WHITE LIGHT CORPORATION, TITANIUM CORPORATION and STA.

MESA
TOURIST
&
DEVELOPMENT
CORPORATION, Petitioners,
vs.
CITY OF MANILA, represented by DE CASTRO, MAYOR ALFREDO S.
LIM, Respondent.

Hence, the petitioners appeared before the SC.

Issue:
Whether Ordinance No. 7774 is a valid exercise of police
power of the State.

Facts:
Held:
On December 3, 1992, City Mayor Alfredo S. Lim signed into
law Manila City Ordinance No. 7774 entitled An Ordinance
Prohibiting Short-Time Admission, Short-Time Admission
Rates, and Wash-Up Rate Schemes in Hotels, Motels, Inns,
Lodging Houses, Pension Houses, and Similar Establishments
in the City of Manila (the Ordinance). The ordinance
sanctions any person or corporation who will allow the
admission and charging of room rates for less than 12
hours or the renting of rooms more than twice a day.
The petitioners White Light Corporation (WLC), Titanium
Corporation (TC), and Sta. Mesa Tourist and Development
Corporation (STDC), who own and operate several hotels and
motels in Metro Manila, filed a motion to intervene and to
admit attached complaint-in-intervention on the ground
that the ordinance will affect their business interests as
operators. The respondents, in turn, alleged that the
ordinance is a legitimate exercise of police power.
RTC declared Ordinance No. 7774 null and void as it
strikes at the personal liberty of the individual
guaranteed and jealously guarded by the Constitution.
Reference was made to the provisions of the Constitution
encouraging private enterprises and the incentive to
needed investment, as well as the right to operate
economic enterprises. Finally, from the observation that
the illicit relationships the Ordinance sought to dissuade
could nonetheless be consummated by simply paying for a
12-hour
stay,
When elevated to CA, the respondents asserted that the
ordinance is a valid exercise of police power pursuant to
Section 458 (4)(iv) of the Local Government Code which
confers on cities the power to regulate the establishment,
operation
and
maintenance
of
cafes,
restaurants,
beerhouses, hotels, motels, inns, pension houses, lodging
houses and other similar establishments, including tourist
guides and transports. Also, they contended that under Art
III Sec 18 of Revised Manila Charter, they have the power
to enact all ordinances it may deem necessary and proper
for the sanitation and safety, the furtherance of the
prosperity and the promotion of the morality, peace, good
order, comfort, convenience and general welfare of the
city and its inhabitants and to fix penalties for the
violation of ordinances.
Petitioners argued that the ordinance is unconstitutional
and void since it violates the right to privacy and
freedom of movement; it is an invalid exercise of police
power; and it is unreasonable and oppressive interference
in
their
business.
CA, in turn, reversed the decision of RTC and affirmed the
constitutionality of the ordinance. First, it held that
the ordinance did not violate the right to privacy or the
freedom of movement, as it only penalizes the owners or
operators of establishments that admit individuals for
short time stays. Second, the virtually limitless reach of
police power is only constrained by having a lawful object
obtained through a lawful method. The lawful objective of
the ordinance is satisfied since it aims to curb immoral
activities.
There
is
a
lawful
method
since
the
establishments are still allowed to operate. Third, the
adverse effect on the establishments is justified by the
well-being of its constituents in general.

No. Ordinance No. 7774 cannot be considered as a valid

exercise
of
police
power,
and
as
such,
it
is
unconstitutional.
The facts of this case will recall to mind not only the
recent City of Manila v Laguio Jr ruling, but the 1967
decision in Ermita-Malate Hotel and Motel Operations
Association, Inc., v. Hon. City Mayor of Manila. The
common thread that runs through those decisions and the
case at bar goes beyond the singularity of the localities
covered under the respective ordinances. All three
ordinances were enacted with a view of regulating public
morals including particular illicit activity in transient
lodging establishments. This could be described as the
middle case, wherein there is no wholesale ban on motels
and
hotels
but
the
services
offered
by
these
establishments have been severely restricted. At its core,
this is another case about the extent to which the State
can intrude into and regulate the lives of its citizens
The test of a valid ordinance is well established. A long
line of decisions including City of Manila has held that
for an ordinance to be valid, it must not only be within
the corporate powers of the local government unit to enact
and pass according to the procedure prescribed by law, it
must
also
conform
to
the
following
substantive
requirements: (1) must not contravene the Constitution or
any statute; (2) must not be unfair or oppressive; (3)
must not be partial or discriminatory; (4) must not
prohibit but may regulate trade; (5) must be general and
consistent with public policy; and (6) must not be
unreasonable.
The ordinance in this case prohibits two specific and
distinct business practices, namely wash rate admissions
and renting out a room more than twice a day. The ban is
evidently sought to be rooted in the police power as
conferred on
local government
units by
the Local
Government Code through such implements as the general
welfare clause.
Police power is based upon the concept of necessity of the
State and its corresponding right to protect itself and
its people. Police power has been used as justification
for numerous and varied actions by the State.
The apparent goal of the ordinance is to minimize if not
eliminate the use of the covered establishments for
illicit sex, prostitution, drug use and alike. These
goals, by themselves, are unimpeachable and certainly fall
within the ambit of the police power of the State. Yet the
desirability of these ends do not sanctify any and all
means for their achievement. Those means must align with
the Constitution.
SC contended that if they were to take the myopic view
that an ordinance should be analyzed strictly as to its
effect only on the petitioners at bar, then it would seem
that the only restraint imposed by the law that they were
capacitated to act upon is the injury to property
sustained by the petitioners. Yet, they also recognized
the capacity of the petitioners to invoke as well the
constitutional rights of their patrons those persons who

would be deprived of availing short time access or wash-up

rates to the lodging establishments in question. The
rights at stake herein fell within the same fundamental
rights
to
liberty.
Liberty
as
guaranteed
by
the
Constitution was defined by Justice Malcolm to include
the right to exist and the right to be free from
arbitrary restraint or servitude. The term cannot be
dwarfed into mere freedom from physical restraint of the
person of the citizen, but is deemed to embrace the right
of man to enjoy the facilities with which he has been
endowed by his Creator, subject only to such restraint as
are necessary for the common welfare,

The ordinance rashly equates wash rates and renting out a

room more than twice a day with immorality without
accommodating innocuous intentions.

Indeed, the right to privacy as a constitutional right

must be recognized and the invasion of it should be
justified by a compelling state interest. Jurisprudence
accorded recognition to the right to privacy independently
of its identification with liberty; in itself it is fully
deserving
of
constitutional
protection.
Governmental
powers should stop short of certain intrusions into the
personal life of the citizen.

G.R. No. 179554

An ordinance which prevents the lawful uses of a wash rate

depriving patrons of a product and the petitioners of
lucrative business ties in with another constitutional
requisite for the legitimacy of the ordinance as a police
power measure. It must appear that the interests of the
public generally, as distinguished from those of a
particular class, require an interference with private
rights and the means must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive of
private rights. It must also be evident that no other
alternative for the accomplishment of the purpose less
intrusive of private rights can work. More importantly, a
reasonable relation must exist between the purposes of the
measure and the means employed for its accomplishment, for
even under the guise of protecting the public interest,
personal rights and those pertaining to private property
will not be permitted to be arbitrarily invaded.
Lacking a concurrence of these requisites, the police
measure shall be struck down as an arbitrary intrusion
into
private
rights.
The behavior which the ordinance seeks to curtail is in
fact already prohibited and could in fact be diminished
simply by applying existing laws. Less intrusive measures
such as curbing the proliferation of prostitutes and drug
dealers through active police work would be more effective
in easing the situation. So would the strict enforcement
of existing laws and regulations penalizing prostitution
and drug use. These measures would have minimal intrusion
on the businesses of the petitioners and other legitimate
merchants. Further, it is apparent that the ordinance can
easily be circumvented by merely paying the whole day rate
without any hindrance to those engaged in illicit
activities. Moreover, drug dealers and prostitutes can in
fact collect wash rates from their clientele by charging
their customers a portion of the rent for motel rooms and
even apartments.
SC reiterated that individual rights may be adversely
affected only to the extent that may fairly be required by
the legitimate demands of public interest or public
welfare. The State is a leviathan that must be restrained
from needlessly intruding into the lives of its citizens.
However well-intentioned the ordinance may be, it is in
effect an arbitrary and whimsical intrusion into the
rights of the establishments as well as their patrons. The
ordinance needlessly restrains the operation of the
businesses of the petitioners as well as restricting the
rights of their patrons without sufficient justification.

