Stone v.

Mississippi - Case Brief Summary

In Stone v. Mississippi (1879) 101 U.S. 814, the Supreme Court permitted prosecution of a state-chartered
corporation for conducting a lottery in violation of state law even though the company's charter, issued before the
law was enacted, expressly authorized that activity. In reaching its conclusion, the court made the identical
distinction found in United States Trust between a public contract impacted by a state's exercise of its police
powers and one involving use of its revenue and spending powers. The court first noted that the law at issue was
an appropriate exercise of the state's police powers: "When the government is untrammeled by any claim of
vested rights or chartered privileges, no one has ever supposed that lotteries could not lawfully be suppressed . .
. ." ( Id. at p. 818.)

The court then dismissed the corporation's claim that its corporate charter was a contract with the state that was
impermissibly impaired by the law banning lotteries, holding that "the contracts which the Constitution protects
are those that relate to property rights, not governmental." ( Id. at p. 820.) "We have held . . . that this clause the
contract clause protected a corporation in its charter exemptions from taxation. . . . But the power of governing is
a trust committed by the people to the government, no part of which can be granted away. . . . They may create
corporations, and give them, so to speak, a limited citizenship; but as citizens, limited in their privileges, or
otherwise, these creatures of the government creation are subject to such rules and regulations as may from time
to time be ordained and established for the preservation of health and morality." (Ibid.)
G.R. No. L-7995 May 31, 1957
LAO H. ICHONG, in his own behalf and in behalf of other alien residents, corporations and partnerships
adversely affected. by Republic Act No. 1180, petitioner,
vs.
JAIME HERNANDEZ, Secretary of Finance, and MARCELINO SARMIENTO, City Treasurer of
Manila,respondents.
Ozaeta, Lichauco and Picazo and Sycip, Quisumbing, Salazar and Associates for petitioner.
Office of the Solicitor General Ambrosio Padilla and Solicitor Pacifico P. de Castro for respondent Secretary of
Finance.
City Fiscal Eugenio Angeles and Assistant City Fiscal Eulogio S. Serrano for respondent City Treasurer.
Dionisio Reyes as Amicus Curiae.
Marcial G. Mendiola as Amicus Curiae.
Emiliano R. Navarro as Amicus Curiae.
LABRADOR, J.:
I. The case and issue, in general
This Court has before it the delicate task of passing upon the validity and constitutionality of a legislative
enactment, fundamental and far-reaching in significance. The enactment poses questions of due process, police
power and equal protection of the laws. It also poses an important issue of fact, that is whether the conditions
which the disputed law purports to remedy really or actually exist. Admittedly springing from a deep, militant, and
positive nationalistic impulse, the law purports to protect citizen and country from the alien retailer. Through it,
and within the field of economy it regulates, Congress attempts to translate national aspirations for economic
independence and national security, rooted in the drive and urge for national survival and welfare, into a concrete
and tangible measures designed to free the national retailer from the competing dominance of the alien, so that
the country and the nation may be free from a supposed economic dependence and bondage. Do the facts and
circumstances justify the enactment?
II. Pertinent provisions of Republic Act No. 1180
Republic Act No. 1180 is entitled "An Act to Regulate the Retail Business." In effect it nationalizes the retail trade
business. The main provisions of the Act are: (1) a prohibition against persons, not citizens of the Philippines,
and against associations, partnerships, or corporations the capital of which are not wholly owned by citizens of
the Philippines, from engaging directly or indirectly in the retail trade; (2) an exception from the above prohibition
in favor of aliens actually engaged in said business on May 15, 1954, who are allowed to continue to engaged
therein, unless their licenses are forfeited in accordance with the law, until their death or voluntary retirement in
case of natural persons, and for ten years after the approval of the Act or until the expiration of term in case of
juridical persons; (3) an exception therefrom in favor of citizens and juridical entities of the United States; (4) a
provision for the forfeiture of licenses (to engage in the retail business) for violation of the laws on nationalization,
control weights and measures and labor and other laws relating to trade, commerce and industry; (5) a
prohibition against the establishment or opening by aliens actually engaged in the retail business of additional
stores or branches of retail business, (6) a provision requiring aliens actually engaged in the retail business to
present for registration with the proper authorities a verified statement concerning their businesses, giving,
among other matters, the nature of the business, their assets and liabilities and their offices and principal offices
of judicial entities; and (7) a provision allowing the heirs of aliens now engaged in the retail business who die, to
continue such business for a period of six months for purposes of liquidation.
III. Grounds upon which petition is based-Answer thereto
Petitioner, for and in his own behalf and on behalf of other alien residents corporations and partnerships
adversely affected by the provisions of Republic Act. No. 1180, brought this action to obtain a judicial declaration
that said Act is unconstitutional, and to enjoin the Secretary of Finance and all other persons acting under him,
particularly city and municipal treasurers, from enforcing its provisions. Petitioner attacks the constitutionality of
the Act, contending that: (1) it denies to alien residents the equal protection of the laws and deprives of their
liberty and property without due process of law ; (2) the subject of the Act is not expressed or comprehended in
the title thereof; (3) the Act violates international and treaty obligations of the Republic of the Philippines; (4) the
provisions of the Act against the transmission by aliens of their retail business thru hereditary succession, and
those requiring 100% Filipino capitalization for a corporation or entity to entitle it to engage in the retail business,
violate the spirit of Sections 1 and 5, Article XIII and Section 8 of Article XIV of the Constitution.
In answer, the Solicitor-General and the Fiscal of the City of Manila contend that: (1) the Act was passed in the
valid exercise of the police power of the State, which exercise is authorized in the Constitution in the interest of
national economic survival; (2) the Act has only one subject embraced in the title; (3) no treaty or international
obligations are infringed; (4) as regards hereditary succession, only the form is affected but the value of the
property is not impaired, and the institution of inheritance is only of statutory origin.
IV. Preliminary consideration of legal principles involved
a. The police power. —
There is no question that the Act was approved in the exercise of the police power, but petitioner claims that its
exercise in this instance is attended by a violation of the constitutional requirements of due process and equal
protection of the laws. But before proceeding to the consideration and resolution of the ultimate issue involved, it
would be well to bear in mind certain basic and fundamental, albeit preliminary, considerations in the
determination of the ever recurrent conflict between police power and the guarantees of due process and equal
protection of the laws. What is the scope of police power, and how are the due process and equal protection
clauses related to it? What is the province and power of the legislature, and what is the function and duty of the
courts? These consideration must be clearly and correctly understood that their application to the facts of the
case may be brought forth with clarity and the issue accordingly resolved.
It has been said the police power is so far - reaching in scope, that it has become almost impossible to limit its
sweep. As it derives its existence from the very existence of the State itself, it does not need to be expressed or
defined in its scope; it is said to be co-extensive with self-protection and survival, and as such it is the most
positive and active of all governmental processes, the most essential, insistent and illimitable. Especially is it so
under a modern democratic framework where the demands of society and of nations have multiplied to almost
unimaginable proportions; the field and scope of police power has become almost boundless, just as the fields of
public interest and public welfare have become almost all-embracing and have transcended human foresight.
Otherwise stated, as we cannot foresee the needs and demands of public interest and welfare in this constantly
changing and progressive world, so we cannot delimit beforehand the extent or scope of police power by which
and through which the State seeks to attain or achieve interest or welfare. So it is that Constitutions do not define
the scope or extent of the police power of the State; what they do is to set forth the limitations thereof. The most
important of these are the due process clause and the equal protection clause.
b. Limitations on police power. —
The basic limitations of due process and equal protection are found in the following provisions of our Constitution:
SECTION 1.(1) No person shall be deprived of life, liberty or property without due process of law, nor
any person be denied the equal protection of the laws. (Article III, Phil. Constitution)
These constitutional guarantees which embody the essence of individual liberty and freedom in democracies, are
not limited to citizens alone but are admittedly universal in their application, without regard to any differences of
race, of color, or of nationality. (Yick Wo vs. Hopkins, 30, L. ed. 220, 226.)
c. The, equal protection clause. —
The equal protection of the law clause is against undue favor and individual or class privilege, as well as hostile
discrimination or the oppression of inequality. It is not intended to prohibit legislation, which is limited either in the
object to which it is directed or by territory within which is to operate. It does not demand absolute equality among
residents; it merely requires that all persons shall be treated alike, under like circumstances and conditions both
as to privileges conferred and liabilities enforced. The equal protection clause is not infringed by legislation which
applies only to those persons falling within a specified class, if it applies alike to all persons within such class,
and reasonable grounds exists for making a distinction between those who fall within such class and those who
do not. (2 Cooley, Constitutional Limitations, 824-825.)
d. The due process clause. —
The due process clause has to do with the reasonableness of legislation enacted in pursuance of the police
power. Is there public interest, a public purpose; is public welfare involved? Is the Act reasonably necessary for
the accomplishment of the legislature's purpose; is it not unreasonable, arbitrary or oppressive? Is there sufficient
foundation or reason in connection with the matter involved; or has there not been a capricious use of the
legislative power? Can the aims conceived be achieved by the means used, or is it not merely an unjustified
interference with private interest? These are the questions that we ask when the due process test is applied.
The conflict, therefore, between police power and the guarantees of due process and equal protection of the laws
is more apparent than real. Properly related, the power and the guarantees are supposed to coexist. The
balancing is the essence or, shall it be said, the indispensable means for the attainment of legitimate aspirations
of any democratic society. There can be no absolute power, whoever exercise it, for that would be tyranny. Yet
there can neither be absolute liberty, for that would mean license and anarchy. So the State can deprive persons
of life, liberty and property, provided there is due process of law; and persons may be classified into classes and
groups, provided everyone is given the equal protection of the law. The test or standard, as always, is reason.
The police power legislation must be firmly grounded on public interest and welfare, and a reasonable relation
must exist between purposes and means. And if distinction and classification has been made, there must be a
reasonable basis for said distinction.
e. Legislative discretion not subject to judicial review. —
Now, in this matter of equitable balancing, what is the proper place and role of the courts? It must not be
overlooked, in the first place, that the legislature, which is the constitutional repository of police power and
exercises the prerogative of determining the policy of the State, is by force of circumstances primarily the judge
of necessity, adequacy or reasonableness and wisdom, of any law promulgated in the exercise of the police
power, or of the measures adopted to implement the public policy or to achieve public interest. On the other
hand, courts, although zealous guardians of individual liberty and right, have nevertheless evinced a reluctance
to interfere with the exercise of the legislative prerogative. They have done so early where there has been a
clear, patent or palpable arbitrary and unreasonable abuse of the legislative prerogative. Moreover, courts are
not supposed to override legitimate policy, and courts never inquire into the wisdom of the law.
V. Economic problems sought to be remedied
With the above considerations in mind, we will now proceed to delve directly into the issue involved. If the
disputed legislation were merely a regulation, as its title indicates, there would be no question that it falls within
the legitimate scope of legislative power. But it goes further and prohibits a group of residents, the aliens, from
engaging therein. The problem becomes more complex because its subject is a common, trade or occupation, as
old as society itself, which from the immemorial has always been open to residents, irrespective of race, color or
citizenship.
a. Importance of retail trade in the economy of the nation. —
In a primitive economy where families produce all that they consume and consume all that they produce, the
dealer, of course, is unknown. But as group life develops and families begin to live in communities producing
more than what they consume and needing an infinite number of things they do not produce, the dealer comes
into existence. As villages develop into big communities and specialization in production begins, the dealer's
importance is enhanced. Under modern conditions and standards of living, in which man's needs have multiplied
and diversified to unlimited extents and proportions, the retailer comes as essential as the producer, because
thru him the infinite variety of articles, goods and needed for daily life are placed within the easy reach of
consumers. Retail dealers perform the functions of capillaries in the human body, thru which all the needed food
and supplies are ministered to members of the communities comprising the nation.
There cannot be any question about the importance of the retailer in the life of the community. He ministers to the Assets Gross Sales
resident's daily needs, food in all its increasing forms, and the various little gadgets and things needed for home Year and Retailers No.- Per cent Per cent
Pesos Pesos
and daily life. He provides his customers around his store with the rice or corn, the fish, the salt, the vinegar, the Nationality Establishments Distribution Distribution
spices needed for the daily cooking. He has cloths to sell, even the needle and the thread to sew them or darn 1941:
the clothes that wear out. The retailer, therefore, from the lowly peddler, the owner of a small sari-sari store, to Filipino .......... 106,671 200,323,138 55.82 174,181,924 51.74
the operator of a department store or, a supermarket is so much a part of day-to-day existence.
Chinese ........... 15,356 118,348,692 32.98 148,813,239 44.21
Others ............ 1,646 40,187,090 11.20 13,630,239 4.05
b. The alien retailer's trait. —
1947:

