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G.R. No.

168288

REPUBLIC OF THE PHILIPPINES, Petitioner


vs.
HAROLD TIO GO, Respondent

DECISION

REYES, J.:

This is a petition for review on certiorari1under Rule 45 of the Rules of Court contesting the Decision2 dated May 23, 2005
of the Court of Appeals (CA) in CA-G.R. CV No. 76801, which denied the appeal of the Republic of the Philippines (Republic) and
affirmed in toto the Decision3 dated February 4, 2002 of the Regional Trial Court (RTC) of Mandaue City, Branch 55, in LRC Case No.
N-588, an application for original registration of title.

Antecedent Facts

Respondent Harold Tio Go (Go) filed an qpplication for original registration of title in 1999. 4 His application covered two (2)
parcels of land located in Liloan, Cebu, identified as Lot No. 9196, Pls-823 (identical to Lot No. 281-A) with an area of 404 square
meters and Lot No. 9197 (identical to Lot No. 281-B) with an area of 2,061 sq m.

The Republic filed an opposition5 to the application on the grounds that: (1) Go or his predecessors-in-interest have not
been in open, continuous, exclusive and notorious possession of the property since June 12, 1945 or prior thereto; (2) Go failed to
adduce evidence showing bona fide acquisition of the land applied for; (3) the claim of ownership can no longer be availed of by Go
since he failed to file an application within six months from February 16, 1976 as required by Presidential Decree No. 892; and (4) the
parcels of land applied for belong to a portion of the public domain.6 Despite its written opposition, the Republic failed to appear during
the initial hearing of the case.7 After reception of Go's evidence, the RTC granted his application in its Decision8 dated February 4,
2002, the dispositive portion of which provides:

WHEREFORE, foregoing premises considered, an order is hereby issued, to wit:

1. Admitting Exhibits "A up to Y" and all its submarkings formally offered by applicants [sic] as part of the testimonies of the
[applicant's] witnesses and for the purpose/s for which they were being offered;

2. Ordering the issuance of title to the land, Lot No. 281-A with an area of 404 [sq m], more or less; and Lot No. 281-B,
consisting a total area of 2,061 [sq m], more or less, situated at Barrio Tayud, Municipality of Li loan, Province of Cebu,
Philippines, covered by approved Subdivision Plan, Csd-07-003219, and approved Technical Descriptions, for and in the
name of [GO], Filipino citizen, legal age, married to Mich Y. Go, with residence and postal address at 14 Lakandula St.,
Cebu City, Philippines.

Upon finality of this decision, let a corresponding decree of registration be issued in favor of applicant, [Go] in accordance
with Sec. 39 of PD 1529.1âwphi1

Notify parties accordingly.

SO ORDERED.9

The Republic appealed the RTC decision on the ground that the trial court erred in granting Go's application in the absence
of proof that the land applied for is within alienable and disposable land of the public domain. 10

In the assailed decision, the CA denied the Republic's appeal and affirmed the RTC decision, taking into account the
Community Environment and Natural Resources Office (CENRO) Certification dated September 15, 2003 issued by CENR Officer
Elpidio R. Palaca (Palaca), which was attached to Go's appellee's brief. The certification stated, in part:

This is to certify that per projection conducted by Forester Anastacio C. Cabalejo, a tract of land, Lot No. 281, PLS 823,
containing an area of TWO THOUSAND FOUR HUNDRED SIXTY[-]FIVE (2,465) [sq m], more or less situated at Tayud, Liloan, Cebu
as shown and described in the plan at the back hereof, x x x was found to be within the Alienable and Disposable Land, Land
Classification Project 29 Per map 1391 of Liloan, Cebu FAO 4-537 dated July 31, 1940. 11 (Emphasis ours)

The CA concluded that Go's submission of the certificate "settles the issue on whether or not the subject lots in this case
are alienable and disposable in the affirmative." 12
Now before the Court, the Republic objects to the admission of the CENRO Certification by the CA, arguing that:

THE [CA] ERRED XX X WHEN IT AFFIRMED THE TRIAL COURT'S GRANT OF THE APPLICATION FOR ORIGINAL
REGISTRATION DESPITE THE ABSENCE OF EVIDENCE THAT [GO] HAD COMPLIED WITH THE PERIOD OF POSSESSION
AND OCCUPATION REQUIRED BY LAW. 13

The main contention of the Republic is that the CENRO Certification should not have been admitted by the CA as it was not
adduced and marked as evidence during the trial, and consequently not formally offered and admitted by the trial court, in violation of
Rule 132, Section 34 of the Rules of Court. 14

Ruling of the Court

The issue in this petition is whether the CA committed a reversible error in admitting the CENRO Certification.1avvphi1 A
corollary issue is whether Go sufficiently established the alienability and disposability of the subject properties.