WHEREFORE, the Petition is GRANTED. The Decision of the

Court of Appeals is REVERSED, and the Decision of the
Regional Trial Court of Manila, Branch 9, is REINSTATED.
Ordinance No. 7774 is hereby declared UNCONSTITUTIONAL. No
pronouncement as to costs.
Metropolitan Manila Development Authority vs. Trackworks
Rail Transit Advertising, Vending and Promotions, Inc.
December 16, 2009

Facts: In 1997, the Government, through the Department of

Transportation and Communications, entered into a buildlease-transfer agreement (BLT agreement) with Metro Rail
Transit Corporation, Limited (MRTC) pursuant to Republic
Act No. 6957 (Build, Operate and Transfer Law), under
which MRTC undertook to build MRT3 subject to the
condition that MRTC would own MRT3 for 25 years, upon the
expiration of which the ownership would transfer to the
Government. In 1998, respondent Trackworks Rail Transit
Advertising, Vending & Promotions, Inc. (Trackworks)
entered into a contract for advertising services with
MRTC.
Trackworks
thereafter
installed
commercial
billboards, signages and other advertising media in the
different parts of the MRT3. In 2001, however, MMDA
requested Trackworks to dismantle the billboards, signages
and other advertising media pursuant to MMDA Regulation
No.
96-009,
whereby
MMDA
prohibited
the
posting,
installation and display of any kind or form of
billboards, signs, posters, streamers, in any part of the
road, sidewalk, center island, posts, trees, parks and
open space. After Trackworks refused the request of MMDA,
MMDA proceeded to dismantle the formers billboards and
similar forms of advertisement.
Issue: Whether MMDA has the power to dismantle, remove or
destroy the billboards, signages and other advertising
media installed by Trackworks on the interior and exterior
structures of the MRT3.
Ruling: That Trackworks derived its right to install its
billboards, signages and other advertising media in the
MRT3 from MRTCs authority under the BLT agreement to
develop commercial premises in the MRT3 structure or to
obtain
advertising
income
therefrom
is
no
longer
debatable. Under the BLT agreement, indeed, MRTC owned the
MRT3 for 25 years, upon the expiration of which MRTC would
transfer ownership of the MRT3 to the Government.
Considering that MRTC remained to be the owner of the
MRT3 during the time material to this case, and until this
date, MRTCs entering into the contract for advertising
services with Trackworks was a valid exercise of ownership
by the former. In fact, in Metropolitan Manila Development
Authority v. Trackworks Rail Transit Advertising, Vending
&
Promotions, Inc., this
Court
expressly
recognized
Trackworks right to install the billboards, signages and
other advertising media pursuant to said contract. The
latters right should, therefore, be respected.
It is futile for MMDA to simply invoke its legal mandate
to justify the dismantling of Trackworks billboards,
signages and other advertising media. MMDA simply had no
power on its own to dismantle, remove, or destroy the
billboards, signages and other advertising media installed
on the MRT3 structure by Trackworks. In Metropolitan
Manila
Development
Authority
v.
Bel-Air
Village

Association, Inc., Metropolitan

Manila
Development
Authority
v.
Viron
Transportation
Co.,
Inc., and Metropolitan Manila Development Authority v.
Garin, the Court had the occasion to rule that MMDAs
powers were limited to the formulation, coordination,
regulation,
implementation,
preparation,
management,
monitoring, setting of policies, installing a system, and
administration. Nothing in Republic Act No. 7924 granted
MMDA police power, let alone legislative power.
The Court also agrees with the CAs ruling that MMDA
Regulation No. 96-009 and MMC Memorandum Circular No. 8809 did not apply to Trackworks billboards, signages and
other advertising media. The prohibition against posting,
installation and display of billboards, signages and other
advertising media applied only to public areas, but MRT3,
being private property pursuant to the BLT agreement
between the Government and MRTC, was not one of the areas
as to which the prohibition applied.
ACEBEDO OPTICAL VS CA
Acebedo Optical Company, Inc. applied for a business
permit to operate in Iligan City. After hearing the sides
of local optometrists, Mayor Camilo Cabili of Iligan
granted the permit but he attached various special
conditions which basically made Acebedo dependent upon
prescriptions or limitations to be issued by local
optometrists. Acebedo basically is not allowed to practice
optometry within the city (but may sell glasses only).
Acebedo however acquiesced to the said conditions and
operated under the permit. Later, Acebedo was charged for
violating the said conditions and was subsequently
suspended from operating within Iligan. Acebedo then
assailed the validity of the attached conditions. The
local optometrists argued that Acebedo is estopped in
assailing the said conditions because it acquiesced to the
same and that the imposition of the special conditions is
a valid exercise of police power; that such conditions
were entered upon by the city in its proprietary function
hence the permit is actually a contract.
ISSUE: Whether or not the special conditions attached by
the mayor is a valid exercise of police power.
HELD: NO. Acebedo was applying for a business permit to
operate its business and not to practice optometry (the
latter being within the jurisdiction PRC Board of
Optometry). The conditions attached by the mayor is ultra
vires hence
cannot
be
given
any
legal
application
therefore estoppel does not apply. It is neither a valid
exercise of police power. Though the mayor can definitely
impose conditions in the granting of permits, he must base
such conditions on law or ordinances otherwise the
conditions are ultra vires. Lastly, the granting of the
license is not a contract, it is a special privilege
estoppel does not apply.
EMINENT DOMAIN
PHILIPPINE PRESS INSTITUTE VS. COMELEC [
Facts: Respondent Comelec promulgated Resolution No. 2772
directingnewspapers to provide free Comelec space of not
less than one-half page for the common use of political
parties and candidates. The Comelec space shall be
allocated by the Commission, free of charge, among all
candidates
to
enable
them
to
make
known
their qualifications, their stand on public Issue and
their platforms of government. The Comelec space shall
also be used by the Commission for dissemination of vital
election
information.

Petitioner Philippine Press Institute, Inc. (PPI), a nonprofit organization of newspaper and magazine publishers,
asks the Supreme Court to declare Comelec Resolution No.
2772 unconstitutional and void on the ground that it
violates the prohibition imposed by the Constitution upon
the government against the taking of private property for
public use without just compensation. On behalf of the
respondent Comelec, the Solicitor General claimed that the
Resolution is a permissible exercise of the power of
supervision (police power) of the Comelec over the
information operations ofprint
media enterprises
during
the
election
period
to
safeguard
and
ensure
a
fair, impartial and
credible
election.
Issue:
Whether
or
not
Comelec
Resolution
No.
2772
is
unconstitutional.
Held: The Supreme Court declared the Resolution as
unconstitutional. It held that to compel print media
companies to donate Comelec space amounts to taking of
private personal property without payment of the just
compensation required in expropriation cases. Moreover,
the element of necessity for the taking has not been
established
by
respondent
Comelec,
considering
that
the newspapers were not unwilling to sell advertising
space. The taking of private property for public use is
authorized by the constitution, but not without payment of
just compensation. Also Resolution No. 2772 does not
constitute a valid exercise of the police power of the
state. In the case at bench, there is no showing of
existence
of
a
national
emergency
to
take private
property of newspaper or magazine publishers.
ASSOCIATION OF SMALL LANDOWNERS V. SECRETARY OF DAR
FACTS:
These are consolidated cases involving common legal
questions
including
serious
challenges
to
the
constitutionality of R.A. No. 6657 also known as the
"Comprehensive Agrarian Reform Law of 1988"
In G.R. No. 79777, the petitioners are questioning the P.D
No. 27 and E.O Nos. 228 and 229 on the grounds inter alia
of separation of powers, due process, equal protection and
the constitutional limitation that no private property
shall be taken for public use without just compensation.
In G.R. No. 79310, the petitioners in this case claim that
the power to provide for a Comprehensive Agrarian Reform
Program as decreed by the Constitution belongs to the
Congress and not to the President, the also allege that
Proclamation No. 131 and E.O No. 229 should be annulled
for violation of the constitutional provisions on just
compensation, due process and equal protection. They
contended that the taking must be simultaneous with
payment of just compensation which such payment is not
contemplated in Section 5 of the E.O No. 229.
In G.R. No. 79744, the petitioner argues that E.O Nos. 228
and 229 were invalidly issued by the President and that
the said executive orders violate the constitutional
provision that no private property shall be taken without
due process or just compensation which was denied to the
petitioners.
In G.R. No 78742 the petitioners claim that they cannot
eject their tenants and so are unable to enjoy their right
of retention because the Department of Agrarian Reform has
so far not issued the implementing rules of the decree.
They therefore ask the Honorable Court for a writ of
mandamus to compel the respondents to issue the said
rules.
ISSUE:

Whether or not the laws being challenged is a valid

exercise of Police power or Power of Eminent Domain.

In its January 14, 2002 order (first order), the trial

court granted respondents motion.

