SUPREME COURT OF THE PHILIPPINES

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FIRST DIVISION

NOTICE

Sirs/Mesdames:
Please take notice that the Court, First Division, issued a
Resolution dated July 30, 2019 which reads as follows:

"G.R. No. 193011 (Tarciso S. Calilung v. Caltex Philippines,

Inc., et al.); G.R. No. 193039 (Caltex Philippines, Inc. v. Jose
Medina, et al.). - These consolidated petitions for review on
certiorari1 assail the Decision2 dated November 17, 2009 and the
Resolution3 dated July 9, 2010 of the Court of Appeals (CA) in CA-
G.R. CV No. 85830 affirming with modification the Decision4 dated
March 9, 2005 of Branch 16 of the Regional Trial Court (RTC) in
Ilagan, Isabela in Civil Case No. 948.

In G.R. No. 193011, petitioner Atty. Tarciso S. Calilung (Atty.

Calilung) assails the CA Decision solely on the ground that it deleted
the RTC's grant of lucro cesante, moral and exemplary damages,
attorney's fees, and costs of suit in his favor.

In G.R. No. 193039, Caltex Philippines, Inc. (Caltex) assails the

CA Decision insofar as it declared that Caltex usurped the interests of
Jose Antonio Medina, Maria Luisa Medina, and Maria Milagros
Medina (hereafter collectively known as the Medinas) in the
properties subject of this case, thus, ordering it to pay the Medinas the
amount of P257,259,000.00 representing the fair market value of their
interest therein. It further assails the CA's ruling ordering it to return
to Atty. Calilung the money which the latter paid, the same being a
legitimate business transaction. Lastly, Caltex assails the CA's finding
of bad faith on its part and, on account thereof, holding it liable for
moral and exemplary damages to the Medinas.
- over - thirty-three (33) pages ...
185-B
1
Rollo (G.R. No. 193011), pp. 3-46; Rollo (G.R. No. 193039), pp. 12-115.
2 Rollo (G.R. No. 193011), pp. 53-113; penned by Associate Justice Bienvenido L. Reyes (now
a Retired Member of this Court), concurred in by Associate Justices Japar B. Dimaampao and
Antonio L. Villamor.
3
Id. at 50-51.
4 Id. at 118-146; penned by Honorable Isaac R. De Alban.

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 .
RESOLUTION 2 G.R. Nos. 193011 & 193039
July 30, 2019

The controversy revolves around a 228.9-hectare land in

Alibagu, Ilagan, Isabela consisting of 14 parcels (subject properties)
originally registered under Original Certificate of Title (OCT) No. P-
35316 of the Register of Deeds of Isabela in the name of Antonio
Medina (Antonio). Upon Antonio's death, the subject properties
passed on, through intestate succession, to his wife Antonia Vda. De
Medina (Antonia) and their three children, Jose Antonio Medina
(Jose), Maria Luisa Medina (Luisa), and Milagros Medina (Milagros).
Subsequently, the subject properties were transferred in the name of
the "Heirs of Antonio Medina represented by Antonia Carragayan
Medina," and covered by 14 separate titles, Transfer Certificates of
Title (TCT) No. T-133021 to T-133034. 5

Antonia was a dealer of Caltex. For unpaid deliveries of

petroleum products, Caltex filed an action for collection of sum of
money against her with Branch 21 of the RTC of Manila, docketed as
Civil Case No. 84-22434, entitled Caltex (Philippines, Inc.) v. Antonia
Vda. De Medina. 6

On September 17, 1984, the RTC, in Civil Case No. 84-22434,

rendered a judgment by default7 in favor of Caltex and against
Antonia which became final and executory upon the latter's failure to
appeal. Consequently, on June 9, 1989, a Writ of Execution was
issued. 8 On July 24, 1989, Deputy Sheriff Adolfo Garcia issued: (1) a
Notification9 informing Antonia of the sale of her properties through
public auction; (2) a Notice of Levy on Execution 10 addressed to the
Register of Deeds, Ilagan, Isabela identifying Antonia's properties
which were levied upon and requesting that proper annotations be
made in the former's records; and (3) a Notice of Sheriffs Sale 11
setting the public auction on August 24, 1989 and directing
compliance with the publication and posting requirements. The
subject properties were listed and identified in these notices.

On August 24, 1989, the Deputy Sheriff sold Antonia's

properties to Caltex for P2, 785,620.00. He issued a Certificate of
Sale 12 indicating that whatever rights or interests Antonia may have
on the real properties mentioned in the notice of levy/sale were sold to
Caltex.
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185-B
5
Rollo (G.R. No. 19!301 I), pp. 661-683.
6
Id. at 54. Caltex ! also filed criminal cases for estafa against Antonia, resulting in her
conviction and incarchation in I 992.
7
Id. at 361-365.
8
Rollo (G.R. No. I 93039), p. 397.
9
Id. at 398.
10
Id. at 399.
11
Id. at 401-407.
12
Id. at 3 I 6-321.

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 RESOLUTION 3 G.R. Nos. 193011 & 193039
July 30, 2019

Thus, on October 24, 1990, a Sheriffs Certificate of Final

13
Sale was issued stating that all the properties stated therein,
including the subject properties, were sold at public auction to Caltex,
the lone bidder.

Meanwhile, prior to the issuance of the Writ of Execution dated

June 9, 1989 in favor of Caltex in Civil Case No. 84-22434, Antonia
executed the following:

1.) Special Power of Attorney 14 (SPA) in favor of Carlito

Balauag (Balauag) dated April 5, 1988, authorizing him to
represent her and her children in transactions with the
. Department of Agrarian Reform (DAR) or the Land Bank of
the Philippines (Land Bank) and any private or public
institution with regard to the subject properties. On March
10, 1989, Balauag offered the subject properties to the DAR
for coverage under the Comprehensive Agrarian Reform
Program (CARP) pursuant to Republic Act No. (RA) 6657
through the Voluntary Offer to Sell (VOS) scheme. 15

2.) Deed of Assignment 16 (With Special Power of Attorney

Coupled with Interest) dated February 22, 1989 where
Antonia assigned to Caltex "all [her] rights, interests, claims
and participation from the proceeds of land compensation
for all the property [she has] voluntarily offered for
[operational] land transfer" 17 in consideration of her unpaid
obligations to Caltex, as well as designating the latter as her
exclusive attorney-in-fact to follow up with the DAR the
papers pertaining to the voluntary offer of the subject
properties.

On August 13, 1993, Caltex sold to the DAR, under the VOS
scheme of the CARP, the subject properties. 18 Thereafter, the DAR
issued Certificates of Land Ownership Awards (CLOAs) to agrarian
reform beneficiaries. 19

In October 1994, Atty. Calilung manifested his interest to

acquire Caltex's rights over the subject properties. He came to know

- over -
185-B
13
Id. at 322-327.
14
Rollo (G.R. No. 193011), pp. 366-367.
15
Id. at 368-379.
16 Id. at 147 . .
i1 Id
18
Rollo (G.R. No. 193011), pp. 927-949, 1958-1971.
19
Id. at 57.

4)
 '•
RESOLUTION 4 G.R. Nos. 193011 & 193039
July 30, 2019

of the subject properties when he met Luisa, Antonia's daughter and

his future wife. In consideration of the sale, Caltex was to absolve
Antonia from any further civil and/or criminal responsibility. The sale
pushed through for a consideration of P3,500,000.00. 20 Accordingly,
Caltex issued a Deed of Waiver and Quitclaim21 dated December 30,
1994 releasing and discharging Antonia from any and all pending civil
and criminal cases which Caltex had filed against her.

On June 22, 1995, Atty. Calilung and Caltex executed a Deed

of Assignment with Consolidation of Title, 22 where Caltex, claiming
ownership over the subject properties, transferred its rights to Atty.
Calilung. 23 In the same deed, Atty. Calilung acknowledged that he
was fully aware of the circumstances under which the properties were
acquired by Caltex and that he has examined the title and inspected its
boundaries and locations. 24

Atty. Calilung then attempted to register the deed with the

Register of Deeds of Isabela but the latter refused. on the ground that
Caltex already sold the properties to the DAR. 25

On October 25, 1996, the Medinas filed with the RTC a

complaint26 for annulment of sheriffs sale, cancellation of sheriffs
certificate of final sale, annulment of voluntary offer to sell of Caltex
to the DAR, annulment of Deed of Assignment with prayer for the
issuance of a temporary restraining order/writ of preliminary
injunction against Caltex, Deputy Sheriff Adolfo B. Garcia, Provincial
Agrarian Reform Officer (PARO) David Pascua, Municipal Agrarian
Reform Officer (MARO) Jun Israel, the DAR and its Secretary, the
Land Bank, and Atty. Calilung. The case was docketed as Civil Case
No. 948 and raffled to Branch 16 of the RTC in Isabela.

