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Republic of the Philippines

SUPREME COURT
Manila

CITY OF CEBU,
Petitioner,
G.R. No. _______________
(Civil Case No. CEB-26607,
Regional Trial Court Branch 21,
Cebu City; CA-G.R. CV No.
-versus- 02496, Court of Appeals 20th
Division, Cebu City)

SPOUSES ROQUE &


FATIMA TING,
Respondents.
x - - - - - - - - - - - - - - - - -/

PETITION FOR REVIEW ON CERTIORARI

PETITIONER CITY OF CEBU, by counsel, to this Honorable Court,


most respectfully states that:

PREFATORY STATEMENT

The initiation of the present case before the Regional Trial


Court was prompted by the firm refusal of Petitioner City of
Cebu to pay the original demand of Respondents Spouses Fatima
and Roque Ting of the amount of P300,000.00 as just
compensation for parcels of land actually lying beneath the sea,
on the basis of a Memorandum of Agreement in which Petitioner
was not a party thereto. Petitioner is now compelled by the courts
a quo to pay Respondents the amount of P33,700,000.00 as just
compensation for the submerged land, which cause of action was
neither alleged in the Complaint for Specific Performance and
Damages (Civil Case No. CEB-26607) nor sought as a relief in
the same case. Clearly, compelling Petitioner to disburse
government funds to pay the said amount, inter alia, as just
compensation to Respondents for their submerged land would set
a bad and dangerous precedent, as a matter of law.

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NATURE OF THE PETITION

This is a Petition for Review on Certiorari under Rule 45 of the 1997


Rules of Civil Procedure to review the 26 November 2013 Decision and the
12 May 2014 Resolution of the Honorable Court of Appeals, Twentieth
Division, Cebu City, in CA-G.R. CV No. 02496, entitled “Spouses Roque
and Fatima Ting vs. City of Cebu.” The assailed 26 November 2013
Decision of the Honorable Court of Appeals denied herein petitioner’s
appeal and affirmed with modification the 03 January 2008 Decision of the
Regional Trial Court, Branch 21, Cebu City, in Civil Case No. CEB-26607,
entitled “Spouses Roque and Fatima Ting vs. City of Cebu”, an action for
Specific Performance and Damages. The assailed 12 May 2014 Resolution
of the Honorable Court of Appeals denied petitioner’s motion for
reconsideration.

In compliance with Section 2, Rule 45 of the 1997 Rules of Civil


Procedure, petitioner respectfully submits together with this Petition for
Review on Certiorari Postal Money Orders, particularly PMO No.
A1320099593 (P2,000.00), PMO No. B1310095274 (P1,000.00), PMO No.
J1350488543(P30.00) and PMO No. J1350488542 (P500.00), to cover the
payment for the docket & other lawful fees and the deposit for costs.

TIMELINESS OF THE PETITION

A copy of the assailed 12 May 2014 Resolution of the Honorable


Court of Appeals denying petitioner’s motion for reconsideration was
received by petitioner on 22 May 2014. Accordingly, petitioner has fifteen
(15) days therefrom or until 06 June 2014 within which to file the instant
Petition for Review on Certiorari.

THE PARTIES

Petitioner City of Cebu is the defendant before the Regional Trial


Court, Branch 21, Cebu City in Civil Case No. CEB-26607 and the
Defendant-Appellant before the Honorable Court of Appeals, Twentieth
Division, Cebu City, in CA-G.R. CV No. 02496. Petitioner is a local
government unit and classified as a highly urbanized city with its own
charter. Notices and processes of this Honorable Court may be served to
petitioner through the undersigned counsel at the Ground Floor, Legislative
Building, Cebu City Hall, M.C. Briones St., Cebu City.

Respondents Spouses Roque and Fatima Ting are the plaintiffs before
the Regional Trial Court Branch 21, Cebu City, in Civil Case No. CEB-
26607 and the Plaintiffs-Appellees before the Honorable Court of Appeals,
Twentieth Division, Cebu City, in CA-G.R. CV No. 02496. Respondents
may be collectively served with notices and processes of this Honorable
Court at San Roque, Talisay City, Cebu, and through their counsel on record
Atty. Francis M. Zosa at Don Mariano Cui St., Fuente Osmeña, Cebu City.

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STATEMENT OF THE FACTS AND THE CASE

The Facts

The South Reclamation Project required the reclamation of more than


three hundred (300) hectares of coastal water, bounded by the terms and
conditions of the Environmental Compliance Certificate (ECC) issued by the
Department of Environment and Natural Resources, one of which is that the
project must be separated from the main island of Cebu by a channel of
water. Stated otherwise, the South Reclamation Project must maintain at
least 15-meters distance or gap from the mainland to allow the water to pass
through it and also to allow fishermen to go out to sea and get back their
houses along the coastline.

In 1997, then MCDP III Project Manager Samuel Darza discovered


the reclamation project of Respondent inside the fifteen (15)-meter
waterway, with standing structures therein. As a result, said reclamation
project of respondents blocked the waterway and reduced the fifteen(15)-
meter gap between the mainland Cebu and the South Reclamation Project.
Thus, according to Mr. Darza, he decided to enter into the subject
Memorandum of Agreement with respondents so that the said reclamation
project may be removed, the pertinent portion of which is hereby quoted as
follows:

MEMORANDUM OF AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This Memorandum of Agreement is entered into by and between:

REPUBLIC OF THE PHILIPPINES, represented in this Act


by SAMUEL B. DARZA, in his capacity as Project Director, Project
Coordination and Monitoring Office (PCMO), MCDP III, hereinafter
referred to as the FIRST PARTY and ROQUE P. TING, of legal age,
Filipino, married to Fatima G. Ting, and a resident of P. Remedio St.,
Banilad, Mandaue City, hereinafter referred to as the SECOND
PARTY.

