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Present :
PANGANIBAN, J., Chairman,
- v e r s u s - CORONA,
Respondent. Promulgated :
September 30, 2005
Before us is a petition for review under Rule 45 of the Rules of Court seeking to reverse and set
aside the decision[1] of the Court of Appeals which affirmed the judgment [2] of Branch 93,
Regional Trial Court (RTC), Quezon City.
The facts follow.
Petitioner Salvacion Ladanga and respondent Bernardo Aseneta were first cousins. They
were both reared and educated by their aunt Clemencia Aseneta. Respondent Bernardo was
adopted by Clemencia on June 30, 1961 in a special proceeding [3] before the then Juvenile and
Domestic Relations Court (JDRC) of Manila.
In her lifetime, Clemencia Aseneta owned several parcels of land in Manila, Quezon City and
Albay from which she derived rentals. Among these properties was the disputed parcel of land
located in Diliman, Quezon City.

Respondent Bernardo alleged that sometime in 1974, Clemencia complained that she was not
receiving the rentals from petitioner spouses to whom she had entrusted the administration of
her properties. Bernardo investigated the matter. He found out that Clemencia purportedly sold
nine parcels of land[4] to petitioner spouses on April 6, 1974. Among the properties sold was the
land in Diliman, Quezon City covered by TCT No. 5813 (Diliman property). The deed of
sale[5] showed that the land had been sold by Clemencia to petitioner Salvacion for
only P20,000 although the market value stated in the tax declaration was P134,130. TCT No.
197624 was then issued by the Register of Deeds of Quezon City to petitioner Salvacion
Serrano Ladanga. The consideration for the eight other properties sold to petitioner spouses on
the same day amounted to P60,200 which was supposedly paid in cash to Clemencia.
Respondent Bernardo also found out that a parcel of land in Cubao, Quezon City and covered
by TCT No. 177619 (Cubao property) had been sold by Clemencia to petitioner Salvacion on
November 8, 1974. The lot was priced at P12,000[6] although the market value stated in the tax
declaration was P42,000. TCT No. 204090 was correspondingly issued in the name of
petitioner Salvacion Ladanga for this property.
Respondent Bernardo confronted Clemencia about the incredulous sales to petitioners.
However, the latter denied selling the properties to and receiving payment from them. This
prompted respondent to file guardianship proceedings[7] for Clemencia before the then JDRC of
Quezon City.
In an order[8] dated April 17, 1975, the JDRC declared Clemencia Aseneta, a 76-year-old
spinster, an incompetent and an easy victim of deceit and exploitation. It further directed the
issuance of Letters of Guardianship[9] to respondent Bernardo for the person and properties of
Respondent Bernardo, as guardian of Clemencia, then filed in various courts actions for
reconveyance and accounting of rentals against petitioner spouses for the ten sales. For the
Diliman and Cubao properties, the action was brought before Branch 93, RTC Quezon City.[10]

In their answer[11], petitioner spouses alleged that Clemencia was disgusted with
respondent Bernardo who was purportedly cheating her of the rentals from her properties. She
therefore appointed petitioner Salvacions husband, Dr. Agustin Ladanga, as administrator in
1969 for the properties in Albay, and in 1972 for the properties in Manila and Quezon City.
Petitioner Agustin paid the income and realty taxes on the properties. He also paid for the
necessary repairs on the leased properties and all other fees in behalf of Clemencia. According
to petitioner spouses, Clemencia sold her properties to them because of her bitterness towards
respondent Bernardo and also out of gratitude to them for taking care of her. They further
alleged that a certain Atty. Arambulo prepared all the deeds of sale and that they paid
Clemencia in the presence of the lawyers who notarized the documents.
When Clemencia died[12] during the pendency of the proceedings in the trial court,
respondent Bernardo substituted her in the action as legal heir.[13]
At the hearing, respondent Bernardo presented Atty. Dominador Arambulo who
notarized the deeds of sale executed on April 6, 1974 and the deposition of Atty. Efren
Barangan who notarized the deed of sale executed on November 8, 1974. Both lawyers declared
that the deeds of sale were already prepared when they notarized them in their respective
offices. They also denied witnessing the actual payment allegedly made by petitioner spouses to
After a prolonged trial lasting 20 years, the court a quo rendered judgment declaring
that no contract of sale was perfected either for the Diliman or for the Cubao property.
According to the trial court, there was no clear agreement between the parties on the subject
matter and consideration considering that while Miss (Clemencia) Aseneta appear(ed) to have
signed the subject documents, there were strong indications that she was not aware of the
import of the documents that she had signed. The trial court also observed that the purported
considerations of the properties sold by Clemencia to petitioner spouses were grossly
disproportionate to their market values as indicated in the tax declarations. The dispositive
portion read:

WHEREFORE, premises considered by preponderance of evidence, the Court finds in

favor of the plaintiff and against the defendants, and hereby orders as follows:

For defendants spouses Ladanga to reconvey the titles and possession to the
property now covered (by) TCT Nos. 197624 and 294090 to the plaintiffs for and in
behalf of Miss Clemencia Aseneta;


For the Register of Deeds of Quezon City to cancel TCT Nos. 197624 and 204090
and to issue new transfer certificates of title in lieu of those cancelled, upon payment
of the required fees by the plaintiff, in the name of Miss Clemencia Aseneta;


For the defendants spouses Ladanga to render within fifteen (15) days an
accounting of rentals received from the properties covered by TCT No. 197624 from
April, 1974 up to the present and so with the property under TCT No. 204090 from
November, 1974 up to the present and to remit said rentals to the plaintiff minus any
amount paid by the defendants Ladanga as realty taxes for the period mentioned;


For defendants Ladanga to pay plaintiff P10,000.00 as reasonable attorneys fees;



Cost of suit.

In the meantime, the parties entered into a compromise agreement on the Cubao
property and, after securing court approval, sold it to a third party in 1987.
During the pendency of the appeal, respondent Bernardo filed a motion to cite
petitioners in contempt after they sold the Diliman property to a certain Bernardo Hizon on
July 6, 1996 in spite of the annotation of lis pendens at the back of the title. Respondent
insisted that the sale amounted to a fraudulent deception, a defiance of court authority and
obstruction of justice because the property was in custodia legis and could not be disposed of
without the necessary court approval.
The motion was denied by the Court of Appeals which held that the property was not
in custodia legis. It, however, observed that Bernardo Hizon, being a transferee pendente lite,
took the property subject to the outcome of the appeal. The appellate court thereafter affirmed
the trial courts judgment with respect to the remaining Diliman property.[15]
Hence, this petition for review centered on the following issues:
(1) whether or not there was a perfected contract [of sale of the Diliman property];

(2) whether or not petitioners paid the purchase price mentioned in the contract; and
(3) whether the price was grossly disproportionate to the market value of the land in