The alien retailer must have started plying his trades in this country in the bigger centers of population (Time Filipino .......... 111,107 208,658,946 65.05 279,583,333 57.03
there was when he was unknown in provincial towns and villages). Slowly but gradually be invaded towns and Chinese ........... 13,774 106,156,218 33.56 205,701,134 41.96
villages; now he predominates in the cities and big centers of population. He even pioneers, in far away nooks Others ........... 354 8,761,260 .49 4,927,168 1.01
where the beginnings of community life appear, ministering to the daily needs of the residents and purchasing 1948: (Census)
their agricultural produce for sale in the towns. It is an undeniable fact that in many communities the alien has
Filipino .......... 113,631 213,342,264 67.30 467,161,667 60.51
replaced the native retailer. He has shown in this trade, industry without limit, and the patience and forbearance
of a slave. Chinese .......... 12,087 93,155,459 29.38 294,894,227 38.20
Others .......... 422 10,514,675 3.32 9,995,402 1.29
Derogatory epithets are hurled at him, but he laughs these off without murmur; insults of ill-bred and insolent 1949:
neighbors and customers are made in his face, but he heeds them not, and he forgets and forgives. The Filipino .......... 113,659 213,451,602 60.89 462,532,901 53.47
community takes note of him, as he appears to be harmless and extremely useful. Chinese .......... 16,248 125,223,336 35.72 392,414,875 45.36
Others .......... 486 12,056,365 3.39 10,078,364 1.17
c. Alleged alien control and dominance. — 1951:
Filipino ......... 119,352 224,053,620 61.09 466,058,052 53.07
There is a general feeling on the part of the public, which appears to be true to fact, about the controlling and
Chinese .......... 17,429 134,325,303 36.60 404,481,384 46.06
dominant position that the alien retailer holds in the nation's economy. Food and other essentials, clothing,
almost all articles of daily life reach the residents mostly through him. In big cities and centers of population he Others .......... 347 8,614,025 2.31 7,645,327 87
has acquired not only predominance, but apparent control over distribution of almost all kinds of goods, such as
lumber, hardware, textiles, groceries, drugs, sugar, flour, garlic, and scores of other goods and articles. And were
it not for some national corporations like the Naric, the Namarco, the Facomas and the Acefa, his control over
principal foods and products would easily become full and complete.
AVERAGE
ASSETS AND GROSS SALES PER ESTABLISHMENT
Petitioner denies that there is alien predominance and control in the retail trade. In one breath it is said that the
fear is unfounded and the threat is imagined; in another, it is charged that the law is merely the result of Item
Year and Retailer's Gross Sales
Assets
radicalism and pure and unabashed nationalism. Alienage, it is said, is not an element of control; also so many Nationality
(Pesos)
(Pesos)
unmanageable factors in the retail business make control virtually impossible. The first argument which brings up
an issue of fact merits serious consideration. The others are matters of opinion within the exclusive competence 1941:
of the legislature and beyond our prerogative to pass upon and decide.
Filipino ............................................. 1,878 1,633

The best evidence are the statistics on the retail trade, which put down the figures in black and white. Between Chinese .............................................. 7,707 9,691
the constitutional convention year (1935), when the fear of alien domination and control of the retail trade already
filled the minds of our leaders with fears and misgivings, and the year of the enactment of the nationalization of Others ............................................... 24,415 8,281
the retail trade act (1954), official statistics unmistakably point out to the ever-increasing dominance and control
by the alien of the retail trade, as witness the following tables: 1947:
 Filipino ............................................. 1,878 2,516 d. Alien control and threat, subject of apprehension in Constitutional convention. —

Chinese ...........................................
Others ..............................................
1948: (Census)
Filipino .............................................
Chinese .............................................
Others ..............................................
1949:
Filipino .............................................
7,707 14,934 It is this domination and control, which we believe has been sufficiently shown to exist, that is the legislature's
target in the enactment of the disputed nationalization would never have been adopted. The framers of our
24,749 13,919
Constitution also believed in the existence of this alien dominance and control when they approved a resolution
categorically declaring among other things, that "it is the sense of the Convention that the public interest requires
the nationalization of the retail trade; . . . ." (II Aruego, The Framing of the Philippine Constitution, 662-663,
1,878 4,111 quoted on page 67 of Petitioner.) That was twenty-two years ago; and the events since then have not been either
pleasant or comforting. Dean Sinco of the University of the Philippines College of Law, commenting on the
7,707 24,398 patrimony clause of the Preamble opines that the fathers of our Constitution were merely translating the general
24,916 23,686
preoccupation of Filipinos "of the dangers from alien interests that had already brought under their control the
commercial and other economic activities of the country" (Sinco, Phil. Political Law, 10th ed., p. 114); and
analyzing the concern of the members of the constitutional convention for the economic life of the citizens, in
connection with the nationalistic provisions of the Constitution, he says:
1,878 4,069

Chinese .............................................. 7,707 24,152 But there has been a general feeling that alien dominance over the economic life of the country is not
desirable and that if such a situation should remain, political independence alone is no guarantee to
Others .............................................. 24,807 20,737 national stability and strength. Filipino private capital is not big enough to wrest from alien hands the control
of the national economy. Moreover, it is but of recent formation and hence, largely inexperienced, timid and
1951: hesitant. Under such conditions, the government as the instrumentality of the national will, has to step in
and assume the initiative, if not the leadership, in the struggle for the economic freedom of the nation in
Filipino ............................................. 1,877 3,905
somewhat the same way that it did in the crusade for political freedom. Thus . . . it (the Constitution)
Chinese ............................................. 7,707 33,207 envisages an organized movement for the protection of the nation not only against the possibilities of
armed invasion but also against its economic subjugation by alien interests in the economic field. (Phil.
Others ............................................... 24,824 22,033 Political Law by Sinco, 10th ed., p. 476.)

