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EXPROPRIATION ONWARDS

LAST CASE ASSIGNMENTS IN PROV REM payment. Not satisfied, petitioner filed an appeal with the Court of
Appeals. On 20 October 2004, the Court of Appeals rendered its
XIII
Decision holding petitioner liable to pay the full fair market value at
• NPC V. CO, G.R. NO. 166973, FEBRUARY 10, 2009- TORREJOS the time of actual taking, with interest at 6% per annum from 15
April 2002. To determine the actual valuation of the property, the
Principle :
Court of Appeals ordered the RTC to appoint a new set of
disinterested commissioners.
Substantive matters of expropriation proceedings involving national
project is governed by RA 8974 to the exclusion of Rule 67. It is the
Petitioner filed a motion for partial reconsideration, questioning the
plain intent of Rep. Act No. 8974 to supersede the system of deposit
order to pay the full fair market value computed as of the date of its
under Rule 67 with the scheme of immediate payment in cases
actual possession of the property. The Court of Appeals denied the
involving national government infrastructure projects.
motion for partial reconsideration; hence, the present petition.

Just compensation is to be ascertained as of the time of the taking,


ISSUE: Whether petitioner (NPC) should pay the property in its full
which usually coincides with the commencement of the market value instead of the easement fee.
expropriation proceedings. Where the institution of the action
precedes entry into the property, the just compensation is to be When is the reckoning date for the determination of just
compensation?
ascertained as of the time of the filing of the complaint
HELD:
FACTS:
1.) YES.

NPC, (petitioner) is a government corp. created under R.A. No. 6395


Petitioner reliance on Sec. 3A1[18] of R.A. No. 6395, as
to undertake the development of hydroelectric generation of power
amended, which provides that only an easement fee equivalent to
and the production of electricity from nuclear, geothermal and
10% of the market value shall be paid to affected property owners
other sources, as well as the transmission of electric power on a
is misplaced. Petitioner expropriated respondents property for its
nationwide basis. Its charter grants, among others, the power to
Lahar Project, a project for public use. In Republic v. Gingoyon
exercise the right to eminent domain.
(Gingoyon), we observed that R.A. No. 8974 covers expropriation
proceedings intended for national government infrastructure
On 27 June 2001, petitioner filed a complaint with the RTC of San
projects. The Implementing
Fernando, Pampanga, for the acquisition of an easement of right-of-
way over three (3) lots at Barangay Cabalantian, Bacolor, Pampanga
Rules and Regulations of R.A. No. 8974 explicitly include power
with a total area of 575 square meters belonging to respondent, in
generation, transmission and distribution projects among the
connection with the construction of its transmission lines for its
national government projects covered by the law. There is no doubt
Lahar Affected Transmission Line Project (Lahar Project). It
that the installation of transmission lines is important to the
obtained a writ of possession of March 25,2002 and took
continued growth of the country. Electricity moves our economy, it
possession of the property on April 2002.
is a national concern. R.A. No. 8974 should govern the
expropriation of respondent's property since the Lahar Project is a
RTC appointed three (3) commissioners to determine the fair
national government project.
market value of the property as of 15 April 2002. Commissioners
Dayrit and Garcia submitted their joint report and appraised the
Significantly, Gingoyon is explicit authority that R.A. No.
value of the property at P1,900.00 per square meter or a total of
8974 applies with respect to substantive matters covered by it to
P1,179,000.00, while Commissioner Abcejo valued it at P875.00 per
the exclusion of Rule 67 in cases when expropriation is availed of
square meter. The RTC rendered its Partial Decision, wherein it
for a national government project. We noted in Gingoyon:
declared the validity of the expropriation and ordered petitioner to
pay the sum of P1,179,000.00, with interest at 6% per annum
beginning 15 April 2002, the date of actual taking, until full
1
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It is the plain intent of Rep. Act No. In 2003 respondent Bases Conversion Development Authority
8974 to supersede the system of deposit under (BCDA), a government corporation, filed several expropriation
Rule 67 with the scheme of immediate payment actions before the various branches of the RTC of Angeles City, for
in cases involving national government
acquisition of lands needed for the construction of the Subic-Clark-
infrastructure projects.
Tarlac Expressway Project. Ten of these cases were raffled to Branch
58 of the court.
2. The determination of just compensation should reckoned from
the date of filing.
The defendants in Branch 58 cases were respondents Simbillo,
Marcelo, David, Bucud, Santos, Enriquez, Espeleta, Castro, Mercado,
It is settled that just compensation is
and Suarez. They were the registered owners of the expropriated
to be ascertained as of the time of the taking,
which usually coincides with the lands that they acquired as beneficiaries of the comprehensive
commencement of the expropriation agrarian reform program. Another defendant was Land Bank of the
proceedings. Where the institution of the Philippines, the mortgagee of the lands by virtue of the loans it
action precedes entry into the property, the extended for their acquisition. The lands in these cases were located
just compensation is to be ascertained as of in Pampanga.
the time of the filing of the complaint.
(emphasis supplied) On learning of the expropriation cases before Branch 58, petitioner
Philippine Veterans Bank (PVB) filed motions to intervene in all the
Typically, the time of taking is contemporaneous with the cases with attached complaints-in-intervention, a remedy that it
time the petition is filed. The general rule is what is adopted in similar cases with the other branches. PVB alleged that
the covered properties actually belonged to Belmonte Agro-
provided for by Rule 67, exceptions are grave injustice to
Industrial Development Corp. which mortgaged the lands to PVB in
the property owner, the taking did not have color of legal 1976. PVB had since foreclosed on the mortgages and bought the
authority, the taking of the property was not initially for same at public auction in 1982. Unfortunately, the bank had been
unable to consolidate ownership in its name.
expropriation and the owner will be given undue
increment advantages because of the expropriation. The court’s order of August 18, 2004, Branch 58 denied PVB’s
motion for intervention on the ground that the intervention
amounts to a third-party complaint that is not allowed in
QUICK DIGEST:
expropriation cases and that the intervention would delay the
proceedings in the cases before it. Besides, said Branch 58, PVB had
NPC, a gov’t corporation which is granted in its charter the power a pending action for annulment of the titles issued to the individual
to exercise the right of eminent domain instituted expropriation defendants and this was pending before Branch 62 of the court.
proceedings on a lot Mr. Co. for the construction of transmission PVB filed its motion for reconsideration but Branch 58 denied the
lines in the Lahar Affected Area. The Commissioners appointed by same, prompting the bank to file a petition for certiorari with the
RTC appraised its value at 1,179,000.00. RTC declared the validity of CA. CA rendered a decision, dismissing the petition for lack of
merit. It also denied in a resolution PVB’s MR.
the expropriation and ordered petitioner to pay the sum with 6%
int. per annum reckoned from the time of the taking. NPC appealed On April 2006 Branch 58 issued separate decisions in all 10 cases
the findings of RTC, CA affirmed the decision of RTC ordering NPC before it, granting the expropriation of the subject properties. The
court noted the uncertainty as to the ownership of such properties
to pay the full value of the property, aggrieved of the decision of the but took no action to grant BCDA’s prayer in its complaint that it
CA, petitioner filed a petition for review on certiorari. determine the question of ownership of the same pursuant to
Section 9, Rule 67 of the Revised Rules of Civil Procedure.
• PHILIPPINE VETERANS BANK V. BASES CONVERSION, G.R. NO.
ISSUE:
173085, JANUARY 19, 2011- FERNANDEZ
Whether or not PVB is entitled to intervene in the expropriation
BACKGROUND:
cases before Branch 58.
This case is about the authority of the court in an expropriation case
SC RULING:
to adjudicate questions of ownership of the subject properties
where such questions involve the determination of the validity of No. PVB is not entitled to intervene.
the issuance to the defendants of Certificates of Land Ownership
Awards (CLOAs) and Emancipation Patents (EPs), questions that fall PVB maintains that in deciding the case, the RTC and the CA ignored
within the jurisdiction of the Department of Agrarian Reform Section 9, Rule 67 of the 1997 Rules of Civil Procedure, which
Adjudication Board (DARAB). authorizes the court adjudicating the expropriation case to hear and
decide conflicting claims regarding the ownership of the properties
FACTS:

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involved while the compensation for the expropriated property is in FACTS:
the meantime deposited with the court. Section 9 provides:
BCDA filed several expropriation actions before the various
Sec. 9. Uncertain ownership; conflicting claims. – If the ownership of branches of the RTC of Angeles City, for acquisition of lands needed
the property taken is uncertain, or there are conflicting claims to for the construction of the Subic-Clark-Tarlac Expressway Project.
any part thereof, the court may order any sum or sums awarded as Ten of these cases were raffled to Branch 58 of the court. Another
compensation for the property to be paid to the court for the benefit defendant was LBP, the mortgagee of the lands by virtue of the loans
of the person adjudged in the same proceeding to be entitled it extended for their acquisition. The lands in these cases were
thereto. But the judgment shall require the payment of the sum or located in Pampanga.
sums awarded to either the defendant or the court before the
plaintiff can enter upon the property, or retain it for the public use PVB filed motions to intervene in all the cases but it was denied.
or purpose if entry has already been made. Their motions were denied in all other proceedings/courts.

PVB’s point regarding the authority of the court in expropriation Branch 58 issued separate decisions in all 10 cases before it,
cases to hear and adjudicate conflicting claims over the ownership granting the expropriation. The court noted the uncertainty as to
of the lands involved in such cases is valid. But such rule obviously the ownership of such properties but took no action to grant BCDA’s
cannot apply to PVB for the following reasons: prayer in its complaint that it determine the question of ownership.

1. At the time PVB tried to intervene in the expropriation cases, its ISSUE:
conflict with the farmer beneficiaries who held CLOAs, EPs, or TCTs
emanating from such titles were already pending before Angeles Whether or not the court can decide questions of ownership in
City RTC Branch 62, a co-equal branch of the same court. Branch 58 expropriation cases.
had no authority to pre-empt Branch 62 of its power to hear and
SC RULING:
adjudicate claims that were already pending before it.
Yes.
2. After the CA dismissed PVB’s petition on January 2006, the latter
filed a motion for reconsideration, pointing out that it had in the As a rule, the court in expropriation cases can hear and adjudicate
meantime already withdrawn the actions it filed with Branch 62 conflicting claims over the ownership of the lands involved in the
after learning from the decision of the Supreme Court in cases (See Sec. 9 Rule 67). But such rule obviously cannot apply
Department of Agrarian Reform v. Cuenca, that jurisdiction over to PVB for the following reasons:
cases involving the annulment of CLOAs and EPs were vested by
Republic Act 6657 in the DARAB. 1. At the time PVB tried to intervene in the expropriation cases, its
conflict with the farmer beneficiaries who held CLOAs, EPs, or TCTs
PVB now points out that, since there was no longer any impediment emanating from such titles were already pending before Branch 62,
in RTC Branch 58 taking cognizance of its motion for intervention a co-equal branch of the same court.
and adjudicating the parties’ conflicting claims over the
expropriated properties, the CA was in error in not reconsidering its 2. PVB’s withdrawal of its actions from Branch 62 cannot give
decision. Branch 58 comfort. The jurisdiction over the annulment of the
individual defendants’ CLOAs and EPs with the DARAB. Branch 58
But PVB’s withdrawal of its actions from Branch 62 cannot give would still have no power to adjudicate the issues of ownership
Branch 58 comfort. As PVB itself insists, jurisdiction over the presented by the PVB’s intervention.
annulment of the individual defendants’ CLOAs and EPs (which
titles if annulled would leave PVB’s titles to the lands unchallenged) • REPUBLIC V. GINGOYON, G.R. NO. 166429, 19 DECEMBER
lies with the DARAB. Branch 58 would still have no power to 2005- VALDEZ
adjudicate the issues of ownership presented by the PVB’s
intervention. LONGDIGEST

Actually, PVB’s remedy was to secure an order from Branch 58 to FACTS:


have the proceeds of the expropriation deposited with that branch The case concerns the construction of the NAIA Terminal 3. The first
in the meantime, pending adjudication of the issues of ownership of case that has reached the Supreme Court is Agan v. PIATCO wherein
the expropriated lands by the DARAB. Section 9 empowers the court the contracts which the Government had with the contractor were
to order payment to itself of the proceeds of the expropriation voided for being contrary to law and public policy. The second case
whenever questions of ownership are yet to be settled. There is no now before the Court involves the matter of just compensation due
reason why this rule should not be applied even where the the contractor for the terminal complex it built. The case was
settlement of such questions is to be made by another tribunal. decided on the basis of fairness, the same norm that pervades both
the Court’s 2004 Resolution in the first case and the latest
AFFIRMED the decision of the Court of Appeals. expropriation law.

QUICK DIGEST: The present controversy has its roots with the promulgation of the
Court’s decision in Agan v. PIATCO (2003 Decision). This decision

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nullified the "Concession Agreement for the Build-Operate-and- valuation of the Bureau of Internal Revenue (BIR), whichever is
Transfer Arrangement of the Ninoy Aquino International Airport higher, and the value of the improvements and/or structures using
Passenger Terminal III" entered into between the Philippine the replacement cost method.
Government and the Philippine International Air Terminals Co., Inc.
(PIATCO), as well as the amendments and supplements thereto. The Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974
agreement had authorized PIATCO to build a new international and Section 10 of the Implementing Rules, the RTC made key
airport terminal (NAIA 3), as well as a franchise to operate and qualifications to its earlier issuances. First, it directed the Land
maintain the said terminal during the concession period of 25 years. Bank of the Philippines, Baclaran Branch (LBP-Baclaran), to
The contracts were nullified, among others, that Paircargo immediately release the amount of US$62,343,175.77 to PIATCO, an
Consortium, predecessor of PIATCO, did not possess the requisite amount which the RTC characterized as that which the Government
financial capacity when it was awarded the NAIA 3 contract and that "specifically made available for the purpose of this expropriation;"
the agreement was contrary to public policy. and such amount to be deducted from the amount of just
compensation due PIATCO as eventually determined by the RTC.
After the promulgation of the rulings in Agan, the NAIA 3 facilities Second, the Government was directed to submit to the RTC a
have remained in the possession of PIATCO, despite the avowed Certificate of Availability of Funds signed by authorized officials to
intent of the Government to put the airport terminal into immediate cover the payment of just compensation. Third, the Government
operation. was directed "to maintain, preserve and safeguard" the NAIA 3
Then, on 21 December 2004, the Government filed a Complaint for facilities or "perform such as acts or activities in preparation for
expropriation with the Pasay City Regional Trial Court (RTC), their direct operation" of the airport terminal, pending
together with an Application for Special Raffle seeking the expropriation proceedings and full payment of just compensation.
immediate holding of a special raffle. The Government sought upon However, the Government was prohibited "from performing acts of
the filing of the complaint the issuance of a writ of possession ownership like awarding concessions or leasing any part of [NAIA
authorizing it to take immediate possession and control over the 3] to other parties."
NAIA 3 facilities.
The very next day after the issuance of the assailed 4 January 2005
The Government also declared that it had deposited the amount of Order, the Government filed an Urgent Motion for Reconsideration,
P3,002,125,000.00 (3 Billion) in Cash with the Land Bank of the which was set for hearing on 10 January 2005. On 7 January 2005,
Philippines, representing the NAIA 3 terminal’s assessed value for the RTC issued another Order, the second now assailed before this
taxation purposes. Court, which appointed three (3) Commissioners to ascertain the
amount of just compensation for the NAIA 3 Complex. That same
The case was raffled to Branch 117 of the Pasay City RTC, presided day, the Government filed a Motion for Inhibitionof Hon. Gingoyon.
by respondent judge Hon. Henrick F. Gingoyon. On the same day
that the Complaint was filed, the RTC issued an Order directing the The RTC heard the Urgent Motion for Reconsideration and Motion
issuance of a writ of possession to the Government, authorizing it to for Inhibition on 10 January 2005. On the same day, it denied these
"take or enter upon the possession" of the NAIA 3 facilities. motions in an Omnibus Order dated 10 January 2005. This is the
third Order now assailed before this Court. Nonetheless, while the
However, on 4 January 2005, the RTC issued another Order Omnibus Order affirmed the earlier dispositions in the 4 January
designed to supplement its 21 December 2004 Order and the Writ 2005Order, it excepted from affirmance "the superfluous part of the
of Possession. In the 4 January 2005 Order, now assailed in the Order prohibiting the plaintiffs from awarding concessions or
present petition, the RTC noted that its earlier issuance of its writ of leasing any part of [NAIA 3] to other parties."
possession was pursuant to Section 2, Rule 67 of the 1997 Rules of
Civil Procedure. However, it was observed that Republic Act No. Thus, the present Petition for Certiorari and Prohibition under Rule
8974 otherwise known as "An Act to Facilitate the Acquisition of 65 was filed on 13 January 2005. The petition prayed for the
Right-of-Way, Site or Location for National Government nullification of the RTC orders dated 4 January 2005, 7 January
Infrastructure Projects and For Other Purposes" and its 2005, and 10 January 2005, and for the inhibition of Hon. Gingoyon
Implementing Rules and Regulations had amended Rule 67 in many from taking further action on the expropriation case. A concurrent
respects. prayer for the issuance of a temporary restraining order and
preliminary injunction was granted by this Court in a Resolution
There are at least two crucial differences between the respective dated 14 January 2005.
procedures under Rep. Act No. 8974 and Rule 67. Under the statute,
the Government is required to make immediate payment to the ISSUE:
property owner upon the filing of the complaint to be entitled to a Whether or not Rule 67 prevails over R.A. 8974 in the expropriation
writ of possession, whereas in Rule 67, the Government is required proceedings.
only to make an initial deposit with an authorized government
depositary. Moreover, Rule 67 prescribes that the initial deposit be RULING:
equivalent to the assessed value of the property for purposes of
taxation, unlike Rep. Act No. 8974 which provides, as the relevant NO. Rule 67 outlines the procedure under which eminent domain
standard for initial compensation, the market value of the property may be exercised by the Government. Yet by no means does it serve
as stated in the tax declaration or the current relevant zonal at present as the solitary guideline through which the State may
expropriate private property. For example, Section 19 of the Local

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Government Code governs as to the exercise by local government immediately pay the owner of the property its proffered value
units of the power of eminent domain through an enabling taking into consideration the standards prescribed in Section 5
ordinance. And then there is Rep. Act No. 8974, which covers hereof.
expropriation proceedings intended for national government
infrastructure projects. Upon completion with the guidelines abovementioned, the court
Rep. Act No. 8974, which provides for a procedure eminently more shall immediately issue to the implementing agency an order to
favorable to the property owner than Rule 67, inescapably applies take possession of the property and start the implementation of the
in instances when the national government expropriates property project.
"for national government infrastructure projects."Thus, if
expropriation is engaged in by the national government for Before the court can issue a Writ of Possession, the implementing
purposes other than national infrastructure projects, the assessed agency shall present to the court a certificate of availability of funds
value standard and the deposit mode prescribed in Rule 67 from the proper official concerned.
continues to apply.
...
Under both Rule 67 and Rep. Act No. 8974, the Government
As can be gleaned from the above-quoted texts, Rule 67 merely
commences expropriation proceedings through the filing of a
requires the Government to deposit with an authorized government
complaint. Unlike in the case of local governments which
depositary the assessed value of the property for expropriation for
necessitate an authorizing ordinance before expropriation may be
it to be entitled to a writ of possession. On the other hand, Rep. Act
accomplished, there is no need under Rule 67 or Rep. Act No. 8974
No. 8974 requires that the Government make a direct payment to
for legislative authorization before the Government may proceed
the property owner before the writ may issue. Moreover, such
with a particular exercise of eminent domain. The most crucial
payment is based on the zonal valuation of the BIR in the case of
difference between Rule 67 and Rep. Act No. 8974 concerns the
land, the value of the improvements or structures under the
particular essential step the Government has to undertake to be
replacement cost method, or if no such valuation is available and in
entitled to a writ of possession.
cases of utmost urgency, the proffered value of the property to be
The first paragraph of Section 2 of Rule 67 provides: seized.

SEC. 2. Entry of plaintiff upon depositing value with authorized It is quite apparent why the Government would prefer to apply Rule
government depository. — Upon the filing of the complaint or at any 67 in lieu of Rep. Act No. 8974. Under Rule 67, it would not be
time thereafter and after due notice to the defendant, the plaintiff obliged to immediately pay any amount to PIATCO before it can
shall have the right to take or enter upon the possession of the real obtain the writ of possession since all it need do is deposit the
property involved if he deposits with the authorized government amount equivalent to the assessed value with an authorized
depositary an amount equivalent to the assessed value of the government depositary. Hence, it devotes considerable effort to
property for purposes of taxation to be held by such bank subject to point out that Rep. Act No. 8974 does not apply in this case,
the orders of the court. Such deposit shall be in money, unless in notwithstanding the undeniable reality that NAIA 3 is a national
lieu thereof the court authorizes the deposit of a certificate of government project. Yet, these efforts fail, especially considering the
deposit of a government bank of the Republic of the Philippines controlling effect of the 2004 Resolution in Agan on the
payable on demand to the authorized government depositary. adjudication of this case.

In contrast, Section 4 of Rep. Act No. 8974 relevantly states: It is the finding of this Court that the staging of expropriation
proceedings in this case with the exclusive use of Rule 67 would
SEC. 4. Guidelines for Expropriation Proceedings.— Whenever it is allow for the Government to take over the NAIA 3 facilities in a
necessary to acquire real property for the right-of-way, site or fashion that directly rebukes our 2004 Resolution in Agan. This
location for any national government infrastructure project through Court cannot sanction deviation from its own final and executory
expropriation, the appropriate proceedings before the proper court orders.
under the following guidelines:
Section 2 of Rule 67 provides that the State "shall have the right to
a) Upon the filing of the complaint, and after due notice to the take or enter upon the possession of the real property involved if
defendant, the implementing agency shall immediately pay the [the plaintiff] deposits with the authorized government depositary
owner of the property the amount equivalent to the sum of (1) one an amount equivalent to the assessed value of the property for
hundred percent (100%) of the value of the property based on the purposes of taxation to be held by such bank subject to the orders of
current relevant zonal valuation of the Bureau of Internal Revenue the court." It is thus apparent that under the provision, all the
(BIR); and (2) the value of the improvements and/or structures as Government need do to obtain a writ of possession is to deposit the
determined under Section 7 hereof; amount equivalent to the assessed value with an authorized
government depositary.
...
Would the deposit under Section 2 of Rule 67 satisfy the
c) In case the completion of a government infrastructure project is requirement laid down in the 2004 Resolution that "[f]or the
of utmost urgency and importance, and there is no existing government to take over the said facility, it has to compensate
valuation of the area concerned, the implementing agency shall respondent PIATCO as builder of the said structures"? Evidently not.

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If Section 2 of Rule 67 were to apply, PIATCO would be enjoined (3) Applying Rep. Act No. 8974, the implementation of Writ of
from receiving a single centavo as just compensation before the Possession in favor of the Government over NAIA 3 is held in
Government takes over the NAIA 3 facility by virtue of a writ of abeyance until PIATCO is directly paid the amount of P3 Billion,
possession. Such an injunction squarely contradicts the letter and representing the proffered value of NAIA 3 under Section 4(c) of the
intent of the 2004 Resolution. Hence, the position of the law.
Government sanctions its own disregard or violation the
prescription laid down by this Court that there must first be just (4) Applying Rep. Act No. 8974, the Government is authorized to
compensation paid to PIATCO before the Government may take over start the implementation of the NAIA 3 Airport terminal project by
the NAIA 3 facilities. performing the acts that are essential to the operation of the NAIA 3
as an international airport terminal upon the effectivity of the Writ
Thus, at the very least, Rule 67 cannot apply in this case without of Possession, subject to the conditions above-stated. As prescribed
violating the 2004 Resolution. Even assuming that Rep. Act No. by the Court, such authority encompasses "the repair,
8974 does not govern in this case, it does not necessarily follow that reconditioning and improvement of the complex, maintenance of
Rule 67 should then apply. After all, adherence to the letter of the existing facilities and equipment, installation of new facilities
Section 2, Rule 67 would in turn violate the Court’s requirement in and equipment, provision of services and facilities pertaining to the
the 2004 Resolution that there must first be payment of just facilitation of air traffic and transport, and other services that are
compensation to PIATCO before the Government may take over the integral to a modern-day international airport."
property.
(5) The RTC is mandated to complete its determination of the just
It is the plain intent of Rep. Act No. 8974 to supersede the system of compensation within sixty (60) days from finality of this Decision.
deposit under Rule 67 with the scheme of "immediate payment" in In doing so, the RTC is obliged to comply with "law and equity" as
cases involving national government infrastructure projects. ordained in Again and the standard set under Implementing Rules
of Rep. Act No. 8974 which is the "replacement cost method" as the
It likewise bears noting that the appropriate standard of just standard of valuation of structures and improvements.
compensation is a substantive matter. It is well within the province
of the legislature to fix the standard, which it did through the (6) There was no grave abuse of discretion attending the RTC Order
enactment of Rep. Act No. 8974. Specifically, this prescribes the new appointing the commissioners for the purpose of determining just
standards in determining the amount of just compensation in compensation. The provisions on commissioners under Rule 67
expropriation cases relating to national government infrastructure shall apply insofar as they are not inconsistent with Rep. Act No.
projects, as well as the manner of payment thereof. At the same 8974, its Implementing Rules, or the rulings of the Court in Agan.
time, Section 14 of the Implementing Rules recognizes the
continued applicability of Rule 67 on procedural aspects when it (7) The Government shall pay the just compensation fixed in the
provides "all matters regarding defenses and objections to the decision of the trial court to PIATCO immediately upon the finality
complaint, issues on uncertain ownership and conflicting claims, of the said decision.
effects of appeal on the rights of the parties, and such other
incidents affecting the complaint shall be resolved under the (8) There is no basis for the Court to direct the inhibition of Hon.
provisions on expropriation of Rule 67 of the Rules of Court." Gingoyon.

Given that the 2004 Resolution militates against the continued use SHORTDIGEST
of the norm under Section 2, Rule 67, is it then possible to apply
FACTS:
Rep. Act No. 8974? We find that it is, and moreover, its application in
The present controversy has its roots with the promulgation of the
this case complements rather than contravenes the prescriptions
Court’s decision in Agan v. PIATCO, promulgated in 2003 (2003
laid down in the 2004 Resolution.
Decision). This decision nullified the “Concession Agreement for the
SUMMARY OF THE COURT'S RULING: Build-Operate-and-Transfer Arrangement of the Ninoy Aquino
International Airport Passenger Terminal III” entered into between
(1) The 2004 Resolution in Agan sets the base requirement that has the Philippine Government (Government) and the Philippine
to be observed before the Government may take over the NAIA 3, International Air Terminals Co., Inc. (PIATCO), as well as the
that there must be payment to PIATCO of just compensation in amendments and supplements thereto.
accordance with law and equity. Any ruling in the present
expropriation case must be conformable to the dictates of the Court After the promulgation of the rulings in Agan, the NAIA 3 facilities
as pronounced in the Agan cases. have remained in the possession of PIATCO, despite the avowed
intent of the Government to put the airport terminal into immediate
(2) Rep. Act No. 8974 applies in this case, particularly insofar as it operation. The Government and PIATCO conducted several rounds
requires the immediate payment by the Government of at least the of negotiation regarding the NAIA 3 facilities.
proffered value of the NAIA 3 facilities to PIATCO and provides
certain valuation standards or methods for the determination of Planning to put NAIA 3 facilities into immediate operation, the
just compensation. Government, through expropriation filed a petition to be entitled of
a writ of possession contending that a mere deposit of the assessed
value of the property with an authorized government depository is

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enough for the entitlement to said writ (Rule 67 of the Rules of PRINCIPLE: while Section 4, Rule 67 of the Rules of Court provides
Court). that just compensation shall be determined at the time of the filing
of the complaint for expropriation, such law cannot prevail over R.A.
However, respondent avers that before an entitlement of the writ of 7160, which is a substantive law.
possession is issued, direct payment of just compensation must be
made, citing RA No. 8974. Facts:

ISSUE: On 17 September 1993, petitioner City of Cebu filed in Civil Case No.
Whether or not Rule 67 prevails over R.A. 8974 in the expropriation CEB-14632 a complaint for eminent domain against respondents
proceedings. spouses Apolonio and Blasa Dedamo. The petitioner alleged therein
that it needed the following parcels of land of respondents (Lot No.
RULING: 1527 and Lot No. 1528) for a public purpose, i.e., for the
No. The 2004 Resolution in Agan sets the base requirement that has construction of a public road which shall serve as an access/relief
to be observed before the Government may take over the NAIA 3, road of Gorordo Avenue to extend to the General Maxilum Avenue
that there must be payment to PIATCO of just compensation in and the back of Magellan International Hotel Roads in Cebu City.
accordance with law and equity. Any ruling in the present The total area sought to be expropriated is 1,624 square meters
expropriation case must be conformable to the dictates of the Court with an assessed value of P1,786,400. Petitioner deposited with the
as pronounced in the Agan case. Philippine National Bank the amount of P51,156 representing 15%
of the fair market value of the property to enable the petitioner to
Rule 67 outlines the procedure under which eminent domain may take immediate possession of the property pursuant to Section 19
be exercised by the Government. Yet by no means does it serve at of R.A. No. 7160.
present as the solitary guideline through which the State may
expropriate private property. The parties executed and submitted to the trial court an Agreement
wherein they declared that they have partially settled the case.
And then there is Rep. Act No. 8974, which covers expropriation
proceedings intended for national government infrastructure Pursuant to said agreement, the trial court appointed three
projects. Rep. Act No. 8974, which provides for a procedure commissioners to determine the just compensation of the lots
eminently more favorable to the property owner than Rule 67, sought to be expropriated
inescapably applies in instances when the national government
expropriates property “for national government infrastructure On the basis of the commissioners report and after due deliberation
projects.” Thus, if expropriation is engaged in by the national thereon, the trial court rendered its decision where the Plaintiff is
government for purposes other than national infrastructure directed to pay Spouses Apolonio S. Dedamo and Blasa Dedamo the
projects, the assessed value standard and the deposit mode sum of pesos: (P24,865.930.00) representing the compensation
prescribed in Rule 67 continues to apply. mentioned in the Complaint.

Thus, at the very least, Rule 67 cannot apply in this case without Petitioner elevated the case to the Court of Appeals, which docketed
violating the 2004 Resolution. Even assuming that Rep. Act No. the case. Petitioner alleged that the lower court erred in fixing the
8974 does not govern in this case, it does not necessarily follow that amount of just compensation. Contending that just compensation
Rule 67 should then apply. After all, adherence to the letter of should be based on the prevailing market price of the property at
Section 2, Rule 67 would in turn violate the Court’s requirement in the commencement of the expropriation proceedings.
the 2004 Resolution that there must first be payment of just
compensation to PIATCO before the Government may take over the ISSUE: whether just compensation should be determined as of the
property. date of the filing of the complaint?

