PHILIPPINE SUPREME COURT DECISIONS

FIRST DIVISION

[G.R. No. L-3636. August 29, 1907. ]

FREDERICK GARFIELD WAITE, Plaintiff-Appellee, v. JAMES J. PETERSON, ET AL., Defendants-Appellants.

Hartigan, Rohde & Gutierrez, for Appellants.

Frederick Garfield Waite, in his own behalf.

SYLLABUS

1. WRONGFUL TAKING OF PROPERTY; SALE OR TRANSFER; ACTION BY THE TRANSFEREE. — When the
property of one person is unlawfully taken by another, the former has a right of action against the latter
for the recovery of the property or for damages for the taking or retention, and he is entitled to his
choice of these two remedies. This is also a right which may be transferred by the sale or assignment of
the property, and the transferee can maintain either action against the wrongdoer.

2. ID.; ID.; ID.; RESPONSIBILITY OF THE SHERIFF. — When, however, the owner seeks to make the sheriff
responsible for such wrongful act he must, in order to preserve his right against the sheriff, comply with
the provisions of section 451 of the Code of Civil Procedure.

3. LEVY UPON PROPERTY; RESPONSIBILITY OF THE CREDITOR. — If a sheriff levies upon property at the
instance of a creditor and is indemnified by the latter, the creditor is thenceforward liable for the acts of
the sheriff with respect to the property.

DECISION

WILLARD, J. :

The appellant (Kwong We Shing) has not caused the proof in this case to be brought here. The only
question therefore is whether the facts admitted in the pleadings and those found by the court below in
its decision sustain the judgment appealed from. That court found among other things as
follows:jgc:chanrobles.com.ph

"From the evidence presented at the trial, the court finds that on December 8, 1905, one Henry
Manheim delivered to L.K. Tiao Eng a diamond ring one consignment for 800 pesos, to be returned, if
not sold, in sixty days; that on the 22d day of January, 1906, while the ring was in the possession of L.K.
Tiao Eng, the defendant, as sheriff of Manila, levied upon the said ring; that on the 23d day of January,
1906, the aforementioned Henry Manheim, for value received, assigned all his right to and interest in
said ring to the said plaintiff herein; that on the 25th day of January, 1906, the plaintiff made demand
upon the sheriff of Manila, who had made the levy, as before said, for the said ring, and alleged the
value thereof to be 800 pesos; that the sheriff was indemnified by the judgment creditor, in whose favor
the levy had been made, as provided by law, and retained possession of the ring and sold the same at
public sale; that the said Henry Manheim has never been paid for the said ring, in accordance with the
terms of the contract hereinbefore mentioned or any part thereof; that at the time of the levy by the
sheriff upon the said ring, as before stated, the said Henry Manheim was the owner of and entitled to
possession of the said ring; that while the ring was in the possession of the sheriff the said Henry
Manheim transferred his ownership and right to possession of said ring to plaintiff herein and that the
plaintiff thereupon became the owner and entitled to possession of said ring."cralaw virtua1aw library

Judgment was rendered against both of the defendants for the return of the ring, and, if that could not
be had, for the sum of 725 pesos, with interest, and costs.

I. The appellant claims that by the terms of section 451 of the Code of Civil Procedure this action can not
be maintained by the plaintiff because he was not the owner of the ring at the time the levy was made.
In other words, as we understand it, his claim is that no action for the value of the property taken can be
maintained except by the person who was the owner thereof at the time it was seized by the sheriff. We
do not think that this contention can be sustained. Said section 451 is as follows:jgc:chanrobles.com.ph

"Claims by third persons to property levied on. — Property levied on can be claimed by a third person as
his property, by a written claim, verified by the oath of such claimant, setting out his title thereto, his
right to possession thereof, stating the ground of such title, and served upon the governor, or his
deputy, or officer making the levy. The officer in such case is not bound to keep the property, unless the
plaintiff, or the person in whose favor the writ of execution runs, on demand, indemnify the officer
against such claim by an obligation, signed by the plaintiff, with good and sufficient surety, and no claim
to such property shall be valid against the officer, or shall be received or be notice of any rights against
him, unless made as herein provided; but nothing herein contained shall prevent such third person from
vindicating his claim to the property by any proper action."cralaw virtua1aw library

The vice in the argument of the appellant consist in the fact that he assumes that section 451 is the only
law which gives the plaintiff a right of action against the sheriff, and that if he is not included within that
section, he can not maintain any action. This is manifestly erroneous. So far from being the origin of any
rights on the part of the owner of property wrongfully taken by the sheriff, it is rather a limitation upon
his rights previously existing. If property of a person is taken by the sheriff upon an execution against
another person, the sheriff is liable thereof in the absence of statute, as any private person would be.
When one’s property is wrongfully taken by another, the former has a right of action against the person
who interfered with his property, whether for the recovery of the property itself or for damages for its
taking, and he has his choice of these remedies. If section 451 did not exist, by the general principles of
the law the sheriff would always be responsible for wrongfully taking the property of another. For the
purpose of limiting the responsibility of the sheriff in such cases, and to provided that some notice
should be given to him of the claims of third persons, this section requires such third persons to make
such claims in writing, so that the sheriff, after the notice is given to him, can decide for himself whether
he will proceed with the levy or abandon the property.

The right of action given by the general principles of law to the person whose property has wrongfully
been taken from him, either to recover damages or the possession of the property, is a right which can
be transferred by him, and his transferee can maintain either one of these actions against the
wrongdoer. On this first claim of the appellant, then, the only question is whether this section 451 has
taken away from the assignee of the owner his right to maintain an action to recover the value of the
property.

An examination of the section will show that there is no distinct statements therein, that the claim can
only be made by a person who was the owner of the property at the time the levy was made. As the
section is written, we do not think that it should be so construed. Such a construction would, in case of
the involuntary transfer of rights, deprive the transferee of actions which might be absolutely necessary
to him for the protection of his interest. If we so construed the section, we should have the levy his
executor or administrator would have no right to make a claim against the sheriff for the return of the
property and would be deprived of an action against the sheriff for the recovery of damages for such
wrongful taking. The same rule would have to be made if an order in bankruptcy was passed against the
owner of the property the day after the levy. We do not think that the section requires any such
construction.

II. It is further claimed by the appellant that in no event should judgment have been entered against him
— that is to say, against Kwong We Shing. It will be noticed that the court found that the sheriff was
indemnified by the judgment creditor. This statement is sufficient to make the judgment creditor liable
for the acts of the sheriff. In the case of Lovejoy v. Murray (3 Wall. U.S., 1) the court said, at page
9:jgc:chanrobles.com.ph

"The demand for indemnity, and the giving of it by the defendants, proceeded upon the supposition that
the sheriff would without it go no further in that direction, but would give up the property to the
claimant, the present plaintiff, and make his peace on the best terms he could. By the present statute of
Iowa he had a right to do this, if the plaintiff in attachment refused to assume the hazard of
indemnifying him. And if there were no such statute, he had a right to deliver the property to the
claimant, and risk a suit by the plaintiff in attachment rather than a contest with a rightful claimant of
the goods.

"The giving of the bond by the present defendants must, therefore, be held equivalent to a personal
interference in the course of the proceeding, by directing or requesting of the defendants in
attachment. In doing this they assumed the direction and control of the sheriff’s future action, so far as
it might constitute a trespass, and they became to that extent the principals, and he their agent in the
transaction. This made them responsible for the continuance of the wrongful possession and for the sale
and conversion of the goods; in other words, for all the real damages which plaintiff sustained."cralaw
virtua1aw library

The judgment of the court below is affirmed, with the costs of this instance against the appellant, Kwong
We Shing. So ordered.

Arellano, C.J., Torres, Johnson, and Tracey, JJ., concur.

Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 74287 October 27, 1989

SPOUSES AGUSTIN FLORES and PURITA M. FLORES, petitioners,

vs.

THE HONORABLE INTERMEDIATE APPELLATE COURT and SALVADOR, MILAGROS and CONRADA, all
SURNAMED NICO, respondents.

Florenz D. Regalado & Associates for petitioners

Rodolfo L. Legaspi for private respondents.

MELENCIO-HERRERA, J.:

This suit involves a boundary dispute between owners of adjoining lots situated in the poblacion of
Miag-ao, Iloilo. Judgment was rendered by the former Court of First Instance of Iloilo, Branch III, 1
dismissing the Complaint filed by private respondents, the NICOS, as well as the Counterclaim of
petitioners, the FLORESES. Said Trial Court was of the opinion that "neither the plaintiffs (the NICOS) nor
the defendants (the FLORESES) were able to sufficiently establish that the areas claimed by them really
belong to them."

On appeal by the NICOS, the then Intermediate Appellate Court 2 reversed stating that "the discrepancy
in the area may not justify the position of the lower Court in refusing to declare who owns the disputed
portion to check constant strifes between the neighbors." It then dispositively decreed:

WHEREFORE, the decision a quo is hereby REVERSED and set aside and another one is rendered
declaring plaintiffs (the NICOS) as the owners of the disputed portion of 222 square meters, more or
less, as indicated in the sketch (Exh. F); ordering the defendants (the FLORESES) to demolish the fence
erected by them and intruding into the land of plaintiff, and directing defendants to surrender
possession thereof and to desist from further disturbing or claiming possession of the disputed portion
awarded to the plaintiffs. No damages and costs. (Emphasis ours).

Hence, this recourse by the FLORESES seeking a reversal of the aforesaid judgment.

On 30 July 1986, after receiving the Comment of the NICOS, we resolved to deny the Petition for lack of
merit.

Upon motion for reconsideration of the FLORESES, on the ground that the Appellate Court findings with
respect to the areas of the respective properties of the parties as well as the disputed portion were
"totally without factual basis," we remanded the case on 21 September 1987 to respondent Appellate
Court for determination of the exact area in dispute "in the interest of a more accurate determination of
the controversy" and to "DECIDE the case accordingly." In effect, we had granted reconsideration and
reinstated the Petition.

On 12 April 1988, the Appellate Court promulgated an Amended Decision 3 modifying the area of the
disputed portion to 199 square meters only and maintaining the rest of its dispositions. The FLORESES
moved for reconsideration urging that the Amended Decision affirm instead the judgment of the Trial
Court in toto. This was denied by the Appellate Court stating that the issue of ownership of the disputed
piece of land was before this Court; that in so far as it was concerned its finding thereon was final; and
that it had already resolved the true area of the disputed portion as ordered by this Court.

Petitioners FLORESES then filed before the Appellate Court a Manifestation and Motion praying for the
elevation of the case to this Court for proper disposition. This was opposed by respondents NICOS on
the ground that the Petition for certiorari with this Court had already been denied for lack merit. On 25
August 1989 respondent Court rejected this contention and ordered the elevation of the records to us
since it had already complied with our Resolution of 21 September 1987. We received the records on 1
September 1989, and the case was included in the Agenda of 18 September 1989.

With the area in controversy now accurately determined by respondent Appellate Court, the case is
back with us for action on the Petition. We resolved to give due course and to decide the same.

The antecedent facts show that the NICOS own Assessors Lot No. 71, located at the corner of Delgado
Street and the national highway, Miag-ao, Iloilo. The NICOS claim that the area of their lot is 689 square
meters as shown by Tax Declarations (Exhibits "A", "A-1" and "B") and the sketch plans duly certified by
the Office of the Provincial Assessor (Exhibits "C" and "D"); and that they have been in possession of that
property since 1936. On the other hand, the FLORESES own the adjoining Assessors Lot No. 72. Their
allegation is that this lot has an area of 3,173 square meters pursuant to the Deed of Sale in their favor
dated 11 January 1967 (Exhibit "11") and as shown by Tax Declarations (Exhibits "1" to "5" inclusive). A
sketch plan however, also indicates that the area is 3,083 square meters (Exhibit "7"). Both lots are
unregistered properties.

Sometime in 1975, the FLORESES constructed a bamboo fence, and in 1978 March, a hollow-block fence
to separate the two adjoining properties, over the strong protest of the NICOS who alleged that the
construction encroached upon a portion of their property. As the FLORESES refused to heed the protest,
on 19 April 1978, the NICOS filed an action for "Recovery of Real Property with Damages" before the
Trial Court of Iloilo. During the pendency thereof, the predecessor-in-interest of the NICOS died and the
latter, her children, were substituted in her stead.

As heretofore stated, the Appellate Court, even in its Amended Decision, ruled that the disputed area of
199 square meters belong to the NICOS and that the FLORESES should demolish the fence they had
erected as it intrudes into the NICOS property.

After a review of the evidence, which we had ordered elevated, we find some misapprehension of facts
by the Appellate Court, sufficient to affect the outcome of the case.

We derive our bearings from Exhibit "N", the Report by the Commissioners appointed by the Court, and
Exhibit "N-1", the plan they had submitted, both of which have been admitted by the parties. From
those documents, we find the following as established: (1) the aggregate area disputed is, indeed, 199
square meters, Lot A of 55 square meters being claimed by the FLORESES, and Lot B of 144 square
meters by the NICOS, (2) the uncontested area belonging to the NICOS is 419 square meters; while (3)
the uncontested area for the FLORESES is 2,883 square meters (all per Exhibit "N-1").

Like the Trial Court, we find that neither party has proven its entitlement to the entire disputed portion
of 199 square meters. Much less has either party convincingly shown the dividing line between their two
properties. All contrary to the basic rule that in an action to recover, the person who claims that he has
a better right to the property must prove both ownership and identity (Laluan vs. Malpaya, L-21231, July
30,1975, 65 SCRA 494; Article 434, Civil Code). Accordingly, we deem it best to divide the disputed area
between the parties equally, or 99.5 square meters for each of them. This will give the NICOS 518.5
square meters (419 sq. ms. + 99.5 sq. ms.), short by 170.5 square meters of their claimed 689 square
meters. The FLORESES, for their part, will get 2,982.5 square meters (2,883 sq. ms. + 99.5 sq. ms.), also
less by 190.5 square meters from their claim of 3,173 square meters. This, to the Court is the most
equitable solution considering the attendant circumstances.

