The Republic and MCIAA’s petition in G.R. No. 168812 is bereft of merit, while the Ouano petition in G.R. No. 168770 is meritorious.
At the outset, three (3) fairly established factual premises ought to be emphasized:
First, the MCIAA and/or its predecessor agency had not actually used the lots subject of the final decree of expropriation in Civil Case No. R-1881 for the purpose they were originally taken by the government, i.e., for the expansion and development ofLahugAirport.
Second, the Lahug Airport had been closed and abandoned. A significant portion of it had, in fact, been purchased by a private corporation for development as a commercial complex.
Third, it has been preponderantly established by evidence that the NAC, through its team of negotiators, had given assurance to the affected landowners that they would be entitled to repurchase their respective lots in the event they are no longer used for airport purposes. “No less than Asterio Uy,” the Court noted in Heirs of Moreno, “one of the members of the CAA Mactan Legal Team, which interceded for the acquisition of the lots for the Lahug Airport’s expansion, affirmed that persistent assurances were given to the landowners to the effect that as soon as the Lahug Airport is abandoned or transferred to Mactan, the lot owners would be able to reacquire their properties.” In Civil Case No. CEB-20743, Exhibit “G,” the transcript of the deposition of Anunciacion vda. de Ouano covering the assurance made had been formally offered in evidence and duly considered in the initial decision of the RTC Cebu City. In Civil Case No. CEB-18370, the trial court, on the basis of testimonial evidence, and later the CA, recognized the reversionary rights of the suing former lot owners or their successors in interest and resolved the case accordingly. In point with respect to the representation and promise of the government to return the lots taken should the planned airport expansion do not materialize is what the Court said in Heirs of Moreno, thus:
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 airport’s venue. Some acted on this assurance and sold their properties; other landowners held out and waited for the exercise of eminent domain to take its course until finally coming to terms with respondent’s predecessors that they would not appeal nor block further judgment of condemnation if the right of repurchase was extended to them. A handful failed to prove that they acted on such assurance when they parted with ownership of their land. (Emphasis supplied; citations omitted.)
For perspective, Heirs of Moreno––later followed by MCIAA v. Tudtud (Tudtud) and the consolidated cases at bar––is cast under the same factual setting and centered on the expropriation of privately-owned lots for the public purpose of expanding the Lahug Airport and the alleged promise of reconveyance given by the negotiating NAC officials to the private lot owners. All the lots being claimed by the former owners or successors-in-interest of the former owners in the Heirs of Moreno, Tudtud, and the present cases were similarly adjudged condemned in favor of the Republic in Civil Case No. R-1881. All the claimants sought was or is to have the condemned lots reconveyed to them upon the payment of the condemnation price since the public purpose of the expropriation was never met. Indeed, the expropriated lots were never used and were, in fact, abandoned by the expropriating government agencies.
In all then, the issues and supporting arguments presented by both sets of petitioners in these consolidated cases have already previously been passed upon, discussed at length, and practically peremptorily resolved in Heirs of Moreno and the November 2008 Tudtud ruling. The Ouanos, as petitioners in G.R. No. 168770, and the Inocians, as respondents in G.R. No. 168812, are similarly situated as the heirs of Moreno in Heirs of Moreno and Benjamin Tudtud in Tudtud. Be that as it may, there is no reason why the ratio decidendi in Heirs of Moreno and Tudtud should not be made to apply to petitioners Ouanos and respondents Inocians such that they shall be entitled to recover their or their predecessors’ respective properties under the same manner and arrangement as the heirs of Moreno and Tudtud. Stare decisis et non quieta movere (to adhere to precedents, and not to unsettle things which are established).
Just like in Tudtud and earlier in Heirs of Moreno, MCIAA would foist the theory that the judgment of condemnation in Civil Case No. R-1881 was without qualification and was unconditional. It would, in fact, draw attention to the fallo of the expropriation court’s decision to prove that there is nothing in the decision indicating that the government gave assurance or undertook to reconvey the covered lots in case the Lahug airport expansion project is aborted. Elaborating on this angle, MCIAA argues that the claim of the Ouanos and the Inocians regarding the alleged verbal assurance of the NAC negotiating team that they can reacquire their landholdings is barred by the Statute of Frauds.
