Title
Republic vs. Court of Appeals
Case
G.R. No. 130118
Decision Date
Jul 9, 1998
Tetro Enterprises sued the Philippines for land taken in 1974 without compensation. Courts ruled in favor of Tetro, but the Supreme Court reversed, allowing the government's appeal on procedural and valuation grounds.
trial court
government
substantial amount

Case Summary (G.R. No. 130118)

Factual Background

On February 10, 1992, Tetro Enterprises, Inc. filed a complaint denominated for recovery of possession and damages against the Republic, represented by the Regional Director of Region III of the DPWH. The complaint alleged that Tetro was the owner of the subject land and that its probable value was P252,569.00. It further alleged that, in 1974, the Republic constructed a road on the property without acquiring it through expropriation or negotiated sale. Tetro demanded that the Republic return the land in its original state, close the road constructed thereon, and pay damages including actual damages of P100,000.00, rentals at P200.00 per month totaling P40,800.00, and attorney’s fees, commencing from 1974.

The Republic, in its answer, denied liability and raised two principal procedural and substantive defenses. First, it alleged that Tetro had no cause of action because it failed to exhaust administrative remedies before filing the complaint. Second, it asserted that the action was, in substance, a suit against the State without consent. Substantively, the Republic claimed that it constructed part of the Olongapo-Gapan Road on the property with the knowledge and consent of Tetro, and that Tetro had actually engaged in negotiations about the price of the land. It averred that it was willing to pay the fair market value of the property at the time of taking plus interest. It added that returning the land was no longer feasible.

Trial Court Proceedings and Valuation by Commissioners

By agreement, the RTC issued an order dated November 25, 1994 creating a board of commissioners tasked to determine the “actual value” of the property. The board’s determination would serve as a basis for an amicable settlement or, if settlement failed, for the RTC’s decision. The commissioners were Eller V. Garcia (representing Tetro), Abraham Sison, Provincial Assessor of Pampanga (representing the Republic), and Juan P. Limpin, Jr., clerk of court of the RTC, as chairman.

On December 8, 1995, the board submitted a report recommending that the property be priced between P4,000.00 and P6,000.00 per square meter as just compensation. The board observed that while the lot was devoted to sugarcane at the time of taking, it became highly commercial after the road construction due to the opening of residential subdivisions and the building of commercial establishments.

Relying on the board’s report, the RTC rendered its decision on September 2, 1996, fixing the price at P6,000.00 per square meter, or a total of P75,858,000.00 for 12,643 square meters. The RTC noted that a nearby lot had been sold at P10,000.00 per square meter, and it adopted the view that the government would benefit from acquisition because of the property’s utility.

Post-Decision Incidents and Denial of the Appeal

The Republic’s counsel, the Office of the Solicitor General (OSG), received a copy of the RTC decision on September 9, 1996. On September 17, 1996, the OSG moved for reconsideration, asserting that the RTC erred in fixing compensation using the current market value of P6,000.00 per square meter rather than the value at the time of taking in 1974. The motion, however, did not attach proof of service as required by Rule 15, 6.

On October 3, 1996, the RTC denied the motion for reconsideration, holding it to be without merit and also dismissing it for being a “scrap of paper” filed in violation of Rule 15, 6. The Republic’s copy of the order was received on December 6, 1996. Meanwhile, on December 3, 1996, Tetro moved for execution. On December 23, 1996, the RTC granted execution.

On December 13, 1996, the Republic filed a notice of appeal. The RTC denied it on January 7, 1997 on the ground that the RTC decision of September 2, 1996 had become final and executory.

Court of Appeals Ruling

The Republic filed a petition for certiorari with the Court of Appeals to annul the RTC orders of October 3, 1996, December 23, 1996, and January 7, 1997. The Court of Appeals dismissed the petition on June 9, 1997, and denied reconsideration on August 6, 1997.

