PUBLIC USE

LORENZO SUMULONG and EMILIA VIDANES-BALAOING, petitioners,

vs.
HON. BUENAVENTURA GUERRERO and NATIONAL HOUSING AUTHORITY, respondents.

CORTES, J.:
On December 5, 1977 the National Housing Authority (NIIA) filed a complaint for expropriation of
parcels of land covering approximately twenty five (25) hectares, (in Antipolo, Rizal) including the
lots of petitioners Lorenzo Sumulong and Emilia Vidanes-Balaoing with an area of 6,667 square
meters and 3,333 square meters respectively. The land sought to be expropriated were valued by
the NHA at one peso (P1.00) per square meter adopting the market value fixed by the provincial
assessor in accordance with presidential decrees prescribing the valuation of property in
expropriation proceedings.
Together with the complaint was a motion for immediate possession of the properties. The NHA
deposited the amount of P158,980.00 with the Philippine National Bank, representing the "total
market value" of the subject twenty five hectares of land, pursuant to Presidential Decree No. 1224
which defines "the policy on the expropriation of private property for socialized housing upon
payment of just compensation."
On January 17, 1978, respondent Judge issued the following Order:
Plaintiff having deposited with the Philippine National Bank, Heart Center Extension
Office, Diliman, Quezon City, Metro Manila, the amount of P158,980.00 representing
the total market value of the subject parcels of land, let a writ of possession be
issued.
SO ORDERED.
Pasig, Metro Manila, January 17, 1978.
(SGD)
BUENAVENTURA S.
GUERRERO
J
u
d
g
e
Petitioners filed a motion for reconsideration on the ground that they had been deprived of the
possession of their property without due process of law. This was however, denied.

Hence, this petition challenging the orders of respondent Judge and assailing the constitutionality of
Pres. Decree No. 1224, as amended. Petitioners argue that:
1) Respondent Judge acted without or in excess of his jurisdiction or with grave
abuse of discretion by issuing the Order of January 17, 1978 without notice and
without hearing and in issuing the Order dated June 28, 1978 denying the motion for
reconsideration.
2) Pres. Decree l224, as amended, is unconstitutional for being violative of the due
process clause, specifically:
a) The Decree would allow the taking of property regardless of size
and no matter how small the area to be expropriated;
b) "Socialized housing" for the purpose of condemnation proceeding,
as defined in said Decree, is not really for a public purpose;
c) The Decree violates procedural due process as it allows immediate
taking of possession, control and disposition of property without
giving the owner his day in court;
d) The Decree would allow the taking of private property upon
payment of unjust and unfair valuations arbitrarily fixed by
government assessors;
e) The Decree would deprive the courts of their judicial discretion to
determine what would be the "just compensation" in each and every
raise of expropriation.
Indeed, the exercise of the power of eminent domain is subject to certain limitations imposed by the
constitution, to wit:
Private property shall not be taken for public use without just compensation (Art. IV,
Sec. 9);
No person shall be deprived of life, liberty, or property without due process of law,
nor shall any person be denied the equal protection of the laws (Art. IV, sec. 1).
Nevertheless, a clear case of constitutional infirmity has to be established for this Court to nullify
legislative or executive measures adopted to implement specific constitutional provisions aimed at
promoting the general welfare.
Petitioners' objections to the taking of their property subsumed under the headings of public use, just
compensation, and due process have to be balanced against competing interests of the public
recognized and sought to be served under declared policies of the constitution as implemented by
legislation.
1. Public use
a) Socialized Housing

Petitioners contend that "socialized housing" as defined in Pres. Decree No. 1224, as amended, for
the purpose of condemnation proceedings is not "public use" since it will benefit only "a handful of
people, bereft of public character."
"Socialized housing" is defined as, "the construction of dwelling units for the middle and lower class
members of our society, including the construction of the supporting infrastructure and other
facilities" (Pres. Decree No. 1224, par. 1). This definition was later expanded to include among
others:
a) The construction and/or improvement of dwelling units for the middle and lower
income groups of the society, including the construction of the supporting
infrastructure and other facilities;
b) Slum clearance, relocation and resettlement of squatters and slum dwellers as
well as the provision of related facilities and services;
c) Slum improvement which consists basically of allocating homelots to the dwellers
in the area or property involved, rearrangemeant and re-alignment of existing houses
and other dwelling structures and the construction and provision of basic community
facilities and services, where there are none, such as roads, footpaths, drainage,
sewerage, water and power system schools, barangay centers, community centers,
clinics, open spaces, parks, playgrounds and other recreational facilities;
d) The provision of economic opportunities, including the development of commercial
and industrial estates and such other facilities to enhance the total community
growth; and
e) Such other activities undertaken in pursuance of the objective to provide and
maintain housing for the greatest number of people under Presidential Decree No,
757, (Pres. Decree No. 1259, sec. 1)
The "public use" requirement for a and exercise of the power of eminent domain is a flexible and
evolving concept influenced by changing conditions. In this jurisdiction, the statutory and judicial
trend has been summarized as follows:
The taking to be valid must be for public use. There was a time when it was felt that a
literal meaning should be attached to such a requirement. Whatever project is
undertaken must be for the public to enjoy, as in the case of streets or parks.
Otherwise, expropriation is not allowable. It is not anymore. As long as the purpose
of the taking is public, then the power of eminent domain comes into play. As just
noted, the constitution in at least two cases, to remove any doubt, determines what is
public use. One is the expropriation of lands to be subdivided into small lots for
resale at cost to individuals. The other is in the transfer, through the exercise of this
power, of utilities and other private enterprise to the government. It is accurate to
state then that at present whatever may be beneficially employed for the general
welfare satisfies the requirement of public use [Heirs of Juancho Ardona v. Reyes,
G.R. Nos. 60549, 60553-60555 October 26, 1983, 125 SCRA 220 (1983) at 234-5
quoting E. FERNANDO, THE CONSTITUTION OF THE PHILIPPINES 523-4, (2nd
ed., 1977) Emphasis supplied].

The term "public use" has acquired a more comprehensive coverage. To the literal import of the term
signifying strict use or employment by the public has been added the broader notion of indirect
public benefit or advantage. As discussed in the above cited case of Heirs of Juancho Ardona:
The restrictive view of public use may be appropriate for a nation which
circumscribes the scope of government activities and public concerns and which
possesses big and correctly located public lands that obviate the need to take private
property for public purposes. Neither circumstance applies to the Philippines. We
have never been a laissez faire State. And the necessities which impel the exertion
of sovereign power are all too often found in areas of scarce public land or limited
government resources. (p. 231)
Specifically, urban renewal or redevelopment and the construction of low-cost housing is recognized
as a public purpose, not only because of the expanded concept of public use but also because of
specific provisions in the Constitution. The 1973 Constitution made it incumbent upon the State to
establish, maintain and ensure adequate social services including housing [Art. 11, sec. 7]. The
1987 Constitution goes even further by providing that:
The State shall promote a just and dynamic social order that will ensure the
prosperity and independence of the nation and free the people from poverty through
policies that provide adequate social services, promote full employment, a rising
standard of living and an improved quality of life for all. [Art. II, sec. 9]
The state shall by law, and for the common good, undertake, in cooperation with the
private sector, a continuing program of urban land reform and housing which will
make available at affordable cost decent housing and basic services to
underprivileged and homeless citizens in urban centers and resettlement areas. It
shall also promote adequate employment opportunities to such citizens. In the
implementation of such program the State shall respect the rights of small property
owners. (Art. XIII, sec. 9, Emphaisis supplied)
Housing is a basic human need. Shortage in housing is a matter of state concern since it directly and
significantly affects public health, safety, the environment and in sum, the general welfare. The
public character of housing measures does not change because units in housing projects cannot be
occupied by all but only by those who satisfy prescribed qualifications. A beginning has to be made,
for it is not possible to provide housing for are who need it, all at once.
Population growth, the migration to urban areas and the mushrooming of crowded makeshift
dwellings is a worldwide development particularly in developing countries. So basic and urgent are
housing problems that the United Nations General Assembly proclaimed 1987 as the "International
Year of Shelter for the Homeless" "to focus the attention of the international community on those
problems". The General Assembly is Seriously concerned that, despite the efforts of Governments at
the national and local levels and of international organizations, the driving conditions of the majority
of the people in slums and squatter areas and rural settlements, especially in developing countries,
continue to deteriorate in both relative and absolute terms." [G.A. Res. 37/221, Yearbook of the
United Nations 1982, Vol. 36, p. 1043-4]
In the light of the foregoing, this Court is satisfied that "socialized housing" fans within the confines of
"public use". It is, particularly important to draw attention to paragraph (d) of Pres. Dec. No. 1224
which opportunities inextricably linked with low-cost housing, or slum clearance, relocation and
resettlement, or slum improvement emphasize the public purpose of the project.

In the case at bar, the use to which it is proposed to put the subject parcels of land meets the
requisites of "public use". The lands in question are being expropriated by the NHA for the expansion
of Bagong Nayon Housing Project to provide housing facilities to low-salaried government
employees. Quoting respondents:
1. The Bagong Nayong Project is a housing and community development
undertaking of the National Housing Authority. Phase I covers about 60 hectares of
GSIS property in Antipolo, Rizal; Phase II includes about 30 hectares for industrial
development and the rest are for residential housing development.
It is intended for low-salaried government employees and aims to provide housing
and community services for about 2,000 families in Phase I and about 4,000 families
in Phase II.
It is situated on rugged terrain 7.5 kms. from Marikina Town proper; 22 Kms. east of
Manila; and is within the Lungs Silangan Townsite Reservation (created by
Presidential Proclamation No. 1637 on April 18, 1977).
The lands involved in the present petitions are parts of the expanded/additional areas
for the Bagong Nayon Project totalling 25.9725 hectares. They likewise include raw,
rolling hills. (Rollo, pp. 266-7)
The acute shortage of housing units in the country is of public knowledge. Official data indicate that
more than one third of the households nationwide do not own their dwelling places. A significant
number live in dwellings of unacceptable standards, such as shanties, natural shelters, and
structures intended for commercial, industrial, or agricultural purposes. Of these unacceptable
dwelling units, more than one third is located within the National Capital Region (NCR) alone which
lies proximate to and is expected to be the most benefited by the housing project involved in the
case at bar [See, National Census and Statistics Office, 1980 Census of Population and Housing].
According to the National Economic and Development Authority at the time of the expropriation in
question, about "50 per cent of urban families, cannot afford adequate shelter even at reduced rates
and will need government support to provide them with social housing, subsidized either partially or
totally" [NEDA, FOUR YEAR DEVELOPMENT PLAN For 1974-1977, p. 357]. Up to the present,
housing some remains to be out of the reach of a sizable proportion of the population" [NEDA,
MEDIUM-TERM PHILIPPINE DEVELOPMENT PLAN 1987-1992, p. 240].
The mushrooming of squatter colonies in the Metropolitan Manila area as well as in other cities and
centers of population throughout the country, and, the efforts of the government to initiate housing
and other projects are matters of public knowledge [See NEDA, FOUR YEAR DEVELOPMENT
PLAN For 1974-1977, pp. 357-361; NEDA, FIVE-YEAR PHILIPPINE DEVELOPMENT PLAN 19781982, pp. 215-228 NEDA, FIVE YEAR PHILIPPINE DEVELOPMENT PLAN 1983-1987, pp. 109117; NEDA, MEDIUM TERM PHILIPPINE DEVELOPMENT PLAN 1987-1992, pp. 240-254].
b) Size of Property
Petitioners further contend that Pres. Decree 1224, as amended, would allow the taking of "any
private land" regardless of the size and no matter how small the area of the land to be expropriated.
Petitioners claim that "there are vast areas of lands in Mayamot, Cupang, and San Isidro, Antipolo,
Rizal hundred of hectares of which are owned by a few landowners only. It is surprising [therefore]
why respondent National Housing Authority [would] include [their] two man lots ..."

In J.M. Tuason Co., Inc. vs. Land Tenure Administration [G. R. No. L-21064, February 18, 1970, 31
SCRA 413 (1970) at 428] this Court earlier ruled that expropriation is not confined to landed estates.
This Court, quoting the dissenting opinion of Justice J.B.L. Reyes in Republic vs. Baylosis, [96 Phil.
461 (1955)], held that:
The propriety of exercising the power of eminent domain under Article XIII, section 4
of our Constitution cannot be determined on a purely quantitative or area basis. Not
only does the constitutional provision speak of lands instead of landed estates, but I
see no cogent reason why the government, in its quest for social justice and peace,
should exclusively devote attention to conflicts of large proportions, involving a
considerable number of individuals, and eschew small controversies and wait until
they grow into a major problem before taking remedial action.
The said case of J.M. Tuason Co., Inc. departed from the ruling in Guido vs. Rural Progress
Administration [84 Phil. 847 (1949)] which held that the test to be applied for a valid expropriation of
private lands was the area of the land and not the number of people who stood to be benefited.
Since then "there has evolved a clear pattern of adherence to the "number of people to be benefited
test" " [Mataas na Lupa Tenants Association, Inc. v. Dimayuga, G.R. No. 32049, June 25,1984, 130
SCRA 30 (1984) at 39]. Thus, in Pulido vs. Court of Appeals [G.R. No. 57625, May 3, 1983, 122
SCRA 63 (1983) at 73], this Court stated that, "[i]t is unfortunate that the petitioner would be
deprived of his landholdings, but his interest and that of his family should not stand in the way of
progress and the benefit of the greater may only of the inhabitants of the country."
The State acting through the NHA is vested with broad discretion to designate the particular
property/properties to be taken for socialized housing purposes and how much thereof may be
expropriated. Absent a clear showing of fraud, bad faith, or gross abuse of discretion, which
petitioners herein failed to demonstrate, the Court will give due weight to and leave undisturbed the
NHA's choice and the size of the site for the project. The property owner may not interpose
objections merely because in their judgment some other property would have been more suitable, or
just as suitable, for the purpose. The right to the use, enjoyment and disposal of private property is
tempered by and has to yield to the demands of the common good. The Constitutional provisions on
the subject are clear:
The State shall promote social justice in all phases of national development. (Art. II,
sec. 10)
The Congress shall give highest priority to the enactment of measures that protect
and enhance the right of all the people to human dignity, reduce social, economic,
and political inequalities, and remove cultural inequities by equitably diffusing wealth
and political power for the common good. To this end, the State shall regulate the
acquisition, ownership, use and disposition of property and its increments. (Art, XIII,
sec. 1)
Indeed, the foregoing provisions, which are restatements of the provisions in the 1935 and 1973
Constitutions, emphasize:
...the stewardship concept, under which private property is supposed to be held by
the individual only as a trustee for the people in general, who are its real owners. As
a mere steward, the individual must exercise his rights to the property not for his own
exclusive and selfish benefit but for the good of the entire community or nation
[Mataas na Lupa Tenants Association, Inc. supra at 42-3 citing I. CRUZ, PHILIPPINE
POLITICAL LAW, 70 (1983 ed.)].

2. Just Compensation
Petitioners maintain that Pres. Decree No. 1224, as amended, would allow the taking of private
property upon payment of unjust and unfair valuations arbitrarily fixed by government assessors. In
addition, they assert that the Decree would deprive the courts of their judicial discretion to determine
what would be "just compensation".
The foregoing contentions have already been ruled upon by this Court in the case of Ignacio vs.
Guerrero (G.R. No. L-49088, May 29, 1987) which, incidentally, arose from the same expropriation
complaint that led to this instant petition. The provisions on just compensation found in Presidential
Decree Nos. 1224, 1259 and 1313 are the same provisions found in Presidential Decree Nos. 76,
464, 794 and 1533 which were declared unconstitutional in Export Processing Zone All thirty vs.
Dulay (G.R. No. 5960 April 29, 1987) for being encroachments on prerogatives.
This Court abandoned the ruling in National Housing Authority vs. Reyes [G.R. No. 49439, June
29,1983, 123 SCRA 245 (1983)] which upheld Pres. Decree No. 464, as amended by - Presidential
Decree Nos. 794, 1224 and 1259.
In said case of Export Processing Zone Authority, this Court pointed out that:
The basic unfairness of the decrees is readily apparent.
Just compensation means the value of the property at the time of the taking. It
means a fair and full equivalent for the loss sustained. ALL the facts as to the
condition of the property and its surroundings, its improvements and capabilities,
should be considered.
xxx xxx xxx
Various factors can come into play in the valuation of specific properties singled out
for expropriation. The values given by provincial assessors are usually uniform for
very wide areas covering several barrios or even an entire total with the exception of
the poblacion. Individual differences are never taken into account. The value of land
is based on such generalities as its possible cultivation for rice, corn, coconuts, or
other crops. Very often land described as directional has been cultivated for
generations. Buildings are described in terms of only two or three classes of building
materials and estimates of areas are more often inaccurate than correct. Tax values
can serve as guides but cannot be absolute substitutes for just compensation.
To say that the owners are estopped to question the valuations made by assessors
since they had the opportunity to protest is illusory. The overwhelming mass of
landowners accept unquestioningly what is found in the tax declarations prepared by
local assessors or municipal clerks for them. They do not even look at, much less
analyze, the statements. The Idea of expropriation simply never occurs until a
demand is made or a case filed by an agency authorized to do so. (pp. 12-3)
3. Due Process
Petitioners assert that Pres. Decree 1224, as amended, violates procedural due process as it allows
immediate taking of possession, control and disposition of property without giving the owner his day

in court. Respondent Judge ordered the issuance of a writ of possession without notice and without
hearing.
The constitutionality of this procedure has also been ruled upon in the Export Processing Zone
Authority case, viz:
It is violative of due process to deny to the owner the opportunity to prove that the
valuation in the tax documents is unfair or wrong. And it is repulsive to basic
concepts of justice and fairness to allow the haphazard work of minor bureaucrat or
clerk to absolutely prevail over the judgment of a court promulgated only after expert
commissioners have actually viewed the property, after evidence and arguments pro
and con have been presented, and after all factors and considerations essential to a
fair and just determination have been judiciously evaluated. (p. 13)
On the matter of the issuance of a writ of possession, the ruling in the Ignacio case is reiterated,
thus:
[I]t is imperative that before a writ of possession is issued by the Court in
expropriation proceedings, the following requisites must be met: (1) There must be a
Complaint for expropriation sufficient in form and in substance; (2) A provisional
determination of just compensation for the properties sought to be expropriated must
be made by the trial court on the basis of judicial (not legislative or executive)
discretion; and (3) The deposit requirement under Section 2, Rule 67 must be
complied with. (p. 14)
This Court holds that "socialized housing" defined in Pres. Decree No. 1224, as amended by Pres.
Decree Nos. 1259 and 1313, constitutes "public use" for purposes of expropriation. However, as
previously held by this Court, the provisions of such decrees on just compensation are
unconstitutional; and in the instant case the Court finds that the Orders issued pursuant to the
corollary provisions of those decrees authorizing immediate taking without notice and hearing are
violative of due process.
WHEREFORE, the Orders of the lower court dated January 17, 1978 and June 28, 1978 issuing the
writ of possession on the basis of the market value appearing therein are annulled for having been
issued in excess of jurisdiction. Let this case be remanded to the court of origin for further
proceedings to determine the compensation the petitioners are entitled to be paid. No costs.
SO ORDERED.