Under the rule on the Statute of Frauds, as expressed in Article 1403 of the Civil Code, a contract for the sale or acquisition of real property shall be unenforceable unless the same or some note of the contract be in writing and subscribed by the party charged. Subject to defined exceptions, evidence of the agreement cannot be received without the writing, or secondary evidence of its contents.
MCIAA’s invocation of the Statute of Frauds is misplaced primarily because the statute applies only to executory and not to completed, executed, or partially consummated contracts. Carbonnel v. Poncio, et al., quoting Chief Justice Moran, explains the rationale behind this rule, thusly:
x x x “The reason is simple. In executory contracts there is a wide field for fraud because unless they may be in writing there is no palpable evidence of the intention of the contracting parties. The statute has been precisely been enacted to prevent fraud.” x x x 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 derived by him from the transaction in litigation, and at the same time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby. (Emphasis in the original.)
Analyzing the situation of the cases at bar, there can be no serious objection to the proposition that the agreement package between the government and the private lot owners was already partially performed by the government through the acquisition of the lots for the expansion of the Lahug airport. The parties, however, failed to accomplish the more important condition in the CFI decision decreeing the expropriation of the lots litigated upon: the expansion of theLahugAirport. The project––the public purpose behind the forced property taking––was, in fact, never pursued and, as a consequence, the lots expropriated were abandoned. Be that as it may, the two groups of landowners can, in an action to compel MCIAA to make good its oral undertaking to allow repurchase, adduce parol evidence to prove the transaction.
At any rate, the objection on the admissibility of evidence on the basis of the Statute of Frauds may be waived if not timely raised. Records tend to support the conclusion that MCIAA did not, as the Ouanos and the Inocians posit, object to the introduction of parol evidence to prove its commitment to allow the former landowners to repurchase their respective properties upon the occurrence of certain events.
In a bid to deny the lot owners the right to repurchase, MCIAA, citing cases, points to the dispositive part of the decision in Civil Case R-1881 which, as couched, granted the Republic absolute title to the parcels of land declared expropriated. The MCIAA is correct about the unconditional tone of the dispositive portion of the decision, but that actuality would not carry the day for the agency. Addressing the matter of the otherwise absolute tenor of the CFI’s disposition in Civil Case No. R-1881, the Court, in Heirs of Moreno, after taking stock of the ensuing portion of the body of the CFI’s decision, said:
As for the public purpose of the expropriation proceeding, it cannot now be doubted. Although MactanAirportis being constructed, it does not take away the actual usefulness and importance of the LahugAirport: it is handling the air traffic of 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 judgments 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.)
We went on to state as follows:
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 the 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-à-vis the expropriated lots x x x 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.
Not to be overlooked of course is what the Court said in its Resolution disposing of MCIAA’s motion to reconsider the original ruling in Heirs of Moreno. In that resolution, We stated that the fallo of the decision in Civil Case R-1881 should be viewed and understood in connection with the entire text, which contemplated a return of the property taken if the airport expansion project were abandoned. For ease of reference, following is what the Court wrote:
Moreover, we do not subscribe to the [MCIAA’s] contention that since the possibility of the LahugAirport’s closure was actually considered by the trial court, a stipulation on reversion or repurchase was so material that it should not have been discounted by the court a quo in its decision in Civil Case No. R-1881, if, in fact, there was one. We find it proper to cite, once more, this Court’s ruling that the fallo of the decision in Civil Case No. R-1881 must be read in reference to the other portions of the decision in which it forms a part. A reading of the Court’s judgment must not be confined to the dispositive portion alone; rather it should be meaningfully construed in unanimity with the ratio decidendi thereof to grasp the true intent and meaning of a decision.
The Court has, to be sure, taken stock of Fery v. Municipality of Cabanatuan, a case MCIAA cites at every possible turn, where the Court made these observations:
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 and in that case the non-user does not have the effect of defeating the title acquired by the expropriation proceedings x x x.
