involved interest that was essentially
consensual in nature, i.e., interest stipulated in signed agreements between the
contracting parties. In contrast, the interest involved in the present case runs as
a matter of law and follows as a matter of course from the right of the landowner
to be placed in as good a position as money can accomplish, as of the date of
taking.[33]

Furthermore, the allegedly considerable payments made by the LBP to the

petitioners cannot be a proper premise in denying the landowners the interest due
them under the law and established jurisprudence. If the just compensation for
the landholdings is considerable, this compensation is not undue because the
landholdings the owners gave up in exchange are also similarly considerable
AFC gave up an aggregate landholding of 640.3483 hectares, while HPIs gave
up 805.5308 hectares. When the petitioners surrendered these sizeable
landholdings to the government, the incomes they gave up were likewise sizeable
and cannot in any way be considered miniscule. The incomes due from these
properties, expressed as interest, are what the government should return to the
petitioners after the government took over their lands without full payment of just
compensation. In other words, the value of the landholdings themselves should be
equivalent to the principal sum of the just compensation due; interest is due and
should be paid to compensate for the unpaid balance of this principal sum after
taking has been completed. This is the compensation arrangement that should
prevail if such compensation is to satisfy the constitutional standard of being
just.
Neither can LBPs payment of the full compensation due before the finality
of the judgment of this Court justify the reduction of the interest due them. To rule
otherwise would be to forget that the petitioners had to wait twelve years from the
time they gave up their lands before the government fully paid the principal of the
just compensation due them. These were twelve years when they had no income
from their landholdings because these landholdings have immediately been taken;
no income, or inadequate income, accrued to them from the proceeds of
compensation payment due them because full payment has been withheld by
government.
If the full payment of the principal sum of the just compensation is legally
significant at all under the circumstances of this case, the significance is only in
putting a stop to the running of the interest due because the principal of the just

compensation due has been paid. To close our eyes to these realities is to condone
what is effectively a confiscatory action in favor of the LBP.
That the legal interest due is now almost equivalent to the principal to be
paid is not per se an inequitable or unconscionable situation, considering the length
of time the interest has remained unpaid almost twelve long years. From the
perspective of interest income, twelve years would have been sufficient for the
petitioners to double the principal, even if invested conservatively, had they been
promptly paid the principal of the just compensation due them. Moreover, the
interest, however enormous it may be, cannot be inequitable and
unconscionable because it resulted directly from the application of law and
jurisprudence standards that have taken into account fairness and equity in
setting the interest rates due for the use or forebearance of money.
If the LBP sees the total interest due to be immense, it only has itself to
blame, as this interest piled up because it unreasonably acted in its valuation of the
landholdings and consequently failed to promptly pay the petitioners. To be sure,
the consequences of this failure i.e., the enormity of the total interest due and the
alleged financial hemorrhage the LBP may suffer should not be the very reason
that would excuse it from full compliance. To so rule is to use extremely flawed
logic. To so rule is to disregard the question of how the LBP, a government
financial institution that now professes difficulty in paying interest at 12% per
annum, managed the funds that it failed to pay the petitioners for twelve long
years.
It would be utterly fallacious, too, to argue that this Court should tread
lightly in imposing liabilities on the LBP because this bank represents the
government and, ultimately, the public interest. Suffice it to say that public interest
refers to what will benefit the public, not necessarily the government and its
agencies whose task is to contribute to the benefit of the public. Greater public
benefit will result if government agencies like the LBP are conscientious in
undertaking its tasks in order to avoid the situation facing it in this case. Greater

public interest would be served if it can contribute to the credibility of the

governments land reform program through the conscientious handling of its
part of this program.
As our last point, equity and equitable principles only come into full play
when a gap exists in the law and jurisprudence. [34] As we have shown above,
established rulings of this Court are in place for full application to the present
case. There is thus no occasion for the equitable consideration that Justice ChicoNazario suggested.

The Amount Due the Petitioners

Compensation

as Just

As borne by the records, the 12% interest claimed is only on the difference
between the price of the expropriated lands (determined with finality to
be P1,383,179,000.00) and the amount of P411,769,168.32 already paid to the
petitioners. The difference between these figures amounts to the remaining balance
of P971,409,831.68 that was only paid on May 9, 2008.
As above discussed, this amount should bear interest at the rate of 12%
per annum from the time the petitioners properties were taken on December
9, 1996 up to the time of payment. At this rate, the LBP now owes the petitioners
the total amount of One Billion Three Hundred Thirty-One Million One Hundred
Twenty-Four Thousand Two Hundred Twenty-Three and 05/100 Pesos
(P1,331,124,223.05), computed as follows:
Just Compensation

P971,409,831.68

Legal Interest from 12/09/1996

To 05/09/2008 @ 12%/annum
12/09/1996 to 12/31/1996

23 days

7,345,455.17

01/01/1997 to 12/31/2007
01/01/2008 to 05/09/2008

11 years
130 days

1,282,260,977.82
41,517,790.07
P1,331,124,223.05[35]

The Immutability of Judgment Issue

As a rule, a final judgment may no longer be altered, amended or modified,

even if the alteration, amendment or modification is meant to correct what is
perceived to be an erroneous conclusion of fact or law and regardless of what court,
be it the highest Court of the land, rendered it.[36] In the past, however, we have
recognized exceptions to this rule by reversing judgments and recalling their entries
in the interest of substantial justice and where special and compelling reasons
called for such actions.
Notably, in San Miguel Corporation v. National Labor Relations
Commission,[37] Galman v. Sandiganbayan,[38] Philippine Consumers Foundation v.
National Telecommunications Commission,[39] and Republic v. de los Angeles,[40] we
reversed our judgment on the second motion for reconsideration, while in Vir-Jen
Shipping and Marine Services v. National Labor Relations Commission,[41] we did
so
on
a third motion
for
reconsideration. In Cathay
Pacific
v.
[42]
[43]
Romillo and Cosio v. de Rama, we modified or amended our ruling on the
second motion for reconsideration. More recently, in the cases of Munoz v. Court of
Appeals,[44]Tan Tiac Chiong v. Hon. Cosico,[45] Manotok IV v. Barque,[46] and Barnes
v. Padilla,[47] we recalled entries of judgment after finding that doing so was in the
interest of substantial justice. In Barnes, we said:
x x x Phrased elsewise, a final and executory judgment can no longer
be attacked by any of the parties or be modified, directly or indirectly,
even by the highest court of the land.
However, this Court has relaxed this rule in order to serve
substantial justice considering (a) matters of life, liberty, honor or

property, (b) the existence of special or compelling circumstances,

(c) the merits of the case, (d) a cause not entirely attributable to the
fault or negligence of the party favored by the suspension of the rules,
(e) a lack of any showing that the review sought is merely frivolous and
dilatory, and (f) the other party will not be unjustly prejudiced thereby.
Invariably, rules of procedure should be viewed as mere tools
designed to facilitate the attainment of justice. Their strict and rigid
application, which would result in technicalities that tend to frustrate
rather than promote substantial justice, must always be eschewed. Even
the Rules of Court reflects this principle. The power to suspend or even
disregard rules can be so pervasive and compelling as to alter even that
which this Court itself had already declared to be final. [48][Emphasis
supplied.]

That the issues posed by this case are of transcendental importance is not
hard to discern from these discussions. A constitutional limitation, guaranteed
under no less than the all-important Bill of Rights, is at stake in this case: how can
compensation in an eminent domain be just when the payment for the
compensation for property already taken has been unreasonably delayed? To
claim, as the assailed Resolution does, that only private interest is involved in this
case is to forget that an expropriation involves the government as a necessary
actor. It forgets, too, that under eminent domain, the constitutional limits or
standards apply to government who carries the burden of showing that these
standards have been met. Thus, to simply dismiss this case as a private interest
matter is an extremely shortsighted view that this Court should not leave
uncorrected.
As duly noted in the above discussions, this issue is not one of first
impression in our jurisdiction; the consequences of delay in the payment of just
compensation have been settled by this Court in past rulings. Our settled
jurisprudence on the issue alone accords this case primary importance as a contrary
ruling would unsettle, on the flimsiest of grounds, all the rulings we have
established in the past.

More than the stability of our jurisprudence, the matter before us is of

transcendental importance to the nation because of the subject matter involved
agrarian reform, a societal objective that the government has unceasingly sought to
achieve in the past half century. This reform program and its objectives would
suffer a major setback if the government falters or is seen to be faltering, wittingly
or unwittingly, through lack of good faith in implementing the needed
reforms. Truly, agrarian reform is so important to the national agenda that the
Solicitor General, no less, pointedly linked agricultural lands, its ownership and
abuse, to the idea of revolution.[49] This linkage, to our mind, remains valid even if
the landowner, not the landless farmer, is at the receiving end of the distortion of
the agrarian reform program.
As we have ruled often enough, rules of procedure should not be applied in a
very rigid, technical sense; rules of procedure are used only to help secure, not
override, substantial justice.[50] As we explained inGinete v. Court of Appeals:[51]
Let it be emphasized that the rules of procedure should be viewed as
mere tools designed to facilitate the attainment of justice. Their strict and rigid
application, which would result in technicalities that tend to frustrate rather than
promote substantial justice, must always be eschewed. Even the Rules of Court
reflect this principle. The power to suspend or even disregard rules can be so
pervasive and compelling as to alter even that which this Court itself has already
declared to be final, as we are now constrained to do in the instant case.
x x x x

The emerging trend in the rulings of this Court is to afford every

party litigant the amplest opportunity for the proper and just
determination of his cause, free from the constraints of technicalities.
Time and again, this Court has consistently held that rules must not be
applied rigidly so as not to override substantial justice. [52] [Emphasis
supplied.]

Similarly, in de Guzman v. Sandiganbayan,[53] we had occasion to state:

The Rules of Court was conceived and promulgated to set forth
guidelines in the dispensation of justice but not to bind and chain the
hand that dispenses it, for otherwise, courts will be mere slaves to or
robots of technical rules, shorn of judicial discretion. That is precisely

why courts in rendering justice have always been, as they ought to be,
conscientiously guided by the norm that when on the balance,
technicalities take a backseat against substantive rights, and not the
other way around. Truly then, technicalities, in the appropriate
language of Justice Makalintal, "should give way to the realities of the
situation.[54] [Emphasis supplied.]

We made the same recognition in Barnes,[55] on the underlying premise that a

courts primordial and most important duty is to render justice; in discharging the
duty to render substantial justice, it is permitted to re-examine even a final and
executory judgment.
Based on all these considerations, particularly the patently illegal and
erroneous conclusion that the petitioners are not entitled to 12% interest, we find
that we are duty-bound to re-examine and overturn the assailed Resolution. We
shall completely and inexcusably be remiss in our duty as defenders of justice if,
given the chance to make the rectification, we shall let the opportunity pass.
Attorneys Fees
We are fully aware that the RTC has awarded the petitioners attorneys fees
when it fixed the just compensation due and decreed that interest of 12% should be
paid on the balance outstanding after the taking of the petitioners landholdings
took place. The petitioners, however, have not raised the award of attorneys fees
as an issue in the present motion for reconsideration. For this reason, we shall not
touch on this issue at all in this Resolution.
WHEREFORE, premises considered, we GRANT the petitioners motion
for reconsideration. The Court En Bancs Resolution dated December 4, 2009, as
well as the Third Divisions Resolutions dated April 30, 2008 and December 19,
2007, are hereby REVERSED and SET ASIDE.
The respondent Land Bank of the Philippines is hereby ORDERED to pay
petitioners Apo Fruits Corporation and Hijo Plantation, Inc. interest at the rate of

12% per annum on the unpaid balance of the just compensation, computed from
the date the Government took the properties on December 9, 1996, until the
respondent Land Bank of the Philippines paid on May 9, 2008 the balance on the
principal amount.
Unless the parties agree to a shorter payment period, payment shall be in
monthly installments at the rate of P60,000,000.00 per month until the whole
amount owing, including interest on the outstanding balance, is fully paid.
Costs against the respondent Land Bank of the Philippines.
SO ORDERED.