(Estimated Assets and Gross Sales of Retail Establishments, By Year and Nationality of Owners,
Benchmark: 1948 Census, issued by the Bureau of Census and Statistics, Department of Commerce
and Industry; pp. 18-19 of Answer.)
The above statistics do not include corporations and partnerships, while the figures on Filipino establishments
already include mere market vendors, whose capital is necessarily small..
The above figures reveal that in percentage distribution of assests and gross sales, alien participation has
steadily increased during the years. It is true, of course, that Filipinos have the edge in the number of retailers,
but aliens more than make up for the numerical gap through their assests and gross sales which average
between six and seven times those of the very many Filipino retailers. Numbers in retailers, here, do not imply
superiority; the alien invests more capital, buys and sells six to seven times more, and gains much more. The
same official report, pointing out to the known predominance of foreign elements in the retail trade, remarks that
the Filipino retailers were largely engaged in minor retailer enterprises. As observed by respondents, the native
investment is thinly spread, and the Filipino retailer is practically helpless in matters of capital, credit, price and
supply.
Belief in the existence of alien control and predominance is felt in other quarters. Filipino businessmen,
manufacturers and producers believe so; they fear the dangers coming from alien control, and they express
sentiments of economic independence. Witness thereto is Resolution No. 1, approved on July 18, 1953, of the
Fifth National convention of Filipino Businessmen, and a similar resolution, approved on March 20, 1954, of the
Second National Convention of Manufacturers and Producers. The man in the street also believes, and fears,
alien predominance and control; so our newspapers, which have editorially pointed out not only to control but to
alien stranglehold. We, therefore, find alien domination and control to be a fact, a reality proved by official
statistics, and felt by all the sections and groups that compose the Filipino community.
e. Dangers of alien control and dominance in retail. —
But the dangers arising from alien participation in the retail trade does not seem to lie in the predominance alone;
there is a prevailing feeling that such predominance may truly endanger the national interest. With ample capital,
unity of purpose and action and thorough organization, alien retailers and merchants can act in such complete
unison and concert on such vital matters as the fixing of prices, the determination of the amount of goods or
articles to be made available in the market, and even the choice of the goods or articles they would or would not
patronize or distribute, that fears of dislocation of the national economy and of the complete subservience of
national economy and of the consuming public are not entirely unfounded. Nationals, producers and consumers
alike can be placed completely at their mercy. This is easily illustrated. Suppose an article of daily use is desired
to be prescribed by the aliens, because the producer or importer does not offer them sufficient profits, or because
a new competing article offers bigger profits for its introduction. All that aliens would do is to agree to refuse to
sell the first article, eliminating it from their stocks, offering the new one as a substitute. Hence, the producers or
importers of the prescribed article, or its consumers, find the article suddenly out of the prescribed article, or its
consumers, find the article suddenly out of circulation. Freedom of trade is thus curtailed and free enterprise
correspondingly suppressed.
We can even go farther than theoretical illustrations to show the pernicious influences of alien domination. Grave
abuses have characterized the exercise of the retail trade by aliens. It is a fact within judicial notice, which courts
of justice may not properly overlook or ignore in the interests of truth and justice, that there exists a general
feeling on the part of the public that alien participation in the retail trade has been attended by a pernicious and
intolerable practices, the mention of a few of which would suffice for our purposes; that at some time or other
they have cornered the market of essential commodities, like corn and rice, creating artificial scarcities to justify
and enhance profits to unreasonable proportions; that they have hoarded essential foods to the inconvenience
and prejudice of the consuming public, so much so that the Government has had to establish the National Rice
and Corn Corporation to save the public from their continuous hoarding practices and tendencies; that they have
violated price control laws, especially on foods and essential commodities, such that the legislature had to enact
a law (Sec. 9, Republic Act No. 1168), authorizing their immediate and automatic deportation for price control
convictions; that they have secret combinations among themselves to control prices, cheating the operation of
the law of supply and demand; that they have connived to boycott honest merchants and traders who would not
cater or yield to their demands, in unlawful restraint of freedom of trade and enterprise. They are believed by the
public to have evaded tax laws, smuggled goods and money into and out of the land, violated import and export
prohibitions, control laws and the like, in derision and contempt of lawful authority. It is also believed that they
have engaged in corrupting public officials with fabulous bribes, indirectly causing the prevalence of graft and
corruption in the Government. As a matter of fact appeals to unscrupulous aliens have been made both by the
Government and by their own lawful diplomatic representatives, action which impliedly admits a prevailing feeling
about the existence of many of the above practices.
The circumstances above set forth create well founded fears that worse things may come in the future. The
present dominance of the alien retailer, especially in the big centers of population, therefore, becomes a potential
source of danger on occasions of war or other calamity. We do not have here in this country isolated groups of
harmless aliens retailing goods among nationals; what we have are well organized and powerful groups that
dominate the distribution of goods and commodities in the communities and big centers of population. They owe
no allegiance or loyalty to the State, and the State cannot rely upon them in times of crisis or emergency. While
the national holds his life, his person and his property subject to the needs of his country, the alien may even
become the potential enemy of the State.
f. Law enacted in interest of national economic survival and security. —
We are fully satisfied upon a consideration of all the facts and circumstances that the disputed law is not the
product of racial hostility, prejudice or discrimination, but the expression of the legitimate desire and
determination of the people, thru their authorized representatives, to free the nation from the economic situation
that has unfortunately been saddled upon it rightly or wrongly, to its disadvantage. The law is clearly in the
interest of the public, nay of the national security itself, and indisputably falls within the scope of police power,
thru which and by which the State insures its existence and security and the supreme welfare of its
citizens.VI. The Equal Protection Limitation
a. Objections to alien participation in retail trade. — The next question that now poses solution is, Does the law
deny the equal protection of the laws? As pointed out above, the mere fact of alienage is the root and cause of
the distinction between the alien and the national as a trader. The alien resident owes allegiance to the country of
his birth or his adopted country; his stay here is for personal convenience; he is attracted by the lure of gain and
profit. His aim or purpose of stay, we admit, is neither illegitimate nor immoral, but he is naturally lacking in that
spirit of loyalty and enthusiasm for this country where he temporarily stays and makes his living, or of that spirit of
regard, sympathy and consideration for his Filipino customers as would prevent him from taking advantage of
their weakness and exploiting them. The faster he makes his pile, the earlier can the alien go back to his beloved
country and his beloved kin and countrymen. The experience of the country is that the alien retailer has shown
such utter disregard for his customers and the people on whom he makes his profit, that it has been found
necessary to adopt the legislation, radical as it may seem.
Another objection to the alien retailer in this country is that he never really makes a genuine contribution to
national income and wealth. He undoubtedly contributes to general distribution, but the gains and profits he
makes are not invested in industries that would help the country's economy and increase national wealth. The
alien's interest in this country being merely transient and temporary, it would indeed be ill-advised to continue
entrusting the very important function of retail distribution to his hands.
The practices resorted to by aliens in the control of distribution, as already pointed out above, their secret
manipulations of stocks of commodities and prices, their utter disregard of the welfare of their customers and of
the ultimate happiness of the people of the nation of which they are mere guests, which practices, manipulations
and disregard do not attend the exercise of the trade by the nationals, show the existence of real and actual,
positive and fundamental differences between an alien and a national which fully justify the legislative
classification adopted in the retail trade measure. These differences are certainly a valid reason for the State to
prefer the national over the alien in the retail trade. We would be doing violence to fact and reality were we to
hold that no reason or ground for a legitimate distinction can be found between one and the other.
b. Difference in alien aims and purposes sufficient basis for distinction. —
The above objectionable characteristics of the exercise of the retail trade by the aliens, which are actual and real,
furnish sufficient grounds for legislative classification of retail traders into nationals and aliens. Some may
disagree with the wisdom of the legislature's classification. To this we answer, that this is the prerogative of the
law-making power. Since the Court finds that the classification is actual, real and reasonable, and all persons of
one class are treated alike, and as it cannot be said that the classification is patently unreasonable and
unfounded, it is in duty bound to declare that the legislature acted within its legitimate prerogative and it can not
declare that the act transcends the limit of equal protection established by the Constitution.
Broadly speaking, the power of the legislature to make distinctions and classifications among persons is not
curtailed or denied by the equal protection of the laws clause. The legislative power admits of a wide scope of
discretion, and a law can be violative of the constitutional limitation only when the classification is without
reasonable basis. In addition to the authorities we have earlier cited, we can also refer to the case of Linsey vs.
Natural Carbonic Fas Co. (1911), 55 L. ed., 369, which clearly and succinctly defined the application of equal
protection clause to a law sought to be voided as contrary thereto:
. . . . "1. The equal protection clause of the Fourteenth Amendment does not take from the state the power
to classify in the adoption of police laws, but admits of the exercise of the wide scope of discretion in that
regard, and avoids what is done only when it is without any reasonable basis, and therefore is purely
arbitrary. 2. A classification having some reasonable basis does not offend against that clause merely
because it is not made with mathematical nicety, or because in practice it results in some inequality. 3.
When the classification in such a law is called in question, if any state of facts reasonably can be conceived
that would sustain it, the existence of that state of facts at the time the law was enacted must be assumed.
4. One who assails the classification in such a law must carry the burden of showing that it does not rest
upon any reasonable basis but is essentially arbitrary."
c. Authorities recognizing citizenship as basis for classification. —
The question as to whether or not citizenship is a legal and valid ground for classification has already been
affirmatively decided in this jurisdiction as well as in various courts in the United States. In the case of Smith Bell
& Co. vs. Natividad, 40 Phil. 136, where the validity of Act No. 2761 of the Philippine Legislature was in issue,
because of a condition therein limiting the ownership of vessels engaged in coastwise trade to corporations
formed by citizens of the Philippine Islands or the United States, thus denying the right to aliens, it was held that
the Philippine Legislature did not violate the equal protection clause of the Philippine Bill of Rights. The
legislature in enacting the law had as ultimate purpose the encouragement of Philippine shibuilding and the
safety for these Islands from foreign interlopers. We held that this was a valid exercise of the police power, and
all presumptions are in favor of its constitutionality. In substance, we held that the limitation of domestic
ownership of vessels engaged in coastwise trade to citizens of the Philippines does not violate the equal
protection of the law and due process or law clauses of the Philippine Bill of Rights. In rendering said decision we
quoted with approval the concurring opinion of Justice Johnson in the case of Gibbons vs. Ogden, 9 Wheat., I, as
follows:
"Licensing acts, in fact, in legislation, are universally restraining acts; as, for example, acts licensing
gaming houses, retailers of spirituous liquors, etc. The act, in this instance, is distinctly of that character,
and forms part of an extensive system, the object of which is to encourage American shipping, and place
them on an equal footing with the shipping of other nations. Almost every commercial nation reserves to its
own subjects a monopoly of its coasting trade; and a countervailing privilege in favor of American shipping
is contemplated, in the whole legislation of the United States on this subject. It is not to give the vessel an
American character, that the license is granted; that effect has been correctly attributed to the act of her
enrollment. But it is to confer on her American privileges, as contra distinguished from foreign; and to
preserve the Government from fraud by foreigners; in surreptitiously intruding themselves into the American
commercial marine, as well as frauds upon the revenue in the trade coastwise, that this whole system is
projected."
The rule in general is as follows:
Aliens are under no special constitutional protection which forbids a classification otherwise justified simply
because the limitation of the class falls along the lines of nationality. That would be requiring a higher
degree of protection for aliens as a class than for similar classes than for similar classes of American
citizens. Broadly speaking, the difference in status between citizens and aliens constitutes a basis for
reasonable classification in the exercise of police power. (2 Am., Jur. 468-469.)
In Commonwealth vs. Hana, 81 N. E. 149 (Massachusetts, 1907), a statute on the licensing of hawkers and
peddlers, which provided that no one can obtain a license unless he is, or has declared his intention, to become
a citizen of the United States, was held valid, for the following reason: It may seem wise to the legislature to limit
the business of those who are supposed to have regard for the welfare, good order and happiness of the
community, and the court cannot question this judgment and conclusion. In Bloomfield vs. State, 99 N. E. 309
(Ohio, 1912), a statute which prevented certain persons, among them aliens, from engaging in the traffic of
liquors, was found not to be the result of race hatred, or in hospitality, or a deliberate purpose to discriminate, but
was based on the belief that an alien cannot be sufficiently acquainted with "our institutions and our life as to
enable him to appreciate the relation of this particular business to our entire social fabric", and was not, therefore,
invalid. In Ohio ex rel. Clarke vs. Deckebach, 274 U. S. 392, 71 L. ed. 115 (1926), the U.S. Supreme Court had
under consideration an ordinance of the city of Cincinnati prohibiting the issuance of licenses (pools and billiard
rooms) to aliens. It held that plainly irrational discrimination against aliens is prohibited, but it does not follow that
alien race and allegiance may not bear in some instances such a relation to a legitimate object of legislation as to
be made the basis of permitted classification, and that it could not state that the legislation is clearly wrong; and
that latitude must be allowed for the legislative appraisement of local conditions and for the legislative choice of
methods for controlling an apprehended evil. The case of State vs. Carrol, 124 N. E. 129 (Ohio, 1919) is a
parallel case to the one at bar. In Asakura vs. City of Seattle, 210 P. 30 (Washington, 1922), the business of
pawn brooking was considered as having tendencies injuring public interest, and limiting it to citizens is within the
scope of police power. A similar statute denying aliens the right to engage in auctioneering was also sustained
in Wright vs. May, L.R.A., 1915 P. 151 (Minnesota, 1914). So also in Anton vs. Van Winkle, 297 F. 340 (Oregon,
1924), the court said that aliens are judicially known to have different interests, knowledge, attitude, psychology
and loyalty, hence the prohibitions of issuance of licenses to them for the business of pawnbroker, pool, billiard,
card room, dance hall, is not an infringement of constitutional rights. In Templar vs. Michigan State Board of
Examiners, 90 N.W. 1058 (Michigan, 1902), a law prohibiting the licensing of aliens as barbers was held void, but
the reason for the decision was the court's findings that the exercise of the business by the aliens does not in any
way affect the morals, the health, or even the convenience of the community. In Takahashi vs. Fish and Game
Commission, 92 L. ed. 1479 (1947), a California statute banning the issuance of commercial fishing licenses to
person ineligible to citizenship was held void, because the law conflicts with Federal power over immigration, and
because there is no public interest in the mere claim of ownership of the waters and the fish in them, so there
was no adequate justification for the discrimination. It further added that the law was the outgrowth of antagonism
toward the persons of Japanese ancestry. However, two Justices dissented on the theory that fishing rights have
been treated traditionally as natural resources. In Fraser vs. McConway & Tarley Co., 82 Fed. 257
(Pennsylvania, 1897), a state law which imposed a tax on every employer of foreign-born unnaturalized male
persons over 21 years of age, was declared void because the court found that there was no reason for the
classification and the tax was an arbitrary deduction from the daily wage of an employee.
d. Authorities contra explained. —
It is true that some decisions of the Federal court and of the State courts in the United States hold that the
distinction between aliens and citizens is not a valid ground for classification. But in this decision the laws
declared invalid were found to be either arbitrary, unreasonable or capricious, or were the result or product of
racial antagonism and hostility, and there was no question of public interest involved or pursued. In Yu Cong Eng
vs. Trinidad, 70 L. ed. 1059 (1925), the United States Supreme Court declared invalid a Philippine law making
unlawful the keeping of books of account in any language other than English, Spanish or any other local dialect,
but the main reasons for the decisions are: (1) that if Chinese were driven out of business there would be no
other system of distribution, and (2) that the Chinese would fall prey to all kinds of fraud, because they would be
deprived of their right to be advised of their business and to direct its conduct. The real reason for the decision,
therefore, is the court's belief that no public benefit would be derived from the operations of the law and on the
other hand it would deprive Chinese of something indispensable for carrying on their business. In Yick Wo vs.
Hopkins, 30 L. ed 220 (1885) an ordinance conferring powers on officials to withhold consent in the operation of
laundries both as to persons and place, was declared invalid, but the court said that the power granted was
arbitrary, that there was no reason for the discrimination which attended the administration and implementation of
the law, and that the motive thereof was mere racial hostility. In State vs. Montgomery, 47 A. 165 (Maine, 1900),
a law prohibiting aliens to engage as hawkers and peddlers was declared void, because the discrimination bore
no reasonable and just relation to the act in respect to which the classification was proposed.
The case at bar is radically different, and the facts make them so. As we already have said, aliens do not
naturally possess the sympathetic consideration and regard for the customers with whom they come in daily
contact, nor the patriotic desire to help bolster the nation's economy, except in so far as it enhances their profit,
nor the loyalty and allegiance which the national owes to the land. These limitations on the qualifications of the
aliens have been shown on many occasions and instances, especially in times of crisis and emergency. We can
do no better than borrow the language of Anton vs. Van Winkle, 297 F. 340, 342, to drive home the reality and
significance of the distinction between the alien and the national, thus:
. . . . It may be judicially known, however, that alien coming into this country are without the intimate
knowledge of our laws, customs, and usages that our own people have. So it is likewise known that certain
classes of aliens are of different psychology from our fellow countrymen. Furthermore, it is natural and
reasonable to suppose that the foreign born, whose allegiance is first to their own country, and whose
ideals of governmental environment and control have been engendered and formed under entirely different
regimes and political systems, have not the same inspiration for the public weal, nor are they as well
disposed toward the United States, as those who by citizenship, are a part of the government itself. Further
enlargement, is unnecessary. I have said enough so that obviously it cannot be affirmed with absolute
confidence that the Legislature was without plausible reason for making the classification, and therefore
appropriate discriminations against aliens as it relates to the subject of legislation. . . . .
VII. The Due Process of Law Limitation.
a. Reasonability, the test of the limitation; determination by legislature decisive. —
We now come to due process as a limitation on the exercise of the police power. It has been stated by the
highest authority in the United States that:
. . . . And the guaranty of due process, as has often been held, demands only that the law shall not be
unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation
to the subject sought to be attained. . . . .
So far as the requirement of due process is concerned and in the absence of other constitutional restriction
a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare,
and to enforce that policy by legislation adapted to its purpose. The courts are without authority either to
declare such policy, or, when it is declared by the legislature, to override it. If the laws passed are seen to
have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the
requirements of due process are satisfied, and judicial determination to that effect renders a court functus
officio. . . . (Nebbia vs. New York, 78 L. ed. 940, 950, 957.)
Another authority states the principle thus:
. . . . Too much significance cannot be given to the word "reasonable" in considering the scope of the police
