Lagcao vs. Labra

A local government unit's exercise of eminent domain for socialized housing is unconstitutional if it fails to strictly comply with the mandatory order of priorities in land acquisition and the requirement to exhaust other modes of acquisition under Sections 9 and 10 of RA 7279.

In 1965, petitioners purchased Lot 1029 from the City of Cebu on installment. The lots reverted to the Province of Cebu later that year, prompting the province to seek annulment of the sale. Petitioners successfully sued for specific performance, obtaining a deed of absolute sale and title in 1994. Upon attempting to take possession, petitioners discovered squatters on the property and filed an ejectment suit, securing a final writ of execution and order of demolition by 1998.

• Acquisition of Title: In 1964, the Province of Cebu donated 210 lots, including Lot 1029 (4,048 sqm), to the City of Cebu. Petitioners purchased Lot 1029 on installment in 1965. The lots subsequently reverted to the province, which attempted to annul the sale. Petitioners sued for specific performance and won, resulting in the execution of a deed of absolute sale in their favor on June 17, 1994, and the issuance of Transfer Certificate of Title No. 129306.
• Ejectment of Squatters: Upon acquiring title, petitioners discovered squatters on Lot 1029 and filed ejectment proceedings on June 15, 1997. The Municipal Trial Court in Cities (MTCC) ordered the squatters to vacate on April 1, 1998. The RTC affirmed the decision and issued a writ of execution and order of demolition.
• Suspension of Demolition: When the demolition order was about to be implemented, Cebu City Mayor Alvin Garcia wrote to the MTCC requesting deferment on the ground that the City was looking for a relocation site. The MTCC suspended the demolition for 120 days from February 22, 1999.
• Enactment of Expropriation Ordinance: During the suspension period, the Sangguniang Panlungsod identified Lot 1029 as a socialized housing site. On July 19, 2000, Ordinance No. 1843 was enacted, authorizing the mayor to institute expropriation proceedings over Lot 1029 for the benefit of the homeless, appropriating ₱6,881,600 for its acquisition. The ordinance was approved on August 2, 2000.

• Public Use: Petitioners argued that Ordinance No. 1843 is unconstitutional because the expropriation of their property to sell to squatters benefits only a handful of people, contravening the concept of "public use" contemplated by the Constitution.
• Bad Faith and Oppression: Petitioners alleged the ordinance was passed for politicking, as squatters represent a significant voting bloc, and that the city arbitrarily singled out their small property without genuine necessity.

• Public Purpose: Respondent maintained that the expropriation serves a valid public purpose—providing socialized housing for the homeless and low-income residents of Cebu City—pursuant to the Local Government Code and RA 7279.

• Constitutionality of Expropriation: Whether the expropriation of petitioners' property under Ordinance No. 1843 contravenes the Constitution and applicable laws, specifically regarding public use and due process.

• Constitutionality of Expropriation: Ordinance No. 1843 was declared unconstitutional for violating petitioners' right to due process. Local government units do not possess unbridled authority to exercise eminent domain; such power is limited by the Constitution and pertinent laws. The City of Cebu failed to strictly comply with Sections 9 and 10 of RA 7279, which mandate an order of priority in acquiring land for socialized housing (with privately-owned lands ranking last) and require that expropriation be resorted to only after other modes of acquisition have been exhausted. No evidence was presented showing the City attempted to acquire lands listed in Sections 9(a) to 9(e) of RA 7279 or exhausted other modes of acquisition under Section 10. Furthermore, the City failed to make a valid and definite offer to buy the property as required by Section 19 of RA 7160. The precipitate manner of the ordinance's enactment—using the suspension of demolition ostensibly to find a relocation site as a pretext to instead pass an expropriation ordinance—demonstrated bad faith, oppression, and manifest partiality.

• Limitations on Local Government Eminent Domain — While local government units may exercise the power of eminent domain pursuant to RA 7160, such exercise is not absolute and is strictly limited by the due process clause, the requirement of just compensation, and mandatory statutory conditions. Compliance with the order of priorities for land acquisition and the exhaustion of other modes of acquisition under RA 7279 are mandatory safeguards against the tyrannical violation of due process.
• Validity of Ordinances — For an ordinance to be valid, it must satisfy the following substantive requirements: (1) it must not contravene the Constitution or any statute; (2) it must not be unfair or oppressive; (3) it must not be partial or discriminatory; (4) it must not prohibit but may regulate trade; (5) it must be general and consistent with public policy; and (6) it must not be unreasonable.

• "Condemnation of private lands in an irrational or piecemeal fashion or the random expropriation of small lots to accommodate no more than a few tenants or squatters is certainly not the condemnation for public use contemplated by the Constitution. This is depriving a citizen of his property for the convenience of a few without perceptible benefit to the public."
• "A pro-poor program that is well-studied, adequately funded, genuinely sincere and truly respectful of everyone’s basic rights is what this problem calls for, not the improvident enactment of politics-based ordinances targeting small private lots in no rational fashion."

• Estate or Heirs of the Late Ex-Justice Jose B.L. Reyes et al. vs. City of Manila, G.R. Nos. 132431 and 137146, February 13, 2004 — Followed. Established that Sections 9 and 10 of RA 7279 impose strict limitations on the exercise of eminent domain by local government units, making compliance with the order of priority and the exhaustion of other modes of acquisition mandatory.
• De Knecht vs. Bautista, G.R. No. L-51078, 30 October 1980, 100 SCRA 660 — Cited. Affirmed that due process frowns on arbitrariness and protects landowners from oppressive state action.
• Urban Estates, Inc. vs. Montesa, 88 Phil. 348 (1951) — Cited. Enunciated that the random expropriation of small lots for a few squatters does not constitute public use.
• City of Manila vs. Chinese Community of Manila, 40 Phil. 349 (1919) — Cited. Recognized that the exercise of eminent domain is necessarily in derogation of private rights.

• Section 19, Republic Act No. 7160 (Local Government Code of 1991) — Confers the power of eminent domain to local government units, provided it is exercised for public use, purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, and pursuant to the Constitution and pertinent laws. Requires a valid and definite offer previously made to the owner before exercising the power.
• Section 9, Republic Act No. 7279 (Urban Development and Housing Act of 1992) — Enumerates the order of priorities for acquiring land for socialized housing: (a) government-owned lands; (b) alienable public lands; (c) unregistered or idle lands; (d) unacquired priority development sites; (e) unacquired BLISS sites; and (f) privately-owned lands. Applied to show the City of Cebu failed to prioritize the acquisition of government-owned lands before targeting petitioners' private property.
• Section 10, Republic Act No. 7279 — Lists the modes of acquiring land for socialized housing, including community mortgage, land swapping, negotiated purchase, and expropriation. Provides that expropriation shall be resorted to only when other modes of acquisition have been exhausted, and exempts small property owners. Applied to demonstrate the City's failure to exhaust alternative acquisition modes.
• Article III, Sections 1 and 9, 1987 Constitution — Guarantee that no person shall be deprived of life, liberty, or property without due process of law, and that private property shall not be taken for public use without just compensation. Applied as the foundational constitutional limitations violated by the ordinance.

Davide, Jr., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Carpio Morales, Callejo, Sr., Azcuna, Tinga, and Chico-Nazario.