62 NPC vs Lucman

FIRST DIVISION G.R. No. 175863, February 18, 2015 NATIONAL PO!R "ORPORATION, "ORPORATION, Petitioner   Petitioner , v. L#"$AN $. I%RA&I$, A  D!"ISION P!R!', J. P!R!', J.((  At bench is a petition for for review on certiorari 1 assailing the Decision 2 dated 24 June 2005 and Resolution 3 dated 5 Deceber 200! of the "ourt of Appeals in "A#$%R% "& 'o% !(0!1% )he facts* The Subject Land +n 1-(, petitioner too. possession of a 2 1,5 s/uare eter parcel of land in arawi "it subect land for the purpose of building thereon a hdroelectric hdroelectric power plant pursuant to its  Agus 1 proect% )he subect land, while in truth a portion of a private estate registered under )ransfer "erticate "erticate of )itle )") 'o% 3-(#A 4 in the nae of herein respondent acapanton 6% angondato angondato,5 was occupied b petitioner under the ista.en belief that such land is part of the vast tract of public land reserved for its use b the governent under  Proclamation  Proclamation No. 1354, 1354, s. 1!4 1!4 %!cralawred angondato rst discovered petitioner7s occupation of the subect land in 1-8the ear that petitioner started its construction of the  Agus 1 plant% 9hortl after such discover, angondato began deanding copensation for the subect land fro petitioner% +n support of his deand for copensation, angondato sent to petitioner a letter - dated 2( 9epteber 1(1 wherein the forer detailed the origins of his ownership over the lands covered b )") 'o% 3-(#A, including the subect land% )he relevant portions of the letter read*chanRoblesvirtual:awlibrar read*chanRoblesvirtual:awlibrar 'ow let e trace the basis of the title to the land adverted to for particularit% )he land titled in  nae was originall consisting of seven - hectares% )his piece of land was particularl set aside b the ;atriarch aruho, a fact recogni>> and the propert is condened in favor of ?petitioner@ eGective Jul 12 upon paent of the fair ar.et value of the propert at Fne )housand ;1,000%00 ;esos per s/uare eter or a total of )went#Fne illion 'ine =undred 'inet#Eive )housand ;21,5,000%00 ?;@esos% 11cralawred cralawlawlibrar Disagreeing with the aount of ust copensation that it was adudged to pa under the said decision, petitioner led an appeal with the "ourt of Appeals% )his appeal was doc.eted in the "ourt of Appeals as "A-G.R. "V No. 3353.

During the pendenc of "A#$%R% "& 'o% 3353, or on 2 arch 13, herein respondents the +brahis and aruhos 12 led before the R)" of arawi "it a coplaint13 against angondato and petitioner% )his coplaint was doc.eted as ")*)+ "ae No. 67-3 and 67-3 and was raed to Branch 10 of the arawi "it R)"%

Decision in "A#$%R% "& 'o% 3353 dening the appeal of petitioner and aGiring in toto the 21 August 12 Decision in "ivil "ase 'o% !05#2 and "ivil "ase 'o% !10# 2% Cndeterred, petitioner ne>t led a petition for review on certiorari  with this "ourt that was doc.eted herein as G.R. No. 1131/.20cralawred