power in a constitutional sense, for the test used to determine the constitutionality of the means employed
by the legislature is to inquire whether the restriction it imposes on rights secured to individuals by the Bill
of Rights are unreasonable, and not whether it imposes any restrictions on such rights. . . .
. . . . A statute to be within this power must also be reasonable in its operation upon the persons whom it
affects, must not be for the annoyance of a particular class, and must not be unduly oppressive. (11 Am.
Jur. Sec. 302., 1:1)- 1074-1075.)
In the case of Lawton vs. Steele, 38 L. ed. 385, 388. it was also held:
. . . . To justify the state in thus interposing its authority in behalf of the public, it must appear, first, that the
interests of the public generally, as distinguished from those of a particular class, require such interference;
and second, that the means are reasonably necessary for the accomplishment of the purpose, and not
unduly oppressive upon individuals. . . .
Prata Undertaking Co. vs. State Board of Embalming, 104 ALR, 389, 395, fixes this test of constitutionality:
In determining whether a given act of the Legislature, passed in the exercise of the police power to regulate
the operation of a business, is or is not constitutional, one of the first questions to be considered by the
court is whether the power as exercised has a sufficient foundation in reason in connection with the matter
involved, or is an arbitrary, oppressive, and capricious use of that power, without substantial relation to the
health, safety, morals, comfort, and general welfare of the public.
b. Petitioner's argument considered. —
Petitioner's main argument is that retail is a common, ordinary occupation, one of those privileges long ago
recognized as essential to the orderly pursuant of happiness by free men; that it is a gainful and honest
occupation and therefore beyond the power of the legislature to prohibit and penalized. This arguments overlooks
fact and reality and rests on an incorrect assumption and premise, i.e., that in this country where the occupation
is engaged in by petitioner, it has been so engaged by him, by the alien in an honest creditable and
unimpeachable manner, without harm or injury to the citizens and without ultimate danger to their economic
peace, tranquility and welfare. But the Legislature has found, as we have also found and indicated, that the
privilege has been so grossly abused by the alien, thru the illegitimate use of pernicious designs and practices,
that he now enjoys a monopolistic control of the occupation and threatens a deadly stranglehold on the nation's
economy endangering the national security in times of crisis and emergency.
The real question at issue, therefore, is not that posed by petitioner, which overlooks and ignores the facts and
circumstances, but this, Is the exclusion in the future of aliens from the retail trade unreasonable. Arbitrary
capricious, taking into account the illegitimate and pernicious form and manner in which the aliens have
heretofore engaged therein? As thus correctly stated the answer is clear. The law in question is deemed
absolutely necessary to bring about the desired legislative objective, i.e., to free national economy from alien
control and dominance. It is not necessarily unreasonable because it affects private rights and privileges (11 Am.
Jur. pp. 1080-1081.) The test of reasonableness of a law is the appropriateness or adequacy under all
circumstances of the means adopted to carry out its purpose into effect (Id.) Judged by this test, disputed
legislation, which is not merely reasonable but actually necessary, must be considered not to have infringed the
constitutional limitation of reasonableness.
The necessity of the law in question is explained in the explanatory note that accompanied the bill, which later
was enacted into law:
This bill proposes to regulate the retail business. Its purpose is to prevent persons who are not citizens of
the Philippines from having a strangle hold upon our economic life. If the persons who control this vital
artery of our economic life are the ones who owe no allegiance to this Republic, who have no profound
devotion to our free institutions, and who have no permanent stake in our people's welfare, we are not
really the masters of our destiny. All aspects of our life, even our national security, will be at the mercy of
other people.
In seeking to accomplish the foregoing purpose, we do not propose to deprive persons who are not citizens
of the Philippines of their means of livelihood. While this bill seeks to take away from the hands of persons
who are not citizens of the Philippines a power that can be wielded to paralyze all aspects of our national
life and endanger our national security it respects existing rights.
The approval of this bill is necessary for our national survival.
If political independence is a legitimate aspiration of a people, then economic independence is none the less
legitimate. Freedom and liberty are not real and positive if the people are subject to the economic control and
domination of others, especially if not of their own race or country. The removal and eradication of the shackles
of foreign economic control and domination, is one of the noblest motives that a national legislature may pursue.
It is impossible to conceive that legislation that seeks to bring it about can infringe the constitutional limitation of
due process. The attainment of a legitimate aspiration of a people can never be beyond the limits of legislative
authority.
c. Law expressly held by Constitutional Convention to be within the sphere of legislative action. —
The framers of the Constitution could not have intended to impose the constitutional restrictions of due process
on the attainment of such a noble motive as freedom from economic control and domination, thru the exercise of
the police power. The fathers of the Constitution must have given to the legislature full authority and power to
enact legislation that would promote the supreme happiness of the people, their freedom and liberty. On the
precise issue now before us, they expressly made their voice clear; they adopted a resolution expressing their
belief that the legislation in question is within the scope of the legislative power. Thus they declared the their
Resolution:
That it is the sense of the Convention that the public interest requires the nationalization of retail trade; but
it abstain from approving the amendment introduced by the Delegate for Manila, Mr. Araneta, and others
on this matter because it is convinced that the National Assembly is authorized to promulgate a law which
limits to Filipino and American citizens the privilege to engage in the retail trade. (11 Aruego, The Framing
of the Philippine Constitution, quoted on pages 66 and 67 of the Memorandum for the Petitioner.)
It would do well to refer to the nationalistic tendency manifested in various provisions of the Constitution. Thus in
the preamble, a principle objective is the conservation of the patrimony of the nation and as corollary the
provision limiting to citizens of the Philippines the exploitation, development and utilization of its natural
resources. And in Section 8 of Article XIV, it is provided that "no franchise, certificate, or any other form of
authorization for the operation of the public utility shall be granted except to citizens of the Philippines." The
nationalization of the retail trade is only a continuance of the nationalistic protective policy laid down as a primary
objective of the Constitution. Can it be said that a law imbued with the same purpose and spirit underlying many
of the provisions of the Constitution is unreasonable, invalid and unconstitutional?
The seriousness of the Legislature's concern for the plight of the nationals as manifested in the approval of the
radical measures is, therefore, fully justified. It would have been recreant to its duties towards the country and its
people would it view the sorry plight of the nationals with the complacency and refuse or neglect to adopt a
remedy commensurate with the demands of public interest and national survival. As the repository of the
sovereign power of legislation, the Legislature was in duty bound to face the problem and meet, through
adequate measures, the danger and threat that alien domination of retail trade poses to national economy.
d. Provisions of law not unreasonable. —
A cursory study of the provisions of the law immediately reveals how tolerant, how reasonable the Legislature
has been. The law is made prospective and recognizes the right and privilege of those already engaged in the
occupation to continue therein during the rest of their lives; and similar recognition of the right to continue is
accorded associations of aliens. The right or privilege is denied to those only upon conviction of certain offenses.
In the deliberations of the Court on this case, attention was called to the fact that the privilege should not have
been denied to children and heirs of aliens now engaged in the retail trade. Such provision would defeat the law
itself, its aims and purposes. Beside, the exercise of legislative discretion is not subject to judicial review. It is well
settled that the Court will not inquire into the motives of the Legislature, nor pass upon general matters of
legislative judgment. The Legislature is primarily the judge of the necessity of an enactment or of any of its
provisions, and every presumption is in favor of its validity, and though the Court may hold views inconsistent
with the wisdom of the law, it may not annul the legislation if not palpably in excess of the legislative power.
Furthermore, the test of the validity of a law attacked as a violation of due process, is not its reasonableness, but
its unreasonableness, and we find the provisions are not unreasonable. These principles also answer various
other arguments raised against the law, some of which are: that the law does not promote general welfare; that
thousands of aliens would be thrown out of employment; that prices will increase because of the elimination of
competition; that there is no need for the legislation; that adequate replacement is problematical; that there may
be general breakdown; that there would be repercussions from foreigners; etc. Many of these arguments are
directed against the supposed wisdom of the law which lies solely within the legislative prerogative; they do not
import invalidity.
VIII. Alleged defect in the title of the law
A subordinate ground or reason for the alleged invalidity of the law is the claim that the title thereof is misleading
or deceptive, as it conceals the real purpose of the bill which is to nationalize the retail business and prohibit
aliens from engaging therein. The constitutional provision which is claimed to be violated in Section 21 (1) of
Article VI, which reads:
No bill which may be enacted in the law shall embrace more than one subject which shall be expressed in
the title of the bill.
What the above provision prohibits is duplicity, that is, if its title completely fails to appraise the legislators or the
public of the nature, scope and consequences of the law or its operation (I Sutherland, Statutory Construction,
Sec. 1707, p. 297.) A cursory consideration of the title and the provisions of the bill fails to show the presence of
duplicity. It is true that the term "regulate" does not and may not readily and at first glance convey the idea of
"nationalization" and "prohibition", which terms express the two main purposes and objectives of the law. But
"regulate" is a broader term than either prohibition or nationalization. Both of these have always been included
within the term regulation.
Under the title of an act to "regulate", the sale of intoxicating liquors, the Legislature may prohibit the sale of
intoxicating liquors. (Sweet vs. City of Wabash, 41 Ind., 7; quoted in page 41 of Answer.)
Within the meaning of the Constitution requiring that the subject of every act of the Legislature shall be
stated in the tale, the title to regulate the sale of intoxicating liquors, etc." sufficiently expresses the subject
of an actprohibiting the sale of such liquors to minors and to persons in the habit of getting intoxicated;
such matters being properly included within the subject of regulating the sale. (Williams vs. State, 48 Ind.
306, 308, quoted in p. 42 of Answer.)
The word "regulate" is of broad import, and necessarily implies some degree of restraint and prohibition of
acts usually done in connection with the thing to be regulated. While word regulate does not ordinarily
convey meaning of prohibit, there is no absolute reason why it should not have such meaning when used in
delegating police power in connection with a thing the best or only efficacious regulation of which involves
suppression. (State vs. Morton, 162 So. 718, 182 La. 887, quoted in p. 42 of Answer.)
The general rule is for the use of general terms in the title of a bill; it has also been said that the title need not be
an index to the entire contents of the law (I Sutherland, Statutory Construction, See. 4803, p. 345.) The above
rule was followed the title of the Act in question adopted the more general term "regulate" instead of "nationalize"
or "prohibit". Furthermore, the law also contains other rules for the regulation of the retail trade which may not be
included in the terms "nationalization" or "prohibition"; so were the title changed from "regulate" to "nationalize" or
"prohibit", there would have been many provisions not falling within the scope of the title which would have made
the Act invalid. The use of the term "regulate", therefore, is in accord with the principle governing the drafting of
statutes, under which a simple or general term should be adopted in the title, which would include all other
provisions found in the body of the Act.
One purpose of the constitutional directive that the subject of a bill should be embraced in its title is to apprise the
legislators of the purposes, the nature and scope of its provisions, and prevent the enactment into law of matters
which have received the notice, action and study of the legislators or of the public. In the case at bar it cannot be
claimed that the legislators have been appraised of the nature of the law, especially the nationalization and the
prohibition provisions. The legislators took active interest in the discussion of the law, and a great many of the
persons affected by the prohibitions in the law conducted a campaign against its approval. It cannot be claimed,
therefore, that the reasons for declaring the law invalid ever existed. The objection must therefore, be overruled.
IX. Alleged violation of international treaties and obligations
Another subordinate argument against the validity of the law is the supposed violation thereby of the Charter of
the United Nations and of the Declaration of the Human Rights adopted by the United Nations General
Assembly. We find no merit in the Nations Charter imposes no strict or legal obligations regarding the rights and
freedom of their subjects (Hans Kelsen, The Law of the United Nations, 1951 ed. pp. 29-32), and the Declaration
of Human Rights contains nothing more than a mere recommendation or a common standard of achievement for
all peoples and all nations (Id. p. 39.) That such is the import of the United Nations Charter aid of the Declaration
of Human Rights can be inferred the fact that members of the United Nations Organizations, such as Norway and
Denmark, prohibit foreigners from engaging in retail trade, and in most nations of the world laws against
foreigners engaged in domestic trade are adopted.
The Treaty of Amity between the Republic of the Philippines and the Republic of China of April 18, 1947 is also
claimed to be violated by the law in question. All that the treaty guarantees is equality of treatment to the Chinese
nationals "upon the same terms as the nationals of any other country." But the nationals of China are not
discriminating against because nationals of all other countries, except those of the United States, who are
granted special rights by the Constitution, are all prohibited from engaging in the retail trade. But even supposing
that the law infringes upon the said treaty, the treaty is always subject to qualification or amendment by a
subsequent law (U. S. vs. Thompson, 258, Fed. 257, 260), and the same may never curtail or restrict the scope
of the police power of the State (plaston vs. Pennsylvania, 58 L. ed. 539.)
X. Conclusion
Resuming what we have set forth above we hold that the disputed law was enacted to remedy a real actual
threat and danger to national economy posed by alien dominance and control of the retail business and free
citizens and country from dominance and control; that the enactment clearly falls within the scope of the police
power of the State, thru which and by which it protects its own personality and insures its security and future; that
the law does not violate the equal protection clause of the Constitution because sufficient grounds exist for the
distinction between alien and citizen in the exercise of the occupation regulated, nor the due process of law
clause, because the law is prospective in operation and recognizes the privilege of aliens already engaged in the
occupation and reasonably protects their privilege; that the wisdom and efficacy of the law to carry out its
objectives appear to us to be plainly evident — as a matter of fact it seems not only appropriate but actually
necessary — and that in any case such matter falls within the prerogative of the Legislature, with whose power
and discretion the Judicial department of the Government may not interfere; that the provisions of the law are
clearly embraced in the title, and this suffers from no duplicity and has not misled the legislators or the segment
of the population affected; and that it cannot be said to be void for supposed conflict with treaty obligations
because no treaty has actually been entered into on the subject and the police power may not be curtailed or
surrendered by any treaty or any other conventional agreement.
Some members of the Court are of the opinion that the radical effects of the law could have been made less
harsh in its impact on the aliens. Thus it is stated that the more time should have been given in the law for the
liquidation of existing businesses when the time comes for them to close. Our legal duty, however, is merely to
determine if the law falls within the scope of legislative authority and does not transcend the limitations of due
process and equal protection guaranteed in the Constitution. Remedies against the harshness of the law should
be addressed to the Legislature; they are beyond our power and jurisdiction.
The petition is hereby denied, with costs against petitioner.
Paras, C.J., Bengzon, Reyes, A., Bautista Angelo, Concepcion, Reyes, J.B.L., Endencia and Felix, JJ., concur.
Separate Opinions
PADILLA, J., concurring and dissenting:
I agree to the proposition, principle or rule that courts may not inquire into the wisdom of an the Act passed by
the Congress and duly approved by the President of the Republic. But the rule does not preclude courts from
inquiring and determining whether the Act offends against a provision or provisions of the Constitution. I am
satisfied that the Act assailed as violative of the due process of law and the equal protection of the laws clauses
of the Constitution does not infringe upon them, insofar as it affects associations, partnership or corporations, the
capital of which is not wholly owned by the citizens of the Philippines, and aliens, who are not and have not been
engaged in the retail business. I am, however, unable to persuade myself that it does not violate said clauses
insofar as the Act applies to associations and partnerships referred to in the Act and to aliens, who are and have
heretofore been engaged in said business. When they did engage in the retail business there was no prohibition
on or against them to engage in it. They assumed and believed in good faith they were entitled to engaged in the
business. The Act allows aliens to continue in business until their death or voluntary retirement from the business
or forfeiture of their license; and corporations, associations or partnership, the capital of which is not wholly
owned by the citizens of the Philippines to continue in the business for a period of ten years from the date of the
approval of the Act (19 June 1954) or until the expiry of term of the existence of the association or partnership or
corporation, whichever event comes first. The prohibition on corporations, the capital of which is not wholly
owned by citizens of the Philippines, to engage in the retail business for a period of more than ten years from the
date of the approval of the Act or beyond the term of their corporate existence, whichever event comes first, is
valid and lawful, because the continuance of the existence of such corporations is subject to whatever the
Congress may impose reasonably upon them by subsequent legislation.1 But the prohibition to engage in the
retail business by associations and partnerships, the capital of which is not wholly owned by citizen of the
Philippines, after ten years from the date of the approval of the Act, even before the end of the term of their
existence as agreed upon by the associates and partners, and by alien heirs to whom the retail business is
transmitted by the death of an alien engaged in the business, or by his executor or administrator, amounts to a
deprivation of their property without due process of law. To my mind, the ten-year period from the date of the
approval of the Act or until the expiration of the term of the existence of the association and partnership,
whichever event comes first, and the six-month period granted to alien heirs of a deceased alien, his executor or
administrator, to liquidate the business, do not cure the defect of the law, because the effect of the prohibition is
to compel them to sell or dispose of their business. The price obtainable at such forced sale of the business
would be inadequate to reimburse and compensate the associates or partners of the associations or partnership,
and the alien heirs of a deceased alien, engaged in the retail business for the capital invested in it. The stock of
merchandise bought and sold at retail does not alone constitute the business. The goodwill that the association,
partnership and the alien had built up during a long period of effort, patience and perseverance forms part of
such business. The constitutional provisions that no person shall be deprived of his property without due process
of law2 and that no person shall be denied the equal protection of the laws3 would have no meaning as applied to
associations or partnership and alien heirs of an alien engaged in the retail business if they were to be compelled
to sell or dispose of their business within ten years from the date of the approval of the Act and before the end of
the term of the existence of the associations and partnership as agreed upon by the associations and partners
and within six months after the death of their predecessor-in-interest.
The authors of the Constitution were vigilant, careful and zealous in the safeguard of the ownership of private
agricultural lands which together with the lands of the public domain constitute the priceless patrimony and
mainstay of the nation; yet, they did not deem it wise and prudent to deprive aliens and their heirs of such lands. 4
For these reasons, I am of the opinion that section 1 of the Act, insofar as it compels associations and
partnership referred to therein to wind up their retail business within ten years from the date of the approval of the
Act even before the expiry of the term of their existence as agreed upon by the associates and partners and
section 3 of the Act, insofar as it compels the aliens engaged in the retail business in his lifetime his executor or
administrator, to liquidate the business, are invalid, for they violate the due process of law and the equal
protection of the laws clauses of the Constitution.
Footnotes
1 Section 76, Act No. 1459..
2 Section 1 (1), Article III, of the Constitution..
3 Ibid.
4 Section 5, Article XIII, of the Constitution.

