POLITICAL LAW REVIEW

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G.R. No. 176625 February 25, 2010

MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY and AIR
TRANSPORTATION OFFICE vs. BERNARDO L. LOZADA, SR.

Subject of this case is (Lot No. 88), 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.

During the pendency of the expropriation proceedings, Bernardo L.

Lozada, Sr. acquired Lot No. 88 from Deiparine. Consequently,
Transfer Certificate of Title (TCT) No. 9045 was issued in Lozadas
name.

trial court - rendered judgment in favor of the Republic and

ordered the latter to pay Lozada the fair market value of Lot No.
88. 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.
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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.

President Corazon C. Aquino 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.

Congress of the Philippines passed Republic Act (R.A.) No. 6958,

entitled An Act Creating the Mactan-Cebu International Airport
Authority,

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.

Thus, on June 4, 1996, LOZADA initiated a complaint for the

recovery of possession and reconveyance of ownership of Lot No. 88.

In their Answer, MACTAN-CEBU asked for the immediate dismissal

of the complaint. They specifically denied that the Government had
made assurances to reconvey Lot No. 88 to LOZADAS in the event
that the property would no longer be needed for airport
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operations. MACTAN-CEBU AIR instead asserted that the judgment of

condemnation was unconditional, and LOZADAS 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:

During trial, LOZADAS presented Bernardo Lozada, Sr. as their lone

witness, while MACTAN-CEBU AIR presented their own witness,
Mactan-Cebu International Airport Authority legal assistant Michael
Bacarisas.

RTC = renders judgment in favor of the, Bernardo L. Lozada, Sr., and

the heirs of Rosario Mercado, and against defendants Cebu-Mactan
International Airport Authority (MCIAA) and Air Transportation
Office (ATO):

CA = affirming in toto the Decision of the RTC,

ISSUE:
(1) the LOZADAS 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 LOZADAS claim of verbal assurances from government

officials violates the Statute of Frauds.

The petition should be denied.

If x x x land is expropriated for a particular purpose,

with the condition that when that purpose is ended or
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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.

“FEE SIMPLE, UNCONDITIONALLY”

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.

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.
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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.

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 the instant case, on the question of whether LOZADAS 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 LOZADAS, 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
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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
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part of the compromise agreement,[18] he nevertheless

adduced sufficient evidence to support his claim.[19]

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:

Statute of Frauds, invoked by MACTAN-CEBU AIR to bar the claim

of LOZADAS 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, LOZADAS relied on
the same by not pursuing their appeal before the CA. Moreover,
contrary to the claim of MACTAN-CEBU AIR, 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 LOZADAS 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 LOZADAS 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.

“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
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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, MACTAN-CEBU AIR 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 MACTAN-CEBU AIR to reconvey the
parcels of land to them, otherwise, MACTAN-CEBU AIR
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.

“REPURCHASE PRICE”

On the matter of the repurchase price, while MACTAN-CEBU AIR

are obliged to reconvey Lot No. 88 to LOZADAS, 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 MACTAN-CEBU AIR
comply with their obligation to LOZADAS.
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LOZADAS must likewise pay MACTAN-CEBU AIR 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 LOZADAS were benefited thereby.

MACTAN-CEBU AIR may keep whatever income or fruits they may

have obtained from Lot No. 88, and LOZADAS need not account for
the interests that the amounts they received as just compensation
may have earned in the meantime.

WHEREFORE, the petition is DENIED. Decision of the Regional

Trial Court, are AFFIRMED with MODIFICATION as follows:

1. LOZADAS are ORDERED to return to MACTAN-CEBU AIR 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
MACTAN-CEBU AIR comply with their obligation to reconvey Lot No.
88 to them;

2. LOZADAS are ORDERED to pay MACTAN-CEBU AIR the

necessary expenses the latter incurred in maintaining Lot No. 88,
plus the monetary value of their services to the extent that LOZADAS
were benefited thereby;

3. MACTAN-CEBU AIR are ENTITLED to keep whatever fruits and

income they may have obtained from Lot No. 88; and

4. LOZADAS 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;
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G.R. No. 165828 August 24, 2011

NATIONAL POWER CORPORATION VS. HEIRS OF MACABANGKIT
SANGKAY

BERSAMIN, J.:
Private property shall not be taken for public use
without just compensation.
Section 9, Article III, 1987 Constitution

The application of this provision of the Constitution is the focus of

this appeal.