RULING:

Petitioner moved for its reconsideration. It argued that

RA 8974 was inapplicable as the payment required under the
law applied only to instances where the property was still
in the owners possession and had yet to be transferred to
the government. It could not be validly invoked when the
property was already in the governments possession, as in
this case. It also averred that it should be made to pay
only the price of the land at the time of its taking.
Corollarily, if it was ordered to pay the amount required
under RA 8974, it would be unjustly penalized for its own
improvements to the property.

Police Power through the Power of Eminent Domain, though

there are traditional distinction between the police power
and the power of eminent domain, property condemned under
police power is noxious or intended for noxious purpose,
the compensation for the taking of such property is not
subject to compensation, unlike the taking of the property
in Eminent Domain or the power of expropriation which
requires the payment of just compensation to the owner of
the property expropriated.
REPUBLIC OF THE PHILIPPINES, represented by the PHILIPPINE
ECONOMIC
ZONE
AUTHORITY
(PEZA),Petitioner,
vs.
SPOUSES AGUSTIN and IMELDA CANCIO, Respondents.
Petitioner Philippine Economic Zone Authority is a
government-owned and controlled corporation created and
existing under and by virtue of RA 7916,2 as amended. It is
vested with governmental functions,3 including the power of
eminent domain, thus enabling it to acquire private land
within or adjacent to the ecozone for consolidation with
land for zone development purposes.4 On January 15, 1979,
then President Ferdinand E. Marcos issued Proclamation No.
18115 which reserved certain parcels of land of the public
domain in Lapu Lapu City in favor of petitioner (then
Export Processing Zone Authority or EPZA) for the
establishment of the Mactan Export Processing Zone.
However, some of the parcels covered by the proclamation,
including that of respondent spouses Agustin and Imelda
Cancio, were private land.

This time, the RTC agreed with petitioners position. On

February 26, 2002 (second order), the court a quogranted
petitioners motion for reconsideration.
Respondents filed a motion for reconsideration, contending
that petitioner should make the required payment under the
law because RA 8974, which took effect before the
commencement of the expropriation case, applied to all
actions of
such nature
regardless of
whether the
government agency was already in possession or not. The
court a quo issued its September 5, 2002 order (third
order) which reversed its second order and reinstated the
first one.
Thereafter, petitioner filed a petition for certiorari in
the CA, assailing the first and third orders of the RTC.
The appellate court sustained the RTCs ruling.
Hence, this petition.

Petitioner eventually laid out the development of the

economic zone and subsequently leased out respondents
47,540 sq. m. lot to an investor in the economic zone,
Maitland Smith Inc. (Maitland).
On
May
19,
2001,
petitioner
offered
to
purchase
respondents lot at P1,100 per sq. m. or P52,294,000 for
the whole property. The letter containing the offer
further instructed respondents "to consider and accept,
otherwise we will initiate expropriation proceedings in
the proper court."
Instead of accepting the offer, respondents filed an
unlawful detainer case against Maitland in the Municipal
Trial Court of Lapu Lapu City.
Thereafter, petitioner commenced expropriation proceedings
for respondents property with the Regional Trial Court
(RTC) of Lapu Lapu City, Branch 54 on August 27,
2001.6 Accordingly, it sought a writ of possession for the
property for which it was willing to deposit 10% of the
offered amount or a total of P5,229,400 with the Land Bank
of the Philippines in accordance with Administrative Order
(A.O.) No. 50.7
Respondents, however, filed a motion to require petitioner
to comply with RA 8974,8 specifically Section 4(a) thereof,
which requires that, upon the filing of the complaint for
expropriation, the implementing agency shall immediately
pay the owner of the property an amount equivalent to 100%
of the current zonal valuation thereoffor purposes of the
issuance of a writ of possession.

The issue before us is whether or not RA 8974 is

applicable to this case for purposes of the issuance of
the writ of possession.9 It is petitioners stance that it
is not. It cited A.O. No. 50 as its legal authority when
it offered to purchase respondents property in an amount
equivalent to ten percent (10%) higher than the zonal
value thereof.10 Consequently, petitioner prayed in its
complaint for expropriation11 that it be issued a writ of
possession upon a showing that the amount equivalent to
ten percent (10%) of the offered amount has been duly
deposited. Respondents, on the other hand, agree that RA
8974 is the controlling law in this case as the complaint
for expropriation was instituted when said law was already
in effect.
We deny the petition. RA 8974 governs this case, not A.O.
No. 50 as petitioner insists.
A perusal of RA 8974 readily reveals that it applies to
instances
when
the
national
government
expropriates
property
for
national
government
infrastructure
projects.12 Undeniably, the economic zone is a national
government project a matter undisputed by both parties.
Also, the complaint for expropriation was filed only on
August 27, 2001 or almost one year after the law was
approved on November 7, 2000. Thus, there is no doubt
about its applicability to this case.
We note that this expropriation case is still in its
initial stages. The trial court had yet to approve a writ
of possession in petitioners favor when the issue of
payment of just compensation cropped up. Both parties
seemed to have confused the requirement of paying 100% of

the current zonal valuation of the property (as a

prerequisite to the issuance of a writ of possession) with
the payment of just compensation itself.
In its
that:

complaint

filed

in

the

RTC, 13 petitioner

prayed

a. A writ of possession be issued in favor of plaintiff

respecting its possession, control and disposition of the
land sought to be expropriated including the power or
authority to demolish, if any, improvements thereon, upon
showing that the amount equivalent to 10% of the offered
amount has been duly deposited.
In their motion to require petitioner to comply with RA
8974,14 respondents countered that they:
x x x contest PEZAs proferred value as it is not a just
compensation for the property sought to be expropriated.
When petitioner moved for reconsideration15 after the RTC
granted respondents aforementioned motion, it argued
that:
The inapplicability of R. A. No. 8974 is further
highlighted by the fact that it requires a deposit based
on the current zonal valuation of the property. To apply
such valuation to the instant case would be to violate the
cardinal principle in eminent domain proceedings that the
just compensation for the property should be its fair
market value at the time of taking. The nature and
character of the land at the time of its taking is the
principal criterion to determine just compensation to the
landowner (National Power Corporation vs. Henson, 300 SCRA
751 [1998]). (Emphasis supplied)
Clearly, there was a confusion regarding the nature of the
amount to be paid for the issuance of a writ of
possession. In Capitol Steel Corporation v. PHIVIDEC
Industrial Authority,16 we clarified that the payment of
the provisional value as a condition for the issuance of a
writ of possession is different from the payment of just
compensation for the expropriated property. While the
provisional value is based on the current relevant zonal
valuation, just compensation is based on the prevailing
fair market value of the property.1avvph!1.zw+
In that case, we agreed with the CAs explanation17 that:
The first refers to the preliminary or provisional
determination of the value of the property. It serves a
double-purpose of pre-payment if the property is fully
expropriated, and of an indemnity for damages if the
proceedings are dismissed. It is not a final determination
of just compensation and may not necessarily be equivalent
to the prevailing fair market value of the property. Of
course, it may be a factor to be considered in the
determination of just compensation.
Just
compensation,
on
the
other
hand,
is
the final determination of the fair market value of the
property. It has been described as "the just and complete
equivalent of the loss which the owner of the thing
expropriated
has
to
suffer
by
reason
of
the
expropriation." Market value[s,] has also been described
in a variety of ways as the "price fixed by the buyer and
seller in the open market in the usual and ordinary course
of legal trade and competition; the price and value of the

article established as shown by sale, public or private,

in the ordinary way of business; the fair value of the
property between one who desires to purchase and one who
desires to sell; the current price; the general or
ordinary price for which property may be sold in that
locality." (Emphasis in the original)
There is therefore no need yet to determine with
reasonable certainty the final amount of just compensation
in resolving the issue of a writ of possession. 18 In fact,
it is the ministerial duty of the trial court to issue the
writ upon compliance with the requirements of Section
419 of the law. No hearing is required and the court cannot
exercise its discretion in order to arrive at the amount
of
the
provisional
value
of
the
property
to
be
expropriated as the legislature has already fixed the
amount under the aforementioned provision of the law.20
It is only after the trial court ascertains the
provisional amount to be paid that just compensation will
be determined.
In establishing the amount of just compensation, the
parties may present evidence relative to the propertys
fair market value, as provided under Section 5 of RA
8974.21 Thus:
Sec. 5. 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 wellestablished factors, the following relevant standards:
(a) The classification
property is suited;

and

use

for

which

the

(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 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.
This must be so as just compensation should take into
account the consequential benefits and damages which may
arise from the expropriation.22 Furthermore, it is well to
remember that the concept of just compensation does not
mean fairness to the property owner alone. It must also be

just to the public which ultimately bears the cost of

expropriation.23
Lastly, RA 8974 provides that "the court shall determine
the just compensation to be paid the owner within sixty
(60) days from the date of filing of the expropriation
case."24 In this case, almost eight years have passed since
petitioner commenced the expropriation proceedings on
August 27, 2001. We, however, hold that it is still
feasible to comply with the spirit of the law by requiring
the trial court to make such determination within sixty
(60) days from finality of this decision, in accordance
with the guidelines laid down in RA 8974 and its
implementing rules.25
WHEREFORE, the petition is hereby DENIED.
LAND BANK OF THE
MARTINEZ,Respondent.