Indeed, the rule is that the court shall consider no evidence which has not been formally offered. 15 The Court, however, in
the interest . of justice, allowed in certain cases the belated submission on appeal of a Department of Environment and Natural
Resources (DENR) or CENRO Certification as proof that a land is already alienable and disposable land of the public domain. Thus,
in Victoria v. Republic of the Philippines, 16 the Court admitted the DENR Ce1iification, which was submitted by therein petitioner only
on appeal to the CA. The Court reversed the CA decision and reinstated the judgment of the Metropolitan Trial Court of Taguig, which
granted therein petitioner's application for registration of title to a 1,729-sq-m lot in Barn bang, Taguig City. The Court stated:

The rules of procedure being mere tools designed to facilitate the attainment of justice, the Court is empowered to suspend
their application to a particular case when its rigid application tends to frustrate rather than promote the ends of justice. Denying the
application for registration now on the ground of failure to present proof of the status of the land before the trial court and
allowing Victoria to re-file her application would merely unnecessarily duplicate the entire process, cause additional expense
and add to the number of cases that courts must resolve. It would be more prudent to recognize the DENR Certification and
resolve the matter now. 17 (Citation omitted and emphasis ours)

Meanwhile, in Spouses Llanes v. Republic of the Philippines, 18 the Court accepted the corrected CENRO Certification even
though it was submitted by the Spouses Llanes only during the appeal in the CA. The Court ruled:

If the Court strictly applies the aforequoted provision of law [Section 34, Rule 132 of the Rules of Court on Offer of Evidence],
it would simply pronounce that the [CA] could not have admitted the corrected CENRO Certification because it was not formally offered
as evidence before the MCTC during the trial stage. Nevertheless, since the determination of the true date when the subject
property became alienable and disposable is material to the resolution of this case, it behooves this Court, in the interest of
substantial justice, fairness, and equity, to consider the corrected CENRO Certification even though it was only presented
during the appeal to the [CA]. Since rules of procedure arc mere tools designed to facilitate the attainment of justice, it is
well recognized that the Court is empowered to suspend its rules or to exempt a particular case from the application of a
general rule, when the rigid application thereof tends to frustrate rather than promote the ends of justice. 19 (Citation omitted
and emphasis ours)

Clearly, therefore, the CA took the prudent action in admitting the CENRO Certification, albeit belatedly submitted, as it
would be more in keeping with the ends of substantial justice.

In keeping with Victoria, 20the Court also issued Resolution21 elated September 18, 2013 requiring Go to submit the following
documents: (1) verification from the DENR whether Palaca has authority to issue certifications regarding status of public land as
alienable and disposable land, and (2) certified true copy of the administrative order or proclamation declaring the area where the two
parcels of land applied for in this case is located as alienable and disposable, if any. In compliance, Go submitted a certification from
the DENR Region VII, which stated, among others, that "the Municipality of Lilo-an is under the jurisdiction of CENRO Carmen and
that any employee of said office acting as CENR Officer has the authority to issue certifications which would include the status of
public land as alienable and disposable land."22 The certification also stated that "we have no available copy of [Forestry Administrative
Order (FAO)] No[.] 4-537 elated July 31, 1940 x x x."23 Go also submitted a certification from the National Mapping and Resource
Information Authority (NAMRIA) certifying that FAO No. 4-537 dated July 31, 1940 is not available in the records of NAMRIA.24

More importantly, Go has adequately established his and his predecessors-in-interest's open, continuous, exclusive and
notorious possession of the properties subject of the application.

Lot No. 9196, Pls-823 and Lot No. 9197 were originally known as Lot No. 281 and, as certified by the CENRO, part of
alienable and disposable land of Liloan, Cebu as early as July 31, 1940. Lot No. 281 was owned by Rufina Pepito (Rufina), married
to Felimon Cagang (Felimon), with whom she had two sons, Ambrosio and Leonardo. The Cagang family occupied the property as
early as 1953, based on the testimony of Rufina's nephew, Elpido Pepito (Elpido), who was born in 1943. Rufina, however, declared
Lot No. 281 for tax purposes only from 1965 and until 1993. 25According to Elpido, bananas, buli and mango were planted by the
Cagang family on the property. 26
After Rufina's death in 1987, Felimon, Ambrosio and Leonardo assumed ownership and took possession of Lot No. 281. In
1990, Felimon and Ambrosio sold a 404-sq-m (Lot No. 281-A) portion to the Spouses Rosendo and Carmen Pilapil (Spouses
Pilapil).27 Thereafter, Felimon and Leandro sold in 1992 another portion of Lot No. 281 with an area of 620 sq m (Lot No. 281-B-part),
also to the Spouses Pilapil.28 The latter then assumed ownership and possession of Lots Nos. 281-A and 281-B-part and declared the
property for tax purposes in 1991 (Lot No. 281-A) and 1993 (Lot No. 281-B-part). The remaining 1,441-sq-m portion of Lot No. 281
(Lot No. 281-B-part) was eventually sold by Leonardo to Go in 1994. 29 Go immediately assumed possession and declared Lot No.
281-B-part for tax purposes in 1994.30 Finally, in 1998, Go was able to consolidate ownership over the entire Lot No. 28l when the
Spouses Pilapil sold Lots Nos. 281-A and 281-B-part to him. 31 Go also assumed possession and declared Lots Nos. 28 l-A32 and 28
l-B-part33 for tax purposes in 1998. In 1999, Go filed the application for registration of title. Thus, as found by the RTC:

In carefully evaluating the evidences [sic] presented by applicants, both oral and documentary, the Court is convinced and
so holds, that applicant, [GO], married to Mich Y. Go, is entitled to the reliefs prayed for in his application. His possession of the subject
property, x x x, including his predecessors-in-interest is more than thirty (30) years, which is open, public, peaceful, continuous and
uninterrupted in the concept of an owner and against the whole world. Thus, applicant, [Go,] is entitled to the issuance of title over the
subject land and the same should be registered and confirmed. 34

It should be stressed that the factual findings and conclusion of the RTC on the issue of Go's possession and occupation
were neither controverted nor refuted by the Office of the Solicitor General on appeal to the CA or on review to this Court. The rule is
that "issues or grounds not raised below cannot be resolved on review by the Supreme Court, for to allow the parties to raise new
issues is antithetical to the sporting idea of fair play, justice and due process."35 For all intents and purposes, the matter of Go's
possession and occupation is already settled and considering that the CA correctly admitted the CENRO Certification, there is,
therefore, no more obstacle to the issuance of title in the name of Go for Lot No. 9196 and Lot No. 9197, Pls-823.

