G.R. No. 176625.  February 25, 2010.*

MACTAN-CEBU INTERNATIONAL AIRPORT

AUTHORITY and AIR TRANSPORTATION OFFICE,
petitioners, vs. BERNARDO L. LOZADA, SR., and the
HEIRS OF ROSARIO MERCADO, namely, VICENTE
LOZADA, MARIO M. LOZADA, MARCIA L. GODINEZ,
VIRGINIA L. FLORES, BERNARDO LOZADA, JR.,
DOLORES GACASAN, SOCORRO CAFARO and
ROSARIO LOZADA, represented by MARCIA LOZADA
GODINEZ, respondents.

Eminent Domain; Requisites; Legal Research; Fery v.

Municipality of Cabanatuan, 42 Phil. 28 (1921), was not decided
pursuant to our now sacredly held constitutional right that private
property

_______________

* EN BANC.

 
 
619

shall not be taken for public use without just compensation.—

Fery was not decided pursuant to our now sacredly held
constitutional right that private property shall not be taken for
public use without just compensation. It is well-settled that the
taking of private property by the Government’s 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.
Same; 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, and 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; The
Court now expressly holds that the taking of private property,
consequent to the Government’s 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.—
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 owner’s right to justice,
fairness, and equity. In light of these premises, we now expressly
hold that the taking of private property, consequent to the
Government’s 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

 
 
620

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.
 Contracts; Statute of Frauds; The Statute of Frauds operates
only with respect to executory contracts, and does not apply to
contracts which have been completely or partially performed—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 delivered by him
from the transaction in litigation, and, at the same time, evade the
obligations, respon­sibilities or liabilities assumed or contracted by
him thereby.—As regards the position of petitioners that
respondents’ testimonial evidence violates the Statute of Frauds,
suffice it to state that the Statute of Frauds operates only with
respect to executory contracts, and does not apply to contracts
which have been completely or partially performed, the rationale
thereof being as follows: In executory contracts there is a wide
field for fraud because unless they be in writing there is no
palpable evidence of the intention of the contracting parties. The
statute has precisely been enacted to prevent fraud. 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 delivered by
him from the transaction in litigation, and, at the same time,
evade the obligations, responsibilities or liabilities assumed or
contracted by him thereby.
Same; Repurchase Price; Duties of the Parties.—On the
matter of the repurchase price, while petitioners are obliged to
reconvey Lot No. 88 to respondents, the latter must return to the
former what they received as just compensation for the
expropriation of the property, plus legal interest to be computed
from default, which in this case runs from the time petitioners
comply with their obligation to respondents. Respondents must
likewise pay petitioners the necessary expenses they may have
incurred in maintaining Lot No. 88, as well as the monetary value
of their services in managing it to the extent that respondents
were benefited thereby. Following Article 1187 of the Civil Code,
petitioners may keep whatever income or fruits they may have
obtained from Lot No. 88, and respondents

 
 

621

need not account for the interests that the amounts they
received as just compensation may have earned in the meantime.
In accordance with Article 1190 of the Civil Code vis-à-vis Article
1189, which provides that “(i)f a thing is improved by its nature,
or by time, the improvement shall inure to the benefit of the
creditor x x x,” respondents, as creditors, do not have to pay, as
part of the process of restitution, the appreciation in value of Lot
No. 88, which is a natural consequence of nature and time.

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals (Cebu City),
Twentieth Division.
The facts are stated in the opinion of the Court.
   The Solicitor General for petitioners.
  Diores Law Offices for respondents.

NACHURA,  J.:

 
This is a petition for review on certiorari under Rule 45
of the Rules of Court, seeking to reverse, annul, and set
aside the Decision1 dated February 28, 2006 and the
Resolution2 dated February 7, 2007 of the Court of Appeals
(CA) (Cebu City), Twentieth Division, in CA-G.R. CV No.
65796.
The antecedent facts and proceedings are as follows:
Subject of this case is Lot No. 88-SWO-25042 (Lot No.
88), with an area of 1,017 square meters, more or less,
located in Lahug, Cebu City. Its original owner was
Anastacio Deiparine when the same was subject to
expropriation proceedings, initiated by the Republic of the
Philippines (Republic), represented by the then Civil
Aeronautics Administration (CAA), for the expansion and
improvement of the Lahug Airport. The

_______________

1  Penned by Associate Justice Enrico A. Lanzanas, with Associate

Justices Pampio A. Abarintos and Apolinario D. Bruselas, Jr., concurring;
Rollo, pp. 46-65.
2 Rollo, pp. 67-68.

