Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 182572               June 18, 2012

LAND BANK OF THE PHILIPPINES, Petitioner,
vs.
HON. ERNESTO P. PAGAYATAN, in his capacity as Presiding Judge of the Regional Trial Court, Branch 46, San Jose, Occidental Mindoro, JOSEFINA S. LUBRICA, in her capacity as Assignee of Federico Suntay, NENITA SUNTAY TAÑEDO and EMILIO A.M. SUNTAY III, Respondents.

D E C I S I O N

SERENO, J.:

In the present case, petitioner does not question the jurisdiction of Branch 46, Regional Trial Court (RTC) of San Jose, Fourth Judicial Region, Occidental Mindoro to order the transfer of custody to the clerk of court of the deposit representing the just compensation provisionally determined by the Provincial Agrarian Reform Adjudicator (PARAD). Rather, petitioner merely questions the RTCís Order to physically turn over the deposit.

The present case is a sequel to G.R. No. 170220 promulgated on 20 November 2006.1 We adopt the findings of facts as follows:2

Petitioner Josefina S. Lubrica is the assignee of Federico C. Suntay over certain parcels of agricultural land located at Sta. Lucia, Sablayan, Occidental Mindoro, with an area of 3,682.0285 hectares covered by Transfer Certificate of Title (TCT) No. T-31 (T-1326) of the Registry of Deeds of Occidental Mindoro. In 1972, a portion of the said property with an area of 311.7682 hectares, was placed under the land reform program pursuant to Presidential Decree No. 27 (1972) and Executive Order No. 228 (1987). The land was thereafter subdivided and distributed to farmer beneficiaries. The Department of Agrarian Reform (DAR) and the LBP fixed the value of the land at P 5,056,833.54 which amount was deposited in cash and bonds in favor of Lubrica.

On the other hand, petitioners Nenita Suntay-Tañedo and Emilio A.M. Suntay III inherited from Federico Suntay a parcel of agricultural land located at Balansay, Mamburao, Occidental Mindoro covered by TCT No. T-128 of the Register of Deeds of Occidental Mindoro, consisting of two lots, namely, Lot 1 with an area of 45.0760 hectares and Lot 2 containing an area of 165.1571 hectares or a total of 210.2331 hectares. Lot 2 was placed under the coverage of P.D. No. 27 but only 128.7161 hectares was considered by LBP and valued the same at P 1,512,575.05.

Petitioners rejected the valuation of their properties, hence the Office of the Provincial Agrarian Reform Adjudicator (PARAD) conducted summary administrative proceedings for determination of just compensation. On January 29, 2003, the PARAD fixed the preliminary just compensation at P 51,800,286.43 for the 311.7682 hectares (TCT No. T-31) and P 21,608,215.28 for the 128.7161 hectares (TCT No. T-128).

Not satisfied with the valuation, LBP filed on February 17, 2003, two separate petitions for judicial determination of just compensation before the Regional Trial Court of San Jose, Occidental Mindoro, acting as a Special Agrarian Court, docketed as Agrarian Case No. R-1339 for TCT No. T-31 and Agrarian Case No. R-1340 for TCT No. T-128, and raffled to Branch 46 thereof.

Petitioners filed separate Motions to Deposit the Preliminary Valuation Under Section 16(e) of Republic Act (R.A.) No. 6657 (1988) and Ad Cautelam Answer praying among others that LBP deposit the preliminary compensation determined by the PARAD.

On March 31, 2003, the trial court issued an Order granting petitionersí motion x x x.

x x x           x x x          x x x.

On May 26, 2004, the Court of Appeals rendered a Decision in favor of the petitioners xxx.

x x x           x x x          x x x

The Court of Appeals held that the trial court correctly ordered LBP to deposit the amounts provisionally determined by the PARAD as there is no law which prohibits LBP to make a deposit pending the fixing of the final amount of just compensation. It also noted that there is no reason for LBP to further delay the deposit considering that the DAR already took possession of the properties and distributed the same to farmer-beneficiaries as early as 1972.