WHEREFORE, the petition is DENIED. The Decision dated May 23, 2005 of the Court of Appeals in CA-G.R. CV No. 76801
is AFFIRMED.

SO ORDERED.

[ G.R. No. 200612, April 05, 2017 ]

RAFAEL C. UY (CABANGBANG STORE), PETITIONER, V. ESTATE OF VIPA FERNANDEZ, RESPONDENT.

This is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court seeking to annul and set aside the
Decision[2] dated November 26, 2010 and Resolution[3] dated January 24, 2012 issued by the Court of Appeals (CA) in CA-G.R. SP
No. 04481.

Facts

Vipa Fernandez Lahaylahay (Vipa) is the registered owner of a parcel of land situated in Lopez Jaena Street, Jaro, Iloilo
City covered by Transfer Certificate of Title No. T-26576 (subject property).[4] Vipa and her husband, Levi Lahaylahay (Levi), have
two children – Grace Joy Somosierra (Grace Joy) and Jill Frances Lahaylahay (Jill Frances).[5]

Sometime in 1990, a contract of lease was executed between Vipa and Rafael Uy (Rafael) over the subject property and
the improvements thereon, pursuant to which, Rafael bound himself to pay Vipa, as consideration for the lease of the property, the
amount of P3,000.00 per month, with a provision for a 10% increase every year thereafter.[6]

On March 5, 1994, Vipa died leaving no will or testament whatsoever. Grace Joy became the de facto administrator of the
estate of Vipa. After Vipa's death, Levi lived in Aklan.[7]

In June 1998, Rafael stopped paying the monthly rents.[8] Consequently, on June 12, 2003, the Estate of Vipa, through
Grace Joy, filed a complaint[9] for unlawful detainer with the Municipal Trial Court in Cities (MTCC) of Iloilo City against Rafael. It was
alleged therein that, as of June 1998, Rafael was already bound to pay rent at the amount of P3,300.00 per month and that his last
payment was made in May 1998. Accordingly, at the time of the filing of the Complaint, Rafael's unpaid rents amounted to
P271,150.00.[10] The Estate of Vipa claimed that despite repeated demands, Rafael refused to pay the rents due.[11]

In his Answer,[12] Rafael denied that he refused to pay the rent for the lease of the subject property. He claimed that
sometime in June 1998 Patria Fernandez-Cuenca (Patria), Vipa's sister, demanded for the payment of the rents, claiming that she is
the rightful heir of Vipa.[13] Since he had no idea on who is entitled to receive the rent for the subject property, he deposited the
amount of P10,000.00 with the Office of the Clerk of Court of the Regional Trial Court (RTC) of Iloilo City on November 20, 1998 and
that Grace Joy was informed of such consignation.[14] He claimed that a case for the settlement of the Estate of Vipa was instituted
by Patria with the RTC, which was docketed as Special Proceeding No. 6910. He averred that he is willing to pay the rent on the
leased property to the rightful heirs of Vipa and that he made another consignation with the RTC in the amount of P6,000.00.[15]

On June 12, 2008, the MTCC rendered a Decision,[16] the decretal portion of which reads:
WHEREFORE, in the light of the foregoing ratiocination, judgment is hereby rendered in favor of the [Estate of
Vipa] and against [Rafael], ordering the latter, to wit:

1 to vacate the premises subject of this case and covered by TCT No. T-26576 and to
peacefully turn over the possession of the same to the [Estate of Vipa];

2 to pay the [Estate of Vipa] the amount of Php271,150.00 as payment for the unpaid rentals
with 12% interest per annum from the last demand on May 3, 2003 until the whole amount is paid;

3 to pay the [Estate of Vipa] the amount of Php3,000.00 per month with 12% interest per annum
for the use and occupancy of the premises computed from the date of the filing of this case on June 12, 2003
until fully paid;

4 to pay the [Estate of Vipa] attorney's fees in the amount of Php20,000.00; [and]

5 to pay the costs of suit.

SO ORDERED.[17]

The MTCC found that after Vipa's death in 1994 until 1998, Rafael was paying the rent for the lease of the subject property
to Grace Joy.[18] That the real reason why Patria claimed to be the heir of Vipa is because she owed Rafael money which she could
not pay. Patria then charged the debt she owes to Rafael from the monthly rent of the subject property, an arrangement that Rafael
took advantage to avoid paying Grace Joy the monthly rents. The MTCC further opined that the consignations made by Rafael in the
total amount of P16,000.00 are not valid since there was no prior tender of payment.[19]

On appeal, the RTC, in its Decision[20] dated April 15, 2009, reversed the MTCC's Decision dated June 12, 2008 and, thus,
dismissed the complaint for unlawful detainer filed by the Estate of Vipa. Thus:

WHEREFORE, premises considered, the Decision appealed from is REVERSED and SET ASIDE; and the herein complaint
is hereby DISMISSED for lack of merit; and further DISMISSING [Rafael's] counterclaim for failure to substantiate the same.

