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.

FACTS

The subject of the case is Lot No. 88, originally owned by Anastacio Deiparine and later acquired by respondent Bernardo L. Lozada, Sr. during the pendency of expropriation proceedings initiated by the Republic of the Philippines, represented by the Civil Aeronautics Administration (CAA, later ATO), for the expansion and improvement of the Lahug Airport. The trial court rendered judgment in favor of the Republic in 1961, ordering payment to Lozada. Pending appeal, the ATO proposed a compromise settlement whereby landowners would not appeal in consideration of a commitment that the expropriated lots would be resold at the expropriation price if the Lahug Airport was abandoned. Due to this promise, Lozada did not pursue his appeal, and title was transferred to the Republic. The airport expansion plan was never pursued. In 1989, President Corazon C. Aquino directed the transfer of operations from Lahug Airport to Mactan International Airport and the closure of Lahug Airport. The old airport was later converted into a commercial complex (Ayala I.T. Park), and Lot No. 88 was used for a jail and occupied by squatters. Respondents filed a complaint for recovery of possession and reconveyance, arguing the public purpose for expropriation had ceased. The RTC ruled in favor of respondents, ordering restoration of the lot upon repayment of the expropriation price. The CA affirmed the RTC decision.

ISSUE

Whether respondents are entitled to recover the expropriated property due to the non-realization or abandonment of the public purpose for which it was taken.

RULING

Yes. The Supreme Court denied the petition and affirmed the CA decision. The Court held that the right to recover the property arises when the purpose for the expropriation has ceased or the property is no longer devoted to public use. The expropriation in this case was conditional, intended solely for the expansion of Lahug Airport. Since this public purpose was not realized and the airport was eventually closed and the land converted to other uses (a commercial complex), the condition failed. The government’s title thus became conditional and subject to the right of repurchase by the former owners. The assurance given by the CAA Director, which induced respondents to withdraw their appeal, reinforced this conditional nature. The failure of the government to use the property for the intended public purpose for decades, coupled with its subsequent diversion to other uses, entitled respondents to recover the property upon reimbursement of the expropriation price. The defense of the Statute of Frauds was unavailing as the action was not for specific performance of an oral contract but for reconveyance based on the failure of the expropriation’s condition.