The Medinas alleged that Caltex misappropriated their

respective co-ownership shares: first, by attachment, levy and
execution sale of the subject parcels of land; second, by selling the
same by way of VOS to the DAR; and third, by selling the subject
properties to Atty. Calilung. 27

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185-B

20
Id. at 42 I.
21
Id. at 159-160.
22
Id. at 161-166.
23
Id. at 165.
24 Id.
25
Rollo (G.R. No. 193011), p. 59.
26
Id. at 305-319.
21 Id.

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 RESOLUTION 5 G.R. Nos. 193011 & 193039
July 30, 2019

In its answer with compulsory counterclaims, 28 Caltex stressed

that it did not encroach upon the property rights of the Medinas
because the Sheriffs execution sale covered only Antonia's rights and
interests in the subject properties. Caltex was merely constrained to
file the VOS in favor of the DAR to protect its rights and interests.

In his answer with cross-claim and its amendment, 29 Atty.

Calilung alleged that he became aware of the VOS to DAR only after
he became an assignee of Caltex. Further, he claims he could not be
held liable for he is also a victim of Caltex's fraudulent
misrepresentation and machinations. In his cross-claim, Atty. Calilung
claims that Caltex fraudulently and falsely represented itself as owner
of the subject properties when it assigned the same to him. Because of
Caltex's failure to deliver the 228.9 hectares it sold to him, it should
be held liable to pay compensatory damages in the form of lucro
cesante based on the price difference at the time of acquisition of the
subject properties and the present action, plus interest. He asserts that
he is also entitled to damages due to Caltex's bad faith.

Through its Decision30 dated March 9, 2005, the RTC, in Civil

Case No. 948, ruled that, as heirs of Antonio, Antonia, Milagros, Jose,
and Luisa became owners of the estate in four equal pro-indiviso
shares; therefore, Antonia is only entitled to 1/4 of the estate. It upheld
the validity of the auction sale insofar as Antonia's 1/4 share is
concerned, but declared that the 3/4 share should be restored to the
Medinas. The RTC also invalidated the SPA in favor of Balauag, as
well as the latter's VOS to DAR. However, it upheld Caltex's VOS
only to the extent of Antonia's 1/4 share in the subject properties. On
Atty. Calilung's claim, the RTC ordered Caltex to pay Atty. Calilung
P300,000,000.00 as lucro cesante or unrealized profits. The
dispositive portion of the RTC's Decision reads:

WHEREFORE, after a careful consideration of

the respective claims of all the parties, the evidence
and applicable laws, judgment is hereby rendered:

1. Declaring the Sheriffs Sale of August 24, 1989

pursuant to a final judgment in Civil Case No. 84-
22434 of RTC Manila Br. 31, valid as to the one
fourth (1/4) share in the subject property of the
judgment debtor Antonia Vda. De Medina only;
which share passed on to defendant Caltex
Philippines, Inc. as successful bidder;

- over -
185-B

28
Rollo (G.R. No. 193011), pp. 794-816.
29
Id. at 779-783, 821-829.
30
Rollo (G.R. No. 193039), pp. 187-215.

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RESOLUTION 6 G.R. Nos. 193011 & 193039
July 30, 2019

2. Upholding the Voluntary Offer to Sell of

defendant Caltex in favor of the Department of
Agrarian Reform to the extent of the one fourth
(1/4) share in subject property;

3. Declaring the Voluntary Offer to Sell of

Antonia Vda. De Medina thru her Attorney-in-fact
Carlito Balauag invalid as the same is not
authorized by law;

4. To restore plaintiffs to their three fourth (3/4)

share in subject property. To this end, the parties
concerned, plaintiffs and representatives of the
Department of Agrarian Reform and their respective
Counsels are directed to submit a draft partition of
the property, taking care to promote the best use
thereof for the benefit of all parties within 30 days
from receipt of the decision for the approval of the
Court;

5. To order defendant Caltex to pay plaintiffs the

total sum of P3,000,000.00 (3 million) by way of
compensation for damages for all the years
plaintiffs failed to fully utilized (sic) their shares in
subject property occasioned by the erroneous
disposition thereof by defendant Caltex;

6. To order defendant Caltex to pay plaintiffs

P500, 000.00 as moral damages and P500, 000.00
as exemplary damages;

7. To order defendant Caltex to pay plaintiffs

P500, 000.00 by way of Attorneys (sic) fee and
P300,000.00 as reimbursement for litigation
expenses;

ON THE CROSS-CLAIM:

8. To annul and declare invalid the Deed of

Assignment with consolidation of titles executed by
Caltex in favor of defendant Cross-Claimant;

9. To order defendant Caltex to restore to Cross-

Claimant the amount of P3, 500, 000.00 which he
paid for the subject property with legal interest
thereon from October 1994 until fully paid;

10. To order Caltex to pay Cross-Claimant the

amount of P300, 000, 000.00 by way of Luera
cessante with legal interest until fully paid;

- over -
185-B

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 RESOLUTION 7 G.R. Nos. 193011 & 193039
July 30, 2019

11. To order Caltex to pay Cross-Claimant Pl,

000, 000.00 by way of moral damages and Pl, 000,
000.00 by way of exemplary damages;

12. To order Caltex to pay Cross-Claimant P500,

000.00 by way of Attorneys (sic) fee and P300,
000.00 as reimbursement for litigation expenses;

13. To order Caltex to pay Cost of Suit.

SO ORDERED. 31

Both Atty. Calilung and Caltex filed separate appeals to the

CA.

In denying Atty. Calilung's appeal, the CA ruled that the

amount of P300,000,000.00 awarded and the P745,000,000.00 Atty.
Calilung is praying for cannot be justified as lucro cesante since it
arose from his investment of only P3,500,000.00. It, however, ordered
Caltex to return the purchase price with legal interest. 32

With regard to Caltex's appeal, the CA ruled that Caltex

usurped Medinas' interest over the subject properties. Consequently, it
found that the Medinas are entitled to the reconveyance of their pro-
indiviso share of 3/4 of the subject properties. Since the subject
properties have already been subjected to CARP and have been taken
over by the DAR, with CLOAs already issued to beneficiaries of
portions of the subject properties,3 3 the CA instead ordered Caltex to
pay the Medinas' the present market value thereof, plus interest and
damages. 34 The dispositive portion of the CA Decision reads:

IN LIGHT OF ALL Tl-IE FOREGOING, the

assailed Decision dated March 9, 2005 in Civil Case
No. 948 is hereby AFFIRMED WITH
MODIFICATION.

Accordingly, the decretal portion of said

Decision is modified as follows: (Original Decision
in italics; Modified decision underscored)

"WHEREFORE, after a careful

consideration of the respective claims of all the
parties, the evidence and applicable laws,
judgment is hereby rendered:

- over -
185-B

31
Rollo (G.R. No. 193011), pp. 145-146.
32
Id. at 109.
33
Id. at 88.
34
Id. at 90-91.

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RESOLUTION 8 G.R. Nos. 193011 & 193039
July 30, 2019

1. Declaring the Sheriff's Sale of August

24, 1989 pursuant to a final judgment in Civil
Case No. 84-22434 of RTC Manila Br. 31,
valid as to the one fourth (1/4) share in the
subject property of the judgment debtor
Antonia Vda. De Medina only; which share
passed on to defendant Caltex Philippines,
Inc. as successful bidder.

2. Upholding the Voluntary Offer to Sell

of defendant Caltex in favor of the
Department of Agrarian Reform to the extent
of the one fourth (1/4) share in subject[ J
property;

3. Declaring the Voluntary Offer to Sell

ofAntonia Vda. De Medina thru her Attorney-
in-fact Carlita Balauag invalid as the same is
not authorized by law.

4. Ordering CAL TEX to pay the

plaintiffs the monetary equivalent of their ¾
share in the Medina Estate in the amount of
TWO HUNDRED FIFTY SEVEN MILLION
TWO HUNDRED FIFTY THOUSAND
PESOS {P257. 250. 000.00). at 6% interest
per annum from the time of judicial demand
up to the finality of the judgment and at 12%
interest per annum from the finality of
judgment until the actual payment thereof.

5. Ordering CALTEX to pay the

plaintiffs FIVE HUNDRED THOUSAND
PESOS {P500. 000.00) as moral damages;

6. Ordering CALTEX to pay the

plaintiffs FIVE HUNDRED THOUSAND
PESOS (P500. 000.00) as exemplary
damages;and

7. Ordering CALTEX to return to ATTY.

T ARCISO CALILUNG the amount of
THREE MILLION FIVE HUNDRED
THOUSAND PESOS (P3. 500, 000.00) with
legal interest at 6% per annum reckoned from
March 9. 2005 when the RTC rendered its
judgment. From the time this Decision
becomes final and executory. the interest rate
shall be 12% until its satisfaction.