PHILIPPINES, Petitioner, v. RAYMUNDA

R E S O L U T I O N
NACHURA, J.:
Before the Court are petitioner's September 20, 2007
Motion
for
Reconsideration1 and
November
8,
2007
Supplemental Motion for Reconsideration,2 which seek the
reversal of the August 14, 2007 Decision3 in the instant
case. To recall, the Court in the challenged decision
denied the Petition for Review on Certiorari and affirmed
the ruling of the Court of Appeals (CA) in CA-G.R. SP No.
83276.
Lifted from the said assailed decision are the following
antecedent facts and proceedings:
After compulsory acquisition by the Department of Agrarian
Reform (DAR), on November 16, 1993, of respondent
Martinez's 62.5369-hectare land in Barangay Agpudlos, San
Andres, Romblon, pursuant to Republic Act No. 6657 or the
Comprehensive
Agrarian
Reform
Law
of
1988
(CARL),
petitioner
Land
Bank
of
the
Philippines
(LBP)
offeredP1,955,485.60 as just compensation. Convinced that
the
proffered
amount
was
unjust
and
confiscatory,
respondent rejected it. Thus, the Department of Agrarian
Reform Adjudication Board (DARAB), through its Provincial
Agrarian Reform Adjudicator (PARAD) conducted summary
administrative
proceedings
for
the
preliminary
determination of just compensation in accordance with
Section 16 (d) of the CARL.
On September 4, 2002, PARAD Virgilio M. Sorita, finding
some marked inconsistencies in the figures and factors
made as bases by LBP in its computation, rendered judgment
as follows:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered:
Ordering the Land Bank of the Philippines to pay
landowner-protestant RAYMUNDA MARTINEZ for her property
covered and embraced by TCT No. T-712 with an area
of62.5369 hectares, more or less, which the Department of
Agrarian Reform intends to acquire, the total amount of
TWELVE MILLION ONE HUNDRED SEVENTY NINE THOUSAND FOUR
HUNDRED NINETY TWO and 50/100 Pesos (Php12,179,492.50), in
the manner provided for by law.
SO ORDERED.

A petition for the fixing of just compensation docketed as

Agrarian Case No. 696 was then filed by LBP's counsel
before the Special Agrarian Court (SAC), the Regional
Trial Court of Odiongan, Romblon, Branch 82. After filing
her answer to the said petition, respondent, contending
that the orders, rulings and decisions of the DARAB become
final after the lapse of 15 days from their receipt, moved
for the dismissal of the petition for being filed out of
time. Petitioner opposed the motion.
Meanwhile, respondent, still asserting the finality of
PARAD Sorita's decision, filed before the Office of the
PARAD a motion for the issuance of a writ of execution,
which was eventually granted on November 11, 2003.
Ascertaining that the petition before the SAC was filed by
LBP 26 days after it received a copy of PARAD Sorita's
decision, the Office of the PARAD denied LBP's motion for
reconsideration and ordered the issuance of a writ of
execution on February 23, 2004. Aggrieved of these
developments, LBP, on March 12, 2004, moved to quash the
said February 23, 2004 PARAD resolution.
On April 6, 2004, even as the motion to quash was yet
unresolved,
LBP
instituted
a
petition
for certiorari before the CA, which was docketed as CAG.R. SP No. 83276, assailing both the November 11, 2003
and the February 23, 2004 PARAD resolutions. LBP primarily
contended that the Office of the PARAD gravely abused its
discretion when it issued the writ of execution despite
the pendency with the SAC of a petition for the fixing of
just compensation.
The CA, finding LBP guilty of forum-shopping for not
disclosing the pendency of the Motion to Quash dated March
12, 2004, dismissed the petition on September 28, 2004,
thus:
ACCORDINGLY,
the
DISMISSED outright.

present

petition

for certiorari is

Consequently, in view of the dismissal of the aboveentitled case, we are no longer in a position to act on
the private respondent's motion for execution pending
appeal.
Further, this Court, mindful that under Sec. 5, Rule 7, of
the 1997 Rules of Civil Procedure, willful and deliberate
forum-shopping constitutes direct contempt of court and
cause for administrative sanctions, which may both be
resolved and imposed in the same case where the forum
shopping is found, WARNS the counsel of record of the
petitioner that a repetition of a similar act of
submitting a false certification shall be dealt with most
severely.
SO ORDERED.
Not persuaded by LBP's motion for reconsideration, the
appellate court denied the same on July 15, 2005.
Necessarily, LBP, through its legal department, elevated
the case before this Court on September 9, 2005 via a
Petition
for
Review
on Certiorari under
Rule
45,
contending, among
others, that
it did
not commit
deliberate forum shopping for what it filed with the
Office of the PARAD was a motion to quash, which is not an
initiatory pleading; and the decision of the PARAD cannot
be executed due to the pending petition for fixing of just
compensation with the SAC.
On September 14, 2005, we issued a temporary restraining
order (TRO) restraining the appellate court and the DAR

adjudicators from implementing the November 11, 2003 and

the February 23, 2004 resolutions.
For her part, respondent contends that petitioner has
committed
forum-shopping
when
it
filed
a certiorari petition
without
first
awaiting
the
resolution by the Office of the PARAD of the motion to
quash; and that petitioner has lost its standing to sue
considering that it is being represented by its lawyers
and not the Office of the Government Corporate Counsel
(OGCC). [Citations omitted.]4
Three primordial issues were then resolved by the Court in
the said decision' (1) whether or not petitioner could
file its appeal solely through its legal department; (2)
whether or not petitioner committed forum shopping; and
(3) whether or not the Provincial Agrarian Reform
Adjudicator (PARAD) gravely abused his discretion when he
issued a writ of execution despite the pendency of LBP's
petition for fixing of just compensation with the Special
Agrarian Court (SAC).
The Court went on to rule that the Petition for Review
on Certiorari could not be filed without the Office of the
Government
Corporate
Counsel
(OGCC)
entering
its
appearance as the principal legal counsel of the bank or
without the OGCC giving its conformity to the LBP Legal
Department's filing of the petition. The Court also found
petitioner to have forum-shopped when it moved to quash
the PARAD resolutions and at the same time petitioned for
their
annulment
via certiorari under
Rule
65.
Most
importantly, the Court ruled that petitioner was not
entitled to the issuance of a writ of certiorari by the
appellate court because the Office of the PARAD did not
gravely abuse its discretion when it undertook to execute
the September 4, 2002 decision on land valuation. The said
adjudicator's decision attained finality after the lapse
of the 15-day period stated in Rule XIII, Section 11 of
the Department of Agrarian Reform Adjudication Board
(DARAB) Rules of Procedure.
Dissatisfied with our ruling, petitioner successively
filed, as aforesaid, the September 20, 2007 Motion for
Reconsideration5 and the November 8, 2007 Supplemental
Motion for Reconsideration.6 In both motions, petitioner
contends that its lawyers are authorized to appear in the
instant case for they have been issued a letter of
authority by the OGCC on April 17, 2006; that it did not
commit deliberate forum shopping; that the Provincial
Agrarian Reform Adjudicator (PARAD) gravely abused his
discretion in issuing the writ of execution to implement
his decision; that respondent's defense of res judicata or
the alleged finality of the PARAD's decision was never
pleaded in her answer, hence, was already deemed waived;
that the PARAD had no jurisdiction to issue the writ of
execution due to the pending petition for determination of
just compensation with the SAC; and that the Court's
August 14, 2007 Decision in this case is contrary to its
October 11, 2007 Decision in Land Bank of the Philippines
v. Suntay, G.R. No. 157903 on the issue of whether the
petition for determination of just compensation was filed
out of time.
Respondent, in her January 24, 2008 Comment, 7 counters,
among others, that the filing of the said motions is only
dilatory considering that the arguments raised therein
have already been answered by the Court in the decision
sought to be reconsidered.
The Court agrees with respondent's contention and denies
petitioner's motions.