The issues raised by petitioners are purely factual. The Court, not being a trier of facts,
does not normally re-examine the evidence submitted by the contending parties during the
trial of a case. Findings of fact of the Court of Appeals, affirming those of the trial court, are
final and conclusive.[17] The jurisdiction of the Court in a petition for review on certiorari is
limited to reviewing only errors of law, not of fact, unless it is shown, inter alia, that: (1) the
conclusion is grounded on speculations, surmises or conjectures; (2) the inference is manifestly
mistaken, absurd and impossible; (3) there is grave abuse of discretion; (4) the judgment is
based on misapprehension of facts; (5) the findings of fact are conflicting and (6) the Court of
Appeals went beyond the issues of the case and its findings are contrary to the admissions of
both parties.[18]
We decline to review, much more reverse, the trial and appellate courts findings.
The facts of this case are the same as those of Ladanga v. Court of Appeals (L-55999)

promulgated on August 24, 1984. In that case, we voided the sale between Clemencia and

petitioner Salvacion of a Manila property included in the nine parcels of land purportedly sold
on April 6, 1974.
With respect to the seven remaining parcels of land located in Albay and ostensibly sold
on the same day, the Court of Appeals ruled in the same manner and nullified the various
sales.[20]In its decision, the appellate court held:

Plaintiffs [respondent Bernardos] theory that L-55999 is now the law of the case
is never doubted by this Court.
And because all lower Courts should take their bearings from the Supreme
Court, this Court has no other choice but to treat L-55999 as the law of this case, the
properties involved being same properties included in the deed of sale executed in one
single day before the same notary public using identical witnesses, same parties and

same facts. So far there is no showing that aforesaid ruling has been reversed and this
Court has to meekly follow the light emanating therefrom in order not to be lost.

Stare decisis et non quieta movere. Let the decision stand and disturb not what is
already settled. The doctrine of stare decisis is a salutary and necessary rule. When a court
lays down a principle of law applicable to a certain state of facts, it must adhere to such
principle and apply it to all future cases in which the facts sued upon are substantially the
same.[21] Once a case is decided one way, then another case involving exactly the same point at
issue should be decided the same way. [22] It proceeds from the principle of justice that, absent
any powerful countervailing considerations, like cases ought to be decided alike.[23]
The ten cases for reconveyance brought by respondent Bernardo in various courts
having jurisdiction over the real properties sold on April 6, 1974 and November 8, 1974 were
similar, except for the descriptions of the properties. Only one has remained unresolved. The
rest have either been settled or the contracts of sale declared void by the courts for
insufficiency of consideration. Thus, in Ladanga v. Court of Appeals:[24]
The questions ventilated by the Ladangas in their briefs and in their comment of
April 3, 1984 may be reduced to the issue of the validity of the sale which the vendor
Clemencia herself assailed in her testimony on August 16 and December 3, 1976 when
she was eighty years old. Her testimony and that of the notary leave no doubt that the
price xxx was never paid.
A contract of sale is void and produces no effect whatsoever where the price,
which appears therein as paid, has in fact never been paid by the purchaser to the
Such a sale is inexistent and cannot be considered consummated.
It was not shown that Clemencia intended to donate the xxx property to the
Ladangas. Her testimony and the notarys testimony destroyed any presumption that the
sale was fair and regular and for a true consideration.
xxx. [T]he Ladangas abused Clemencias confidence and defrauded her of
properties with a market value of P393,559.25 when she was already 78 years old.
(citations omitted)
Hence, for the sake of certainty and the stability of case law, the conclusions reached in
that earlier case should be followed here.

As to the issue of contempt, suffice it to say that the Court of Appeals was correct. A
notice of lis pendens is an announcement to the whole world that a particular real property is
in litigation and serves as a warning that one who acquires an interest over said property does
so at his own risk[25], or that he gambles on the result of the litigation. The property subject of
litigation is not by that fact alone in custodia legis. It is only when property is lawfully taken by
virtue of legal process that it becomes in custodia legis, and not otherwise.
Considering that the disputed property was not in the custody of the court, petitioner spouses
cannot be held liable for contempt when they sold it to a third person. The transferee Bernardo
Hizon, however, being presumed by law to be aware of the ongoing litigation over the property,
is bound by this decision and shall transfer the Diliman property back to the estate of
Clemencia Aseneta, with financial recourse to petitioner spouses.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of
Costs against petitioners.


Associate Justice

W E C O N C U R:
Associate Justice


Associate Justice Associate Justice

Associate Justice

I attest that the conclusions in the above decision were reached in consultation before
the case was assigned to the writer of the opinion of the Courts Division.

Associate Justice
Chairman, Third Division

Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairmans
Attestation, it is hereby certified that the conclusions in the above decision were reached in
consultation before the case was assigned to the writer of the opinion of the Court.


Chief Justice


Penned by Associate Justice Godardo A. Jacinto, concurred in by Associate Justices Bernardo P. Abesamis and
Alicia L. Santos of the Eleventh Division; Rollo, pp. 18-28.
Penned by Judge Elpidio M. Catungal, Sr.; Id, pp. 29-35.
SP No. 03152, Records (Exhibits of Plaintiff), Exhibit B.
Out of the 9 properties, 7 were located in Albay, 1 in Manila and 1 in Quezon City, the last being the property
subject of this petition.
Records, Vol. 1, pp. 8-11.
Id., pp. 12-15.
SP No. QC- 00908.
Records (Exhibits of Plaintiff), Exhibits C.
Records, Vol. 1, p.38.


Id., pp. 1-7.

Id., pp. 24-27.
Certificate of Death dated May 21, 1977; Records, Vol. 1, p.81.
Id., p. 85.
See note 2.
See note 1.
Rollo, p. 8.
Larena v. Mapil, G.R. No. 146341, 7 August 2003, 408 SCRA 484.
Chan v. Maceda, Jr., 450 Phil. 416 (2003).
Penned by Associate Justice Ramon C. Aquino, 216 Phil. 332 (1984).
Penned by Associate Justice Oscar M. Herrera, concurred in by Associate Justices Santiago M. Kapunan (a
former Associate Justice of this Court) and Jainal D. Rasul of the Third Division; CA-G.R. No. CV No.
25252, June 29, 1992; in the decision, the appellate court affirmed the dismissal of the complaint with
respect to 6 parcels of land because of an amicable settlement between the parties. The seventh lot was,
however, ordered to be reconveyed to the heirs of Clemencia Aseneta. The court stated that if not for the
amicable settlement, the sale of the other 6 properties would have also been declared void and ordered
reconveyed to the heirs of Clemencia.
Pinlac v. Court of Appeals, G.R. No. 91486, 10 September 2003, 410 SCRA 419.
Tay Chun Suy v. Court of Appeals, G.R. No. 93640, 7 January 1994, 229 SCRA 151.
Villena v. Chavez, G.R. No. 148126, 10 November 2003, 415 SCRA 33.
Supra at note 19.
Los Baos Rural Bank, Inc. v. Africa, 433 Phil. 903 (2002).
Republic of the Philippines


G.R. No. 177190


- versus HON. ERNESTO P. PAGAYATAN, in his capacity as

Presiding Judge of the Regional Trial Court, Branch 46,
San Jose, Occidental Mindoro; and JOSEFINA S.
LUBRICA, in her capacity as Assignee of Federico

