G.R. No. 168967 - City of Iloilo vs. Contreras-Besana

Case Summary (G.R. No. 168967)

Key Dates

Filing of expropriation complaint: September 18, 1981 (Civil Case No. 14052).
RTC order granting writ of possession: May 17, 1983.
Physical possession by petitioner: mid-1985.
Private respondent’s discovery that no deposit was made: April 17, 2000.
Recovery of possession suit filed by private respondent: April 2, 2003 (Civil Case No. 03-27571).
Consolidation and commission creation: consolidated Aug. 26, 2003; commission created Nov. 14, 2003.
Assailed RTC orders: Dec. 12, 2003 (First), June 15, 2004 (Second), Mar. 9, 2005 (Third).
Supreme Court decision: February 12, 2010.

Applicable Law and Authorities

Primary constitutional framework: 1987 Philippine Constitution (applicable by decision date).
Statutory and procedural authorities cited: Presidential Decree No. 1533 (rules on deposit and immediate possession), Rules of Court (Rule 67, Sec. 4), and relevant jurisprudence cited by the Court (e.g., cases addressing finality of condemnation orders, reckoning point for just compensation, and damages for prolonged uncompensated occupation).

Factual Background (Petitioner’s Eminent Domain Proceeding)

The City filed an eminent domain complaint in 1981 to expropriate the Subject Property for a school site, alleging a tax-declared value of P60.00/sqm (total P43,560.00). Javellana admitted ownership but disputed public necessity and asserted a fair market value of at least P220.00/sqm. In May 1982 the City moved for a writ of possession, attaching a certification that P40,000.00 had been deposited with PNB as 10% deposit; Javellana opposed.

RTC Writ of Possession and Use of Property

On May 17, 1983, the trial court granted the Motion for Writ of Possession, authorizing the City to take immediate possession. A writ issued and the City took physical possession by mid-1985. The Subject Property was used as the site for Lapaz National High School; Javellana never denied such use.

Dormancy, Discovery, and New Proceedings

Expropriation proceedings remained largely dormant until April 2000, when Javellana sought to withdraw the alleged P40,000.00 deposit and discovered, via a PNB certification, that no deposit had been made. He then demanded just compensation and, after unsuccessful negotiations, filed a separate civil action (April 2, 2003) for recovery of possession, rentals, and damages. The City argued the exclusive remedy was payment of just compensation and opposed recovery of possession; the two cases were consolidated.

Movements Before the RTC and Creation of Commission

After consolidation, the RTC created a commission (Nov. 14, 2003) to determine just compensation. Javellana sought first to have the May 17, 1983 order declared null and void and to require the City to deposit 10% of the just compensation based on a later valuation (2001 City Appraisal Committee value), arguing the reckoning date must be when condemnation is ordered or when deposit is properly made.

First Assailed Order (Dec. 12, 2003)

The RTC issued an order declaring the May 17, 1983 writ-of-possession order null and void, and directed the City to deposit 10% of the just compensation (after the Commission’s report) based on the value “not at the time it was condemned but at the time the complaint was filed in court.” The City did not seek reconsideration of this First Assailed Order.

Second Assailed Order (June 15, 2004)

The RTC issued an “Amended Order” which was substantively identical to the First Assailed Order except that the reckoning point for valuation was revised to “the time this order was issued” (i.e., June 15, 2004). The City filed a motion for reconsideration, contending lack of legal basis.

Third Assailed Order (Mar. 9, 2005)

The RTC denied the City’s motion for reconsideration. The court reasoned that because no deposit had been made, the taking was illegal; therefore the fair market value should be determined as of the time the order was issued. The court emphasized its power to amend interlocutory orders in the interest of justice.

Commission Report on Values

The Commission submitted a report (Apr. 15, 2004) presenting differing value estimates without a single recommendation: (a) values anchored to 1981 sales evidence at P110.00/sqm (total P79,860.00); (b) a 1981 bank appraisal at P686.81/sqm (total P498,625.22); (c) a 2002 City Appraisal Committee valuation at P3,500.00/sqm (total P2,541,000.00); and (d) a 2004 private appraisal at P4,200.00/sqm (total P3,049,200.00).

Issues Presented to the Supreme Court

Two issues were framed: (1) whether an order of expropriation (condemnation and issuance of writ of possession) becomes final and thus immune from later nullification by the trial court; and (2) the correct reckoning date for determining just compensation.

Finality of Condemnation Orders — Court’s Ruling

The Court reaffirmed that expropriation proceedings have two distinct stages: (1) the threshold determination (order of condemnation or dismissal) resolving whether the government lawfully exercised eminent domain; and (2) the determination of just compensation. Each stage culminates in a final, appealable order. Because Javellana did not appeal the May 17, 1983 order granting the writ of possession, that order became final. The Court held that the RTC gravely erred in nullifying a final condemnation order.

Reckoning Point for Just Compensation — Court’s Ruling

The Court reiterated the longstanding rule that just compensation is to be ascertained as of the time of the taking, which generally coincides with the commencement of expropriation proceedings. Where institution of the action precedes entry, the proper date is the filing of the complaint. Here, the complaint was filed on September 18, 1981;

Case Syllabus (G.R. No. 168967)

Citation and Panel

Reported at 626 Phil. 375, Second Division, G.R. No. 168967, decision dated February 12, 2010.
Decision authored by Justice Del Castillo.
Members of the Court who concurred: Carpio (Chairperson), Brion, Abad, and Perez, JJ.

