PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS, and PHILIP J.

KLEPZIG, Petitioners,
versus ANTONIO D. TODARO, Respondent.2007 Jun 83rd DivisionG.R. NO. 154830D E C I S I O N
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari seeking to annul and set aside the Decision[1] of the
Court of Appeals (CA) dated October 31, 2000 in CA-G.R. SP No. 54155 and its Resolution[2] of August 21,
2002 denying petitioners Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with the Regional Trial Court (RTC)
of Makati City, a complaint for Sum of Money and Damages with Preliminary Attachment against Pioneer
International Limited (PIL), Pioneer Concrete Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc.
(PPHI), John G. McDonald (McDonald) and Philip J. Klepzig (Klepzig).[3]
In his complaint, Todaro alleged that PIL is a corporation duly organized and existing under the laws of
Australia and is principally engaged in the ready-mix concrete and concrete aggregates business; PPHI is
the company established by PIL to own and hold the stocks of its operating company in the Philippines;
PCPI is the company established by PIL to undertake its business of ready-mix concrete, concrete
aggregates and quarrying operations in the Philippines; McDonald is the Chief Executive of the Hongkong
office of PIL; and, Klepzig is the President and Managing Director of PPHI and PCPI; Todaro has been the
managing director of Betonval Readyconcrete, Inc. (Betonval), a company engaged in pre-mixed concrete
and concrete aggregate production; he resigned from Betonval in February 1996; in May 1996, PIL
contacted Todaro and asked him if he was available to join them in connection with their intention to
establish a ready-mix concrete plant and other related operations in the Philippines; Todaro informed PIL of
his availability and interest to join them; subsequently, PIL and Todaro came to an agreement wherein the
former consented to engage the services of the latter as a consultant for two to three months, after which,
he would be employed as the manager of PIL's ready-mix concrete operations should the company decide
to invest in the Philippines; subsequently, PIL started its operations in the Philippines; however, it refused
to comply with its undertaking to employ Todaro on a permanent basis.[4]
Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the complaint on the
grounds that the complaint states no cause of action, that the RTC has no jurisdiction over the subject
matter of the complaint, as the same is within the jurisdiction of the NLRC, and that the complaint should
be dismissed on the basis of the doctrine of forum non conveniens.[5]
In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied herein petitioners' respective
motions to dismiss.[6] Herein petitioners, as defendants, filed an Urgent Omnibus Motion[7] for the
reconsideration of the trial court's Order of January 4, 1999 but the trial court denied it via its Order[8]
dated June 3, 1999.
On August 3, 1999, herein petitioners filed a Petition for Certiorari with the CA.[9] On October 31, 2000,
the CA rendered its presently assailed Decision denying herein petitioners' Petition for Certiorari.
Petitioners filed a Motion for Reconsideration but the CA denied it in its Resolution dated August 21, 2002.
Hence, herein Petition for Review on Certiorari based on the following assignment of errors:
A.
THE COURT OF APPEALS' CONCLUSION THAT THE COMPLAINT STATES A CAUSE OF ACTION AGAINST
PETITIONERS IS WITHOUT ANY LEGAL BASIS. THE ANNEXES TO THE COMPLAINT CLEARLY BELIE THE
ALLEGATION OF EXISTENCE OF AN EMPLOYMENT CONTRACT BETWEEN PRIVATE RESPONDENT AND
PETITIONERS.
B.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW AND
WITH APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT UPHELD THE JURISDICTION OF THE TRIAL
COURT DESPITE THE FACT THAT THE COMPLAINT INDUBITABLY SHOWS THAT IT IS AN ACTION FOR AN
ALLEGED BREACH OF EMPLOYMENT CONTRACT, AND HENCE, FALLS WITHIN THE EXLCUSIVE JURISDICTION
OF THE NATIONAL LABOR RELATIONS COMMISSION.
C

THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER THE PRINCIPLE OF FORUM NON
CONVENIENS AS A VALID GROUND FOR DISMISSING A COMPLAINT.[10]
In their first assigned error, petitioners contend that there was no perfected employment contract
between PIL and herein respondent. Petitioners assert that the annexes to respondent's complaint show
that PIL's offer was for respondent to be employed as the manager only of its pre-mixed concrete
operations and not as the company's managing director or CEO. Petitioners argue that when respondent
reiterated his intention to become the manager of PIL's overall business venture in the Philippines, he, in
effect did not accept PIL's offer of employment and instead made a counter-offer, which, however, was not
accepted by PIL. Petitioners also contend that under Article 1318 of the Civil Code, one of the requisites for
a contract to be perfected is the consent of the contracting parties; that under Article 1319 of the same
Code, consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract; that the offer must be certain and the acceptance absolute; that a
qualified acceptance constitutes a counter-offer. Petitioners assert that since PIL did not accept
respondent's counter-offer, there never was any employment contract that was perfected between them.
Petitioners further argue that respondent's claim for damages based on the provisions of Articles 19
and 21 of the Civil Code is baseless because it was shown that there was no perfected employment
contract.
Assuming, for the sake of argument, that PIL may be held liable for breach of employment contract,
petitioners contend that PCPI and PPHI, may not also be held liable because they are juridical entities with
personalities which are separate and distinct from PIL, even if they are subsidiary corporations of the latter.
Petitioners also aver that the annexes to respondent's complaint show that the negotiations on the alleged
employment contract took place between respondent and PIL through its office in Hongkong. In other
words, PCPI and PPHI were not privy to the negotiations between PIL and respondent for the possible
employment of the latter; and under Article 1311 of the Civil Code, a contract is not binding upon and
cannot be enforced against one who was not a party to it even if he be aware of such contract and has
acted with knowledge thereof.
Petitioners further assert that petitioner Klepzig may not be held liable because he is simply acting
in his capacity as president of PCPI and PPHI and settled is the rule that an officer of a corporation is not
personally liable for acts done in the performance of his duties and within the bounds of the authority
conferred on him. Furthermore, petitioners argue that even if PCPI and PPHI are held liable, respondent still
has no cause of action against Klepzig because PCPI and PPHI have personalities which are separate and
distinct from those acting in their behalf, such as Klepzig.
As to their second assigned error, petitioners contend that since herein respondent's claims for
actual, moral and exemplary damages are solely premised on the alleged breach of employment contract,
the present case should be considered as falling within the exclusive jurisdiction of the NLRC.
With respect to the third assigned error, petitioners assert that the principle of forum non
conveniens dictates that even where exercise of jurisidiction is authorized by law, courts may refuse to
entertain a case involving a foreign element where the matter can be better tried and decided elsewhere,
either because the main aspects of the case transpired in a foreign jurisdiction or the material witnesses
have their residence there and the plaintiff sought the forum merely to secure procedural advantage or to
annoy or harass the defendant. Petitioners also argue that one of the factors in determining the most
convenient forum for conflicts problem is the power of the court to enforce its decision. Petitioners contend
that since the majority of the defendants in the present case are not residents of the Philippines, they are
not subject to compulsory processes of the Philippine court handling the case for purposes of requiring
their attendance during trial. Even assuming that they can be summoned, their appearance would entail
excessive costs. Petitioners further assert that there is no allegation in the complaint from which one can
conclude that the evidence to be presented during the trial can be better obtained in the Philippines.
Moreover, the events which led to the present controversy occurred outside the Philippines. Petitioners
conclude that based on the foregoing factual circumstances, the case should be dismissed under the
principle of forum non conveniens.
In his Comment, respondent extensively quoted the assailed CA Decision maintaining that the
factual allegations in the complaint determine whether or not the complaint states a cause of action.

As to the question of jurisdiction, respondent contends that the complaint he filed was not based on
a contract of employment. Rather, it was based on petitioners' unwarranted breach of their contractual
obligation to employ respondent. This breach, respondent argues, gave rise to an action for damages
which is cognizable by the regular courts.
Even assuming that there was an employment contract, respondent asserts that for the NLRC to
acquire jurisdiction, the claim for damages must have a reasonable causal connection with the employeremployee relationship of petitioners and respondent.
Respondent further argues that there is a perfected contract between him and petitioners as they
both agreed that the latter shall employ him to manage and operate their ready-mix concrete operations in
the Philippines. Even assuming that there was no perfected contract, respondent contends that his
complaint alleges an alternative cause of action which is based on the provisions of Articles 19 and 21 of
the Civil Code.
As to the applicability of the doctrine of forum non conveniens, respondent avers that the question
of whether a suit should be entertained or dismissed on the basis of the principle of forum non conveniens
depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial
judge, who is in the best position to determine whether special circumstances require that the court desist
from assuming jurisdiction over the suit.
The petition lacks merit.
Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as the act or
omission by which a party violates a right of another. A cause of action exists if the following elements are
present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is
created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and,
(3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a
breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for
recovery of damages.[11]
In Hongkong and Shanghai Banking Corporation Limited v. Catalan,[12] this Court held:
The elementary test for failure to state a cause of action is whether the complaint alleges facts
which if true would justify the relief demanded. Stated otherwise, may the court render a valid judgment
upon the facts alleged therein? The inquiry is into the sufficiency, not the veracity of the material
allegations. If the allegations in the complaint furnish sufficient basis on which it can be maintained, it
should not be dismissed regardless of the defense that may be presented by the defendants.[13]
Moreover, the complaint does not have to establish or allege facts proving the existence of a cause of
action at the outset; this will have to be done at the trial on the merits of the case.[14] To sustain a motion
to dismiss for lack of cause of action, the complaint must show that the claim for relief does not exist,
rather than that a claim has been defectively stated, or is ambiguous, indefinite or uncertain.[15]
Hence, in resolving whether or not the Complaint in the present case states a cause of action,
the trial court correctly limited itself to examining the sufficiency of the allegations in the Complaint as well
as the annexes thereto. It is proscribed from inquiring into the truth of the allegations in the Complaint or
the authenticity of any of the documents referred or attached to the Complaint, since these are deemed
hypothetically admitted by the respondent.
This Court has reviewed respondents allegations in its Complaint. In a nutshell, respondent alleged
that herein petitioners reneged on their contractual obligation to employ him on a permanent basis. This
allegation is sufficient to constitute a cause of action for damages.
The issue as to whether or not there was a perfected contract between petitioners and respondent is
a matter which is not ripe for determination in the present case; rather, this issue must be taken up during
trial, considering that its resolution would necessarily entail an examination of the veracity of the
allegations not only of herein respondent as plaintiff but also of petitioners as defendants.

The Court does not agree with petitioners' contention that they were not privy to the negotiations
for respondent's possible employment. It is evident from paragraphs 24 to 28 of the Complaint[16] that, on
various occasions, Klepzig conducted negotiations with respondent regarding the latter's possible
employment. In fact, Annex H[17] of the complaint shows that it was Klepzig who informed respondent
that his company was no longer interested in employing respondent. Hence, based on the allegations in
the Complaint and the annexes attached thereto, respondent has a cause of action against herein
petitioners.
As to the question of jurisdiction, this Court has consistently held that where no employer-employee
relationship exists between the parties and no issue is involved which may be resolved by reference to the
Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial Court that
has jurisdiction.[18] In the present case, no employer-employee relationship exists between petitioners
and respondent. In fact, in his complaint, private respondent is not seeking any relief under the Labor
Code, but seeks payment of damages on account of petitioners' alleged breach of their obligation under
their agreement to employ him. It is settled that an action for breach of contractual obligation is
intrinsically a civil dispute.[19] In the alternative, respondent seeks redress on the basis of the provisions
of Articles 19 and 21 of the Civil Code. Hence, it is clear that the present action is within the realm of civil
law, and jurisdiction over it belongs to the regular courts.[20]
With respect to the applicability of the principle of forum non conveniens in the present case, this
Court's ruling in Bank of America NT & SA v. Court of Appeals[21] is instructive, to wit:
The doctrine of forum non conveniens, literally meaning the forum is inconvenient, emerged in
private international law to deter the practice of global forum shopping, that is to prevent non-resident
litigants from choosing the forum or place wherein to bring their suit for malicious reasons, such as to
secure procedural advantages, to annoy and harass the defendant, to avoid overcrowded dockets, or to
select a more friendly venue. Under this doctrine, a court, in conflicts of law cases, may refuse impositions
on its jurisdiction where it is not the most convenient or available forum and the parties are not
precluded from seeking remedies elsewhere.
Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely upon
the facts of the particular case and is addressed to the sound discretion of the trial court. In the case of
Communication Materials and Design, Inc. vs. Court of Appeals, this Court held that xxx [a] Philippine
Court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites
are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the
Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the
Philippine Court has or is likely to have power to enforce its decision.
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals, that the
doctrine of forum non conveniens should not be used as a ground for a motion to dismiss because Sec. 1,
Rule 16 of the Rules of Court does not include said doctrine as a ground. This Court further ruled that while
it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do
so only after vital facts are established, to determine whether special circumstances require the courts
desistance; and that the propriety of dismissing a case based on this principle of forum non conveniens
requires a factual determination, hence it is more properly considered a matter of defense.[22] mphasis
supplied)
In the present case, the factual circumstances cited by petitioners which would allegedly justify the
application of the doctrine of forum non conveniens are matters of defense, the merits of which should
properly be threshed out during trial.
WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of the Court of
Appeals are AFFIRMED.

