Philippine Supreme Court Resolutions

G.R. No. 145153 (PHILIPPINE PORTS AUTHORITY v. THELMA MARANAN, ET AL.). - Before this Court is an ENTRY OF APPEARANCE and URGENT MOTION FOR CLARIFICATION AD CAUTELAM, dated December 1, 2011, filed by Atty. David D. Erro (Atty. Erro), new counsel for the respondents of the instant case.

In his motion, Atty. Erro sought to clarify whether the Resolution of the Court, dated January 25, 2002, which approved the Compromise Agreement between the parties therein, resolved the entire case and not merely the claims for damages.

To recapitulate, the instant case originated from an action for ejectment filed by the Philippine Ports Authority (PPA) against respondents, residents of the Batangas City Development Project Site, Barangay Sta. Clara, Port Area, Batangas City. However, during the pendency of the case, PPA initiated the demolition of the residential houses of respondents. Thus, respondents filed a Counterclaim for damages.

On April 19, 1996,^[1]  PPA was held liable for damages for the demolition of the houses and other structures of respondents, notwithstanding the pendency of the action for ejectment, to wit: 

PREMISES CONSIDERED, plaintiff is hereby ordered to pay defendants-counterclaimants damages under the following formula: (amount of counterclaim less 25% discount) less partial amount already paid by plaintiff, as summarized in the Commissioner's Report filed on March 27, 1996, plus interest of 6% per annum computed from June 27, 1994 until fully paid.

Dissatisfied, PPA appealed before the Court of Appeals.

On September 8, 2000, the appellate court dismissed PPA's appeal for lack of merit and affirmed the court a quo's Decision dated April 19, 1996.

On November 9, 2000, PPA filed a petition for review on certiorari^[2] before this Court and prayed that the decision of the appellate court be reversed.

However, pending resolution of PPA's appeal, PPA and respondents agreed to enter into an amicable settlement. Thus, on November 28, 2001, both parties signed a Compromise Agreement, the pertinent terms and conditions thereof reads, thus: 

1. As a class suit, DEFENDANTS/COUNTER-CLAIMANTS concerned consisting of 398 persons are willing to amicably settle the case in SC-G.R. No. 145153, ''entitled, "Philippine Ports Authority versus Thelma M. Maranan, et al.," in order to put a final end to the action or claim filed by all of the 1,465 defendants against PPA;^[3] (Emphasis ours.)

Upon motion, on January 25, 2002, the Court approved the parties' Compromise Agreement. On March 19, 2002, the Decision already became final and executory.

Thus, the instant motion to clarify whether what has been resolved and subject of the compromise agreement was only the Order dated April 19, 1996 concerning the claims for damages due to illegal demolition and not the entire case.

We resolve in the negative.

In the instant case, the counterclaim of respondents is not merely permissive but compulsory in nature: it arises out of, or is necessarily connected with, the transaction or occurrence that is the subject matter of the opposing party's claim. Clearly, the same evidence needed to sustain the counterclaim of respondents would also refute the cause of action in petitioner's complaint. This is because a compulsory counterclaim is auxiliary to the proceeding in the original suit and merely derives its jurisdictional support therefrom.

Thus, it necessarily follows that the court a quo, in its Decision dated April 19, 1996, could not have resolved the claims of defendants for damages without threshing out the issues raised in the original complaint. We, however, understand where the confusion is coming from, considering that the court a quo has not categorically resolved the action for ejectment which was the nature of the original complaint. But this is not without explanation. In the Decision dated April 19, 2006, the court a quo explained that PPA's complaint was actually "deceptive." We quote: 

This case was originally filed by plaintiff as recovery of possession (accion publiciana) as a class suit, submitting in its pleadings that the plaintiff has a better right of possession, although the complaint is captioned: For Ejectment. It prays that defendants vacate the area in question at Barangay Sta. Clara, Batangas City within the expanded Port Zone of Batangas District Port; it cited Executive Order No. 431 dated October 19, 1990 that the land is a public land reserved for the PPA (not disposable public land). 

On the other hand, defendant's claim adverse vested proprietory and possessory interest dating their possession and that of their predecessors-in-interest as early as the year 1920 which cannot be defeated by Executive Order No. 431. x x x 

Since the object of the taking of the defendant's possession is for public use - the expansion of the Port of Batangas, this case partakes of the nature of eminent domain under Rule 67 of the Rules of Court, as a special civil action. 

However, the Court could no longer appoint commissioners to ascertain the value of the houses demolished on June 25-27, 1994 because they are no longer existing. x x x (Emphasis ours)

Thus, it is apparent that while the original complaint was captioned to be an ejectment case, it, however, partakes the nature of an eminent domain. Corollary, the court a quo, in resolving the issues involved in Civil Case No. 3601, did so, pursuant to the proceedings of eminent domain under Rule 67 for purposes of ascertaining just compensation.

We, likewise, note that the parties knew of the decisions of both the court a quo as well as the appellate court and, thus, the parties took into consideration the said decisions before they executed the Compromise Agreement.^[4]  Therefore, when the parties entered into the Compromise Agreement, they were freely aware of the consequences of the same and that all issues raised have been fully disposed of.

Moreover, pursuant to the terms and conditions of the Compromise Agreement,^[5] the parties thereto, the same parties in Civil Case No. 3601, to wit: First Party: Philippine Ports Authority and Second Party, Defendants/Counter-claimants, as defendants/counter-claimants in the ejectment suit docketed as Civil Case No. 3601, entitled Philippine Ports Authority v. Thelma Maranan, et al.;^[6] had the intuition to amicably settle in order to put an end or finality to the action/claim filed by all of the 1,465 defendants against PPA.^[7] 

We would like to stress that compromise agreements are contracts, whereby the parties undertake reciprocal obligations to resolve their differences, thus avoiding litigation, or put an end to one already commenced. It is a cardinal rule in contract interpretation that the ascertainment of the intention of the contracting parties is to be discharged by looking to the words they used to project that intention in their contract, that is, all the words, not just a particular word or two, and words in context, not words standing alone.

If we are to believe the interpretation of the respondent's counsel, we would, in effect, go against the very rationale of entering into a Compromise Agreement, i.e., to put an end to litigation. Furthermore, the Court itself would not have approved the same for being contrary to law, morals and public policy. cralaw

IN VIEW OF THE FOREGOING, the Motion for Clarification is hereby DENIED for lack of merit.

SO ORDERED.

Very truly yours,

(Sgd.) WILFREDO V. LAPITAN
Deputy Division Clerk of Court

Endnotes:

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^[1] Records, pp. 121-130.

^[2] Docketed as SC-G.R. No. 145153, entitled Philippine Ports Authority v. Thelma M. Maranan, et al. 

^[3] Rollo, p. 111. 

^[4] Annex A, id.  at 114. 

^[5] Rollo, p. 111. 

^[6] Id. at 109. 

^[7] Id. at 111.