We granted the Petition stating as follows:3

WHEREFORE, premises considered, the petition is GRANTED. The assailed Amended Decision dated October 27, 2005 of the Court of Appeals in CA-G.R. SP No. 77530 is REVERSED and SET ASIDE. The Decision dated May 26, 2004 of the Court of Appeals affirming (a) the March 31, 2003 Order of the Special Agrarian Court ordering the respondent Land Bank of the Philippines to deposit the just compensation provisionally determined by the PARAD; (b) the May 26, 2003 Resolution denying respondentís Motion for Reconsideration; and (c) the May 27, 2003 Order directing Teresita V. Tengco, respondentís Land Compensation Department Manager to comply with the March 31, 2003 Order, is REINSTATED. The Regional Trial Court of San Jose, Occidental Mindoro, Branch 46, acting as Special Agrarian Court is ORDERED to proceed with dispatch in the trial of Agrarian Case Nos. R-1339 and R-1340, and to compute the final valuation of the subject properties based on the aforementioned formula.

Thereafter, petitioner deposited the balance of the amount of P 73.4 million representing the PARAD valuation and subject of the 31 March 2003 Order to Deposit.

Apparently, another case, docketed as Sp. Proc. N-705, was pending with Branch 17 of the RTC of Cavite City. In this case, TCT No. T-31 was alleged to be part of the estate of Emilio Aguinaldo and Maria Agoncillo. Thus, on 29 April 2005, Branch 17 issued an Order:4

Finally, considering that counsel for the administrator has joined counsel for Delfin Aguinaldo and Heirs of Angel Aguinaldo in the latterís motion, as prayed for, the president of the Landbank of the Philippines is hereby directed to hold in abeyance any further releases of the proceeds of the compulsory acquisition by the DAR of that parcel of land located in Sablayan, Occidental Mindoro covered by T-31 (T-1326) until such time that the issue is resolved.

In CA-G.R. SP No. 97052, a Petition for annulment of judgment was also filed with the Court of Appeals (CA) by the surviving heirs of Cristina Aguinaldo Suntay, the deceased spouse of Federico Suntay. Therein petitioners, Isabel Cojuangco Suntay and Emilio Cojuangco Suntay, Jr., alleged that the parcels of land covered by Transfer Certificate of Title (TCT) Nos. T-31 and T-128 registered in the name of Cristina were among her paraphernal properties that had been illegally included as part of the estate of Federico C. Suntay and had been subject of agrarian reform land distribution.

On 5 March 2007, the CA in CA-G.R. SP No. 97052, through a Resolution,5 issued a temporary restraining order (TRO) enjoining private respondents Emilio A.M. Suntay III and Nenita Tañedo from collecting or receiving the land compensation proceeds of the subject property. It stated as follows:

WHEREFORE, a temporary restraining order is hereby issued, effective upon service and for a period of sixty (60) days, unless sooner lifted, ENJOINING private respondents and their representatives from collecting or receiving the land compensation proceeds of the property covered by Transfer Certificate of Title Nos. T-31 (1326) and T-128 registered in the name of Cristina Aguinaldo Suntay. A bond for the temporary restraining order in the amount of P 250,000.00 is hereby set pursuant to Section 4(b) of Rule 58 of the Rules of Court. In lieu of a hearing, both parties are required to file simultaneous memoranda within ten (10) days from receipt hereof with respect to the issuance of a writ of preliminary injunction.

SO ORDERED.

Petitioner subsequently filed a Manifestation6 dated 16 April 2007 informing Branch 46 of the Decision of this Court in G.R. No. 170220; of the issuance by the CA of a TRO in CA-G.R. SP No. 97052, as well as by Branch 17 of the 29 April Order; and of petitionerís deposit totalling P 73.4 million in cash and bonds representing the PARAD valuation and subject of the 31 March 2003 Order to Deposit.

Acting on the Manifestation, Branch 46 issued this Order on 26 April 2007:7

In the interest of the expeditious resolution of the above-entitled cases, the Clerk of Court is hereby directed to take possession of the cash deposits and original Agrarian Reform bonds as stated in paragraph 2, page 3 of the Manifestation of the Petitioner; and the petitioner Land Bank of the Philippines is hereby ordered to turn over the said cash deposits and bonds to the Clerk of Court within five (5) days from receipt hereof.

SO ORDERED.