Indeed, except for the alleged conflict of the August 14,

2007 Decision with that promulgated on October 11, 2007 in
G.R. No. 157903 [LBP v. Suntay], the grounds raised by
petitioner in the motions are identical to those stated in
its previous pleadings. And these have already been
considered and sufficiently passed upon by the Court in
the August 14, 2007 Decision.
On the supposedly conflicting pronouncements in the cited
decisions, the Court reiterates its ruling in this case
that the agrarian reform adjudicator's decision on land
valuation attains finality after the lapse of the 15-day
period stated in the DARAB Rules. The petition for the
fixing of just compensation should therefore, following
the law and settled jurisprudence, be filed with the SAC
within the said period. This conclusion, as already
explained in the assailed decision, is based on the
doctrines laid down in Philippine Veterans Bank v. Court
of Appeals8 and Department of Agrarian Reform Adjudication
Board v. Lubrica.9
In Philippine Veterans Bank, decided in 2000 through the
pen of Justice Vicente V. Mendoza, the Court ruled that
the trial court correctly dismissed the petition for the
fixing of just compensation because it was filed beyond
the 15-day period provided in the DARAB Rules.
In Lubrica, decided in 2005 through the pen of Justice
Dante O. Tinga, the Court, citing Philippine Veterans
Bank, ruled that the adjudicator's decision had already
attained finality because LBP filed the petition for just
compensation
beyond
the
15-day
reglementary
period.
Incidentally, Josefina Lubrica is the assignee of Federico
Suntay whose property is the subject of the aforementioned
October 11, 2007 Decision in LBP v. Suntay.chanrobles
virtual law library
Following settled doctrine, we ruled in this case that the
PARAD's decision had already attained finality because of
LBP's failure to file the petition for the fixing of just
compensation within the 15-day period.
This ruling, however, as correctly pointed out by
petitioner, runs counter to the Court's recent decision in
Suntay [the motions for reconsideration in Suntay were
denied with finality in the January 30, 2008 Resolution of
the Court10], in which the Court ruled that the trial court
erred in dismissing the petition for determination of just
compensation on the ground that it was filed out of time.
The Court in that case stressed that the petition was not
an appeal from the adjudicator's final decision but an
original
action
for
the
determination
of
just
compensation.
We, however, promulgated our decision in this case ahead
of Suntay. To reiterate, this case was decided on August
14, 2007, while Suntay was decided two months later, or on
October 11, 2007. Suntay should have then remained
consistent with our ruling, and with the doctrines
enunciated in Philippine Veterans Bank and in Lubrica,
especially considering that Lubrica was the representative
of Suntay in the Suntay case.
The Court notes that the Suntay ruling is based on
Republic of the Philippines v. Court of Appeals,11 decided
in 1996 also through the pen of Justice Vicente V.
Mendoza. In that case, the Court emphasized that the
jurisdiction of the SAC is original and exclusive, not
appellate. Republic, however, was decided at a time when
Rule XIII, Section 11 was not yet present in the DARAB
Rules. Further, Republic did not discuss whether the

petition filed therein for the fixing of just compensation

was filed out of time or not. The Court merely decided the
issue of whether cases involving just compensation should
first be appealed to the DARAB before the landowner can
resort to the SAC under Section 57 of R.A. No. 6657.
To resolve the conflict in the rulings of the Court, we
now declare herein, for the guidance of the bench and the
bar, that the better rule is that stated in Philippine
Veterans Bank, reiterated in Lubrica and in the August 14,
2007 Decision in this case. Thus, while a petition for the
fixing of just compensation with the SAC is not an appeal
from the agrarian reform adjudicator's decision but an
original action, the same has to be filed within the 15day period stated in the DARAB Rules; otherwise, the
adjudicator's decision will attain finality. This rule is
not only in accord with law and settled jurisprudence but
also with the principles of justice and equity. Verily, a
belated petition before the SAC, e.g., one filed a month,
or a year, or even a decade after the land valuation of
the DAR adjudicator, must not leave the dispossessed
landowner in a state of uncertainty as to the true value
of his property.
IN THE LIGHT OF THE FOREGOING DISQUISITIONS, the Court
DENIES WITH FINALITY petitioner's September 20, 2007
Motion for Reconsideration and the November 8, 2007
Supplemental Motion for Reconsideration.
SO ORDERED.
HON. VICENTE P. EUSEBIO, LORNA A. BERNARDO, VICTOR
ENDRIGA, and the CITY OF PASIG,Petitioners, v. JOVITO M.
LUIS, LIDINILA LUIS SANTOS, ANGELITA CAGALINGAN, ROMEO M.
LUIS, and VIRGINIA LUIS-BELLESTEROS,*Respondents.
This resolves the Petition for Review on Certiorari under
Rule 45 of the Rules of Court, praying that the
Decision1 of the Court of Appeals (CA) dated November 28,
2003, affirming the trial court judgment, and the CA
Resolution2 dated February 27, 2004, denying petitioners'
motion for reconsideration, be reversed and set aside.
The antecedent facts are as follows:
Respondents are the registered owners of a parcel of land
covered by Transfer Certificate of Title Nos. 53591 and
53589 with an area of 1,586 square meters. Said parcel of
land was taken by the City of Pasig sometime in 1980 and
used as a municipal road now known as A. Sandoval Avenue,
Barangay Palatiw, Pasig City. On February 1, 1993, the
Sanggunian of Pasig City passed Resolution No. 15
authorizing payments to respondents for said parcel of
land. However, the Appraisal Committee of the City of
Pasig, in Resolution No. 93-13 dated October 19, 1993,
assessed the value of the land only at P150.00 per square
meter. In a letter dated June 26, 1995, respondents
requested the Appraisal Committee to consider P2,000.00
per square meter as the value of their land.
One of the respondents also wrote a letter dated November
25, 1994 to Mayor Vicente P. Eusebio calling the latter's
attention to the fact that a property in the same area, as
the land subject of this case, had been paid for by
petitioners at the price of P2,000.00 per square meter
when said property was expropriated in the year 1994 also
for
conversion
into
a
public
road.
Subsequently,
respondents' counsel sent a demand letter dated August 26,
1996 to Mayor Eusebio, demanding the amount ofP5,000.00
per square meter, or a total of P7,930,000.00, as just
compensation for respondents' property. In response, Mayor

Eusebio wrote a letter dated September 9, 1996 informing

respondents that the City of Pasig cannot pay them more
than the amount set by the Appraisal Committee.
Thus, on October 8, 1996, respondents filed a Complaint
for Reconveyance and/or Damages (Civil Case No. 65937)
against herein petitioners before the Regional Trial Court
(RTC) of Pasig City, Branch 155. Respondents prayed that
the property be returned to them with payment of
reasonable rental for sixteen years of use at P500.00 per
square meter, or P793,000.00, with legal interest of 12%
per annum from date of filing of the complaint until full
payment, or in the event that said property can no longer
be returned, that petitioners be ordered to pay just
compensation in the amount ofP7,930,000.00 and rental for
sixteen years of use at P500.00 per square meter,
or P793,000.00, both with legal interest of 12% per annum
from the date of filing of the complaint until full
payment. In addition, respondents prayed for payment of
moral and exemplary damages, attorney's fees and costs.
After trial, the RTC rendered a Decision3 dated January 2,
2001, the dispositive portion of which reads as follows:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered in favor of the plaintiffs and against the
defendants:
1. Declaring as ILLEGAL and UNJUST the action of the
defendants in taking the properties of plaintiffs covered
by Transfer Certificates of Title Nos. 53591 and 53589
without their consent and without the benefit of an
expropriation proceedings required by law in the taking of
private property for public use;
2. Ordering the defendants to jointly RETURN the subject
properties to plaintiffs with payment of reasonable rental
for its use in the amount of P793,000.00 with legal
interest at the rate of 6% per annum from the filing of
the instant Complaint until full payment is made;
3. In the event that said properties can no longer be
returned to the plaintiffs as the same is already being
used as a public road known as A. Sandoval Avenue, Pasig
City, the defendants are hereby ordered to jointly pay the
plaintiffs the fair and reasonable value therefore
at P5,000.00 per square meter or a total of P7,930,000.00
with payment of reasonable rental for its use in the
amount
of P500.00
per
square
meter
or
a
total
of P793,000.00, both with legal interest at the rate of 6%
per annum from the filing of the instant Complaint until
full payment is made; andcralawlibrary
4. Ordering the defendants to jointly pay the plaintiffs
attorney's fees in the amount ofP200,000.00.
NATIONAL POWER CORPORATION, Petitioner, v. HEIRS OF
MACABANGKIT SANGKAY, NAMELY: CEBU, BATOWA-AN, ET AL., ALL
SURNAMED
MACABANGKIT,
Respondents.
Pursuant to its legal mandate under Republic Act No. 6395
(An Act Revising the Charter of the National Power
Corporation), 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.
On November 21, 1997, the respondents as the owners of
land with an area of 221,573 square meters situated in

