Wednesday, March 14, 2012

De Knecht v CA [G.R. No. 109234. May 20, 1998]

J. Puno

In 1979, the Republic of the Philippines initiated a case for expropriation against the Knechts' property. The government sought to utilize the land for  the completion of the Manila Flood Control and Drainage Project and the extension of the EDSA towards Roxas Boulevard.
The CFI issued a writ of possession.  This SC, however, held that the choice of area for the extension of EDSA was arbitrary.  The SC annulled the writ.
In 1982, the City Treasurer of Pasay discovered that the Knechts failed to pay real estate taxes on the property from 1980 to 1982. As a consequence of this deficiency, the City Treasurer sold the property at public auction on May 27, 1982 for the sum of P63,000.00, the amount of the deficiency taxes. The highest bidders were respondents Babiera and Sangalang couples.
The petitioners failed to redeem the property. Babiera then filed for registration of the land to his name. The trial court granted the petition. The Knechts, who were in possession of the property, allegedly learned of the auction sale only by the time they received the orders of the land registration courts.
The De Knechts also filed Civil Case No. 2961-P to prevent the titles from being given to the contending spouses. They put up lack of notice to the sale as defense. This was dismissed for lack of counsel to appear on the last hearing.
On March 12, 1985, Sangalang and Babiera sold the land to respondent Salem Investment Corporation (Salem) for P400,000.00.
Meanwhile, on February 17, 1983, the Batasang Pambansa passed B.P. Blg. 340 authorizing the national government to expropriate certain properties in Pasay City for the EDSA Extension. The just compensation for this purpose was docketed by the OSG under civil case 7327. The De Knecht property was covered by the expropriation. On  August 30, seven of the eight houses of the Knechts were demolished and the government took possession of the portion of land on which the houses stood. Salem instituted against them Civil Case No. 85-263 for unlawful detainer.
The SC allowed for the expropriation this time.  Meanwhile, Salem conveyed 5,611.92 square meters of the subject property to respondent spouses Mariano and Anacoreta Nocom. Part was left to Salem.
As prayed for by Salem, the trial court issued an order on September 13, 1990 for the release of P5,763,650.00 to Salem by the Philippine National Bank (PNB) as partial payment of just compensation.
The De Knechts filed a motion to intervene. On April 23, 1992, as prayed for by Mariano Nocom, the trial court ordered the release of P11,526,000.00 as third installment for his 5,611.92 square meters of the subject land. The De Knechts questioned this in the CA.
The CA quashed their motion to intervene due to the lack of legal interest. They filed an original action for the annulment of TC judgments. Therein, the Knechts challenged the validity of the orders of the land registration courts in the two petitions of the Sangalangs and Babieras for registration of their names, the reconveyance case and the just compensation proceedings.
The Court of Appeals dismissed  the petition for lack of merit on November 24, 1992.  Hence the filing of G.R. No. 108015.  In a Resolution dated February 1, 1993, the SC denied the petition finding "no reversible error" committed by the Court of Appeals. The De Knechts alleged:
1. CA committed a reversible error when it claimed 7327 was not an eminent domain proceeding
2. another error when CA upheld res judicata to bar the MFR
3. another error when CA refused for respondent judge to rule for the motion for inhibition

1. Were the De Knechts denied due process when they were not sufficiently notified of the tax delinquency, the auction sale, and the surrender of the owner’s duplicate for the tax lien?
2. Is the first civil case (2961-P) res judicata? Was there due process in this dismissal?
3. Is 7327 an expropriation case?

Held: Petition dismissed.