- over -
185-B

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 RESOLUTION 9 G.R. Nos. 193011 & 193039
July 30, 2019

Costs against defendants-appellants CALTEX

PHILIPPINES, INC.

SO ORDERED. 35 (Emphasis in the original.)

In a Resolution36 dated July 9, 2010, Atty. Calilung's and

Caltex's motions for reconsideration were denied. Hence, these
petitions, which were consolidated on October 3, 2011. 37

In G.R. No. 193039, Caltex claims that it cannot be faulted for

the inclusion of the Medinas' share in the CARP. The VOS is not the
operative act which placed the subject properties under CARP as it
was the government, through the DAR, which made the
determination. Regardless of whether anyone, including Caltex,
voluntarily offered the subject properties for sale to the government,
the latter will eventually acquire them for redistribution under CARP.
Caltex also argues that it has never misrepresented itself to be the
owner of the subject properties and that it has consistently maintained
that it acquired ownership only over the rights, interests, participation
and title of Antonia. Any damage caused to the Medinas is due to their
own fault because they refused to participate in the proceedings before
the DAR despite their knowledge of the proceedings. Caltex also
questions the monetary awards in favor of the Medinas and Atty.
Calilung for lack of basis.

In G.R. No. 193011, Atty. Calilung insists that he should be

paid lucro cesante and damages as he was unable to register his title
over the subject properties.

At the outset, We affirm the CA's disposition with regard to the

DAR's appeal from the RTC Decision. The CA was correct in holding
that the RTC was without jurisdiction to declare the subject properties
as exempt from CARP coverage as jurisdiction over this very issue is
vested with the DAR.

Section 50 of RA 6657 provides for the DAR's primary

jurisdiction over agrarian reform cases:

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185-B

5
3 Id. at 111-113.
36
Id. at 50-51.
31
Id. at 1974.

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 RESOLUTION 10 G.R. Nos. 193011 & 193039
July 30, 2019

Sec. 50. Quasi-Judicial Powers of the DAR. -

The DAR is hereby vested with the primary
jurisdiction to determine and adjudicate agrarian
reform matters and shall have exclusive original
jurisdiction over all matters involving the
implementation of agrarian reform except those
falling under the exclusive jurisdiction of the
Department of Agriculture (DA) and the
Department of Environment and Natural Resources
(DENR).

xxxx

Specifically, DAR Administrative Order 09-94 No. (DAR AO

09-94 ), the executive issuance in force at the time the complaint in
Civil Case No. 948 was filed in 1996, mandates the DAR Regional
Directors to hear and decide protests in agrarian reform cases. 38
Relevant provisions of DAR AO 09-94 read:
I

Rationale
In line with the administration's vision to
complete land distribution within ten ( 10) years
from the effectivity of the CARL and in order to
resolve the factors contributing to the delay in the
coverage of lands under the program, the authority
to hear and decide all protests involving
coverage under R.A. No. 6657 or P.D. No. 27 is
hereby devolved to all Regional Directors (RDs).
The Authority of the RDs to decide protests against
coverage under P.D. No. 27 pursuant to
the Memorandum Circular No. 5, Series of 1987 is
hereby affirmed.

The appeal process from the decisions of the

RDs to the Secretary is also hereby defined,
pursuant to Book VII of the Administrative Code of
1987.

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185-B

38
Subsequent issuances of the DAR involving agrarian reform law implementation, i.e., DAR
AO 06-00 entitled, "Rules of Procedure for Agrarian Law Implementation (ALI) Cases," DAR
AO 03-03 entitled, "2003 Rules for Agrarian Law Implementation Cases," and DAR AO 03-17
entitled, "2017 Rules for Agrarian Law Implementation (ALI) Cases" retain the mandate of the
DAR, whether the Secretary or the Regional Directors, to exercise primary jurisdiction over all
agrarian law implementation cases. The issues which the DAR have primary jurisdiction to hear
include: (1) classification and identification of landholdings for CARP coverage, including
protests or oppositions and petitions for lifting of such coverage; (2) classification,
identification, inclusion and qualification of potential/actual farmer-beneficiaries; and (3)
landowner's exercise of its right ofretention, application for exemption from CARP coverage.

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 RESOLUTION 11 G.R. Nos. 193011 & 193039
July 30, 2019

II

Definition
Protests against coverage under CARP or
under P.D. No. 27 occur when the landowner files a
written objection to the initial activities undertaken
by the DAR to bring a certain property under the
agrarian reform program, such as the issuance of
Notice of Coverage, Notice of Acquisition and the
like. Protests may be based on exemptions,
exclusions, retention and other grounds provided by
law.

Protests shall also include those lodged in

writing by farmers who believe they have a priority
right over those have been previously identified by
the Municipal Agrarian Reform Officer (MARO) as
the beneficiaries of the land distribution program.
(Emphasis supplied.)

In Union Bank v. Hon. Regional Agrarian Reform Officer, et

39
al., We explained:
The jurisdiction of a court or tribunal over the
nature and subject matter of an action is conferred
by law. Section 50 of the CARL and Section 17 of
EO No. 229 vested upon the DAR primary
jurisdiction to determine and adjudicate agrarian
reform matters, as well as original jurisdiction over
all matters involving the implementation of agrarian
reform. Through EO No. 129-A, the power to
adjudicate agrarian reform cases was transferred to
the DARAB, and jurisdiction over the
implementation of agrarian reform was delegated to
the DAR regional offices. In Heirs of Candido Del
Rosario v. Del Rosario, we held that consistent with
the DARAB Rules of Procedure, the agrarian
reform cases that fall within the jurisdiction of the
PARAD and DARAB are those that involve
agrarian disputes. Section 3(d) of the CARL defines
an "agrarian dispute" as any controversy relating to
tenurial arrangements, whether leasehold, tenancy,
stewardship or otherwise, over lands devoted to
agriculture. Given the technical legal meaning of the
term "agrarian dispute," it follows that not all cases
involving agricultural lands automatically fall
within the jurisdiction of the PARAD and
DARAB. 40
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185-B
39 G.R. No. 200369, March 1, 2017, 819 SCRA 24, 35-37.
40
Id. at 35-37. See also DAR v. Trinidad Valley Realty & Development Corporation, G.R. No.
173386, February 11, 2014, 715 SCRA 650; Valcurza v. Tamparong, Jr., G.R. No. 189874,
September 4, 2013, 705 SCRA 128; and Sta. Rosa Realty Development Corporation v. CA, et
al., G.R. No. 112526, October 12, 2001, 367 SCRA 175.

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 RESOLUTION 12 G.R. Nos. 193011 & 193039
July 30, 2019

We note the law and jurisprudence's use of the phrase "primary

jurisdiction." This emphasizes the requirement of complying with the
correct procedure and of observing the doctrine of primary
jurisdiction. This doctrine is well-established. We explained:

The doctrine of primary jurisdiction has been

increasingly called into play on matters demanding
the special competence of administrative agencies
even if such matters are at the same time within the
jurisdiction of the courts. A case that requires for its
determination the expertise, specialized skills, and
knowledge of some administrative board or
commission because it involves technical matters or
intricate questions of fact, relief must first be
obtained in an appropriate administrative
proceeding before a remedy will be supplied by the
courts although the matter comes within the
jurisdiction of the courts. The application of the
doctrine does not call for the dismissal of the case in
the court but only for its suspension until after the
matters within the competence of the administrative
body are threshed out and determined.

To accord with the doctrine of primary

jurisdiction, the courts cannot and will not
determine a controversy involving a question within
the competence of an administrative tribunal, the
controversy having been so placed within the
special competence of the administrative tribunal
under a regulatory scheme. In that instance, the
judicial process is suspended pending referral to the
administrative body for its view on the matter in
dispute. Consequently, if the courts cannot resolve a
question that is within the legal competence of an
administrative body prior to the resolution of that
question by the latter, especially where the question
demands the exercise of sound administrative
discretion requmng the special knowledge,
experience, and services of the administrative
agency to ascertain technical and intricate matters
of fact, and a uniformity of ruling is essential to
comply with the purposes of the regulatory statute
administered, suspension or dismissal of the action
is proper. 41

As the issue raised before the RTC and the CA of whether the
subject properties are within CARP coverage does not fall within the

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185-B

41
San Miguel Properties, Inc. v. Perez, G.R. No. 166836, September 4, 2013, 705 SCRA 38,
60-61.

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 RESOLUTION 13 G.R. Nos. 193011 & 193039
July 30, 2019

technical meaning of agrarian dispute and following the doctrine of

primary jurisdiction, it is clear that DAR exercises preliminary
jurisdiction, to the exclusion of the RTC.

