SECOND DIVISION

[G.R. No. 156273. October 15, 2003.]

HEIRS OF TIMOTEO MORENO and MARIA ROTEA, namely:

ESPERANZA R. EDJEC, BERNARDA R. SUELA, RUBY C.
ROTEA, BERNARDA R. ROTEA, ELIA R. VDA. DE LIMBAGA,
VIRGINIA R. ARBON, ROSALINDA R. ARQUISOLA,
CORAZON ROTEA, FE R. EBORA, CARIDAD ROTEA,
ANGELES VDA. DE RENACIA, JORGE ROTEA, MARIA LUISA
ROTEA-VILLEGAS, ALFREDO R. ROTEA, represented by his
heirs LIZBETH ROTEA and ELEPETH ROTEA; LUIS ROTEA,
represented by his heir JENNIFER ROTEA; and ROLANDO
R. ROTEA, represented by his heir ROLANDO R. ROTEA
JR.,petitioners, vs. MACTAN — CEBU INTERNATIONAL
AIRPORT AUTHORITY, respondent.

Lawrence L. Fernandez for petitioners.

The Solicitor General for respondent.

SYNOPSIS

In 1949, the National Airport Corporation, as the predecessor agency of

respondent Mactan-Cebu International Airport Authority (MCIAA), wanted to
acquire Lots Nos. 916 and 920 for the proposed expansion of the Lahug Airport.
To entice the landowners to cede their properties, the government assured them
that they could repurchase their lands once Lahug Airport was closed or its
operations transferred to Mactan Airport. Petitioners are the successors-in-
interest of the former registered owners of the subject land situated in Lahug,
Cebu City. The subject lots were eventually expropriated and new certificates of
title were issued in the name of the Republic of the Philippines and were later
transferred in favor of respondent MCIAA. At the end of 1991, Lahug Airport
ceased operations as the Mactan Airport was opened for incoming and outgoing
flights. Petitioners then wrote President Fidel V. Ramos and the airport manager
begging them for the exercise of their alleged right to repurchase Lots Nos. 916
and 920. Their pleas were not heeded. Petitioners then filed a complaint for
reconveyance and damages with RTC of Cebu City against respondent MCIAA to
compel the repurchase of Lots Nos. 916 and 920. The trial court found merit in
the claims of petitioners and granted them the right to repurchase the properties
at the amount pegged as just compensation, but subject to the alleged property
rights of a certain Richard E. Enchuan and the leasehold of the Department of
Public Works and Highways (DPWH). acHDTA

Hence, the petition.

The Supreme Court granted the petition. According to the Court, while the trial
court in the civil case 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, the 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." The
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-a-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 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. 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
Court ordered respondent Mactan-Cebu International Airport Authority to
reconvey to petitioners the subject lots with all the improvements thereon
evolving through nature or time, but excluding those that were introduced by
third parties, i. e., DPWH, which shall be governed by existing contracts and
relevant provisions of law. The Court also remanded the case to the trial court
for purposes of determining the amount of compensation for Lots Nos. 916 and
920 to be paid by petitioners.

SYLLABUS

1.POLITICAL LAW; EMINENT DOMAIN; THE MEANINGFUL STATEMENTS IN THE

BODY OF THE TRIAL COURT'S DECISION WARRANT THE CONCLUSION THAT
THE EXPROPRIATED PROPERTIES WOULD REMAIN TO BE SO UNTIL IT WAS
CONFIRMED THAT THE LAHUG AIRPORT WAS NO LONGER "IN OPERATION". —
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. 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 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-a-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 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.SIacTE

2.REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; FINAL AND EXECUTORY;

THE PRESENT READING OF THE FALLO OF THE DECISION IN CIVIL CASE NO.
R-4891 SO AS TO INCLUDE THE STATEMENTS IN THE BODY THEREOF IS
SANCTIONED BY THE RULE THAT A FINAL AND EXECUTORY JUDGMENT MAY
NONETHELESS BE CLARIFIED BY REFERENCE TO OTHER PORTIONS OF THE
DECISION OF WHICH IT FORMS PART. — To sum up what we have said so far,
the attendance in the case at bar of standing admissible evidence validating the
claim of petitioners as well as the portions above-quoted of the Decision in the
expropriation case volunteered no less than by respondent itself, takes this case
away from the ambit of Mactan-Cebu International Airport Authority v. Court of
Appeals but within the principles enunciated in Fery as mentioned earlier. In
addition, there should be no doubt that our present reading of the fallo of
the Decision in Civil Case No. R-1881 so as to include the statements in the body
thereof afore-quoted is sanctioned by the rule that a final and executory
judgment may nonetheless be "clarified" by reference to other portions of the
decision of which it forms a part.aIAHcE