1. No.
The De Knechts claimed that they did not receive the notices for tax delinquency and the auction sale. That was why they were unable to claim the property.
It has been ruled that the notices and publication, as well as the legal requirements for a tax delinquency sale, are mandatory; and the failure to comply therewith can invalidate the sale. The prescribed notices must be sent to comply with the requirements of due process.
The De knechts’ claim was a factual question and not to be answered in the SC. Moreover, the question had already been answered in the previous cases in the appellate courts. Res judicata had already set in.
Res judicata is a ground for dismissal of an action. It is a rule that precludes parties from relitigating issues actually litigated and determined by a prior and final judgment. It pervades every well-regulated system of jurisprudence, and is based upon two grounds embodied in various maxims of the common law-- one, public policy and necessity, that there should be a limit to litigation; and another, the individual should not be vexed twice for the same cause.
When a right of fact has been judicially tried and determined by a court of competent jurisdiction, or an opportunity for such trial has been given, the judgment of the court, so long as it remains unreversed, should be conclusive upon the parties and those in privity with them in law or estate.
2. Yes. Yes.
Petitioners claim it wasn’t due to the lack of judgment on the merits in the said case. Moreover, it was based by the court on their “lack of interest”.
Court- "Lack of interest" is analogous to "failure to prosecute." (S 3, R 17 of ROC)
An action may be dismissed for failure to prosecute in any of the following instances:  (1) if the plaintiff fails to appear at the time of trial; or (2) if he fails to prosecute the action for an unreasonable length of time; or (3) if he fails to comply with the Rules of Court or any order of the court.
They also requested for postponments which prompted Salem to move for dismissal. The court agreed. The order of dismissal was based on the following factors: (1) pendency of the complaint for a considerable length of time; (2) failure of counsel to appear at the scheduled hearing despite notice; and (3) lack of interest of the petitioners. Under Section 3, Rule 17, a dismissal order which does not provide that it is without prejudice to the filing of another action is understood to be an adjudication on the merits.
The Knechts contend, however, that the facts of the case do not call for the application of res judicata because this amounts to "a sacrifice of justice to technicality." It must be noted that the Knechts were given the opportunity to assail the tax sale and present their evidence on its validity in Civil Case No. 2961-P, the reconveyance case.
3. Yes. The Court of Appeals erred in declaring that Civil Case No. 7327 was not an expropriation case.
It was precisely in the exercise of the state's power of eminent domain under B.P. Blg. 340 that expropriation proceedings were instituted against the owners of the lots sought to be expropriated.
B.P. Blg. 340 did not, by itself, lay down the procedure for expropriation. The law merely described the specific properties expropriated and declared that just compensation was to be determined by the court. It designated the then Ministry of Public Works and Highways as the administrator in the "prosecution of the project." Thus, in the absence of a procedure in the law for expropriation, reference must be made to the provisions on eminent domain in Rule 67 of the Revised Rules of Court.
“The complaint must join as defendants all persons owning or claiming to own, or occupying, any part thereof or interest therein.”
The defendants in an expropriation case are not limited to the  owners of the property condemned. They include all other persons owning, occupying  or claiming to own the property including a mortgagee, a lessee and a vendee in possession under an executory contract. Every person having an estate or interest at law or in equity in the land taken is entitled to share in the award.
The Knechts insist that although they were no longer the registered owners of the property at the time Civil Case No. 7327 was filed, they still occupied the property and therefore should have been joined as defendants in the expropriation proceedings. They claim that they still occupied the land when it was expropriated and therefore had a share.
Four months earlier, in January 1990, Civil Case No. 2961-P for reconveyance was dismissed with finality by this Court and judgment was entered in February 1990. The Knechts lost whatever right or colorable title they had to the property after we affirmed the order of the trial court dismissing the reconveyance case.
The Knechts' possession of the land and buildings was based on their claim of ownership not on any juridical title such as a lessee, mortgagee, or vendee.
Indeed, the Knechts had no legal interest in the property by the time the expropriation proceedings were instituted. They had no right to intervene and the trial  court did not err in denying their "Motion for Intervention and to Implead Additional Parties." Their intervention having been denied, the Knechts had no personality to move for the inhibition of respondent Judge Sayo from the case.

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