 
622

case was filed with the then Court of First Instance of

Cebu, Third Branch, and docketed as Civil Case No. R-
1881.
As early as 1947, the lots were already occupied by the
U.S. Army. They were turned over to the Surplus Property
Commission, the Bureau of Aeronautics, the National
Airport Corporation and then to the CAA.
 During the pendency of the expropriation proceedings,
respondent Bernardo L. Lozada, Sr. acquired Lot No. 88
from Deiparine. Consequently, Transfer Certificate of Title
(TCT) No. 9045 was issued in Lozada’s name.
On December 29, 1961, the trial court rendered
judgment in favor of the Republic and ordered the latter to
pay Lozada the fair market value of Lot No. 88, adjudged
at P3.00 per square meter, with consequential damages by
way of legal interest computed from November 16, 1947—
the time when the lot was first occupied by the airport.
Lozada received the amount of P3,018.00 by way of
payment.
The affected landowners appealed. Pending appeal, the
Air Transportation Office (ATO), formerly CAA, proposed a
compromise settlement whereby the owners of the lots
affected by the expropriation proceedings would either not
appeal or withdraw their respective appeals in
consideration of a commitment that the expropriated lots
would be resold at the price they were expropriated in the
event that the ATO would abandon the Lahug Airport,
pursuant to an established policy involving similar cases.
Because of this promise, Lozada did not pursue his appeal.
Thereafter, Lot No. 88 was transferred and registered in
the name of the Republic under TCT No. 25057.
The projected improvement and expansion plan of the
old Lahug Airport, however, was not pursued.
Lozada, with the other landowners, contacted then CAA
Director Vicente Rivera, Jr., requesting to repurchase the
lots, as per previous agreement. The CAA replied that
there might still be a need for the Lahug Airport to be used
as an
 
 
623

emergency DC-3 airport. It reiterated, however, the

assurance that “should this Office dispose and resell the
properties which may be found to be no longer necessary as
an airport, then the policy of this Office is to give priority to
the former owners subject to the approval of the President.”
On November 29, 1989, then President Corazon C.
Aquino issued a Memorandum to the Department of
Transportation, directing the transfer of general aviation
operations of the Lahug Airport to the Mactan
International Airport before the end of 1990 and, upon such
transfer, the closure of the Lahug Airport.
 Sometime in 1990, the Congress of the Philippines
passed Republic Act (R.A.) No. 6958, entitled “An Act
Creating the Mactan-Cebu International Airport Authority,
Transferring Existing Assets of the Mactan International
Airport and the Lahug Airport to the Authority, Vesting
the Authority with Power to Administer and Operate the
Mactan International Airport and the Lahug Airport, and
For Other Purposes.”
From the date of the institution of the expropriation
proceedings up to the present, the public purpose of the
said expropriation (expansion of the airport) was never
actually initiated, realized, or implemented. Instead, the
old airport was converted into a commercial complex. Lot
No. 88 became the site of a jail known as Bagong Buhay
Rehabilitation Complex, while a portion thereof was
occupied by squatters.3 The old airport was converted into
what is now known as the Ayala I.T. Park, a commercial
area.
Thus, on June 4, 1996, petitioners initiated a complaint
for the recovery of possession and reconveyance of
ownership of Lot No. 88. The case was docketed as Civil
Case No. CEB-18823 and was raffled to the Regional Trial
Court (RTC), Branch 57, Cebu City. The complaint
substantially alleged as follows:

_______________

3 TSN, June 25, 1998, p. 7.

624

(a)  Spouses Bernardo and Rosario Lozada were the

registered owners of Lot No. 88 covered by TCT No. 9045;
(b)  In the early 1960’s, the Republic sought to acquire by
expropriation Lot No. 88, among others, in connection with
its program for the improvement and expansion of the
Lahug Airport;
(c)  A decision was rendered by the Court of First Instance
in favor of the Government and against the land owners,
among whom was Bernardo Lozada, Sr. appealed
therefrom;
(d)  During the pendency of the appeal, the parties entered
into a compromise settlement to the effect that the subject
property would be resold to the original owner at the same
price when it was expropriated in the event that the
Government abandons the Lahug Airport;
 (e)  Title to Lot No. 88 was subsequently transferred to the
Republic of the Philippines (TCT No. 25057);
(f)  The projected expansion and improvement of the Lahug
Airport did not materialize;
(g)  Plaintiffs sought to repurchase their property from
then CAA Director Vicente Rivera. The latter replied by
giving as assurance that priority would be given to the
previous owners, subject to the approval of the President,
should CAA decide to dispose of the properties;
(h)  On November 29, 1989, then President Corazon C.
Aquino, through a Memorandum to the Department of
Transportation and Communications (DOTC), directed the
transfer of general aviation operations at the Lahug Airport
to the Mactan-Cebu International Airport Authority;
(i)  Since the public purpose for the expropriation no longer
exists, the property must be returned to the plaintiffs.4