3.POLITICAL LAW; EMINENT DOMAIN; 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 THE "LAHUG AIRPORT WILL CONTINUE TO
BE IN OPERATION" WHEN IT GRANTED THE COMPLAINT FOR EMINENT
DOMAIN. — 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 Nos. 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. AEIDTc

4.CIVIL LAW; TRUST; CONSTRUCTIVE TRUST; PRINCIPLE THEREOF

APPLICABLE IN CASE AT BAR. — 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 trusts 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 unyielding formula when they are used by courts as devices to
remedy any situation in which the holder of the 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.TEDHaA

5.ID.; ID.; ID.; RIGHTS AND OBLIGATIONS OF PETITIONERS AND

RESPONDENT AS BENEFICIARY AND CONSTRUCTIVE TRUSTEE, RESPECTIVELY.
— 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 . . . 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 . . ." Hence,
respondent MCIAA as representative of the State is obliged to reconvey Lots Nos.
916 and 920 to petitioners who shall hold the same subject to existing liens
thereon, i.e., leasehold right of DPWH. In return, petitioners as if they were
plaintiff beneficiaries of a constructive trust must restore to respondent MCIAA
what they received as just compensation for the expropriation of Lots Nos. 916
and 920 in Civil Case No. R-1881, i.e., P7,065.00 for Lot No. 916 and P9,291.00
for Lot No. 920 with consequential damages by way of legal interest from 16
November 1947. Petitioners must likewise pay respondent MCIAA the necessary
expenses it may have incurred in sustaining the properties and the monetary
value of its services in managing them to the extent that petitioners will be
benefited thereby. The government however may keep whatever income or fruits
it may have obtained from the parcels of land, in the same way that petitioners
need not account for the interests that the amounts they received as just
compensation may have earned in the meantime. As a matter of justice and
convenience, the law considers the fruits and interests as the equivalent of each
other. HECaTD
6.ID.; OBLIGATIONS; CONDITIONAL OBLIGATIONS; THE IMPROVEMENTS ON
THE SUBJECT LOTS SHALL BE GOVERNED BY ARTICLE 1189 OF THE CIVIL
CODE. — Under Art. 1189 of the Civil Code, "If the thing is improved by its
nature, or by time, the improvement shall inure to the benefit of the creditor . . .
" the creditor being the person who stands to receive something as a result of
the process of restitution. Consequently, petitioners as creditors do not have to
settle as part of the process of restitution the appreciation in value of Lots Nos.
916 and 920 which is the natural consequence of nature and time. Petitioners
need not also pay for improvements introduced by third parties, i.e., DPWH, as
the disposition of these properties is governed by existing contracts and relevant
provisions of law. As for the improvements that respondent MCIAA may have
made on Lots Nos. 916 and 920, if any, petitioners must pay respondent their
prevailing free market price in case petitioners opt to buy them and respondent
decides to sell. In other words, if petitioners do not want to appropriate such
improvements or respondent does not choose to sell them, the improvements
would have to be removed without any obligation on the part of petitioners to
pay any compensation to respondent MCIAA for whatever it may have tangibly
introduced therein.aETDIc

7.CIVIL LAW; DAMAGES; ATTORNEY'S FEES; DELETED IN CASE AT BAR; NO

PROOF WAS PRESENTED BY PETITIONER TO SHOW THAT THE ACTUATIONS OF
RESPONDENT WERE CLEARLY UNFOUNDED AND PURELY FOR PURPOSES OF
HARASSMENT; IT IS NOT SOUND PUBLIC POLICY TO SET A PREMIUM ON THE
RIGHT TO LITIGATE WHERE SUCH RIGHT IS EXERCISED IN GOOD FAITH. —
We delete the award of P860,000.00 for attorney's fees and P15,000.00 for
litigation expenses in favor of petitioners as decreed in the assailed Decision of
12 April 1999 of the trial court. It is not sound public policy to set a premium
upon the right to litigate where such right is exercised in good faith, as in the
present case, albeit the decision to resist the claim is erroneous. In the case at
bar, considering the established absence of any stipulation regarding attorney's
fees, the trial court cannot base its award on any of the exceptions enumerated
in Art. 2208. The records of the instant case do not disclose any proof presented
by petitioners to substantiate that the actuations of respondent MCIAA were
clearly unfounded or purely for the purpose of harassment; neither does the trial
court make any finding to that effect in its appealed Decision. While Art. 2208,
par. (4), allows attorney's fees in cases of clearly unfounded civil actions, this
exception must be understood to mean those where the defenses are so
untenable as to amount to gross and evident bad faith. Evidence must be
presented to the court as to the facts and circumstances constituting the alleged
bad faith, otherwise, the award of attorney's fees is not justified where there is
no proof other than the bare statement of harassment that a party to be so
adjudged had acted in bad faith. The exercise of judicial discretion in the award
of attorney's fees under Art. 2208, par. (11), demands a factual, legal or
equitable justification that would bring the case within the exception and justify
the grant of such award. STCDaI