NARCISO AMOROSO, Petitioner, versus JUAN ALEGRE, JR., Respondent.2007 Jun 152nd DivisionG.R. No.
142766D E C I S I O N
Tinga, J.:
Before us is a Petition for Review on Certiorari[1] assailing the Decision[2] dated 31 May 1999 and
Resolution[3] dated 8 March 2000 of the Court of Appeals in CA-G.R. CV No. 42100 which involved an
appeal from the Decision[4] dated 26 March 1993 of the Regional Trial Court (RTC) of Roxas City, Branch
16, in Civil Case No. V-5111.
This case involves two parcels of land, Cadastral Lots No. 3961 and 3962, which are subdivided lots
of Cadastral Lot No. 729 of the Capiz Cadastre, situated at Barrio Cadimahan, Bilbao Street, Roxas City.
On 19 November 1954, Juan Alegre, Sr., father of herein respondent Juan Alegre, Jr., filed a petition
for reconstitution of the titles covering Lots No. 730, 3961, 3962, and 1383 before the Court of First
Instance (CFI) of Capiz. The CFI set the reception of applicant before the Clerk of Court on 19 May 1955,
there being no opposition to the petition. The following day, 20 May 1955, the CFI, acting on the ex-parte
motion of the applicant, issued an order[5] directing the Register of Deeds of Capiz to effect the
reconstitution of the certificates of title. On 21 May 1955, reconstituted titles Original Certificate of Title
(OCT) Nos. RO-1020[6] and RO-1021[7] were issued pursuant to the order.
On 31 May 1955, herein petitioner Narciso Amoroso filed a Motion for Relief from the Order dated 20
May 1955, in particular questioning the reconstitution of the titles to Lots No. 3962 and 3961.[8] Finding
the motion to be well-founded, the CFI, on 4 November 1955, set aside the Order[9] of 20 May 1955 and
set the case for hearing on the merits. However, on 23 November 1955, Alegre, Sr. moved for
reconsideration of the 4 November 1955 Order and the same was granted. On 29 February 1956, the CFI
set aside the 4 November 1955 Order and reaffirmed the Order of 20 May 1955.
Petitioner, in turn, filed on 12 March 1956 a motion for reconsideration of the 29 February 1956 Order.
Before the filing of his motion, however, petitioner requested leave of court to amend his motion for relief.
His request to amend was granted on 12 May 1956 and the Clerk of Court was ordered to calendar the
amended motion for hearing and complete reception of evidence. After several postponements, the
hearing of the case was conducted and terminated on 26 July 1957. On 3 October 1957, the CFI rendered
a Decision[10] dismissing the petition for reconstitution and setting aside the Order of 20 May 1955.
On 10 April 1985, respondent, as plaintiff, filed a complaint before the RTC of Roxas City against
petitioner, for the recovery of possession and ownership of the subject properties. The complaint was
docketed as Civil Case No. V-5111 and raffled to Branch 16. Respondent alleged that the original owners
of Lot No. 729 were his grandparents, the spouses Saturnino Alegre and Concepcion Acupinpin. About a
year before the death of Saturnino Alegre, his son, Juan Alegre, Sr., purchased Lot No. 729 which had been

subdivided into Lots No. 3961 and 3962. Alegre, Sr. was able to obtain reconstituted titles OCT Nos. RO1020 and RO-1021 to the subdivided lots in his name pursuant to the 20 May 1955 Order. When Alegre,
Sr. and his family moved to Manila, petitioner, taking advantage of their absence, occupied the subject
property and constructed three houses thereon without Alegre, Sr.s knowledge and consent. Upon Alegre,
Sr.s return to Roxas City after several years, he demanded that petitioner vacate the property but the
latter pleaded that he be allowed to remain on the property for a few more months. Alegre, Sr. acceded.
Months turned into years and petitioner remained on the property, continually begging for extensions until
Alegre, Sr. fell sick and died. Meanwhile, respondent became the owner of the properties after purchasing
the rights of his co-heirs. He then filed the complaint docketed as Civil Case No. V-5111[11] since
petitioner refused to vacate the property despite demand.
Petitioner, on the other hand, claims that he is the owner of the properties in question, as he
allegedly bought Lot No. 729 from the brothers Roque and Matias Severino, the registered owners of the
property under OCT No. 4570, per Deed of Absolute Sale[12] dated 31 May 1946. From that time onwards,
he occupied the property and constructed his house thereon, declared the land for taxation purposes in his
name, and has been religiously paying all the taxes due thereon. He alleged that OCT Nos. RO-1020 and
RO-1021 in Alegre, Sr.s name had already been cancelled by virtue of the CFI Decision dated 3 October
1957, since Alegre, Sr. was found to have made false declarations[13] in his petition for reconstitution and
the evidence he presented. Furthermore, the CFI found that petitioner had been in possession of the
properties since 1946 and had constructed three houses thereon without Alegre, Sr. molesting him, and
that petitioners predecessors-in-interest had been in possession of the properties prior to 1946. In view of
this Decision dated 3 October 1957, petitioner argued, Civil Case No. V-5111 states no cause of action and
any cause of action is already barred by prior judgment and the statute of limitations and/or laches.[14]
Petitioner also filed before the RTC of Roxas City a petition for reconstitution, this time of OCT No.
4570 which allegedly covered both Lots No. 3961 and 3962, docketed as Case No. R-1777 and raffled to
Branch 16.[15] Civil Case No. V-5111 and Case No. R-1777 were jointly tried.
On 19 March 1990, the RTC rendered a decision dismissing both cases.[16] The RTC refused to adjudicate
in whose name, as between respondent and petitioner, the certificates of title should be issued,
maintaining that the ownership of the lots had already been previously adjudicated in cadastral
proceedings in 1924 and a ruling on the cases would be reopening a decree that had already become
incontrovertible.[17]
Both parties appealed the 19 March 1990 Decision. On 23 April 1992, the Court of Appeals (CA)
rendered its decision on the appeal docketed as CA G.R. No. 29299-300-CV.[18] The trial court was found
to have erred in dismissing Civil Case No. V-5111 and in not deciding it on the merits since the action is
neither a land registration case nor a reopening of a land registration case or a review of a decree of
registration, but a plain and simple case of recovery of possession. Thus, the appellate court ordered the
remand of Civil Case No. V-5111 to the trial court for it to render a decision on the basis of the evidence
presented by the parties.
As to Case No. R-1777, the CA affirmed the dismissal of petitioners petition for reconstitution since it
found that the allegations in the petition failed to show any basis for his claim of title to the properties in
question. The CA also made reference to the Decision dated 3 October 1957, observing that the CFI of
Capiz had set aside the Order of 20 May 1955 granting the reconstitution of OCT Nos. RO-1021 and RO1022. However, the CA opined, the CFI promulgated the 3 October 1957 Decision after the Order of 20
May 1955 had already become final since petitioner had not filed any appeal or motion for reconsideration
of the 4 November 1955 Order.[19] Thus the dismissal of the reconstitution case filed by petitioner was
proper.
The records of Civil Case No. V-5111 were remanded to the RTC. On 3 February 1993, the case was
deemed submitted for decision. On 26 March 1993, the RTC decided in favor of respondent,[20] based
primarily on his evidence consisting of the certification[21] of the Bureau of Lands issued on 2 July 1956
that the spouses Saturnino Alegre and Concepcion Acupinpin were the claimants of Lot No. 729, supported
by a cadastral list[22] which showed at the same time that petitioners predecessor, Roque Severino, was
the claimant of the adjacent Lot No. 728. Even the Deed of Absolute Sale[23] dated 31 May 1946
presented by petitioner to establish that the subject properties were sold to him by Roque and Matias
Severino shows that the parcel of land described and numbered therein is not Lot No. 729 but Lot No.

3982, written in words and figures. Petitioner attempted to convince the RTC that the lot number in the
Deed was a mere clerical error through an affidavit supposedly executed by Matias Severino in 1951, but
the RTC was not persuaded, since the affidavit was executed five years after the alleged sale had been
made and was not even registered. Even the tax declarations presented by petitioner did not show for
which property the land taxes were being paid. Thus, the RTC held that petitioner acquired no better title
to the subject properties than the seller Roque Severino who was not the owner thereof. As a result, no
valid title over Lot No. 729 or its sublots passed to petitioner . As to the defense that Alegre, Sr. was
convicted of perjury for the false allegations in his petition for reconstitution, the RTC found this to be
irrelevant, since it is not Alegre, Sr. who is the plaintiff and his conviction does not affect the overwhelming
proof of possession and ownership presented by petitioner.
The RTC added that the 3 October 1957 Decision which ordered the cancellation of the reconstituted
titles in Alegre, Sr.s name and which was relied upon by petitioner had already been superseded by the 17
January 1983 Decision[24] in Special Civil Case No. 2776 of the CFI of Capiz, Branch IV, which ordered the
expunction of the word cancelled on the faces of OCT Nos. RO-1020 and RO-1021.
Petitioner appealed the 26 March 1993 Decision of the RTC to the CA via CA-G.R. No. 42100. He
alleged that Civil Case No. V-5111 is barred by res judicata in view of the Decision dated 3 October 1957
and by laches/prescription; and that the trial court erred in declaring respondent as the actual and real
possessor and owner of the lots.
The CA affirmed the decision of the trial court. The Decision[25] dated 31 March 1999 reiterated the
opinion in the CA Decision dated 23 April 1992 that the Order of the CFI of Capiz dated 20 May 1955 had
already become final, rendering the 3 October 1957 Decision of no force and effect.[26] Since the 20 May
1955 Order had already become final, the appellate court ruled that petitioner could no longer raise the
defense that the decision in the reconstitution case operates as res judicata on the issue of who is entitled
to possession of the subject lots. Thus, it concluded that the 3 October 1957 Decision has no bearing on
the results of the present case. The CA also remained convinced by the evidence presented by respondent
that his predecessors were the lawful owners and possessors of the properties and agreed with the factual
findings of the trial court.
Petitioner now challenges the decision of the CA, raising the following questions: (a) whether or not the
court a quo acted correctly in affirming the trial courts judgment and in holding that res judicata is
unavailing and in not considering the issue of laches as ground for dismissal of the complaint; and (b)
whether or not the courts a quo acted correctly in concluding, based on undisputed facts, that respondent
is the actual and real possessor and lawful owner of the subject lots.[27]
Petitioner reiterates his argument that res judicata and laches bar this suit. He asserts that the then CFI of
Capiz had already rendered a final and executory Decision[28] dated 3 October 1957 cancelling the
certificates of title issued to respondents late father, Alegre, Sr., and declaring that petitioner had
sufficiently proven his possession of the properties with sufficient title. He argues that the 20 May 1955
Order[29] did not become final since he had timely filed a motion for relief which was granted in the Order
of 4 November 1955. The Decision[30] of 17 January 1983 in Special Case No. 2776 which supposedly
superseded the Decision of 3 October 1957 was also rendered long after the latter decision had become
final and executory and was even rendered without complying with the jurisdictional requirement of notice
to petitioner pursuant to Sec. 113 of Act No. 496.
Petitioner also argues that the suit is barred by laches. He had been in actual physical possession of the
properties since 1946 while respondent filed the civil case for recovery of possession and ownership only in
1985. It would be unjust and inequitable to permit respondent to enforce his right after so many years and
after petitioner had invested time, money and effort to buy and improve the property and to pay taxes
thereon, petitioner adds.
In his Comment,[31] respondent reiterates the finding of the CFI and the CA that the Decision of 3 October
1957 is a nullity for having been rendered long after the Order of 20 May 1955 had become final, therefore
demolishing petitioners theory that the case is barred by res judicata. The Order of 20 May 1955 was set
aside by the CFI on 4 November 1955. Petitioner filed a Motion for Relief on 31 May 1955, and after
hearing on the motion, the 20 May 1955 Order was reinstated on 29 February 1956 and thereafter became

final and executory. This was pointed out in the decision of the appellate court. Since there is no prior
valid decision, there can be no res judicata.
There is likewise no reason for laches to apply, respondent maintains, since he and his father never slept
on their rights as lawful and true owners of the properties in question. Respondent had even testified that
his father had filed an ejectment case against petitioner.
Respondent concludes by averring that the issue as to who was in possession of the lots in question had
already been ruled upon by the trial court and affirmed by the CA, and is a question of fact which cannot
properly be raised in a petition for review.
The petition must be denied.
It must be pointed out that the case for resolution before us concerns the complaint for accion
reivindicatoria filed by respondent. Accion reivindicatoria or accion de reivindicacion is an action whereby
plaintiff alleges ownership over a parcel of land and seeks recovery of its full possession. It is a suit to
recover possession of a parcel of land as an element of ownership.[32] The basic question in such an
action is whether the plaintiff, respondent herein, has presented sufficient evidence to prove his ownership
of the properties in question.
As in all civil cases, the burden of proof is on the plaintiff to establish his case by preponderance of
evidence. Preponderance of evidence is the weight, credit, and value of the aggregate evidence on
either side and is usually considered to be synonymous with the term greater weight of the evidence or
greater weight of the credible evidence. Preponderance of evidence is a phrase which, in the last
analysis, means probability of the truth. It is evidence which is more convincing to the court as worthy of
belief than that which is offered in opposition thereto.[33] If plaintiff claims a right granted or created by
law, he must prove his claim by competent evidence. He must rely on the strength of his own evidence
and not upon the weakness of that of his opponent.[34]
The RTC and the CA are one in saying that respondent had sufficiently proven his claim of ownership over
the subject properties. In particular, both courts relied on the certification dated 2 July 1956 by the Bureau
of Lands and the cadastral list presented by respondent that showed his predecessors-in-interest to be the
owners of the subject lands. Both courts also demonstrated the weakness of the evidence presented by
petitioner, pointing out that the documents he presented showed that his predecessors-in-interest were
owners of the adjoining piece of land and not the properties in dispute. A reexamination of these
conclusions is no longer necessary since factual issues are not the province of the Supreme Court
especially in petitions for review where only questions of law may be raised. This Court cannot be tasked
to go over the proofs presented by the parties in the lower courts and analyze, assess and weigh them to
ascertain if the trial court and the appellate court were correct in their appreciation of the evidence.[35]
Moreover, the factual findings as to the ownership of the properties reached by the trial court and affirmed
by the appellate court are supported by the evidence on record and therefore should be accorded great
respect.[36]
The foregoing, however, does not write finis to the case at bar. There remains the matter of the validity of
the 3 October 1957 Decision denying the reconstitution of titles in respondents fathers name, and
whether this decision influences the outcome of the accion reivindicatoria. It is here where the issue of
applicability of the doctrine of res judicata comes into play.
It is apparent that a petition for reconstitution of title and a case for recovery of possession of property
have no identity of causes of action. In a reconstitution case, the judgment merely orders the re-issuance
of a lost certificate of title in its original form and condition. It does not determine or resolve the ownership
of the land covered by the lost or destroyed title. A reconstituted title, like the original certificate of title,
by itself does not vest ownership of the land or estate covered thereby.[37] An accion reivindicatoria, on
the other hand, is a suit to recover possession of a parcel of land as an element of ownership. It is an
action whereby the plaintiff alleges ownership over a parcel of land and seeks recovery of its full
possession. The judgment in such a case determines the ownership of the property and awards the
possession of the property to the lawful owner.

