Mactan-Cebu International Airport Authority and Air Transportation Office v. Bernardo L.

Lozada,
Sr., and the heirs of Rosario Mercado
G.R. No. 176625 | February 25, 2010

Doctrine: 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.

FACTS: Respondents were the registered owners of Lot No. 88 situated in the City of Cebu, the subject
lot. The property was expropriated in favor of the Republic of the Philippines by virtue of a decision of
the CFI of Cebu in a civil case. The public purpose for which the property was expropriated was for the
expansion and improvement of theLahugAirport. The affected landowners appealed. Pending appeal, the
Air Transportation Office (ATO) proposed a compromise settlement that the expropriated lots would be
resold at the price they were expropriated in the event that the ATO would abandon the Lahug Airport.
Because of this, Lozada did not pursue his appeal.

Then President Corazon Aquino directed the Department of Transportation and Communication to
transfer general aviation operations of the Lahug Airport to the Mactan-Cebu International Airport
Authority and to close the Lahug Airport after such transfer, therefore, the public purpose of the said
expropriation (expansion of the airport) was never actually initiated, realized, or implemented.

Herein respondents initiated a complaint for the recovery of possession and reconveyance of ownership
of Lot No. 88. The RTC rendered judgment in their favor. This was affirmed by the CA.

ISSUE: Whether the ownership and possession of Lot No. 88 should be restored to respondents.

HELD:Yes, the ownership and possession of Lot No. 88 should be restored to respondents.

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, subject to the return of the
amount of just compensation received. 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.
Secretary of DPWH v. Tecson

Facts:
Spouses Heracleo are the co-owners of a land which is among the private properties traversed by
MacArthur Highway in Bulacan, a government project undertaken sometime in 1940. The taking
was taken without the requisite expropriation proceedings and without their consent. In 1994,
Heracleo demanded the payment of the fair market value of the property. The DPWH offered to pay
0.70 centavos per sqm., as recommended by the appraiser committee of Bulacan. Unsatisfied,
Heracleo filed a complaint for recovery of possession with damages. Favorable decisions were
rendered by the RTC and the CA, with valuation of P 1,500 per sqm and 6% interest per annum from
the time of filing of the until full payment. The SC Division reversed the CA ruling and held that
computation should be based at the time the property was taken in 1940, which is 0.70 per sqm. But
because of the contrasting opinions of the members of the Division and transcendental importance
of the issue, the case was referred to the En Banc for resolution.

Issue 1: W/N the taking of private property without due process should be nullified
No. The governments failure to initiate the necessary expropriation proceedings prior to actual
taking cannot simply invalidate the States exercise of its eminent domain power, given that the property
subject of expropriation is indubitably devoted for public use, and public policy imposes upon the
public utility the obligation to continue its services to the public. To hastily nullify said expropriation in
the guise of lack of due process would certainly diminish or weaken one of the States inherent
powers, the ultimate objective of which is to serve the greater good.
Thus, the non-filing of the case for expropriation will not necessarily lead to the return of the property
to the landowner. What is left to the landowner is the right of compensation.

Issue 2: W/N compensation is based on the market value of the property at the time of taking
Yes. While it may appear inequitable to the private owners to receive an outdated valuation, the
long-established rule is that the fair equivalent of a property should be computed not at the time of
payment, but at the time of taking. This is because the purpose of just compensation is not to
reward the owner for the property taken but to compensate him for the loss thereof. The owner should
be compensated only for what he actually loses, and what he loses is the actual value of the
property at the time it is taken.
Issue 3: W/N the principle of equity should be applied in this case
No. The Court must adhere to the doctrine that its first and fundamental duty is the application of the
law according to its express terms, interpretation being called for only when such literal application is
impossible. To entertain other formula for computing just compensation, contrary to those
established by law and jurisprudence, would open varying interpretation of economic policies a
matter which this Court has no competence to take cognizance of. Equity and equitable principles
only come into full play when a gap exists in the law and jurisprudence.

Velasco Dissent:
The States power of eminent domain is not absolute; the Constitution is clear that no person shall
be deprived of life, liberty and property without due process of law. As such, failure of the
government to institute the necessary proceedings should lead to failure of taking an individuals
property. In this case, since the property was already taken, the complainants must be equitably
compensated for the loss thereof.

