Case Summary (G.R. No. 182630)
Factual Background and Permit Denial
Sugarland Hotel, operating since 1973 adjacent to Bacolod City Domestic Airport, sought a height‐clearance permit in 1982 for a fourth‐floor annex. ATO Director Singson denied the application, citing potential obstruction to aerial navigation. No further administrative action was taken until 1994.
Airport Closure Due to Alleged Obstructions
On May 13, 1994, ATO Chief Villaruel ordered the airport’s closure, identifying the hotel’s upper floors and nearby informal settlements as hazards. Public outcry prompted efforts to negotiate reopening.
Memorandum of Understanding and Survey Terms
On May 20, 1994, city, provincial, ATO, and hotel representatives executed an MOU: ATO would re‐survey; if only the fourth floor obstructed operations, it would be demolished within 5–7 days, and city/province would indemnify the hotel based on appraisals approved by their sanggunian and COA. All ICAO‐noncompliant structures were to be removed simultaneously.
Partial Demolition and Airport Reopening
ATO and public works engineers conducted resurvey without hotel participation. On May 25, 1994, ATO recommended lowering the hotel by 6.38 m; Sugarland Hotel demolished its fourth floor, and the airport resumed operations the same day.
Withheld Indemnification and Nuisance Declaration
Although sanggunian ordinances appropriated P4,000,000 (city) and P3,600,000 (province) for compensation, both governments refused payment. The city sanggunian then declared the remaining parapet a public nuisance and authorized “extra-legal” demolition.
Forced Demolition and Collateral Damage
On November 17–18, 1994, the city engineer, with police and armed guards, forcibly demolished the hotel’s remaining parapet and fourth‐floor shells without a court order. Debris damaged lower floors, utilities, and structural integrity, forcing hotel closure until repairs completed in 1997.
Trial Court Ruling: MOU Binding and No Obstruction
In December 2005, the Bacolod RTC held the MOU valid under Art. 1318, N.C.C., found no impelling aviation safety need under Administrative Order No. 5 (domestic airports), and ruled the fourth floor was not an illegal nuisance. It ordered city and province to pay P4,000,000 and P3,600,000 plus 12% interest, and jointly and severally awarded P12,000,000 unearned profits (later deleted), P1,000,000 moral damages, P1,000,000 exemplary damages, P600,000 attorney’s fees, and costs.
Court of Appeals Modifications
In November 2007, the CA affirmed the RTC’s holdings on the MOU, illegality, and nuisance. It modified awards by: deleting unearned‐profits award and granting P6,000,000 temperate damages; reducing interest to 6% per annum from May 25, 1994; and dismissing city/province reimbursement claims against DOTC/ATO.
Supreme Court Deference to Lower Courts’ Findings
The Supreme Court, applying the 1987 Constitution, declined to disturb the RTC’s and CA’s factual findings on consent, performance, and non‐nuisance, emphasizing Rule 45’s limitation to questions of law and the high respect due affirmed factual conclusions.
Non-Nuisance Finding Under Domestic Airport Rules
The Court confirmed Bacolod Domestic Airport is governed by Administrative Order No. 5 (1967), not ICAO Annex 14. The hotel’s 2.5% allowable gradient was not exceeded; the 1.6% standard for international aerodromes did not apply, so no safety imperative justified demolition.
Case Syllabus (G.R. No. 182630)
Antecedents
- Sugarland Hotel, formerly Sampaguita Hotel, acquired by Felix Yusay in 1973; four-story building adjacent to Bacolod City Domestic Airport
- 1982: Height Clearance Permit for a proposed fourth-floor annex denied by ATO
- 13 May 1994: ATO Chief Villaruel orders closure of the airport citing the hotel’s third and fourth floors as obstructions and public safety hazard
- 20 May 1994: Memorandum of Understanding (MOU) executed among ATO, City of Bacolod, Province of Negros Occidental, and Sugarland Hotel with key terms:
- Joint re-survey of building height
- Demolition of the fourth floor (or portion) within 5–7 days, indemnified by City and Province subject to COA and Sanggunian approvals
- Simultaneous abatement of all ICAO-standard obstructions
Post-MOU Developments
- ATO-conducted surveys (without hotel representation) recommend lowering obstacle by 6.38 m
- 25 May 1994: Yusay consents to and effects demolition of fourth floor; airport reopens same day
- 27 October 1994: Sangguniang Panlungsod appropriates ₱4,000,000 and ₱5,000,000 (later reduced to ₱3,600,000) for indemnification
- 3 November 1994: City resolutions declare remaining parapet and structures a public nuisance, authorize summary and even “extra-legal” removal
- City and Province refuse to remit appropriated funds, citing ICAO Rules applicability
Further Demolition and Damage
- 7 November 1994: Sugarland Hotel authorizes Airport Task Force to finish demolition under reservation of legal remedies
- Mid-November 1994: ATO orders inclusion of parapet; City Engineer seizes demolition, enters hotel without court order, completes work by 18 November
- Resulting damage to lower floors, elevator, satellite dish, water tank; hotel forced to suspend operations (closed 1 August 1994) and undergo three years of major repairs
- Later survey shows hotel did not exceed 2.5% gradient under Administrative Order No. 5 (domestic airports); 1.6% ICAO gradient for internation