G.R. No. 202384 - Equitable PCI Bank, Inc. vs. South Rich Acres, Inc.

Case Summary (G.R. No. 202384)

Factual background and ordinance at issue

On July 2, 1997 the Sangguniang Panlungsod of Las Piñas enacted City Ordinance No. 343‑97 declaring the whole length of Marcos Alvarez Avenue from Alabang‑Zapote Road to the boundary with Bacoor, Cavite, a public road. SRA and Top Service assert they are the present legal owners of the seven parcels forming part of a private road network known as Marcos Alvarez Avenue; Top Service’s ownership is evidenced by several Transfer Certificates of Title and deeds of sale, and the companies have historically granted rights of way and received compensation from other landowners and developers.

Initial proceedings and intervention

SRA and Top Service filed a petition for declaratory relief and damages with a prayer for preliminary injunction in the Regional Trial Court (RTC), Las Piñas, seeking annulment of City Ordinance No. 343‑97. The City filed an answer asserting that Marcos Alvarez Avenue had been withdrawn from commerce and treated as government property. RAMPI moved to intervene to defend the ordinance and asserted that, under PD 1216 (amending PD 957), subdivision open spaces and roads are effectively identified for public use and vested in the local government. The RTC initially denied the motion to intervene, later reconsidered and allowed it; RAMPI’s interest derived from its development and use of Marcos Alvarez Avenue for the Royal South Subdivision.

Interim orders, substitution and trial court judgment

The RTC granted a writ of preliminary injunction enjoining enforcement of the ordinance. RAMPI transferred its rights to EPCIB (BDO), and EPCIB substituted as intervenor-defendant; the RTC annotated lis pendens on titles of the Royal South Subdivision. After pre‑trial and trial on the merits, the RTC rendered a decision on April 30, 2004 declaring City Ordinance No. 343‑97 invalid and unconstitutional for taking private property without just compensation, and denied SRA and Top Service’s damages claim against EPCIB for lack of merit.

Court of Appeals decision

On appeal, the Court of Appeals (CA) affirmed the RTC’s declaration that City Ordinance No. 343‑97 was invalid and unconstitutional because it effectively confiscated privately owned lots without just compensation. The CA rejected BDO’s contention that the ordinance could be sustained as an exercise of police power, noting that the City did not plead police power as a ground in its answer; more fundamentally, the CA observed that where there is a taking or confiscation, the State exercises eminent domain (which requires compensation), not police power. The CA also ordered the Register of Deeds of Las Piñas City to cancel notices of lis pendens annotated on the transfer certificates of title of the Royal South Subdivision properties, finding those annotations improper because the BDO‑owned lots were not the subject property in the litigation.

Issues presented in the consolidated petitions

BDO (G.R. No. 202384) contested the CA’s invalidation of City Ordinance No. 343‑97, arguing the ordinance was a valid exercise of police power serving public interest and thus not requiring compensation. SRA and Top Service (G.R. No. 202397) agreed with the CA’s invalidation of the ordinance but challenged the CA’s order cancelling the lis pendens on BDO’s subdivision titles, contending that the lis pendens protects public notice and that the RTC order permitting annotation had become final and executory.

Governing constitutional and doctrinal framework (1987 Constitution)

Under the 1987 Constitution, private property shall not be taken for public use without just compensation (cited in the record as Section 9, Article III). The Court reiterated the well‑established distinction between police power and eminent domain: police power permits regulation or restraint on property use for public welfare and generally does not entail compensable taking; eminent domain is the State’s power to appropriate private property for public use and requires just compensation. The Court relied on prior decisions (as cited in the record) that delineate when a regulation is a noncompensable exercise of police power and when a measure effects a taking requiring compensation.

Application of doctrine to the ordinance — taking versus regulation

The Court found that City Ordinance No. 343‑97 amounted to an unlawful taking because it declared as public road the entirety of Marcos Alvarez Avenue although SRA and Top Service had retained legal ownership of the parcels and there was no showing of donation, conveyance, or lawful expropriation in favor of the City. The ordinance effectively deprived the owners of their ownership without just compensation; such appropriation cannot be validated under police power. The Court cited precedent that subdivision road lots remain private property until acquired by donation, purchase, or expropriation, and that mere public use or tolerance by an owner does not convert private subdivision roads into public property.