[G.R. No. L-7859. December 22, 1955.]
WALTER LUTZ, as Judicial Administrator of the Intestate Estate of the deceased Antonio Jayme
Ledesma, Plaintiff-Appellant, v. J. ANTONIO ARANETA, as the Collector of Internal Revenue, Defendant-
Appellee.
Ernesto J. Gonzaga for Appellant.
Solicitor General Ambrosio Padilla, First Assistant Solicitor General Guillermo E. Torres and Solicitor
Felicisimo R. Rosete for Appellee.
SYLLABUS
1. CONSTITUTIONAL LAW; TAXATION; POWER OF STATE TO LEVY TAX IN AND SUPPORT OF SUGAR
INDUSTRY. — As the protection and promotion of the sugar industry is a matter of public concern the Legislature
may determine within reasonable bounds what is necessary for its protection and expedient for its promotion.
Here, the legislative must be allowed full play, subject only to the test of reasonableness; and it is not contended
that the means provided in section 6 of Commonwealth Act No. 567 bear no relation to the objective pursued or
are oppressive in character. If objective an methods are alike constitutionally valid, no reason is seen why the
state may not levy taxes to raise funds for their prosecution and attainment. Taxation may be made the
implement. Taxation may be made the implement of the state’s police power (Great Atl. & Pac. Tea Co. v.
Grosjean, 301 U.S. 412, 81 L. Ed. 1193; U.S. v. Butler, 297 U.S. 1, 80 L. Ed. 477; M’Culloch v. Maryland, 4
Wheat, 316, 4 L. Ed. 579).
2. ID.; ID.; POWER OF STATE TO SELECT SUBJECT OF TAXATION. — It is inherent in the power to tax that a
state be free to select the subjects of taxation, and it has been repeatedly held that "inequalities which result from
a singling out of one particular class for taxation or exemption infringe no constitutional limitation (Carmicheal v.
Southern Coal & Coke Co., 301 U.S. 495, 81 L. Ed. 1245, citing numerous authorities, at 1251).
DECISION
REYES, J. B. L., J.:
This case was initiated in the Court of First Instance of Negros Occidental to test the legality of the taxes imposed
by Commonwealth Act No. 567, otherwise known as the Sugar Adjustment Act.
Promulgated in 1940, the law in question opens (section 1) with a declaration of emergency, due to the threat to
our industry by the imminent imposition of export taxes upon sugar as provided in the Tydings-McDuffie Act, and
the "eventual loss of its preferential position in the United States market" ; wherefore, the national policy was
expressed "to obtain a readjustment of the benefits derived from the sugar industry by the component elements
thereof" and "to stabilize the sugar industry so as to prepare it for the eventuality of the loss of its preferential
position in the United States market and the imposition of the export taxes."cralaw virtua1aw library
In section 2, Commonwealth Act 567 provides for an increase of the existing tax on the manufacture of sugar, on
a graduated basis, on each picul of sugar manufactures; while section 3 levies on owners or persons in control of
lands devoted to the cultivation of sugar cane and ceded to others for a consideration, on lease or otherwise —
"a tax equivalent to the difference between the money value of the rental or consideration collected and the
amount representing 12 per centum of the assessed value of such land."cralaw virtua1aw liy
According to section 6 of the law —
SEC. 6. All collections made under this Act shall accrue to a special fund in the Philippine Treasury, to be known
as the ’Sugar Adjustment and Stabilization Fund,’ and shall be paid out only for any or all of the following
purposes or to attain any or all of the following objectives, as may be provided by law.
First, to place the sugar industry in a position to maintain itself despite the gradual loss of the preferential position
of the Philippine sugar in the United States market, and ultimately to insure its continued existence
notwithstanding the loss of that market and the consequent necessity of meeting competition in the free markets
of the world;
Second, to readjust the benefits derived from the sugar industry by all of the component elements thereof — the
mill, the landowner, the planter of the sugar cane, and the laborers in the factory and in the field — so that all
might continue profitably to engage therein;
Third, to limit the production of sugar to areas more economically suited to the production thereof; and
Fourth, to afford labor employed in the industry a living wage and to improve their living and working conditions:
Provided, That the President of the Philippines may, until the adjournment of the next regular session of the
National Assembly, make the necessary disbursements from the fund herein created (1) for the establishment
and operation of sugar experiment station or stations and the undertaking of researchers (a)to increase the
recoveries of the centrifugal sugar factories with the view of reducing manufacturing costs, (b) to produce and
propagate higher yielding varieties of sugar cane more adaptable to different distinct conditions in the Philippines,
(c) to lower the costs of raising sugar cane, (d) to improve the buying quality of denatured alcohol from molasses
for motor fuel, (e) to determine the possibility of utilizing the other by-products of the industry, (f) to determine
what crop or crops are suitable for rotation and for the utilization of excess cane lands, and (g) on other problems
the solution of which would help rehabilitated and stabilize the industry, and (2) for the improvement of living and
working conditions in sugar mills and sugar plantations, authorizing him to organize the necessary agency or
agencies to take charge of the expenditure and allocation of said funds to carry out the purpose hereinbefore
enumerated, and, likewise, authorizing the disbursement from the fund herein created of the necessary amount
of amounts needed for salaries, wages, travelling expenses, equipment, and other sundry expenses or said
agency or agencies."cralaw virtua1aw library
Plaintiff, Walter Lutz, in his capacity as Judicial Administrator of the Intestate Estate of Antonio Jayme Ledesma,
seeks to recover from the Collector of Internal Revenue the sum of P14,666.40 paid by the estate as taxes,
under section 3 of the Act, for the crop years 1948-1949 and 1949-1950; alleging that such tax is unconstitutional
and void, being levied for the aid and support of the sugar industry exclusively, which in plaintiff’s opinion is not a
public purpose for which a tax may be constitutionally levied. The action having been dismissed by the Court of
First Instance, the plaintiffs appealed the case directly to this Court (Judiciary Act, section 17).

