G.R. No. 174672; April 16, 2008
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA), petitioner, vs. HEIRS OF MARCELINA L. SERO, et al., respondents.

FACTS

Respondents, heirs of Ysabel Limbaga, filed a complaint for recovery of ownership and declaration of nullity of titles over properties, four of which are registered in the names of petitioner MCIAA and the Republic. They alleged that the original titles were lost during WWII and that a fraudulent reconstitution was made by another person pretending to be “Isabel Limbaga,” leading to subsequent sales. The properties were originally acquired by the Civil Aeronautics Administration through expropriation in 1961 for the Lahug Airport. The airport was closed in 1989, and its functions were transferred to MCIAA, created in 1990.
The Regional Trial Court (RTC) dismissed the complaint on grounds of lack of cause of action, prescription, and laches. The Court of Appeals reversed, holding that the complaint alleged ultimate facts sufficient to constitute a cause of action and that issues of prescription and laches require evidentiary proof best threshed out in a full trial. The appellate court remanded the case for trial on the merits.

ISSUE

Whether the Court of Appeals erred in reversing the RTC’s dismissal and in holding that respondents have a cause of action against petitioner, and that the action is not barred by prescription and laches.

RULING

The Supreme Court granted the petition, reversing the Court of Appeals and reinstating the RTC’s dismissal. On the issue of cause of action, the Court held that while a motion to dismiss hypothetically admits the truth of the complaint’s factual allegations, it does not admit the correctness of its conclusions of law. The core legal right asserted by respondents is the recovery of ownership based on alleged fraud in the titling process. However, the properties were acquired through a valid and final judgment in an expropriation proceeding. The government’s acquisition of title was by virtue of the exercise of eminent domain, not through a derivative mode from the previous owner. Thus, even assuming fraud in the original titling, the subsequent expropriation constituted an independent and supervening source of title for the government, thereby severing any link to the alleged fraudulent reconstitution. The complaint, therefore, failed to state a cause of action as it did not allege a violation of a legal right by the petitioner, whose title was derived from a valid expropriation.
Regarding prescription and laches, the Court found the action barred. The expropriation judgment became final in 1961, and respondents filed their complaint only in 1999, nearly four decades later. Their inaction for such an extended period, despite the property’s visible use as an airport, constitutes laches. The closure of the Lahug Airport does not automatically revive a right to reconveyance, as the property remains devoted to a public purpose under the control of MCIAA, a government instrumentality.