SO ORDERED.[21]

The RTC opined that Grace Joy was actually the plaintiff in the case and not the Estate of Vipa. It then pointed out that
Grace Joy failed to bring the dispute to the barangay for conciliation prior to filing the complaint for unlawful detainer.[22]

The RTC further held that the MTCC erred in including the entire subject property as part of the Estate of Vipa. The RTC
explained that the subject property was acquired by Vipa during the subsistence of her marriage with Levi and, as such, is part of their
conjugal properties. That after Vipa's death, the conjugal partnership was terminated, entitling Levi to one-half of the property.[23] The
RTC then pointed out that Levi sold his share in the subject property to Rafael, as evidenced by a Deed of Sale[24] dated December
29, 2005.[25] Accordingly, the RTC ruled that Rafael, as co-owner of the subject property, having bought Levi's one-half share thereof,
had the right to possess the same.[26]

The Estate of Vipa sought a reconsideration [27] of the Decision dated April 15, 2009, but it was denied by the RTC in its
Order dated July 28; 2009.[28]

The Estate of Vipa then filed a Petition for Review[29] with the CA. On November 26, 2010, the CA rendered a Decision,[30]
which declared:

WHEREFORE, in view of all the foregoing, the instant petition for review is GRANTED and the April 15, 2009 Decision of
the court a quo in Civil Case No. 08-29842 is hereby REVERSED and SET ASIDE. Accordingly, the June 12, 2008 Decision
of the Municipal Trial Court, Branch 4, Iloilo City, in Civil Case No. 03-208 is hereby REINSTATED.

SO ORDERED.[31]

The CA held that there was no necessity to bring the dispute before the barangay for conciliation since the Estate of Vipa,
being a juridical person, cannot be impleaded to a barangay conciliation proceeding. The CA likewise pointed out that any allegations
against Grace Joy's authority to represent the Estate of Vipa had been laid to rest when she was appointed as administrator of the
Estate of Vipa in Special Proceedings No. 6910 pending before the RTC.[32]

Further, the CA held that Rafael raised the issue of ownership of the subject property, i.e., Levi's sale of his one-half share
in the subject property to Rafael, only for the first time in his appeal with the RTC. Accordingly, it was error on the part of the RTC to
have resolved the issue of ownership of the subject property.[33] Furthermore, the CA agreed with the MTCC that Rafael's
consignation of the rent to the RTC is ineffective. It ruled that Rafael made the consignation only twice and the amount consigned was
patently insignificant compared to the amount of rent due.[34]

Rafael's motion for reconsideration[35] was denied by the CA in its Resolution[36] dated January 24, 2012.

Hence, the instant petition.


Rafael maintains that Grace Joy has no authority to represent the Estate of Vipa and, when she filed the complaint for
unlawful detainer with the MTCC, she did so in her personal capacity. Thus, Rafael claims that the dispute should have been brought
to the barangay for conciliation before the complaint was filed in the MTCC.[37] He further claims that the CA erred in . reversing the
RTC's ruling on the issue of ownership of the subject property. He insists that he already purchased Levi's one-half share in the subject
property.[38]

On the other hand, the Estate of Vipa, in its Comment,[39] avers that the supposed lack of authority of Grace Joy to file the
complaint for unlawful detainer and the ownership of the subject property were never raised in the proceedings before the MTCC and,
hence, could not be passed upon by the RTC in the appellate proceedings. In any case, it pointed out that the RTC's Decision[40]
dated October 28, 2005 in Special Proceedings No. 6910, which appointed Grace Joy as the administrator of the intestate estate of
Vipa, recognized that the latter and Jill Frances are legitimate children of Vipa and Levi.

Issue

Essentially, the issue set forth for the Court's resolution is whether the CA erred in reversing the RTC's Decision dated April
15, 2009.

Ruling of the Court

The petition is partly meritorious.

Rafael's claim that the complaint below should have been dismissed since Grace Joy has no authority to represent the
Estate of Vipa and that there was lack of prior barangay conciliation is untenable. Unlawful detainer cases are covered by the Rules
on Summary Procedure.[41] Section 5 of the 1991 Revised Rules on Summary Procedure provides that affirmative and negative
defenses not pleaded in the answer shall be deemed waived, except lack of jurisdiction over the subject matter.

Rafael failed to plead in the answer he filed with the MTCC that Grace Joy has no authority to represent the Estate of Vipa.
Neither did he raise therein the lack of barangay conciliation between the parties herein prior to the filing of the complaint for unlawful
detainer. Accordingly, the foregoing defenses are already deemed waived.

In any case, the issue of the supposed lack of authority of Grace Joy to represent the Estate of Vipa had already been
rendered moot with the RTC's appointment of Grace Joy as the administrator of the Estate of Vipa in Special Proceedings No. 6910.

Also, there was no need to refer the dispute between the parties herein to the barangay for conciliation pursuant to the
Katarungang Pambarangay Law.[42] It bears stressing that only individuals may be parties to barangay conciliation proceedings either
as complainants or respondents. Complaints by or against corporations, partnerships or other juridical entities may not be filed with,
received or acted upon by the barangay for conciliation.[43] The Estate of Vipa, which is the complainant below, is a juridical entity
that has a personality, which is separate and distinct from that of Grace Joy.[44] Thus, there is no necessity to bring the dispute to the
barangay for conciliation prior to filing of the complaint for unlawful detainer with the MTCC.

The CA, nevertheless, erred in hastily dismissing Rafael's allegation as regards the ownership of the subject property. In
disregarding Rafael's claim that he owns Levi's one-half undivided share in the subject property, the CA ruled that the said issue was
raised for the first time on appeal and should thus not have been considered by the RTC, viz.:

On the second issue, the records show that [Rafael] raised the issue of ownership only for the first time on appeal;
hence, the [RTC] erred in deciding the appeal before it on the findings that part of the subject premises is owned by
petitioners, allegedly having bought the same from [Levi], the husband of [Vipa].