For purposes of just compensation, the value of the land should be determined from the time the
property owners filed the initiatory complaint, earning interest therefrom. To hold otherwise would
validate the States act as one of expropriation in spite of procedural infirmities which, in turn, would
amount to unjust enrichment on its part. To continue condoning such acts would be licensing the
government to continue dispensing with constitutional requirements in taking private property.

Hacienda Luisita Incorporated vs Presidential Agrarian

Reform Council, et al., Case Digest G.R. No. 171101
November 22, 2011

Facts:

The SC en banc voted 11-0 dismissing the petition filed by HLI Affirm with
modifications the resolutions of the Presidential Agrarian Reform Council (PARC for brevity)
revoking Hacienda Luisita Inc. (HLI for brevity) Stock Distribution Plan (SDP) and placing the
subject land in HL under compulsory coverage of the CARP of the government.

Thereafter, the SC voting 6-5 averred that there are operative facts that occurred in the
premises. The SC thereat declared that the revocation of the SDP shall, by application of the
operative fact principle, give the 5296 qualified Farmworkers Beneficiaries (FWBs for brevity)
to choose whether they want to remain as HLI stockholders or choose actual land distribution.
Considering the premises, DAR immediately scheduled a meeting regarding the effects of their
choice and therefrom proceeded to secret voting of their choice.

The parties, thereafter, filed their respective Motion for Reconsideration regarding the
SCs decision.
 Issue:

1) Whether or not operative fact doctrine is applicable in the said case.

2) Whether or not Sec. 31 of R.A. 6657 unconstitutional.

3) Whether or not the 10-year period prohibition on the transfer of awarded lands under RA
6657 lapsed on May 10, 1999, since Hacienda Luisita were placed under CARP coverage
through the SDOA scheme on May 11, 1989, and thus the qualified FWBs should now be
allowed to sell their land interests in Hacienda Luisita to third parties, whether they have fully
paid for the lands or not?

4) Whether or not qualified FWBs shall be entitled to the option of remaining as stockholder be
reconsidered.

Ruling:

1) Operative Fact Doctrine is applicable to the instant case. The court ruled that the doctrine is
not limited only to invalid or unconstitutional law but also to decisions made by the president
or the administrative agencies that have the force and effect of laws, especially if the said
decisions produced acts and consequences that must be respected. That the implementation of
PARC resolution approving SDP of HLI manifested such right and benefits favorable to the
FWBs;

2) The SC said that the constitutionality of Sec. 31 of R.A. 6657 is not the lis mota of the case and it
was not raised at the earliest opportunity and did not rule on the constitutionality of the law;

3) The SC ruled that it has not yet lapsed on May 10, 1999, and qualified FWBs are not allowed to
sell their land interest in HL to third parties; That the start of the counting of the prohibitive
period shall be ten years from the issuance and registration of the Emancipation Patent (EP for
brevity) or Certificate of Land Ownership Award (CLOA for brevity), and considering that the
EPs and CLOAs have not yet been issued, the prohibitive period has not started yet.

4) The SC ruled in the affirmative, giving qualified FWBs the option to remain as stockholder

YES, the ruling in the July 5, 2011 Decision that the qualified FWBs be given an option to
remain as stockholders of HLI should be reconsidered.

[The Court reconsidered its earlier decision that the qualified FWBs should be given an option
to remain as stockholders of HLI, inasmuch as these qualified FWBs will never gain control
[over the subject lands] given the present proportion of shareholdings in HLI. The Court noted
that the share of the FWBs in the HLI capital stock is [just] 33.296%. Thus, even if all the
holders of this 33.296% unanimously vote to remain as HLI stockholders, which is unlikely,
control will never be in the hands of the FWBs. Control means the majority of [sic] 50% plus at
least one share of the common shares and other voting shares. Applying the formula to the HLI
stockholdings, the number of shares that will constitute the majority is 295,112,101 shares
(590,554,220 total HLI capital shares divided by 2 plus one [1] HLI share). The 118,391,976.85
shares subject to the SDP approved by PARC substantially fall short of the 295,112,101 shares
needed by the FWBs to acquire control over HLI.]

The SC PARTIALLY GRANTED the motions for reconsideration of respondents PARC, et al., The
6,296 original FWBs shall forfeit and relinquish their rights over the HLI shares of stock issued
to them in favor of HLI. The HLI Corporate Secretary shall cancel the shares issued to the said
FWBs and transfer them to HLI in the stocks and transfer book. The 4,206 non-qualified FWBs
shall remain as stockholders of HLI.