 
In their Answer, petitioners asked for the immediate
dismissal of the complaint. They specifically denied that
the Government had made assurances to reconvey Lot No.
88 to

_______________

4 Rollo, pp. 20-21.

 
625

respondents in the event that the property would no longer

be needed for airport operations. Petitioners instead
asserted that the judgment of condemnation was
unconditional, and respondents were, therefore, not
entitled to recover the expropriated property
notwithstanding non-use or abandonment thereof.
After pretrial, but before trial on the merits, the parties
stipulated on the following set of facts:

(1)  The lot involved is Lot No. 88-SWO-25042 of the

Banilad Estate, situated in the City of Cebu, containing an
area of One Thousand Seventeen (1,017) square meters,
more or less;
(2)  The property was expropriated among several other
properties in Lahug in favor of the Republic of the
Philippines by virtue of a Decision dated December 29, 1961
of the CFI of Cebu in Civil Case No. R-1881;
 (3)  The public purpose for which the property was
expropriated was for the purpose of the Lahug Airport;
(4)  After the expansion, the property was transferred in
the name of MCIAA; [and]
(5)  On November 29, 1989, then President Corazon C.
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[.]5

 
During trial, respondents presented Bernardo Lozada,
Sr. as their lone witness, while petitioners presented their
own witness, Mactan-Cebu International Airport Authority
legal assistant Michael Bacarisas.
On October 22, 1999, the RTC rendered its Decision,
disposing as follows:

_______________

5 Id., at pp. 22-23.

 
626

“WHEREFORE, in the light of the foregoing, the Court hereby

renders judgment in favor of the plaintiffs, Bernardo L. Lozada,
Sr., and the heirs of Rosario Mercado, namely, Vicente M. Lozada,
Marcia L. Godinez, Virginia L. Flores, Bernardo M. Lozada, Jr.,
Dolores L. Gacasan, Socorro L. Cafaro and Rosario M. Lozada,
represented by their attorney-in-fact Marcia Lozada Godinez, and
against defendants Cebu-Mactan International Airport Authority
(MCIAA) and Air Transportation Office (ATO):
1.  ordering MCIAA and ATO to restore to plaintiffs the
possession and ownership of their land, Lot No. 88 Psd-821 (SWO-
23803), upon payment of the expropriation price to plaintiffs; and
2.  ordering the Register of Deeds to effect the transfer of the
Certificate of Title from defendant[s] to plaintiffs on Lot No. [88],
cancelling TCT No. 20357 in the name of defendant MCIAA and
to issue a new title on the same lot in the name of Bernardo L.
Lozada, Sr. and the heirs of Rosario Mercado, namely: Vicente M.
Lozada, Mario M. Lozada, Marcia L. Godinez, Virginia L. Flores,
Bernardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro
and Rosario M. Lozada.
No pronouncement as to costs.
SO ORDERED.”6
  
Aggrieved, petitioners interposed an appeal to the CA.
After the filing of the necessary appellate briefs, the CA
rendered its assailed Decision dated February 28, 2006,
denying petitioners’ appeal and affirming in toto the
Decision of the RTC, Branch 57, Cebu City. Petitioners’
motion for reconsideration was, likewise, denied in the
questioned CA Resolution dated February 7, 2007.
Hence, this petition arguing that: (1) the respondents
utterly failed to prove that there was a repurchase
agreement or compromise settlement between them and
the Government; (2) the judgment in Civil Case No. R-1881
was absolute and unconditional, giving title in fee simple to
the Republic; and

