G.R. No. 164282 - Yujuico vs. Atienza, Jr.

Case Summary (G.R. No. 164282)

Ordinance, Expropriation, and Final Just Compensation

On 8 December 1995, the City Council of Manila passed an ordinance authorizing acquisition of certain parcels for the Francisco Benitez Elementary School. The property, located along Solis St. near Juan Luna St. in the Second District of Manila, covered an approximate area of 3,979.10 square meters and was covered by transfer certificates of title in Yujuico’s name.

The ordinance expressly contemplated payment from the SEF and provided that an amount not to exceed the fair market value prevailing in the area would be allocated out of that fund to defray the acquisition cost. When acquisition by negotiation failed, the City instituted an expropriation suit on 22 August 1996 against Yujuico as owner, docketed as Civil Case No. 96-79699 in RTC Manila Branch 15.

On 30 June 2000, the RTC rendered judgment declaring the lots expropriated for public use and fixing just compensation. The dispositive portion declared the lots expropriated, fixed the fair market value of the lots at P18,164.80 per square meter, fixed the fair market value of improvements at P978,000.00, and ordered payment of a total just compensation amount of P73,257,555.00, less the amount already deposited in court, resulting in a balance of P67,894,266.00, with interest at 6% per annum from the date of possession until full payment. The decision became final and executory since no appeal was interposed.

Execution and the 2 August 2001 Order Lifting Garnishment

After finality, on 6 April 2001, Yujuico filed a Motion for Execution of Judgment, which the RTC granted. Pursuant to a writ of execution dated 28 June 2001, the sheriff served a Notice of Garnishment on funds of the City deposited with the Land Bank of the Philippines, YMCA Branch, Manila, intended to satisfy the judgment amount and interest.

The City moved to quash the garnishment based on jurisprudence that public funds are not subject to execution. In acting on the motion, the RTC issued an Order dated 2 August 2001. The RTC recalled that, at the hearing on the motion to quash, the City’s counsel manifested that P36,403,170.00 had been appropriated by the City School Board (CSB) under CSB Resolutions Nos. 613 and 623, and that P31,039,881.00 was available for release. It also noted that P5,363,269.00, representing fifteen percent (15%) of the assessed value of the property, had been deposited in court and later received by Yujuico.

In line with the counsel’s manifestation and with no opposition to the release, the RTC ordered the release to Yujuico of P31,039,881.00 deposited with the Land Bank as partial payment. The RTC also lifted the garnishment, reasoning that the case was analogous to Municipality of Makati v. Court of Appeals, holding that public funds are not subject to levy and execution. The RTC further directed the CSB to pass a necessary resolution within thirty (30) days for payment of the remaining balance.

A copy of the 2 August 2001 Order was served on the CSB on 3 August 2001. Yujuico thereafter sought confirmation of compliance due to the absence of any action after the thirty-day period. When the CSB did not respond, she demanded compliance and, on 1 February 2002, filed a petition for contempt against respondents, asserting noncompliance with the court’s directive.

Contempt Petition and Subsequent Mandamus Decision

In response to the contempt petition, respondents filed a Motion to Dismiss, arguing that they had not disregarded the RTC order because the matter had been calendared and deliberated upon in CSB meetings. In an omnibus reply, respondents argued further that Yujuico’s failure to take the proper remedy to enforce the final and executory judgment could not justify a finding of contempt. They asserted, citing Municipality of Makati v. Court of Appeals, that the proper recourse was mandamus to compel the CSB to pass the necessary resolution. They also insisted that Yujuico had treated the 2 August 2001 Order as a writ of mandamus although it was only an order in furtherance of the writ of execution, and that her purpose was to avoid docket fees.

The RTC denied the contempt petition in an Order dated 17 May 2002. On 6 June 2002, Yujuico then filed a Petition for Mandamus against the CSB members seeking to compel the CSB to pass a resolution appropriating the amount needed to pay the balance of the court-adjudged compensation. The mandamus case was docketed as Spl. Civil Action No. 02-103748 and raffled to RTC Manila Branch 51. On Yujuico’s motion, Branch 51 ordered consolidation with the expropriation case before Branch 15 through an Order dated 23 August 2002.

On 9 October 2002, Branch 15 granted mandamus and ordered respondents to immediately pass a resolution appropriating the necessary amount and disbursing it to fully pay the remaining balance. The RTC reasoned that the case was on all fours with Municipality of Makati v. Court of Appeals and emphasized that a final and executory judgment established Yujuico’s legal right and imposed an imperative duty on respondents.

Respondents’ motion for reconsideration was denied on 13 December 2002. Since no appeal was filed, the decision became final and executory on 2 January 2003. Entry of judgment was issued on 15 January 2003, and the RTC granted Yujuico’s Motion for Execution on 12 March 2003.