Ditucalan, Iligan City, sued NPC in the RTC for the

recovery of damages and of the property, with the
alternative prayer for the payment of just compensation.
They 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 Atty. Saidali C. Gandamra, 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; that such rejection had been followed by the
withdrawal
by
Global
Asia
Management
and
Resource
Corporation from developing the land into a housing
project for the same reason; that 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; that the underground tunnel had
been constructed without their knowledge and consent; that
the presence of the tunnel deprived them of the
agricultural, commercial, industrial and residential value
of their land; and that their land had also become an
unsafe place for habitation because of the loud sound of
the water rushing through the tunnel and the constant
shaking of the ground, forcing them and their workers to
relocate
to
safer
grounds.
In its answer with counterclaim, NPC countered that the
Heirs of Macabangkit had no right to compensation under
section 3(f) of Republic Act No. 6395, under which a mere
legal easement on their land was established; that their
cause of action, should they be entitled to compensation,
already
prescribed due
to the
tunnel having
been
constructed in 1979; and that by reason of the tunnel
being an apparent and continuous easement, any action
arising from such easement prescribed in five years.
After trial, the RTC ruled in favor of the plaintiffs
(Heirs
of
Macabangkit).
Earlier, on August 18, 1999, the Heirs of Macabangkit
filed an urgent motion for execution of judgment pending
appeal. The RTC granted the motion and issued a writ of
execution, prompting NPC to assail the writ by petition
for certiorari in the CA. On September 15, 1999, the CA
issued a temporary restraining order (TRO) to enjoin the
RTC
from
implementing
its
decision.The
Heirs
of
Macabangkit elevated the ruling of the CA (G.R. No.
141447), but the Court upheld the CA on May 4, 2006.
On October 5, 2004, the CA affirmed the decision of the
RTC.
ISSUE:
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.
HELD: We uphold the liability of NPC for payment of just
compensation.
REMEDIAL LAW: factual findings of the RTC, when affirmed
by
the
CA,
are
binding

The existence of the tunnel underneath the land of the

Heirs of Macabangkit, being a factual matter, cannot now
be properly reviewed by the Court, for questions of fact
are beyond the pale of a petition for review on
certiorari.
Moreover,the
factual
findings
and
determinations by the RTC as the trial court are generally
binding on the Court, particularly after the CA affirmed
them. Bearing these doctrines in mind, the Court should
rightly
dismiss
NPCs
appeal.
NPC argues, however, that this appeal should not be
dismissed because the Heirs of Macabangkit essentially
failed to prove the existence of the underground tunnel.
It insists that the topographic survey map and the rightof-way map presented by the Heirs of Macabangkit did not
at all establish the presence of any underground tunnel.
NPC

still

fails

to

convince.

Even assuming, for now, that the Court may review the
factual findings of the CA and the RTC, for NPC to insist
that the evidence on the existence of the tunnel was not
adequate and incompetent remains futile. On the contrary,
the evidence on the tunnel was substantial, for the
significance of the topographic survey map and the sketch
map (as indicative of the extent and presence of the
tunnel construction) to the question on the existence of
the tunnel was strong, as the CA correctly projected in
its
assailed
decision,viz:
Among the pieces of documentary evidence presented showing
the existence of the said tunnel beneath the subject
property is the topographic survey map. The topographic
survey map is one conducted to know about the location and
elevation of the land and all existing structures above
and underneath it. Another is the Sketch Map which shows
the location and extent of the land traversed or affected
by the said tunnel.These two (2) pieces of documentary
evidence readily point the extent and presence of the
tunnel construction coming from the power cavern near the
small man-made lake which is the inlet and approach
tunnel, or at a distance of about two (2) kilometers away
from the land of the plaintiffs-appellees, and then
traversing the entire and the whole length of the
plaintiffs-appellees property, and the outlet channel of
the tunnel is another small man-made lake.This is a subterrain construction, and considering that both inlet and
outlet are bodies of water, the tunnel can hardly be
noticed. All constructions done were beneath the surface
of the plaintiffs-appellees property. This explains why
they could never obtain any knowledge of the existence of
such tunnel during the period that the same was
constructed
and
installed
beneath
their
property.
The power cavern and the inlet and outlet channels
established the presence of the underground tunnel, based
on the declaration in the RTC by Sacedon, a former
employee of the NPC. It is worthy to note that NPC did not
deny the existence of the power cavern, and of the inlet
and outlet channels adverted to and as depicted in the
topographic survey map and the sketch map. The CA cannot
be faulted for crediting the testimony of Sacedon despite
the effort of NPC to discount his credit due to his not
being an expert witness, simply because Sacedon had
personal knowledge based on his being NPCs principal
engineer and supervisor tasked at one time to lay out the
tunnels and transmission lines specifically for the
hydroelectric projects, and to supervise the construction
of the Agus 1 Hydroelectric Plant itself from 1978 until
his retirement from NPC. Besides, he declared that he

personally experienced the vibrations caused by the

rushing currents in the tunnel, particularly near the
outlet channel. Under any circumstances, Sacedon was a
credible
and
competent
witness.
The ocular inspection actually confirmed the existence of
the
tunnel
underneath
the
land
of
the
Heirs
of
Macabangkit.
More so, the Ocular inspection conducted on July 23, 1998
further bolstered such claim of the existence and extent
of such tunnel. This was conducted by a team composed of
the 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.
It bears noting that NPC did not raise any issue against
or tender any contrary comment on the ocular inspection
report.
ANUNCIACION
PHILIPPINES
[G.R.

VDA.

DE

OUANO

VS.

THE

REPUBLIC

NO.

MACTAN-CEBU
INTERNATIONAL
AIRPORT
PETITIONER, VS. RICARDO L. INOCIAN

AUTHORITY

NAC met and negotiated with the owners of the properties

situated around the airport, which included Lot Nos. 744A, 745-A, 746, 747, 761-A, 762-A, 763-A, 942, and 947 of
the Banilad Estate. As the landowners would later claim,
the government negotiating team, as a sweetener, assured
them that they could repurchase their respective lands
should the Lahug Airport expansion project do not push
through or once the Lahug Airport closes or its operations
transferred to Mactan-Cebu Airport. Some of the landowners
accepted the assurance and executed deeds of sale with a
right of repurchase. Others, however, including the owners
of the aforementioned lots, refused to sell because the
purchase price offered was viewed as way below market,
forcing the hand of the Republic, represented by the then
Civil Aeronautics Administration (CAA), as successor
agency of the NAC, to file a complaint for the
expropriation of Lot Nos. 744-A, 745-A, 746, 747, 761-A,
762-A, 763-A, 942, and 947, among others, docketed
as Civil Case No. R-1881 entitled Republic v. Damian
Ouano,
et
al.

THE

On December 29, 1961, the then Court of First Instance

(CFI) of Cebu rendered judgment for the Republic,
disposing, in part, as follows:

168812]

IN VIEW OF THE FOREGOING, judgment is hereby rendered:

(MCIAA),

1. Declaring the expropriation of Lots Nos. 75, 76, 76,

89, 90, 91, 92, 105, 106, 107, 108, 104, 921-A, 88, 93,
913-B, 72, 77, 916, 777-A, 918, 919, 920, 764-A, 988, 744A, 745-A, 746, 747, 762-A, 763-A, 951, 942, 720-A, x x x
and 947, included in the Lahug Airport, Cebu City,
justified in and in lawful exercise of the right of
eminent
domain.

OF

At the center of these two (2) Petitions for Review on

Certiorari under Rule 45 is the issue of the right of the
former owners of lots acquired for the expansion of the
Lahug Airport in Cebu City to repurchase or secure
reconveyance
of
their
respective
properties.
In the first petition, docketed as G.R. No. 168770,
petitioners Anunciacion vda. de Ouano, Mario Ouano,
Leticia Ouano Arnaiz and Cielo Ouano Martinez (the Ouanos)
seek to nullify the Decision[1]dated September 3, 2004 of
the Court of Appeals (CA) in CA-G.R. CV No. 78027,
affirming the Order dated December 9, 2002 of the Regional
Trial Court (RTC), Branch 57 in Cebu City, in Civil Case
No. CEB-20743, a suit to compel the Republic of the
Philippines and/or the Mactan-Cebu International Airport
Authority (MCIAA) to reconvey to the Ouanos a parcel of
land.
The second petition, docketed as G.R. No. 168812, has the
MCIAA seeking principally to annul and set aside the
Decision[2] and Resolution[3] dated January 14, 2005 and June
29, 2005, respectively, of the CA in CA-G.R. CV No. 64356,
sustaining the RTC, Branch 13 in Cebu City in its Decision
of October 7, 1988 in Civil Case No. CEB-18370.
Per its October 19, 2005 Resolution, the Court ordered the
consolidation
of
both
cases.
Except for the names of the parties and the specific lot
designation involved, the relevant factual antecedents
which gave rise to these consolidated petitions are, for
the most part, as set forth in the Court's Decision [4] of
October 15, 2003, as reiterated in a Resolution[5] dated
August 9, 2005, in G.R. No. 156273 entitled Heirs of
Timoteo
Moreno
and
Maria
Rotea
v.
Mactan-Cebu
International Airport Authority (Heirs of Moreno),b> and
in
other earlier related
cases.[6]
In 1949, the National Airport Corporation (NAC), MCIAA's
predecessor agency, pursued a program to expand the Lahug
Airport in Cebu City. Through its team of negotiators,