DECISION

BELLOSILLO, J : p

THE HEIRS OF TIMOTEO MORENO AND MARIA ROTEA, petitioners herein, are
the successors-in-interest of the former registered owners of two (2) parcels of
land situated in Lahug, Cebu City, designated as Lot No. 916 with an area of
2,355 square meters under TCT No. RT-7543 (106) T-13694, and Lot No. 920
consisting of 3,097 square meters under TCT No. RT-7544 (107) T-13695. 1

In 1949 the National Airport Corporation as the predecessor agency of

respondent Mactan-Cebu International Airport Authority (MCIAA) wanted to
acquire Lots Nos. 916 and 920 above described among other parcels of land for
the proposed expansion of Lahug Airport. 2 To entice the landowners to cede
their properties, the government assured them that they could repurchase their
lands once Lahug Airport was closed or its operations transferred to Mactan
Airport. 3 Some of the landowners executed deeds of sale with right of
repurchase in favor of the government but many others, including the owners of
Lots Nos. 916 and 920 herein mentioned, refused the offer because the payment
was perceived to be way below the market price. 4

On 16 April 1952, as the negotiations for the purchase of the lots necessary for
the expansion and improvement of Lahug Airport irredeemably broke down, the
Civil Aeronautics Administration as the successor agency of the National Airport
Corporation filed a complaint with the Court of First Instance of Cebu, for the
expropriation of Lots Nos. 916 and 920 and other subject realties, docketed as
Civil Case No. R-1881.

On 29 December 1961 the trial court promulgated its Decision in Civil Case No.
R-1881 condemning Lots Nos. 916 and 920 and other lots for public use upon
payment of just compensation. 5 Petitioners' predecessors were paid P7,065.00
for Lot No. 916 and P9,291.00 for Lot No. 920 with consequential damages by
way of legal interest from 16 November 1947. No appeal was taken from
the Decision on Lots Nos. 916 and 920, and the judgment of condemnation
became final and executory. 6Thereafter, the certificates of title for these parcels
of land were issued in the name of the Republic of the Philippines under TCT No.
58691 for Lot No. 916 and TCT No. 58692 for Lot No. 920, which under RA 6958
(1990) were subsequently transferred in favor of respondent MCIAA. 7

At the end of 1991, or soon after the transfer of Lots Nos. 916 and 920 to
MCIAA, Lahug Airport ceased operations as the Mactan Airport was opened for
incoming and outgoing flights. 8 Lots Nos. 916 and 920 which had been
expropriated for the extension of Lahug Airport were not utilized. 9 In fact, no
expansion of Lahug Airport was undertaken by MCIAA and its predecessors-in-
interest. 10 Hence, petitioners wrote then President Fidel V. Ramos and the
airport manager begging them for the exercise of their alleged right to
repurchase Lots Nos. 916 and 920. 11 Their pleas were not heeded. 12

On 11 March 1997 petitioners filed a complaint for reconveyance and damages

with RTC of Cebu City against respondent MCIAA to compel the repurchase of
Lots Nos. 916 and 920, docketed as Civil Case No. CEB-20015. In the main,
petitioners averred that they had been convinced by the officers of the
predecessor agency of respondent MCIAA not to oppose the expropriation
proceedings since in the future they could repurchase the properties if the airport
expansion would not push through. MCIAA did not object to petitioners' evidence
establishing these allegations.