II

During pre-trial, all the parties stipulated and admitted that

Antonio previously owned the subject properties and that upon his
death, ownership of the subject properties passed to Antonia and the
Medinas. 42 As the pre-trial is a procedural device intended to clarify
and limit the basic issues between the parties and whose main
objective is to simplify, abbreviate and expedite the trial, or totally
dispense with it, it follows that the parties are bound to honor the
stipulations they made during the pre-trial. 43 Thus, upon the death of
Antonio and pursuant to Articles 979, 980, and 996 of the New Civil
Code, 44 Antonia is entitled only to 1/4 of the subject properties while
the surviving children, Jose Antonio, Luisa, and Milagros are entitled
to the remaining 1/4.

We emphasize, however, that none of Antonio's heirs can claim

a specific portion of the subject properties. Each of the four heirs'
right is limited to a 1/4 undivided share of the subject properties. This
is so because there is nothing in the records which would show that
there was already a proper and valid partition of Antonio's estate. We
held in Arado v. Alcoran: 45

Unless there was a proper and valid partition of

the assets of the respective estates of Raymundo,
Nicolas and Joaquina, whether extrajudicially or
judicially, their heirs could not adjudicate unto
themselves and claim specific portions of their
estates, because, as we have declared in Carvajal v.
Court ofAppeals:

x x x Unless a project of partition is

effected, each heir cannot claim ownership over

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185-B
,
42
Rollo (G.R. No. 193039), p. 245.
43
Interlining Corporation, et al. v. Philippine Trust Company, G.R. No. 144190, March 6,
2002, 378 SCRA 521,525.
44
Art. 979. Legitimate children and their descendants succeed the parents and other ascendants,
without distinction as to sex or age, and even if they should come from different marriages.
An adopted child succeeds to the property of the adopting parents in the same manner as a
legitimate child.
Art. 980. The children of the deceased shall always inherit from him in their own right,
dividing the inheritance in equal shares.
xxxx
Art. 996. If a widow or widower and legitimate children or descendants are left, the surviving
spouse has in the succession the same share as that of each of the children.
45 G.R. No. 163362, July 8, 2015, 762 SCRA 37.

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 RESOLUTION 14 G.R. Nos. 193011 & 193039
July 30, 2019

a definite portion of the inheritance. Without

partition, either by agreement between the
parties or by judicial proceeding, a co-heir
cannot dispose of a specific portion of the
estate. For where there are two or more heirs,
the whole estate of the decedent is, before its
partition, owned in common by such heirs.
Upon the death of a person, each of his heirs
becomes the undivided owner of the whole
estate left with respect to the part or portion
which might be adjudicated to him, a
community of ownership being thus formed
among the co-owners of the estate or co-heirs
while it remains undivided. 46

We now determine whether what Caltex acquired in the public

auction and subsequently sold to the government via the VOS scheme
was limited to Antonia's 1/4 share in the subject properties.

Money judgments are enforceable only against the property

incontrovertibly belonging to the judgment debtor. 47 We have held:

x x x Indeed, the power of the court in executing

judgments extends only to properties
unquestionably belonging to the judgment debtor
alone. An execution can be issued only against a
party and not against one who did not have his day
in court. The duty of the sheriff is to levy the
property of the judgment debtor not that of a third
person. For, as the saying goes, one man's goods
shall not be sold for another man's debts. 48

Thus, the public auction conducted to answer the money

judgment against Antonia should be limited to those properties which
she owns. This means that with respect to the subject properties, only
Antonia's 1/4 share can be sold in the public auction.

Both the RTC and CA determined that what was sold during the
public auction was all of the subject properties and not just Antonia's
1/4 share. We affirm this finding. When supported by substantial
evidence, the factual findings of the CA affirming those of the trial
court are final and conclusive on this Court and may not be reviewed
on appeal, unless petitioner can show compelling or exceptional
reasons for this Court to disregard, overturn or modify such findings. 49

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/
46
Id at 57-58, citing Carvajal v. CA, G.R. No. L-44426, February 25, 1982, I 12 SCRA 237,
239.
47
Guyv. Gacott, G.R. No. 206147, January 13, 2016, 780 SCRA 579,591.
48 Id.
49
Serra v. Mumar, G.R. No. 193861, March 14, 2012, 668 SCRA 335,344.

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 RESOLUTION 15 G.R. Nos. 193011 & 193039
July 30, 2019

In this case, the Sheriffs Certificate of Final Sale50 contained

the following relevant portions:

I, ADOLFO B. GARCIA, Deputy Sheriff of the

REGIONAL TRIAL COURT OF MANILA, in the
above-entitled case, by virtue of the 1st Alias Writ
of Execution x x x, in the above-entitled case
against the defendant ANTONIA VDA. DE
MEDINA, the following described real properties
were SOLD at public auction on August 24, 1989 to
CALTEX (PHILIPPINES), INC., x x x.

xxxx

That the plaintiff CALTEX (PHILS. INC.) duly

represented by Atty. Rafael Durian having offered
the highest bid, the undersigned Sheriff have
therefore SOLD, CEDED, and CONVEYED to
CALTEX (PHILS.) Inc. the properties described
subject to redemption period of one year counted
from the date of Certificate of Sale is registered in
the proper Register of Deeds or Assessors Office.

NOW, THEREFORE, and by virtue of the

Sheriffs Sale issued on August 24, 1989 and which
expired on October 23, 1990 by these presents, all
rights, interests, participations and titles of the
herein bidder CALTEX (PHILS.) INC. over the
above-described properties are hereby finally
SOLD, CEDED and TRANSFERRED to said
CALTEX (PHILIPPINES) INC. 51

We likewise note that the subject properties, covered by TCT

Nos. 133021-133032, were included in the enumeration of properties
which were sold to Caltex and that there is nothing to indicate that
with respect to the subject properties, only Antonia's 1/4 share was
sold. We have held that the issuance of a final deed of sale is an act
merely confirmatory of the title that is already in the purchaser and
constituting official evidence of that fact. 52 Following the express
provisions of the certificate of final sale, it is clear that what was sold
to Caltex was not limited to Antonia's 1/4 share.

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185-B

50
Rollo (G.R. No. 193039), pp. 322-327.
si Id.
52
Lucasan v. Philippine Deposit Insurance Corporation, G.R. No. 176929, July 4, 2008, 557
SCRA 306, 315-316, citing Ca/acala v. Republic, G.R. No. 154415, July 28, 2005, 446 SCRA
438,447.

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 RESOLUTION 16 G.R. Nos. 193011 & 193039
July 30, 2019

Worse, and demonstrative of Caltex's bad faith and intent to

exercise ownership over the entire subject properties, Caltex
voluntarily offered for sale the subject properties to the DAR. The
Letters-Offer 53 dated August 13, 1993covered the entire area of each
of the subject properties, contained the annotation that Caltex is
exercising its right of retention to the extent of 10 hectares and were
without any qualification that the offer is limited only to 1/4 of the
subject properties.

Without a doubt, what Caltex intended to purchase in the public

auction and to sell to DAR was the entirety of the subject properties
and not merely Antonia's 1/4 share. We reiterate with approval the
CA's findings:

It seems rather peculiar that CAL TEX offered

for sale to the DAR the ENTIRETY of each parcel
of land, NOT MERELY ANTONIA'S PRO
INDIVISO INTEREST therein. This follows the
tenor of the aforesaid Deputy Sheriffs Certificate
of Sale and the Sheriffs Certificate of Final Sale.
Each letter offer corresponds to one ( 1) parcel of
land and the total area of this land was offered
under the VOS scheme. MARO Eunomio Israel, Jr.
testified that CALTEX executed VOS in favor of
the DAR covering about 220 hectares of the subject
properties.

The Letter Offers (sic) left no doubt or any

suspicion on the part of the DAR as to such
authority. The fact remains that CALTEX had
clearly exercised ownership over the subject
properties, which conferred upon it the right to
dispose of the same by way of sale. CAL TEX,
believing itself as the owner of the subject
properties, and manifesting to be so, exercised its
right to dispose of what it owned when it sold the
subject properties to the DAR. Consequently, the
portions pertaining to the MEDINA CHILDREN
were included in the VOS without the latter's
knowledge and consent.

Fourth. In its Letter Offers (sic), CALTEX even

indicated that it, alone, is exercising its right of
retention to the extent of 10 hectares, a right which
is guaranteed to the landowner by the Constitution.
The law requires no further interpretation as to
which party would have the right of retention, but
that it is the landowner who can claim such right.

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I
53
Rollo(G.R. No.193011),pp.927-949, 1958-1971.

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 RESOLUTION 17 G.R. Nos. 193011 & 193039
July 30, 2019

CALTEX had made clear the real nature of its

ownership of the subject properties. The DAR
cannot be faulted for relying on the representation
of CALTEX based on the letter dated November 24,
1992 by Atty. Joselia J. Poblador, the Deed of
Assignment with Special Power of Attorney
coupled with interest in favor of CALTEX, and the
titles covering the subject properties containing
annotations to the effect that the same were sold at
public auction to CALTEX as the highest bidder,
among others.