CORONA, C.J., Chairperson, VELASCO,

February 23, 2011

The Case

This Petition for Review on Certiorari under Rule 45 seeks to annul the August 17, 2006 Decision [1] and March 27,
2007 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 93206, which affirmed the Order dated March
4, 2005[3] of the Regional Trial Court (RTC), Branch 46 in San Jose, Occidental Mindoro, in Agrarian Case No. 1390
for the fixing of just compensation, entitled Land Bank of the Philippines v. Josefina S. Lubrica, in her capacity as
assignee of Federico Suntay, and Hon. Teodoro A. Cidro, as Provincial Agrarian Reform Adjudicator of San Jose,
Occidental Mindoro. The RTC Order affirmed the Decision dated March 21, 2003 [4] of the Provincial Agrarian
Reform Adjudicator (PARAD) of San Jose, Occidental Mindoro in Case No. DCN-0405-0022-02, entitled Josefina
S. Lubrica, in her capacity as Assignee of Federico Suntay v. Hon. Hernani A. Braganza, in his capacity as
Secretary of the Department of Agrarian Reform, and Land Bank of the Philippines.
The Facts
On October 21, 1972, the 3,682.0286-hectare Suntay Estate, consisting of irrigated/unirrigated rice and corn lands
covered by Transfer Certificate of Title No. T-31(1326) located in the Barangays of Gen. Emilio Aguinaldo, Sta.
Lucia, and San Nicolas in Sablayan, Occidental Mindoro, was subjected to the operation of Presidential Decree No.
27, under its Operation Land Transfer (OLT), with the farmer-beneficiaries declared as owners of the property.
However, a 300-hectare portion of the land was subjected to the Comprehensive Agrarian Reform Program (CARP)
instead of the OLT. Thus, Certificates of Landownership Award were issued to the farmer-beneficiaries in possession
of the land.[5] Such application of the CARP to the 300-hectare land was later the subject of a case before the
Department of Agrarian Reform Adjudicatory Board (DARAB), which ruled that the subject land should have been
the subject of OLT instead of CARP. The landowner admitted before the PARAD that said case was pending with
this Court and docketed as G.R. No. 108920, entitled Federico Suntay v. Court of Appeals.
Meanwhile, the owner of the land remained unpaid for the property. Thus, Josefina S. Lubrica, in her capacity as
assignee of the owner of the property, Federico Suntay, filed a Petition for Summary Determination of Just
Compensation with the PARAD, docketed as Case No. DCN-0405-0022-2002. Thereafter, the PARAD issued its
Decision dated March 21, 2003, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered:

Fixing the preliminary just compensation for 431.1407 hectare property at P166,150.00
per hectare or a total of P71,634,027.30.


Directing the Land Bank of the Philippines to immediately pay the aforestated amount
to the Petitioner;


Directing the DAR to immediately comply with all applicable requirements so that the
subject property may be formally distributed and turned over to the farmer beneficiaries
thereof, in accordance with the Decision of the DARAB Central in DARAB Case No.

No cost.

Petitioner Land Bank of the Philippines (LBP) filed a Motion for Reconsideration dated April 10, 2003 of
the above decision, but the PARAD denied the motion in an Order dated December 15, 2003.[7]
The LBP then filed a Petition dated March 4, 2004 with the RTC docketed as Agrarian Case No. 1390,
appealing the PARAD Decision. In the Petition, the LBP argued that because G.R. No. 108920 was pending with
this Court in relation to the 300-hectare land subject of the instant case, the Petition for Summary Determination of
Just Compensation filed before the PARAD was premature. The LBP argued further that the PARAD could only
make an award of up to PhP 5 million only. The PARAD, therefore, could not award an amount of PhP
71,634,027.30. The LBP also contended that it could not satisfy the demand for payment of Lubrica, considering
that the documents necessary for it to undertake a preliminary valuation of the property were still with the
Department of Agrarian Reform (DAR).
By way of answer, Lubrica filed a Motion to Deposit the Preliminary Valuation under Section 16(e) of
Republic Act No. (RA) 6657 and Ad Cautelam Answer dated June 18, 2004.[8] In the said motion, Lubrica claimed
that since the DAR already took possession of the disputed property, the LBP is duty-bound to deposit the
compensation determined by the PARAD in a bank accessible to the landowner.
In an Order dated March 4, 2005, the RTC resolved Lubricas motion, as follows:
The foregoing considered and as prayed for by the respondent-movant The Land
Compensation Department, Land Bank of the Philipines, is hereby directed to deposit the
preliminary compensation as determined by the PARAD, in case and bonds in the total amount of
Php 71,634,027.30, with the Land Bank of the Philippines, Manila, within seven (7) days from
receipt of this order, and to notify this Court of compliance within such period.[9]

Thus, the LBP filed an Omnibus Motion dated March 17, 2005 praying for the reconsideration of the above
order, the admission of an amended petition impleading the DAR, and the issuance of summons to the new
defendants. In the Omnibus Motion, the LBP contended:
In this AMENDED PETITION, Land Bank impleaded the DAR as respondent because DAR is the
lead agency of the government in the implementation of the agrarian reform. It is the one which is
responsible in identifying the lands to be covered by agrarian reform program, placing/identifying
the farmer beneficiaries, parcellary mapping of the land, and determining the land value covered
by PD 27/EO 228. The documents DAR prepares is placed in a folder called claim folder which it
forwards to Land Bank for processing and payment.
21. At present there is no claim folder prepared and submitted by DAR to Land Bank, and
therefore Land Bank has no claim folder to process and no basis to pay the landowner.[10]

In an Order dated December 8, 2005, [11] the RTC denied the Omnibus Motion finding no reversible error in
its Order dated March 4, 2005 and denying the motion to amend the petition for being unnecessary towards land
Thus, the LBP appealed the RTC Orders dated March 4, 2005 and December 8, 2005 to the CA through a
Petition for Certiorari dated February 13, 2006. The LBP argued that without the claim folder from the DAR, it
could not preliminarily determine the valuation of the covered lands and process the compensation claims.
Moreover, it said that the amount to be deposited under Sec. 16 of RA 6657, or the Agrarian Reform Law of 1988, is
the offered purchase price of DAR for the land contained in the notice of acquisition and not the price determined in
an administrative proceeding before the PARAD.
Afterwards, on August 17, 2006, the CA issued the assailed decision, the dispositive portion of which
WHEREFORE, premises considered, the petition is hereby DENIED DUE COURSE,
and subsequently DISMISSED for lack of merit.
The LBP moved for reconsideration of the CA Decision, but the CA did not reconsider it, as stated in its
Resolution dated March 27, 2007.
Hence, the LBP filed this petition.
The Issue
What is the proper amount to be deposited under Section 16 of Republic Act No. 6657? Is it the
PARAD/DARAB determined valuation or the preliminary valuation as determined by the
The Ruling of the Court
The petition is meritorious.
Private respondent Lubrica argues that, under the doctrines of res judicata and stare decisis, the instant case
must be dismissed in light of the decision of this Court in Lubrica v. Land Bank of the Philippines,[14] the dispositive
portion of which reads:
WHEREFORE, premises considered, the petition is GRANTED. The assailed Amended
Decision dated October 27, 2005 of the Court of Appeals in CA-G.R. SP No. 77530 is
REVERSED and SET ASIDE. The Decision dated May 26, 2004 of the Court of Appeals
affirming (a) the March 31, 2003 Order of the Special Agrarian Court ordering the
respondent Land Bank of the Philippines to deposit the just compensation provisionally
determined by the PARAD; (b) the May 26, 2003 Resolution denying respondents Motion for
Reconsideration; and (c) the May 27, 2003 Order directing Teresita V. Tengco, respondents Land