Fery notwithstanding, MCIAA cannot really rightfully say that it has absolute title to the lots decreed expropriated in Civil Case No. R-1881. The correct lesson of Fery is captured by what the Court said in that case, thus: “the government acquires only such rights in expropriated parcels of land as may be allowed by the character of its title over the properties.” In light of our disposition in Heirs of Moreno and Tudtud, the statement immediately adverted to means that in the event the particular public use for which a parcel of land is expropriated is abandoned, the owner shall not be entitled to recover or repurchase it as a matter of right, unless such recovery or repurchase is expressed in or irresistibly deducible from the condemnation judgment. But as has been determined below, the decision in Civil Case No. R-1881 enjoined MCIAA, as a condition of approving expropriation, to allow recovery or repurchase upon abandonment of the Lahug airport project. To borrow from our underlying decision in Heirs of Moreno, “[n]o doubt, the return or repurchase of the condemned properties of petitioners could readily be justified as the manifest legal effect of consequence of the trial court’s 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.”
Providing added support to the Ouanos and the Inocians’ right to repurchase is what in Heirs of Moreno was referred to as constructive trust, one that is akin to the implied trust expressed in Art. 1454 of the Civil Code, the purpose of which is to prevent unjust enrichment. In the case at bench, the Ouanos and the Inocians parted with their respective lots in favor of the MCIAA, the latter obliging itself to use the realties for the expansion of Lahug Airport; failing to keep its end of the bargain, MCIAA can be compelled by the former landowners to reconvey the parcels of land to them, otherwise, they would be denied the use of their properties upon a state of affairs that was not conceived nor contemplated when the expropriation was authorized. In effect, the government merely held the properties condemned in trust until the proposed public use or purpose for which the lots were condemned was actually consummated by the government. Since the government failed to perform the obligation that is the basis of the transfer of the property, then the lot owners Ouanos and Inocians can demand the reconveyance of their old properties after the payment of the condemnation price.
Constructive trusts are fictions of equity that courts use as devices to remedy any situation in which the holder of the legal title, MCIAA in this case, may not, in good conscience, retain the beneficial interest. We add, however, as in Heirs of Moreno, that the party seeking the aid of equity––the landowners in this instance, in establishing the trust––must himself do equity in a manner as the court may deem just and reasonable.
The Court, in the recent MCIAA v. Lozada, Sr., revisited and abandoned the Fery ruling that the former owner is not entitled to reversion of the property even if the public purpose were not pursued and were abandoned, thus:
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., McConihay v. Theodore Wright, and Reichling v. Covington Lumber Co., 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.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.
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. (Emphasis supplied.)
Clinging to Fery, specifically the fee simple concept underpinning it, is no longer compelling, considering the ensuing inequity such application entails. Too, the Court resolved Fery not under the cover of any of the Philippine Constitutions, each decreeing that private property shall not be taken for public use without just compensation. The twin elements of just compensation and public purpose are, by themselves, direct limitations to the exercise of eminent domain, arguing, in a way, against the notion of fee simple title. The fee does not vest until payment of just compensation.
In esse, expropriation is forced private property taking, the landowner being really without a ghost of a chance to defeat the case of the expropriating agency. In other words, in expropriation, the private owner is deprived of property against his will. Withal, the mandatory requirement of due process ought to be strictly followed, such that the state must show, at the minimum, a genuine need, an exacting public purpose to take private property, the purpose to be specifically alleged or least reasonably deducible from the complaint.
Public use, as an eminent domain concept, has now acquired an expansive meaning to include any use that is of “usefulness, utility, or advantage, or what is productive of general benefit [of the public].” If the genuine public necessity—the very reason or condition as it were—allowing, at the first instance, the expropriation of a private land ceases or disappears, then there is no more cogent point for the government’s retention of the expropriated land. The same legal situation should hold if the government devotes the property to another public use very much different from the original or deviates from the declared purpose to benefit another private person. It has been said that the direct use by the state of its power to oblige landowners to renounce their productive possession to another citizen, who will use it predominantly for that citizen’s own private gain, is offensive to our laws.