Petitioner National Power Corporation (NPC) seeks the review

on certiorari of the decision promulgated on October 5,
2004,[1] whereby the Court of Appeals (CA) affirmed the decision
dated August 13, 1999 and the supplemental decision dated August
18, 1999, ordering NPC to pay just compensation to the respondents,
both rendered by the Regional Trial Court, Branch 1, in Iligan City
(RTC).

Antecedents

Republic Act No. 6395

NPC undertook the Agus River Hydroelectric Power Plant
Project in the 1970s to generate electricity for Mindanao. The project
included the construction of several underground tunnels to be used
in diverting the water flow from the Agus River to the hydroelectric
plants.

(Heirs of Macabangkit), alleged that they had belatedly discovered

that one of the underground tunnels of NPC that diverted the water
flow of the Agus River for the operation of the Hydroelectric Project
in Agus V, Agus VI and Agus VII traversed their land; that their
discovery had occurred in 1995 after
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1. President of the Federation of Arabic Madaris School, had

rejected their offer to sell the land because of the danger the
underground tunnel might pose to the proposed Arabic
Language Training Center and Muslims Skills Development
Center;
2. Global Asia Management and Resource Corporation
REJECTED developing the land into a housing project for
the same reason;
3. Al-Amanah Islamic Investment Bank of the Philippines
had also refused to accept their land as collateral because of
the presence of the underground tunnel;

NPC countered that the Heirs of Macabangkit had no right to

compensation under which a mere legal easement on their land was
established;
Ruling of the RTC

RTC ruled in favor of the plaintiffs (Heirs of Macabangkit). NPC had

concealed the construction of the tunnel in 1979 from the Heirs of
Macabangkit, and had since continuously denied its existence; that
NPC had acted in bad faith by taking possession of the subterranean
portion of their land to construct the tunnel without their
knowledge and prior consent; that the existence of the tunnel had
affected the entire expanse of the land, and had restricted their right
to excavate or to construct a motorized deep well; and that they, as
owners, had lost the agricultural, commercial, industrial and
residential value of the land.

Ruling of the CA
CA affirmed the decision of the RTC

ISSUE
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(1) Whether the CA and the RTC erred in holding

that there was an underground tunnel traversing the
Heirs of Macabangkits land constructed by NPC; and

(2) Whether the Heirs of Macabangkits right to claim

just compensation had prescribed under section 3(i) of
Republic Act No. 6395, or, alternatively, under Article
620 and Article 646 of the Civil Code.
Ruling

We uphold the liability of NPC for payment of just compensation.

Honorable Presiding Judge of the Regional Trial Court,

Branch 01, Lanao del Norte, herself and the respective
lawyers of both of the parties and found that, among
others, said underground tunnel was constructed beneath
the subject property.

Five-year prescriptive period under Section 3(i) of

Republic Act No. 6395 does not apply to claims for just
compensation

We rule that the prescriptive period provided under Section

3(i) of Republic Act No. 6395 is applicable only to an action for
damages, and does not extend to an action to recover just
compensation like this case.

The action to recover just compensation from the State or its

expropriating agency differs from the action for damages. The former,
also known as inverse condemnation, has the objective to recover the
value of property taken in fact by the governmental defendant, even
though no formal exercise of the power of eminent domain has been
attempted by the taking agency. Just compensation is the full and
fair equivalent of the property taken from its owner by the
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expropriator. The measure is not the takers gain, but the owners loss.
The word just is used to intensify the meaning of the
word compensation in order to convey the idea that the equivalent to
be rendered for the property to be taken shall be real, substantial,
full, and ample. On the other hand, the latter action seeks to
vindicate a legal wrong through damages, which may be actual,
moral, nominal, temperate, liquidated, or exemplary.
Due to the need to construct the underground tunnel, NPC
should have first moved to acquire the land from the Heirs of
Macabangkit either by voluntary tender to purchase or through
formal expropriation proceedings. In either case, NPC would have
been liable to pay to the owners the fair market value of the land,
for Section 3(h) of Republic Act No. 6395 expressly requires NPC to
pay the fair market value of such property at the time of the taking,
thusly:

(h) To acquire, promote, hold, transfer, sell, lease, rent,

mortgage, encumber and otherwise dispose of property
incident to, or necessary, convenient or proper to carry
out the purposes for which the Corporation was
created: Provided, That in case a right of way is
necessary for its transmission lines, easement of right of
way shall only be sought: Provided, however, That in
case the property itself shall be acquired by purchase,
the cost thereof shall be the fair market value at the time
of the taking of such property.