G.R. No. 189239

November 24, 2010

SPOUSES LETICIA & JOSE ERVIN ABAD, SPS. ROSARIO AND ERWIN COLLANTES,
SPS. RICARDO AND FELITA ANN, SPS. ELSIE AND ROGER LAS PIAS, LINDA
LAYDA, RESTITUTO MARIANO, SPS. ARNOLD AND MIRIAM MERCINES, SPS. LUCITA
AND WENCESLAO A. RAPACON, SPS. ROMEO AND EMILYN HULLEZA, LUZ
MIPANTAO, SPS. HELEN AND ANTHONY TEVES, MARLENE TUAZON, SPS. ZALDO
AND MIA SALES, SPS. JOSEFINA AND JOEL YBERA, SPS. LINDA AND JESSIE
CABATUAN, SPS. WILMA AND MARIO ANDRADA, SPS. RAYMUNDO AND ARSENIA
LELIS, FREDY AND SUSANA PILONEO, Petitioners,
vs.

FIL-HOMES REALTY and DEVELOPMENT CORPORATION and MAGDIWANG REALTY

CORPORATION,Respondents.
DECISION
CARPIO MORALES, J.:
Fil-Homes Realty and Development Corporation and Magdiwang Realty Corporation
(respondents), co-owners of two lots situated in Sucat, Paraaque City and covered by
Transfer Certificates of Title Nos. 21712 and 21713, filed a complaint for unlawful detainer
on May 7, 2003 against above-named petitioners before the Paraaque Metropolitan Trial
Court (MeTC).
Respondents alleged that petitioners, through tolerance, had occupied the subject lots since
1980 but ignored their repeated demands to vacate them.
Petitioners countered that there is no possession by tolerance for they have been in
adverse, continuous and uninterrupted possession of the lots for more than 30 years; and
that respondents predecessor-in-interest, Pilipinas Development Corporation, had no title to
the lots. In any event, they contend that the question of ownership must first be settled
before the issue of possession may be resolved.
During the pendency of the case or on June 30, 2004, the City of Paraaque filed
expropriation proceedings covering the lots before the Regional Trial Court of Paraaque
with the intention of establishing a socialized housing project therein for distribution to the
occupants including petitioners. A writ of possession was consequently issued and a
Certificate of Turn-over given to the City.
Branch 77 of the MeTC, by Decision of March 3, 2008, rendered judgment in the unlawful
detainer case against petitioners, disposing as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendants Leticia and Ervin Abad et. als. ordering the latter and all persons claiming rights
under them to VACATE and SURRENDERpossession of the premises (Lots covered by
TCT NOS. (71065) 21712 and (71066) 21713 otherwise known as Purok I Silverio
Compound, Barangay San Isidro, Paraaque City to plaintiff and to PAY the said plaintiff as
follows:
1. The reasonable compensation in the amount of P20,000.00 a month commencing
November 20, 2002 and every month thereafter until the defendants shall have
finally vacated the premises and surrender peaceful possession thereof to the
plaintiff;
2. P20,000.00 as and for attorneys fees, and finally
3. Costs of suit.
SO ORDERED.1 (emphasis in the original)

The MeTC held that as no payment had been made to respondents for the lots, they still
maintain ownership thereon. It added that petitioners cannot claim a better right by virtue of
the issuance of a Writ of Possession for the project beneficiaries have yet to be named.
On appeal, the Regional Trial Court (RTC), by Decision of September
2008,2 reversed the MeTC decision anddismissed respondents complaint in this wise:

4,

x x x The court a quo ruled that the case filed by plaintiffs (respondents herein) is unlawful
detainer as shown by the allegations of the Complaint. The ruling of the court a quo is not
accurate. It is not the allegations of the Complaint that finally determine whether a
case is unlawful detainer, rather it is the evidence in the case.
Unlawful detainer requires the significant element of "tolerance". Tolerance of the
occupation of the property must be present right from the start of the defendants
possession. The phrase "from the start of defendants possession" is significant. When
there is no "tolerance" right from the start of the possession sought to be recovered,
the case of unlawful detainer will not prosper.3 (emphasis in the original; underscoring
supplied)
The RTC went on to rule that the issuance of a writ of possession in favor of the City bars
the continuation of the unlawful detainer proceedings, and since the judgment had already
been rendered in the expropriation proceedings which effectively turned over the lots to the
City, the MeTC has no jurisdiction to "disregard the . . . final judgment and writ of
possession" due to non-payment of just compensation:
The Writ of Possession shows that possession over the properties subject of this case had
already been given to the City of Paraaque since January 19, 2006 after they were
expropriated. It is serious error for the court a quo to rule in the unlawful detainer case
that Magdiwang Realty Corporation and Fil-Homes Realty and Development
Corporation could still be given possession of the properties which were already
expropriated in favor of the City of Paraaque.
There is also another serious lapse in the ruling of the court a quo that the case for
expropriation in the Regional Trial Court would not bar, suspend or abate the ejectment
proceedings. The court a quo had failed to consider the fact that the case for expropriation
was already decided by the Regional Trial Court, Branch 196 way back in the year 2006 or
2 years before the court a quo rendered its judgment in the unlawful detainer case in the
year 2008. In fact, there was already a Writ of Possession way back in the year 1996 (sic)
issued in the expropriation case by the Regional Trial Court, Branch 196. The court a quo
has no valid reason to disregard the said final judgment and the writ of possession
already issued by the Regional Trial Court in favor of the City of Paraaque and
against Magdiwang Realty Corporation and Fil-Homes Realty Development
Corporation and make another judgment concerning possession of the subject
properties contrary to the final judgment of the Regional Trial Court, Branch
196.4 (emphasis in the original)
Before the Court of Appeals where respondents filed a petition for review, they maintained
that respondents "act of allowing several years to pass without requiring [them] to vacate

nor filing an ejectment case against them amounts to acquiescence or tolerance of their
possession."5
By Decision of May 27, 2009, 6 the appellate court, noting that petitioners did not present
evidence to rebut respondents allegation of possession by tolerance, and considering
petitioners admission that they commenced occupation of the property without the
permission of the previous owner Pilipinas Development Corporation as indicium of
tolerance by respondents predecessor-in-interest, ruled in favor of respondents. Held the
appellate court:
Where the defendants entry upon the land was with plaintiffs tolerance from the date and
fact of entry, unlawful detainer proceedings may be instituted within one year from the
demand on him to vacate upon demand. The status of such defendant is analogous to that
of a tenant or lessee, the term of whose lease, has expired but whose occupancy is
continued by the tolerance of the lessor. The same rule applies where the defendant
purchased the house of the former lessee, who was already in arrears in the payment of
rentals, and thereafter occupied the premises without a new lease contract with the
landowner.7
Respecting the issuance of a writ of possession in the expropriation proceedings, the
appellate court, citingRepublic v. Gingoyon,8 held the same does not signify the completion
of the expropriation proceedings. Thus it disposed:
WHEREFORE, premises considered, the instant Petition is GRANTED. The assailed
Decision of the Court a quo is REVOKED and SET ASIDE. The Decision of the Metropolitan
Trial Court dated March 3, 2008 is hereby REINSTATED with MODIFICATION [by] deleting
the award for attorneys fees.
SO ORDERED. (underscoring supplied)
Petitioners motion for reconsideration was denied by Resolution dated August 26, 2009,
hence, the filing of the present petition for review.
The petition fails.
In the exercise of the power of eminent domain, the State expropriates private property for
public use upon payment of just compensation. A socialized housing project falls within the
ambit of public use as it is in furtherance of the constitutional provisions on social justice. 9
As a general rule, ejectment proceedings, due to its summary nature, are not suspended or
their resolution held in abeyance despite the pendency of a civil action regarding ownership.
Section 1 of Commonwealth Act No. 53810 enlightens, however:
Section 1. When the Government seeks to acquire, through purchase or expropriation
proceedings, lands belonging to any estate or chaplaincy (cappellania), any action for
ejectment against the tenants occupying said lands shall be automatically suspended, for
such time as may be required by the expropriation proceedings or the necessary

negotiations for the purchase of the lands, in which latter case, the period of suspension
shall not exceed one year.
To avail himself of the benefits of the suspension, the tenants shall pay to the landowner the
current rents as they become due or deposit the same with the court where the action for
ejectment has been instituted. (emphasis and underscoring supplied)
Petitioners did not comply with any of the acts mentioned in the law to avail of the benefits
of the suspension. They nevertheless posit that since the lots are the subject of
expropriation proceedings, respondents can no longer assert a better right of possession;
and that the City Ordinance authorizing the initiation of expropriation proceedings
designated them as beneficiaries of the lots, hence, they are entitled to continue staying
there.
Petitioners position does not lie.
The exercise of expropriation by a local government unit is covered by Section 19 of the
Local Government Code (LGC):
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 of the property.
Lintag v. National Power Corporation11 clearly outlines the stages of expropriation, viz:
Expropriation of lands consists of two stages:
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 .
lavvphi1

It is only upon the completion of these two stages that expropriation is said to have been
completed. The process is not complete until payment of just compensation. Accordingly,
the issuance of the writ of possession in this case does not write finis to the expropriation
proceedings. To effectuate the transfer of ownership, it is necessary for the NPC to pay the
property owners the final just compensation.12 (emphasis and underscoring supplied)
In the present case, the mere issuance of a writ of possession in the expropriation
proceedings did not transfer ownership of the lots in favor of the City. Such issuance was
only the first stage in expropriation. There is even no evidence that judicial deposit had
been made in favor of respondents prior to the Citys possession of the lots, contrary to
Section 19 of the LGC.
Respecting petitioners claim that they have been named beneficiaries of the lots, the city
ordinance authorizing the initiation of expropriation proceedings does not state
so.13 Petitioners cannot thus claim any right over the lots on the basis of the ordinance.
Even if the lots are eventually transferred to the City, it is non sequitur for petitioners to
claim that they are automatically entitled to be beneficiaries thereof. For certain
requirements must be met and complied with before they can be considered to be
beneficiaries.
In another vein, petitioners posit that respondents failed to prove that their possession is by
mere tolerance. This too fails. Apropos is the ruling in Calubayan v. Pascual: 14
In allowing several years to pass without requiring the occupant to vacate the premises nor
filing an action to eject him, plaintiffs have acquiesced to defendants possession and use of
the premises. It has been held that a person who occupies the land of another at the latters
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 against them. The status of the defendant is analogous to
that of a lessee or tenant whose term of lease has expired but whose occupancy continued
by tolerance of the owner. In such a case, the unlawful deprivation or withholding of
possession is to be counted from the date of the demand to vacate. (emphasis and
underscoring supplied)
Respondents bought the lots from Pilipinas Development Corporation in 1983. They
stepped into the shoes of the seller with respect to its relationship with petitioners. Even if
early on respondents made no demand or filed no action against petitioners to eject them
from the lots, they thereby merely maintained the status quo allowed petitioners
possession by tolerance.
WHEREFORE, the petition for review is DENIED.

G.R. No. 168770

February 9, 2011

ANUNCIACION VDA. DE OUANO, MARIO P. OUANO, LETICIA OUANO ARNAIZ, and

CIELO OUANO MARTINEZ, Petitioners,
vs.
THE REPUBLIC OF THE PHILIPPINES, THE MACTAN-CEBU INTERNATIONAL
AIRPORT AUTHORITY, and THE REGISTER OF DEEDS FOR THE CITY OF
CEBU, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 168812
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA), Petitioner,
vs.
RICARDO L. INOCIAN, in his personal capacity and as Attorney-in-Fact of OLYMPIA
E. ESTEVES, EMILIA E. BACALLA, RESTITUTA E. MONTANA, and RAUL L. INOCIAN;
and ALETHA SUICO MAGAT, in her personal capacity and as Attorney-in-Fact of
PHILIP M. SUICO, DORIS S. DELA CRUZ, JAMES M. SUICO, EDWARD M. SUICO,
ROSELYN SUICO-LAWSIN, REX M. SUICO, KHARLA SUICO-GUTIERREZ, ALBERT
CHIONGBIAN, and JOHNNY CHAN, Respondents.
DECISION
VELASCO, JR., J.:
At the center of these two (2) Petitions for Review on Certiorari under Rule 45 is the issue of
the right of the former owners of lots acquired for the expansion of the Lahug Airport in
Cebu City to repurchase or secure reconveyance of their respective properties.
In the first petition, docketed as G.R. No. 168770, petitioners Anunciacion vda. de Ouano,
Mario Ouano, Leticia Ouano Arnaiz and Cielo Ouano Martinez (the Ouanos) seek to nullify
the Decision1 dated September 3, 2004 of the Court of Appeals (CA) in CA-G.R. CV No.
78027, affirming the Order dated December 9, 2002 of the Regional Trial Court (RTC),
Branch 57 in Cebu City, in Civil Case No. CEB-20743, a suit to compel the Republic of the
Philippines and/or the Mactan-Cebu International Airport Authority (MCIAA) to reconvey to
the Ouanos a parcel of land.
The second petition, docketed as G.R. No. 168812, has the MCIAA seeking principally to
annul and set aside the Decision2 and Resolution3 dated January 14, 2005 and June 29,
2005, respectively, of the CA in CA-G.R. CV No. 64356, sustaining the RTC, Branch 13 in
Cebu City in its Decision of October 7, 1988 in Civil Case No. CEB-18370.
Per its October 19, 2005 Resolution, the Court ordered the consolidation of both cases.
Except for the names of the parties and the specific lot designation involved, the relevant
factual antecedents which gave rise to these consolidated petitions are, for the most part,
as set forth in the Courts Decision 4 of October 15, 2003, as reiterated in a Resolution 5 dated
August 9, 2005, in G.R. No. 156273 entitled Heirs of Timoteo Moreno and Maria Rotea v.

