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FILSTREAM INTERNATIONAL INCORPORATED v. CA

FACTS:

Petitioner Filstream International Inc. filed an ejectment suit against the occupants of its adjacent parcels of land in Manila. The Metropolitan Trial Court ruled in favor of petitioner, which was affirmed by the Regional Trial Court and the Court of Appeals. However, during the ejectment proceedings, the occupants filed a complaint to annul a deed of exchange. The City of Manila approved an ordinance authorizing the acquisition of petitioner's properties and filed a complaint for eminent domain. The trial court issued a writ of possession in favor of the City of Manila. Petitioner filed motions to dismiss the complaint for eminent domain and to quash the writ of possession.

The petitioner filed motions for reconsideration and a supplemental motion for reconsideration with the Regional Trial Court. Petitioner also filed a subsequent motion to be allowed to file a second motion for reconsideration, but all motions were denied. Petitioner filed a Petition for Certiorari with the Court of Appeals, which was dismissed. Petitioner's motion for reconsideration was also denied. Meanwhile, the Municipal Trial Court issued a writ of execution and a notice to vacate in favor of petitioner. Private respondents filed a motion to recall or quash the writ, claiming the properties were condemned in an expropriation proceeding. The MTC denied private respondents' motion and upheld the writ of execution. The City of Manila's motion to intervene was also denied, but a temporary restraining order was issued by the trial court and a writ of preliminary injunction was issued by the RTC.

The City of Manila filed a Petition for Certiorari and Prohibition, which was consolidated with the existing case. The RTC issued a preliminary injunction. Petitioner moved for the dismissal of the cases for violation of forum shopping. The RTC dismissed the cases for violation of Supreme Court Circular No. 04-94. Petitioner filed an ex-parte motion for the issuance of an Alias Writ of Demolition and Ejectment. Private respondents filed a Petition for Certiorari and Prohibition with the Court of Appeals, challenging the order of dismissal issued by the RTC. The Court of Appeals granted temporary restraining orders and a writ of preliminary injunction to prevent the implementation of the writ of execution and notice to vacate during the pendency of the case.

ISSUES:

  1. Whether the Court of Appeals erred in dismissing the petition for certiorari for non-compliance with procedural rules.

  2. Whether the Court of Appeals erred in granting the restraining order and the writ of preliminary injunction to enjoin the execution of the writ of demolition.

  3. Whether petitioner Filstream is entitled to assert its ownership rights and enforce the final and executory judgment for the ejectment of private respondents from the disputed premises.

  4. Whether the expropriation proceedings undertaken by the City of Manila render the enforcement of petitioner's rights moot.

  5. Whether the City of Manila complied with the conditions set forth in Sections 9 and 10 of Republic Act No. 7279 (Urban Development and Housing Act of 1992).

  6. Whether there was a violation of petitioner Filstream's right to due process.

  7. Whether or not the transfer and assignment of rights and interests in the loan agreements are valid and enforceable.

  8. Whether or not there is a violation of due process in the proceedings before the Court of Appeals.

RULING:

  1. The Court held that the strict adherence to procedural rules in this case would result in a violation of the substantial rights of the petitioner. The dismissal of the appeal based on procedural grounds would deprive the petitioner of due process of law. Thus, the Court held that the Court of Appeals erred in giving more importance to form rather than substance.

  2. The Court held that the issuance of the restraining order and the writ of preliminary injunction was just an incident to the actual controversy between the parties. The conflicting rights of the parties over the disputed premises should be resolved through proper litigation. Therefore, the Court held that the Court of Appeals did not err in granting the restraining order and the writ of preliminary injunction.

  3. Yes, petitioner Filstream is entitled to assert its ownership rights and enforce the final and executory judgment for the ejectment of private respondents from the disputed premises.

  4. No, the expropriation proceedings undertaken by the City of Manila do not render the enforcement of petitioner's rights moot.

  5. The Supreme Court found that the City of Manila did not comply with the conditions set forth in Sections 9 and 10 of Republic Act No. 7279. It was evident that petitioner Filstream's properties were expropriated without showing that resort to the acquisition of other lands listed under Sec. 9 of RA 7279 had proved futile. This constituted a violation of petitioner Filstream's right to due process.

  6. The transfer and assignment of rights and interests in the loan agreements are valid and enforceable. The Supreme Court held that the transfer and assignment had legal effect, despite the absence of a notice or consent requirement in the loan agreements. It emphasized that the right of a judgment debtor or borrower to refuse the assignment of the judgment or credit should be expressly provided for to be valid and enforceable.

  7. There is no violation of due process in the proceedings before the Court of Appeals. The Supreme Court ruled that the Court of Appeals properly considered the substantive issues raised by the petitioners and decided the case based on the facts and evidence presented. It found that due process was observed and that the parties were given ample opportunity to be heard.

PRINCIPLES:

  • The stringent application of procedural rules may be relaxed if it would violate the substantial rights of the party involved.

  • The courts have discretion to suspend their internal rules to allow for the proper litigation of the issues and to meet the ends of substantial justice.

  • The issuance of a restraining order or writ of preliminary injunction is a procedural matter that may be granted to maintain the status quo pending the resolution of the main controversy.

  • The right to expropriate private property for public use is granted to local government units under Section 19 of the 1991 Local Government Code.

  • The City of Manila has the power to expropriate private property for its urban land reform and housing program as provided in the Revised Charter of the City of Manila.

  • The exercise of eminent domain is not limited to vast tracts of land and can include smaller parcels of land.

  • The concept of public use in eminent domain has evolved to include indirect public benefit or advantage.

  • The exercise by local government units of the power of eminent domain is not without limitations. Even Section 19 of the 1991 Local Government Code explicitly states that it must comply with the provisions of the Constitution and pertinent laws.

  • Private property shall not be taken for public use without just compensation.

  • The State's power of eminent domain for the general good takes precedence over the interest of private property owners, but the individual rights affected by the exercise of such power are entitled to protection. Compliance with due process requirements is necessary.

  • The transfer and assignment of rights and interests in loan agreements are valid and enforceable, unless the loan agreement explicitly provides for the right of the judgment debtor or borrower to refuse such assignment.

  • Due process requires that parties be given a fair and reasonable opportunity to be heard and present evidence before a tribunal.