REPUBLIC OF THE PHILIPPINES ~anbiganba!,ansb.judiciary.gov.ph/RESOLUTIONS/2019/H_Civil_0172...Resolution Civil Case No. 0172 Republic v. Quisumbing, et al. Page 2 of 11 2, 2019, to

REPUBLIC OF THE PHILIPPINES

~anbiganba!,anQuezon City

Fifth Division

REPUBLIC OF THE PHILIPPINESAND PHILIPPINE JOURNALIST,INC., REPRESENTED BY THEPRESIDENTIAL COMMISSIONON GOOD GOVERNMENT,

Plaintiffs,

- versus-

RAMON J. QUISUMBING,JOHNNY M. ARANETA, JAIME A.CURA, ANGEL C. SEPIDOZA andRENATO L. PARAS,

Defendants.

CIVIL CASE NO. 0172

Present:LAGOS, J., Chairperson,MENDOZA-ARCEGA, andCORPUS-MANALAC, JJ.

x-----------------------------------------------------------------------------------------x

RESOLUTION

LAGOS, J.:

This resolves the respective motions for reconsideration filed byplaintiff and the defendants from the Decision of this Court dated April

ResolutionCivil Case No. 0172Republic v. Quisumbing, et al.Page 2 of 11

2, 2019, to wit: (a) Motion for Partial Reconsideration dated April 22,2019 filed by plaintiff Republic of the Philippines, represented by thePresidential Commission on Good Government (PCGG), through theOffice of the Solicitor General; (b) Motion for Partial Reconsideration[of Decision] dated April 15, 2019 filed by defendant Ramon J.Quisumbing; (c) Motion for Reconsideration dated April 17, 2019 filedby defendant Jaime A. Cura; and (d) Motion for Reconsideration [of theDecision dated April 2, 2019J dated April 22, 2019 filed by defendantsJohnny M. Araneta and the Heirs of the Late Renato L. Paras.

Plaintiff filed a Consolidated Comment to the motions forreconsideration of the defendants, while defendant Quisumbing filedhis Opposition to plaintiff's motion for reconsideration.

Arguments of the Plaintiff

In its motion for partial reconsideration, plaintiff argues thatdefendant Ramon Quisumbing cannot be considered a builder ingood faith. On the contrary, he is a builder in bad faith considering thathe did not inquire into the nature and status of the subject propertiesof the Philippine Journalists, Inc. (PJI) from the other defendants in thiscase who were all PCGG-appointed members of the Board of Directorsof PJI. Since Quisumbing is a buyer in bad faith, he cannot beconsidered a builder in good faith and it follows that he is a builder inbad faith. His claimed ignorance of any defect or flaw in his acquisitionof the subject properties, which are unregistered lands, would not givehim any protection from the law.

Even assuming for the sake of argument that defendantQuisumbing is a builder in good faith, he failed to prove by apreponderance of evidence that the alleged improvements on the PJIproperties were constructed between June 5, 1991 and November 6,1996, and that the value of said improvements amounts to 40 millionpesos. Plaintiff also pointed out that defendant did not produce anydocumentary evidence such as construction contracts, buildingpermits, excavation permits, tax declarations receipts, vouchers andthe like to substantiate his claims.

Plaintiff averred that it was still premature for the Court todetermine the amount that should be reimbursed to defendantQuisumbing considering that the Republic has yet to choose which fh/


option it seeks to avail under Article 448 of the Civil Code. It is onlyduring the stage leading to the execution of the judgment in the instantcase that the Court should ascertain: (a) under the first option, theamount of indemnification that the Republic must pay to defendant; or(b) under the second option, the value of the subject property vis-a-visthat of the structures and improvements thereon, or the reasonablerent for the subject property which defendant must pay.