WITNESSETH:

WHEREAS, the FIRST PARTY is the owner of Lot No. 7, Pcs-


5446, and all improvements thereon, situated in Sitio Sawsawan, Brgy.
San Roque, Talisay, Cebu;
WHEREAS, the lot and improvements are affected by the
aforecited projects of the FIRST PARTY more particularly describes in
the PCMO parcellary plan as Lot 7-A with an area of 1,634 square
meters, Lot 7-B with an area of 2,588 square meters, and Lot 7-D with
an area of 2,680 square meters. Copy of the said parcellary plan is

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hereto attached as ANNEX “A” and made an integral part of this
Memorandum of Agreement;
WHEREAS, the FIRST PARTY will institute an expropriation
proceeding for the acquisition of the aforesaid affected portions;
WHEREAS, there is a tract of public disposal and alienable land
adjacent to Lot 7 more particularly described in the PCMO parcellary
plan as Lot C-1 with an area of 4,725 square meters;
WHEREAS, Parties hereto are willing to compromise to
exchange Lot C-1 to Lot 7-A and Lot 7-B;

NOW THEREFORE, premises considered, parties hereto by


these presents agreed as they hereby agree the following, to wit:

1. That FIRST PARTY shall file an expropriation proceeding for


the acquisition of Lot 7-A, Lot 7-B and Lot 7-D;
2. That thereafter, subject to the approval of the court, parties
hereto shall compromise for the exchange of Lot C-1 to Lot7-
A and Lot 7-B;
3. That the SECOND PARTY shall forever waive, abandon, and
quitclaim, any claim for just compensation of Lot 7-A and Lot
7-B and all the affected improvements therein against the
FIRST PARTY;
4. The FIRST Party shall pay to the SECOND PARTY the just
compensation for LOT 7-D as determined by the court;
5. That FIRST PARTY shall, at its cost and with care, demolish
the affected improvements with the supervision of the
SECOND PARTY within 15 days from the signing of this
Memorandum of Agreement;
6. That all salvage materials in the demolished improvements
shall be turned over to the SECOND PARTY.
7. That excavated materials by the FIRST PARTY, in Lot 7-A and
Lot 7-B shall be dumped and leveled off at Lot C-1;
8. That the parties shall bind themselves to protect each against
the claim of any third person/whomsoever;
9. That non-compliance of any of the above terms shall
basically rescind this Memorandum of Agreement without
prejudice of the injured party to seek damages in the proper
forum.

IN WITNESS WHEREOF, the Parties have hereunto set their


hands this SEPT 07 1997, at Cebu City Philippines. (Emphasis
supplied)

Copy of the above-quoted Memorandum of Agreement is hereto


attached as “ANNEX A”.

The Case

On 01 April 2002, respondents filed the case for Specific Performance


and Damages before the Regional Trial Court Branch 5, Cebu City, presided
by Judge Ireneo Lee Gako, Jr., against Petitioner City of Cebu, which was

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docketed as Civil Case No. CEB-26607. The pertinent portions of the
Complaint are quoted as follows:

3. That on September 7, 1997, plaintiffs and defendants entered


into a memorandum agreement whereby defendant would exchange its
lot denominated as Lot C-1 with an area of 4,753 square meters with
plaintiffs’ Lot Nos. 7-A and 7-B with areas of 1,634 square meters and
2,588 square meters respectively. Copy of the aforesaid memorandum
of agreement is hereto attached as Annex “A”;
4. In 1999, violation of the agreement, the defendant used and
destroyed plaintiff’s lot and the improvements thereon and made the
same into an open canal as show by pictures attached as Annexes B
and B-1;
5. On the other hand, hand the defendant has not transferred
ownership of its Lot C-1 to the plaintiffs;
6. That the use by the defendant of plaintiffs’ a lot and
destruction of the improvements in violation of memorandum of
agreement standing thereon has caused damages to the plaintiffs in
the amount of P500,000.00, prompting the filling of the present action.

WHEREFORE, in view of the foregoing, it is respectfully prayed


that after due notice and hearing, judgment be rendered ordering
defendant to cede ownership of its Lot C-1 to plaintiffs; to pay
plaintiffs damages in the amount of P500,000.00; attorney’s fees in
the amount of P60,000.00 and expenses of litigation in the amount of
P30,000.00.

Copy of the above-quoted Amended Complaint for Specific


Performance with Damages is hereto attached as “ANNEX B”.

On 21 November 2002, petitioner filed its Answer and alleged as


follows:

(a)That petitioner is not a party to the Memorandum of Agreement


executed by and between the Republic of the Philippines and
Respondents, hence, its terms are not binding on petitioners;
(b)That the contract was executed by and between the Republic of the
Philippines and Respondents, through Mr. Samuel B. Darza, in
his capacity as Project Director, Project Coordination and
Monitoring Office (PCMPO) of MCDP III. Thus, it is a gross
misrepresentation on the part of respondents to claim that Cebu
City has consented to be sued by authorizing one of its
agencies, the MCDP III to enter into a Memorandum of
Agreement with Plaintiffs;
(c)That respondents have no valid cause of action against the
petitioner, a stranger to the Memorandum of Agreement, as
respondents are barking in the wrong tree, so to speak.