Compensation Department Manager to comply with the March 31, 2003 Order, is REINSTATED.
The Regional Trial Court of San Jose, Occidental Mindoro, Branch 46, acting as Special Agrarian
Court is ORDERED to proceed with dispatch in the trial of Agrarian Case Nos. R-1339 and R1340, and to compute the final valuation of the subject properties based on the aforementioned
SO ORDERED. (Emphasis supplied.)

The principles of res judicata and stare decisis do not apply to the case at bar.
In Lanuza v. Court of Appeals,[15] the Court discussed the principle of res judicata, to wit:
Res judicata means a matter adjudged, a thing judicially acted upon or decided; a thing or
matter settled by judgment. The doctrine of res judicata provides that a final judgment, on the
merits rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and
their privies and constitutes an absolute bar to subsequent actions involving the same claim,
demand, or cause of action. The elements of res judicata are (a) identity of parties or at least such
as representing the same interest in both actions; (b) identity of rights asserted and relief prayed
for, the relief being founded on the same facts; and (c) the identity in the two (2) particulars is
such that any judgment which may be rendered in the other action will, regardless of which party
is successful, amount to res judicata in the action under consideration. (Emphasis supplied.)
In Lubrica, the issue was as follows:
Petitioners insist that the determination of just compensation should be based on the
value of the expropriated properties at the time of payment. Respondent LBP, on the other hand,
claims that the value of the realties should be computed as of October 21, 1972 when P.D. No. 27
took effect.[16]

While the Court directed that the valuation made by the PARAD be the amount to be deposited in favor of
the landowner, it was done only because the PARADs valuation was based on the time the payment was made.
The issue before Us is whether the RTC acted properly in ordering the deposit or payment to the landowner
of the preliminary valuation of the land made by the PARAD. This is considering that Sec. 16(e) of RA 6657 clearly
requires the initial valuation made by the DAR and LBP be deposited or paid to the landowner before taking
possession of the latters property, not the preliminary valuation made by the PARAD.
Evidently, the second element of res judicata is not present. The relief prayed for in Lubrica is that the
amount for deposit in favor of the landowner be determined on the basis of the time of payment and not of the time
of taking. But here, the prayer of the LBP is for the deposit of the valuation of the LBP and DAR and not that of the
PARAD. These are two distinct and separate issues. Res judicata, therefore, cannot apply.
We cannot apply the principle of stare decisis to the instant case, too. The Court explained the principle
in Ting v. Velez-Ting:[17]

The principle of stare decisis enjoins adherence by lower courts to doctrinal rules
established by this Court in its final decisions. It is based on the principle that once a question of
law has been examined and decided, it should be deemed settled and closed to further
argument. Basically, it is a bar to any attempt to relitigate the same issues, necessary for two
simple reasons: economy and stability. In our jurisdiction, the principle is entrenched in Article 8
of the Civil Code. (Emphasis supplied.)

To reiterate, Lubrica and the instant case have different issues. Hence, stare decisis is also inapplicable
The LBP posits that under Sec. 16(e) of RA 6657, and as espoused in Land Bank of the Philippines v. Court
of Appeals,[18] it is the purchase price offered by the DAR in its notice of acquisition of the land that must be
deposited in an accessible bank in the name of the landowner before taking possession of the land, not the valuation
of the PARAD.
The Court agrees with the LBP. The RTC erred when it ruled:
Under Section 16 (e) the payment of the provisional compensation determined by the
PARAD in the summary administrative proceedings under Section 16 (d) should precede the
taking of the land. In the present case, the taking of the property even preceded the mere
determination of a provisional compensation by more than 30 years. [19]

Sec. 16 of RA 6657 contains the procedure for the acquisition of private lands, viz:
SEC. 16. Procedure for Acquisition of Private Lands.For purposes of acquisition of
private lands, the following procedures shall be followed:
(a) After having identified the land, the landowners and the beneficiaries, the DAR shall
send its notice to acquire the land to the owners thereof, by personal delivery or registered mail,
and post the same in a conspicuous place in the municipal building and barangay hall of the place
where the property is located. Said notice shall contain the offer of the DAR to pay a
corresponding value in accordance with the valuation set forth in Sections 17, 18, and other
pertinent provisions hereof.
(b) Within thirty (30) days from the date of receipt of written notice by personal delivery
or registered mail, the landowner, his administrator or representative shall inform the DAR of his
acceptance or rejection of the offer.
(c) If the landowner accepts the offer of the DAR, the LBP shall pay the landowner the
purchase price of the land within thirty (30) days after he executes and delivers a deed of transfer
in favor of the Government and surrenders the Certificate of Title and other muniments of title.
(d) In case of rejection or failure to reply, the DAR shall conduct summary administrative
proceedings to determine the compensation of the land by requiring the landowner, the LBP and
other interested parties to submit evidence as to the just compensation for the land, within fifteen
(15) days from the receipt of the notice. After the expiration of the above period, the matter is

deemed submitted for decision. The DAR shall decide the case within thirty (30) days after it is
submitted for decision.
(e) Upon receipt by the landowner of the corresponding payment or in case of
rejection or no response from the landowner, upon the deposit with an accessible bank
designated by the DAR of the compensation in cash or LBP bonds in accordance with this
Act, the DAR shall take immediate possession of the land and shall request the proper
Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic
of the Philippines. The DAR shall thereafter proceed with the redistribution of the land to
the qualified beneficiaries.
(f) Any party who disagrees with the decision may bring the matter to the court of
proper jurisdiction for final determination of just compensation. (Emphasis supplied.)