Fn 11 arch 1!, we rendered our Decision in $%R% 'o% +n their coplaint, the +brahis and aruhos disputed 11314 wherein we upheld the "ourt of Appeals7 denial angondato7s ownership ownership of the lands covered b )") 'o% of petitioner7s appeal% 21 +n the sae decision, decision, we li.ewise 3-(#A, including the subect land% )he +brahis and sustained the appellate court7s aGirance of the decision aruhos asseverate that the are the real owners of in "ivil "ase 'o% !05#2 and "ivil "ase 'o% !10#2 the lands covered b )") 'o% 3 -(#A the being the subect onl to a reduction of the rate of interest on the lawful heirs of the late  atu +aga-o%ong onthl rental fees fro 12H to !H per +aga-o%ong +aruhom +aruhom, who 14 was the original proprietor of the said lands%  )he also annu% 22cralawred claied that angondato actuall holds no clai or right over the lands covered b )") 'o% 3-(#A e>cept that of a Fur decision in $%R% 'o% 11314 eventuall becae nal trustee who erel holds the said lands in trust  for and e>ecutor on 13 a 1!% 23cralawred 15 the% cralawred  0ecution o' the &1 August 1& 1& ecision ecision in "ivil "ivil "ase  No. #$5%& #$5%& and )he +brahis and aruhos subit that since the are "ivil "ase No. #1$%&, as +odi2ed the real owners of the lands covered b )") 'o% 3-(#A, the should be the ones entitled to an rental fees or +n view of the nalit of this "ourt7s decision in $%R% 'o% e>propriation indenit indenit that a be found due for the 11314, angondato led a otion for e>ecution of the subect land% decision in "ivil "ase 'o% !05#2 and "ivil "ase 'o% !10# 2%24 Against this otion, however, petitioner led an =ence, the +brahis and aruhos praed for the opposition%25cralawred following reliefs in their coplaint* 1!cralawred 1% )hat ango angondato ndato be ordered ordered to to e>ecute e>ecute a eed +n its opposition, petitioner adverted to the e>istence of the writ of preliinar inunction earlier issued in "ivil o' "onve-ance transferring to the the ownership of the lands covered b )") 'o% 3-(# "ase 'o% !-#3 that enoins it fro a.ing an paent  A"hanRobles&irtualawlibrar  A"hanRobles&irtualawlibrar of e>propriation indenit over the subect land in favor 2% )hat petit petitione ionerr be ordere ordered d to pa to to the the of angondato% 2! ;etitioner, in su, posits that such writ whatever indenit for the subect land it is of preliinar inunction constitutes a legal ipedient later on adudged to pa in "ivil "ase 'o% !05# that eGectivel bars an eaningful e>ecution of the 2 and "ivil "ase 'o% !10# decision in "ivil "ase 'o% !05#2 and "ivil "ase 'o% !10# 2"hanRobles&irtualawlibrar 2"hanRobles&irtualawlibrar 2% 3% )hat ango angondato ndato be ordered ordered to to pa to the an aount that the forer a have received fro Einding no erit in petitioner7s opposition, however, the petitioner b wa of indenit for the Branch ( of the arawi "it R)" rendered a Resolution 2subect land"hanRobles&irtualawlibrar land "hanRobles&irtualawlibrar dated 4 June 1! ordering the issuance of a writ of 4% )hat petit petitione ionerr and ango angondato ndato be ordered ordered e>ecution in favor of angondato in "ivil "ase 'o% !05#  ointl and severall severall liable liable to pa attorne7s attorne7s fees fees 2 and "ivil "ase 'o% !10#2% :i.ewise, in the sae in the su of ;200,000%00% resolution, the trial court ordered the issuance of a notice of garnishent against several of petitioner7s petitioner7s ban. +n the sae coplaint, the +brahis and aruhos also accounts 2( for the aount of P21,801,51.008the P21,801,51.008the gure praed for the issuance of a teporar restraining order representing representing the total aount of udgent debt due fro )RF and a writ of preliinar inunction inunction to enoin petitioner in "ivil "ase 'o% !05#2 and "ivil "ase 'o% petitioner, during the pendenc of the suit, fro a.ing !10#2 less the aount then alread settled b the latter% an paents to angondato concerning concerning e>propriation )he dispositive portion of the resolution resolution 1indenit for the subect land% cralawred reads*chanRoblesvirtual:awlibrar reads*chanRoblesvirtual:awlibrar =IRIEFRI, let a rit of I>ecution and the Fn 30 arch 13, Branch 10 of the arawi "it R)" corresponding corresponding order or notice of garnishent be granted the praer of the +brahis and aruhos for the iediatel issued against ?petitioner@ ?petitioner@ and in favor of 1( issuance of a )RF%  Fn 2 a 13, after conducting an ?angondato@ for the aount of )went Fne illion appropriate hearing for the purpose, the sae court Iight =undred Fne )housand and 'ine =undred Eift li.ewise granted the praer for the issuance of a writ of Fne ;21,(01,51%00 ;esos%chanrobleslaw ;esos% chanrobleslaw preliinar inunction% 1cralawred 2 > > >% cralawlawlibrar +n due course, trial then ensued in "ivil "ase 'o% !-# 3%chanroblesvirtuallawlibrar 3%chanroblesvirtuallawlibrar ;ursuant to the above resolution, a notice of garnishent 30 dated 5 June 1! for the aount of The ecision o' the "ourt o' A))eals in "A%.(. "/ No. ;21,(01,51%00 was proptl served upon the ;hilippine 3353 'ational Ban. ;'B8the authoripropriation indenit due for the subect land, as previousl adudged in "ivil "ase 'o% !05#2 and "ivil "ase 'o% !10#2, to the +brahis and aruhos% Noab+e ) e r)a+ our4 e))o, oe*er, a a ) e+ bo $aoao a e e))oer solidarily liable o e Ibra)9 a $aruo9 :or e rea+ :ee a e;ror)a)o )e9)y a > > 2% Frdering ?angondato and petitioner@ to pa  ointl and severall ?the +brahis and aruhos@ all fors of e>propriation indenit as adudged for ?the subect land@ consisting of 21,5 s/uare eters in the aount of ;21,(01,051%00 plus other fors of indenit such as rentals and interests "hanRobles&irtualawlibrar 3% Frdering ?angondato and petitioner@ to pa ?the +brahis and aruhos@ ointl and severall the su of ;200,000%00 as attorne7s fees"hanRobles&irtualawlibrar 4% > > > 5% > > > !% > > > 9F FRDIRID% 35cralawred cralawlawlibrar