Copy of the above-mentioned Answer is hereto attached as “ANNEX


C”.

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After the respondents, plaintiffs therein, rested their case, petitioner
filed a Demurrer to Evidence based on the following grounds: (1) that
respondents have no cause of action against petitioner; (2) that respondents
have no right to relief against petitioner; and (3) that respondents seriously
failed to establish any liability on the part of petitioner. The demurrer was,
however, denied by the RTC through an Order dated 23 November 2003.

Parenthetically, on 04 May 2004, respondent Roque P. Ting filed a


another case for Damages before the Regional Trial Court, Branch 58, Cebu
City, against petitioner City of Cebu praying for the payment of just
compensation for the three (3) structures on the subject lot allegedly taken,
removed and demolished by MCDP III. The case was docketed as Civil Case
No. CEB-30208 and copy of the said Complaint is hereto attached as
“ANNEX D”. The case was, however, dismissed by the same court, on
motion by the Petitioner, on the ground of litis pendencia.

After the presentation of evidence by the parties and the case was
already submitted for decision, respondents filed a motion to reopen the case
(Civil Case No. CEB-26607) to allow them to introduce evidence with
respect to the three (3) structures subject of the case for Damages (Civil
Case No. CEB-30208) which was already dismissed by the Regional Trial
Court Branch 58, Cebu City. Copy of the said Motion to Re-Open Case is
hereto attached as “ANNEX E”.

Despite vehement and timely objection on the part of petitioner, the


said motion to reopen the case was granted by the trial court, through an
Order dated 10 January 2005. Copy of the said Order is hereto attached as
“ANNEX F”.

In an Order dated 18 May 2005, the Presiding Judge of Regional Trial


Court, Branch 5, Cebu City, Judge Ireneo Lee Gako, Jr., on motion by
petitioner, inhibited himself from the case. Thus, the case (Civil Case No.
CEB-26607) was raffled off to the Regional Trial Court, Branch 21, Cebu
City, presided by Judge Eric F. Menchavez. Thereafter, Respondent Roque
Ting testified for the second time in the said case and presented evidence as
to the supposed value of the improvements which were allegedly removed
by MDCP III due to the construction of the canal/waterway.

On 12 August 2005, petitioner filed a Motion to Strike Out and


Expunge from Records the Testimony of Roque Ting and Additional
Documentary Evidence, on the ground that the subject matter of the alleged
improvements on the subject lots was neither alleged in the complaint nor
proposed as one of the issues in the case, which dealt solely on the terms and
conditions of the Memorandum of Agreement and the enforceability of its
provisions to petitioner. However, the trial court denied the said motion.

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On 03 January 2008, the Regional Trial Court, Branch 21, Cebu City
rendered a Decision in Civil Case No. CEB-26607, the dispositive portion of
which reads:

“WHEREFORE, in view of the foregoing, judgment is hereby


rendered in favor of the plaintiffs, sentencing defendant to pay
plaintiffs the following:

1. P33,700,000.00 for the value of the plaintiffs’ Lot Nos. 7-B


and 7-C;
2. P3,912,500.00 for the value of the two warehouses and rest
house demolished by the MCDP III;
3. The amounts of P60,000.00 as attorneys’ fee and P30,000.00
as expenses of litigation.

All these amounts shall earn interest at the rate of 6% per


annum from the date of this judgment until fully paid.”

Copy of the abovementioned Decision dated 03 January 2008 is


hereto attached as “ANNEX G”.

Aggrieved by the said Decision, petitioner appealed the same to the


Honorable Court of Appeals. The case was raffled to the Twentieth Division
of the appellate court and docketed as CA-G.R. CV No. 02496. Petitioner’s
appeal raised the following assignment of errors for the consideration of the
appellate court, to wit:

1. The court a quo committed reversible error in not dismissing the


Complaint for Specific Performance and Damages based only on a
Memorandum of Agreement that the City of Cebu never
participated nor committed to be bound;
2. The court a quo committed grievous error in allowing evidence to
be presented over claims and contentions not contained in the
original Complaint for Specific Performance and Damages
without allowing any amendment of the Complaint;
3. The court a quo seriously erred in adjudging liable for the
payment of a total area of 4,753 square meters when all of said
area covered by the title of plaintiffs-appellees were situated on
coastal waters and not on land;
4. The court a quo erred in assessing damages for improvements
without clear evidence to its amount.

On 26 November 2013, the Honorable Court of Appeals rendered a


Decision finding no reversible on the part of the RTC and denying
Petitioner’s appeal for lack of sufficient merit. The dispositive portion of the
assailed Decision reads:

WHEREFORE, in view of the foregoing, We find no error


committed by the trial court and DENY the appeal for lack of

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sufficient merit. The decision of the Regional Trial Court, 7 th Judicial
Region, Branch 21, Cebu City in Civil Case No. CEB-26607 is hereby
AFFIRMED with Modification that Lot No. 7-C as mentioned should
read as Lot No. 7-A.

Certified true copy of the 26 November 2013 Decision of the


Honorable Court of Appeals, Twentieth Division, Cebu City, in CA-G.R. CV
No. 02496, is hereto attached as “ANNEX H”.