ESTATE SALUD JIMENEZ, petitioner,

vs.
PHILIPPINES EXPORT PROCESSING ZONE, respondent.
DELEON, JR., J.:
Before us is a petition for review on certiorari of the Decision1 and the Resolution2 of the Court of
Appeals3 dated March 25, 1998 and January 14, 1999, respectively, which ordered the
Presiding Judge of the Regional trial Court of Cavite City, Branch 17, to proceed with the
hearing of the expropriation proceedings regarding the determination of just compensation for
Lot 1406-B while setting aside the Orders dated August 4, 19974 and November 3, 1997 of the

said Regional Trial Court which ordered the peaceful turnover to petitioner Estate of Salud
Jimenez of said Lot 1406-B.
The facts are as follows:
On may 15, 1981, private respondent Philippines Export Processing Zone (PEZA), then called
as the Export Processing Zone Authority (EPZA), initiated before the Regional Trial Court of
Cavite expropriation proceedings5 on three (3) parcels of irrigated riceland in Rosario, Cavite.
One of the lots, Lot 1406 (A and B) of the San Francisco de Malabon Estate, with an
approximate area of 29,008 square meters, is registered in the name of Salud Jimenez under
TCT No. T-113498 of the Registry of Deeds of Cavite.
More than ten (10) years later6, the said trial court in an Order7 dated July 11, 1991 upheld the
right of private respondent PEZA to expropriate, among others, Lot 1406 (A and B).
Reconsideration of the said order was sought by petitioner contending that said lot would only
be transferred to a private corporation, Philippines Vinyl Corp., and hence would not be utilized
for a public purpose.
In an Order8 dated October 25, 19997, the trial court reconsidered the Order dated July 11,
1991 and released Lot 1406-A from expropriation while the expropriation of Lot 1406-B was
maintained. Finding the said order unacceptable, private respondent PEZA interposed an
appeal to the Court of Appeals.
Meanwhile, petitioner wrote a letter to private respondent offering two (2) proposals, namely:
1. Withdrawal of private respondent's appeal with respect to Lot 1406-A I consideration of
the waiver of claim for damages and lass of income for the possession of said lot by private
respondent.
2. The swap of Lot 1406-B with Lot 434 covered by TCT No. T-14772 since private
respondent has no money yet to pay for the lot.

Private respondent's Board approved the "proposal" and the compromise agreement was
signed by private respondent through its then administrator Tagumpay Jadiniano assisted by
Government Corporate Counsel Oscar I. Garcia. Said compromise agreement9 dated January
4, 1993 is quoted hereunder:
1. That plaintiff agrees to withdraw its appeal from the Order of the Honorable Court dated
October 25, 1991 which released lot 1406-A from the expropriation proceedings. On the
other hand, defendant Estate of Salud Jimenez agrees to waive, quit claim and forfeit its
claim for damages and loss of income which it sustained by person of the possession of said
lot by plaintiff from 1981 up to the present.
2. That the parties agree that defendant Estate of Salud Jimenez shall transfer lot 1406-B
with an area of 13,118 square meters which forms part of the lot registered under TCT No.
113498 of the Registry of Deeds of Cavite to the name of the plaintiff and the same shall be
swapped and exchanged with lot 434 with an area of 14,167 square meters and covered by
Transfer Certificate of Title No. 14772 of the Registry of Deeds of Cavite which lot will be
transferred to the name of Estate of Salud Jimenez.
1wphi1.nt

3. That the swap arrangement recognized the fact that the lot 1406-B covered by TCT No. T113498 of the state of defendant Salud Jimenez is considered expropriated in favor of the
government based on Order of the Honorable Court dated July 11, 1991. However, instead
of being paid the just compensation for said lot, the estate of said defendant shall be paid
with lot 434 covered by TCT No. T-14772.
4. That the parties agree that they will abide by the terms of the foregoing agreement in good
faith and the Decision to be rendered based on this Compromise Agreement is immediately
final and executory.

The Court of Appeals remanded the case to the trial court for the approval of the said
compromise agreement entered into between the parties, consequent with the withdrawal of the
appeal with the Court of Appeals. In the Order10 dated August 23, 1993, the trial court approved
the compromise agreement.
However, private respondent failed to transfer the title of Lot 434 to petitioner inasmuch as it
was not the registered owner of the covering TCT No. T-14772 but Progressive Realty Estate,
Inc. Thus, on March 13, 1997, petitioner Estate filed a "Motion to Partially Annul the Order dated
August 23, 1993."11
In the Order12 dated August 4, 1997, the trial court annulled the said compromise agreement
entered into between the parties and directed private respondent to peacefully turn over Lot
1406-A to the petitioner. Disagreeing with the said Order of the trial court, respondent PEZA
moved13 for its reconsideration. The same proved futile since the trial court denied
reconsideration in its Order14 dated November 3, 1997.
On December 4, 1997, the trial court, at the instance15 of petitioner, corrected the Orders dated
August 4, 1997 and November 3, 1997 by declaring that it is Lot 1406-B and Lot 1406-A that
should be surrendered and returned to petitioner.
On November 27, 1997, respondent interposed before the Court of Appeals a petition for
certiorari and prohibition16seeking to nullify the Orders dated August 4, 1997 and November 3,
1997 of the court. Petitioner filed its Comment17 on January 16, 1998.
Acting on the petition, the Court of Appeals in a Decision18 dated March 25, 1998 upheld the
rescission of the compromise agreement, ratiocinating thus:
A judicial compromise may be enforced by a writ of execution, and if a party fails or refuses
to abide by the compromise, the other party may regard it as rescinded and insist upon his
original demand. This is in accordance with Article 2041 of the Civil Code, which provides:
If one of the parties fails or refuses to abide by the compromise, the other party may either
enforce the compromise or regard it as rescinded and insist upon his original demand."
The Supreme Court had the occasion to explain this provision of law in the case of Leonor v.
Syip (1 SCRA 1215). It ruled that the language of the above mentioned provision denotes
that no action for rescission is required and that the aggrieved party by the breach of
compromise agreement, may regard the compromise agreement already rescinded, to wit:

It is worthy of notice, in this connection, that, unlike article 2039 of the same Code,
which speaks of "a cause of annulment or rescission of the compromise" and
provides that "the compromise may be annulled or rescinded" for the cause therein
specified, thus suggesting an action for annulment or rescission, said Article 2041
confers upon the party concerned not a "cause" for rescission, or the right to
"demand" rescission, of a compromise, but the authority, not only to "regard it as
rescinded," but, also, to 'insist upon his original demand." The language of this Article
2041, particularly when contrasted with that of Article 2039, denotes that no action
for rescission is required in said Article 2041, and that to party aggrieved by the
breach of a compromise agreement may, if he chooses, bring the suit contemplated
or involved in his original demand, as if there had never been any compromise
agreement, without bringing an action for rescission thereof. He need not seek a
judicial declaration of rescission, for he may "regard" the compromise agreement
already, "rescinded".

Nonetheless, it held that:

Having upheld the rescission of the compromise agreement, what is then the status of the
expropriation proceedings? As succinctly discussed in the case of Leonor vs. Sycip, the
aggrieved party may insist on his original demand as if there had never been any
compromise agreement. This means that the situation of the parties will revert back to status
before the execution of the compromise agreement, that is, the second stage of the
expropriation proceedings, which is the determination of the just compensation.19
xxx

Thus, the appellate court partially granted the petition by setting aside the order of the trial court
regarding "the peaceful turn over to the Estate of Salud Jimenez of Lot No. 1406-B" and instead
ordered the trial judge to "proceed with the hearing of the expropriation proceedings regarding
the determination of just compensation over Lot 1406-B."20
Petitioner sought21 reconsideration of the Decision dated March 25, 1998. However, public
respondent in a resolution22 dated January 14, 1999 denied petitioner's motion for
reconsideration.
Hence, this petition anchored on the following assignment of errors, to wit:
I
THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR IN GIVING
DUE COURSE TO THE SPECIAL CIVIL ACTION FILED BY RESPONDENT PEZA IN CAG.R. SP. NO. 46112 WHEN IT WAS MADE SUBSTITUTE FOR LOST APPEAL IN CLEAR
CONTRAVENTION OF THE HONORABLE COURT'S RULING IN SEMPIO VS. COURT OF
APPEALS (263 SCRA 617) AND ONGSITCO VS. COURT OF APPEALS (255 SCRA 703)
AND DESPITE THE FACT THAT THE ORDER OF THE CAVITE REGIONAL TRIAL
COURT IS ALREADY FINAL AND EXECUTORY.
II
GRANTING IN GRATIA ARGUMENTI THAT THE SPECIAL CIVIL ACTION OF
CERTIONRARI IS PROPER, THE COURT OF APPEALS NEVERTHELESS WRONGLY

INTERPRETED THE PHRASE "ORIGINAL DEMAND" CONTAINED IN ARTICLE 2041 OF

PETITIONER ESTATE IS THE RETURN OF THE SUBJECT LOT (LOT 1406-B) WHICH IS
SOUGHT TO BE EXPROPRIATED AND NOT THE DETERMINATION OF JUST
COMPENSATION FOR THE LOT. FURTHERMORE, EVEN IF THE INTERPRETATION OF
THE COURT OF APPEALS OR THE IMPORT OF THE PHRASE IN QUESTION IS
CORRECT, IT IS ARTICLE 2039 OF THE CIVIL CODE AND NOT ARTICLE 2041 WHICH
IS APPLICABLE TO COMPROMISE AGREEMENTS APPROVED BY THE COURTS. 23

We rule in favor of the respondent.

Petitioner contends that the Court of Appeals erred in entertaining the petition for certiorari files
by respondent under Rule 65 of the Rules of Court, the same being actually a substitute for lost
appeal. It appeared that on August 11, 1997, respondent received the Order of the trial court
dated August 4, 1997 annulling the compromise agreement. On August 26, 1997, that last day
for the filling of a notice of appeal, respondent filed instead a motion for reconsideration. The
Order of the trial court denying the motion for reconsideration was received by respondent on
November 23, 1997. The reglementary period to appeal therefore lapsed on November 24,
1997. On November 27, 1997, however, respondent filed with the Court of Appeals a petition for
certiorari docketed as CA-G.R. SP. No. 46112. Petitioner claims that appeal is the proper
remedy inasmuch as the Order dated August 4, 1997 of the Regional Trial Court is a final order
that completely disposes of the case. Besides, according to petitioner, respondent is estopped
in asserting that certiorari is the proper remedy inasmuch as it invoked the fifteen (15) day
reglementary period for appeal when if filed a motion for reconsideration on August 26, 1997
and not the sixty (60) day period for filing for certiorari under Rule 65 of the Rules of Court.
The Court of Appeal did not err in entertaining the petition for certiorari under Rule 65 of The
Rules of Court. A petition for certiorari is the proper remedy when any tribunal, board, or officer
exercising judicial or quasi-judicial functions has acted without or in excess of its jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal,
nor any plain, speedy, and adequate remedy at law.24 Grave abuse of discretion is defined as
the capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. An
error of judgment committed in the exercise of its legitimate jurisdiction is not the same as
"grave abuse of discretion." An abuse of discretion is not sufficient by itself to justify the
issuance of a writ of certiorari. The abuse must be grave and patent, and it must be shown that
the discretion was exercised arbitrarily and despotically.25
As a general rule, a petition for certiorari will not lie if an appeal is the proper remedy thereto
such as when an error of judgment as well as of procedure are involved. As long as a court acts
within its jurisdiction and does not gravely abuse its discretion in the exercise thereof, any
supposed error committed by it will amount to nothing more than an error of judgment
reviewable by a timely appeal and not assailable by a special civil action of certiorari. However,
in certain exceptional cases, where the rigid application of such rule will result in a manifest
failure or miscarriage of justice, the provisions of the Rules of Court which are technical rules
may be relaxed. Certiorari has been deemed to be justified, for instance, in order to prevent
irreparable damage and injury to a party where the trial judge has capriciously and whimsically
exercised his judgment, or where there may be danger of clear failure of justice, or where and
ordinary appeal would simply be inadequate to relieve a party form the injurious effects of the
judgment complained of.26
Expropriation proceedings involve two (2) phases. The first phase ends either with an order of
expropriation (when the right of plaintiff to take the land and the public purpose to which they

are to be devoted are upheld) or an order of dismissal. Either order would be a final one since if
finally disposes of the case. The second phase concerns the determination of just compensation
to be ascertained by three (3) commissioners. It ends with an order fixing the amount to be paid
to the dependant. Inasmuch as it leaves nothing more to be done, this order finally disposes of
the second stage. To both orders the remedy therefrom is an appeal.27
In the case at bar, the first phase was terminated when the July 11, 1991 order of expropriation
became final and the parties subsequently entered into a compromise agreement regarding the
mode of payment of just compensation. When respondent failed to abide by the terms of the
compromise agreement, petitioner filed and action to partially rescind the same. Obviously, the
trial could only validly order the rescission of the compromise agreement anent the payment of
just compensation inasmuch as that was the subject of the compromise. However, on August 4,
1991, the trial court gravely abused its discretion when it ordered the return of Lot 1406-B. It, in
effect, annulled the Order of Expropriation dated July 11, 1991 which was already final and
executory.
We affirm the appellate court's reliance on the cases of Aguilar v. Tan28 and Bautista v.
Sarmiento29 wherein it was ruled that the remedies of certiorari and appeal are not mutually
exclusive remedies in certain exceptional cases, such as when there is grave abuse of
discretion, or when public welfare so requires. The trial court gravely abused its discretion by
setting aside the order of expropriation which has long become final and executory and by
ordering the return of Lot 1406-B to the petitioner. Its action was clearly beyond its jurisdiction
for it cannot modify a final and executory order. A final and executory order can only be annulled
by petition to annual the same on the ground of extrinsic fraud and lack of jurisdiction30 or a
petition for relief from a final order or judgment under Rule 38 of the Rules of Court. However,
no petition to that effect was filed. Hence, though an order completely and finally disposes of the
case, if appeal is not a plain, speedy and adequate remedy at law of the interest of substantial
justice requires, a petition for certiorari may be availed of upon showing of lack or excess of
jurisdiction or grave abuse of discretion on the part of the trial court.
According to petitioner the rule that a petition for certiorari can be availed of despite the fact that
the proper remedy is an appeal only apples in cases where the petition is filed within the
reglementary period for appeal. Inasmuch as the petition in the case at bar was filed after the
fifteen (15) day regulatory period to appeal, said exceptional rule as enshrined in the cases
of Aguilar v. Tan31 and Bautista v. Sarmiento32 is not applicable. We find this interpretation too
restrictive. The said cases do not set as a condition sine qua non the filing of a petition for
certiorari within the fifteen (15) day period to appeal in order for the said petition to be
entertained by the court. To espouse petitioner's contention would render inutile the sixty (60)
day period to file a petition for certiorari under Rule 65. In Republic v. Court of Appeals33, which
also involved an expropriation case where the parties entered in a compromise agreement on
just compensation, this Court entertained the petition for certiorari despite the existence of an
appeal and despite its being filed after the lapse of the fifteen (15) day period to appeal the
same. We ruled that the Court has not too infrequently given due course to a petition for
certiorari, even when the proper remedy would have been an appeal, where valid and
compelling considerations would warrant such a recourse.34 If compelled to return the subject
parcel of land, the respondent would divert its budget already allocated for economic
development in order to pay petitioner the rental payments from the lessee banks. Re-adjusting
its budget would hamper and disrupt the operation of the economic zone. We believe that the
grave abuse of discretion committed by the trial court and the consequent disruption in the

operation of the economic zone constitutes valid and compelling reasons to entertain the
petition.
Petitioner next argues that the instances cited under Section 1 of Rule 41 of the Rules of
Court35 whereby an appeal is not allowed are exclusive grounds for a petition for certiorari.
Inasmuch as the August 4, 1997 Order rescinding the compromise agreement does not fall
under any of the instances enumerated therein, a petition for certiorari will not prosper. This
reasoning is severely flawed. The said section is not phrased to make the instances mentioned
therein the sole grounds for a petition for certiorari. It only states that Rule 65 may be availed of
under the grounds mentioned therein, but it never intended said enumeration to be exclusive. It
must be remembered that a wide breadth of discretion is granted a court of justice in certiorari
proceeding.36
In the second assignment of error, petitioner assails the interpretation by the Court of appeals of
the phrase "original demand" in Article 2041 of the New Civil Code vis--vis the case at bar.
Article 2041 provides that, "if one of the parties fails or refuses to abide by the compromise, the
other party may either enforce the compromise or regard it as rescinded and insist upon his
"original demand" According to petitioner, the appellate court erred in interpreting "original
demand" as the fixing of just compensation. Petitioner claims that the original demand is the
return of Lot 1406-B as stated in petitioner's motion to dismiss37 the complaint for expropriation
inasmuch as the incorporation of the expropriation order in the compromise agreement
subjected the said order to rescission. Since the order of expropriation was rescinded, the
authority of respondent to expropriate and the purpose of expropriation have again become
subject to dispute.
Petitioner cites cases38 which provide that upon the failure to pay by the lessee, the lessor can
ask for the return of the lot and the ejectment of the former, this being the lessor's original
demand in the complaint. We find said cases to be inapplicable to this instant case for the
reason that the case at bar is not a simple ejectment case. This is an expropriation case which
involves two (2) orders: an expropriation order and an order fixing just compensation. Once the
first order becomes final and no appeal thereto is taken, the authority to expropriate and its
public use cannot anymore be questioned.
Contrary to petitioner's contention, the incorporation of the expropriation order in the
compromise agreement did not subject said to rescission but instead constituted an admission
by petitioner of respondent's authority to expropriate the subject parcel of land and the public
purpose for which it was expropriated. This is evident from paragraph three (3) of the
compromise agreement which states that the "swap arrangement recognizes the fact that Lot
1406-B covered by TCT No. T-113498 of the estate of defendant Salud Jimenez is considered
expropriated in favor of the government based on the Order of the Honorable Court dated July
11, 1991." It is crystal clear from the contents of the agreement that the parties limited the
compromise agreement to matter of just compensation to petitioner. Said expropriate order is
not closely intertwined with the issue of payment such that failure to pay by respondent will also
nullify the right of respondent to expropriate. No statement to this effect was mentioned in the
agreement. The Order was mentioned in the agreement only to clarify what was subject to
payment.
1wphi1.nt