Thereafter, on 21 May 2007, the CA in CA-G.R. SP No. 97052 issued a Writ of Preliminary Injunction, effective upon service until sooner lifted.8 Subsequently, on 14 August 2007, the CA clarified its 21 May 2007 Resolution to include the land compensation proceeds of the property covered by TCT No. T-31 in the coverage of the preliminary injunction, to wit:9

Conditioned on petitionersí filing of a bond in the sum of P 2,000,000.00, a writ of preliminary injunction is hereby issued, effective upon service and until sooner lifted, ENJOINING private respondents and their representatives from collecting or receiving the land compensation proceeds of the property covered by Tran[s]fer Certificate of Title No. T-128 registered in the name of Crist[i]na Aguinaldo Suntay.

Consequently, petitioner filed a Motion for Reconsideration,10 alleging that the 26 April 2007 Order would be a violation of the TRO issued by the appellate court in CA-G.R. SP No. 97052 and the 29 April 2005 Order issued by Branch 17; that the Order was inconsistent with this Courtís Decision in G.R. No. 170220; that there was still a pending ownership issue in the intestate proceedings; and that Branch 46 had no jurisdiction to award the proceeds of the subject properties pending resolution of this issue; and, finally, that there was no need to physically turn over the deposit to the clerk of court, since it was made in the name of the Clerk of Court anyway.

On 26 September 2007, Branch 46 denied the Motion, stating as follows:11

The deposit is in the name of the Clerk of Court, and is therefore meant to be in custodia legis. The Court sees no point in placing the deposit in the name of the Clerk of Court if it is actually beyond his power and control since it is kept in the vault of the LBP in the National Capital Region, outside the territorial jurisdiction and judicial region of this Court.

The LBP is not an officer of the Court, nor is it a disinterested person. On the contrary, it is very much an interested party, being a party litigant. It is the very party ordered to make the deposit. By making the deposit with itself[,] it has merged in its person the adverse personalities of the depositor and the depositary, a situation that should not be allowed to continue.

The LBP argues that custody by the Clerk of Court is a violation of the Temporary Restraining Order issued by the Court of Appeals in CA-G.R. SP No. 97052, and the Order dated April 29, 2005 issued by the Regional Trial Court, Branch 17, Cavite City. This Court cannot see the logic in LBPís argument. The mere transfer of the deposit from the Clerk of Court to an interested party may be a violation, but mere transfer from the LBP to the Clerk of Court for purposes of custodia legis is perfectly legal, logical and proper.

The LBP does not claim to be a party in the cases that it is citing. The parties therein have their own counsel and have no need of the LBP to defend them. More importantly, this Court is not directing the payment to any interested party. It is merely directing that the deposit, which is nominally with the Clerk of Court, be placed in his actual, physical custody, or custodia legis.

The Supreme Court held in Camara v. Pagayatan, G.R. No. 176563, April 2, 2007:

"x x x. That the cash deposit was made under its account in trust for, and the bond made payable to respondents judgeís Clerk of Court is not a contumacious disregard of the 4 March 2005 Order not only because that Order is silent in whose name the deposit should be made but also because the Branch Clerk of Court is under respondent Judgeís control. If LBPís supposed transgression is in not placing the cash deposit under the account of, and the bond may payable to, Lubrica, respondent judge could have readily remedied the problem by directing LBP to turn over the managerís check and LBP bond to the Branch Clerk of Court x x x" (Resolution dated April 2, 2007, Camara v. Pagayatan, G.R. No. 176563).

x x x           x x x          x x x

The reason this Court did not order the release of Camara from detention was the perceived refusal of LBP to relinquish possession of the deposit to the Clerk of Court. The Supreme Court corrected this Court. It said that the Clerk of Court in whose name the deposit has been made is under the control of the Court, and the Court can always order the LBP to turn over the deposit to the Clerk of Court. That is precisely what this Court did in its order dated April 26, 2007. It ordered the LBP to turn over the deposit to the Clerk of Court. In doing so, the Court took its cue from Camara v. Pagayatan, G.R. No. 176563, April 2, 2007. (Emphasis supplied.)

Petitioner thereafter filed a Petition for Certiorari under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No. 101506. It alleged that Presiding Judge Ernesto P. Pagayatan of Branch 46 committed grave abuse of discretion when he issued the 26 April 2007 and 26 September 2007 Orders directing the physical turnover of the deposits and reiterating the grounds it had earlier cited in its Motion for Reconsideration.

