G.R. No. 142971 - City of Cebu vs. Spouses Dedamo

Case Summary (G.R. No. 142971)

Subject Property and Claimed Values

Properties: Lot No. 1527 (1,146 sq. m.; tax declaration 03472; title 31833; market value P240,660.00; assessed value P72,200.00) and Lot No. 1528 (total area 793 sq. m.; tax declaration 03450; title 31832; market value for whole lot P1,666,530.00; area sought to be expropriated 478 sq. m.; market value of expropriated area listed P100,380.00; assessed value P49,960.00). Total area sought to be expropriated: 1,624 sq. m. Petitioner initially deposited P51,156 (15% of fair market value based on current tax declaration) to obtain immediate possession under Section 19, R.A. No. 7160.

Purpose of Expropriation

The City alleged the taking was for a public purpose: construction of a public access/relief road connecting Gorordo Avenue to General Maxilum Avenue and the rear of Magellan International Hotel roads in Cebu City. Respondents disputed public purpose, alleging benefit to a private entity (Cebu Holdings, Inc.), and claimed the City had purchased neighboring lots at rates around P20,000 per sq. m., arguing the City could have bought their land instead.

Procedural History — Filing, Possession, and Agreement

Complaint for eminent domain filed by the City on 17 September 1993 (Civil Case No. CEB-14632). Writ of possession issued on 21 September 1994 following the City’s motion under Section 19, R.A. No. 7160. On 14 December 1994 the parties executed a written Agreement recording partial settlement: respondents acknowledged public purpose and agreed to relinquish ownership in return for just compensation to be determined by the court; respondents accepted a provisional payment of P1,786,400.00; they agreed to turn over titles and vacate/demolish structures within 15 days after receiving the provisional payment; and they and the City jointly petitioned the court to render judgment in accordance with the Agreement, followed by a supplemental judgment fixing final just compensation after the commissioners’ report.

Appointment of Commissioners and Initial Report

Pursuant to the parties’ Agreement and Rule 67 procedures, the trial court appointed three commissioners (as above). Each commissioner submitted an assessment and recommendation of just compensation. On 7 May 1996 the trial court rendered judgment adopting the commissioners’ report and directed payment of P24,865,930.00 as compensation (plus commissioners’ fees). Petitioner moved for reconsideration alleging the commissioners had included an area not subject to this expropriation (Lot No. 1528: only 478 of 793 sq. m. were to be taken; remaining 315 sq. m. subject to separate case CEB-8348).

Amended Report, Trial Court Order, and Appeal

On 16 August 1996 the commissioners submitted an amended assessment for the corrected 478 sq. m., valuing it at P12,824.10 per sq. m. for a total of P20,826,339.50. The trial court approved the amended valuation by order dated 27 December 1996 and amended its dispositive portion accordingly. The City appealed to the Court of Appeals (CA-G.R. CV No. 59204), which on 11 October 1999 affirmed the trial court in toto. The City then sought review by the Supreme Court, raising one principal issue: whether just compensation must be determined as of the date of filing the complaint (17 September 1993) rather than as of the time of actual taking (1994).

Legal Issue Presented

Whether the point of valuation for just compensation in this expropriation should be the date of filing of the complaint or the time of actual taking, and whether the trial court erred in accepting the commissioners’ valuation which fixed compensation based on the time of taking pursuant to Section 19, R.A. No. 7160.

Statutory and Procedural Authorities Considered

Section 19, R.A. No. 7160: expressly provides that a local government unit may immediately take possession upon filing expropriation proceedings and making a 15% deposit, and that “the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property.” The Supreme Court treated this as the controlling statute on the point of reckoning.
Rule 67, Sec. 4 of the Rules of Court (then governing): provided that in condemnation proceedings the court may enter an order of condemnation and determine just compensation as of the date of filing of the complaint.
Rule 67, Sec. 5: provided for appointment of commissioners to ascertain just compensation (procedural mechanism followed by the trial court).
Civil Code Articles 1159 and 1315: cited as supporting the binding force of the parties’ Agreement (contracts as law between parties, requiring good faith performance).

Court’s Analysis on Point of Valuation

The Supreme Court held that Section 19 of R.A. No. 7160, being a substantive statute enacted after the Local Government Code’s adoption and applicable to local government expropriations, governs the point of valuation for expropriation by a local government unit. Section 19 expressly fixes just compensation based on fair market value at the time of taking. Consequently, the trial court did not err in determining compensation as of the time of actual taking, rather than as of the date of filing the complaint. The Court clarified its prior discussion in National Power Corp. v. Court of Appeals: while the general rule often applied is valuation as of the date of filing, exceptions exist where the Court has fixed value at the date of taking; the present statutory scheme under R.A. No. 7160 mandates valu

Case Syllabus (G.R. No. 142971)

Case Caption, Citation and Procedural Posture

Reported as 431 Phil. 524, First Division, G.R. No. 142971, May 07, 2002; decision penned by Davide, Jr., C.J.
Petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure by petitioner City of Cebu.
Relief sought: reversal of the Court of Appeals decision of 11 October 1999 in CA-G.R. CV No. 59204 which affirmed the Regional Trial Court, Branch 13, Cebu City, judgment dated 7 May 1996 in Civil Case No. CEB-14632 (eminent domain case).
Outcome at the Supreme Court: petition denied; no pronouncement as to costs. Concurrence by Puno, Kapunan, Ynares-Santiago, and Austria-Martinez, JJ.