The Appellate Court theory of acquisitive prescription by the NICOS is not well taken. While the NICOS
may have been in possession of their lot since 1936 in the concept of owners and planted trees thereon,
these are insufficient to delineate boundaries. The bamboo fences respectively built by the parties
(Exhibit "P"), relied upon by the Appellate Court, do not conclusively appear either as clear dividing lines.
The sketch, Exhibit "F", neither unmistakably proves ownership by the NICOS of the disputed area of
"222" square meters, as found by respondent Court.

The FLORESES will necessarily have to demolish their concrete fence and move it towards the resulting
boundary, but they have only themselves to blame since they proceeded with its construction despite
the verbal and written protests of the NICOS.

WHEREFORE, the judgment under review is hereby SET ASIDE and another one rendered declaring the
NICOS the owners of Assessors Lot No. 1 with an area of 518.5 square meters, and the FLORESES, the
owners of Assessors Lot No. 2, with an area of 2,982.5 square meters. The resulting boundary between
the two lots will have to be adjusted accordingly, the expenses for survey and monumenting to be borne
equally by the parties. The concrete fence that the FLORESES had constructed shall be demolished at
their expense. No costs.

SO ORDERED.
Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-39338 July 16, 1984

DOUGLAS B. ALVIR, petitioner,

vs.

HON. RIZALINA B. VERA, as Presiding Judge, Court of First Instance of Rizal, Branch XXIII, BERNARDO
MOLLAT and TERESA MOLLAT, respondents.

Bolipata & Associates for petitioner.

Quasha, Asperilla, Ancheta, Valmonte, Peña & Marcos for private respondents.

RELOVA, J.:

Records show that petitioner Douglas B. Alvir filed a complaint for unlawful detainer against private
respondents Bernardo Mollat and Teresa Mollat, before the then Municipal Court of San Juan, Rizal.
Basis of the complaint is that petitioner is the registered owner of a residential lot, together with the
improvements thereon situated at No. 299 Verdun Street, San Juan, Rizal and covered by Transfer
Certificate of Title No. 328543 of the Registry of Deeds of Rizal. After said property had been adjudicated
to him as its new owner during the settlement of the estate of his late father Dr. Antonio B. Alvir,
plaintiff (herein petitioner) wrote private respondents to vacate the premises as he and his family are in
need of a place to live. This was followed by another letter reiterating his request which, however, the
private respondents ignored.

In their answer, private respondents alleged that in November 1961 the late Dr. Antonio B. Alvir entered
into a contract of sale with Mr. Howard J. Weber whereby the latter was given the right to pay the full
purchase price of the property within two (2) years from the date of the contract of sale; that private
respondents were allowed by Mr. Weber to occupy the premises before the latter left for the United
States; and that they have been occupying the property as tenants of said Mr. Weber.

After trial, the inferior court rendered judgment in favor of herein petitioner Douglas B. Alvir, ordering
private respondents Bernardo and Teresa Mollat "to vacate the premises occupied by them at No. 299
Verdun Street, San Juan, Rizal and to return possession thereof to the plaintiff; to pay to the plaintiff the
monthly rental of P300.00 per month from May 25, 1972 until the said defendants completely vacate
the said premises; [and] to pay to the plaintiff an additional sum of P500.00 for attorney's fee plus the
cost of this action." (p. 77, Rollo)

Appeal from the decision of the inferior court was taken by private respondents to the then Court of
First Instance of Rizal which set aside the decision of the then municipal court of San Juan, Rizal and
dismissed the complaint.

Hence, this petition for review by way of certiorari.

As found by respondent court, subject property with an area of 502 square meters is situated in San
Juan, Rizal and covered by Transfer Certificate of Title No. 328543 in the name of petitioner Douglas B.
Alvir as of May 25, 1971 when the estate of his father who died in 1951 was settled.

As its owner, petitioner contends that he is entitled to the possession of the premises against the
private respondents with whom he has no contract and, notwithstanding, refused to vacate the same.

On the other hand, the private respondents claim that they were authorized to stay in the property by
Mr. and Mrs. Howard Weber who purchased it from the Alvirs in 1961. On this point, respondent court
said:

... As early as 1966, the Alvirs and Weber seemed not to agree as to the amount still due the Alvirs from
Weber which prompted Weber to deposit the amount which he believed was the maximum amount still
due the Alvirs with the Associated Banking Corporation. On December 1, 1967, Weber wrote Antonio
Alvir, brother of the plaintiff, with respect to the fencing of the property covered by the deed of sale
between the Alvirs and Webers (Exhibit 6-A). As testified to by Antonio Alvir, Weber has been pressing
Catalina Alvir to deliver the title to the property but Mrs. Alvir refused to do so on the ground that the
payment made by Weber was delayed.

From the evidence presented by the defendants. it appears that defendants are claiming the right to
possess the property by virtue of the authority of Weber who claims to be the owner of the property as
per deed of sale executed by the Alvirs in his favor. The contention of the Alvirs that they are not duty
bound to surrender the title to the property on the ground that Weber has not complied with the
conditions of the sale are matters which should be threshed out in a separate proceedings and only until
these matters have been clarified can it be said that Weber has no right to the property and, therefore,
the possession of the defendants under Weber's authority is not lawful

xxx xxx xxx

As a general rule, a mere allegation by the defendant in an ejectment case, that he is the owner of the
real property involved therein, does not and cannot divest the inferior court of its jurisdiction over the
ejectment suit. However, if it appears during the trial that by the nature of the proof presented, the
question of possession cannot be property determined without settling that of ownership, then the
jurisdiction of the court is lost and the action should be dismissed. (Torres vs. Peña, 78 Phil. 231;
Peñalosa vs. Garcia, 78 Phil. 245; Cruz vs. Garcia, 79 Phil. 1; Ganaynay vs. Sarmiento, 79 Phil. 36;
Raymundo vs. Santos, 93 Phil. 395; Dy Sun vs. Brillantes, 93 Phil. 175; Andres vs. Serrano, 101 Phil. 848;
Songahid vs. Cinco, L-14341, January 29, 1960 as cited in 16 SCRA 677). Plaintiff admitted that before
this case was filed, he came across the deed of sale by the Alvirs in favor of Weber while sorting out
papers relevant to this case (tsn, April 6, 1973, pp. 16-17). It is surprising that Weber was not made a
party defendant he being a party in interest. (pp. 73-74, 75, Rollo)

In actions of forcible entry and detainer, the main issue is possession de facto, independently of any
claim of ownership or possession de jure that either party may set forth in his pleading. As incidents of
the main issue of possession de facto, the inferior court can decide the questions of (a) whether or not
the relationship between the parties is one of landlord and tenant; (b) whether or not there is a lease
contract between the parties, the period of such lease contract and whether or not the lease contract
has already expired; (c) the just and reasonable amount of the rent and the date when it will take effect;
(d) the right of the tenant to keep the premises against the will of the landlord; and (e) if the defendant
has built on the land a substantial and valuable building and there is no dispute between the parties as
to the ownership of the land and the building, their rights according to the Civil Code. Defendants' claim
of ownership of the property from which plaintiff seeks to eject him is not sufficient to divest the
inferior court of its jurisdiction over the action of forcible entry and detainer. However, if it appears
during the trial that the principal issue relates to the ownership of the property in dispute and any
question of possession which may be involved necessarily depends upon the result of the inquiry into
the title, previous rulings of this Court are that the jurisdiction of the municipal or city court is lost and
the action should be dismissed.

We have at bar a case where, in effect, the question of physical possession could not properly be
determined without settling that of lawful or de jure possession and of ownership and hence, following
early doctrine, the jurisdiction of the municipal court over the ejectment case was lost and the action
should have been dismissed. As a consequence, respondent court would have no jurisdiction over the
case on appeal and it should have dismissed the case as appealed from the municipal court. However, in
line with Section 11, Rule 40 of the Revised Rules of Court, which reads —

SEC. 11. Lack of jurisdiction. — A case tried by an inferior court without jurisdiction over the subject
matter shall be dismissed on appeal by the Court of First Instance. But instead of dismissing the case,
the Court of First Instance in the exercise of its original jurisdiction, may try the case on the merits if the
parties therein file their pleadings and go to the trial without any objection to such jurisdiction.

this Court held in Saliwan vs. Amores, 51 SCRA 329, 337, that dismissal "on the said ground of lack of
appellate jurisdiction on the part of the lower court flowing from the municipal court's loss of
jurisdiction would lead only to 'needless delay and multiplicity of suits in the attainment of the same
result' and ignores, as above stated, that the case was tried and heard by the lower court in the exercise
of its original jurisdiction by common assent of the parties by virtue of the issues raised by the parties
and the proof presented by them thereon." In a similar case, the Court ruled that —

As the justice of the peace court of Hagonoy had no jurisdiction to try the case on the merits, the order
appealed from remanding the case to that court must be, as it is hereby, revoked; and, in accord with
the precedent established in Cruz et al. vs. Garcia et al., 45 Off. Gaz., 227, and the decisions therein
cited, the case is ordered returned to the Court of First Instance of Bulacan for that court to proceed
with the trial in the exercise of its original jurisdiction. (Teodoro vs. Balatbat, et al., 94 Phil. 247, 250).

ACCORDINGLY, the judgment of respondent judge is hereby REVERSED and the case is remanded to the
Court of First Instance of Rizal for that court to proceed with the trial in the exercise of its original
jurisdiction.

SO ORDERED.

Teehankee (Chairman), Melencio-Herrera, Plana, Gutierrez, Jr. and Dela Fuente JJ., concur.
Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-77691 August 8,1988

PATERNO R. CANLAS, petitioner,

vs.

HON. COURT OF APPEALS, and FRANCISCO HERRERA, respondents.

Paterno R. Canlas Law Offices for petitioner.

Abalos, Gatdula & Bermejo for private respondent.

SARMIENTO, J.:

The case dramatizes the unpleasant spectacle of a lawyer tangling with his own client, more often than
not, in the matter of fees. The lawyer, the petitioner himself, would have his petition decided on pure
questions of procedure, yet, the Court cannot let pass unnoticed the murkier face of the controversy,
wherein the law is corrupted to promote a lawyer's selfseeking ends, and the law profession, debased
into a simple business dealing. Accordingly, we resolve it on the basis not only of the questions raised by
the petitioner pertaining to procedure, but considering its serious ethical implications, on its merits as
well.

We turn to the facts.

The private respondent was the registered owner of eight (six, according to the petitioner) parcels of
land located in Quezon City. 1 Between 1977 and 1978, 2 he obtained various loans from the L & R
Corporation, a financing institution, in various sums totalling P420,000.00 As security therefor, he
executed deeds of mortgage in favor of the corporation over the parcels aforesaid. On August 28,1979,
and upon the maturing of said loans, the firm caused an extrajudicial foreclosure of mortgage following
his failure to pay, as a consequence of which, the said eight (six, according to the petitioner) parcels of
land were disposed of at public auction, and in which L & R Corporation was itself the highest bidder.

Pending redemption, the private respondent filed a complaint for injunction against L & R Corporation,
to enjoin consolidation of title in its name, in which he succeeded in obtaining preliminary injunctive
relief. He was represented by the petitioner. Two years later, and with no imminent end to the litigation
in sight, the parties entered into a compromise agreement whereby L & R Corporation accorded the
private respondent another year to redeem the foreclosed properties subject to payment of
P600,000.00, with interest thereon at one per cent per month. They likewise stipulated that the
petitioner shall be entitled to attorney's fees of P100,000.00. On November 19, 1982, the court 3
approved the compromise.

The private respondent, however, remained in dire financial straits — a fact the petitioner himself
concede 4 — for which reason he failed to acquire the finding to repay the loans in question, let alone
the sum of P100,000.00 in attorney's fees demanded by the petitioner. That notwithstanding, the
petitioner moved for execution insofar as his fees were concemed. The court granted execution,
although it does not appear that the sum was actually collected. 5

Sometime thereafter, the petitioner and the private respondent met to discuss relief for the latter with
respect to his liability to L & R Corporation on the one hand, and his obligation to the petitioner on the
other. The petitioner contends that the private respondent "earnestly implored" 6 him to redeem the
said properties; the private respondent maintains that it was the petitioner himself who 'offered to
advance the money," 7 provided that he, the private respondent, executed a "transfer of mortgage" 8
over the properties in his favor. Who implored whom is a bone of contention, but as we shall see
shortly, we are inclined to agree with the private respondent's version, considering primarily the
petitioner's moral ascendancy over his client and the private respondent's increasing desperation.

The records further show that the parties, pursuant to their agreement, executed a "Deed of Sale and
Transfer of Rights of Redemption and/or to Redeem," a document that enabled the petitioner, first, to
redeem the parcels in question, and secondly, to register the same in his name. The private respondent
alleges that he subsequently filed loan applications with the Family Savings Bank to finance a wet
market project upon the subject premises to find, according to him, and to his dismay, the properties
already registered in the name of the petitioner. He likewise contends that the "Deed of Sale and
Transfer of Rights of Redemption and/or to Redeem" on file with the Register of Deeds (for Quezon City)
had been falsified as follows:

WHEREFORE, for and in full settlement of the attorney's fees of TRANSFEREE in the amount of ONE
HUNDRED THOUSAND PESOS (Pl00,000.00) I, FRANCISCO HERRERA, hereby transfer, assign and convey
unto TRANSFEREE, Atty. Paterno R. Canlas, any and all my rights of the real properties and/or to redeem
from the Mortgagee, L & R Corporation my mortgaged properties foreclosed and sold at public auction
by the Sheriff of Quezon City and subject matter of the above Compromise Agreement in Civil Case No.
Q30679 ... 9

whereas it originally reads:

WHEREFORE, for and in full settlement of the attorney's fees of TRANSFEREE in the amount of ONE
HUNDRED THOUSAND PESOS (P100,000.00), I, FRANCISCO HERRERA, hereby transfer, assign and convey
unto TRANSFEREE, Atty. Paterno R. Canlas, any and all my rights of equity of redemption and/or to
redeem from the Mortgagee, L & R Corporation my mortgaged properties foreclosed and sold at public
auction by the Sheriff of Quezon City and subject matter of the above Compromise Agreement in Civil
Case No. Q30679. . .10

As a consequence, the private respondent caused the annotation of an adverse claim upon the
respective certificates of title embracing the properties. Upon learning of the same, the petitioner
moved for the cancellation of the adverse claim and for the issuance of a writ of possession. The court
granted both motions. The private respondent countered with a motion for a temporary restraining
order and later, a motion to recall the writ of possession. He likewise alleges that he commenced
disbarment proceedings before this Court against the petitioner 11 as well as various criminal
complaints for estafa, falsification, and "betrayal of trust" 12 with the Department of Justice. On
December 1, 1983, finally, he instituted an action for reconveyance and reformation of document, 13
praying that the certificates of title issued in the name of the petitioner be cancelled and that "the Deed
of Sale and Transfer of Rights of Equity of Redemption and/or to Redeem dated May 3, 1983 ... be
reformed to reflect the true agreement of Francisco Herrera and Paterno R. Canlas, of a mortgage." 14
He vehemently maintains that the petitioner's "agreement with [him] was that the latter would lend the
money to the former for a year, so that [petitioner] would have time to look for a loan for the wet
market which [the petitioner] intended to put up on said property." 15 Predictably, the petitioner
moved for dismissal.

