Case Summary (A.M. No. P-02-1651)
Petitioner and Respondent Roles
The Republic asserts ownership under prior expropriation proceedings. Vicente G. Lim claims ownership through mortgage and foreclosure of Lot 932 and seeks quieting of title and possession against the Republic and its officers.
Key Dates and Procedural Background
Expropriation proceedings were instituted in 1938; CFI awarded just compensation in 1940; an entry of judgment was made on April 5, 1948. The Supreme Court decision in Valdehueza affirming the CFI was promulgated on May 19, 1966. Lim executed his mortgage in 1964 and foreclosed in 1976. Lim filed quieting action in 1992; RTC ruled for Lim in 2001; Court of Appeals affirmed in 2003; the Supreme Court denied the Republic’s petition in 2004 and issued the en banc resolution affirming the CA decision in 2005.
Applicable Law and Constitutional Basis
The decision applies the 1987 Constitution (Section 9, Article III: “Private property shall not be taken for public use without just compensation.”). It relies on established eminent domain jurisprudence that title to expropriated property vests in the condemnor only upon full payment of just compensation, Civil Code Article 2127 regarding mortgage rights in expropriation, and procedural rules limiting repetitive motions for reconsideration.
Factual Foundation of the Dispute
The Republic filed an expropriation action for Lots 932 and 939 for military/airport use, deposited P9,500 in bank pursuant to court order, and the CFI awarded P4,062.10 as just compensation. The Republic’s deposit/payment records were lost or inconclusive. Subsequent proceedings produced an award of P16,248.40 with interest by the CFI and affirmation by this Court in Valdehueza, yet the Republic failed to effect actual payment to the owners or their successors for decades.
Mortgage, Foreclosure and Transfer to Respondent
While ownership remained ostensibly with Valdehueza and Panerio, they mortgaged Lot 932 to Vicente Lim in 1964. After default, Lim foreclosed the mortgage in 1976 and obtained registration (TCT No. 63894) in his name, positioning him to bring a quieting action when the Republic did not satisfy the outstanding expropriation awards.
Lower Courts’ Findings and Rationale
The RTC (2001) declared Lim absolute owner and entitled to possession; the Court of Appeals (2003) affirmed, emphasizing that prolonged nonpayment of legally adjudicated just compensation—while the government enjoyed the property’s benefits—violated principles of fair play and justice, and constituted an oppressive exercise of eminent domain that created a removable cloud on title.
Procedural Considerations before the Supreme Court
The Republic sought review but had petitions denied and multiple motions for reconsideration were either explicitly disallowed under Rule 52 (no second motion for reconsideration) or noted without action. The Court nevertheless undertook a merits re-examination in the interest of justice given the Republic’s insistence on its claimed ownership.
Central Legal Issue
Whether the Republic retained ownership of Lot 932 despite failure to pay just compensation as ordered in the expropriation proceedings and later affirmed by this Court, and whether such failure justified restoring possession to the private owner or his assignee.
Constitutional and Doctrinal Principles Applied
The Court reiterated that Article III, Section 9 of the 1987 Constitution guarantees just compensation and that just compensation encompasses not only correct valuation but also payment within a reasonable time. The doctrine applied is that while the government acquires the right to appropriate and use property upon lawful appropriation, title does not pass to the condemnor until full payment of just compensation is made; therefore, expropriation is incomplete without payment.
Effect of Prolonged Government Delay
The Court found the Republic’s delay—spanning more than fifty years and marked by bureaucratic avoidance—to be arbitrary and confiscatory. Because the Republic repeatedly failed to obey judicial mandates (including the May 19, 1966 decision) and did not complete the expropriation process by payment, the condemnor never perfected title. The Republic’s conduct was treated as tantamount to refusal to perform its constitutional obligation.
Exception to the General Rule on Recovery of Possession
Although established doctrine generally precludes restitution of possession to landowners who were not paid (i.e., the owner may only demand compensation), the Court carved a practical and equitable exception: where the government fails to pay just compensation within a reasonable period—expressed as five years from the finality of the judgment—the owner may recover possession. This rule seeks to deter government inaction and vindicate property rights where delay becomes tantamount to confiscation.
Application to the Present Case and Public Interest Argument
Applying the exception, the Court concluded that reversion of Lot 932 to respondent would not imperil national defense nor cause irreparable public harm: the airport had ceased operations, only limited structures remained (some residential for military personnel), and practical disruption would be minimal. The special circumstances and the Republic’s protracted refusal ju
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Citation and Procedural Posture
- Full citation: 500 Phil. 652 EN BANC [G.R. NO. 161656, June 29, 2005].
- Nature of case: Petition for review on certiorari filed by the Republic of the Philippines (through the Office of the Solicitor General) seeking reversal of the Court of Appeals decision affirming a Regional Trial Court judgment that declared Vicente G. Lim absolute and exclusive owner of Lot No. 932 (former Lahug Airport).
- Lower court judgments and appeals timeline:
- CFI (expropriation): Civil Case No. 781 (CFI of Cebu) — expropriation instituted Sept. 5, 1938; CFI Order (deposit) Oct. 19, 1938; CFI Decision ordering payment May 14, 1940; entry of judgment April 5, 1948.
- CFI (recovery of possession): Civil Case No. R-7208 — filed Sept. 20, 1961; CFI Decision July 31, 1962.
- This Court (appeal from CFI decision): L-21032 — Decision May 19, 1966 (affirming CFI).
- Foreclosure and registration events: mortgage annotated 1964; foreclosure 1976; TCT No. 63894 issued in Lim’s name.