_______________

6 Records, p. 178.

 
627

(3) the respondents’ claim of verbal assurances from

government officials violates the Statute of Frauds.
The petition should be denied.
Petitioners anchor their claim to the controverted
property on the supposition that the Decision in the
pertinent expropriation proceedings did not provide for the
condition that should the intended use of Lot No. 88 for the
expansion of the Lahug Airport be aborted or abandoned,
the property would revert to respondents, being its former
owners. Petitioners cite, in support of this position, Fery v.
Municipality of Cabanatuan,7 which declared that the
Government acquires only such rights in expropriated
parcels of land as may be allowed by the character of its
title over the properties—

“If x x x 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. If x x x land is
expropriated for a public street and the expropriation is granted
upon condition that the city can only use it for a public street,
then, of course, when the city abandons its use as a public street,
it returns to the former owner, unless there is some statutory
provision to the contrary. x x x. If, upon the contrary, however,
the decree of expropriation gives to the entity a fee simple title,
then, of course, the land becomes the absolute property of the
expropriator, whether it be the State, a province, or municipality,
and in that case the non-user does not have the effect of defeating
the title acquired by the expropriation proceedings. x x x.
When land has been acquired for public use in fee simple,
unconditionally, either by the exercise of eminent domain or by
purchase, the former owner retains no right in the land, and the
public use may be abandoned, or the land may be devoted to a
different use, without any impairment of the estate or title
acquired, or any reversion to the former owner. x x x.”8

_______________

7 42 Phil. 28 (1921).

8 Id., at pp. 29-30.

 
 

628

Contrary to the stance of petitioners, this Court had

ruled otherwise in Heirs of Timoteo Moreno and Maria
Rotea v. Mactan-Cebu International Airport Authority,9
thus—

“Moreover, respondent MCIAA has brought to our attention a

significant and telling portion in the Decision in Civil Case No. R-
1881 validating our discernment that the expropriation by the
predecessors of respondent was ordered under the running
impression that Lahug Airport would continue in operation—
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 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 judgment for those of the said
departments or agencies. In the absence of such showing,
the Court will presume that the Lahug Airport will continue
to be in operation (emphasis supplied).

 
 While in the trial in Civil Case No. R-1881 [we] could
have simply acknowledged the presence of public purpose
for the exercise of eminent domain regardless of the
survival of Lahug Airport, the trial court in its Decision
chose not to do so but instead prefixed its finding of public
purpose upon its understanding that “Lahug Airport will
continue to be in operation.” Verily, these meaningful
statements in the body of the Decision warrant the
conclusion that the expropriated properties would remain
to be so until it was confirmed that Lahug Airport was no
longer “in operation.” This inference further implies two (2)
things: (a) after the Lahug Airport ceased its undertaking
as such and the expropriated lots were not being used for
any airport expansion project, the rights vis-à-vis the
expropriated Lots Nos. 916 and 920 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 Deci-

_______________

9 G.R. No. 156273, October 15, 2003, 413 SCRA 502.

 
629

sion 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.”10

 
Indeed, the Decision in Civil Case No. R-1881 should be
read in its entirety, wherein it is apparent that the
acquisition by the Republic of the expropriated lots was
subject to the condition that the Lahug Airport would
continue its operation. The condition not having
materialized because the airport had been abandoned, the
former owner should then be allowed to reacquire the
expropriated property.11
On this note, we take this opportunity to revisit our
ruling in Fery, which involved an expropriation suit
commenced upon parcels of land to be used as a site for a
public market. Instead of putting up a public market,
respondent Cabanatuan constructed residential houses for
lease on the area. Claiming that the municipality lost its
right to the property taken since it did not pursue its public
purpose, petitioner Juan Fery, the former owner of the lots
expropriated, sought to recover his properties. However, as
he had admitted that, in 1915, respondent Cabanatuan
acquired a fee simple title to the lands in question,
judgment was rendered in favor of the municipality,
following American jurisprudence, particularly City of Fort
Wayne v. Lake Shore & M.S. RY. Co.,12 McConihay v.
Theodore Wright,13 and Reichling v. Covington Lumber
Co.,14 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

_______________

10 Id., at pp. 509-510.

11 Ruling on the Motion for Reconsideration affirming the Decision;
Heirs of Timoteo Moreno and Maria Rotea v. Mactan-Cebu Inter­national
Airport Authority, G.R. No. 156273, August 9, 2005, 466 SCRA 288, 305.
12 132 Ind. 558, November 5, 1892.
13 121 U.S. 932, April 11, 1887.
14 57 Wash. 225, February 4, 1910.