Petitioner sought for reconsideration of the honorable appellate court’s


26 November 2013 Decision, but the same was denied through a Resolution
dated May 12, 2014. Certified true copy of the 12 May 2014 Resolution of
the Honorable Court of Appeals, Twentieth Division, Cebu City, in CA-G.R.
CV No. 02496, is hereto attached as “ANNEX I”.

Hence, the instant Petition for Review on Certiorari under Rule 45 of


the 1997 Rules of Civil Procedure.

ISSUES

WHETHER OR NOT THE HONORABLE COURT


OF APPEALS COMMITTED A REVERSIBLE
ERROR IN CONCURRING WITH THE RULING OF
THE REGIONAL TRIAL COURT, BRANCH 21,
CEBU CITY, IN CIVIL CASE NO. CEB-26607 THAT
RESPONDENTS HAVE A CAUSE OF ACTION
AGAINST THE PETITIONER EVEN IF
PETITIONER IS NOT A PARTY TO THE
MEMORANDUM OF AGREEMENT EXECUTED
ONLY BETWEEN THE REPUBLIC OF THE
PHILIPPINES (REPRESENTED BY THE MCDP III)
AND HEREIN RESPONDENTS.

II

GRANTING ARGUENDO THAT PETITIONER IS A


PARTY TO THE SUBJECT MEMORANDUM OF
AGREEMENT, WHETHER OR NOT THE
HONORABLE COURT OF APPEALS AND THE
REGIONAL TRIAL COURT COMMITTED A
REVERSIBLE ERROR IN RULING THAT
RESPONDENTS HAVE A CAUSE OF ACTION
AGAINST THE PETITIONER DESPITE NON-
COMPLIANCE WITH THE PROVISIONS OF
SECTION 444 (A) AND (B) OF THE LOCAL
GOVERNMENT CODE OF 1991 AND DESPITE

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THE FACT THAT SUCH RULING BLATANTY
VIOLATED THE PRINCIPLE OF LOCAL
AUTONOMY OF LOCAL GOVERNMENT UNITS.

III

WHETHER OR NOT THE HONORABLE COURT


OF APPEALS (CA) COMMITTED A REVERSIBLE
ERROR IN RULING THAT THE REGIONAL TRIAL
COURT, BRANCH 21, CEBU CITY (RTC), DID NOT
ERR WHEN IT ALLOWED, WITHOUT AMENDING
THE COMPLAINT AND DESPITE PETITIONER’S
VEHEMENT AND TIMELY OBJECTION
THERETO, RESPONDENTS TO PRESENT
EVIDENCE FOR CLAIMS NOT ALLEGED IN THE
COMPLAINT .

IV

WHETHER OR NOT THE CA AND THE RTC


COMMITTED A REVERSIBLE ERROR IN
CONDEMNING PETITIONERS TO PAY FOR THE
SUBJECT LOTS AND THE ALLEGED
IMPROVEMENTS THEREIN DESPITE THE
GLARING FACT THAT THESE LOTS ARE
SUBMERGED IN WATER.

REASONS FOR THE ALLOWANCE OF THE PETITION

The present Petition for Review should be allowed on the following


compelling grounds:

1. The ruling of the RTC and the CA that respondents have a


cause of action against the petitioner despite the fact that
the subject Memorandum of Agreement itself indubitably
shows that petitioner is not a party thereto, violated the
provisions of Article 1311 of the Civil Code of the
Philippines and the established principle of Relativity of
Contracts.

2. Granting for the sake of argument that petitioner is a party


to the subject Memorandum of Agreement, still the ruling
of the RTC and the CA that respondents have a cause of
action against the petitioner has utterly no basis because
the said Memorandum of Agreement was not executed
through the Mayor of the City of Cebu with the prior
authority of the Sangguniang Panglungsod of the same
City, pursuant to Section 444 (a) and (b) of the Local

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Government Code of 1991. Further, the same ruling
violated the Principle of Local Autonomy of Local
Government Units.

3. The ruling of the CA and the RTC allowing respondents to


present evidence on matters and issues not alleged in the
complaint, without amending the said complaint and
despite petitioner’s vehement and timely objection thereto,
violated the provisions of Section 5, Rule 10 of the 1997
Rules of Civil Procedure.

4. The ruling of the RTC and the CA condemning petitioner


to pay for the subject lots and the alleged improvements
therein despite the fact that these lots are actually
submerged in water will expose the officials and
employees of petitioner to criminal, civil and
administrative sanction.

ARGUMENTS

The Court of Appeals (CA) committed a


reversible error in concurring with the
ruling of the Regional Trial Court
Branch 21cebu City (RTC) in Civil
Case No. CEB-26607 that respondents
have a cause of action against the
petitioner even if petitioner is not a
party to the Memorandum of Agreement
executed only between the Republic of
the Philippines and herein respondents.

Granting arguendo that Petitioner is a


party to the subject Memorandum of
Agreement , the Court of Appeals (CA)
and the Regional Trial Court Branch 21
Cebu City committed a reversible error
in ruling that respondents have a cause
of action against the petitioner despite
the fact that the said Memorandum of
Agreement was not executed through
the Mayor of the City of Cebu with the
prior authority of the Sangguniang
Panglungsod of the same City, pursuant
to Section 444 (a) and (b) of the Local
Government Code of 1991. Further, the
same ruling violated the Principle of
Local Autonomy of Local Government
Units.

