G.R. No. 130118 July 9, 1998
Republic of the Philippines, petitioner, vs. Court of Appeals, Hon. Pedro M. Sunga, Jr., and Tetro Enterprises, Inc., respondents.

FACTS

On February 10, 1992, private respondent Tetro Enterprises, Inc. filed a complaint for recovery of possession and damages against the Republic of the Philippines, represented by the DPWH Regional Director. Tetro alleged it was the registered owner of a 12,643-square-meter land in San Fernando, Pampanga, and that sometime in 1974, the government, without expropriation or negotiated sale, constructed a road (Olongapo-Gapan Road) on the property. It prayed for the return of the land in its original state, closure of the road, and payment of damages and rentals. The Republic, in its answer, contended the case was a suit against the State without its consent and that the construction was with Tetro’s knowledge and consent, and it was willing to pay the fair market value at the time of taking. The trial court, upon the parties’ agreement, created a board of commissioners to determine the property’s actual value. The board recommended a price between P4,000 and P6,000 per square meter, noting the land had become highly commercial since the road’s construction. The RTC, on September 2, 1996, fixed the compensation at P6,000 per square meter, totaling P75,858,000. The Republic, through the OSG, filed a motion for reconsideration on September 17, 1996, arguing compensation should be based on the 1974 value at the time of taking, but failed to attach proof of service as required by the Rules. The RTC denied the motion, declaring it a “mere scrap of paper” for violating procedural rules, and subsequently granted Tetro’s motion for execution. The Republic’s notice of appeal was denied. The Court of Appeals dismissed the Republic’s petition for certiorari, upholding the RTC’s orders.

ISSUE

Whether the Court of Appeals erred in strictly applying procedural rules to dismiss the Republic’s appeal, thereby potentially causing a miscarriage of justice given the substantial amount and meritorious defense involved.

RULING

Yes. The Supreme Court reversed the decision of the Court of Appeals. While the Republic’s motion for reconsideration lacked the required proof of service at the time of filing, the subsequent service and the substantial interests at stake warranted a relaxation of procedural rules to serve substantial justice. The Court emphasized the enormous amount involved (P75,858,000) and the prima facie merit of the government’s appeal regarding the proper basis for just compensation (value at the time of taking in 1974 versus current market value). The Court cited precedents where technicalities were set aside to decide cases on their merits, especially when no substantial right of the adverse party was impaired and the government’s vital interests were at stake. The case was remanded with an order for the RTC to give due course to the Republic’s appeal.