FACTS:

Petitioners owned (2) parcels of land. In 1949 MCIAA wanted to lots of petitioners for the proposed expansion of 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. On December 1961 the RTC promulgated its Decision condemning lots of petitioner and other lots for public use upon payment of just compensation. Petitioners were paid. At the end of 1991 Lahug Airport ceased operations. Lots of petitioners which had been expropriated for the extension of Lahug Airport were not utilized. In fact, no expansion of Lahug Airport was undertaken by MCIAA. On March 1997 petitioners filed a complaint for reconveyance and damages with RTC against respondent MCIAA to compel the repurchase of their lots.

ISSUE:

Must just compensation include interest? How much?

RULING:

NO, only if property is taken for public use before compensation is deposited with the court having jurisdiction over the case, the final compensation must include interests on its just value to be computed from the time the property is taken to the time when compensation is actually paid or deposited with the court. In fine, between the taking of the property and the actual payment, legal interests accrue in order to place the owner in a position as good as (but not better than) the position he was in before the taking occurred. The amount of the interest is 6% per annum as stated in the Rules of Court.

MCIAA as representative of the State is obliged to reconvey the lots 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 MCIAA what they received as just compensation for the expropriation of the lots with consequential damages by way of legal interest from 16 November 1947. Petitioners must likewise pay 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.