When the civil case was pending, one Richard E. Enchuan filed a Motion for
Transfer of Interest alleging that he acquired through deeds of assignment the
rights of some of herein petitioners over Lots Nos. 916 and 920. 13 The
Department of Public Works and Highways (DPWH) also sought to intervene in
the civil case claiming that it leased in good faith Lot No. 920 from the
predecessor agencies of respondent MCIAA and that it built thereon its Regional
Equipment Services and its Region 7 Office. 14

On 12 April 1999 the trial court found merit in the claims of petitioners and
granted them the right to repurchase the properties at the amount pegged as
just compensation in Civil Case No. R-1881 but subject to the alleged property
rights of Richard E. Enchuan and the leasehold of DPWH. 15 The trial court opined
that the expropriation became illegal or functus officio when the purpose for
which it was intended was no longer there. 16

Respondent MCIAA appealed the Decision of the trial court to the Court of
Appeals, docketed as CA-G.R. CV No. 64456.
On 20 December 2001 the Court of Appeals reversed the assailed Decision on
the ground that the judgment of condemnation in Civil Case No. R-1881 was
unconditional so that the rights gained therefrom by respondent MCIAA were
indicative of ownership in fee simple. 17 The appellate court cited Fery
v. Municipality of Cabanatuan 18 which held that mere deviation from the public
purpose for which the power of eminent domain was exercised does not justify
the reversion of the property to its former owners, and Mactan-Cebu
International Airport Authority v. Court of Appeals 19 which is allegedly stare
decisis to the instant case to prevent the exercise of the right of repurchase as
the former dealt with a parcel of land similarly expropriated under Civil Case No.
R-1881. 20

On 28 November 2002 reconsideration of the Decision was denied. 21 Hence, this

petition for review. ADECcI

Petitioners argue that Fery v. Municipality of Cabanatuan does not apply to the
case at bar since what was involved therein was the "right of reversion" and not
the "right of repurchase" which they are invoking. They also
differentiate Mactan-Cebu International Airport Authority v. Court of
Appeals 22 from the instant case in that the landowners in the MCIAA case
offered inadmissible evidence to show their entitlement to a right of repurchase,
while petitioners herein offered evidence based on personal knowledge for which
reason MCIAA did not object and thus waived whatever objection it might have
had to the admissibility thereof. Finally, petitioners allege that their right to equal
protection of the laws would be infringed if some landowners are given the right
to repurchase their former properties even as they are denied the exercise of
such prerogative.

On the other hand, respondent MCIAA clings to our decisions in Fery

v. Municipality of Cabanatuan and Mactan-Cebu International Airport Authority
v. Court of Appeals. According to respondent MCIAA "there is only one instance
when expropriated land may be repurchased by its previous owners, and that is,
if the decision of expropriation itself provides [the] condition for such
repurchase." Respondent asserts that the Decision in Civil Case No. R-1881 is
absolute and without conditions, thus, no repurchase could be validly exercised.

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 venture. 23 Some acted on this assurance and sold
their properties; 24 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 the judgment of
condemnation if the same right of repurchase was extended to them. 25 A
handful failed to prove that they acted on such assurance when they parted with
the ownership of their lands. 26

In resolving this dispute, we must reckon with the rulings of this Court in Fery
v. Municipality of Cabanatuan and Mactan-Cebu International Airport Authority
v. Court of Appeals, which define the rights and obligations of landowners whose
properties were expropriated when the public purpose for which eminent domain
was exercised no longer subsists. In Fery, which was cited in the recent case
of Reyes v. Court of Appeals, 27 we 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 . . . 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
. . . 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, sunless there is some statutory provision to
the contrary . . . 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 . . . 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 rights 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 . . . 28

In Mactan-Cebu International Airport Authority, respondent Chiongbian sought to

enforce an alleged right of repurchase over her properties that had been
expropriated in Civil Case No. R-1881. This Court did not allow her to adduce
evidence of her claim, for to do so would unsettle as to her properties the
judgment of condemnation in the eminent domain proceedings. We also held
therein that Chiongbian's evidence was both inadmissible and lacking in
probative value —

The terms of the judgment are clear and unequivocal and grant title to
Lot No. 941 in fee simple to the Republic of the Philippines. There was
no condition imposed to the effect that the lot would return to
CHIONGBIAN or that CHIONGBIAN 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.
CHIONGBIAN cannot rely on the ruling in Mactan-Cebu International
Airport vs. Court of Appeals wherein the presentation of parol evidence
was allowed to prove the existence of a written agreement containing
the right to repurchase. Said case did not involve expropriation
proceedings but a contract of sale . . . To permit CHIONGBIAN to prove
the existence of a compromise settlement which she claims to have
entered into with the Republic of the Philippines prior to the rendition of
judgment in the expropriation case would result in a modification of the
judgment of a court which has long become final and executory . . . And
even assuming for the sake of argument that CHIONGBIAN could prove
the existence of the alleged written agreement acknowledging her right
to repurchase Lot No. 941 through parol evidence, the Court of Appeals
erred in holding that the evidence presented by CHIONGBIAN was
admissible . . . Aside from being inadmissible tinder the provisions of the
Statute of Frauds, [the] testimonies are also inadmissible for being
hearsay in nature . . . 29