Plaintiff further argued that even assuming that defendantQuisumbing is a builder in good faith, he is nonetheless liable to paythe Republic and PJI rent beginning November 6, 1996, when heceased to be a builder in good faith, until he returns the possession ofthe PJI properties to the latter. Also, since he benefited immensely inusing the PJI properties and generated a huge income therefrom, heis compelled to render an accounting of the fruits/income thereof fromthe time of the sale up to the delivery of the subject properties to PJI.

Arguments of Defendant Quisumbing

In his motion for partial reconsideration, defendant Quisumbinginsists that the PJI and the PJI Properties were never sequestered. Asneither PJI nor the PJI Properties were under sequestration when hepurchased the PJI Properties in 1991, the prior approval of theSandiganbayan was not required for such sale. Therefore, the PJIproperty was validly sold to him.

He also argues that the Supreme Court's rulings in G.R. Nos.106209 and 138437 were preliminary in nature, and this Court's strictadherence to the aforesaid rulings is incorrect since according to him,PJI was never sequestered. Moreover, this Court's Resolution dated25 February 1992 in Civil Case No. 0035 and the Supreme Court'sResolution dated 5 October 1993 in G.R. No. 106209 cannot bind oraffect him, as he was never a party in or given prior notice of thoseproceedings.

He also pointed out that the four (4) OrderslWrits ofSequestration, namely: (1) the Sequestration Order dated 22 April1986; (2) the Writ of Sequestration dated 19 February 1987; (3) theWrit of Sequestration dated 28 April 1987; and (4) the Writ ofSequestration dated 21 August 1987, themselves do not in way prove,or tend to prove, that PJI was ever sequestered. Even the Complaint

1/1


in Civil Case No. 0035 (Exhibit "B") shows that PJI was notsequestered, as Annex "A" does not list PJI as one of the sequesteredcorporations. Also, the Decision allegedly disregarded othercircumstances showing that PJI was not under sequestration in 1991when the PJI Property was sold.

Moreover, any alleged Sequestration of PJI effected by the 4OrderslWrits of Sequestration or any other writ of sequestration wouldhave been automatically lifted and voided as of 2 August 1987, whichwas 4 years before the sale of the PJI property. He cited the rulings inthe cases of Republic v. Sandiganbayan and Rosario Olivares (G.R.No. 92376, August 12, 1991), PCGG v. Sandiganbayan (G.R. No.125788, June 5, 1998) and Palm Avenue Holding Co., Inc., et al. v.Sandiganbayan, et al. (G.R. Nos. 173082 and 195795, August 5,2014), which all supposedly refer to the doctrine that a sequestrationorder/writ is automatically lifted and voided as of 2 August 1987 if aproper case is not filed by the Constitutional deadline of 2 August 1987.

Defendant also argues that there is no factual or evidentiarybasis for the ruling that plaintiff Republic is the legal owner of the PJIproperty, and assuming that the 1991 sale was void, plaintiff PJI shouldbe directed to return to him the Php 735,000 he paid, plus interest andpeso devaluation adjustment since 1991.

Arguments of Defendant Cura

In his motion for reconsideration, defendant Cura similarly insiststhat based on the evidence and applicable jurisprudence, the PJI is nota sequestered corporation, and that the sequestration orderspresented by plaintiff are void and/or do not cover the PJI.

He also avers that he is not guilty of gross negligence in directingthe affairs of PJI, nor liable to plaintiff for damages. Rather, he actedsolely for the benefit and interest of PJI. As President of PJI, he wastasked to turn the company around because it was in bad shape at thattime, both financially and operationally. He pointed out that therequired approvals from the Board of Directors for the sale of theunneeded assets were obtained. However, he and the directors andofficers of PJI did not obtain court approval for the sale in the belief thatsuch court approval was not required.


He also argues that plaintiff Republic or the PCGG was not ableto present competent proof of actual damage suffered by the PJIresulting from any gross negligence by him. Thus, the award of Php500,000.00 against him lacks basis.

Arguments of Defendants Araneta and Heirs of Paras

In their motion for reconsideration, defendants argue that theywere not grossly negligent in directing the affairs of the PJI.