The basic defect in the plaintiff’s position is his assumption that the tax provided for in Commonwealth Act No.
567 is a pure exercise of the taxing power. Analysis of the Act, and particularly of section 6 (heretofore quoted in
full), will show that the tax is levied with a regulatory purpose, to provide means for the rehabilitation and
stabilization of the threatened sugar industry. In other words, the act is primarily an exercise of the police power.
This Court can take judicial notice of the fact that sugar production in one of the great industries of our nation,
sugar occupying a leading position among its export products; that it gives employment to thousands of laborers
in fields and factories; that it is a great source of the state’s wealth, is one of the important sources of foreign
exchange needed by our government, and is thus pivotal in the plans of a regime committed to a policy of
currency stability. Its promotion, protection and advancement, therefore redounds greatly to the general welfare.
Hence it was competent for the legislature to find that the general welfare demanded that the sugar industry
should be stabilized in turn; and in the wide field of its police power, the law-making body could provide that the
distribution of benefits therefrom be readjusted among its components to enable it to resist the added strain of
the increase in taxes that it had to sustain (Sligh v. Kirkwood, 237 U. S. 52, 59 L. Ed. 835; Johnson v. State ex
rel. Marey, 99 Fla. 1311, 128 So 853; Maxcy Inc. v. Mayo, 103 Fla. 552, 139 So. 121).
overthrown because there are other instances to which it might have been applied;" and that the legislative
authority, exerted within its proper field, need not embrace all the evils within its reach" (N. L. R. B. v. Jones &
Laughlin Steel Corp. 301 U. S. 1, 81 L. Ed. 893).
Even from the standpoint that the Act is a pure tax measure, it cannot be said that the devotion of tax money to
experimental stations to seek increase of efficiency in sugar production, utilization of by- products and solution of
allied problems, as well as to the improvement of living and working conditions in sugar mills or plantations,
without any part of such money being channeled directly to private persons, constitutes expenditure of tax money
for private purposes, (compare Everson v. Board of Education, 91 L. Ed. 472, 168 ALR 1392, 1400).
The decision appealed from is affirmed, with costs against appellant. So ordered.
Paras, C.J., Bengzon, Padilla, Reyes, A., Jugo, Bautista Angelo, Labrador and Concepcion, JJ., concur.