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Considering that the first two issues are closely interrelated, petitioner
opts to discuss and argue them together, thus:

At the outset, it must be pointed out that the subject Memorandum of


Agreement is the only actionable document upon which the imagined cause
of action of herein respondent stands. It must likewise be pointed out that the
same Memorandum of Agreement was executed only between THE
REPUBLIC OF THE PHILIPPINES (represented by Samuel B. Darza, in his
capacity as Project Director, Project Coordination and Monitoring Office,
MCDP III) and SPOUSES ROQUE AND FATIMA TING. Finally, it must be
pointed out that Mr. Samuel B. Darza was neither an officer or employee nor
an authorized representative of petitioner.

There is no basis therefore to implead petitioner as a party to a case


involving the said Memorandum of Agreement, especially a case for
Specific Performance and Damages like this one. Plainly stated, petitioner
cannot be compelled to perform an act when it has no obligation to do so
under the subject MOA. Basic is the rule that the terms and conditions of a
contract or agreement will only bind the parties thereto. In addition, the
rights of a party cannot be prejudiced by the act, declaration or omission of
another (Res inter alios acta alteri nocere non-debet). It is therefore
respectfully submitted that the case for Specific Performance and Damages
filed by respondents against petitioner has absolutely no basis in fact and
law and the Regional Trial Court as well as the Honorable Court of Appeals
should have dismissed the subject case (Civil Case No. CEB-26607) outright
for lack of cause of action.

The pertinent provision of the Civil Code of the Philippines provides:

“Art. 1311. Contracts take effect only between the parties,


their assigns and heirs, except in case where the rights and
obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law. The heir is
not liable beyond the value of the property he received from the
decedent.

If a contract should contain some stipulation in favor of a


third person, he may demand its fulfillment provided he
communicated his acceptance to the obligor before its
revocation. A mere incidental benefit or interest of a person is
not sufficient. The contracting parties must have clearly and
deliberately conferred a favor upon a third person.” (Emphasis
supplied)

Moreover, in Spouses Nestor and Ma. Nona Borromeo vs. Honorable


Court of Appeals, et al., G.R. No. 169846, 28 March 2008, this Honorable
Court ruled in this wise:

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“It is clear that under Article 1311 of the Civil Code,
contracts take effect only between the parties who execute
them. Where there is no privity of contract, there is likewise no
obligation or liability to speak about. The civil law principle of
relativity of contracts provides that contracts can only bind the
parties who entered into it, and it cannot favor or prejudice a
third person, even if he is aware of such contract and has acted
with knowledge thereof. Since a contract may be violated only
by the parties thereto as against each other, a party who has not
taken part in it cannot sue for performance, unless he shows that
he has a real interest affected thereby.” (Emphasis supplied)

In the case at bar, it is beyond cavil that petitioner is not a party to the
subject Memorandum of Agreement – a perusal of the same agreement will
readily reveal this glaring fact; hence, the foregoing provision of law as well
as the established doctrine enunciated by this Honorable Court in the
Borromeo case earlier cited squarely apply. Thus, it is most respectfully
submitted that, on this ground alone, the instant Petition for Review may be
granted by this Honorable Court.

In affirming the Decision of the RTC in Civil Case No. CEB-26607,


the Honorable Court of Appeals ruled as follows:

In the Memorandum of Agreement executed and entered into by


the Cebu City Government, Department of Public Works and
Highways (DPWH) and the Bureau of Local Government Finance,
dated December 27, 2001, and in the tripartite agreement entered by
them on May 10, 1999, the parties clearly defines the project
components of MCDP III-South Reclamation Project and the Cebu
South Coastal Road. The said MOA also divided the responsibility
and jurisdiction of the parties in terms of project implementation,
supervision and obligation.

Under this Agreement, the Cebu City Government is the


executing agency for the South Reclamation and the DPWH is the
executing agency for the South Coastal Road. The City of Cebu shall
be responsible for the implementation and supervision of the Cebu
South Reclamation in accordance with the OECF loan agreement and
guidelines including loan/related activities with the Land Bank of the
Philippines. The City of Cebu is likewise responsible for the inclusion
f the Cebu South Reclamation in its budget. Hence, in compliance
with the agreement, the Cebu City Government adopted City
Ordinance No. 1744.

Bearing in mind the prior discussion, We concur with the court a


quo’s finding that plaintiffs-appellees had a cause of action against
defendant-appellant City of Cebu even if it was MCDP III who
entered into the Memorandum of Agreement.

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MCDP III was tasked to oversee the Cebu South Reclamation
Project with the City of Cebu as the executing agency of the said
project. Being the executory agency, the City of Cebu is bound by the
contract entered into by MCDP III in the pursuit of the South
Reclamation Project. As executing agency defendant-appellant is
responsible in the implementation and supervision of the said project.
A perusal of the record of the case will show that the subject lots were
affected by the South Reclamation Project. The lots were used and
destroyed by MCDP III as a channel for the said project.
Consequently, the City of Cebu as overseer and executing agency of
the South Reclamation Project is bound by the obligation entered into
by the MCDP III in connection to and for the benefit of the project.