This court therefore finds that the Court of Appeals did not err in interpreting "original demand"
to mean the fixing of just compensation. The authority of respondent and the nature of the
purpose thereof have been put to rest when the Expropriation Order dated July 11, 1991

became final and was duly admitted by petitioner in the compromise agreement. The only issue
for consideration is the manner and amount of payment due to petitioner. In fact, aside from the
withdrawal of private respondent's appeal to the Court of Appeals concerning Lot 1406-A, the
matter of payment of just compensation was the only subject of the compromise agreement
dated January 4, 1993. Under the compromise agreement, petitioner was supposed to receive
respondent's Lot No. 434 in exchange for Lot 1406-B. When respondent failed to fulfill its
obligation to deliver Lot 434, petitioner can again demand for the payment but not the return of
the expropriated Lot 1406-B. This interpretation by the Court of Appeals is in according with
Section 4 to 8, Rule 67 of the Rules of Court.
We also find as inapplicable the ruling in Gatchalian v. Arlegui39 , a case cited by petitioner,
where we held that even a final judgment can still be compromised so long as it is full satisfied.
As already stated, the expropriation order was not the subject of the compromise agreement. It
was only the mode of payment which was the subject of the compromise agreement. Hence, the
Order of Expropriation dated July 11, 1991 can no longer be annulled.
After having invoked the provisions of Article 2041, petitioner inconsistently contends that said
article does not apply to the case at bar inasmuch as it is only applicable to cases where a
compromise has not been approved by a court. In the case at bar, the trial court approved the
compromise agreement. Petitioner insists that Articles 2038, 2039 and 1330 of the New Civil
Code should apply. Said articles provide that:
Article 2038. A compromise, in which there is mistake, fraud, violence, intimidation, undue
influence, or falsity of documents, is subject to the provisions of Article 1330 of this Code.
However, one of the parties cannot set up a mistake of fact as against the other if the latter,
by virtue of the compromise, has withdrawn from a litigation already commenced.
Article 2039. When the parties compromise generally on all differences which they might
have with each other, the discovery of documents referring to one or more but not to all of
the questions settled shall not itself be a cause for annulment or rescission of the
compromise, unless said documents have been concealed by one of the parties.
But the compromise may be annulled or rescinded if it refers only to one thing to which one
of the parties has no right, as shown by the newly discovered documents.(n)"
Article 1330. A contract where consent is given through mistake, violence, intimidation,
undue influence, or fraud is voidable.40

The applicability of the above-quoted legal provisions will not change the outcome of the subject
of the rescission. Since the compromise agreement was only about the mode of payment by
swapping of lots and not about the right and purpose to expropriate the subject Lot 1406-B, only
the originally agreed for of compensation that is by cash payment, was rescinded.
This court holds that respondent has the legal authority to expropriate the subject Lot 1406-B
and that the same was for a valid public purpose. In Sumulong v. Guerrero41 , this Court has
ruled that,

the "public use" requirement for a valid exercise of the power of eminent domain is a flexible
and evolving concept influenced by changing conditions. In this jurisdiction, the statutory and
judicial trend has been summarized as follows:
this court has ruled that the taking to be valid must be for public use. There was a
time when it was felt that a literal meaning should be attached to such a requirement.
Whatever project is undertaken must be for the public to enjoy as in the case of
streets or parks. Otherwise expropriation is not allowable. It is not anymore. As long
as the purpose of the taking is public, then the power of eminent domain comes into
playIt is accurate to beneficially employed for the general welfare satisfies the
requirement of public use. [Heirs of Juancho Ardona v. Reyes, 125 SCRA 220 (1983)
at 234-235 quoting E. Fernando, the Constitution of the Philippines 523-4(2nd Ed.
1977)
The term "public use" has acquired a more comprehensive coverage. To the literal import of
the term signifying strict use or employment by the public has been added the broader notion
of indirect public benefit or advantage.

In Manosca v. Court of Appeals, this Court has also held that what ultimately emerged is a
concept of public use which is just as abroad as "public welfare."42
Respondent PEZA expropriated the subject parcel of land pursuant to Proclamation No. 1980
dated May 30, 1980 issued by former President Ferdinand Marcos. Meanwhile, the power of
eminent domain of respondent is contained in its original charter, Presidential Decree No. 66,
which provides that:
Section 23. Eminent Domain. For the acquisition of rights of way, or of any property for the
establishment of export processing zones, or of low-cost housing projects for the employees
working in such zones, or for the protection of watershed areas, or for the construction of
dams, reservoirs, wharves, piers, docks, quays, warehouses and other terminal facilities,
structures and approaches thereto, the Authority shall have the right and power to acquire
the same by purchase, by negotiation, or by condemnation proceedings. Should the authority
elect to exercise the right of eminent domain, comdemnation proceedings shall be
maintained by and in the name of the Authority and it may proceed in the manner provided
for by law. (italics supplied)

Accordingly, subject Lot 1406-B was expropriated "for the constructionof terminal facilities,
structures and approaches thereto." The authority is broad enough to give the respondent
substantial leeway in deciding for what public use the expropriated property would be utilized.
Pursuant to this broad authority, respondent leased a portion of the lot to commercial banks
while the rest was made a transportation terminal. Said public purposes were even reaffirmed
by Republic Act No. 7916, a law amending respondent PEZA's original charter, which provides
that:
Sec. 7 ECOZONE to be a Decentralized Agro-Industrial, industrial, Commercial/Trading,
Tourist, Investment and financial Community. Within the framework of the Constitution, the
interest of national sovereignty and territorial integrity of the Republic, ECOZONE shall be
developed, as much as possible, into a decentralized, self-reliant and self-sustaining
industrial, commercial/trading, agro-industrial, tourist, banking, financial and investment
center with minimum government intervention. Each ECOZONE shall be provided with
transportation, telecommunications and other facilities needed to generate linkage with

industries and employment opportunities for its own habitants and those of nearby towns and
cities.
The ECOZONE shall administer itself on economic, financial, industrial, tourism development
and such other matters within the exclusive competence of the national government. (italics
supplied)
Among the powers of PEZA enumerated by the same law are:
Sec.12. Functions and Powers of PEZA Board. ---- The Philippines Economic Zone
Authority (PEZA) Board shall have the following function and powers:
(a) Set the general policies on the establishment and operations of the ECOZONE,
Industrial estate, exports processing zones, free trade zones, and the like:
xxx
(b) Regulate and undertake the establishment, operation and maintenance of utilities,
other services and infrastructure in the ECOZONE, such as heat, light and power,
water supply, telecommunications, transport, toll roads and bridges, port services,
etc. and to fix just, reasonable and competitive rates, fares, charges and fees
thereof.43

In Manila Railroad Co. v. Mitchel44 , this Court has ruled that in the exercise of eminent domain,
only as much land can be taken as is necessary for the legitimate purpose of the condemnation,
the term "necessary", in this connection, does not mean absolutely indispensable but requires
only a reasonable necessity of the taking for the stated purpose, growth and future needs of the
enterprise. The respondent cannot attain a self-sustaining and viable ECOZONE if inevitable
needs in the expansion in the surrounding areas are hampered by the mere refusal of the
private landowners to part with their properties. The purpose of creating an ECOZONE and
other facilities is better served if respondent directly owns the areas subject of the expansion
program.
The contention of petitioner that the leasing of the subject lot to banks and building terminals
was not expressly mentioned in the original charter of respondent PEZA and that it was only
after PEZA devoted the lot to said purpose the Republic Act No. 7916 took effect, is not
impressed with merit. It should be pointed out that Presidential Decree No. 66 created the
respondent PEZA to be a viable commercial, industrial and investment area. According to the
comprehensive wording of Presidential Decree No. 66, the said decree did not intend to limit
respondent PEZA to the establishment of an export processing zone but it was also bestowed
with authority to expropriate parcels of land "for the construction of terminal facilities,
structures and approaches thereto." Republic Act No. 7916 simply particularized the broad
language employed by Presidential Decree No. 66 by specifying the purposes for which PEZA
shall devote the condemned lots, that is, for the construction and operation of an industrial
estate, an export processing zone, free trade zones, and the like. The expropriation of Lot 1406B for the purpose of being leased to banks and for the construction of a terminal has the
purpose of making banking and transportation facilities easily accessible to the persons working
at the industries located in PEZA. The expropriation of adjacent areas therefore comes as a
matter of necessity to bring life to the purpose of the law. In such a manner, PEZA's goal of
being a major force in the economic development of the country would be realized.
Furthermore, this Court has already ruled that:

(T)he Legislature may directly determine the necessity for appropriating private property
for a particular improvement for public use, and it may select the exact location of the
improvement. In such a case, it is well-settled that the utility of the proposed improvement,
the existence of the public necessity for its construction, the expediency of constructing it,
the suitableness of the location selected, are all questions exclusively for the legislature to
determine, and the courts have no power to interfere or to substitute their own for those of
the representatives of the people.
In the absence of some constitutional or statutory provision to the contrary, the necessity and
expediency of exercising the right of eminent domain are questions essentially political and
not judicial in their character.45

Inasmuch as both Presidential Decree No. 66 and Republic Act No. 7916, bestow respondent
with authority to develop terminal facilities and banking centers, this Court will not question the
respondent's lease of certain portions of the expropriated lot to banks, as well as the
construction of terminal facilities.
Petitioner contends that respondent is bound by the representations of its Chief Civil Engineer
when the latter testified before the trial court that the lot was to be devoted for the construction
of government offices. Anent this issue, suffice it to say that PEZA can vary the purpose for
which a condemned lot will be devoted to provided that the same is for public use. Petitioner
cannot impose or dictate on the respondent what facilities to establish for as long as the same
are for public purpose.
Lastly, petitioner appeals to the sense of justice and equity to this Court in restoring the said lot
to its possession. From the time of the filing of the expropriation case in 1981 up to the present,
respondent has not yet remunerated the petitioner although respondent has already received
earnings from the rental payments by lessees of the subject property.
We have rules that the concept of just compensation embraces not only the correct
determination of the amount to be paid to the owners of the land, but also the payment of the
land within a reasonable time from its taking. Without prompt payment, compensation cannot be
considered "just" inasmuch as the property owner is made to suffer the consequences of being
immediately deprived of his land while being made to wait for a decade or more before actually
receiving the amount necessary to cope with his loss.46 Payment of just compensation should
follow as a matter of right immediately after the order of expropriation is issued. Any delay in
payment must be counted from said order. However, the delay to constitute a violation of due
process must be unreasonable and inexcusable: it must be deliberately done by a party in order
to defeat the ends of justice.
We find that respondent capriciously evaded its duty of giving what is due to petitioner. In the
case at bar, the expropriation order was issued by the trial court in 1991. The compromise
agreement between the parties was approved by the trial court in 1993. However, from 1993 up
to the present, respondent has failed in its obligation to pay petitioner to the prejudice of the
latter. Respondent caused damage to petitioner in making the latter to expect that it had a good
title to the property to be swapped with Lot 1406-B; and meanwhile, respondent has been
reaping benefits from the lease or rental income of the said expropriated lot. We cannot tolerate
this oppressive exercise of the power of eminent domain by respondent. As we have ruled
in Cosculluela vs. Court of Appeals:47

In the present case, the irrigation project was completed and has been in operation since
1976. The project is benefiting the farmers specifically and the community in general.
Obviously, the petitioner's land cannot be returned to him. However, it is high time that the
petitioner be paid what was due him eleven years ago. It is high time that the petitioner be
paid what was due him eleven years ago. It is arbitrary and capricious for a government
agency to initiate expropriation proceedings, seize a person's property, allow the judgment of
the court to become final and executory and then refuse to pay on the ground that there are
no appropriations for the property earlier taken and profitably used. We condemn in the
strongest possible terms the cavalier attitude of government officials who adopt such a
despotic and irresponsible stance.

Though the respondent has committed a misdeed to petitioner, we cannot, however, grant the
petitioner's prayer for the return of the expropriated Lot No. 1406-B. The Order of expropriation
dated July 11, 1991, has long become final and executory. Petitioner cited Provincial
Government of Sorsogon v. Rosa E. Vda. De Villaroya48 to support its contention that it is
entitled to a return of the lot where this court ruled that "under ordinary circumstance, immediate
return of the owners of the unpaid property is the obvious remedy." However, the said statement
was not the ruling in that case. As in order cases where there was no prompt payment by the
government, this Court declared in Sorsogon that "the Provincial Government of Sorsogon is
expected to immediately pay as directed should any further delay be encountered, the trial court
is directed to seize any patrimonial property or cash saving of the province in the amount
necessary to implement this decision." However, this Court also stressed and declared in that
case that "In cases where land is taken for public use, public interest, however, must be
considered."
In view of all the foregoing, justice and equity dictate that this case be remanded to the trial
court for hearing of the expropriation proceedings on the determination of just compensation for
Lot 1406-B and for its prompt payment to the petitioner.
WHEREFORE, the instant petition is hereby denied. The Regional Trial Court of Cavite City is
hereby ordered to proceed with the hearing of the expropriation proceedings, docketed as Civil
Case No. N-4029, regarding the determination of just compensation for Lot 1406-B, covered
and described in TCT No. T-113498-Cavite, and to resolve the same with dispatch.
SO ORDERED.
LOURDES DE LA PAZ MASIKIP, Petitioner,
vs.
THE CITY OF PASIG, HON. MARIETTA A. LEGASPI, in her capacity as Presiding Judge of
the Regional Trial Court of Pasig City, Branch 165 and THE COURT OF
APPEALS, Respondents.

DECISION
SANDOVAL GUTIERREZ, J.:
Where the taking by the State of private property is done for the benefit of a small community which
seeks to have its own sports and recreational facility, notwithstanding that there is such a

recreational facility only a short distance away, such taking cannot be considered to be for public
use. Its expropriation is not valid. In this case, the Court defines what constitutes a genuine
necessity for public use.
This petition for review on certiorari assails the Decision1 of the Court of Appeals dated October 31,
1997 in CA-G.R. SP No. 41860 affirming the Order2 of the Regional Trial Court, Branch 165, Pasig
City, dated May 7, 1996 in S.C.A. No. 873. Likewise assailed is the Resolution3 of the same court
dated November 20, 1998 denying petitioners Motion for Reconsideration.
The facts of the case are:
Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land with an area of 4,521
square meters located at Pag-Asa, Caniogan, Pasig City, Metro Manila.
In a letter dated January 6, 1994, the then Municipality of Pasig, now City of Pasig, respondent,
notified petitioner of its intention to expropriate a 1,500 square meter portion of her property to be
used for the "sports development and recreational activities" of the residents of Barangay Caniogan.
This was pursuant to Ordinance No. 42, Series of 1993 enacted by the then Sangguniang Bayan of
Pasig.
Again, on March 23, 1994, respondent wrote another letter to petitioner, but this time the purpose
was allegedly "in line with the program of the Municipal Government to provide land opportunities to
deserving poor sectors of our community."
On May 2, 1994, petitioner sent a reply to respondent stating that the intended expropriation of her
property is unconstitutional, invalid, and oppressive, as the area of her lot is neither sufficient nor
suitable to "provide land opportunities to deserving poor sectors of our community."
In its letter of December 20, 1994, respondent reiterated that the purpose of the expropriation of
petitioners property is "to provide sports and recreational facilities to its poor residents."
Subsequently, on February 21, 1995, respondent filed with the trial court a complaint for
expropriation, docketed as SCA No. 873. Respondent prayed that the trial court, after due notice and
hearing, issue an order for the condemnation of the property; that commissioners be appointed for
the purpose of determining the just compensation; and that judgment be rendered based on the
report of the commissioners.
On April 25, 1995, petitioner filed a Motion to Dismiss the complaint on the following grounds:
I
PLAINTIFF HAS NO CAUSE OF ACTION FOR THE EXERCISE OF THE POWER OF EMINENT
DOMAIN, CONSIDERING THAT:
(A) THERE IS NO GENUINE NECESSITY FOR THE TAKING OF THE PROPERTY
SOUGHT TO BE EXPROPRIATED.
(B) PLAINTIFF HAS ARBITRARILY AND CAPRICIOUSLY CHOSEN THE PROPERTY
SOUGHT TO BE EXPROPRIATED.

(C) EVEN ASSUMING ARGUENDO THAT DEFENDANTS PROPERTY MAY BE

EXPROPRIATED BY PLAINTIFF, THE FAIR MARKET VALUE OF THE PROPERTY TO BE
EXPROPRIATED FAR EXCEEDS SEVENTY-EIGHT THOUSAND PESOS (P78,000.00)
II
PLAINTIFFS COMPLAINT IS DEFECTIVE IN FORM AND SUBSTANCE, CONSIDERING THAT:
(A) PLAINTIFF FAILS TO ALLEGE WITH CERTAINTY THE PURPOSE OF THE
EXPROPRIATION.
(B) PLAINTIFF HAS FAILED TO COMPLY WITH THE PREREQUISITES LAID DOWN IN
SECTION 34, RULE VI OF THE RULES AND REGULATIONS IMPLEMENTING THE
LOCAL GOVERNMENT CODE; THUS, THE INSTANT EXPROPRIATION PROCEEDING IS
PREMATURE.
III
THE GRANTING OF THE EXPROPRIATION WOULD VIOLATE SECTION 261 (V) OF THE
OMNIBUS ELECTION CODE.
IV
PLAINTIFF CANNOT TAKE POSSESSION OF THE SUBJECT PROPERTY BY MERELY
DEPOSITING AN AMOUNT EQUAL TO FIFTEEN PERCENT (15%) OF THE VALUE OF THE
PROPERTY BASED ON THE CURRENT TAX DECLARATION OF THE SUBJECT PROPERTY.4
On May 7, 1996, the trial court issued an Order denying the Motion to Dismiss,5 on the ground
that there is a genuine necessity to expropriate the property for the sports and recreational
activities of the residents of Pasig. As to the issue of just compensation, the trial court held that
the same is to be determined in accordance with the Revised Rules of Court.
Petitioner filed a motion for reconsideration but it was denied by the trial court in its Order of July 31,
1996. Forthwith, it appointed the City Assessor and City Treasurer of Pasig City as commissioners to
ascertain the just compensation. This prompted petitioner to file with the Court of Appeals a special
civil action for certiorari, docketed as CA-G.R. SP No. 41860. On October 31, 1997, the Appellate
Court dismissed the petition for lack of merit. Petitioners Motion for Reconsideration was denied in a
Resolution dated November 20, 1998.
Hence, this petition anchored on the following grounds:
THE QUESTIONED DECISION DATED 31 OCTOBER 1997 (ATTACHMENT "A")
AND RESOLUTION DATED 20 NOVEMBER 1998 (ATTACHMENT "B") ARE CONTRARY TO LAW,
THE RULES OF COURT AND JURISPRUDENCE CONSIDERING THAT:
I
A. THERE IS NO EVIDENCE TO PROVE THAT THERE IS GENUINE NECESSITY FOR
THE TAKING OF THE PETITIONERS PROPERTY.