There are two aspects to the doctrine of res judicata. The first concept of res judicata, known as "bar by
prior judgment," is the effect of a judgment as a bar to the prosecution of a second action upon the same
claim, demand or cause of action. This concept is clearly inapplicable to the case at bar since the two
cases, although involving the same parties and the same subject matter, have different causes of action.
In the second concept, known as "conclusiveness of judgment," issues actually and directly resolved in a
former suit cannot again be raised in any future case between the same parties involving a different cause
of action. Conclusiveness of judgment operates as a bar even if there is no identity as between the first
and second causes of action. Under the doctrine, any right, fact, or matter in issue directly adjudicated or
necessarily involved in the determination of an action before a competent court in which judgment is
rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated
between the parties and their privies whether or not the claim, demand, purpose, or subject matter of the
two actions is the same.[38] This second concept is likewise inapplicable to the present case.
Petitioner claims in his petition that the 3 October 1957 Decision resolved the issue of ownership of the
lots and declared in the body of the decision that he had sufficiently proven uncontroverted facts that he
had been in possession of the land in question since 1946 x x x [and] has been in possession of the
property with sufficient title.[39] However, such findings made by the CFI in the said decision are mere
obiter, since the ownership of the properties, titles to which were sought to be reconstituted, was never
the issue in the reconstitution case. Ownership is not the issue in a petition for reconstitution of title. A
reconstitution of title does not pass upon the ownership of the land covered by the lost or destroyed title.
[40]
It may perhaps be argued that ownership of the properties was put in issue when petitioner opposed the
petition for reconstitution by claiming to be the owner of the properties. However, any ruling that the trial
court may make on the matter is irrelevant considering the courts limited authority in petitions for
reconstitution. In a petition for reconstitution of title, the only relief sought is the issuance of a
reconstituted title because the reconstituting officers power is limited to granting or denying a
reconstituted title. As stated earlier, the reconstitution of title does not pass upon the ownership of the
land covered by the lost or destroyed title, and any change in the ownership of the property must be the
subject of a separate suit.[41]
It should be noted, too, that the dispositive portion of the 3 October 1957 Decision did not make a
categorical ruling on the matter of ownership. While it dismissed the petition for reconstitution filed by
Alegre, Sr., it did so without precluding the right of the party or parties entitled thereto. Evidently, the
trial court itself recognized that its authority in the reconstitution case is limited only to the re-issuance of
the certificate of title, and that the matter of ownership of the properties should be threshed out in a
proper and separate proceeding.
Besides, the validity of the 3 October 1957 Decision remains dubious. The order granting the
reconstitution of title in Alegre, Srs name was issued on 20 May 1955. On 31 May 1955, petitioner filed a
Motion for Relief from the said order. However, a motion or petition for relief assumes that the assailed
order or decision has already become final. In this case, the motion for relief was filed less than 30
days[42] from the issuance of the assailed order, clearly before it had become final. Petitioners proper
recourse would have been to appeal or file a motion for reconsideration. Thus, the CFI of Capiz improperly
ruled on the motion for relief and set off a chain of events that led to the promulgation of the 3 October
1957 Decision. It can then be concluded that the 20 May 1955 Order eventually attained finality.
The equitable doctrine of laches is also inapplicable to the case at bar. Laches means the failure or neglect
for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or
should have been done earlier; it is negligence or omission to assert a right within a reasonable time,
warranting the presumption that the party entitled to assert it either has abandoned or declined to assert
it.[43] The question of laches is addressed to the sound discretion of the court, and since laches is an
equitable doctrine, its application is controlled by equitable considerations. It cannot work to defeat justice
or to perpetrate fraud and injustice.[44]
Petitioner had been in possession of Lot No. 729 since 1952. Petitioner first possessed the property
sometime in 1950 but that same year, respondents father filed an ejectment suit against him. The case
was settled upon the intervention of the town mayor, with petitioner explicitly agreeing to vacate the
property. In 1951, when respondents father went to Manila, petitioner returned to the property and

constructed his house thereon. Respondents father filed another ejectment case, but this did not push
through because a fire razed the house petitioner had built. Sometime in 1953 or 1954, respondents
father again filed another ejectment case against petitioner who had re-occupied the property and rebuilt
his house thereon in 1952. The trial court where the ejectment case was filed asked respondents father to
produce the title to the property. The ejectment case was then dismissed and respondents father filed the
reconstitution case before the CFI of Capiz which eventually issued the Order of 20 May 1955.[45] Many
other incidents relating to the reconstitution case followed, leading to the promulgation of the 3 October
1957 Decision.
It appears that during the pendency of the reconstitution case, petitioner remained in possession of the
property. This is understandable since the last ejectment case filed by respondents father against
petitioner was dismissed by the trial court and respondents father was required to produce the title to the
property. However, even after the issuance of the 1955 Order granting reconstitution of the titles in the
name of respondents father, the latter did not re-file or revive the ejectment case. The reason for this
failure was the filing by petitioner of the criminal case for perjury against Alegre, Sr. for which he was
convicted.[46] Alegre, Sr. left for Manila after the decision in the criminal case was promulgated and
remained there out of fear that he would be imprisoned. When Alegre, Sr. had decided to come home after
several years, he received information that petitioner, who was a policeman, was looking for him to place
him in jail. Thus, Alegre, Sr. returned to Manila.[47] Sometime in 1973, respondent, in behalf of his father,
made oral demands upon petitioner to vacate the land but the latter still refused and insisted only on
talking to the elder Alegre. In 1976, Alegre, Sr. came home and talked to petitioner who still insisted on
remaining on the property. Alegre, Sr. finally died on 5 March 1982 without recovering the property.[48]
Then on 12 February 1985, respondent sent petitioner a letter demanding the latter to vacate the property.
[49] Upon petitioners failure to comply, the action for recovery was filed.
Thus, respondents and his fathers right to the property remains intact. Their ownership was affirmed by
the lower courts, while laches could not have set in owing to respondents and his fathers persistent
moves to reclaim possession of the property and the circumstances which prevented Alegre, Sr. from refiling the ejectment case against petitioner. Indeed, neither respondent nor his father abandoned their
right to the property.
WHEREFORE, the petition is hereby DENIED and the Decision dated 31 May 1999 and Resolution dated 8
March 2000 of the Court of Appeals are AFFIRMED.

B.E. SAN DIEGO, INC., Petitioner, versus ROSARIO T. ALZUL, Respondent.2007 Jun 82nd DivisionG.R. No.
169501D E C I S I O N

10

VELASCO, JR., J.:

The Case
This Petition for Review on Certiorari[1] under Rule 45 questions the February 18, 2005 Decision[2] of the
Court of Appeals (CA) in CA-G.R. SP No. 81341, which granted respondent Alzul the right to pay the
balance of the purchase price within five (5) days from receipt of the CA Decision despite the lapse of the
original period given to said party through the final Resolution of this Court in an earlier case. The CA
ruling reversed the September 18, 2003 Resolution[3] and December 2, 2003 Order[4] of the Office of the
President (OP) in O.P. Case No. 01-1-097, which upheld the dismissal of respondent Alzuls complaint for
consignation and specific performance before the Housing and Land Use Regulatory Board (HLURB) in
HLURB Case No. REM-A-99097-0167. Likewise challenged is the August 31, 2005 CA Resolution[5]
rejecting petitioners Motion for Reconsideration.
The Facts
The facts culled by the CA are as follows:
On February 10, 1975, [respondent] Rosario T. Alzul purchased from [petitioner] B.E. San Diego, Inc.
four (4) subdivision lots with an aggregate area of 1,275 square meters located at Aurora Subdivision,
Maysilo, Malabon. These lots, which are now subject of this petition, were bought through installment
under Contract to Sell No. 867 at One Hundred Pesos (P100.00) per square meter, with a downpayment
[sic] of Twelve Thousand Seven Hundred Fifty Pesos (P12,750.00), and monthly installments of One
Thousand Two Hundred Forty-Nine Pesos (P1,249.50). The interest agreed upon was 12 percent (12%) per
annum until fully paid, thus, the total purchase price was Two Hundred Thirty Seven Thousand Six Hundred
Sixty Pesos (P237,660.00).
[Respondent] took immediate possession of the subject property, setting up a perimeter fence and
constructing a house thereon.
On July 25, 1977, [respondent] signed a Conditional Deed of Assignment and Transfer of Rights
which assigned to a certain Wilson P. Yu her rights under the Contract to Sell. [Petitioner] was notified of
the execution of such deed. Later on, the Contract to Sell in [respondents] name was cancelled, and
[petitioner] issued a new one in favor of Yu although it was also denominated as Contract to Sell No. 867.
On July 4, 1979, [respondent] informed [petitioner] about Yus failure and refusal to pay the amounts
due under the conditional deed. She also manifested that she would be the one to pay the installments
due to respondent on account of Yus default.
On August 25, 1980, [respondent] commenced an action for rescission of the conditional deed of
assignment against Yu before the Regional Trial Court of Caloocan City. Subsequently, on September 30,
1985, [respondent] caused the annotation of notices of lis pendens on the titles covering the subject lots.
The trial court ruled in [respondents] favor in the rescission case. The decision was even affirmed by this
[appellate] Court. Yu brought his cause before the Supreme Court in a Petition for Review, but this was
likewise denied.
On February 17, 1989, [petitioner] notified [respondent] that Contract to Sell No. 867 was declared
rescinded and cancelled. On April 28, 1989, the subject lots were sold to spouses Carlos and Sandra
Ventura who were allegedly surprised to find the annotation of lis pendens in their owners duplicate title.
On May 8, 1990, the Ventura spouses filed an action for Quieting of Title with Prayer for Cancellation of
Annotation and Damages before the Regional Trial Court of Malabon. The trial court ruled in favor of the
Ventura spouses. On appeal before this [appellate] Court, however, the decision was reversed on
November 27, 1992, as follows:
WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE, and the complaint therein is
ordered dismissed. Transfer Certificates of Title Nos. N-1922, N-1923, N-1924, and N-1925, all of the
Register of Deeds of Metro Manila, District III, Malabon Branch, in the names of plaintiffs-appellees Carlos
N. Ventura and Sandra L. Ventura are hereby declared null and void, and the titles of ownership reinstated
in the name of B.E. San Diego, Inc. with the corresponding notices of lis pendens therein annotated in favor

11

of defendant-appellant until such time that ownership of the subject parcels of land is transferred to herein
defendant-appellant Rosario Alzul. Costs against plaintiff-appellees.
SO ORDERED.
Upon filing of an appeal to the Supreme Court docketed as GR No. 109078, the above decision was
affirmed on December 26, 1995. A motion for reconsideration was filed, but this was denied by the
Highest Tribunal on February 5, 1996.
On June 17, 1996, a resolution was issued by the Supreme Court, ordering, as follows:
We, however, agree with the observation made by movants that no time limit was set by the
respondent Court of Appeals in its assailed Decision for the private respondent herein, Rosario Alzul, to pay
B.E. San Diego, Inc. the original owner of the properties in litigation. To rectify such oversight, private
respondent Rosario T. Alzul is hereby given a non-extendible period of thirty (30) days from entry of
judgment, within which to make full payment for the properties in question. xxx (Emphasis supplied.)
On July 12, 1996, an Entry of Judgment was issued. In an attempt to comply with the Supreme Courts
directive, herein [respondent] tried to serve payment upon [petitioner] on August 29, 1996, August 30,
1996 and September 28, 1996. On all these dates, however, [petitioner] allegedly refused to accept
payment from [respondent].
On November 11, 1996, [respondent] filed a Manifestation in GR No. 109078 informing the Supreme
Court that [petitioner], on three (3) occasions, refused to accept [her] payment of the balance in the
amount of P187,380.00. On January 29, 1997, a Resolution was issued by the Supreme Court referring the
case to the court of origin for appropriate action, on account of [respondents] manifestation.
On October 21, 1997, [respondents] counsel wrote a letter to [petitioner] citing the latters refusal to
accept her payment on several occasions. It was also mentioned therein that due to its refusal,
[respondent] would just consign the balance due to [petitioner] before the proper judicial authority.
On January 14, 1998, a reply was sent by [petitioner] through a certain Flora San Diego.
[Respondents] request was rejected on account of the following:
1.
We have long legally rescinded the sale in her favor in view of her failure to pay the monthly
amortization as per contract.
2.

