Equitable PCI Bank, Inc. (Now Banco De Oro Unibank, Inc.), vs. South Rich Acres, Inc., Top Service, Inc.

G.R. No. 202384, May 04, 2021

FACTS:

The Sangguniang Panlungsod of the City of Las Piñas enacted City Ordinance No. 343-97, Series of 1997 (City Ordinance No. 343-97), which declared Marcos Alvarez Avenue as a public road. South Rich Acres (SRA) and Top Service filed a Petition for Declaratory Relief and Damages against the City of Las Piñas to annul City Ordinance. SRA is the present legal owner of the seven parcels of land (subject lots) which formed part of a private road network, collectively referred to as Marcos Alvarez Avenue and the City Ordinance No. 343-97 in effect deprived SRA of its ownership over the subject lots without just compensation

Royal Asia Multi-Properties, Inc. (RAMPI) filed a Motion for Leave of Court to File Answer in Intervention on the ground that it has legal interest in the upholding of the validity and constitutionality of City Ordinance No. 343-97 because SRA and Top Service had been unjustifiably demanding payment from them for the use of Marcos Alvarez Avenue. It asserts that under PD 1216, the open spaces and roads in residential subdivisions are beyond the commerce of men, having been automatically and directly identified for public use and vested in favor of the then Municipality of Las Piñas. Consequently, EPCIB substituted RAMPI as intervenor-defendant because all the rights and interests over the Royal South Subdivision had already been transferred, conveyed, and assigned by RAMPI to EPCIB.

The RTC, first, declared City Ordinance No. 343-97 as invalid and unconstitutional for taking the property without just compensation; and second, denied the claim of SRA and Top Service for damages against EPCIB for lack of merit.

The CA affirmed the RTC’s: (a) declaration that City Ordinance No. 343-97 is unconstitutional, and (b) finding that because the lots belonging to SRA and Top Service were neither expropriated nor donated in favor of the City of Las Piñas, City Ordinance No. 343-97 violated the rights of SRA and Top Service against confiscation of property without just compensation. 

BDO argues that City Ordinance No. 343-97 is a valid exercise of police power without the need to pay just compensation as it served the interest of the public in general and was reasonably necessary for the accomplishment of its intended purpose.

ISSUE:

Whether City Ordinance No. 343-97 is unconstitutional as it constitutes taking of the privately owned lots of SRA without just compensation.

HELD: 

YES. City Ordinance No. 343-97 is unconstitutional for being an invalid exercise of police power. The Court finds that the declaration of the entirety of Marcos Alvarez Avenue as a public road despite the fact that the subject lots are owned by SRA is an act of unlawful taking of SRA’s property. As correctly ruled by the CA in CA-G.R. CV No. 91117, the taking of SRA’s property without just compensation amounts to confiscation which is beyond the ambit of police power. While BDO argues that the enactment of City Ordinance No. 343-97 is for the benefit of the public particularly the residents of Las Piñas and Cavite, the constitutional prohibition on the taking of private property for public use without just compensation prevents the City of Las Piñas from doing so.

Distinction Between Police Power and Eminent Domain: 

POLICE POWEREMINENT DOMAIN
Defined as “the inherent power of the State to regulate or to restrain the use of liberty and property for public welfare. Thus, under the police power of the State, ‘property rights of individuals may be subjected to restraints and burdens in order to fulfill the objectives of the government.Defined as “the inherent power of the State to take or appropriate private property for public use. Under Section 9, Article III of the 1987 Constitution, “private property should not be taken for public use without just compensation.” Thus, the exercise of eminent domain requires the payment of just compensation to the owner. 
In the exercise of police power, a property right is impaired by regulation, or the use of property is merely prohibited, regulated or restricted to promote public welfare. In such cases, there is no compensable taking, hence, payment of just compensation is not required.In the exercise of the power of eminent domain, property interests are appropriated and applied to some public purpose which necessitates the payment of just compensation therefor. Normally, the title to and possession of the property are transferred to the expropriating authority.
While the regulation affects the right of ownership, none of the bundle of rights which constitute ownership is appropriated for use by or for the benefit of the public.When there is already a taking or confiscation of private property for public use, the State is no longer exercising police power, but eminent domain for which just compensation must be paid

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