B. THERE IS NO EVIDENCE TO PROVE THAT THE PUBLIC USE REQUIREMENT FOR

THE EXERCISE OF THE POWER OF EMINENT DOMAIN HAS BEEN COMPLIED WITH.
C. THERE IS NO EVIDENCE TO PROVE THAT RESPONDENT CITY OF PASIG HAS
COMPLIED WITH ALL CONDITIONS PRECEDENT FOR THE EXERCISE OF THE POWER
OF EMINENT DOMAIN.
THE COURT A QUOS ORDER DATED 07 MAY 1996 AND 31 JULY 1996, WHICH WERE
AFFIRMED BY THE COURT OF APPEALS, EFFECTIVELY AMOUNT TO THE TAKING OF
PETITIONERS PROPERTY WITHOUT DUE PROCESS OF LAW:
II
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING OF RULE ON ACTIONABLE
DOCUMENTS TO THE DOCUMENTS ATTACHED TO RESPONDENT CITY OF
PASIGS COMPLAINT DATED 07 APRIL 1995 TO JUSTIFY THE COURT A QUOS DENIAL OF
PETITIONERS RESPONSIVE PLEADING TO THE COMPLAINT FOR EXPROPRIATION (THE
MOTION TO DISMISS DATED 21 APRIL 1995).
III
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE RULE ON HYPOTHETICAL
ADMISSION OF FACTS ALLEGED IN A COMPLAINT CONSIDERING THAT THE MOTION TO
DISMISS FILED BY PETITIONER IN THE EXPROPRIATION CASE BELOW WAS THE
RESPONSIVE PLEADING REQUIRED TO BE FILED UNDER THE THEN RULE 67 OF THE
RULES OF COURT AND NOT AN ORIDNARY MOTION TO DISMISS UNDER RULE 16 OF THE
RULES OF COURT.
The foregoing arguments may be synthesized into two main issues one substantive and one
procedural. We will first address the procedural issue.
Petitioner filed her Motion to Dismiss the complaint for expropriation on April 25, 1995. It was denied
by the trial court on May 7, 1996. At that time, the rule on expropriation was governed by Section 3,
Rule 67 of the Revised Rules of Court which provides:
"SEC. 3. Defenses and objections. Within the time specified in the summons, each defendant, in
lieu of an answer, shall present in a single motion to dismiss or for other appropriate relief, all his
objections and defenses to the right of the plaintiff to take his property for the use or purpose
specified in the complaint. All such objections and defenses not so presented are waived. A copy of
the motion shall be served on the plaintiffs attorney of record and filed with the court with proof of
service."
The motion to dismiss contemplated in the above Rule clearly constitutes the responsive pleading
which takes the place of an answer to the complaint for expropriation. Such motion is the pleading
that puts in issue the right of the plaintiff to expropriate the defendants property for the use specified
in the complaint. All that the law requires is that a copy of the said motion be served on plaintiffs
attorney of record. It is the court that at its convenience will set the case for trial after the filing of the
said pleading.6
The Court of Appeals therefore erred in holding that the motion to dismiss filed by petitioner
hypothetically admitted the truth of the facts alleged in the complaint, "specifically that there is a

genuine necessity to expropriate petitioners property for public use." Pursuant to the above Rule,
the motion is a responsive pleading joining the issues. What the trial court should have done was to
set the case for the reception of evidence to determine whether there is indeed a genuine necessity
for the taking of the property, instead of summarily making a finding that the taking is for public use
and appointing commissioners to fix just compensation. This is especially so considering that the
purpose of the expropriation was squarely challenged and put in issue by petitioner in her motion to
dismiss.
Significantly, the above Rule allowing a defendant in an expropriation case to file a motion to dismiss
in lieu of an answer was amended by the 1997 Rules of Civil Procedure, which took effect on July 1,
1997. Section 3, Rule 67 now expressly mandates that any objection or defense to the taking of the
property of a defendant must be set forth in an answer.
The fact that the Court of Appeals rendered its Decision in CA-G.R. SP No. 41860 on October 31,
after the 1997 Rules of Civil Procedure took effect, is of no moment. It is only fair that the Rule at the
time petitioner filed her motion to dismiss should govern. The new provision cannot be applied
retroactively to her prejudice.
We now proceed to address the substantive issue.
In the early case of US v. Toribio,7 this Court defined the power of eminent domain as "the right of a
government to take and appropriate private property to public use, whenever the public exigency
requires it, which can be done only on condition of providing a reasonable compensation therefor." It
has also been described as the power of the State or its instrumentalities to take private property for
public use and is inseparable from sovereignty and inherent in government.8
The power of eminent domain is lodged in the legislative branch of the government. It delegates the
exercise thereof to local government units, other public entities and public utility
corporations,9 subject only to Constitutional limitations. Local governments have no inherent power
of eminent domain and may exercise it only when expressly authorized by statute.10 Section 19 of
the Local Government Code of 1991 (Republic Act No. 7160) prescribes the delegation by Congress
of the power of eminent domain to local government units and lays down the parameters for its
exercise, thus:
"SEC. 19. Eminent Domain. A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise the power of eminent domain for public use, purpose or welfare
for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the
provisions of the Constitution and pertinent laws:Provided, however, That, the power of eminent
domain may not be exercised unless a valid and definite offer has been previously made to the
owner and such offer was not accepted: Provided, further, That, the local government unit may
immediately take possession of the property upon the filing of expropriation proceedings and upon
making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the
property based on the current tax declaration of the property to be expropriated: Provided, finally,
That, the amount to be paid for expropriated property shall be determined by the proper court, based
on the fair market value at the time of the taking of the property."
Judicial review of the exercise of eminent domain is limited to the following areas of concern: (a) the
adequacy of the compensation, (b) the necessity of the taking, and (c) the public use character of
the purpose of the taking.11
In this case, petitioner contends that respondent City of Pasig failed to establish a genuine necessity
which justifies the condemnation of her property. While she does not dispute the intended public

purpose, nonetheless, she insists that there must be a genuine necessity for the proposed use and
purposes. According to petitioner, there is already an established sports development and
recreational activity center at Rainforest Park in Pasig City, fully operational and being utilized by its
residents, including those from Barangay Caniogan. Respondent does not dispute this. Evidently,
there is no "genuine necessity" to justify the expropriation.
The right to take private property for public purposes necessarily originates from "the necessity" and
the taking must be limited to such necessity. In City of Manila v. Chinese Community of Manila,12 we
held that the very foundation of the right to exercise eminent domain is a genuine necessity
and that necessity must be of a public character. Moreover, the ascertainment of the necessity
must precede or accompany and not follow, the taking of the land. In City of Manila v. Arellano Law
College,13 we ruled that "necessity within the rule that the particular property to be expropriated must
be necessary, does not mean an absolute but only a reasonable or practical necessity, such as
would combine the greatest benefit to the public with the least inconvenience and expense to the
condemning party and the property owner consistent with such benefit."
Applying this standard, we hold that respondent City of Pasig has failed to establish that there is a
genuine necessity to expropriate petitioners property. Our scrutiny of the records shows that the
Certification14 issued by the Caniogan Barangay Council dated November 20, 1994, the basis for the
passage of Ordinance No. 42 s. 1993 authorizing the expropriation, indicates that the intended
beneficiary is the Melendres Compound Homeowners Association, a private, non-profit organization,
not the residents of Caniogan. It can be gleaned that the members of the said Association are
desirous of having their own private playground and recreational facility. Petitioners lot is the
nearest vacant space available. The purpose is, therefore, not clearly and categorically public. The
necessity has not been shown, especially considering that there exists an alternative facility for
sports development and community recreation in the area, which is the Rainforest Park, available to
all residents of Pasig City, including those of Caniogan.
The right to own and possess property is one of the most cherished rights of men. It is so
fundamental that it has been written into organic law of every nation where the rule of law prevails.
Unless the requisite of genuine necessity for the expropriation of ones property is clearly
established, it shall be the duty of the courts to protect the rights of individuals to their private
property. Important as the power of eminent domain may be, the inviolable sanctity which the
Constitution attaches to the property of the individual requires not only that the purpose for the taking
of private property be specified. The genuine necessity for the taking, which must be of a public
character, must also be shown to exist.
WHEREFORE, the petition for review is GRANTED. The challenged Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 41860 are REVERSED. The complaint for expropriation filed
before the trial court by respondent City of Pasig, docketed as SCA No. 873, is ordered DISMISSED.
SO ORDERED.

HEIRS OF TIMOTEO MORENO and MARIA ROTEA, namely: ESPERANZA R. EDJEC,

BERNARDA R. SUELA, RUBY C. ROTEA, BERNARDA R. ROTEA, ELIA R. VDA. DE
LIMBAGA, VIRGINIA R. ARBON, ROSALINDA R. ARQUISOLA, CORAZON ROTEA, FE R.
EBORA, CARIDAD ROTEA, ANGELES VDA. DE RENACIA, JORGE ROTEA, MARIA LUISA
ROTEA-VILLEGAS, ALFREDO R. ROTEA, represented by his heirs LIZBETH ROTEA and
ELEPETH ROTEA; LUIS ROTEA, represented by his heir JENNIFER ROTEA; and
ROLANDO R. ROTEA, represented by his heir ROLANDO R. ROTEA JR., petitioners,
vs.
MACTAN - CEBU INTERNATIONAL AIRPORT AUTHORITY, respondent.

DECISION
BELLOSILLO, J.:
THE HEIRS OF TIMOTEO MORENO AND MARIA ROTEA, petitioners herein, are the
successors-in-interest of the former registered owners of two (2) parcels of land situated in
Lahug, Cebu City, designated as Lot No. 916 with an area of 2,355 square meters under TCT
No. RT-7543 (106) T-13694, and Lot No. 920 consisting of 3,097 square meters under TCT No.
RT-7544 (107) T-13695.1
In 1949 the National Airport Corporation as the predecessor agency of respondent MactanCebu International Airport Authority (MCIAA) wanted to acquire Lots Nos. 916 and 920 above
described among other parcels of land for the proposed expansion of Lahug Airport.2 To entice
the landowners to cede their properties, the government assured them that they could
repurchase their lands once Lahug Airport was closed or its operations transferred to Mactan
Airport.3 Some of the landowners executed deeds of sale with right of repurchase in favor of the
government but many others, including the owners of Lots Nos. 916 and 920 herein mentioned,
refused the offer because the payment was perceived to be way below the market price.4
On 16 April 1952, as the negotiations for the purchase of the lots necessary for the expansion
and improvement of Lahug Airport irredeemably broke down, the Civil Aeronautics
Administration as the successor agency of the National Airport Corporation filed a complaint
with the Court of First Instance of Cebu, for the expropriation of Lots Nos. 916 and 920 and
other subject realties, docketed as Civil Case No. R-1881.
On 29 December 1961 the trial court promulgated its Decision in Civil Case No. R-1881
condemning Lots Nos. 916 and 920 and other lots for public use upon payment of just
compensation.5 Petitioners predecessors were paidP7,065.00 for Lot No. 916 and P9,291.00
for Lot No. 920 with consequential damages by way of legal interest from 16 November 1947.
No appeal was taken from the Decision on Lots Nos. 916 and 920, and the judgment of
condemnation became final and executory.6 Thereafter, the certificates of title for these parcels
of land were issued in the name of the Republic of the Philippines under TCT No. 58691 for Lot
No. 916 and TCT No. 58692 for Lot No. 920, which under RA 6958 (1990) were subsequently
transferred in favor of respondent MCIAA.7
At the end of 1991, or soon after the transfer of Lots Nos. 916 and 920 to MCIAA, Lahug Airport
ceased operations as the Mactan Airport was opened for incoming and outgoing flights.8 Lots
Nos. 916 and 920 which had been expropriated for the extension of Lahug Airport were not
utilized.9 In fact, no expansion of Lahug Airport was undertaken by MCIAA and its
predecessors-in-interest.10 Hence, petitioners wrote then President Fidel V. Ramos and the
airport manager begging them for the exercise of their alleged right to repurchase Lots Nos. 916
and 920.11Their pleas were not heeded.12
On 11 March 1997 petitioners filed a complaint for reconveyance and damages with RTC of
Cebu City against respondent MCIAA to compel the repurchase of Lots Nos. 916 and 920,
docketed as Civil Case No. CEB-20015. In the main, petitioners averred that they had been
convinced by the officers of the predecessor agency of respondent MCIAA not to oppose the
expropriation proceedings since in the future they could repurchase the properties if the airport
expansion would not push through. MCIAA did not object to petitioners evidence establishing
these allegations.

When the civil case was pending, one Richard E. Enchuan filed a Motion for Transfer of Interest
alleging that he acquired through deeds of assignment the rights of some of herein petitioners
over Lots Nos. 916 and 920.13 The Department of Public Works and Highways (DPWH) also
sought to intervene in the civil case claiming that it leased in good faith Lot No. 920 from the
predecessor agencies of respondent MCIAA and that it built thereon its Regional Equipment
Services and its Region 7 Office.14
On 12 April 1999 the trial court found merit in the claims of petitioners and granted them the
right to repurchase the properties at the amount pegged as just compensation in Civil Case No.
R-1881 but subject to the alleged property rights of Richard E. Enchuan and the leasehold of
DPWH.15 The trial court opined that the expropriation became illegal or functus officio when the
purpose for which it was intended was no longer there.16
Respondent MCIAA appealed the Decision of the trial court to the Court of Appeals, docketed
as CA-G.R. CV No. 64456.
1vvphi1.nt

On 20 December 2001 the Court of Appeals reversed the assailed Decision on the ground that
the judgment of condemnation in Civil Case No. R-1881 was unconditional so that the rights
gained therefrom by respondent MCIAA were indicative of ownership in fee simple.17 The
appellate court cited Fery v. Municpality of Cabanatuan18 which held that mere deviation from
the public purpose for which the power of eminent domain was exercised does not justify the
reversion of the property to its former owners, and Mactan-Cebu International Airport Authority
v. Court of Appeals19 which is allegedly stare decisis to the instant case to prevent the exercise
of the right of repurchase as the former dealt with a parcel of land similarly expropriated under
Civil Case No. R-1881.20
On 28 November 2002 reconsideration of the Decision was denied. 21 Hence, this petition for
review.
Petitioners argue that Fery v. Municpality of Cabanatuan does not apply to the case at bar since
what was involved therein was the "right of reversion" and not the "right of repurchase" which
they are invoking. They also differentiate Mactan-Cebu International Airport Authority v. Court of
Appeals22 from the instant case in that the landowners in the MCIAA case offered inadmissible
evidence to show their entitlement to a right of repurchase, while petitioners herein offered
evidence based on personal knowledge for which reason MCIAA did not object and thus waived
whatever objection it might have had to the admissibility thereof. Finally, petitioners allege that
their right to equal protection of the laws would be infringed if some landowners are given the
right to repurchase their former properties even as they are denied the exercise of such
prerogative.
On the other hand, respondent MCIAA clings to our decisions in Fery v. Municpality of
Cabanatuan and Mactan-Cebu International Airport Authority v. Court of Appeals. According to
respondent MCIAA "there is only one instance when expropriated land may be repurchased by
its previous owners, and that is, if the decision of expropriation itself provides [the] condition for
such repurchase." Respondent asserts that the Decision in Civil Case No. R-1881 is absolute
and without conditions, thus, no repurchase could be validly exercised.
This is a difficult case calling for a difficult but just solution. To begin with, there exists an
undeniable historical narrative that the predecessors of respondent MCIAA had suggested to
the landowners of the properties covered by the Lahug Airport expansion scheme that they

could repurchase their properties at the termination of the airports venture.23 Some acted on
this assurance and sold their properties;24 other landowners held out and waited for the exercise
of eminent domain to take its course until finally coming to terms with respondents
predecessors that they would not appeal nor block further the judgment of condemnation if the
same right of repurchase was extended to them.25 A handful failed to prove that they acted on
such assurance when they parted with the ownership of their lands.26
In resolving this dispute, we must reckon with the rulings of this Court in Fery v. Municpality of
Cabanatuan and Mactan-Cebu International Airport Authority v. Court of Appeals, which define
the rights and obligations of landowners whose properties were expropriated when the public
purpose for which eminent domain was exercised no longer subsists. In Fery, which was cited in
the recent case of Reyes v. Court of Appeals,27 we declared that the government acquires only
such rights in expropriated parcels of land as may be allowed by the character of its title over
the properties If x x x land is expropriated for a particular purpose, with the condition that when that purpose is
ended or abandoned the property shall return to its former owner, then, of course, when the
purpose is terminated or abandoned the former owner reacquires the property so expropriated.
If x x x land is expropriated for a public street and the expropriation is granted upon condition
that the city can only use it for a public street, then, of course, when the city abandons its use as
a public street, it returns to the former owner, unless there is some statutory provision to the
contrary x x x x If, upon the contrary, however, the decree of expropriation gives to the entity a
fee simple title, then, of course, the land becomes the absolute property of the expropriator,
whether it be the State, a province, or municipality, and in that case the non-user does not have
the effect of defeating the title acquired by the expropriation proceedings x x x x When land has
been acquired for public use in fee simple, unconditionally, either by the exercise of eminent
domain or by purchase, the former owner retains no rights in the land, and the public use may
be abandoned, or the land may be devoted to a different use, without any impairment of the
estate or title acquired, or any reversion to the former owner x x x x28
In Mactan-Cebu International Airport Authority, respondent Chiongbian sought to enforce an
alleged right of repurchase over her properties that had been expropriated in Civil Case No. R1881. This Court did not allow her to adduce evidence of her claim, for to do so would unsettle
as to her properties the judgment of condemnation in the eminent domain proceedings. We also
held therein that Chiongbians evidence was both inadmissible and lacking in probative value The terms of the judgment are clear and unequivocal and grant title to Lot No. 941 in fee simple
to the Republic of the Philippines. There was no condition imposed to the effect that the lot
would return to CHIONGBIAN or that CHIONGBIAN had a right to repurchase the same if the
purpose for which it was expropriated is ended or abandoned or if the property was to be used
other than as the Lahug Airport. CHIONGBIAN cannot rely on the ruling in Mactan-Cebu
International Airport vs. Court of Appeals wherein the presentation of parol evidence was
allowed to prove the existence of a written agreement containing the right to repurchase. Said
case did not involve expropriation proceedings but a contract of sale x x x x To permit
CHIONGBIAN to prove the existence of a compromise settlement which she claims to have
entered into with the Republic of the Philippines prior to the rendition of judgment in the
expropriation case would result in a modification of the judgment of a court which has long
become final and executory x x x x And even assuming for the sake of argument that
CHIONGBIAN could prove the existence of the alleged written agreement acknowledging her
right to repurchase Lot No. 941 through parol evidence, the Court of Appeals erred in holding

that the evidence presented by CHIONGBIAN was admissible x x x x Aside from being
inadmissible under the provisions of the Statute of Frauds, [the] testimonies are also
inadmissible for being hearsay in nature x x x x29
We adhere to the principles enunciated in Fery and in Mactan-Cebu International Airport
Authority, and do not overrule them. Nonetheless the weight of their import, particularly our
ruling as regards the properties of respondent Chiongbian in Mactan-Cebu International Airport
Authority, must be commensurate to the facts that were established therein as distinguished
from those extant in the case at bar. Chiongbian put forth inadmissible and inconclusive
evidence, while in the instant case we have preponderant proof as found by the trial court of the
existence of the right of repurchase in favor of petitioners.
Moreover, respondent MCIAA has brought to our attention a significant and telling portion in the
Decision in Civil Case No. R-1881 validating our discernment that the expropriation by the
predecessors of respondent was ordered under the running impression that Lahug Airport would
continue in operation As for the public purpose of the expropriation proceeding, it cannot now be doubted. Although
Mactan Airport is being constructed, it does not take away the actual usefulness and importance
of the Lahug Airport: it is handling the air traffic both civilian and military. From it aircrafts fly to
Mindanao and Visayas and pass thru it on their flights to the North and Manila. Then, no
evidence was adduced to show how soon is the Mactan Airport to be placed in operation and
whether the Lahug Airport will be closed immediately thereafter. It is up to the other
departments of the Government to determine said matters. The Court cannot substitute its
judgment for those of the said departments or agencies. In the absence of such showing, the
Court will presume that the Lahug Airport will continue to be in operation (emphasis supplied).30