With due respect to the Honorable Court of Appeals, the foregoing


ruling lacks legal and factual basis, taking into consideration the following
important points:

First, the Memorandum of Agreement dated 27 December 2001


referred to in the assailed Decision of the Honorable Court of Appeals, as
well as the tripartite agreement dated 10 May 1999, pertains to matters
totally different, irrelevant and immaterial to the instant case for Specific
Performance with Damages which deals on with the Memorandum of
Agreement dated 07 September 2007 executed by and between THE
REPUBLIC OF THE PHILIPPINES and SPOUSES ROQUE AND FATIMA
TING. Further, the said tripartite agreements involve only the City of Cebu,
the Department of Public Works and Highways and the Bureau of Local
Finance. Nowhere in the said tripartite agreements were the names of herein
respondents included or mentioned as parties thereto; hence, neither
respondents nor the Honorable Court of appeals can take refuge on the
provisions of these tripartite agreements.

Second, the fact that these tripartite agreements designated herein


petitioner as the executing agency for the South Reclamation Project did not
automatically vest unbridled authority to MCDP III to act for and in behalf
of the City of Cebu in all matters affecting the South Reclamation Project.
As consistently pointed out by petitioner from the very beginning of this
case, MCDP III is not a creation of the City of Cebu, but a creation of
Executive Order No. 308 enacted by Pres. Corazon C. Aquino, entitled
“Providing for the Reorganization of the Regional Development Council.”
Further, MCDP III is not a department of the Cebu City Government, but an
agency of the Republic of the Philippines as indubitably shown by the fact
that Mr. Samuel B. Darza, signed the subject Memorandum of Agreement in
his capacity as Project Director of the Project Coordinating and Monitoring
Office of the MCDP and as representative of the Republic of the Philippines,
not of petitioner City of Cebu.

Third, Article X, Sections 2 of the 1897 Constitution of the


Philippines provide as follows:

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Section 2. The territorial and political subdivisions shall enjoy local
autonomy.

Moreover, Section 2, Chapter I, Title I, Book I, of the Local


Government Code of 1991 provides:

Section 2. Declaration of Policy. -


(a) It is hereby declared the policy of the State that the
territorial and political subdivisions of the State shall
enjoy genuine and meaningful local autonomy to enable
them to attain their fullest development as self-reliant
communities and make them more effective partners in
the attainment of national goals. Toward this end, the State
shall provide for a more responsive and accountable local
government structure instituted through a system of
decentralization whereby local government units shall be
given more powers, authority, responsibilities, and
resources. The process of decentralization shall proceed
from the national government to the local government units.
xxx

Accordingly, the line of reasoning used by the Honorable Court of


Appeals in the assailed Decision, when not reviewed, corrected or reversed
by this Honorable Court, will create a very dangerous and bad precedent
because it, in effect, allowed the Republic of the Philippines through
national government agencies like the MCDP III to validly dispose
properties and enter into binding and legally enforceable agreements or
contracts for and in behalf of a local government unit (like petitioner)
without the latter’s consent, authority or approval – a blatant and patent
violation of the principle of local autonomy of the local government unit
concerned, as quoted above.

It is therefore, most respectfully submitted that there is a compelling


need to review, reverse and set aside the assailed Decision of the Court of
Appeals.

In addition, the property subject of the Memorandum of Agreement


between the Republic of the Philippines and Respondent, particularly Lot
No. C-1, is owned by the City of Cebu. If indeed, this property has to be
exchanged or otherwise disposed, the transaction must be executed and the
contracts documenting such disposal must be signed by the Mayor of the
City of Cebu (not by Mr. Samuel Darza), with the prior authority to do so
from the Sangguniang Panglungsod of petitioner.

It must be pointed out that these requirements are mandatory and


indispensable pursuant to the Provisions of Section 444(a) and 444(b) of the
Local Government Code of 1991, which provides that “[T]he municipal
mayor, as the chief executive of the municipal government, shall exercise
such powers and performs such duties and functions as provided by this

14
Code and other laws” and that the mayor shall, “upon authorization by the
sangguniang bayan, represent the municipality in all its business
transactions and sign on its behalf all bonds, contracts, and obligations,
and such other documents made pursuant to law or ordinance.” In view of
the patent absence of compliance with the foregoing requirements, the
Memorandum of Agreement dated 07 September 2007 executed by and
between THE REPUBLIC OF THE PHILIPPINES (represented by Samuel
B. Darza, in his capacity as Project Director, Project Coordination and
Monitoring Office, MCDP III) and SPOUSES ROQUE AND FATIMA
TING, is VOID ab intio.

Whether or not the Court of Appeals


(CA) committed a reversible error in
ruling that the Regional Trial Court
Branch 21 Cebu City did not err when
it allowed, without amending the
complaint and despite petitioner’s
vehement and timely objection thereto,
plaintiffs-appellants to present evidence
for claims not contained in the
complaint .

It is worthy to note that the Complaint filed by herein respondents


before the Regional Trial Court, Branch 21, Cebu City, is for Specific
Performance and Damages, wherein the issue of compensation for the three
(3) structures allegedly demolished by the MCDP III was never alleged in
said Complaint. In fact, respondents only prayed therein that judgment be
rendered ordering herein petitioner, then defendant, (1) to cede ownership of
its Lot C-1 to Respondents; (2) to pay respondents, then plaintiffs, damages
in the amount of P50,000.00; attorneys fees in the amount of P60,000.00 and
expenses of litigation in the amount of P30,000.00.1

Thus, the RTC and the CA committed a reversible error when both
courts ruled that respondents may present evidence on the issue of
compensation for the three (3) structures allegedly demolished by MCDP III
without complying the requisite amendment of the complaint and despite the
vehement and timely objection of herein petitioner. Such ruling violated the
established principle in the Rule on Pleadings and Evidence that THAT
WHICH IS NOT ALLEGED CANNOT BE PROVED (Non allegata non
probata).