The trial court, however, denied the private respondent's petition. It held that the alteration complained
of did not change the meaning of the contract since it was "well within [the petitioner's] rights" 16 "to
protect and insure his interest of P654,000.00 which is the redemption price he has paid;" 17 secondly,
that the petitioner himself had acquired an interest in the properties subject of reconveyance based on
the compromise agreement approved by Judge Castro in the injunction case, pursuant to Section 29(b),
of Rule 39, of the Rules of Court, that had, consequently, made him a judgment creditor in his own right;
thirdly, that the private respondent had lost all rights over the same arising from his failure to redeem
them from L & R Corporation within the extended period; and finally, that the petitioner cannot be said
to have violated the ban against sales of properties in custodia legis to lawyers by their clients pendente
lite, since the sale in question took place after judgment in the injunction case abovesaid had attained
finality. The complaint was consequently dismissed, a dismissal that eventually attained a character of
finality.

Undaunted, the private respondent, on December 6, 1985, filed a suit for "Annulment Of Judgment 18 in
the respondent Court of Appeals, 19 praying that the orders of Judge Castro: (1). granting execution
over the portion of the compromise agreement obliging the private respondent to pay the petitioner
P100,000.00 as attorney's fees; (2) denying the private respondent's prayer for a restraining order
directed against the execution: and (3) denying the motion to recall writ of possession, all be set aside.

The petitioner filed a comment on the petition, but followed it up with a motion to dismiss. On
December 8, 1986, the respondent Court of Appeals promulgated the first of its challenged resolutions,
denying the motion to dismiss. On March 3, 1987, the Appellate Court denied reconsideration. 20

Hence the instant petition.

As we stated, the petitioner assails these twin resolutions on grounds of improper procedure.
Specifically, he assigns the following errors:

I.

THE RESPONDENT COURT GRAVELY ABUSE [sic] ITS DISCRETION IN NOT DISMISSING AC G.R. NO. 07860
ON THE GROUND THAT IT IS IN REALITY A PETITION FOR CERTIORARI FILED OUT OF TIME AND SHOULD
NOT BE GIVEN DUE COURSE.

II.

THE RESPONDENT COURT GRAVELY ABUSE [sic] ITS DISCRETION IN NOT DISMISSING AC G.R. NO. 07860
ON THE GROUND OF RES JUDICATA

III.
THE RESPONDENT COURT GRAVELY ABUSE [sic] ITS DISCRETION IN NOT CONSIDERING AC G. R. 07860 AS
MOOT AND ACADEMIC SINCE PETITIONER HAD DISPOSED OF THE SUBJECT PROPERTIES LONG BEFORE
THE FILING OF THIS SUIT.

IV

THE RESPONDENT COURT GRAVELY ABUSED ITS DISCRETION IN NOT DENYING PETITIONER'S MOTION
TO DISMISS SOLELY ON THE GROUND THAT THE ARGUMENT RAISED THEREIN ARE BUT REHASH OF THE
ARGUMENTS IN HIS COMMENT TO THE PETITION. 21

The petitioner argues that the petition pending with the respondent court "is actually a petition for
certiorari," 22 disguised as a pleading for annulment of judgment and that in such a case, it faces alleged
legal impediments (1) It had been filed out of time, allegedly two years from the issuance of the assailed
orders, and (2) It was not preceded by a motion for reconsideration. He adds that assuming annulment
of judgment were proper, no judgment allegedly exists for annulment, the aforesaid two orders being in
the nature of interlocutory issuances.

On purely technical grounds, the petitioner's arguments are impressive. Annulment of judgment, we
have had occasion to rule, rests on a single ground: extrinsic fraud. What "extrinsic fraud" means is
explained in Macabingkil v. People's Homesite and Housing Corporation : 23

xxx xxx xxx

It is only extrinsic or collateral fraud, as distinguished from intrinsic fraud, however, that can serve as a
basis for the annulment of judgment. Fraud has been regarded as extrinsic or collateral, within the
meaning of the rule, "where it is one the effect of which prevents a party from having a trial, or real
contest, or from presenting all of his case to the court, or where it operates upon matters pertaining,
not to the judgment itself, but of the manner in which it was procured so that there is not a fair
submission of the controversy." In other words, extrinsic fraud refers to any fraudulent act of the
prevailing party in the litigation which is committed outside of the trial of the case, whereby the
defeated party has been prevented from exhibiting fully his side of the case, by fraud or deception
practiced on him by his opponent. 24

A perusal of the petition of therein private respondent Herrera pending before the respondent Court
reveals no cause of action for annulment of judgment. In the first place, and as herein petitioner Canlas
correctly points out, the judgment itself is not assailed, but rather, the orders merely implementing it.
Secondly, there is no showing that extrinsic fraud, as Makabingkil defines it, indeed vitiated the
proceedings presided over by Judge Castro. On the contrary, Herrera's petition in the respondent court
will show that he was privy to the incidents he complains of, and in fact, had entered timely oppositions
and motions to defeat Atty. Canlas' claims under the compromise agreement.

What he objects to is his suspected collusion between Atty. Canlas and His Honor to expedite the
former's collection of his fees. He alleges that his counsel had deliberately, and with malevolent designs,
postponed execution to force him (Herrera) to agree to sell the properties in controversy to him (Atty.
Canlas) subject to redemption. ("...t was understandable that respondent Atty. Paterno R. Canlas did not
implement the writ of execution, instead he contacted petitioner in order that petitioner would sign the
questioned documents. This was the clincher of the plan of respondent Atty, Paterno R. Canlas to divest
petitioner of his properties. For this purpose, it is obvious that respondent Atty. Paterno R. Canlas had to
conspire with the respondent court judge to achieve his plan." 25) Aside from being plain speculation, it
is no argument to justify annulment. Clearly, it does not amount to extrinsic fraud as the term is defined
in law.

Neither is it proper for the extraordinary remedy of certiorari. Certiorari presupposes the absence of an
appeal 26 and while there is no appeal from execution of judgment, appeal lies in case of irregular
implementation of the writ. 27 In the case at bar, there is no irregular execution to speak of As a rule,
"irregular execution" means the failure of the writ to conform to the decree of the decision executed. 28
In the instant case, respondent Herrera's charges, to wit, that Judge Castro had erred in denying his
motions for temporary restraining order and to recall writ of possession, or that His Honor had acted
hastily (". . . that respondent court/judge took only one [1) day to resolve petitioner's motion for
issuance of [restraining] order. . ." 29) in denying his twofold motions, do not make out a case for
irregular execution. The orders impugned are conformable to the letter of the judgment approving the
parties'compromise agreement.

The lengths the private respondent, Francisco Herrera, would go to in a last-ditch bid to hold on to his
lands and constraints of economic privation have not been lost on us. It is obvious that he is uneasy
about the judgment on compromise itself, as well as the subsequent contract between him and his
lawyer. In such a case, Article 2038 of the Civil Code applies:

Art. 2038. A compromise in which there is mistake, fraud, violence intimidation, undue influence,
or falsity of documents, is subject to the provisions of article 1330 of this Code ...

in relation to Article 1330 thereof:

Art. 1330. A contract where consent is given through mistake, violence, intimidation, undue influence,
or fraud is voidable.

in relation to its provisions on avoidance of'contracts. 30 The court notes that he had, for this purpose,
gone to the Regional Trial Court, a vain effort as we stated, and in which the decision had become final.

We, however, sustain Atty. Canlas' position-on matters of procedure — for the enlightenment solely of
the bench and the bar. It does not mean that we find merit in his petition. As we have intimated, we
cannot overlook the unseemlier side of the proceeding, in which a member of the bar would exploit his
mastery of procedural law to score a "technical knockout" over his own client, of all people. Procedural
rules, after all, have for their object assistance unto parties "in obtaining just, speedy, and inexpensive
determination of every action and proceeding." 31 If procedure were to be an impediment to such an
objective, "it deserts its proper office as an aid to justice and becomes its great hindrance and chief
enemy." 32 It was almost eight decades ago that the Court held:

... A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle
art of movement and position, entraps and destroys the other. It is, rather, a contest in which each
contending party fully and fairly lays before the court the facts in issue and then, brushing aside as
wholly trivial and indecisive all imperfections of form and technicalities of procedure, asks that justice be
done upon the merits. Lawsuits, unlike duels, are not to be won by the a rapier's thrust ... 33

It is a ruling that almost eight decades after it was rendered, holds true as ever.
By Atty. Canlas' own account, "due to lack of paying capacity of respondent Herrera, no financing entity
was willing to extend him any loan with which to pay the redemption price of his mortgaged properties
and petitioner's P100,000.00 attorney's fees awarded in the Compromise Judgment," 34 a development
that should have tempered his demand for his fees. For obvious reasons, he placed his interests over
and above those of his client, in opposition to his oath to "conduct himself as a lawyer ... with all good
fidelity ... to [his] clients." 35 The Court finds the occasion fit to stress that lawyering is not a
moneymaking venture and lawyers are not merchants, a fundamental standard that has, as a matter of
judicial notice, eluded not a few law advocates. The petitioner's efforts partaking of a shakedown" of his
own client are not becoming of a lawyer and certainly, do not speak well of his fealty to his oath to
"delay no man for money." 36

It is true that lawyers are entitled to make a living, in spite of the fact that the practice of law is not a
commercial enterprise; but that does not furnish an excuse for plain lust for material wealth, more so at
the expense of another. Law advocacy, we reiterate, is not capital that yields profits. The returns it
births are simple rewards for a job done or service rendered. It is a calling that, unlike mercantile
pursuits which enjoy a greater deal of freedom from government interference, is impressed with a
public interest, for which it is subject to State regulation. 37 Anent attomey's fees, section 24, of Rule
138, of the Rules, provides in part as follows:

SEC. 24. Compensation of attorneys, agreement as to fees. — An attorney shall be entitled to have and
recover from his client no more than a reasonable compensation for his services, with a view to the
importance of the subject matter of the controversy, the extent of the services rendered, and the
professional standing of the attorney... A written contract for services shall control the amount to be
paid therefor unless found by the court to be unconscionable or unreasonable.

So also it is decreed by Article 2208 of the Civil Code, reproduced in part, as follows:

Art. 2208 ...

In all cases, the attorney's fees and expenses of litigation must be reasonable.

We do not find the petitioner's claim of attorney's fees in the sum of P100,000.00 reasonable. We do
not believe that it satisfies the standards set forth by the Rules. The extent of the services he had
rendered in Civil Case No. 30679, and as far as the records will yield, is not impressive to justify payment
of such a gargantuan amount. The case itself moreover did not involve complex questions of fact or law
that would have required substantial effort as to research or leg work for the petitioner to warrant his
demands. The fact that the properties subject thereof commanded quite handsome prices in the market
should not be a measure of the importance or non-importance of the case. We are not likewise
persuaded that the petitioner's stature warrants the sum claimed.

All things considered, we reduce the petitioner's fees, on a quantum meruit basis, to P20,000.00.

It is futile to invoke the rule granting attorneys a lien upon the things won in litigation similar to that
vested upon redemptioners. 38 To begin with, the rule refers to realty sold as a result of execution in
satisfaction of judgment. In this case, however, redemption was decreed by agreement (on
compromise) between the mortgagor and mortgagee. It did not give the petitioner any right to the
properties themselves, much less the right of redemption, although provisions for his compensation
were purportedly provided. It did not make him a redemptioner for the plain reason that he was not
named one in the amicable settlement. To this extent, we reverse Judge Pedro Santiago's ruling in Civil
Case No. 40066, recognizing Atty. Canlas' "legal right, independent of the questioned deed of sale and
transfer which was executed subsequently on May 3, 1983, to redeem the subject realty from the L & R
Corporation pursuant to Sec. 29 (b), Rule 39 of the Rules of Court." 39 Whatever right he had, it was,
arguably with respect alone to his renumeration. It did not extend to the lands.

Secondly, and assuming that such a right exists, it must be in proportion to the "just fees and
disbursements" 40 due him. It is still subject to the tempering hand of this Court.

The Court notes a hidden agenda in the petitioner's haste to execute the compromise agreement and
subsequently, to force the transfer of the properties to himself. As we have observed, in spite of the
issuance of the writ of execution, it does not appear that the petitioner took pains to implement it. We
find this perplexing given his passionate and persistent pleas that he was entitled to the proceeds. There
can indeed be no plausible explanation other than to enable him to keep an "ace" against the private
respondent that led finally, to the conveyance of the properties in his favor. To be sure, he would have
us beheve that by redeeming the same from the mortgagee and by in fact parting with his own money
he had actually done the private respondent a favor, but this is to assume that he did not get anything
out of the transaction. Indeed, he himself admits that "itles to the properties have been issued to the
new owners long before the filing of private respondents [sic] petition for annulment." 41 To say that he
did not profit therefrom is to take either this Court or the petitioner for naive, a proposition this Court is
not prepared to accept under the circumstances.