She sold her rights to Mr. Wilson Yu who failed to pay his monthly amortizations, too.

3.
We are not and have never been a part of the case you are alluding to hence we cannot be bound by
the same.
4.
The property in question is now under process to be reconveyed to us as ordered by the court by
virtue of a compromised (sic) agreement entered into in Civil Case No. 2655 MN of the Malabon RTC Branch
entitled Spouses Carlos Ventura and Sandra Ventura vs. B.E. San Diego, Inc. xxx
Thinking that an action for consignation alone would not be sufficient to allow for the execution of a
final judgment in her favor, [respondent] decided to file an action for consignation and specific
performance against [petitioner] before the Housing and Land Use Regulatory Board on March 12, 1998.
The complaint, docketed as REM-031298-10039, prayed that a) [respondent] be considered to have fully
paid the total purchase price of the subject properties; b) TCT Nos. N-155545 to 48 which were declared
void in CA GR No. L-109078 be cancelled; c) new certificates of title over the subject properties be issued
in the name of [respondent]; and d) [petitioner] be ordered to reimburse [respondent] the sum of Fifty
Thousand Pesos (P50,000.00) as attorneys fees and litigation expenses.
On July 12, 1999, a decision was rendered by the HLURB through Housing and Land Use Arbiter
Dunstan T. San Vicente. It was held, thus:

12

The purported consignation in this case is thus of no moment, inasmuch as the amount allegedly
due was not even deposited or placed at the disposal of this Office by the complainant.
In any event, we agree with [petitioner] that even if the complainant had actually made the
consignation of the amount, such consignation is still ineffective and void for having been done long after
the expiration of the non-extendible period set forth in the 17 June 1996 Supreme Court Resolution that
expired on 20 September 1996.
WHEREFORE, Premises Considered, a judgment is hereby rendered DISMISSING the complaint. Cost
against complainant.
IT (sic) SO ORDERED.
Aggrieved by the above decision, [respondent] filed a Petition for Review before the HLURBs First
Division. On March 17, 2000, a decision was rendered dismissing the petition for lack of merit, and
affirming the decision dated July 12, 1999. [Respondent] filed a Motion for Reconsideration, but this was
denied on July 31, 2001.
[Respondent] then filed an appeal to the Office of the President. This was, however, dismissed on June
2, 2003 for having been filed out of time. Again, [respondent] moved for its reconsideration. On
September 18, 2003, the Office of the President gave due course to [respondents] motion, and resolved
the motion according to its merits. The single question resolved was whether or not [respondents] offer of
consignation was correctly denied by the HLURB. Said office ruled in the affirmative, and We quote:
From the foregoing, it is evident that there was no valid consignation of the balance of the purchase price.
The 30-day non-extendible period set forth in the 17 June 1996 resolution had already expired on 20
September 1996. The HLURB is therefore justified in refusing the consignation, otherwise it would be
accused of extending the period beyond that provided by the Supreme Court. A valid consignation is
effected when there is an actual consignation of the amount due within the prescribed period (St. Dominic
Corporation vs. Intermediate Appellate Court, 138 SCRA 242). x x x
WHEREFORE, premises considered, the appeal is hereby DISMISSED for lack of merit. x x x
[Respondent] filed a Motion for Reconsideration [of] the above Resolution, but this was denied with
finality on December 2, 2003.[6]
The Ruling of the Court of Appeals
Respondent Alzul brought before the CA a petition for certiorari docketed as CA-G.R. SP No. 67637,
ascribing grave abuse of discretion to the OP in dismissing her appeal in O.P. Case No. 01-1-097 and
affirming the March 17, 2000 Decision[7] and July 31, 2001 Resolution[8] of the HLURB First Division in
HLURB Case No. REM-A-990907-0167.
On February 18, 2005, the CA rendered its assailed Decision reversing the September 18, 2003 Resolution
and December 2, 2003 Order of the OP, the fallo of which reads:
WHEREFORE, in the higher interest of justice, the assailed Decision, Resolution and Order dated March 17,
2000, September 18, 2003 and December 2, 2003, respectively, are hereby REVERSED and SET ASIDE.
Accordingly, [respondent Alzul] is hereby ordered to pay [petitioner B.E. San Diego, Inc.] the balance due
for the sale of the subject four parcels of land within five (5) days from receipt of this decision. [Petitioner
B.E. San Diego, Inc.], on the other hand, is ordered to accept such payment from [respondent Alzul], after
which, the corresponding Deed of Sale must be issued.
SO ORDERED.[9]
The CA agreed with the HLURB that no valid consignation was made by respondent but found that justice
would be better served by allowing respondent Alzul to effect the consignation, albeit belatedly. It cited
the respondents right over the disputed lots as confirmed by this Court in G.R. No. 109078, which, if taken
away on account of the delay in completing the payment, would amount to a grave injustice.

13

Moreover, the CA pointed out that respondents counsel concededly lacked the vigilance and competence
in defending his clients right when he failed to consign the balance on time; nonetheless, such may be
disregarded in the interest of justice. It considered the failure of respondents counsel to avail of the
remedy of consignation as a procedural lapse, citing the principle that where a rigid application of the rules
will result in a manifest failure or miscarriage of justice, technicalities can be ignored.
A copy of the February 18, 2005 CA Decision was received by respondent Alzul through her counsel on
February 24, 2005.
On March 4, 2005, respondent filed a Compliance and Motion for Extension of Time to Comply with the
Decision of the [CA][10] praying that she be given an extension of ten (10) days or from March 2 to 11,
2005 to comply with the CA Decision. On the other hand, on March 8, 2005, petitioner filed its Motion for
Reconsideration with Opposition to Petitioners Motion for Extension of Time to Comply with the Decision
of the [CA].[11]
Through its assailed August 31, 2005 Resolution, the CA denied petitioners Motion for Reconsideration,
and finding that respondent duly exerted efforts to comply with its Decision and a valid consignation was
made by respondent, it granted the requested 10-day extension of time to comply with the February 18,
2005 Decision and her motion for consignation. The fallo of said Resolution reads:
IN VIEW OF THE FOREGOING, the motion for extension to comply with the Decision is hereby GRANTED, the
motion for reconsideration is DENIED and the motion for consignation is GRANTED. [Petitioner] B.E. San
Diego, Inc. is hereby ordered to receive the payment of [respondent] Rosario T. Alzul and to issue, in her
favor, the corresponding Deed of Sale.[12]
The Issues
Hence, before us is the instant petition with the following issues:
1. Whether or not the Court of Appeals, in issuing the assailed 18 February 2005 Decision and 31 August
2005 Resolution in CA-G.R. SP No. 81341, has decided questions of law in a way not in accord with law and
with the applicable decisions of the Honorable Court;
2. Whether or not the Court of Appeals committed patent grave abuse of discretion and/or acted without
or in excess of jurisdiction in granting respondent Alzuls subsequent motion for extension of time to
comply with the 18 February 2005 decision and motion for consignation; and
3. Whether or not the 18 February 2005 Decision and 31 August 2005 Resolution of the Court of Appeals
in CA-G.R. SP No. 81341 ought to be annulled and set aside, for being contrary to law and jurisprudence.
[13]
The Courts Ruling
On the procedural issue, petitioner B.E. San Diego, Inc. assails the sufficiency of respondent Alzuls
CA petition as the latter, in violation of the rules, allegedly lacked the essential and relevant pleadings filed
with the HLURB and the OP.
Section 6 of Rule 43, 1997 Rules of Civil Procedure pertinently provides:
SEC. 6. Contents of the petition.The petition for review shall x x x (c) be accompanied by a clearly
legible duplicate original or a certified true copy of the award, judgment, final order or resolution appealed
from, together with certified true copies of such material portions of the record referred to therein and
other supporting papers; x x x (Emphasis supplied.)
The above proviso explicitly requires the following to be appended to a petition: 1) clearly legible
duplicate original or a certified true copy of the award, judgment, final order, or resolution appealed from;
2) certified true copies of such material portions of the record referred to in the petition; and 3) other
supporting papers.

14

Obviously, the main reason for the prescribed attachments is to facilitate the review and evaluation of the
petition by making readily available to the CA all the orders, resolutions, decisions, pleadings, transcripts,
documents, and pieces of evidence that are material and relevant to the issues presented in the petition
without relying on the case records of the lower court. The rule is the reviewing court can determine the
merits of the petition solely on the basis of the submissions by the parties[14] without the use of the
records of the court a quo. It is a fact that it takes several months before the records are elevated to the
higher court, thus the resulting delay in the review of the petition. The attachment of all essential and
necessary papers and documents is mandatory; otherwise, the petition can be rejected outright under Sec.
7 of Rule 43 of the Rules of Court, which provides:
Effect of failure to comply with requirements.The failure of the petitioner to comply with any of the
foregoing requirements regarding the payment of the docket and other lawful fees, the deposit for costs,
proof of service of the petition, and the contents of and the documents which should accompany the
petition shall be sufficient ground for the dismissal thereof.
To prevent premature dismissals, the requirements under Sec. 6 on the contents of the petition have to be
elucidated.
First, there can be no question that only the award, judgment, or final order or resolution issued by the
lower court or agency and appealed from has to be certified as true.
The second set of attachments refers to the certified true copies of such material portions of the record
referred to therein.
Material is defined as important; more or less necessary; having influence or effect; going to the
merits; having to do with matter, as distinguished from form.[15] Thus, material portions of the records
are those parts of the records that are relevant and directly bear on the issues and arguments raised and
discussed in the petition. They may include any of the pleadings that are subject of any issue,
documentary evidence, transcripts of testimonial evidence, and parts of the records pertinent and relevant
to the grounds supporting the petition. The attachment of the material portions is subject to the
qualification that these are referred to or cited in the petition. Thus, only the material parts specified in
the petition have to be appended and that would be sufficient compliance with the rule as to form.
It would be prudent however for the petitioner to attach all parts of the records which are relevant,
necessary, or important in whatever way to be able to reach the resolution of the issues of the petition.
The availability of such documents to the ponente and members of a Division can easily provide the
substance and support to the merits of the grounds put forward by the petitioner. Moreover, the processing
time for the review and resolution of the petition is greatly abbreviated, thereby obviating intolerable
delays.
Lastly, it has to be explained whether the material portions of the records have to be certified as
true by the clerk of court or his/her duly authorized representative as provided in Sec. 6 of Rule 43. If
strictly required, the rule to require attachment of certified true copies of the material portions will surely
make the preparation of the petition more tedious, cumbersome, and expensive. It should therefore be
construed that merely clear and legible copies of the material portions will suffice. The rules on the
different modes of appeal from the lower courts or quasi-judicial agencies to the CA reveal that it is only
Rule 43 that specifically states that the material portions to be appended to the petition should be certified
true copies. Rule 41 of course does not require attachment of the pertinent records since the entire
records are elevated to the CA. Rule 42 on petition for review from the trial court in aid of its appellate
jurisdiction to the CA speaks of plain copies of the material portions of the record as would support the
allegations of the petition.[16] Even Rule 45 on appeal by certiorari from the CA to this Court simply
speaks of material portions of the records without indicating that these should be certified true copies.
Rule 46 on original cases to this Court only requires plain copies of the material portions of the records.
Finally, Rule 65 on special civil actions requires only copies of relevant and pertinent pleadings and
documents.
From the foregoing premises, the inescapable conclusion is that only plain and clear copies of the
material portions of the records are required under Sec. 3 of Rule 43. This finding is buttressed by our