1awphi 1.nt

While the trial court in Civil Case No. R-1881 could have simply acknowledged the presence of
public purpose for the exercise of eminent domain regardless of the survival of Lahug Airport,
the trial court in its Decision chose not to do so but instead prefixed its finding of public purpose
upon its understanding that "Lahug Airport will continue to be in operation." Verily, these
meaningful statements in the body of the Decision warrant the conclusion that the expropriated
properties would remain to be so until it was confirmed that Lahug Airport was no longer "in
operation." This inference further implies two (2) things: (a) after the Lahug Airport ceased its
undertaking as such and the expropriated lots were not being used for any airport expansion
project, the rights vis--vis the expropriated Lots Nos. 916 and 920 as between the State and
their former owners, petitioners herein, must be equitably adjusted; and, (b) the foregoing
unmistakable declarations in the body of the Decision should merge with and become an
intrinsic part of the fallo thereof which under the premises is clearly inadequate since the
dispositive portion is not in accord with the findings as contained in the body thereof.31
Significantly, in light of the discussion above, the admission of petitioners during the pre-trial of
Civil Case No. CEB-20015 for reconveyance and damages that respondent MCIAA was the
absolute owner of Lots Nos. 916 and 920 does not prejudice petitioners interests. This is as it
should be not only because the admission concerns a legal conclusion fiercely debated by the
parties32 but more so since respondent was truly the absolute owner of the realties until it was
apparent that Lahug Airport had stopped doing business.
To sum up what we have said so far, the attendance in the case at bar of standing admissible
evidence validating the claim of petitioners as well as the portions above-quoted of the Decision

in the expropriation case volunteered no less than by respondent itself, takes this case away
from the ambit of Mactan-Cebu International Airport Authority v. Court of Appeals33 but within
the principles enunciated in Fery as mentioned earlier. In addition, there should be no doubt that
our present reading of the fallo of the Decision in Civil Case No. R-1881 so as to include the
statements in the body thereof afore-quoted is sanctioned by the rule that a final and executory
judgment may nonetheless be "clarified" by reference to other portions of the decision of which
it forms a part. In Republic v. De Los Angeles34 we ruled This Court has promulgated many cases x x x wherein it was held that a judgment must not be
read separately but in connection with the other portions of the decision of which it forms a part.
Hence x x x the decision of the court below should be taken as a whole and considered in its
entirety to get the true meaning and intent of any particular portion thereof x x x x Neither is this
Court inclined to confine itself to a reading of the said fallo literally. On the contrary, the
judgment portion of a decision should be interpreted and construed in harmony with the ratio
decidendi thereof x x x x As stated in the case of Policarpio vs. Philippine Veterans Board, et al.,
supra, to get the true intent and meaning of a decision, no specific portion thereof should be
resorted to but the same must be considered in its entirety. Hence, a resolution or ruling may
and does appear in other parts of the decision and not merely in the fallo thereof x x x x The
foregoing pronouncements find support in the case of Locsin, et al. vs. Paredes, et al., 63 Phil.,
87, 91-92, wherein this Court allowed a judgment that had become final and executory to be
"clarified" by supplying a word which had been inadvertently omitted and which, when supplied,
in effect changed the literal import of the original phraseology x x x x This is so because, in the
first place, if an already final judgment can still be amended to supply an omission committed
through oversight, this simply means that in the construction or interpretation of an already final
decision, the fallo or dispositive portion thereof must be correlated with the body of such final
decision x x x x [I]f an amendment may be allowed after a decision has already become final x x
x such amendment may consist x x x either in the x x x interpretation of an ambiguous phrase
therein in relation to the body of the decision which gives it life.35
We now resolve to harmonize the respective rights of the State and petitioners to the
expropriated Lots Nos. 916 and 920.
Mactan-Cebu International Airport Authority36 is correct in stating that one would not find an
express statement in the Decision in Civil Case No. R-1881 to the effect that "the [condemned]
lot would return to [the landowner] or that [the landowner] had a right to repurchase the same if
the purpose for which it was expropriated is ended or abandoned or if the property was to be
used other than as the Lahug Airport." This omission notwithstanding, and while the inclusion of
this pronouncement in the judgment of condemnation would have been ideal, such precision is
not absolutely necessary nor is it fatal to the cause of petitioners herein. No doubt, the return or
repurchase of the condemned properties of petitioners could be readily justified as the manifest
legal effect or consequence of the trial courts underlying presumption that "Lahug Airport will
continue to be in operation" when it granted the complaint for eminent domain and the airport
discontinued its activities.
The predicament of petitioners involves a constructive trust, one that is akin37 to the implied trust
referred to in Art. 1454 of the Civil Code, "If an absolute conveyance of property is made in
order to secure the performance of an obligation of the grantor toward the grantee, a trust by
virtue of law is established. If the fulfillment of the obligation is offered by the grantor when it
becomes due, he may demand the reconveyance of the property to him." In the case at bar,
petitioners conveyed Lots Nos. 916 and 920 to the government with the latter obliging itself to

use the realties for the expansion of Lahug Airport; failing to keep its bargain, the government
can be compelled by petitioners to reconvey the parcels of land to them, otherwise, petitioners
would be denied the use of their properties upon a state of affairs that was not conceived nor
contemplated when the expropriation was authorized.
Although the symmetry between the instant case and the situation contemplated by Art. 1454 is
not perfect, the provision is undoubtedly applicable. For, as explained by an expert on the law of
trusts: "The only problem of great importance in the field of constructive trusts is to decide
whether in the numerous and varying fact situations presented to the courts there is a wrongful
holding of property and hence a threatened unjust enrichment of the defendant."38 Constructive
trusts are fictions of equity which are bound by no unyielding formula when they are used by
courts as devices to remedy any situation in which the holder of the legal title may not in good
conscience retain the beneficial interest.39
In constructive trusts, the arrangement is temporary and passive in which the trustees sole duty
is to transfer the title and possession over the property to the plaintiff-beneficiary.40 Of course,
the "wronged party seeking the aid of a court of equity in establishing a constructive trust must
himself do equity."41 Accordingly, the court will exercise its discretion in deciding what acts are
required of the plaintiff-beneficiary as conditions precedent to obtaining such decree and has
the obligation to reimburse the trustee the consideration received from the latter just as the
plaintiff-beneficiary would if he proceeded on the theory of rescission.42 In the good judgment of
the court, the trustee may also be paid the necessary expenses he may have incurred in
sustaining the property, his fixed costs for improvements thereon, and the monetary value of his
services in managing the property to the extent that plaintiff-beneficiary will secure a benefit
from his acts.43
The rights and obligations between the constructive trustee and the beneficiary, in this case,
respondent MCIAA and petitioners over Lots Nos. 916 and 920, are echoed in Art. 1190 of the
Civil Code, "When the conditions have for their purpose the extinguishment of an obligation to
give, the parties, upon the fulfillment of said conditions, shall return to each other what they
have received x x x x In case of the loss, deterioration or improvement of the thing, the
provisions which, with respect to the debtor, are laid down in the preceding article shall be
applied to the party who is bound to return x x x x"
Hence, respondent MCIAA as representative of the State is obliged to reconvey Lots Nos. 916
and 920 to petitioners who shall hold the same subject to existing liens thereon, i.e., leasehold
right of DPWH. In return, petitioners as if they were plaintiff-beneficiaries of a constructive trust
must restore to respondent MCIAA what they received as just compensation for the
expropriation of Lots Nos. 916 and 920 in Civil Case No. R-1881, i.e.,P7,065.00 for Lot No. 916
and P9,291.00 for Lot No. 920 with consequential damages by way of legal interest from 16
November 1947. Petitioners must likewise pay respondent MCIAA the necessary expenses it
may have incurred in sustaining the properties and the monetary value of its services in
managing them to the extent that petitioners will be benefited thereby. The government however
may keep whatever income or fruits it may have obtained from the parcels of land, in the same
way that petitioners need not account for the interests that the amounts they received as just
compensation may have earned in the meantime. As a matter of justice and convenience, the
law considers the fruits and interests as the equivalent of each other.44
Under Art. 1189 of the Civil Code, "If the thing is improved by its nature, or by time, the
improvement shall inure to the benefit of the creditor x x x," the creditor being the person who

stands to receive something as a result of the process of restitution. Consequently, petitioners

as creditors do not have to settle as part of the process of restitution the appreciation in value of
Lots Nos. 916 and 920 which is the natural consequence of nature and time.
Petitioners need not also pay for improvements introduced by third parties, i.e., DPWH, as the
disposition of these properties is governed by existing contracts and relevant provisions of law.
As for the improvements that respondent MCIAA may have made on Lots Nos. 916 and 920, if
any, petitioners must pay respondent their prevailing free market price in case petitioners opt to
buy them and respondent decides to sell. In other words, if petitioners do not want to
appropriate such improvements or respondent does not choose to sell them, the improvements
would have to be removed without any obligation on the part of petitioners to pay any
compensation to respondent MCIAA for whatever it may have tangibly introduced therein.45
The medium of compensation for the restitution shall be ready money or cash payable within a
period of three hundred sixty five (365) days from the date that the amount to be returned by
petitioners is determined with finality, unless the parties herein stipulate and agree upon a
different scheme, medium or schedule of payment. If after the period of three hundred sixty five
(365) days or the lapse of the compromise scheme or schedule of payment such amount owed
is not settled, the right of repurchase of petitioners and the obligation of respondent MCIAA to
reconvey Lots Nos. 916 and 920 and/or the latters improvements as set forth herein shall be
deemed forfeited and the ownership of those parcels of land shall vest absolutely upon
respondent MCIAA.
Finally, we delete the award of P60,000.00 for attorneys fees and P15,000.00 for litigation
expenses in favor of petitioners as decreed in the assailed Decision of 12 April 1999 of the trial
court. It is not sound public policy to set a premium upon the right to litigate where such right is
exercised in good faith, as in the present case, albeit the decision to resist the claim is
erroneous.46
The rule on awards of attorneys fees and litigation expenses is found in Art. 2208 of the Civil
Code In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs,
cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interests;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff's valid and demandable claim;
1awphi 1.nt

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen's compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's fees and
expenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable.
As noted in Mirasol v. De la Cruz,47 Art. 2208 intends to retain the award of attorneys fees as
the exception in our law and the general rule remains that attorneys fees are not recoverable in
the absence of a stipulation thereto.
In the case at bar, considering the established absence of any stipulation regarding attorneys
fees, the trial court cannot base its award on any of the exceptions enumerated in Art. 2208.
The records of the instant case do not disclose any proof presented by petitioners to
substantiate that the actuations of respondent MCIAA were clearly unfounded or purely for the
purpose of harassment; neither does the trial court make any finding to that effect in its
appealed Decision.
While Art. 2208, par. (4), allows attorneys fees in cases of clearly unfounded civil actions, this
exception must be understood to mean those where the defenses are so untenable as to
amount to gross and evident bad faith. Evidence must be presented to the court as to the facts
and circumstances constituting the alleged bad faith, otherwise, the award of attorneys fees is
not justified where there is no proof other than the bare statement of harassment that a party to
be so adjudged had acted in bad faith. The exercise of judicial discretion in the award of
attorneys fees under Art. 2208, par. (11), demands a factual, legal or equitable justification that
would bring the case within the exception and justify the grant of such award.
WHEREFORE, the instant Petition for Review is GRANTED. The Decision of the Court of
Appeals in CA-G.R. CV No. 64456 dated 20 December 2001 and its Resolution of 28 November
2002 denying reconsideration of the Decision are REVERSED and SET ASIDE.
The Decision of RTC-Br. 19 of Cebu City dated 12 April 1999 in Civil Case No. CEB-20015 is
MODIFIED IN PART by (a) ORDERING respondent Mactan-Cebu International Airport Authority (MCIAA) TO
RECONVEY to petitioner Heirs of Timoteo Moreno and Maria Rotea, namely: Esperanza R.
Edjec, Bernarda R. Suela, Ruby C. Rotea, Bernarda R. Rotea, Elia R. Vda De Limbaga,
Virginia R. Arbon, Rosalinda R. Arquisola, Corazon Rotea, Fe R. Ebora, Caridad Rotea,
Angeles Vda. De Renacia, Jorge Rotea, Maria Luisa Rotea-Villegas, Alfredo R. Rotea,
represented by his heirs, namely: Lizbeth Rotea and Elepeth Rotea; Luis Rotea, represented
by his heir Jennifer Rotea; and Rolando R. Rotea, represented by his heir Rolando R. Rotea
Jr., Lot No. 916 with an area of 2,355 square meters and Lot No. 920 consisting of 3,097
square meters in Lahug, Cebu City, with all the improvements thereon evolving through
nature or time, but excluding those that were introduced by third parties, i.e., DPWH, which
shall be governed by existing contracts and relevant provisions of law;

(b) ORDERING petitioner Heirs of Timoteo Moreno and Maria Rotea TO PAY respondent
MCIAA what the former received as just compensation for the expropriation of Lots Nos. 916
and 920 in Civil Case No. R-1881, i.e., P7,065.00 for Lot No. 916 and P9,291.00 for Lot No.
920 with consequential damages by way of legal interest from 16 November 1947.
Petitioners must likewise PAY respondent MCIAA the necessary expenses that the latter
may have incurred in sustaining the properties and the monetary value of its services in
managing the properties to the extent that petitioners will secure a benefit from such acts.
Respondent MCIAA however may keep whatever income or fruits it may have obtained from
the parcels of land, in the same way that petitioners need not account for the interests that
the amounts they received as just compensation may have earned in the meantime;
(c) ORDERING respondent MCIAA TO CONVEY to petitioners the improvements it may
have built on Lots Nos. 916 and 920, if any, in which case petitioners SHALL PAY for these
improvements at the prevailing free market price, otherwise, if petitioners do not want to
appropriate such improvements, or if respondent does not choose to sell them, respondent
MCIAA SHALL REMOVE these improvements WITHOUT ANY OBLIGATION on the part of
petitioners to pay any compensation to respondent MCIAA for them;
(d) ORDERING petitioners TO PAY the amount so determined under letter (b) of this
dispositive portion as consideration for the reconveyance of Lots Nos. 916 and 920, as well
as the prevailing free market price of the improvements built thereon by respondent MCIAA,
if any and desired to be bought and sold by the parties, in ready money or cash PAYABLE
within a period of three hundred sixty five (365) days from the date that the amount under
letter (b) above is determined with finality, unless the parties herein stipulate a different
scheme or schedule of payment, otherwise, after the period of three hundred sixty five (365)
days or the lapse of the compromise scheme or schedule of payment and the amount so
payable is not settled, the right of repurchase of petitioners and the obligation of respondent
MCIAA to so reconvey Lots Nos. 916 and 920 and/or the improvements shall be DEEMED
FORFEITED and the ownership of those parcels of land shall VEST ABSOLUTELY upon
respondent MCIAA;
(e) REMANDING the instant case to RTC-Br. 19 of Cebu City for purposes of determining
the amount of compensation for Lots Nos. 916 and 920 to be paid by petitioners as
mandated in letter (b) hereof, and the value of the prevailing free market price of the
improvements built thereon by respondent MCIAA, if any and desired to be bought and sold
by the parties, and in general, securing the immediate execution of this Decision under the
premises;
(f) ORDERING petitioners to respect the right of the Department of Public Works and
Highways to its lease contract until the expiration of the lease period; and
(g) DELETING the award of P60,000.00 for attorneys fees and P15,000.00 for litigation
expenses against respondent MCIAA and in favor of petitioners.

This Decision is without prejudice to the claim of intervenor one Richard E. Enchuan on his
allegation that he acquired through deeds of assignment the rights of some of herein petitioners
over Lots Nos. 916 and 920.
No costs.
SO ORDERED.

MARINA Z. REYES; ALFREDO A. FRANCISCO; ANGELITA Z. GARCIA; ALFREDO Z.

FRANCISCO, JR; ARMANDO Z. FRANCISCO; ALMA C. FRANCISCO; EUGENIA Z. LUNA;
CLARITA Z. ZABALLERO, LEONARDO Z. ZABALLERO, JR, and TEODORO Z.
ZABALLERO, in substitution of LEONARDO M. ZABALLERO; AUGUSTO M. ZABALLERO;
FRINE A. ZABALLERO; ELENA FRONDA ZABALLERO; VICTOR GREGORIO F.
ZABALLERO; MARIA ELENA F. ZABALLERO; LOURDES ZABALLERO-LAVA; SOCORRO
EMILIA ZABALLERO-YAP; and TERESITA F. ZABALLERO, petitioners,
vs.
NATIONAL HOUSING AUTHORITY, respondent.
PUNO, J.:
This is an appeal by certiorari from the decision of the Court of Appeals in CA-GR CV No.
51641 dated September 29, 20001 affirming the judgment of the Regional Trial Court of Quezon
City, Branch 79 which dismissed the complaint for forfeiture of rights filed by herein petitioners,
as well as the Resolution dated March 13, 2001 denying petitioners' motion for reconsideration.
Records show that in 1977, respondent National Housing Authority (NHA) filed separate
complaints for the expropriation of sugarcane lands, particularly Lot Nos. 6450, 6448-E, 6198-A
and 6199 of the cadastral survey of Dasmarias, Cavite belonging to the petitioners, before the
then Court of First Instance of Cavite, and docketed as Civil Case Nos. T.G.-392, T.G.-396 and
T.G.-417. The stated public purpose of the expropriation was the expansion of the Dasmarias
Resettlement Project to accommodate the squatters who were relocated from the Metropolitan
Manila area. The trial court rendered judgment ordering the expropriation of these lots and the
payment of just compensation. This was affirmed by the Supreme Court in a decision rendered
on October 29, 1987 in the case of NHA vs. Zaballero2 and which became final on November
26, 1987.3
On February 24, 1989, the expropriation court (now Branch 18, Regional Trial Court of Tagaytay
City) issued an Order4 the dispositive portion of which reads:
"WHEREFORE, and resolving thus, let an Alias Writ of Execution be immediately issued and
that:
(1) The Register of Deeds of the Province of Cavite is hereby ordered to transfer, in the
name of the plaintiff National Housing Authority, the following:
(a) Transfer Certificate No. RT-638 containing an area of 79,167 square meters
situated in Barrio Bangkal, Dasmarias, Cavite;
(b) Transfer Certificate of Title No. T-55702 containing an area of 20,872 square
meters situated in Barrio Bangkal, Dasmarias, Cavite;
(c) Transfer Certificate of Title No. RT-639 and RT-4641 covering Lot Nos. 6198-A
and 6199 with an aggregate area of 159,985 square meters also situated in Barrio
Bangkal, Dasmarias, Cavite.
(2) Plaintiff National Housing Authority is likewise hereby ordered, under pain of contempt, to
immediately pay the defendants, the amounts stated in the Writ of Execution as the
adjudicated compensation of their expropriated properties, which process was received by it

according to the records, on September 26, 1988, segregating therefrom, and in separate
check, the lawyer's fees in favor of Atty. Bobby P. Yuseco, in the amount of P322,123.05, as
sustained by their contract as gleaned from the records, with no other deduction, paying on
its own (NHA) account, the necessary legal expenses incident to the registration or issuance
of new certificates of title, pursuant to the provisions of the Property Registration Law (PD
1529);
(3) Defendants, however, are directed to pay the corresponding capital gains tax on the
subject properties, directing them additionally, to coordinate with the plaintiff NHA in this
regard, in order to facilitate the termination of this case, put an end to this controversy and
consign the same to its final rest."