As stated in Johnson v. State ex rel. Marey, with reference to the citrus industry in Florida —

"The protection of a large industry constituting one of the great sources of the state’s wealth and therefore
directly or indirectly affecting the welfare of so great a portion of the population of the State is affected to such an
extent by public interests as to be within the police power of the sovereign." (128 So. 857)

Once it is conceded, as it must, that the protection and promotion of the sugar industry is a matter of public
concern, it follows that the Legislature may determine within reasonable bounds what is necessary for its
protection and expedient for its promotion. Here, the legislative discretion must be allowed full play, subject only
to the test of reasonableness; and it is not contended that the means provided in section 6 of the law (above
quoted) bear no relation to the objective pursued or are oppressive in character. If objective and methods are
alike constitutionally valid, no reason is seen why the state may not be levy taxes to raise funds for their
prosecution and attainment. Taxation may be made the implement of the state’s police power (Great Atl. & Pac.
Tea Co. v. Grosjean, 301 U. S. 412, 81 L. Ed. 1193; U. S. v. Butler, 297 U. S. 1, 80 L. Ed. 477; M’Culloch v.
Maryland, 4 Wheat. 318, 4 L. Ed. 579).

That the tax to be levied should burden the sugar producers themselves can hardly be a ground of complaint;
indeed, it appears rational that the tax be obtained precisely from those who are to be benefited from the
expenditure of the funds derived from it. At any rate, it is inherent in the power to tax that a state be free to select
the subjects of taxation, and it has been repeatedly held that "inequalities which result from a singling out of one
particular class for taxation, or exemption infringe no constitutional limitation" (Carmichael v. Southern Coal &
Coke Co., 301 U. S. 495, 81 L. Ed. 1245, citing numerous authorities, at p. 1251).

