Title
Bungcayao, Sr. vs. Fort Ilocandia Property Holdings and Development Corporation
Case
G.R. No. 170483
Decision Date
Apr 19, 2010
A dispute over foreshore land claims between petitioner and respondent, involving settlement agreements, alleged undue influence, and legal questions on counterclaims and summary judgment.
possession dispute
compulsory counterclaim
summary judgment
A

Case Summary (G.R. No. 170483)

Factual Background

Petitioner contended that he was among the entrepreneurs who in 1978 introduced improvements on the foreshore area of Calayab Beach contemporaneously with the construction of Fort Ilocandia Hotel, and that the foreshore later became occupied by members of the D'Sierto Beach Resort Owner's Association, Inc. In July 1980, six parcels in Barrio Balacad were transferred to the Philippine Tourism Authority under Presidential Decree No. 1704, upon which Fort Ilocandia Resort Hotel was erected. In 1992 petitioner and other D'Sierto members obtained provisional foreshore permits from the Community Environment and Natural Resources Office.

Administrative Proceedings

On 31 January 2002 respondent filed a foreshore application covering a 14-hectare area abutting Fort Ilocandia, which included the five-hectare portion claimed by D'Sierto members. The conflicting foreshore applications were docketed as DENR Case No. 5473. In an undated order, DENR Regional Executive Director Victor J. Ancheta denied the D'Sierto applications on the ground that the subject area either fell within titled property or within respondent's applied area. The D'Sierto members appealed, and on 21 August 2003 then DENR Secretary Elisea G. Gozun denied the appeal based on a final verification plan indicating encroachment on respondent's titled property.

The Luncheon Meeting and Deed of Assignment

On 18 September 2003 respondent invited D'Sierto members to a luncheon to discuss settlement. Atty. Liza Marcos attended as mediator. At the meeting respondent offered P300,000 per claimant for vacatur; D'Sierto members counter-offered P400,000. Petitioner alleged that his son, Manuel Bungcayao, Jr., at the meeting signed a Deed of Assignment, Release, Waiver and Quitclaim in favor of respondent under undue pressure and without authority. Respondent alleged that Manuel, Jr. and Romel attended voluntarily, had consulted their parents by cellular phone, and validly executed the deed.

Trial Court Proceedings

Petitioner filed a complaint for declaration of nullity of contract in Civil Case Nos. 12891-13 in the Regional Trial Court of Laoag City, Branch 13, alleging lack of authority by Manuel, Jr. Respondent answered and filed three counterclaims: recovery of the P400,000, recovery of possession of the subject property, and damages for delay in development. On 6 November 2003 the trial court confirmed the parties' agreement to cancel the Deed and to return P400,000 to respondent, but petitioner maintained a claim for damages. The parties agreed to submit the case for summary resolution; the trial court considered the case submitted on 28 November 2003. Respondent later moved for summary judgment.

Decision of the Trial Court

By decision dated 13 February 2004 the trial court granted summary judgment. The court held that the only remaining issues concerned damages and respondent's counterclaims, that the parties had made admissions and stipulated issues, and that summary judgment was appropriate. The trial court found that alleged pressure on petitioner’s sons did not constitute force, violence, or intimidation vitiating consent. The court concluded that the property occupied by petitioner was within respondent's titled property and granted respondent's counterclaim for recovery of possession, directing petitioner to vacate immediately. The trial court dismissed petitioner's damages claim as without legal basis and deferred pronouncement on respondent's damages.

Court of Appeals' Decision

In its 21 November 2005 decision the Court of Appeals affirmed the trial court in toto. The Court of Appeals upheld the resort to summary judgment where the pleadings raised no genuine issue of material fact and where the sole disputed question was whether the subject property lay within respondent's title. The Court of Appeals also held that respondent's counterclaims were compulsory as arising out of the same transaction or occurrence and thus properly adjudicated together with the complaint. The Court of Appeals therefore affirmed the trial court's grant of respondent's counterclaim for recovery of possession.

Issues Presented to the Supreme Court

Petitioner presented two issues: whether respondent's counterclaim for recovery of possession was compulsory; and whether summary judgment was appropriate in the circumstances of this case.

The Supreme Court's Ruling on Compulsory Counterclaim

The Supreme Court found merit in petitioner's challenge to the characterization of respondent's counterclaim as compulsory. The Court reiterated the established definition of compulsory counterclaim and the four-pronged test to determine compulsoriness: whether the issues of fact and law are largely the same, whether res judicata would bar a subsequent suit absent the compulsory rule, whether substantially the same evidence would support both claims, and whether there is a logical relation between claim and counterclaim, citing Cruz-Agana v. Hon. Santiago-Lagman, Lafarge Cement Phil., Inc. v. Continental Cement Corp., and NAMARCO v. Federation of United Mamarco Distributors as authorities. Applying the test, the Court observed that respondent’s claim for recovery of possession, although an offshoot of the same basic controversy, would not be barred in a subsequent action if not set up in the present case; consequently the claim was not compulsory but permissive.

The Supreme Court's Ruling on Summary Judgment

The Supreme Court affirmed the trial court's use of summary judgment for the limited issue of damages. The Court recited Section 1, Rule 35 of the 1997 Rules of Civil Procedure and the requisites set forth in Section 3 of Rule 35: that there be no genuine issue as to any material fact (except amount of damages) and that the moving party be entitled to judgment as a matter of law. The Court concluded that, having limited the live controversy to the damages claimed by the parties and finding no genuine issue of material fact on that question, summary judgment was properly rendered.

Disposition

The Supreme Court modified the Court of Appeals' 21 November 2005 decision insofar as it declared respondent's counterclaim for recovery of possession to be compulsory. The Court held that respondent's second counterclaim was permissive, that respondent had not paid the requisite docket fees for a permissive counterclaim, and that any judgment rendered without jurisdiction on that basis was a nullity. Accordingly, the

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