- RTC (quieting): Civil Case No. CEB-12701 — complaint filed Aug. 20, 1992; RTC Decision May 4, 2001 declaring Lim owner.
- Court of Appeals: CA-G.R. CV No. 72915 — Decision Sept. 18, 2003 affirming RTC.
- Supreme Court: petition for review denied March 1, 2004 (Resolution); motion for reconsideration denied May 17, 2004 (Resolution); subsequent petitions/motions noted and addressed; final EN BANC Resolution/Judgment June 29, 2005 — CA decision affirmed in toto; motion for reconsideration denied with finality; entry of judgment ordered.
Facts — Properties, Titles, Deposits, and Early Proceedings
- Properties and original registrants:
- Lot 932 (Banilad Friar Land Estate, Lahug, Cebu City): registered to Gervasia Denzon, TCT No. 14921, area 25,137 square meters.
- Lot 939: registered to Eulalia Denzon, TCT No. 12560, area 13,164 square meters.
- Expropriation initiation and deposit:
- Republic instituted special civil action for expropriation on Sept. 5, 1938 (Civil Case No. 781) for military reservation/airport purposes.
- Pursuant to CFI Order of Oct. 19, 1938, Republic deposited P9,500.00 with the Philippine National Bank and took possession.
- Early judgment and appeals:
- CFI rendered Decision on May 14, 1940 ordering payment of P4,062.10 as just compensation to the Denzons.
- Denzons appealed; appeal dismissed March 11, 1948; entry of judgment April 5, 1948.
- Post-war and administrative responses:
- 1950: Jose Galeos (heir) filed claim for rentals with National Airports Corporation — denied knowledge.
- Another heir, Nestor Belocura, elevated claim to President Carlos Garcia, who wrote to CAA and Secretary of National Defense to expedite payment.
- Sept. 6, 1961: Lt. Manuel Cabal expressed willingness to pay appraised value but rejected claim then.
- Ownership succession and subsequent action:
- Successors-in-interest (Francisca Galeos-Valdehueza and Josefina Galeos-Panerio) filed action for recovery of possession with damages on Sept. 20, 1961 (Civil Case No. R-7208).
- Nov. 9, 1961: TCT Nos. 23934 (Lot 932) and 23935 (Lot 939) issued in names of Francisca and Josefina with annotation: “subject to the priority of the National Airports Corporation to acquire said parcels of land, Lots 932 and 939 upon previous payment of a reasonable market value.”
- Valdehueza v. Republic developments:
- CFI Decision July 31, 1962: found plaintiffs owners, ordered deed of sale in favor of Republic upon payment, adjusted market value P16,248.40 with 6% interest per annum from April 5, 1948.
- CFI motion for reconsideration denied; appeal to Supreme Court (L-21032); this Court’s Decision May 19, 1966 affirmed the CFI Decision and found plaintiffs still registered owners and not entitled to recover possession but to demand fair market value.
- Mortgage and foreclosure:
- 1964: Valdehueza and Panerio mortgaged Lot 932 to Vicente Lim; mortgage annotated at back of title.
- 1976: Lim foreclosed mortgage for failure to pay; TCT No. 23934 cancelled and TCT No. 63894 issued in Lim’s name.
RTC and Court of Appeals Proceedings Leading to This Petition
- Vicente Lim’s quieting action:
- Aug. 20, 1992: Lim filed complaint for quieting of title with RTC Branch 10, Cebu City; later amended to implead the Republic.
- May 4, 2001: RTC rendered judgment declaring Lim “absolute and exclusive owner of Lot No. 932 with all the rights of an absolute owner including the right to possession”; monetary claims dismissed.
- Court of Appeals (CA) affirmance:
- CA Decision Sept. 18, 2003 (Penned by Justice Sergio L. Pestaño, concurring Justices Perlita J. Tria Tirona and Jose C. Mendoza):
- Upheld RTC decision.
- Held that the Republic evaded its duty of paying compensation fixed by expropriation over more than 50 years while deriving benefits from the property — contrary to fair play.
- Emphasized that just compensation includes payment within a reasonable time; significant delay makes compensation not “just.”
- Concluded that the Republic’s claim constituted a cloud on Lim’s title which could be removed by quieting action; therefore the CA affirmed dispossessory relief in Lim’s favor.
- CA Decision Sept. 18, 2003 (Penned by Justice Sergio L. Pestaño, concurring Justices Perlita J. Tria Tirona and Jose C. Mendoza):
Questions Presented / Core Legal Issues
- Whether the Republic retained ownership of Lot 932 despite failure to pay the just compensation fixed by the CFI and later affirmed by this Court.
- Whether non-payment of just compensation for an extended period (over 50 years) justifies recovery of possession by the private owner or successor-in-interest.
- Whether respondent Vicente Lim acquired title/rights by mortgage foreclosure and quieting action despite annotations on TCT and prior expropriation pending at the time of the mortgage.
- Whether Lim acted in bad faith and, if so, whether bad faith affects his right to ownership or possession in light of the Republic’s alleged outstanding ownership claim.
- Whether constructions and military use on the property alter equitable relief (reversion to private owner) due to asserted public interest/defense concerns.
Governing Constitutional and Doctrinal Principles (as stated in the opinion)
- Constitutional mandate:
- Section 9, Article III, Constitution: “Private property shall not be taken for public use without just compensation.” — treated as a limitation of governmental power to be strictly construed against expropriator and liberally for owner.
- Doctrine on expropriation stages and completion:
- Expropriation consists of two stages: (1) determination of authority and order of condemnation; (2) determination of just compensation by court with commissioners. Expropriation is complete only upon completion of both stages.
- Title to property expropriated does not pass to the condemnor until full payment of just compensation;