G.R. No. 167880 - Arroyo vs. Bocago Inland Development Corp.

Case Summary (G.R. No. 167880)

Factual Background

Petitioner asserted in his complaint that he was the owner of the three parcels of land, that he acquired them in 1972, and that he had been paying taxes over the properties. He further alleged that the parcels were approximately sixty percent (60%) developed at the time of his purchase from the Development Bank of the Philippines and that the properties served as natural breeding grounds for crabs and prawns. Petitioner claimed that he later discovered that respondents had been occupying the parcels since 1974. He sent demand letters to respondents seeking the return of peaceful possession, but respondents refused to respond and continued the occupation, forcing petitioner to litigate.

Petitioner’s complaint prayed for recovery of possession and damages consisting of unpaid rentals, attorney’s fees of P100,000.00, and litigation expenses of P100,000.00. In their answer, respondents denied petitioner’s cause of action and maintained that petitioner did not possess or manage the fishpond. They asserted that the late Ramon Bocago had been in possession as early as 1967, when the area was still a swamp, and that improvements were introduced by Ramon Bocago, with help from some of his sons, after the original applicant Mr. Anselmo Delantar transferred his rights to Ramon Bocago. Respondents stated that after Ramon Bocago’s death in 1984, his heirs continued occupying, possessing, and developing the area into a fishpond. They alleged that only about twenty-five percent (25%) of the area had been converted into a fishpond by 1974, and that gradually approximately 154,768 square meters, more or less, was developed with dikes enclosing the fishpond in 1991, at Ramon Bocago’s expense and later by his heirs.

Respondents also raised procedural and substantive defenses: they argued that because the property was agricultural land, the requested relief would effectively eject them and would violate agrarian reform laws, thus supposedly placing the case under the exclusive jurisdiction of the DARAB. They further insisted that petitioner’s claim was barred by prescription, laches, and estoppel, and they sought their own damages and reimbursement of litigation expenses.

RTC Proceedings: Default, Scheduling, and Amendments

After the last pleading was filed, the RTC set the matter for pre-trial on July 21, 1997. Respondents filed an urgent motion for postponement on July 7, 1997, stating their counsel had a prior commitment in another hearing. At the RTC hearing on July 21, 1997, the RTC, upon petitioner’s motion, declared respondents in default for failure to appear at pre-trial and for failure to file a pre-trial brief. Petitioner had filed his pre-trial brief on July 14, 1997, while respondents filed theirs through registered mail on July 18, 1997, but the RTC received it only on July 24, 1997. The case was reset for presentation of petitioner’s evidence.

On August 7, 1997, petitioner’s counsel failed to attend the scheduled hearing, and the RTC reset the presentation of evidence to September 23, 1997. Respondents then moved to set aside the default and declared that petitioner’s ex-parte presentation thereafter was void, and they also sought postponement of the September 23, 1997 hearing pending resolution of their motion. The RTC denied these motions in an order dated September 23, 1997, ruling that the postponement motion of the pre-trial did not state a hearing date and did not toll the period to appeal.

Subsequently, petitioner filed a motion to admit an amended complaint on November 20, 1997, and the RTC admitted the amended complaint on March 5, 1998, impleading the heirs of Ramon Bocago as new defendants. Respondents sought, in a manifestation and motion dated September 15, 1998, to drop BIDECO as a defendant, which the RTC denied on January 29, 1999, and denied reconsideration thereafter. Summons were served on the newly impleaded party defendants.

From January 6, 2000 onward, respondents filed motions for extension and for responsive pleading, but the RTC denied them on January 19, 2000 for lack of notice of hearing. After further extensions were denied, respondents filed motions and sought resolution. The RTC eventually granted a motion to hold pre-trial in abeyance and considered the previously submitted answer to the initial complaint as the answer to the amended complaint due to respondents’ failure to file a responsive pleading, and then reset pre-trial.

Multiple resets followed due to the illness and unavailability of respondents’ counsel and the presiding judge. Pre-trial was reset several times, including to September 22, 2000, then October 20, 2000, then December 18, 2000, and later to February 26, 2001, and May 28, 2001. On February 26, 2001, counsel failed to appear, but the RTC noted that one of the parties informed the court that counsel had been brought to the hospital; the RTC reset pre-trial to May 28, 2001. On May 28, 2001, petitioner’s counsel sought resetting to July 12, 2001 because petitioner was out of the country, and both counsels agreed.