 
 
630

the property was taken, is not a ground for the recovery of

the same by its previous owner, the title of the
expropriating agency being one of fee simple.
Obviously, Fery was not decided pursuant to our now
sacredly held constitutional right that private property
shall not be taken for public use without just
compensation.15 It is well settled that the taking of private
property by the Government’s 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.16
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 owner’s right to
justice, fairness, and equity.
In light of these premises, we now expressly hold that
the taking of private property, consequent to the
Government’s 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 particu-

_______________

15 Constitution, Art. III, Sec. 9.

16 Supra note 11, at 302; Vide Republic v. Lim, G.R. No. 161656, June
29, 2005, 462 SCRA 265.

 
631

lar 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.17
Even without the foregoing declaration, in the instant
case, on the question of whether respondents were able to
establish the existence of an oral compromise agreement
that entitled them to repurchase Lot No. 88 should the
operations of the Lahug Airport be abandoned, we rule in
the affirmative.
It bears stressing that both the RTC, Branch 57, Cebu
and the CA have passed upon this factual issue and have
declared, in no uncertain terms, that a compromise
agreement was, in fact, entered into between the
Government and respondents, with the former undertaking
to resell Lot No. 88 to the latter if the improvement and
expansion of the Lahug Airport would not be pursued. In
affirming the factual finding of the RTC to this effect, the
CA declared—
 “Lozada’s testimony is cogent. An octogenarian widower-retiree
and a resident of Moon Park, California since 1974, he testified
that government representatives verbally promised him and his
late wife while the expropriation proceedings were on-going that
the government shall return the property if the purpose for the
expropriation no longer exists. This promise was made at the
premises of the airport. As far as he could remember, there were
no expropriation proceedings against his property in 1952 because
the first notice of expropriation he received was in 1962. Based on
the promise, he did not hire a lawyer. Lozada was firm that he
was promised that the lot would be reverted to him once the
public use of the lot ceases. He made it clear that the verbal
promise was made in Lahug with other lot owners before the 1961
decision was handed down, though he could not name the
government representatives who made the promise. It was just a
verbal promise; nevertheless, it is binding. The fact

_______________

17 Vide the Separate Concurring Opinion of Associate Justice

Presbitero J. Velasco, Jr.

 
632

that he could not supply the necessary details for the

establishment of his assertions during cross-examination, but
that “When it will not be used as intended, it will be returned
back, we just believed in the government,” does not dismantle the
credibility and truthfulness of his allegation. This Court notes
that he was 89 years old when he testified in November 1997 for
an incident which happened decades ago. Still, he is a competent
witness capable of perceiving and making his perception known.
The minor lapses are immaterial. The decision of the competency
of a witness rests primarily with the trial judge and must not be
disturbed on appeal unless it is clear that it was erroneous. The
objection to his competency must be made before he has given any
testimony or as soon as the incompetency becomes apparent.
Though Lozada is not part of the compromise agreement,18 he
nevertheless adduced sufficient evidence to support his claim.”19

 
As correctly found by the CA, unlike in Mactan Cebu
International Airport Authority v. Court of Appeals,20 cited
by petitioners, where respondent therein offered
testimonies which were hearsay in nature, the testimony of
Lozada was based on personal knowledge as the assurance
from the government was personally made to him. His
testimony on cross-examination destroyed neither his
credibility as a witness nor the truthfulness of his words.
Verily, factual findings of the trial court, especially
when affirmed by the CA, are binding and conclusive on
this Court and may not be reviewed. A petition for
certiorari under Rule 45 of the Rules of Court contemplates
only questions of law and not of fact.21 Not one of the
exceptions to this rule is present in this case to warrant a
reversal of such findings.

_______________

18 Petitioners’ witness Michael Bacarisas testified that three other lot

owners entered into a written compromise agreement with the
government but Lozada was not part of it.
19 Rollo, pp. 58-59.
20 G.R. No. 121506, October 30, 1996, 263 SCRA 736.
21 Caluag v. People, G.R. No. 171511, March 4, 2009, 580 SCRA 575,
583; Gregorio Araneta University Foundation v. Regional Trial Court of
Kalookan City, Br. 120, G.R. No. 139672, March 4, 2009,

 
 
633

As regards the position of petitioners that respondents’

testimonial evidence violates the Statute of Frauds, suffice
it to state that the Statute of Frauds operates only with
respect to executory contracts, and does not apply to
contracts which have been completely or partially
performed, the rationale thereof being as follows:

“In executory contracts there is a wide field for fraud because

unless they be in writing there is no palpable evidence of the
intention of the contracting parties. The statute has precisely
been enacted to prevent fraud. 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 delivered by him from the
transaction in litigation, and, at the same time, evade the
obligations, responsibilities or liabilities assumed or contracted by
him thereby.”22

 
In this case, the Statute of Frauds, invoked by
petitioners to bar the claim of respondents for the
reacquisition of Lot No. 88, cannot apply, the oral
compromise settlement having been partially performed.
By reason of such assurance made in their favor,
respondents relied on the same by not pursuing their
appeal before the CA. Moreover, contrary to the claim of
petitioners, the fact of Lozada’s eventual conformity to the
appraisal of Lot No. 88 and his seeking the correction of a
clerical error in the judgment as to the true area of Lot No.
88 do not conclusively establish that respondents
absolutely parted with their property. To our mind, these
acts were simply meant to cooperate with the government,
particularly because of the oral promise made to them.
The right of respondents to repurchase Lot No. 88 may
be enforced based on a constructive trust constituted on the
property held by the government in favor of the former. On

_______________

580 SCRA 532, 544; Heirs of Jose T. Calo v. Calo, G.R. No. 156101,
February 10, 2009, 578 SCRA 226, 232.
22  Mactan-Cebu International Airport Authority v. Tudtud, G.R. No.
174012, November 14, 2008, 571 SCRA 165, 175.

 
 
634

this note, our ruling in Heirs of Timoteo Moreno is

instructive, viz.:

“Mactan-Cebu International Airport Authority is correct in

stating that one would not find an express statement in the
Decision in Civil Case No. R-1881 to the effect that “the
[condemned] lot would return to [the landowner] or that [the
landowner] had a right to repurchase the same if the purpose for
which it was expropriated is ended or abandoned or if the property
was to be used other than as the Lahug Airport.” This omission
notwithstanding, and while the inclusion of this pronouncement
in the judgment of condemnation would have been ideal, such
precision is not absolutely necessary nor is it fatal to the cause of
petitioners herein. No doubt, the return or repurchase of the
condemned properties of petitioners could be readily justified as
the manifest legal effect or 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.
The predicament of petitioners involves a constructive trust,
one that is akin to the implied trust referred to in Art. 1454 of the
Civil Code, “If an absolute conveyance of property is made in order
to secure the performance of an obligation of the grantor toward
the grantee, a trust by virtue of law is established. If the
fulfillment of the obligation is offered by the grantor when it
becomes due, he may demand the reconveyance of the property to
him.” In the case at bar, petitioners conveyed Lots No. 916 and
920 to the government with the latter obliging itself to use the
realties for the expansion of Lahug Airport; failing to keep its
bargain, the government can be compelled by petitioners to
reconvey the parcels of land to them, otherwise, petitioners would
be denied the use of their properties upon a state of affairs that
was not conceived nor contemplated when the expropriation was
authorized.
Although the symmetry between the instant case and the
situation contemplated by Art. 1454 is not perfect, the provision is
undoubtedly applicable. For, as explained by an expert on the law
of trusts: “The only problem of great importance in the field of
constructive trust is to decide whether in the numerous and
varying fact situations presented to the courts there is a wrongful
holding of property and hence a threatened unjust enrichment of
the defendant.” Constructive trusts are fictions of equity which
are bound by no unyield-

 
 
635

ing formula when they are used by courts as devices to remedy

any situation in which the holder of legal title may not in good
conscience retain the beneficial interest.
In constructive trusts, the arrangement is temporary and
passive in which the trustee’s sole duty is to transfer the title and
possession over the property to the plaintiff-beneficiary. Of
course, the “wronged party seeking the aid of a court of equity in
establishing a constructive trust must himself do equity.”
Accordingly, the court will exercise its discretion in deciding what
acts are required of the plaintiff-beneficiary as conditions
precedent to obtaining such decree and has the obligation to
reimburse the trustee the consideration received from the latter
just as the plaintiff-beneficiary would if he proceeded on the
theory of rescission. In the good judgment of the court, the trustee
may also be paid the necessary expenses he may have incurred in
sustaining the property, his fixed costs for improvements thereon,
and the monetary value of his services in managing the property
to the extent that plaintiff-beneficiary will secure a benefit from
his acts.
The rights and obligations between the constructive trustee
and the beneficiary, in this case, respondent MCIAA and
petitioners over Lots Nos. 916 and 920, are echoed in Art. 1190 of
the Civil Code, “When the conditions have for their purpose the
extinguishment of an obligation to give, the parties, upon the
fulfillment of said conditions, shall return to each other what they
have received x x x In case of the loss, deterioration or
improvement of the thing, the provisions which, with respect to the
debtor, are laid down in the preceding article shall be applied to
the party who is bound to return x x x.”23

