City of Bacolod City v. Sugarland Hotel

Summary

This consolidated case arose from a 1994 dispute over the demolition of Sugarland Hotel's fourth floor adjacent to Bacolod City Domestic Airport. Following airport closure orders due to alleged aviation obstructions, parties executed a Memorandum of Understanding providing for voluntary demolition with government compensation. After Sugarland Hotel substantially complied by demolishing 95% of the structure, government entities refused payment despite appropriating funds, then forcibly completed demolition causing extensive damage. The Supreme Court affirmed lower courts' findings that the MOU was valid, the structure was not an actual obstruction under applicable domestic airport regulations, and government entities breached their contractual obligations in bad faith. The Court awarded P7.6 million in compensation plus P2.6 million in damages, emphasizing that contracts have the force of law between parties and must be performed in good faith.