On 31 January 2008, the CA dismissed the Petition.12 It held that the assailed Orders were issued after the finality of the Decision in G. R. No. 170220. It also ruled that respondent judge had fully explained the basis of his reliance on this Courtís ruling in G.R. No. 176563, as quoted above, where we said that the trial court may direct petitioner to turn over the Managerís Check and bond to the branch clerk of court. Moreover, petitionerís perceived violation of the injunctive Writ issued by the CA or the Order issued by Branch 17 was supposedly without factual basis. The CA opined that "the pendency of a suit involving ownership of the expropriated lands provides even greater justification for the court to take possession of the disputed funds representing partial payment of the just compensation due the landowners pursuant to agrarian reform laws." Finally, it held that it is only when property is lawfully taken by virtue of legal process that it becomes in custodia legis. The CA likewise denied petitionerís Motion for Reconsideration through the assailed Resolution dated 17 April 2008.13

Hence, this Petition.

We have repeatedly said that grave abuse of discretion "implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words, where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law."14

The CA has correctly held that petitioner failed to show any basis for the latterís allegations. It cannot be said that respondent judge acted in an arbitrary or despotic manner, as he clearly based the assailed Orders on this Courtís Decision in Camara v. Pagayatan, G.R. No. 176563. In that case, we recognized the trial courtís jurisdiction in ordering the deposits to be put under custodia legis; that is, by turning over the deposits to the Clerk of Court.

Moreover, we cannot subscribe to petitionerís assertions when it does not even question the Order of respondent judge for it to place the deposits under custodia legis, but only on the condition that these deposits could not be physically turned over to the clerk of court. For property to be in custodia legis, it must have been lawfully seized and taken by legal process and authority, and placed in the possession of a public officer such as a sheriff, or of an officer of the court empowered to hold it such as a receiver.15 Therefore, it was only a natural consequence for respondent judge to order the physical turnover of the deposits, which had already been placed under the name of the Clerk of Court in partial compliance with the 26 April 2007 Order.

Petitionerís fear that the deposits would be released to the litigants is premature and unfounded.1‚wphi1 No order of release was ever made by respondent judge; thus, no violation of the outstanding writ of preliminary injunction has been committed.

Neither can we subscribe to petitionerís theory that the Order for the physical turnover was violative of our Decision in Lubrica v. Land Bank of the Philippines (G.R. No. 170220), as that case did not even touch on the ownership dispute, which was not raised by the parties. Indeed, in Lubrica, we ordered petitioner to deposit the provisionally determined land compensation to its office in Manila. In that case, however, the issue was simply whether the computation for just compensation was correct. The order to deposit the compensation to petitionerís Manila office was intended to facilitate the immediate release of the funds to the landowner. Considering the circumstances that arose after our ruling in Lubrica, respondent Judge Pagayatan issued the Order placing the deposit in custodia legis to prevent any wrongful release thereof.

WHEREFORE, in view of the foregoing, the Petition is hereby DENIED. The Court of Appeals Decision dated 31 January 2008 and Resolution dated 17 April 2008 in CA-G.R. SP No. 101506 are hereby AFFIRMED.

SO ORDERED.

MARIA LOURDES P. A. SERENO
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Senior Associate Justice
Chairperson

ARTURO D. BRION
Associate Justice
JOSE PORTUGAL PEREZ
Associate Justice

BIENVENIDO L. REYES
Associate Justice

C E R T I F I C A T I O N

I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courtís Division.

ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. 296, The Judiciary Act of 1948, as amended)


Footnotes

1 Lubrica v. Land Bank of the Philippines, 20 November 2006, 507 SCRA 415.

2 Id. at 416-420.

3 Id. at 425.

4 Rollo, pp. 193-194.

5 Id. at 190-192.

6 Id. at 177-182.

7 Id. at 285.

8 Id. at 247-255. Penned by Associate Justice Rebecca de Guia-Salvador, with Associate Justices Magdangal M. de Leon and Ricardo R. Rosario concurring.

9 Rollo, p. 255.

10 Id. at 148-162.

11 Rollo, pp. 145-147.

12 Penned by Associate Justice Martin S. Villarama, Jr. (now a member of this Court), with Associate Justices Noel G. Tijam and Sesinando E. Villon concurring; rollo, pp. 10-24.

13 Rollo, p. 80.

14 Cuison v. Court of Appeals, 351 Phil. 1089, 1102 (1998).

15 Castillo v. Buencillo, 407 Phil. 143 (2001).


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