PD 957/PD 1216 donation provision and its limits

BDO invoked PD 957, as amended by PD 1216, which prescribes that upon completion the roads, alleys and open spaces in subdivisions shall be donated to the municipality and become non‑alienable public lands. The Court, however, relied on controlling precedent (Republic v. Sps. Llamas) holding that the compulsion to donate under Section 31 of PD 957, as amended, cannot be sustained as valid; the more consistent reading preserves the developer’s freedom whether to donate. Thus, PD 957/PD 1216 cannot be used to sanction a municipal ordinance that unilaterally declares private subdivision roads public without due process and just compensation.

Significance of prior administrative and appellate findings about public use

The CA’s earlier pronouncements in related administrative proceedings (including an Office of the President ocular finding that the road was used by the public and treated by the City as a municipal road) were insufficient to establish that SRA and Top Se

Case Syllabus (G.R. No. 202384)

Case Caption, Dockets and Nature of Review

Consolidated petitions before the Supreme Court: (1) Petition for Review (G.R. No. 202384) filed by Equitable PCI Bank, Inc. (EPCIB), now Banco de Oro Unibank, Inc. (BDO); and (2) Petition for Review on Certiorari under Rule 45 (G.R. No. 202397) filed by South Rich Acres, Inc. (SRA) and Top Service, Inc.
Both petitions assail the Court of Appeals Decision dated March 9, 2012 and Resolution dated June 20, 2012 in CA-G.R. CV No. 91117.
The Supreme Court rendered an en banc decision authored by Justice Inting and issued on May 04, 2021, addressing constitutionality of a municipal ordinance and issues regarding lis pendens annotations.

Parties and Their Status

Petitioners/Respondents: Equitable PCI Bank, Inc. (EPCIB), now Banco de Oro Unibank, Inc. (BDO).
Petitioners/Respondents: South Rich Acres, Inc. (SRA) and Top Service, Inc. (Top Service), corporations organized under Philippine law.
Respondent: City of Las PIAAS (City of Las Piñas) — a corporate entity recognized under Republic Act No. 7160 (Local Government Code of 1991).
Intervenors/Successors in Interest: Royal Asia Multi-Properties, Inc. (RAMPI) intervened; EPCIB later substituted RAMPI as intervenor-defendant following transfer of rights and interests.

Ordinance at Issue (City Ordinance No. 343-97)

Enacted by the Sangguniang Panlungsod of the City of Las PIAAS on July 2, 1997, City Ordinance No. 343-97 declared Marcos Alvarez Avenue from Congressman Felimon C. Aguilar Avenue (Alabang-Zapote Road) to the boundary of the Municipality of Bacoor, Cavite, as a public road.
Ordinance findings emphasized: (a) Marcos Alvarez had become a busy avenue due to motor vehicle volume from Cavite; (b) constant use aggravated wear and tear necessitating repair and maintenance; (c) status of the avenue had long been accepted by residents and transients as public road.
Ordinance Text (excerpted): “SECTION 1. The whole length of Marcos Alvarez Avenue ... is hereby declared Public Road. SECTION 2. This Ordinance shall take effect upon its approval.” (Italics supplied in source.)

Factual Background and Title/Ownership Allegations

SRA claimed present legal ownership of seven parcels of land (subject lots) forming part of a private road network collectively referred to as Marcos Alvarez Avenue, stretching from Alabang-Zapote Road to the boundary of Brgy. Molino, Bacoor, Cavite.
SRA acquired the subject lots from Top Service by legal assignment; Top Service’s title traces to purchases from private owners dating to 1959.
Presented evidence: three Transfer Certificates of Title (TCTs) in Top Service’s name — TCT No. S-34609, TCT No. 413759, and TCT No. 2309184 — and deeds of absolute sale for other lots.
Since 1960, other landowners and developers using Marcos Alvarez Avenue had secured right of way authority from SRA and Top Service and paid compensation, supporting SRA/Top Service’s ownership theory.
City of Las PIAAS, in its Answer, did not deny private ownership of the subject lots but asserted Marcos Alvarez Avenue was already government property, having been withdrawn from commerce as open space.