All these are telling circumstances that

CALTEX misrepresented itself to have the right to
dispose of the entire subject properties. Verily, the
foregoing acts demonstrative of full ownership
manifested by CALTEX indubitably show that
indeed it usurped the pro-indiviso share of the
MEDINA CHILDREN. 54

We stress that · an execution creditor generally acquires no

higher or better right than what the execution debtor has in
the property levied upon. It follows then that if the
judgment debtor had no interest in the property, the execution creditor
acquires no interest therein. 55 Thus, despite its actions to the contrary,
as Antonia's interest over the subject properties was limited to her 1/4
undivided share, Caltex, during the public auction, was able to acquire
only Antonia's 1/4 undivided share. In turn, Caltex could have offered
to the DAR only the same 1/4 undivided share.

Consequently, as the public auction covered the entire subject

properties, the Medinas are entitled to the reconveyance of their 3/4
undivided share of the subject properties.

III

We are aware that the subject properties have already been

subject to CARP and CLOAs already issued to the famer
beneficiaries. A CLOA is a document evidencing ownership of the
land granted or awarded to the beneficiary by DAR, and contains the
restrictions and conditions provided for in RA 6657 and other
applicable laws. 56 The mere issuance of a CLOA does not put the
beneficiaries' ownership beyond attack and scrutiny. CLOAs may in
fact be corrected and cancelled for violations of agrarian laws, rules

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185-B
/

54
Rollo (G.R. No. 193011), pp. 80-81.
55 Tay Chun Suyv. Court ofAppeals, G.R. No. 93640, January 7, 1994, 229 SCRA 151, 164.
56 RA 6657, Sec. 24; Lebrudo v. Loyola, G.R. No. 181370, March 9, 2011, 645 SCRA 156, 161.

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 RESOLUTION 18 G.R. Nos. 193011 & 193039
July 30, 2019

and regulations. 57 The grounds for their cancellation, however, are

limited and generally result from actions of the beneficiary. These are:

1. Misuse or diversion of financial and support

services extended to the ARB; (Section 37 of R.A.
No. 6657)

2. Misuse of land; (Section 22 of R.A. No.

6657)

3. Material misrepresentation of the ARB' s

basic qualifications as provided under Section 22 of
R.A. No. 6657, P.D. No. 27, and other agrarian
laws;

4. Illegal conversion by the ARB; (Cf. Section

73, Paragraph C and E ofR.A. No. 6657)

5. Sale, transfer, lease or other forms of

conveyance by a beneficiary of the right to use or
any other usufructuary right over the land acquired
by virtue of being a beneficiary in order to
circumvent the provisions of Section 73 of R.A. No.
6657, P.D. No. 27, and other agrarian laws.
However, if the land has been acquired under P.D.
No. 27/E.O. No. 228, ownership may be transferred
after full payment of amortization by the
beneficiary; (Sec. 6 of E.O. No. 228)

6. Default in the obligation to pay an aggregate

of three (3) consecutive amortizations in case of
voluntary land transfer/direct payment scheme,
except in cases of fortuitous events and force
majeure;

7. Failure of the ARBs to pay for at least three

(3) annual amortizations to the LBP, except in cases
of fortuitous events and force majeure; (Section 26
of RA 6657)

8. Neglect or abandonment of the awarded land

continuously for a period of two (2) calendar years
as determined by the Secretary or his authorized
representative; (Section 22 of RA 6657)

9. The land is found to be exempt/excluded

from P.D. No. 27/E.O. No. 228 or CARP coverage
or to be part of the landowner's retained area as
determined by the Secretary or his authorized
representative; and

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185-B
,'

57
See Almagro v. Amaya, Sr., G.R. No. 179685, June 19, 2013, 699 SCRA 61, 79.

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 RESOLUTION 19 G.R. Nos. 193011 & 193039
July 30, 2019

10. Other grounds that will circumvent laws

related to the implementation of agrarian reform. 58

11. The land is found to be exempt/excluded

from CARP coverage, or part of the landowner's
retained area. 59

As none of these grounds are present in this case, cancellation

of the CLOAs cannot be effected and reconveyance of the Medinas'
3/4 share is no longer be possible. This does not mean, however, that
the Medinas are left with nothing.

On the part of the CA, citing equity, it held that as the Medinas
could not be restored to their share in their inheritance from Antonio,
Caltex should be made to pay them the subject properties' present
market value plus interest and damages.

We differ with the CA on this point. Instead of the subject

properties' present market value, We hold that the Medinas are
entitled to their share in the just compensation over the subject
properties equivalent to their 3/4 share which should be computed in
accordance with the express parameters set by law.

This case was initially one for annulment of sale with prayer for
recovery of the subject properties, or, in the alternative, payment of
the subject properties' fair market value. More, there is no pending
petition for the determination of just compensation. Considering,
however, that We are not a trier of facts and cannot receive new
evidence from the parties to aid them in the prompt resolution of the
case60 and further considering the length of time this case has been
pending and in order to finally settle the dispute and avoid further
delay, We remand this case to the RTC, sitting as a Special Agrarian
Court (SAC), for the purpose of determining the just compensation
the Medinas are entitled to receive.

We stress that the taking of private lands under the agrarian

reform program partakes of the nature of an expropriation

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185-B
/

58 Item IV B, DAR AO No. 02-94, Rules Governing the Correction and Cancellation of
Registered/Unregistered Emancipation Patents (EPs), and Certificates of Land Ownership
Award (CLOAs) due to Unlawful Acts and Omissions or Breach of Obligations of Agrarian
Reform Beneficiaries (ARBs) and for Other Causes; Jose, et al. v. Novida, et al., G.R. No.
177374, July 2, 2014, 728 SCRA 552, 572.
59 Item I, DAR AO 02-94.
60
Land Bank ofthe Philippines v. Yatco Agricultural Enterprises, G.R. No. 172551, January 15,
2014, 713 SCRA 370,395.

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 RESOLUTION 20 G.R. Nos. 193011 & 193039
July 30, 2019

proceeding. 61 This program is a revolutionary kind of expropriation

which affects all private agricultural lands whenever found and of
whatever kind as long as they are in excess of the maximum retention
limits allowed their owners. 62 As the State's exercise of its power of
eminent domain is involved, the following limitations must be
observed: (1) the purpose of taking must be for public use; and (2) just
compensation must be given to the owner of the private property. 63

Just compensation is defined as the full and fair equivalent of

the property taken from its owner by the expropriator. Its measure is
not the taker's gain but the owner's loss. The word "just" is used to
intensify the meaning of the word "compensation" to convey the idea
that the equivalent to be rendered for the property to be taken shall be
real, substantial, full, and ample. 64 For purposes of determining just
compensation, the fair market value of an expropriated property is
determined by its character and price at the time of taking. 65

Section 17 of RA 6657 provides for the determination of just

compensation, to wit:

Sec. 17. Determination of Just Compensation. -

In determining just compensation, the cost of
acquisition of the land, the current value of the like
properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations,
and the assessment made by government assessors
shall be considered. The social and economic
benefits contributed by the farmers and the
farmworkers and by the Government to the property
as well as the non-payment of taxes or loans
secured from any government financing institution
on the said land shall be considered as additional
factors to determine its valuation.

Further, Sections 56 and 57 of the same law constitute SACs

and identify their jurisdiction:

Sec. 56. Special Agrarian Court. - The Supreme

Court shall designate at least one ( 1) branch of the
Regional Trial Court (RTC) within each province to
act as a Special Agrarian Court.
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185-B
✓

61
Land Bank of the Philippines v. Heirs of Salvador Encinas, G.R. No. 167735, April 18, 2012,
670 SCRA 52, 59.
62
Association of Small Landowners in the Philippines, Inc., et al. v. Secretary of Agrarian
Reform, G.R. No. 78742, July 14, 1989, 175 SCRA 343,386.
63
Apo Fruits Corporation v. Land Bank of the Philippines, G.R. No. 164195, October 12, 2010,
632 SCRA 727, 739.
64
Supra note 60 at 378-379.
65
Land Bank ofthe Philippines v. Heirs ofJesus Alsua, G.R. No. 211351, February 4, 2015, 750
SCRA 121, 13 I.

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 RESOLUTION 21 G.R. Nos. 193011 & 193039
July 30, 2019

The Supreme Court may designate more

branches to constitute such additional Special
Agrarian Courts as may be necessary to cope with
the number of agrarian cases in each province. In
the designation, the Supreme Court shall give
preference to the Regional Trial Courts which have
been assigned to handle agrarian cases or whose
presiding judges were former judges of the defunct
Court of Agrarian Relations.

The Regional Trial Court (RTC) judges

assigned to said courts shall exercise said special
jurisdiction in addition to the regular jurisdiction of
their respective courts.

The Special Agrarian Courts shall have the

powers and prerogatives inherent in or belonging to
the Regional Trial Courts.