Mactan-Cebu International Airport Authority (Heirs of Moreno), and in other earlier related
cases.6
In 1949, the National Airport Corporation (NAC), MCIAAs predecessor agency, pursued a
program to expand the Lahug Airport in Cebu City. Through its team of negotiators, NAC
met and negotiated with the owners of the properties situated around the airport, which
included Lot Nos. 744-A, 745-A, 746, 747, 761-A, 762-A, 763-A, 942, and 947 of the
Banilad Estate. As the landowners would later claim, the government negotiating team, as a
sweetener, assured them that they could repurchase their respective lands should the
Lahug Airport expansion project do not push through or once the Lahug Airport closes or its
operations transferred to Mactan-Cebu Airport. Some of the landowners accepted the
assurance and executed deeds of sale with a right of repurchase. Others, however,
including the owners of the aforementioned lots, refused to sell because the purchase price
offered was viewed as way below market, forcing the hand of the Republic, represented by
the then Civil Aeronautics Administration (CAA), as successor agency of the NAC, to file a
complaint for the expropriation of Lot Nos. 744-A, 745-A, 746, 747, 761-A, 762-A, 763-A,
942, and 947, among others, docketed as Civil Case No. R-1881 entitled Republic v.
Damian Ouano, et al.
On December 29, 1961, the then Court of First Instance (CFI) of Cebu rendered judgment
for the Republic, disposing, in part, as follows:
IN VIEW OF THE FOREGOING, judgment is hereby rendered:
1. Declaring the expropriation of Lots Nos. 75, 76, 76, 89, 90, 91, 92, 105, 106, 107,
108, 104, 921-A, 88, 93, 913-B, 72, 77, 916, 777-A, 918, 919, 920, 764-A, 988, 744A, 745-A, 746, 747, 762-A, 763-A, 951, 942, 720-A, x x x and 947, included in the
Lahug Airport, Cebu City, justified in and in lawful exercise of the right of eminent
domain.
xxxx
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. 7
In view of the adverted buy-back assurance made by the government, the owners of the lots
no longer appealed the decision of the trial court. 8 Following the finality of the judgment of
condemnation, certificates of title for the covered parcels of land were issued in the name of
the Republic which, pursuant to Republic Act No. 6958, 9 were subsequently transferred to
MCIAA.
At the end of 1991, or soon after the transfer of the aforesaid lots to MCIAA, Lahug Airport
completely ceased operations, Mactan Airport having opened to accommodate incoming
and outgoing commercial flights. On the ground, the expropriated lots were never utilized for
the purpose they were taken as no expansion of Lahug Airport was undertaken. This

development prompted the former lot owners to formally demand from the government that
they be allowed to exercise their promised right to repurchase. The demands went
unheeded. Civil suits followed.
G.R. No. 168812 (MCIAA Petition)
On February 8, 1996, Ricardo L. Inocian and four others (all children of Isabel Limbaga who
originally owned six [6] of the lots expropriated); and Aletha Suico Magat and seven others,
successors-in-interest of Santiago Suico, the original owner of two (2) of the condemned
lots (collectively, the Inocians), filed before the RTC in Cebu City a complaint for
reconveyance of real properties and damages against MCIAA. The complaint, docketed
as Civil Case No. CEB-18370, was eventually raffled to Branch 13 of the court.
On September 29, 1997, one Albert Chiongbian (Chiongbian), alleging to be the owner of
Lot Nos. 761-A and 762-A but which the Inocians were now claiming, moved and was later
allowed to intervene.
During the pre-trial, MCIAA admitted the following facts:
1. That the properties, which are the subject matter of Civil Case No. CEB-18370,
are also the properties involved in Civil Case R-1881;
2. That the purpose of the expropriation was for the expansion of the old Lahug
Airport; that the Lahug Airport was not expanded;
3. That the old Lahug Airport was closed sometime in June 1992;
4. That the price paid to the lot owners in the expropriation case is found in the
decision of the court; and
5. That some properties were reconveyed by the MCIAA because the previous
owners were able to secure express waivers or riders wherein the government
agreed to return the properties should the expansion of the Lahug Airport not
materialize.
During trial, the Inocians adduced evidence which included the testimony of Ricardo Inocian
(Inocian) and Asterio Uy (Uy). Uy, an employee of the CAA, testified that he was a member
of the team which negotiated for the acquisition of certain lots in Lahug for the proposed
expansion of the Lahug Airport. He recalled that he acted as the interpreter/spokesman of
the team since he could speak the Cebuano dialect. He stated that the other members of
the team of negotiators were Atty. Pedro Ocampo, Atty. Lansang, and Atty. Saligumba. He
recounted that, in the course of the negotiation, their team assured the landowners that their
landholdings would be reconveyed to them in the event the Lahug Airport would be
abandoned or if its operation were transferred to the Mactan Airport. Some landowners
opted to sell, while others were of a different bent owing to the inadequacy of the offered
price.

Inocian testified that he and his mother, Isabel Lambaga, attended a meeting called by the
NAC team of negotiators sometime in 1947 or 1949 where he and the other landowners
were given the assurance that they could repurchase their lands at the same price in the
event the Lahug Airport ceases to operate. He further testified that they rejected the NACs
offer. However, he said that they no longer appealed the decree of expropriation due to the
repurchase assurance adverted to.
The MCIAA presented Michael Bacarizas (Bacarizas), who started working for MCIAA as
legal assistant in 1996. He testified that, in the course of doing research work on the lots
subject of Civil Case No. CEB-18370, he discovered that the same lots were covered by the
decision in Civil Case No. R-1881. He also found out that the said decision did not
expressly contain any condition on the matter of repurchase.
Ruling of the RTC
On October 7, 1998, the RTC rendered a Decision in Civil Case No. CEB-18370, the
dispositive portion of which reads as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered directing defendant
Mactan Cebu International Airport Authority (MCIAA) to reconvey (free from liens and
encumbrances) to plaintiffs Ricardo Inocian, Olimpia E. Esteves, Emilia E. Bacalla,
Restituta E. Montana and Raul Inocian Lots No. 744-A, 745-A, 746, 762-A, 747, 761-A and
to plaintiffs Aletha Suico Magat, Philip M. Suico, Doris S. dela Cruz, James M. Suico,
Edward M. Suico, Roselyn S. Lawsin, Rex M. Suico and Kharla Suico-Gutierrez Lots No.
942 and 947, after plaintiffs shall have paid MCIAA the sums indicated in the decision in
Civil Case No. R-1881. Defendant MCIAA is likewise directed to pay the aforementioned
plaintiffs the sum or P50,000.00 as and for attorneys fees and P10,000.00 for litigation
expenses.
Albert Chiongbians intervention should be, as it is hereby DENIED for utter lack of factual
basis.
With costs against defendant MCIAA.10
Therefrom, MCIAA went to the CA on appeal, docketed as CA-G.R. CV No. 64356.
Ruling of the CA
On January 14, 2005, the CA rendered judgment for the Inocians, declaring them entitled to
the reconveyance of the questioned lots as the successors-in-interest of the late Isabel
Limbaga and Santiago Suico, as the case may be, who were the former registered owners
of the said lots. The decretal portion of the CAs Decision reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by
us DISMISSING the appeal filed in this case and AFFFIRMING the decision rendered by
the court a quo on October 7, 1998 in Civil Case No. CEB-18370.
SO ORDERED.

The CA, citing and reproducing excerpts from Heirs of Moreno, 11 virtually held that the
decision in Civil Case No. R-1881 was conditional, stating "that the expropriation of [plaintiffappellees] lots for the proposed expansion of the Lahug Airport was ordered by the CFI of
Cebu under the impression that Lahug Airport would continue in operation." 12 The condition,
as may be deduced from the CFIs decision, was that should MCIAA, or its precursor
agency, discontinue altogether with the operation of Lahug Airport, then the owners of the
lots expropriated may, if so minded, demand of MCIAA to make good its verbal assurance
to allow the repurchase of the properties. To the CA, this assurance, a demandable
agreement of repurchase by itself, has been adequately established.
On September 21, 2005, the MCIAA filed with Us a petition for review of the CAs Decision,
docketed as G.R. No. 168812.
G.R. No. 168770 (Ouano Petition)
Soon after the MCIAA jettisoned the Lahug Airport expansion project, informal settlers
entered and occupied Lot No. 763-A which, before its expropriation, belonged to the
Ouanos. The Ouanos then formally asked to be allowed to exercise their right to repurchase
the aforementioned lot, but the MCIAA ignored the demand. On August 18, 1997, the
Ouanos instituted a complaint before the Cebu City RTC against the Republic and the
MCIAA for reconveyance, docketed as Civil Case No. CEB-20743.
Answering, the Republic and MCIAA averred that the Ouanos no longer have enforceable
rights whatsoever over the condemned Lot No. 763-A, the decision in Civil Case No. R1881 not having found any reversionary condition.
Ruling of the RTC
By a Decision dated November 28, 2000, the RTC, Branch 57 in Cebu City ruled in favor of
the Ouanos, disposing as follows:
WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in favor of
the plaintiffs, Anunciacion Vda. De Ouano, Mario P. Ouano, Leticia Ouano Arnaiz and Cielo
Ouano Martinez and against the Republic of the Philippines and Mactan Cebu International
Airport Authority (MCIAA) to restore to plaintiffs, the possession and ownership of their land,
Lot No. 763-A upon payment of the expropriation price to defendants; and
2. Ordering the Register of Deeds to effect the transfer of the Certificate of Title from
defendant Republic of the Philippines on Lot 763-A, canceling TCT No. 52004 in the name
of defendant Republic of the Philippines and to issue a new title on the same lot in the
names of Anunciacion Vda. De Ouano, Mario P. Ouano, Leticia Ouano Arnaiz and Cielo
Ouano Martinez.
No pronouncement as to costs.13
Acting on the motion of the Republic and MCIAA for reconsideration, however, the RTC,
Branch 57 in Cebu City, presided this time by Judge Enriqueta L. Belarmino, issued, on

December 9, 2002, an Order14 that reversed its earlier decision of November 28, 2000 and
dismissed the Ouanos complaint.
Ruling of the CA
In time, the Ouanos interposed an appeal to the CA, docketed as CA-G.R. CV No. 78027.
Eventually, the appellate court rendered a Decision 15 dated September 3, 2004, denying the
appeal, thus:
WHEREFORE, premises considered, the Order dated December 9, 2002, of the Regional
Trial Court, 7th Judicial Region, Branch 57, Cebu City, in Civil Case No. CEB-20743, is
hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Explaining its case disposition, the CA stated that the decision in Civil Case No. R-1881 did
not state any condition that Lot No. 763-A of the Ouanosand all covered lots for that
matterwould be returned to them or that they could repurchase the same property if it
were to be used for purposes other than for the Lahug Airport. The appellate court also went
on to declare the inapplicability of the Courts pronouncement in MCIAA v. Court of Appeals,
RTC, Branch 9, Cebu City, Melba Limbago, et al.,16 to support the Ouanos cause, since the
affected landowners in that case, unlike the Ouanos, parted with their property not through
expropriation but via a sale and purchase transaction.
The Ouanos filed a motion for reconsideration of the CAs Decision, but was denied per the
CAs May 26, 2005 Resolution.17 Hence, they filed this petition in G.R. No. 168770.
The Issues
G.R. No. 168812
GROUNDS FOR ALLOWANCE OF THE PETITION
l. THE ASSAILED ISSUANCES ILLEGALLY STRIPPED THE REPUBLIC OF ITS
ABSOLUTE AND UNCONDITIONAL TITLE TO THE SUBJECT EXPROPRIATED
PROPERTIES.
ll. THE IMPUNGED DISPOSITIONS INVALIDLY OVERTURNED THIS
HONORABLE COURTS FINAL RULINGS IN FERY V. MUNICIPALITY OF
CABANATUAN, MCIAA V. COURT OF APPEALS AND REYES V. NATIONAL
HOUSING AUTHORITY.
lll. THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THIS
HONORABLE COURTS RULING IN MORENO, ALBEIT IT HAS NOT YET
ATTAINED FINALITY.18
G.R. No. 168770