Origin of Litigation and Relief Sought

SRA and Top Service filed a Petition for Declaratory Relief and Damages with a Prayer for Preliminary Injunction in RTC Branch 253, Las PIAAS City, docketed as Civil Case No. LP-97-0190, seeking annulment of City Ordinance No. 343-97.
RAMPI filed Motion for Leave to Intervene (Sept. 29, 1997) alleging legal interest in upholding the Ordinance because Royal South Subdivision uses Marcos Alvarez Avenue and RAMPI was being unjustifiably demanded payment by SRA/Top Service.
RTC initially denied RAMPI’s motion (Resolution dated Oct. 6, 1997), but later set aside that denial and permitted intervention (Resolution dated Jan. 12, 1998).
RTC granted SRA and Top Service’s prayer for issuance of a writ of preliminary injunction enjoining the effectivity and implementation of City Ordinance No. 343-97 (Resolution dated Oct. 17, 1997).

Substitution, Lis Pendens Annotation, and Answers

On July 24, 2000, SRA and Top Service filed Motion for Substitution of Parties with Motion to Annotate Lis Pendens. RTC granted substitution on Oct. 5, 2000: EPCIB substituted RAMPI as intervenor-defendant due to transfer of rights and interests; Register of Deeds of Las PIAAS ordered to annotate notice of lis pendens on all titles of Royal South Subdivision.
EPCIB filed its Answer on May 4, 2001. RAMPI’s earlier Answer in Intervention included Motion to Dismiss and opposition to preliminary injunction; it argued PD 1216 amended PD 957 making subdivision open spaces beyond commerce of men and vested in the Municipality by operation of law.

Trial Court (RTC) Ruling — April 30, 2004

RTC, in Decision penned by Presiding Judge Jose F. Caoibes, Jr., dated April 30, 2004:
- Declared City Ordinance No. 343-97 invalid and unconstitutional for taking property without just compensation.
- Denied SRA and Top Service’s claim for damages against EPCIB for lack of merit.
Post-decision motions: SRA and Top Service filed Motion for Partial Reconsideration (May 25, 2004); EPCIB filed Notice of Appeal (May 27, 2004) and Motion to Cancel Notice of Lis Pendens (Mar. 23, 2005). RTC subsequently directed transmission of records to the Court of Appeals in Consolidated Order dated Oct. 18, 2005.

Court of Appeals Proceedings and Ruling — March 9, 2012

CA docketed matter as CA-G.R. CV No. 91117. Appellant’s Brief filed by BDO (formerly EPCIB) on April 3, 2009 argued RTC erred in invalidating the Ordinance and in denying motion to cancel lis pendens on Royal South Subdivision titles.
CA rendered a Resolution (April 28, 2009) dismissing SRA and Top Service’s separate appeal as abandoned for failure to file appellant’s brief; partial entry of judgment for SRA and Top Service became final and executory (May 20, 2009).
CA Decision dated March 9, 2012 (pened by Associate Justice Isaias P. Dicdican, concurring Justices Jane Aurora C. Lantion and Amy C. Lazaro-Javier):
- Partially granted BDO’s appeal: affirmed RTC’s declaration that City Ordinance No. 343-97 is invalid and unconstitutional.
- Held the Ordinance violated SRA and Top Service’s rights against confiscation of property without just compensation because the lots were neither expropriated nor donated to the City.
- Dismissed BDO’s police power argument due to absence of such allegation in the City’s Answer and because a taking for public use implicates eminent domain, not police power.
- Declined to decide on an asserted hypothetical division of Marcos Alvarez Avenue ownership (one-third private vs remainder public) as records did not indicate such division.
- Rejected BDO’s reliance on PD 957 as amended by PD 1216 to establish automatic vesting of ownership in favor of the City, relying on White Plains Homeowners Ass’n, Inc. v. CA (1998) that a private owner cannot be compelled to transfer/donate property to government.
- Ordered the Register of Deeds of Las PIAAS City to cancel notices of lis pendens annotated on all TCTs of the Ro