 Petitioners A))eal to the "ourt o' A))eals and the  0ecution  Pending A))eal o' the ecision in "ivil "ase No. #!%3 ;etitioner appealed the decision in "ivil "ase 'o% !-#3 with the "ourt of Appeals* contesting ainl the holding in the said decision that it ought to be solidaril liable with angondato to pa to the +brahis and aruhos the rental fees and e>propriation indenit adudged due for the subect land% )his appeal was doc.eted as "AG.R. "V No. 68061% hile the foregoing appeal was still pending decision b the "ourt of Appeals, however, the +brahis and aruhos were able to secure with the court a uo a writ of e>ecution pending appeal 3! of the decision in "ivil "ase 'o% !-#3% )he enforceent of such writ led to the garnishent of angondato7s ones in the possession of the 9ocial 9ecurit 9ste 999 in the aount of ;2,-00,000%00 on 1( 9epteber 1(% 3- Iventuall, the aount thereb garnished was paid to the +brahis and angondato in partial satisfaction of the decision in "ivil "ase 'o% !-#3% Fn 24 June 2005, the "ourt of Appeals rendered its Decision 3( in "A#$%R% "& 'o% !(0!1 dening petitioner7s appeal% )he appellate court denied petitioner7s appeal and aGired the decision in "ivil "ase 'o% !-#3, subect to the right of petitioner to deduct the aount of ;2,-00,000%00 fro its liabilit as a conse/uence of the partial e>ecution of the decision in "ivil "ase 'o% !-# 3%3cralawred =ence, the present appeal b petitioner% chanroblesvirtuallawlibrar The Present A))eal )he present appeal poses the /uestion of whether it is correct, in view of the facts and circustances in this case, to hold petitioner liable in favor of the +brahis and aruhos for the rental fees and e>propriation indenit adudged due for the subect land% +n their respective decisions, both Branch 10 of the arawi "it R)" and the "ourt of Appeals had answered the foregoing /uestion in the aGirative% )he two tribunals postulated that, notwithstanding petitioner7s previous paent to angondato of the rental fees and e>propriation indenit as a conse/uence of the e>ecution of the decision in "ivil "ase 'o% !05#2 and !10#2, petitioner a still be held liable to the +brahis and aruhos for such fees and indenit because its previous paent to angondato was tainted with K bad  'aith%L40 As proof of such bad faith, both courts cite the following considerations* 41cralawred 1% ;etitioner KallowedL paent to angondato despite its prior .nowledge, which dates bac. as earl as 2( 9epteber 1(1, b virtue of angondato7s letter of even date, that the subect land was owned b a certain Datu agao#ong aruho and not b angondato and 2 % ;e ti ti on er K alloedL such paent despite the issuance of a )RF and a writ of preliinar