 
On the matter of the repurchase price, while petitioners
are obliged to reconvey Lot No. 88 to respondents, the
latter must return to the former what they received as just
compensation for the expropriation of the property, plus
legal interest to be computed from default, which in this
case runs from the time petitioners comply with their
obligation to respondents.
Respondents must likewise pay petitioners the
necessary expenses they may have incurred in maintaining
Lot No. 88,

_______________

23 Supra note 9, at 512-514.

 
 
636

as well as the monetary value of their services in managing

it to the extent that respondents were benefited thereby.
Following Article 118724 of the Civil Code, petitioners
may keep whatever income or fruits they may have
obtained from Lot No. 88, and respondents need not
account for the interests that the amounts they received as
just compensation may have earned in the meantime.
In accordance with Article 119025 of the Civil Code vis-à-
vis Article 1189, which provides that “(i)f a thing is
improved by its nature, or by time, the improvement shall
inure to the benefit of the creditor x x x,” respondents, as
creditors, do not have to pay, as part of the process of
restitution, the appreciation in value of Lot No. 88, which is
a natural consequence of nature and time.26
WHEREFORE, the petition is DENIED. The February
28, 2006 Decision of the Court of Appeals, affirming the
October 22, 1999 Decision of the Regional Trial Court,
Branch 87, Cebu City, and its February 7, 2007 Resolution
are AFFIRMED with MODIFICATION as follows:
_______________

24  Art.  1187.  The effects of a conditional obligation to give, once the
condition has been fulfilled, shall retroact to the day of the constitution of
the obligation. Nevertheless, when the obligation imposes reciprocal
prestations upon the parties, the fruits and interests during the pendency
of the condition shall be deemed to have been mutually compensated. x x
x.
25  Art.  1190.  When the conditions have for their purpose the
extinguishment of an obligation to give, the parties, upon the fulfillment
of said conditions, shall return to each other what they have received.
In case of the loss, deterioration or improvement of the thing, the
provisions which, with respect to the debtor, are laid down in the
preceding article (Article 1189) shall be applied to the party who is bound
to return.
26 Mactan-Cebu International Airport Authority v. Tudtud, supra note
22, at 177.

 
 
637

1.  Respondents are ORDERED to return to petitioners

the just compensation they received for the expropriation of
Lot No. 88, plus legal interest, in the case of default, to be
computed from the time petitioners comply with their
obligation to reconvey Lot No. 88 to them;
2.  Respondents are ORDERED to pay petitioners the
necessary expenses the latter incurred in maintaining Lot
No. 88, plus the monetary value of their services to the
extent that respondents were benefited thereby;
3.  Petitioners are ENTITLED to keep whatever fruits
and income they may have obtained from Lot No. 88; and
4.  Respondents are also ENTITLED to keep whatever
interests the amounts they received as just compensation
may have earned in the meantime, as well as the
appreciation in value of Lot No. 88, which is a natural
consequence of nature and time;
In light of the foregoing modifications, the case is
REMANDED to the Regional Trial Court, Branch 57, Cebu
City, only for the purpose of receiving evidence on the
amounts that respondents will have to pay petitioners in
accordance with this Court’s decision. No costs.
SO ORDERED.

Puno (C.J.), Carpio, Corona, Carpio-Morales, Velasco,

Jr., Leonardo-De Castro, Brion, Bersamin, Del Castillo,
Abad, Villarama, Jr., Perez and Mendoza, JJ., concur.
 Peralta, J., On Official Leave.

Petition denied, judgment and resolution affirmed with

modification.

Notes.—Time and again, the Court has declared that

eminent domain cases are to be strictly construed against
the expropriator. (San Roque Realty and Development
Corporation vs. Republic, 532 SCRA 493 [2007])

 
636

Where the proceedings before the trial court were not for
expropriation but for damages, Section 5, Rule 67 of the
Revised Rules of Court is irrelevant. (National Power
Corporation vs. Vda. De Capin, 569 SCRA 648 [2008])
 

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