Conspicuously, there is no mention of the PARAD in the foregoing Sec. 16(e) when it speaks of the deposit
with an accessible bank designated by the DAR of the compensation in cash or LBP bonds in accordance with this
Act. Moreover, it is only after the DAR has made its final determination of the initial valuation of the land that the
landowner may resort to the judicial determination of the just compensation for the land. Clearly, therefore, it is the
initial valuation made by the DAR and LBP that is contained in the letter-offer to the landowner under Sec. 16(a),
said valuation of which must be deposited and released to the landowner prior to taking possession of the property.
This too was the Courts interpretation of the above provision in Land Bank of the Philippines v. Heir of
Trinidad S. Vda. De Arieta:[20]
It was thus erroneous for the CA to conclude that the provisional compensation required
to be deposited as provided in Section 16 (e) is the sum determined by the
DARAB/PARAD/RARAD in a summary administrative proceeding merely because the word
deposit appeared for the first time in the sub-paragraph immediately succeeding that subparagraph where the administrative proceeding is mentioned (sub-paragraph d). On the contrary,
sub-paragraph (e) should be related to sub-paragraphs (a), (b) and (c) considering that the taking
of possession by the State of the private agricultural land placed under the CARP is the next step
after the DAR/LBP has complied with notice requirements which include the offer of just
compensation based on the initial valuation by LBP. To construe sub-paragraph (e) as the appellate
court did would hamper the land redistribution process because the government still has to wait for
the termination of the summary administrative proceeding before it can take possession of the
lands. Contrary to the CAs view, the deposit of provisional compensation is made even before the
summary administrative proceeding commences, or at least simultaneously with it, once the
landowner rejects the initial valuation (offer) by the LBP. Such deposit results from his rejection of
the DAR offer (based on the LBPs initial valuation). Both the conduct of summary administrative
proceeding and deposit of provisional compensation follow as a consequence of the landowners
rejection under both the compulsory acquisition and VOS. This explains why the words rejection
or failure to reply and rejection or no response from the landowner are found in sub-paragraphs (d)
and (e). Such rejection/no response from the landowner could not possibly refer to the award of
just compensation in the summary administrative proceeding considering that the succeeding subparagraph (f) states that the landowner who disagrees with the same is granted the right to petition
in court for final determination of just compensation. As it is, the CAs interpretation would have
loosely interchanged the terms rejected the offer and disagrees with the decision, which is far from
what the entire provision plainly conveys.
Under the law, the LBP is charged with the initial responsibility of determining the value
of lands placed under land reform and the compensation to be paid for their taking. Once an
expropriation proceeding or the acquisition of private agricultural lands is commenced by the

DAR, the indispensable role of LBP begins. EO No. 405, issued on June 14, 1990, provides that
the DAR is required to make use of the determination of the land valuation and compensation by
the LBP as the latter is primarily responsible for the determination of the land valuation and
compensation. In fact, the LBP can disagree with the decision of the DAR in the determination of
just compensation, and bring the matter to the RTC designated as [Special Agrarian Court] for
final determination of just compensation.
The amount of offer which the DAR gives to the landowner as compensation for his
land, as mentioned in Section 16 (b) and (c), is based on the initial valuation by the LBP. This
then is the amount which may be accepted or rejected by the landowner under the procedure
established in Section 16. Perforce, such initial valuation by the LBP also becomes the basis
of the deposit of provisional compensation pending final determination of just compensation,
in accordance with sub-paragraph (e). (Emphasis supplied.)

It is clear from Sec. 16 of RA 6657 that it is the initial valuation made by the DAR and the LBP that must
be released to the landowner in order for DAR to take possession of the property. Otherwise stated, Sec. 16 of RA
6657 does not authorize the release of the PARADs determination of just compensation for the land which has not
yet become final and executory.
Moreover, it bears pointing out that, pursuant to DAR Administrative Order No. 02, Series of 1996,
entitled Revised Rules and Procedures Governing the Acquisition of Agricultural Lands subject of Voluntary Offer to
Sell and Compulsory Acquisition pursuant to Republic Act No. 6657, the DAR Municipal Office (DARMO) first
prepares a claim folder (CF) containing the necessary documents for the valuation of the land. The DARMO then
forwards this claim folder to the DAR Provincial Office (DARPO) which, in turn, has the following duties: Receives
claim folder and forwards to the DAR-LBP Pre-Processing Unit (PPU) for review/evaluation of documents. Gathers
lacking documents, if any.[21] The DAR-LBP PPU then forwards the CF to the LBP-Land Valuation and Landowners
Compensation Office (LVLCO) which receives and evaluates the CF for completeness, consistency and document
sufficiency. Gathers additional valuation documents.[22] Thereafter, the LBP-LVLCO determines land valuation
based on valuation inputs and prepares and sends Memo of Valuation, Claim Folder Profile and Valuation Summary
(MOV-CFPVS) to the DARPO.[23] The DARPO then sends Notice of Valuation and Acquisition to LO [landowner]
by personal delivery with proof of service or by registered mail with return card, attaching copy of MOV-CFPVS
and inviting LOs attention to the submission of documents required for payment of claim.[24]
Notably, DAR failed to prepare the claim folder which is necessary for the LBP to make a valuation of the
land to be expropriated. The proper remedy would have been to ask the DAR and LBP to determine such initial
valuation and to have the amount deposited to his account, in accordance with Sec. 16 of RA 6657. Nevertheless, it
was erroneous for private respondent to have filed a Petition for Determination of Just Compensation with PARAD
when the remedy that she was seeking was for the deposit of the initial valuation that the DAR and LBP should have

Contrary to the CAs ruling, the RTCs failure to distinguish between the initial valuation that is
contemplated in Sec. 16 of RA 6657 and the just compensation subject of judicial determination is a gross and patent
error that can be considered as grave abuse of discretion. Gross abuse of discretion is defined, as follows:
A special civil action for certiorari, under Rule 65, is an independent action based on the
specific grounds therein provided and will lie only if there is no appeal or any other plain, speedy,
and adequate remedy in the ordinary course of law. A petition forcertiorari will prosper only if
grave abuse of discretion is alleged and proved to exist. Grave abuse of discretion, under Rule 65,
has a specific meaning. It is the arbitrary or despotic exercise of power due to passion, prejudice or
personal hostility; or the whimsical, arbitrary, or capricious exercise of power that amounts to an
evasion or refusal to perform a positive duty enjoined by law or to act at all in contemplation of
law. For an act to be struck down as having been done with grave abuse of discretion, the
abuse of discretion must be patent and gross.[25] x x x (Emphasis supplied.)

It should also be pointed out that in the related Land Bank of the Philippines v. Pagayatan,[26] the Court had
found the presiding judge of the RTC, Branch 16 in San Jose, Occidental Mindoro, herein respondent Judge Ernesto
P. Pagayatan, guilty of Gross Ignorance of the Law or Procedure and Gross Misconduct for holding Teresita V.
Tengco, Acting Chief of the Land Compensation Department of the LBP, and Leticia Lourdes A. Camara, Chief of
the Land Compensation Department of the LBP, guilty of indirect contempt for allegedly disobeying the very same
Order dated March 4, 2005 of the RTC. In that case, Court ruled:
The partiality of respondent was highlighted when, out of his selective invocation of
judicial courtesy, he refused to resolve Leticia and Teresitas February 14, 2007 Urgent
Manifestation of Compliance and Motion and other pending incidents in view of the pendency
before the appellate court of the LBPs Omnibus Motion praying for, among other things, the
quashal of the warrant of arrest, whereas he had earlier found Leticia and Teresita guilty of
contempt despite the pendency before the appellate court of LBPs motion for reconsideration of
the dismissal of the petition in CA-G.R. SP No. 93206.