Eor the two tribunals, the bad faith on the part of petitioner rendered its previous paent to angondato invalid insofar as the +brahis and aruhos are concerned% =ence, both courts concluded that petitioner a still be held liable to the +brahis and aruhos for the rental fees and e>propriation indenit previousl paid to angondato%42cralawred ;etitioner, however, argues otherwise% +t subits that a nding of bad faith against it would have no basis in fact and law, given that it erel coplied with the nal and e>ecutor decision in "ivil "ase 'o% !05#2 and "ivil "ase 'o% !10#2 when it paid the rental fees and e>propriation indenit due the subect to angondato% 43 ;etitioner thus insists that it should be absolved fro an liabilit to pa the rental fees and e>propriation indenit to the +brahis and aruhos and pras for the disissal of "ivil "ase 'o% !-#3 against it%chanroblesvirtuallawlibrar O#R R#LING

 As a testaent to its enduring /ualit, the foregoing pronounceent in  9oard o' Liuidators  had been reiterated in a slew of later cases, 52 ore recentl, in the 200 case of Na6areno, et al. v. "it- o' umaguete53 and the 2012 case of  Aliling v. 8eliciano. 54cralawred 9till, in 15, the case of  8ar 0ast 9an< and Trust "om)an- v. "ourt o' A))eals 55 contributed the following description of bad faith in our  urisprudence*chanRoblesvirtual:awlibrar Kalice or bad faith iplies a conscious and intentional design to do a wrongful act for a dishonest purpose or oral obli/uit>>>%L 5!cralawlawlibrar )he description of bad faith in  8ar 0ast 9an< and Trust "om)an-  then went on to be repeated in subse/uent cases such as 157s =rtega v. "ourt o' A))eals ,5- 1-7s  Laureano *nvestment and evelo)ment "or)oration v. "ourt o' A))eals ,5( 20107s Lambert Panbroui?ones, !0 to nae a few%

e grant the appeal%  &eril, the clear denoinator in all of the foregoing  udicial pronounceents is that the essence of bad faith consists in the deliberate  coission of a rong % +ndeed, the concept has often been e/uated with alicious or ;etitioner is correct% 'o K bad 'aithL a be ta.en against fraudulent otives, et distinguished fro the ere it in paing angondato the rental fees and e>propriation unintentional wrongs resulting fro ere siple negligence or oversight% !1cralawred indenit due the subect land%

 No Bad Faith On The Part of Petitioner 

Fur case law is not new to the concept of bad 'aith. Decisions of this "ourt, both old and new, had been teeing with various pronounceents that illuinate the concept aidst diGering legal conte>ts% +n an attept to understand the basics of bad faith, it is andator to ta.e a loo. at soe of these pronounceents* +n Lo)e6, et al. v. Pan American 7orld Aira-s ,44 a 1!! landar. tort case, we dened the concept of bad faith as*chanRoblesvirtual:awlibrar KMa breach of a .nown dut through soe otive of interest or ill will%L 45cralawlawlibrar  Just onths after the proulgation of  Lo)e6 , however, cae the case of  Air 8rance v. "arrascoso, et al., 4! +n Air  8rance, we e>pounded on :ope>> a state of ind aGirativel operating with furtive design or with soe otive of self#interest or will or for ulterior purpose%L 4-cralawlawlibrar

 Air 8rances  articulation of the eaning of bad faith was, in turn, echoed in a nuber subse/uent cases, 4( one of which, is the 200 case of  9albuena, et al. v. Saba-, et al%4cralawred +n the 1!- case of B oard o' Liuidators v. :eirs o' +.  ;ala,50 on the other hand, we enunciated one of the ore oft#repeated forulations of bad faith in our case law*chanRoblesvirtual:awlibrar K>>> bad faith does not sipl connote bad udgent or negligence it iports a dishonest purpose or soe oral obli/uit and conscious doing of wrong% +t eans breach

