TL;DR

The Supreme Court affirmed that a city ordinance declaring a privately-owned road as public without just compensation is unconstitutional. This means local governments cannot simply take private land for public use by ordinance without going through proper legal procedures like expropriation and paying fair market value to the landowner. The ruling protects property owners from losing their land to public projects without due process and ensures that private property rights are respected, even when public benefit is intended. This decision reinforces the constitutional right to just compensation when private property is taken for public use.

When Public Roads Run Over Private Rights: Examining Eminent Domain vs. Police Power

This case revolves around a dispute over Marcos Alvarez Avenue in Las Piñas City. South Rich Acres, Inc. (SRA) and Top Service, Inc. asserted their private ownership over parcels of land comprising the avenue. However, the City of Las Piñas enacted City Ordinance No. 343-97, declaring Marcos Alvarez Avenue a public road. This ordinance was challenged by SRA and Top Service, leading to a legal battle that ultimately reached the Supreme Court. The core legal question is whether the city’s declaration constituted a valid exercise of police power or an unlawful taking of private property requiring just compensation under the principle of eminent domain. Equitable PCI Bank, Inc. (now Banco de Oro Unibank, Inc. or BDO), intervened as it had interests in a subdivision that utilized Marcos Alvarez Avenue, adding another layer to the complex property rights issue.

The legal framework distinguishing police power from eminent domain is crucial here. Police power is the state’s inherent authority to regulate liberty and property for public welfare. It allows for restrictions on property rights without compensation, particularly when aimed at promoting public health, safety, or morals. Eminent domain, conversely, is the power to take private property for public use, but it is constitutionally bound by the requirement of just compensation. The Supreme Court reiterated these distinctions, emphasizing that police power involves regulation, not appropriation of ownership rights for public benefit. When the state essentially appropriates or confiscates private property for public use, it crosses into the realm of eminent domain, triggering the constitutional mandate for just compensation.

In this instance, City Ordinance No. 343-97 effectively declared Marcos Alvarez Avenue as public, stripping SRA and Top Service of their ownership rights over the land. The city argued that this was a valid exercise of police power, necessary for public convenience given the avenue’s heavy use. However, the Court disagreed, pointing out that the ordinance did not merely regulate the use of the property but outrightly declared it public, amounting to a taking. The Court referenced established jurisprudence stating that while police power allows for property regulation, it does not extend to uncompensated confiscation, except in specific instances like destroying noxious items for public safety. The declaration of Marcos Alvarez Avenue as a public road, without expropriation proceedings or payment of just compensation, was deemed an invalid exercise of police power and an unconstitutional taking.

BDO, as an intervenor, invoked Presidential Decree No. 957 (PD 957), as amended by PD 1216, arguing that subdivision developers are mandated to donate roads and open spaces to the local government. They contended that this justified the city’s action. However, the Supreme Court clarified that while PD 957 encourages donations, it does not mandate them in a way that overrides the constitutional right to property. The Court cited Republic of the Philippines v. Sps. Llamas, which affirmed that property owners retain the freedom to donate or not donate subdivision roads. Therefore, the argument that ownership of Marcos Alvarez Avenue automatically vested in the City of Las Piñas due to subdivision regulations was rejected.

Furthermore, the Supreme Court upheld the Court of Appeals’ decision to cancel the notice of lis pendens annotated on BDO’s properties. A notice of lis pendens serves as a public warning that a property is subject to litigation. However, it is only properly annotated on properties directly involved in the lawsuit. In this case, the litigation concerned the validity of City Ordinance No. 343-97 and its impact on SRA and Top Service’s land. BDO’s subdivision properties, though using Marcos Alvarez Avenue, were not the subject of the ownership dispute. Thus, the lis pendens on BDO’s titles was deemed improper and rightly cancelled, as it was not necessary to protect SRA’s rights in the properties under litigation.

Ultimately, the Supreme Court’s decision underscores the importance of respecting private property rights even when pursuing public interests. Local governments must resort to eminent domain and just compensation when taking private land for public use, rather than attempting to circumvent constitutional safeguards through ordinances framed under the guise of police power. This ruling provides clarity on the limits of government power and reinforces the fundamental right to property ownership in the Philippines.

FAQs

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Equitable PCI Bank, Inc. vs. South Rich Acres, Inc., G.R No. 202397, May 4, 2021