3.NPCs construction of the tunnel constituted taking of the land And

entitled owners to just compensation

Notwithstanding the fact that petitioner only

occupies the sub-terrain portion, it is liable to pay not
merely an easement fee but rather the full compensation
for land. This is so because in this case, the nature of the
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easement practically deprives the owners of its normal

beneficial use. Respondents, as the owner of the property
thus expropriated, are entitled to a just compensation
which should be neither more nor less, whenever it is
possible to make the assessment, than the money
equivalent of said property.

Did such consequence constitute taking of the land as to entitle the

owners to just compensation? Yes!

there was a full taking on the part of NPC, notwithstanding

that the owners were not completely and actually dispossessed. It is
settled that the taking of private property for public use, to be
compensable, need not be an actual physical taking or
appropriation. Indeed, the expropriators action may be short of
acquisition of title, physical possession, or occupancy but may still
amount to a taking. Compensable taking includes destruction,
restriction, diminution, or interruption of the rights of ownership or
of the common and necessary use and enjoyment of the property in a
lawful manner, lessening or destroying its value.[38] It is neither
necessary that the owner be wholly deprived of the use of his
property, nor material whether the property is removed from the
possession of the owner, or in any respect changes hands.[40]

As a result, NPC should pay just compensation for the entire

land. In that regard, the RTC pegged just compensation
at P500.00/square meter based on its finding on what the prevailing
market value of the property was at the time of the filing of the
complaint, and the CA upheld the RTC.
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G.R. No. 192100 March 12, 2014

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT
OF PUBLIC WORKS AND HIGHWAYS (DPWH)
vs.
ASIA PACIFIC INTEGRATED STEEL CORPORATION,

VILLARAMA, JR., J.:

Asia Pacific Integrated Steel Corporation (ASIA PACIFIC) is the

registered owner of a property situated in Barangay Sta. Monica,
Municipality of San Simon, Province of PampangA.

Republic of the Philippines (DPWH) through the Toll Regulatory

Board (TRB) instituted expropriation proceedings against the ASIA
PACIFIC over a portion of their property. The affected area, shall be
traversed by the expansion of (NLEX Project).

trial court issued an order granting DPWH’s motion and directing

the Register of Deeds of Pampanga to cause the annotation of the
writ of possession on TCT

ASIA PACIFIC questioned the TRB’s authority to expropriate the

subject property and objected to DPWH’s offered compensation which
ASIA PACIFIC deems unjust because the basis thereof - the BIR zonal
valuation - was an unofficial valuation

pre-trial conference, the parties agreed on TRB’s authority to

expropriate the subject property but disagreed as to the amount of
just compensation. DPWH offered to pay ₱607,200.00 for the portion
taken but ASIA PACIFIC made a counter-offer of ₱1,821,600.00. The
parties eventually agreed to submit the issue of just compensation to
three Commissioners composed of the Municipal Assessor of San
Simon as Chairman, and the RTC Branch Clerk of Court and the
Register of Deeds for the Province of Pampanga as Members.
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trial court granted ASIA PACIFIC’s motion to withdraw the

₱607,200.00 deposited by DPWH with the LBP as partial payment
for just compensation.11

the Assessor’s Office being aware of the actual conditions of subject

property decided to use opinion values in the determination of the
current and fair market value for the purpose of payment of just
compensation.

In its Decision, the trial court ruled as follows:

x x x Although there was no documentary evidence attached to

substantiate the opinions of the banks and the realtors indicated in
the Commissioners’ Report, the Court finds the commissioners’
recommendation of the valuation of industrial lands at ₱1,000.00 to
₱1,500.00 to be fair, absent any showing that the valuation is
exorbitant or otherwise unjustified. There was no fraud or prejudice
that tainted the report.