Sec. 57. Special Jurisdiction. - The Special

Agrarian Courts shall have original and exclusive
jurisdiction over all petitions for the determination
of just compensation to landowners, and the
prosecution of all criminal offenses under this Act.
The Rules of Court shall apply to all proceedings
before the Special Agrarian Courts, unless modified
by this Act.

The Special Agrarian Courts shall decide all

appropriate cases under their special jurisdiction
within thirty (30) days from submission of the case
for decision.

In Land Bank of the Philippines v. Celada, 66 We upheld the

original and exclusive jurisdiction of the RTC, sitting as SAC, over
petitions for determination of just compensation:

We do not agree with petitioner's submission

that the SAC erred in assuming jurisdiction over
respondent's petition for determination of just
compensation despite the pendency of the
administrative proceedings before the DARAB.
In Land Bank of the Philippines v. Court of
Appeals, the landowner filed an action for
determination of just compensation without waiting
for the completion of the DARAB's re-evaluation
of the land. The Court nonetheless held therein that
the SAC acquired jurisdiction over the action for the
following reason:

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185-B✓

66
G.R. No. 164876, January 23, 2006, 479 SCRA 495.

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 RESOLUTION 22 G.R. Nos. 193011 & 193039
July 30, 2019

It is clear from Sec. 57 that the RTC, sitting as a

Special Agrarian Court, has 'original and exclusive
jurisdiction over all petitions for the determination
of just compensation to landowners.' This 'original
and exclusive' jurisdiction of the RTC would be
undermined if the DAR would vest in
administrative officials original jurisdiction in
compensation cases and make the RTC an appellate
court for the review of administrative decision.
Thus, although the new rules speak of directly
appealing the decision of adjudicators to the RTCs
sitting as Special Agrarian Courts, it is clear from
Sec. 57 that the original and exclusive jurisdiction
to determine such cases is in the RTCs. Any effort
to transfer such jurisdiction to the adjudicators and
to convert the original jurisdiction of the RTCs into
appellate jurisdiction would be contrary to Sec. 57
and therefore would be void. Thus, direct resort to
the SAC by private respondent is valid.

It would be well to emphasize that the taking of

property under RA No. 6657 is an exercise of the
power of eminent domain by the State. The
valuation of property or determination of just
compensation in eminent domain proceedings is
essentially a judicial function which is vested with
the courts and not with administrative agencies.
Consequently, the SAC properly took cognizance of
respondent's petition for determination of just
compensation. 67

To guide the SAC in the performance of its task of determining

just compensation and the amount the Medinas are entitled to, We
reiterate the guidelines the Court prescribed in Alfonso v. Land Bank
of the Philippines: 68

First, in determining just compensation, courts

are obligated to apply both the compensation
valuation factors enumerated by the Congress under
Section 17 of RA 6657, and the basic formula laid
down by the DAR.

xxxx

Second, the formula, being an administrative

regulation issued by the DAR pursuant to its rule-
making and subordinate legislation power under RA
6657, has the force and effect of law. Unless

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185-B
67
Id at 504-505.
68
G.R.Nos.181912& 18334,November29,2016,811 SCRA27.

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 RESOLUTION 23 G.R. Nos. 193011 & 193039
July 30, 2019

declared invalid in a case where its validity is

directly put in issue, courts must consider their use
and application.
xxxx

Third, courts, in the exercise of their judicial

discretion, may relax the application of the formula
to fit the peculiar circumstances of a case. They
must, however, clearly explain the reason for any
deviation; otherwise, they will be considered in
grave abuse of discretion.

xxxx

For clarity, we restate the body of rules as

follows: The factors listed under Section 17 of
RA 6657 and its resulting formulas provide a
uniform framework or structure for the
computation of .inst compensation which ensures
that the amounts to be paid to affected
landowners are not arbitrary, absurd or even
contradictory to the objectives of agrarian
reform. Until and unless declared invalid in a
proper case, the DAR formulas partake of the
nature of statutes, which under the 2009
amendment became law itself, and thus have in
their favor the presumption of legality, such that
courts shall consider, and not disregard, these
formulas in the determination of just
compensation for properties covered by the
CARP. When faced with situations which do not
warrant the formula's strict application, courts
may, in the exercise of their _judicial discretion,
relax the formula's application to fit the factual
situations before them, sub_ject only to the
condition that they clearly explain in their
Decision their reasons (as borne by the evidence
on record) for the deviation undertaken. It is
thus entirely allowable for a court to allow a
landowner's claim for an amount higher than
what would otherwise have been offered (based
on an application of the formula) for as long as
there is evidence on record sufficient to support
the award. 69 (Emphasis. in the original.)

Another important and essential requirement in the

determination of just compensation is that, the fair market value of the
expropriated property is determined as of the time of taking. The
"time of taking" refers to that time when the State deprived the

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185-B.,,

69
Id at 73-79.

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 RESOLUTION 24 G.R. Nos. 193011 & 193039
July 30, 2019

landowner of the use and benefit of his property, as when the State
acquires title to the property or as of the filing of the complaint, per
Section 4, Rule 67 of the Rules of Court. 70 We have also held that the
time of taking may also refer to the time when the title is transferred
in the name of the CARP beneficiaries. 71

On this score, We find that the records are unclear as to the time
of taking. The records are silent as to the date when title over the
subject properties was transferred to the Republic or to the
beneficiaries. Thus, We also direct the RTC, sitting as SAC, to
determine the time of taking of the subject properties in the
computation of just compensation.

The RTC, sitting as SAC, may also award interest in favor of

the Medinas. In Apo Fruits Corp. and Hija Plantation, Inc. v. Land
Bank of the Philippines, 72 We explained the rationale in awarding
interest on the just compensation due:

Apart from the requirement that compensation

for expropriated land must be fair and reasonable,
compensation, to be "just," must also be made
without delay. Without prompt payment,
compensation cannot be considered "just" if the
property is immediately taken as the property owner
suffers the immediate deprivation of both his land
and its fruits or income.

This is the principle at the core of the present

case where the petitioners were made to wait for
more than a decade after the taking of their property
before they actually received the full amount of the
principal of the just compensation due them. What
they have not received to date is the income of their
landholdings corresponding to what they would
have received had no uncompensated taking of
these lands been immediately made. This income, in
terms of the interest on the unpaid principal, is the
subject of the current litigation.

We recognized in Republic v. Court of

Appeals the need for prompt payment and the
necessity of the payment of interest to compensate
for any delay in the payment of compensation for
property already taken. We ruled in this case that:

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185-B
/

70
land Bank of the Philippines v. Yatco Agricultural Enterprises, supra note 60 at 392-393.
71
land Bank of the Philippines v. Heirs ofJesus A/sua, supra note 65 at 393.
72
G.R. No. 164195, October 12, 2010, 632 SCRA 727.

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 RESOLUTION 25 G.R. Nos. 193011 & 193039
July 30, 2019

The constitutional limitation of 'just

compensation" is considered to be the sum
equivalent to the market value of the property,
broadly described to be the price fixed by the
seller in open market in the usual and ordinary
course of legal action and competition or the
fair value of the property as between one who
receives, and one who desires to sell, i[f] fixed
at the time of the actual taking by the
government. Thus, if property is taken for
public use before compensation is deposited
with the court having jurisdiction over the case,
the final compensation must include interest[ s]
on its just value to be computed from the time
the property is taken to the time when
compensation is actually paid or deposited with
the court. In fine, between the taking of the
property and the actual payment, legal
interest[s] accrue in order to place the owner in
a position as good as (but not better than) the
position he was in before the taking occurred. 73

Here, the Medinas have already been deprived of the use and
dominion over their landholdings for a substantial period of time and
farmer-beneficiaries have already benefitted from their properties.
Thus, the award of legal interest is proper. Needless to state, We
cannot overemphasize the Medinas' right to receive their share in the
just compensation equivalent to their 3/4 share in the subject
properties. The right of a landowner to just compensation for the
taking of his or her private property is a legally demandable
and enforceable right guaranteed by no less than the Bill of Rights,
under Section 9, Article III of the Constitution. 74

IV

Meanwhile, We affirm with modification the CA's award of

moral and exemplary damages in favor of the Medinas. The CA
awarded P500,000.00 moral damages and P500,000.00 exemplary
damages, collectively, to the Medinas. We modify this award and hold
that each of the Medinas is entitled to Pl,000,000.00 moral damages

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185-B
I

73
Id at 743-744.
74
Id at 89.

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 RESOLUTION 26 G.R. Nos. 193011 & 193039
July 30, 2019

and Pl,000,000.00 exemplary damages. 75 In effect, We are increasing

the total amount of damages each of the Medinas is entitled to receive.

