EL PROCESO DE MERCANTILIZACIÓN Y PRIVATIZACIÓN

FACTS

In the present case, 57 years have lapsed from the time the Decision in the subject expropriation proceedings became final, but still the Republic has not compensated the owner of the property.

In 1938, the Republic expropriated Lots 932 and 939 of the Banilad Friar Land Estate, Lahug, Cebu City, for the purpose of establishing a military reservation for the Philippine Army. Lot 932 was registered in the name of Gervasia Denzon with an area of 25,137 sq.m., while Lot 939 was in the name of Eulalia Denzon consisting of 13,164 sq.m. RP deposited the amount of P9,500 to PNB, while the CFI rendered its Decision ordering the Republic to pay the Denzons the sum of P4,062.10 as just compensation. The Denzons interposed an appeal to the CA but it was dismissed with an entry of judgment made on April 5, 1948.

In 1950, Galeos, one of the heirs of the Denzons, filed with the National Airports Corporation a claim for rentals for the two lots, but it “denied knowledge of the matter.” In 1961, Lt. Cabal rejected the claim but expressed willingness to pay the appraised value of the lots within a reasonable time.

For failure of the Republic to pay for the lots, on September 1961, the Denzons’ successors-in-interest, Valdehueza and Panerio, filed with the same CFI an action for recovery of possession with damages against the RP and officers of the AFP in possession of the property. In November 1961, titles covering Lots 932 and 939 were issued in the names of the said persons. With an Annotation “subject to the priority of the National Airports Corporation to acquire said parcels of land, Lots 932 and 939 upon previous payment of a reasonable market value.”

On July 1962, the CFI promulgated its Decision in favor of Valdehueza and Panerio, holding that they are the owners and have retained their right as such over Lots 932 and 939 because of the Republic’s failure to pay the amount of P4,062.10, adjudged in the expropriation proceedings. However, in view of the annotation on their land titles, they were ordered to execute a deed of sale in favor of the Republic. In view of “the differences in money value from 1940 up to the present,” the court adjusted the market value at P16,248.40, to be paid with 6% interest per annum from 1948, date of entry in the expropriation proceedings, until full payment. After their motion for reconsideration was denied, Valdehueza and Panerio appealed from the CFI Decision, in view of the amount in controversy, directly to this Court. On May 19, 1966, this Court rendered its Decision affirming the CFI Decision. It held that Valdehueza and Panerio are still the registered owners of Lots 932 and 939, there having been no payment of just compensation by the Republic.

It is true that plaintiffs are still the registered owners of the land, there not having been a transfer of said lots in favor of the Government. The records do not show that the Government paid the owners or their successors-in-interest according to the 1940 CFI decision although, as stated, P9,500.00 was deposited by it, and said deposit had been disbursed. With the records lost, however, it cannot be known who received the money (‘Vouchers and pertinent Journal and Cash Book were destroyed during the last World War,

Page | 48 and therefore the names of the payees concerned cannot be

ascertained.’) And the Government now admits that there is no available record showing that payment for the value of the lots in question has been made.

Meanwhile, in 1964, Valdehueza and Panerio mortgaged Lot 932 to Vicente Lim, as security for their loans. For their failure to pay Lim despite demand, he had the mortgage foreclosed in 1976. In 1992, respondent Lim filed a complaint for quieting of title with RTC, Cebu against General Zulueta, as Commander of the AFP. Subsequently, he amended the complaint to implead the Republic.

RTC rendered a decision in favor of respondent declaring Lim the absolute and exclusive owner of Lot No. 932 with all the rights of an absolute owner including the right to possession.

The expropriation proceedings had already become final in the late 1940’s and yet, up to now, the Republic had not yet paid the compensation fixed by the court while continuously reaping benefits from the expropriated property to the prejudice of the landowner. x x x. This is contrary to the rules of fair play because the concept of just compensation embraces not only the correct determination of the amount to be paid to the owners of the land, but also the payment for the land within a reasonable time from its taking. Without prompt payment, compensation cannot be considered “just” for the property owner is made to suffer the consequence of being immediately deprived of his land while being made to wait for a decade or more, in this case more than 50 years, before actually receiving the amount necessary to cope with the loss. To allow the taking of the landowners’ properties, and in the meantime leave them empty-handed by withholding payment of compensation while the government speculates on whether or not it will pursue expropriation, or worse, for government to subsequently decide to abandon the property and return it to the landowners, is undoubtedly an oppressive exercise of eminent domain that must never be sanctioned.

The SOLGEN filed with this Court a petition for review on certiorari alleging that the Republic has remained the owner of Lot as held by this Court in Valdehueza vs. Republic. SC denied the petition outright on the ground that the CA did not commit a reversible error. RP filed an urgent motion for reconsideration which was denied with finality in May 2004 which was again denied because of the finality of the decision. On October 2004, RP filed a very urgent motion for leave to file a motion for reconsideration for such decision with prayer to refer the case to the En Banc.

ISSUE

WON the Republic has retained ownership of Lot 932 despite its failure to pay just compensation pursuant to the judgment of the CFI in 1940.

RULING

CA decision is affirmed in toto. Petition is Denied.

One of the basic principles enshrined in our Constitution is that no person shall be deprived of his private property without due process of law; and in expropriation cases, an essential element of due process is that there must be just compensation whenever private property is taken for public use. Undoubtedly, over 50 years of delayed payment cannot, in any way, be viewed as fair. Apparent from the events is the fact that respondent’s predecessors-in-

interest were given a “run around” by the Republic’s officials and agents.