We adhere to the principles enunciated in Fery and in Mactan-Cebu International

Airport Authority, and do not overrule them. Nonetheless the weight of their
import, particularly our ruling as regards the properties of respondent Chiongbian
in Mactan-Cebu International Airport Authority, must be commensurate to the
facts that were established therein as distinguished from those extant in the case
at bar. Chiongbian put forth inadmissible and inconclusive evidence, while in the
instant case we have preponderant proof as found by the trial court of the
existence of the right of repurchase in favor of petitioners.

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). 30

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 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 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. 31

Significantly, in light of the discussion above, the admission of petitioners during

the pre-trial of Civil Case No. CEB-20015 for reconveyance and damages that
respondent MCIAA was the absolute owner of Lots Nos. 916 and 920 does not
prejudice petitioners' interests. This is as it should be not only because the
admission concerns a legal conclusion fiercely debated by the parties 32 but more
so since respondent was truly the absolute owner of the realties until it was
apparent that Lahug Airport had stopped doing business. DHEcCT

To sum up what we have said so far, the attendance in the case at bar of
standing admissible evidence validating the claim of petitioners as well as the
portions above-quoted of the Decision in the expropriation case volunteered no
less than by respondent itself, takes this case away from the ambit of Mactan-
Cebu International Airport Authority v. Court of Appeals 33 but within the
principles enunciated in Fery as mentioned earlier. In addition, there should be
no doubt that our present reading of the fallo of the Decision in Civil Case No. R-
1881 so as to include the statements in the body thereof afore-quoted is
sanctioned by the rule that a final and executory judgment may nonetheless be
"clarified" by reference to other portions of the decision of which it forms a part.
In Republic v. De Los Angeles 34we ruled —

This Court has promulgated many cases . . . wherein it was held that a
judgment must not be read separately but in connection with the other
portions of the decision of which it forms a part. Hence . . . the decision
of the court below should be taken as a whole and considered in its
entirety to get the true meaning and intent of any particular portion
thereof . . . Neither is this Court inclined to confine itself to a reading of
the said fallo literally. On the contrary, the judgment portion of a
decision should be interpreted and construed in harmony with the ratio
decidendi thereof . . . As stated in the case of Policarpio vs.Philippine
Veterans Board, et al., supra, to get the true intent and meaning of a
decision, no specific portion thereof should be resorted to but the same
must be considered in its entirety. Hence, a resolution or ruling may and
does appear in other parts of the decision and not merely in
the fallo thereof . . . The foregoing pronouncements find support in the
case of Locsin, et al. vs. Paredes, et al., 63 Phil., 87, 91-92, wherein this
Court allowed a judgment that had become final and executory to be
"clarified" by supplying a word which had been inadvertently omitted
and which, when supplied, in effect changed the literal import of the
original phraseology . . . This is so because, in the first place, if an
already final judgment can still be amended to supply an omission
committed through oversight, this simply means that in the construction
or interpretation of an already final decision, the fallo or dispositive
portion thereof must be correlated with the body of such final decision .
. . [I]f an amendment may be allowed after a decision has already
become final . . . such amendment may consist . . . either in the . . .
interpretation of an ambiguous phrase therein in relation to the body of
the decision which gives it life. 35

We now resolve to harmonize the respective rights of the State and petitioners to
the expropriated Lots Nos. 916 and 920.

Mactan-Cebu International Airport Authority 36 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 37 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 Nos. 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 trusts 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." 38 Constructive trusts are fictions of equity which are bound by no
unyielding formula when they are used by courts as devices to remedy any
situation in which the holder of the legal title may not in good conscience retain
the beneficial interest. 39

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. 40 Of course, the "wronged party seeking the aid of a court
of equity in establishing a constructive trust must himself do
equity." 41 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. 42 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. 43

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 . . . 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 . . ."

