Equitable PCI Bank, Inc. v. South Rich Acres, Inc.
REITERATIONFacts
The Antecedents: South Rich Acres, Inc. (SRA) and Top Service, Inc. (Top Service) are owners of parcels of land constituting Marcos Alvarez Avenue. The City of Las Piñas enacted City Ordinance No. 343-97, declaring Marcos Alvarez Avenue as a public road. SRA and Top Service filed a Petition for Declaratory Relief and Damages seeking to annul the ordinance, asserting ownership over the subject lots. Procedural History: The Regional Trial Court (RTC) initially granted a preliminary injunction against the ordinance. Royal Asia Multi-Properties, Inc. (RAMPI), developer of Royal South Subdivision, intervened, arguing the ordinance was valid under PD 1216. Equitable PCI Bank (EPCIB), now Banco de Oro Unibank, Inc. (BDO), later substituted RAMPI. The RTC declared City Ordinance No. 343-97 unconstitutional for taking private property without just compensation but denied damages. EPCIB appealed. The Court of Appeals (CA) affirmed the declaration of unconstitutionality but ordered the cancellation of the notice of lis pendens annotated on BDO's properties. The Petition: Both BDO and SRA/Top Service filed petitions for review. BDO argued the ordinance was a valid exercise of police power. SRA/Top Service argued the CA correctly invalidated the ordinance but erred in ordering the cancellation of the lis pendens.
Issue(s)
Whether City Ordinance No. 343-97 is an unconstitutional taking of private property without just compensation. Whether the annotation of a notice of lis pendens on BDO's properties was proper and should be cancelled.
Ruling
The Supreme Court denied both petitions, affirming the Court of Appeals' Decision which declared City Ordinance No. 343-97 unconstitutional and ordered the cancellation of the notices of lis pendens annotated on the transfer certificates of title of the Royal South Subdivision project.
Ratio Decidendi
On the constitutionality of City Ordinance No. 343-97: The Court held that City Ordinance No. 343-97 is unconstitutional because it constitutes an unlawful taking of the privately owned lots of SRA without just compensation. The Court distinguished between police power and eminent domain, stating that while police power allows for regulation of property for public welfare, it does not involve the taking or confiscation of property without compensation. Eminent domain, on the other hand, allows for the taking of private property for public use but mandates the payment of just compensation. In this case, the ordinance effectively deprived SRA of its ownership without compensation, which is an act of confiscation beyond the ambit of police power. The Court reiterated the principle that local governments must acquire private roads through donation, purchase, or expropriation if they are to be utilized as public roads, and mere use by the public does not strip the property of its private character. On the cancellation of the notice of lis pendens: The Court affirmed the CA's order to cancel the notice of lis pendens on BDO's properties. The Court clarified that a notice of lis pendens is intended to announce that a property is under litigation and to protect the rights of the party who caused its registration. However, it can only be annotated on properties directly affected by the litigation. In this case, the properties owned by BDO (Royal South Subdivision) were not the subject of the litigation, which concerned the ownership of the lots comprising Marcos Alvarez Avenue. Therefore, the annotation of lis pendens on BDO's titles was improper and unnecessary to protect SRA's rights, justifying its cancellation.
Main Doctrine
A local ordinance declaring a private road as a public road without just compensation constitutes an unlawful taking of private property, which is an invalid exercise of police power and violates the constitutional prohibition against taking private property for public use without just compensation. The annotation of a notice of lis pendens is proper only on properties subject to litigation and necessary to protect the rights of the party who caused it to be registered.