Rep. Act No. 8974 applies in this case, particularly insofar as it RULING:
requires the immediate payment by the Government of at least the
proffered value of the NAIA 3 facilities to PIATCO and provides In the case at bar, the applicable law as to the point of reckoning for
certain valuation standards or methods for the determination of the determination of just compensation is Section 19 of R.A. No.
just compensation. 7160, which expressly provides that just compensation shall be
determined as of the time of actual taking. The Section reads as
Applying Rep. Act No. 8974, the implementation of Writ of follows:
Possession in favor of the Government over NAIA 3 is held in
abeyance until PIATCO is directly paid the amount of P3 Billion, SECTION 19. Eminent Domain. -- A local government unit may,
representing the proffered value of NAIA 3 under Section 4(c) of the through its chief executive and acting pursuant to an ordinance,
law. exercise the power of eminent domain for public use, or purpose or
welfare for the benefit of the poor and the landless, upon payment
• REPUBLIC V. GINGOYON, G.R. NO. 166429, FEBRUARY 1, 2006- of just compensation, pursuant to the provisions of the Constitution
CHUA 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

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EXPROPRIATION ONWARDS
accepted: Provided, further, That the local government unit may this case, including the two previous cases of Agan and Gingoyon,
immediately take possession of the property upon the filing of the relates to the NAIA 3 project. However, the facts in Agan, Jr. case as
expropriation proceedings and upon making a deposit with the well as that of Gingoyon case were presented herein as reference for
the court's resolution of the prohibition and mandamus petitions
proper court of at least fifteen percent (15%) of the fair market
filed by Asia's Emerging Dragon. Of these 3 cases, it is only
value of the property based on the current tax declaration of the "Republic vs Gingoyon case" that fits the topic - Expropriation. But
property to be expropriated: Provided finally, That, the amount to be after reading the entire 43-page decision, the last few pages of this
paid for the expropriated property shall be determined by the decision show little relevance, to wit:
proper court, based on the fair market value at the time of the
taking of the property. FACTS:

The petitioner has misread our ruling in The National Power Corp. Congresman Baterina intervened in this case, he was opposing the
vs. Court of Appeals. We did not categorically rule in that case that expropriation proceedings, as discussed in Republic vs Gingoyon, on
just compensation should be determined as of the filing of the the ground that NAIA IPT III is already public property. Hence,
complaint. We explicitly stated therein that although the general according to him, PIATCO is not entitled to just compensation for
rule in determining just compensation in eminent domain is the NAIA IPT III. He is asking the Court to make a definitive ruling on
value of the property as of the date of the filing of the complaint, the this matter considering that it was not settled in either Agan or
rule admits of an exception: where this Court fixed the value of the Gingoyon cases.
property as of the date it was taken and not at the date of the
commencement of the expropriation proceedings. HELD:

Also, the trial court followed the then governing procedural law on The Court ruled: We disagree. Contrary to Baterina's stance,
the matter, which was Section 5 of Rule 67 of the Rules of Court, PIATCO's entitlement to just and equitable consideration for its
which provided as follows: construction of NAIA IPT III and the propriety of the Republic's
resort to expropriation proceedings were already recognized and
SEC. 5. Ascertainment of compensation. -- Upon the entry of the upheld by this Court in Agan and Gingoyon.
order of condemnation, the court shall appoint not more than three
(3) competent and disinterested persons as commissioners to The Court's Decisions in both Agan and Gingoyon had attained
ascertain and report to the court the just compensation for the finality. This Court already made an unequivocal pronouncement in
property sought to be taken. The order of appointment shall its Resolution in Agan that for the Government of the Republic to
designate the time and place of the first session of the hearing to be take over the NAIA IPT III facility, it has to compensate PIATCO as a
held by the commissioners and specify the time within which their builder of the structures; and that the compensation must be just
report is to be filed with the court. and in accordance with law and equity for the government cannot
unjustly enrich itself at the expense of PIATCO and its investors. As
More than anything else, the parties, by a solemn document freely between the Republic and PIATCO, the judgment on the need to
and voluntarily agreed upon by them, agreed to be bound by the compensate PIATCO before the Government may take over NAIA
report of the commission and approved by the trial court. The IPT III is already conclusive and beyond question.
agreement is a contract between the parties.
Hence, the Petition is DISMISSED for being moot and academic.
Furthermore, during the hearing on 22 November 1996, petitioner
did not interpose a serious objection. It is therefore too late for LANDBANK V. WYCOCO, G.R. NO. 140160, 13 JANUARY 2004,
petitioner to question the valuation now without violating the 419 SCRA 67, 80- LAMBAN
principle of equitable estoppel.
PRINCIPLE:
Finally, while Section 4, Rule 67 of the Rules of Court provides that
just compensation shall be determined at the time of the filing of JURISDICTION OF SPECIAL AGRARIAN COURTS : Special Agrarian
the complaint for expropriation, such law cannot prevail over R.A. Courts are given original and exclusive jurisdiction over two
7160, which is a substantive law. categories of cases, to wit: (1) all petitions for the determination of
just compensation; and (2) the prosecution of all criminal offenses
WHEREFORE, finding no reversible error in the assailed judgment under R.A. No. 6657. Section 50 must be construed in harmony with
of the Court of Appeals in CA-G.R. CV No. 59204, the petition in this Section 57 by considering cases involving the determination of just
case is hereby DENIED. compensation and criminal cases for violations of R.A. No. 6657 as
excepted from the plenitude of power conferred to the DAR. Indeed,
• ASIA’S EMERGING DRAGON CORPORATION V. DOTC, G.R. NO. there is a reason for this distinction. The DAR, as an administrative
169914, APRIL 18, 2008 SURRALTA agency, cannot be granted jurisdiction over cases of eminent
domain and over criminal cases. The valuation of property in
Note: This case is a petition for Prohibition and Mandamus filed by eminent domain is essentially a judicial function which is vested
Asia's Emergring Dragon Corporation (the original proponent of the with the Special Agrarian Courts and cannot be lodged with
"Unsolicited Proposal for the construction and operation of NAIA 3
administrative agencies.
Project " as discussed in the case of Agan, Jr. vs. PIATCO as was also
reiterated in the subsequent case of Republic vs Gingoyon). Guys,

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EXPROPRIATION ONWARDS
VALUATION: While market value may be one of the bases of ISSUE:
determining just compensation, the same cannot be arbitrarily
arrived at without considering the factors to be appreciated in (1) Whether or not the RTC acting as a Special Agrarian Court
arriving at the fair market value of the property e.g., the cost of taking into cognizance the case of land valuation covered by CARP
acquisition, the current value of like properties, its size, shape, was proper.
location, as well as the tax declarations thereon.
(2) Whether or not RTC acting as a Special Agrarian Court’s
DETERMINATION OF LAND COVERAGE: The power to determine assumption of value of the property was proper.
whether a parcel of land may come within the coverage of the
Comprehensive Agrarian Reform Program is essentially lodged with (3) Whether or not Wycoco can compel the DAR to purchase the
the DAR. entire property.

FACTS: HELD:

Feliciano F. Wycoco is the registered owner of a 94.1690 hectare 1. Yes.


unirrigated and untenanted rice land situated in the Nueva Ecija. In
Anent the issue of jurisdiction, the laws in point are Sections 50 and
line with the Comprehensive Agrarian Reform Program (CARP) of
57 of Republic Act No. 6657 (Comprehensive Agrarian Reform Law
the government, Wycoco voluntarily offered to sell the land to the
of 1988) which, in pertinent part, provide:
Department of Agrarian Reform (DAR) for P14.9 million. However,
after the DAR’s evaluation of the application and the determination Section 50. Quasi-judicial Powers of the DAR. The DAR is hereby
of the just compensation by the Land Bank of the Philippines (LBP), vested with primary jurisdiction to determine and adjudicate
a notice of intention to acquire 84.5690 hectares of the property agrarian reform matters and shall have exclusive original
excluding idle lands, river and road located therein for P1,342,667.4 jurisdiction over all matters involving the implementation of
but later on raised to P2,594,045.39 and, upon review, was modified agrarian reform, except those falling under the exclusive jurisdiction
to P2,280,159.82 to which Wycoco refused to prompting the the of the Department of Agriculture (DA) and the Department of
DAR to indorse the case to the Department of Agrarian Reform Environment and Natural Resources (DENR).
Adjudication Board (DARAB) for the purpose of fixing the just
compensation in a summary administrative proceeding. Section 57. Special Jurisdiction. The Special Agrarian Court shall
have original and exclusive jurisdiction over all petitions for the
DARAB required the parties to submit their respective memoranda determination of just compensation to landowners, and the
or position papers in support of their claim. Wycoco, however, prosecution of all criminal offenses under this Act.
decided to forego with the filing of the required pleadings, and
instead filed on April 13, 1993, the instant case for determination of In Republic v. Court of Appeals, it was held that Special Agrarian
just compensation with the Regional Trial Court of Cabanatuan City, Courts are given original and exclusive jurisdiction over two
Branch 23 impleading as party defendants the DAR and LBP. categories of cases, to wit: (1) all petitions for the determination of
just compensation; and (2) the prosecution of all criminal offenses
DARAB issued an order dismissing the case to give way to the under R.A. No. 6657. Section 50 must be construed in harmony with
determination of just compensation by the Cabanatuan court. DAR Section 57 by considering cases involving the determination of just
and LBP filed their respective answers before the special agrarian compensation and criminal cases for violations of R.A. No. 6657 as
court contending that the valuation of Wycocos property was in excepted from the plenitude of power conferred to the DAR. Indeed,
accordance with law and that the latter failed to exhaust there is a reason for this distinction. The DAR, as an administrative
administrative remedies by not participating in the summary agency, cannot be granted jurisdiction over cases of eminent
administrative proceedings before the DARAB which has primary domain and over criminal cases. The valuation of property in
jurisdiction over determination of land valuation. eminent domain is essentially a judicial function which is vested
with the Special Agrarian Courts and cannot be lodged with
On November 14, 1995, the trial court rendered a decision in favor
administrative agencies.
of Wycoco. It ruled that there is no need to present evidence in
support of the land valuation inasmuch as it is of public knowledge The trial court properly acquired jurisdiction over Wycocos
that the prevailing market value of agricultural lands sold in Licab, complaint for determination of just compensation. It must be
Nueva Ecija is from P135,000.00 to 150,000.00 per hectare. The stressed that although no summary administrative proceeding was
DAR and the LBP filed separate petitions before the Court of held before the DARAB, LBP was able to perform its legal mandate
Appeals but was both dismissed. of initially determining the value of Wycocos land pursuant to
Executive Order No. 405, Series of 1990. What is more, DAR and
The decision became final and executory prompting Wycoco to file a
LBPs conformity to the pre-trial order which limited the issue only
petition for mandamus before this Court, docketed as G.R. No.
to the determination of just compensation estopped them from
146733, praying that the decision of the Regional Trial Court of
questioning the jurisdiction of the special agrarian court. The pre-
Cabanatuan City, Branch 23, in Agrarian Case No. 91 (AF) be
trial order limited the issues to those not disposed of by admission
executed, and that Judge Rodrigo S. Caspillo, the now presiding
or agreements; and the entry thereof controlled the subsequent
Judge of said court, be compelled to inhibit himself from hearing the
course of action.
case.

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EXPROPRIATION ONWARDS
Besides, the issue of whether Wycoco violated the rule on that the prevailing market value of agricultural lands sold in Licab,
exhaustion of administrative remedies was rendered moot and Nueva Ecija is from P135,000.00 to 150,000.00 per hectare. The
academic in view of the DARABs dismissal of the administrative DAR and the LBP filed separate petitions before the Court of
case to give way to and in recognition of the courts power to Appeals but was both dismissed.
determine just compensation.
• NPC V. ANGAS, G.R. NOS. 60225-26, 8 MAY 1992, 208 SCRA
2. No. 542- DACUA

The valuation of the property of Wycoco is the very issue in the case FACTS:
at bar, the trial court should have allowed the parties to present
evidence thereon instead of practically assuming a valuation NPC filed complaints for eminent domain against respondents with
without basis. While market value may be one of the bases of CFI no RTC of Lanao del Sur. The complaint which sought to
determining just compensation, the same cannot be arbitrarily expropriate certain lots in Limogao, Saguiaran, Lanao del Sur was
arrived at without considering the factors to be appreciated in for the purpose of the development of hydro-electric power and
arriving at the fair market value of the property e.g., the cost of production of electricity as well as the erection of such subsidiary
acquisition, the current value of like properties, its size, shape, works and constructions as may be necessarily connected
location, as well as the tax declarations thereon. Since these factors therewith.
were not considered, a remand of the case for determination of just
compensation is necessary. On June 15, 1979, a consolidated decision in Civil Cases Nos. 2248
and 2277 was rendered by the lower court, declaring and
3. No. confirming that the lots mentioned and described in the complaints
have entirely been lawfully condemned and expropriated by the
The DAR cannot be compelled to purchase the entire property petitioner, and ordering the latter to pay the private respondents
voluntarily offered by Wycoco. The power to determine whether a certain sums of money as just compensation for their lands
parcel of land may come within the coverage of the Comprehensive expropriated "with legal interest thereon . . . until fully paid."
Agrarian Reform Program is essentially lodged with the DAR. That
Wycoco will suffer damages by the DARs non-acquisition of the Two consecutive motions for reconsideration of the said
approximately 10 hectare portion of the entire land which was consolidated decision were filed by the petitioner. The same were
found to be not suitable for agriculture is no justification to compel denied by the respondent court. Petitioner did not appeal the
DAR to acquire the whole area. aforesaid consolidated decision, which became final and executory.

Quick Digest: Thus, on May 16, 1980, one of the private respondents (Sittie Sohra
Batara) filed an ex-parte motion for the execution of the June 15,
Feliciano F. Wycoco is the registered owner of a 94.1690 hectare 1979 decision, praying that petitioner be directed to pay her the
unirrigated and untenanted rice land situated in the Nueva Ecija. In unpaid balance of P14,300.00 for the lands expropriated from her,
line with the Comprehensive Agrarian Reform Program (CARP) of including legal interest which she computed at 6% per annum. The
the government, Wycoco voluntarily offered to sell the land to the said motion was granted by the lower court. Thereafter, the lower
Department of Agrarian Reform (DAR) for P14.9 million however, a court directed the petitioner to deposit with its Clerk of Court the
different valuation was offered by DAR to which he refused to sums of money as adjudged in the joint decision dated June 15,
prompting the the DAR to indorse the case to the Department of 1979. Petitioner complied with said order and deposited the sums
Agrarian Reform Adjudication Board (DARAB) for the purpose of of money with interest computed at 6% per annum.
fixing the just compensation in a summary administrative
proceeding. On February 10, 1981, one of the private respondents (Pangonatan
Cosna Tagol), through counsel, filed with the trial court an ex-
Wycoco, however, decided to forego with the filing of the required parte motion in Civil Case No. 2248 praying, for the first time, that
pleadings, and instead filed on April 13, 1993, the instant case for the legal interest on the just compensation awarded to her by the
determination of just compensation with the Regional Trial Court of court be computed at 12% per annum as allegedly "authorized
Cabanatuan City, Branch 23 impleading as party defendants the under and by virtue of Circular No. 416 of the Central Bank issued
DAR and LBP. To this, DARAB issued an order dismissing the case to pursuant to Presidential Decree No. 116 and in a decision of the
give way to the determination of just compensation by the Supreme Court that legal interest allowed in the judgment of the
Cabanatuan court. DAR and LBP filed their respective answers courts, in the absence of express contract, shall be computed at
contending that the valuation of Wycocos property was in 12% per annum."
accordance with law and that the latter failed to exhaust
administrative remedies by not participating in the summary On February 11, 1981, the lower court granted the said motion
administrative proceedings before the DARAB which has primary allowing 12% interest per annum.
jurisdiction over determination of land valuation.
Petitioner moved for a reconsideration of the lower court's last
On November 14, 1995, the trial court rendered a decision in favor order dated August 28, 1981, alleging that the main decision had
of Wycoco. It ruled that there is no need to present evidence in already become final and executory with its compliance of
support of the land valuation inasmuch as it is of public knowledge depositing the sums of money as just compensation for the lands

It ’s not a PROVREM 2015  10


EXPROPRIATION ONWARDS
condemned, with legal interest at 6% per annum; that the said main not only from said circular but also from Presidential Decree
decision can no longer be modified or changed by the lower court; No. 116, which amended Act No. 2655, otherwise known as the
and that Presidential Decree No. 116 is not applicable to this case Usury Law. On the other hand, Art. 2209 of the Civil Code
because it is Art. 2209 of the Civil Code which applies. applies to transactions requiring the payment of indemnities
as damages, in connection with any delay in the performance of
ISSUE: Whether or not in the computation of the legal rate of the obligation arising therefrom other than those covering loan
interest on just compensation for expropriated lands, the law or forbearance of money, goods or credits.
applicable is Article 2209 of the Civil Code which prescribes a 6%
legal interest rate or Central Bank Circular No. 416 which fixed the In the case at bar, the transaction involved is clearly not a loan or
legal interest rate at 12% per annum. forbearance of money, goods or credits but expropriation of certain
parcels of land for a public purpose, the payment of which is
RULING: without stipulation regarding interest, and the interest adjudged by
the trial court is in the nature of indemnity for damages. The legal
The legal rate should be 6% per annum. interest required to be paid on the amount of just compensation for
the properties expropriated is manifestly in the form of indemnity
By virtue of the authority granted to it under Section 1 of Act No.
for damages for the delay in the payment thereof. Therefore, since
2655, as amended, otherwise known as the "Usury Law," the
the kind of interest involved in the joint judgment of the lower court
Monetary Board, in its Resolution No. 1622 dated July 29, 1974, has
sought to be enforced in this case is interest by way of damages, and
prescribed that the rate of interest for the loan or forbearance of
not by way of earnings from loans, etc. Art. 2209 of the Civil Code
any money, goods or credits and the rate allowed in judgments,
shall apply.
in the absence of express contract as to such rate of interest,
shall be twelve per cent (12%)per annum. SHORT DIGEST:
It is clear from the foregoing provision that the Central Bank NPC filed a complaint for eminent domain against respondent
circular applies only to loan or forbearance of money, goods or which sought to expropriate certain lands in Lanao del Sur for
credits. This has already been settled in several cases decided by certain public purpose.
this Court. Private respondents, however, take exception to the
inclusion of the term "judgments" in the said circular, claiming that The lower court directed the expropriation and required the
such term refers to any judgment directing the payment of legal petitioner to pay just compensation with legal interest thereon.
interest, which term includes the questioned judgment of the lower
court in the case at bar. One of the private respondents moved for execution of judgment
praying for petitioner to pay the just compensation and the legal
Private respondents' contention is bereft of merit. The term interest of 6% per annum pursuant to Art. 2209 of the Civil Code.
"judgments" as used in Section 1 of the Usury Law, as well as in Thereafter, the lower court directed petitioner to deposit the
Central Bank Circular No. 416, should be interpreted to mean only payment with the interest of 6% per annum.
judgments involving loan or forbearance of money, goods or credits,
following the principle of ejusdem generis. Under this doctrine, Another one of the private respondents filed ex parte motion stating
where general terms follow the designation of particular things or that the legal interest should be 12% per annum and not the 6% per
classes of persons or subjects, the general term will be construed to annum pursuant to Circular No. 416 of the Central Bank issued
comprehend those things or persons of the same class or of the pursuant to PD 116.
same nature as those specifically enumerated.
What is the legal rate of interest on just compensation for
Applying the said rule on statutory construction to Central Bank expropriated lands?
Circular No. 416, the general term "judgments" can refer only to
judgments in cases involving loans or forbearance of any money, • CITY OF MANILA V. SERRANO, G.R. NO. 142304, JUNE 20, 2001
goods or credits. REALINO

Obviously, therefore, Art. 2209 of the Civil Code, and not FACTS:
Central Bank Circular No. 416, is the law applicable to the case
at bar. Said law reads: The City Council of Manila enacted Ordinance No. 7833 authorizing
the expropriation of certain properties in Manila’s First District in
Art. 2209. If the obligation consists in the payment of a sum of Tondo. One of the properties sought to be expropriated was that
money, and the debtor incurs a delay, the indemnity for damages, supposedly owned by respondents.
there being no stipulation to the contrary, shall be the payment of
the interest agreed upon, and in the absence of stipulation, the legal Petitioner City of Manila filed an amended complaint for
interest, which is six percent per annum. expropriation, docketed as Civil Case No. 94-72282, with the RTC of
Manila, against the supposed owners of the lots, which included
The Central Bank circular applies only to loan or forbearance herein respondents Oscar, Felicitas, Jose, Benjamin, Estelita,
of money, goods or credits and to judgments involving such Leonora, Adelaida, all surnamed Serrano.
loan or forbearance of money, goods or credits. This is evident

It ’s not a PROVREM 2015  11


EXPROPRIATION ONWARDS
Respondents filed a consolidated answer, in which they alleged that the orders of the court. After such deposit is made the court shall
their mother, the late Demetria De Guia, had acquired Lot 1-C from order the sheriff or other proper officer to forthwith place the
Lee Kian Hui; that they had been the bona fide occupants of the said plaintiff in possession of the property involved and promptly
parcel of land for more than 40 years; that the expropriation of Lot submit a report thereof to the court with service of copies to the
1-C would result in their dislocation, it being the only residential parties. Thus, a writ of execution may be issued by a court upon the
land left to them by their deceased mother; and that the said lot was filing by the government of a complaint for expropriation sufficient
exempt from expropriation because dividing the said parcel of land in form and substance and upon deposit made by the government of
among them would entitle each of them to only about 50 square the amount equivalent to the assessed value of the property subject
meters of land. Respondents, therefore, prayed that judgment be to expropriation. Upon compliance with these requirements, the
rendered declaring Lot 1-C exempt from expropriation and ordering issuance of the writ of possession becomes ministerial. In this case,
the cancellation of the notice annotated on the back of TCT No. these requirements were satisfied and, therefore, it became the
226048, regarding the pendency of Civil Case No. 94-72282 for ministerial duty of the trial court to issue the writ of possession.
eminent domain filed by petitioner.
The Court of Appeals, however, ruled that petitioner failed to
Upon motion by petitioner, the trial court issued an order, dated comply with the requirements laid down in §§9-10 of R.A. No. 7279
October 9, 1998, directing petitioner to deposit the amount of and reiterated in the Filstream ruling. This is error. The ruling in
P1,825,241.00 equivalent to the assessed value of the properties. Filstream was necessitated because an order of condemnation had
After petitioner had made the deposit, the trial court issued another already been issued by the trial court in that case. Thus, the
order, dated December 15, 1998, directing the issuance of a writ of judgment in that case had already become final. In this case, the
possession in favor of petitioner. trial court has not gone beyond the issuance of a writ of possession.
Hearing is still to be held to determine whether or not petitioner
Respondents filed a petition for certiorari with the Court of Appeals, indeed complied with the requirements provided in R.A. No. 7279.
alleging that the expropriation of Lot 1-C would render It is, therefore, premature at this stage of the proceedings to find
respondents, who are actual occupants thereof, landless; that Lot 1- that petitioner resorted to expropriation without first trying the
C is exempt from expropriation because R.A. No. 7279 provides that other modes of acquisition enumerated in §10 of the law.
properties consisting of residential lands not exceeding 300 square Expropriation proceedings consists of two stages: first,
meters in highly urbanized cities are exempt from expropriation; condemnation of the property after it is determined that its
that respondents would only receive around 49 square meters each acquisition will be for a public purpose or public use and, second,
after the partition of Lot 1-C which consists of only 343.10 square the determination of just compensation to be paid for the taking of
meters; and that R.A. No. 7279 was not meant to deprive an owner private property to be made by the court with the assistance of not
of the entire residential land but only that in excess of 300 square more than three commissioners.
meters.
• MCWD V. J. KING AND SONS, G.R. NO. 175983, APRIL 16, 2009
On November 16, 1999, the Court of Appeals rendered a decision MATA
holding that Lot 1-C is not exempt from expropriation because it
undeniably exceeds 300 square meters which is no longer Principle:
considered a small property within the framework of R.A. No. 7279.
However, it held that in accordance with the ruling in Filstream In expropriation proceeding, there are two stages, first, is the
International Inc. v. Court of Appeals, the other modes of acquisition determination of the validity of the expropriation, and second is the
of lands enumerated in §§9-10 of the law must first be tried by the determination of just compensation.
city government before it can resort to expropriation. As petitioner
failed to show that it had done so, the Court of Appeals gave The general rule is that upon filing of the expropriation complaint,
judgment for respondents and enjoined petitioner from the plaintiff has the right to take or enter into possession of the real
expropriating Lot 1-C. property involved if he deposits with the authorized government
depositary an amount equivalent to the assessed value of the
ISSUE: property for purposes of taxation. An exception to this procedure is
provided by R.A. No. 8974. It requires the payment of one hundred
WON the CA erred in concluding that the Order of the RTC which percent (100%) of the zonal value of the property to be
authorizes the immediate entry of the City as the expropriating expropriated to entitle the plaintiff to a writ of possession.
agency into the property sought to be expropriated upon the
deposit thereof as tantamount to condemnation of the property. Facts:

RULING: Petitioner Metropolitan Cebu Water District is a government-owned


and controlled corporation created pursuant to Presidential Decree
YES. Rule 67, §2 provides: Upon the filing of the complaint or at any No. 198, as amended. Among its purposes are to acquire, install,
time thereafter and after due notice to the defendant, the plaintiff improve, maintain and operate water supply and distribution
shall have the right to take or enter upon the possession of the real systems within the boundaries of the District.
property involved if he deposits with the authorized government
depositary an amount equivalent to the assessed value of the Petitioner, wanted to acquire a five (5)-square meter lot occupied by
property for purposes of taxation to be held by such bank subject to its production well. The lot is part of respondent’s property covered

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EXPROPRIATION ONWARDS
by TCT No. 168605 and located in Banilad, Cebu City. Petitioner determination of the validity of the expropriation, and second is the
initiated negotiations with respondent for the voluntary sale of the determination of just compensation.
latter’s property. Respondent did not acquiesce to petitioner’s
proposal. After the negotiations had failed, petitioner pursuant to As an inherent sovereign prerogative, the power to expropriate
its charter initiatedexpropriation proceedings through Board pertains to the legislature. However, Congress may, as in fact it often
Resolution No. 015-2004 which was duly approved by the Local does, delegate the exercise of the power to government agencies,
Water Utilities Administration (LWUA). On 10 November 2004, public officials and quasi-public entities. Petitioner is empowered
petitioner filed a complaint to expropriate the five (5)-square meter under its charter, to explicitly exercise the power of eminent
portion of respondent’s property. domain.

On 7 February 2005, petitioner filed a motion for the issuance of a R.A. No. 8974, otherwise known as "An Act To Facilitate The
writ of possession. Petitioner wanted to tender the amount to Acquisition Of Right-Of-Way, Site Or Location For National
respondent during a rescheduled hearing which petitioner’s Government Infrastructure Projects And For Other Purposes" ,
counsel had failed to attend. Petitioner then deposited with the includes projects undertaken by government owned and controlled
Clerk of Court the amount of P17,500.00 equivalent to one hundred corporations. Moreover, the Implementing Rules and Regulations of
percent (100%) of the current zonal value of the property which the R.A. No. 8974 explicitly includes water supply, sewerage, and waste
Bureau of Internal Revenue had pegged at P3,500.00 per square management facilities among the national government projects
meter. Subsequently, the trial court granted the motion and issued covered by the law.
the writ of possession. Respondent moved for reconsideration but
the motion was denied. A corporation does not have powers beyond those expressly
conferred upon it by its enabling law. All the powers, privileges, and
Respondent filed a petition for certiorari under Rule 65 with the duties of the district shall be exercised and performed by and
Court of Appeals. It sought the issuance of a temporary restraining through the board and that any executive, administrative or
order (TRO) which the Court of Appeals granted. Thus, petitioner ministerial power may be delegated and re-delegated by the board
was not able to gain entry to the lot. to any of its officers or agents for suchpurpose.

On 26 July 2006, the Court of Appeals rendered the assailed In this case, petitioner being a corporation it can exercise its powers
decision granting respondent’s petition. It ruled that the board only through its board of directors. For petitioner to exercise its
resolution which authorized the filing of the expropriation power of eminent domain, two requirements should be met,
complaint lacked exactitude and particularity which made it invalid; namely: first, its board of directors passed a resolution authorizing
that there was no genuine necessity for the expropriation of the five the expropriation, and; second, the exercise of the power of eminent
(5)-square meter lot and; that the reliance on Republic Act (R.A.) domain was subjected to review by the LWUA. These requirements
No. 8974 in fixing the value of the property contravenes the judicial were properly observed by the petitioner. Therefore, there was
determination of just compensation. Petitioner moved for sufficient authority from the petitioner’s board of directors to
reconsideration but the motion was rejected institute the expropriation complaint.

Hence, this petition. As to the propriety of the issuance of a writ of possession, a


discussion on the various stages in an expropriation proceeding is
Issues: necessary.

1. Whether there was sufficient authority from the petitioner’s The general rule is that upon filing of the expropriation complaint,
board of directors to institute the expropriation complaint; and the plaintiff has the right to take or enter into possession of the real
property involved if he deposits with the authorized government
2. Whether the procedure in obtaining a writ of possession was depositary an amount equivalent to the assessed value of the
properly observed. property for purposes of taxation. An exception to this procedure is
provided by R.A. No. 8974. It requires the payment of one hundred
Ruling: percent (100%) of the zonal value of the property to be
expropriated to entitle the plaintiff to a writ of possession, as
Yes, the petitioner’s board of directors has sufficient authority to
discussed inTan v. Republic G.R. No. 170740, 25 May 2007,523 SCRA
institute the expropriation complaint. Moreover, the procedure in
203. R.A. No. 8974 also provides a different scheme for the
obtaining a writ of possession was properly observed.
obtention of a writ of possession. The law does not require a
Eminent domain is the right of the state to acquire private property deposit with a government bank; instead it requires the
for public use upon payment of just compensation. The power of government to immediately pay the property owner.Under this
eminent domain is inseparable in sovereignty being essential to the statutory provision, when the government, its agencies or
existence of the State and inherent in government. Its exercise is government-owned and controlled corporations, make the required
proscribed by only two Constitutional requirements: first, that there provisional payment, the trial court has a ministerial duty to issue a
must be just compensation, and second, that no person shall be writ of possession.
deprived of life, liberty or property without due process of law.In an
In this case, petitioner was supposed to tender the provisional
expropriation proceeding there are two stages, first, is the
payment directly to respondent during a hearing which it had failed

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EXPROPRIATION ONWARDS
to attend. Petitioner, then, deposited the provisional payment with Side Notes: Full discussion of the stages of expropriation
the court. The trial court did not commit an error in accepting the proceeding.
deposit and in issuing the writ of possession. The deposit of the
provisional amount with the court is equivalent to payment. Upon (1) Determination of the authority of the plaintiff to exercise the
compliance with the requirements, a petitioner in an expropriation power of eminent domain and the propriety of its exercise in the
case is entitled to a writ of possession as a matter of right and it context of the facts involved in the suit. It ends with an order, if not
becomes the ministerial duty of the trial court to forthwith issue the of dismissal of the action, with condemnation declaring that the
writ of possession. Therefore, the proper procedure was observed plaintiff has a lawful right to take the property sought to be
in this case. condemned for the public use or purpose described in the
complaint, upon payment of just compensation. An order of
Quick digest: expropriation is final. An order of dismissal, if this be ordained,
would be a final one, as it finally disposes of the action and leaves
NDXE, a GOCC, with authority to expropriate private property under nothing more to be done by the courts on the merits. The order of
its charter, sought to expropriate portion of K. Queen and Daughters expropriation would also be a final one for after its issuance, no
Company’s property, for its deep well project. The Board of objection to the right of condemnation shall be heard. The order of
Directors of NDXE authorized its expropriation and was reviewed expropriation may be appealed by any party aggrieved thereby by
by Local Water Utilities Administration. NXDE then deposited with filing a record on appeal.
the Clerk of Court the amount of P17,500.00 equivalent to one
hundred percent (100%) of the current zonal value of the property (2) Determination by the court of the just compensation for the
which the Bureau of Internal Revenue had pegged at P3,500.00 per property sought to be taken with the assistance of not more than
square meter.The trial court issued writ of possession to NXDE over three (3) commissioners. The order fixing the just compensation on
the property. However, the Court of Appeals(CA) issued a TRO the basis of the evidence before the court and findings of the
because there was no sufficient authority to expropriate said commissioners would likewise be a final one, as it would leave
property. Is the CA correct? nothing more to be done by the court regarding the issue. A second
and separate appeal may be taken from this order fixing the just
No. compensation.37

In an expropriation proceeding there are two stages, first, is the • Republic v. Tagle, G.R. No. 129079, December 2, 1998 PAGAPONG
determination of the validity of the expropriation, and second is the
determination of just compensation. Re: Executive Order No. 1035[1] (EO 1035) was enacted to facilitate
government acquisition of private property to be used for
A corporation does not have powers beyond those expressly infrastructure or other development projects. Under Section 7
conferred upon it by its enabling law. All the powers, privileges, and thereof, it is the ministerial duty of courts to issue a writ of
duties of the district shall be exercised and performed by and possession within five days from the time the government deposits
through the board and that any executive, administrative or 10 percent of the just compensation payable. Moreover, such writ
ministerial power may be delegated and re-delegated by the board cannot be nullified by an adverse decision in an ejectment
to any of its officers or agents for such purpose. proceeding involving the same property and the same parties.