15

ruling in Cadayona v. CA, where it was held that only judgments or final orders of the lower courts are
needed to be certified true copies or duplicate originals.[17] There is no plausible reason why a different
treatment or stricter requirement should be applied to petitions under Rule 43.
The last requirement is the attachment of other supporting papers. Again, it is only in Rule 43 that
we encounter the requirement of annexing supporting papers to the petition. This can be interpreted to
mean other documents, pictures, and pieces of evidence not forming parts of the records of the lower
court or agency that can bolster and shore up the petition. While not so specified in Sec. 3 of Rule 43, it is
inarguable that said papers must also be relevant and material to the petition; otherwise, the attachments
would be mere surplusages and devoid of use and value.
Petitioner claims respondents petition in CA-G.R. SP No. 81341 failed to attach material documents
of the records of the HLURB and the OP. They cry foul that none of the pleadings filed with the HLURB and
the OP found their way into the CA petition. It prays that the CA petition should have been dismissed
under Sec. 7 of Rule 43 due to the lack of needed attachments.
Petitioners postulation must fail.
Sec. 7 of Rule 43 does not prescribe outright rejection of the petition if it is not accompanied by the
required documents but simply gives the discretion to the CA to determine whether such breach
constitutes a sufficient ground for dismissal. Apparently, petitioner was not able to convince the CA that
the alleged missing attachments deprived said court of the full opportunity and facility in examining and
resolving the petition. It has not been satisfactorily shown that the pleadings filed by petitioner with the
quasi-judicial agencies have material bearing or importance to the CA petition. Such pleadings could have
been attached to the comment of respondent and hence, no prejudice would be suffered. Thus, the CA did
not exercise its discretion in an arbitrary or oppressive manner by giving due course to the petition.
In addition, it was noted in Cusi-Hernandez v. Diaz that the CA Revised Internal Rules provide certain
flexibility in the submission of additional documents:
When a petition does not have the complete annexes or the required number of copies, the Chief of
the Judicial Records Division shall require the petitioner to complete the annexes or file the necessary
number of copies of the petition before docketing the case. Pleadings improperly filed in court shall be
returned to the sender by the Chief of the Judicial Records Division.[18]
In Rosa Yap Paras, et al. v. Judge Ismael O. Baldado, et al., the Court preferred the determination of cases
on the merits over technicality or procedural imperfections so that the ends of justice would be served
better, thus:
At the same time, the Rules of Court encourage a reading of the procedural requirements in a manner
that will help secure and not defeat justice. Thus:
Section 6. Construction.These Rules shall be liberally construed in order to promote their objective of
securing a just, speedy and inexpensive disposition of every action and proceeding.
As expressed in Alberto vs. Court of Appeals, (w)hat should guide judicial action is the principle that a
party-litigant is to be given the fullest opportunity to establish the merits of his complaint or defense rather
than for him to lose life, liberty, honor or property on technicalities. x x x (T)he rules of procedure should
be viewed as mere tools designed to facilitate the attainment of justice. Their strict and rigid application,
which would result in technicalities that tend to frustrate rather than promote substantial justice, must
always be eschewed.[19]
Now we will address the main issuewhether respondent Alzul is still entitled to consignation
despite the lapse of the period provided by the Court in G.R. No. 109078 entitled Yu v. Court of Appeals.
Petitioner stresses the fact that respondent Alzul did not comply with this Courts June 17, 1996
Resolution[20] which gave a non-extendible period of thirty (30) days from entry of judgment within which
to make full payment for the subject properties. The entry of judgment shows that the December 26, 1995
Resolution[21] in G.R. No. 109078 became final and executory on July 2, 1996. Respondent Alzul received

16

through counsel a copy of the entry of judgment on August 21, 1996. Thus, respondent had until
September 20, 1996 within which to make the full payment.
After three (3) unsuccessful tenders of payment, respondent Alzul made no consignation of the amount to
the court of origin. It was only on March 12, 1998 or about a year and a half later that respondent offered
to consign said amount in an action for consignment before the HLURB. Relying on the case of St. Dominic
Corporation v. Intermediate Appellate Court,[22] petitioner strongly asserts that upon its refusal to accept
the tendered payment, respondent ought to have consigned it with the court of origin also within the 30day period or within a reasonable time thereafter. Respondent failed to do this as she waited for a year
and a half before instituting the instant action for specific performance and consignment before the
HLURB.
Moreover, petitioner argues that respondents delay of a year and a half to pursue full payment must
be regarded as a waiver on her part to claim whatever residual remedies she might still have for the
enforcement of the June 17, 1996 Resolution in G.R. No. 109078.
Petitioner further contends that even if the action before the HLURB was made on time, that is, within the
30-day period, still it is fatally defective as respondent did not deposit any amount with the HLURB which
violated the rules for consignment which require actual deposit of the amount allegedly due with the
proper judicial authority.
Premised upon these considerations, petitioner faults the appellate court for its grant of
respondents petition for review which nullified the denial by the HLURB Arbiter, HLURB First Division, and
the OP of respondents action.
On the other hand, respondent contends that the June 17, 1996 Resolution of this Court should not
be construed against her inability to effect payment due to the obstinate and unjust refusal by petitioner
a supervening circumstance beyond her control. Respondent underscores that within the 30-day period,
she repeatedly attempted to effect the payment to no avail. Moreover, the much delayed response of
petitioner embodied in its January 14, 1998 letter[23] confirming its refusal was based on untenable,
baseless, and contrived grounds.
Moreover, she argues that the December 26, 1995 Resolution in G.R. No. 109078 granting her
proprietary rights over the subject lots has long become final and executory.
Anent the issue of laches and estoppel, respondent strongly contends that such do not apply in the
instant case as incontrovertible circumstances show that she has relentlessly pursued the protection and
enforcement of her rights over the disputed lots for over a quarter of a century.
After a careful study of the factual milieu, applicable laws, and jurisprudence, we find the petition
meritorious.
Respondent Alzul was accorded legal rights over subject properties
In G.R. No. 109078, finding no reversible error on the part of the CA, we denied Wilson P. Yus petition
and affirmed the appellate courts ruling that as between Wilson P. Yu, the Ventura spouses, petitioner B.E.
San Diego, Inc., and respondent Alzul, respondent has inchoate proprietary rights over the disputed lots.
We upheld the CA ruling declaring as null and void the titles issued in the name of the Ventura spouses
and reinstating them in the name of B.E. San Diego, Inc., with the corresponding notices of lis pendens
annotated on them in favor of respondent until such time that ownership of the subject parcels of land is
transferred to respondent Rosario Alzul.
It is thus clear that we accorded respondent Alzul expectant rights over the disputed lots, but such is
conditioned on the payment of the balance of the purchase price. Having been conceded such rights,
respondent had the obligation to pay the remaining balance to vest absolute title and rights of ownership
in his name over the subject properties.

17

In our June 17, 1996 Resolution, we clearly specified thirty (30) days from entry of judgment for
respondent to promptly effect the full payment of the balance of the purchase price for the subject
properties, thus:
We however agree with the observation made by movants that no time limit was set by the
respondent Court of Appeals in its assailed Decision for the private respondent herein, Rosario Alzul, to pay
B.E. San Diego, Inc., the original owner of the properties in litigation. To rectify such oversight, private
respondent Rosario T. Alzul is hereby given a non-extendible period of thirty (30) days from entry of
judgment, within which to make full payment for the properties in question.[24] (Emphasis supplied.)
The non-compliance with our June 17, 1996 Resolution is fatal to respondent Alzuls action for consignation
and specific performance
Unfortunately, respondent failed to effect such full payment of the balance of the purchase price for
the subject properties.
No consignation within the 30-day period or at a reasonable time thereafter
It is clear as day that respondent did not attempt nor pursue consignation within the 30-day period
given to her in accordance with the prescribed legal procedure. She received a copy of the entry of
judgment on August 21, 1996 and had 30 days or until September 20, 1996 to pay the balance of the
purchase price to petitioner. She made a tender of payment on August 29, 1996, August 30, 1996, and
September 28, 1996, all of which were refused by petitioner possibly because the latter is of the view that
it is not bound by the November 27, 1992 Decision in CA-G.R. CV No. 33619 nor the December 26, 1995
Resolution in G.R. No. 109078, and the fact that respondent has forfeited her rights to the lots because of
her failure to pay the monthly amortizations.
It must be borne in mind however that a mere tender of payment is not enough to extinguish an
obligation. In Meat Packing Corporation of the Philippines v. Sandiganbayan, we distinguished consignation
from tender of payment and reiterated the rule that both must be validly done in order to effect the
extinguishment of the obligation, thus:
Consignation is the act of depositing the thing due with the court or judicial authorities whenever the
creditor cannot accept or refuses to accept payment, and it generally requires a prior tender of payment.
It should be distinguished from tender of payment. Tender is the antecedent of consignation, that is, an
act preparatory to the consignation, which is the principal, and from which are derived the immediate
consequences which the debtor desires or seeks to obtain. Tender of payment may be extrajudicial, while
consignation is necessarily judicial, and the priority of the first is the attempt to make a private settlement
before proceeding to the solemnities of consignation. Tender and consignation, where validly made,
produces the effect of payment and extinguishes the obligation.[25] (Emphasis supplied.)
There is no dispute that a valid tender of payment had been made by respondent. Absent however a
valid consignation, mere tender will not suffice to extinguish her obligation and consummate the
acquisition of the subject properties.
In St. Dominic Corporation involving the payment of the installment balance for the purchase of a lot
similar to the case at bar, where a period has been judicially directed to effect the payment, the Court held
that a valid consignation is made when the amount is consigned with the court within the required period
or within a reasonable time thereafter. We ruled as follows:
First of all, the decision of the then Court of Appeals which was promulgated on October 21, 1981, is
quite clear when it ordered the payment of the balance of the purchase price for the disputed lot within 60
days from receipt hereof meaning from the receipt of the decision by the respondents. It is an admitted
fact that the respondents received a copy of the decision on October 30, 1981. Hence, they had up to
December 29, 1981 to make the payment. Upon refusal by the petitioner to receive such payment, the
proper procedure was for the respondent to consign the same with the court also within the 60-day period
or within a reasonable time thereafter.[26] (Emphasis supplied.)

18

The records also reveal that respondent failed to effect consignation within a reasonable time after
the 30-day period which expired on September 20, 1996. Instead of consigning the amount with the court
of origin, respondent filed her November 11, 1996 Manifestation informing this Court of petitioners unjust
refusal of the tender of payment. We acted favorably to it by issuing our January 28, 1997 Resolution
which ordered, thus:
Considering the manifestation, dated November 11, 1996, filed by counsel for private respondent
Rosario T. Alzul, stating that private respondent tendered to B.E. San Diego, Inc. the payment of the sum of
P187,380.00 representing the balance of the purchase price of the properties which are the subject of this
litigation, but B.E. San Diego, Inc., refused to accept the same, the Court resolved to REFER the case to the
court of origin, for appropriate action.[27]
Respondent still failed to take the cue by her inaction to consign the amount with the court of origin.
Undoubtedly, pursuing the action for consignation on March 12, 1998 or over a year after the Court issued
its January 28, 1997 Resolution is way beyond a reasonable time thereafter. Indeed, we have accorded
respondent, through said Resolution, all the opportunity to pursue consignation with the court of origin and
yet, respondent failed to make a valid consignation. This is already inexcusable neglect on the part of
respondent.
No valid consignation made
We agree with petitioners assertion that even granting arguendo that the instant case for
consignation was instituted within the 30-day period or within a reasonable time thereafter, it would still
not accord respondent relief as no valid consignation was made. Certainly, the records show that there
was no valid consignation made by respondent before the HLURB as she did not deposit the amount with
the quasi-judicial body as required by law and the rules.
Pertinently, the first paragraph of Article 1258 of the Civil Code provides that [c]onsignation shall
be made by depositing the things due at the disposal of judicial authority, before whom the tender of
payment shall be proved, in a proper case, and the announcement of the consignation in other cases
(emphasis supplied).
It is true enough that respondent tendered payment to petitioner three (3) times through a
Solidbank Managers Check No. 1146 in the amount of PhP 187,380[28] on August 29 and 30, 1996 and
September 28, 1996. It is true likewise that petitioner refused to accept it but not without good reasons.
Petitioner was not impleaded as a party by the Ventura spouses in the Malabon City RTC case for quieting
of title against Wilson Yu nor in the appealed case to the CA nor in G.R. No. 109078.
Petitioner is of the view that there was no jurisdiction acquired over its person and hence, it is not
bound by the final judgment and June 17, 1996 Resolution in G.R. No. 109078. Secondly, petitioner
believed that respondent Alzul has lost her rights over the subject lot by the rescission of the sale in her
favor due to the latters failure to pay the installments and also as a result of her transferees failure to pay
the agreed amortizations. And even in the face of the refusal by petitioner to accept tender of payment,
respondent is not left without a remedy. It is basic that consignation is an available remedy, and
respondent, with the aid of her counsel, could have easily availed of such course of action sanctioned
under the Civil Code.
Considering the tenor of our June 17, 1996 Resolution, respondent ought to have consigned the
amount with the court of origin within the non-extendible period of 30 days that was accorded her or
within a reasonable time thereafter.
As cited earlier, consignation is the act of depositing the thing due with the court or judicial authorities
whenever the creditor cannot accept or refuses to accept payment and it generally requires a prior tender
of payment.[29] It is of no moment if the refusal to accept payment be reasonable or not. Indeed,
consignation is the remedy for an unjust refusal to accept payment. The first paragraph of Art. 1256 of the
Civil Code precisely provides that [i]f the creditor to whom tender of payment has been made refuses
without just cause to accept it, the debtor shall be released from responsibility by the consignation of the
thing or sum due (emphasis supplied).