Questions of law presented in this Petition

Whether or not the testimonial evidence of the petitioners proving the promises, assurances
and representations by the airport officials and lawyers are inadmissbale under the Statute
of Frauds.
Whether or not under the ruling of this Honorable Court in the heirs of Moreno Case, and
pursuant to the principles enunciated therein, petitioners herein are entitiled to recover their
litigated property.
Reasons for Allowances of this Petition
Respondents did not object during trial to the admissibility of petitioners testimonial
evidence under the Statute of Frauds and have thus waived such objection and are now
barred from raising the same. In any event, the Statute of Frauds is not applicable herein.
Consequently, petitioners evidence is admissible and should be duly given weight and
credence, as initially held by the trial court in its original Decision. 19
While their respective actions against MCIAA below ended differently, the Ouanos and the
Inocians proffered arguments presented before this Court run along parallel lines, both
asserting entitlement to recover the litigated property on the strength of the Courts ruling
in Heirs of Moreno. MCIAA has, however, formulated in its Consolidated Memorandum the
key interrelated issues in these consolidated cases, as follows:
I
WHETHER ABANDONMENT OF THE PUBLIC USE FOR WHICH THE SUBJECT
PROPERTIES WERE EXPROPRIATED ENTITLES PETITIONERS OUANOS, ET AL. AND
RESPONDENTS INOCIAN, ET AL. TO REACQUIRE THEM.
II
WHETHER PETITIONERS OUANOS, ET AL. AND RESPONDENTS INOCIAN, ET AL. ARE
ENTITLED TO RECONVEYANCE OF THE SUBJECT PROPERTIES SIMPLY ON THE
BASIS OF AN ALLEGED VERBAL PROMISE OR ASSURANCE OF SOME NAC
OFFICIALS THAT THE SUBJECT PROPERTIES WILL BE RETUNRED IF THE AIRPORT
PROJECT WOULD BE ABANDONED.
The Courts Ruling
The Republic and MCIAAs petition in G.R. No. 168812 is bereft of merit, while the Ouano
petition in G.R. No. 168770 is meritorious.
At the outset, three (3) fairly established factual premises ought to be emphasized:
First, the MCIAA and/or its predecessor agency had not actually used the lots subject of the
final decree of expropriation in Civil Case No. R-1881 for the purpose they were originally
taken by the government, i.e., for the expansion and development of Lahug Airport.

Second, the Lahug Airport had been closed and abandoned. A significant portion of it had,
in fact, been purchased by a private corporation for development as a commercial
complex.20
Third, it has been preponderantly established by evidence that the NAC, through its team of
negotiators, had given assurance to the affected landowners that they would be entitled to
repurchase their respective lots in the event they are no longer used for airport
purposes.21 "No less than Asterio Uy," the Court noted in Heirs of Moreno, "one of the
members of the CAA Mactan Legal Team, which interceded for the acquisition of the lots for
the Lahug Airports 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." 22 In Civil Case No. CEB20743, Exhibit "G," the transcript of the deposition 23 of Anunciacion vda. de Ouano covering
the assurance made had been formally offered in evidence and duly considered in the initial
decision of the RTC Cebu City. In Civil Case No. CEB-18370, the trial court, on the basis of
testimonial evidence, and later the CA, recognized the reversionary rights of the suing
former lot owners or their successors in interest 24 and resolved the case accordingly. In
point with respect to the representation and promise of the government to return the lots
taken should the planned airport expansion do not materialize is what the Court said
in Heirs of Moreno, thus:
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 airports venue.
Some acted on this assurance and sold their properties; other landowners held out and
waited for the exercise of eminent domain to take its course until finally coming to terms
with respondents predecessors that they would not appeal nor block further judgment of
condemnation if the right of repurchase was extended to them. A handful failed to prove that
they acted on such assurance when they parted with ownership of their land. 25 (Emphasis
supplied; citations omitted.)
For perspective, Heirs of Morenolater followed by MCIAA v. Tudtud (Tudtud)26 and the
consolidated cases at baris cast under the same factual setting and centered on the
expropriation of privately-owned lots for the public purpose of expanding the Lahug Airport
and the alleged promise of reconveyance given by the negotiating NAC officials to the
private lot owners. All the lots being claimed by the former owners or successors-in-interest
of the former owners in the Heirs of Moreno, Tudtud, and the present cases were similarly
adjudged condemned in favor of the Republic in Civil Case No. R-1881. All the claimants
sought was or is to have the condemned lots reconveyed to them upon the payment of the
condemnation price since the public purpose of the expropriation was never met. Indeed,
the expropriated lots were never used and were, in fact, abandoned by the expropriating
government agencies.
In all then, the issues and supporting arguments presented by both sets of petitioners in
these consolidated cases have already previously been passed upon, discussed at length,
and practically peremptorily resolved in Heirs of Moreno and the November
2008 Tudtud ruling. The Ouanos, as petitioners in G.R. No. 168770, and the Inocians, as

respondents in G.R. No. 168812, are similarly situated as the heirs of Moreno in Heirs of
Moreno and Benjamin Tudtud in Tudtud. Be that as it may, there is no reason why the ratio
decidendi in Heirs of Moreno and Tudtudshould not be made to apply to petitioners Ouanos
and respondents Inocians such that they shall be entitled to recover their or their
predecessors respective properties under the same manner and arrangement as the heirs
of Moreno and Tudtud. Stare decisis et non quieta movere (to adhere to precedents, and
not to unsettle things which are established). 27
Just like in Tudtud and earlier in Heirs of Moreno, MCIAA would foist the theory that the
judgment of condemnation in Civil Case No. R-1881 was without qualification and was
unconditional. It would, in fact, draw attention to thefallo of the expropriation courts decision
to prove that there is nothing in the decision indicating that the government gave assurance
or undertook to reconvey the covered lots in case the Lahug airport expansion project is
aborted. Elaborating on this angle, MCIAA argues that the claim of the Ouanos and the
Inocians regarding the alleged verbal assurance of the NAC negotiating team that they can
reacquire their landholdings is barred by the Statute of Frauds. 28
Under the rule on the Statute of Frauds, as expressed in Article 1403 of the Civil Code, a
contract for the sale or acquisition of real property shall be unenforceable unless the same
or some note of the contract be in writing and subscribed by the party charged. Subject to
defined exceptions, evidence of the agreement cannot be received without the writing, or
secondary evidence of its contents.
MCIAAs invocation of the Statute of Frauds is misplaced primarily because the statute
applies only to executory and not to completed, executed, or partially consummated
contracts.29 Carbonnel v. Poncio, et al., quoting Chief Justice Moran, explains the rationale
behind this rule, thusly:
x x x "The reason is simple. In executory contracts there is a wide field for fraud because
unless they may be in writing there is no palpable evidence of the intention of the
contracting parties. The statute has been precisely been enacted to prevent fraud." x x x
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 derived by him from the transaction in litigation, and at the same time,
evade the obligations, responsibilities or liabilities assumed or contracted by him
thereby.30 (Emphasis in the original.)
Analyzing the situation of the cases at bar, there can be no serious objection to the
proposition that the agreement package between the government and the private lot owners
was already partially performed by the government through the acquisition of the lots for the
expansion of the Lahug airport. The parties, however, failed to accomplish the more
important condition in the CFI decision decreeing the expropriation of the lots litigated upon:
the expansion of the Lahug Airport. The projectthe public purpose behind the forced
property takingwas, in fact, never pursued and, as a consequence, the lots expropriated
were abandoned. Be that as it may, the two groups of landowners can, in an action to
compel MCIAA to make good its oral undertaking to allow repurchase, adduce parol
evidence to prove the transaction.

At any rate, the objection on the admissibility of evidence on the basis of the Statute of
Frauds may be waived if not timely raised. Records tend to support the conclusion that
MCIAA did not, as the Ouanos and the Inocians posit, object to the introduction of parol
evidence to prove its commitment to allow the former landowners to repurchase their
respective properties upon the occurrence of certain events.
In a bid to deny the lot owners the right to repurchase, MCIAA, citing cases, 31 points to the
dispositive part of the decision in Civil Case R-1881 which, as couched, granted the
Republic absolute title to the parcels of land declared expropriated. The MCIAA is correct
about the unconditional tone of the dispositive portion of the decision, but that actuality
would not carry the day for the agency. Addressing the matter of the otherwise absolute
tenor of the CFIs disposition in Civil Case No. R-1881, the Court, in Heirs of Moreno, after
taking stock of the ensuing portion of the body of the CFIs decision, said:
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 of 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 judgments 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.32 (Emphasis supplied.)
We went on to state as follows:
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
the 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--vis the expropriated lots x x x
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.33
Not to be overlooked of course is what the Court said in its Resolution disposing of MCIAAs
motion to reconsider the original ruling in Heirs of Moreno. In that resolution, We stated that
the fallo of the decision in Civil Case R-1881 should be viewed and understood in
connection with the entire text, which contemplated a return of the property taken if the
airport expansion project were abandoned. For ease of reference, following is what the
Court wrote:

Moreover, we do not subscribe to the [MCIAAs] contention that since the possibility of the
Lahug Airports 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 Courts 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 Courts 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.34
The Court has, to be sure, taken stock of Fery v. Municipality of Cabanatuan,35 a case
MCIAA cites at every possible turn, where the Court made these observations:
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 and in that case the non-user does not have the effect of defeating
the title acquired by the expropriation proceedings x x x.
Fery notwithstanding, MCIAA cannot really rightfully say that it has absolute title to the lots
decreed expropriated in Civil Case No. R-1881. The correct lesson of Fery is captured by
what the Court said in that case, thus: "the government acquires only such rights in
expropriated parcels of land as may be allowed by the character of its title over the
properties." In light of our disposition in Heirs of Moreno and Tudtud, the statement
immediately adverted to means that in the event the particular public use for which a parcel
of land is expropriated is abandoned, the owner shall not be entitled to recover or
repurchase it as a matter of right, unless such recovery or repurchase is expressed in or
irresistibly deducible from the condemnation judgment. But as has been determined below,
the decision in Civil Case No. R-1881 enjoined MCIAA, as a condition of approving
expropriation, to allow recovery or repurchase upon abandonment of the Lahug airport
project. To borrow from our underlying decision in Heirs of Moreno, "[n]o doubt, the return or
repurchase of the condemned properties of petitioners could readily be justified as the
manifest legal effect of consequence of the trial courts 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." 36
Providing added support to the Ouanos and the Inocians right to repurchase is what
in Heirs of Moreno was referred to as constructive trust, one that is akin to the implied trust
expressed in Art. 1454 of the Civil Code, 37 the purpose of which is to prevent unjust
enrichment.38 In the case at bench, the Ouanos and the Inocians parted with their respective
lots in favor of the MCIAA, the latter obliging itself to use the realties for the expansion of
Lahug Airport; failing to keep its end of the bargain, MCIAA can be compelled by the former
landowners to reconvey the parcels of land to them, otherwise, they would be denied the
use of their properties upon a state of affairs that was not conceived nor contemplated when
the expropriation was authorized. In effect, the government merely held the properties
condemned in trust until the proposed public use or purpose for which the lots were

condemned was actually consummated by the government. Since the government failed to
perform the obligation that is the basis of the transfer of the property, then the lot owners
Ouanos and Inocians can demand the reconveyance of their old properties after the
payment of the condemnation price.
Constructive trusts are fictions of equity that courts use as devices to remedy any situation
in which the holder of the legal title, MCIAA in this case, may not, in good conscience, retain
the beneficial interest. We add, however, as in Heirs of Moreno, that the party seeking the
aid of equitythe landowners in this instance, in establishing the trustmust himself do
equity in a manner as the court may deem just and reasonable.
The Court, in the recent MCIAA v. Lozada, Sr., revisited and abandoned the Fery ruling that
the former owner is not entitled to reversion of the property even if the public purpose were
not pursued and were abandoned, thus:
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.,McConihay v. Theodore Wright, and Reichling
v. Covington Lumber Co., 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.
1avvphi1

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. It is well settled
that the taking of private property by the Governments 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.
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 owners right to justice, fairness, and equity.