The general rule is that upon filing of the expropriation complaint, Facts:
the plaintiff has the right to take or enter into possession of the real
property involved if he deposits with the authorized government • 2 parcels of land were owned by Helena Benetiz.
depositary an amount equivalent to the assessed value of the
property for purposes of taxation. An exception to this procedure is • The Philippine Government, through the Philippine Human
provided by R.A. No. 8974. It requires the payment of one hundred Resources Development Center (PHRDC) in coordination with the
percent (100%) of the zonal value of the property to be Japanese International Cooperation Agency (JICA) plan for the
expropriated to entitle the plaintiff to a writ of possession establishment of ASEAN Human Resources Development Project in
the Philippines.
In this case, petitioner being a corporation it can exercise its powers
only through its board of directors. NXDE was authorized by its • Among the 5 main programs of the proposed project was the
Board, and was reviewed by Local Water Utilities Administration. Construction Manpower Development Center (CMDC) in the land
Further, NXDE then properlydeposited with the Clerk of Court the owned by Helena.
amount of P17,500.00 equivalent to one hundred percent (100%) of
the current zonal value of the property which the Bureau of Internal • Several transaction and agreements were entered into between
Revenue had pegged at P3,500.00 per square meter. Benitez and the PHRDC with regards to the lease and consequently,
the possible sale of the land which did not push through because of
Therefore, NXDE has sufficient authority to expropriate the Benitez’s desistance.
property of K. Queen and Daughters Company. The CA’s order was
incorrect. • Thus subsequently, the state through DTI instituted a complaint
for Eminent Domain, pursuant to EO 1935. In compliance with
Section 2, Rule 67 of the Rules of Court, as amended by Presidential

It ’s not a PROVREM 2015  14


EXPROPRIATION ONWARDS
Decree No. 42, DTI deposited with PNB in favor of Benitez P708,490 • Ineludibly, said writ is both necessary and practical, because mere
an amount equivalent to the provisional value of the land sought to physical possession that is gained by entering the property is not
be expropriated. equivalent to expropriating it with the aim of acquiring ownership
over, or even the right to possess, the expropriated property.
• Subsequently, DTI filed a Motion for Issuance of Writ of Possession
which had been granted but; Short case:

• Subsequently the writ was quashed by MTC Judge Tagle on the The government through its Human Development Agency (HDA)
ground that the applicants were already in possession of the lot. leased the private land of Benetiz for its infrastructure. Latter
however, HDA offer to buy the land to which Benetiz decline. This
• (note: that Benitez in turn, also instituted a case of ejectment prompted HDA to file for an expropriation proceeding. In turn,
against PHRDC) Benetiz also filed a case for ejectment against HDA.

Issue: After HDA paid the provisional value of the land pursuant to EO
1935, it prayed the court to issue a writ of possession to which the
Whether Judge Tagle may quash a writ of possession on the ground court granted, but latter quashed. The court argued that the writ is
that the expropriating government agency is already occupying the no longer necessary in view of the fact that HDA has the land in
property sought to be expropriated. possession.
Ruling: Is the contention of the court correct? Reason out.
No. Judge Tagle is required to issue a writ of possession pursuant to
Sec. 7 of EO 1035:
• CITY OF CEBU V. SPOUSES DEDAMO, G.R. NO. 142971, MAY 7,
“SEC 7. Expropriation. If the parties fail to agree in negotiation of 2002 DUYONGCO
the sale of the land as provided in the preceding section, the
government implementing agency/instrumentality concerned shall PRINCIPLE: while Section 4, Rule 67 of the Rules of Court provides
have authority to immediately institute expropriation proceedings that just compensation shall be determined at the time of the filing
through the Office of the Solicitor General, as the case may be. The of the complaint for expropriation, such law cannot prevail over R.A.
just compensation to be paid for the property acquired through 7160, which is a substantive law.
expropriation shall be in accordance with the provisions of P.D. No.
1533. Courts shall give priority to the adjudication of cases on Facts:
expropriation and shall immediately issue the necessary writ of
possession upon deposit by the government implementing On 17 September 1993, petitioner City of Cebu filed in Civil Case No.
agency/instrumentality concerned of an amount equivalent to ten CEB-14632 a complaint for eminent domain against respondents
per cent (10%) of the amount of just compensation provided under spouses Apolonio and Blasa Dedamo. The petitioner alleged therein
P.D. No. 1533; Provided, That the period within which said writ of that it needed the following parcels of land of respondents (Lot No.
possession shall be issued shall in no case extend beyond five (5) 1527 and Lot No. 1528) for a public purpose, i.e., for the
days from the date such deposit was made.” construction of a public road which shall serve as an access/relief
road of Gorordo Avenue to extend to the General Maxilum Avenue
Under this statutory provision, when the government or its and the back of Magellan International Hotel Roads in Cebu City.
authorized agent makes the required deposit, the trial court has a The total area sought to be expropriated is 1,624 square meters
ministerial duty to issue a writ of possession. with an assessed value of P1,786,400. Petitioner deposited with the
Philippine National Bank the amount of P51,156 representing 15%
What will happen if the required writ of possession is not issued? of the fair market value of the property to enable the petitioner to
take immediate possession of the property pursuant to Section 19
• This question becomes very important because the Municipal of R.A. No. 7160.
Trial Court (MTC), where private respondent (Benetiz) sued
petitioner for unlawful detainer, has rendered a decision ordering The parties executed and submitted to the trial court an Agreement
petitioner to vacate the property.[16] It would be circuitous, if not wherein they declared that they have partially settled the case.
legally absurd, for this Court to require petitioner to first vacate the
property in view of the adverse judgment in the unlawful detainer Pursuant to said agreement, the trial court appointed three
case, and soon afterwards, order the trial court to issue in commissioners to determine the just compensation of the lots
petitioners favor a writ of possession pursuant to the expropriation sought to be expropriated
proceedings. Such a scenario is a bureaucratic waste of precious
time and resources. This precisely is the sort of pernicious and On the basis of the commissioners report and after due deliberation
unreasonable delay of government infrastructure or development thereon, the trial court rendered its decision where the Plaintiff is
projects, which EO 1035 intended to address by requiring the directed to pay Spouses Apolonio S. Dedamo and Blasa Dedamo the
immediate issuance of a writ of possession. sum of pesos: (P24,865.930.00) representing the compensation
mentioned in the Complaint.

It ’s not a PROVREM 2015  15


EXPROPRIATION ONWARDS
Petitioner elevated the case to the Court of Appeals, which docketed report of the commission and approved by the trial court. The
the case. Petitioner alleged that the lower court erred in fixing the agreement is a contract between the parties.
amount of just compensation. Contending that just compensation
should be based on the prevailing market price of the property at Furthermore, during the hearing on 22 November 1996, petitioner
the commencement of the expropriation proceedings. did not interpose a serious objection. It is therefore too late for
petitioner to question the valuation now without violating the
ISSUE: whether just compensation should be determined as of the principle of equitable estoppel.
date of the filing of the complaint?
Finally, while Section 4, Rule 67 of the Rules of Court provides that
RULING: just compensation shall be determined at the time of the filing of
the complaint for expropriation, such law cannot prevail over R.A.
In the case at bar, the applicable law as to the point of reckoning for 7160, which is a substantive law.
the determination of just compensation is Section 19 of R.A. No.
7160, which expressly provides that just compensation shall be WHEREFORE, finding no reversible error in the assailed judgment
determined as of the time of actual taking. The Section reads as of the Court of Appeals in CA-G.R. CV No. 59204, the petition in this
follows: case is hereby DENIED.

SECTION 19. Eminent Domain. -- A local government unit may, • SPOUSES ORTEGA V. CITY OF CEBU, G.R. NO. 181562-63,
through its chief executive and acting pursuant to an ordinance, OCTOBER 2, 2009 BELLEZA
exercise the power of eminent domain for public use, or purpose or
welfare for the benefit of the poor and the landless, upon payment FACTS:
of just compensation, pursuant to the provisions of the Constitution
and pertinent laws: Provided, however, That the power of eminent Spouses Ortega are the registered owners of a parcel of land known
domain may not be exercised unless a valid and definite offer has as Lot No. 310-B, situated in Hipodromo, Cebu City, with an area of
been previously made to the owner, and such offer was not 5,712 square meters and covered by Transfer Certificate of Title No.
accepted: Provided, further, That the local government unit may 113311, issued by the Register of Deeds of the City of Cebu.
immediately take possession of the property upon the filing of the
On May 23, 1994, the Sangguniang Panglungsod of [Cebu City]
expropriation proceedings and upon making a deposit with the
enacted City Ordinance No. 1519, giving authority to the City Mayor
proper court of at least fifteen percent (15%) of the fair market
to expropriate one-half (1/2) portion (2,856 square meters) of [the
value of the property based on the current tax declaration of the
spouses Ortegas] land (which is occupied by the squatters), and
property to be expropriated: Provided finally, That, the amount to be
appropriating for that purpose the amount of P3,284,400.00 or at
paid for the expropriated property shall be determined by the
the price of ONE THOUSAND ONE HUNDRED FIFTY PESOS
proper court, based on the fair market value at the time of the
(P1,150.00) per square meter.
taking of the property.
Pursuant to said ordinance, [Cebu City] filed a Complaint for
The petitioner has misread our ruling in The National Power Corp.
Eminent Domain [before the Regional Trial Court (RTC), Branch 23,
vs. Court of Appeals. We did not categorically rule in that case that
Cebu City] against [the spouses Ortega], docketed as Civil Case No.
just compensation should be determined as of the filing of the
CEB-16577.
complaint. We explicitly stated therein that although the general
rule in determining just compensation in eminent domain is the On March 13, 1998, the [RTC] issued an order declaring that
value of the property as of the date of the filing of the complaint, the [Cebu City] has the lawful right to take the property subject of the
rule admits of an exception: where this Court fixed the value of the instant case, for public use or purpose described in the complaint
property as of the date it was taken and not at the date of the upon payment of just compensation.
commencement of the expropriation proceedings.
Based on the recommendation of the appointed
Also, the trial court followed the then governing procedural law on Commissioners (one of whom was the City Assessor of [Cebu City],
the matter, which was Section 5 of Rule 67 of the Rules of Court, the [RTC] issued another Order dated May 21, 1999, fixing the value
which provided as follows: of the land subject to expropriation at ELEVEN THOUSAND PESOS
(P11,000.00) per square meter and ordering [Cebu City] to pay
SEC. 5. Ascertainment of compensation. -- Upon the entry of the
[Spouses Ortega] the sum of THIRTY ONE MILLION AND FOUR
order of condemnation, the court shall appoint not more than three
HUNDRED SIXTEEN THOUSAND PESOS (P31,416,000.00) as just
(3) competent and disinterested persons as commissioners to
compensation for the expropriated portion of Lot No. 310-B.
ascertain and report to the court the just compensation for the
property sought to be taken. The order of appointment shall The Decision of the [RTC] became final and executory because of
designate the time and place of the first session of the hearing to be [Cebu Citys] failure to perfect an appeal on time, and a Writ of
held by the commissioners and specify the time within which their Execution was issued on September 17, 1999 to enforce the courts
report is to be filed with the court. judgment.

More than anything else, the parties, by a solemn document freely


and voluntarily agreed upon by them, agreed to be bound by the

It ’s not a PROVREM 2015  16


EXPROPRIATION ONWARDS
In view thereof, the above-mentioned sum is now subject for purpose described in the complaint, upon the payment of just
execution or garnishment for the same is no longer exempt from compensation to be determined as of the date of the filing of the
execution. complaint; and

[Cebu City] filed an Omnibus Motion to Stay Execution, Modification 2. Determination by the court of the just compensation for
of Judgment and Withdrawal of the Case, contending that the price the property sought to be taken.
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 2. It is well-settled in jurisprudence that the determination of
socialized housing program. The motion was denied by the [RTC]. just compensation is a judicial prerogative.
[Cebu City’s] Motion for Reconsideration was likewise denied. Then
it appealed to CA and CA affirmed RTC’s decision. In Export Processing Zone Authority v. Dulay, we declared:

Issue: The determination of just compensation in eminent domain cases


is a judicial function. The executive department or the legislature
1. Whether or not the CA erred in affirming the RTCs denial may make the initial determinations but when a party claims a
of Cebu Citys Omnibus Motion to Modify Judgment and to violation of the guarantee in the Bill of Rights that private property
be Allowed to Withdraw from the Expropriation may not be taken for public use without just compensation, no
Proceedings. statute, decree, or executive order can mandate that its own
determination shall prevail over the courts findings. Much less can
2. Whether or not just compensation is dependent on the courts be precluded from looking into the just-ness of the
whether State/City [Cebu City] would have sufficient decreed compensation.
funds to pay for the same.
We, therefore, hold that P.D. No. 1533, which eliminates the courts
Ruling: discretion to appoint commissioners pursuant to Rule 67 of the
Rules of Court, is unconstitutional and void. To hold otherwise
1. No. Both the Order of expropriation and the Order fixing would be to undermine the very purpose why this Court exists in
just compensation by the RTC can no longer be modified. the first place.
In short, Cebu City cannot withdraw from the
expropriation proceedings. Likewise, in the recent cases of National Power Corporation v. dela
Cruz and Forfom Development Corporation v. Philippine National
Section 4, Rule 67 of the Rules of Court on Expropriation provides: Railways, we emphasized the primacy of judicial prerogative in the
ascertainment of just compensation as aided by the appointed
SEC. 4. Order of expropriation. If the objections to and the defenses commissioners, to wit:
against the right of the plaintiff to expropriate the property are
overruled, or when no party appears to defend as required by this Though the ascertainment of just compensation is a judicial
Rule, the court may issue an order of expropriation declaring that prerogative, the appointment of commissioners to ascertain just
the plaintiff has a lawful right to take the property sought to be compensation for the property sought to be taken is a mandatory
expropriated, for the public use or purpose described in the requirement in expropriation cases. While it is true that the findings
complaint, upon the payment of just compensation to be of commissioners may be disregarded and the trial court may
determined as of the date of the taking of the property or the filing substitute its own estimate of the value, it may only do so for valid
of the complaint, whichever came first. reasons; that is, where the commissioners have applied illegal
principles to the evidence submitted to them, where they have
A final order sustaining the right to expropriate the property may disregarded a clear preponderance of evidence, or where the
be appealed by any party aggrieved thereby. Such appeal, however, amount allowed is either grossly inadequate or excessive. Thus, trial
shall not prevent the court from determining the just compensation with the aid of the commissioners is a substantial right that may not
to be paid. be done away with capriciously or for no reason at all.
After the rendition of such an order, the plaintiff shall not be • BPI V. COURT OF APPEALS, G.R. NO. 160890, NOVEMBER 10,
permitted to dismiss or discontinue the proceeding except on such 2004 LIM
terms as the court deems just and equitable.
Principle:
Plainly, from the aforequoted provision, expropriation proceedings
speak of two (2) stages, i.e.: The just compensation is determined as of the date of the taking of
the property or the filing of the complaint whichever came first.
1. Determination of the authority of the plaintiff to exercise the
power of eminent domain and the propriety of its exercise in the Facts:
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 This is a petition for review under Rule 45 of the Rules of Court,
expropriation] declaring that the plaintiff has the lawful right to assailing the Decision of the Court of Appeals which reversed the
take the property sought to be condemned, for the public use or Decision of the Regional Trial Court reducing from P10,000.00 to

It ’s not a PROVREM 2015  17


EXPROPRIATION ONWARDS
P3,000.00 the amount of just compensation for the expropriated After a careful perusal of the records, we find no reason to disturb
land of petitioner; and decreasing from P10,000.00 to P3,000.00 the this finding of fact by the Court of Appeals, sufficiently supported as
commissioners fee for each of the three commissioners. it is, by the evidence on record.

On April 15, 1996, private respondent National Power Corporation We find that the rate imposed by the Commissioners is
(NAPOCOR) filed a Complaint for Eminent Domain, seeking to unsubstantiated. No official documents were presented to reflect
expropriate a portion of petitioner Bank of the Philippine Islands the true market value of the subject lots in the surrounding area.
(BPI) property located Cavite, for the purpose of constructing and The Commissioners Report merely states that the value of the land
maintaining its DasmariasZapote 230 KV Transmission Line Project. is based on sales and listings of comparable property registered
within the immediate vicinity without any evidence to support the
Consequently, BPI moved for the dismissal of the case and the same market data provided.
was granted without prejudice to its reinstatement.Private
respondent NAPOCOR filed a motion for reconsideration. The trial In this instance, we accord more weight to Resolution No. 0895
court granted the motion and reinstated the case. promulgated by the Provincial Appraisal Committee of Cavite held
at the Office of the Provincial Assessor.Said Resolution pegs as fair
In its Order dated November 28, 1997, the trial court designated and reasonable the value of P3,000.00 per square meter of all the
three commissioners to determine the just value of the property lots in the Municipality of Dasmarias, specifically along General
subject of the expropriation. Accordingly, on February 26, 1999, the Aguinaldo Highway.
Commissioners submitted its Report which assessed the sum of the
area of the property taken and the estimated value of just The just compensation is determined as of the date of the taking of
compensation at 75.34 square meters x P10,000.00 = P753,400.00, the property or the filing of the complaint whichever came
and recommended an additional payment of P524,660.00 as first.NAPOCOR filed the complaint on April 15, 1996. A period of 6
severance damage, or a total of P1,278,060.00. Likewise, they months has elapsed from the valuation of the Provincial Assessors
submitted an undated Commissioners Valuation Report citing the and the filing of the complaint. We note the considerable
Market Data Approach as the method used in arriving at the amount discrepancy between the valuation of the former and that of the
of P10,000.00 per square meter as just compensation, whereby the Commissioners. Indeed, the appellate court computed the increase
value of the land is based on sales and listing of comparable of the valuation to be 233%.
property registered within the immediate vicinity.
The Court of Appeals pointed out that more than 70% of the 200 lot
The trial court rendered judgment in favor of BPI and ordered the owners have entered into compromise agreements and accepted
NAPOCOR to pay the latter the fair market value of the property at the price set by the Provincial Appraisal Committee of Cavite. It is
10,000 per square meter. The CA reversed the trial court decision also worthy to note that one of the Commissioners in this case, Mr.
and ordered the NAPOCOR to pay BPI the amount of 3,000 per Lamberto C. Parra, was the Chairman Provincial Assessor and
square meter. signatory of the same Resolution

Issue: Short Digest:

Whether the Court of Appeals gravely abused its discretion and Facts:
seriously erred in fixing the just compensation for the subject
property at P3,000.00 per square meter. NAPOCOR filed a complaint for Eminent Domain seeking to
expropriate a portion of BPI’s property in Cavite. The trial court
Ruling: designated three commissioners to determine the value of just
compensation. On February 26, 1999, the Commissioners submitted
No. Just compensation is defined as the full and fair equivalent of its Report which assessed the sum of the area of the property taken
the property taken from its owner by the expropriator. The measure and the estimated value of just compensation at 75.34 square
is not the takers gain, but the owners loss.To compensate is to meters x P10,000.00. Likewise, they submitted an undated
render something which is equal in value to that taken or received. Commissioners Valuation Report citing the Market Data Approach
The word just is used to intensify the meaning of the word as the method used in arriving at the amount of P10,000.00 per
compensation; to convey the idea that the equivalent to be rendered square meter as just compensation. On the other hand, the
for the property taken shall be real, substantial, full, ample. Provincial Appraisal Committee of Cavite promulgated a resolution.
Said resolution pegs as fair and reasonable the value of P3,000.00
In eminent domain or expropriation proceedings, the general rule is per square meter of all the lots in the Municipality of Dasmarias.
that the just compensation which the owner of condemned
property is entitled to is the market value. Market value is that sum The CA affirmed the 3,000 per square meter just compensation.
of money which a person desirous but not compelled to buy, and an
owner willing but not compelled to sell, would agree on as a price to Issue:
be given and received therefor.
Whether or not the CA is correct in fixing the just compensation at
3,000 per square meter.

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EXPROPRIATION ONWARDS
Ruling: purchase offer of TWO HUNDRED THOUSAND PESOS
(P200,000.00). The expropriation of Lot 4381-D was being
Yes. The find that the rate imposed by the Commissioners is pursued in view of providing Barangay Masili a multi-
unsubstantiated. No official documents were presented to reflect purpose hall for the use and benefit of its constituents.
the true market value of the subject lots in the surrounding area.
The Commissioners Report merely states that the value of the land - On March 5, 1999, the MTC dismissed Civil Case No. 3648
is based on sales and listings of comparable property registered for lack of interest for failure of the [respondent] and its
within the immediate vicinity without any evidence to support the counsel to appear at the pre-trial.
market data provided.
- The second [C]omplaint for eminent domain, docketed as
In this instance, the court accord more weight to Resolution No. 08- Civil Case No. 2845-99-C and entitled Brgy. Masili,
95 promulgated by the Provincial Appraisal Committee of Cavite Calamba, Laguna v. Devorah E. Bardillon, was filed
held at the Office of the Provincial Assessor. Said Resolution pegs as before Branch 37 of the Regional Trial Court of Calamba,
fair and reasonable the value of P3,000.00 per square meter of all Laguna (RTC) on October 18, 1999. This [C]omplaint also
the lots in the Municipality of Dasmarias, specifically along General sought the expropriation of the said Lot 4381-D for the
Aguinaldo Highway. erection of a multi-purpose hall of Barangay Masili, but
petitioner, by way of a Motion to Dismiss, opposed this
The just compensation is determined as of the date of the taking of [C]omplaint by alleging in the main that it violated Section
the property or the filing of the complaint whichever came 19(f) of Rule 16 in that [respondents] cause of action is
first.NAPOCOR filed the complaint on April 15, 1996. A period of 6 barred by prior judgment, pursuant to the doctrine of res
months has elapsed from the valuation of the Provincial Assessors judicata.
and the filing of the complaint.We note the considerable
discrepancy between the valuation of the former and that of the - With the subsequent approval of Municipal Ordinance No.
Commissioners. Indeed, the appellate court computed the increase 2000-261 on July 10, 2000, and the submission thereof in
of the valuation to be 233%. compliance with [the] Judges Order dated June 9, 2000
requiring herein respondent to produce the authority for
The Court of Appeals pointed out that more than 70% of the 200 lot the expropriation through the Municipal Council of
owners have entered into compromise agreements and accepted Calamba, Laguna, the assailed Order dated August 4, 2000
the price set by the Provincial Appraisal Committee of Cavite. was issued in favor of Barangay Masili x xx and, on August
16, 2000, the corresponding order for the issuance of
• BARDILLON V. BARANGAY MASILI, G.R. NO. 146886, APRIL 30, the [W]rit of [P]ossession over Lot 4381-D.[5] Hence, this
2003 GARBANZOS petition.
PRINCIPLE: ISSUE:
An expropriation suit does not involve the recovery of a sum of
money. Rather, it deals with the exercise by the government of its
1. Whether the MTC had jurisdiction over the expropriation
case.
authority and right to take property for public use. [11] As such, it is
incapable of pecuniary estimation and should be filed with the
RULING:
regional trial courts.[12]
1. NO
FACTS:
An expropriation suit does not involve the recovery of a sum of
- Two (2) [C]omplaints for eminent domain which were
money. Rather, it deals with the exercise by the government of its
filed by herein respondent for the purpose of
authority and right to take property for public use. [11] As such, it is
expropriating a ONE HUNDRED FORTY FOUR (144)
incapable of pecuniary estimation and should be filed with the
square meter-parcel of land, otherwise known as Lot
regional trial courts.[12]
4381-D situated in Barangay Masili, Calamba, Laguna and
owned by herein petitioner under Transfer Certificate of This was explained by the Court in Barangay San Roque v. Heirs of
Title No. 383605 which petitioner acquired from Makiling Francisco Pastor:[13]
Consolidated Credit Corporation the said lot pursuant to
a Deed of Absolute Sale. It should be stressed that the primary consideration in an
expropriation suit is whether the government or any of its
- The first [C]omplaint for eminent domain, docketed as instrumentalities has complied with the requisites for the taking of
Civil Case No. 3648 and entitled Brgy. Masili, Calamba, private property. Hence, the courts determine the authority of the
Laguna v. Emelita A. Reblara, Eugenia government entity, the necessity of the expropriation, and the
Almazan&Devorah E. Bardillon, was filed before the observance of due process. In the main, the subject of an
Municipal Trial Court of Calamba, Laguna (MTC) expropriation suit is the governments exercise of eminent domain, a
on February 23, 1998, following the failure of Barangay matter that is incapable of pecuniary estimation.
Masili to reach an agreement with herein petitioner on the

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EXPROPRIATION ONWARDS
QUICK DIGEST: The hearing was set on 19 May 1994, to give private respondent
(plaintiff) time to consider the offer of petitioner (defendant) to
FACTS: amicably settle the case.

- Two (2) complaints for eminent domain were filed by On 16 May 1994, private respondent filed with the RTC an "Urgent
herein respondent for the purpose of expropriating a Motion to Deposit The Amount of P2,121,600 in Court," alleging that
parcel of land, otherwise known as Lot 4381-D situated in petitioner’s counsel previously manifested in open court that the
Barangay Masili, Calamba, Laguna and owned by herein amount was ready for release should the amount be acceptable to
petitioner. The first case filed in the MTC was dismissed by private respondent, and praying that said amount ofP2,121,600 be
the court for lack of interest for failure of the [respondent] deposited by petitioner with the trial court. 8 The RTC granted the
and its counsel to appear at the pre-trial. The second motion but it was only on 21 October 1994 that petitioner
complaint was filed in the RTC. Respondents moved to deposited with the RTC Clerk of Court a Landbank check amounting
dismiss but was denied. With the subsequent approval of to P2,121,600 as just compensation.10
Municipal Ordinance No. 2000-261 on July 10, 2000, and
the submission thereof in compliance with [the] Judges On 16 June 1994, the RTC ordered the commissioners to submit
Order dated June 9, 2000 requiring herein respondent to their report as soon as possible, but until the scheduled hearing on
produce the authority for the expropriation through the 15 July 1994, the commissioners still failed to submit their report.
Municipal Council of Calamba, Laguna, the assailed Order Upon motion of private respondent, the RTC issued an order
dated August 4, 2000 was issued in favor of Barangay appointing a new set of commissioners.11
Masili x xx and, on August 16, 2000, the corresponding
order for the issuance of the [W]rit of [P]ossession over Lot On 11 October 1994, the new commissioners submitted their report
4381-D. Hence, this petition. stating the valuation of the property involved. They informed the
trial court that what has been taken over and used by the defendant
• REPUBLIC V. COURT OF APPEALS, G.R. NO. 160379, AUGUST is not only 663 square meters but 746 square meters, more or less,
14, 2009 DESCALLAR which includes Lot No. 849-B-1.

Facts: On appeal by petitioner, the Court of Appeals rendered


judgment,15 affirming with modifications the decision of the RTC.
Private respondent Rosario Rodriguez Reyes is the absolute owner The Court of Appeals found that the commissioners’
of a parcel of land identified as Lot 849-B covered by TCT No. T- recommendations on just compensation were not supported by
7194. The 1,043-square meter lot is situated on Claro M. Recto and valid documents
Osmenñ a Streets, Cagayan de Oro City.
Petitioner filed a Motion for Reconsideration, but this was denied by
On 6 November 1990, private respondent received a letter from the Court of Appeals in its Resolution of 17 September 2003.
petitioner Republic of the Philippines, through the DPWH,
requesting permission to enter into a portion of private Issue:
respondent’s lot consisting of 663 square meters, and to begin
construction of the Osmenñ a Street extension road. Petitioner took Whether the Court of Appeals erred in ordering the remand of the
possession of private respondent’s property without initiating case to the trial court, to order the reconvening of the
expropriation proceedings. Consequently, on 4 and 7 January commissioners or appointment of new commissioners to determine
1991, private respondent sent letters to the DPWH stating her the consequential damages for the remaining 297- square meter lot.
objection to the taking of her property. On 16 May 1991, private
respondent sent a letter to the City Appraisal Committee (CAC) Ruling:
rejecting the latter’s appraisal of the subject property and requested
The appeal is unmeritorious.
the City Assessor for a reappraisal of her property, but said request
was denied.4 Eminent domain is the authority and right of the State, as sovereign,
to take private property for public use upon observance of due
On 17 March 1992 , private respondent filed with the Regional Trial
process of law and payment ofjust compensation. 20 The Constitution
Court (RTC) of Cagayan de Oro City a complaint claiming just
provides that, "[p]rivate property shall not be taken for public use
compensation and damages against petitioner.
without just compensation."21
On 30 June 1993, the RTC appointed three commissioners 5 to
Just compensation is the full and fair equivalent of the property
determine the subject property’s fair market value, as well as the
sought to be expropriated.22 Among the factors to be considered in
consequential benefits and damages of its expropriation. On 15
arriving at the fair market value of the property are the cost of
September 1993, one of the three commissioners submitted to the
acquisition, the current value of like properties, its actual or
RTC a separate report stating that the just, fair and reasonable
potential uses, and in the particular case of lands, their size, shape,
market value of P4,000 per square meter as the highest price
location, and the tax declarations thereon. 23 The measure is not the
obtaining and prevailing in 1990.
taker’s gain but the owner’s loss. 24 To be just, the compensation
must be fair not only to the owner but also to the taker. 25

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EXPROPRIATION ONWARDS
Just compensation is based on the price or value of the property at the other hand, if the expropriation results to benefits to the
the time it was taken from the owner and appropriated by the remaining lot of private respondent, these consequential
government.26 However, if the government takes possession before benefits36 may be deducted from the awarded consequential
the institution of expropriation proceedings, the value should be damages, if any, or from the market value of the expropriated
fixed as of the time of the taking of said possession, not of the filing property. In B.H. Berkenkotter & Co. v. Court of Appeals 37 that:
of the complaint. The value at the time of the filing of the complaint
should be the basis for the determination of the value when the To determine just compensation, the trial court should first
taking of the property involved coincides with or is subsequent to ascertain the market value of the property, to which should be
the commencement of the proceedings. 27 added the consequential damages after deducting therefrom the
consequential benefits which may arise from the expropriation. If
The procedure for determining just compensation is set forth in the consequential benefits exceed the consequential damages, these
Rule 67 of the 1997 Rules of Civil Procedure. Section 5 of Rule 67 items should be disregarded altogether as the basic value of the
partly states that "[u]pon the rendition of the order of property should be paid in every case.
expropriation, the court shall appoint not more than three (3)
competent and disinterested persons as commissioners to ascertain Section 6 of Rule 67 of the Rules of Civil Procedure provides:
and report to the court the just compensation for the property
sought to be taken." However, we held in Republic v. Court of x x x The commissioners shall assess the consequential damages to the
Appeals28 that Rule 67 presupposes a prior filing of complaint for property not taken and deduct from such consequential damages the
eminent domain with the appropriate court by the expropriator. If consequential benefits to be derived by the owner from the public use
no such complaint is filed, the expropriator is considered to have or purpose of the property taken, the operation of its franchise by the
violated procedural requirements, and hence, waived the usual corporation or the carrying on of the business of the corporation or
procedure prescribed in Rule 67, including the appointment of person taking the property. But in no case shall the consequential
commissioners to ascertain just compensation. benefits assessed exceed the consequential damages assessed, or the
owner be deprived of the actual value of his property so taken.
In this case, petitioner took possession of the subject property
without initiating expropriation proceedings. Consequently, private An award of consequential damages for property not taken is not
respondent filed the instant case for just compensation and tantamount to unjust enrichment of the property owner. There is
damages. To determine just compensation, the trial court appointed unjust enrichment "when a person unjustly retains a benefit to the
three commissioners pursuant to Section 5 of Rule 67 of the 1997 loss of another, or when a person retains money or property of
Rules of Civil Procedure. None of the parties objected to such another against the fundamental principles of justice, equity and
appointment. good conscience."