We are likewise convinced that it was the petitioner who succeeded in having the private respondent
sign the "Deed of Sale and Transfer of Rights of Equity of Redemption and/or to Redeem," a pre-
prepared document apparently, that allowed him (the petitioner) to exercise the right of redemption
over the properties and to all intents and purposes, acquire ownership thereof. As we have earlier
averred, the private respondent, by reason of bankruptcy, had become an easy quarry to his counsel's
moral influence and ascendancy. We are hard put to believe that it was the private respondent who
"earnestly implored" 42 him to undertake the redemption amid the former's obstinate attempts to keep
his lands that have indeed led to the multiple suits the petitioner now complains of, apart from the fact
that the latter himself had something to gain from the transaction, as alluded to above. We are of the
opinion that in ceding his right of redemption, the private respondent had intended merely to forestall
the total loss of the parcels to the mortgagee upon the understanding that his counsel shall acquire the
same and keep them therefore within reach, subject to redemption by his client under easier terms and
conditions. Surely, the petitioner himself would maintain that he agreed to make the redemption"in
order that may already be paid the P100,000.00 attorney's fees awarded him in the Compromise
Agreement," 43 and if his sole concern was his fees, there was no point in keeping the properties in their
entirety.

The Court simply cannot fag for the petitioner's pretensions that he acquired the properties as a gesture
of magnanimity and altruism He denies, of course, having made money from it, but what he cannot
dispute is the fact that he did resell the properties. 44

But if he did not entertain intents of making any profit, why was it necessary to reword the conveyance
document executed by the private respondent? It shall be recalled that the deed, as originally drafted,
provided for conveyance of the private respondent's "rights of equity of redemption and/or redeem" 45
the properties in his favor, whereas the instrument registered with the Register of Deeds purported to
transfer "any and all my rights of the real properties and/or to redeem," 46 in his favor. He admits
having entered the intercalations in question but argues that he did so "to facilitate the registration of
the questioned deed with the Register of Deeds" 47 and that it did not change the meaning of the
paper, for which Judge Santiago acquitted him of any falsification charges. 48 To start with, the Court is
at a loss how such an alteration could "facilitate" registration. Moreover, if it did not change the tenor of
the deed, why was it necessary then? And why did he not inform his client? At any rate, the agreement
is clearly a contract of adhesion. Its provisions should be read against the party who prepared it.

But while we cannot hold the petitioner liable for falsification — this is not the proper occasion for it —
we condemn him nonetheless for infidelity to his oath "to do no falsehood" 49

This brings us to the final question: Whether or not the conveyance in favor of the petitioner is subject
to the ban on acquisition by attorneys of things in litigation. The pertinent provisions of the Civil Code
state as follows:

Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial action,
either in person or through the mediation of another:

(1) The guardian, the property of the person or persons who may be under his guardianship;

(2) Agents, the property whose administration or sale may have been intrusted to them, unless the
consent of the principal have been given;

(3) Executors and administrators, the property of the estate under administration;

(4) Public officers and employees, the property of the State or of any subdivision thereof, or of any
government owned or controlled corporation, or institution, the administration of which has been
instrusted to them; this provision shall apply to judges and government experts who, in any manner
whatsoever, take part in the sale;

(5) Justice judges prosecuting attorneys clerks of superior and inferior courts, and other officers and
employees connected with the administration of justice, the property and rights in litigation or levied
upon an execution before the court within whose jurisdiction or territory they exercise their respective
functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with
respect to the property and rights which may be the object of any litigation in which they may take part
by virtue of their profession.

(6) Any others specially disqualified by law.**

In Rubias v. Batiller, 50 we declared such contracts to be void by force of Article 1409, paragraph (7), of
the Civil Code, defining inexistent contracts. In Director of Lands v. Ababa 51 however, we said that the
prohibition does not apply to contingent contracts, in which the conveyance takes place after judgment,
so that the property can no longer be said to be "subject of litigation."

In the instant case, the Court observes that the "Deed of Sale and Transfer of Rights of Equity of
Redemption and/or to Redeem" was executed following the finality of the decision approving the
compromise agreement. It is actually a new contract — not one in pursuance of what had been agreed
upon on compromise — in which, as we said, the petitioner purportedly assumed redemption rights
over the disputed properties (but in reality, acquired absolute ownership thereof). By virtue of such a
subsequent agreement, the lands had ceased to be properties which are "the object of any litigation."
Parenthetically, the Court states that a writ of possession is improper to eject another from possession
unless sought in connection with: (1) a land registration proceeding; (2) an extrajudicial foreclosure of
mortgage of real property; (3) in a judicial foreclosure of property provided that the mortgagor has
possession and no third party has intervened; and (4) in execution sales. 52 It is noteworthy that in this
case, the petitioner moved for the issuance of the writ pursuant to the deed of sale between him and
the private respondent and not the judgment on compromise. (He was, as we said, issued a writ of
execution on the compromise agreement but as we likewise observed, he did not have the same
enforced. The sale agreement between the parties, it should be noted, superseded the compromise.)
The writ does not lie in such a case. His remedy is specific performance.

At any rate, the transfer, so we hold, is not subject to the injunction of Article 1491 of the Civil Code. But
like all voidable contracts, it is open to annulment on the ground of mistake, fraud, or undue influence,
53 which is in turn subject to the right of innocent purchasers for value. 54

For this reason, we invalidate the transfer in question specifically for undue influence as earlier detailed.
While the respondent Herrera has not specifically prayed for invalidation, this is the clear tenor of his
petition for annulment in the Appellate Court. It appearing, however, that the properties have been
conveyed to third persons whom we presume to be innocent purchasers for value, the petitioner, Atty.
Paterno Canlas, must be held liable, by way of actual damages, for such a loss of properties.

We are not, however, condoning the private respondent's own shortcomings. In condemning Atty.
Canlas monetarily, we cannot overlook the fact that the private respondent has not settled his hability
for payment of the properties. To hold Atty. Canlas alone liable for damages is to enrich said respondent
at the expense of his lawyer. The parties must then set off their obligations against the other. To obviate
debate as the actual amounts owing by one to the other, we hold Francisco Herrera, the private
respondent, liable to Atty. Paterno Canlas, the petitioner, in the sum of P654,000.00 representing the
redemption price of the properties, 55 in addition to the sum of P20,000. 00 as and for attomey's fees.
We order Atty. Canlas, in turn, to pay the respondent Herrera the amount of P1,000,000.00, the sum he
earned from the resale thereof, 56 such that he shall, after proper adjustments, be indebted to his client
in the sum of P326,000.00 as and for damages.

Needless to say, we sustain the action of the respondent Court of Appeals in taking cognizance of the
petition below. But as we have stated, we are compelled, as the final arbiter of justiciable cases and in
the highest interests ofjustice, to write finis to the controversy that has taxed considerably the dockets
of the inferior courts.

Let the Court further say that while its business is to settle actual controversies and as a matter of
general policy, to leave alone moot ones, its mission is, first and foremost, to dispense justice. At the
outset, we have made clear that from a technical vantage point, certiorari, arguably lies, but as we have
likewise stated, the resolution of the case rests not only on the mandate of technical rules, but if the
decision is to have any real meaning, on the merits too. This is not the first time we would have done so;
in many cases we have eschewed the rigidity of the Rules of Court if it would establish a barrier upon
the administration ofjustice. It is especially so in the case at bar, in which no end to suit and counter-suit
appears imminent and for which it is high time that we have the final say. We likewise cannot, as the
overseer of good conduct in both the bench and the bar, let go unpunished what convinces us as serious
indiscretions on the part of a lawyer.
WHEREFORE, judgment is hereby rendered.

1. ORDERING the petitioner, Atty. Patemo Canlas, to pay to the private respondent, Francisco
Herrera, the sum of P326,000.00, as and for damages;

2. ORDERING the petitioner to SHOW CAUSE why no disciplinary action may be imposed on him for
violation of his oath, as a lawyer, within ten (10) days from notice, after which the same will be
consolidated with AC No. 2625;

3. DISMISSING this petition and REMANDING the case to the respondent Court of Appeals for
execution; and

4. ORDERING the petitioner to pay costs.

SO ORDERED.

Melencio-Herrera (Chairperson) and Medialdea, ** JJ., concur.

Paras and Padilla, JJ., took no part.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 192100 March 12, 2014

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
(DPWH)1, Petitioner,

vs.

ASIA PACIFIC INTEGRATED STEEL CORPORATION, Respondent.

DECISION

VILLARAMA, JR., J.:

Before this Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure,
as amended, assailing the July 21, 2009 Decision2 of the Court of Appeals (CA) in CA-G.R. CV No. 90539.
The CA partially affirmed the September 21, 2007 Decision3 of the Regional Trial Court (RTC), Branch 54,
of Macabebe, Pampanga, and reduced the annual legal interest awarded from 12% to 6% per annum.
Also assailed is the appellate court's April 28, 2010 Resolution4 denying petitioner's motion for
reconsideration.

As culled from the records, the following are the pertinent facts:

Asia Pacific Integrated Steel Corporation (respondent) is the registered owner of a 17,175-square meter
property situated in Barangay Sta. Monica, Municipality of San Simon, Province of Pampanga and
covered by Transfer Certificate of Title (TCT) No. 271813-R.5

On March 1, 2002, the Republic of the Philippines (petitioner) through the Toll Regulatory Board (TRB)
instituted expropriation proceedings against the respondent over a portion of their property. The
affected area, consisting of 2,024 square meters, shall be traversed by the expansion of the San Simon
Interchange, an integral component of the construction, rehabilitation and expansion of the North
Luzon Expressway (NLEX Project). Subsequently, petitioner filed an urgent ex-parte motion for issuance
of writ of possession, stating that it deposited with the Land Bank of the Philippines (LBP) the amount of
₱607,200.00 (100% of the value of the property based on current zonal valuation of the Bureau of
Internal Revenue [BIR]) in accordance with Section 4(a) of Republic Act No. 89746 (R.A. 8794), and hence
the court has the ministerial duty to place petitioner in possession pursuant to Section 2, Rule 67 of the
Rules of Civil Procedure.7

On March 19, 2002, the trial court issued an order granting petitioner’s motion and directing the
Register of Deeds of Pampanga to cause the annotation of the writ of possession on TCT No. 271813-R.8

In its Answer with Opposition to the Motion for Issuance of Writ of Possession,9 respondent questioned
the TRB’s authority to expropriate the subject property and objected to petitioner’s offered
compensation which respondent deems unjust because the basis thereof - the BIR zonal valuation - was
an unofficial valuation, being merely based on an internal memorandum issued by BIR Revenue District
No. 21, not by the Asset Valuation Department of the BIR National Office. Respondent asserted that just
compensation should be at ₱3,036,000.00 or at ₱1,500.00 per square meter plus consequential
damages, considering the fair market value and the industrial classification of the subject property.

During the pre-trial conference, the parties agreed on TRB’s authority to expropriate the subject
property but disagreed as to the amount of just compensation. Petitioner offered to pay ₱607,200.00
for the portion taken but respondent made a counter-offer of ₱1,821,600.00. The parties eventually
agreed to submit the issue of just compensation to three Commissioners composed of the Municipal
Assessor of San Simon as Chairman, and the RTC Branch Clerk of Court and the Register of Deeds for the
Province of Pampanga as Members.10

On June 1, 2004, the trial court granted respondent’s motion to withdraw the ₱607,200.00 deposited by
petitioner with the LBP as partial payment for just compensation.11

On June 9, 2004, the Commissioners submitted their Report with the following findings and
recommendation:

The affected lot is within the area wherein the land use are residential, commercial, and industrial
(mixed land use), as per Vicinity Map hereto attached as Annex "B". The area is along MacArthur
Highway, Quezon Road, Municipal and Barangay Roads

In the absence of bonafide sales transaction in the area, the Assessor’s Office being aware of the actual
conditions of subject property decided to use opinion values in the determination of the current and fair
market value for the purpose of payment of just compensation.

OPINION VALUES

A. Real Estate Brokers/Independent Appraisers/Owners, etc.

1. Residential - ranging from ₱2,000.00 to ₱2,500.00 per square meter

2. Commercial - ranging from ₱2,500.00 to ₱3,000.00 per square meter

3. Industrial - ranging from ₱1,000.00 above per square meter

B. Banks and Financial Institutions

1. Residential - ranging from ₱1,000.00 to ₱2,000.00 per square meter

2. Commercial - ranging from ₱2,000.00 to ₱3,000.00 per square meter

3. Residential - ranging from ₱1,000.00 to ₱1,500.00 per square meter

Appraisal conducted by the Assessor of San Simon, Pampanga for various properties within the area,
recommended an amount ranging from ₱1,000.00 to ₱1,500.00, Philippine currency, per square meter,
depending on their proximity to the national roads, municipal roads, and barangay roads, and the
improvement/development put in place. The amount of ₱1,000.00 to ₱1,500.00 was arrived at by the
undersigned commissioners due to the conversion of the subject property from agricultural to industrial
use as evidenced by the Order of Conversion dated July 8, 1991, issued by Renato B. Padilla,
Undersecretary, Department of Agrarian Reform, a xerox copy of which is hereto attached Annex "C".12
On September 23, 2004, an ocular inspection was conducted in the presence of the parties’
representatives and their respective counsels, during which the trial court noted the following:

1. There is an existing toll plaza on the right lane of the expressway facing the direction of Manila with
blue colored roofing.

2. Comprised in the aforesaid toll plaza are three toll booths. The third booth located on the extreme
right facing Manila occupies a portion of the expropriated portion of defendant’s property.

3. The expropriated portion which is shown in a sketch which was marked as Exhibit H is indicated by its
color: green. It has an area of 2,021 square meters. The remaining unexpropriated portion of
defendant’s land has an area of 15,151 square meters.

4. The unexpropriated portion of the land of defendant is presently very much below the level of the
expressway because the expressway was upgraded. It is immediately adjacent to the existing
expressway, located as it is, on its right side facing Manila. It is swampy with little water.13

In its Decision, the trial court ruled as follows:

x x x Although there was no documentary evidence attached to substantiate the opinions of the banks
and the realtors indicated in the Commissioners’ Report, the Court finds the commissioners’
recommendation of the valuation of industrial lands at ₱1,000.00 to ₱1,500.00 to be fair, absent any
showing that the valuation is exorbitant or otherwise unjustified. There was no fraud or prejudice that
tainted the report.