In light of these premises, we now expressly hold that the taking of private property,
consequent to the Governments 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.39(Emphasis supplied.)
Clinging to Fery, specifically the fee simple concept underpinning it, is no longer compelling,
considering the ensuing inequity such application entails. Too, the Court resolved Fery not
under the cover of any of the Philippine Constitutions, each decreeing that private property
shall not be taken for public use without just compensation. The twin elements of just
compensation and public purpose are, by themselves, direct limitations to the exercise of
eminent domain, arguing, in a way, against the notion of fee simple title. The fee does not
vest until payment of just compensation.40
1avvphi1

In esse, expropriation is forced private property taking, the landowner being really without a
ghost of a chance to defeat the case of the expropriating agency. In other words, in
expropriation, the private owner is deprived of property against his will. Withal, the
mandatory requirement of due process ought to be strictly followed, such that the state must
show, at the minimum, a genuine need, an exacting public purpose to take private property,
the purpose to be specifically alleged or least reasonably deducible from the complaint.
Public use, as an eminent domain concept, has now acquired an expansive meaning to
include any use that is of "usefulness, utility, or advantage, or what is productive of general
benefit [of the public]."41 If the genuine public necessitythe very reason or condition as it
wereallowing, at the first instance, the expropriation of a private land ceases or
disappears, then there is no more cogent point for the governments retention of the
expropriated land. The same legal situation should hold if the government devotes the
property to another public use very much different from the original or deviates from the
declared purpose to benefit another private person. It has been said that the direct use by
the state of its power to oblige landowners to renounce their productive possession to
another citizen, who will use it predominantly for that citizens own private gain, is offensive
to our laws.42
A condemnor should commit to use the property pursuant to the purpose stated in the
petition for expropriation, failing which it should file another petition for the new purpose. If
not, then it behooves the condemnor to return the said property to its private owner, if the
latter so desires. The government cannot plausibly keep the property it expropriated in any
manner it pleases and, in the process, dishonor the judgment of expropriation. This is not in
keeping with the idea of fair play,
The notion, therefore, that the government, via expropriation proceedings, acquires
unrestricted ownership over or a fee simple title to the covered land, is no longer tenable.
We suggested as much in Heirs of Moreno and inTudtud and more recently in Lozada, Sr.
Expropriated lands should be differentiated from a piece of land, ownership of which was
absolutely transferred by way of an unconditional purchase and sale contract freely entered

by two parties, one without obligation to buy and the other without the duty to sell. In that
case, the fee simple concept really comes into play. There is really no occasion to apply the
"fee simple concept" if the transfer is conditional. The taking of a private land in
expropriation proceedings is always conditioned on its continued devotion to its public
purpose. As a necessary corollary, once the purpose is terminated or peremptorily
abandoned, then the former owner, if he so desires, may seek its reversion, subject of
course to the return, at the very least, of the just compensation received.
To be compelled to renounce dominion over a piece of land is, in itself, an already bitter pill
to swallow for the owner. But to be asked to sacrifice for the common good and yield
ownership to the government which reneges on its assurance that the private property shall
be for a public purpose may be too much. But it would be worse if the power of eminent
domain were deliberately used as a subterfuge to benefit another with influence and power
in the political process, including development firms. The mischief thus depicted is not at all
far-fetched with the continued application of Fery. Even as the Court deliberates on these
consolidated cases, there is an uncontroverted allegation that the MCIAA is poised to sell, if
it has not yet sold, the areas in question to Cebu Property Ventures, Inc. This provides an
added dimension to abandon Fery.
Given the foregoing disquisitions, equity and justice demand the reconveyance by MCIAA of
the litigated lands in question to the Ouanos and Inocians. In the same token, justice and
fair play also dictate that the Ouanos and Inocian return to MCIAA what they received as
just compensation for the expropriation of their respective properties plus legal interest to be
computed from default, which in this case should run from the time MCIAA complies with
the reconveyance obligation.43 They must likewise pay MCIAA the necessary expenses it
might have incurred in sustaining their respective lots and the monetary value of its services
in managing the lots in question to the extent that they, as private owners, were benefited
thereby.
In accordance with Art. 1187 of the Civil Code on mutual compensation, MCIAA may keep
whatever income or fruits it may have obtained from the parcels of land expropriated. In
turn, the Ouanos and Inocians need not require the accounting of interests earned by the
amounts they received as just compensation.44
Following Art. 1189 of the Civil Code providing that "[i]f the thing is improved by its nature, or
by time, the improvement shall inure to the benefit of the creditor x x x," the Ouanos and
Inocians do not have to settle the appreciation of the values of their respective lots as part
of the reconveyance process, since the value increase is merely the natural effect of nature
and time.
Finally, We delete the award of PhP 50,000 and PhP 10,000, as attorneys fees and
litigation expenses, respectively, made in favor of the Inocians by the Cebu City RTC in its
judgment in Civil Case No. CEB-18370, as later affirmed by the CA. As a matter of sound
policy, no premium should be set on the right to litigate where there is no doubt about
the bona fides of the exercise of such right, 45 as here, albeit the decision of MCIAA to resist
the former landowners claim eventually turned out to be untenable.

WHEREFORE, the petition in G.R. No. 168770 is GRANTED. Accordingly, the CA Decision
dated September 3, 2004 in CA-G.R. CV No. 78027 is REVERSED and SET ASIDE.
Mactan-Cebu International Airport Authority is ordered to reconvey subject Lot No. 763-A to
petitioners Anunciacion vda. de Ouano, Mario P. Ouano, Leticia Ouano Arnaiz, and Cielo
Ouano Martinez. The Register of Deeds of Cebu City is ordered to effect the necessary
cancellation of title and transfer it in the name of the petitioners within fifteen (15) days from
finality of judgment.
The petition of the Mactan-Cebu International Airport Authority in G.R. No. 168812
is DENIED, and the CAs Decision and Resolution dated January 14, 2005 and June 29,
2005, respectively, in CA-G.R. CV No. 64356 areAFFIRMED, except insofar as they
awarded attorneys fees and litigation expenses that are hereby DELETED. Accordingly,
Mactan-Cebu International Airport Authority is ordered to reconvey to respondents Ricardo
L. Inocian, Olympia E. Esteves, Emilia E. Bacalla, Restituta E. Montana, and Raul L.
Inocian the litigated Lot Nos. 744-A, 745-A, 746, 762-A, 747, and 761-A; and to
respondents Aletha Suico Magat, Philip M. Suico, Dolores S. dela Cruz, James M. Suico,
Edward M. Suico, Roselyn S. Lawsin, Rex M. Suico, and Kharla Suico-Gutierrez the
litigated Lot Nos. 942 and 947. The Register of Deeds of Cebu City is ordered to effect the
necessary cancellation of title and transfer it in the name of respondents within a period of
fifteen (15) days from finality of judgment.
The foregoing dispositions are subject to QUALIFICATIONS, to apply to these consolidated
petitions, when appropriate, as follows:
(1) Petitioners Ouano, et al. in G.R. No. 168770 and respondents Ricardo L Inocian,
et al. in G.R. No. 168812 are ordered to return to the MCIAA the just compensation
they or their predecessors-in-interest received for the expropriation of their
respective lots as stated in Civil Case No. R-1881, within a period of sixty (60) days
from finality of judgment;
(2) The MCIAA shall be entitled to RETAIN whatever fruits and income it may have
obtained from the subject expropriated lots without any obligation to refund the same
to the lot owners; and
(3) Petitioners Ouano, et al. in G.R. No. 168770 and respondents Ricardo L. Inocian,
et al. in G.R. No. 168812 shall RETAIN whatever interests the amounts they
received as just compensation may have earned in the meantime without any
obligation to refund the same to MCIAA.
SO ORDERED.

NATIONAL POWER CORPORATION,

Petitioner,
- versus -

HEIRS OF MACABANGKIT SANGKAY, namely: CEBU, BATOWA-AN,

SAYANA, NASSER, MANTA, EDGAR, PUTRI , MONGKOY*, and AMIR,
all surnamed MACABANGKIT,
Respondents.
BERSAMIN, J.:
Private property shall not be taken for public use without just
compensation.
Section 9, Article III, 1987 Constitution

The application of this provision of the Constitution is the focus of this

appeal.
Petitioner National Power Corporation (NPC) seeks the review
on certiorari of the decision promulgated on October 5, 2004,[1] whereby the Court
of Appeals (CA) affirmed the decision dated August 13, 1999 and the supplemental
decision dated August 18, 1999, ordering NPC to pay just compensation to the
respondents, both rendered by the Regional Trial Court, Branch 1, in Iligan City
(RTC).
Antecedents
Pursuant to its legal mandate under Republic Act No. 6395 (An Act Revising
the Charter of the National Power Corporation), NPC undertook the Agus River
Hydroelectric Power Plant Project in the 1970s to generate electricity for
Mindanao. The project included the construction of several underground tunnels to
be used in diverting the water flow from the Agus River to the hydroelectric plants.
[2]

On November 21, 1997, the respondents, namely: Cebu, Bangowa-an,

Sayana, Nasser, Manta, Edgar, Putri, Mongkoy and Amir, all surnamed
Macabangkit (Heirs of Macabangkit), as the owners of land with an area
of 221,573 square meters situated in Ditucalan, Iligan City, sued NPC in the RTC

for the recovery of damages and of the property, with the alternative prayer for the
payment of just compensation. [3] They alleged that they had belatedly discovered
that one of the underground tunnels of NPC that diverted the water flow of the
Agus River for the operation of the Hydroelectric Project in Agus V, Agus VI and
Agus VII traversed their land; that their discovery had occurred in 1995 after Atty.
Saidali C. Gandamra, President of the Federation of Arabic Madaris School, had
rejected their offer to sell the land because of the danger the underground tunnel
might pose to the proposed Arabic Language Training Center and Muslims Skills
Development Center; that such rejection had been followed by the withdrawal by
Global Asia Management and Resource Corporation from developing the land into
a housing project for the same reason; that Al-Amanah Islamic Investment Bank of
the Philippines had also refused to accept their land as collateral because of the
presence of the underground tunnel; that the underground tunnel had been
constructed without their knowledge and consent; that the presence of the tunnel
deprived them of the agricultural, commercial, industrial and residential value of
their land; and that their land had also become an unsafe place for habitation
because of the loud sound of the water rushing through the tunnel and the constant
shaking of the ground, forcing them and their workers to relocate to safer grounds.
In its answer with counterclaim,[4] NPC countered that the Heirs of
Macabangkit had no right to compensation under section 3(f) of Republic Act No.
6395, under which a mere legal easement on their land was established; that their
cause of action, should they be entitled to compensation, already prescribed due to
the tunnel having been constructed in 1979; and that by reason of the tunnel being
an apparent and continuous easement, any action arising from such easement
prescribed in five years.
Ruling of the RTC
On July 23, 1998, an ocular inspection of the land that was conducted by
RTC Judge Mamindiara P. Mangotara and the representatives of the parties
resulted in the following observations and findings:

a. That a concrete post which is about two feet in length from the
ground which according to the claimants is the middle point of the
tunnel.
b. That at least three fruit bearing durian trees were uprooted and as a
result of the construction by the defendant of the tunnel and about
one hundred coconuts planted died.
c. That underground tunnel was constructed therein.[5]

[6]

After trial, the RTC ruled in favor of the plaintiffs (Heirs of Macabangkit),
decreeing:

WHEREFORE, premises considered:

1. The prayer for the removal or dismantling of defendants tunnel
is denied. However, defendant is hereby directed and ordered:
a)To pay plaintiffs land with a total area of 227,065 square
meters, at the rate of FIVE HUNDRED (P500.00) PESOS per
square meter, or a total of ONE HUNDRED THIRTEEN MILLION
FIVE HUNDRED THIRTY TWO THOUSAND AND FIVE
HUNDRED (P113,532,500.00), PESOS, plus interest, as actual
damages or just compensation;
b)
To pay plaintiff a monthly rental of their land in the
amount of THIRTY THOUSAND (P30,000.00) PESOS from 1979
up to July 1999 with 12% interest per annum;
c)To pay plaintiffs the sum of TWO HUNDRED THOUSAND
(P200,000.00) PESOS, as moral damages;
d) To pay plaintiffs, the sum of TWO HUNDRED
THOUSAND (P200,000.00) PESOS, as exemplary damages;

e)To pay plaintiffs, the sum equivalent to 15% of the total

amount awarded, as attorneys fees, and to pay the cost.
SO ORDERED.