For the alleged failure of respondent NHA to comply with the above order, petitioners filed on
April 28, 1992 a complaint5 for forfeiture of rights before the Regional Trial Court of Quezon City,
Branch 79, in Civil Case No. Q-92-12093. They alleged that respondent NHA had not relocated
squatters from the Metropolitan Manila area on the expropriated lands in violation of the stated
public purpose for expropriation and had not paid the just compensation fixed by the court. They
prayed that respondent NHA be enjoined from disposing and alienating the expropriated
properties and that judgment be rendered forfeiting all its rights and interests under the
expropriation judgment. In its Answer,6 respondent NHA averred that it had already paid a
substantial amount to herein petitioners and that the expropriation judgment could not be
executed in view of several issues raised by respondent NHA before the expropriation court
(now Branch 18, RTC, Tagaytay City) concerning capital gains tax, registration fees and other
expenses for the transfer of title to respondent NHA, as well as the claims for attorney's fees of
Atty. Joaquin Yuseco, Jr., collaborating counsel for petitioners.
Ocular inspections7 conducted by the trial court on the subject properties show that:
"1. 80% of Lot No. 6198-A with an area of 120,146 square meters is already occupied by
relocatees whose houses are made of light materials with very few houses partly made of
hollow blocks. The relocatees were relocated only on (sic) March of 1994;
2. Most of the area covered by Lot No. 2075 is almost occupied by houses and structures,
most of which are made of concrete materials. These houses are not being occupied by
squatters relocated to the said lot by the defendant NHA;
3. Lot No. 6199 is also occupied by concrete houses and structures but likewise there are no
relocatees in said lot. A large area of the same is still unoccupied."

On September 29, 1995, the trial court rendered judgment dismissing the complaint. Finding
that the failure of respondent NHA to pay just compensation and of petitioners to pay capital
gains tax are both unjustified and unreasonable, the trial court held that: (1) respondent NHA is
not deemed to have abandoned the public purpose for which the subject properties were
expropriated because the relocation of squatters involves a long and tedious process. It ruled
that respondent NHA actually pursued the public purpose of the expropriation when it entered
into a contract with Arceo C. Cruz involving the construction of low cost housing on the
expropriated lots to be sold to qualified low income beneficiaries; (2) there is no condition
imposed in the expropriation judgment that the subject properties shall revert back to its original
owners in case the purpose of expropriation is terminated or abandoned; (3) the payment of just
compensation is independent of the obligation of herein petitioners to pay capital gains tax; and

(4) in the payment of just compensation, the basis should be the value at the time the property
was taken. On appeal, the Court of Appeals affirmed the decision of the trial court.
Petitioners are now before us raising the following assignment of errors:
"1. The Honorable Court of Appeals had decided a question of substance not in accord with
justice and equity when it ruled that, as the judgment of the expropriation court did not
contain a condition that should the expropriated property be not used for the intended
purpose it would revert to the condemnee, the action to declare the forfeiture of rights under
the expropriation judgment can not prosper;
2. The Honorable Court of Appeals decided a question of substance not in accord with
jurisprudence, justice and equity when it ruled that the non-payment is not a ground for
forfeiture;
3. The Honorable Court of Appeals erred in not declaring the judgment of expropriation
forfeited in light of the failure of respondent to use the expropriated property for the intended
purpose but for a totally different purpose."

The petition is not impressed with merit.

Petitioners contend that respondent NHA violated the stated public purpose for the expansion of
the Dasmarias Resettlement Project when it failed to relocate the squatters from the Metro
Manila area, as borne out by the ocular inspection conducted by the trial court which showed
that most of the expropriated properties remain unoccupied. Petitioners likewise question the
public nature of the use by respondent NHA when it entered into a contract for the construction
of low cost housing units, which is allegedly different from the stated public purpose in the
expropriation proceedings. Hence, it is claimed that respondent NHA has forfeited its rights and
interests by virtue of the expropriation judgment and the expropriated properties should now be
returned to herein petitioners. We are not persuaded.
The 1987 Constitution explicitly provides for the exercise of the power of eminent domain over
private properties upon payment of just compensation. More specifically, section 9, Article III
states that private property shall not be taken for public use without just compensation. The
constitutional restraints are public use and just compensation.
Petitioners cannot insist on a restrictive view of the eminent domain provision of the Constitution
by contending that the contract for low cost housing is a deviation from the stated public use. It
is now settled doctrine that the concept of public use is no longer limited to traditional purposes.
Here, as elsewhere, the idea that "public use" is strictly limited to clear cases of "use by the
public" has been abandoned. The term "public use" has now been held to be synonymous with
"public interest," "public benefit," "public welfare," and "public convenience."8 The rationale for
this new approach is well explained in the case of Heirs of Juancho Ardona, et al. vs. Reyes, et
al.,9 to wit:
"The restrictive view of public use may be appropriate for a nation which circumscribes the
scope of government activities and public concerns and which possesses big and correctly
located public lands that obviate the need to take private property for public purposes.
Neither circumstance applies to the Philippines. We have never been a laissez faire State.
And the necessities which impel the exertion of sovereign power are all too often found in
areas of scarce public land or limited government resources.

xxx

xxx

xxx

The taking to be valid must be for public use. There was a time when it was felt that a literal
meaning should be attached to such a requirement. Whatever project is undertaken must be
for the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not
allowable. It is not anymore. As long as the purpose of the taking is public, then the power of
eminent domain comes into play. As just noted, the constitution in at least two cases, to
remove any doubt, determines what is public use. One is the expropriation of lands to be
subdivided into small lots for resale at cost to individuals. The other is in the transfer, through
the exercise of this power, of utilities and other private enterprise to the government. It is
accurate to state then that at present whatever may be beneficially employed for the
general welfare satisfies the requirement of public use." (emphasis supplied)

The act of respondent NHA in entering into a contract with a real estate developer for the
construction of low cost housing on the expropriated lots to be sold to qualified low income
beneficiaries cannot be taken to mean as a deviation from the stated public purpose of their
taking. Jurisprudence has it that the expropriation of private land for slum clearance and urban
development is for a public purpose even if the developed area is later sold to private
homeowners, commercials firms, entertainment and service companies, and other private
concerns.10
Moreover, the Constitution itself allows the State to undertake, for the common good and in
cooperation with the private sector, a continuing program of urban land reform and
housing which will make at affordable cost decent housing and basic services to
underprivileged and homeless citizens in urban centers and resettlement areas.11 The
expropriation of private property for the purpose of socialized housing for the marginalized
sector is in furtherance of the social justice provision under Section 1, Article XIII of the
Constitution which provides that:
"SECTION 1. The Congress shall give highest priority to the enactment of measures that
protect and enhance the right of all the people to human dignity, reduce social, economic,
and political inequalities, and remove cultural inequities by equitably diffusing wealth and
political power for the common good.
To this end, the State shall require the acquisition, ownership, use and disposition of
property and its increments."

It follows that the low cost housing project of respondent NHA on the expropriated lots is
compliant with the "public use" requirement.
We likewise do not subscribe to petitioners' contention that the stated public purpose was
abandoned when respondent NHA failed to occupy the expropriated lots by relocating squatters
from the Metro Manila area. The expropriation judgment declared that respondent NHA has a
lawful right to take petitioners properties "for the public use or purpose of expanding the
Dasmarias Resettlement Project." The taking here is absolute, without any condition,
restriction or qualification. Contrary to petitioners' submission, the ruling enunciated in the early
case ofFery vs. Municipality of Cabanatuan,12 is still good and sound doctrine, viz.:
"x x x If, for example, land is expropriated for a particular purpose, with the condition that
when that purpose is ended or abandoned the property shall return to its former owner, then,
of course, when the purpose is terminated or abandoned the former owner reacquires the

property so expropriated. x x x If, upon the contrary, however, the decree of expropriation
gives to the entity a fee simple title, then, of course, the land becomes the absolute property
of the expropriator x x x.
When land has been acquired for public use in fee simple unconditionally, either by
the exercise of eminent domain or by purchase, the former owner retains no rights in
the land, and the public use may be abandoned, or the land may be devoted to a
different use, without any impairment of the estate or title acquired, or any reversion
to the former owner."

Petitioners further aver that the continued failure of respondent NHA to pay just compensation
for a long period of time justifies the forfeiture of its rights and interests over the expropriated
lots. They demand the return of the expropriated lots. Respondent NHA justifies the delay to pay
just compensation by reason of the failure of petitioners to pay the capital gains tax and to
surrender the owners' duplicate certificates of title.
In the recent case of Republic of the Philippines vs. Court of Appeals, et al.,13 the Court ruled
that non-payment of just compensation does not entitle the private landowners to recover
possession of their expropriated lots. Thus:
"Thus, in Valdehueza vs. Republic where the private landowners had remained unpaid ten
years after the termination of the expropriation proceedings, this Court ruled
'The points in dispute are whether such payment can still be made and, if so, in what
amount. Said lots have been the subject of expropriation proceedings. By final and executory
judgment in said proceedings, they were condemned for public use, as part of an airport, and
ordered sold to the government. x x x. It follows that both by virtue of the judgment, long
final, in the expropriation suit, as well as the annotations upon their title certificates, plaintiffs
are not entitled to recover possession of their expropriated lots which are still devoted to
the public use for which they were expropriated but only to demand the market value of the
same.
Said relief may be granted under plaintiffs' prayer for such other remedies, which may be
deemed just and equitable under the premises.'
The Court proceeded to reiterate its pronouncement in Alfonso vs. Pasay City where the
recovery of possession of property taken for public use prayed for by the unpaid landowner
was denied even while no requisite expropriation proceedings were first instituted. The
landowner was merely given the relief of recovering compensation for his property computed
at its market value at the time it was taken and appropriated by the State.
The judgment rendered by the Bulacan RTC in 1979 on the expropriation
proceedings provides not only for the payment of just compensation to herein
respondents but likewise adjudges the property condemned in favor of petitioner over
which parties, as well as their privies, are bound. Petitioner has occupied, utilized and,
for all intents and purposes, exercised dominion over the property pursuant to the
judgment. The exercise of such rights vested to it as the condemnee indeed has
amounted to at least a partial compliance or satisfaction of the 1979 judgment, thereby
preempting any claim of bar by prescription on grounds of non-execution. In arguing for the
return of their property on the basis of non-payment, respondents ignore the fact that
the right of the expropriating authority is far from that of an unpaid seller in ordinary
sales, to which the remedy of rescission might perhaps apply. An in rem proceeding,

condemnation acts upon the property. After condemnation, the paramount title is in the
public under a new and independent title; thus, by giving notice to all claimants to a disputed
title, condemnation proceedings provide a judicial process for securing better title against all
the world than may be obtained by voluntary conveyance." (emphasis supplied)

We, however, likewise find the refusal of respondent NHA to pay just compensation, allegedly
for failure of petitioners to pay capital gains tax and surrender the owners' duplicate certificates
of title, to be unfounded and unjustified.
First, under the expropriation judgment the payment of just compensation is not subject to any
condition. Second, it is a recognized rule that although the right to enter upon and appropriate
the land to public use is completed prior to payment, title to the property expropriated shall pass
from the owner to the expropriator only upon full payment of the just compensation. In the case
of Association of Small Landowners in the Phils., Inc., et al. vs. Secretary of Agrarian
Reform,14 it was held that:
"Title to property which is the subject of condemnation proceedings does not vest the
condemnor until the judgment fixing just compensation is entered and paid, but the
condemnor's title relates back to the date on which the petition under the Eminent Domain
Act, or the commissioner's report under the Local Improvement Act, is filed.
x x x Although the right to appropriate and use land taken for a canal is complete at
the time of entry, title to the property taken remains in the owner until payment is
actually made.
In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to
property does not pass to the condemnor until just compensation had actually been made. In
fact, the decisions appear to be uniformly to this effect. As early as 1838, in Rubottom v.
McLure, it was held that 'actual payment to the owner of the condemned property was a
condition precedent to the investment of the title to the property in the State' albeit 'not to the
appropriation of it to public use.' In Rexford v. Knight, the Court of Appeals of New York said
that the construction upon the statutes was that the fee did not vest in the State until the
payment of the compensation although the authority to enter upon and appropriate the land
was complete prior to the payment. Kennedy further said that 'both on principle and authority
the rule is x x x that the right to enter on and use the property is complete, as soon as
the property is actually appropriated under the authority of law for a public use, but
that the title does not pass from the owner without his consent, until just
compensation has been made to him.'"
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that:
If the laws which we have exhibited or cited in the preceding discussion are attentively
examined it will be apparent that the method of expropriation adopted in this jurisdiction is
such as to afford absolute reassurance that no piece of land can be finally and irrevocably
taken from an unwilling owner until compensation is paid. x x x." (emphasis supplied)

With respect to the amount of the just compensation still due and demandable from respondent
NHA, the lower courts erred in not awarding interest computed from the time the property is
actually taken to the time when compensation is actually paid or deposited in court. In Republic,
et al. vs. Court of Appeals, et al.,15 the Court imposed interest at 12% per annum in order to help

eliminate the issue of the constant fluctuation and inflation of the value of the currency over
time, thus:
"The constitutional limitation of 'just compensation' is considered to be the sum equivalent to
the market value of the property, broadly described to be the price fixed by the seller in open
market in the usual and ordinary course of legal action and competition or the fair value of
the property as between one who receives, and one who desires to sell, it being fixed at the
time of the actual taking by the government. Thus, if property is taken for public use before
compensation is deposited with the court having jurisdiction over the case, the final
compensation must include interests on its just value to be computed from the time the
property is taken to the time when compensation is actually paid or deposited with the court.
In fine, between the taking of the property and the actual payment, legal interests accrue in
order to place the owner in a position as good as (but not better than) the position he was in
before the taking occurred.
x x x This allowance of interest on the amount found to be the value of the property as of the
time of the taking computed, being an effective forbearance, at 12% per annum should help
eliminate the issue of the constant fluctuation and inflation of the value of the currency over
time. Article 1250 of the Civil Code, providing that, in case of extraordinary inflation or
deflation, the value of the currency at the time of the establishment of the obligation shall be
the basis for the payment when no agreement to the contrary is stipulated, has strict
application only to contractual obligations. In other words, a contractual agreement is needed
for the effects of extraordinary inflation to be taken into account to alter the value of the
currency."

Records show that there is an outstanding balance of P1,218,574.35 that ought to be paid to
petitioners.16 It is not disputed that respondent NHA took actual possession of the expropriated
properties in 1977.17 Perforce, while petitioners are not entitled to the return of the expropriated
property, they are entitled to be paid the balance of P1,218,574.35 with legal interest thereon at
12% per annum computed from the taking of the property in 1977 until the due amount shall
have been fully paid.
WHEREFORE, the appealed judgment is modified as follows:
1. Ordering respondent National Housing Authority to pay petitioners the amount of
P1,218,574.35 with legal interest thereon at 12% per annum computed from the taking of the
expropriated properties in 1997 until the amount due shall have been fully paid;
2. Ordering petitioners to pay the capital gains tax; and
3. Ordering petitioners to surrender to respondent National Housing Authority the owners'
duplicate certificates of title of the expropriated properties upon full payment of just
compensation.

SO ORDERED.
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY and AIR TRANSPORTATION
OFFICE, Petitioners,
vs.
BERNARDO L. LOZADA, SR., and the HEIRS OF ROSARIO MERCADO, namely, VICENTE
LOZADA, MARIO M. LOZADA, MARCIA L. GODINEZ, VIRGINIA L. FLORES, BERNARDO

LOZADA, JR., DOLORES GACASAN, SOCORRO CAFARO and ROSARIO LOZADA,

represented by MARCIA LOZADA GODINEZ, Respondents.
DECISION
NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse,
annul, and set aside the Decision1 dated February 28, 2006 and the Resolution2 dated February
7, 2007 of the Court of Appeals (CA) (Cebu City), Twentieth Division, in CA-G.R. CV No. 65796.
The antecedent facts and proceedings are as follows:
Subject of this case is Lot No. 88-SWO-25042 (Lot No. 88), with an area of 1,017 square
meters, more or less, located in Lahug, Cebu City. Its original owner was Anastacio Deiparine
when the same was subject to expropriation proceedings, initiated by the Republic of the
Philippines (Republic), represented by the then Civil Aeronautics Administration (CAA), for the
expansion and improvement of the Lahug Airport. The case was filed with the then Court of First
Instance of Cebu, Third Branch, and docketed as Civil Case No. R-1881.
As early as 1947, the lots were already occupied by the U.S. Army. They were turned over to
the Surplus Property Commission, the Bureau of Aeronautics, the National Airport Corporation
and then to the CAA.
During the pendency of the expropriation proceedings, respondent Bernardo L. Lozada, Sr.
acquired Lot No. 88 from Deiparine. Consequently, Transfer Certificate of Title (TCT) No. 9045
was issued in Lozadas name.
On December 29, 1961, the trial court rendered judgment in favor of the Republic and ordered
the latter to pay Lozada the fair market value of Lot No. 88, adjudged at P3.00 per square
meter, with consequential damages by way of legal interest computed from November 16,
1947the time when the lot was first occupied by the airport. Lozada received the amount
of P3,018.00 by way of payment.
The affected landowners appealed. Pending appeal, the Air Transportation Office (ATO),
formerly CAA, proposed a compromise settlement whereby the owners of the lots affected by
the expropriation proceedings would either not appeal or withdraw their respective appeals in
consideration of a commitment that the expropriated lots would be resold at the price they were
expropriated in the event that the ATO would abandon the Lahug Airport, pursuant to an
established policy involving similar cases. Because of this promise, Lozada did not pursue his
appeal. Thereafter, Lot No. 88 was transferred and registered in the name of the Republic under
TCT No. 25057.
The projected improvement and expansion plan of the old Lahug Airport, however, was not
pursued.
Lozada, with the other landowners, contacted then CAA Director Vicente Rivera, Jr., requesting
to repurchase the lots, as per previous agreement. The CAA replied that there might still be a
need for the Lahug Airport to be used as an emergency DC-3 airport. It reiterated, however, the
assurance that "should this Office dispose and resell the properties which may be found to be

no longer necessary as an airport, then the policy of this Office is to give priority to the former
owners subject to the approval of the President."
On November 29, 1989, then President Corazon C. Aquino issued a Memorandum to the
Department of Transportation, directing the transfer of general aviation operations of the Lahug
Airport to the Mactan International Airport before the end of 1990 and, upon such transfer, the
closure of the Lahug Airport.
Sometime in 1990, the Congress of the Philippines passed Republic Act (R.A.) No. 6958,
entitled "An Act Creating the Mactan-Cebu International Airport Authority, Transferring Existing
Assets of the Mactan International Airport and the Lahug Airport to the Authority, Vesting the
Authority with Power to Administer and Operate the Mactan International Airport and the Lahug
Airport, and For Other Purposes."
From the date of the institution of the expropriation proceedings up to the present, the public
purpose of the said expropriation (expansion of the airport) was never actually initiated, realized,
or implemented. Instead, the old airport was converted into a commercial complex. Lot No. 88
became the site of a jail known as Bagong Buhay Rehabilitation Complex, while a portion
thereof was occupied by squatters.3 The old airport was converted into what is now known as
the Ayala I.T. Park, a commercial area.
1avvphi 1