At the time of the sale, the directors-defendants were guided onlyby the Sequestration Orders. Hence, the defendants cannot be faultedfor following the literal import of the wordings of Sequestration Orders,that is - "(njot to cause any transfer, conveyance, encumbrance,concealment or liquidation of the aforementioned shares of stockswithout any written authority from the Commission". They argue thatdefendants-directors did not "cause any transfer, conveyance,encumbrance, concealment or liquidation of the aforementionedshares of stocks without any written authority from the Commission".Rather, what the defendants-directors approved was the sale of thesubject properties previously acquired by PJI in 1988. Defendants-directors, therefore, cannot be said to be grossly negligent approvinga sale that did not violate the Sequestration Orders.

Defendants also insist that the PJI is not a sequesteredcorporation, which they claim can be inferred from the ruling in the caseof Asset Privatization Trust v. Sandiganbayan (Second Division) andOlivares.

Also, as the supposed plaintiff (PJI) never authorized the filing ofthe instant case for and on its behalf, it is a grievous error for this Courtto have proceeded with the trial and affirmatively resolved the instantcase in favor of PJI which did not give its acquiescence over the filingof the instant case for and on its behalf.

Defendants also question the award of damages in favor of theplaintiff, as the latter failed to present proof of such damages.


RULING AND DISCUSSION

On Plaintiff's Motion for Reconsideration

Plaintiff's argument that defendant Qiusumbing is a builder in badfaith, is erroneous. The statement of this Court that defendantQuisumbing cannot be considered a buyer in good faith, was based onCabacungan vs. Laigo, et al.1, where it was held that in landregistration law, the issue of whether the buyer of realty is in good orbad faith, is relevant only where the subject of the sale is registeredland. The PJI Properties are unregistered lands and covered only bytax declarations, hence this Court's statement that defendantQuisumbing may not be considered a buyer in good faith. There was,however, no categorical finding by the Court that Quisumbing was abuyer in bad faith, as this was not the issue in this case. Therefore,even if Quisumbing may not be considered a buyer in good faith, itdoes not follow that he is a builder in bad faith.

A builder in good faith is defined as "one who builds with thebelief that the land he is building on is his, or that by some title one hasthe right to build thereon, and is ignorant of any defect or flaw in histitle or mode of acquisition."

From the evidence, the Court found that for the period June 5,1991 to November 6, 1996, defendant Quisumbing was ignorant of anydefect or flaw in his acquisition of the PJI Properties. Thus, the Courtruled that he was a builder in good faith with respect to any structure,building or improvement he may have built or introduced on the PJIProperties during that period.

The Court's finding that improvements were made by defendantQuisumbing on the PJI Properties for the period June 5, 1991 toNovember 6, 1996 amounting to Php 40 million, was made after acareful and thorough evaluation of the evidence on record. On theother hand, plaintiff did not present countervailing evidence to provethat the improvements made on the PJI Properties were notconstructed during the period June 5, 1991 to November 6, 1996, or todisprove the Php 40 million valuation of the improvements. Theforegoing findings and ruling were based on a preponderance of the

1G.R. No. 175073,Aug. 15, 2011


evidence. Plaintiff's motion for reconsideration has not raised anysubstantial argument why the same should be reversed or evenmodified.

It is not premature, but in fact proper, for the Court to determinethe valuation of the improvements made by defendant Quisumbing onthe PJI Properties. Defendant had raised in his pleadings the issue ofhis reimbursement of the amounts he had invested in the property inthe form of necessary and useful expenses, Moreover, under Article448, in relation to Article 546, of the Civil Code, the landowner has theoption, either to: (1) appropriate the improvements as his own uponpayment to the builder in good faith of the proper amount of indemnityconsisting of the necessary and useful expenses incurred; or (2) to sellthe land to the builder in good faith. Thus, a determination of thevaluation of the improvements on the PJI Properties becomesnecessary to allow plaintiff to knowingly and rationally exercise eitherof the options available under Article 448.