The Court of Appeals agreed with the RTC that the Republic’s failure to attach proof of service to the motion for reconsideration meant the motion was a mere scrap of paper that did not toll the period for appeal. Thus, the RTC correctly denied the notice of appeal. The Republic later submitted, before the Court of Appeals, a registry return card purporting to show that Tetro’s counsel received a copy of the motion for reconsideration on September 24, 1996. The Court of Appeals considered the card insignificant because proof of service should have been presented to the RTC and not to the appellate court for the first time.

In sustaining dismissal, the appellate court emphasized that the Republic’s predicament was self-inflicted. It pointed out, among others, that counsel did not append registry return receipt and affidavit of service, did not inform the RTC of the sending of the motion, failed to appear at the hearing, did not oppose execution despite notice, and did not seek reconsideration of the denial of the notice of appeal while knowing that certiorari is available only when there is no other plain, speedy and adequate remedy.

Issues Presented

The core issue before the Supreme Court concerned whether the Court of Appeals rigidly erred in treating the Republic’s motion for reconsideration as a scrap of paper and, consequently, in holding that the RTC’s decision had become final for failure to perfect an appeal on time. Related to this issue was whether the Republic had substantially complied with the requirement of notice to the adverse party, considering that Tetro’s counsel actually received the motion for reconsideration before the scheduled hearing date. The Republic also raised the merits of its valuation argument, asserting that compensation should be based on the land’s value at the time of taking in 1974, not on the property’s current market value.

The Parties’ Positions in the Supreme Court

The Republic argued that the Court of Appeals committed grave error by strictly applying procedural rules to the detriment of the government and to the extent that the application would cause a miscarriage of justice. It insisted that it substantially complied with the notice requirement through the registry return card showing that a copy of the motion for reconsideration was sent by registered mail to Tetro’s counsel, Atty. Zenaida G. Cruz-Ducut, on September 18, 1996, and it sought remand for proper determination of the just compensation according to settled jurisprudence.

Tetro countered that the Court of Appeals’ ruling on the “scrap of paper” doctrine was consistent with this Court’s decisions. On the valuation matter, Tetro contended that the basis for compensation was not in issue in the case because the action was one for recovery of possession and damages, not expropriation. It also argued that the Republic should be estopped from contesting the valuation because the RTC’s figure was based on the commissioners’ recommendation in which the government was represented.

Legal Basis and Reasoning of the Supreme Court

The Supreme Court agreed that the Republic’s motion for reconsideration initially lacked the proof of service required by Rule 15, 6. It further recognized that at the time the motion was filed, no copy had yet been served because the motion was sent to Tetro’s counsel only on September 18, 1996, the day after filing.

Nonetheless, the Court held that the Court of Appeals should have considered the subsequent service as substantial compliance, especially considering “the question raised in the appeal of the government and the amount involved.” The Court invoked its prior rulings to show that strict adherence to the proof-of-service attachment requirement may be relaxed where the adverse party has actually received the motion and its rights are not impaired.

In De Rapisura v. Nicolas, the movant also failed to attach proof of service to a motion for reconsideration. The Court held the failure not fatal where the adverse party had actually received the motion and had been present in court when it was heard, concluding that substantial justice had been satisfied.

In People v. Leviste, the Court characterized it as grave abuse of discretion for a trial court to deny postponement of the private prosecutor’s motion because the prosecutor was not served. The Court reasoned that no substantial right was impaired and that deciding cases on the merits should take precedence over technical dismissals.

In Azajar v. Court of Appeals, the Court sustained the intermediate appellate court’s setting aside of a default judgment where the defendant’s procedural lapse in relation to notice and hearing was not utterly implausible and where the defendant had meritorious defenses that could defeat the claim.

Applying these principles, the Supreme Court noted that Atty. Cruz-Ducut actually received the copy of the motion for reconsideration on September 24, 1996, several days before the hearing scheduled for October 2, 1996. It rejected Tetro’s contention that Atty. Cruz-Ducut ceased to be counsel of record as of September 18, 1996, requiring service to be made instead on Atty. Restituto M. David. The Court held that the records showed Atty. Cruz-Ducut was still counsel of record when she received the motion and withdrew only on September 30, 1996. Consequently, there was effective service.

The Supreme Court further stressed the general rule that cases shoul

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