The Court is not unmindful that in forcible entry and unlawful detainer cases, the MTC may rule on the issue [of]
ownership in order to determine the issue of possession. However, the issue of ownership must be raised by the defendant
on the earliest opportunity; otherwise, it is already deemed waived. Moreover, the instant case was covered by the Rules
on Summary Procedure, which expressly provide that affirmative and negative defenses not pleaded therein shall be
deemed waived, except for lack of jurisdiction over the subject matter. Thus, the [RTC] erred in resolving the issue of
ownership for the first time on appeal.[45] (Citations omitted)

It is true that fair play, justice, and due process dictate that parties should not raise for the first time on appeal issues that
they could have raised but never did during trial. However, before a party may be barred from raising an issue for the first time on
appeal, it is imperative that the issue could have been raised during the trial.[46] What escaped the appellate court's attention is that
the sale of the one-half undivided share in the subject property to Rafael was consummated only on December 29, 2005, more than
two years after Rafael filed with the MTCC his answer to the complaint for unlawful detainer on July 18, 2003.[47] Obviously, Rafael
could not have raised his acquisition of Levi's share in the subject property as an affirmative defense in the answer he filed with the
MTCC.

Moreover, Rafael's ownership of the one-half undivided share in the subject property would necessarily affect the property
relations between the parties herein. Thus, the CA should have exerted efforts to resolve the said issue instead of dismissing the
same on the flimsy ground that it was not raised during the proceedings before the MTCC.
Levi and Vipa were married on March 24, 1961[48] and, in the absence of a marriage settlement, the system of conjugal
partnership of gains governs their property relations.[49] It is presumed that the subject property is part of the conjugal properties of
Vipa and Levi considering that the same was acquired during the subsistence of their marriage and there being no proof to the
contrary.[50]

When Vipa died on March 5, 1994, the conjugal partnership was automatically terminated.[51] Under Article 130 of the
Family Code, the conjugal partnership property, upon its dissolution due to the death of either spouse, should be liquidated either in
the same proceeding for the settlement of the estate of the deceased or, in the absence thereof, by the surviving spouse within one
year from the death of the deceased spouse. That absent any liquidation, any disposition or encumbrance of the conjugal partnership
property is void. Thus:

Article 130. Upon the termination of the marriage by death, the conjugal partnership property shall be liquidated
in the same proceeding for the settlement of the estate of the deceased.

If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the conjugal
partnership property either judicially or extra-judicially within six months from the death of the deceased spouse.
If upon the lapse of the six-month period no liquidation is made, any disposition or encumbrance involving the
conjugal partnership property of the terminated marriage shall be void.

Should the surviving spouse contract a subsequent marriage without compliance with the foregoing requirements, a
mandatory regime of complete separation of property shall govern the property relations of the subsequent marriage.
(Emphasis ours)

Article 130 of the Family Code is applicable to conjugal partnership of gains already established between the spouses prior
to the effectivity of the Family Code pursuant to Article 105 thereof, viz.:

Article 105. In case the future spouses agree in the marriage settlements that the regime of conjugal partnership
of gains shall govern their property relations during marriage, the provisions in this Chapter shall be of supplementary
application.

The provisions of this Chapter shall also apply to conjugal partnerships of gains already established
between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance
with the Civil Code or other laws as provided in Article 256. (Emphasis ours)

Rafael bought Levi's one-half share in the subject property in consideration of P500,000.00 as evidenced by the Deed of
Sale[52] dated December 29, 2005. At that time, the conjugal partnership properties of Levi and Vipa were not yet liquidated. However,
such disposition, notwithstanding the absence of liquidation of the conjugal partnership properties, is not necessarily void.

It bears stressing that under the regime of conjugal partnership of gains, the husband and wife are co-owners of all the
property of the conjugal partnership.[53] Thus, upon the termination of the conjugal partnership of gains due to the death of either
spouse, the surviving spouse has an actual and vested one-half undivided share of the properties, which does not consist of
determinate and segregated properties until liquidation and partition of the conjugal partnership.[54] With respect, however, to the
deceased spouse's share in the conjugal partnership properties, an implied ordinary co-ownership ensues among the surviving spouse
and the other heirs of the deceased.[55]

Thus, upon Vipa's death, one half of the subject property was automatically reserved in favor of the surviving spouse, Levi,
as his share in the conjugal partnership. The other half, which is Vipa's share, was transmitted to Vipa's heirs – Grace Joy, Jill Frances,
and her husband Levi, who is entitled to the same share as that of a legitimate child. The ensuing implied co-ownership is governed
by Article 493 of the Civil Code, which provides:

Article 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto,
and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be
limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.
(Emphasis ours)

Although Levi became a co-owner of the conjugal partnership properties with Grace Joy and Jill Frances, he could not yet
assert or claim title to any specific portion thereof without an actual partition of the property being first done either by agreement or by
judicial decree. Before the partition of a land or thing held in common, no individual or co-owner can claim title to any definite portion
thereof. All that the co-owner has is an ideal or abstract quota or proportionate share in the entire land or thing.[56]

Nevertheless, a co-owner could sell his undivided share; hence, Levi had the right to freely sell and dispose of his undivided
interest. Thus, the sale by Levi of his one-half undivided share in the subject property was not necessarily void, for his right as a co-
owner thereof was effectively transferred, making the buyer, Rafael, a co-owner of the subject property. It must be stressed that the
binding force of a contract must be recognized as far as it is legally possible to do so (quando res non valet ut ago, valeat quantum
valere potest).[57]
However, Rafael became a co-owner of the subject property only on December 29, 2005 – the time when Levi sold his one-
half undivided share over the subject property to the former. Thus, from December 29, 2005 Rafael, as a co-owner, has the right to
possess the subject property as an incident of ownership. Otherwise stated, prior to his acquisition of Levi's one-half undivided share,
Rafael was a mere lessee of the subject property and is thus obliged to pay the rent for his possession thereof.