Hence, respondent MCIAA as representative of the State is obliged to reconvey

Lots Nos. 916 and 920 to petitioners who shall hold the same subject to existing
liens thereon, i.e., leasehold right of DPWH. In return, petitioners as if they were
plaintiff-beneficiaries of a constructive trust must restore to respondent MCIAA
what they received as just compensation for the expropriation of Lots Nos. 916
and 920 in Civil Case No. R-1881, i.e., P7,065.00 for Lot No. 916 and P9,291.00
for Lot No. 920 with consequential damages by way of legal interest from 16
November 1947. Petitioners must likewise pay respondent MCIAA the necessary
expenses it may have incurred in sustaining the properties and the monetary
value of its services in managing them to the extent that petitioners will be
benefited thereby. The government however may keep whatever income or fruits
it may have obtained from the parcels of land, in the same way that petitioners
need not account for the interests that the amounts they received as just
compensation may have earned in the meantime. As a matter of justice and
convenience, the law considers the fruits and interests as the equivalent of each
other. 44

Under Art. 1189 of the Civil Code, "If the thing is improved by its nature, or by
time, the improvement shall inure to the benefit of the creditor . . .," the creditor
being the person who stands to receive something as a result of the process of
restitution. Consequently, petitioners as creditors do not have to settle as part of
the process of restitution the appreciation in value of Lots Nos. 916 and 920
which is the natural consequence of nature and time. aSCDcH

Petitioners need not also pay for improvements introduced by third parties, i.e.,
DPWH, as the disposition of these properties is governed by existing contracts
and relevant provisions of law. As for the improvements that respondent MCIAA
may have made on Lots Nos. 916 and 920, if any, petitioners must pay
respondent their prevailing free market price in case petitioners opt to buy them
and respondent decides to sell. In other words, if petitioners do not want to
appropriate such improvements or respondent does not choose to sell them, the
improvements would have to be removed without any obligation on the part of
petitioners to pay any compensation to respondent MCIAA for whatever it may
have tangibly introduced therein. 45

The medium of compensation for the restitution shall be ready money or cash
payable within a period of three hundred sixty five (365) days from the date that
the amount to be returned by petitioners is determined with finality, unless the
parties herein stipulate and agree upon a different scheme, medium or schedule
of payment. If after the period of three hundred sixty five (365) days or the
lapse of the compromise scheme or schedule of payment such amount owed is
not settled, the right of repurchase of petitioners and the obligation of
respondent MCIAA to reconvey Lots Nos. 916 and 920 and/or the latter's
improvements as set forth herein shall be deemed forfeited and the ownership of
those parcels of land shall vest absolutely upon respondent MCIAA.

Finally, we delete the award of P60,000.00 for attorney's fees and P15,000.00 for
litigation expenses in favor of petitioners as decreed in the assailed Decision of
12 April 1999 of the trial court. It is not sound public policy to set a premium
upon the right to litigate where such right is exercised in good faith, as in the
present case, albeit the decision to resist the claim is erroneous. 46

The rule on awards of attorney's fees and litigation expenses is found in Art.
2208 of the Civil Code —

In the absence of stipulation, attorney's fees and expenses of litigation,

other than judicial costs, cannot be recovered, except:

(1)When exemplary damages are awarded;

(2)When the defendant's act or omission has compelled the plaintiff to

litigate with third persons or to incur expenses to protect his interests;

(3)In criminal cases of malicious prosecution against the plaintiff;

 (4)In case of a clearly unfounded civil action or proceeding against the
plaintiff;

(5)Where the defendant acted in gross and evident bad faith in refusing
to satisfy the plaintiff's valid and demandable claim;

(6)In actions for legal support;

(7)In actions for the recovery of wages of household helpers, laborers

and skilled workers;

(8)In actions for indemnity under workmen's compensation and

employer's liability laws;

(9)In a separate civil action to recover civil liability arising from a crime;

(10)When at least double judicial costs are awarded;

(11)In any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be

reasonable.

As noted in Mirasol v. De la Cruz, 47 Art. 2208 intends to retain the award of

attorney's fees as the exception in our law and the general rule remains that
attorney's fees are not recoverable in the absence of a stipulation thereto.

In the case at bar, considering the established absence of any stipulation

regarding attorney's fees, the trial court cannot base its award on any of the
exceptions enumerated in Art. 2208. The records of the instant case do not
disclose any proof presented by petitioners to substantiate that the actuations of
respondent MCIAA were clearly unfounded or purely for the purpose of
harassment; neither does the trial court make any finding to that effect in its
appealed Decision.

