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

Case Summary (G.R. No. 187604)

Applicable Law and Constitutional Basis

Applicable constitutional framework: 1987 Philippine Constitution (decision issued after 1990). Statutory and regulatory provisions applied: Republic Act No. 7279 (Urban Development and Housing Act, UDHA) — particularly Sections 9 and 10; Article 35 of the Rules and Regulations Implementing the Local Government Code (procedures for offer and conference when owner seeks a higher price); Local Government Code provisions on expropriation (including the advance deposit requirement under Section 19); and procedural precepts from the Rules of Court. The Court also relied on existing jurisprudence cited in the record.

Material Facts

The Manila City Council enacted Ordinance authorizing acquisition of specified titled lots for socialized housing. The City offered P1,500.00 per sq. m.; owners rejected the offer as too low and indicated willingness to sell at an appropriate price. The City filed an expropriation complaint in the RTC after depositing P1,500,000.00 to enable possession. The RTC issued a writ of possession; later parties agreed to dispense with pre-trial and to submit memoranda on whether necessity for expropriation existed. Respondents filed a memorandum; the City did not. The RTC dismissed the complaint for failure to comply with statutory prerequisites (Sections 9 and 10 of R.A. 7279) and for failing to show exhaustion of other acquisition modes and genuine necessity. The Court of Appeals affirmed; the Supreme Court denied the petition with specified modifications.

Procedural History

City passed ordinance authorizing acquisition and made a written offer.
Owners rejected offer; City filed expropriation action in RTC.
City deposited funds and obtained writ of possession.
Parties agreed to forego pre-trial and submit memoranda; only respondents timely filed theirs.
RTC dismissed complaint for procedural and substantive noncompliance with R.A. 7279 and implementing rules.
CA affirmed the dismissal.
Petition to the Supreme Court was denied, with modifications on indemnity and return of deposit; City was allowed to re-file after statutory compliance.

Issues Presented to the Court

Whether the RTC denied the City due process by dismissing the case without hearing the City’s side.
Whether the CA erred in upholding the RTC’s ruling that the City failed to comply with Sections 9 and 10 of R.A. 7279 in attempting to expropriate the lots.
Whether the CA erred in sustaining the RTC’s finding that the City failed to establish genuine necessity/public use for the taking.
Whether respondents’ withdrawal of the City’s deposit constituted implied consent to expropriation.

Court’s Analysis — Due Process and the City’s Opportunity to Be Heard

The Court treated expropriation as having two stages: (1) determination of the authority/necessity to acquire property for public use (a threshold question), and (2) determination of just compensation. The parties’ agreement to submit memoranda in lieu of pre-trial implicated the threshold issue. By agreeing to that procedure, the City effectively waived its opportunity to present additional evidence at trial; it nonetheless failed to submit a memorandum. The City’s subsequent appeal, filed before the RTC ruled on its motion for reconsideration, extinguished any complaint of denial of opportunity to be heard. The dismissal therefore did not violate due process because the City had agreed to the procedure and then failed to avail itself of the agreed method for presenting its case on the threshold question.

Court’s Analysis — Compliance with R.A. 7279 Section 9 (Priorities)

Section 9 of R.A. 7279 prescribes an order of priority for acquiring lands for socialized housing: (a) government-owned lands; (b) alienable public domain lands; (c) unregistered/idle lands; (d) lands within declared priority/zonal improvement/slum improvement sites not yet acquired; (e) BLISS sites not yet acquired; and (f) privately-owned lands. The statute contains an exception permitting deviation where on-site development is found more practicable and advantageous to beneficiaries; however, the local government bears the burden of proving that the exception applies. The City asserted on-site development was more practicable because the occupants were long-time residents of the lots, but it produced no evidence to substantiate that factual claim. Without that proof, the City could not bypass the statutory priorities that place private lands last.

Court’s Analysis — Compliance with R.A. 7279 Section 10 (Modes of Acquisition) and Negotiation Requirement

Section 10 of R.A. 7279 lists preferred modes of acquiring land (community mortgage, land swapping, negotiated purchase, etc.) and conditions that expropriation should be used only after other modes are exhausted. The Court emphasized the policy against litigation as the first remedy and the statutory expectation that the government exhaust reasonable negotiation and other modes. Article 35 of the Implementing Rules of the Local Government Code specifically requires the local chief executive to call property owners to a conference if owners indicate willingness to sell at a higher price. Here, respondents rejected the P1,500.00 offer yet indicated openness to sale at a proper price, but the City made no further effort to renegotiate or show exhaustion of other modes. The City’s failure to make a bona fide effort to reach agreement rendered the expropriation filing premature and subject to dismissal.

Court’s Analysis — Genuine Necessity and Burden of Proof

Respondents directly contested the asserted public purpose, alleging the proposed taking would benefit only a few occupants. That affirmative defense raised a factual question going to the threshold stage. Because the parties agreed to submit memoranda rather than take evidence and the City did not file its memorandum or otherwise present evidence to prove public necessity, the Court found the City failed to establish the requisite showing that the taking was for a legitimate public use or benefit. The burden to prove genuine necessity rested on the City at the threshold stage, and it did not meet that burden.