Accordingly, Rafael could no longer be directed to vacate the subject property since he is already a co-owner thereof.
Nevertheless, Rafael is still bound to pay the unpaid rentals from June 1998 until April 2003 in the amount of P271,150.00. In Nacar
v. Gallery Frames, et al.,[58] the Court pointed out that pursuant to Resolution No. 796 of the Bangko Sentral ng Pilipinas Monetary
Board, the interest rate of loans or forbearance of money, in the absence of stipulation shall be six percent (6%) effective only from
July 1, 2013. Thus, prior to July 1, 2013, the rate of interest on loans or forbearance of money, in the absence of stipulation, is still
12%. Accordingly, the amount of P271,150.00, representing the unpaid rentals shall earn interest at the rates of 12% per annum from
the date of the last demand on May 3, 2003 until June 30, 2013 and 6% per annum from July 1, 2013 until fully paid.

Further, Rafael is likewise bound to pay reasonable rent for the use and occupancy of the subject property from May 2003
until December 28, 2005 at the rate of P3,000.00 per month with interest at the rate of 12% per annum from the date of the last
demand, i.e., the filing of the complaint with the MTCC on June 12, 2003, until June 30, 2013 and 6% per annum from July 1, 2013
until fully paid.

The award of attorney's fees of P20,000.00 is likewise proper. Attorney's fees can be awarded in the cases enumerated in
Article 2208 of the Civil Code, specifically:

Article 2208. x x x

xxxx

(2) Where the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest[.]

Certainly, because of Rafael's unjustified refusal to pay the rents due on the lease of the subject prope1iy, the Estate of
Vipa was put to unnecessary expense and trouble to protect its interest under paragraph (2), Article 2208 of the Civil Code. In unlawful
detainer cases, where attorney's fees are awarded, the same shall not exceed P20,000.00.[59]

WHEREFORE, in view of the foregoing disquisitions, the petition for review on certiorari is PARTIALLY GRANTED. The
Decision dated November 26, 2010 and Resolution dated January 24, 2012 issued by the Court of Appeals in CA-G.R. SP No. 04481
are hereby REVERSED and SET ASIDE. Petitioner Rafael C. Uy is hereby directed to pay the Estate of Vipa Fernandez the following:

1 The amount of P271,150.00, representing the unpaid rentals, with interest at the rates of twelve percent
(12%) per annum from the date of the last demand on May 3, 2003 until June 30, 2013, and six percent (6%) per
annum from July 1, 2013 until fully paid;

2 Reasonable rent for the use and occupancy of the subject property from May 2003 until December 28,
2005 at the rate of P3,000.00 per month with interest at the rates of twelve percent (12%) per annum from the
date of the last demand, i.e., the filing of the complaint for unlawful detainer on June 12, 2003, until June 30,
2013, and six percent (6%) per annum from July 1, 2013 until fully paid; and

3 The amount of P20,000.00 as attorney's fees.

SO ORDERED.

G.R. No. 215290

HEIRS OF PABLO FELICIANO, JR., namely: LOURDES FELICIANO TUDLA, GLORIA FELICIANO
CAUDAL, GABRIELA FELICIANO BAUTISTA, ANGELA FELICIANO LUCAS, DONNA CELESTE
FELICIANO-GATMAITAN, CYNTHIA CELESTE FELICIANO, and HECTOR REUBEN FELICIANO,
represented by its assignee, VICTORIA ALDA REYES ESPIRITU,, Petitioners,
vs.
LAND BANK OF THE PHILIPPINES, Respondent.

DECISION

PERLAS-BERNABE, J.:
Before the Court is a petition for review on certiorari1assailing the Amended Decision2 dated
October 24, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 122761, directing respondent the Land
Bank of the Philippines (LBP) to pay petitioner, Victoria Alda Reyes Espiritu (Espiritu) the amount of
₱1,892,471.01, representing the interest due on the balance of the revalued just compensation which
accrued from July 1, 2009 until December 13, 2011, with interest at the rate of 6% per annum (p.a.) from
the finality of the Decision until full payment.