19

The proper and valid consignation of the amount due with the court of origin, which shall judicially
pronounce the validity of the consignation and declare the debtor to be released from his/her
responsibility, shall extinguish the corresponding obligation.
Moreover, in order that consignation may be effective, the debtor must show that: (1) there was a debt
due; (2) the consignation of the obligation had been made because the creditor to whom tender of
payment was made refused to accept it, or because s/he was absent or incapacitated, or because several
persons claimed to be entitled to receive the amount due or because the title to the obligation had been
lost; (3) previous notice of the consignation had been given to the person interested in the performance of
the obligation; (4) the amount due was placed at the disposal of the court; and (5) after the consignation
had been made, the person interested was notified of the action.[30]
Respondent did not comply with the provisions of law particularly with the fourth and fifth requirements
specified above for a valid consignation. In her complaint for consignation and specific performance,
respondent only prayed that she be allowed to make the consignation without placing or depositing the
amount due at the disposal of the court of origin. Verily, respondent made no valid consignation.
The rights of petitioner and respondent over the 1,275 square meter lot subject of this petition will
be determined by the significance and effects of the December 26, 1995 Resolution rendered in G.R. No.
109078 entitled Yu v. Court of Appeals.[31]
The subject matter of G.R. No. 109078 is the November 27, 1992 Decision rendered in CA-G.R. CV
No. 33619 entitled Carlos N. Ventura and Sandra L. Ventura v. Rosario T. Alzul, et al., the fallo of which
reads:
WHEREFORE, the appealed decision is hereby REVERSED AND SET ASIDE, and the complaint therein is
ordered dismissed. Transfer Certificates of Title Nos. N-1922, N-1923, N-1924, and N-1925, all of the
Register of Deeds of Metro Manila, District III, Malabon Branch, in the names of plaintiffs-appellees Carlos
N. Ventura and Sandra L. Ventura are hereby declared null and void, and the titles of ownership reinstated
in the name of B.E. San Diego, Inc., with the corresponding notices of lis pendens therein annotated in
favor of defendant-appellant until such time that ownership of the subject parcels of land is transferred to
herein defendant-appellant Rosario Alzul. Costs against plaintiff-appellees.
SO ORDERED.[32]
On December 26, 1995, this Court issued the Resolution in G.R. No. 109078 wherein it found no
reversible error in the actions of the CA in its aforequoted disposition in CA-G.R. CV No. 33619, and
resolved to deny the petition for lack of merit. On February 5, 1996, this Court denied with finality the
Motion for Reconsideration filed by petitioner Wilson Yu.
However, on June 17, 1996, this Court, in resolving the Motion for Reconsideration of private
respondents Spouses Carlos and Sandra Ventura, granted respondent Alzul a non-extendible period of
thirty (30) days from entry of judgment, within which to make full payment for the properties in
question.[33]
The question iscan the Court, the CA, or the Malabon City RTC order petitioner B.E. San Diego, Inc.
to accept the tender of payment made by respondent Alzul?
Definitely, they cannot. The reason is that petitioner was not impleaded as a party in the Malabon
City RTC civil case, CA-G.R. CV No. 33619, nor in G.R. No. 109078 and hence is not under the jurisdiction of
said courts. What were determined and decided in the CA Decision in CA-G.R. CV No. 33619 were the
annulment of the titles of spouses Carlos and Sandra Ventura, the reinstatement of said titles to the name
of petitioner, and the declaration that the ownership of the lots subject of said titles will be transferred to
respondent. There is no directive to respondent granting her the right to pay the balance of the price to
petitioner and, more importantly, there is no order for petitioner to accept the payment. The dispositive or
fallo of the decision is what actually constitutes the judgment or resolution of the court that can be the
subject of execution. Where there is a conflict between the dispositive portion of the decision and its body,
the dispositive portion controls irrespective of what appears in the body of the decision.[34] Such being
the case, petitioner is not duty bound to accept any tender of payment from respondent precisely because

20

such diktat is absent in the fallo of the CA Decision which was affirmed by this Court in its December 26,
1995 Resolution in G.R. No. 109078.
The lacuna in the CA Decision was sought to be corrected in its June 17, 1996 Resolution in G.R. No.
109078 where respondent was given a non-extendible period of thirty (30) days from entry of judgment,
within which to make full payment for the properties in question. Pursuant to this Resolution, what was
established was the right of respondent to pay the balance of the purchase price within 30 days. Again,
the query iscan this Court, the CA, or the trial court compel petitioner to accept the tender of payment
from respondent?
The answer is no. The reason is obvious as jurisdiction was never acquired over the person of
petitioner. The action for quieting of title is characterized as quasi in rem. In Realty Sales Enterprise, Inc. v.
Intermediate Appellate Court, it was held that:
Suits to quiet title are not technically suits in rem, nor are they, strictly speaking, in personam, but
being against the person in respect of the res, these proceedings are characterized as quasi in rem.
(McDaniel v. McElvy, 108 So. 820 [1926].) The judgment in such proceedings is conclusive only between
the parties. (Emphasis supplied.)[35]
Not being impleaded as a necessary or indispensable party, petitioner is not bound by the
dispositions in the CA Decision in CA-G.R. CV No. 33619 and the Resolutions of this Court in G.R. No.
109078. Moreover, there is no explicit and clear directive for petitioner to accept the payment of the
balance of the price.
It is for this reason that respondent cannot ask for a writ of execution from the trial court where the
complaint was originally instituted as said court has no jurisdiction over the person of petitioner. Even if a
writ is issued, it should conform to the judgment, and the fallo of the CA Decision does not impose the duty
or obligation on the part of petitioner to accept the payment from respondent. It is the settled doctrine
that a writ of execution must conform to the judgment and if it is different from or exceeds the terms of the
judgment, then it is a nullity.[36]
thus:

In addition, Sec. 10, Rule 39 provides the procedure for execution of judgments for specific acts,

Sec. 10. Execution of judgments for specific act.(a) Conveyance, delivery of deeds, or other specific
acts; vesting title.If a judgment directs a party to execute a conveyance of land or personal property, or
to deliver deeds or other documents, or to perform any other specific act in connection therewith, and the
party fails to comply within the time specified, the court may direct the act to be done at the cost of the
disobedient party by some other person appointed by the court and the act when so done shall have like
effect as if done by the party. If real or personal property is situated within the Philippines, the court in lieu
of directing a conveyance thereof may by an order divest the title of any party and vest it in others, which
shall have the force and effect of a conveyance executed in due form of law.
The rule mentions the directive to a party. It is therefore essential that the person tasked to
perform the specific act is impleaded as a party to the case. Otherwise, the judgment cannot be executed.
In the case at bar, petitioner should have been impleaded as a party so as to compel it to accept payment
and execute the deed of sale over the disputed lots in favor of respondent. As petitioner was not
impleaded as a party, then the CA Decision in CA-G.R. CV No. 33619 as affirmed in G.R. No. 109078 cannot
be enforced against it.
The cause of action available to respondent is to file an action for consignation against petitioner
which she did by registering a complaint for consignation before the HLURB on March 12, 1998.
Unfortunately, it was filed way beyond the 30-day period which lapsed on September 20, 1996 or
immediately thereafter. Because of the failure of respondent to effect payment to petitioner within the 30day period or soon thereafter, her rights to buy the disputed lots have been forfeited, lost, and
extinguished.

21

In St. Dominic Corporation, which is substantially similar to the case at bar, we explained the
procedure when a party is directed to pay the balance of the purchase price based on a court decision,
thus:
First of all, the decision of the then Court of Appeals which was promulgated on October 21, 1981, is
quite clear when it ordered the payment of the balance of the purchase price for the disputed lot within 60
days from receipt hereof, meaning from the receipt of the decision by the respondents. It is an admitted
fact that the respondents received a copy of the decision on October 30, 1981. Hence, they had up to
December 29, 1981 to make the payment. Upon refusal by the petitioner to receive such payment, the
proper procedure was for the respondent to consign the same with the court also within the 60-day period
or within a reasonable time thereafter. The fact that efforts were made by the petitioner to reach an
agreement with the respondents after the promulgation of the decision did not in anyway affect the finality
of the judgment. This was clearly emphasized in the order of the appellate court on May 6, 1982.
Secondly, even if we reckon the 60-day period from the date of the finality of the decision as
interpreted by the appellate court, such finality should be counted from March 5, 1982, which was the date
the decision became final as indicated in the entry of judgment and not from August 26, 1982 which is the
date the entry was made. The date of a finality of a decision is entirely distinct from the date of its entry
and the delay in the latter does not affect the effectivity of the former as such is counted from the
expiration of the period to appeal.[37] x x x
In the aforecited case, the lot owner was made a party to the case and the judgment of the court was for
the plaintiff to pay to the lot owner the balance of the purchase price within 60 days from receipt of the
Decision. Even assuming arguendo that petitioner B.E. San Diego, Inc., though not a party in the
complaint for quieting of title, can be compelled to receive the purchase price, still, the refusal to receive
the money requires respondent Alzul to follow the procedure in St. Dominic Corporation and consign the
money with the court of origin. Having failed in this respect, respondents rights to the property have been
forfeited as a result of non-payment within the prescribed time frame.
The CA relied on justice and equity in granting an additional period of five (5) days from receipt of
the February 18, 2005 Decision in CA-G.R. SP No. 81341 to pay the balance due for the sale of the four
lots.[38] While we commiserate with the plight of respondent, the CA ruling will not prevail over the
established axiom that equity is applied only in the absence of and never against statutory law or judicial
rules of procedure.[39] For all its conceded merits, equity is available only in the absence of law and not
as its replacement.[40] Equity as an exceptional extenuating circumstance does not favor, nor may it be
used to reward, the indolent. This Court will not allow a party, in guise of equity, to benefit from
respondents own negligence.[41]
In the light of the foregoing considerations, we find that the grant of respondents petition in CA-G.R.
SP No. 81341 and the recognition of the belated consignation of the amount find no support nor basis in
law, rule, or jurisprudence. The CAs holding that the non-consignation of the amount due is merely a
procedural lapse on the part of respondents counsel is misplaced and is contrary to settled jurisprudence.
Plainly, respondents rights over the subject property are now lost and forfeited.
Having resolved the core issue on the validity of the consignation, the Court sees no further need to
discuss the remaining issues raised in the petition.
Petitioner to reimburse payments
However, respondent had made payments over the subject properties based on her agreement with
petitioner. So as not to enrich itself at the expense of respondent, petitioner is obliged to reimburse
respondent whatever amount was paid by her in form of monthly amortizations. On the other hand, if
respondent is in possession of the subject properties, she and all persons claiming under her should
surrender the possession to petitioner.
WHEREFORE, the petition is GRANTED, the February 18, 2005 Decision and August 31, 2005
Resolution of the CA are REVERSED and SET ASIDE, and the September 18, 2003 Resolution and December
2, 2003 Order of the OP are hereby REINSTATED. Petitioner is ORDERED to reimburse respondent
whatever amount the latter has paid for the subject properties per the Contract to Sell No. 867. Petitioner

22

is DECLARED to be the true and legal owner of Lots Nos. 5, 6, 7, and 8, Block 18, Aurora Subdivision,
Maysilo, Malabon City. The Register of Deeds of Manila, District III, Malabon City Branch is ORDERED to
cancel Transfer Certificates of Title Nos. N-1922, N-1923, N-1924, and N-1925 in the names of spouses
Carlos N. Ventura and Sandra L. Ventura and register the same in the name of petitioner. The lis pendens
in favor of respondent annotated on the Transfer Certificates of Title over the subject properties is hereby
LIFTED, and the Register of Deeds for Metro Manila, District III is DIRECTED to CANCEL said lis pendens.
Respondent and all persons claiming under her are ORDERED to vacate the subject properties and
surrender them to petitioner within sixty (60) days from finality of this judgment. No pronouncement as to
costs.

NATIONAL POWER CORPORATION, Petitioner, versus LUCMAN G. IBRAHIM, OMAR G. MARUHOM, ELIAS G.
MARUHOM, BUCAY G. MARUHOM, FAROUK G. MARUHOM, HIDJARA G. MARUHOM, ROCANIA G. MARUHOM,
POTRISAM G. MARUHOM, LUMBA G. MARUHOM, SINAB G. MARUHOM, ACMAD G. MARUHOM, SOLAYMAN G.
MARUHOM, MOHAMAD M. IBRAHIM, and CAIRONESA M. IBRAHIM, Respondents.2007 Jun 291st DivisionG.R.
No. 168732DECISION
AZCUNA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul the
Decision[1] dated June 8, 2005 rendered by the Court of Appeals (CA) in C.A.-G.R. CV No. 57792.
The facts are as follows:
On November 23, 1994, respondent Lucman G. Ibrahim, in his personal capacity and in behalf of his coheirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom,
Hidjara G. Maruhom, Rocania G. Maruhom, Potrisam G. Maruhom, Lumba G. Maruhom, Sinab G. Maruhom,
Acmad G. Maruhom, Solayman G. Maruhom, Mohamad M. Ibrahim and Caironesa M. Ibrahim, instituted an
action against petitioner National Power Corporation (NAPOCOR) for recovery of possession of land and
damages before the Regional Trial Court (RTC) of Lanao del Sur.
In their complaint, Ibrahim and his co-heirs claimed that they were owners of several parcels of land
described in Survey Plan FP (VII-5) 2278 consisting of 70,000 square meters, divided into three (3) lots, i.e.
Lots 1, 2, and 3 consisting of 31,894, 14,915, and 23,191 square meters each respectively. Sometime in
1978, NAPOCOR, through alleged stealth and without respondents knowledge and prior consent, took
possession of the sub-terrain area of their lands and constructed therein underground tunnels. The
existence of the tunnels was only discovered sometime in July 1992 by respondents and then later
confirmed on November 13, 1992 by NAPOCOR itself through a memorandum issued by the latters Acting
Assistant Project Manager. The tunnels were apparently being used by NAPOCOR in siphoning the water of
Lake Lanao and in the operation of NAPOCORs Agus II, III, IV, V, VI, VII projects located in Saguiran, Lanao
del Sur; Nangca and Balo-i in Lanao del Norte; and Ditucalan and Fuentes in Iligan City.
On September 19, 1992, respondent Omar G. Maruhom requested the Marawi City Water District for a
permit to construct and/or install a motorized deep well in Lot 3 located in Saduc, Marawi City but his
request was turned down because the construction of the deep well would cause danger to lives and
property. On October 7, 1992, respondents demanded that NAPOCOR pay damages and vacate the subterrain portion of their lands but the latter refused to vacate much less pay damages. Respondents further
averred that the construction of the underground tunnels has endangered their lives and properties as
Marawi City lies in an area of local volcanic and tectonic activity. Further, these illegally constructed
tunnels caused them sleepless nights, serious anxiety and shock thereby entitling them to recover moral
damages and that by way of example for the public good, NAPOCOR must be held liable for exemplary
damages.