Evidently, the RTC had already acted with partiality in deciding the case and with grave abuse of discretion.
Moreover, in order to give life and breath to Sec. 16 of RA 6657, as well as DAR Administrative Order No. 02,
Series of 1996, the Court is constrained to direct the DAR and the LBP to make the initial valuation of the subject
land as of the time of its taking and to deposit the valuation in the name of the landowner or his estate, in accordance
with RA 6657 and the pertinent decisions of this Court on the matter.
The length of time that has elapsed that the landowner has not received any compensation for the land cannot justify
the release of the PARAD valuation to the landowner. Sec. 16 of RA 6657 only allows the release of the initial
valuation of the DAR and the LBP to the landowner prior to the determination by the courts of the final just
compensation due. Besides, it must be stressed that it was only sometime in 2003 that the assignee of the landowner
filed a petition for determination of just compensation with the PARAD. Clearly, the landowner slept on his right to
demand payment of the initial valuation of the land. Nevertheless, such lapse of time demands that the DAR and the

LBP act with dispatch in determining such initial valuation and to deposit it in favor of the landowner at the soonest
possible time.
WHEREFORE, the petition is GRANTED. The CAs August 17, 2006 Decision and March 27, 2007
Resolution in CA-G.R. SP No. 93206 are hereby REVERSED and SET ASIDE. The DAR and the LBP are hereby
given three (3) months from receipt of notice that this Decision has become final and executory, within which to
determine the initial valuation of the subject lot and to deposit its initial value to the account of private respondent












hereby ANNULLED and SET ASIDE. The RTC Order dated March 4, 2005 in Agrarian Case No. 1390 is
No costs.


Associate Justice


Chief Justice


Associate Justice Associate Justice


Associate Justice

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

Chief Justice

Additional member per Special Order No. 947 dated February 11, 2011.
Rollo, pp. 73-80. Penned by Associate Justice Juan Q. Enriquez, Jr. and concurred in by Associate
Justices Godardo A. Jacinto and Magdangal M. de Leon.
Id. at 82-83.
Id. at 177-178.
Id. at 185-194.
Id. at 187.
Id. at 193.
Id. at 200-201.
Id. at 214-221.
Id. at 178.
Id. at 275-276.
Id. at 179-180.
Id. at 80.
Id. at 61.
G.R. No. 170220, November 20, 2006, 507 SCRA 415, 425-426.
G.R. No. 131394, March 28, 2005, 454 SCRA 54, 61-62.
Supra note 14, at 421.
G.R. No. 166562, March 31, 2009, 582 SCRA 694, 704.
G.R. No. 118712, October 6, 1995, 249 SCRA 149.
Rollo, p. 178.
G.R. No. 161834, August 11, 2010.
Rollo, p. 288.
Id. at 289.
Beluso v. Commission on Elections, G.R. No. 180711, June 22, 2010, 621 SCRA 450, 456.
A.M. No. RTJ-07-2089, September 8, 2009, 598 SCRA 592, 605.


[G.R. No. 129995. October 19, 2001]

THE PROVINCE OF BATAAN, petitioner-appellant, vs. HON. PEDRO VILLAFUERTE, JR., as Presiding
Judge of the Regional Trial Court of Bataan (Branch 4), and THE PRESIDENTIAL COMMISSION
ON GOOD GOVERNMENT, respondents-appellees.
Sought to be reversed in the instant Petition for Review on Certiorari is the Decision[1] of the Court of Appeals,
dated 19 December 1996, in C.A. G.R. SP. No. 33344, upholding the twin orders dated 28 July 1993 and 11
November 1993 of the Regional Trial Court (RTC) of Bataan, Branch 4, in Civil Case No. 210-ML, for annulment
of sale.
In its order dated 28 July 1993,[2] the lower court directed that herein petitioner Province of Bataan remit to
said court whatever lease rentals petitioner may receive from lessees 7-R Port Services and Marina Port Services,
and that such lease rentals be placed under a special time deposit with the Land Bank of the Philippines, Balanga
Branch, for the account of the RTC-Balanga, Branch 4, in escrow, for the person or persons, natural or juridical,
who may be adjudged lawfully entitled thereto. The order dated 11 November 1993, [3] denied herein petitioners
motion for reconsideration of the 28 July, 1993 order.
Involved in the present controversy is an expanse of real property (hereinafter referred to as the BASECO
property) situated at Mariveles, Bataan and formerly registered and titled in the name of either the Bataan Shipyard
and Engineering Corporation (BASECO), the Philippine Dockyard Corporation or the Baseco Drydock and
Construction Co., Inc..
Pursuant to Presidential Decree No. 464, otherwise known as the Real Property Tax Code of 1974, the
Provincial Treasurer of Bataan advertised for auction sale the BASECO property due to real estate tax delinquency
amounting to P7,914,281.72, inclusive of penalties. [4] At the auction sale held on 12 February 1988, no bidder vied
for said property as a result of which, the Provincial Treasurer of Bataan adjudged the property to, and acquired the
same for, and in the name of herein petitioner Province of Bataan. Upon the expiration of the one-year redemption
period, and without the owner exercising its right to redeem the subject property, the Provincial Government of
Bataan consolidated its title thereon; the corresponding certificates of title were then issued in the name of herein
petitioner Province of Bataan.
Eventually, petitioner, thru then Provincial Governor Enrique T. Garcia, entered into a ten-year contract of
lease with 7-R Port Services, Inc., whereby portions of the BASECO property including facilities and improvements
thereon, were leased to the latter for a minimum escalating annual rental of Eighteen Million Pesos (P18 million).
On 10 May 1993, petitioner forged another contract of lease with Marina Port Services, over a ten-hectare portion of
the BASECO property.
On 11 May 1993, The Presidential Commission on Good Government (PCGG), for itself and on behalf of the
Republic of the Philippines and the BASECO, the Philippine Dockyard Corporation and the Baseco Drydock and
Construction Co. Inc., filed with the RTC-Bataan a complaint for annulment of sale, [5] principally assailing the
validity of the tax delinquency sale of the BASECO property in favor of petitioner Province of Bataan. Among
others, the complaint alleged that the auction sale held on 12 February 1988, is void for having been conducted: [6]
a) In defiance of an injunctive order issued by the PCGG in the exercise of its powers under Executive
Order No. 1, Series of 1986;
b) in contravention of the Real Property Tax Code of 1974;
c) while the issue of ownership of the Baseco property and of whether the same partakes of the nature of
ill-gotten wealth is pending litigation in Civil Case No. 0010 before the Sandiganbayan; and
d) despite the inscription of the sequestration order at the back of each title of the BASECO property.