Thus, on June 4, 1996, petitioners initiated a complaint for the recovery of possession and
reconveyance of ownership of Lot No. 88. The case was docketed as Civil Case No. CEB18823 and was raffled to the Regional Trial Court (RTC), Branch 57, Cebu City. The complaint
substantially alleged as follows:
(a) Spouses Bernardo and Rosario Lozada were the registered owners of Lot No. 88
covered by TCT No. 9045;
(b) In the early 1960s, the Republic sought to acquire by expropriation Lot No. 88, among
others, in connection with its program for the improvement and expansion of the Lahug
Airport;
(c) A decision was rendered by the Court of First Instance in favor of the Government and
against the land owners, among whom was Bernardo Lozada, Sr. appealed therefrom;
(d) During the pendency of the appeal, the parties entered into a compromise settlement to
the effect that the subject property would be resold to the original owner at the same price
when it was expropriated in the event that the Government abandons the Lahug Airport;
(e) Title to Lot No. 88 was subsequently transferred to the Republic of the Philippines (TCT
No. 25057);
(f) The projected expansion and improvement of the Lahug Airport did not materialize;
(g) Plaintiffs sought to repurchase their property from then CAA Director Vicente Rivera. The
latter replied by giving as assurance that priority would be given to the previous owners,
subject to the approval of the President, should CAA decide to dispose of the properties;

(h) On November 29, 1989, then President Corazon C. Aquino, through a Memorandum to
the Department of Transportation and Communications (DOTC), directed the transfer of
general aviation operations at the Lahug Airport to the Mactan-Cebu International Airport
Authority;
(i) Since the public purpose for the expropriation no longer exists, the property must be
returned to the plaintiffs.4

In their Answer, petitioners asked for the immediate dismissal of the complaint. They specifically
denied that the Government had made assurances to reconvey Lot No. 88 to respondents in the
event that the property would no longer be needed for airport operations. Petitioners instead
asserted that the judgment of condemnation was unconditional, and respondents were,
therefore, not entitled to recover the expropriated property notwithstanding non-use or
abandonment thereof.
After pretrial, but before trial on the merits, the parties stipulated on the following set of facts:
(1) The lot involved is Lot No. 88-SWO-25042 of the Banilad Estate, situated in the City of
Cebu, containing an area of One Thousand Seventeen (1,017) square meters, more or less;
(2) The property was expropriated among several other properties in Lahug in favor of the
Republic of the Philippines by virtue of a Decision dated December 29, 1961 of the CFI of
Cebu in Civil Case No. R-1881;
(3) The public purpose for which the property was expropriated was for the purpose of the
Lahug Airport;
(4) After the expansion, the property was transferred in the name of MCIAA; [and]
(5) On November 29, 1989, then President Corazon C. Aquino directed the Department of
Transportation and Communication to transfer general aviation operations of the Lahug
Airport to the Mactan-Cebu International Airport Authority and to close the Lahug Airport after
such transfer[.]5

During trial, respondents presented Bernardo Lozada, Sr. as their lone witness, while petitioners
presented their own witness, Mactan-Cebu International Airport Authority legal assistant Michael
Bacarisas.
On October 22, 1999, the RTC rendered its Decision, disposing as follows:
WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in favor of the
plaintiffs, Bernardo L. Lozada, Sr., and the heirs of Rosario Mercado, namely, Vicente M.
Lozada, Marcia L. Godinez, Virginia L. Flores, Bernardo M. Lozada, Jr., Dolores L. Gacasan,
Socorro L. Cafaro and Rosario M. Lozada, represented by their attorney-in-fact Marcia Lozada
Godinez, and against defendants Cebu-Mactan International Airport Authority (MCIAA) and Air
Transportation Office (ATO):
1. ordering MCIAA and ATO to restore to plaintiffs the possession and ownership of their
land, Lot No. 88 Psd-821 (SWO-23803), upon payment of the expropriation price to plaintiffs;
and

2. ordering the Register of Deeds to effect the transfer of the Certificate of Title from
defendant[s] to plaintiffs on Lot No. [88], cancelling TCT No. 20357 in the name of defendant
MCIAA and to issue a new title on the same lot in the name of Bernardo L. Lozada, Sr. and
the heirs of Rosario Mercado, namely: Vicente M. Lozada, Mario M. Lozada, Marcia L.
Godinez, Virginia L. Flores, Bernardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro
and Rosario M. Lozada.

No pronouncement as to costs.
SO ORDERED.6
Aggrieved, petitioners interposed an appeal to the CA. After the filing of the necessary appellate
briefs, the CA rendered its assailed Decision dated February 28, 2006, denying petitioners
appeal and affirming in toto the Decision of the RTC, Branch 57, Cebu City. Petitioners motion
for reconsideration was, likewise, denied in the questioned CA Resolution dated February 7,
2007.
Hence, this petition arguing that: (1) the respondents utterly failed to prove that there was a
repurchase agreement or compromise settlement between them and the Government; (2) the
judgment in Civil Case No. R-1881 was absolute and unconditional, giving title in fee simple to
the Republic; and (3) the respondents claim of verbal assurances from government officials
violates the Statute of Frauds.
The petition should be denied.
Petitioners anchor their claim to the controverted property on the supposition that the Decision
in the pertinent expropriation proceedings did not provide for the condition that should the
intended use of Lot No. 88 for the expansion of the Lahug Airport be aborted or abandoned, the
property would revert to respondents, being its former owners. Petitioners cite, in support of this
position, Fery v. Municipality of Cabanatuan,7 which declared that the Government acquires only
such rights in expropriated parcels of land as may be allowed by the character of its title over
the properties
If x x x land is expropriated for a particular purpose, with the condition that when that purpose is
ended or abandoned the property shall return to its former owner, then, of course, when the
purpose is terminated or abandoned the former owner reacquires the property so expropriated.
If x x x land is expropriated for a public street and the expropriation is granted upon condition
that the city can only use it for a public street, then, of course, when the city abandons its use as
a public street, it returns to the former owner, unless there is some statutory provision to the
contrary. x x x. If, upon the contrary, however, the decree of expropriation gives to the entity a
fee simple title, then, of course, the land becomes the absolute property of the expropriator,
whether it be the State, a province, or municipality, and in that case the non-user does not have
the effect of defeating the title acquired by the expropriation proceedings. x x x.
When land has been acquired for public use in fee simple, unconditionally, either by the
exercise of eminent domain or by purchase, the former owner retains no right in the land, and
the public use may be abandoned, or the land may be devoted to a different use, without any
impairment of the estate or title acquired, or any reversion to the former owner. x x x.8

Contrary to the stance of petitioners, this Court had ruled otherwise in Heirs of Timoteo Moreno
and Maria Rotea v. Mactan-Cebu International Airport Authority,9 thus
Moreover, respondent MCIAA has brought to our attention a significant and telling portion in the
Decision in Civil Case No. R-1881 validating our discernment that the expropriation by the
predecessors of respondent was ordered under the running impression that Lahug Airport would
continue in operation
As for the public purpose of the expropriation proceeding, it cannot now be doubted. Although
Mactan Airport is being constructed, it does not take away the actual usefulness and importance
of the Lahug Airport: it is handling the air traffic both civilian and military. From it aircrafts fly to
Mindanao and Visayas and pass thru it on their flights to the North and Manila. Then, no
evidence was adduced to show how soon is the Mactan Airport to be placed in operation and
whether the Lahug Airport will be closed immediately thereafter. It is up to the other
departments of the Government to determine said matters. The Court cannot substitute its
judgment for those of the said departments or agencies. In the absence of such showing, the
Court will presume that the Lahug Airport will continue to be in operation (emphasis supplied).
While in the trial in Civil Case No. R-1881 [we] could have simply acknowledged the presence of
public purpose for the exercise of eminent domain regardless of the survival of Lahug Airport,
the trial court in its Decision chose not to do so but instead prefixed its finding of public purpose
upon its understanding that "Lahug Airport will continue to be in operation." Verily, these
meaningful statements in the body of the Decision warrant the conclusion that the expropriated
properties would remain to be so until it was confirmed that Lahug Airport was no longer "in
operation." This inference further implies two (2) things: (a) after the Lahug Airport ceased its
undertaking as such and the expropriated lots were not being used for any airport expansion
project, the rights vis--vis the expropriated Lots Nos. 916 and 920 as between the State and
their former owners, petitioners herein, must be equitably adjusted; and (b) the foregoing
unmistakable declarations in the body of the Decision should merge with and become an
intrinsic part of the fallo thereof which under the premises is clearly inadequate since the
dispositive portion is not in accord with the findings as contained in the body thereof.10
Indeed, the Decision in Civil Case No. R-1881 should be read in its entirety, wherein it is
apparent that the acquisition by the Republic of the expropriated lots was subject to the
condition that the Lahug Airport would continue its operation. The condition not having
materialized because the airport had been abandoned, the former owner should then be
allowed to reacquire the expropriated property.11
On this note, we take this opportunity to revisit our ruling in Fery, which involved an
expropriation suit commenced upon parcels of land to be used as a site for a public market.
Instead of putting up a public market, respondent Cabanatuan constructed residential houses
for lease on the area. Claiming that the municipality lost its right to the property taken since it did
not pursue its public purpose, petitioner Juan Fery, the former owner of the lots expropriated,
sought to recover his properties. However, as he had admitted that, in 1915, respondent
Cabanatuan acquired a fee simple title to the lands in question, judgment was rendered in favor
of the municipality, following American jurisprudence, particularly City of Fort Wayne v. Lake
Shore & M.S. RY. Co.,12 McConihay v. Theodore Wright,13 and Reichling v. Covington Lumber
Co.,14 all uniformly holding that the transfer to a third party of the expropriated real property,
which necessarily resulted in the abandonment of the particular public purpose for which the

property was taken, is not a ground for the recovery of the same by its previous owner, the title
of the expropriating agency being one of fee simple.
Obviously, Fery was not decided pursuant to our now sacredly held constitutional right that
private property shall not be taken for public use without just compensation.15 It is well settled
that the taking of private property by the Governments power of eminent domain is subject to
two mandatory requirements: (1) that it is for a particular public purpose; and (2) that just
compensation be paid to the property owner. These requirements partake of the nature of
implied conditions that should be complied with to enable the condemnor to keep the property
expropriated.16
More particularly, with respect to the element of public use, the expropriator should commit to
use the property pursuant to the purpose stated in the petition for expropriation filed, failing
which, it should file another petition for the new purpose. If not, it is then incumbent upon the
expropriator to return the said property to its private owner, if the latter desires to reacquire the
same. Otherwise, the judgment of expropriation suffers an intrinsic flaw, as it would lack one
indispensable element for the proper exercise of the power of eminent domain, namely, the
particular public purpose for which the property will be devoted. Accordingly, the private
property owner would be denied due process of law, and the judgment would violate the
property owners right to justice, fairness, and equity.
In light of these premises, we now expressly hold that the taking of private property, consequent
to the Governments exercise of its power of eminent domain, is always subject to the condition
that the property be devoted to the specific public purpose for which it was taken. Corollarily, if
this particular purpose or intent is not initiated or not at all pursued, and is peremptorily
abandoned, then the former owners, if they so desire, may seek the reversion of the property,
subject to the return of the amount of just compensation received. In such a case, the exercise
of the power of eminent domain has become improper for lack of the required factual
justification.17
Even without the foregoing declaration, in the instant case, on the question of whether
respondents were able to establish the existence of an oral compromise agreement that entitled
them to repurchase Lot No. 88 should the operations of the Lahug Airport be abandoned, we
rule in the affirmative.
It bears stressing that both the RTC, Branch 57, Cebu and the CA have passed upon this
factual issue and have declared, in no uncertain terms, that a compromise agreement was, in
fact, entered into between the Government and respondents, with the former undertaking to
resell Lot No. 88 to the latter if the improvement and expansion of the Lahug Airport would not
be pursued. In affirming the factual finding of the RTC to this effect, the CA declared
Lozadas testimony is cogent. An octogenarian widower-retiree and a resident of Moon Park,
California since 1974, he testified that government representatives verbally promised him and
his late wife while the expropriation proceedings were on-going that the government shall return
the property if the purpose for the expropriation no longer exists. This promise was made at the
premises of the airport. As far as he could remember, there were no expropriation proceedings
against his property in 1952 because the first notice of expropriation he received was in 1962.
Based on the promise, he did not hire a lawyer. Lozada was firm that he was promised that the
lot would be reverted to him once the public use of the lot ceases. He made it clear that the
verbal promise was made in Lahug with other lot owners before the 1961 decision was handed

down, though he could not name the government representatives who made the promise. It was
just a verbal promise; nevertheless, it is binding. The fact that he could not supply the necessary
details for the establishment of his assertions during cross-examination, but that "When it will
not be used as intended, it will be returned back, we just believed in the government," does not
dismantle the credibility and truthfulness of his allegation. This Court notes that he was 89 years
old when he testified in November 1997 for an incident which happened decades ago. Still, he is
a competent witness capable of perceiving and making his perception known. The minor lapses
are immaterial. The decision of the competency of a witness rests primarily with the trial judge
and must not be disturbed on appeal unless it is clear that it was erroneous. The objection to his
competency must be made before he has given any testimony or as soon as the incompetency
becomes apparent. Though Lozada is not part of the compromise agreement,18 he nevertheless
adduced sufficient evidence to support his claim.19
As correctly found by the CA, unlike in Mactan Cebu International Airport Authority v. Court of
Appeals,20 cited by petitioners, where respondent therein offered testimonies which were
hearsay in nature, the testimony of Lozada was based on personal knowledge as the assurance
from the government was personally made to him. His testimony on cross-examination
destroyed neither his credibility as a witness nor the truthfulness of his words.
Verily, factual findings of the trial court, especially when affirmed by the CA, are binding and
conclusive on this Court and may not be reviewed. A petition for certiorari under Rule 45 of the
Rules of Court contemplates only questions of law and not of fact.21 Not one of the exceptions to
this rule is present in this case to warrant a reversal of such findings.
As regards the position of petitioners that respondents testimonial evidence violates the Statute
of Frauds, suffice it to state that the Statute of Frauds operates only with respect to executory
contracts, and does not apply to contracts which have been completely or partially performed,
the rationale thereof being as follows:
In executory contracts there is a wide field for fraud because unless they be in writing there is
no palpable evidence of the intention of the contracting parties. The statute has precisely been
enacted to prevent fraud. However, if a contract has been totally or partially performed, the
exclusion of parol evidence would promote fraud or bad faith, for it would enable the defendant
to keep the benefits already delivered by him from the transaction in litigation, and, at the same
time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby.22
In this case, the Statute of Frauds, invoked by petitioners to bar the claim of respondents for the
reacquisition of Lot No. 88, cannot apply, the oral compromise settlement having been partially
performed. By reason of such assurance made in their favor, respondents relied on the same by
not pursuing their appeal before the CA. Moreover, contrary to the claim of petitioners, the fact
of Lozadas eventual conformity to the appraisal of Lot No. 88 and his seeking the correction of
a clerical error in the judgment as to the true area of Lot No. 88 do not conclusively establish
that respondents absolutely parted with their property. To our mind, these acts were simply
meant to cooperate with the government, particularly because of the oral promise made to
them.
The right of respondents to repurchase Lot No. 88 may be enforced based on a constructive
trust constituted on the property held by the government in favor of the former. On this note, our
ruling in Heirs of Timoteo Moreno is instructive, viz.:

Mactan-Cebu International Airport Authority is correct in stating that one would not find an
express statement in the Decision in Civil Case No. R-1881 to the effect that "the [condemned]
lot would return to [the landowner] or that [the landowner] had a right to repurchase the same if
the purpose for which it was expropriated is ended or abandoned or if the property was to be
used other than as the Lahug Airport." This omission notwithstanding, and while the inclusion of
this pronouncement in the judgment of condemnation would have been ideal, such precision is
not absolutely necessary nor is it fatal to the cause of petitioners herein. No doubt, the return or
repurchase of the condemned properties of petitioners could be readily justified as the manifest
legal effect or consequence of the trial courts underlying presumption that "Lahug Airport will
continue to be in operation" when it granted the complaint for eminent domain and the airport
discontinued its activities.
The predicament of petitioners involves a constructive trust, one that is akin to the implied trust
referred to in Art. 1454 of the Civil Code, "If an absolute conveyance of property is made in
order to secure the performance of an obligation of the grantor toward the grantee, a trust by
virtue of law is established. If the fulfillment of the obligation is offered by the grantor when it
becomes due, he may demand the reconveyance of the property to him." In the case at bar,
petitioners conveyed Lots No. 916 and 920 to the government with the latter obliging itself to
use the realties for the expansion of Lahug Airport; failing to keep its bargain, the government
can be compelled by petitioners to reconvey the parcels of land to them, otherwise, petitioners
would be denied the use of their properties upon a state of affairs that was not conceived nor
contemplated when the expropriation was authorized.
Although the symmetry between the instant case and the situation contemplated by Art. 1454 is
not perfect, the provision is undoubtedly applicable. For, as explained by an expert on the law of
trusts: "The only problem of great importance in the field of constructive trust is to decide
whether in the numerous and varying fact situations presented to the courts there is a wrongful
holding of property and hence a threatened unjust enrichment of the defendant." Constructive
trusts are fictions of equity which are bound by no unyielding formula when they are used by
courts as devices to remedy any situation in which the holder of legal title may not in good
conscience retain the beneficial interest.
In constructive trusts, the arrangement is temporary and passive in which the trustees sole duty
is to transfer the title and possession over the property to the plaintiff-beneficiary. Of course, the
"wronged party seeking the aid of a court of equity in establishing a constructive trust must
himself do equity." Accordingly, the court will exercise its discretion in deciding what acts are
required of the plaintiff-beneficiary as conditions precedent to obtaining such decree and has
the obligation to reimburse the trustee the consideration received from the latter just as the
plaintiff-beneficiary would if he proceeded on the theory of rescission. In the good judgment of
the court, the trustee may also be paid the necessary expenses he may have incurred in
sustaining the property, his fixed costs for improvements thereon, and the monetary value of his
services in managing the property to the extent that plaintiff-beneficiary will secure a benefit
from his acts.
The rights and obligations between the constructive trustee and the beneficiary, in this case,
respondent MCIAA and petitioners over Lots Nos. 916 and 920, are echoed in Art. 1190 of the
Civil Code, "When the conditions have for their purpose the extinguishment of an obligation to
give, the parties, upon the fulfillment of said conditions, shall return to each other what they
have received x x x In case of the loss, deterioration or improvement of the thing, the provisions

which, with respect to the debtor, are laid down in the preceding article shall be applied to the
party who is bound to return x x x."23
On the matter of the repurchase price, while petitioners are obliged to reconvey Lot No. 88 to
respondents, the latter must return to the former what they received as just compensation for
the expropriation of the property, plus legal interest to be computed from default, which in this
case runs from the time petitioners comply with their obligation to respondents.
Respondents must likewise pay petitioners the necessary expenses they may have incurred in
maintaining Lot No. 88, as well as the monetary value of their services in managing it to the
extent that respondents were benefited thereby.
Following Article 118724 of the Civil Code, petitioners may keep whatever income or fruits they
may have obtained from Lot No. 88, and respondents need not account for the interests that the
amounts they received as just compensation may have earned in the meantime.
In accordance with Article 119025 of the Civil Code vis--vis Article 1189, which provides that "(i)f
a thing is improved by its nature, or by time, the improvement shall inure to the benefit of the
creditor x x x," respondents, as creditors, do not have to pay, as part of the process of
restitution, the appreciation in value of Lot No. 88, which is a natural consequence of nature and
time.26
WHEREFORE, the petition is DENIED. The February 28, 2006 Decision of the Court of
Appeals, affirming the October 22, 1999 Decision of the Regional Trial Court, Branch 87, Cebu
City, and its February 7, 2007 Resolution are AFFIRMED with MODIFICATION as follows:
1. Respondents are ORDERED to return to petitioners the just compensation they received
for the expropriation of Lot No. 88, plus legal interest, in the case of default, to be computed
from the time petitioners comply with their obligation to reconvey Lot No. 88 to them;
2. Respondents are ORDERED to pay petitioners the necessary expenses the latter incurred
in maintaining Lot No. 88, plus the monetary value of their services to the extent that
respondents were benefited thereby;
3. Petitioners are ENTITLED to keep whatever fruits and income they may have obtained
from Lot No. 88; and
4. Respondents are also ENTITLED to keep whatever interests the amounts they received
as just compensation may have earned in the meantime, as well as the appreciation in value
of Lot No. 88, which is a natural consequence of nature and time;

In light of the foregoing modifications, the case is REMANDED to the Regional Trial Court,
Branch 57, Cebu City, only for the purpose of receiving evidence on the amounts that
respondents will have to pay petitioners in accordance with this Courts decision. No costs.
SO ORDERED.