3.
After
the payment
of the
foregoing financial
obligation to the landowners, directing the latter to
deliver to the plaintiff the corresponding Transfer
Certificates of Title to their respective lots; and upon
the presentation of the said titles to the Register of
Deeds, ordering the latter to cancel the same and to
issue, in lieu thereof, new Transfer Certificates of Title
in the name of the plaintiff.[7]

In view of the adverted buy-back assurance made by the

government, the owners of the lots no longer appealed the
decision of the trial court.[8] Following the finality of
the judgment of condemnation, certificates of title for
the covered parcels of land were issued in the name of the
Republic which, pursuant to Republic Act No. 6958, [9] were
subsequently
transferred
to
MCIAA.
At the end of 1991, or soon after the transfer of the
aforesaid lots to MCIAA, Lahug Airport completely ceased
operations, Mactan Airport having opened to accommodate
incoming and outgoing commercial flights. On the ground,
the expropriated lots were never utilized for the purpose
they were taken as no expansion of Lahug Airport was
undertaken.
This development prompted the former lot
owners to formally demand from the government that they be
allowed to exercise their promised right to repurchase.
The demands went unheeded. Civil suits followed.
G.R. No. 168812 (MCIAA Petition)

On February 8, 1996, Ricardo L. Inocian and four others

(all children of Isabel Limbaga who originally owned
six [6] of the lots expropriated); and Aletha Suico Magat
and seven others, successors-in-interest of Santiago

Suico, the original owner of two (2) of the condemned lots

(collectively, the Inocians), filed before the RTC in Cebu
City a complaint for reconveyance of real properties and
damages against MCIAA. The complaint, docketed as Civil
Case No. CEB-18370, was eventually raffled to Branch 13 of
the
court.
On September 29, 1997, one Albert Chiongbian (Chiongbian),
alleging to be the owner of Lot Nos. 761-A and 762-A but
which the Inocians were now claiming, moved and was later
allowed
to
intervene.
During the pre-trial, MCIAA admitted the following facts:
1. That the properties, which are the subject matter of
Civil Case No. CEB-18370, are also the properties involved
in
Civil
Case
R-1881;
2. That the purpose of the expropriation was for the
expansion of the old Lahug Airport; that the Lahug Airport
was
not
expanded;
3. That the old Lahug Airport was closed sometime in June
1992;
4. That the price paid to the lot owners in the
expropriation case is found in the decision of the court;
and
5. That some properties were reconveyed by the MCIAA
because the previous owners were able to secure express
waivers or riders wherein the government agreed to return
the properties should the expansion of the Lahug Airport
not materialize.

During trial, the Inocians adduced evidence which included

the testimony of Ricardo Inocian (Inocian) and Asterio Uy
(Uy). Uy, an employee of the CAA, testified that he was a
member of the team which negotiated for the acquisition of
certain lots in Lahug for the proposed expansion of the
Lahug Airport. He recalled that he acted as the
interpreter/spokesman of the team since he could speak the
Cebuano dialect. He stated that the other members of the
team of negotiators were Atty. Pedro Ocampo, Atty.
Lansang, and Atty. Saligumba.
He recounted that, in the
course of the negotiation, their team assured the
landowners that their landholdings would be reconveyed to
them in the event the Lahug Airport would be abandoned or
if its operation were transferred to the Mactan Airport.
Some landowners opted to sell, while others were of a
different bent owing to the inadequacy of the offered
price.
Inocian testified that he and his mother, Isabel Lambaga,
attended a meeting called by the NAC team of negotiators
sometime in 1947 or 1949 where he and the other landowners
were given the assurance that they could repurchase their
lands at the same price in the event the Lahug Airport
ceases to operate.
He further testified that they
rejected the NAC's offer. However, he said that they no
longer appealed the decree of expropriation due to the
repurchase
assurance
adverted
to.
The MCIAA presented Michael Bacarizas (Bacarizas), who
started working for MCIAA as legal assistant in 1996. He
testified that, in the course of doing research work on
the lots subject of Civil Case No. CEB-18370, he
discovered that the same lots were covered by the decision
in Civil Case No. R-1881. He also found out that the said
decision did not expressly contain any condition on the

matter
Ruling

of

repurchase.

of

the

RTC

On October 7, 1998, the RTC rendered a Decision in Civil

Case No. CEB-18370, the dispositive portion of which reads
as follows:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered directing defendant Mactan Cebu International
Airport Authority (MCIAA) to reconvey (free from liens and
encumbrances) to plaintiffs Ricardo Inocian, Olimpia E.
Esteves, Emilia E. Bacalla, Restituta E. Montana and Raul
Inocian Lots No. 744-A, 745-A, 746, 762-A, 747, 761-A and
to plaintiffs Aletha Suico Magat, Philip M. Suico, Doris
S. dela Cruz, James M. Suico, Edward M. Suico, Roselyn S.
Lawsin, Rex M. Suico and Kharla Suico-Gutierrez Lots No.
942 and 947, after plaintiffs shall have paid MCIAA the
sums indicated in the decision in Civil Case No. R-1881.
Defendant
MCIAA
is
likewise
directed
to
pay
the
aforementioned plaintiffs the sum or P50,000.00 as and for
attorney's fees and P10,000.00 for litigation expenses.
Albert Chiongbian's intervention
hereby DENIED for
utter
lack

should be, as
of
factual

it is
basis.

With costs against defendant MCIAA.[10]

Therefrom, MCIAA went to the CA on appeal, docketed as CAG.R.

CV
No.
64356.
Ruling

of

the

CA

On January 14, 2005, the CA rendered judgment for the

Inocians, declaring them entitled to the reconveyance of
the questioned lots as the successors-in-interest of the
late Isabel Limbaga and Santiago Suico, as the case may
be, who were the former registered owners of the said
lots. The decretal portion of the CA's Decision reads:
WHEREFORE, in view of the foregoing premises, judgment is
hereby rendered by usDISMISSING the appeal filed in this
case and AFFFIRMING the decision rendered by the court a
quo on October 7, 1998 in Civil Case No. CEB-18370.
SO ORDERED.

The CA, citing and reproducing excerpts from Heirs of

Moreno,[11] virtually held that the decision in Civil Case
No.
R-1881
was
conditional,
stating
"that
the
expropriation of [plaintiff-appellees'] lots for the
proposed expansion of the Lahug Airport was ordered by the
CFI of Cebu under the impression that Lahug Airport would
continue in operation."[12] The condition, as may be deduced
from the CFI's decision, was that should MCIAA, or its
precursor
agency,
discontinue
altogether
with
the
operation of Lahug Airport, then the owners of the lots
expropriated may, if so minded, demand of MCIAA to make
good its verbal assurance to allow the repurchase of the
properties.
To the CA, this assurance, a demandable
agreement of repurchase by itself, has been adequately
established.
On September 21, 2005, the MCIAA filed with Us a petition
for review of the CA's Decision, docketed as G.R. No.
168812.
G.R. No. 168770 (Ouano Petition)

Soon after the MCIAA jettisoned the Lahug Airport

expansion project, informal settlers entered and occupied
Lot No. 763-A which, before its expropriation, belonged to
the Ouanos. The Ouanos then formally asked to be allowed
to exercise their right to repurchase the aforementioned
lot, but the MCIAA ignored the demand.
On August 18,
1997, the Ouanos instituted a complaint before the Cebu
City RTC against the Republic and the MCIAA for
reconveyance, docketed as Civil Case No. CEB-20743.
Answering, the Republic and MCIAA averred that the Ouanos
no longer have enforceable rights whatsoever over the
condemned Lot No. 763-A, the decision in Civil Case No. R1881
not
having
found
any
reversionary
condition.
Ruling

of

the

RTC

By a Decision dated November 28, 2000, the RTC, Branch 57

in Cebu City ruled in favor of the Ouanos, disposing as
follows:
WHEREFORE, in the light of the foregoing, the Court hereby
renders judgment in favor of the plaintiffs, Anunciacion
Vda. De Ouano, Mario P. Ouano, Leticia Ouano Arnaiz and
Cielo Ouano Martinez and against the Republic of the
Philippines
and
Mactan
Cebu
International
Airport
Authority (MCIAA) to restore to plaintiffs, the possession
and ownership of their land, Lot No. 763-A upon payment of
the
expropriation
price
to
defendants;
and
2. Ordering the Register of Deeds to effect the transfer
of the Certificate of Title from defendant Republic of the
Philippines on Lot 763-A, canceling TCT No. 52004 in the
name of defendant Republic of the Philippines and to issue
a new title on the same lot in the names of Anunciacion
Vda. De Ouano, Mario P. Ouano, Leticia Ouano Arnaiz and
Cielo
Ouano
Martinez.
No pronouncement as to costs.[13]

Acting on the motion of the Republic and MCIAA for

reconsideration, however, the RTC, Branch 57 in Cebu City,
presided this time by Judge Enriqueta L. Belarmino,
issued, on December 9, 2002, an Order [14] that reversed its
earlier decision of November 28, 2000 and dismissed the
Ouanos'
complaint.
Ruling

of

the

CA

In time, the Ouanos interposed an appeal to the CA,

docketed as CA-G.R. CV No. 78027. Eventually, the
appellate court rendered a Decision[15] dated September 3,
2004, denying the appeal, thus:
WHEREFORE, premises considered, the Order dated December
9, 2002, of the Regional Trial Court, 7th Judicial Region,
Branch 57, Cebu City, in Civil Case No. CEB-20743, is
hereby
AFFIRMED.
No
pronouncement
as
to
costs.
SO ORDERED.