SC stated: Such prolonged obstinacy bespeaks of lack of respect to private rights and to the rule of law, which we cannot countenance. It is tantamount to confiscation of private property. While it is true that all private properties are subject to the need of government, and the government may take them whenever the necessity or the exigency of the occasion demands, however, the Constitution guarantees that when this governmental right of expropriation is exercised, it shall be attended by compensation.

The recognized rule is that title to the property expropriated shall pass from the owner to the expropriator only upon full payment of the just compensation.

“Title to property which is the subject of condemnation proceedings does not vest the condemnor until the judgment fixing just compensation is entered and paid, but the condemnor’s title relates back to the date on which the petition under the Eminent Domain Act, or the commissioner’s report under the Local Improvement Act, is filed.

The Republic’s acquisition of ownership is conditioned upon the full payment of just compensation within a reasonable time.

“x x x The first phase is the determination of the authority of the RP to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. The second phase of the eminent domain action is concerned with the determination by the court of “the just compensation for the property sought to be taken.” It is only upon the completion of these two stages that expropriation is said to have been completed. The doctrine that “non-payment of just compensation (in an expropriation proceedings) does not entitle the private landowners to recover possession of the expropriated lots is not availing in the facts of the present case where the Republic was ordered to pay just compensation twice, the first was in the expropriation proceedings and the second, in Valdehueza. Fifty-seven (57) years have passed since then. SC cannot but construe the Republic’s failure to pay just compensation as a deliberate refusal on its part. Under such circumstance, recovery of possession is in order.

It is no exaggeration to say that a person invoking a right guaranteed under Article III of the Constitution is a majority of one even as against the rest of the nation who would deny him that right.

Lot 932 had ceased to operate as an airport. What remains in the site is just the National Historical Institute’s marking stating that Lot 932 is the “former location of Lahug Airport.” There are only residence apartments of military personnel, with 2 buildings actually used as training centers therein. The reversion of Lot 932 to respondent will only affect a handful of military personnel and will not result to “irreparable damage” or “damage beyond pecuniary estimation.

The issue of whether or not LIM acted in bad faith is immaterial considering that the Republic did not complete the expropriation process. In short, it failed to perfect its title over Lot 932 by its failure to pay just compensation.

Here, the annotation merely served as a caveat that the Republic had a preferential right to acquire Lot 932 upon its payment of a “reasonable market value.” It did not proscribe Valdehueza and

Page | 49 Panerio from exercising their rights of ownership including their

right to mortgage or even to dispose of their property.

Therefore, until the action for expropriation has been completed and terminated, ownership over the property being expropriated remains with the registered owner. Consequently, the latter can exercise all rights pertaining to an owner, including the right to dispose of his property subject to the power of the State ultimately to acquire it through expropriation.

Where the government failed to pay just compensation within five (5) years from the finality of the judgment in the expropriation proceedings, the owners concerned shall have the right to recover possession of their property. This is in consonance with the principle that “the government cannot keep the property and dishonor the judgment.”To be sure, the five-year period limitation will encourage the government to pay just compensation punctually. This is in keeping with justice and equity.

ANUNCIACION VDA. DE OUANO, et al VS. THE REPUBLIC OF THE PHILIPPINES

[Feb. 09, 2011] FACTS:

This is a petition for Review on Certiorari on 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 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, NAC met and negotiated with the owners of the properties situated around the airport, severl lots 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 to file a complaint for the expropriation of the said lots entitled Republic v.

Damian Ouano, et al. The trial court ruled in favor of the Republic,

and in view of the adverted buy-back assurance made by the government, the owners of the lots no longer appealed such decision. 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,

were subsequently transferred to MCIAA.

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. The expropriated lots were never utilized for the purpose they were taken as no expansion of Lahug Airport was undertaken. This 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. Thus, civil suits followed. In a separate petition for reconveyance of parcels of land also part of the Lahug expansion, during its trial, the Inocians adduced

evidence which included the testimony of Atty. Uy, an employee of the CAA, testified that he was a member of the team which negotiated for the acquisition of certain lots for the proposed expansion of the Lahug Airport. He recounted that 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.

The CA, citing excerpts from Heirs of Moreno, 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." 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. Thus, MCIAA filed for this petition.

In the case of Ouano,, the CA stated that the decision in Civil Case No. R-1881 did not state any condition that Lot 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. CA also stated the inapplicability of the MCIAA v. Court of Appeals, 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. Thus, this petition.

ISSUES:

1. WON the testimonial evidence of the petitioners proving the promises, assurances and representations by the airport officials and lawyers are inadmissible under the Statute of Frauds

2. WON under the ruling of SC in the “Heirs of Moreno Case”, petitioners herein are entitled to recover their litigated property

RULING:

Petition of Ouano is meritorious while that of MCIAA is bereft of merit.

First, the MCIAA had not actually used the lots subject of the final

decree of expropriation for the purpose they were originally taken

by the government.

Second, the Lahug Airport had been closed and abandoned. A

significant portion of it had, in fact, been purchased by a private corporation for development as a commercial complex.

Third, it has been preponderantly established by evidence that the

NAC, through its team of negotiators, had given assurance to the affected landowners that they would be entitled to repurchase their respective lots in the event they are no longer used for airport purposes. The Court noted in Heirs of Moreno, "No less than UY, one of the members of the 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

Page | 50 to Mactan, the lot owners would be able to reacquire their

properties."[

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. 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.

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. The project--the public purpose 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 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 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