The trial court’s appointment of commissioners in this particular As stated, consequential damages are awarded if as a result of the
case is not improper. The appointment was done mainly to aid the expropriation, the remaining property of the owner suffers from an
trial court in determining just compensation, and it was not impairment or decrease in value. Thus, there is a valid basis for the
opposed by the parties. Besides, the trial court is not bound by the grant of consequential damages to the property owner, and no
commissioners’ recommended valuation of the subject property. unjust enrichment can result therefrom.
The court has the discretion on whether to adopt the
• Eusebio v. Luis, G.R. No. 162474, October 13, 2009 TURA
commissioners’ valuation or to substitute its own estimate of the
value as gathered from the records.32 • LANDBANK V. SANTIAGO, G.R. NO. 182209, 3 OCTOBER 2012
ALTERADO
The Supreme Court agreed with the appellate court that the trial
court’s decision is not clear as to its basis for ascertaining just When the agrarian reform process is still incomplete as the just
compensation. The trial court mentioned in its decision the compensation due the landowner has yet to be settled, such just
valuations in the reports of the City Appraisal Committee and of the compensation should be determined and the process concluded
commissioners appointed pursuant to Rule 67. The trial court under Republic Act No. 6657:
simply gave the total amount of just compensation due to the
property owner without laying down its basis. Thus, there is no way Section 17 of Republic Ac t No. 6657 or the Comprehensive Agrarian
to determine whether the adjudged just compensation is based on Reform Law of 1988 provides:
competent evidence. For this reason alone, a remand of the case to
the trial court for proper determination of just compensation is in SEC. 17. Determination of Just compensation. - In determining just
order. The court is proscribed from basing its judgment on compensation, the cost of acquisition of the land, the current value
speculations and surmises.35 of like properties, its nature, actual use and income, the sworn
valuation by the owner, the tax declarations, and the assessment
No actual taking of the remaining portion of the real property is made by government assessors shall be considered. The social and
necessary to grant consequential damages. If as a result of the economic benefits contributed by the farmers and the farm workers
expropriation made by petitioner, the remaining lot) of private and by the Government to the property as well as the non-payment
respondent suffers from an impairment or decrease in value, of taxes or loans secured from any government financing institution
consequential damages may be awarded to private respondent. On

It ’s not a PROVREM 2015  21


EXPROPRIATION ONWARDS
on the said land shall be considered as additional factors to computation of the just compensation for the subject property.
determine its valuation. Moreover, the incremental interest of 6% compounded annually, as
per PARC Resolution No. 94-24-1, should be imposed on the
FACTS: principal amount from 1972 to 1998 or for 26 years.

Land Bank of the Philippines (LBP) is a government financial On January 21, 2000, the Special Agrarian Court (SAC) Branch 23
institution designated under Section 64 of Republic Act No. 6657 as rendered its Decision, ordering LBP to pay the Santiagos the sum
the financial intermediary of the agrarian reform program of the of P 1,039,017.88 representing the balance of the land valuation of
government. the plaintiff with legal interest at 12 % from the year 1998 until the
same is fully paid subject to the modes of compensation under R.A.
Emiliano R. Santiago, Jr. (respondent) is one of the heirs of Emiliano No. 6657.
F. Santiago (Santiago), the registered owner of an 18.5615-hectare
parcel of land (subject property) in Laur, Nueva Ecija. Discontented with the ruling, respondent filed a Motion for
Reconsideration of the SAC’s decision on February 16, 2000,
Pursuant to the government’s Operation Land Transfer (OLT) arguing that the GSP per cavan of palay should be computed
Program under Presidential Decree No. 27, the Department of at P 400.00 instead of P 300.00 because payment of the preliminary
Agrarian Reform (DAR) acquired 17.4613 hectares of the subject compensation was made by LBP in 1998 and not in 1992.
property. Respondent likewise insisted that in addition to the 12% legal
interest ordered by the SAC, a compounded annual interest of 6% of
In determining the just compensation payable to Santiago, the LBP
the principal amount should be awarded to them pursuant to the
and the DAR used the following formula under Presidential Decree
PARC Resolution and DAR AO No. 13. Furthermore, respondent
No. 27, which states: the value of the land shall be equivalent to two
asked that the DAR be ordered to return to him the unacquired
and one-half (2-1/2) times the average harvest of three normal crop
portion of the subject property.
years immediately preceding the promulgation of this Decree and
Executive Order No. 228. On February 10, 2000, the presiding judge of SAC Branch 23,
inhibited himself from resolving the motion for
The above formula in equation form is: reconsideration,29 thus, the case was re-raffled to the RTC of
Cabanatuan City, Branch 29, acting as Special Agrarian Court (SAC
(Average Gross Production [AGP] x 2.5 Branch 29).
Land Value
Hectares x Government Support Price
(LV) =
[GSP]) On January 28, 2004, the SAC Branch 29 issued a Resolution,
ordering LBP to pay the petitioner the sum of P1,039,017.88
Using the foregoing formula, the land value of the subject property
representing the land valuation of the petitioner with legal interest
was pegged at 3,915 cavans of palay.
of six percent (6%) per annum beginning year 1998 until the same
is fully paid subject to the modes of compensation under Republic
As Santiago had died earlier on November 1, 1987, the LBP, in 1992,
Act No. 6657 and to return to the petitioner the unacquired portion
reserved in trust for his heirs the amount of One Hundred Thirty-
of the subject property after segregating the area taken by the DAR.
Five Thousand Four Hundred Eighty-Two Pesos and 12/100
(P 135,482.12), as just compensation computed by LBP and DAR
In denying respondent’s claim over the 6% compounded annual
using the above formula with P 35.00 as the GSP per cavan of palay
interest, the SAC Branch 29 explained that the purpose of the
for the year 1972 under Executive Order No. 228.
compounded interest was to compensate the landowners for
unearned interest, as their money would have earned if they had
been paid in 1972, when the GSP for a cavan of palay was still
This amount was released to Santiago’s heirs on April 28, 1998. On at P 35.00. The SAC Branch 29 said that since a higher GSP was
May 21, 1998 and June 1, 1998, the LBP, also paid the heirs the sum already used in the computation of the subject property’s land
of P353, 122.62, representing the incremental interest of 6% on the value, there was no more justification in adding any compounded
preliminary compensation pursuant to Provincial Agrarian Reform interest to the principal amount. Furthermore, since the
Council (PARC) Resolution and DAR Administrative Order (AO) No. government only acquired 17.4 hectares of the subject property, it
13. ordered LBP to return the unacquired portion to respondent.

However, on November 20, 1998, respondent, as a co-owner and LBP filed a Petition for Review before the Court of Appeals,
administrator of the subject property, filed a petition before the RTC questioning the just compensation fixed and the legal interest
of Cabanatuan City, Branch 23, acting as a Special Agrarian Court granted by the SAC Branch 23 and by the SAC Branch 29. The Court
(SAC Branch 23), for the "approval and appraisal of just of Appeals, affirmed the SAC Branch 23’s Decision as modified by
compensation" due on the subject property. the SAC Branch 29’s Resolution.

While respondent was in total agreement with the land valuation of The Court of Appeals held that the formula in DAR AO No. 13 could
the subject property at 3,915 cavans of palay, he contended that the no longer be applied since the Provincial Agrarian Reform Ad
1998 GSP per cavan, which was P 400.00, should be used in the judicator (PARAD) had already been using a higher GSP. Hence, the

It ’s not a PROVREM 2015  22


EXPROPRIATION ONWARDS
Court of Appeals ruled that he was no longer entitled to the process, the just compensation should be determined and the
incremental interest of 6%. process concluded under the said law. Indeed, RA 6657 is the
applicable law, with PD 27 and EO 228 having only suppletory
The LBP moved to reconsider the foregoing decision. However, the effect.
Court of Appeals. Hence this case.
It would certainly be inequitable to determine just compensation
ISSUE: based on the guideline provided by PD 27 and EO 228 considering
the DAR's failure to determine the just compensation for a
What law or formula should govern the computation of just considerable length of time. That just compensation should be
compensation for the subject property? Under PD 27 and EO 228 or determined in accordance with RA 6657, and not PD 27 or EO 228,
RA 6657? is especially imperative considering that just compensation should
be the full and fair equivalent of the property taken from its owner
RULING:
by the expropriator, the equivalent being real, substantial, full and
LBP has been consistent in its position that the formula prescribed ample.
in Presidential Decree No. 27 and Executive Order No. 228 is the
In the case before us, the emancipation patents were issued to the
only formula that should be applied in the computation of the
farmer-beneficiaries from 1992 to 1994. While the preliminary
valuation of lands acquired under Presidential Decree No. 27.
compensation of P 135,482.12 was reserved in trust at LBP for the
This Court notes that even before respondent filed a petition for the heirs of Santiago in 1992, this amount was not received by the heirs
judicial determination of the just compensation due him for the until 1998, as its release, pending the final determination of the
subject property before the SAC Branch 23 on November 20, 1998, land valuation, became the subject of a petition in this Court in Land
Republic Act No. 6657, otherwise known as the Comprehensive Bank of the Philippines v. Court of Appeals. Like in the case cited
Agrarian Reform Law of 1988, already took effect on June 15, 1988. above, both the taking and the valuation of the subject property
occurred after Republic Act No. 6657 had already become effective.
The determination of the just compensation therefore in this case Until now, the issue of just compensation for the subject property
depends on the valuation formula to be applied. has not been settled and the process has yet to be completed; thus,
the provisions of Republic Act No. 6657 shall apply.
In the case of Land Bank of the Philippines vs. Natividad, the Court
categorically ruled: "the seizure of the landholding did not take • LANDBANK V. ARANETA, G.R. NO. 161796, 8 FEBRUARY 2012
place on the date of effectivity of P.D. No. 27 but would take effect on DAPANAS
the payment of just compensation." Under Section 17 of R.A. No.
6657, the following factors are considered in determining just Principle:
compensation, to wit:
1. Vested Private Rights  The Farmer-Beneficiaries who
were given Certificate of Land Transfers (CLTs) PRIOR TO THE
Sec. 17. Determination of Just Compensation. - In determining just ISSUANCE OF PD # 1283, as amended by PD # 1637: Water
compensation, the cost of acquisition of the land, the current value Conservation Act of Antipolo, are deemed full owners of the lots
of like properties, its nature, actual use and income, the sworn covered by CLTs vis-a-vis the real registered owner. The farmer-
valuation by the owner, the tax declarations, and the assessment beneficiaries have private rights over said lots as they were deemed
made by government assessors shall be considered. The social and owners prior to the establishment of the subsequent issuance PD #
economic benefits contributed by the farmers and the farm-workers 1283 as amended or at least are subrogated to the rights of the
registered lot owner.
and by the Government to the property as well as the non-payment
of taxes or loans secured from any government financing institution But, for those farmer-beneficiaries who were issued CLTs
on the said land shall be considered as additional factors to or EPs after June 21, 1974 when PD # 1283, as amended, became
determine its valuation. effective do not acquire rights over the lots they were claiming
under PD 27 or RA 6657, because the lots have already been
Under the circumstances of this case, the Court deems it more reclassified as residential and are beyond the compulsory coverage
equitable to apply the ruling in the Natividad case. In said case, the for agrarian reform under RA 6657.
Court applied the provisions of R.A. No. 6657 in computing just
2. The Office of Solicitor General (OSG) withdrawal of
compensation for property expropriated under P.D. No. 27: Land
the expropriation suit did not automatically restore the
Bank's contention that the property was acquired for purposes of property to its original classification nor did it grant DAR or
agrarian reform on October 21, 1972, the time of the effectivity of DARAB the power or jurisdiction to order the compulsory
PD 27, ergo just compensation should be based on the value of the acquisition of the property and to place it under CARP. Pursuant
property as of that time and not at the time of possession in 1993, is to DAR AO #3: Emancipation Patents (EPs) or Certificate of Land
likewise erroneous. Ownership Awards (CLOAs) already generated for landholdings to be
reconveyed shall have to be cancelled first pursuant to Administrative
Under the factual circumstances of this case, the agrarian reform Order No. 02, Series of 1994 prior to the actual reconveyance. The
cancellation shall either be through administrative proceedings
process is still incomplete as the just compensation to be paid
in cases where the EP/CLOA has not yet been registered with the
private respondents has yet to be settled. Considering the passage ROD or through quasi-judicial proceedings in cases where the
of Republic Act No. 6657 (RA 6657) before the completion of this said EP/CLOA has already been registered.

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EXPROPRIATION ONWARDS
Petitioners assailed the CA decision reversing the DARAB
decision upholding the agrarian reform coverage of 1,266 hectares
LONG CASE DIGEST: of respondent estates 1,644.55-hectare property and its award to
over a thousand farmer-beneficiaries. According to the CA, the
At the heart of the controversy is a large tract of land, property in question, having meanwhile ceased to be agricultural, is
denominated as Lot # 23, located in Brgy. Mascap, Montalban, Rizal not amenable to land reform coverage and, hence, falls outside of
with an area of 1,645 hectares, more or less. Lot 23 was originally DARs jurisdiction to implement agrarian enactments.
registered in the name of Alfonso Doronilla under Original
Certificate of Title (OCT) No. 7924 of the Rizal Registry. In particular, petitioners assailed the rulings of CA giving
The petitioners who were compose of: “retroactive exclusionary” application of PD 1283 as amended
 Land Bank of the Phils.; by 1637 – Watershed Conservation Act/LungsodSilangan Town
 Department of Agrarian Reform (DAR); Site issued on June 21, 1974 & April 18, 1977 respectively and
 the 79-TENANT FARMERS who were issued with the RA # 6657: CARP Law in 1988 AFTER the 1972 issuance of
Certificate of Land Transfers (CLT) base on PD # PD # 27: Tenant Emancipation Decree. In so doing, they
27 Tenant Emancipation Decree of October 21, claims, the CA effectively but illegally extended exempt-
1972; and coverage status to the subject land and in the process
 the recent 912-FARMER BENEFICIARIES issued negated the purpose behind Presidential Decree No. (PD) 27:
with Emancipation Patents on September 25, to emancipate rice/corn land tenant-farmers from the bondage
1990under RA # 6657 – CARP Law of 1988. of the soil under their tillage.

However, the implementation of PD # 27 Tenant Issue:


Emancipation DecreeWERE STOPPED due to the issuances of PD
1283 as amended by 1637 – Watershed Conservation Whether or not the Doronilla, now the Araneta, property,
Act/LungsodSilangan Town Site SUBJECT TO PRIVATE RIGHTS, in light of the issuance of the land reclassifying Proclamation 1283,
IF ANY THERE BEissued on June 21, 1974 & April 18, as amended, is, as held by the CA, entirely outside the ambit of PD
1977respectively and the RA # 6657: CARP LAW OF1988. 27 and RA 6657, and, thus, excluded from compulsory agrarian
reform coverage, unfettered by the private claim of the farmer-
On November 9, 1977, Letter of Instructions No. (LOI) 625 beneficiaries.
addressed to several agencies. The OSG, in particular, was directed
to initiate condemnation proceedings for the acquisition of If so, in the negative, what would be the effect of the OSG’s
private lands within the new townsite, among which was Lot 23 withdrawal of EXPROPRIATION proceedings to the property?
(the Doronilla property). In 1978, the OSG, conformably with the
directive embodied in LOI 625, filed with the then CFI -Rizal an Held:
expropriation complaint against the Doronilla
property. Meanwhile, on June 6, 1979, Doronilla issued a SC held that the petition is partly meritorious, that is:
Certification, copy furnished the Agrarian Reform Office, among
other agencies, listing seventy-nine (79) bona fide planters he 1ST ISSUE: NO, as to the vested PRIVATE RIGHTS of the
allegedly permitted to occupy a portion of his land. On 75-TENANT FARMERS who were issued with Certificate of Land
September 9, 1987 or nine (9) years after it commenced Transfers (CLT) base on PD # 27 Tenant Emancipation Decree
expropriation proceedings, the OSG moved for and secured, per of October 21, 1972;
the Rizal CFI Order dated September 18, 1987, the DISMISSAL
OF THE EXPROPRIATION CASE. Under the principle of Natalia Realty Inc. Casethey would
be exempt from land reform and, by necessarily corollary, beyond
Defendant Araneta, sometime in April 1992, filed with the DARs or DARABs jurisdictional reach. Excerpts from Natalia Realty,
DARAB an “ACTION AGAINST THE DAR AND LAND BANK Inc.:
FOR CANCELLATION OF COMPULSORY COVERAGE UNDER PD 27
AND EXEMPTION FROM CARL COVERAGE OF THE ERSTWHILE We now determine whether such lands are
DORONILLA PROPERTY.” covered by the CARL. Section 4 of R.A. 6657
provides that the CARL shall cover, regardless of
RULING OF THE REGIONAL ADJUDICATOR -- tenurial arrangement and commodity produced,
Unfavorable to Araneta:By Decision of the Regional Agrarian all public and private agricultural lands. As to
Reform Adjudicator (RARAD)-Manalang ruled against Araneta, what constitutes AGRICULTURAL LAND, IT IS
denying its bid to have its property excluded from OLT coverage REFERRED TO AS LAND DEVOTED TO
and/or the compulsory scheme under CARL. Therefrom, Araneta AGRICULTURAL ACTIVITY AS DEFINED IN THIS
appealed to the DARAB proper. The appeal was docketed as DARAB ACT AND NOT CLASSIFIED AS MINERAL, FOREST,
Case No. 4176 which following the RARADs line that the intervenor- RESIDENTIAL, COMMERCIAL OR INDUSTRIAL
appellees were deemed owners of the land they tilled as of October LAND. The deliberations of the Constitutional
21, 1972, rendered a Decision affirming in toto that of the RARADs. Commission confirm this limitation. Agricultural
lands are only those lands which are arable and
RULING OF THE CA: By Decision of the CA, SET ASIDE the suitable agricultural lands and do not include
Decision of the DARAB, in effect nullifying all the individual farm commercial, industrial and residential lands.
lots awards thus made by the DARAB ostensibly in favor of the
named intervenor-appellees and necessarily all other unnamed Guided by the foregoing doctrinal pronouncement, the key
awardees. In the main, the CA predicated its reversal action on the date to reckon, as a preliminary matter, is the precise time when
interplay of the ensuing premises, juxtaposed with the pertinent Doronillas Lot 23, now Aranetas property, ceased to be agricultural.
pronouncements in the cited cases of NATALIA REALTY, INC. This is the same crucial cut-off date for considering the existence of
private rights of farmers, if any, to the property in question. This, in

It ’s not a PROVREM 2015  24


EXPROPRIATION ONWARDS
turn, means the date when Proclamation 1637 establishing LS since this Court, in Natalia Realty, Inc., cited with approval DOJ
Townsite was issued: April 18, 1977. xxx apply mutatis mutandis to Opinion No. 181, such citation carries weight and importance as
the instant case. jurisprudence. Be that as it may, We recognize and apply the
principles found in Natalia Realty, Inc. regarding the character of the
HOWEVER: Unlike in Natalia Realty, Inc., however, where Doronilla property being converted to a townsite and, thus, non-
pre-existing tenancy arrangement over the Natalia land, among agricultural in character.
other crucial considerations, was not part of the equation, THIS
CASE INVOLVES FARMERS CLAIMING BEFORE APRIL 18, 1979 TO The DARAB has been created and designed to exercise the
BE ACTUAL TENANTS OF THE RICE AND/OR CORN PORTION OF DARs adjudicating functions. And just like any quasi-judicial
THE DORONILLA PROPERTY. The Court has, to be sure, taken stock body, DARAB derives its jurisdiction from law, specifically RA
of the fact that PD 27 ordains the emancipation of tenants and 6657,which invested it with adjudicatory powers over agrarian
deems them owners of the rice and corn lands they till as of October reform disputes, and matters related to the implementation of
21, 1972. The following provisions of the decree have concretized CARL. As earlier discussed, the process of land reform covering
this emancipation and ownership policy: the 1,266 hectares of the Araneta estate was not completed
prior to the issuance of Proclamation 1637. So the intervenors,
Therefore: Summarizing, the FARMER-BENEFICIARIES with the exception of the 79 tenant-beneficiaries who were
WHO WERE GIVEN THE 75 CLTS PRIOR TO THE ISSUANCE OF granted CLTs, failed to acquire private rights of ownership
PROCLAMATION 1283, as amended by Proclamation 1637, are under PD 27 before the effective conversion of the Doronilla
DEEMED FULL OWNERS OF THE LOTS COVERED BY 75 CLTS property to non-agricultural uses. Hence, the DORONILLA
VIS--VIS THE REAL REGISTERED OWNER. The farmer- PROPERTY, BEING OUTSIDE OF CARP COVERAGE, IS ALSO
beneficiaries have private rights over said lots as they were BEYOND DARABS JURISDICTION.
deemed owners prior to the establishment of the LS Townsite
reservation or at least are subrogated to the rights of the
registered lot owner. REMEDY OF REACQUIRING OWNERSHIP FOR
ERRONEOUS CARP COVERAGE:
Thus, DAR itself issued administrative circulars governing lands
exempted from CARP. For instance, Administrative No. (AO) 3,
YES, as to the recent 912-FARMER BENEFICIARIES Series of 1996, declares in its policy statement what categories
issued with Emancipation Patents under RA # 6657 – CARP Law of lands are outside CARP coverage and unequivocally states
on September 25, 1990. that properties not covered by CARP shall be reconveyed to the
original transferors or owners. Significantly, AO 3 defines lands
Those farmer-beneficiaries who were issued CLTs or not so covered as property determined to be exempted from CARP
EPs after June 21, 1974 when Proclamation 1283, as amended, coverage pursuant to [DOJ] Opinion Nos. 44 and 181 and where
became effective do not acquire rights over the lots they were Presidential Proclamation has been issued declaring the subject
claiming under PD 27 or RA 6657, because the lots have property for certain uses other than agricultural. Said policy of the
already been reclassified as residential and are beyond the DAR, as explained in the CA Decision, should be applied and upheld
compulsory coverage for agrarian reform under RA in cases where the DAR had erroneously ordered the compulsory
6657. Perforce, the said CLTs or EPs issued after June 21, 1974 have acquisition of the lands found outside CARP coverage. This is true
to be annulled and invalidated for want of legal basis, since the lots with the case at bar due to the fact that Proclamation 1283, as
in question are no longer subject to agrarian reform due to the amended by Proclamation 1637, had effectively reclassified
reclassification of the erstwhile Doronilla estate to non-agricultural respondents land as residential.
purposes.
HOW? To address erroneous compulsory coverage or
(MY COMPARATIVE LEGAL OPINION: Therefore, this case acquisition of non-agricultural lands or agricultural lands subject of
Land Bank vs. Araneta is an exception to the application of Natalia retention, especially where Certificates of Land Ownership Award
Realty Inc. principle, wherein there is already a vested private rights (CLOAs) or EPs have been generated, AO # 3 itself provides the
existingthus, it is still within the ambit of PD 27 or RA6657 and mechanism/remedy for the reconveyance of lots thus covered
subject for issuances of CLT’s and /or EP’s). or acquired, viz:

The Emancipation Patents (EPs) or Certificate


2ND ISSUE: of Land Ownership Awards (CLOAs) already generated
for landholdings to be reconveyed shall have to be
THE OSGS WITHDRAWAL OF THE EXPROPRIATION cancelled first pursuant to Administrative Order No.
SUIT on September 9, 1987 DID NOT, as Land Bank posits, 02, Series of 1994 prior to the actual reconveyance.
automatically restore the Doronilla property to its original The cancellation shall either be through
classification nor did it grant DAR or DARAB the power or administrative proceedings in cases where the
jurisdiction to order the compulsory acquisition of the property EP/CLOA has not yet been registered with the ROD or
and to place it under CARP. And, as the CA aptly noted, the DOJ through quasi-judicial proceedings in cases where the
Secretary, through Opinion No. 181, even advised the DAR Secretary said EP/CLOA has already been registered.
that lands covered by Proclamation 1637, having been reserved for
townsite purposes, are not deemedagricultural lands within the
meaning and intent of Sec. 3(c) of RA 6657 and, hence, outside the Given the foregoing perspective, private petitioners lament
coverage of CARL. The Secretary of Justice further stated that RA about the injustice done to them due to the cancellation of their EPs
6657 did not supersede or repeal Proclamations 1283 and 1637 or CLOAs, as the case may be, is specious at best, for those EPs or
and they remain operative until now; their being townsite CLOAs were generated or granted based on the invalid order by
reservations still remain valid and subsisting. To clarify, a DOJ DAR for the inclusion of the bulk of the Doronilla property under PD
opinion carries only a persuasive weight upon the courts. However 27 and CARP.

It ’s not a PROVREM 2015  25


EXPROPRIATION ONWARDS
compulsory agrarian reform coverage, unfettered by the private
claim of the farmer-beneficiaries.
Fallo: WHEREFORE, the petitions are hereby
partly DENIED. The CA Decision dated September 19, 2003, as If so, in the negative, what would be the effect of the OSG’s
effectively reiterated in its Resolution of January 22, 2004 and April 2, withdrawal of EXPROPRIATION proceedings to the property?
2004, is AFFIRMED with the modification that the 75 CLTs issued
prior to the effectivity of Presidential Proclamation No. 1283 on June
21, 1974 are declared legal and valid.The other CLTs, EPs, CLOAs HELD:
issued by DAR involving the subject property are SC held that the petition is partly meritorious, that is:
hereby CANCELED and NULLIFIED.
1ST ISSUE: NO, as to the vested PRIVATE RIGHTS of the
The Land Bank and DAR are hereby ordered 75-TENANT FARMERS who were issued with Certificate of Land
to COMPUTE the just compensation of the land subject of the 75 CLTs Transfers (CLT) base on PD # 27 Tenant Emancipation Decree
and PAY the just compensation to the Estate of J. Amado Araneta. No of October 21, 1972;
pronouncement as to cost.
Under the principle of Natalia Realty Inc. Case they would
SHORT CASE DIGEST: be exempt from land reform and, by necessarily corollary, beyond
DARs or DARABs jurisdictional reach. Excerpts from Natalia Realty,
Petitioners “79-Tenant Farmers” was issued a Certificate Inc.:
of Land Transfers (CLTs) over Lot # 23 registered under name of
“D” (Doronilla) under PD # 27: Tenant Emancipation Decree on xxxlands are covered by the CARL. Section 4 of R.A.
October 21, 1974. However, the implementation thereof were 6657 provides that the CARL shall cover,
stopped due to the subsequent issuances of PD 1283 as amended by regardless of tenurial arrangement and
1637 – Watershed Conservation Act/LungsodSilangan Town Site commodity produced, all public and private
SUBJECT TO PRIVATE RIGHTS, IF ANY THERE BE which was agricultural lands. As to what constitutes
issued on June 21, 1974 & April 18, 1977 respectively. AGRICULTURAL LAND, IT IS REFERRED TO AS
LAND DEVOTED TO AGRICULTURAL ACTIVITY
While the other Petitioners composing of “912 Tenant AS DEFINED IN THIS ACT AND NOT CLASSIFIED
Beneficiaries” were issued Emancipation Patents (EPs) under the AS MINERAL, FOREST, RESIDENTIAL,
RA # 6557 otherwise known as the CARP Law of 1988 on COMMERCIAL OR INDUSTRIAL LAND. The
September 20, 1990. deliberations of the Constitutional Commission
confirm this limitation. Agricultural lands are only
Meanwhile, in 1979, “D” issued a Certification, copy those lands which are arable and suitable
furnished the Agrarian Reform Office, among other agencies, listing agricultural lands and do not include
seventy-nine (79) bona fide planters he allegedly permitted to commercial, industrial and residential lands.
occupy a portion of his land. On 1987 or nine (9) years after it
commenced expropriation proceedings, the OSG moved for and Guided by the foregoing doctrinal pronouncement, the key
secured, per the Rizal CFI Order dated September 18, 1987, the date to reckon, as a preliminary matter, is the precise time when
dismissal of the expropriation case. Doronillas Lot 23, now Aranetas property, ceased to be
agricultural. This is the same crucial cut-off date for considering
Defendant “A” (Araneta), in April 1992, filed with the the existence of private rights of farmers, if any, to the property in
DARAB an “Action Against The DARand Land Bank For Cancellation question. This, in turn, means the date when Proclamation 1637
Of Compulsory Coverage Under PD 27 And Exemption From Carl establishing LS Townsite was issued: April 18, 1977. xxx
Coverage Of The Erstwhile Doronilla Property.” Which ruled apply mutatis mutandis to the instant case.
unfavorably against A, but said rulings was reversed by the CA.
HOWEVER: Unlike in Natalia Realty, Inc., where pre-
Petitioners were joined by the Land Bank of the existing tenancy arrangement over the Natalia land, among
Philippines and the DARAB in assailing the reversed rulings of CA other crucial considerations, was not part of the equation, THIS
giving “retroactive exclusionary” application of PD 1283 as CASE INVOLVES FARMERS CLAIMING BEFORE APRIL 18, 1979 TO
amended by 1637 – Watershed Conservation Act/LungsodSilangan BE ACTUAL TENANTS OF THE RICE AND/OR CORN PORTION OF
Town Site issued on June 21, 1974 & April 18, 1977 respectively and THE DORONILLA PROPERTY. The Court has, to be sure, taken stock
the RA # 6657: CARP Law in 1988 AFTER the 1972 issuance of PD of the fact that PD 27 ordains the emancipation of tenants and
# 27: Tenant Emancipation Decree. In so doing, they claims, the CA deems them owners of the rice and corn lands they till as of October
effectively but illegally extended exempt-coverage status to the 21, 1972. The following provisions of the decree have concretized
subject land and in the process negated the purpose behind this emancipation and ownership policy:
Presidential Decree No. (PD) 27: to emancipate rice/corn land
tenant-farmers from the bondage of the soil under their tillage. Therefore: Summarizing, the FARMER-BENEFICIARIES
WHO WERE GIVEN THE 75 CLTS PRIOR TO THE ISSUANCE OF
According to the CA, the property in question, having PROCLAMATION 1283, as amended by Proclamation 1637, are
meanwhile ceased to be agricultural, is not amenable to land reform DEEMED FULL OWNERS OF THE LOTS COVERED BY 75 CLTS
coverage and, hence, falls outside of DARs jurisdiction to implement VIS--VIS THE REAL REGISTERED OWNER. The farmer-
agrarian enactments. beneficiaries have private rights over said lots as they were
deemed owners prior to the establishment of the LS Townsite
Rule, whether or not the Doronilla, now the Araneta, reservation or at least are subrogated to the rights of the
property, in light of the issuance of the land reclassifying registered lot owner.
Proclamation 1283, as amended, is, as held by the CA, entirely
outside the ambit of PD 27 and RA 6657, and, thus, excluded from BUT,

It ’s not a PROVREM 2015  26


EXPROPRIATION ONWARDS
Proclamation 1283, as amended by Proclamation 1637, had
YES, as to the recent 912-FARMER BENEFICIARIES effectively reclassified respondents land as residential.
issued with Emancipation Patents under RA # 6657 – CARP Law
on September 25, 1990. HOW?DAR AO # 3 itself provides the
mechanism/remedy for the reconveyance of lots thus covered
But, those farmer-beneficiaries who were issued CLTs or acquired, viz:
or EPs after June 21, 1974 when Proclamation 1283, as
amended, became effective do not acquire rights over the lots The Emancipation Patents (EPs) or Certificate of Land
they were claiming under PD 27 or RA 6657, because the lots Ownership Awards (CLOAs) already generated for landholdings to
have already been reclassified as residential and are beyond be reconveyed shall have to be cancelled first pursuant to
the compulsory coverage for agrarian reform under RA Administrative Order No. 02, Series of 1994 prior to the actual
6657. Perforce, the said CLTs or EPs issued after June 21, 1974 have reconveyance. The cancellation shall either be through
to be annulled and invalidated for want of legal basis, since the lots administrative proceedings in cases where the EP/CLOA has not
in question are no longer subject to agrarian reform due to the yet been registered with the ROD or through quasi-judicial
reclassification of the erstwhile Doronilla estate to non-agricultural proceedings in cases where the said EP/CLOA has already been
purposes. registered.