The Court finds the valuation of the Republic of the Philippines which was pegged at Php300.00 per
square meter to be very low. The zonal valuation of the Bureau of Internal Revenue (Exhibits A and B
with submarkings) is merely a gauge or is necessary in the assessment of correct transfer taxes by the
said office. Furthermore the Department Order No. 23-98 took effect only last February 2, 1998 which
was four (4) years prior to the filing of the complaint. The same is true with Ordinance No. 17, Series of
1994 issued by the Sangguniang Panlalawigan of Pampanga (Exhibit E) which was issued eight (8) years
also prior to the filing of the complaint.

Concerning the Deed of Absolute Sale (Exhibit C) notarized on July 19, 2002, the same was undated and
pertains only to a right of way. An easement of right of way transmits no rights except the easement
itself. Hence, the just compensation pertaining to easement of right of way should be lower than that in
the Deed of Absolute Sale. x x x

xxxx

Using the recommendation of the three (3) commissioners as guide, the Court finds the amount of ONE
THOUSAND THREE HUNDRED PESOS (Php1,300.00) per square meter as just compensation for the
property subject of expropriation.

WHEREFORE, premises considered, judgment is rendered:

1) Ordering the plaintiff to pay the defendant in the amount of TWO MILLION TWENTY FOUR
THOUSAND PESOS (Php2,024,000.00) representing the net amount of just compensation after deducting
the partial payment of ₱607,200.00 based on the valuation of Php1,300.00 per square meter on the
expropriated portion of the parcel of land [Lot 329-A of the subdivision, plan (LRC) Psd-246403, being a
portion of lot 329, San Simon, LRC. Cad Rec. No. 1316] with an area of 2,024 square meters situated in
Sta. Monica, San Simon, Pampanga covered by Transfer Certificate of Title No. 271813-R plus legal
interest of 12% per annum from the time of taking (March 21, 2002) until fully paid less taxes due on the
land.

2) Ordering the plaintiff to pay the costs and/or expenses in relation to the transfer of ownership of the
property in its favor from defendant Asia Pacific Integrated Steel Corporation.

3) Condemning the property subject of expropriation free from all liens and encumbrances for the
construction, rehabilitation and expansion of the North Luzon Expressway.

SO ORDERED.14

Petitioner appealed to the CA, arguing that the just compensation should not be more than ₱300.00 per
square meter and that the correct rate of interest is 6% per annum.

The CA upheld the trial court’s ruling, reiterating the principle that the determination of just
compensation is an inherently judicial function. It stressed that any valuation for just compensation laid
down in statutes merely serve as guides or factors and may not substitute the court’s own judgment as
to what amount should be awarded and how to arrive at such amount.15

Further, the CA noted that petitioner itself admitted that the BIR zonal valuation is only for the purpose
of determining the correct amount of transfer taxes. It held that while BIR zonal valuation may be a
factor in determining just compensation, the same is not a competent basis thereof. Citing R.A. 8974,
the CA pointed out the distinction between provisional value as a precondition for the issuance of a writ
of possession and the payment of just compensation for the expropriated property. While the
provisional value is based on the zonal value as may be determined by the BIR, just compensation is
based on the prevailing fair market value of the property. Necessarily, the zonal valuation of properties
is not equivalent to their fair market value.16

After examining the records, the CA found no reversible error in the trial court’s determination of just
compensation and held that the valuation of ₱1,500.00 per square meter is more in consonance with
the concept of just compensation based upon due consideration of all evidence. Thus:

It is equally settled that the valuation of a property in tax declarations cannot be a substitute to just
compensation. Elsewise stated, the market value reflected in the tax declaration of the condemned
property is no longer conclusive. Accordingly, we cannot appreciate the herein tax declaration in favor
of the Republic.

Further, it is uncontested that the deed of sale dated July 19, 2002 between San Simon Realty, Inc. and
the Republic pertained only to a right of way, hence, the value thereof should be considerably lower.
Ordinance No. 17, as correctly found by the RTC, was issued on June 22, 1994 or eight (8) years prior to
the institution of the herein complaint. Certainly, the valuation of properties therein can by no means be
reflective of the current, prevailing and fair value of the subject property. The Republic failed to present
evidence to controvert he RTC’s finding on the matter. Neither has it shown that the property sold
thereunder shares the same features as the herein subject property as to warrant a similar valuation.
We cannot, thus, yield to the Republic’s submission that its evidence are the proper basis in determining
just compensation for Asia Pacific’s property.17
However, the CA modified the rate of interest imposed on the amount due as just compensation from
12% to 6% in conformity with prevailing jurisprudence.

On April 28, 2010, the CA denied petitioner’s motion for reconsideration, stating that the argument on
valuation by petitioner was merely a rehash of what the CA had already passed upon.

Hence, this petition assailing the CA’s affirmance of the trial court’s award of just compensation, the
legal basis of which is allegedly insufficient.

Petitioner argues that the evidence for determining the amount of just compensation in expropriation
cases should be on those factors provided in Section 5 of R.A. 8974. Considering such factors and the
evidence submitted by the parties before the trial court, petitioner maintains that just compensation for
the subject property should be no more than the zonal valuation (₱300.00 per square meter), and in no
case should it amount to the market value of ₱1,300.00 per square meter adjudged by the trial and
appellate courts. Petitioner claims that such huge sum for only 2,024-square meter portion of
respondent’s 17,175-square meter property, is unbelievably 433.4% more than the 1998 BIR zonal value
for an underdeveloped industrial land at the time of its taking.

On the other hand, respondent contends that no reversible error was committed by the CA in affirming
the trial court’s decision after considering all the arguments raised by petitioner and the evidence on
record. It asserts that the main issue of just compensation and the findings thereon by the trial court as
affirmed by the CA is a question of fact which should not be disturbed by this Court. Moreover,
respondent asserts that the determination by the trial court is entitled to the highest respect
considering that the judge has personal knowledge of the condition of the subject property, having
conducted an ocular inspection on September 23, 2004.

We grant the petition.

As a rule, a petition for review under Rule 45 of the Rules of Court covers only questions of law.
Questions of fact are not reviewable and cannot be passed upon by this Court in the exercise of its
power to review. The distinction between questions of law and questions of fact is established. A
question of law exists when the doubt or difference centers on what the law is on a certain state of
facts. A question of fact, on the other hand, exists if the doubt centers on the truth or falsity of the
alleged facts.18 This being so, the findings of fact of the CA are final and conclusive and this Court will
not review them on appeal.19

For a question to be one of law, the same must not involve an examination of the probative value of the
evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what
the law provides on the given set of circumstances.20 In this case, the only legal issue raised by
petitioner is whether the trial court based its determination of just compensation on the factors
provided under existing laws and jurisprudence.

Section 5 of R.A. 8974 enumerates the standards for assessing the value of expropriated land taken for
national government infrastructure projects, thus:

SECTION 5. Standards for the Assessment of the Value of the Land Subject of Expropriation Proceedings
or Negotiated Sale. – In order to facilitate the determination of just compensation, the court may
consider, among other well-established factors, the following relevant standards:
(a) The classification and use for which the property is suited;

(b) The developmental costs for improving the land;

(c) The value declared by the owners;

(d) The current selling price of similar lands in the vicinity;

(e) The reasonable disturbance compensation for the removal and/or demolition of certain
improvements on the land and for the value of the improvements thereon;

(f) The size, shape or location, tax declaration and zonal valuation of the land;

(g) The price of the land as manifested in the ocular findings, oral as well as documentary evidence
presented; and

(h) Such facts and events as to enable the affected property owners to have sufficient funds to acquire
similarly-situated lands of approximate areas as those required from them by the government, and
thereby rehabilitate themselves as early as possible.

In this case, the trial court considered only (a) and (d): (1) the classification of the subject property which
is located in an area with mixed land use (commercial, residential and industrial) and the property’s
conversion from agricultural to industrial land, and (2) the current selling price of similar lands in the
vicinity – the only factors which the commissioners included in their Report. It also found the
commissioners’ recommended valuation of ₱1,000.00 to ₱1,500.00 per square to be fair and just
despite the absence of documentary substantiation as said prices were based merely on the opinions of
bankers and realtors.

In National Power Corporation v. Manubay Agro-Industrial Development Corporation,21 the

recommended price of the city assessor was rejected by this Court. The opinions of the banks and the
realtors as reflected in the computation of the market value of the property and in the Commissioners’
Report, were not substantiated by any documentary evidence.

Similarly, in National Power Corporation v. Diato-Bernal,22 this Court rejected the valuation
recommended by court-appointed commissioners whose conclusions were devoid of any actual and
reliable basis. The market values of the subject property’s neighboring lots were found to be mere
estimates and unsupported by any corroborative documents, such as sworn declarations of realtors in
the area concerned, tax declarations or zonal valuation from the BIR for the contiguous residential
dwellings and commercial establishments. Thus, we ruled that a commissioners’ report of land prices
which is not based on any documentary evidence is manifestly hearsay and should be disregarded by
the court.

We find that the trial court did not judiciously determine the fair market value of the subject property as
it failed to consider other relevant factors such as the zonal valuation, tax declarations and current
selling price supported by documentary evidence. Indeed, just compensation must not be arrived at
arbitrarily, but determined after an evaluation of different factors.23

Just compensation is defined as the full and fair equivalent of the property taken from its owner by the
expropriator. The measure is not the taker’s gain, but the owner’s loss. The word "just" is used to
intensify the meaning of the word "compensation" and to convey thereby the idea that the equivalent
to be rendered for the property to be taken shall be real, substantial, full, and ample. Such "just"-ness of
the compensation can only be attained by using reliable and actual data as bases in fixing the value of
the condemned property.24 Trial courts are required to be more circumspect in its evaluation of just
compensation due the property owner, considering that eminent domain cases involve the expenditure
of public funds.25

We agree with the trial court that it was not bound by the assessment report of the commissioners and
that it had the discretion to reject the same and substitute its own judgment on its value as gathered
from the record, or it may accept the report/recommendation of the commissioners in toto and base its
judgment thereon. However, the decision of the court must be based on all established rules, upon
correct legal principles and competent evidence.26 The court is proscribed from basing its judgment on
speculations and surmises.

Nonetheless, we cannot subscribe to petitioner’s argument that just compensation for the subject
property should not exceed the zonal valuation (₱300.00 per square meter).

In Republic v. Court of Appeals,27 we held that --

The constitutional limitation of "just compensation" is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market in the
usual and ordinary course of legal action and competition or the fair value of the property as between
one who receives, and one who desires to sell, it fixed at the time of the actual taking by the
government. x x x

Zonal valuation is just one of the indices of the fair market value of real estate. By itself, this index
cannot be the sole basis of "just compensation" in expropriation cases.28 As this Court ruled in Leca
Realty Corporation v. Rep. of the Phils.29:

The Republic is incorrect, however, in alleging that the values were exorbitant, merely because they
exceeded the maximum zonal value of real properties in the same location where the subject properties
were located. The zonal value may be one, but not necessarily the sole, index of the value of a realty.
National Power Corporation v. Manubay Agro-Industrial held thus:

"x x x [Market value] is not limited to the assessed value of the property or to the schedule of market
values determined by the provincial or city appraisal committee. However, these values may serve as
factors to be considered in the judicial valuation of the property."

The above ruling finds support in EPZA v. Dulay in this wise:

"Various factors can come into play in the valuation of specific properties singled out for
expropriation.1âwphi1 The values given by provincial assessors are usually uniform for very wide areas
covering several barrios or even an entire town with the exception of the poblacion. Individual
differences are never taken into account. The value of land is based on such generalities as its possible
cultivation for rice, com, coconuts or other crops. Very often land described as 'cogonal' has been
cultivated for generations. Buildings are described in terms of only two or three classes of building
materials and estimates of areas are more often inaccurate than correct. Tax values can serve as guides
but cannot be absolute substitutes for just compensation." (Emphasis supplied.)
Among the factors to be considered in arriving at the fair market value of the property are the cost of
acquisition, the current value of like properties, its actual or potential uses, and in the particular case of
lands, their size, shape, location, and the tax declarations thereon. The measure is not the taker's gain
but the owner's loss.30 To be just, the compensation must be fair not only to the owner but also to the
taker.31

It is settled that the final conclusions on the proper amount of just compensation can only be made after
due ascertainment of the requirements set forth under R.A. 8974 and not merely based on the
declarations of the parties.32 Since these requirements were not satisfactorily complied with, and in the
absence of reliable and actual data as bases in fixing the value of the condemned property, remand of
this case to the trial court is in order.

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated July 21, 2009 and
Resolution dated April 28, 2010 of the Court of Appeals in CA-G.R. CV No. 90539 are hereby SET ASIDE.

This case is remanded to the trial court for the proper determination of just compensation, in
conformity with this Decision.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice
Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 165354 January 12, 2015

REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL POWER CORPORATION, Petitioner,

vs.

HEIRS OF SATURNINO Q. BORBON, AND COURT OF APPEALS, Respondents.

DECISION

BERSAMIN, J.:

The expropriator who has taken possession of the property subject of expropriation is obliged to pay
reasonable compensation to the landowner for the period of such possession although the proceedings
had been discontinued on the ground that the public purpose for the expropriation had meanwhile
ceased.