Furthermore, there is nothing in the cited case of Tuatis vs.Spouses Escol2 which precludes the Court from determining the valueof the improvements on the PJI Properties. In Tuatis , the SupremeCourt considered the decretal portion of the trial court's decision to bedeficient, as it failed to make an adjudication on the rights of the partiesunder Article 448 of the Civil Code. Thus, it outlined the additionalproceedings to be conducted by the trial court for the purpose of"clarifying or completing the obviously deficient decretal portion of thedecision, so that said portion could effectively order the implementationof the actual ruling of the RTC, as clearly laid down in the rationale ofthe same decision."

There is also no merit to plaintiff's arguments that defendantQuisumbing should render an accounting of the fruits/income from thePJ/ Properties, or that defendant is liable to pay rent beginningNovember 6, 1996 until he returns the PJI Properties to the plaintiff.

Since defendant Quisumbing has been determined to be abuilder in good faith, the relationship between plaintiff and defendantas well as their corresponding rights will be governed by Article 448 of

2 G.R.No. 175399, October 24, 2009


the Civil Code. An accounting of the fruits and/or income of the subjectland is not one of the remedies granted to the owner of the land.

Also, payment of rent can only come into play if the plaintiff,under the second option of Article 448: (a) does not choose toappropriate the improvements and instead, obliges defendantQuisumbing to pay the present or current fair value of the land; and (b)the present or current value of the PJI Properties turns out to beconsiderably more than that of the improvements built thereon, anddefendant Quisumbing does not want to pay for the PJI Properties. Inwhich case, defendant must pay plaintiff reasonable rent for thesame. Both plaintiff and defendant Quisumbing must agree on theterms of the lease, otherwise, the Court will fix the terms.

In summary, plaintiff has not raised any substantial argumentwhich would warrant a reversal or modification of this Court's April 2,2019 Decision.

On the Motions for Reconsideration of Defendants

As some of the points raised by the defendants are similar orinterrelated, these will be discussed simultaneously.

Arguments raised by the defendants relating to the sequestrationof the PJI shares, and of the PJI itself; the validity of said sequestration;and of the PJI properties being under custodia legis, are a mere rehashof arguments previously raised by defendants. To the point of soundingrepetitious, it is again emphasized that these matters have alreadybeen considered, passed upon and resolved, not only in this Court'spreviously issued Resolutions", but also in the Supreme Court rulingsin the cases of PJI and Jaime Cura vs. Sandiganbayan, et al. (G.R.No.106209)4 and Quisumbing vs. Sandiganbayan, et. al.5 (G.R. No.138437). The rulings of the Supreme Court in these cases have longattained finality. Thus, defendants' persistence in raising these samearguments is a futile attempt to revive long-settled issues, alreadydecided with finality by no less than the Supreme Court.

3 Cited in the Decision of April 2, 20194 G.R. No.106209, October 5,19935 G.R. No. 138437, November 14, 2008


Defendant Quisumbing cannot validly claim that theaforementioned rulings are not binding upon him, as this same issuewas raised and squarely ruled upon, first in this Court's Resolutionsdated November 13, 1998 and March 16, 1999, and then inQuisumbing vs. Sandiganbayan, et. aI, (G.R. No. 138437) which wasdecided on November 14,2008.

It was also ruled in G.R. No. 138437 that the Republic is a realparty in interest since the PJI is a corporation under sequestration bythe PCGG, representing the Republic, for the recovery of ill-gottenwealth. Thus, the Republic stands to be benefited or injured in theoutcome of the case.

While the case of Palm Avenue Holdings Co., et al. vs.Sandiganbayan, et al.6 was decided after Quisumbing vs.Sandiganbayan, et. al., the ruling in the former is not applicable to theinstant case.