In its prayer, the complaint asked for the following reliefs:

1) The tax delinquency sale held on February 12, 1988 be declared null and void; and the defendant Province of
Bataan be ordered to reconvey all the properties thus sold to its rightful owners, the Republic of the Philippines
and/or the other plaintiffs herein;
2) The defendants be ordered to render an accounting to, and pay plaintiffs all earnings, fruits and income which
they have received or could have received from the time they claimed ownership and took possession and control of
all the auctioned properties; and to account and pay for all the losses, deterioration and destruction thereof;
3) The defendants be ordered, jointly and severally to pay plaintiffs for all damages suffered by it/them by reason of
the unlawful actuations of the defendants, in the sum herein claimed and proven at the trial of this case, including
attorneys fees and costs of suit;
4) The defendant 7-R Port Services, Inc. be ordered to immediately cease and desist from paying any lease rentals to
the Province of Bataan, and instead to pay the same directly to the plaintiffs;
5) The Register of Deeds of Bataan be ordered to cancel the Torrens titles it had issued in favor of the Province of
Bataan, and issue a new Torrens titles (sic) in favor of plaintiffs in lieu of the cancelled ones.
Herein respondent PCGG, upon learning of the lease contracts entered into by and between petitioner and
Marina Port Services, filed with the RTC an urgent motion for the issuance of a writ of preliminary injunction to
enjoin herein petitioner from entering into a lease contract with Marina Port Services, Inc. (Marina), or any other
entity, and/or from implementing/enforcing such lease contract, if one has already been executed, and to maintain
the status quo until further orders from the Court.
On 06 July 1993, the lower court denied the motion ratiocinating that the lease contract with Marina was
already a fait accompli when the motion was filed, and that Marina was not a party to the suit for not having been
impleaded as party-defendant.
On 30 June 1993, the PCGG filed with the lower court an Urgent Motion to Deposit Lease Rentals,
alleging inter alia that the rentals amounting to Hundreds of Millions of Pesos are in danger of being unlawfully
spent, squandered and dissipated to the great and irreparable damage of plaintiffs who are the rightful owners of the
property leased.
On 28 July 1993, the lower court granted the PCGGs urgent motion and issued its assailed order the dispositive
portion of which reads:
ACCORDINGLY, the defendant Province of Bataan is hereby ordered to remit to this Court the lease rentals it may
receive from the defendant 7-R Port Services, Inc. and the Marina Port Services, Inc. to commence from its receipt
of this Order and for the Clerk of Court of this Branch to deposit said amount under special time deposit with the
Land Bank of the Philippines, Balanga Branch, in Balanga, Bataan in the name and/or account of this Court to be
held in ESCROW for the person or persons, natural or juridical, who may be finally adjudged lawfully entitled
thereto, and subject to further orders from this Court.[7]
Petitioner moved to reconsider the aforementioned order, which motion the lower court denied via its assailed
order dated 11 November 1993.[8] Aggrieved by the lower courts twin orders, petitioner filed before the Court of
Appeals a petition for certiorari with prayer for issuance of a temporary restraining order and writ of preliminary
On 01 December 1995, the Bataan Shipyard and Engineering Corporation, the Philippine Dockyard
Corporation and the Baseco Drydock and Construction Co., Inc., filed a motion for leave to intervene before the
Court of Appeals. In a Resolution dated 26 March 1996, the appellate court granted the motion.

On 16 April 1996, the intervenors-respondents filed their Answer-in-Intervention praying for the dismissal of
the petition before the Court of Appeals and the dissolution of the preliminary injunction issued in favor of
In its Decision dated 19 December 1996, the Court of Appeals dismissed the petition to which a motion for
reconsideration was filed by petitioner. In a Resolution dated 21 July 1997, respondent court likewise denied the
motion for reconsideration, hence, the instant appeal where petitioner Province of Bataan imputes to the Court of
Appeals a lone assignment of error, to wit:
The Court of Appeals manifestly erred in refusing to declare and/or hold that the respondent judge acted without
jurisdiction or with grave abuse of discretion in ordering the deposit in escrow of the rental payments pertaining to
the petitioner province.
In simpler terms, the sole issue for resolution revolves around the propriety of the escrow order issued by the
lower court in the civil suit for annulment of sale.
The instant petition is devoid of merit.
In the main, petitioner insists that the issuance of the escrow order by the trial court was patently irregular, if
not downright anomalous, reasoning that nowhere in the Revised Rules of Court is the trial court, or any court for
that matter, authorized to issue such escrow order, whether as a provisional or permanent remedy. According to
petitioner, the escrow orders in question are null and void ab initio for having been issued absent any legal basis and
are merely calculated to prejudice the petitioner province without any practical or worthwhile, much less legal
We do not agree. An escrow[11] fills a definite niche in the body of the law; it has a distinct legal character.
The usual definition is that an escrow is a written instrument which by its terms imports a legal obligation and
which is deposited by the grantor, promisor, or obligor, or his agent with a stranger or third party, to be kept by the
depositary until the performance of a condition or the happening of a certain event, and then to be delivered over to
the grantee, promisee, or obligee.[13]

While originally, the doctrine of escrow applied only to deeds by way of grant, [14] or as otherwise stated,
instruments for the conveyance of land,[15] under modern theories of law, the term escrow is not limited in its
application to deeds, but is applied to the deposit of any written instrument with a third person. [16] Particular
instruments which have been held to be the subject of an escrow include bonds or covenants, deeds, mortgages, oil
and gas leases, contracts for the sale of land or for the purchase of personal property, corporate stocks and stock
subscriptions, promissory notes or other commercial paper, insurance applications and policies, contracts for the
settlement of will-contest cases, indentures of apprenticeship, receipts assigning concessions and discontinuances
and releases of causes of action.[17] Moreover, it is no longer open to question that money may be delivered in
In our jurisdiction, an escrow order issued by a court of law may find ample basis and support in the courts
intrinsic power to issue orders and other ancillary writs and processes incidental or reasonably necessary to the
exercise of its main jurisdiction. Evidently, judicial power connotes certain incidental and inherent attributes
reasonably necessary for an effective administration of justice. [19]
In a manner of speaking, courts have not only the power to maintain their life, but they have also the power to
make that existence effective for the purpose for which the judiciary was created. They can, by appropriate means,
do all things necessary to preserve and maintain every quality needful to make the judiciary an effective institution
of Government. Courts have therefore inherent power to preserve their integrity, maintain their dignity and to insure
effectiveness in the administration of justice.[20]
To lend flesh and blood to this legal aphorism, Rule 135 of the Rules of Court explicitly provides:
Section 5. Inherent powers of courts- Every court shall have power:
X X X (g) To amend and control its process and orders so as to make them conformable to law and justice.

