Title
Mactan-Cebu International Airport Authority vs. Lozada, Sr.
Case
G.R. No. 176625
Decision Date
Feb 25, 2010
Lot No. 88, expropriated for Lahug Airport expansion, reverted to original owners after airport abandonment due to conditional expropriation and constructive trust. Respondents must return compensation but retain property appreciation.

Case Summary (G.R. No. 137489)

Procedural Background in the Expropriation Action

  • The Republic instituted expropriation proceedings (Civil Case No. R-1881) before the Court of First Instance of Cebu to acquire several Lahug lots, including Lot No. 88.
  • Judgment in the expropriation action (December 29, 1961) awarded compensation at P3.00 per square meter; Bernardo Lozada received P3,018.00.
  • During the pendency of appeals, ATO/CAA representatives proposed a compromise: affected owners would not pursue appeals or would withdraw appeals in consideration of an undertaking that, should the Government abandon the Lahug Airport, the expropriated lots would be resold to the former owners at the expropriation price. Relying on this assurance, Lozada did not pursue his appeal.
  • Title to Lot No. 88 was subsequently transferred to the Republic (registered under a new TCT). The planned airport expansion did not proceed.

Subsequent Events Prompting Reconveyance Action

  • Presidential memorandum (November 29, 1989) directed transfer of general aviation operations of Lahug Airport to Mactan and closure of Lahug Airport thereafter. Congress enacted R.A. No. 6958 (circa 1990), creating MCIAA and transferring assets including Lahug Airport.
  • The Lahug Airport ceased to serve the originally intended public purpose and the land was later devoted to non-airport uses.
  • On June 4, 1996, MCIAA and ATO initiated a complaint for recovery of possession and reconveyance of Lot No. 88 (Civil Case No. CEB-18823, raffled to RTC Branch 57). Respondents (Lozada and heirs) answered, alleging an oral compromise/assurance and seeking return of the property now that the public purpose no longer existed. Petitioners denied any binding assurance and maintained that the condemnation judgment vested fee simple title in the Republic unconditionally.

Stipulated Facts at Trial

The parties stipulated before trial to the following material facts:

  1. The lot is Lot No. 88-SWO-25042, Banilad Estate, Cebu City, approx. 1,017 sqm.
  2. The property was expropriated in favor of the Republic by Decision dated December 29, 1961 in Civil Case No. R-1881.
  3. The public purpose for expropriation was the Lahug Airport.
  4. After the supposed expansion, the property was transferred to MCIAA.
  5. On November 29, 1989, President Corazon C. Aquino directed transfer of general aviation operations at Lahug Airport to MCIAA and the closure of Lahug Airport thereafter.

Trial Evidence and Lower Court Disposition

  • Respondents presented Bernardo Lozada, Sr. as their sole witness; petitioners presented MCIAA legal assistant Michael Bacarisas.
  • The Regional Trial Court (Branch 57) rendered judgment (October 22, 1999) ordering MCIAA and ATO to restore possession and ownership of Lot No. 88 to respondents upon payment of the expropriation price, and ordered the Register of Deeds to transfer title back to respondents.
  • Petitioners appealed to the Court of Appeals (CA); the CA affirmed the RTC decision in full (Decision dated February 28, 2006) and denied reconsideration (Resolution dated February 7, 2007). Petitioners then filed a petition for review under Rule 45.

Issues Raised by Petitioners in the Supreme Court Petition

Petitioners advanced principally three arguments:

  1. Respondents failed to prove the existence of a repurchase agreement or compromise settlement entitling them to reacquisition of Lot No. 88.
  2. The condemnation judgment in Civil Case No. R-1881 was absolute and unconditional, thereby granting fee simple title to the Republic that is not defeasible by nonuse or abandonment of the public purpose.
  3. The alleged verbal assurances are barred by the Statute of Frauds (oral agreements affecting interests in land must be in writing).

Supreme Court’s Analysis of Eminent Domain and Public Purpose

  • The Court revisited and distinguished prior decisional law. It expressly revisits the precedent in Fery v. Municipality of Cabanatuan (1921) and explains that earlier authorities were decided in a different constitutional and legal context.
  • The Court articulates a binding doctrine: the taking of private property by eminent domain is subject to the condition that the property be devoted to the specific public purpose stated in the petition for expropriation. The two mandatory requirements for an exercise of eminent domain are (1) public purpose and (2) just compensation. These requirements are not merely formal; they are implied conditions that justify the condemnor’s retention of the property.
  • If the particular public purpose is not initiated, pursued, or is peremptorily abandoned, then the judgment of expropriation is flawed for lack of factual justification and the former owner may seek reconveyance upon returning the just compensation received. This constitutional analysis is grounded in the takings clause and the requirement of just compensation under the 1987 Constitution.

The Court’s Treatment of the 1961 Expropriation Judgment’s Text and Intent

  • The Court notes significant statements in the body of the 1961 judgment that presupposed the continued operation of Lahug Airport (e.g., the trial court’s presumption that Lahug Airport “will continue to be in operation”). Those statements, read together with the dispositive portion, support the conclusion that the acquisition was ordered under an implicit condition that the airport would continue in operation.
  • Because the dispositive portion did not explicitly incorporate that conditional premise, the Court holds the finding in the body of the judgment must be read into the fallo to give full effect to the trial court’s underlying reasoning. When the airport ceased operation and the land was not used for expansion, the implied condition supporting the exercise of eminent domain failed, justifying reconveyance.

Factual Finding on Oral Compromise and Evidentiary Issues

  • The Supreme Court affirms the factual determinations of the RTC and CA that an oral compromise/assurance was made to respondents that the government would resell the expropriated lots to former owners if the airport purpose ceased. The Court emphasizes that findings of fact by trial courts and the CA are binding and conclusive on the Supreme Court in the absence of an applicable exception; a Rule 45 petition raises questions of law and cannot ordinarily disturb such findings.
  • Lozada’s testimony was credited as personal knowledge of a promise made to him and other lot owners, and the CA found him credible despite some lapses consistent with the passage of time. Petitioners’ contrary evidence (e.g., that other owners had written agreements while Lozada did not) did not overturn the factfinder’s credibility determination.

Statute of Frauds and Partial Performance

  • The Court holds that the Statute of Frauds does not bar respondents’ claim because the alleged oral agreement was partially performed. The doctrine is that the Statute of Frauds is designed to prevent fraud in executory contracts; where a contract has been partially performed, excluding parol evidence would itself foster fraud by allowing the party who accepted benefits to repudiate obligations.
  • Here, respondents’ forbearance from pursuing appeal and other acts based on the government’s assurance constitute partial performance sufficient to take the oral promise out of the Statute of Frauds’ bar.

Constructive Trust, Equitable Relief, and Restitution Principles Applied

  • The Court applies the equitable doctrine of constructive trust to vindicate respondents’ right to repurchase or recover
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