(MY COMPARATIVE LEGAL OPINION: Therefore, this case


Land Bank vs. Araneta is an exception to the application of Natalia • LANDBANK V. PERALTA, G.R. NO. 182704, 23 APRIL 2014
Realty Inc. principle, wherein there is already a vested private rights BITANGJOL
existing thus, it is still within the ambit of PD 27 or RA6657 and
subject for issuances of CLT’s and /or EP’s). Principle:

That just compensation should be determined in


2ND ISSUE:
THE OSGS WITHDRAWAL OF THE EXPROPRIATION accordance with RA 6657, and not PD 27 or EO 228, is especially
SUIT on September 9, 1987 DID NOT, as Land Bank posits, imperative considering that just compensation should be the full
automatically restore the Doronilla property to its original and fair equivalent of the property taken from its owner by the
classification nor did it grant DAR or DARAB the power or expropriator, the equivalent being real, substantial, full and ample.
jurisdiction to order the compulsory acquisition of the property
and to place it under CARP. And, as the CA aptly noted, the DOJ Facts:
Secretary, through Opinion No. 181, even advised the DAR Secretary
that lands covered by Proclamation 1637, having been reserved for Victorino T. Peralta (respondent) is the registered owner
townsite purposes, are not deemedagricultural lands within the of two parcels of agricultural land. On October 17, 2000, he filed
meaning and intent of Sec. 3(c) of RA 6657 and, hence, outside the
with the RTC, acting as Special Agrarian Court (SAC), a petition for
coverage of CARL. The Secretary of Justice further stated that RA
6657 did not supersede or repeal Proclamations 1283 and 1637 judicial determination of just compensation for his landholding
and they remain operative until now; their being townsite which he claimed was valued by the Department of Agrarian Reform
reservations still remain valid and subsisting. To clarify, a DOJ Adjudication Board (DARAB) at the price of only P17,240.00.
opinion carries only a persuasive weight upon the courts. However
since this Court, in Natalia Realty, Inc., cited with approval DOJ Respondent alleged that based on his own investigation, the true
Opinion No. 181, such citation carries weight and importance as valuation of lands sold within the vicinity is P200,000/ha. while the
jurisprudence. Be that as it may, We recognize and apply the valuation made by petitioner as affirmed by the DARAB was fixed at
principles found in Natalia Realty, Inc. regarding the character of the
only P6,315.02/ha., or 63 centavos per square meter which is highly
Doronilla property being converted to a townsite and, thus, non-
agricultural in character. unconscionable.

The DARAB has been created and designed to exercise the Petitioner filed its Answer stating that the subject land
DARs adjudicating functions. And just like any quasi-judicial was valued way back in 1981 as evidenced by the Landowner-
body, DARAB derives its jurisdiction from law, specifically RA Tenant Production Agreement (LTPA). It maintained that having
6657,which invested it with adjudicatory powers over agrarian agreed to the stipulated price in the LTPA, respondent had waived
reform disputes, and matters related to the implementation of his claim for a higher compensation. Also, petitioner claimed that
CARL. Hence, the DORONILLA PROPERTY, BEING OUTSIDE OF
respondent’s cause of action has already prescribed under Article
CARP COVERAGE, IS ALSO BEYOND DARABS JURISDICTION.
1144 of the Civil Code.
REMEDY OF REACQUIRING OWNERSHIP FOR
ERRONEOUS CARP COVERAGE: DAR itself issued administrative On December 14, 2004, the SAC rendered its decision:
circulars governing lands exempted from CARP. For instance, WHEREFORE, judgment is rendered in favor of the plaintiff,
Administrative No. (AO) 3, Series of 1996, declares in its policy declaring the amount of FOUR HUNDRED NINE THOUSAND FIVE
statement what categories of lands are outside CARP coverage HUNDRED (P409,500.00) PESOS as just compensation for the
and unequivocally states that properties not covered by CARP property of the plaintiff.
shall be reconveyed to the original transferors or owners. Said
policy of the DAR, as explained in the CA Decision, should be applied Petitioner appealed to the CA arguing that respondent’s act of filing
and upheld in cases where the DAR had erroneously ordered the
a petition for judicial determination of just compensation with the
compulsory acquisition of the lands found outside CARP
coverage. This is true with the case at bar due to the fact that SAC was in repudiation of the LTPA executed more than 19 years
ago. Not only did respondent fail to indicate in his complaint before

It ’s not a PROVREM 2015  27


EXPROPRIATION ONWARDS
the RTC his date of receipt of the DARAB decision, more than 30 XIV.A Monzon v. Relova, G.R. No. 171827, 12 September 2008 GIME
days had already lapsed before he brought the action in court.
MONZON VS RELOVA
The CA ruled that while it is true that petitioner had made a
valuation of the property as stated in the LTPA, using the formula Principle: Types of sales, namely: an ordinary execution sale, a
provided under P.D. No. 27, the CA stressed that the effort has not judicial foreclosure sale, and an extrajudicial foreclosure sale. An
gone beyond that point as no just compensation, as thus evaluated, ordinary execution sale is governed by the pertinent provisions of
had ever been made to the respondent prompting the latter to file, Rule 39 of the Rules of Court on Execution, Satisfaction and Effect of
sometime in 2000, a summary administrative proceeding before the Judgments. Rule 68 of the Rules, captioned Foreclosure of Mortgage,
DARAB, and eventually a petition with the SAC praying for the fixing governs judicial foreclosure sales. On the other hand, Act No. 3135,
of just compensation pursuant to Republic Act No. 6657. The CA as amended by Act No. 4118, otherwise known as "An Act to
thus ruled that since the application of the process of agrarian Regulate the Sale of Property under Special Powers Inserted in or
reform to the subject land has remained incomplete as of the advent Annexed to Real Estate Mortgages," applies in cases of extrajudicial
of R.A. No. 6657, actual title remains with respondent and the foreclosure sales of real estate mortgages.
completion of the agrarian reform process should now be
undertaken under R.A. No. 6657. FACTS:

Issue: Monzon executed a promissory note in favor of the spouses Perez


for the amount of P600,000.00, with interest of five percent per
WHETHER OR NOT THE CARP LAW (R.A. 6657) HAS RENDERED month, payable on or before 28 December 1999. This was secured
INOPERATIVE THE VALUATION FORMULA AND FACTORS by a 300-square meter lot in Barangay Kaybagal, Tagaytay City.
PRESCRIBED IN PRESIDENTIAL DECREE NO. 27, EXECUTIVE Denominated as Lot No. 2A, this lot is a portion of Psu-232001,
ORDER NO. 228. covered by Tax Declaration No. 98-008-1793. On 31 December
1998, Monzon executed a Deed of Absolute Sale over the said parcel
Ruling: of land in favor of the spouses Perez.

The Court has, in several cases, for reason of equity, Respondents also claim in their Petition for Injunction that on 29
applied R.A. No. 6657 in determining just compensation for lands March 1999, Monzon executed another promissory note, this time
acquired under P.D. No. 27 and before the effectivity of R.A. No. in favor of the spouses Relova for the amount of P200,000.00 with
6657. interest of five percent per month payable on or before 31
December 1999. This loan was secured by a 200 square meter lot,
In Land Bank of the Philippines v. Natividad, 24 we ruled that where denominated as Lot No. 2B, another portion of the aforementioned
the agrarian reform process is still incomplete at the time of Psu-232001 covered by Tax Declaration No. 98-008-1793. On 27
effectivity of R.A. 6657, the just compensation should be December 1999, Monzon executed a Deed of Conditional Sale over
determined and the process concluded under the latter law. said parcel of land in favor of the spouses Relova.

Under the factual circumstances of this case, the agrarian reform On 23 October 1999, Coastal Lending Corporation extrajudicially
process is still incomplete as the just compensation to be paid foreclosed the entire 9,967-square meter propertythe covered by
private respondents has yet to be settled. Considering the passage Psu-232001, including the portions mortgaged and subsequently
of Republic Act No. 6657 (RA 6657) before the completion of this sold to respondents. According to the Petition for Injunction,
process, the just compensation should be determined and the Monzon was indebted to the Coastal Lending Corporation in the
process concluded under the said law. Indeed, RA 6657 is the total amount of P3,398,832.35. The winning bidder in the
applicable law, with PD 27 and EO 228 having only suppletory extrajudicial foreclosure, Addio Properties Inc., paid the amount of
effect, conformably with our ruling in Paris v. Alfeche. P5,001,127.00, thus leaving a P1,602,393.65 residue. According to
respondents, this residue amount, which is in the custody of Atty.
x xxx Luna as Branch Clerk of Court, should be turned over to them
pursuant to Section 4, Rule 68 of the Revised Rules of Civil
It would certainly be inequitable to determine just compensation
Procedure. Thus, respondents pray in their Petition for Injunction
based on the guideline provided by PD 27 and EO 228 considering
for a judgment (1) finding Monzon liable to the spouses Perez in the
the DAR’s failure to determine the just compensation for a
amount of P1,215,000.00 and to the spouses Relova in the amount
considerable length of time. That just compensation should be
of P385,000.00.
determined in accordance with RA 6657, and not PD 27 or EO 228,
is especially imperative considering that just compensation should ISSUE:
be the full and fair equivalent of the property taken from its owner
by the expropriator, the equivalent being real, substantial, full and Whether or not the rule 68 is applicables?
ample.25 (Emphasis supplied; citations omitted.)
RULING:
In sum, if the issue of just compensation is not settled prior to the
passage of R.A. No. 6657, it should be computed in accordance with No.le 68 governs the judicial foreclosure of mortgages. Extra-
the said law, although the property was acquired under P.D. No. 27. judicial foreclosure of mortgages, which was what transpired in the

It ’s not a PROVREM 2015  28


EXPROPRIATION ONWARDS
case at bar, is governed by Act No. 3135,[11] as amended by Act No. manage to extrajudicially foreclosed the property and sells it to
4118,[12] Section 6 of Republic Act No. 7353, Section 18 of Republic Adio Property Inc., for P5,001,127.00, the debt was only for
Act No. 7906, and Section 47 of Republic Act No. 8791. A.M. No. 99- P3,398,832.35 thus leaving a P1,602,393.65 residue. According to
10-05-0, issued on 14 December 1999, provides for the procedure respondents, this residue amount, which is in the custody of Atty.
to be observed in the conduct of an extrajudicial foreclosure sale. Luna as Branch Clerk of Court, should be turned over to them
Thus, we clarified the different types of sales in Supena v. Dela Rosa, pursuant to Section 4, Rule 68 of the Revised Rules of Civil
[13] to wit: Procedure. Thus, respondents pray in their Petition for Injunction
for a judgment (1) finding Monzon liable to the spouses Perez in the
Any judge, worthy of the robe he dons, or any lawyer, for that amount of P1,215,000.00 and to the spouses Relova in the amount
matter, worth his salt, ought to know that different laws apply to of P385,000.00.
different kinds of sales under our jurisdiction. We have three
different types of sales, namely: an ordinary execution sale, a
judicial foreclosure sale, and an extrajudicial foreclosure sale. An
ordinary execution sale is governed by the pertinent provisions of XIV.B LOOYUKO V. CA, G.R. NO. 102696, 12 JULY 2001
Rule 39 of the Rules of Court on Execution, Satisfaction and Effect of CABUENAS CLEA
Judgments. Rule 68 of the Rules, captioned Foreclosure of Mortgage,
governs judicial foreclosure sales. On the other hand, Act No. 3135, PRINCIPLE:
Section 1, Rule 68 of the Rules of Court requires all persons having
as amended by Act No. 4118, otherwise known as "An Act to
or claiming an interest in the premises subordinate in right to that
Regulate the Sale of Property under Special Powers Inserted in or of the holder of the mortgage be made defendants in the action for
Annexed to Real Estate Mortgages," applies in cases of extrajudicial foreclosure. The requirement for joinder of the person claiming an
foreclosure sales of real estate mortgages. interest subordinate to the mortgage sought to be foreclosed,
however, is not mandatory in character but merely directory, in the
Unlike Rule 68, which governs judicial foreclosure sales, neither Act sense that failure to comply therewith will not invalidate the
No. 3135 as amended, nor A.M. No. 99-10-05-0 grants to junior foreclosure proceedings.
encumbrancers the right to receive the balance of the purchase
FACTS:
price. The only right given to second mortgagees in said issuances is
 Disputed in these consolidated cases is a house and lot
the right to redeem the foreclosed property pursuant to Section 6 of located in Mandaluyong City. Previously owned by the
Act No. 3135, as amended by Act No. 4118, which provides: Spouses Mendoza. The property is contested by the
spouses’ various creditors as well as the creditors’ of
Sec. 6. Redemption. In all cases in which an extrajudicial sale is alleged assignee.
made under the special power hereinbefore referred to, the debtor,  One set of creditors includes Looyuko and Uy. Their
his successors in interest or any judicial creditor or judgment lawyer, Atty. Victoria Cuyos, has also annotated her
creditor of said debtor, or any person having a lien on the property attorney’s lien over the property. Gutang and her children
subsequent to the mortgage or deed of trust under which the David and Elizabeth, who have substituted their father,
comprise another set. Both sets of creditors rest their
property is sold, may redeem the same at any time within the term
claim upon separate levies on execution and their
of one year from and after the date of the sale; and such redemption supposed purchase of the property at public auction.
shall be governed by the provisions of sections four hundred and
sixty-four to four hundred and sixty- six,[14] inclusive, of the Code  Looyuko and Uy, through Atty. Cuyos, filed a complaint
of Civil Procedure, in so far as these are not inconsistent with this against the Spouses Mendoza before the RTC of Manila.
Act. The Manila RTC issued a writ of preliminary attachment
over the property and a notice of levy on attachment
Even if, for the sake of argument, Rule 68 is to be applied to bearing the date April 22, 1977 was annotated at the back
extrajudicial foreclosure of mortgages, such right can only be given of the TCT No. 1702.
to second mortgagees who are made parties to the (judicial)
foreclosure. While a second mortgagee is a proper and in a sense The Manila RTC issued a writ of execution and the
even a necessary party to a proceeding to foreclose a first mortgage property was sold at public auction with Looyuko and Uy
on real property, he is not an indispensable party, because a valid as the highest bidders.
decree may be made, as between the mortgagor and the first
mortgagee, without regard to the second mortgage; but the The Register of Deeds of Mandaluyong issued a new TCT
over the property in the name of Looyuko and Uy.
consequence of a failure to make the second mortgagee a party to
the proceeding is that the lien of the second mortgagee on the
 In another case filed in the RTC of Iloilo, Gutang filed a
equity of redemption is not affected by the decree of foreclosure.
complaint for a sum of money with damages against
[15] Mendoza. Judgment was rendered in favor of Gutang and
the decision later became final and executor. A notice of
BAR Question: levy on execution was annotated on the same TCT No.
1702.
Monzon executed 2 two promissory notes to spouses pereaz and
spouses relova which was mortgages by land. It turns out that Gutang, by virtue of the certificate of sale, filed a petition
Coastal Lending Corporation was also a creditor of monzon and it for the cancellation of TCT No. 1702 and the issuance of a

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EXPROPRIATION ONWARDS
new title in her name. This was granted by the RTC of ISSUES: Was the motion for intervention filed by the Spouses
Rizal. Gutang and Looyuko et. al proper considering that the case already
final and executory?
TCT No. 1702 was cancelled and a new TCT was issued on
December 23, 1987. HELD:

 On December 2, 1976, Sps. Mendoza executed a mortgage NO. We do not deem it necessary to address the issue of whether
over the subject property in favor of FGU Insurance the complaint filed by FGU against the Spouses Mendoza was an
Corporation. The spouses failed to satisfy the obligation action for foreclosure of mortgage or one for a sum of money.
secured by the mortgage. FGU filed an action with the RTC Clearly, if it were the latter, the Gutangs and Looyuko et al. would
of Manila against the spouses. have no right to intervene therein since the action for sum of money,
i.e., damages, would have arisen from the contract secured by
mortgage, to which they are not parties. Then Section 2, Rule 12 of
Judgment was rendered in favor of FGU and the spouses the Rules of Court, the law prevailing at the time, read as follows:
were ordered to pay FGU sum of money.
Intervention. – A person may, before or during a trial be
FGU filed a motion for partial reconsideration, pointing permitted by the court, in its discretion, to intervene in an
out that the action was not for a sum of money but for action, if he has legal interest in the matter in litigation, or
foreclosure of mortgage. It prayed that in accordance with in the success of either of the parties, or an interest against
Section 2, Rule 68 of the Rules of Court, "the decision be both, or when he is so situated as to be adversely affected by
amended by ordering the sale of the property mortgaged a distribution or other disposition of property in the custody
in case defendant should not satisfy the judgment in favor of the court or of an officer thereof. [Italics supplied.]
of plaintiff within ninety (90) days from notice of
decision."
None of the grounds underscored above are present to warrant
their intervention. Accordingly, we assume for purposes of
The RTC granted the motion. No appeal was taken and the discussion that the action was indeed for the foreclosure of the
Order subsequently became final and executory. mortgage over the subject property.

In a public bidding, FGU was declared the highest bidder The rule stated above also requires that a motion for intervention
and the issuance of new TCT was issued in the name of should be made "before or during a trial." Because of varying
FGU. interpretations of the phrase, the present Rules have clarified that
the motion should be filed "any time before rendition of judgment."
Before the new TCT was issued, the Spouses Gutang filed
a motion for intervention and to set aside the judgment of In the present case, the motions for intervention were filed after
the RTC, alleging that they are the new registered owners judgment had already been rendered, indeed when the case was
of the property. already final and executory. Certainly, intervention can no longer be
allowed in a case already terminated by final judgment.
The RTC allowed the motion for intervention, holding that
the failure of the FGU to implead the Spouses in the action Intervention is merely collateral or accessory or ancillary to the
for foreclosure deprived the latter of due process. principal action, and not an independent proceeding; it is an
interlocutory proceeding dependent on or subsidiary to the case
 Looyuko et al. filed a motion for intervention which the between the original parties. Where the main action ceases to exist,
RTC granted in its Order. there is no pending proceeding wherein the intervention may be
 FGU filed a petition for certiorari, prohibition and based. Here, there is no more pending principal action wherein the
mandamus in the Court of Appeals, arguing that the trial Spouses Gutang and Looyuko et al. may intervene.
court committed grave abuse of discretion in granting the
Spouses Gutang’s motion for intervention since the RTC A decision was already rendered therein and no appeal
decision was already final and executory. having been taken therefrom, the judgment in that main
case is now final and executory. Intervention is legally
 The CA ruled that the action before the RTC was not possible only "before or during a trial," hence a motion for
actually an action for foreclosure but one for collection of a intervention filed after trial—and, a fortiori, when the case
sum of money. The court affirmed the order of the RTC has already been submitted, when judgment has been
allowing intervention. rendered, or worse, when judgment is already final and
executory—should be denied.
 FGU filed a petition for review on certiorari with the SC.
FGU contents that the CA erred in characterizing the case Section 1, Rule 68 of the Rules of Court requires all persons having
as an action for a sum of money and not one for the or claiming an interest in the premises subordinate in right to that
foreclosure of mortgage and in allowing the intervention of the holder of the mortgage be made defendants in the action for
of the Sps. Gutang and Looyuko et al in the proceedings foreclosure. The requirement for joinder of the person claiming an
before the trial court. interest subordinate to the mortgage sought to be foreclosed,
however, is not mandatory in character but merely directory, in the
sense that failure to comply therewith will not invalidate the
foreclosure proceedings.

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EXPROPRIATION ONWARDS
A subordinate lien holder is a proper, even a necessary, but not an ISSUE: Was the motion for intervention filed by the Spouses X and
indispensable, party to a foreclosure proceeding. Appropriate relief Y proper considering that the case already final and executory?
could be granted by the court to the mortgagee in the foreclosure
proceeding, without affecting the rights of the subordinate lien HELD: NO.
holders. The effect of the failure on the part of the mortgagee to We do not deem it necessary to address the issue of whether the
make the subordinate lien holder a defendant is that the decree complaint filed by FGU against the Spouses Y was an action for
entered in the foreclosure proceeding would not deprive the foreclosure of mortgage or one for a sum of money. Clearly, if it
subordinate lien holder of his right of redemption. A decree of
were the latter, the X and Z would have no right to intervene
foreclosure in a suit to which the holders of a second lien are not
parties leaves the equity of redemption in favor of such lien holders therein since the action for sum of money, i.e., damages, would
unforeclosed and unaffected. have arisen from the contract secured by mortgage, to which they
are not parties.
The Spouses Gutang make a lot of needless hair-splitting by arguing
The rule requires that a motion for intervention should be made
that cases applying the above principles are not on all fours with the
one at bar. They persistently cling to the notion that as purchasers "before or during a trial." Because of varying interpretations of
in the execution sale, they stepped into the shoes of the Spouses the phrase, the present Rules have clarified that the motion
Gutang and have become, in legal contemplation, the mortgagors of should be filed "any time before rendition of judgment."
the property. Consequently, their intervention should be allowed.
Intervention is merely collateral or accessory or ancillary to the
This contention is utterly devoid of merit. Subordinate lien holders principal action, and not an independent proceeding; it is an
like the Spouses Gutang and Looyuko et al. acquire only a lien upon interlocutory proceeding dependent on or subsidiary to the case
the equity of redemption vested in the mortgagor, and their rights between the original parties. Where the main action ceases to
are strictly subordinate to the superior lien of the mortgagee. exist, there is no pending proceeding wherein the intervention
may be based. Here, there is no more pending principal action
wherein the Spouses Gutang and Looyuko et al. may intervene
An execution creditor who levies his execution upon property that
the judgment debtor has mortgaged to another can sell at most only Section 1, Rule 68 of the Rules of Court requires all persons
the equity of redemption belonging to the mortgagor. As it is the having or claiming an interest in the premises subordinate in
equity of redemption that the subordinate lien holders had acquired right to that of the holder of the mortgage be made defendants in
by the levy on execution and that was sold in the public auction, this the action for foreclosure. The requirement for joinder of the
equity, not the property itself, was what the purchasers, who person claiming an interest subordinate to the mortgage sought
incidentally are the subordinate lien holders themselves, bought at to be foreclosed, however, is not mandatory in character but
the execution sale. merely directory, in the sense that failure to comply therewith
will not invalidate the foreclosure proceedings.
The failure of the mortgagee to join the subordinate lien holders as
defendants in the foreclosure suit, therefore, did not have the effect XIV.C • LOOYOKO, ID. VILLAMANTE
of nullifying the foreclosure proceeding, but kept alive the equity of
redemption acquired by the purchasers in their respective Basic Principle:
execution sales.
This is the mortgagor’s equity (not right) of redemption which, as
SHORT DIGEST above stated, may be exercised by him even beyond the 90-day
period "from the date of service of the order," and even after the
X filed a complaint of against Spouses Y before the RTC of Manila.
foreclosure sale itself, provided it be before the order of
The RTC granted the petition and issued a writ a preliminary
confirmation of the sale. After such order of confirmation, no
attachment over the subject property. The property was later on
redemption can be effected any longer.
transferred in the name of X. In another case filed in the RTC of
Iloilo, Z, by virtue of certificate of sale, filed a petition for Facts:
cancellation of TCT. 1702 and the issuance of a new title in Z’s
name. The Trial Court granted the petition. Disputed in these consolidated cases is a house and lot located in
Mandaluyong, Rizal (now Mandaluyong City), formerly covered by
Spouses Y executed a mortgage over the subject property in favor
Transfer Certificate of Title (TCT) No. 1702, and previously owned
of FGU. Sps. Y failed to settle their obligation. FGU filed an action
by the Spouses Tomas and Linda Mendoza. Bitterly contesting the
with the RTC of manila against Spouses Y. The RTC rendered an
property are the spouses’ various creditors as well as the creditors’
order in favor of FGU and ordered the spouses to pay the plaintiff
alleged assignee.
a sum of money. In a later order, the RTC pointed out that the
action was not for a sum of money but for foreclosure of One set of creditors includes Albert Looyuko and Jose Uy. Their
mortgage. lawyer, Atty. Victoria Cuyos, has also annotated her attorney’s lien
over the property. Antonia Gutang and her children David and
Before the new TCT was issued, X and Z filed a motion for
Elizabeth, who have substituted their father,[1] comprise another
intervention and prayed to set aside the judgment of the RTC
set. Both sets of creditors rest their claim upon separate levies on
alleging that they are the new registered owners of the property.
execution and their supposed purchase of the property at public
auction, including the claims of another creditor, FGU Insurance
Corporation, as well as Schubert Tanuliong, who purports to be

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EXPROPRIATION ONWARDS
Looyuko et al.’s and the Gutangs’ assignee.FGU filed a motion for The scheduled auction sale of subject pieces of properties
partial reconsideration, pointing out that the action was not for a proceeded and the private respondent was declared the highest
sum of money but for foreclosure of mortgage which was granted by bidder. The covering Certificate of Sale issued in its favor was
the RTC. registered.

However, before the issuance of TCT for FGU insurance, Sps. Gutang Petitioner contended that the Intercom, predecessor in interest of
filed a motion for intervention alleging that they are the newly the private respondent, is a credit institution, such that Section 78
registered owner of the property which was granted by the RTC. of Republic Act No. 337 should apply in this case. Stated differently,
FGU moved to reconsider the RTC’s decision over the granting of it is the submission of petitioner that it should be allowed to
intervention. redeem subject properties within one year from the date of sale as a
result of the foreclosure of the mortgage constituted thereon.
Schubert Tanunliong claims that on December 19, 1985, the
Spouses Mendoza sold the subject house and lot to him.

The Court of Appeals ruled that the action before the RTC was not ISSUE:
actually an action for foreclosure but one for collection of a sum of
money. Whether or not the petitioner has the one-year right of redemption
of subject properties under Section 78 of Republic Act No. 337
Issue/s: otherwise known as the General Banking Act.

Whether or not an execution creditor who levies his execution upon


property that the judgment debtor has mortgaged to another can
sell at most only the equity of redemption belonging to the RULING:
mortgagor.
NO.
Held:
The one-year right of redemption under Section 78 of Republic
Yes. Act No. 337 is applicable if the mortgagee is a bank or credit
institution.
As it is the equity of redemption that the subordinate lien holders
had acquired by the levy on execution and that was sold in the In this case, for several crucial stages of the proceedings petitioner
public auction, this equity, not the property itself, was what the failed to allege and prove that private respondent's predecessor in
purchasers, who incidentally are the subordinate lien holders interest was a credit institution and therefore, Section 78 of R.A. No.
themselves, bought at the execution sale. 337 was applicable.