While Art. 2208, par. (4), allows attorney's fees in cases of clearly unfounded
civil actions, this exception must be understood to mean those where the
defenses are so untenable as to amount to gross and evident bad faith. Evidence
must be presented to the court as to the facts and circumstances constituting
the alleged bad faith, otherwise, the award of attorney's fees is not justified
where there is no proof other than the bare statement of harassment that a
party to be so adjudged had acted in bad faith. The exercise of judicial discretion
in the award of attorney's fees under Art. 2208, par. (11), demands a factual,
legal or equitable justification that would bring the case within the exception and
justify the grant of such award.

WHEREFORE, the instant Petition for Review is GRANTED. The Decision of the
Court of Appeals in CA-G.R. CV No. 64456 dated 20 December 2001 and
its Resolutionof 28 November 2002 denying reconsideration of the Decision are
REVERSED and SET ASIDE.

The Decision of RTC-Br. 19 of Cebu City dated 12 April 1999 in Civil Case No.
CEB-20015 is MODIFIED IN PART by —

(a)ORDERING respondent Mactan-Cebu International Airport Authority (MCIAA)

TO RECONVEY to petitioner Heirs of Timoteo Moreno and Maria Rotea, namely:
Esperanza R. Edjec, Bernarda R. Suela, Ruby C. Rotea, Bernarda R. Rotea, Elia
R. Vda De Limbaga, Virginia R. Arbon, Rosalinda R. Arquisola, Corazon Rotea, Fe
R. Ebora, Caridad Rotea, Angeles Vda. De Renacia, Jorge Rotea, Maria Luisa
Rotea-Villegas, Alfredo R. Rotea, represented by his heirs, namely: Lizbeth Rotea
and Elepeth Rotea; Luis Rotea, represented by his heir Jennifer Rotea; and
Rolando R. Rotea, represented by his heir Rolando R. Rotea Jr., Lot No. 916 with
an area of 2,355 square meters and Lot No. 920 consisting of 3,097 square
meters in Lahug, Cebu City, with all the improvements thereon evolving through
nature or time, but excluding those that were introduced by third parties, i.e.,
DPWH, which shall be governed by existing contracts and relevant provisions of
law;

(b)ORDERING petitioner Heirs of Timoteo Moreno and Maria Rotea TO PAY

respondent MCIAA what the former received as just compensation for the
expropriation of Lots Nos. 916 and 920 in Civil Case No. R-1881, i.e., P7,065.00
for Lot No. 916 and P9,291.00 for Lot No. 920 with consequential damages by
way of legal interest from 16 November 1947. Petitioners must likewise PAY
respondent MCIAA the necessary expenses that the latter may have incurred in
sustaining the properties and the monetary value of its services in managing the
properties to the extent that petitioners will secure a benefit from such acts.
Respondent MCIAA however may keep whatever income or fruits it may have
obtained from the parcels of land, in the same way that petitioners need not
account for the interests that the amounts they received as just compensation
may have earned in the meantime;

(c)ORDERING respondent MCIAA TO CONVEY to petitioners the improvements it

may have built on Lots Nos. 916 and 920, if any, in which case petitioners SHALL
PAY for these improvements at the prevailing free market price, otherwise, if
petitioners do not want to appropriate such improvements, or if respondent does
not choose to sell them, respondent MCIAA SHALL REMOVE these improvements
WITHOUT ANY OBLIGATION on the part of petitioners to pay any compensation
to respondent MCIAA for them; ESDHCa

(d)ORDERING petitioners TO PAY the amount so determined under letter (b) of

this dispositive portion as consideration for the reconveyance of Lots Nos. 916
and 920, as well as the prevailing free market price of the improvements built
thereon by respondent MCIAA, if any and desired to be bought and sold by the
parties, in ready money or cash PAYABLE within a period of three hundred sixty
five (365) days from the date that the amount under letter (b) above is
determined with finality, unless the parties herein stipulate a different scheme or
schedule of payment, otherwise, after the period of three hundred sixty five
(365) days or the lapse of the compromise scheme or schedule of payment and
the amount so payable is not settled, the right of repurchase of petitioners and
the obligation of respondent MCIAA to so reconvey Lots Nos. 916 and 920 and/or
the improvements shall be DEEMED FORFEITED and the ownership of those
parcels of land shall VEST ABSOLUTELY upon respondent MCIAA;

(e)REMANDING the instant case to RTC-Br. 19 of Cebu City for purposes of

determining the amount of compensation for Lots Nos. 916 and 920 to be paid
by petitioners as mandated in letter (b) hereof, and the value of the prevailing
free market price of the improvements built thereon by respondent MCIAA, if any
and desired to be bought and sold by the parties, and in general, securing the
immediate execution of this Decision under the premises;

(f)ORDERING petitioners to respect the right of the Department of Public Works

and Highways to its lease contract until the expiration of the lease period; and

(g)DELETING the award of P60,000.00 for attorney's fees and P15,000.00 for
litigation expenses against respondent MCIAA and in favor of petitioners.

