SPOUSES CIRIACO and ARMINDA ORTEGA, petitioners

vs. CITY OF CEBU, respondent.

[G.R. No. 181562-63. October 2, 2009.]

FACTS:

➢ Spouses Ciriaco and Arminda Ortega are the registered owners of a parcel of land in
Cebu City, however, one-half of this land is occupied by squatters.

➢ On September 24, 1990, [the Spouses Ortega] filed an ejectment case against the
squatters and decision was rendered in favor of them.

➢ The case eventually reached the Supreme Court, which affirmed the decision of the
MTCC.

➢ The decision of the MTCC became final and executory, and a writ of execution was issued
on February 1, 1994.

➢ On May 23, 1994, the Sangguniang Panglungsod of [Cebu City] enacted City Ordinance
No. 1519 giving authority to the City Mayor to expropriate one-half (1/2) portion (2,856
square meters) of [the spouses Ortega's] land (which is occupied by the squatters), and
appropriating for that purpose the amount of P3,284,400.00 or at the price of ONE
THOUSAND ONE HUNDRED FIFTY PESOS (P1,150.00) per square meter.

➢ The value of the land was determined by the Cebu City Appraisal Committee

➢ Pursuant to said ordinance, [Cebu City] filed a Complaint for Eminent Domain against [the
spouses Ortega].

➢ On March 13, 1998, the [RTC] issued an order declaring that [Cebu City] "has the lawful
right to take the property subject of the instant case, for public use or purpose described
in the complaint upon payment of just compensation"

➢ Based on the recommendation of the appointed Commissioners (one of whom was the
City Assessor of [Cebu City], [RTC] issued another Order fixing the value of the land
subject to expropriation at ELEVEN THOUSAND PESOS (P11,000.00) per square
meter and ordering [Cebu City] to pay [Spouses Ortega] the sum of THIRTY ONE
MILLION AND FOUR HUNDRED SIXTEEN THOUSAND PESOS (P31,416,000.00) as
just compensation for the expropriated portion.

➢ The Decision of the [RTC] became final and executory because of [Cebu City's] failure to
perfect an appeal on time, and a Writ of Execution was issued on September 17, 1999 to
enforce the court's judgment.

➢ Upon motion of [the Spouses Ortega], the [RTC] issued an Order dated March 11, 2002,
for the garnishment of the appropriated amount.

➢ [Cebu City] filed motions contending that the price set by the RTC as just compensation to
 be paid to the SPS. Ortega is way beyond reach of its intended beneficiaries for its
socialized housing program. Motion was denied. MR was also denied. [Cebu City] filed
the Petition in CA. (CA-GR SP no. 80187).

➢ By virtue of the Order of the [RTC] Sheriff Benigno B. Reas[,] Jr. served a Notice of
Garnishment to Philippine Postal Bank, P. del Rosario and Junquera Branch Cebu City,
garnishing [Cebu City's] bank deposit therein.

➢ During the pendency of Petition in CA, Cebu city filed a motion to dissolve, quash or recall
the Order of Garnishment. Motion was denied. While SPS. Ortega filed Ex-parte motion
to Direct the new manager of Phil. Postal Bank to Release the garnished amount. The
Motion was granted. Cebu City filed another petition in CA. (CA- GR SP no. 00147)

➢ Ruling of CA:
1. CA- GR SP no. 80187 - Partially granted RTC Orders dated March 11, 2002 (order of
garnishment) and July 2, 2003 (Notice of Garnishment) were annulled and set aside for
denying Cebu City;’s Motion to Stay Execution, but AFFIRMED in denying the Motion to
modify judgment and withdraw from Expropriation.
2. CA-GR SP no. 00147 - RTC order dated March 8, 2004 (Denying Motion to
Dissolve..) Annulled and set aside.

ISSUE:
1. Whether or not Cebu City may be allowed to withdraw from the Expropriation Proceedings
after the expropriation case has become final and executory.
2. Whether or not an Order of Garnishment be issued to satisfy judgment of expropriation when
CEBU City refuse to effect the payment

RULING:
1. No. The Court held that Cebu City cannot withdraw from the expropriation proceedings since
the expropriation case had long been final and executory. Both the Order of Expropriation and
the Order fixing just compensation by the RTC can no longer be modified.

Section 4, Rule 67 of the Rules of Court on Expropriation provides:

Sec. 4. Order of Execution.

If the objections to and the defenses against the right of the plaintiff to expropriate
the property are overruled, or when no party appears to defend as required by this Rule,
the court may issue an order of expropriation declaring that the plaintiff has a lawful right
to take the property sought to be expropriated, for the public use or purpose described in
the complaint, upon the payment of just compensation to be determined as of the date of
the taking of the property or the filing of the complaint, whichever came first.

A final order sustaining the right to expropriate the property may be appealed by any party
aggrieved thereby. Such appeal, however, shall not prevent the court from determining the just
compensation to be paid.

