City of Cebu vs. Spouses Dedamo

Just compensation in expropriation cases instituted by local government units is determined as of the time of actual taking pursuant to Section 19 of R.A. No. 7160, which prevails over the procedural rule in Section 4, Rule 67 of the Rules of Court providing for valuation at the time of the filing of the complaint.

The City of Cebu required respondents' lots (Lot No. 1527 and a portion of Lot No. 1528) for the construction of a public road serving as an access/relief road to Gorordo Avenue. Respondents initially moved to dismiss the expropriation complaint, alleging the taking was for the benefit of a private entity, Cebu Holdings, Inc., and that the offered price was disproportionately low compared to the P20,000 per square meter paid for neighboring lots. The trial court subsequently issued a writ of possession. On 14 December 1994, the parties executed a compromise agreement wherein respondents conceded the public purpose of the expropriation, accepted a provisional payment of P1,786,400, and stipulated that just compensation would be definitively fixed by court-appointed commissioners.

• The Expropriation Filing: On 17 September 1993, City of Cebu filed a complaint to expropriate 1,624 square meters of respondents' land for a public road, depositing P51,156 (15% of the fair market value) with the Philippine National Bank to take immediate possession pursuant to Section 19 of R.A. No. 7160.
• Initial Resistance: Respondents moved to dismiss, claiming the true beneficiary was Cebu Holdings, Inc., and contesting the low offered price relative to the P20,000 per square meter paid for neighboring properties.
• The Agreement: On 14 December 1994, the parties executed an agreement. Respondents conceded the public purpose, agreed to part with ownership upon payment of just compensation determined by the court, accepted a provisional payment of P1,786,400, and jointly petitioned the court to render judgment based on the valuation of court-appointed commissioners.
• Commissioners' Report and Judgment: The trial court appointed three commissioners. Their initial report led to a 7 May 1996 decision fixing compensation at P24,865,930. Petitioner moved for reconsideration, noting an area overlap with a separate expropriation case. The commissioners submitted an amended assessment for the 478 square meters of Lot No. 1528, fixing the value at P12,824.10 per square meter (totaling P20,826,339.50). The trial court approved this amended assessment in its 27 December 1996 Order.

• Timing of Valuation: Petitioner asserted that just compensation should be determined as of the date of the filing of the complaint (17 September 1993), not the time of actual taking in 1994, invoking the ruling in National Power Corporation vs. Court of Appeals.

• Binding Agreement: Respondents maintained that the trial court correctly based its decision on the parties' mutual agreement to be bound by the commissioners' report.
• Estoppel: Respondents argued petitioner failed to interpose a serious objection to the commissioners' amended report and was thus estopped from attacking the valuation upon which the decision was based.
• Actual Value: Respondents contended the determined just compensation was even lower than the actual value of the property at the time of the taking in 1994.

• Timing of Just Compensation: Whether just compensation should be determined as of the date of the filing of the complaint or the time of actual taking.

• Timing of Just Compensation: Just compensation must be determined as of the time of actual taking. Section 19 of R.A. No. 7160 expressly provides this rule for local government units, and as a substantive law, it prevails over the procedural rule in Section 4, Rule 67 of the Rules of Court. Moreover, National Power Corporation vs. Court of Appeals did not categorically rule out valuation at the time of taking, having admitted exceptions to the general rule of valuation at the filing of the complaint. Additionally, petitioner is estopped from questioning the valuation after voluntarily agreeing to be bound by the commissioners' report and failing to interpose a serious objection during the hearings.

• Eminent Domain — The fundamental State power to appropriate private property for public use or purpose upon payment of just compensation, operating in the nature of a compulsory sale to the State.
• Estoppel in Pais — Arises when one, by acts, representations, admissions, or silence when one ought to speak out, intentionally or through culpable negligence induces another to believe certain facts to exist, and such other rightfully relies and acts on such belief to their prejudice. Applied here because petitioner consented to the commissioners' valuation and failed to object seriously, thus it cannot now deny the correctness of the assessment.
• Law on Contracts (Art. 1159 & 1315, Civil Code) — Obligations arising from contracts have the force of law between contracting parties and should be complied with in good faith. The parties' solemn agreement to be bound by the commissioners' report constitutes a contract that petitioner cannot unilaterally disregard.

• "The amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property." — Quoting the final proviso of Section 19, R.A. No. 7160, establishing the controlling substantive rule on the reckoning point for just compensation in local government expropriations.
• "Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith." — Quoting Article 1159 of the Civil Code, reinforcing the binding nature of the parties' agreement to submit to the commissioners' valuation.

• National Power Corporation vs. Court of Appeals, 254 SCRA 577 [1996] — Distinguished. Did not categorically rule that just compensation must be determined as of the filing of the complaint, as it explicitly acknowledged an exception where valuation is fixed at the time of taking.
• Moday v. Court of Appeals, 268 SCRA 586 [1997] — Followed. Cited for the definition of eminent domain as a fundamental State power inseparable from sovereignty.
• Ibaan Rural Bank, Inc. v. Court of Appeals, 321 SCRA 88 [1999]; Philippine National Bank v. Court of Appeals, 315 SCRA 309 [1999] — Followed. Cited for the definition and elements of estoppel in pais.
• Philippine National Bank v. Independent Planters Association, Inc., 122 SCRA 113 [1983] — Followed. Cited to support the principle that a substantive law (R.A. 7160) prevails over a procedural law (Rules of Court).

• Section 19, R.A. No. 7160 (Local Government Code) — Authorizes local government units to exercise the power of eminent domain for public use upon payment of just compensation, and expressly mandates that the amount to be paid shall be based on the fair market value at the time of the taking of the property. Applied as the controlling substantive law dictating the reckoning point for just compensation, overriding conflicting procedural rules.
• Section 4, Rule 67 of the Rules of Court — Provides that just compensation shall be determined as of the date of the filing of the complaint. Subordinated to Section 19 of R.A. 7160 because the rule is procedural in nature, while the statute is substantive.
• Articles 1159 and 1315 of the Civil Code — Govern the binding effect of obligations arising from contracts. Applied to enforce the parties' agreement to be bound by the commissioners' report, precluding petitioner from later assailing the valuation.

Puno, Kapunan, Ynares-Santiago, De Leon, Jr., and Austria-Martinez, JJ.