Moral damages are awarded to compensate for any physical

suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation and
similar injuries unjustly caused the claimant. 76 It is not, however,
enough to prove these sufferings as the result of the actuations of the
other party. Invariably such action must be shown to have been
willfully done in bad faith or with ill motive. 77 Similarly, to warrant
the award of exemplary damages, the wrongful act must be
accompanied by bad faith, and an award of damages would be
allowed only if the guilty party acted in a wanton, fraudulent, reckless
or malevolent manner. 78

As correctly found by the RTC and affirmed by the CA, Caltex

deprived the Medinas of their ownership and possession of their share
in the subject properties. As a result, they suffered mental anguish and
social humiliation. 79 More, Caltex was guilty of bad faith in its
dealings with respect to the subject properties.

Bad faith does not simply connote bad judgment or negligence.

It imports a dishonest purpose or some moral obliquity and conscious
doing of a wrong, a breach of known duty through some motive or
interest or ill will that partakes of the nature of fraud. It is, therefore, a
question of intention, which can be inferred from one's conduct
and/or contemporaneous statements. 80

We examined Caltex's acts and find that it was aware that only
Antonia's share in the subject properties could be purchased during
the public auction. In its August 23, 1989 Bid-Letter addressed to the
Deputy Sheriff, Caltex clarified its bid as follows:

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185-B
75
In Allied Banking v. Eserjose, G.R. No. I 61776, March I 0, 2005, 453 SCRA 163, the Court
reduced the amount of damages from P4,000,000.00 moral damages and P4,000,000.00
exemplary damages to P2,000,000.00 each. They were awarded to a property owner whose
property was subjected to void real estate mortgages. In Mercury Drug Corp. v. Huang, G.R.
No. 172122, June 22, 2007, 525 SCRA 427, the Court affirmed the award of Pl,000,000.00
moral and P2,000,000.00 exemplary damages to a victim of a vehicular accident who sustained
massive injuries to his spinal cord, head, face, and lung and became paralyzed for life from his
chest down and requires continuous medical and rehabilitation treatment. In Sulpicio Lines, Inc.
v. Sesante, G.R. No. 172682, July 27, 2016, 798 SCRA 459, the Court awarded moral and
exemplary damages in the amount of Pl,000,000.00 each to a passenger ofa ship who sustained
injuries due to the buffeting by the waves and consequent sinking of the ship.
76
Simon, Jr. v. Martinez, G.R. No. 156025, January 31, 2007, 513 SCRA 532,550.
77
Francisco v. Ferrer, Jr., G.R. No. 142029, February 28, 2001, 353 SCRA 261,266.
78
Id at 267.
79
Rollo (G.R. No. 193039), pp. 183, 200-201.
80
Adriano v. Lasala, G.R. No. 197842, October 9, 2013, 707 SCRA 345,358.

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 RESOLUTION 27 G.R. Nos. 193011 & 193039
July 30, 2019

(3) With respect to property registered in the

name of Heirs of Antonio Medina and/or Antonia
Vda. de Medina representing or as Administration
of Estate of Antonio Medina the Certificate of Sale
shall refer only the rights, interests, claims and
participation of Antonia Vda. de Medina in the
covered property and improvements since she has
co-heirs, a son and a daughter.xx x 81

This shows that Caltex knew that it cannot acquire the entire
subject properties. Thus, knowing that the sale of the entire subject
properties to it as reflected in the Certificate of Final Sale was
erroneous, Caltex should have notified the Sheriff of the error and
sought for a correction of the certificate of final sale. Instead, it let the
error stand and even acted as if it owned the entire subject properties
when it executed the letters-offer to the DAR.

Clearly, Caltex was dishonest with its dealings over the subject
properties. As bad faith attended its actuations, there is reason to
increase the award of moral and exemplary damages to Pl ,000,000.00
each.

Caltex's dishonesty not only deprived the Medinas of their

share in the subject properties and their right to possess and occupy
them, it also resulted in the delay of the CARP proceedings, most
particularly the determination and computation of just compensation.
More, the Medinas lost their right to assert their right over it. Further
taking into consideration the length of time the Medinas have been
deprived of their share in the subject properties and in the just
compensation, We hold that the increase in the amount of damages is
justified.

We are aware of our ruling in Paredes, et al. v. Calilung8 2

where We held that Caltex made no false representation to Atty.
Calilung that it owned the subject properties in their entirety. In
Paredes, Atty. Calilung charged Caltex's officers with estafa because
they allegedly employed deceit to induce Atty. Calilung to enter into a
contract of sale with Caltex by: ( 1) falsely misrepresenting that Caltex
was the owner of and could assign to Atty. Calilung the entire subject
real properties, when in truth, Caltex only acquired and could assign
to Atty. Calilung the limited interest of Antonia; and (2) fraudulently
concealing the fact that the subject properties were covered by CARP
and were actually the subject of a pending VOS with the DAR.

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185-B

81
Rollo (G.R. No. 193039), pp. 314.
82
G.R. No. 156055, March 5, 2007, 517 SCRA 369.

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 RESOLUTION 28 G.R. Nos. 193011 & 193039
July 30, 2019

In holding that there was no probable cause to charge Caltex's

officers with estafa, We held that the sale of Caltex's interest in the
subject properties was a legitimate business transaction done in the
course of Caltex's business. We further held that the following
circumstances cast doubt on Atty. Calilung's claim that he was
ignorant of the true state of affairs of the subject properties: (1)
Antonia was Atty. Calilung's mother-in-law; it was impossible that
his mother-in-law and wife did not consult with him regarding the
subject properties. It was also Atty. Calilung who approached Caltex
and sought the purchase of the subject properties; (2) there is a paper
trail by which Atty. Calilung could have traced and uncovered the
status of the subject properties. As a lawyer, Atty. Calilung had every
opportunity to verify what he was purchasing and should have
realized that all he could purchase from Caltex was the same limited
interest Caltex acquired from Antonia; and (3) Atty. Calilung is
presumed to know that a VOS is not yet considered a consummated
sale. As there is still no consummated sale, Caltex cannot be
considered guilty of double sale. 83

Verily, the circumstances We considered in Paredes and in this

case are different. In the former, in deciding that Caltex's officers
were not guilty of bad faith, only Caltex's actions towards Atty.
Calilung were considered. Here, in declaring that Caltex was guilty of
bad faith, We considered the totality of Caltex's actions, from the time
of the auction sale when Caltex acquired the subject properties up to
the time it sold the properties to the DAR via VOS.

The amount of moral and exemplary damages, however, is

tempered and mitigated by the Medinas' contributory negligence.
Negligence is the failure to observe, for the protection of the interest
of another person, that degree of care, precaution, and vigilance which
the circumstances justly demand, whereby such other person suffers
injury. On the other hand, contributory negligence is conduct on the
part of the injured party, contributing as a legal cause to the harm he
has suffered, which falls below the standard which he is required to
conform for his own protection. 84 The underlying precept on
contributory negligence is that a plaintiff who is partly responsible for
his own injury should not be entitled to recover damages in full but
must bear the consequences of his own negligence. 85

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185-B

83
Id. at 399-410.
84
National Power Corporation v. Heirs of Noble Casionan, G.R. No. 165969, November 27,
2008, 572 SCRA 71, 81-82.
85
Lambert v. Heirs of Ray Castillon, G.R. No. 160709, February 23, 2005, 452 SCRA 285, 292.

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 RESOLUTION 29 G.R. Nos. 193011 & 193039
July 30, 2019

The Medinas contributed to the delay in the CARP proceedings.

Caltex already sent several letters seeking to settle the partition of the
subject properties and determine once and for all the share of the
Medinas in the subject properties. Instead of responding, the Medinas
ignored these letters. This lack of vigilance in asserting their right, to
Our mind, constitutes contributory negligence which warrants limiting
the award of damages to each of the Medinas at Pl,000,000.00 moral
damages and Pl ,000,000.00 exemplary damages.

Atty. Calilung argues that he is entitled to moral and exemplary

damages and at least P745,911,833.00 lucro cesante as he could not
register his title over the subject properties. Caltex sold the subject
properties to him, when, in truth and in fact, it could not do so since
the same were already sold to the DAR. He likewise claims that he is
entitled to moral and exemplary damages, owing to the failure of
Caltex to transfer title over, and deliver, the subject properties. 86

We deny Atty. Calilung's claim for lucro cesante. There are

two kinds of actual or compensatory damages: one is the loss of what
a person already possesses (dano emergente), and the other is the
failure to receive as a benefit that which would have pertained to him
(lucro cesante). 87 The latter refers to indemnification for profits which
the injured party failed to obtain or unrealized profits or income. 88

To be awarded lucro cesante, it must be established that there

exists a basis for a reasonable expectation that profits would have
continued to be generated had there been no breach of contract. This
is, however, subject to the rule that a party is entitled to adequate
compensation only for such pecuniary loss suffered by him as he has
duly proved. 89 The amount of unrealized profits must be established
and supported by independent evidence of the mean income of the
business undertaking interrupted by the illegal seizure. 90

Atty. Calilung's bases for the award of lucro cesante are: (1) he
was unable to register the subject properties in his name; and (2)
based on the Bureau of Internal Revenue (BIR) Zonal Valuation
Report of the BIR Regional Offices in Ilagan, Isabela, the lucro

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185-B

86
Rollo (G.R. No. 193011), pp. 20-21.
87
PNOC Shipping and Transport Corporation v. Court of Appeals, G.R. No. 107518, October
8, 1998, 297 SCRA 402, 417.
88
SeeOngv. CourtofAppeals,G.R.No.117103,January21, 1999,301 SCRA387,403.
89
So v. Food Fest Land, Inc., G.R. No. 183628, April 7, 2010, 617 SCRA 541, 547-548.
90
Yu v. Ngo Yet Te, G.R. No. 155868, February 6, 2007, 514 SCRA 423,435.