Antecedents

The National Power Corporation (NAPOCOR) is a government-owned and -controlled corporation vested
with authority under Republic Act No. 6395, as amended, to undertake the development of hydro-
electric generation of power, production of electricity from any and all sources, construction, operation
and maintenance of power plants, auxiliary plants, dams, reservoirs, pipes, main transmission lines,
power stations and substations, and other works for the purpose of developing hydraulic power from
any river, lake, creek, spring and waterfalls in the Philippines and to supply such power to the
inhabitants thereof.1

In February 1993, NAPOCOR entered a property located in Barangay San Isidro, Batangas City in order to
construct and maintain transmission lines for the 230 KV Mahabang Parang-Pinamucan Power
Transmission Project.2 Respondents heirs of Saturnino Q. Borbon owned the property, with a total area
of 14,257 square meters, which was registered under Transfer Certificate of Title No. T-9696 of the
Registry of Deeds of Batangas.3

On May 26, 1995, NAPOCOR filed a complaint for expropriation in the Regional Trial Court in Batangas
City (RTC),4 seeking the acquisition of an easement of right of way over a portion of the property
involving an area of only 6,326 square meters, more or less,5 alleging that it had negotiated with the
respondents for the acquisition of the easement but they had failed to reach any agreement; and that,
nonetheless, it was willing to deposit the amount of ₱9,790.00 representing the assessed value of the
portion sought to be expropriated.6 It prayed for the issuance of a writ of possession upon deposit to
enable it to enter and take possession and control of the affected portion of the property; to demolish
all improvements existing thereon; and to commence construction of the transmission line project. It
likewise prayed for the appointment of three commissioners to determine the just compensation to be
paid.7
In their answer with motion to dismiss,8 the respondents staunchly maintained that NAPOCOR had not
negotiated with them before entering the property and that the entry was done without their consent in
the process, destroying some fruit trees without payment, and installing five transmission line posts and
five woodpoles for its project;9 that the area being expropriated only covered the portion directly
affected by the transmission lines; that the remaining portion of the property was also affected because
the transmission line passed through the center of the land, thereby dividing the land into three lots;
that the presence of the high tension transmission line had rendered the entire property inutile for any
future use and capabilities;10 that, nonetheless, they tendered no objection to NAPOCOR’s entry
provided it would pay just compensation not only for the portion sought to be expropriated but for the
entire property whose potential was greatly diminished, if not totally lost, due to the project;11 and that
their property was classified as industrial land. Thus, they sought the dismissal of the complaint, the
payment of just compensation of ₱1,000.00/square meter, and attorney’s fees;12 and to be allowed to
nominate their representative to the panel of commissioners to be appointed by the trial court.13

In the pre-trial conference conducted on December 20, 1995, the parties stipulated on: (1) the location
of the property; (2) the number of the heirs of the late Saturnino Q. Borbon; (3) the names of the
persons upon whom title to the property was issued; and (4) the ownership and possession of the
property.14 In its order of that date, the RTC directed the parties to submit the names of their nominees
to sit in the panel of commissioners within 10 days from the date of the pre-trial.15

The RTC constituted the panel of three commissioners. Two commissioners submitted a joint report on
April 8, 1999,16 in which they found that the property was classified as industrial land located within the
Industrial 2 Zone;17 that although the property used to be classified as agricultural (i.e., horticultural
and pasture land), it was reclassified to industrial land for appraisal or taxation purposes on June 30,
1994; and that the reclassification was made on the basis of a certification issued by the Zoning
Administrator pursuant to Section 3.10 (d) of the Amended Zoning Ordinance (1989) of the City of
Batangas.18 The two commissioners appraised the value at ₱550.00/square meter.19 However, the
third commissioner filed a separate report dated March 16, 1999,20 whereby he recommended the
payment of "an easement fee of at least ten percent (10%) of the assessed value indicated in the tax
declaration21 plus cost of damages in the course of the construction, improvements affected and tower
occupancy fee."22

The parties then submitted their respective objections to the reports. On their part, the respondents
maintained that NAPOCOR should compensate them for the entire property at the rate of
₱550.00/square meter because the property was already classified as industrial land at the time
NAPOCOR entered it.23 In contrast, NAPOCOR objected to the joint report, insisting that the property
was classified as agricultural land at the time of its taking in March 1993; and clarifying that it was only
seeking an easement of right of way over a portion of the property, not the entire area thereof, so that
it should pay only 10% of the assessed value of the portion thus occupied.24

In the judgment dated November 27, 2000,25 the RTC adopted the recommendation contained in the
joint report, and ruled thusly:

The price to be paid for an expropriated land is its value at the time of taking, which is the date when
the plaintiff actually entered the property or the date of the filing of the complaint for expropriation. In
this case, there is no evidence as to when the plaintiff actually entered the property in question, so the
reference point should be the date of filing of the complaint, which is May 5, 1995.
On this date, the property in question was already classified as industrial. So, the Joint Report (Exhibit
"1") is credible on this point. The two Commissioners who submitted the Joint Report are government
officials who were not shown to be biased. So, that their report should be given more weight than the
minority report submitted by a private lawyer representing the plaintiff. In view of these, the Court
adopts the Joint Report and rejects the minority report. The former fixed the just compensation at
₱550.00 per square meter for the whole lot of 14,257 square meters.26

Accordingly, the RTC ordered NAPOCOR to pay the respondents: (1) just compensation for the whole
area of 14,257 square meters at the rate of ₱550.00/square meter; (2) legal rate of interest from May 5,
1995 until full payment; and (3) the costs of suit.27

NAPOCOR appealed (CA-G.R. No. 72069).

On April 29, 2004,28 the CA promulgated its decision, viz:

WHEREFORE, premises considered, the Decision dated November 27, 2000 of Branch I of the Regional
Trial Court of Batangas City, is hereby AFFIRMED with the MODIFICATION that plaintiff-appellant shall
pay only for the occupied 6,326 square meters of the subject real property at the rate of ₱550.00 per
square meter and to pay legal interest therefrom until fully paid.

SO ORDERED.29

Hence, this appeal by NAPOCOR.

Issue

On December 3, 2012, during the pendency of the appeal, NAPOCOR filed a Motion to Defer
Proceedings stating that negotiations between the parties were going on with a view to the amicable
settlement of the case.30

On January 3, 2014, NAPOCOR filed a Manifestation and Motion to Discontinue Expropriation

Proceedings,31 informing that the parties failed to reach an amicable agreement; that the property
sought to be expropriated was no longer necessary for public purpose because of the intervening
retirement of the transmission lines installed on the respondents’ property;32 that because the public
purpose for which such property would be used thereby ceased to exist, the proceedings for
expropriation should no longer continue, and the State was now duty-bound to return the property to
its owners; and that the dismissal or discontinuance of the expropriation proceedings was in accordance
with Section 4, Rule 67 of the Rules of Court. Hence, NAPOCOR prayed that the proceedings be
discontinued "under such terms as the court deems just and equitable,"33 and that the compensation to
be awarded the respondents be reduced by the equivalent of the benefit they received from the land
during the time of its occupation, for which purpose the case could be remanded to the trial court for
the determination of reasonable compensation to be paid to them.34

In light of its Manifestation and Motion to Discontinue Expropriation Proceedings, NAPOCOR contends
that the expropriation has become without basis for lack of public purpose as a result of the retirement
of the transmission lines; that if expropriation still proceeds, the Government will be unduly burdened
by payment of just compensation for property it no longer requires; and that there is legal basis in
dismissing the proceedings, citing Metropolitan Water District v. De los Angeles35 where the Court
granted petitioner’s prayer for the quashal of expropriation proceedings and the eventual dismissal of
the proceedings on the ground that the land sought to be expropriated was no longer "indispensably
necessary" in the maintenance and operation of petitioner's waterworks system.

The issue to be considered and resolved is whether or not the expropriation proceedings should be
discontinued or dismissed pending appeal.

Ruling of the Court

The dismissal of the proceedings for expropriation at the instance of NAPOCOR is proper, but,
conformably with Section 4,36 Rule 67 of the Rules of Court, the dismissal or discontinuance of the
proceedings must be upon such terms as the court deems just and equitable.

Before anything more, we remind the parties about the nature of the power of eminent domain. The
right of eminent domain is "the ultimate right of the sovereign power to appropriate, not only the public
but the private property of all citizens within the territorial sovereignty, to public purpose."37 But the
exercise of such right is not unlimited, for two mandatory requirements should underlie the
Government’s exercise of the power of eminent domain, namely: (1) that it is for a particular public
purpose; and (2) that just compensation be paid to the property owner.38 These requirements partake
the nature of implied conditions that should be complied with to enable the condemnor to keep the
property expropriated.39

Public use, in common acceptation, means "use by the public." However, the concept has expanded to
include utility, advantage or productivity for the benefit of the public.40 In Asia's Emerging Dragon
Corporation v. Department of Transportation and Communications,41 Justice Corona, in his dissenting
opinion said that:

To be valid, the taking must be for public use. The meaning of the term "public use" has evolved over
time in response to changing public needs and exigencies. Public use which was traditionally understood
as strictly limited to actual "use by the public" has already been abandoned. "Public use" has now been
held to be synonymous with "public interest," "public benefit," and "public convenience."

It is essential that the element of public use of the property be maintained throughout the proceedings
for expropriation. The effects of abandoning the public purpose were explained in Mactan-Cebu
International Airport Authority v. Lozada, Sr.,42 to wit:

More particularly, with respect to the element of public use, the expropriator should commit to use the
property pursuant to the purpose stated in the petition for expropriation filed, failing which, it should
file another petition for the new purpose. If not, it is then incumbent upon the expropriator to return
the said property to its private owner, if the latter desires to reacquire the same. Otherwise, the
judgment of expropriation suffers an intrinsic flaw, as it would lack one indispensable element for the
proper exercise of the power of eminent domain, namely, the particular public purpose for which the
property will be devoted. Accordingly, the private property owner would be denied due process of law,
and the judgment would violate the property owner's right to justice, fairness and equity.43

A review reveals that Metropolitan Water District v. De los Angeles44 is an appropriate precedent
herein. There, the Metropolitan Water District passed a board resolution requesting the Attorney-
General to file a petition in the Court of First Instance of the Province of Rizal praying that it be
permitted to discontinue the condemnation proceedings it had initiated for the expropriation of a parcel
of land in Montalban, Rizal to be used in the construction of the Angat Waterworks System. It claimed
that the land was no longer indispensably necessary in the maintenance and operation of its waterworks
system, and that the expropriation complaint should then be dismissed. The Court, expounding on the
power of the State to exercise the right of eminent domain, then pronounced:

There is no question raised concerning the right of the plaintiff here to acquire the land under the power
of eminent domain.1âwphi1 That power was expressly granted it by its charter. The power of eminent
domain is a right reserved to the people or Government to take property for public use. It is the right of
the state, through its regular organization, to reassert either temporarily or permanently its dominion
over any portion of the soil of the state on account of public necessity and for the public good. The right
of eminent domain is the right which the Government or the people retains over the estates of
individuals to resume them for public use. It is the right of the people, or the sovereign, to dispose, in
case of public necessity and for the public safety, of all the wealth contained in the state.45

Indeed, public use is the fundamental basis for the action for expropriation; hence, NAPOCOR’s motion
to discontinue the proceedings is warranted and should be granted. The Court has observed in
Metropolitan Water District v. De los Angeles:

It is not denied that the purpose of the plaintiff was to acquire the land in question for public use. The
fundamental basis then of all actions brought for the expropriation of lands, under the power of
eminent domain, is public use. That being true, the very moment that it appears at any stage of the
proceedings that the expropriation is not for a public use, the action must necessarily fail and should be
dismissed, for the reason that the action cannot be maintained at all except when the expropriation is
for some public use. That must be true even during the pendency of the appeal or at any other stage of
the proceedings. If, for example, during the trial in the lower court, it should be made to appear to the
satisfaction of the court that the expropriation is not for some public use, it would be the duty and the
obligation of the trial court to dismiss the action. And even during the pendency of the appeal, if it
should be made to appear to the satisfaction of the appellate court that the expropriation is not for
public use, then it would become the duty and the obligation of the appellate court to dismiss it.

In the present case the petitioner admits that the expropriation of the land in question is no longer
necessary for public use. Had that admission been made in the trial court the case should have been
dismissed there. It now appearing positively, by resolution of the plaintiff, that the expropriation is not
necessary for public use, the action should be dismissed even without a motion on the part of the
plaintiff. The moment it appears in whatever stage of the proceedings that the expropriation is not for a
public use the complaint should be dismissed and all the parties thereto should be relieved from further
annoyance or litigation.46 (underscoring and emphasis supplied)

It is notable that the dismissal of the expropriation proceedings in Metropolitan Water District v. De los
Angeles was made subject to several conditions in order to address the dispossession of the defendants
of their land, and the inconvenience, annoyance and damages suffered by the defendants on account of
the proceedings. Accordingly, the Court remanded the case to the trial court for the issuance of a writ of
possession ordering Metropolitan Water District to immediately return possession of the land to the
defendants, and for the determination of damages in favor of the defendants, the claims for which must
be presented within 30 days from the return of the record to the court of origin and notice thereof.47
Here, NAPOCOR seeks to discontinue the expropriation proceedings on the ground that the transmission
lines constructed on the respondents’ property had already been retired. Considering that the Court has
consistently upheld the primordial importance of public use in expropriation proceedings, NAPOCOR’s
reliance on Metropolitan Water District v. De los Angeles was apt and correct. Verily, the retirement of
the transmission lines necessarily stripped the expropriation proceedings of the element of public use.
To continue with the expropriation proceedings despite the definite cessation of the public purpose of
the project would result in the rendition of an invalid judgment in favor of the expropriator due to the
absence of the essential element of public use.

Unlike in Metropolitan Water District v. De los Angeles where the request to discontinue the
expropriation proceedings was made upon the authority appearing in the board resolution issued on
July 14, 1930,48 counsel for NAPOCOR has not presented herein any document to show that NAPOCOR
had decided, as a corporate body, to discontinue the expropriation proceedings. Nonetheless, the Court
points to the Memorandum dated December 13, 201249 and the Certificate of
Inspection/Accomplishment dated February 5, 200550 attached to NAPOCOR’s motion attesting to the
retirement of the transmission lines. Also, Metropolitan Water District v. De los Angeles emphasized
that it became the duty and the obligation of the court, regardless of the stage of the proceedings, to
dismiss the action "if it should be made to appear to the satisfaction of the court that the expropriation
is not for some public use."51 Despite the lack of the board resolution, therefore, the Court now
considers the documents attached to NAPOCOR’s Manifestation and Motion to Discontinue
Expropriation Proceedings to be sufficient to establish that the expropriation sought is no longer for
some public purpose.