Court’s Analysis — Deposit, Withdrawal, and Implied Consent

The Court distinguished between the advance deposit required to obtain a writ of possession and payment of just compensation. The deposit functions as (a) a pre-payment if expropriation succeeds and (b) indemnity for damages if the proceeding is dismissed. Withdrawal of such a deposit by respondents does not constitute implied consent to expropriation or a waiver of defenses. Because the complaint was dismissed, the deposit may be used to indemnify respondents for damages or returned to the City as appropriate. In this case respo

Case Syllabus (G.R. No. 187604)

Facts and the Case

On March 1, 2001, the City Council of Manila passed Ordinance 8012 authorizing the City Mayor to acquire certain lots belonging to respondents Alegar Corporation, Terocel Realty Corporation, and Filomena Vda. De Legarda for use in the socialized housing project of the City of Manila.
The City offered to buy the subject lots at P1,500.00 per square meter (sq m); the owners rejected this offer as too low.
On December 2, 2003, the City filed a complaint for expropriation against the respondents before the Regional Trial Court (RTC) of Manila.
The City alleged that it sought to acquire the lots for its land-for-the-landless and on-site development programs involving the residents occupying them (Amended Complaint, paragraphs 3 & 5).
The aggregate value of the lots for taxation purposes was P809,280.00; the City deposited P1,500,000.00 with the Land Bank of the Philippines to enable immediate occupation pending the hearing.
Respondents Alegar and Terocel challenged the legitimacy of the City’s taking as benefitting solely a few long-time occupants; Alegar also stated that, while it declined the City’s initial offer, it did not foreclose the possibility of selling for the right price (Annex “a2” of Answer).
The subject lots total 1,505.30 square meters and are covered by TCT Nos. 61050, 61051, 61052, 61059, 61061, 61062, 61063, 61064, 90853 and 126822. (Footnote 1)
The expropriation case was docketed as Civil Case No. 03-108565 before the RTC. (Footnote 2)

Procedural History

March 1, 2001: Ordinance 8012 passed by City Council of Manila authorizing the acquisition.
December 2, 2003: City filed complaint for expropriation (RTC docketed Civil Case 03-108565).
June 9, 2004: RTC issued a writ of possession in favor of the City.
December 19, 2006: Upon joint motion of the parties, the RTC released the P1,500,000.00 deposit to the defendant owners.
October 15, 2007: Parties agreed to forego pre-trial and to simultaneously submit memoranda on whether there was necessity for expropriation; owners submitted a memorandum, the City did not (Order dated October 15, 2007).
February 12, 2008: RTC dismissed the City’s complaint for failure to comply with Sections 9 and 10 of R.A. 7279 and for failing to present evidence establishing genuine necessity.
The City moved for reconsideration; before the RTC acted, the City appealed to the Court of Appeals (CA) (docketed as CA-G.R. CV 90530).
February 27, 2009: CA, penned by Associate Justice Remedios A. Salazar-Fernando (with Associate Justices Fernanda Lampas-Peralta and Apolinario D. Bruselas, Jr. concurring), affirmed the RTC’s dismissal.
The City filed a petition to the Supreme Court (G.R. No. 187604); the decision under review is dated June 25, 2012 (689 Phil. 31). The Supreme Court decision was authored by Justice Abad.

Issues Presented

Whether the Court of Appeals erred in failing to rule that the RTC denied the City its right to due process when it dismissed the case without hearing the City’s side.
Whether the CA erred in affirming the RTC’s ruling that the City failed to comply with the requirements of Sections 9 and 10 of R.A. 7279 in attempting to acquire the subject lots by expropriation.
Whether the CA erred in failing to set aside the RTC’s ruling that the City failed to establish the existence of genuine necessity in expropriating the subject lots for public use or purpose.
Whether the CA erred in failing to rule that the owners’ withdrawal of the P1.5 million deposit constituted implied consent to expropriation of their lots.

Legal Framework and Authorities Cited

Republic Act No. 7279, known as the Urban Development Housing Act (UDHA), specifically:
- Section 9. Priorities in the acquisition of Land: the order of priority for lands for socialized housing is:
  - (a) Those owned by the Government or any of its subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations and their subsidiaries;
  - (b) Alienable lands of the public domain;
  - (c) Unregistered or abandoned and idle lands;
  - (d) Those within the declared Areas for Priority Development, Zonal Improvement Program sites, and Slum Improvement and Resettlement Program sites which have not yet been acquired;
  - (e) Bagong Lipunan Improvement of Sites and Services or BLISS sites which have not yet been acquired; and
  - (f) Privately-owned lands.
  - Where on-site development is found more practicable and advantageous to the beneficiaries, the priorities mentioned shall not apply. The local government units shall give budgetary priority to on-site development of government lands. (Emphasis supplied in source)
- Section 10. Modes of Land Acquisition: enumerates modes of acquiring land including community mortgage, land swapping, land assembly or consolidation, land banking, donation to the Government, joint-venture agreement, negotiated purchase, and expropriation; provides that expropriation shall be resorted to only when other modes of acquisition have been exhausted; parcels owned by small property owners shall be exempted for purposes of the Act. (Emphasis supplied in source)
Article 35 of the Rules and Regulations Implementing the Local Government Code (as quoted in the source):
- Offer to buy private property for public use must be in writing, specify property, reasons, and price offered.
- If the owner is willing to sell but at a higher price than offered, the local chief executive shall call them to a conference for the purpose of reaching an agreement on the selling price; the chairman of the appropriation or finance committee of the sanggunian, or a representative, shall participate; when agreement is reached, a contract of sal