23

Disputing respondents claim, NAPOCOR filed an answer with counterclaim denying the material
allegations of the complaint and interposing affirmative and special defenses, namely that (1) there is a
failure to state a cause of action since respondents seek possession of the sub-terrain portion when they
were never in possession of the same, (2) respondents have no cause of action because they failed to
show proof that they were the owners of the property, and (3) the tunnels are a government project for the
benefit of all and all private lands are subject to such easement as may be necessary for the same.[2]
On August 7, 1996, the RTC rendered a Decision, the decretal portion of which reads as follows:
WHEREFORE, judgment is hereby rendered:
1.
Denying plaintiffs [private respondents] prayer for defendant [petitioner] National Power
Corporation to dismantle the underground tunnels constructed between the lands of plaintiffs in Lots 1, 2,
and 3 of Survey Plan FP (VII-5) 2278;
2.
Ordering defendant to pay to plaintiffs the fair market value of said 70,000 square meters of
land covering Lots 1, 2, and 3 as described in Survey Plan FP (VII-5) 2278 less the area of 21,995 square
meters at P1,000.00 per square meter or a total of P48,005,000.00 for the remaining unpaid portion of
48,005 square meters; with 6% interest per annum from the filing of this case until paid;
3.
Ordering defendant to pay plaintiffs a reasonable monthly rental of P0.68 per square meter of
the total area of 48,005 square meters effective from its occupancy of the foregoing area in 1978 or a total
of P7,050,974.40.
4.

Ordering defendant to pay plaintiffs the sum of P200,000.00 as moral damages; and

5.

Ordering defendant to pay the further sum of P200,000.00 as attorneys fees and the costs.

SO ORDERED.[3]
On August 15, 1996, Ibrahim, joined by his co-heirs, filed an Urgent Motion for Execution of
Judgment Pending Appeal. On the other hand, NAPOCOR filed a Notice of Appeal by registered mail on
August 19, 1996. Thereafter, NAPOCOR filed a vigorous opposition to the motion for execution of judgment
pending appeal with a motion for reconsideration of the Decision which it had received on August 9, 1996.
On August 26, 1996, NAPOCOR filed a Manifestation and Motion withdrawing its Notice of Appeal purposely
to give way to the hearing of its motion for reconsideration.
On August 28, 1996, the RTC issued an Order granting execution pending appeal and denying NAPOCORs
motion for reconsideration, which Order was received by NAPOCOR on September 6, 1996.
On September 9, 1996, NAPOCOR filed its Notice of Appeal by registered mail which was denied by the RTC
on the ground of having been filed out of time. Meanwhile, the Decision of the RTC was executed pending
appeal and funds of NAPOCOR were garnished by respondents Ibrahim and his co-heirs.
On October 4, 1996, a Petition for Relief from Judgment was filed by respondents Omar G. Maruhom, Elias
G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Potrisam
G. Maruhom and Lumba G. Maruhom asserting as follows:
1)
they did not file a motion to reconsider or appeal the decision within the reglementary period
of fifteen (15) days from receipt of judgment because they believed in good faith that the decision was for
damages and rentals and attorneys fees only as prayed for in the complaint:
2)
it was only on August 26, 1996 that they learned that the amounts awarded to the plaintiffs
represented not only rentals, damages and attorneys fees but the greatest portion of which was payment
of just compensation which in effect would make the defendant NPC the owner of the parcels of land
involved in the case;
3)
when they learned of the nature of the judgment, the period of appeal has already expired;
4)
they were prevented by fraud, mistake, accident, or excusable negligence from taking legal
steps to protect and preserve their rights over their parcels of land in so far as the part of the decision
decreeing just compensation for petitioners properties;

24

5)
they would never have agreed to the alienation of their property in favor of anybody,
considering the fact that the parcels of land involved in this case were among the valuable properties they
inherited from their dear father and they would rather see their land crumble to dust than sell it to
anybody.[4]
The RTC granted the petition and rendered a modified judgment dated September 8, 1997, thus:
WHEREFORE, a modified judgment is hereby rendered:
1)
Reducing the judgment award of plaintiffs for the fair market value of P48,005,000.00 by
9,526,000.00 or for a difference by P38,479,000.00 and by the further sum of P33,603,500.00 subject of
the execution pending appeal leaving a difference of 4,878,500.00 which may be the subject of execution
upon the finality of this modified judgment with 6% interest per annum from the filing of the case until
paid.
2)
Awarding the sum of P1,476,911.00 to herein petitioners Omar G. Maruhom, Elias G.
Maruhom, Bucay G. Maruhom, Mahmod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Portrisam
G. Maruhom and Lumba G. Maruhom as reasonable rental deductible from the awarded sum of
P7,050,974.40 pertaining to plaintiffs.
3)
Ordering defendant embodied in the August 7, 1996 decision to pay plaintiffs the sum of
P200,000.00 as moral damages; and further sum of P200,000.00 as attorneys fees and costs.
SO ORDERED.[5]
Subsequently, both respondent Ibrahim and NAPOCOR appealed to the CA.
In the Decision dated June 8, 2005, the CA set aside the modified judgment and reinstated the original
Decision dated August 7, 1996, amending it further by deleting the award of moral damages and reducing
the amount of rentals and attorneys fees, thus:
WHEREFORE, premises considered, herein Appeals are hereby partially GRANTED, the Modified
Judgment is ordered SET ASIDE and rendered of no force and effect and the original Decision of the court a
quo dated 7 August 1996 is hereby RESTORED with the MODIFICATION that the award of moral damages is
DELETED and the amounts of rentals and attorneys fees are REDUCED to P6,888,757.40 and P50,000.00,
respectively.
In this connection, the Clerk of Court of RTC Lanao del Sur is hereby directed to reassess and
determine the additional filing fee that should be paid by Plaintiff-Appellant IBRAHIM taking into
consideration the total amount of damages sought in the complaint vis--vis the actual amount of
damages awarded by this Court. Such additional filing fee shall constitute a lien on the judgment.
SO ORDERED.[6]
Hence, this petition ascribing the following errors to the CA:
(a)
RESPONDENTS WERE NOT DENIED THE BENEFICIAL USE OF THEIR SUBJECT PROPERTIES TO
ENTITLE THEM TO JUST COMPENSATION BY WAY OF DAMAGES;
(b)
ASSUMING THAT RESPONDENTS ARE ENTITLED TO JUST COMPENSATION BY WAY OF
DAMAGES, NO EVIDENCE WAS PRESENTED ANENT THE VALUATION OF RESPONDENTS PROPERTY AT THE
TIME OF ITS TAKING IN THE YEAR 1978 TO JUSTIFY THE AWARD OF ONE THOUSAND SQUARE METERS
(P1000.00/SQ. M.) EVEN AS PAYMENT OF BACK RENTALS IS ITSELF IMPROPER.
This case revolves around the propriety of paying just compensation to respondents, and, by
extension, the basis for computing the same. The threshold issue of whether respondents are entitled to
just compensation hinges upon who owns the sub-terrain area occupied by petitioner.
Petitioner maintains that the sub-terrain portion where the underground tunnels were constructed does not
belong to respondents because, even conceding the fact that respondents owned the property, their right
to the subsoil of the same does not extend beyond what is necessary to enable them to obtain all the
utility and convenience that such property can normally give. In any case, petitioner asserts that
respondents were still able to use the subject property even with the existence of the tunnels, citing as an
example the fact that one of the respondents, Omar G. Maruhom, had established his residence on a part
of the property. Petitioner concludes that the underground tunnels 115 meters below respondents

25

property could not have caused damage or prejudice to respondents and their claim to this effect was,
therefore, purely conjectural and speculative.[7]
The contention lacks merit.
Generally, in an appeal by certiorari under Rule 45 of the Rules of Court, the Court does not pass
upon questions of fact. Absent any showing that the trial and appellate courts gravely abused their
discretion, the Court will not examine the evidence introduced by the parties below to determine if they
correctly assessed and evaluated the evidence on record.[8] The jurisdiction of the Court in cases brought
to it from the CA is limited to reviewing and revising the errors of law imputed to it, its findings of fact
being as a rule conclusive and binding on the Court.
In the present case, petitioner failed to point to any evidence demonstrating grave abuse of discretion on
the part of the CA or to any other circumstances which would call for the application of the exceptions to
the above rule. Consequently, the CAs findings which upheld those of the trial court that respondents
owned and possessed the property and that its substrata was possessed by petitioner since 1978 for the
underground tunnels, cannot be disturbed. Moreover, the Court sustains the finding of the lower courts
that the sub-terrain portion of the property similarly belongs to respondents. This conclusion is drawn from
Article 437 of the Civil Code which provides:
ART. 437. The owner of a parcel of land is the owner of its surface and of everything under it, and he can
construct thereon any works or make any plantations and excavations which he may deem proper, without
detriment to servitudes and subject to special laws and ordinances. He cannot complain of the reasonable
requirements of aerial navigation.
Thus, the ownership of land extends to the surface as well as to the subsoil under it. In Republic of
the Philippines v. Court of Appeals,[9] this principle was applied to show that rights over lands are
indivisible and, consequently, require a definitive and categorical classification, thus:
The Court of Appeals justified this by saying there is no conflict of interest between the owners of
the surface rights and the owners of the sub-surface rights. This is rather strange doctrine, for it is a wellknown principle that the owner of a piece of land has rights not only to its surface but also to everything
underneath and the airspace above it up to a reasonable height. Under the aforesaid ruling, the land is
classified as mineral underneath and agricultural on the surface, subject to separate claims of title. This is
also difficult to understand, especially in its practical application.
Under the theory of the respondent court, the surface owner will be planting on the land while the mining
locator will be boring tunnels underneath. The farmer cannot dig a well because he may interfere with the
mining operations below and the miner cannot blast a tunnel lest he destroy the crops above. How deep
can the farmer, and how high can the miner go without encroaching on each others rights? Where is the
dividing line between the surface and the sub-surface rights?
The Court feels that the rights over the land are indivisible and that the land itself cannot be half
agricultural and half mineral. The classification must be categorical; the land must be either completely
mineral or completely agricultural.
Registered landowners may even be ousted of ownership and possession of their properties in the event
the latter are reclassified as mineral lands because real properties are characteristically indivisible. For the
loss sustained by such owners, they are entitled to just compensation under the Mining Laws or in
appropriate expropriation proceedings.[10]
Moreover, petitioners argument that the landowners right extends to the sub-soil insofar as necessary for
their practical interests serves only to further weaken its case. The theory would limit the right to the subsoil upon the economic utility which such area offers to the surface owners. Presumably, the landowners
right extends to such height or depth where it is possible for them to obtain some benefit or enjoyment,
and it is extinguished beyond such limit as there would be no more interest protected by law.[11]
In this regard, the trial court found that respondents could have dug upon their property motorized deep
wells but were prevented from doing so by the authorities precisely because of the construction and

26

existence of the tunnels underneath the surface of their property. Respondents, therefore, still had a legal
interest in the sub-terrain portion insofar as they could have excavated the same for the construction of
the deep well. The fact that they could not was appreciated by the RTC as proof that the tunnels interfered
with respondents enjoyment of their property and deprived them of its full use and enjoyment, thus:
Has it deprived the plaintiffs of the use of their lands when from the evidence they have already existing
residential houses over said tunnels and it was not shown that the tunnels either destroyed said houses or
disturb[ed] the possession thereof by plaintiffs? From the evidence, an affirmative answer seems to be in
order. The plaintiffs and [their] co-heirs discovered [these] big underground tunnels in 1992. This was
confirmed by the defendant on November 13, 1992 by the Acting Assistant Project Manager, Agus 1 Hydro
Electric Project (Exh. K). On September 16, 1992, Atty. Omar Maruhom (co-heir) requested the Marawi City
Water District for permit to construct a motorized deep well over Lot 3 for his residential house (Exh. Q). He
was refused the permit because the construction of the deep well as (sic) the parcels of land will cause
danger to lives and property. He was informed that beneath your lands are constructed the Napocor
underground tunnel in connection with Agua Hydroelectric plant (Exh. Q-2). There in fact exists ample
evidence that this construction of the tunnel without the prior consent of plaintiffs beneath the latters
property endangered the lives and properties of said plaintiffs. It has been proved indubitably that Marawi
City lies in an area of local volcanic and tectonic activity. Lake Lanao has been formed by extensive earth
movements and is considered to be a drowned basin of volcano/tectonic origin. In Marawi City, there are a
number of former volcanoes and an extensive amount of faulting. Some of these faults are still moving.
(Feasibility Report on Marawi City Water District by Kampsa-Kruger, Consulting Engineers, Architects and
Economists, Exh. R). Moreover, it has been shown that the underground tunnels [have] deprived the
plaintiffs of the lawful use of the land and considerably reduced its value. On March 6, 1995, plaintiffs
applied for a two-million peso loan with the Amanah Islamic Bank for the expansion of the operation of the
Ameer Construction and Integrated Services to be secured by said land (Exh. N), but the application was
disapproved by the bank in its letter of April 25, 1995 (Exh. O) stating that:
Apropos to this, we regret to inform you that we cannot consider your loan application due to the
following reasons, to wit:
That per my actual ocular inspection and verification, subject property offered as collateral has
an existing underground tunnel by the NPC for the Agus I Project, which tunnel is traversing underneath
your property, hence, an encumbrance. As a matter of bank policy, property with an existing
encumbrance cannot be considered neither accepted as collateral for a loan.
All the foregoing evidence and findings convince this Court that preponderantly plaintiffs have established
the condemnation of their land covering an area of 48,005 sq. meters located at Saduc, Marawi City by the
defendant National Power Corporation without even the benefit of expropriation proceedings or the
payment of any just compensation and/or reasonable monthly rental since 1978.[12]
In the past, the Court has held that if the government takes property without expropriation and
devotes the property to public use, after many years, the property owner may demand payment of just
compensation in the event restoration of possession is neither convenient nor feasible.[13] This is in
accordance with the principle that persons shall not be deprived of their property except by competent
authority and for public use and always upon payment of just compensation.[14]
Petitioner contends that the underground tunnels in this case constitute an easement upon the property of
respondents which does not involve any loss of title or possession. The manner in which the easement
was created by petitioner, however, violates the due process rights of respondents as it was without notice
and indemnity to them and did not go through proper expropriation proceedings. Petitioner could have, at
any time, validly exercised the power of eminent domain to acquire the easement over respondents
property as this power encompasses not only the taking or appropriation of title to and possession of the
expropriated property but likewise covers even the imposition of a mere burden upon the owner of the
condemned property.[15] Significantly, though, landowners cannot be deprived of their right over their
land until expropriation proceedings are instituted in court. The court must then see to it that the taking is
for public use, that there is payment of just compensation and that there is due process of law.[16]
In disregarding this procedure and failing to recognize respondents ownership of the sub-terrain portion,
petitioner took a risk and exposed itself to greater liability with the passage of time. It must be emphasized

