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MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY v. BERNARDO L. LOZADA

FACTS:

Lot No. 88-SWO-25042 of the Banilad Estate, located in Cebu City, was expropriated by the Republic of the Philippines for the expansion and improvement of the Lahug Airport. However, the Lahug Airport was eventually closed and the general aviation operations were transferred to the Mactan-Cebu International Airport Authority (MCIAA).

The former owners of Lot No. 88 filed a complaint seeking the restoration of their possession and ownership of the property, arguing that since the purpose for the expropriation no longer existed, the property should be returned to them. They claimed that they were given assurances by government officials that the property would be reconveyed to them if it was no longer needed for airport operations.

MCIAA and the Air Transportation Office (ATO) denied the existence of any agreement to reconvey the property and asserted that the judgment of condemnation was unconditional, thus the former owners were not entitled to recover the expropriated property.

After stipulating certain facts, including the expropriation of Lot No. 88 and the transfer of the property to MCIAA, the Regional Trial Court (RTC) ruled in favor of the former owners, ordering MCIAA and ATO to restore possession and ownership of the property to them. The Court of Appeals affirmed the RTC's decision.

MCIAA brings attention to a previous decision, which stated that the expropriation was ordered under the impression that the Lahug Airport would continue to operate. The Court cannot substitute its judgment for that of other government departments or agencies and must presume that the Lahug Airport will continue to be in operation based on the absence of any showing. The trial court's decision found public purpose in the expropriation based on the understanding that the Lahug Airport would continue to be operational.

ISSUES:

  1. Whether or not the expropriated properties should be returned to their former owners because the condition that the Lahug Airport would continue in operation was not met.

  2. Whether or not the former owners are entitled to seek reversion of the property and return of just compensation received if the specific public purpose for which the property was taken is not pursued and abandoned.

  3. Whether the respondents were able to establish the existence of an oral compromise agreement that entitled them to repurchase Lot No. 88 if the operations of the Lahug Airport were abandoned.

  4. Whether the government can be compelled to reconvey the properties to the petitioners.

  5. Whether the petitioners are entitled to reimbursement for necessary expenses and the monetary value of their services.

  6. Whether the petitioners can keep the fruits and income obtained from the properties.

  7. Whether the government is entitled to keep the interests and appreciation in value of the properties.

  8. Whether or not the trial court erred in not awarding the petitioners the value of the income they could have earned on the just compensation they received for their land.

RULING:

  1. Yes, the expropriated properties should be returned to their former owners because the condition that the Lahug Airport would continue in operation was not met.

  2. Yes, the former owners are entitled to seek reversion of the property and return of just compensation received if the specific public purpose for which the property was taken is not pursued and abandoned.

  3. The Court ruled in the affirmative. The trial court and the Court of Appeals both found that a compromise agreement was entered into between the government and the respondents, with the government undertaking to resell Lot No. 88 to the respondents in the event that the improvement and expansion of the Lahug Airport would not be pursued. The findings of fact by the lower courts are binding and conclusive on the Supreme Court unless there are exceptional circumstances present to warrant a reversal.

  4. Yes, the government can be compelled to reconvey the properties to the petitioners based on a constructive trust. The government failed to fulfill its obligation to use the properties for the expansion of the airport, and therefore, the petitioners are entitled to the return of their properties.

  5. Yes, the petitioners are entitled to reimbursement for the necessary expenses they incurred in maintaining the properties and for the monetary value of their services. The court has the discretion to decide what acts are required of the petitioners as conditions precedent to obtaining the reconveyance and the petitioners must do equity.

  6. Yes, the petitioners can keep the fruits and income obtained from the properties.

  7. No, the government is not entitled to keep the interests and appreciation in value of the properties. The government must return the just compensation received by the petitioners, plus legal interest, and the appreciation in value of the properties is a natural consequence of nature and time.

  8. The Supreme Court modified the ruling of the trial court and held that the petitioners are entitled to the income they could have earned on the just compensation they received for their land. The Court also stated that the petitioners are entitled to the appreciation in value of the land, which is a natural consequence of nature and time. The case was remanded to the trial court for the determination of the amounts that the respondents need to pay the petitioners.

PRINCIPLES:

  • The taking of private property by the government through 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.

  • The expropriator should commit to using the property for the purpose stated in the petition for expropriation, and if it is not pursued and abandoned, the former owner may seek the reversion of the property.

  • The exercise of the power of eminent domain becomes improper if the specific public purpose for which the property was taken is not initiated or pursued, and the former owners may seek reversion of the property.

  • Factual findings of the trial court, especially when affirmed by the Court of Appeals, are binding and conclusive on the Supreme Court and cannot be reviewed, unless there are exceptional circumstances.

  • The Statute of Frauds, which requires contracts to be in writing, does not apply to contracts that have been partially or completely performed. The exclusion of parol evidence in contracts that have been partially performed would enable the party to keep the benefits already received without fulfilling their obligations.

  • Constructive trust allows for the reconveyance of property when there is a wrongful holding and threatened unjust enrichment.

  • The court may exercise its discretion in deciding the acts required of the party seeking the reconveyance and the party seeking reconveyance must do equity.

  • The arrangement in a constructive trust is temporary and passive, with the trustee's sole duty being to transfer title and possession to the plaintiff-beneficiary.

  • Reimbursement for necessary expenses and the monetary value of services may be awarded in a constructive trust situation.

  • The return of property and reimbursement for expenses and services are governed by the provisions on extinction of obligation.

  • The petitioner is entitled to keep the fruits and income obtained from the property.

  • The government is not entitled to keep the interests and appreciation in value of the property.

  • Just compensation includes the value of the income that the landowners could have earned on the compensation they received for their land.

  • Landowners are also entitled to the appreciation in value of the land, which is a natural consequence of nature and time.