Nature of Proceeding and Relief Sought

Petition for Certiorari under Rule 65 of the Rules of Court, with a prayer for temporary restraining order, filed by the City of Iloilo (petitioner).
Petition seeks annulment of three Orders of the Regional Trial Court (RTC) of Iloilo City, Branch 32 dated December 12, 2003; June 15, 2004; and March 9, 2005 (collectively, the Assailed Orders).
Relief sought: overturning of the Assailed Orders which had effectively nullified an earlier RTC order (May 17, 1983) authorizing a writ of possession and altering the reckoning point for just compensation.

Panel Opening Statement and Tone of Decision

The decision emphatically condemns prolonged government expropriation without just compensation, describing the conduct of taking and withholding compensation for over 25 years as arbitrary, capricious, high-handed, and irresponsible.
The Court states the City of Iloilo is liable for damages for its failure to properly compensate the landowner.

Factual Antecedents — Commencement of Expropriation Proceedings

On September 18, 1981, the City of Iloilo filed a Complaint for eminent domain against private respondent Elpidio T. Javellana and Southern Negros Development Bank (mortgagee), docketed as Civil Case No. 14052 and raffled to the then Court of First Instance of Iloilo, Branch 7.
Subject Property: two parcels identified as Lot Nos. 3497-CC and 3497-DD, registered to Javellana under Transfer Certificate of Title No. T-44894, intended for use as a school site for Lapaz High School.
The expropriation was authorized by Sanggunian Panglungsod Resolution No. 96 dated April 25, 1978, authorizing initiation of expropriation of Lot No. 180 of Arevalo and Lot Nos. 3497-CC and 3497-DD at La Paz for school site purposes.
City alleged Tax Declaration No. 40080 valued the property at P60.00 per square meter, total P43,560.00.

Private Respondent’s Position and Pleadings

Javellana admitted ownership in his Answer (filed December 9, 1981) but denied the public purpose asserted by the City, asserting the City already had an existing school site for Lapaz High School.
Javellana claimed the property's true fair market value was no less than P220.00 per square meter.
Javellana later filed an Amended Answer on April 21, 1984.

Petitioner's Motion for Writ of Possession and Alleged Deposit

On May 11, 1982, petitioner filed a Motion for Issuance of Writ of Possession alleging deposit of P40,000.00 with Philippine National Bank (PNB) Iloilo Branch — claimed to be an amount equivalent to 10% of the amount of compensation under Presidential Decree No. 1533, Section 1.
Petitioner attached a Certification from Estefanio C. Libutan, then Officer-in-Charge of the Iloilo City Treasurer’s Office, stating such deposit was made.
Javellana opposed the motion, reiterating objections to public purpose and alleging the 10% based on the tax valuation was grossly inadequate.

Trial Court Order of May 17, 1983 — Writ of Possession

On May 17, 1983, the trial court granted the Motion for Issuance of Writ of Possession, authorizing the petitioner to take immediate possession, control and disposition of Lot Nos. 3497-CC and 3497-DD.
A Writ of Possession issued in favor of the City, and petitioner took physical possession of the property around mid-1985.
Javellana never denied that the Subject Property was used as Lapaz National High School.

Dormancy and Subsequent Discovery of Non-Deposit

Expropriation proceedings remained largely dormant for many years after an Amended Answer in 1984.
On April 17, 2000, Javellana filed an Ex Parte Motion/Manifestation asserting that when he attempted to withdraw the P40,000 alleged deposit, he discovered no deposit was ever made.
Javellana presented a Certification from the Philippine National Bank stating no deposit was made for the expropriation of the Subject Property.
Plaintiff (City) could not produce documentary or testimonial evidence proving that any payment was actually made to Javellana.

Civil Action for Recovery of Possession (2003) and Consolidation

On April 2, 2003, Javellana filed a Complaint for Recovery of Possession, Fixing and Recovery of Rental and Damages (Civil Case No. 03-27571, Branch 28), alleging petitioner’s possession was illegal due to non-payment of compensation and praying for vacatur, rentals at P15,000.00 per month, moral, exemplary and actual damages and attorney’s fees.
On May 15, 2003, petitioner answered asserting the Subject Property had been taken for public use and that Javellana’s remedy was only for payment of just compensation; the legality of possession should be determined in the eminent domain case.
Parties jointly moved to consolidate Civil Case No. 14052 (expropriation) and Civil Case No. 03-27571 (recovery), which the trial court granted by Order dated August 26, 2003.

Post-Consolidation Proceedings — Creation of Commission and Motions

On November 14, 2003, a Commission was created to determine just compensation due to Javellana.
On November 20, 2003, Javellana filed a Motion/Manifestation arguing the court should first order condemnation before creating a commission, and that fair market value should be reckoned from the date the court orders condemnation, not the date of actual taking.
The RTC denied this November 19, 2003 Motion in an Order dated November 21, 2003.

Omnibus Motion and Request to Require 10% Deposit Based on Higher Valuation

On November 25, 2003, Javellana filed an Omnibus Motion to Declare Null and Void th