GR 217956; (November, 2016) (Digest)
G.R. No. 217956. November 16, 2016
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA), PETITIONER, VS. LIMBONHAI AND SONS, RESPONDENT.
FACTS
The government, through the then Court of First Instance (CFI) of Cebu, initiated expropriation proceedings in the 1960s for several lots, including Lot No. 2498 owned by Isidro Godinez. In 1967, the CFI issued an order fixing the reasonable value of the lots. However, that same year, Godinez caused the judicial reconstitution of the Original Certificate of Title (OCT) for the lot and subsequently sold it to Tirso S. Limbonhai. The property was later transferred to respondent Limbonhai and Sons Corporation. The government took possession of the lot but did not complete payment of just compensation.
In 1996, petitioner Republic, represented by Mactan-Cebu International Airport Authority (MCIAA), filed a Complaint for Cancellation of Title, asserting ownership based on the expropriation proceedings and claiming respondent held the title in trust. Respondent countered that there was no valid expropriation as just compensation was never paid, and the lot was never used for the intended airport purpose.
ISSUE
Whether the Court of Appeals erred in affirming the dismissal of the complaint, upholding respondent’s title and finding the action barred by laches.
RULING
The Supreme Court denied the petition and affirmed the Court of Appeals. The core legal principle is that the failure of the government to pay just compensation for an expropriated property means the owner retains legal title, and the government merely holds a possessory right. Expropriation is not a completed act until full payment is made. Here, the records showed no evidence that the government paid Godinez the compensation fixed by the CFI. Consequently, ownership never passed to the Republic, and Godinez validly retained the right to dispose of the property.
Furthermore, the defense of laches was correctly applied against the government. While laches generally does not lie against the state when it sues in its sovereign capacity, an exception exists when the government acts in a proprietary capacity. MCIAA, as a government-owned and controlled corporation, was acting in a proprietary role in administering airport assets. The government’s inaction for nearly three decades—during which respondent fenced the property and exercised acts of ownership—constituted unreasonable delay prejudicial to respondent, making the claim stale. Thus, the reconstituted and subsequent titles in respondent’s favor were upheld.