In Palm Avenue Holdings Co., the subject writ of sequestrationwas lifted by reason of the Republic's failure to comply with theSandiganbayan's order to file the required bill of particulars that wouldcompletely and fully inform the Palm Companies of the charges againstthem. This was coupled with the fact that while the writ of sequestrationwas issued on October 27,1986, the Palm Companies were impleadedin the case only in 1997, or already a decade from the ratification ofthe Constitution in 1987. This was held to be way beyond theprescribed period.

Clearly, the above factual circumstances are not present in thiscase. Also, the instant Complaint for the Reconveyance, Recovery ofPossession, Accounting and Damages of the PJI Properties, was filedagainst herein defendants on October 11, 1996 pursuant to thepronouncement of the Supreme Court in G.R. No. 106209 that PJI is asequestered corporation and all its properties and assets areconsidered in custodia legis. Hence, the PCGG cannot validly sell theproperty in question without prior authority from the Sandiganbayan.

The ruling of this Court adjudging plaintiffs Republic of thePhilippines and the Philippine Journalist, Inc. (PJI) as the legal owners

6GR. Nos. 173082 and 195795, August 6,2014


of the PJI Properties was made in relation to, and for the purpose ofresolving the issue of who, as between the plaintiffs and defendantQuisumbing, had the better right to the PJI Properties. Considering thatthe sale of the PJI Properties to defendant Quisumbing was declaredvoid, plaintiffs PJI and the Republic have the right to recoverpossession of the PJI Properties, subject to the rights of defendant asa builder in good faith.

Defendant Quisumbing's argument that plaintiff PJI should bedirected to return to him the Php 735,000 he paid, plus interest andpeso devaluation adjustment since 1991, lacks merit. Since he hasbeen determined to be a builder in good faith, Quisumbing's rights tothe PJI Properties will be governed by Article 448 of the Civil Code,where the choice of option belongs to plaintiffs.

The arguments of defendants Cura, Araneta, and the Heirs ofSepidoza and Paras questioning the award of Php 500,000 as againstthem do not convince. The award in favor of plaintiff PJI was broughtabout by this Court's finding that defendants were grossly negligent indirecting the affairs of the corporation. It is emphasized that suchfinding of gross negligence was, in turn, based on the clear, categoricalfindings of the Supreme Court in G.R. No. 106209 (PJI and Jaime Curavs. the Sandiganbayan, et al.).

The gross negligence of defendants Jaime A. Cura, Johnny M.Araneta, Angel C. Sepidoza and Renato L. Paras resulted in damageto the plaintiff, since the PJI was deprived the lawful use of the subjectparcels of land, as well as the income therefrom, including theappreciated value of the said parcels of land. In addition, plaintiffincurred expenses for the filing of the instant case. The Court, aftertaking into consideration the facts and circumstances of this case,found the amount of Php 500,000 in actual and compensatorydamages to be reasonable to compensate plaintiff for the saiddamages.

In summary, defendants also have not raised any substantialargument or presented any compelling reason to warrant a reversal ormodification of this Court's April 2, 2019 Decision.


WHEREFORE, in view of the foregoing, the Court herebyDENIES for lack of merit:

(1) Plaintiff's Motion for Partial Reconsideration dated April 22,2019;

(2) Defendant Ramon J. Quisumbing's Motion for PartialReconsideration [of DecisionJ dated April 15, 2019;

(3) Defendant Jaime A. Cura's Motion for Reconsiderationdated April 17, 2019; and

(4) Defendants Johnny M. Araneta's and the Heirs of the LateRenato L. Paras' Motion for Reconsideration [of the Decision datedApril 2, 2019J dated April 22, 2019.

50 ORDERED.

~~AGOSChairperson

Associate Justice

WE CONCUR:

MA;.fME'CORPU -MANALACAsso iate Justice

Documents

REPUBLIC OF THE PHILIPPINES ~anbiganba!,ansb.judiciary.gov.ph/RESOLUTIONS/2019/H_Civil_0172...Resolution Civil Case No. 0172 Republic v. Quisumbing, et al. Page 2 of 11 2, 2019, to