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 RESOLUTION 30 G.R. Nos. 193011 & 193039
July 30, 2019

cesante to which he is entitled to can be pegged at P400.00 per square

meter for interior lots and P800.00 per square meter for barangay road
lots. Other than these bare and unsubstantiated allegations, however,
Atty. Calilung presented no other evidence to prove that he is entitled
to unrealized profits.

More, We affirm the CA's conclusion that Atty. Calilung knew

or ought to have known the true nature and status of the subject
properties. We agree with the CA that Atty. Calilung had become a
member of Antonia's family prior to the sale to him of the subject
properties. As such, he had easy access to information affecting them.
More, if Atty. Calilung took time to check public records on file with
the Register of Deeds, he would have easily discovered the issues
surrounding the subject properties which would create suspicion in an
otherwise reasonable man, more so with a lawyer and entrepreneur
like him.

We also reject Atty. Calilung's claim for moral and exemplary

damages from Caltex on the ground of res judicata under the concept
of conclusiveness of judgment.

Conclusiveness of judgment is a species of res judicata and it

applies where there is identity of parties in the first and second cases,
but there is no identity of causes of action. 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. 91

In Paredes, We held that the transaction and sale between

Caltex and Atty. Calilung was done in good faith. We also held that at
that time, the VOS covering the subject properties was still being
processed by the DAR. As there was no consummated sale to the
DAR yet, Caltex remained a co-owner of the subject properties,
together with the Medinas, and could still legally sell its share or
interest therein to another person, including Atty. Calilung. Should the
DAR finally approve the VOS covering the subject properties, Atty.
Calilung, after acquiring Caltex's interest, shall be entitled to just
compensation corresponding to his interest.

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185-B

91
Ta/a Realty Services Corp., Inc. v. Banco Filipino Savings & Mortgage Bank, G.R. No.
181369, June 22, 2016, 794 SCRA 252,263.

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RESOLUTION 31 G.R. Nos. 193011 & 193039
July 30, 2019

As the issue of Caltex's good faith with respect to Atty.

Calilung has already been settled, there is no more ground to justify
the grant of moral and exemplary damages in favor of the latter in this
case.

For the same reason, We hold that Caltex is correct in arguing

that the RTC and CA erred in directing it to return to Atty. Calilung
the amount of P3,500,000.00 the latter paid for his purchase of the
subject properties. Again, following Our ruling in Paredes, the
transaction and sale between Caltex and Atty. Calilung was a
legitimate business transaction. Thus, the contract between them
remains valid. As such, similar to the Medinas and consistent with
Our ruling in Paredes, Atty. Calilung is entitled to his 1/4 share in the
just compensation. He is also entitled to legal interest because he was
likewise deprived of the use and enjoyment of his share in the subject
properties.

WHEREFORE, the petition for review on certiorari in G.R.

No. 193011 is DENIED, while the petition for review on certiorari in
G.R. No. 193039 is PARTLY GRANTED. The Court of Appeals
Decision dated November 17, 2009 and Resolution dated July 9, 2010
are MODIFIED to read as follows:

1. Declaring the Sheriffs Sale of August 24, 1989 pursuant to a

Final Judgement in Civil Case No. 84-22434 of Branch 31 of
the Regional Trial Court of Manila, valid as to the 1/4 share in
the subject properties of the judgment debtor Antonia Vda. de
Medina only; which share passed on to Caltex Philippines,
Inc. as successful bidder.

2. Upholding the Voluntary Offer to Sell of Caltex Philippines,

Inc. in favor of the Department of Agrarian Reform to the
extent of its 1/4 share in the subject properties.

3. Declaring the Voluntary Offer to Sell of Antonia V da. de

Medina, thru her Attorney-in-Fact Carlito Balauag, invalid.

4. The case is remanded to the Regional Trial Court, sitting as

SAC, for the determination of just compensation due to the
parties, to be computed pursuant to Alfonso v. Land Bank of
the Philippines and the amount to be divided as follows: (a)
the Medinas are entitled to their 3/4 share; and (b) Atty.
Calilung is entitled to his 1/4 share. The Regional Trial Court,

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 RESOLUTION 32 G.R. Nos. 193011 & 193039
July 30, 2019

sitting as Special Agrarian Court, is also directed to compute

the amount of legal interest the Medinas and Atty. Calilung
are entitled to receive, and to act with dispatch.

5. Caltex is ordered to pay moral damages in the amount of

Pl ,000,000.00 and exemplary damages in the amount of
Pl ,000,000.00, each to Jose Antonio Medina, Maria Luisa
Medina and Milagros Medina. Consistent with prevailing
jurisprudence,92 these amounts shall earn interest at the rate of
6% per annum from the finality of this Resolution until fully
paid.

The letter dated June 10, 2019 of Tarcisio S. Calilung, herein

petitioner, stating that he is withdrawing/terminating the services of
the Law Firm of Diaz Del Rosario & Associates, Anacleto M. Diaz as
collaborating counsel; the manifestation of Atty. Maria Rosario Z. Del
Rosario of the Law Firm of Diaz Del Rosario & Associates, stating its
confirmation as to the withdrawal of appearance as collaborating
counsel for herein petitioner Tarcisio S. Calilung per his notice dated
June 10, 2019; and the notice of withdrawal of appearance by Atty.
Maria Rosario Z. Del Rosario of the Law Firm of Diaz Del Rosario &
Associates, stating its withdrawal as collaborating counsel for
petitioner Tarcisio S. Calilung with the latter's consent as evidenced
by his notice filed before this Court on June 10, 2019, are all
NOTED.

Atty. Maria Rosario Z. Del Rosario is hereby required to

SUBMIT within five (5) days from notice hereof, a soft copy in
compact disc, USB or e-mail containing the PDF files of the signed
manifestation and the signed notice of withdrawal of appearance
pursuant to A.M. Nos. 10-3-7-SC and 11-9-4-SC.

SO ORDERED."

Very truly yours,

LIB .i1UENA
Clerk of Court,,rJt1L
185-B

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92
Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA 439.

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..
RESOLUTION
ANGARA ABELLO CONCEPCION
REGALA & CRUZ
Counsel for Caltex, Phils., Inc.
22nd Floor, ACCRALA W Tower
Second Avenue cor. 30th Street
Bonifacio Global City
1630 Taguig City
*Atty. Maria Rosario Z. Del Rosario
LAW FIRM OF DIAZ DEL ROSARIO
& ASSOCIATES
Collaborating Counsel for T. Calilung
6th Floor, Padilla Building
F. Ortigas Jr. Road, Ortigas Center
1605 Pasig City
Atty. Angelito C. Lo
Counsel for T. Calilung
S605, Cattleya Condominium Building
235 Salcedo Street, Legaspi Village
1229 Makati City
*For this Resolution only.
UR
33 G.R. Nos. 193011 & 193039
July 30, 2019
Court of Appeals (x)
Manila
(CA-G.R. CV No. 85830)
Atty. Dominador B. Lao
Counsel for Resps. J. A. Medina, et al.
25F, KP Tower Building
Recto cor. Luna Streets, Binondo
1006 Manila
LEGAL SERVICES GROUP
Counsel for Landbank of
the Philippines
Land Bank Plaza, 1598 M.H. Del Pilar
cor. Dr. Quintos Streets, Malate
1004 Manila
THE LEGAL ASSISTANCE
DIVISION
DEPARTMENT OF AGRARIAN
REFORM
Regional Office No. 2
Luna Street, 3500 Tuguegarao City
The Hon. Presiding Judge
Regional Trial Court, Branch 16
Ilagan, 3300 Isabela
(Civil Case No. 948)
The Hon. Secretary
DEPARTMENT OF AGRARIAN
REFORM
Elliptical Road, Diliman
1101 Quezon City
The Sheriff
Regional Trial Court, Branch 31
1000 Manila
Public Information Office (x)
Library Services (x)
Supreme Court
(For uploading pursuant to A.M.
No. 12-7-1-SC)
Judgment Division (x)
Supreme Court
185-B
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