After the rendition of such an order, the plaintiff shall not be permitted to dismiss or discontinue
the proceeding except on such terms as the court deems just and equitable.
TWO STAGES OF EXPROPRIATION PROCEEDINGS:

1. Determination of the authority of the plaintiff to exercise the power of eminent

domain and the propriety of its exercise in the context of the facts involved in the
suit. This ends with an order, if not of dismissal of the action, of condemnation [or
order of expropriation] declaring that the plaintiff has the lawful right to take the
property sought to be condemned, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the
date of the filing of the complaint; and
2. Determination by the court of the just compensation for the property sought to
be taken.

The Court held in the recent case of Republic v. Phil-Ville Development and Housing
Corporation that:

[A]n order of expropriation denotes the end of the first stage of expropriation. Its end then
paves the way for the second stage; the determination of just compensation, and,
ultimately, payment. An order of expropriation puts an end to any ambiguity regarding
the right of the petitioner to condemn the respondents' properties. Because an order of
expropriation merely determines the authority to exercise the power of eminent domain
and the propriety of such exercise, its issuance does not hinge on the payment of just
compensation. After all, there would be no point in determining just compensation if, in the
first place, the plaintiff's right to expropriate the property was not first clearly established.

Conversely, as is evident from the foregoing, an order by the trial court fixing just compensation
does not affect a prior order of expropriation. As applied to the case at bar, Cebu City can no
longer ask for modification of the judgment, much less, withdraw its complaint, after it failed to
appeal even the first stage of the expropriation proceedings.

CEBU contended that it should be allowed to withdraw because the price fixed by the RTC was
too high and the intended expropriation of the SPS. Ortega’s property is dependent on Cebu’s
availability of funds to pay for the same.

The Court ruled that it is well-settled in jurisprudence that the determination of just
compensation is a judicial prerogative.

“In Export Processing Zone Authority v. Dulay, we declared:

The determination of "just compensation" in eminent domain cases is a judicial function. The
executive department or the legislature may make the initial determinations but when a party
claims a violation of the guarantee in the Bill of Rights that private property may not be taken for
public use without just compensation, no statute, decree, or executive order can mandate that
its own determination shall prevail over the court's findings. Much less can the courts be
precluded from looking into the "just-ness" of the decreed compensation. We, therefore, hold
that P.D. No. 1533, which eliminates the court's discretion to appoint commissioners pursuant to
Rule 67 of the Rules of Court, is unconstitutional and void. To hold otherwise would be to
undermine the very purpose why this Court exists in the first place.

In the recent cases of National Power Corporation v. dela Cruz and Forfom Development
Corporation v. Philippine National Railways, we emphasized the primacy of judicial prerogative
in the ascertainment of just compensation as aided by the appointed commissioners, to wit:

Though the ascertainment of just compensation is a judicial prerogative, the appointment

of commissioners to ascertain just compensation for the property sought to be taken is a
mandatory requirement in expropriation cases. While it is true that the findings of
commissioners may be disregarded and the trial court may substitute its own estimate of
the value, it may only do so for valid reasons; that is, where the commissioners have
applied illegal principles to the evidence submitted to them, where they have
disregarded a clear preponderance of evidence, or where the amount allowed is either
grossly inadequate or excessive. Thus, "trial with the aid of the commissioners is a
substantial right that may not be done away with capriciously or for no reason at all".

2. NO. The Court held that properties may not be seized under writs of execution or
garnishment to satisfy judgments. This is based on public policy that
disbursements of public funds must be covered by the corresponding
appropriation required by law.

The proper remedy of [the Spouses Ortega] is to file a mandamus case against [Cebu City] in
order to compel its Sangguniang Panglungsod to enact an appropriation ordinance for the
satisfaction of [the Spouses Ortega's] claim. This remedy is provided in the case of Municipality
of Makati v. Court of Appeals, which provides:

“…where the Municipality of Makati enacted an ordinance appropriating certain sum of money
as payment for the land the municipality expropriated, chargeable to Account No. S/A 265-
537154-3 deposited in PNB Buendia Branch, the Supreme Court held that the trial court has no
authority to garnish the Municipality's other bank account (Account No. S/A 263- 530850-7) in
order to cover the deficiency in Account No. S/A 265- 537154-3, even if both accounts are in the
same branch of the PNB.

In said case, the Supreme Court held:

Absent any showing that the municipal council of Makati has passed an ordinance appropriating
from its public funds an amount corresponding to the balance due under the RTC decision
dated June 4, 1987, less the sum of P99,743.94 deposited in Account No. S/A 265-537154-3,
no levy under execution may be validly effected on the public funds of petitioner deposited in
Account No. S/A 263-530850-7. “

The foregoing rules find application in the case at bar. While the SP of petitioner
enacted Ordinance No. 1519 appropriating P3,284,400 for payment of just compensation
for the expropriated land, such ordinance cannot be considered as a source of authority for the
[RTC] to garnish [Cebu City's] bank account with Philippine Postal Bank, which was already
appropriated for another purpose. [Cebu City's] account with Philippine Postal Bank was not
specifically opened for the payment of just compensation nor was it specifically appropriated by
Ordinance No. 1519 for such purpose. Said account, therefore, is exempt from garnishment.
Since the [RTC] has no authority to garnish [Cebu City's] other bank accounts in order to satisfy
its judgment, consequently, it has no authority to order the release of [Cebu City's] other
deposits with Philippine Postal Bank . . . .”