Material Operative Facts — Parties, Property Descriptions and Values Alleged in the Complaint

Petitioner: City of Cebu. Respondents: Spouses Apolonio and Blasa Dedamo.
Complaint for eminent domain filed by City of Cebu on 17 September 1993 in Civil Case No. CEB-14632.
Parcels of respondents’ land described in complaint:
- Lot No. 1527
  - Area: 1,146 square meters
  - Tax Declaration: 03472
  - Title No.: 31833
  - Market value (as alleged): P240,660.00
  - Assessed value: P72,200.00
- Lot No. 1528
  - Area (entire lot): 793 square meters
  - Area sought to be expropriated: 478 square meters
  - Tax Declaration: 03450
  - Title No.: 31832
  - Market value for whole lot (as alleged): P1,666,530.00
  - Market value of area to be expropriated (as alleged): P100,380.00
  - Assessed value (as alleged): P49,960.00
Total area sought to be expropriated: 1,624 square meters.
Assessed value referenced in complaint for the total sought area: P1,786,400.
Purpose alleged by petitioner: construction of a public road serving as access/relief road of Gorordo Avenue extending to General Maxilum Avenue and the back of Magellan International Hotel Roads in Cebu City; the lots were alleged to be the most suitable site for that public purpose.
Petitioner deposited P51,156 with the Philippine National Bank, representing 15% of the fair market value of the property, to enable immediate possession pursuant to Section 19 of R.A. No. 7160.

Respondents’ Early Pleadings and Objections

Respondents filed a motion to dismiss the complaint asserting:
- The purported taking was not for a public purpose but for the benefit of a single private entity, Cebu Holdings, Inc.
- Petitioner could have purchased the property directly at fair market value as it allegedly did with neighboring lots.
- The price offered in effect was very low compared to consideration of about P20,000 per square meter allegedly paid to neighboring lots.
- Respondents alleged they had no other land in Cebu City.
A pre-trial was conducted.

Writ of Possession and Subsequent Agreement Between Parties

On 23 August 1994, petitioner moved for issuance of a writ of possession pursuant to Section 19 of R.A. No. 7160.
Trial court granted the motion on 21 September 1994.
On 14 December 1994, parties executed and submitted to the trial court a written Agreement declaring a partial settlement and the following material terms:
- Respondents (SECOND PARTY) consented to the intended expropriation by the City (FIRST PARTY) for public purpose and benefit of the general public.
- Respondents agreed to part with ownership provided the City will pay just compensation as determined by the court after due notice and hearing.
- Respondents agreed to receive P1,786,400.00 as a provisional payment for the subject parcels, without prejudice to the final valuation determined by the court.
- The City, in light of the issued Writ of Possession, agreed to take possession of the portion of the lot where respondents’ house was located only after fifteen (15) days from respondents’ receipt of the P1,786,400.00.
- Upon receipt of the provisional amount, respondents agreed to turn over the title to the City and within the fifteen-day period voluntarily demolish their house and any other structures at their own expense.
- Both parties agreed to jointly petition the court to render judgment in Civil Case No. CEB-14632 in accordance with the Agreement.
- The judgment to be rendered under the Agreement would be followed by a supplemental judgment fixing just compensation after the commissioners appointed by the court render their report and it is approved by the court.

Appointment of Commissioners and Their Report(s)

Pursuant to the Agreement and the trial court’s order of condemnation process, the trial court appointed three commissioners to determine just compensation:
- Palermo M. Lugo — nominated by petitioner and designated Chairman.
- Alfredo Cisneros — nominated by respondents.
- Herbert E. Buot — designated by the trial court.
Parties agreed to the appointments.
Commissioners submitted an initial report containing their respective assessments and recommendations as to valuation.
After petitioner’s motion for reconsideration alleging inaccuracy (specifically that Lot No. 1528’s total area is 793 sqm but only 478 sqm was subject to this expropriation, and the remaining 315 sqm was subject to a separate proceeding in Civil Case No. CEB-8348), the commissioners on 16 August 1996 submitted an amended assessment for the 478 square meters of Lot No. 1528, fixing it at P12,824.10 per square meter or a total of P20,826,339.50 for that portion.
The amended assessment was approved as the just compensation by the trial court in its Order of 27 December 1996.

Trial Court Judgment and Decretal Items

Trial court rendered decision on 7 May 1996 adopting the commissioners’ report; decretal portion ordered:
- Plaintiff (City of Cebu) directed to pay spouses Apolonio S. Dedamo and Blasa Dedamo the sum of P24,865,930.00 (as compensation mentioned in the Complaint per the decretal text).
- Commissionaires’ fees ordered:
  - Palermo Lugo — P21,000.00
  - Herbert Buot — P19,000.00
  - Alfredo Cisneros — P19,000.00
- No pronouncement as to costs in that decision.
Subsequent amendment of dispositive portion to reflect the commissioners’ amended assessment of P20,826,339.50 (Order of 27 December 1996) following the commissioners’ revised valuation for the 478 sqm portion of Lot No. 1528.

Appeal to the Court of Appeals and Further Review

Petitioner elevated the case to the Court of Appeals (docketed CA-G.R. CV No. 59204), arguing that the trial court erred in fixing just compensation at P20,826,339.50 and asserting the proper point of valuation is the prevailing market price at the commencement of expropriation proceedings (i.e., date of filing of complaint, 17 September 1993).
Court of Appeals, in a decision dated 11 October 1999, affirmed the trial court judgment in toto.
Petitioner filed the present petition for review with the Supreme Court raising the sole issue whether just compensation should be determined as of the date of filing of the complaint (17 September 1993) and relying on National Power Corporation v. Court