A condemnor should commit to use the property pursuant to the purpose stated in the petition for expropriation, failing which it should file another petition for the new purpose. If not, then it behooves the condemnor to return the said property to its private owner, if the latter so desires. The government cannot plausibly keep the property it expropriated in any manner it pleases and, in the process, dishonor the judgment of expropriation. This is not in keeping with the idea of fair play,
The notion, therefore, that the government, via expropriation proceedings, acquires unrestricted ownership over or a fee simple title to the covered land, is no longer tenable. We suggested as much in Heirs of Moreno and in Tudtud and more recently in Lozada, Sr. Expropriated lands should be differentiated from a piece of land, ownership of which was absolutely transferred by way of an unconditional purchase and sale contract freely entered by two parties, one without obligation to buy and the other without the duty to sell. In that case, the fee simple concept really comes into play. There is really no occasion to apply the “fee simple concept” if the transfer is conditional. The taking of a private land in expropriation proceedings is always conditioned on its continued devotion to its public purpose. As a necessary corollary, once the purpose is terminated or peremptorily abandoned, then the former owner, if he so desires, may seek its reversion, subject of course to the return, at the very least, of the just compensation received.
To be compelled to renounce dominion over a piece of land is, in itself, an already bitter pill to swallow for the owner. But to be asked to sacrifice for the common good and yield ownership to the government which reneges on its assurance that the private property shall be for a public purpose may be too much. But it would be worse if the power of eminent domain were deliberately used as a subterfuge to benefit another with influence and power in the political process, including development firms. The mischief thus depicted is not at all far-fetched with the continued application of Fery. Even as the Court deliberates on these consolidated cases, there is an uncontroverted allegation that the MCIAA is poised to sell, if it has not yet sold, the areas in question to Cebu Property Ventures, Inc. This provides an added dimension to abandon Fery.
Given the foregoing disquisitions, equity and justice demand the reconveyance by MCIAA of the litigated lands in question to the Ouanos and Inocians. In the same token, justice and fair play also dictate that the Ouanos and Inocian return to MCIAA what they received as just compensation for the expropriation of their respective properties plus legal interest to be computed from default, which in this case should run from the time MCIAA complies with the reconveyance obligation. They must likewise pay MCIAA the necessary expenses it might have incurred in sustaining their respective lots and the monetary value of its services in managing the lots in question to the extent that they, as private owners, were benefited thereby.
In accordance with Art. 1187 of the Civil Code on mutual compensation, MCIAA may keep whatever income or fruits it may have obtained from the parcels of land expropriated. In turn, the Ouanos and Inocians need not require the accounting of interests earned by the amounts they received as just compensation.
Following Art. 1189 of the Civil Code providing that “[i]f the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor x x x,” the Ouanos and Inocians do not have to settle the appreciation of the values of their respective lots as part of the reconveyance process, since the value increase is merely the natural effect of nature and time.
Finally, We delete the award of PhP 50,000 and PhP 10,000, as attorney’s fees and litigation expenses, respectively, made in favor of the Inocians by the Cebu City RTC in its judgment in Civil Case No. CEB-18370, as later affirmed by the CA. As a matter of sound policy, no premium should be set on the right to litigate where there is no doubt about the bona fides of the exercise of such right, as here, albeit the decision of MCIAA to resist the former landowners’ claim eventually turned out to be untenable.
WHEREFORE, the petition in G.R. No. 168770 is GRANTED. Accordingly, the CA Decision dated September 3, 2004 in CA-G.R. CV No. 78027 is REVERSED and SET ASIDE. Mactan-Cebu International Airport Authority is ordered to reconvey subjectLot No. 763-A to petitioners Anunciacion vda. de Ouano, Mario P. Ouano, Leticia Ouano Arnaiz, and Cielo Ouano Martinez. The Register of Deeds of Cebu City is ordered to effect the necessary cancellation of title and transfer it in the name of the petitioners within fifteen (15) days from finality of judgment.