The RTC found that NPC had concealed the construction of the tunnel in
1979 from the Heirs of Macabangkit, and had since continuously denied its
existence; that NPC had acted in bad faith by taking possession of the subterranean
portion of their land to construct the tunnel without their knowledge and prior
consent; that the existence of the tunnel had affected the entire expanse of the land,
and had restricted their right to excavate or to construct a motorized deep well; and
that they, as owners, had lost the agricultural, commercial, industrial and
residential value of the land.
The RTC fixed the just compensation at P500.00/square meter based on the
testimony of Dionisio Banawan, OIC-City Assessor of Iligan City, to the effect that
the appraised value of the adjoining properties ranged from P700.00 to P750.00,
while the appraised value of their affected land ranged from P400.00 to P500.00.
The RTC also required NPC to pay rentals from 1979 due to its bad faith in
concealing the construction of the tunnel from the Heirs of Macabangkit.
On August 18, 1999, the RTC issued a supplemental decision,[7] viz:
Upon a careful review of the original decision dated August 13,
1999, a sentence should be added to paragraph 1(a) of the dispositive
portion thereof, to bolster, harmonize, and conform to the findings of the
Court, which is quoted hereunder, to wit:
Consequently, plaintiffs land or properties are hereby
condemned in favor of defendant National Power Corporation,
upon payment of the aforesaid sum.
Therefore, paragraph 1(a) of the dispositive portion of the original
decision should read, as follows:

a) To pay plaintiffs land with a total area of 227,065 square

meters, at the rate of FIVE HUNDRED (P500.00) PESOS per
square meter, or a total of ONE HUNDRED THIRTEEN
MILLION FIVE HUNDRED THIRTY TWO THOUSAND
AND FIVE HUNDRED (P113,532,500.00) PESOS, plus
interest, as actual damages or just compensation; Consequently,
plaintiffs land or properties are hereby condemned in favor of
defendant National Power Corporation, upon payment of the
aforesaid sum;
This supplemental decision shall be considered as part of
paragraph 1(a) of the dispositive portion of the original decision.
Furnish copy of this supplemental decision to all parties
immediately.
SO ORDERED.

On its part, NPC appealed to the CA on August 25, 1999.[8]

Earlier, on August 18, 1999, the Heirs of Macabangkit filed an urgent motion
for execution of judgment pending appeal.[9] The RTC granted the motion and
issued a writ of execution,[10] prompting NPC to assail the writ by petition
for certiorari in the CA. On September 15, 1999, the CA issued a temporary
restraining order (TRO) to enjoin the RTC from implementing its decision. The
Heirs of Macabangkit elevated the ruling of the CA (G.R. No. 141447), but the
Court upheld the CA on May 4, 2006.[11]
Ruling of the CA
NPC raised only two errors in the CA, namely:

I
THE COURT A QUO SERIOUSLY ERRED IN RULING THAT
NAPOCORS UNDERGROUND TUNNEL IN ITS AGUS RIVER
HYDRO-ELECTRIC PLANT PROJECT TRAVERSED AND/OR

AFFECTED APPELLEES PROPERTY AS THERE IS NO CLEAR

EVIDENCE INDUBITABLY ESTABLISHING THE SAME
II
THE COURT A QUO SERIOUSLY ERRED IN GRANTING
APPELLEES CLAIMS IN THEIR ENTIRETY FOR GRANTING
ARGUENDO THAT NAPOCORS UNDERGROUND TUNNEL
INDEED TRAVERSED APPELLEES PROPERTY, THEIR CAUSE
OF ACTION HAD ALREADY BEEN BARRED BY PRESCRIPTION,
ESTOPPEL AND LACHES

On October 5, 2004, the CA affirmed the decision of the RTC, holding that
the testimonies of NPCs witness Gregorio Enterone and of the respondents
witness Engr. Pete Sacedon, the topographic survey map, the sketch map, and the
ocular inspection report sufficiently established the existence of the underground
tunnel traversing the land of the Heirs of Macabangkit; that NPC did not
substantiate its defense that prescription already barred the claim of the Heirs of
Macabangkit; and that Section 3(i) of R.A. No. 6395, being silent about tunnels,
did not apply, viz:
As regard Section 3(i) of R.A. No. 6395 (An Act Revising the
Charter of the National Power Corporation), it is submitted that the same
provision is not applicable. There is nothing in Section 3(i) of said law
governing claims involving tunnels. The same provision is applicable to
those projects or facilities on the surface of the land, that can easily be
discovered, without any mention about the claims involving tunnels,
particularly those surreptitiously constructed beneath the surface of the
land, as in the instant case.
Now, while it is true that Republic Act No. 6395 authorizes
NAPOCOR to take water from any public stream, river, creek, lake,
spring or waterfall in the Philippines for the realization of the purposes
specified therein for its creation; to intercept and divert the flow of
waters from lands of riparian owners (in this case, the Heirs), and from
persons owning or interested in water which are or may be necessary to
said purposes, the same Act expressly mandates the payment of just
compensation.

WHEREFORE, premises considered, the instant appeal is hereby

DENIED for lack of merit. Accordingly, the appealed Decision dated
August 13, 1999, and the supplemental Decision dated August 18, 1999,
are hereby AFFIRMED in toto.
SO ORDERED.[12]

Issue
NPC has come to the Court, assigning the lone error that:
THE APPELLATE COURT ERRED ON A QUESTION OF LAW
WHEN IT AFFIRMED THE DECISION AND SUPPLEMENTAL
DECISION OF THE COURT A QUO DIRECTING AND ORDERING
PETITIONER TO PAY JUST COMPENSATION TO RESPONDENTS.

NPC reiterates that witnesses Enterone and Sacedon lacked personal

knowledge about the construction and existence of the tunnel and were for that
reason not entitled to credence; and that the topographic and relocation maps
prepared by Sacedon should not be a basis to prove the existence and location of
the tunnel due to being self-serving.
NPC contends that the CA should have applied Section 3(i) of Republic Act
No. 6395, which provided a period of only five years from the date of the
construction within which the affected landowner could bring a claim against it;
and that even if Republic Act No. 6395 should be inapplicable, the action of the
Heirs of Macabangkit had already prescribed due to the underground tunnel being
susceptible to acquisitive prescription after the lapse of 10 years pursuant to Article
620 of the Civil Code due to its being a continuous and apparent legal easement
under Article 634 of the Civil Code.
The issues for resolution are, therefore, as follows:

(1) Whether the CA and the RTC erred in holding that there was
an underground tunnel traversing the Heirs of Macabangkits land
constructed by NPC; and
(2) Whether the Heirs of Macabangkits right to claim just
compensation had prescribed under section 3(i) of Republic Act No.
6395, or, alternatively, under Article 620 and Article 646 of the Civil
Code.
Ruling
We uphold the liability of NPC for payment of just compensation.
1.
Factual findings of the RTC,
when affirmed by the CA, are binding
The existence of the tunnel underneath the land of the Heirs of Macabangkit,
being a factual matter, cannot now be properly reviewed by the Court, for
questions of fact are beyond the pale of a petition for review on certiorari.
Moreover, the factual findings and determinations by the RTC as the trial court are
generally binding on the Court, particularly after the CA affirmed them. [13] Bearing
these doctrines in mind, the Court should rightly dismiss NPCs appeal.
NPC argues, however, that this appeal should not be dismissed because the
Heirs of Macabangkit essentially failed to prove the existence of the underground
tunnel. It insists that the topographic survey map and the right-of-way map
presented by the Heirs of Macabangkit did not at all establish the presence of any
underground tunnel.
NPC still fails to convince.
Even assuming, for now, that the Court may review the factual findings of
the CA and the RTC, for NPC to insist that the evidence on the existence of the

tunnel was not adequate and incompetent remains futile. On the contrary, the
evidence on the tunnel was substantial, for the significance of the topographic
survey map and the sketch map (as indicative of the extent and presence of the
tunnel construction) to the question on the existence of the tunnel was strong, as
the CA correctly projected in its assailed decision, viz:
Among the pieces of documentary evidence presented showing the
existence of the said tunnel beneath the subject property is the
topographic survey map. The topographic survey map is one conducted
to know about the location and elevation of the land and all existing
structures above and underneath it. Another is the Sketch Map which
shows the location and extent of the land traversed or affected by the
said tunnel. These two (2) pieces of documentary evidence readily
point the extent and presence of the tunnel construction coming
from the power cavern near the small man-made lake which is the
inlet and approach tunnel, or at a distance of about two (2)
kilometers away from the land of the plaintiffs-appellees, and then
traversing the entire and the whole length of the plaintiffs-appellees
property, and the outlet channel of the tunnel is another small manmade lake. This is a sub-terrain construction, and considering that both
inlet and outlet are bodies of water, the tunnel can hardly be noticed. All
constructions done were beneath the surface of the plaintiffs-appellees
property. This explains why they could never obtain any knowledge of
the existence of such tunnel during the period that the same was
constructed and installed beneath their property.[14]

The power cavern and the inlet and outlet channels established the presence
of the underground tunnel, based on the declaration in the RTC by Sacedon, a
former employee of the NPC.[15] It is worthy to note that NPC did not deny the
existence of the power cavern, and of the inlet and outlet channels adverted to and
as depicted in the topographic survey map and the sketch map. The CA cannot be
faulted for crediting the testimony of Sacedon despite the effort of NPC to discount
his credit due to his not being an expert witness, simply because Sacedon had
personal knowledge based on his being NPCs principal engineer and supervisor
tasked at one time to lay out the tunnels and transmission lines specifically for the
hydroelectric projects,[16] and to supervise the construction of the Agus 1

Hydroelectric Plant itself[17] from 1978 until his retirement from NPC.[18] Besides,
he declared that he personally experienced the vibrations caused by the rushing
currents in the tunnel, particularly near the outlet channel.[19] Under any
circumstances, Sacedon was a credible and competent witness.
The ocular inspection actually confirmed the existence of the tunnel
underneath the land of the Heirs of Macabangkit. Thus, the CA observed:
More so, the Ocular inspection conducted on July 23, 1998 further
bolstered such claim of the existence and extent of such tunnel. This was
conducted by a team composed of the Honorable Presiding Judge of the
Regional Trial Court, Branch 01, Lanao del Norte, herself and the
respective lawyers of both of the parties and found that, among others,
said underground tunnel was constructed beneath the subject
property.[20]

It bears noting that NPC did not raise any issue against or tender any
contrary comment on the ocular inspection report.
2.
Five-year prescriptive period under Section 3(i) of Republic Act
No. 6395 does not apply to claims for just compensation
The CA held that Section 3(i) of Republic Act No. 6395 had no application
to this action because it covered facilities that could be easily discovered, not
tunnels that were inconspicuously constructed beneath the surface of the land.[21]
NPC disagrees, and argues that because Article 635 [22] of the Civil
Code directs the application of special laws when an easement, such as the
underground tunnel, was intended for public use, the law applicable was Section
3(i) of Republic Act No. 6395, as amended, which limits the action for recovery of
compensation to five years from the date of construction. It posits that the five-year

prescriptive period already set in due to the construction of the underground tunnel
having been completed in 1979 yet.
Without necessarily adopting the reasoning of the CA, we uphold its
conclusion that prescription did not bar the present action to recover just
compensation.
Section 3 (i) of Republic Act No. 6395, the cited law, relevantly provides:
Section 3. Powers and General Functions of the Corporation. The
powers, functions, rights and activities of the Corporation shall be the
following:
xxx
(i) To construct works across, or otherwise, any stream,
watercourse, canal, ditch, flume, street, avenue, highway or
railway of private and public ownership, as the location of said
works may require:Provided, That said works be constructed in
such a manner as not to endanger life or property; And provided,
further, That the stream, watercourse, canal ditch, flume, street,
avenue, highway or railway so crossed or intersected be restored
as near as possible to their former state, or in a manner not to
impair unnecessarily their usefulness. Every person or entity
whose right of way or property is lawfully crossed or intersected
by said works shall not obstruct any such crossings or
intersection and shall grant the Board or its representative, the
proper authority for the execution of such work. The
Corporation is hereby given the right of way to locate, construct
and maintain such works over and throughout the lands owned
by the Republic of the Philippines or any of its branches and
political subdivisions. The Corporation or its representative may
also enter upon private property in the lawful performance or
prosecution of its business and purposes, including the
construction of the transmission lines thereon; Provided, that the
owner of such property shall be indemnified for any actual
damage caused thereby;Provided, further, That said action for
damages is filed within five years after the rights of way,
transmission lines, substations, plants or other facilities shall
have been established; Provided, finally, That after said period,

no suit shall be brought to question the said rights of way,

transmission lines, substations, plants or other facilities;