27

that the acquisition of the easement is not without expense. The underground tunnels impose limitations
on respondents use of the property for an indefinite period and deprive them of its ordinary use. Based
upon the foregoing, respondents are clearly entitled to the payment of just compensation.[17]
Notwithstanding the fact that petitioner only occupies the sub-terrain portion, it is liable to pay not merely
an easement fee but rather the full compensation for land. This is so because in this case, the nature of
the easement practically deprives the owners of its normal beneficial use. Respondents, as the owners of
the property thus expropriated, are entitled to a just compensation which should be neither more nor less,
whenever it is possible to make the assessment, than the money equivalent of said property.[18]
The entitlement of respondents to just compensation having been settled, the issue now is on the manner
of computing the same. In this regard, petitioner claims that the basis for the computation of the just
compensation should be the value of the property at the time it was taken in 1978. Petitioner also
impugns the reliance made by the CA upon National Power Corporation v. Court of Appeals and
Macapanton Mangondato[19] as the basis for computing the amount of just compensation in this action.
The CA found that the award of damages is not excessive because the P1000 per square meter as the fair
market value was sustained in a case involving a lot adjoining the property in question which case involved
an expropriation by [petitioner] of portion of Lot 1 of the subdivision plan (LRC) PSD 116159 which is
adjacent to Lots 2 and 3 of the same subdivision plan which is the subject of the instant controversy.[20]
Just compensation has been understood to be the just and complete equivalent of the loss[21] and is
ordinarily determined by referring to the value of the land and its character at the time it was taken by the
expropriating authority.[22] There is a taking in this sense when the owners are actually deprived or
dispossessed of their property, where there is a practical destruction or a material impairment of the value
of their property, or when they are deprived of the ordinary use thereof. There is a taking in this context
when the expropriator enters private property not only for a momentary period but for 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.[23] Moreover, taking of the property for purposes of
eminent domain entails that the entry into the property must be under warrant or color of legal authority.
[24]
Under the factual backdrop of this case, the last element of taking mentioned, i.e., that the entry into the
property is under warrant or color of legal authority, is patently lacking. Petitioner justified its nonpayment
of the indemnity due respondents upon its mistaken belief that the property formed part of the public
dominion.
This situation is on all fours with that in the Mangondato case. NAPOCOR in that case took the property of
therein respondents in 1979, using it to build its Aqua I Hydroelectric Plant Project, without paying any
compensation, allegedly under the mistaken belief that it was public land. It was only in 1990, after more
than a decade of beneficial use, that NAPOCOR recognized therein respondents ownership and negotiated
for the voluntary purchase of the property.
In Mangondato, this Court held:
The First Issue: Date of Taking or Date of Suit?
The general rule in determining just compensation in eminent domain is the value of the property as of
the date of the filing of the complaint, as follows:
Sec. 4. Order of Condemnation. When such a motion is overruled or when any party fails to
defend as required by this rule, the court may enter an order of condemnation declaring that the plaintiff
has a lawful right to take the property sought to be condemned, for the public use or purpose described in
the complaint, upon the payment of just compensation to be determined as of the date of the filing of the
complaint. x x x (Italics supplied).
Normally, the time of the taking coincides with the filing of the complaint for expropriation. Hence,
many ruling of this Court have equated just compensation with the value of the property as of the time of
filing of the complaint consistent with the above provision of the Rules. So too, where the institution of the
action precedes entry to the property, the just compensation is to be ascertained as of the time of filing of
the complaint.

28

The general rule, however, admits of an exception: where this Court fixed the value of the property
as of the date it was taken and not the date of the commencement of the expropriation proceedings.
In the old case of Provincial Government of Rizal vs. Caro de Araullo, the Court ruled that x x x the
owners of the land have no right to recover damages for this unearned increment resulting from the
construction of the public improvement (lengthening of Taft Avenue from Manila to Pasay) from which the
land was taken. To permit them to do so would be to allow them to recover more than the value of the
land at the time it was taken, which is the true measure of the damages, or just compensation, and would
discourage the construction of important public improvements.
In subsequent cases, the Court, following the above doctrine, invariably held that the time of taking
is the critical date in determining lawful or just compensation. Justifying this stance, Mr. Justice (later Chief
Justice) Enrique Fernando, speaking for the Court in Municipality of La Carlota vs. The Spouses Felicidad
Baltazar and Vicente Gan, said, x x x the owner as is the constitutional intent, is paid what he is entitled
to according to the value of the property so devoted to public use as of the date of taking. From that time,
he had been deprived thereof. He had no choice but to submit. He is not, however, to be despoiled of
such a right. No less than the fundamental law guarantees just compensation. It would be injustice to him
certainly if from such a period, he could not recover the value of what was lost. There could be on the
other hand, injustice to the expropriator if by a delay in the collection, the increment in price would accrue
to the owner. The doctrine to which this Court has been committed is intended precisely to avoid either
contingency fraught with unfairness.
Simply stated, the exception finds the application where the owner would be given undue
incremental advantages arising from the use to which the government devotes the property expropriated
-- as for instance, the extension of a main thoroughfare as was in the case in Caro de Araullo. In the
instant case, however, it is difficult to conceive of how there could have been an extra-ordinary increase in
the value of the owners land arising from the expropriation, as indeed the records do not show any
evidence that the valuation of P1,000.00 reached in 1992 was due to increments directly caused by
petitioners use of the land. Since the petitioner is claiming an exception to Rule 67, Section 4, it has the
burden in proving its claim that its occupancy and use -- not ordinary inflation and increase in land values
-- was the direct cause of the increase in valuation from 1978 to 1992.
Side Issue: When is there Taking of Property?
But there is yet another cogent reason why this petition should be denied and why the respondent
Court should be sustained. An examination of the undisputed factual environment would show that the
taking was not really made in 1978.
This Court has defined the elements of taking as the main ingredient in the exercise of power of
eminent domain, in the following words:
A number of circumstances must be present in taking of property for purposes of eminent
domain: (1) the expropriator must enter a private property; (2) the entrance into private property must be
for more than a momentary period; (3) the entry into the property should be under warrant or color of legal
authority; (4) the property must be devoted to a public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for public use must be in such a way to oust the
owner and deprive him of all beneficial enjoyment of the property.(Italics supplied)
In this case, the petitioners entrance in 1978 was without intent to expropriate or was not made
under warrant or color of legal authority, for it believed the property was public land covered by
Proclamation No. 1354. When the private respondent raised his claim of ownership sometime in 1979, the
petitioner flatly refused the claim for compensation, nakedly insisted that the property was public land and
wrongly justified its possession by alleging it had already paid financial assistance to Marawi City in
exchange for the rights over the property. Only in 1990, after more than a decade of beneficial use, did
the petitioner recognize private respondents ownership and negotiate for the voluntary purchase of the
property. A Deed of Sale with provisional payment and subject to negotiations for the correct price was
then executed. Clearly, this is not the intent nor the expropriation contemplated by law. This is a simple
attempt at a voluntary purchase and sale. Obviously, the petitioner neglected and/or refused to exercise
the power of eminent domain.

29

Only in 1992, after the private respondent sued to recover possession and petitioner filed its
Complaint to expropriate, did petitioner manifest its intention to exercise the power of eminent domain.
Thus the respondent Court correctly held:
If We decree that the fair market value of the land be determined as of 1978, then We would be
sanctioning a deceptive scheme whereby NAPOCOR, for any reason other than for eminent domain would
occupy anothers property and when later pressed for payment, first negotiate for a low price and then
conveniently expropriate the property when the land owner refuses to accept its offer claiming that the
taking of the property for the purpose of the eminent domain should be reckoned as of the date when it
started to occupy the property and that the value of the property should be computed as of the date of the
taking despite the increase in the meantime in the value of the property.
In Noble vs. City of Manila, the City entered into a lease-purchase agreement of a building
constructed by the petitioners predecessor-in-interest in accordance with the specifications of the former.
The Court held that being bound by the said contract, the City could not expropriate the building.
Expropriation could be resorted to only when it is made necessary by the opposition of the owner to the
sale or by the lack of any agreement as to the price. Said the Court:
The contract, therefore, in so far as it refers to the purchase of the building, as we have
interpreted it, is in force, not having been revoked by the parties or by judicial decision. This being the
case, the city being bound to buy the building at an agreed price, under a valid and subsisting contract,
and the plaintiff being agreeable to its sale, the expropriation thereof, as sought by the defendant, is
baseless. Expropriation lies only when it is made necessary by the opposition of the owner to the sale or
by the lack of any agreement as to the price. There being in the present case a valid and subsisting
contract, between the owner of the building and the city, for the purchase thereof at an agreed price, there
is no reason for the expropriation. (Italics supplied)
In the instant case, petitioner effectively repudiated the deed of sale it entered into with the private
respondent when it passed Resolution No. 92-121 on May 25, 1992 authorizing its president to negotiate,
inter alia, that payment shall be effective only after Agus I HE project has been placed in operation. It
was only then that petitioners intent to expropriate became manifest as private respondent disagreed
and, barely a month, filed suit.[25]
In the present case, to allow petitioner to use the date it constructed the tunnels as the date of valuation
would be grossly unfair. First, it did not enter the land under warrant or color of legal authority or with
intent to expropriate the same. In fact, it did not bother to notify the owners and wrongly assumed it had
the right to dig those tunnels under their property. Secondly, the improvements introduced by
petitioner, namely, the tunnels, in no way contributed to an increase in the value of the land. The trial
court, therefore, as affirmed by the CA, rightly computed the valuation of the property as of 1992, when
respondents discovered the construction of the huge underground tunnels beneath their lands and
petitioner confirmed the same and started negotiations for their purchase but no agreement could be
reached.[26]
As to the amount of the valuation, the RTC and the CA both used as basis the value of the adjacent
property, Lot 1 (the property involved herein being Lots 2 and 3 of the same subdivision plan), which was
valued at P1,000 per sq. meter as of 1990, as sustained by this Court in Mangondato, thus:
The Second Issue: Valuation
We now come to the issue of valuation.
The fair market value as held by the respondent Court, is the amount of P1,000.00 per square
meter. In an expropriation case where the principal issue is the determination of just compensation, as is
the case here, a trial before Commissioners is indispensable to allow the parties to present evidence on the
issue of just compensation. Inasmuch as the determination of just compensation in eminent domain cases
is a judicial function and factual findings of the Court of Appeals are conclusive on the parties and
reviewable only when the case falls within the recognized exceptions, which is not the situation obtaining
in this petition, we see no reason to disturb the factual findings as to valuation of the subject property. As

30

can be gleaned from the records, the court-and-the-parties-appointed commissioners did not abuse their
authority in evaluating the evidence submitted to them nor misappreciate the clear preponderance of
evidence. The amount fixed and agreed to by the respondent appellate Court is not grossly exorbitant. To
quote:
Commissioner Ali comes from the Office of the Register of Deeds who may well be considered an
expert, with a general knowledge of the appraisal of real estate and the prevailing prices of land in the
vicinity of the land in question so that his opinion on the valuation of the property cannot be lightly
brushed aside.
The prevailing market value of the land is only one of the determinants used by the
commissioners report the other being as herein shown:
xxx
xxx
Commissioner Doromals report, recommending P300.00 per square meter, differs from the 2
commissioners only because his report was based on the valuation as of 1978 by the City Appraisal
Committee as clarified by the latters chairman in response to NAPOCORs general counsels query.
In sum, we agree with the Court of Appeals that petitioner has failed to show why it should be
granted an exemption from the general rule in determining just compensation provided under Section 4 of
Rule 67. On the contrary, private respondent has convinced us that, indeed, such general rule should in
fact be observed in this case.[27]
Petitioner has not shown any error on the part of the CA in reaching such a valuation. Furthermore, these
are factual matters that are not within the ambit of the present review.
WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals in C.A.-G.R. CV No. 57792
dated June 8, 2005 is AFFIRMED.

31