Further, it is settled that in civil cases, only those that are alleged in
the complaint, answer and reply are considered as issues. These are the
pleadings which determine the issues because they alone contain the
ultimate stand of the parties, informing the court what they have admitted
and denied of each other’s allegations. Therefore, evidence that tends to
prove a matter which is not raised as an issue in the pleading is not
1
Amended Complaint, attached as ANNEX B to the instant Petition.

15
admissible. (Rogers vs. Dick & Reyes, 117 Phil. 1053; De Leon vs.
Villanueva, 51 Phil. 676; Philippine American General Insurance Co. Inc.
vs. Sweet Lines Inc., G.R. No. 87434, August 5, 2012).

The same ruling of both the RTC and the CA patently violated the
provisions of Section 5, Rule 10 of the 1997 Revised Rules on Civil
Procedure, which reads:

Sec. 5. Amendment to conform to or authorize presentation of


evidence. - When issues not raised by the pleadings are tried with the
express or implied consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings. Such amendment
of the pleadings as may be necessary to cause them to conform to the
evidence and to raise these issues may be made upon motion of any
party at any time, even after judgment; but failure to amend does not
affect the result of the trial of these issues. If evidence is objected to at
the trial on the ground that it is not within the issues made by the
pleadings, the court may allow the pleadings to be amended and
shall do so with liberality if the presentation of the merits of the
action and the ends of substantial justice will be subserved thereby.
The court may grant a continuance to enable the amendment to be
made. (Emphasis supplied)

Based on the foregoing provisions, it is very clear that when evidence is


presented on issues not raised by the pleadings and such presentation was
objected to by the other party, the court may allow the pleading to be
amended to conform with the evidence. The word “may” in the above
quoted provision requires that leave of court must be obtained before any
pleading may be amended and that once leave is obtained the pleading must
actually be amended; otherwise, such evidence is not admissible. To rule
otherwise would be tantamount to depriving herein petitioner of its
constitutional right to due process and would place respondents at an undue
advantage over petitioner. In the instant case, respondents only asked the
trial court to re-open the case and respondents never asked for leave to
amend the complaint to conform with the evidence. Worse, the complaint
was never actually amended by respondents. The inevitable conclusion,
therefore, is that any and all evidence relating to the compensation of the
three (3) structures allegedly demolished by MCDP III is not admissible.

In Mercader vs. Development Bank of the Philippines (Cebu Branch),


G.R. No. 130699, May 12, 2000, this Honorable Court explained that Section
5, Rule 10 of the 1997 Rules of Civil Procedure envisions two scenarios -
first, when evidence is introduced on an issue not alleged in the pleadings
and no objection was interjected and second, when evidence is offered on an
issue not alleged in the pleadings but this time an objection was interpolated.
In cases where an objection is made, the court may nevertheless admit the
evidence where the adverse party fails to satisfy the court that the admission
of the evidence would prejudice him in maintaining his defense upon the

16
merits, and the court may grant him a continuance to enable him to meet the
new situation created by the evidence.

In line with the ruling of this Honorable Court in Mercader, it is beyond


cavil that the evidence offered to prove the issue of compensation for the
three (3) structures allegedly demolished by MCDP III is not admissible in
evidence, because records of this case will abundantly show that such
admission would prejudice petitioner in maintaining its defense upon the
merits, thus:

First, the main issue in the Complaint for Specific Performance and
Damages (Civil Case No. CEB-26607) is whether or not petitioner may be
bound by the provisions of the subject Memorandum of Agreement despite
being not a party thereto. For this issue, it is the consistent defense of
petitioner that it is not bound by the provisions of the subject Memorandum
of Agreement precisely because the MOA itself shows that petitioner is not a
party to the said agreement. Thus, there could have been no way for
petitioner to adequately prepare its defense regarding the compensation of
the three (3) structures allegedly demolished by MCDP III on the subject lot.
Stated otherwise, the defense of petitioner in the Amended Complaint is no
longer applicable once evidence will be presented by respondents on the
issue of compensation for the three (3) structures allegedly demolished by
MCDP III – an entirely separate issue not raised in the said Amended
Complaint; hence, petitioner will surely be prejudiced by the admission of
such evidence, especially when the guidelines and procedures on the matter
prescribed by the Rules were completely disregarded by respondents.
Applying the Mercader case, the RTC and the CA should not have allowed
the presentation of evidence on the three (3) structures allegedly demolished
by MCDP III on the subject lot, and consequently admitting them, because
the Rules require when there is a timely and vehement objection to the
presentation of such evidence (as in this case) such evidence is only
admissible when the right of petitioner will not be prejudiced.

Second, it was already established that MCDP III is not a creation of the
City of Cebu, but a creation of Executive Order No. 308 enacted by Pres.
Corazon C. Aquino. Further, it was likewise established that MCDP III is not
a department of the Cebu City Government, but an agency of the Republic
of the Philippines as indubitably shown by the fact that Mr. Samuel B.
Darza, signed the subject Memorandum of Agreement in his capacity as
Project Director of the Project Coordinator and Monitoring Office of the
MCDP and as representative of the Republic of the Philippines, not of
petitioner City of Cebu. Finally, it is not disputed that it was MCDI III, not
petitioner, which removed and demolished the three (3) structures on the
subject lot.