The failure of the mortgagee to join the subordinate lien holders as If petitioner were really acting in good faith, it would have
defendants in the foreclosure suit, therefore, did not have the effect ventilated before the Court of Appeals its alleged right under
of nullifying the foreclosure proceeding, but kept alive the equity of Section 78 of R.A. No. 337; but petitioner never did do so.
redemption acquired by the purchasers in their respective
execution sales. Indeed, at the earliest opportunity, when it submitted its answer to
the complaint for judicial foreclosure, petitioner should have
This is the mortgagor’s equity (not right) of redemption which, as alleged that it was entitled to the beneficial provisions of Section 78
above stated, may be exercised by him even beyond the 90-day of R.A. No. 337 but again, it did not make any allegation in its
period "from the date of service of the order," and even after the answer regarding any right thereunder.
foreclosure sale itself, provided it be before the order of
confirmation of the sale. After such order of confirmation, no The failure of petitioner to seasonably assert its alleged right under
redemption can be effected any longer. Section 78 of R.A. No. 337 precludes it from so doing at this late
stage case. Estoppel may be successfully invoked if the party fails to
Such equity of redemption does not constitute a bar to the raise the question in the early stages of the proceedings.
registration of the property in the name of the mortgagee.
XIV.D
• HUERTA ALBA . V. COURT OF APPEALS, G.R. NO. 128567, 1
SEPTEMBER 2000- VILLAGANAS SPOUSES SUICO V. PHILIPPINE NATIONAL BANK, G.R. NO.
170215, 28 AUGUST 2007- CANETE FRANCIS
FACTS:
Principle:The disposition of the proceeds of the sale in foreclosure
Herein private respondent sought the foreclosure of 4 parcels of shall be as follows: TICA
land mortgaged by petitioner to Intercon.
(a) first, pay the costs
Private respondent instituted judicial foreclosure of mortgage as
mortgagee-assignee. (b) secondly, pay off the mortgage debt

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EXPROPRIATION ONWARDS
(c) thirdly, pay the junior encumbrancers, if any in the order of Rule 68, Section 4 of the Rules of Court provides:
priority
SEC. 4. Disposition of proceeds of sale. — The amount
(d) fourthly, give the balance to the mortgagor, his agent or the realized from the foreclosure sale of the mortgaged property shall,
person entitled to it. after deducting the costs of the sale, be paid to the person
foreclosing the mortgage, and when there shall be any balance or
Thus it has been held that if the mortgagee is retaining more of the residue, after paying off the mortgage debt due, the same shall be
proceeds of the sale than he is entitled to, this fact alone will not paid to junior encumbrancers in the order of their priority, to be
affect the validity of the sale but simply give the mortgagor a cause ascertained by the court, or if there be no such encumbrancers or
of action to recover such surplus. there be a balance or residue after payment to them, then to the
mortgagor or his duly authorized agent, or to the person entitled to
FACTS: it.
Petitioners Spouses Esmeraldo and Elizabeth Suico,
obtained a loan from the Philippine National Bank (PNB) secured by
a real estate mortgage on real properties. The petitioners were Under the above rule, the disposition of the proceeds of the sale in
unable to pay their obligation prompting the PNB to extrajudicially foreclosure shall be as follows: TICA
foreclose the mortgage over the subject properties before the City
Sheriff of Mandaue City. The petitioners thereafter filed a Complaint (a) First, pay the costs
against the PNB before the Regional Trial Court (RTC) of Mandaue
City, Branch 55,for Declaration of Nullity of Extrajudicial (b) Secondly, pay off the mortgage debt
Foreclosure of Mortgage.
(c) Thirdly, pay the junior encumbrancers, if any in the order of
Petitioners claimed that during the foreclosure sale of the priority
subject properties held on 30 October 1992, PNB, as the lone bidder,
offered a bid in the amount of P8,511,000.00. By virtue of the said (d) Fourthly, give the balance to the mortgagor, his agent or the
bid, a Certificate of Sale of the subject properties was issued by the person entitled to it.
Mandaue City Sheriff in favor of PNB. PNB did not pay to the Sheriff
It is the mortgagee's duty to return any surplus in the
who conducted the auction sale the amount of its bid which was
selling price to the mortgagor. A mortgagee who exercises the
P8,511,000.00 or give an accounting of how said amount was
power of sale contained in a mortgage is considered a custodian of
applied against petitioners' outstanding loan, which, as of 10 March
the fund and, being bound to apply it properly, is liable to the
1992, amounted only to P1,991,770.38. Since the amount of the bid
persons entitled thereto if he fails to do so. And even though the
grossly exceeded the amount of petitioners' outstanding obligation
mortgagee is not strictly considered a trustee in a purely equitable
as stated in the extrajudicial foreclosure of mortgage, it was the
sense, but as far as concerns the unconsumed balance, the
legal duty of the winningbidder, PNB, to deliver to the Mandaue City
mortgagee is deemed a trustee for the mortgagor or owner of the
Sheriff the bid price or what was left thereof after deducting the
equity of redemption.
amount of petitioners' outstanding obligation. PNB failed to deliver
the amount of their bid to the Mandaue City Sheriff or, at the very Thus it has been held that if the mortgagee is retaining
least, the amount of such bid in excess of petitioners' outstanding more of the proceeds of the sale than he is entitled to, this fact
obligation. alone will not affect the validity of the sale but simply give the
mortgagor a cause of action to recover such surplus.
Owing to the failure of PNB as the winning bidder to
deliver to the petitioners the amount of its bid or even just the Being the only existing documentary evidence to support its claim,
amount in excess of petitioners' obligation, the latter averred that shows that petitioners' loan obligations to PNB as of 30 October
the extrajudicial foreclosure conducted over the subject properties 1992 amounted to P6,409,814.92, and considering that the amount
by the Mandaue City Sheriff, as well as the Certificate of Sale and the of PNB's bid is P8,511,000.00, there is clearly an excess in the bid
Certificate of Finality of Sale of the subject properties issued by the price which PNB must return, together with the interest computed
Mandaue City Sheriff, in favor of PNB, were all null and void. in accordance with the guidelines laid down by the court in Eastern
Shipping Lines v. Court of Appeals.
PNB filed a Motion to Dismiss, however, the Motion to
Dismisswas denied in the Order of the RTC. RTC rendered its SHORT DIGEST:
Decision for the declaration of nullity of the extrajudicial
foreclosure of mortgage. PNB appealed its case to the Court of FACTS:
Appeals, and the appellate court granted the appeal.
Petitioners Spouses Suico, obtained a loan from the
ISSUE: WON the foreclosure proceeding is null and void for failure Philippine National Bank (PNB) secured by a real estate
of the mortgagee to pay and tender the price of its bid or the mortgage on real properties. PNB extrajudicially foreclose the
surplus thereof to the sheriff. mortgage over the subject properties before the City Sheriff of
Mandaue City as Sps. Suico is unable to pay their
HELD:NO. obligation.Petitioners thereafter filed a Complaint against the PNB

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EXPROPRIATION ONWARDS
before the RTC of Mandaue City, for Declaration of Nullity of As a general rule, there is no right of redemption in a judicial
Extrajudicial Foreclosure of Mortgage. foreclosure of mortgage. The only exemption is when the mortgagee
is the Philippine National Bank or a bank or a banking institution.
During the foreclosure salePNB, as the lone bidder, offered The mortgagors only have equity (not right) of redemption which
a bid in the amount of P8,511,000.00. However, PNB did not pay to may be exercised by him even beyond the 90-day period from the
the Sheriff who conducted the auction sale the amount of its bid or date of service of the order, and even after the foreclosure sale itself,
give an accounting of how said amount was applied against provided it be before the order of confirmation of the sale. After
petitioners' outstanding loan, which, as of 10 March 1992, such order of confirmation, no redemption can be effected any
amounted only to P1,991,770.38. longer.

Owing to the failure of PNB as the winning bidder to Quick digest:


deliver to the petitioners the amount of its bid or even just the
amount in excess of petitioners' obligation, the latter averred that Facts:
the extrajudicial foreclosure be declared null and void.
The RTC of Manila rendered judgment in 2 civil cases that the Deed
RTC rendered its Decision for the declaration of nullity of of Sale affecting the property in question as an equitable mortgage;
the extrajudicial foreclosure of mortgage. PNB appealed its case to declared spouses Rosales to deposit to the Cleark the sum of
the Court of Appeals, and the appellate court granted the appeal. P65,000 for payment to Macaspac with 9%interest/annum plus
P219.76 for real estate tax reimbursement; while Macapac to
ISSUE: WON the foreclosure proceeding is null and void for failure execute a deed of reconveyance to Spouses Rosales upon deposit,
of the mortgagee to pay and tender the price of its bid or the however in case of non-payment, the property shall be sold in
surplus thereof to the sheriff. accordance with the rules of court.

HELD: NO. The decision became final and executory. Spouses Ricardo and
Erlinda Rosales failed to comply.An auction sale of the property was
Rule 68, Section 4 of the Rules of Court provides: held and the property was sold forP285,000.00 to spouses Alfonso
and Lourdes Suba, herein respondents, being the highest
SEC. 4. Disposition of proceeds of sale. — The amount
bidders. On July 15, 1998, the trial court issued an order confirming
realized from the foreclosure sale of the mortgaged property shall,
the sale of the property and directing the sheriff to issue a final deed
after deducting the costs of the sale, be paid to the person
of sale in their favor.
foreclosing the mortgage, and when there shall be any balance or
residue, after paying off the mortgage debt due, the same shall be The Register of Deeds of Manila issued a new TCT over the subject
paid to junior encumbrancers in the order of their priority, to be property in the Spouses Suba.
ascertained by the court, or if there be no such encumbrancers or
there be a balance or residue after payment to them, then to the Spouses Suba filed with the trial court a motion for a writ of
mortgagor or his duly authorized agent, or to the person entitled to possession. The trial court ruled that petitioners have no right to
it. redeem the property since the case is for judicial foreclosure of
mortgage under Rule 68 of the 1997 Rules of Civil Procedure, as
Under the above rule, the disposition of the proceeds of the sale in amended. Hence, respondents, as purchasers of the property, are
foreclosure shall be as follows: TICA entitled to its possession as a matter of right.
(a) first, pay the costs Petitioners filed with the Court of Appeals a petition for certiorari
however, Court of Appeals dismissed the petition, holding that there
(b) secondly, pay off the mortgage debt
is no right of redemption in case of judicial foreclosure of mortgage.
(c) thirdly, pay the junior encumbrancers, if any in the order of
priority
Issue: WON Petitioner has the right of redemption?
(d) fourthly, give the balance to the mortgagor, his agent or the
person entitled to it. Ruling: No. There is no right of redemption in a judicial foreclosure
of mortgage.
Thus it has been held that if the mortgagee is retaining more of the
proceeds of the sale than he is entitled to, this fact alone will not
affect the validity of the sale but simply give the mortgagor a cause
of action to recover such surplus. The law declares that a judicial foreclosure sale, when confirmed by
an order of the court, x x x shall operate to divest the rights of all the
XIV.E SPOUSES ROSALES V. SPOUSES SUBA, G.R. NO. 137792, 12 parties to the action and to vest their rights in the purchaser, subject
AUGUST 2003- CORTES to such rights of redemption as may be allowed by law. The
mortgagors equity (not right) of redemption which may be
Principle:
exercised by him even beyond the 90-day period from the date of

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EXPROPRIATION ONWARDS
service of the order, and even after the foreclosure sale itself, On July 28, 1998, Macaspac filed a motion praying for the release to
provided it be before the order of confirmation of the sale. After him of the amount of P176,176.06 from the proceeds of the auction
such order of confirmation, no redemption can be effected any sale, prompting petitioners to file a motion praying that an
longer. independent certified public accountant be appointed to settle the
exact amount due to movant Macaspac.
The Petitioners merely have an equity of redemption, which, to
reiterate, is simply their right, as mortgagor, to extinguish the Meanwhile, the Register of Deeds of Manila issued a new Transfer
mortgage and retain ownership of the property by paying the Certificate of Title over the subject property in the names of
secured debt prior to the confirmation of the foreclosure respondents.
sale. However, instead of exercising this equity of redemption,
petitioners chose to delay the proceedings by filing several On August 18, 1998, respondents filed with the trial court a motion
manifestations with the trial court. Thus, they only have themselves for a writ of possession, contending that the confirmation of the sale
to blame for the consequent loss of their property. effectively cut off petitioners equity of redemption which the trial
court granted. The trial court ruled that petitioners have no right to
Long Digest redeem the property since the case is for judicial foreclosure of
mortgage under Rule 68 of the 1997 Rules of Civil Procedure, as
Facts: amended. Hence, respondents, as purchasers of the property, are
entitled to its possession as a matter of right.
On June 13, 1997, the Regional Trial Court, Branch 13, Manila
rendered a Decision] in 2 Civil cases, where the dispositive portion Petitioners filed with the Court of Appeals a petition for certiorari,
reads: alleging that the trial court committed grave abuse of discretion
amounting to lack or excess of jurisdiction in issuing a writ of
(1) Declaring the Deed of Sale affecting the property in question, as possession for confirming the sale of the property.
an equitable mortgage;
However, Court of Appeals dismissed the petition, holding
(2) Declaring the parties Erlinda Sibug and Ricardo Rosales, within that there is no right of redemption in case of judicial foreclosure of
90 days from finality of this Decision, to deposit with the Clerk of mortgage.
Court, for payment to the parties Felicisimo Macaspac and Elena
Jiao, the sum of P65,000.00, with interest at nine (9) percent per Arguments:
annum from September 30, 1982 until payment is made, plus the
sum of P219.76 as reimbursement for real estate taxes; Petitioners= they faulted the Appellate Court in applying the rules
on judicial foreclosure of mortgage. They contend that their loan
(3) Directing the parties Felicisimo Macaspac and Elena Jiao, upon with Macaspac is unsecured, hence, its payment entails an execution
the deposit on their behalf of the amounts specified in the foregoing of judgment for money under Section 9 in relation to Section 25,
paragraph, to execute a deed of reconveyance of the property in Rule 39 of the 1997 Rules of Civil Procedure, as amended, allowing
question to Erlinda Sibug, married to Ricardo Rosales, and the the judgment debtor one (1) year from the date of registration of
Register of Deeds of Manila shall cancel Transfer Certificate of Title the certificate of sale within which to redeem the foreclosed
No. 150540 in the name of the Macaspacs and issue new title in the property.
name of Sibug;
Respondents= they insist that petitioners are actually questioning
(4) For non-compliance by Sibug and Rosales of the directive in the decision of the trial court dated June 13, 1997 which has long
paragraph (2) of this dispositive portion, let the property be sold in become final and executory; and that the latter have no right to
accordance with the Rules of Court for the release of the mortgage redeem a mortgaged property which has been judicially foreclosed.
debt and the issuance of title to the purchaser.
Issue:
The decision became final and executory. Spouses Ricardo and
Erlinda Rosales, judgment debtors and herein petitioners, failed to 1. WON the transaction between petitioner and Macaspac is
comply with paragraph 2 quoted above. an equitable mortgage?

This prompted Macaspac, as judgment creditor, to file with the trial 2. WON Petitioner has the right of redemption?
court a motion for execution.
Ruling:
An auction sale of the property was held wherein petitioners
participated. However, the property was sold forP285,000.00 to 1. YES.
spouses Alfonso and Lourdes Suba, herein respondents, being the
highest bidders. On July 15, 1998, the trial court issued an order The decision of the trial court, which is final and executory, declared
confirming the sale of the property and directing the sheriff to issue the transaction between petitioners and Macaspac an equitable
a final deed of sale in their favor. mortgage.

In Matanguihan vs. Court of Appeals, this Court defined an equitable


mortgage as one which although lacking in some formality, or form

It ’s not a PROVREM 2015  35


EXPROPRIATION ONWARDS
or words, or other requisites demanded by a statute, nevertheless exceptionally allowed by law (i.e., even after the confirmation by an
reveals the intention of the parties to charge real property as order of the court) are those granted by the charter of the
security for a debt, and contains nothing impossible or contrary to Philippine National Bank (Act Nos. 2747 and 2938), and the General
law. An equitable mortgage is not different from a real estate Banking Act (R.A.337). These laws confer on the mortgagor, his
mortgage, and the lien created thereby ought not to be defeated by successors in interest or any judgment creditor of the mortgagor,
requiring compliance with the formalities necessary to the validity the right to redeem the property sold on foreclosure after
of a voluntary real estate mortgage. Since the parties transaction is confirmation by the court of the foreclosure sale which right may be
an equitable mortgage and that the trial court ordered its exercised within a period of one (1) year, counted from the date of
foreclosure, execution of judgment is governed by Sections 2 and 3, registration of the certificate of sale in the Registry of Property.
Rule 68 of the 1997 Rules of Civil Procedure, as amended, quoted as
follows: XXX This is the mortgagors equity (not right) of
redemption which, as above stated, may be exercised by him
SEC. 2. Judgment on foreclosure for payment or sale. If upon the even beyond the 90-day period from the date of service of the
trial in such action the court shall find the facts set forth in the order, and even after the foreclosure sale itself, provided it be
complaint to be true, it shall ascertain the amount due to the before the order of confirmation of the sale. After such order of
plaintiff upon the mortgage debt or obligation, including interest confirmation, no redemption can be effected any longer.
and other charges as approved by the court, and costs, andshall
render judgment for the sum so found due and order that the XIV.F SUICO RATTAN V. COURT OF APPEALS, G.R. NO. 138145,
same be paid to the court or to the judgment obligee within a 15 JUNE 2006- SAURA
period of not less that ninety (90) days nor more than one
hundred twenty (120) days from the entry of judgment, and Principle:
that in default of such payment the property shall be sold at
Given the fact that the proceeds of the auction sale were not sufficient
public auction to satisfy the judgment.
to answer the entire obligation of petitioners to respondent bank, the
SEC. 3. Sale of mortgaged property, effect. When the defendant, latter has the right to recover the balance due it after applying the
after being directed to do so as provided in the next preceding proceeds of the sale. We agree with the CA that where the mortgage
section, fails to pay the amount of the judgment within the creditor chooses the remedy of foreclosure and the foreclosure sale
period specified therein, the court, upon motion, shall order are insufficient to cover the debt, the mortgagee is entitled to claim
the property to be sold in the manner and under the provisions of the deficiency from the debtor.
Rule 39 and other regulations governing sales of real estate under
FACTS:
execution. Such sale shall not effect the rights of persons holding
prior encumbrances upon the property or a part thereof, and when Suico Rattan &Buri Interiors, Inc. (SRBII) is a domestic corporation
confirmed by an order of the court, also upon motion, it shall engaged in the business of export of rattan and buri products.
operate to divest the rights in the property of all the parties to Spouses Esmeraldo and Elizabeth Suico (Suico spouses) are officers
the action and to vest their rights in the purchaser, subject to of SRBII. On the other hand, Metropolitan Bank and Trust Co., Inc.
such rights of redemption as may be allowed by law. (Metrobank) is a commercial banking corporation duly organized
and existing under the laws of the Philippines.

In the course of its business, SRBII applied for a credit line with
2. NO. The right of redemption is not recognized in a judicial
Metrobank. On September 5, 1991, SRBII and Metrobank, Mandaue
foreclosure.
branch, entered into a Credit Line Agreement (Agreement) wherein
The right of redemption in relation to a mortgage understood the latter granted the former a discounting line amounting to
in the sense of a prerogative to re-acquire mortgaged property P7,000,000.00 and an export bills purchase or draft against
after registration of the foreclosure saleexists only in the case payment line (EBP/DP line) P10,000,000.00 for a maximum
of the extrajudicial foreclosure of the mortgage. No such right aggregate principal amount of P17,000,000.00.4 As provided for
is recognized in a judicial foreclosure except only where the under the Agreement, drawings on the credit line are secured by a
mortgagee is the Philippine National bank or a bank or a Continuing Surety Agreement for the sum of P17,500,000.00
banking institution. executed by the Suico spouses,5 a Real Estate Mortgage executed on
September 5, 1991 by SRBII and the Suico spouses over properties
Where a mortgage is foreclosed extrajudicially, Act 3135 grants to located at Brgy. Tabok, Mandaue City, Cebu and covered by Transfer
the mortgagor the right of redemption within one (1) year from the Certificate of Title (TCT) Nos. 21663 and 21665, and Fire Insurance
registration of the sheriffs certificate of foreclosure sale. policies over the properties duly endorsed in favor of Metrobank.
The Agreement expressly provides that the EBP/DP line is "clean". 6
Where the foreclosure is judicially effected, however, no
equivalent right of redemption exists. The law declares that Previous to the execution of the Agreement, the Suico spouses had
a judicial foreclosure sale, when confirmed by an order of the already incurred loan obligations from Metrobank which are
court, x x x shall operate to divest the rights of all the parties to secured by separate Real Estate Mortgages executed on May 8,
the action and to vest their rights in the purchaser, subject to 1986,7 March 23, 19878 and August 24, 19879 over the same
such rights of redemption as may be allowed by law. Such rights properties which are the subject of the Real Estate Mortgage

It ’s not a PROVREM 2015  36


EXPROPRIATION ONWARDS
executed on September 5, 1991. Between June 13, 1991 and July 11, properties’ actual market value or by simply selling their right to
1991, SRBII also incurred obligations with Metrobank by entering redeem for a price which is equivalent to the difference between the
into twelve negotiations for the purchase of export bills by the supposed market value of the said properties and the price
former from the latter. These obligations are evidenced by drafts obtained during the foreclosure sale. In either case, petitioners will
drawn by SRBII in favor of Metrobank for a sum amounting to be able to recoup the loss they claim to have suffered by reason of
US$441,279.25 which has a peso equivalent of P12,218,866.23. 10 As the inadequate price obtained at the auction sale and, thus, enable
a consequence of these negotiations, Metrobank issued various them to settle their obligation with respondent bank. Moreover,
checks in favor of petitioners totaling P12,194,443.23, 11 the last one petitioners are not justified in concluding that they should be
of which was dated July 24, 1991.12 considered as having paid their obligations in full since respondent
bank was the one who acquired the mortgaged properties and that
Subsequently, SRBII and the Suico spouses were unable to pay their the price it paid was very inadequate. The fact that it is respondent
obligations prompting Metrobank to extra-judicially foreclose the bank, as the mortgagee, which eventually acquired the mortgaged
four mortgages constituted over the subject properties. Metrobank, properties and that the bid price was low is not a valid reason for
being the lone and highest bidder, acquired the said properties petitioners to refuse to pay the remaining balance of their
during the auction sale. A Certificate of Sale dated November 18, obligation. Settled is the rule that a mortgage is simply a
1992 was then issued in its favor. 13 security and not a satisfaction of indebtedness.

On November 5, 1992, Metrobank filed an action for the recovery of Given the fact that the proceeds of the auction sale were not
a sum of money arising from the obligations of SRBII and the Suico sufficient to answer the entire obligation of petitioners to
spouses on their export bills purchases incurred between June and respondent bank, the latter has the right to recover the balance due
July, 1991.14 SRBII and the Suico spouses filed their Answer it after applying the proceeds of the sale. We agree with the CA that
contending that their indebtedness are secured by a real estate where the mortgage creditor chooses the remedy of
mortgage and that the value of the mortgaged properties is more foreclosure and the foreclosure sale are insufficient to cover
than enough to answer for all their obligations to Metrobank. the debt, the mortgagee is entitled to claim the deficiency from
the debtor.
While the CA affirmed the trial court’s ruling that under the
provisions of the real estate mortgage contracts executed by herein Short Digest
petitioners, the clear intent of the contracting parties is that the
mortgages shall not be limited to the amount secured under the FACTS: SRBII applied for a credit line with Metrobank.
said contracts but shall extend to other obligations that they may Subsequently, SRBII and the Suico spouses were unable to pay their
obtain from Metrobank, including renewals or extensions thereof, obligations prompting Metrobank to extra-judicially foreclose the
the CA ruled that since the proceeds from the foreclosure sale of the four mortgages constituted over the subject properties. Metrobank,
mortgaged properties amounted only to P10,383,141.63, the same being the lone and highest bidder, acquired the said properties
is not sufficient to answer for the entire obligation of petitioners to during the auction sale.The proceeds from the foreclosure sale of
Metrobank and that the latter may still recover the deficiency of the mortgaged properties amounted only to P10,383,141.63, the
P16,585,286.27 representing the value of the export bills purchased same is not sufficient to answer for the entire obligation of
by herein petitioners. petitioners to Metrobanksince there is a deficiency of
P16,585,286.27 representing the value of the export bills purchased
ISSUE: by herein petitioners.

Whether or not the mortgage creditor is entitled to claim the ISSUE: Whether or not the mortgage creditor is entitled to claim the
deficiency from the debtor if the former chooses the remedy of deficiency from the debtor if the former chooses the remedy of
foreclosure and the sale are insufficient to cover the debt. foreclosure and the sale are insufficient to cover the debt.

RULING: RULING: YES.Given the fact that the proceeds of the auction sale
were not sufficient to answer the entire obligation of petitioners to
YES. respondent bank, the latter has the right to recover the balance due
it after applying the proceeds of the sale. We agree with the CA that
The creditor is not barred from recovering the deficiency even if it
where the mortgage creditor chooses the remedy of foreclosure and
bought the mortgaged property at the extrajudicial foreclosure sale
the foreclosure sale are insufficient to cover the debt, the mortgagee
at a lower price than its market value notwithstanding the fact that
is entitled to claim the deficiency from the debtor.
said value is more than or equal to the total amount of the debtor’s
obligation. XVI.A • ARAMBULO V. GUNGAB, G.R. NO. 156581, 30
SEPTEMBER 2005- SILVA
Hence, it is wrong for petitioners to conclude that when
respondent bank supposedly bought the foreclosed properties Principe: pls refer to the table under “Short Digest”
at a very low price, the latter effectively prevented the former
from satisfying their whole obligation. Petitioners still had the Long Digest:
option of either redeeming the properties and, thereafter, selling the
same for a price which corresponds to what they claim as the Facts:

It ’s not a PROVREM 2015  37


EXPROPRIATION ONWARDS
Respondent Emerenciana R. Gungab is the registered owner
of the contested parcel of land with improvements located in Quezon Persons who occupy the land of another at the latter’s
City. Petitioners are her sister Victoria R. Arambulo and nephew Miguel tolerance or permission, without any contract between them is bound
R. Arambulo III. In separate letters, respondents’ counsel made a by an implied promise that they will vacate the same upon demand,
formal demand to petitioners to vacate the subject property. failing which a summary action for ejectment is the proper remedy
Petitioners refused. Respondent sought the assistance of the barangay against them. Notably, respondent only allowed petitioners to use and
authorities. However, no amicable settlement was reached. occupy certain portions of the subject property. They admitted their
use and possession of these portions of the subject property had been
Later, respondent filed separate ejectment complaints with the knowledge, consent and tolerance of all the other co-owners.
against the petitioners before the MeTC alleging: (1) that she owns the Consequently, after respondent obtained title to the subject property
subject property; (2) that she tolerated petitioner’s occupancy of and withdrew her tolerance later on, petitioners refusal to vacate it
certain portions of the subject property without rent; and (3) that rendered their possession thereof unlawful.
despite her demands, they refused to vacate the subject
property.Petitioners denied respondents claim of sole ownership of the The court did not sustain petitioners contention that since
subject property, asserting that petitioner Victoria Arambulo is a co- they had possession of the subject property, they are entitled to
owner, that Victoria continuously used and occupied this portion for remain there. Again, they confuse unlawful detainer with forcible entry.
the last 20 yearsand that their use and possession of these portions of Prior physical possession by the plaintiff is not necessary in an unlawful
the subject property had been with the knowledge, consent and detainer case. It is enough that she has a better right of possession.
tolerance of all the other co-owners.
Prior physical possession of a property by a party is
MeTC dismissed the ejectment cases for lack of cause of indispensable only in forcible entry cases. In unlawful detainer cases,
action, that summary procedure was not the proper procedure to the defendant is necessarily in prior lawful possession of the property,
resolve the cases. but his possession eventually becomes unlawful upon termination or
RTC upheld the MeTCs judgment. expiration of his right to possess. Thus, petitioners prior physical
Court of Appealsreversed RTC’s decision and orderedthe possession of the property does not automatically entitle them to
petitioners to vacate the portion of the subject property under their continue in said possession and does not give them a better right to the
occupancy or possession, and to surrender the same to the property.
respondent. It held that respondent had a preferred right to possess
the property because she had a genuine TCT. It rejected for being Short Digest:
unsubstantiated, petitioners claim that Victoria was a co-owner of the
subject property. Facts:
Herein Respondent filed separate ejectment complaints
Issue: WON respondents can eject the petitioners against the petitioners (respondent’s sister and nephew) before the
MeTC allegingthat she owns said property, tolerated petitioners’
Ruling: occupancy of certain portions of the subject property without rent; and
YES. that despite her demands, they refused to vacate the subject property.
Petitioners denied respondents claim of sole ownership of the subject
In forcible entry, one is deprived of physical possession of property, asserting that petitioner is a co-owner, and has continuously
land or building by means of force, intimidation, threat, strategy, or used and occupied this portion for the last 20 years and that their use
stealth. In unlawful detainer, one unlawfully withholds possession and possession of these portions of the subject property had been with
thereof after the expiration or termination of his right to hold the knowledge, consent and tolerance of all the other co-owners.
possession under any contract, express or implied. In forcible entry, the
possession is illegal from the beginning and the basic inquiry centers on MeTC dismissed the ejectment cases for lack of cause of
who has the prior possession de facto. In unlawful detainer, the action, that summary procedure was not the proper procedure to
possession was originally lawful but became unlawful by the expiration resolve the cases.
or termination of the right to possess, hence the issue of rightful RTC upheld the MeTCs judgment.
possession is decisive for, in such action, the defendant is in actual Court of Appeals reversed RTC’s decision and ordered the
possession and the plaintiffs cause of action is the termination of the petitioners to vacate the portion of the subject property under their
defendants right to continue in possession. What determines the cause occupancy or possession, and to surrender the same to the
of action is the nature of defendants entry into the land. If the entry is respondent. It held that respondent had a preferred right to possess
illegal, then the action which may be filed against the intruder within the property because she had a genuine TCT. It rejected for being
one year therefrom is forcible entry. If, on the other hand, the entry is unsubstantiated, petitioners claim that Victoria was a co-owner of the
legal but the possession thereafter became illegal, the case is one of subject property.
unlawful detainer which must be filed within one year from the date of
the last demand. Issue: WON respondents can eject the petitioners

Here, respondents’ cause of action was not deprivation of Ruling:


possession of the subject property by force, intimidation, threat,
strategy or stealth. Rather, these were for unlawful detainer since Yes.Pertinent to the instant case are the summary remedies of forcible
respondent alleged that (1) she owns the subject property; (2) she entry and unlawful detainer under Section 1, Rule 70 of the Rules of
allowed petitioners to occupy it by tolerance; (3) she withdrew her Court. The 2 are differentiated as follows:
consent and demanded that petitioners vacate it, but they refused. Her
complaints were also filed within one year from the date of her last FORCIBLE ENTRY UNLAWFUL DETAINER
demand. -one is deprived of physical -One unlawfully withholds

It ’s not a PROVREM 2015  38


EXPROPRIATION ONWARDS
possession of land or building by possession thereof after the derived, on the other hand, from the land originally transferred to
means of force, intimidation, expiration or termination of his Procopio de Guzman.
threat, strategy, or stealth right to hold possession under
any contract, express or implied
-the possession is illegal from the -the possession was originally
beginning and the basic inquiry lawful but became unlawful by The complaint was dismissed but was revived. Petitioners
centers on who has the prior the expiration or termination of received summons and, instead of filing a new Answer, file a Motion
possession de facto the right to possess, hence the for Extension of Time to File Answer which the MTC denied. The
issue of rightful possession is petitioners filed a motion for reconsideration. Respondents filed a
decisive for, in such action, the Motion for the Issuance of a Writ of Execution.
defendant is in actual possession
and the plaintiffs cause of action
is the termination of the
defendants right to continue in
To stop the implementation of the writ of execution, the
possession.
petitioners filed a Notice of Appeal while respondents filed a
-filed within 1 yr from illegal entry -filed within 1 yr from the last
Manifestation and Motion praying that the petitioners Motion for
demand to vacate
Reconsideration be denied for being moot and academic.

UNLAWFUL DETAINER is applicable here.

In the case, respondents’ cause of action was not deprivation MTC issued an order declaring the petitioners Motion for
of possession of the subject property by force, intimidation, threat, Reconsideration abandoned because of the Notice of Appeal they
strategy or stealth. Rather, these were for unlawful detainer since previously filed. Thereafter, the MTC forwarded the entire record of
respondent alleged that (1) she owns the subject property; (2) she Civil Case to the Regional Trial Court, Branch 20 Malolos, Bulacan.
allowed petitioners to occupy it by tolerance; (3) she withdrew her Petitioners submitted their Appeal Memorandum to the RTC Branch
consent and demanded that petitioners vacate it, but they refused. Her 20 which affirmed the MTC decision.
complaints were also filed within one year from the date of her last
demand.

Persons who occupy the land of another at the latter’s On October 5, 2000, the petitioner Julita's sister, Leticia,
tolerance or permission, without any contract between them is bound representing herself to be the sole owner of EP No. A-050545 (TCT
by an implied promise that they will vacate the same upon demand, No. T-188-EP), filed a Petition for Quieting of Title with the Regional
failing which a summary action for ejectment is the proper remedy
Trial Court, Branch 19 (RTC Branch 19), Malolos, Bulacan. On
against them. Notably, respondent only allowed petitioners to use and
October 9, 2000, prior to their receipt of the RTC Branch 20s
occupy certain portions of the subject property. They admitted their
use and possession of these portions of the subject property had been September 20, 2000 decision, the petitioners filed an Urgent Motion
with the knowledge, consent and tolerance of all the other co-owners. for the Suspension of Proceedings which was denied by the court.
Consequently, after respondent obtained title to the subject property
and withdrew her tolerance later on, petitioners refusal to vacate it
rendered their possession thereof unlawful.
The petitioners brought the denials to the CA via a petition
• Spouses Barnachea v. Court of Appeals, G.R. No. 150025, 23 July for certiorari under Rule 65 of the Rules of Court on the issue of
2008- EDOMBINGO whether the pendency of an action involving the issue of ownership
is sufficient basis for the suspension of an ejectment proceeding
“A pending civil action involving ownership of the same property between the same parties and relating to the same subject matter.
does not justify the suspension of the ejectment proceedings.” CA denied the petition.

