Case Summary (G.R. No. 176625)
Abandonment of Public Purpose
The projected airport improvements never materialized. Following a 1989 Presidential Memorandum directing the closure of Lahug Airport and enactment of R.A. 6958 transferring assets to MCIAA, the old airport land was repurposed for commercial development, including a jail and Ayala I.T. Park. The government never implemented the stated airport expansion.
Complaint for Reconveyance
In 1996, respondents sued MCIAA and ATO for recovery of possession and ownership, alleging:
- A verbal compromise during expropriation promising resale if airport plans were abandoned;
- Transfer of title to the Republic;
- Failure to pursue the public purpose; and
- Demand for return of the lot due to non-use.
Stipulated Facts and Trial Presentation
Parties stipulated to the expropriation of Lot No. 88 for airport purposes, transfer to MCIAA, and the 1989 directive closing Lahug Airport. At trial, respondents relied on Lozada’s testimony about the oral promise; petitioners denied any binding agreement and argued the judgment of condemnation was unconditional fee simple.
Regional Trial Court Ruling
On October 22, 1999, the RTC held that the expropriation was conditional on continued airport use, that the Republic abandoned the purpose, and that respondents were entitled to reconveyance upon payment of the expropriation price. The court ordered MCIAA and ATO to restore possession and title.
Court of Appeals Decision
In February 2006, the CA affirmed the RTC in toto. It found Lozada credible despite minor memory lapses and held that respondents proved the oral compromise. The CA rejected the petitioners’ reliance on the Statute of Frauds and cases holding unconditional fee simple acquisition.
Issues on Supreme Court Review
- Whether the expropriation judgment was conditional on airport use versus an unconditional fee simple transfer.
- Whether respondents proved an oral compromise agreement despite the Statute of Frauds.
- Whether factual findings on the oral agreement and condition precedent must be disturbed.
Public Purpose and Conditional Expropriation
Under the 1987 Constitution, eminent domain requires a specific public purpose and just compensation. The Court held that the judgment in Civil Case No. R-1881, read in full, imposed an implied condition that Lahug Airport remain in operation. Abandonment of that purpose rendered the expropriation improper, entitling former owners to reversion upon repayment of compensation.
Oral Compromise and Statute of Frauds
Respondents’ reliance on the partially performed oral agreement—specifically, their decision to forego appeal—precluded application of the Statute of Frauds, which does not bar evidence of oral contracts that have been executed in whole or in part. The CA’s factual findings on credibility and agreement were binding on the Supreme Court.
Constructive Trust and Restitution
Equity supported imposing a constructive trust over the property in favor of respondents. Petitioners held legal title with the obligation to reconvey once the public purpose f
Case Syllabus (G.R. No. 176625)
Procedural History
- Petition for review on certiorari under Rule 45 filed by MCIAA and ATO before the Supreme Court.
- Seeks reversal of the Court of Appeals Decision (February 28, 2006) and Resolution (February 7, 2007) in CA-G.R. CV No. 65796 affirming the RTC’s October 22, 1999 Decision.
- RTC Case No. CEB-18823: Complaint for recovery of possession and reconveyance of Lot No. 88, filed June 4, 1996.
- CA denied petitioners’ appeal and motion for reconsideration.
Facts of the Case
- Subject property: Lot No. 88-SWO-25042 (1,017 sqm) in Lahug, Cebu City; originally owned by Anastacio Deiparine.
- Expropriation initiated by Republic (CAA) for Lahug Airport expansion; Civil Case No. R-1881.
- 1947: U.S. Army occupation; property passed through various agencies to CAA.
- Bernardo L. Lozada, Sr. acquired Lot No. 88 during pendency; TCT No. 9045 issued in his name.
- December 29, 1961: CFI judgment in favor of Republic; fair market value set at ₱3.00/sqm; legal interest from November 16, 1947; ₱3,018 paid to Lozada.
- Owners appealed but, in reliance on an ATO compromise promise, did not pursue appeals.
- Title transferred to Republic (TCT No. 25057); airport expansion never done.
- Property later became Bagong Buhay Rehabilitation Complex and Ayala I.T. Park; squatters occupied a portion.
Antecedent Considerations
- November 29, 1989: President Corazon C. Aquino memorandum directing transfer of Lahug Airport operations to Mactan before end of 1990 and closure of Lahug.
- 1990: R.A. No. 6958 created MCIAA; vested it with Lahug and Mactan airports.
Issue Presented
- Whether respondents proved an oral compromise agreement entitling them to repurchase Lot No. 88 upon abandonment of airport operations.
- Whether the 1961 condemnation decree was unconditional fee simple, barring reversion.
- Whether respondents’ claim violated the Statute of Frauds.
Arguments of Petitioners (MCIAA and ATO)
- No proof of a repurchase agreement or compromise settlement.
- 1961 expropriation judgment conferred unconditional fee simple title.
- Verbal assurances violate the Statute of Frauds.