Accordingly, the Court grants the motion to discontinue the proceedings subject to the conditions to be
shortly mentioned hereunder, and requires the return of the property to the respondents. Having said
that, we must point out that NAPOCOR entered the property without the owners’ consent and without
paying just compensation to the respondents. Neither did it deposit any amount as required by law prior
to its entry. The Constitution is explicit in obliging the Government and its entities to pay just
compensation before depriving any person of his or her property for public use.52 Considering that in
the process of installing transmission lines, NAPOCOR destroyed some fruit trees and plants without
payment, and the installation of the transmission lines went through the middle of the land as to divide
the property into three lots, thereby effectively rendering the entire property inutile for any future use,
it would be unfair for NAPOCOR not to be made liable to the respondents for the disturbance of their
property rights from the time of entry until the time of restoration of the possession of the property.
There should be no question about the taking. In several rulings, notably National Power Corporation v.
Zabala,53 Republic v. Libunao,54 National Power Corporation v. Tuazon,55 and National Power
Corporation v. Saludares,56 this Court has already declared that "since the high-tension electric current
passing through the transmission lines will perpetually deprive the property owners of the normal use of
their land, it is only just and proper to require Napocor to recompense them for the full market value of
their property."

There is a sufficient showing that NAPOCOR entered into and took possession of the respondents’
property as early as in March 1993 without the benefit of first filing a petition for eminent domain. For
all intents and purposes, therefore, March 1993 is the reckoning point of NAPOCOR’s taking of the
property, instead of May 5, 1995, the time NAPOCOR filed the petition for expropriation. The reckoning
conforms to the pronouncement in Ansaldo v. Tantuico, Jr.,57 to wit:
Normally, of course, where the institution of an expropriation action precedes the taking of the property
subject thereof, the just compensation is fixed as of the time of the filing of the complaint. This is so
provided by the Rules of Court, the assumption of possession by the expropriator ordinarily being
conditioned on its deposits with the National or Provincial Treasurer of the value of the property as
provisionally ascertained by the court having jurisdiction of the proceedings.

There are instances, however, where the expropriating agency takes over the property prior to the
expropriation suit, as in this case although, to repeat, the case at bar is quite extraordinary in that
possession was taken by the expropriator more than 40 years prior to suit. In these instances, this Court
has ruled that the just compensation shall be determined as of the time of taking, not as of the time of
filing of the action of eminent domain.

In the context of the State's inherent power of eminent domain, there is a "taking" when the owner is
actually deprived or dispossessed of his property; when there is a practical destruction or a material
impairment of the value of his property or when he is deprived of the ordinary use thereof. There is a
"taking" in this sense when the expropriator enters private property not only for a momentary period
but for a more permanent duration, for the purpose of devoting the property to a public use in such a
manner as to oust the owner and deprive him of all beneficial enjoyment thereof. For ownership, after
all, "is nothing without the inherent rights of possession, control and enjoyment. Where the owner is
deprived of the ordinary and beneficial use of his property or of its value by its being diverted to public
use, there is taking within the Constitutional sense." x x x.58

In view of the discontinuance of the proceedings and the eventual return of the property to the
respondents, there is no need to pay "just compensation" to them because their property would not be
taken by NAPOCOR. Instead of full market value of the property, therefore, NAPOCOR should
compensate the respondents for the disturbance of their property rights from the time of entry in
March 1993 until the time of restoration of the possession by paying to them actual or other
compensatory damages. This conforms with the following pronouncement in Mactan-Cebu International
Airport Authority v. Lozada, Sr.:59

In light of these premises, we now expressly hold that the taking of private property, consequent to the
Government’s exercise of its power of eminent domain, is always subject to the condition that the
property be devoted to the specific public purpose for which it was taken. Corollarily, if this particular
purpose or intent is not initiated or not at all pursued, and is peremptorily abandoned, then the former
owners, if they so desire, may seek the reversion of the property, subject to the return of the amount of
just compensation received. In such a case, the exercise of the power of eminent domain has become
improper for lack of the required factual justification.60

This should mean that the compensation must be based on what they actually lost as a result and by
reason of their dispossession of the property and of its use, including the value of the fruit trees, plants
and crops destroyed by NAPOCOR’s construction of the transmission lines. Considering that the
dismissal of the expropriation proceedings is a development occurring during the appeal, the Court now
treats the dismissal of the expropriation proceedings as producing the effect of converting the case into
an action for damages. For that purpose, the Court remands the case to the court of origin for further
proceedings, with instruction to the court of origin to enable the parties to fully litigate the action for
damages by giving them the opportunity to re-define the factual and legal issues by the submission of
the proper pleadings on the extent of the taking, the value of the compensation to be paid to the
respondents by NAPOCOR, and other relevant matters as they deem fit. Trial shall be limited to matters
the evidence upon which had not been heretofore heard or adduced. The assessment and payment of
the correct amount of filing fees due from the respondents shall be made in the judgment, and such
amount shall constitute a first lien on the recovery. Subject to these conditions, the court of origin shall
treat the case as if originally filed as an action for damages.

WHEREFORE, the Court DISMISSES the expropriation proceedings due to the intervening cessation of
the need for public use; REMANDS the records to the Regional Trial Court, Branch 1, in Batangas City as
the court of origin for further proceedings to be conducted in accordance with the foregoing
instructions; and ORDERS said trial court to try and decide the issues with dispatch.

SO ORDERED.

LUCAS P. BERSAMIN

Associate Justice
THIRD DIVISION

JOVEN DE GRANO, represented by Venus P. de Grano, Ernesto H. Malabanan, and Simplicia D.

Malabanan,

Petitioner,

- versus -

GREGORIO LACABA,

Respondent.

G.R. No. 158877

Present:

YNARES-SANTIAGO, J.,

Chairperson,

CHICO-NAZARIO,

VELASCO, JR.,

NACHURA, and

PERALTA, JJ.

Promulgated:

June 16, 2009

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Assailed in this petition for review on certiorari is the Decision of the Court of Appeals (CA) in CA-G.R. SP
No. 67852 dated October 16, 2002 and Resolution dated June 18, 2003. This decision reversed the
uniform decisions of the municipal and regional trial courts dismissing a forcible entry case filed by
respondent Gregorio Lacaba. The antecedents of the petition are as follows:

Respondent Gregorio Lacaba claims that he is the owner of two adjacent parcels of land, located in
Barangay Niugan, Laurel, Batangas and identified as Cadastral Lot Nos. 6916 and 6917 in Survey No. REI-
041011-001184. Lot No. 6916 has an area of 5,743 square meters, while Lot No. 6917 has an area of 804
square meters. Each parcel of land is covered by a separate tax declaration in the name of respondent.

On May 30, 2000, respondent filed a complaint for forcible entry with prayer for a temporary restraining
order and/or preliminary injunction against petitioner Joven de Grano. According to respondent, he has
been in physical possession of the two parcels of land for more than 30 years and has been paying real
property taxes thereon. In 1978, respondent purportedly designated as caretakers the spouses Ely and
Anita Mojica (spouses Mojica), who occupied the property until the present, and allowed three other
spouses, including the spouses Silvestre and Amor Matilla (spouses Matilla), to build their respective
houses on the property and conduct fruit vending and carinderia business.

Respondent alleged that, sometime during the second week of May 2000, petitioner, by means of force,
intimidation, strategy and threats, and with the help of his men, destroyed the perimeter fence built by
respondent. The fence was made of concrete posts and barbed wire. Respondent averred that
petitioner effectively disrupted respondents peaceful possession and occupation of the property by
clearing the land of plants, bushes and trees and demolishing the house owned by the spouses Matilla.
The continuous intrusion of petitioner caused serious fear and anxiety to the occupants of the
properties.

Respondent attached to the complaint Tax Declaration Nos. 016-00618 and 016-00619 and a copy of
Official Receipt No. 5342125 dated May 30, 2000 of the payment of real property tax from 1998 until
2000. In addition, respondent later submitted a Certification issued by Barangay Captain Marcelo Balba
stating that respondent was the declared owner of Lot Nos. 6916 and 6917 based on Relocation Survey
Plan No. REI-041011-001184, and a Certification dated June 6, 1997 issued by the Municipal Assessor of
Laurel, Batangas stating that their records showed that respondent was the true and lawful owner of the
properties covered by Tax Declaration Nos. 016-006618 and 016-00619, and that real property tax had
been paid from previous years until 1997. Respondents counsels also executed a Joint Affidavit stating
that they prepared affidavits for the caretakers and neighbors to sign, but the latter refused to sign for
fear of their lives.

In his Answer, petitioner averred that the real owners and possessors of the property were the family of
Ernesto Malabanan, as evidenced by Transfer Certificate of Title (TCT) No. T-31929 of the Register of
Deeds of Tanauan, Batangas. He pointed out that Relocation Survey Plan No. REI-041011-001184 had
already been cancelled by the Bureau of Lands on October 8, 1999; and that, on April 13, 2000, the
Bureau of Lands approved a Consolidation and Subdivision Plan, which determined the metes and
bounds of the properties of the Malabanans. Petitioner alleged that the Office of the Building Official
approved the application of the Malabanans for the construction of a fence on a portion of their
property; and petitioner, acting in accordance with the instructions of the Malabanans, caused the
clearing of the property. Petitioner submitted in evidence a copy of TCT No. T-31929; Relocation Survey
Plan No. REI-041011-001184 with a cancelled marking; Order of cancellation of Relocation Survey Plan
No. REI-041011-001184; Consolidation and Subdivision Plan No. Pcs-04-015296; Sinumpaang Salaysay of
Nepumuceno Noveno, also a caretaker of the Malabanan family; and uniformly worded affidavits of the
occupants of the property, stating that they were not connected with respondent, and that they were
occupying the property upon the permission of Ernesto Malabanan.

On August 11, 2000, the Municipal Circuit Trial Court (MCTC) dismissed the complaint for lack of cause
of action. The court a quo found that respondents claim, that he was in actual possession of the
property through the possession of his caretakers and the other spouses he allowed to occupy the
property, was belied by his own statement and that of Mr. Nepomuceno Noveno, a resident of the
barangay where the property is located, who testified for petitioner.

On November 13, 2000, the Regional Trial Court (RTC) affirmed the MCTC Decision. Respondents
counsel received a copy of the decision on November 21, 2000. On December 14, 2000, respondent filed
a motion for reconsideration.
In an Order dated March 28, 2001, the RTC denied the motion for reconsideration, thus:

Finding no cogent reason to modify the decision of the Court dated November 13, 2000, defendants
Motion for Reconsideration is hereby DENIED for lack of merit.

Respondents counsel received a copy of the Resolution on April 18, 2001.

On October 23, 2001, upon manifestation of petitioner that it was not he who filed the motion for
reconsideration, the RTC modified the dispositive portion of its March 28, 2001 Order, changing
defendant to plaintiff. Respondent received a copy of this resolution on November 12, 2001.

Alleging that the October 23, 2001 RTC Resolution was the resolution denying his motion for
reconsideration, respondent filed a motion for extension of time to file a petition for review with the CA
on November 27, 2001. The CA granted the motion subject to its timeliness. Finally on December 12,
2001, respondent filed a Petition for Review with the CA.

On January 8, 2002, petitioner filed a Manifestation with Motion to Dismiss Instant Petition and to Cite
Petitioner (herein respondent) and Petitioners Counsel for Contempt. Petitioner alleged therein that
respondent deliberately concealed the fact that the petition was filed out of time by not attaching the
March 28, 2001 RTC Order which denied respondents motion for reconsideration.

On October 16, 2002, the CA rendered a Decision with the following dispositive portion:

WHEREFORE, the decision dated November 13, 2000, as well as the Order dated October 23, 2001
denying the motion for reconsideration of said decision, is hereby REVERSED and SET ASIDE. The
respondent and all persons acting under his authority and/or in his behalf is hereby ordered to vacate
the subject premises and to cease and desist from occupying the subject parcel of land, as well as from
exercising any and all acts of possession and dominion over the same.

SO ORDERED.

The CA dismissed the issue of the timeliness of the filing of respondents motion for reconsideration
before the RTC on the ground that such issue was raised for the first time before the appellate court. It,
likewise, ignored the issue of the belated filing of the petition for review with the CA, ratiocinating that
petitioner was barred by estoppel from questioning the timeliness of the petition, and that dismissing
the case would not serve the ends of justice.

On the merits, the CA concluded that respondent had been in prior, actual, open, peaceful,
uninterrupted and adverse possession of the subject properties for more than 40 years based on the
fact that he was paying taxes thereon. The CA did not give credence to the written manifestations of
petitioners witnesses whose statements were drafted in identical form. Instead, the CA gave weight to
the statement of respondents counsels that they failed to secure affidavits from the caretakers and the
neighbors because the latter feared for their lives.

Petitioner filed a motion for reconsideration. Thereafter, he filed a Manifestation with Request for
Judicial Notice of the verification survey conducted by the DENR on February 15, 2002, which shows that
the subject property was part of the parcel of land registered in the name of the Malabanan family.
On June 18, 2003, the CA issued a Resolution denying petitioners Motion for Reconsideration. In the
same Resolution, the CA noted that Verification Plan No. VS-04-000534 was approved long after it had
already rendered its decision.

Disgruntled, petitioner filed this petition for review, raising the following issues:

I. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN TAKING COGNIZANCE

AND/OR GIVING DUE COURSE TO THE PETITION FOR REVIEW FILED BEFORE IT BY RESPONDENT LACABA.

II. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT HEREIN
RESPONDENT LACABA IS ENTITLED TO THE RELIEF BEING SOUGHT IN THE COMPLAINT FILED BEFORE THE
MCTC.

III. WHETHER OR NOT THE COURT OF APPEALS PATENTLY ERRED IN NOT FINDING THAT HEREIN
PETITIONER DE GRANO IS NOT THE REAL PARTY IN INTEREST.

The petition is meritorious.

The CA erred in taking cognizance of the petition for review that was filed way beyond the reglementary
period. Rules of procedure may be relaxed in the interest of substantial justice and in order to give a
litigant the fullest opportunity to establish the merits of his complaint. However, concomitant to a
liberal application of the rules of procedure should be an effort on the part of the party invoking
liberality to explain its failure to comply with the rules and prove the existence of exceptionally
meritorious circumstances warranting such liberality.

Respondent proffered no explanation for the delay as, in fact, he did not acknowledge that he filed his
petition for review with the CA beyond the prescriptive period. In his motion for extension of time to file
the petition for review with the CA, respondent alleged that it was the October 28, 2001 RTC Order that
denied his motion for reconsideration. As a stratagem or out of plain ignorance, he counted the
reglementary period from the date of his receipt of the said order. But, as the CA was well aware, the
reglementary period should have been counted from the receipt of the March 28, 2001 Order.