The CA upheld the trial court’s ruling, reiterating the principle that
the determination of just compensation is an inherently judicial
function. It stressed that any valuation for just compensation laid
down in statutes merely serve as guides or factors and may not
substitute the court’s own judgment as to what amount should be
awarded and how to arrive at such amount.

Further, the CA noted that DPWH itself admitted that the BIR zonal
valuation is only for the purpose of determining the correct amount
of transfer taxes. It held that while BIR zonal valuation may be a
factor in determining just compensation, the same is not a competent
basis thereof. Citing R.A. 8974, the CA pointed out the distinction
between provisional value as a precondition for the issuance of a
writ of possession and the payment of just compensation for the
expropriated property.
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PROVISIONAL VALUE is based on the zonal value as may be

determined by the BIR,

JUST COMPENSATION is based on the prevailing fair market

value of the property. Necessarily, the zonal valuation of
properties is not equivalent to their fair market value.

ISSUE:

whether the trial court based its determination of just compensation

on the factors provided under existing laws and jurisprudence.

Section 5 of R.A. 8974. Standards for the Assessment of the Value of

the Land Subject of Expropriation Proceedings or Negotiated Sale. –
In order to facilitate the determination of just compensation, the
court may consider, among other well-established factors, the
following relevant standards:

(a) The classification and use for which the property is suited;
(b) The developmental costs for improving the land;
(c) The value declared by the owners;
(d) The current selling price of similar lands in the vicinity;
(e) The reasonable disturbance compensation for the removal
and/or demolition of certain improvements on the land and
for the value of the improvements thereon;
(f) The size, shape or location, tax declaration and zonal
valuation of the land;
(g) The price of the land as manifested in the ocular findings,
oral as well as documentary evidence presented; and
(h) Such facts and events as to enable the affected property
owners to have sufficient funds to acquire similarly-situated
lands of approximate areas as those required from them by the
government, and thereby rehabilitate themselves as early as
possible.
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In this case, the trial court considered only (a) and (d): (1) the
classification of the subject property which is located in an area
with mixed land use (commercial, residential and industrial) and
the property’s conversion from agricultural to industrial land, and
(2) the current selling price of similar lands in the vicinity – the
only factors which the commissioners included in their Report.

We find that the trial court did not judiciously determine the fair
market value of the subject property as it failed to consider other
relevant factors such as the zonal valuation, tax declarations and
current selling price supported by documentary evidence. Indeed, just
compensation must not be arrived at arbitrarily, but determined
after an evaluation of different factors.

Just compensation is defined as the full and fair equivalent of the

property taken from its owner by the expropriator. The measure is
not the taker’s gain, but the owner’s loss. The word "just" is used to
intensify the meaning of the word "compensation" and to convey
thereby the idea that the equivalent to be rendered for the property
to be taken shall be real, substantial, full, and ample. Such "just"-
ness of the compensation can only be attained by using reliable and
actual data as bases in fixing the value of the condemned
property. Trial courts are required to be more circumspect in its
evaluation of just compensation due the property owner, considering
that eminent domain cases involve the expenditure of public funds.

We agree with the trial court that it was not bound by the assessment
report of the commissioners and that it had the discretion to reject
the same and substitute its own judgment on its value as gathered
from the record, or it may accept the report/recommendation of the
commissioners in toto and base its judgment thereon. However, the
decision of the court must be based on all established rules, upon
correct legal principles and competent evidence.26The court is
proscribed from basing its judgment on speculations and surmises.
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Among the factors to be considered in arriving at the fair market

value of the property are the cost of acquisition, the current value of
like properties, its actual or potential uses, and in the particular
case of lands, their size, shape, location, and the tax declarations
thereon. The measure is not the taker's gain but the owner's loss. To
be just, the compensation must be fair not only to the owner but also
to the taker.

It is settled that the final conclusions on the proper amount of just

compensation can only be made after due ascertainment of the
requirements set forth under R.A. 8974 and not merely based on the
declarations of the parties. Since these requirements were not
satisfactorily complied with, and in the absence of reliable and
actual data as bases in fixing the value of the condemned property,
remand of this case to the trial court is in order.