 A nding of bad faith, thus, usuall assues the presence of two 2 eleents* 2rst, that the actor .new or should have .nown that a particular course of action is wrong or illegal, and second,  that despite such actual or iputable .nowledge, the actor, voluntaril, consciousl and out of his own free will, proceeds with such course of action% Fnl with the concurrence of these two eleents can we begin to consider that the wrong coitted had been done deliberatel and, thus, in bad faith% +n this case, both Branch 10 of the arawi "it R)" and the "ourt of Appeals held that petitioner was in bad faith when it paid to angondato the rental fees and e>propriation indenit due the subect land% )he two tribunals, in substance, fault petitioner when it KallowedL such paent to ta.e place despite the latter7s alleged .nowledge of the e>isting clai of the +brahis and aruhos upon the subect land and the issuance of a )RF in "ivil "ase 'o% !-#3% =ence, the two tribunals clai that petitioner7s paent to angondato is ineGective as to the +brahis and aruhos, who the found to be the real owners of the subect land% e do not agree% Branch 10 of the arawi "it R)" and the "ourt of  Appeals erred in their nding of bad faith because the have overloo.ed the utter signicance of one iportant fact* a e))oer4 ay9e o $aoao o: e rea+ :ee a e;ror)a)o )e9)y  adudged due for the subect land in "ivil "ase 'o% !05#2 and "ivil "ase 'o% !10#2, a re=u)re by e >a+ a e;euory e))o ) e a) o  ae a a

paent to angondato was o a rou o: a e+)berae o)e on the part of the petitioner but was ade onl in copliance to the lawful orders of a court with urisdiction% "ontrar then to the view of Branch 10 of the arawi "it R)" and of the "ourt of Appeals, it was not the petitioner that KallowedL the paent of the rental fees and e>propriation indenit to angondato% +ndeed, given the circustances, the ore accurate ruination would be that it was the trial court in "ivil "ase 'o% !05# 2 and "ivil "ase 'o% ! 10#2 that ordered or allowed the paent to angondato and that petitioner erel coplied with the order or allowance b the trial court% 9ince petitioner was onl acting under the lawful orders of a court in paing angondato, we nd that no bad faith can be ta.en against it, even assuming  that petitioner a have had prior .nowledge about the clais of the +brahis and aruhos upon the subect land and the )RF issued in "ivil "ase 'o% !-#3% Sans Bad Faith, Petitioner  Cannot Be Held Liable to the  Ibrahims and Marhoms

e>propriation indenit due for the subect land% Article +a, e )9)a+ o: ")*)+ "ae No. 67-3 )o:ar 1242 of the "ivil "ode reads*chanRoblesvirtual:awlibrar a e))oer ) oere ) a++e :or. K;aent ade in good faith to an person in possession of the credit shall release the debtor%L cralawlawlibrar  *e+ ttorney)s Fees  Article 1242 of the "ivil "ode is an e>ception to the rule that a valid paent of an obligation can onl be ade to the person to who such obligation is rightfull owed% !4 +t conteplates a situation where a debtor pas a @)ossessor o' credit  i%e%, soeone who is not the real creditor but appears, under the circustances, to be the real creditor% !5 +n such scenario, the law considers the paent to the @)ossessor o' credit  as valid even as against the real creditor ta.ing into account the good faith of the debtor% Borrowing the principles behind Article 1242 of the "ivil "ode, we nd that angondato8being the udgent creditor in "ivil "ase 'o% !05#2 and "ivil "ase 'o% !10# 2 as well as the registered owner of the subect land at the tie !!8a be considered as a K )ossessor o' credit L with respect to the rental fees and e>propriation indenit adudged due for the subect land in the two cases, if the +brahis and aruhos turn out to be the real owners of the subect land% =ence, petitioner7s paent to angondato of the fees and indenit due for the subect land as a conse/uence of the e>ecution of "ivil "ase 'o% !05#2 and "ivil "ase 'o% !10#2 could still validl e>tinguish its obligation to pa for the sae even as against the +brahis and aruhos%

ithout the e>istence of bad faith, the ruling of the R)" and of the "ourt of Ap peals apropos petitioner7s reaining liabilit to the +brahis and aruhos becoes devoid of legal basis% +n fact, p etitioner7s previous paent to angondato of the rental fees and e>propriation indenit due the subect land pursuant to the nal udgent in "ivil "ase 'o% !05#2 and "ivil "ase  &'e$t of &(tin!ishment of  Petitioner)s Obli!ation 'o% !10#2 a be considered to have e>tinguished the forer7s obligation rear+e o: o beee )he e>tinguishent of petitioner7s obligation to pa for $aoao, o oe a, a e Ibra)9 a the rental fees and e>propriation indenit due the $aruo9, o e oer, ur ou o be e rea+ !2 subect land carries with it certain legal eGects* oer o: e ub