Petition for Relief from Judgment and the 25 June 2004 Order

Despite finality and after execution proceedings had started, on 14 March 2003 respondents filed a Petition for Relief from Judgment, also seeking a temporary restraining order and a writ of preliminary injunction. They relied on excusable negligence as the reason for their failure to seasonably file an appeal.

The RTC denied the application for a TRO because it had already granted Yujuico’s motion for execution. Nonetheless, the RTC granted the Petition for Relief from Judgment in its Order dated 25 June 2004. This order had the effect of giving due course to respondents’ appeal, even though the mandamus decision had already become final.

Yujuico challenged the 25 June 2004 Order in the Supreme Court. She sought reversal and setting aside of the grant of relief from judgment on a pure question of law.

Procedural Issues Raised by Respondents and the Court’s Treatment

Respondents attacked Yujuico’s petition on procedural grounds. They argued that the order granting relief from judgment was interlocutory and therefore not appealable, and that Yujuico violated the hierarchy of courts. They also asserted that the Supreme Court had no exclusive original jurisdiction to issue certiorari, given that the RTC and the Court of Appeals share concurrent jurisdiction in certain cases.

The Court acknowledged that an interlocutory order cannot be made subject to appeal in the ordinary sense. However, it found that the petition’s allegations, when considered in context, showed that the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction in granting relief from judgment. The Court thus treated the petition as a special civil action for certiorari under Rule 65, exercising discretion and to end protracted litigation. It relied on the principle that technical miscaptioning should not defeat adjudication on the merits when the petition was filed within the proper period for a Rule 65 petition, and it considered facial allegations of reversible error as contextual averments of grave abuse of discretion.

On the hierarchy-of-courts issue, the Court held that the doctrine is not an iron-clad rule and may be relaxed under exceptional and compelling circumstances. It pointed to the prolonged finality of the judgment and the fact that the expropriated property had been used as a school site for years, while the adjudged compensation had not been fully paid.

Respondents also raised the issue that Yujuico allegedly failed to implead the correct members of the CSB after substitutions. The Court noted that it had already ordered the impleading/substitution of the replaced CSB members in its earlier Resolution dated 8 August 2005. It further held that the procedural posture had been substantially cured: only one of the newly impleaded CSB members filed a comment; the others were deemed to have adopted the same position through their retained counsel and by adopting the comment already filed.

Finally, respondents invoked alleged noncompliance with Section 4, Rule 7 and Section 4, Rule 45 of the 1997 Rules of Civil Procedure as amended by Supreme Court Circular A.M. No. 00-2-10-SC. They claimed deficiencies in the verification, including that it allegedly failed to state certain material dates and that it allegedly did not include specific averments about the petitioner’s reading of the petition and the authenticity of attached copies. The Court rejected the procedural attack. It held that the requirement of verification is meant to assure good faith and the truth of allegations, that it affects the form of pleadings rather than their substantive viability, and that the verification in question substantially complied such that the alleged defects were not material enough to warrant dismissal.

Grounds for Relief under Rule 38 and the Court’s Assessment

The substantive issue focused on whether the RTC properly granted respondents’ Petition for Relief from Judgment. The Court explained that Sections 2 and 3, Rule 38 allow relief if the movant shows, first, that through fraud, accident, mistake or excusable negligence the party was prevented from taking an appeal, and second, that the party has a good and substantial cause of action or defense. It emphasized that relief from judgment is equitable in nature and operates as an act of grace allowed only in exceptional cases.

Respondents claimed excusable negligence based on the alleged failure of an OCLO employee, Ronald Silva, to forward the RTC order denying reconsideration to the handling lawyers. Silva received the denial order on 17 December 2002 but, due to being

Case Syllabus (G.R. No. 164282)

The case arose from a Petition for Review on Certiorari filed by Teresita M. Yujuico questioning the Order dated 25 June 2004 that granted respondents’ Petition for Relief from Judgment under Section 2, Rule 38 of the 1997 Rules of Civil Procedure.
The underlying controversy was a mandamus case filed by Yujuico as petitioner in the RTC, docketed as Civil Case No. 02-103748 before the RTC of Manila, Branch 15.
The RTC’s later order giving due course to respondents’ belated appeal effectively disturbed a prior final Decision dated 9 October 2002 in the mandamus case.
The Supreme Court treated the petition as a special civil action for certiorari under Rule 65, notwithstanding the petition’s caption as Rule 45 review, because the lower court allegedly acted with grave abuse of discretion amounting to lack or excess of jurisdiction.
The Supreme Court ultimately reversed the order granting relief from judgment and reinstated the mandamus decision ordering respondents to appropriate and disburse funds for full payment of just compensation.