It is therefore the height of injustice to allow respondents to present


evidence on matters and issues not raised in the instant Amended Complaint
for Specific Performance and Damages to prove the amount to be paid by

17
petitioner as compensation for the three (3) structures allegedly removed and
demolished by MCDP III, not petitioner. One cannot help but wonder why
would the court allow the presentation of such evidence against petitioner
when it was MCDP III, not petitioner, which removed the said structures?
As earlier discussed, the rights of a party cannot be prejudiced by the act,
declaration or omission of another (Res inter alios acta alteri nocere non-
debet). Simply stated, since it was MCDP III which demolished the three (3)
structures of respondent on the subject lots, then just compensation thereof
must be paid by MCDP III, not by Petitioner City of Cebu. Again, applying
the Mercader case, any and all evidence presented on the three (3) structures
allegedly demolished by MCDP III on the subject lot is not admissible in
evidence in the instant case.

Parenthetically, petitioner cannot help but notice the glaring fact the
Regional Trial Court, Branch 21, Cebu City, has the penchant to bend,
stretch and even disregard the law, rules and established doctrines and
jurisprudence just to accommodate herein respondents and to the utmost
prejudice of herein petitioner. The most glaring among several other acts is
the award by the said Court of the amounts of (i) “P33,700,000.00 for the
value of the plaintiffs’ Lot Nos. 7-B” and 7-C and (ii) “P3,912,500.00 for the
value of the two warehouses and rest house demolished by the MCDP III,”2
when respondents only prayed in their Complaint for Specific Performance
and Damages as follows:

WHEREFORE, in view of the foregoing, it is respectfully prayed


that after due notice and hearing, judgment be rendered ordering
defendant to cede ownership of its Lot C-1 to plaintiffs; to pay
plaintiffs damages in the amount of P500,000.00; attorney’s fees in
the amount of P60,000.00 and expenses of litigation in the amount of
P30,000.00.3

It is for compelling reasons like the foregoing that herein petitioner


most respectfully come before this Honorable Court praying to correct a
terrible wrong on the part of the RTC and the CA, lest petitioner and its
constituents will suffer grave and irreparable damage or injury if the assailed
Decision will not be reviewed, reversed and set aside.

The CA and the RTC committed a


reversible error in condemning
petitioners to pay for the subject lots
and the alleged improvements therein
despite the glaring fact that these lots
or portions thereof are submerged in
water.

2
Decision of the RTC, Branch 21, Cebu City (Specific Performance and Damages),
attached as ANNEX G to the instant Petition
3
Amended Complaint (Specific Performance and Damages), attached as ANNEX B to
the instant Petition.

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Contrary to the findings of both the RTC and the CA, the subject lots
or portions thereof are actually submerged in water. In order to give their
claim over the subject lots a semblance of merit, respondents attempted to
reclaim the area. However, such reclamation did not prosper because the
Philippine Reclamation Authority issued a cease and desist order directing
respondent to desist from these unauthorized reclamation works and other
related activities. Copy of the Cease and Desist Order is hereto attached as
“ANNEX J”.

Thus, despite the existence of a Transfer Certificate of Title covering


the subject lots, there is no doubt that these lots or substantial portion thereof
are actually submerged in water. Thus, payment by petitioners of these
submerged lots will surely expose the officials and employees of petitioner
to criminal, civil and administrative liabilities and would set a very bad and
dangerous precedent. Thus, it is most respectfully submitted that blind
compliance by petitioner of the assailed Decision of the RTC and the CA
cannot be considered as payment of just compensation, but robbery of
government funds in its most sophisticated form.

Accordingly, it is imperative that the assailed Decisions of the RTC


and the CA be reviewed, reversed and set aside by this Honorable Court in
order to prevent the use of government funds in paying the unfounded
claims of herein respondents.

PRAYER

IN VIEW WHEREOF, it is most respectfully prayed of this Honorable


Court that the instant Petition for Review be given due course and that the
assailed 26 November 2013 Decision and 12 May 2014 Resolution of the
Honorable Court of Appeals be ANNULED and SET ASIDE, and a new one
be entered DISMISSING WITH PREJUDICE respondents’ Complaint for
Specific Performance with Damages, docketed as Civil Case No. CEB-
26607 entitled “Spouses Roque and Fatima Ting vs. City of Cebu.”

Other reliefs and remedies just and equitable under the circumstances
are likewise prayed for.

Cebu City for Manila, Philippines. 05 June 2014.

OFFICE OF THE CITY LEGAL OFFICER


Counsel for the Petitioner
Ground Floor, Legislative Building
Cebu City Hall, M.C. Briones St., Cebu City
Tel. Nos. (032) 412-1919 or (032) 2532500
Email address: casaslaw@yahoo.com.ph

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By:

ATTY. JERONE G. CASTILLO, CPA


City Attorney
Roll No. 48797
IBP No. 937093; 01.06.2014-Cebu City
PTR No.4359881; 01.02.2014-Cebu City
MCLE Compliance No. IV-0003670/ 12.02.11

ATTY. FLORO Q. CASAS, JR.


Attorney III
Roll No. 52972
IBP No. 937007/03Jan2014/Cebu City
PTR No. 397924/02Jan2014/Cebu City
MCLE Compliance No. IV-0003591/02Dec2011

EXPLANATION

Service and filing of this Petition for Review was done through
Registered Mail due to distance and lack of material time.

ATTY. FLORO Q. CASAS, JR.

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