G.R. No. 187604 - City of Manila vs. Alegar Corporation

Case Summary (G.R. No. 187604)

Factual Background

The City sought to acquire privately owned lots totaling 1,505.30 square meters, covered by various Transfer Certificates of Title, for its socialized housing and land-for-the-landless programs. The City offered P1,500.00 per square meter, an offer the owners rejected as below zonal value. The City deposited P1,500,000.00 with the Land Bank to enable immediate occupation. The owners contended that the taking would benefit only a few long-time occupants and that the City had not negotiated in good faith.

Trial Court Proceedings

The City filed its complaint for expropriation in December 2003. The RTC issued a writ of possession in the City’s favor in June 2004. The parties jointly obtained release of the deposited P1,500,000.00 in December 2006. The parties then agreed to forego pre-trial and to submit simultaneous memoranda on whether the City had necessity to expropriate. The owners filed a memorandum; the City did not. On February 12, 2008, the RTC dismissed the complaint for failure to comply with Sections 9 and 10 of R.A. 7279 and for failing to prove that it had exhausted negotiations and other modes of acquisition.

Appeal to the Court of Appeals

The City filed an appeal to the Court of Appeals while its motion for reconsideration before the RTC remained unresolved. On February 27, 2009, the Court of Appeals affirmed the RTC’s dismissal. The CA held that the City failed to comply with the priority scheme in Section 9 of R.A. 7279 and with the requirement in Section 10 that expropriation be resorted to only after other modes of acquisition have been exhausted. The CA also rejected the City’s due process claim, noting that the City agreed to the memorandum procedure yet failed to submit its own memorandum.

Issues Presented to the Supreme Court

The petition raised four issues: whether the CA erred in not finding a denial of due process by the RTC; whether the CA erred in affirming that the City failed to comply with Sections 9 and 10 of R.A. 7279; whether the CA erred in finding that the City failed to establish genuine necessity for the taking; and whether the owners’ withdrawal of the P1,500,000.00 deposit constituted implied consent to the expropriation.

Parties’ Contentions

The City of Manila argued that it was denied due process when the RTC dismissed the complaint without hearing the City’s evidence, that on-site development made the statutory priorities inapplicable, and that the owners’ withdrawal of the deposit implied consent to the taking. The owners countered that the City made no good faith effort to negotiate, that privately owned lands ranked last under Section 9 and thus required proof that no other lands were available, and that alternative acquisition modes under Section 10 had not been exhausted.

Two-Stage Nature of Expropriation and Due Process

The Court reiterated that expropriation proceedings have two stages: the threshold determination of the plaintiff’s authority to exercise eminent domain under the facts, and the subsequent determination of just compensation. The first stage may terminate in dismissal or in a determination of public use. The parties’ agreement to dispense with pre-trial and to submit memoranda placed the issue of necessity squarely in issue before the RTC. The City’s failure to submit a memorandum and its subsequent filing of a notice of appeal while its motion for reconsideration remained pending meant the City could not successfully claim denial of opportunity to be heard.

Compliance with Sections 9 and 10 of R.A. 7279

The Court held that the CA correctly found noncompliance with Section 9 of R.A. 7279, which prescribes an order of priority in acquiring lands for socialized housing and expressly places privately owned lands last, except when on-site development is demonstrably more practicable and advantageous. The City claimed on-site development justified departure from the priority scheme but produced no evidence to support that claim. The Court further emphasized Section 10, which lists preferred modes of acquisition and provides that expropriation shall be used only when other modes have been exhausted. The Court invoked Article 35 of the Rules and Regulations Implementing the Local Government Code, which requires a conference to renegotiate where owners indicate willingness to sell at a higher price. The City made a proffered offer of P1,500.00 per square meter and did not engage in further negotiation after rejection; this failure justified dismissal.

Burden of Proof and Necessity

The Court reiterated that the burden rested on the local government to prove compliance with statutory prerequisites or to demonstrate that they did not apply. The owners’ answer raised a factual challenge to the City’s asserted public purpose, alleging that the taking would benefit only a few. The City’s submission of the issue without presenting evidence left that challenge unresolved. Consequently, the City failed to establish genuine necessity for the taking in the first-stage inquiry.

Effect of Advance Deposit

The Court explained that the advance deposit under Section 19 of the Local Government Code functions as an advance payment if the expropriation succeeds and as indemnity for damages if the proceedings fail. The deposit is not payment of just compensation and does not constitute the owners’ consent to the taking merely because they withdrew it. Because the complaint was dismissed, the owners’ withdrawal did not operate as waiver of defenses. The Court ordered that the owners return the remainder of the P1,500,000.00 to the City, but it awarded the owners P50,000.00 in attorneys

Case Syllabus (G.R. No. 187604)

Parties and Posture

CITY OF MANILA, PETITIONER filed a complaint for expropriation against ALEGAR CORPORATION, TEROCEL REALTY CORPORATION, AND FILOMENA VDA. DE LEGARDA, RESPONDENTS seeking to acquire several titled lots for its socialized housing program.
The complaint alleged acquisition for the City's land-for-the-landless and on-site development programs and offered P1,500.00 per square meter as the purchase price.
The City deposited P1,500,000.00 with the Land Bank of the Philippines to enable immediate occupancy and subsequently procured a writ of possession from the trial court.
The City sought review of the Court of Appeals' affirmation of the trial court's dismissal by filing a petition with the Supreme Court.

Key Facts

The subject lots totaled 1,505.30 square meters and were covered by several Torrens Certificates of Title as listed in the record.
The City initially offered P1,500.00 per square meter while the aggregate assessed value for taxation was P809,280.00.
The owners rejected the City's offer and alleged that the taking would benefit only a few long-time occupants and that the complaint was prematurely filed.
The trial court released the City’s P1,500,000.00 deposit to the owners upon joint motion on December 19, 2006, and the parties later agreed to forego pre-trial and to submit memoranda instead.
The City failed to submit its memorandum on the threshold issue of necessity, and the trial court dismissed the complaint on February 12, 2008 for noncompliance with statutory prerequisites.

Procedural History

The expropriation complaint was docketed in the RTC of Manila as Civil Case 03-108565 and a writ of possession issued on June 9, 2004.
The RTC dismissed the complaint for failure to comply with Sections 9 and 10 of R.A. 7279 and Article 35 of the Rules and Regulations Implementing the Local Government Code, and for failing to prove genuine necessity.
The City appealed to the Court of Appeals in CA-G.R. CV 90530, which affirmed the RTC's dismissal in a decision penned February 27, 2009.
The City brought the present petition to the Supreme Court, which resolved the case by denying the petition and affirming the CA decision with modifications.

Issues Presented

Whether the RTC denied CITY OF MANILA its right to due process by dismissing the complaint without hearing the City's evidence.
Whether the CA erred in affirming the RTC's finding that the City failed to comply with Sections 9 and 10 of R.A. 7279.
Whether the CA erred in upholding the RTC's ruling that the City failed to establish genuine necessity for the taking.
Whether the CA erred in not treating respondents' withdrawal of the P1,500,000.00 deposit as implied consent to expropriation.

Statutory Framework

Section 9 of R.A. 7279 prescribes the order of priority in acquiring land for socialized housing and places privately-owned lands last in the order except where on-site development is found more practicable and advantageous.
Section 10 of R.A. 7279 enumerates preferred modes of acquisition, including negotiated purchase, and provides that expropriation shall be resorted to only after other modes have been exhausted.
Article 35 of the Rules and Regulation