This Decision is without prejudice to the claim of intervenor one Richard E.

Enchuan on his allegation that he acquired through deeds of assignment the
rights of some of herein petitioners over Lots Nos. 916 and 920.

No costs.

SO ORDERED.

Quisumbing, Austria-Martinez, Callejo, Sr. and Tinga, JJ ., concur.

Footnotes

1.Rollo, pp. 15, 75–78.

2.Id., p. 154.

3.Ibid.

4.Id., p. 68.

5.Decision penned by Judge Mateo Canonoy, RTC-Br. 3, Cebu City; Rollo, pp. 84–110.

6.Rollo, p. 17.

7.Id., pp. 17, 79–82.

8.Id., p. 154.

9.Id., p. 157.

10.Ibid.; see also Mactan-Cebu International Airport Authority v. Court of Appeals,

G.R. No. 139495, 27 November 2000, 346 SCRA 126.

11.Rollo, pp. 82–83.

12.Id., p. 71.

13.Id., p. 52.

14.Ibid.

15.Decision penned by Judge Ramon G. Codilla Jr., RTC-Br. 19, Cebu City, Rollo, pp.
149–159.

16.Rollo, pp. 157–158.

17.Decision penned by Associate Justice Portia Aliño-Hormachuelos, concurred in by

Associate Justices Eriberto U. Rosario Jr. and Amelita G. Tolentino, Seventeenth
Division; Rollo, pp. 48–63.

18.42 Phil. 28 (1921).

19.See Note 10.

20.Rollo, pp. 56–63.

21.Resolution penned by Associate Justice Portia Aliño-Hormachuelos, concurred in by
Associate Justices Buenaventura J. Guerrero and Amelita G. Tolentino, Special
Former Seventeenth Division; Rollo, pp. 63–65.

22.See Note 10.

23.Mactan-Cebu International Airport Authority v. Court of Appeals, G.R. No. 121506,

30 October 1996, 263 SCRA 736.

24.Ibid.

25.Ibid; Republic v. Escaño, CA-G.R. No. 33045-R, 27 July 1964 as cited in Mactan-
Cebu International Airport Authority v. Court of Appeals, G.R. No. 139495, 27
November 2000, 346 SCRA 126.

26.See Note 10.

27.G.R. No. 147511, 20 January 2003.

28.42 Phil. 28, 29–30 (1921).

29.G.R. No. 139495, 27 November 2000, 346 SCRA, 126, 135–137.

30.Rollo, p. 224; Comment of the Solicitor General, p. 22.

31.Rosales v. Court of Appeals, G.R. No. 137566, 28 February 2001, 353 SCRA
179; People v. Lacbayan, G.R. No. 125006, 31 August 2000, 339 SCRA 396.

32.See Mercy's Incorporated v. Verde, No. L-21571, 29 September 1966, 18 SCRA

171.

33.See Note 10.

34.No. L-26112, 4 October 1971, 41 SCRA 422.

35.Id., pp. 441–446.

36.See Note 10.

37.The statutory enumeration of implied trusts in the Civil Code is not exclusive,
hence, Art. 1447 of the Civil Code provides "The enumeration of the following
cases of implied trust does not exclude others established by the general law of
trust, but the limitation laid down in article 1442 shall be applicable."

38.G.G. Bogert, Handbook of the Law of Trusts, 210 (1963).

39.Id., pp. 208–209.

40.Id., pp. 209–210.

41.Id., p. 209.

42.Ibid.

43.Ibid.

44.Civil Code, 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. If the obligation is
unilateral, the debtor shall appropriate the fruits and interests received, unless
from the nature and circumstances of the obligation it should be inferred that
the intention of the person constituting the same was different."

45.See Coleongco v. Regalado, 92 Phil. 387 (1952).

46.Mirasol v. De la Cruz, No. L-32552, 31 July 1978, 84 SCRA 337.

47.Ibid.