The July 12, 2001 Event and the Decision on the Merits

On July 12, 2001, respondents’ counsel failed to appear. Petitioner prayed that respondents be declared in default and that petitioner be allowed to present evidence ex-parte. One of the incorporators of BIDECO, Divina Bocago-Legaspi, informed the court that respondents’ counsel was ill. The RTC declared respondents in default and allowed petitioner to present evidence ex-parte. Later, the RTC corrected itself in an amended order dated July 26, 2001, deleting the portion declaring respondents in default but continuing to allow petitioner to present evidence ex-parte.

After petitioner’s ex-parte presentation of evidence, the RTC issued its Decision dated October 15, 2001 ordering respondents—including BIDECO and all its officers and members—(a) to vacate the properties and return peaceful possession to petitioner; and (b) to pay P2,581,560.00 as reasonable rentals and P100,000.00 as attorney’s fees.

Post-Decision Motions and Appeal to the Court of Appeals

Petitioner filed a Motion for Partial Reconsideration on October 26, 2001, contending that the reasonable rentals awarded were insufficient and requesting P5,887,845.00 as the correct amount based on the total area occupied and the duration of the stay. Respondents filed on November 20, 2001 a Motion for Reconsideration and/or to Declare the Decision Null and Void, arguing that the absence of counsel in pre-trial rested on a reasonable ground due to counsel’s illness, and requesting leave to present their own evidence. The RTC denied both motions on February 8, 2002.

On appeal, respondents challenged not only liability but also procedural rulings. The CA held that the RTC properly allowed petitioner to present evidence ex-parte pursuant to Section 5, Rule 18 of the Rules of Court when the defendant fails to appear at pre-trial. The CA also upheld the RTC’s finding that petitioner was the registered owner of the subject parcels used as fishponds. Despite these affirmances, the CA set aside the RTC judgment and dismissed petitioner’s complaint on laches, reasoning that petitioner had failed to assert his rights for over twenty years.

The CA denied petitioner’s motion for reconsideration in its resolution dated April 14, 2005. Petitioner then elevated the matter to the Court via a Rule 45 petition, maintaining that his complaint was not barred by laches.

The Parties’ Contentions on Review

Petitioner argued that the CA erred in applying laches in the absence of competent proof establishing its elements. The case turned on whether laches could defeat an action by a registered owner for recovery of possession and the return of property allegedly occupied without right.

Respondents, for their part, relied on the CA’s laches theory, emphasizing the long duration of their occupation and the alleged delay in petitioner’s assertion of his rights. They also had earlier asserted defenses grounded on prescription and other equitable and procedural doctrines, but the Court’s focus in the present disposition was the CA’s laches ruling.

Legal Basis and Reasoning of the Court

The Court rejected the CA’s conclusion that laches applied. It reiterated the rule, as in Heirs of Tomas Dolleton vs. Fil-Estate Management, Inc., that the elements of laches must be proven positively. The Court stressed that laches is evidentiary in nature. It cannot rest on mere allegations in pleadings. It further emphasized the case-by-case character of laches, noting, consistent with Department of Education, Division of Albay vs. Onate, that there is no absolute rule on what constitutes staleness of demand and that each matter must be assessed according to its specific circumstances. The Court also recognized that laches involves equitable considerations committed to the court’s sound discretion.

Applying these principles, the Court held that respondents did not present evidence supporting their laches defense and failed to take advantage of the opportunities afforded them to establish it. The Court cited Heirs of Anacleto B. Nieto vs. Municipality of Meycauayan, Bulacan and enumerated the elements of laches: first, conduct on the part of the defendant giving rise to the situation complained of; second, delay in asserting the complainant’s rights despite knowledge and opportunity to sue; third, lack of knowledge on the part of the defendant that the complainant would assert the right; and fourth, injury or prejudice to the defendant if relief is granted.

The Court found the record devoid of proof of the crucial elements. While the first element could be inferred from admissions in the complaint and answer that petitioner was the registered owner and that respondents had occupied the property and refused to vacate, the Court observed that the remaining elements—especial

Case Syllabus (G.R. No. 167880)

The case involved a Petition for Review on Certiorari under Rule 45 seeking to reverse the Court of Appeals rulings dated November 18, 2004 and April 14, 2005, and to reinstate the Regional Trial Court judgment.
The dispute centered on whether the plaintiff’s action for recovery of possession and damages was barred by laches.
The Court found the appellate court’s application of laches unsupported by the evidentiary record and reversed the Court of Appeals decision.

