G.R. No. 168967 ; February 12, 2010.
CITY OF ILOILO represented by HON. JERRY P. TREÑAS, City Mayor, Petitioner, vs. HON. LOLITA CONTRERAS-BESANA, Presiding Judge, Regional Trial Court, Branch 32, and ELPIDIO JAVELLANA, Respondents.

FACTS

On September 18, 1981, the City of Iloilo filed a Complaint for eminent domain against Elpidio T. Javellana to expropriate two parcels of land (Lot Nos. 3497-CC and 3497-DD) for use as a school site for Lapaz High School. The city alleged the property’s value was ₱43,560.00 based on its tax declaration. Javellana, in his Answer, claimed the fair market value was no less than ₱220.00 per square meter. On May 11, 1982, the city filed a Motion for Issuance of Writ of Possession, claiming it had deposited ₱40,000.00 (allegedly 10% of the compensation) with the Philippine National Bank (PNB). On May 17, 1983, the trial court granted the motion and issued a Writ of Possession, allowing the city to take immediate possession. The city took physical possession around mid-1985. Sixteen years later, on April 17, 2000, Javellana filed an Ex Parte Motion/Manifestation alleging that no such ₱40,000.00 deposit was ever made with the PNB, a fact supported by a PNB Certification. Attempts at amicable settlement failed. On April 2, 2003, Javellana filed a Complaint for Recovery of Possession, Fixing and Recovery of Rental and Damages. The two cases were consolidated. A commission was created to determine just compensation. Javellana filed an Omnibus Motion to declare null and void the May 17, 1983 Order and to require a deposit. On December 12, 2003, the RTC issued the First Assailed Order, nullifying the May 17, 1983 Order and ordering the city to deposit 10% of the just compensation, with the value to be determined as of the time the complaint was filed. On June 15, 2004, the RTC issued the Second Assailed Order (an “Amended Order”), identical to the first but changing the reckoning point for just compensation to “the time this order was issued” (June 15, 2004). The city’s Motion for Reconsideration was denied by the Third Assailed Order on March 9, 2005, with the RTC ruling that since no deposit was made, the taking was illegal and just compensation should be determined as of the date of the order. A Commission Report provided various estimates of the property’s value from 1981 to 2004.

ISSUE

Whether the Regional Trial Court gravely abused its discretion in issuing the Assailed Orders which nullified the May 17, 1983 Order granting the writ of possession and changed the reckoning date for the determination of just compensation.

RULING

The Supreme Court granted the petition. The RTC committed grave abuse of discretion. The May 17, 1983 Order granting the writ of possession was a final order on the issue of possession and had long become final and executory; it could not be nullified by the RTC after 20 years. The city’s lawful taking of the property occurred in 1985 when it entered and used it as a school site. Just compensation must be determined as of that date of taking, not as of the date of the filing of the complaint or the date of a subsequent court order. The failure to make a deposit does not affect the validity of the taking nor alter the reckoning date for valuation; it merely results in the city not being entitled to the accrual of interest on the amount ultimately determined as just compensation. The case was remanded to the RTC solely for the determination of the exact amount of just compensation due, computed as of 1985, with legal interest from the time of taking until full payment. The Court strongly condemned the city’s failure to compensate the landowner for over 25 years as arbitrary, capricious, high-handed, and irresponsible, making it liable for damages.