The Facts

Petitioners heirs of Pablo Feliciano, Jr., namely: Lourdes Feliciano Tudla, Gloria Feliciano Caudal,
Gabriela Feliciano Bautista, Angela Feliciano Lucas, Donna Celeste Feliciano-Gatmaitan, Cynthia Celeste
Feliciano, and Hector Reuben Feliciano (Feliciano heirs) are co-owners of a 300 hectare (ha.) parcel of
agricultural land situated at F. Simeon, Ragay, Camarines Sur, covered by Transfer Certificate of Title
(TCT) No. RT 3080 (4120).3

In 1972, a 135.2583 ha. portion of the afore-mentioned land was classified as un-irrigated riceland
(subject land), and placed under the coverage4 of Presidential Decree No. (PD) 27.5 The Certificates of
Land Transfer were distributed to the 84 tenant-beneficiaries in 1973 who were issued Emancipation
Patents in 1989.6 The claim folder covering the subject land was received by the LBP from the Department
of Agrarian Reform (DAR) on December 2, 1997.7 The DAR valued the subject land at ₱1,301,498.09,
inclusive of interests, but the Feliciano heirs rejected the said valuation, prompting the LBP to deposit the
said amount in the latter's name on January 26, 1998.8 On March 24, 2000, the said amount was released
to them.9

After the summary administrative proceedings for the determination of just compensation, the
Office of the Provincial Agrarian Reform Adjudicator of Camarines Sur, Branch I rendered a
Decision10 dated September 28, 2001, fixing the value of the subject land at ₱4,64l ,080.465 or an average
of ₱34,302.375/ha.11

On November 22, 2001, the LBP filed a petition12 for the determination of just compensation before
the Regional Trial Court of Naga City, Branch 23 (RTC), docketed as Civil Case No. 2001-0359, which was
initially dismissed, but eventually reinstated. 13

In the interim, the Feliciano heirs assigned their rights over the just compensation claims to
Espiritu. 14

The RTC Proceedings

In an Order dated May 4, 2011, the RTC directed the LBP to revalue the subject land in accordance
with DAR Administrative Order No. (AO) 1, Series of 2010 15 (DAR AO 1, Series of 2010). In compliance
therewith, the LBP revalued the land at ₱7,725,904.05. Espiritu accepted the said amount but insisted on
petitioners' entitlement to twelve percent (12%) interest p.a. on the revalued amount on the ground of
unreasonable delay in the payment thereof. 16

In a Decision17 dated September 19, 2011, the RTC (a) fixed the just compensation for the subject
land at ₱7,725,904.05; and (b) directed the LBP (i) to pay Espiritu the said amount, less amounts already
paid to and received by the Feliciano heirs, and (ii) to pay 12% interest p.a. on the unpaid balance of the
just compensation, computed from January 1, 2010 until full payment. 18 It observed that the subject land,
which was expropriated pursuant to PD 27, fell under the coverage of DAR AO 13, Series of 1994, 19 DAR
AO 2, Series of 2004,20 and DAR AO 6, Series of 200821 (DAR AO 6-2008; collectively, DAR AOs) that
provided for the payment of 6% annual interest for any delay in the payment of just compensation. Since
DAR AO 06-2008 was effective only until December 31, 2009, the RTC imposed 12% interest p.a. on the
unpaid just compensation22 from January 1, 2010 until full payment. 23
Both parties moved for reconsideration, 24 which were denied in an Order25 dated November 24,
2011, modifying the reckoning of the 12% interest p.a. from the finality of the Decision until its satisfaction.

Aggrieved, the Feliciano heirs, represented by Espiritu (collectively, petitioners), elevated the
matter before the CA. 26

The CA Ruling

In a Decision27 dated March 17, 2014, the CA fixed the just compensation for the subject land at
₱7,725,904.05, plus legal interest at the rate of twelve percent (12%) p.a., computed from July 1, 2009 up
to the finality of the Decision, or the total amount of ₱8,316,876,97, and directed the LBP to pay the said
amount to Espiritu. 28 It ruled that the DAR AOs are no longer applicable to the instant case since the subject
land was revalued based on the July 1, 2009 values pursuant to DAR AO 1, Series of 2010. It further held
that interest at 12% p.a. was proper considering the delay in the payment of just compensation. 29

Petitioners filed a motion for reconsideration30 but the same was denied by the CA in an Amended
Decision31 dated October 24, 2014, which modified its earlier ruling. The CA pointed out that since the LBP
had already paid petitioners the total amount of ₱7,725,904.05 on December 13, 2011, it is only liable for
the payment of 12% interest p.a., accruing from July 1, 2009 up to the said date, or the amount of
P1,892,471.01. Accordingly, it ordered the LBP to pay Espiritu the said amount, which shall thereafter earn
interest at the rate of six percent (6%) p.a. from the finality of the said Decision until full payment. 32 Hence,
the instant petition.

The Issue Before the Court

The essential issue for the Court's resolution is whether or not the CA's determination of just
compensation is correct.

The Court's Ruling

Case law states that when the acquisition process under PD 27 is still incomplete - such as in this
case, where the just compensation due the landowner has yet to be settled - just compensation should be
determined and the process be concluded under Republic Act No. (RA) 6657, 33 otherwise known as the
"Comprehensive Agrarian Reform Law of 1988."34

For purposes of determining just compensation, the fair market value of an expropriated
property is determined by its character and its price at the time of taking, or the time when the
landowner was deprived of the use and benefit of his property, such as when the title is transferred in the
name of the beneficiaries. In addition, the factors enumerated under Section 17 of RA 6657, as
amended, i.e., (a) the acquisition cost of the land, (b) the current value of like properties, (c) the nature and
actual use of the property, and the income therefrom, (d) the owner's sworn valuation, (e) the tax
declarations, (f) the assessment made by government assessors, (g) the social and economic benefits
contributed by the farmers and the farmworkers, and by the government to the property, and (h) the non-
payment of taxes or loans secured from any government financing institution on the said land, if any, must
be equally considered.35