Facts: Issue:

A complaint for ejectment was filed by the respondents Whether or not the ejectment case filed by the
against petitioner before the MTC on October 20, 1998 over a parcel respondents against petitioners with the MTC of Pulilan is for
of land titled in respondent’s name Avelino Ignacio which lots are unlawful detainer or for forcible entry;
adjacent to the property that the petitioners own and occupy, which
were originally part of a piece of land owned by a certain Luis
Santos and subsequently inherited by his daughter Purificacion
Santos Imperial. The land was subdivided and transferred to tenant- Held:
farmers Santiago Isidro and Procopio de Guzman. The property that
Petition was dismissed.
the petitioners own and occupy was derived from the land
transferred to Santiago Isidro. Respondent Ignacios properties were

It ’s not a PROVREM 2015  39


EXPROPRIATION ONWARDS
The actions for forcible entry and unlawful detainer are Issue:
similar because they are both summary actions where the issue is
purely physical possession. Dissimilarities are clear, distinct, and Whether or not the ejectment case filed by the
well established in law. respondents against petitioners with the MTC of Pulilan is for
unlawful detainer or for forcible entry;

Held:
In forcible entry, (1) the plaintiff must prove that he was in
prior physical possession of the property until he was deprived of Petition was dismissed.
possession by the defendant; (2) the defendant secures possession
of the disputed property from the plaintiff by means of force, The actions for forcible entry and unlawful detainer are
intimidation, threat, strategy or stealth; hence, his possession is similar because they are both summary actions where the issue is
unlawful from the beginning; (3) the law does not require a purely physical possession. Dissimilarities are clear, distinct, and
previous demand by the plaintiff for the defendant to vacate the well established in law.
premises; and (4) the action can be brought only within one-year
In forcible entry, (1) the plaintiff must prove that he was in
from the date the defendant actually and illegally entered the
prior physical possession of the property until he was deprived of
property.
possession by the defendant; (2) the defendant secures possession
of the disputed property from the plaintiff by means of force,
intimidation, threat, strategy or stealth; hence, his possession is
Unlawful detainer is attended by the following features: unlawful from the beginning; (3) the law does not require a
(1) prior possession of the property by the plaintiff is not previous demand by the plaintiff for the defendant to vacate the
necessary; (2) possession of the property by the defendant at the premises; and (4) the action can be brought only within one-year
start is legal but the possession becomes illegal by reason of the from the date the defendant actually and illegally entered the
termination of his right to possession based on his or her contract property.
or other arrangement with the plaintiff; (3) the plaintiff is required
by law to make a demand as a jurisdictional requirement; and (4) Unlawful detainer is attended by the following features:
the one-year period to bring the complaint is counted from the date (1) prior possession of the property by the plaintiff is not
of the plaintiffs last demand on the defendant. necessary; (2) possession of the property by the defendant at the
start is legal but the possession becomes illegal by reason of the
termination of his right to possession based on his or her contract
or other arrangement with the plaintiff; (3) the plaintiff is required
The case involves forcible entry rather than unlawful by law to make a demand as a jurisdictional requirement; and (4)
detainer. There is a showing that the respondents allowed them to the one-year period to bring the complaint is counted from the date
occupy the disputed property by tolerance; that the respondents of the plaintiffs last demand on the defendant.
eventually made a demand that the petitioners vacate the; and that
the petitioners refused to vacate the property in light of the The case involves forcible entry rather than unlawful
defenses they presented. detainer. There is a showing that the respondents allowed them to
occupy the disputed property by tolerance; that the respondents
There is complete absence of any allegation of force, intimidation, eventually made a demand that the petitioners vacate the; and that
strategy or stealth in the complaint with respect to the petitioner’s the petitioners refused to vacate the property in light of the
possession of the respondent’s property. While admittedly no defenses they presented.
express contract existed between the parties regarding the
petitioner’s possession, the absence does not signify an illegality in There is complete absence of any allegation of force, intimidation,
the entry nor an entry by force, intimidation, strategy or stealth that strategy or stealth in the complaint with respect to the petitioner’s
would characterize the entry as forcible. possession of the respondent’s property. While admittedly no
express contract existed between the parties regarding the
SHORT DIGEST: petitioner’s possession, the absence does not signify an illegality in
the entry nor an entry by force, intimidation, strategy or stealth that
Facts: would characterize the entry as forcible.

A complaint for ejectment was filed by the respondents • FERNANDO V. SPOUSES LIM, G.R. NO. 176282, 22 AUGUST
against petitioner. The complaint was dismissed but was revived. 2008- CLAROS
MTC forwarded the entire record of Civil Case to the Regional Trial
Court, which affirmed the MTC decision. Petitioners brought the FACTS:
denials to the CA via a petition for certiorari under Rule 65 of the
Rules of Court on the issue of whether the pendency of an action X Inc [Lim Kieh Tong and Sons, Inc. (LKTSI)]owns property leased
involving the issue of ownership is sufficient basis for the by Y [Victoria Fernando]. Y is leasing the property on a month-to-
suspension of an ejectment proceeding between the same parties month basis. X Inc executed a deed of assignment over the property
and relating to the same subject matter. CA denied the petition. to Spouses Z (Spouses Lim).

It ’s not a PROVREM 2015  40


EXPROPRIATION ONWARDS
Y sought to annul the deed of assignment to Z in a complaint filed detainer.[57] The underlying reason for this rule is to prevent the
before the RTC. X Inc then filed an ejectment suit against Y in the defendant from trifling with the summary nature of the case by the
MeTC. simple expedient of asserting ownership over the disputed
property.
Y invokes PD 1517 which provides that legitimate tenants in Urban
Land Reform Areas who have resided on the land for ten years or The consistent case law is that ejectment suits deal only with the
more who have built their homes on the land and residents who issue of physical possession. The pendency of an action for the
have legally occupied the lands by contract, continuously for the last annulment of the sale and the reconveyance of the disputed
ten years shall not be dispossessed of the land and shall be allowed property may not be successfully pleaded in abatement of an action
the right of first refusal to purchase. Y claims that Spouses Z did not for ejectment.
acquire title to the property because PD 1517 prohibited
dispossession of tenants or the transfer of property without first XVI.B
offering it for sale to tenants like her. Y argued before the MeTC that
the court had no jurisdiction over the ejectment suit because the • SPOUSES SAMONTE V. CENTURY SAVINGS BANK, G.R. NO.
issues of possession and title could not be adjudicated separately 176413, NOVEMBER 25, 2009 –CULTURA
and an accion reivindicatoria should have been brought before the
LONG DIGEST
RTC, not the MeTC.
PRINCIPLE:
The lower courts, MeTC, RTC, and CA ruled against petitioner
As a general rule, an ejectment suit cannot be abated or suspended
ISSUE: WON the MeTC had jurisdiction over the ejectment suit
by the mere filing of another action raising ownership of the
Petitioner, however, has raised an issue of title, to question the property as an issue.
jurisdiction of the MeTC. She claims that respondents have no right
FACTS:
to institute the action for unlawful detainer because they did not
validly acquire the property in view of the prohibition under P.D. Petitioners Danilo T. Samonte and Rosalinda N. Samonte obtained a
No. 1517 against her dispossession or the transfer of the property loan amounting to P1,500,000.00 from respondent Century Savings
without first offering it for sale to her. She insists that such issue of Bank secured by a Real Estate Mortgage over a property located at
title prevents the MeTC from acquiring jurisdiction over the case; it 7142 M. Ocampo Street, Pio del Pilar, Makati City. For petitioners
should have deferred to the jurisdiction of the RTC where there is a failure to pay the obligation, the mortgage was extrajudicially
pending case for annulment of the title of respondents. foreclosed on December 9, 1999 and the property was sold at public
auction and was eventually awarded to respondent as the highest
ISSUE: Whether the trial court a quo has jurisdiction over the
bidder.
complaint when the defendant raises a defense in her answer that
the issue of possession cannot be resolved without resolving the Having failed to redeem the property, petitioners entered into a
issue of title. Contract of Lease with respondent, wherein the former agreed to
pay the latter a monthly rental of P10,000.00 for and in
HELD: YES
consideration of their continuing occupation of the subject property
The allegations in a complaint[50] and the character of the relief from January 16, 2001-January 16, 2002. Petitioners further
sought[51] determine the nature of the action and the court with acknowledged respondents valid and legal title to enter into the
jurisdiction over it. The defenses set up in an answer are not contract as absolute owner of the property in question.
determinative
On March 28, 2001, respondent consolidated its ownership over the
A complaint sufficiently alleges a cause of action for unlawful property, which led to the cancellation of petitioners title and the
detainer if it recites that: a) initially, possession of the property by issuance of a new one in respondents name.
the defendant was by contract with or by tolerance of the plaintiff;
Of the agreed monthly rentals, petitioners only paid a total amount
b) eventually, such possession became illegal upon notice by
of P40,000.00. On April 4, 2002, respondent sent a letter to
plaintiff to defendant of the termination of the latter's right of
petitioners demanding that the latter pay their unpaid rentals and
possession; c) thereafter, defendant remained in possession of the
vacate the leased premises. Petitioners, however, refused to heed
property and deprived plaintiff of the enjoyment thereof; and d)
the demand. Hence, the complaint for ejectment docketed as Civil
within one year from the last demand on defendant to vacate the
Case No. 79002.
property, plaintiff instituted the complaint for ejectment.
In their Answer, petitioners admitted having entered into the
As a rule, the nature of a complaint for unlawful detainer
contract of lease but claimed that it was void, since their consent
and the jurisdiction of a court over it are not altered by the mere
was vitiated by mistake and they were made to believe that it was a
claim of the defendant of title to the property subject matter of the
requirement for the loan-restructuring agreement with the bank. To
ejectment case.[56] Even a pending action involving title to the
justify their failure to pay the rents and to vacate the premises,
property which the defendant may have instituted in another court
petitioners insisted on the nullity of the foreclosure proceedings.
will not abate or suspend the summary proceedings for unlawful

It ’s not a PROVREM 2015  41


EXPROPRIATION ONWARDS
Petitioners had, in fact, commenced an action for the nullification of in nature. The provisional determination of ownership in the
the foreclosure proceedings docketed as Civil Case No. 01-1564. ejectment case cannot be clothed with finality.

MeTC rendered a decision in favor of respondent.

RTC affirmed the MeTC decision. SHORT DIGEST

CA rendered the assailed decision affirming the RTC decision. PRINCIPLE:

ISSUE: As a general rule, an ejectment suit cannot be abated or suspended


by the mere filing of another action raising ownership of the
Whether or not the instant ejectment case should be suspended property as an issue.
pending the resolution of the action for nullity of foreclosure.
FACTS:
RULING: NO
Petitioners Danilo T. Samonte and Rosalinda N. Samonte obtained a
As a general rule, an ejectment suit cannot be abated or suspended loan amounting to P1,500,000.00 from respondent Century Savings
by the mere filing of another action raising ownership of the Bank secured by a Real Estate Mortgage over a property located at
property as an issue. 7142 M. Ocampo Street, Pio del Pilar, Makati City. For petitioners
failure to pay the obligation, the mortgage was extrajudicially
Only in rare instances is suspension allowed to await the outcome of foreclosed on December 9, 1999 and the property was sold at public
a pending civil action. In Vda. de Legaspi v. Avendao, and Amagan v. auction and was eventually awarded to respondent as the highest
Marayag, we ordered the suspension of the ejectment proceedings bidder.
on considerations of equity. We explained that the ejectment of
petitioners therein would mean a demolition of their house and Having failed to redeem the property, petitioners entered into a
would create confusion, disturbance, inconvenience, and expense. Contract of Lease with respondent, wherein the former agreed to
Needlessly, the court would be wasting much time and effort by pay the latter a monthly rental of P10,000.00 for and in
proceeding to a stage wherein the outcome would at best be consideration of their continuing occupation of the subject property
temporary but the result of enforcement would be permanent, from January 16, 2001-January 16, 2002. Petitioners further
unjust and probably irreparable. acknowledged respondents valid and legal title to enter into the
contract as absolute owner of the property in question.
The instant case hardly falls within the exception cited in Vda. de
Legaspi and Amagan as the resolution of the ejectment suit will not Of the agreed monthly rentals, petitioners only paid a total amount
result in the demolition of the leased premises. Verily, petitioners of P40,000.00.
failed to show strong reasons of equity to sustain the suspension or
dismissal of the ejectment case. Faced with the same scenario on To justify their failure to pay the rents and to vacate the premises,
which the general rule is founded, and finding no reason to deviate petitioners insisted on the nullity of the foreclosure proceedings.
therefrom, the Court adheres to settled jurisprudence that suits
involving ownership may not be successfully pleaded in abatement Petitioners had, in fact, commenced an action for the nullification of
of an action for ejectment. This rule is not without good reason. If the foreclosure proceedings docketed as Civil Case No. 01-1564.
the rule were otherwise, ejectment cases could easily be frustrated
through the simple expedient of filing an action contesting the MeTC rendered a decision in favor of respondent.
ownership over the property subject of the controversy. This would
RTC affirmed the MeTC decision.
render nugatory the underlying philosophy of the summary remedy
of ejectment which is to prevent criminal disorder and breaches of CA rendered the assailed decision affirming the RTC decision.
the peace and to discourage those who, believing themselves
entitled to the possession of the property, resort to force rather than ISSUE:
to some appropriate action in court to assert their claims.
Whether or not the instant ejectment case should be suspended
We would like to stress that unlawful detainer and forcible entry pending the resolution of the action for nullity of foreclosure.
suits under Rule 70 of the Rules of Court are designed to summarily
restore physical possession of a piece of land or building to one who RULING: NO
has been illegally or forcibly deprived thereof, without prejudice to
the settlement of the parties opposing claims of juridical possession As a general rule, an ejectment suit cannot be abated or suspended
in appropriate proceedings. These actions are intended to avoid by the mere filing of another action raising ownership of the
disruption of public order by those who would take the law in their property as an issue.
hands purportedly to enforce their claimed right of possession. In
Only in rare instances is suspension allowed to await the outcome of
these cases, the issue is pure physical or de facto possession, and
a pending civil action.
pronouncements made on questions of ownership are provisional

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EXPROPRIATION ONWARDS
The instant case hardly falls within the exception as the resolution instituted an action for ejectment on October 20, 1993 in the
of the ejectment suit will not result in the demolition of the leased Metropolitan Trial Court of Valenzuela, Branch 81.
premises. Verily, petitioners failed to show strong reasons of equity
to sustain the suspension or dismissal of the ejectment case. The MTC decision (3/4/1994) dismissed the complaint for
Court adheres to settled jurisprudence that suits involving ejectmentbased on its finding that herein petitioners are the lawful
ownership may not be successfully pleaded in abatement of an occupants of the premises.
action for ejectment.
RTC decisionaffirmed with modification the judgment of the lower
We would like to stress that unlawful detainer and forcible entry court by declaring herein petitioners and private respondents co-
suits under Rule 70 of the Rules of Court are designed to summarily owners of the lot and the two-door apartment.
restore physical possession of a piece of land or building to one who
has been illegally or forcibly deprived thereof, without prejudice to Petition for review on CA(12/9/1994) reversed and set aside the
the settlement of the parties opposing claims of juridical possession decisions of the Metropolitan Trial Court and the Regional Trial
in appropriate proceedings. These actions are intended to avoid Court, and thereafter ordered petitioners and their privies to vacate
disruption of public order by those who would take the law in their the subject premises and to surrender possession thereof to private
hands purportedly to enforce their claimed right of possession. In respondents.In so ruling, respondent court declared that the
these cases, the issue is pure physical or de facto possession, and Regional Trial Court, in the exercise of its appellate jurisdiction
pronouncements made on questions of ownership are provisional over an ejectment case, had no authority to resolve the issue of
in nature. The provisional determination of ownership in the ownership and to declare herein petitioners as co-owners
ejectment case cannot be clothed with finality. because its power is limited only to a determination of the
issue of possession; that petitioners bare allegation of ownership
• SPOUSES REFUGIA V. COURT OF APPEALS, G.R. NO. 118284, 5 cannot prevail over the transfer certificate of title and deed of sale
JULY 1996 AMORES in favor of private respondents; and that petitioners have been
occupying the subject premises by mere tolerance.
PRINCIPLE:
ISSUE:
The judgment rendered in an action for forcible entry or unlawful
detainer shall be effective with respect to the possession only and in WONthe Metropolitan Trial Court, as well as the Regional Trial
no wise bind the title or affect the ownership of the land or building. Court in the exercise of its appellate jurisdiction, have jurisdiction to
resolve the issue of ownership in an action for unlawful detainer
Long digest where the issue of possession cannot be resolved without deciding
the question of ownership.
FACTS:
HELD:
The records en bloc of the aforesaid cases show that private
respondent-spouses Arturo Refugia and Aurora Timbang-Refugia No.
are the registered owners of a parcel of land and a duplex
apartment building located at No. 16 Meriales Street, Marulas, The Regional Trial Court overstepped its bounds in ruling that
Valenzuela, as evidenced by TCT No. 218979.The title was issued petitioners and private respondents are co-owners of the property.
pursuant to a Deed of Absolute Sale executed on September 11,
1975 in favor of respondent Arturo Refugia, but the purchase price Where the question of who has prior possession hinges on the
of P20,000.00 was reportedly advanced by his father, herein question of who the real owner of the disputed portion is, the
petitioner MamertoRefugia. Thereafter, respondent Arturo Refugia inferior court may resolve the issue of ownership and make a
obtained a housing loan from the SSS, using the land as collateral to declaration as to who among the contending parties is the real
secure payment thereof. In 1976, after the construction of the owner. In the same vein, where the resolution of the issue of
duplex apartment building, herein petitioners immediately began to possession hinges on a determination of the validity and
occupy one door while respondents stayed in the other unit. interpretation of the document of title or any other contract on
which the claim of possession is premised, the inferior court may
However, things did not turn out well between between petitioner likewise pass upon these issues. This is because, and it must be so
FelizaRefugia and her daughter-in-law, Aurora, such that in understood, that any such pronouncement made affecting
February of 1993, petitioners were told by private respondents to ownership of the disputed portion is to be regarded merely
vacate the unit that they were occupying because, according to as provisional, hence, does not bar nor prejudice an action between
private respondents, the family of one of their children who is the same parties involving title to the land. Moreover, Section 7,
married needed a place of their own. Petitioners refused to leave, Rule 70 of the Rules of Court expressly provides that the judgment
claiming that they own the unit they are occupying by reason of the rendered in an action for forcible entry or unlawful detainer shall
fact that it was actually MamertoRefugia who bought the lot on be effective with respect to the possession only and in no wise bind
which the duplex apartment stood. Because of this, the matter was the title or affect the ownership of the land or building.
brought before the barangay court of conciliation. No amicable
settlement having been reached and so private respondents While it may be argued that petitioners were able to prove prior
possession, such, however, is not the issue involved in this action for

It ’s not a PROVREM 2015  43


EXPROPRIATION ONWARDS
unlawful detainer. An action for unlawful detainer is different from (c) In ejection cases where the question of ownership is brought in
a forcible entry case in that the former involves an act of issue in the pleadings. The issue of ownership shall therein be resolved
unlawfully withholding the possession of the land or building in conjunction with the issue of possession.
against or from a landlord, vendor or vendee or other person
after the expiration or termination of the detainers right to August 14, 1981, Batas PambansaBlg. 129, or the Judiciary
hold possession by virtue of a contract, express or implied, and Reorganization Act of 1980, was approved and it redefined the
neither is prior physical possession of the property by the jurisdiction of the Court of Appeals, the Regional Trial Courts and
plaintiff necessary; whereas in the latter, the main issue is one of the inferior courts. Specifically, the new law modified the power of
priority of possession. inferior courts to resolve the issue of ownership in forcible entry
and unlawful detainer cases, subject, however, to the qualification
In the case at bar, petitioners failed to show that they were legally that a resolution thereof shall only be for the purpose of
entitled to continue occupying the unit in question. We agree with determining the issue of possession:
the position of respondent Court of Appeals that petitioners would
in effect be occupying the premises by mere tolerance. A person Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
who occupies the land of another at the latters tolerance or Courts and Municipal Circuit Trial Courts in Civil Cases.Metropolitan
permission, without any contract between them, is necessarily Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
bound by an implied promise that he will vacate the same upon Courts shall exercise:
demand, failing which a summary action for ejectment is the proper
remedy against him. The status of petitioners is analogous to that of xxx xxx xxx
a lessee or tenant whose term of lease has expired but whose
(2) Exclusive original jurisdiction over cases of forcible entry and
occupancy continued by tolerance of the owner.
unlawful detainer: Provided, That when in such cases, the defendant
It has further been held that such tolerance must be present right raises the question of ownership in his pleadings and the question of
from the start of possession sought to be recovered, to categorize a possession cannot be resolved without deciding the issue of
cause of action as one of unlawful detainer. Here, it cannot be ownership, the issue of ownership shall be resolved only to determine
gainsaid that petitioners possession was by mere tolerance of the issue of possession.
private respondents from the very beginning.
Subsequently, this Court promulgated its Interim Rules and
Original Rules on forcible entry and unlawful detainer and the Guidelines in the implementation of Batas PambansaBlg. 129,
Amended rules Section 10 of which provides:

Under Republic Act No. 296, or the Judiciary Act of 1948as 10. Jurisdiction in ejectment cases. Metropolitan trial courts,
amended, the jurisdiction of the then municipal and city courts over municipal trial courts, and municipal circuit trial courts, without
actions for forcible entry and unlawful detainer was defined as distinction, may try cases of forcible entry and detainer even if the
follows: question of ownership is raised in the pleadings and the question of
possession could not be resolved without deciding the issue of
Sec. 88. Original jurisdiction in civil cases. x xx In forcible entry and ownership, but the question of ownership shall be resolved only to
detainer proceedings, the municipal judge or judge of the city court determine the issue of possession.
shall have original jurisdiction, but the said municipal judge or city
judge may receive evidence upon the question of title therein, Section 33(2) of Batas PambansaBlg. 129, inferior courts have
whatever may be the value of the property, solely for the purpose of jurisdiction to resolve the question of ownership raised as an
determining the character and extent of possession and damages for incident in an ejectment case where a determination thereof is
detention. In forcible entry proceedings, he may grant preliminary necessary for a proper and complete adjudication of the issue of
injunctions, in accordance with the provisions of the Rules of Court, to possession. Certain guidelines, however, must be observed in the
prevent the defendant from committing further acts of dispossession implementation of this legislative prescription, viz.:
against the plaintiff. (As amended by Republic Acts Nos. 2613 and
1. The primal rule is that the principal issue must be that of
3828).
possession, and that ownership is merely ancillary thereto, in
The law was subsequently amended by Republic Act No. which case the issue of ownership may be resolved but only for the
5967 which vested in the city courts special jurisdiction to resolve purpose of determining the issue of possession. Thus, as earlier
the issue of ownership in conjunction with the issue of possession stated, the legal provision under consideration applies only where
whenever the question of ownership is brought in issue by the the inferior court believes and the preponderance of evidence
pleadings, thus: shows that a resolution of the issue of possession is dependent
upon the resolution of the question of ownership.
Sec. 3. Besides the civil cases over which the City Courts have
jurisdiction under Section eighty-eight of Republic Act Numbered 2. It must sufficiently appear from the allegations in the complaint
Two hundred ninety-six, as amended, it shall likewise have concurrent that what the plaintiff really and primarily seeks is the restoration
jurisdiction with the Court of First Instance over the following: of possession.Consequently, where the allegations of the complaint
as well as the reliefs prayed for clearly establish a case for the
recovery of ownership, and not merely one for the recovery of

It ’s not a PROVREM 2015  44


EXPROPRIATION ONWARDS
possession de facto, or where the averments plead the claim of ejectment case to the petitioners. RTC ruled that petitioners and
material possession as a mere elemental attribute of such claim for respondents are co-owners.
ownership, or where the issue of ownership is the principal
question to be resolved, the action is not one for forcible entry but ISSUE:
one for title to real property.
WON the Metropolitan Trial Court, as well as the Regional Trial
3. The inferior court cannot adjudicate on the nature of ownership Court in the exercise of its appellate jurisdiction, have jurisdiction to
where the relationship of lessor and lessee has been sufficiently resolve the issue of ownership in an action for unlawful detainer
established in the ejectment case, unless it is sufficiently established where the issue of possession cannot be resolved without deciding
that there has been a subsequent change in or termination of that the question of ownership.
relationship between the parties. This is because under Section
2(b), Rule 131 of the Rules of Court, the tenant is not permitted to HELD:
deny the title of his landlord at the time of the commencement of
No.
the relation of landlord and tenant between them.
The Regional Trial Court overstepped its bounds in ruling that
4. The rule in forcible entry cases, but not in those for unlawful
petitioners and private respondents are co-owners of the property,
detainer, is that a party who can prove prior possession can recover
which issue should be finally determined in the separate action for
such possession even against the owner himself. Regardless of the
specific performance reportedly pending between the parties. The
actual condition of the title to the property and whatever may be
evidence conduces to a finding that private respondents are in
the character of his prior possession, if he has in his favor priority in
possession of the premises in the concept of and consequent to
time, he has the security that entitles him to remain on the property
their being owners thereof.Even on such prima facie showing,
until he is lawfully ejected by a person having a better right through
therefore, private respondents can maintain the ejectment case
an accionpubliciana oraccionreivindicatoria. Corollarily, if prior
involved.
possession may be ascertained in some other way, then the inferior
court cannot dwell upon or intrude into the issue of ownership. While it may be argued that petitioners were able to prove prior
possession, such, however, is not the issue involved in this action for
5. Where the question of who has prior possession hinges on the
unlawful detainer. An action for unlawful detainer is different from
question of who the real owner of the disputed portion is, the
a forcible entry case in that the former involves an act of
inferior court may resolve the issue of ownership and make a
unlawfully withholding the possession of the land or building
declaration as to who among the contending parties is the real
against or from a landlord, vendor or vendee or other person
owner. In the same vein, where the resolution of the issue of
after the expiration or termination of the detainers right to
possession hinges on a determination of the validity and
hold possession by virtue of a contract, express or implied, and
interpretation of the document of title or any other contract on
neither is prior physical possession of the property by the
which the claim of possession is premised, the inferior court may
plaintiff necessary; whereas in the latter, the main issue is one of
likewise pass upon these issues. This is because, and it must be so
priority of possession.
understood, that any such pronouncement made affecting
ownership of the disputed portion is to be regarded merely XVI.C ENCARNACION V. AMIGO, G.R. NO. 169793, 15
as provisional, hence, does not bar nor prejudice an action between SEPTEMBER 2006 CABUENAS CLARISSE
the same parties involving title to the land. Moreover, Section 7,
Rule 70 of the Rules of Court expressly provides that the judgment PRINCIPLES:
rendered in an action for forcible entry or unlawful detainer shall
be effective with respect to the possession only and in no wise bind A. The three kinds of actions for the recovery of possession of real
the title or affect the ownership of the land or building. property are:

SHORT DIGEST 1. Accioninterdictal, or an ejectment proceeding which may be


either that for forcible entry (detentacion) or unlawful detainer
FACTS: (desahucio), which is a summary action for recovery of physical
possession where the dispossession has not lasted for more than
Petitioners claim to be co-owners of the subject premises on the one year, and should be brought in the proper inferior court;
basis of an alleged verbal agreement between the parties to
subdivide the property, as well as the payment made by petitioner 2. Accionpubliciana or the plenary action for the recovery of the real
MamertoRefugia for the purchase of the lot in the amount of right of possession, which should be brought in the proper Regional
P20,000.00. On the other hand, private respondents property rights Trial Court when the dispossession has lasted for more than one
are supported by sufficient documents and muniments of year; and
ownership, namely, the deed of absolute sale, transfer certificate of
title (acquired by Arturo from Mamerto), and building permit in
their names, the regularity in the issuance of which was never
controverted nor put in issue by petitioners.Respondent filed an 3. Accionreinvindicatoria or accion de reivindicacion, which is an
action for the recovery of ownership which must be brought in the
proper Regional Trial Court.

It ’s not a PROVREM 2015  45


EXPROPRIATION ONWARDS
B. If the case is tried on the merits by the Municipal Court without The Court of Appeals committed no reversible error in holding that
jurisdiction over the subject matter, the RTC on appeal may no the proper action in this case is accionpubliciana; and in ordering
longer dismiss the case if it has original jurisdiction thereof. the remand of the case to the Regional Trial Court.
Moreover, the RTC shall no longer try the case on the merits, but
shall decide the case on the basis of the evidence presented in the The three kinds of actions for the recovery of possession of real
lower court, without prejudice to the admission of the amended property are:
pleadings and additional evidence in the interest of justice.
1. Accioninterdictal, or an ejectment proceeding which may be
LONG DIGEST either that for forcible entry (detentacion) or unlawful detainer
(desahucio), which is a summary action for recovery of physical
FACTS: possession where the dispossession has not lasted for more than
one year, and should be brought in the proper inferior court;
Petitioner Victoriano M. Encarnacion is the registered owner of Lot
No. 2121-B-1 and Lot No. 2121-B-2. Said two lots originally form 2. Accionpubliciana or the plenary action for the recovery of the real
part of Lot No. 2121 owned by Rogelio Valiente who sold the same right of possession, which should be brought in the proper Regional
to NicasioMallapitan on 1982. On 1985, Mallapitan sold the land to Trial Court when the dispossession has lasted for more than one
VictorianoMagpantay. After the death of the latter in 1992, his year; and
widow, Anita N. Magpantay executed an Affidavit of Waiver on 1995
waving her right over the property in favor of her son-in-law, herein 3. Accionreinvindicatoria or accion de reivindicacion, which is an
petitioner, VictorianoEncarnacion. Thereafter, the latter caused the action for the recovery of ownership which must be brought in the
subdivision of the land into two lots and the issuance of titles in his proper Regional Trial Court.
name.
The material element that determines the proper action to be filed
Respondent Nieves Amigo allegedly entered the premises and took for the recovery of the possession of the property in this case is the
possession of a portion of the property sometime in 1985 without length of time of dispossession.
the permission of the then owner, VictorianoMagpantay.

Petitioner, demanded from respondent to vacate the subject


property. The demand letter was delivered by registered mail to the It appears that the petitioner became the owner of the property on
respondent on February 12, 2001. Notwithstanding receipt of the 1995 by virtue of the waiver of rights executed by his mother-in-
demand letter, respondent still refused to vacate the subject law. He filed the complaint for ejectment 2001 making the filing of
property. Thereafter, on March 2, 2001, petitioner filed a the complaint for ejectment fall within the requisite one year from
complaint for ejectment, damages with injunction and prayer for last demand for complaints for unlawful detainer. It is also equally
restraining order with the Municipal Trial Court in Cities of Isabela. true that petitioner became the owner of the subject lot in 1995 and
Respondent alleged that he has been in actual possession and has been since that time deprived possession of a portion thereof.
occupation of a portion of the subject land since 1968 and that the From the date of the petitioner's dispossession in 1995 up to his
issuance of Free Patent and titles in the name of petitioner was filing of his complaint for ejectment in 2001, almost 6 years have
tainted with irregularities. elapsed. The length of time that the petitioner was dispossessed of
his property made his cause of action beyond the ambit of an
The Municipal Trial Court in Cities rendered judgment against accioninterdictal and effectively made it one for accionpubliciana.
herein respondent ordering him to vacate the portion of the parcels
of land he is now occupying and surrender it to Encarnacion. On The respondent's actual entry on the land of the petitioner was in
appeal, the Regional Trial Courtdismissed the case on the ground 1985 but it was only on March 2, 2001 or sixteen years after, when
that the Municipal Court had no jurisdiction over the case, thusthe petitioner filed his ejectment case. The respondent should have filed
Regional Trial Court acquired no appellate jurisdiction thereof. an accionpubliciana case which is under the jurisdiction of the RTC.

Aggrieved, petitioner filed a petition for review under Rule 42 of the However, the RTC should have not dismissed the case. Section 8,
Rules of Court before the Court of Appeals which promulgated the Rule 40 of the Rules of Court provides:
assailed Decision remanding the case to the Regional Trial Court for
Section 8.
further proceedings. Hence, this petition.
xxx xx
ISSUE:
If the case was tried on the merits by the lower court without
Whether or not the proper action in this case is accionpubliciana
jurisdiction over the subject matter, the Regional Trial Court on
and not unlawful detainer as determined by the allegations in the
appeal shall not dismiss the case if it has original jurisdiction
complaint filed by petitioner.
thereof, but shall decide the case in accordance with the preceding
HELD: section, without prejudice to the admission of amended pleadings
and additional evidence in the interest of justice.