Explaining its case disposition, the CA stated that the

decision in Civil Case No. R-1881 did not state any
condition that Lot No. 763-A of the Ouanos--and all
covered lots for that matter--would be returned to them or
that they could repurchase the same property if it were to
be used for purposes other than for the Lahug Airport.
The appellate court also went on to declare the

inapplicability of the Court's pronouncement in MCIAA v.

Court of Appeals, RTC, Branch 9, Cebu City, Melba Limbago,
et al.,[16] to support the Ouanos' cause, since the affected
landowners in that case, unlike the Ouanos, parted with
their property not through expropriation but via a sale
and
purchase
transaction.
The Ouanos filed a motion for reconsideration of the CA's
Decision, but was denied per the CA's May 26, 2005
Resolution.[17] Hence, they filed this petition in G.R. No.
168770.
The Issues

G.R. No. 168812

GROUNDS FOR ALLOWANCE OF THE PETITION

l. THE ASSAILED ISSUANCES ILLEGALLY STRIPPED THE REPUBLIC

OF ITS ABSOLUTE AND UNCONDITIONAL TITLE TO THE SUBJECT
EXPROPRIATED
PROPERTIES.
ll. THE IMPUNGED DISPOSITIONS INVALIDLY OVERTURNED THIS
HONORABLE COURT'S FINAL RULINGS IN FERY V. MUNICIPALITY OF
CABANATUAN, MCIAA V. COURT OF APPEALS AND REYES V.
NATIONAL
HOUSING
AUTHORITY.
lll. THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THIS
HONORABLE COURT'S RULING IN MORENO, ALBEIT IT HAS NOT YET
ATTAINED
FINALITY.[18]
G.R. No. 168770
Questions of law presented in this Petition

Whether or not the testimonial evidence of the petitioners

proving the promises, assurances and representations by
the airport officials and lawyers are inadmissbale under
the
Statute
of
Frauds.
Whether or not under the ruling of this Honorable Court in
the heirs of Moreno Case, and pursuant to the principles
enunciated therein, petitioners herein are entitiled to
recover their litigated property.
Reasons for Allowances of this Petition

Respondents
did
not
object
during
trial
to
the
admissibility of petitioners' testimonial evidence under
the Statute of Frauds and have thus waived such objection
and are now barred from raising the same. In any event,
the
Statute
of
Frauds
is
not
applicable
herein.
Consequently, petitioners' evidence is admissible and
should be duly given weight and credence, as initially
held by the trial court in its original Decision.[19]

While their respective actions against MCIAA below ended

differently, the Ouanos and the Inocians' proffered
arguments presented before this Court run along parallel
lines, both asserting entitlement to recover the litigated
property on the strength of the Court's ruling in Heirs of
Moreno. MCIAA has, however, formulated in its Consolidated
Memorandum
the
key
interrelated
issues
in
these
consolidated cases, as follows:
I

WHETHER ABANDONMENT OF THE PUBLIC USE FOR WHICH THE

SUBJECT PROPERTIES WERE EXPROPRIATED ENTITLES PETITIONERS
OUANOS, ET AL. AND RESPONDENTS INOCIAN, ET AL. TO
REACQUIRE THEM.
II

WHETHER PETITIONERS OUANOS, ET

INOCIAN, ET AL. ARE ENTITLED TO
SUBJECT PROPERTIES SIMPLY ON THE
VERBAL PROMISE OR ASSURANCE OF SOME
SUBJECT PROPERTIES WILL BE RETUNRED
WOULD BE ABANDONED.

AL. AND RESPONDENTS

RECONVEYANCE OF THE
BASIS OF AN ALLEGED
NAC OFFICIALS THAT THE
IF THE AIRPORT PROJECT

The Court's Ruling

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
premises
ought

(3) fairly established factual

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
of
Lahug
Airport.
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.[20]
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. [21] "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."[22] In Civil Case No. CEB-20743, Exhibit "G,"
the transcript of the deposition [23] 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. CEB18370, 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[24] 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.[25] (Emphasis supplied; citations omitted.)

For perspective, Heirs of Moreno--later followed by MCIAA

v. Tudtud (Tudtud)[26] 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).[27]
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.[28]
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.[29] Carbonnel v. Poncio, et al., quoting Chief
Justice Moran, explains the rationale behind this rule,
thusly:

of such showing, the court will presume that the Lahug

Airport will continue to be in operation.[32] (Emphasis
supplied.)

We went on to state as follows:

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.[30] (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
the Lahug Airport. 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,[31] 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 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 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

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
theDecision 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 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.[33]

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 Lahug Airport'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. R1881 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.[34]

The Court has, to be sure, taken stock of Fery v.

Municipality of Cabanatuan,[35] 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 orirresistibly
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."[36]
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,
[37]
the purpose of which is to prevent unjust enrichment.
[38]
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 inFery, 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,
respondentCabanatuan acquired a fee simple title to the
lands in question, judgment was rendered in favor of the
municipality,
following
American
jurisprudence,
particularlyCity of Fort Wayne v. Lake Shore & M.S. RY.
Co.,McConihay
v.
Theodore
Wright, andReichling
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,Ferywas 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.[39](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.[40]

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]."[41]
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. [42]
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.[43]
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.[44]
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, [45] 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. MactanCebu International Airport Authority is ordered to
reconvey subject Lot 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.
The petition of the Mactan-Cebu International Airport
Authority
in G.R.
No.
168812 is DENIED, and
the CA's
Decision and Resolution dated January 14, 2005 and June
29,
2005,
respectively,
in
CA-G.R.
CV
No.
64356
are AFFIRMED, except insofar as they awarded attorney's
fees and litigation expenses that are hereby DELETED.
Accordingly, Mactan-Cebu International Airport Authority
is ordered to reconvey to respondents Ricardo L. Inocian,
Olympia E. Esteves, Emilia E. Bacalla, Restituta E.
Montana, and Raul L. Inocian the litigated Lot Nos. 744-A,
745-A, 746, 762-A, 747, and 761-A; and to respondents
Aletha Suico Magat, Philip M. Suico, Dolores S. dela Cruz,
James M. Suico, Edward M. Suico, Roselyn S. Lawsin, Rex M.
Suico, and Kharla Suico-Gutierrez the litigated Lot Nos.

942 and 947. The Register of Deeds of Cebu City is ordered

to effect the necessary cancellation of title and transfer
it in the name of respondents within a period of fifteen
(15)
days
from
finality
of
judgment.
The foregoing dispositions are subject to QUALIFICATIONS,
to
apply
to
these
consolidated
petitions,
when
appropriate,
as
follows:
(1)
Petitioners
Ouano,
et
al.
in
G.R.
No.
168770 and respondents Ricardo L Inocian, et al. in G.R.
No. 168812 are ordered to return to the MCIAA the just
compensation
they
or
their
predecessors-in-interest
received for the expropriation of their respective lots as
stated in Civil Case No. R-1881, within a period of sixty
(60)
days
from
finality
of
judgment;
(2) The MCIAA shall be entitled to RETAIN whatever fruits
and income it may have obtained from the subject
expropriated lots without any obligation to refund the
same
to
the
lot
owners;
and
(3)

Petitioners

Ouano,

et

al.

in

G.R.

No.

168770 and respondents Ricardo L. Inocian, et al. in G.R.

No. 168812 shall RETAIN whatever interests the amounts
they received as just compensation may have earned in the
meantime without any obligation to refund the same to
MCIAA.
***Expropriation; reconveyance of expropriated property.
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 landowners 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 if the thing is improved by its nature, or
by time, the improvement shall inure to the benefit of the
creditor, the landowners 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.