A cursory reading shows that Section 3(i) covers the construction of works
across, or otherwise, any stream, watercourse, canal, ditch, flume, street, avenue,
highway or railway of private and public ownership, as the location of said works
may require. It is notable that Section 3(i) includes no limitation except those
enumerated after the term works. Accordingly, we consider the term works as
embracing all kinds of constructions, facilities, and other developments that can
enable or help NPC to meet its objectives of developing hydraulic power expressly
provided under paragraph (g) of Section 3. [23] The CAs restrictive construal of
Section 3(i) as exclusive of tunnels was obviously unwarranted, for the provision
applies not only to development works easily discoverable or on the surface of the
earth but also to subterranean works like tunnels. Such interpretation accords with
the fundamental guideline in statutory construction that when the law does not
distinguish, so must we not.[24] Moreover, when the language of the statute is plain
and free from ambiguity, and expresses a single, definite, and sensible meaning,
that meaning is conclusively presumed to be the meaning that the Congress
intended to convey.[25]
Even so, we still cannot side with NPC.
We rule that the prescriptive period provided under Section 3(i) of Republic
Act No. 6395 is applicable only to an action for damages, and does not extend to
an action to recover just compensation like this case. Consequently, NPC cannot
thereby bar the right of the Heirs of Macabangkit to recover just compensation for
their land.
The action to recover just compensation from the State or its expropriating
agency differs from the action for damages. The former, also known as inverse
condemnation, has the objective to recover the value of property taken in fact by
the governmental defendant, even though no formal exercise of the power of

eminent domain has been attempted by the taking agency .[26] Just compensation is
the full and fair equivalent of the property taken from its owner by the
expropriator. The measure is not the takers gain, but the owners loss. The
word just is used to intensify the meaning of the word compensation in order to
convey the idea that the equivalent to be rendered for the property to be taken shall
be real, substantial, full, and ample. [27] On the other hand, the latter action seeks to
vindicate a legal wrong through damages, which may be actual, moral, nominal,
temperate, liquidated, or exemplary. When a right is exercised in a manner not
conformable with the norms enshrined in Article 19[28] and like provisions on
human relations in the Civil Code, and the exercise results to the damage of
another, a legal wrong is committed and the wrongdoer is held responsible.[29]
The two actions are radically different in nature and purpose. The action to
recover just compensation is based on the Constitution[30] while the action for
damages is predicated on statutory enactments. Indeed, the former arises from the
exercise by the State of its power of eminent domain against private property for
public use, but the latter emanates from the transgression of a right. The fact that
the owner rather than the expropriator brings the former does not change the
essential nature of the suit as an inverse condemnation,[31] for the suit is not based
on tort, but on the constitutional prohibition against the taking of property without
just compensation.[32] It would very well be contrary to the clear language of the
Constitution to bar the recovery of just compensation for private property taken for
a public use solely on the basis of statutory prescription.
Due to the need to construct the underground tunnel, NPC should have first
moved to acquire the land from the Heirs of Macabangkit either by voluntary
tender to purchase or through formal expropriation proceedings. In either case,
NPC would have been liable to pay to the owners the fair market value of the land,
for Section 3(h) of Republic Act No. 6395 expressly requires NPC to pay the fair
market value of such property at the time of the taking, thusly:

(h) To acquire, promote, hold, transfer, sell, lease, rent, mortgage,

encumber and otherwise dispose of property incident to, or necessary,
convenient or proper to carry out the purposes for which the
Corporation was created:Provided, That in case a right of way is
necessary for its transmission lines, easement of right of way shall only
be sought: Provided, however, That in case the property itself shall be
acquired by purchase, the cost thereof shall be the fair market value
at the time of the taking of such property.

This was what NPC was ordered to do in National Power Corporation v.

Ibrahim,[33] where NPC had denied the right of the owners to be paid just
compensation despite their land being traversed by the underground tunnels for
siphoning water from Lake Lanao needed in the operation of Agus II, Agus III,
Agus IV, Agus VI and Agus VII Hydroelectric Projects in Saguiran, Lanao del Sur,
in Nangca and Balo-I in Lanao del Norte and in Ditucalan and Fuentes in Iligan
City. There, NPC similarly argued that the underground tunnels constituted a mere
easement that did not involve any loss of title or possession on the part of the
property owners, but the Court resolved against NPC, to wit:
Petitioner contends that the underground tunnels in this case
constitute an easement upon the property of the 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.
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.[34]

3.
NPCs construction of the tunnel

constituted taking of the land, and

entitled owners to just compensation

The Court held in National Power Corporation v. Ibrahim that NPC was
liable to pay not merely an easement fee but rather the full compensation for
land traversed by the underground tunnels, viz:
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. 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
owner 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.[35]

Here, like in National Power Corporation v. Ibrahim, NPC constructed a

tunnel underneath the land of the Heirs of Macabangkit without going through
formal expropriation proceedings and without procuring their consent or at least
informing them beforehand of the construction. NPCs construction adversely
affected the owners rights and interests because the subterranean intervention by
NPC prevented them from introducing any developments on the surface, and from
disposing of the land or any portion of it, either by sale or mortgage.
Did such consequence constitute taking of the land as to entitle the owners to
just compensation?

We agree with both the RTC and the CA that there was a full taking on the
part of NPC, notwithstanding that the owners were not completely and actually
dispossessed. It is settled that the taking of private property for public use, to be
compensable, need not be an actual physical taking or appropriation. [36] Indeed, the
expropriators action may be short of acquisition of title, physical possession, or
occupancy but may still amount to a taking. [37] Compensable taking includes
destruction, restriction, diminution, or interruption of the rights of ownership or of
the common and necessary use and enjoyment of the property in a lawful manner,
lessening or destroying its value.[38] It is neither necessary that the owner be wholly
deprived of the use of his property,[39] nor material whether the property is removed
from the possession of the owner, or in any respect changes hands.[40]
As a result, NPC should pay just compensation for the entire land. In that
regard, the RTC pegged just compensation at P500.00/square meter based on its
finding on what the prevailing market value of the property was at the time of the
filing of the complaint, and the CA upheld the RTC.
We affirm the CA, considering that NPC did not assail the valuation in the
CA and in this Court. NPCs silence was probably due to the correctness of the
RTCs valuation after careful consideration and weighing of the parties evidence,
as follows:
The matter of what is just compensation for these parcels of land is
a matter of evidence. These parcels of land is (sic) located in the City of
Iligan, the Industrial City of the South. Witness Dionisio Banawan, OICCity Assessors Office, testified, Within that area, that area is classified
as industrial and residential. That plaintiffs land is adjacent to many
subdivisions and that is within the industrial classification. He testified
and identified Exhibit AA and AA-1, a Certification, dated April 4,
1997, showing that the appraised value of plaintiffs land ranges
from P400.00 to P500.00 per square meter (see, TSN, testimony of
Dionisio Banawan, pp. 51, 57, and 71, February 9, 1999). Also, witness
Banawan, testified and identified Two (2) Deeds of Sale, marked as
Exhibit AA-2 and AA-3,[] showing that the appraised value of the

land adjoining or adjacent to plaintiff land ranges from P700.00

to P750.00 per square meter. As between the much lower price of the
land as testified by defendants witness Gregorio Enterone, and that of
the City Assessor of Iligan City, the latter is more credible. Considering
however, that the appraised value of the land in the area as determined
by the City Assessors Office is not uniform, this Court, is of the opinion
that the reasonable amount of just compensation of plaintiffs land
should be fixed at FIVE HUNDRED (500.00) PESOS, per square meter.
xxx.[41]

The RTC based its fixing of just compensation ostensibly on the prevailing
market value at the time of the filing of the complaint, instead of reckoning from
the time of the taking pursuant to Section 3(h) of Republic Act No. 6395. The CA
did not dwell on the reckoning time, possibly because NPC did not assign that as
an error on the part of the RTC.
We rule that the reckoning value is the value at the time of the filing of the
complaint, as the RTC provided in its decision. Compensation that is reckoned on
the market value prevailing at the time either when NPC entered or when it
completed the tunnel, as NPC submits, would not be just, for it would compound
the gross unfairness already caused to the owners by NPCs entering without the
intention of formally expropriating the land, and without the prior knowledge and
consent of the Heirs of Macabangkit. NPCs entry denied elementary due process
of law to the owners since then until the owners commenced the inverse
condemnation proceedings. The Court is more concerned with the necessity to
prevent NPC from unjustly profiting from its deliberate acts of denying due
process of law to the owners. As a measure of simple justice and ordinary fairness
to them, therefore, reckoning just compensation on the value at the time the owners
commenced these inverse condemnation proceedings is entirely warranted.
In National Power Corporation v. Court of Appeals,[42] a case that involved
the similar construction of an underground tunnel by NPC without the prior
consent and knowledge of the owners, and in which we held that the basis in fixing
just compensation when the initiation of the action preceded the entry into the

property was the time of the filing of the complaint, not the time of taking, [43] we
pointed out that there was no taking when the entry by NPC was made without
intent to expropriate or was not made under warrant or color of legal authority.
4.
Awards for rentals, moral damages, exemplary
damages, and attorneys fees are deleted
for insufficiency of factual and legal bases

The CA upheld the RTCs granting to the Heirs of Macabangkit of rentals

of P 30,000.00/month from 1979 up to July 1999 with 12% interest per annum
by finding NPC guilty of bad faith in taking possession of the land to construct the
tunnel without their knowledge and consent.
Granting rentals is legally and factually bereft of justification, in light of the
taking of the land being already justly compensated. Conformably with the ruling
in Manila International Airport Authority v. Rodriguez,[44] in which the award of
interest was held to render the grant of back rentals unwarranted, we delete the
award of back rentals and in its place prescribe interest of 12% interest per
annum from November 21, 1997, the date of the filing of the complaint, until the
full liability is paid by NPC. The imposition of interest of 12% interest per
annum follows a long line of pertinent jurisprudence, [45] whereby the Court has
fixed the rate of interest on just compensation at 12% per annum whenever the
expropriator has not immediately paid just compensation.
The RTC did not state any factual and legal justifications for awarding to the
Heirs of Macabangkit moral and exemplary damages each in the amount
of P200,000.00. The awards just appeared in the fallo of its decision. Neither did
the CA proffer any justifications for sustaining the RTC on the awards. We
consider the omissions of the lower courts as pure legal error that we feel bound to
correct even if NPC did not submit that for our consideration. There was, to begin
with, no factual and legal bases mentioned for the awards. It is never trite to

remind that moral and exemplary damages, not by any means liquidated or
assessed as a matter of routine, always require evidence that establish the
circumstances under which the claimant is entitled to them. Moreover, the failure
of both the RTC and the CA to render the factual and legal justifications for the
moral and exemplary damages in the body of their decisions immediately demands
the striking out of the awards for being in violation of the fundamental rule that the
decision must clearly state the facts and the law on which it is based. Without the
factual and legal justifications, the awards are exposed as the product of conjecture
and speculation, which have no place in fair judicial adjudication.
We also reverse and set aside the decree of the RTC for NPC to pay to the
Heirs of Macabangkit the sum equivalent to 15% of the total amount awarded, as
attorneys fees, and to pay the cost. The body of the decision did not state the
factual and legal reasons why NPC was liable for attorneys fees. The
terse statement found at the end of the body of the RTCs decision, stating: xxx
The contingent attorneys fee is hereby reduced from 20% to only 15% of the total
amount of the claim that may be awarded to plaintiffs, without more, did
not indicate or explain why and how the substantial liability of NPC for attorneys
fees could have arisen and been determined.
In assessing attorneys fees against NPC and in favor of the respondents, the
RTC casually disregarded the fundamental distinction between the two concepts of
attorneys fees the ordinary and the extraordinary. These concepts were aptly
distinguished in Traders Royal Bank Employees Union-Independent v. NLRC,
[46]
thuswise:
There are two commonly accepted concepts of attorneys fees, the
so-called ordinary and extraordinary. In its ordinary concept, an
attorneys fee is the reasonable compensation paid to a lawyer by his
client for the legal services he has rendered to the latter. The basis of this
compensation is the fact of his employment by and his agreement with
the client.