Section 6. Means to carry jurisdiction into effect - When by law jurisdiction is conferred on a court or judicial
officer, all auxiliary writs, processes and other means necessary to carry it into effect may be employed by
such court or officer, and if the procedure to be followed in the exercise of such jurisdiction is not specifically
pointed out by law or by these rules, any suitable process or mode of proceeding may be adopted which appears
conformable to the spirit of said law or rules. (Emphasis ours)
It is beyond dispute that the lower court exercised jurisdiction over the main action docketed as Civil Case No.
210-ML, which involved the annulment of sale and reconveyance of the subject properties. Under this circumstance,
we are of the firm view that the trial court, in issuing the assailed escrow orders, acted well within its province and
sphere of power inasmuch as the subject orders were adopted in accordance with the Rules and jurisprudence and
were merely incidental to the courts exercise of jurisdiction over the main case, thus:
X X X Jurisdiction attaching, the courts powers as a necessary incident to their general jurisdiction, to make such
orders in relation to the cases pending before them are as necessary to the progress of the cases and the dispatch of
business follow. Deming v. Foster, 42 N.H. 165, 178 cited in Burleigh v. Wong Sung De Leon 139 A. 184,83 N.H.
X X X A court is vested, not only with the powers expressly granted by the statute, but also with all such powers as
are incidentally necessary to the effective exercise of the powers expressly conferred (In re McLures Estate, 68
Mont. 556, 220 P. 527) and to render its orders, made under such express powers effective. Brown v. Clark, 102
Tex. 323, 116 S.W. 360, 24 L.R.A. (N.S.) 670 cited in State v. District Court, 272 P. 525.
In the absence of prohibitive legislation, courts have inherent power to provide themselves with appropriate
procedures required for the performance of their tasks. Ex parte Peterson, 253 U.S. 300, 312, 313, 40 S. Ct. 543, 64
L. Ed. 919; Funk v. U.S., 290 U.S. 371,381-384, 54 A. Ct. 212, 78 L.Ed. 369, 93 A.L.R. 1136 cited in Ex parte U.S.
C.C.A. Wis., 101 F 2d 870.
A court has inherent power to make such interlocutory orders as may be necessary to protect its jurisdiction, and
to make certain that its eventual decree may not be ineffective. (Boynton v. Moffat Tunnel Improvement Dist.
C.C.A. Colo, 57 F, 2d 772.
In the ordinary case the courts can proceed to the enforcement of the plaintiffs rights only after a trial had in the
manner prescribed by the laws of the land, which involves due notice, the right of the trial by jury, etc. Preliminary
to such an adjucation, the power of the court is generally to preserve the subject matter of the litigation to
maintain the status, or issue some extraordinary writs provided by law, such as attachments, etc. None of
these powers, however, are exercised on the theory that the court should, in advance of the final adjudication
determine the rights of the parties in any summary way and put either of them in the enjoyment thereof; but such
actions taken merely, as means for securing an effective adjudication and enforcement of rights of the parties after
such adjudication. Colby c. Osgood Tex. Civ. App., 230 S.W. 459;)[21] (emphasis ours)
On this score, the incisive disquisition of the Court of Appeals is worthy of mention, to wit:
X X X Given the jurisdiction of the trial court to pass upon the raised question of ownership and possession of the
disputed property, there then can hardly be any doubt as to the competence of the same court, as an adjunct of its
main jurisdiction, to require the deposit in escrow of the rentals thereof pending final resolution of such question. To

paraphrase the teaching in Manila Herald Publishing Co., Inc. vs. Ramos (G.R. No. L-4268, January 18, 1951,
cited in Francisco, Revised Rules of Court, Vol. 1, 2nd ed., p. 133), jurisdiction over an action carries with it
jurisdiction over an interlocutory matter incidental to the cause and deemed essential to preserve the subject matter
of the suit or to protect the parties interest. X X X
X X X the impugned orders appear to us as a fair response to the exigencies and equities of the situation.
Parenthetically, it is not disputed that even before the institution of the main case below, the Province of Bataan has
been utilizing the rental payments on the Baseco Property to meet its financial requirements. To us, this
circumstance adds a more compelling dimension for the issuance of the assailed orders. X X X
Applying the foregoing principles and considering the peculiarities of the instant case, the lower court, in the
course of adjudicating and resolving the issues presented in the main suit, is clearly empowered to control the
proceedings therein through the adoption, formulation and issuance of orders and other ancillary writs, including the
authority to place the properties in custodia legis, for the purpose of effectuating its judgment or decree and
protecting further the interests of the rightful claimants of the subject property.
To trace its source, the courts authority proceeds from its jurisdiction and power to decide, adjudicate and
resolve the issues raised in the principal suit. Stated differently, the deposit of the rentals in escrow with the bank, in
the name of the lower court, is only an incident in the main proceeding. [22] To be sure, placing property in
litigation under judicial possession, whether in the hands of a receiver, and administrator, or as in this case, in a
government bank,[23] is an ancient and accepted procedure. [24] Consequently, we find no cogency to disturb the
questioned orders of the lower court and in effect uphold the propriety of the subject escrow orders. (emphasis ours)
IN VIEW WHEREOF, the instant petition is hereby DENIED for lack of merit. ACCORDINGLY, the
assailed decision of the Court of Appeals is hereby AFFIRMED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and De Leon, Jr., JJ., concur.


Court of Appeals Decision in C.A.-G.R. SP. No. 33344, promulgated on 19 December 1996, penned by Justice Cancio C.
Garcia and concurred in by Justices Eugenio S. Labitoria and Omar U. Amin; Rollo, p. 30-39.

Records, pp. 124-125; Annex C.


Records, pp.60-61; Annex E.


Rollo, p. 31.


Docketed as Civil Case No. 210-ML; Rollo, pp. 41-56; Annex C.


Rollo, pp. 32-33.


Records, pp. 50-51.


Records, pp. 60-61.


Docketed as CA-GR SP No. 33344; Records, pp. 2-20.


Rollo, pp. 36.


The term escrow is derived from a French word meaning bond or writing; Stonewall vs. Mcgown (Tex Civ App) 231 SW


Squire vs. Branciforti, 131 Ohio St 344, 2 NE2d 878; 28 Am Jur 2d, p. 3.


28 Am Jur 2d, p.3; Gulf Petroleum, S.A. vs. Collazo (CA1 Puerto Rico) 316 F2d 257; Munger vs. Perlman Rim
Corp. (CA2 NY) 275 F21 cert den 257 US 645,66 L ed 413, 42 S Ct 54; Ashford vs. Prewitt, 102 Ala 264, 14 So


Jordan vs. Jordan, 78 Tenn (10 Lea) 124.


Vaughan vs. Vaughan, 161 Ky 401, 170 SW 981; Moore Mill & Lumber Co. vs. Curry County Bank, 200 Or 558, 267
P2d 202.


Gulf Petroleum, S.A. vs. Collazo (CA 1 Puerto Rico) 316 F2d 257; Vaughan vs. Vaughan, 161 Ky 401, 170 SW
981; Ganser vs. Zimmerman (ND) 80 NW2d 828.


28 Am Jur 2d, pp. 5-6.


American Service Co. vs. Henderson (CA4 NC) 120 F2d 525, 135 ALR 1414.

People vs. Gutierrez, 36 SCRA 172 [1970].


Borromeo vs. Mariano 41 Phil. 322, 332.


Republic vs. Sandiganbayan, 186 SCRA 864 [1990].




Land Bank of the Philippines, Balanga Branch.


Republic vs. Sandiganbayan, 186 SCRA 864, 872 citing Gustilo, et al. vs. Matti, et al., 11 Phil 611, 615 [1908],
per Chief Justice Cayetano Arellano.