However, it bears pointing out that while Congress passed RA 970036 on August 7, 2009, further
amending certain provisions of RA 6657, as amended, among them, Section 17, its implementing
rules, i.e., DAR AO 2, Series of 2009,37 clarified that the said law shall not apply to claims/cases where
the claim folders were received by the LBP prior to July 1, 2009. 38 In such a situation, just
compensation shall be determined in accordance with Section 17 of RA 6657, as amended, prior to
its further amendmentby RA 9700.39
In LBP v. Kho,40the Court had succinctly explained the "cut-off rule" in the application of RA 9700:

It is significant to stress, however, that DAR AO 1, series of 2010 which was issued in line with
Section 31 of RA 9700 empowering the DAR to provide the necessary rules and regulations for its
implementation, became effective only subsequent to July 1. 2009. Consequently, it cannot be
applied in the determination of just compensation for the subject land where the claim folders were
undisputedly received by the LBP prior to July 1. 2009, and, as such, should be valued in
accordance with Section 17 of RA 6657 prior to its further amendment by RA 9700 pursuant to the
cut-off date set under DAR AO 2, series of 2009 (cut-off rule). Notably, DAR AO 1, series of 2010
did not expressly or impliedly repeal the cut-off rule set under DAR AO 2, series of 2009, having
made no reference to any cut-off date with respect to land valuation for previously acquired lands
under PD 27 and EO 228 wherein valuation is subject to challenge by
landowners.1âwphi1 Consequently, the application of DAR AO 1, series of 2010 should be, thus,
limited to those where the claim folders were received on orsubsequent to July 1, 2009. (Emphases
and underlining supplied)

Following the above dictum, since the claim folder covering the subject land was received by the
LBP on December 2, 1997,41 or prior to July 1, 2009, the RTC should have computed just compensation
using pertinent DAR regulations applying Section 17 of RA 6657 prior to its amendment by RA 9700 instead
of adopting the new DAR issuance. While the RTC, acting as a Special Agrarian Court (SAC), is not strictly
bound by the different formula created by the DAR since the valuation of property or the determination of
just compensation is essentially a judicial function which is vested with the courts, and not with
administrative agencies,42 it must explain and justify in clear terms the reason for any deviation from the
prescribed factors and the applicable formula.43

In this case, the Court has gone over the records and found that neither the RTC nor the CA
considered the date when the claim folder was received nor explained their reasons for deviating from the
DAR formula. Therefore, as it stands, the RTC and the CA should have utilized the basic formula prescribed
and laid down in pertinent DAR regulations existing prior to the passage of RA 9700, in determining the just
compensation for the subject land.

Accordingly, while the parties did not raise as issue the improper application of DAR AO 1, Series
of 2010, the Court finds the need to remand the case to the RTC for the determination of just compensation
toensure compliance with the law, and to give everyone - the landowner, the farmers, and the State
– their due.44 To this end, the RTC is herebydirected to observe the following guidelines in the remand of
the case:

1. Just compensation must be valued at the time of taking, or the time when the owner was
deprived of the use and benefit of his property, in this case, when emancipation patents were issued
in the names of the farmer-beneficiaries in 1989. 45 Hence, the evidence to be presented by the
parties before the RTC for the valuation of the subject land must be based on the values prevalent
on such time of taking for like agricultural lands.46

2. Just compensation must be arrived at pursuant to the guidelines set forth in Section 17
of RA 6657, as amended, prior to its amendment by RA 9700. However, the RTC is reminded
that while it should take intoaccount the different formula created by the DAR in arriving at the
justcompensation for the subject land, it is not strictly bound thereto if thesituations before it do not
warrant their application.47 In any event, shouldthe RTC find the said guidelines to be inapplicable,
it must clearly explainthe reasons for deviating therefrom, and for using other factors or formula
inarriving at the reasonable just compensation for the acquired property. 48

3. Interest may be awarded as may be warranted by the circumstances of the case and based
on prevailing jurisprudence. In previous cases, the Court has allowed the grant of legal interest
inexpropriation cases where there is delay in the payment since the justcompensation due to the
landowners was deemed to be an effectiveforbearance on the part of the State. 49 Legal interest
on the unpaid balanceshall be pegged at the rate of 12% p.a. from the time of taking in 1989
whenEmancipation Patents were issued, until June 30, 2013 only. Thereafter, orbeginning July 1,
2013, until fully paid, the just compensation due thelandowners shall earn interest at the new legal
rate of 6% p.a. 50 in line withthe amendment introduced by Bangko Sentral ng Pilipinas-
Monetary BoardCircular No. 799,51 Series of 2013.

For guidance of the bench, the bar, and the public, we reiterate the rule: Out of regard for the DAR's
expertise as the concerned implementing agency, courts should henceforth consider the factors stated in
Section 17 of RA 6657, as amended, as translated into the applicable DAR formulas in their determination
of just compensation for the properties covered by the said law. If, in the exercise of their judicial discretion,
courts find that a strict application of said formulas is not warranted under the specific circumstances of the
case before them, they may deviate or depart therefrom, provided that this departure or deviation is
supported by a reasoned explanation grounded on the evidence on record. In other words, courts of law
possess the power to make a final determination of just compensation. 52

WHEREFORE, the Amended Decision dated October 24, 2014 of the Court of Appeals in CA-GR.
SP No. 122761 is REVERSED and SET ASIDE. Civil Case No. 2001-0359 is hereby REMANDED to the
Regional Trial Court of Naga City, Branch 23 for reception of evidence on the issue of just compensation
in accordance with the guidelines set in this Decision. The trial court is DIRECTED to conduct the
proceedings in the said case with reasonable dispatch, and to submit to the Court a report on its findings
and recommended conclusions within sixty (60) days from notice of this Decision.

SO ORDERED.