Parties and Procedural Posture

Petitioner was Teresita M. Yujuico, the judgment obligee in an eminent domain case and the petitioner in the RTC mandamus case.
Respondents were Hon. Jose L. Atienza, Jr. and other officials and members of the City School Board of Manila (CSB), including Dr. Ma. Luisa S. Quiones, Roger Gernale, and later substituted members and secretariat officials, plus Judge Mercedes Posada-Lacap in her capacity as presiding judge of the RTC Manila Branch 15.
Yujuico first pursued execution of the final expropriation judgment and later sought contempt and then mandamus to compel completion of payment.
Respondents moved for relief from judgment claiming excusable negligence, and the RTC granted the relief, thereby enabling an appeal that had otherwise become final.
Yujuico challenged the 25 June 2004 order in the Supreme Court, arguing that the grant of relief from judgment was legally erroneous and constituted grave abuse of discretion.
The Supreme Court addressed procedural infirmities raised by respondents before resolving the core validity of the RTC’s grant of relief.

Core Facts of Expropriation

On 8 December 1995, the City Council of Manila enacted an ordinance authorizing the City Mayor to acquire by negotiation or expropriation certain parcels of land for a school site.
The project required acquisition of a parcel of approximately 3,979.10 square meters, located along Solis St. near Juan Luna St. in the Second District of Manila.
The parcels were covered by multiple Transfer Certificates of Title and were in the name of petitioner.
The ordinance provided that the acquisition cost would be allocated from the Special Education Fund (SEF) of the City of Manila not to exceed the fair market value prevailing at the time.
When acquisition by negotiation failed, the City filed an eminent domain case against Yujuico, which was docketed as Civil Case No. 96-79699 and raffled to RTC Manila Branch 15.
On 30 June 2000, the RTC rendered a decision declaring the property expropriated for public use and fixing the fair market value of the lots and improvements as part of the just compensation.
The judgment became final and executory because no appeal was taken by either party.
Yujuico later moved for execution, and the trial court issued a writ of execution and a notice of garnishment directed at the City funds deposited with the Land Bank of the Philippines.

Garnishment Dispute and Quashal

During execution, the City sought to quash the garnishment based on jurisprudence that public funds could not be levied or executed.
In the Order dated 2 August 2001, the RTC recalled counsel’s manifestation that the CSB had already appropriated P36,403,170.00, with P31,039,881.00 available for release, and that P5,363,269.00 represented the fifteen percent (15%) deposit.
The RTC ordered release of P31,039,881.00 from the Land Bank as partial payment of the adjudged just compensation.
The RTC also lifted the notice of garnishment after reasoning that the case was “on all fours” with Municipality of Makati v. Court of Appeals (190 SCRA 206), where the rule on immunity of public funds from levy and execution was applied.
The RTC gave the CSB thirty (30) days from receipt of the order to pass the necessary resolution for the payment of the remaining balance.
Yujuico later repeatedly sought confirmation whether the CSB had complied with the RTC directive, but she did not receive an adequate response.

Contempt Proceedings Filed

After the CSB failed to act within the specified compliance period, Yujuico filed a petition for contempt against CSB officers and members in Civil Case No. 02-102837.
Respondents moved to dismiss and claimed they did not disregard the RTC order because the matter had been calendared and deliberated upon in CSB meetings.
In reply, respondents argued that Yujuico had an available remedy and that her failure to pursue the proper recourse should not support a contempt finding.
Respondents asserted that Yujuico should have filed a petition for mandamus to compel the CSB to pass the needed resolution, citing Municipality of Makati v. Court of Appeals.
The RTC denied the contempt petition on 17 May 2002.

Mandamus Case and RTC Decision

On 6 June 2002, Yujuico filed a Petition for Mandamus against CSB members to compel the passing of a resolution and disbursement for the balance of the court-adjudged compensation.
The mandamus petition was docketed as Spl. Civil Action No. 02-103748 and raffled to RTC Manila Branch 51.
At Yujuico’s motion, Branch 51 ordered consolidation of the mandamus case with the expropriation case before Branch 15.
On 9 October 2002, Branch 15 granted mandamus and ordered respondents to immediately pass a resolution appropriating the amount and disbursing it for full and complete payment of the remaining balance.
The RTC grounded its ruling on the principle in Municipality of Makati v. Court of Appeals that eminent domain must operate within fair play and justice and that mandamus may compel fulfillment of a right established by a final judgment.
The RTC held that the final and executory expropriation judgment created a legal right for Yujuico and an imperative duty for respondents.
The RTC denied respondents’ motion for reconsideration on 13 December 2002, and the decision became final on 2 January 2003.

Relief from Judgment and Challenged Order

Yujuico’s execution efforts continued, and the RTC granted her motion for execution on 12 March 2003.
On 14 March 2003, respondents filed a Petition for Relief from Judgment and requested a temporary restraining order and writ of preliminary injunction.
Respondents relied on excusable negligence as the reason for their failure to file a timely appeal.
The RTC denied the application for TRO due to