Respondent might have been confused with the rule that, when a judgment is amended, the date of the
amendment should be considered the date of the decision in the computation of the period for
perfecting the appeal. For all intents and purposes, the lower court rendered a new judgment from
which the time to appeal must be reckoned. However, this rule presupposes that the amendment
consists of a material alteration of such substance and proportion that would, in effect, give rise to an
entirely new judgment. But when the amendment merely consists of the correction of a clerical error,
no new judgment arises. In such case, the period for filing the appeal should still be counted from the
receipt of the original judgment.

In this case, there was no material alteration of the judgment. The amendment merely consisted of
changing the word defendant with plaintiff in the dispositive portion, and it is obvious that it was
plaintiff (herein respondent) who filed the motion for reconsideration. Hence, the prescriptive period for
filing the petition for review with the CA should be counted from the date respondent received a copy of
the first judgment denying his motion for reconsideration, which was on April 18, 2001. Respondent had
until May 3, 2001 to file a petition for review, but he filed a motion for extension to file the petition only
on November 27, 2001, or almost seven months later. In one case, the Court declared that a delay of
almost seven months is far from reasonable.

Despite respondents failure to acknowledge his error, the CA, finding the petition to be meritorious,
chose to excuse the belated filing of the petition to serve the ends of justice. This Court, however, finds
otherwise, and holds that the MCTC, as affirmed by the RTC, was correct in dismissing the complaint.

For a forcible entry suit to prosper, the complainant must allege and prove that he was in prior physical
possession of the property and that he was deprived of such possession by means of force, intimidation,
threat, strategy, or stealth. A party who can prove prior possession can recover such possession even
against the owner himself. Whatever may be the character of his possession, if he has in his favor prior
possession in time, he has the security that entitles him to remain in the property until a person with a
better right lawfully ejects him.

A party having the burden of proof must establish his case by a preponderance of evidence. In doing so,
he must rely on the strength of his own evidence, not on the weakness of the defendants. To prove prior
possession, respondent presented his tax declarations, tax receipt and a certification from the municipal
assessor attesting that he has paid real property tax from previous years. He, likewise, testified that he
appointed the spouses Mojica as his caretakers, and allowed three other spouses to build their houses
on the property. Respondents counsels also explained that they were not able to secure the affidavits of
the occupants of the property and the neighbors because they feared for their lives.

Respondents evidence fails to make out a prima facie case of forcible entry as it does not satisfactorily
establish that respondent has been in physical possession of the subject property prior to petitioners
occupation thereof.

For one, we cannot tack respondents possession of the property on his alleged tenants actual
possession absent any proof that said tenants acknowledge that respondent is the owner and that they
have occupied the property as respondents tenants. For all we know, these tenants could have been in
adverse possession of the property. We cannot simply rely on respondents self-serving testimony that
he designated the spouses Mojica as his caretakers and allowed the other families to occupy the
property.

Tax declarations and realty tax payments are not conclusive proof of possession. They are merely good
indicia of possession in the concept of owner based on the presumption that no one in his right mind
would be paying taxes for a property that is not in his actual or constructive possession. It bears
emphasizing that the word possession, as used in forcible entry and unlawful detainer cases, means
nothing more than physical possession, not legal possession in the sense contemplated in civil law.
When the law speaks of possession, the reference is to prior physical possession or possession de facto,
as contra-distinguished from possession de jure. Only prior physical possession, not title, is the issue.
Issues as to the right of possession or ownership are not involved in the action; evidence thereon is not
admissible, except only for the purpose of determining the issue of possession.

More importantly, no substantial injustice would be caused the respondent if we uphold the finality of
the RTC judgment, considering that he still has another remedy to recover his alleged right to possess
the property. Since respondent anchors his right to possess the property on his alleged ownership of the
same, he may file the appropriate action to recover such ownership.
With the foregoing disquisition, we find no necessity to discuss the issue of whether petitioner is the
real party in interest.

WHEREFORE, premises considered, the petition is GRANTED. The Court of Appeals Decision dated
October 16, 2002 and Resolution dated June 18, 2003 are REVERSED and SET ASIDE.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO

Associate Justice

Chairperson

MINITA V. CHICO-NAZARIO

Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

DIOSDADO M. PERALTA

Associate Justice
Republic of the Philippines

Supreme Court

Manila

THIRD DIVISION

NELSON LAGAZO,

Petitioner,

-versus-

GERALD B. SORIANO and GALILEO B. SORIANO,

Respondents.

G.R. No. 170864

Present:

CORONA, J., Chairperson,

VELASCO, JR.,

NACHURA,

PERALTA, and

MENDOZA, JJ.

Promulgated:

February 16, 2010

x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the
Decision of the Court of Appeals (CA) in CA-G.R. SP No. 80709, promulgated on October 28, 2005,
granting herein respondents' petition for review, and the CA Resolution promulgated on December 20,
2005, denying herein petitioner's motion for reconsideration, be reversed and set aside.

The undisputed facts are as follows.

On January 16, 2001, respondents filed with the Municipal Trial Court of Tabuk, Kalinga (MTC), a
complaint for Forcible Entry with Application for Termporary Restraining Order and a Writ of Preliminary
Injunction and Damages against petitioner. Respondents claimed they were the owners of a parcel of
land covered by Original Certificate of Title No. P-665, Lot No. 816, Pls-93 with an area of 58,171 square
meters. They allegedly acquired the same by purchase from their grandfather, Arsenio Baac, on
September 10, 1998, but even prior thereto, they were already allowed by Arsenio Baac to cultivate said
land. They paid real property taxes for said property from 1990 to 1998 and had been in actual
possession from that time. However, on January 6, 2001, herein petitioner allegedly unlawfully entered
the property by means of force, stealth, and strategy and began cultivating the land for himself.

On the other hand, petitioner insisted in his Answer that he, together with his mother, brothers, and
sisters, were the lawful owners of the land in question, being the legal heirs of Alfredo Lagazo, the
registered owner thereof. They denied that the subject land was sold to Arsenio Baac, alleging instead
that the agreement between Alfredo Lagazo and Arsenio Baac was merely one of mortgage. Petitioner,
likewise maintained that he and his co-heirs had always been in possession of the disputed land. They
allegedly tried several times to redeem the property, but Baac increased the redemption price from
P10,000.00 to P100,000.00. This prompted them to bring the matter before the Barangay Lupon of
Balong, Tabuk, Kalinga, but no agreement was reached.

On November 23, 2001, the MTC rendered a Decision, the dispositive portion of which reads as follows:

WHEREFORE, judgment is hereby rendered as follows:

1. Dismissing the complaint of Forcible Entry filed against defendant Nelson Lagazo;

2. Ordering the plaintiffs, Gerald B. Soriano and Galileo B. Soriano to surrender Original
Certificate of Title No. P-665 in the name of Alfredo Lagazo to the heirs of Lagazo which was given to
Arsenio Baac by Alfredo Lagazo when the Deed of Mortgage was executed between them;

3. Ordering the heirs of Alfredo Lagazo to execute the deed of conveyance in favor of the
plaintiffs covering the one (1) hectare portion subject of the mortgage between Alfredo Lagazo and
Arsenio Baac and to segregate the same from property covered by OCT P-665;

4. Plaintiffs to pay the costs of suit.

SO ORDERED.

The foregoing Decision was appealed to the Regional Trial Court (RTC) of Tabuk, Kalinga. Said appellate
court ruled that herein respondents failed to prove prior physical possession, thus, it reversed the MTC
Decision and dismissed the complaint against herein petitioner.

Respondents then filed with the CA a Petition for Review under Rule 42 of the Rules of Court and on
October 28, 2005, the CA promulgated the assailed Decision which disposed thus:

WHEREFORE, premises considered, the petition is GRANTED. Physical possession is hereby ordered
returned to the petitioners, without prejudice to the respondent's right to take recourse to remedies
provided for under the law, if he is so inclined. Actual, moral and exemplary damages cannot be granted
because of lack of substantive evidence to prove the same. However, we grant the amount of
P10,000.00 in attorney's fees plus P500.00 per appearance of petitioners' counsel, as well as another
P10,000.00 in litigation expenses as prayed for in their complaint, conformably to par. 11 of Art. 2208 of
the Civil Code, i.e. it is just and equitable under the circumstances, and considering that the award is
well deserved by the petitioners who had shown evident good faith in, and respect for, the judicial
system.

SO ORDERED.
Petitioner moved for reconsideration, but the same was denied per CA Resolution dated December 20,
2005. Hence, this petition where the following issues are raised:

WHETHER THE TRIAL COURT GRAVELY ERRED IN FINDING THAT THERE WAS IMPLIED ADMISSION ON
THE PART OF THE PETITIONER THAT RESPONDENTS HAD BEEN IN ACTUAL PHYSICAL POSSESSION OF THE
LOT IN CONTROVERSY SINCE 1979.

WHETHER THE TRIAL COURT GRAVELY ERRED IN NOT GIVING CREDENCE TO THE EVIDENCE ADDUCED BY
PETITIONER SUBSTANTIATING HIS PRIORITY IN POSSESSION OVER THE LOT IN CONTROVERSY.

WHETHER THE TRIAL COURT GRAVELY ERRED IN FINDING THAT THE RESPONDENTS HAVE BETTER RIGHT
OF POSSESSION OVER THE LOT IN CONTROVERSY.

The Court finds the petition unmeritorious.

Prior physical possession is an indispensable element in forcible entry cases. Thus, the ultimate question
here is who had prior physical possession of the disputed land.

Ordinarily, in a Petition for Review on Certiorari, this Court only considers questions of law, as it is not a
trier of facts. However, there are exceptions to this general rule, such as, when the findings of fact of the
appellate court are contrary to those of the trial court. Such circumstance exists in this case, hence, the
Court is compelled to take a closer look at the records.

In Sudaria v. Quiambao, the Court held that:

Ejectment proceedings are summary proceedings intended to provide an expeditious means of

protecting actual possession or right to possession of property. Title is not involved. The sole issue to be
resolved is who is entitled to the physical or material possession of the premises or possession de facto.
On this point, the pronouncements in Pajuyo v. Court of Appeals are enlightening, thus:

xxxx

x x x Regardless of the actual condition of the title to the property, the party in peaceable quiet
possession shall not be thrown out by a strong hand, violence or terror. Neither is the unlawful
withholding of property allowed. Courts will always uphold respect for prior possession.

Thus, a party who can prove prior possession can recover such possession even against the owner
himself. Whatever may be the character of his possession, if he has in his favor prior possession in time,
he has the security that entitles him to remain on the property until a person with a better right lawfully
ejects him. To repeat, the only issue that the court has to settle in an ejectment suit is the right to
physical possession. (Emphasis supplied.)

Moreover, in De Grano v. Lacaba, it was explained that:

x x x the word possession, as used in forcible entry and unlawful detainer cases, means nothing more
than physical possession, not legal possession in the sense contemplated in civil law. When the law
speaks of possession, the reference is to prior physical possession or possession de facto, as contra-
distinguished from possession de jure. Only prior physical possession, not title, is the issue. Issues as to
the right of possession or ownership are not involved in the action; evidence thereon is not admissible,
except only for the purpose of determining the issue of possession. (Emphasis supplied.)
Bearing the foregoing in mind, a thorough examination of the evidence revealed that, indeed, the
parties in last peaceable quiet possession of the property in question were herein respondents.

The most important evidence for respondents was the testimony of Brgy. Capt. Artemio Fontanilla, who
stated that he was born and had continuously resided in Balong, Tabuk, Kalinga; that the disputed land
was only about three kilometers from his house; that for the longest time, he had always known that it
was Arsenio Baac who was cultivating and occupying said property; and that it was only sometime in
January 2001, when the police asked him to accompany them to the subject land, that he saw petitioner
with some other men working said land.

On the other hand, what petitioner's evidence sought to establish was that he and his co-heirs
continued to be the owners of the land, as his predecessor never intended to sell the property to
Arsenio Baac, the true agreement being only one of a mortgage. Petitioner never established the fact of
his physical possession over the disputed land. Ironically, the most telling pieces of evidence that
doomed petitioner's case were the testimonies of petitioner himself and his sister, Marina Nialga. Their
own admissions on the witness stand proved that respondents were indeed the ones in physical
possession of the subject property. Petitioner Lagazo himself testified as follows:

Q: So, at that time that you were at Alicia, Isabela and at that time that you staying thereat, you have no
knowledge to what is happening to the land which is now the subject of this case, Am I correct?

A: I was only hearing stories from my father and my mother that they want to regain back the land
which was mortgaged, sir.

xxxx

Q: It is when only on January of 2001 that you allegedly claimed over the parcel of land in question, am I
correct Mr. Witness?

A: Was not only during that time but that was only the time we entered into the land, sir.

Q: So, you are now admitting Mr. Witness, its only on January 6, 2001, you entered the land in question?

A: Yes, sir.

Q: And, prior to January 6 of 2001, you never possessed or cultivated the land in question, Am I correct?

xxxx

Q: Who was an apparent heir of spouses Alfredo Lagaso, you never personally cultivated or possessed
the land in question prior to January 6, 2001, am I correct?

A: No, sir because according to them it was mortgaged, Your Honor.

Q: But you never personally cultivated the land prior to January 6, 2001?

A: No, sir.

Meanwhile, Marina Nialga also recounted that in 1979, they left the subject property out of fear
because Arsenio Baac allegedly wanted to grab the land for himself. She testified that after they left in
1979, it was already Arsenio Baac who cultivated said land. Despite such claim that Arsenio Baac took
their land with force and intimidation, Marina said they never reported the matter to the police, and
never filed any criminal action in court against Arsenio Baac.

Verily, the foregoing leaves no doubt in our mind that it was only on January 6, 2001 that petitioner,
believing himself to be the lawful owner of the disputed land, entered the same, thereby disturbing
respondents' peaceful possession thereof.

IN VIEW OF THE FOREGOING, the instant petition is dismissed. The Decision and Resolution of the Court
of Appeals dated October 28, 2005 and December 20, 2005, respectively, in CA G.R. SP No. 80709 are
AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA

Associate Justice