Parties and Procedural Posture

The petitioner was Jack Arroyo.
The respondents were Bocago Inland Dev’t. Corp. (BIDECO), represented by Carlito Bocago, and/or the heirs of the deceased Ramon Bocago, namely Basilisa Vda. de Bocago, Carlito Bocago, Sannie Bocago Arreng[o], and Inday Bueno.
The plaintiff filed a complaint in the Regional Trial Court (Branch 56) of Libmanan, Camarines Sur.
The RTC ruled for the plaintiff on October 15, 2001.
The Court of Appeals upheld the RTC’s allowance of ex-parte presentation of the plaintiff’s evidence but reversed the judgment and dismissed the complaint on laches.
The plaintiff’s motion for reconsideration was denied by the Court of Appeals on April 14, 2005.
The plaintiff then filed the present Rule 45 petition, raising the principal issue of whether his complaint was barred by laches.
The Court granted the petition, set aside the Court of Appeals rulings, and reinstated the RTC decision.

Key Factual Allegations

The plaintiff alleged that he was the owner of three parcels of land in Del Gallego, Camarines Sur, covered by TCT No. RT-854 (14007), TCT No. RT-853 (10065), and TCT No. RT-855 (19085).
The plaintiff claimed that since his acquisition in 1972, he paid taxes on the lands.
The plaintiff asserted that when he bought the properties from the Development Bank of the Philippines, the lands were already about sixty percent (60%) developed, and that the properties served as natural breeding grounds for crabs and prawns.
The plaintiff stated that he later discovered that the defendants had been occupying the parcels since 1974.
The plaintiff alleged that he sent demand letters to return peaceful possession, but the defendants did not respond.
The plaintiff sought damages including unpaid rentals, attorney’s fees of P100,000.00, and litigation expenses of P100,000.00.
The defendants denied the plaintiff’s cause of action by asserting lack of possession and lack of management of the alleged fishpond by the plaintiff.
The defendants claimed that Ramon Bocago had been in possession as early as 1967, when the area was still a swamp, prior to conversion into a fishpond.
The defendants asserted that improvements were introduced by Ramon Bocago with assistance of some sons after the original applicant Mr. Anselmo Delantar transferred his rights to Ramon Bocago.
After Ramon Bocago’s death in 1984, the defendants claimed that his heirs continued possession and development.
The defendants alleged that conversion into fishpond began at about twenty-five percent (25%) in 1974 and that about 154,768 square meters, more or less, was developed with dikes enclosing the fishpond in 1991, done at Ramon Bocago’s then later heirs’ expense.
The defendants raised procedural and substantive defenses, including exclusive jurisdiction by the DARAB due to the nature of the land and alleged violation of agrarian reform laws, and also claimed prescription, laches, and estoppel.
The defendants counterclaimed for exemplary, actual and compensatory damages, attorney’s fees, and reimbursable litigation expenses.

RTC Pre-trial and Default Proceedings

The plaintiff filed a Reply and Answer to Counterclaim on July 5, 1997, and the case was set for pre-trial on July 21, 1997.
The defendants filed an Urgent Motion for Postponement on July 7, 1997, citing counsel’s prior commitment, and the plaintiff moved for a default order.
On July 21, 1997, the RTC declared defendants in default for failure to appear at pre-trial and for failure to file a pre-trial brief.
The plaintiff’s pre-trial brief was filed on July 14, 1997, while the defendants’ pre-trial brief was mailed on July 18, 1997 and received by the RTC only on July 24, 1997.
The case was then reset for plaintiff’s evidence to August 7, 1997, but plaintiff’s counsel failed to attend, and the presentation of evidence was reset to September 23, 1997.
The defendants filed motions to set aside the default and declare the plaintiff’s ex-parte presentation null, and they argued that their postponement motion and pre-trial brief were timely.
The RTC, in an order dated September 23, 1997, denied the motions and held that the postponement motion did not contain a date of hearing, so it was treated as ineffectual and did not toll the appeal period.
The plaintiff later filed a Motion to Admit Amended Complaint on November 20, 1997.
The amended complaint impleaded the heirs of Ramon Bocago as new defendants, and the RTC admitted the amendment on March 5, 1998.
The RTC later denied the defendants’ motion to drop the corporation as party defendant in an order dated January 29, 1999.
The RTC also denied the defendants’ multiple requests for extension of time to file responsive pleadings on account of the failure to include notices of hearing, in orders dated January 19, 2000.
The case experienced multiple resets of pre-trial for reasons including illness and counsel’s inability to attend, including a pre-trial reset cycle from April