It ’s not a PROVREM 2015  46


EXPROPRIATION ONWARDS
Hence, Court of Appeals is correct in ordering the remand of the Hence, Court of Appeals is correct in ordering the remand of the
case to the Regional Trial Court for further proceedings. case to the Regional Trial Court for further proceedings.

SHORT DIGEST XVI.D SPOUSES MENDOZA V. CORONEL, G.R. NO. 156402, 13


FEBRUARY 2006 ROLLAN
FACTS:
Principles:
Petitioner VictorianoEncarnacion is the registered owner of Lot No.
2121-B-1 and Lot No. 2121-B-2. Said two lots originally form part of Facts: Respodent Maria Coronel is one of the co-owners of Lots 1
Lot No. 2121 owned by Rogelio Valiente who sold the same to and 2. Petitioners, spouses Mendoza, occupied said lots upon
Nicasio, who also sold to VictorianoMagpantay. The latter’s widow, tolerance of respondent and her co-owners without paying any
Anita N. Magpantay executed an Affidavit of Waiver on 1995 waving rent. When respondent demanded that petitioners vacate the
her right over the property in favor of her son-in-law, herein premises, the latter refused. Thus, respondent filed a case before
petitioner, VictorianoEncarnacion. the MTC for unlawful detainer against petitioners. The MTC ordered
petitioner to vacate. RTC ruled in favor of the petitioners. It held
Respondent Nieves Amigo allegedly entered the premises and took that the co-owners of the subject lot should have been impleaded as
possession of a portion of the property sometime in 1985 without indispensable parties. The CA reversed the decision of the RTC.
the permission of the then owner, VictorianoMagpantay.
Issue: Whether or not any co-owners may bring an action in
Petitioner, demanded from respondent to vacate the subject ejectment.
property. Respondent alleged that he has been in actual possession
and occupation of a portion of the subject land since 1968 and that Ruling: Yes.
the issuance of Free Patent and titles in the name of petitioner was
tainted with irregularities. Article 487 of the Civil Code provides any one of the co-owners may
bring an action in ejectment.
The Municipal Trial Court in Cities rendered judgment against
herein respondent ordering him to vacate the subject land. On As explained by Tolentino, a co-owner to bring an action for
appeal, the Regional Trial Courtdismissed the case on the ground ejectment, which covers all kinds of actions for the recovery of
that the Municipal Court had no jurisdiction over the case, thusthe possession, including forcible entry and unlawful detainer, without
Regional Trial Court acquired no appellate jurisdiction thereof. the necessity of joining all the other co-owners as co-plaintiffs,
because the suit is deemed to be instituted for the benefit of all.
Aggrieved, petitioner filed a petition for review under Rule 42 of the
Rules of Court before the Court of Appeals which remand the case to In this case, as co-owner respondent Coronel can validly bring an
the Regional Trial Court for further proceedings. Hence, this action for ejectment without impleading the other co-owners.
petition.
Other principle:
ISSUE:
Petitioners claim that Juanito Coronel, attorney-in-fact of Maria
Whether or not the proper action in this case is accionpubliciana Coronel, one of the co-owners of the lots in dispute is not
and not unlawful detainer as determined by the allegations in the authorized to file the ejectment suit. They insist that he should have
complaint filed by petitioner. obtained the authority and consent of all the co-owners. But since
Article 487 of the Civil Code authorizes any one of the co-owners to
HELD: bring an action for ejectment and the suit is deemed to be instituted
for the benefit of all, without the other co-owners actually giving
The material element that determines the proper action to be filed consent to the suit, it follows that an attorney-in-fact of the plaintiff
for the recovery of the possession of the property in this case is the co-owner does not need authority from all the co-owners. He needs
length of time of dispossession. authority only from the co-owner instituting the ejectment suit.

The respondent's actual entry on the land of the petitioner was in XVI.E PAJUYO V. COURT OF APPEALS, G.R. NO. 146364, 3 JUNE
1985 but it was only on March 2, 2001 or sixteen years after, when 2004 CANETE LUVERNIE
petitioner filed his ejectment case. The respondent should have filed
an accionpubliciana case which is under the jurisdiction of the RTC. Principle:
In no way should our ruling in this case be interpreted to condone
However, the RTC should have not dismissed the case. The Rules of squatting. The ruling on the issue of physical possession does not
Court provides that if the case was tried on the merits by the lower affect title to the property nor constitute a binding and conclusive
court without jurisdiction over the subject matter, the Regional Trial adjudication on the merits on the issue of ownership. The owner
Court on appeal shall not dismiss the case if it has original can still go to court to recover lawfully the property from the person
jurisdiction thereof, but shall decide the case in accordance with the who holds the property without legal title. Our ruling here does not
preceding section, without prejudice to the admission of amended diminish the power of government agencies, including local
pleadings and additional evidence in the interest of justice. governments, to condemn, abate, remove or demolish illegal or

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EXPROPRIATION ONWARDS
unauthorized structures in accordance with existing laws. On 21 June 2000, the Court of Appeals issued its decision reversing
the RTC decision. The dispositive portion of the decision reads:

FACTS: WHEREFORE, premises considered, the assailed Decision of the


June 1979, petitioner Colito T. Pajuyo ("Pajuyo") paid P400 to a court is REVERSED and SET ASIDE; and it is hereby declared that
certain Pedro Perez for the rights over a 250-square meter lot in the ejectment case filed against defendant-appellant is without
Barrio Payatas, Quezon City. Pajuyo then constructed a house made factual and legal basis.
of light materials on the lot. Pajuyo and his family lived in the house
from 1979 to 7 December 1985. Pajuyo filed a motion for reconsideration of the decision. Pajuyo
pointed out that the Court of Appeals should have dismissed
On 8 December 1985, Pajuyo and private respondent Eddie outright Guevarra’s petition for review because it was filed out of
Guevarra ("Guevarra") executed a Kasunduan or agreement. Pajuyo, time. Moreover, it was Guevarra’s counsel and not Guevarra who
as owner of the house, allowed Guevarra to live in the house for free signed the certification against forum-shopping.
provided Guevarra would maintain the cleanliness and orderliness
of the house. Guevarra promised that he would voluntarily vacate The CA found that Pajuyo and Guevarra are squatters. Pajuyo and
the premises on Pajuyo’s demand. Guevarra illegally occupied the contested lot which the government
owned.
In September 1994, Pajuyo informed Guevarra of his need of the
house and demanded that Guevarra vacate the house. Guevarra Perez, the person from whom Pajuyo acquired his rights, was also a
refused. squatter. Perez had no right or title over the lot because it is public
land. The assignment of rights between Perez and Pajuyo, and the
Pajuyo filed an ejectment case against Guevarra with the MTC of Kasunduan between Pajuyo and Guevarra, did not have any legal
Quezon City. effect. Pajuyo and Guevarra are in pari delicto or in equal fault. The
court will leave them where they are.
In his Answer, Guevarra claimed that Pajuyo had no valid title or
right of possession over the lot where the house stands because the ISSUE:
lot is within the 150 hectares set aside by Proclamation No. 137 for 1. WON the CA erred when it renounced its jurisdiction in an action
socialized housing. Guevarra pointed out that from December 1985 for ejectment case upon finding that Pajuyo and Guevarra are
to September 1994, Pajuyo did not show up or communicate with squatters
him. Guevarra insisted that neither he nor Pajuyo has valid title to
the lot. 2. Who is entitled to the possession of the premises?

The MTC ordered its decision in favor or Pajuyo ordering Guevarra HELD:
to vacate the property. 1. YES

Guevarra appealed to the RTC of Quezon City but the RTC affirmed Settled is the rule that the defendant’s claim of ownership of the
MTC’s decision. disputed property will not divest the inferior court of its
jurisdiction over the ejectment case. Even if the pleadings raise the
Guevarra received the RTC decision on 29 November 1996. issue of ownership, the court may pass on such issue to determine
Guevarra had only until 14 December 1996 to file his appeal with only the question of possession, especially if the ownership is
the Court of Appeals. Instead of filing his appeal with the Court of inseparably linked with the possession. The adjudication on the
Appeals, Guevarra filed with the Supreme Court a "Motion for issue of ownership is only provisional and will not bar an action
Extension of Time to File Appeal by Certiorari Based on Rule 42" between the same parties involving title to the land. This doctrine is
("motion for extension"). Guevarra theorized that his appeal raised a necessary consequence of the nature of the two summary actions
pure questions of law. The Receiving Clerk of the Supreme Court of ejectment, forcible entry and unlawful detainer, where the only
received the motion for extension on 13 December 1996 or one day issue for adjudication is the physical or material possession over the
before the right to appeal expired. real property.

On 3 January 1997, Guevarra filed his petition for review with the Ownership or the right to possess arising from ownership is not at
Supreme Court. issue in an action for recovery of possession. The parties cannot
present evidence to prove ownership or right to legal possession
On 8 January 1997, the First Division of the Supreme Court issued a except to prove the nature of the possession when necessary to
Resolution referring the motion for extension to the Court of resolve the issue of physical possession. The same is true when the
Appeals which has concurrent jurisdiction over the case. The case defendant asserts the absence of title over the property. The
presented no special and important matter for the Supreme Court absence of title over the contested lot is not a ground for the courts
to take cognizance of at the first instance. to withhold relief from the parties in an ejectment case.

On 28 January 1997, the Thirteenth Division of the Court of Appeals 2. Pajuyo is Entitled to Physical Possession of the Disputed Property
issued a Resolution granting the motion for extension conditioned
on the timeliness of the filing of the motion.

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EXPROPRIATION ONWARDS
The only question that the courts must resolve in ejectment Guevarra does not dispute Pajuyo’s prior possession of the lot and
proceedings is - who is entitled to the physical possession of the ownership of the house built on it. Guevarra expressly admitted the
premises, that is, to the possession de facto and not to the existence and due execution of the Kasunduan.
possession de jure. It does not even matter if a party’s title to the
property is questionable, or when both parties intruded into public Based on the Kasunduan, Pajuyo permitted Guevarra to reside in the
land and their applications to own the land have yet to be approved house and lot free of rent, but Guevarra was under obligation to
by the proper government agency. Regardless of the actual maintain the premises in good condition. Guevarra promised to
condition of the title to the property, the party in peaceable quiet vacate the premises on Pajuyo’s demand but Guevarra broke his
possession shall not be thrown out by a strong hand, violence or promise and refused to heed Pajuyo’s demand to vacate.
terror. Neither is the unlawful withholding of property allowed.
Courts will always uphold respect for prior possession. These facts make out a case for unlawful detainer. Unlawful detainer
Thus, a party who can prove prior possession can recover such involves the withholding by a person from another of the
possession even against the owner himself. Whatever may be the possession of real property to which the latter is entitled after the
character of his possession, if he has in his favor prior possession in expiration or termination of the former’s right to hold possession
time, he has the security that entitles him to remain on the property under a contract, express or implied.
until a person with a better right lawfully ejects him. To repeat, the
Where the plaintiff allows the defendant to use his property by
only issue that the court has to settle in an ejectment suit is the
tolerance without any contract, the defendant is necessarily bound
right to physical possession.
by an implied promise that he will vacate on demand, failing which,
Their entry into the disputed land was illegal. Both the plaintiff and an action for unlawful detainer will lie.60 The defendant’s refusal to
defendant entered the public land without the owner’s permission. comply with the demand makes his continued possession of the
Title to the land remained with the government because it had not property unlawful.61 The status of the defendant in such a case is
awarded to anyone ownership of the contested public land. Both the similar to that of a lessee or tenant whose term of lease has expired
plaintiff and the defendant were in effect squatting on government but whose occupancy continues by tolerance of the owner.
property. Yet, we upheld the courts’ jurisdiction to resolve the issue
This principle should apply with greater force in cases where a
of possession even if the plaintiff and the defendant in the
contract embodies the permission or tolerance to use the property.
ejectment case did not have any title over the contested land.
The Kasunduan expressly articulated Pajuyo’s forbearance. Pajuyo
Courts must not abdicate their jurisdiction to resolve the issue of did not require Guevarra to pay any rent but only to maintain the
physical possession because of the public need to preserve the basic house and lot in good condition. Guevarra expressly vowed in the
policy behind the summary actions of forcible entry and unlawful Kasunduan that he would vacate the property on demand.
detainer. The underlying philosophy behind ejectment suits is to Guevarra’s refusal to comply with Pajuyo’s demand to vacate made
prevent breach of the peace and criminal disorder and to compel Guevarra’s continued possession of the property unlawful.
the party out of possession to respect and resort to the law alone to
Ruling on Possession Does not Bind Title to the Land in Dispute
obtain what he claims is his. The party deprived of possession must
not take the law into his own hands. Ejectment proceedings are We are aware of our pronouncement in cases where we declared
summary in nature so the authorities can settle speedily actions to that "squatters and intruders who clandestinely enter into titled
recover possession because of the overriding need to quell social government property cannot, by such act, acquire any legal right to
disturbances. said property."80 We made this declaration because the person who
had title or who had the right to legal possession over the disputed
property was a party in the ejectment suit and that party instituted
The Principle of Pari Delicto is not Applicable to Ejectment Cases.
the case against squatters or usurpers.
Clearly, the application of the principle of pari delicto to a case of
ejectment between squatters is fraught with danger. To shut out In this case, the owner of the land, which is the government, is not a
relief to squatters on the ground of pari delicto would openly invite party to the ejectment case. This case is between squatters. Had the
mayhem and lawlessness. A squatter would oust another squatter government participated in this case, the courts could have evicted
from possession of the lot that the latter had illegally occupied, the contending squatters, Pajuyo and Guevarra.
emboldened by the knowledge that the courts would leave them
where they are. Nothing would then stand in the way of the ousted Since the party that has title or a better right over the property is
squatter from re-claiming his prior possession at all cost. not impleaded in this case, we cannot evict on our own the parties.
Possession is the only Issue for Resolution in an Ejectment Case Such a ruling would discourage squatters from seeking the aid of
The Court of Appeals’ determination of Pajuyo and Guevarra’s rights the courts in settling the issue of physical possession. Stripping both
under Proclamation No. 137 was premature. Pajuyo and Guevarra the plaintiff and the defendant of possession just because they are
were at most merely potential beneficiaries of the law. Courts squatters would have the same dangerous implications as the
should not preempt the decision of the administrative agency application of the principle of pari delicto. Squatters would then
mandated by law to determine the qualifications of applicants for rather settle the issue of physical possession among themselves
the acquisition of public lands. Instead, courts should expeditiously than seek relief from the courts if the plaintiff and defendant in the
resolve the issue of physical possession in ejectment cases to ejectment case would both stand to lose possession of the disputed
prevent disorder and breaches of peace.

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EXPROPRIATION ONWARDS
property. This would subvert the policy underlying actions for illegally occupied the contested lot which the government owned.
recovery of possession.

Since Pajuyo has in his favor priority in time in holding the property, ISSUE:
he is entitled to remain on the property until a person who has title Who is entitled to the possession of the premises?
or a better right lawfully ejects him. Guevarra is certainly not that HELD:
person. The ruling in this case, however, does not preclude Pajuyo
and Guevarra from introducing evidence and presenting arguments Unlawful detainer involves the withholding by a person from
before the proper administrative agency to establish any right to another of the possession of real property to which the latter is
which they may be entitled under the law.81 entitled after the expiration or termination of the former’s right to
hold possession under a contract, express or implied.
In no way should our ruling in this case be interpreted to condone Where the plaintiff allows the defendant to use his property by
squatting. The ruling on the issue of physical possession does not tolerance without any contract, the defendant is necessarily bound
affect title to the property nor constitute a binding and conclusive by an implied promise that he will vacate on demand, failing which,
adjudication on the merits on the issue of ownership. The owner an action for unlawful detainer will lie.60 The defendant’s refusal to
can still go to court to recover lawfully the property from the person comply with the demand makes his continued possession of the
who holds the property without legal title. Our ruling here does not property unlawful.61 The status of the defendant in such a case is
diminish the power of government agencies, including local similar to that of a lessee or tenant whose term of lease has expired
governments, to condemn, abate, remove or demolish illegal or but whose occupancy continues by tolerance of the owner.
unauthorized structures in accordance with existing laws.
This principle should apply with greater force in cases where a
Petition is granted. contract embodies the permission or tolerance to use the property.
The Kasunduan expressly articulated Pajuyo’s forbearance. Pajuyo
SHORT DIGEST: did not require Guevarra to pay any rent but only to maintain the
house and lot in good condition. Guevarra expressly vowed in the
Kasunduan that he would vacate the property on demand.
FACTS: Guevarra’s refusal to comply with Pajuyo’s demand to vacate made
June 1979, petitioner Colito T. Pajuyo ("Pajuyo") paid P400 to a Guevarra’s continued possession of the property unlawful.
certain Pedro Perez for the rights a lot in Barrio Payatas, Quezon
City. Pajuyo constructed a house made of light materials on the lot. In this case, the owner of the land, which is the government, is not a
Pajuyo and his family lived in the house from 1979 to 7 December party to the ejectment case. This case is between squatters. Had the
1985. government participated in this case, the courts could have evicted
the contending squatters, Pajuyo and Guevarra.

Decembe 8, 1985, Pajuyo and private respondent Eddie Guevarra Since the party that has title or a better right over the property is
("Guevarra") executed a Kasunduan or agreement. Pajuyo, as owner not impleaded in this case, we cannot evict on our own the parties.
of the house, allowed Guevarra to live in the house for free provided Such a ruling would discourage squatters from seeking the aid of
Guevarra would maintain the cleanliness and orderliness of the the courts in settling the issue of physical possession. Stripping both
house. Guevarra promised that he would voluntarily vacate the the plaintiff and the defendant of possession just because they are
premises on Pajuyo’s demand. squatters would have the same dangerous implications as the
application of the principle of pari delicto. Squatters would then
rather settle the issue of physical possession among themselves
In September 1994, Pajuyo informed Guevarra of his need of the than seek relief from the courts if the plaintiff and defendant in the
house and demanded that Guevarra vacate the house. Guevarra ejectment case would both stand to lose possession of the disputed
refused. property. This would subvert the policy underlying actions for
recovery of possession.
Pajuyo filed an ejectment case against Guevarra in the MTC. XVI.F Spouses Benitez v. Court of Appeals, G.R. No. 104828, 16
Guevarra claimed that Pajuyo had no valid title or right of January 1997 DY
possession over the lot where the house stands because the lot is
within the 150 hectares set aside by Proclamation No. 137 for
socialized housing.
Principle:

MTC decided in favor of Pajuyo. On appeal, RTC affirmed MTC’s REMEDIAL LAW; SPECIAL CIVIL ACTIONS; UNLAWFUL DETAINER;
decision. PRIOR PHYSICAL POSSESSION IS NOT REQUIRED. — Prior
possession is not always a condition sine qua non in ejectment. This
On Appeal with CA, the CA reversed MTC’s decision. The CA found is one of the distinctions between forcible entry and unlawful
that Pajuyo and Guevarra are squatters. Pajuyo and Guevarra detainer. In forcible entry, the plaintiff is deprived of physical
possession of his land or building by means of force, intimidation,

It ’s not a PROVREM 2015  50


EXPROPRIATION ONWARDS
threat, strategy or stealth; thus, he must allege and prove prior respondents. It is not unlawful detainer because petitioners were
possession. But in unlawful detainer, the defendant unlawfully not the private respondents’ tenants or vendee unlawfully
withholds possession after the expiration or termination of his right withholding possession thereof.
thereto under any contract, express or implied. In such a case, prior
physical possession is not required. Possession can also be
acquired, not only by material occupation, but also by the fact that a
thing is subject to the action of one's will or by the proper acts and Issue:
legal formalities established for acquiring such right. Possession of
Whether or not the possession of the portion of the
land can be acquired upon the execution of the deed of sale thereof
private respondents' land encroached by petitioners' house can be
by its vendor. Actual or physical occupation is not always necessary.
recovered through an action of ejectment, not accion publiciana?

Bar Question:
Ruling: YES
May possession of a lot encroached upon by a part of another's
• The jurisdictional requirements for ejectment, as borne
house be recovered in an action for ejectment?
out by the facts, are: after conducting a relocation survey, private
respondents discovered that a portion of their land was encroached
by petitioners' house; notices to vacate were sent to petitioners, the
last one being dated October 26, 1989; and private respondents
filed the ejectment suit against petitioners on January 18, 1990 or
Facts: within one (1) year from the last demand.

In 1986, petitioners Rafael and Avelina Benitez purchased • Private respondents' cause of action springs from Sec. 1,
a 303- square-meter parcel of land with improvement from the Rule 70 of the Revised Rules of Court.
Cavite Development Bank. Subsequently, private respondents
Renato and Elizabeth Macapagal bought a 361- square-meter lot • That petitioners occupied the land prior to private
covered by TCT No. 40155. On September 18, 1986, they filed a civil respondents' purchase thereof does not negate the latter's case for
case with the RTC of Pasig against petitioners for the recovery of ejectment.
possession of an encroached portion of the lot they purchased. The
parties were able to reach a compromise in which private • Prior possession is not always a condition sine qua non in
respondents sold the encroached portion to petitioners at ejectment.
P1,000.00/square meter.
o This is one of the distinctions between forcible entry and
unlawful detainer. In forcible entry, the plaintiff is deprived of
physical possession of his land or building by means of force,
On July 17, 1989, private respondents purchased still another intimidation, threat, strategy or stealth; thus, he must allege and
property, a 285.70 square-meter-lot adjacent to that of petitioners. prove prior possession. But in unlawful detainer, the defendant
After a relocation survey was conducted, private respondents unlawfully withholds possession after the expiration or termination
discovered that some 46.50 square meters of their property was of his right thereto under any contract, express or implied. In such a
occupied by petitioners' house. Despite verbal and written case, prior physical possession is not required.
demands, petitioners refused to vacate. A last notice to vacate was
sent to petitioners on October 26, 1989. • Possession can also be acquired, not only by material
occupation, but also by the fact that a thing is subject to the action
of one's will or by the proper acts and legal formalities established
for acquiring such right. Possession of land can be acquired upon
In 1990, private respondents filed with the MeTC of San Juan a civil the execution of the deed of sale thereof by its vendor. Actual or
case for ejectment against petitioners. The MeTC of San Juan physical occupation is not always necessary.
decided in favor of the former. The RTC affirmed the decision of the
lower court on appeal. Upon further appeal, the public respondent • In the case before us, considering that private respondents
found no merit in petitioners' plea and ruled the petition to be a are unlawfully deprived of possession of the encroached land and
mere rehash of the issues and arguments presented before the that the action for the recovery of possession thereof was made
lower courts. within the one- year reglementary period, ejectment is the proper
remedy. The MeTC of San Juan had jurisdiction. In addition, after
In a nutshell, petitioners insist that the MeTC had no jurisdiction voluntarily submitting themselves to its proceedings, petitioners
over the case at bar because its real nature isaccion publiciana or are estopped from assailing the jurisdiction of the MeTC. 13 This
recovery of possession, not unlawful detainer. It is not forcible entry Court will not allow petitioners to attack the jurisdiction of the trial
because private respondents did not have prior possession of the court after receiving a decision adverse to their position.
contested property as petitioners possessed it ahead of private

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EXPROPRIATION ONWARDS
XVI.G MALABANAN V. RURAL BANK OF CABUYAO, G.R. NO. Whether or not a judgment rendered in an ejectment case will bar
163495, 8 MAY 2009 CUEVAS an action between the same parties respecting title to the land or
building? WON it will be conclusive as to the facts therein found in a
Principle: case between the same parties upon a different cause of action
involving possession?
1. A judgment rendered in an ejectment case shall not bar an
action between the same parties respecting title to the HELD:
land or building nor shall it be conclusive as to the facts
therein found in a case between the same parties upon a NO.
different cause of action involving possession.
It has been laid to rest by heaps of cases iterating the principle that
2. If possession is by tolerance as has been alleged in the a judgment rendered in an ejectment case shall not bar an action
complaint such possession becomes illegal upon demand between the same parties respecting title to the land or building nor
to vacate, with the possessor refusing to comply with such shall it be conclusive as to the facts therein found in a case between
demand. the same parties upon a different cause of action involving
possession.
FACTS:
It bears emphasizing that in ejectment suits, the only issue for
Samuel Malabanan (petitioner) was indebted to the Rural Bank of resolution is the physical or material possession of the property
Cabuyao (Respondent) in the amount of P5M which was secured by involved, independent of any claim of ownership by any of the party
a Real Estate Mortgage (REM) over a parcel of land in Calamba, litigants. However, the issue of ownership may be provisionally
Laguna, with an area of 1,021 square meters, covered by Transfer ruled upon for the sole purpose of determining who is entitled to
Certificate of Title (TCT) No. 255916. However, when petitioner possession de facto. Therefore, the provisional determination of
failed to settle the loan, he executed a dacion en pago in favor of ownership in the ejectment case cannot be clothed with finality.
respondent. The transfer of the registration of property was
effected and issued to respondents. Unfortunately, petitioner Corollary, the incidental issue of whether a pending action for
refused to surrender possession thereof which prompted annulment would abate an ejectment suit must be resolved in the
respondent to file a complaint for unlawful detainer before the negative.
MTCC praying for the award of reasonable rental amounting to
P100,000.00; another P100,000.00 as exemplary damages, and A pending action involving ownership of the same property does
P300,000.00 as attorneys fees. not bar the filing or consideration of an ejectment suit, nor suspend
the proceedings. This is so because an ejectment case is simply
Petitioner, in his answer, denied having executed a dacion en pago, designed to summarily restore physical possession of a piece of land
and stated that he never appeared before the Notary Public, and or building to one who has been illegally or forcibly deprived
that its Executive Vice-President/General Manager, Renato Delfino, thereof, without prejudice to the settlement of the parties' opposing
who purportedly represented respondent, was no longer officially claims of juridical possession in appropriate proceedings.
connected with the latter since 1999. He also made a counterclaim
for damages. Prior to the filing of the ejectment case, however, The crux of the controversy centers on the propriety of the unlawful
petitioner had already filed an action for an Annulment of the detainer suit. In unlawful detainer, one unlawfully withholds
dacion en pago and reconveyance before Branch 35, RTC-Calamba. possession thereof after the expiration or termination of his right to
MTCC dismissed the complaint. The lower court noted that hold possession under any contract, express or implied. In such
respondent was not able to prove that petitioners continued case, the possession was originally lawful but became unlawful by
occupancy of the subject premises was by mere tolerance in order the expiration or termination of the right to possess; hence, the
to sustain a cause of action for unlawful detainer. On appeal, the issue of rightful possession is decisive for, in such action, the
RTC reversed the MTCC decision and ordered petitioner to vacate defendant is in actual possession and the plaintiffs cause of action is
the subject property and to pay respondent P100,000.00 for rentals the termination of the defendants right to continue in possession.
and P20,000.00 as attorneys fees.
In the case at bar, both the trial court and the appellate court lent
Petitioner elevated the case to the Court of Appeals by way of more credence to the validity of the dacion en pago and
Petition for Review with Urgent Prayer for Issuance of a Temporary respondents title. This determination, however, is regarded merely
Restraining Order and/or Writ of Preliminary Injunction. Petitioner as provisional. It is a settled doctrine that courts in ejectment cases
imputed error on the part of the trial court in not dismissing the may determine questions of ownership whenever necessary to
complaint for unlawful detainer on the ground of litispendencia. He decide the question of possession. In any case, we sustain the
also faulted the RTC for not simultaneously resolving the ejectment finding that the respondents have the better right to possess the
case and the annulment of dacion en pago. CA affirmed in toto the subject property.
decision of the RTC.
Well-established is the rule that if possession is by tolerance as has
ISSUE: been alleged in the complaint such possession becomes illegal upon
demand to vacate, with the possessor refusing to comply with such
demand.

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EXPROPRIATION ONWARDS
Going over the allegations in the complaint, it is clear that ruled upon for the sole purpose of determining who is entitled to
respondent’s action for unlawful detainer is based on petitioner’s possession de facto. Therefore, the provisional determination of
possession by mere tolerance. From the time the title to the ownership in the ejectment case cannot be clothed with finality.
property was transferred in the name of respondent, petitioners
possession was converted into one by mere tolerance of the owner. Corollary, the incidental issue of whether a pending action for
The forbearance ceased when respondent made a demand on annulment would abate an ejectment suit must be resolved in the
petitioner to vacate the lot. Thenceforth, petitioner’s occupancy had negative.
become unlawful.
A pending action involving ownership of the same property does
A person who occupies the land of another with the latter’s not bar the filing or consideration of an ejectment suit, nor suspend
tolerance or permission, without any contract between them, is the proceedings. This is so because an ejectment case is simply
necessarily bound by an implied promise that he will vacate upon designed to summarily restore physical possession of a piece of land
demand, failing which a summary action for ejectment is the proper or building to one who has been illegally or forcibly deprived
remedy against him. thereof, without prejudice to the settlement of the parties' opposing
claims of juridical possession in appropriate proceedings.
WHEREFORE, premises considered, the Petition is GRANTED IN
PART. The Decision dated 7 May 2004 of the Court of Appeals is The crux of the controversy centers on the propriety of the unlawful
AFFIRMED WITH MODIFICATION in that its affirmation of the detainer suit. In unlawful detainer, one unlawfully withholds
Regional Trial Courts award of reasonable rentals in favor of possession thereof after the expiration or termination of his right to
respondent is DELETED and SET ASIDE. hold possession under any contract, express or implied. In such
case, the possession was originally lawful but became unlawful by
Quick Digest: the expiration or termination of the right to possess; hence, the
issue of rightful possession is decisive for, in such action, the
Petitioner X was indebted to Respondent bank Y in the amount of defendant is in actual possession and the plaintiffs cause of action is
P5M which was secured by a Real Estate Mortgage (REM) over a the termination of the defendants right to continue in possession.
parcel of land. However, when X failed to settle the loan, he executed
a dacion en pago in favor of Y. The transfer of the registration of Well-established is the rule that if possession is by tolerance as has
property was effected and issued to X. Unfortunately, X refused to been alleged in the complaint such possession becomes illegal upon
surrender possession thereof which prompted respondent to file a demand to vacate, with the possessor refusing to comply with such
complaint for unlawful detainer before the MTCC . MTCC dismissed demand.
the complaint.MTCC dismissed the complaint. The lower court
noted that X was not able to prove that petitioners continued Going over the allegations in the complaint, it is clear that
occupancy of the subject premises was by mere tolerance in order respondent’s action for unlawful detainer is based on petitioner’s
to sustain a cause of action for unlawful detainer. On appeal, the possession by mere tolerance. From the time the title to the
RTC reversed the MTCC decision and ordered X to vacate the subject property was transferred in the name of respondent, petitioners
property and to pay Yrental and attorneys fees. CA affirmed the possession was converted into one by mere tolerance of the owner.
decision of the RTC. The forbearance ceased when respondent made a demand on
petitioner to vacate the lot. Thenceforth, petitioner’s occupancy had
Question. become unlawful.

Whether or not a judgment rendered in an ejectment case will bar A person who occupies the land of another with the latter’s
an action between the same parties respecting title to the land or tolerance or permission, without any contract between them, is
building? WON it will be conclusive as to the facts therein found in a necessarily bound by an implied promise that he will vacate upon
case between the same parties upon a different cause of action demand, failing which a summary action for ejectment is the proper
involving possession? remedy against him.

Answer:

NO.

A judgment rendered in an ejectment case shall not bar an action


between the same parties respecting title to the land or building nor
shall it be conclusive as to the facts therein found in a case between
the same parties upon a different cause of action involving
possession.

It bears emphasizing that in ejectment suits, the only issue for


resolution is the physical or material possession of the property
involved, independent of any claim of ownership by any of the party
litigants. However, the issue of ownership may be provisionally

It ’s not a PROVREM 2015  53