In its extraordinary concept, an attorneys fee is an indemnity for

damages ordered by the court to be paid by the losing party in a
litigation. The basis of this is any of the cases provided by law where
such award can be made, such as those authorized in Article 2208, Civil
Code, and is payable not to the lawyer but to the client, unless they have
agreed that the award shall pertain to the lawyer as additional
compensation or as part thereof.

By referring to the award as contingency fees, and reducing the award from
20% to 15%, the RTC was really referring to a supposed agreement on attorneys
fees between the Heirs of Macabangkit and their counsel. As such, the concept of
attorneys fees involved was the ordinary. Yet, the inclusion of the attorneys fees
in the judgment among the liabilities of NPC converted the fees to extraordinary.
We have to disagree with the RTC thereon, and we express our discomfort that the
CA did not do anything to excise the clearly erroneous and unfounded grant.

An award of attorneys fees has always been the exception rather than the
rule. To start with, attorneys fees are not awarded every time a party prevails in a
suit.[47] Nor should an adverse decision ipso factojustify an award of attorneys fees
to the winning party.[48] The policy of the Court is that no premium should be
placed on the right to litigate.[49] Too, such fees, as part of damages, are assessed
only in the instances specified in Art. 2208, Civil Code.[50] Indeed, attorneys fees
are in the nature of actual damages .[51] But even when a claimant is compelled to
litigate with third persons or to incur expenses to protect his rights, attorneys fees
may still be withheld where no sufficient showing of bad faith could be reflected in
a partys persistence in a suit other than an erroneous conviction of the
righteousness of his cause.[52] And, lastly, the trial court must make express findings
of fact and law that bring the suit within the exception. What this demands is that
the factual, legal or equitable justifications for the award must be set forth

not only in the fallo but also in the text of the decision, or else, the award should be
thrown out for being speculative and conjectural.[53]
Sound policy dictates that even if the NPC failed to raise the issue of
attorneys fees, we are not precluded from correcting the lower
courts patently erroneous application of the law.[54] Indeed, the Court, in
supervising the lower courts, possesses
the ample authority to
review legal matters like this one even if not specifically raised or assigned as error
by the parties.
5.
Attorneys fees under quantum meruit principle
are fixed at 10% of the judgment award

Based on the pending motions of Atty. Macarupung Dibaratun and Atty.

Manuel D. Ballelos to assert their respective rights to attorneys fees, both
contending that they represented the Heirs of Macabangkit in this case, a conflict
would ensue from the finality of the judgment against NPC.
A look at the history of the legal representation of the Heirs of Macabangkit
herein provides a helpful predicate for resolving the conflict.
Atty. Dibaratun was the original counsel of the Heirs of Macabangkit. When
the appeal was submitted for decision in the CA, [55] Atty. Ballelos filed his entry of
appearance,[56] and
a
motion
for
early
decision.[57]Atty.
Ballelos
subsequently filed also a manifestation,[58] supplemental manifestation,[59]
reply,[60] and ex parte motion reiterating the motion for early decision.[61] It appears
that a copy of the CAs decision was furnished solely to Atty. Ballelos. However,
shortly before the rendition of the decision, Atty. Dibaratun filed in the CA a
motion to register attorneys lien,[62] alleging that he had not withdrawn his
appearance and had not been aware of the entry of appearance by Atty. Ballelos. A

similar motion was also received by the Court from Atty. Dibaratun a few days
after the petition for review was filed.[63] Thus, on February 14, 2005,[64] the Court
directed Atty. Dibaratun to enter his appearance herein. He complied upon filing
the comment.[65]
Amir Macabangkit confirmed Atty. Dibaratuns representation through an ex
parte manifestation that he filed in his own behalf and on behalf of his siblings
Mongkoy and Putri.[66] Amir reiterated his manifestation on March 6, 2006,[67] and
further imputed malpractice to Atty. Ballelos for having filed an entry of
appearance bearing Amirs forged signature and for plagiarism, i.e., copying
verbatim the arguments contained in the pleadings previously filed by Atty.
Dibaratun.[68]
On September 11, 2008, Atty. Ballelos submitted two motions, to wit: (a) a
manifestation and motion authorizing a certain Abdulmajeed Djamla to receive his
attorneys fees equivalent of 15% of the judgment award,[69] and (b) a motion to
register his attorneys lien that he claimed was contingent.[70]
Both Atty. Dibaratun and Atty. Ballelos posited that their entitlement to
attorneys fees was contingent. Yet, a contract for a contingent fees is an
agreement in writing by which the fees, usually a fixed percentage of what may be
recovered in the action, are made to depend upon the success in the effort to
enforce or defend a supposed right. Contingent fees depend upon an express
contract, without which the attorney can only recover on the basis of quantum
meruit.[71] With neither Atty. Dibaratun nor Atty. Ballelos presenting a written
agreement bearing upon their supposed contingent fees, the only way to determine
their right to appropriate attorneys fees is to apply the principle of quantum
meruit.
Quantum meruit literally meaning as much as he deserves is used as
basis for determining an attorneys professional fees in the absence of an express
agreement.[72] The recovery of attorneys fees on the basis of quantum meruit is a

device that prevents an unscrupulous client from running away with the fruits of
the legal services of counsel without paying for it and also avoids unjust
enrichment on the part of the attorney himself. [73] An attorney must show that he is
entitled to reasonable compensation for the effort in pursuing the clients cause,
taking into account certain factors in fixing the amount of legal fees.[74]
Rule 20.01 of the Code of Professional Responsibility lists the guidelines for
determining the proper amount of attorney fees, to wit:
Rule 20.1 A lawyer shall be guided by the following factors in determining
his fees:
a) The time spent and the extent of the services rendered or required;
b) The novelty and difficult of the questions involved;
c) The important of the subject matter;
d) The skill demanded;
e) The probability of losing other employment as a result of acceptance of
the proffered case;
f) The customary charges for similar services and the schedule of fees of
the IBP chapter to which he belongs;
g) The amount involved in the controversy and the benefits resulting to the
client from the service;
h) The contingency or certainty of compensation;
i)

The character of the employment, whether occasional or established;

j)

The professional standing of the lawyer.

and

In the event of a dispute as to the amount of fees between the attorney and
his client, and the intervention of the courts is sought, the determination requires
that there be evidence to prove the amount of fees and the extent and value of the

services rendered, taking into account the facts determinative thereof. [75] Ordinarily,
therefore, the determination of the attorneys fees on quantum meruit is remanded
to the lower court for the purpose. However, it will be just and equitable to now
assess and fix the attorneys fees of both attorneys in order that the resolution of a
comparatively simple controversy, as Justice Regalado put it in Traders Royal
Bank Employees Union-Independent v. NLRC,[76] would not be needlessly
prolonged, by taking into due consideration the accepted guidelines and so much of
the pertinent data as are extant in the records.
Atty. Dibaratun and Atty. Ballelos each claimed attorneys fees equivalent to
15% of the principal award of P113,532,500.00, which was the amount granted by
the RTC in its decision. Considering that the attorneys fees will be defrayed by the
Heirs of Macabangkit out of their actual recovery from NPC, giving to each of the
two attorneys 15% of the principal award as attorneys fees would be excessive
and unconscionable from the point of view of the clients. Thus, the Court, which
holds and exercises the power to fix attorneys fees on a quantum meruit basis in
the absence of an express written agreement between the attorney and the client,
now fixes attorneys fees at 10% of the principal award of P113,532,500.00.
Whether it is Atty. Dibaratun or Atty. Ballelos, or both, who should receive
attorneys fees from the Heirs of Macabangkit is a question that the Court must
next determine and settle by considering the amount and quality of the work each
performed and the results each obtained.
Atty. Dibaratun, the attorney from the outset, unquestionably carried the bulk
of the legal demands of the case. He diligently prepared and timely filed in behalf
of the Heirs of Macabangkit every pleading and paper necessary in the full
resolution of the dispute, starting from the complaint until the very last motion
filed in this Court. He consistently appeared during the trial, and examined and
cross-examined all the witnesses presented at that stage of the proceedings. The
nature, character, and substance of each pleading and the motions he prepared for
the Heirs of Macabangkit indicated that he devoted substantial time and energy in
researching and preparing the case for the trial. He even advanced P250,000.00 out

of his own pocket to defray expenses from the time of the filing of the motion to
execute pending appeal until the case reached the Court. [77] His representation of all
the Heirs of Macabangkit was not denied by any of them.
We note that Atty. Dibaratun possessed some standing in the legal profession
and in his local community. He formerly served as a member of the Board of
Director of the Integrated Bar of the Philippines (IBP), Lanao del Norte-Iligan City
Chapter, and was an IBP national awardee as Best Legal Aid Committee Chairman.
He taught at Mindanao State University College of Law Extension. He was
a Municipal Mayor of Matungao, Lanao del Norte, and was enthroned Sultan a
Gaus.
In contrast, not much about the character and standing of Atty. Ballelos, as
well as the nature and quality of the legal services he rendered for the Heirs of
Macabangkit are in the records. The motions he filed in the
Court and in the CA lacked enlightening research and were insignificant to the
success of the clients cause. His legal service, if it can be called that, manifested
no depth or assiduousness, judging from the quality of the pleadings from him. His
written submissions in the case appeared either to have been lifted verbatim from
the pleadings previously filed by Atty. Dibaratun, or to have been merely quoted
from the decisions and resolutions of the RTC and the CA. Of the Heirs of
Macabangkit, only Cebu, Batowa-an, Sayana, Nasser, Manta, Mongkoy[78] and
Edgar gave their consent to Atty. Ballelos to appear in their behalf in the CA,
which he did despite Atty. Dibaratun not having yet filed any withdrawal of his
appearance. The Court did not receive any notice of appearance for the Heirs of
Macabangkit from Atty. Ballelos, but that capacity has meanwhile become
doubtful in the face of Amirs strong denial of having retained him.
In fairness and justice, the Court accords full recognition to Atty. Dibaratun
as the counsel de parte of the Heirs of Macabangkit who discharged his
responsibility in the prosecution of the clients cause to its successful end. It is he,

not Atty. Ballelos, who was entitled to the full amount of attorneys fees that the
clients ought to pay to their attorney. Given the amount and quality of his legal
work, his diligence and the time he expended in ensuring the success of his
prosecution of the clients cause, he deserves the recognition, notwithstanding that
some of the clients might appear to have retained Atty. Ballelos after the rendition
of a favorable judgment.[79]
Atty. Ballelos may claim only from Cebu, Batowa-an, Sayana, Nasser,
Manta and Edgar, the only parties who engaged him. The Court considers his work
in the case as very minimal. His compensation under thequantum meruit principle
is fixed at P5,000.00, and only the Heirs of Macabangkit earlier named are liable to
him.
WHEREFORE, the Court AFFIRMS the decision promulgated on October
5, 2004 by the Court of Appeals, subject to the following MODIFICATIONS, to
wit:
(a) Interest at the rate of 12% per annum is IMPOSED on the
principal amount of P113,532,500.00 as just compensation,
reckoned from the filing of the complaint on November 21, 1997
until the full liability is paid;
(b) The awards of P30,000.00 as rental fee, P200,000.00 as moral
damages, and P200,000.00 as exemplary damages are DELETED;
and
(c) The award of 15% attorneys fees decreed to be paid by National
Power Corporation to the Heirs of Macabangkit is DELETED.
The Court PARTLY GRANTS the motion to register attorneys lien filed by
Atty. Macarupung Dibaratun, and FIXES Atty. Dibaratuns attorneys fees on the
basis of quantum meruit at 10% of the principal award of P113,532,500.00.

The motion to register attorneys lien of Atty. Manuel D. Ballelos

is PARTLY GRANTED, and Atty. Ballelos is DECLARED ENTITLED TO
RECOVER from Cebu, Batowa-an, Sayana, Nasser, Manta and Edgar, all
surnamed Macabangkit, the amount of P5,000.00 as attorneys fees on the basis
of quantum meruit.
Costs of suit to be paid by the petitioner.
SO ORDERED.