REPUBLIC OF THE PHILIPPINES, represented by the General Manager of the PHILIPPINE

INFORMATION AGENCY (PIA), petitioner, vs. THE HONORABLE COURT OF APPEALS
and the HEIRS OF LUIS SANTOS as herein represented by DR. SABINO SANTOS and
PURIFICACION SANTOS IMPERIAL, respondents.

DECISION

VITUG, J.:

Petitioner instituted expropriation proceedings on 19 September 1969 before the Regional Trial
Court ("RTC") of Bulacan, docketed Civil Cases No. 3839-M, No. 3840-M, No. 3841-M and No.
3842-M, covering a total of 544,980 square meters of contiguous land situated along MacArthur
Highway, Malolos, Bulacan, to be utilized for the continued broadcast operation and use of radio
transmitter facilities for the Voice of the Philippines project. Petitioner, through the Philippine
Information Agency (PIA), took over the premises after the previous lessee, the Voice of
America, had ceased its operations thereat. Petitioner made a deposit of P517,558.80, the sum
provisionally fixed as being the reasonable value of the property. On 26 February 1979, or more
than nine years after the institution of the expropriation proceedings, the trial court issued this
order -

"WHEREFORE, premises considered, judgment is hereby rendered:

"Condemning the properties of the defendants in Civil Cases Nos. 3839-M to 3842-M located at
KM 43, MacArthur Highway, Malolos, Bulacan and covered by several transfer certificates of
title appearing in the Commissioners Appraisal Report consisting of the total area of 544,980
square meters, as indicated in plan, Exhibit A, for plaintiff, also marked as Exhibit I for the
defendants, and as Appendix A attached to the Commissioners Appraisal Report, for the
purpose stated by the plaintiff in its complaint;

"Ordering the plaintiff to pay the defendants the just compensation for said property which is the
fair market value of the land condemned, computed at the rate of six pesos (P6.00) per square
meter, with legal rate of interest from September 19, 1969, until fully paid; and

"Ordering the plaintiff to pay the costs of suit, which includes the aforesaid fees of
commissioners, Atty. Victorino P. Evangelista and Mr. Pablo Domingo."[1]

The bone of contention in the instant controversy is the 76,589-square meter property
previously owned by Luis Santos, predecessor-in-interest of herein respondents, which forms
part of the expropriated area.

It would appear that the national government failed to pay to herein respondents the
compensation pursuant to the foregoing decision, such that a little over five years later, or on 09
May 1984, respondents filed a manifestation with a motion seeking payment for the
expropriated property. On 07 June 1984, the Bulacan RTC, after ascertaining that the heirs
remained unpaid in the sum of P1,058,655.05, issued a writ of execution served on the plaintiff,
through the Office of the Solicitor General, for the implementation thereof. When the order was
not complied with, respondents again filed a motion urging the trial court to direct the provincial
treasurer of Bulacan to release to them the amount of P72,683.55, a portion of the sum
deposited by petitioner at the inception of the expropriation proceedings in 1969, corresponding
to their share of the deposit. The trial court, in its order of 10 July 1984, granted the motion.

In the meantime, President Joseph Ejercito Estrada issued Proclamation No. 22,[2] transferring
20 hectares of the expropriated property to the Bulacan State University for the expansion of its
facilities and another 5 hectares to be used exclusively for the propagation of the Philippine
carabao. The remaining portion was retained by the PIA. This fact notwithstanding, and despite
the 1984 court order, the Santos heirs remained unpaid, and no action was taken on their case
until 16 September 1999 when petitioner filed its manifestation and motion to permit the deposit
in court of the amount of P4,664,000.00 by way of just compensation for the expropriated
property of the late Luis Santos subject to such final computation as might be approved by the
court. This time, the Santos heirs, opposing the manifestation and motion, submitted a countermotion to adjust the compensation from P6.00 per square meter previously fixed in the 1979
decision to its current zonal valuation pegged at P5,000.00 per square meter or, in the
alternative, to cause the return to them of the expropriated property. On 01 March 2000, the
Bulacan RTC ruled in favor of respondents and issued the assailed order, vacating its decision
of 26 February 1979 and declaring it to be unenforceable on the ground of prescription -

"WHEREFORE, premises considered, the court hereby:

"1) declares the decision rendered by this Court on February 26, 1979 no longer enforceable,
execution of the same by either a motion or an independent action having already prescribed in
accordance with Section 6, Rule 39 of both the 1964 Revised Rules of Court and the 1997
Rules of Civil Procedure;

"2) denies the plaintiffs Manifestation and Motion to Permit Plaintiff to Deposit in Court
Payment for Expropriated Properties dated September 16, 1999 for the reason stated in the
next preceding paragraph hereof; and

"3) orders the return of the expropriated property of the late defendant Luis Santos to his
heirs conformably with the ruling of the Supreme Court in Government of Sorsogon vs. Vda. De
Villaroya, 153 SCRA 291, without prejudice to any case which the parties may deem
appropriate to institute in relation with the amount already paid to herein oppositors and the
purported transfer of a portion of the said realty to the Bulacan State University pursuant to
Proclamation No. 22 issued by President Joseph Ejercito."[3]

Petitioner brought the matter up to the Court of Appeals but the petition was outrightly denied. It
would appear that the denial was based on Section 4, Rule 65, of the 1997 Rules of Civil
Procedure which provided that the filing of a motion for reconsideration in due time after filing of
the judgment, order or resolution interrupted the running of the sixty-day period within which to
file a petition for certiorari; and that if a motion for reconsideration was denied, the aggrieved
party could file the petition only within the remaining period, but which should not be less than
five days in any event, reckoned from the notice of such denial. The reglementary period,
however, was later modified by A.M. No. 00-2-03 S.C., now reading thusly:

Sec. 4. When and where petition filed. --- The petition shall be filed not later than sixty (60)
days from notice of the judgment, order or resolution. In case a motion for reconsideration or
new trial is timely filed, whether such motion is required or not, the sixty (60) day period shall be
counted from notice of the denial of said motion.

The amendatory provision, being curative in nature, should be made applicable to all cases still
pending with the courts at the time of its effectivity.

In Narzoles vs. NLRC,[4] the Court has said:

The Court has observed that Circular No. 39-98 has generated tremendous confusion resulting
in the dismissal of numerous cases for late filing. This may have been because, historically, i.e.,
even before the 1997 revision to the Rules of Civil Procedure, a party had a fresh period from
receipt of the order denying the motion for reconsideration to file a petition for certiorari. Were it
not for the amendments brought about by Circular No. 39-98, the cases so dismissed would
have been resolved on the merits. Hence, the Court deemed it wise to revert to the old rule
allowing a party a fresh 60-day period from notice of the denial of the motion for reconsideration
to file a petition for certiorari. x x x

The latest amendments took effect on September 1, 2000, following its publication in the
Manila Bulletin on August 4, 2000 and in the Philippine Daily Inquirer on August 7, 2000, two
newspapers of general circulation.

In view of its purpose, the Resolution further amending Section 4, Rule 65, can only be
described as curative in nature, and the principles governing curative statutes are applicable.

Curative statutes are enacted to cure defects in a prior law or to validate legal proceedings
which would otherwise be void for want of conformity with certain legal requirements. (Erectors,
Inc. vs. National Labor Relations Commission, 256 SCRA 629 [1996].) They are intended to
supply defects, abridge superfluities and curb certain evils. They are intended to enable
persons to carry into effect that which they have designed or intended, but has failed of
expected legal consequence by reason of some statutory disability or irregularity in their own
action. They make valid that which, before the enactment of the statute was invalid. Their
purpose is to give validity to acts done that would have been invalid under existing laws, as if
existing laws have been complied with. (Batong Buhay Gold Mines, Inc. vs. Dela Serna, 312
SCRA 22 [1999].) Curative statutes, therefore, by their very essence, are retroactive.
(Municipality of San Narciso, Quezon vs. Mendez, Sr., 239 SCRA 11 [1994].)[5]

At all events, petitioner has a valid point in emphasizing the "public nature" of the expropriated
property. The petition being imbued with public interest, the Court has resolved to give it due
course and to decide the case on its merits.

Assailing the finding of prescription by the trial court, petitioner here posited that a motion which
respondents had filed on 17 February 1984, followed up by other motions subsequent thereto,
was made within the reglementary period that thereby interrupted the 5-year prescriptive period
within which to enforce the 1979 judgment. Furthermore, petitioner claimed, the receipt by
respondents of partial compensation in the sum of P72,683.55 on 23 July 1984 constituted
partial compliance on the part of petitioners and effectively estopped respondents from invoking
prescription expressed in Section 6, Rule 39, of the Rules of Court.[6]

In opposing the petition, respondents advanced the view that pursuant to Section 6, Rule 39, of
the Rules of Court, the failure of petitioner to execute the judgment, dated 26 February 1979,
within five years after it had become final and executory, rendered it unenforceable by mere
motion. The motion for payment, dated 09 May 1984, as well as the subsequent disbursement
to them of the sum of P72,683.55 by the provincial treasurer of Bulacan, could not be
considered as having interrupted the five-year period, since a motion, to be considered
otherwise, should instead be made by the prevailing party, in this case by petitioner.
Respondents maintained that the P72,683.55 paid to them by the provincial treasurer of
Bulacan pursuant to the 1984 order of the trial court was part of the initial deposit made by
petitioner when it first entered possession of the property in 1969 and should not be so regarded
as a partial payment. Respondents further questioned the right of PIA to transfer ownership of a
portion of the property to the Bulacan State University even while the just compensation due the
heirs had yet to be finally settled.

The right of eminent domain is usually understood to be an ultimate right of the sovereign power
to appropriate any property within its territorial sovereignty for a public purpose.[7] Fundamental
to the independent existence of a State, it requires no recognition by the Constitution, whose
provisions are taken as being merely confirmatory of its presence and as being regulatory, at
most, in the due exercise of the power. In the hands of the legislature, the power is inherent, its
scope matching that of taxation, even that of police power itself, in many respects. It reaches to
every form of property the State needs for public use and, as an old case so puts it, all separate
interests of individuals in property are held under a tacit agreement or implied reservation
vesting upon the sovereign the right to resume the possession of the property whenever the
public interest so requires it.[8]

The ubiquitous character of eminent domain is manifest in the nature of the expropriation
proceedings. Expropriation proceedings are not adversarial in the conventional sense, for the
condemning authority is not required to assert any conflicting interest in the property. Thus, by
filing the action, the condemnor in effect merely serves notice that it is taking title and
possession of the property, and the defendant asserts title or interest in the property, not to
prove a right to possession, but to prove a right to compensation for the taking.[9]

Obviously, however, the power is not without its limits: first, the taking must be for public use,
and second, that just compensation must be given to the private owner of the property.[10]
These twin proscriptions have their origin in the recognition of the necessity for achieving
balance between the State interests, on the one hand, and private rights, upon the other hand,
by effectively restraining the former and affording protection to the latter.[11] In determining
public use, two approaches are utilized - the first is public employment or the actual use by the
public, and the second is public advantage or benefit.[12] It is also useful to view the matter as
being subject to constant growth, which is to say that as society advances, its demands upon
the individual so increases, and each demand is a new use to which the resources of the
individual may be devoted.[13]

The expropriated property has been shown to be for the continued utilization by the PIA, a
significant portion thereof being ceded for the expansion of the facilities of the Bulacan State
University and for the propagation of the Philippine carabao, themselves in line with the
requirements of public purpose. Respondents question the public nature of the utilization by
petitioner of the condemned property, pointing out that its present use differs from the purpose
originally contemplated in the 1969 expropriation proceedings. The argument is of no moment.
The property has assumed a public character upon its expropriation. Surely, petitioner, as the
condemnor and as the owner of the property, is well within its rights to alter and decide the use
of that property, the only limitation being that it be for public use, which, decidedly, it is.

In insisting on the return of the expropriated property, respondents would exhort on the
pronouncement in Provincial Government of Sorsogon vs. Vda. de Villaroya[14] where the
unpaid landowners were allowed the alternative remedy of recovery of the property there in

question. It might be borne in mind that the case involved the municipal government of
Sorsogon, to which the power of eminent domain is not inherent, but merely delegated and of
limited application. The grant of the power of eminent domain to local governments under
Republic Act No. 7160[15] cannot be understood as being the pervasive and all-encompassing
power vested in the legislative branch of government. For local governments to be able to wield
the power, it must, by enabling law, be delegated to it by the national legislature, but even then,
this delegated power of eminent domain is not, strictly speaking, a power of eminent, but only of
inferior, domain or only as broad or confined as the real authority would want it to be.[16]

Thus, in Valdehueza vs. Republic[17] where the private landowners had remained unpaid ten
years after the termination of the expropriation proceedings, this Court ruled -

The points in dispute are whether such payment can still be made and, if so, in what amount.
Said lots have been the subject of expropriation proceedings. By final and executory judgment
in said proceedings, they were condemned for public use, as part of an airport, and ordered sold
to the government. x x x It follows that both by virtue of the judgment, long final, in the
expropriation suit, as well as the annotations upon their title certificates, plaintiffs are not entitled
to recover possession of their expropriated lots - which are still devoted to the public use for
which they were expropriated - but only to demand the fair market value of the same.

"Said relief may be granted under plaintiffs' prayer for: `such other remedies, which may be
deemed just and equitable under the premises'."[18]

The Court proceeded to reiterate its pronouncement in Alfonso vs. Pasay City[19] where the
recovery of possession of property taken for public use prayed for by the unpaid landowner was
denied even while no requisite expropriation proceedings were first instituted. The landowner
was merely given the relief of recovering compensation for his property computed at its market
value at the time it was taken and appropriated by the State.

The judgment rendered by the Bulacan RTC in 1979 on the expropriation proceedings provides
not only for the payment of just compensation to herein respondents but likewise adjudges the
property condemned in favor of petitioner over which parties, as well as their privies, are
bound.[20] Petitioner has occupied, utilized and, for all intents and purposes, exercised
dominion over the property pursuant to the judgment. The exercise of such rights vested to it as
the condemnee indeed has amounted to at least a partial compliance or satisfaction of the 1979
judgment, thereby preempting any claim of bar by prescription on grounds of non-execution. In
arguing for the return of their property on the basis of non-payment, respondents ignore the fact
that the right of the expropriatory authority is far from that of an unpaid seller in ordinary sales,
to which the remedy of rescission might perhaps apply. An in rem proceeding, condemnation
acts upon the property.[21] After condemnation, the paramount title is in the public under a new
and independent title;[22] thus, by giving notice to all claimants to a disputed title, condemnation

proceedings provide a judicial process for securing better title against all the world than may be
obtained by voluntary conveyance.[23]

Respondents, in arguing laches against petitioner did not take into account that the same
argument could likewise apply against them. Respondents first instituted proceedings for
payment against petitioner on 09 May 1984, or five years after the 1979 judgment had become
final. The unusually long delay in bringing the action to compel payment against herein
petitioner would militate against them. Consistently with the rule that one should take good care
of his own concern, respondents should have commenced the proper action upon the finality of
the judgment which, indeed, resulted in a permanent deprivation of their ownership and
possession of the property.[24]

The constitutional limitation of just compensation is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market
in the usual and ordinary course of legal action and competition or the fair value of the property
as between one who receives, and one who desires to sell, it fixed at the time of the actual
taking by the government.[25] Thus, if property is taken for public use before compensation is
deposited with the court having jurisdiction over the case, the final compensation must include
interests on its just value to be computed from the time the property is taken to the time when
compensation is actually paid or deposited with the court.[26] In fine, between the taking of the
property and the actual payment, legal interests accrue in order to place the owner in a position
as good as (but not better than) the position he was in before the taking occurred.[27]

The Bulacan trial court, in its 1979 decision, was correct in imposing interests on the zonal value
of the property to be computed from the time petitioner instituted condemnation proceedings
and took the property in September 1969. This allowance of interest on the amount found to
be the value of the property as of the time of the taking computed, being an effective
forbearance, at 12% per annum[28] should help eliminate the issue of the constant fluctuation
and inflation of the value of the currency over time.[29] Article 1250 of the Civil Code, providing
that, in case of extraordinary inflation or deflation, the value of the currency at the time of the
establishment of the obligation shall be the basis for the payment when no agreement to the
contrary is stipulated, has strict application only to contractual obligations.[30] In other words, a
contractual agreement is needed for the effects of extraordinary inflation to be taken into
account to alter the value of the currency.[31]

All given, the trial court of Bulacan in issuing its order, dated 01 March 2000, vacating its
decision of 26 February 1979 has acted beyond its lawful cognizance, the only authority left to it
being to order its execution. Verily, private respondents, although not entitled to the return of the
expropriated property, deserve to be paid promptly on the yet unpaid award of just
compensation already fixed by final judgment of the Bulacan RTC on 26 February 1979 at
P6.00 per square meter, with legal interest thereon at 12% per annum computed from the date

of "taking" of the property, i.e., 19 September 1969, until the due amount shall have been fully
paid.

WHEREFORE, the petition is GRANTED. The resolution, dated 31 July 2000, of the Court of
Appeals dismissing the petition for certiorari, as well as its resolution of 04 January 2001
denying the motion for reconsideration, and the decision of the Regional Trial Court of Bulacan,
dated 01 March 2000, are SET ASIDE. Let the case be forthwith remanded to the Regional
Trial Court of Bulacan for the proper execution of its decision promulgated on 26 February 1979
which is hereby REINSTATED. No costs.

SO ORDERED.