From the point of view we have taken it appears of no moment that the funds raised under the Sugar Stabilization
Act, now in question, should be exclusively spent in aid of the sugar industry, since it is that very enterprise that
is being protected. It may be that other industries are also in need of similar protection; but the legislature is not
required by the Constitution to adhere to a policy of "all or none." As ruled in Minnesota ex rel. Pearson v.
Probate Court, 309 U. S. 270, 84 L. Ed. 744, "if the law presumably hits the evil where it is most felt, it is not to be
 G.R. No. L-75697
VALENTIN TIO doing business under the name and style of OMI ENTERPRISES, petitioner,
vs.
VIDEOGRAM REGULATORY BOARD, MINISTER OF FINANCE, METRO MANILA COMMISSION, CITY
MAYOR and CITY TREASURER OF MANILA, respondents.
Nelson Y. Ng for petitioner.
The City Legal Officer for respondents City Mayor and City Treasurer.
MELENCIO-HERRERA, J.:
This petition was filed on September 1, 1986 by petitioner on his own behalf and purportedly on behalf of other
videogram operators adversely affected. It assails the constitutionality of Presidential Decree No. 1987 entitled
"An Act Creating the Videogram Regulatory Board" with broad powers to regulate and supervise the videogram
industry (hereinafter briefly referred to as the BOARD). The Decree was promulgated on October 5, 1985 and
took effect on April 10, 1986, fifteen (15) days after completion of its publication in the Official Gazette.
On November 5, 1985, a month after the promulgation of the abovementioned decree, Presidential Decree No.
1994 amended the National Internal Revenue Code providing, inter alia:
SEC. 134. Video Tapes. — There shall be collected on each processed video-tape cassette, ready for
playback, regardless of length, an annual tax of five pesos; Provided, That locally manufactured or
imported blank video tapes shall be subject to sales tax.
On October 23, 1986, the Greater Manila Theaters Association, Integrated Movie Producers, Importers and
Distributors Association of the Philippines, and Philippine Motion Pictures Producers Association, hereinafter
collectively referred to as the Intervenors, were permitted by the Court to intervene in the case, over petitioner's
opposition, upon the allegations that intervention was necessary for the complete protection of their rights and
that their "survival and very existence is threatened by the unregulated proliferation of film piracy." The
Intervenors were thereafter allowed to file their Comment in Intervention.
The rationale behind the enactment of the DECREE, is set out in its preambular clauses as follows:
1. WHEREAS, the proliferation and unregulated circulation of videograms including, among others,
videotapes, discs, cassettes or any technical improvement or variation thereof, have greatly prejudiced
the operations of moviehouses and theaters, and have caused a sharp decline in theatrical attendance by
at least forty percent (40%) and a tremendous drop in the collection of sales, contractor's specific,
amusement and other taxes, thereby resulting in substantial losses estimated at P450 Million annually in
government revenues;
2. WHEREAS, videogram(s) establishments collectively earn around P600 Million per annum from
rentals, sales and disposition of videograms, and such earnings have not been subjected to tax, thereby
depriving the Government of approximately P180 Million in taxes each year;
3. WHEREAS, the unregulated activities of videogram establishments have also affected the viability of
the movie industry, particularly the more than 1,200 movie houses and theaters throughout the country,
and occasioned industry-wide displacement and unemployment due to the shutdown of numerous
moviehouses and theaters;
4. "WHEREAS, in order to ensure national economic recovery, it is imperative for the Government to
create an environment conducive to growth and development of all business industries, including the
movie industry which has an accumulated investment of about P3 Billion;
5. WHEREAS, proper taxation of the activities of videogram establishments will not only alleviate the dire
financial condition of the movie industry upon which more than 75,000 families and 500,000 workers
depend for their livelihood, but also provide an additional source of revenue for the Government, and at
the same time rationalize the heretofore uncontrolled distribution of videograms;
6. WHEREAS, the rampant and unregulated showing of obscene videogram features constitutes a clear
and present danger to the moral and spiritual well-being of the youth, and impairs the mandate of the
Constitution for the State to support the rearing of the youth for civic efficiency and the development of
moral character and promote their physical, intellectual, and social well-being;
7. WHEREAS, civic-minded citizens and groups have called for remedial measures to curb these blatant
malpractices which have flaunted our censorship and copyright laws;
8. WHEREAS, in the face of these grave emergencies corroding the moral values of the people and
betraying the national economic recovery program, bold emergency measures must be adopted with
dispatch; ... (Numbering of paragraphs supplied).
Petitioner's attack on the constitutionality of the DECREE rests on the following grounds:
1. Section 10 thereof, which imposes a tax of 30% on the gross receipts payable to the local government is
a RIDER and the same is not germane to the subject matter thereof;
2. The tax imposed is harsh, confiscatory, oppressive and/or in unlawful restraint of trade in violation of the
due process clause of the Constitution;
3. There is no factual nor legal basis for the exercise by the President of the vast powers conferred upon
him by Amendment No. 6;
4. There is undue delegation of power and authority;
 5. The Decree is an ex-post facto law; and
6. There is over regulation of the video industry as if it were a nuisance, which it is not.
We shall consider the foregoing objections in seriatim.
1. The Constitutional requirement that "every bill shall embrace only one subject which shall be expressed in the
title thereof" 1 is sufficiently complied with if the title be comprehensive enough to include the general purpose
which a statute seeks to achieve. It is not necessary that the title express each and every end that the statute
wishes to accomplish. The requirement is satisfied if all the parts of the statute are related, and are germane to
the subject matter expressed in the title, or as long as they are not inconsistent with or foreign to the general
subject and title. 2An act having a single general subject, indicated in the title, may contain any number of
provisions, no matter how diverse they may be, so long as they are not inconsistent with or foreign to the general
subject, and may be considered in furtherance of such subject by providing for the method and means of carrying
out the general object." 3 The rule also is that the constitutional requirement as to the title of a bill should not be
so narrowly construed as to cripple or impede the power of legislation. 4 It should be given practical rather than
technical construction. 5
Tested by the foregoing criteria, petitioner's contention that the tax provision of the DECREE is a rider is without
merit. That section reads, inter alia:
Section 10. Tax on Sale, Lease or Disposition of Videograms. — Notwithstanding any provision of law to
the contrary, the province shall collect a tax of thirty percent (30%) of the purchase price or rental rate, as
the case may be, for every sale, lease or disposition of a videogram containing a reproduction of any
motion picture or audiovisual program. Fifty percent (50%) of the proceeds of the tax collected shall accrue
to the province, and the other fifty percent (50%) shall acrrue to the municipality where the tax is collected;
PROVIDED, That in Metropolitan Manila, the tax shall be shared equally by the City/Municipality and the
Metropolitan Manila Commission.
The foregoing provision is allied and germane to, and is reasonably necessary for the accomplishment of,
the general object of the DECREE, which is the regulation of the video industry through the Videogram
Regulatory Board as expressed in its title. The tax provision is not inconsistent with, nor foreign to that
general subject and title. As a tool for regulation 6 it is simply one of the regulatory and control mechanisms
scattered throughout the DECREE. The express purpose of the DECREE to include taxation of the video
industry in order to regulate and rationalize the heretofore uncontrolled distribution of videograms is evident
from Preambles 2 and 5, supra. Those preambles explain the motives of the lawmaker in presenting the
measure. The title of the DECREE, which is the creation of the Videogram Regulatory Board, is
comprehensive enough to include the purposes expressed in its Preamble and reasonably covers all its
provisions. It is unnecessary to express all those objectives in the title or that the latter be an index to the
body of the DECREE. 7
2. Petitioner also submits that the thirty percent (30%) tax imposed is harsh and oppressive, confiscatory, and in
restraint of trade. However, it is beyond serious question that a tax does not cease to be valid merely because it
regulates, discourages, or even definitely deters the activities taxed. 8 The power to impose taxes is one so
unlimited in force and so searching in extent, that the courts scarcely venture to declare that it is subject to any
restrictions whatever, except such as rest in the discretion of the authority which exercises it. 9 In imposing a tax,
the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and
oppressive taxation. 10
The tax imposed by the DECREE is not only a regulatory but also a revenue measure prompted by the
realization that earnings of videogram establishments of around P600 million per annum have not been subjected
to tax, thereby depriving the Government of an additional source of revenue. It is an end-user tax, imposed on
retailers for every videogram they make available for public viewing. It is similar to the 30% amusement tax
imposed or borne by the movie industry which the theater-owners pay to the government, but which is passed on
to the entire cost of the admission ticket, thus shifting the tax burden on the buying or the viewing public. It is a
tax that is imposed uniformly on all videogram operators.
The levy of the 30% tax is for a public purpose. It was imposed primarily to answer the need for regulating the
video industry, particularly because of the rampant film piracy, the flagrant violation of intellectual property rights,
and the proliferation of pornographic video tapes. And while it was also an objective of the DECREE to protect
the movie industry, the tax remains a valid imposition.
The public purpose of a tax may legally exist even if the motive which impelled the legislature to impose the
tax was to favor one industry over another. 11
It is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been
repeatedly held that "inequities which result from a singling out of one particular class for taxation or
exemption infringe no constitutional limitation". 12 Taxation has been made the implement of the state's
police power.13
At bottom, the rate of tax is a matter better addressed to the taxing legislature.
3. Petitioner argues that there was no legal nor factual basis for the promulgation of the DECREE by the former
President under Amendment No. 6 of the 1973 Constitution providing that "whenever in the judgment of the
President ... , there exists a grave emergency or a threat or imminence thereof, or whenever the interim
Batasang Pambansa or the regular National Assembly fails or is unable to act adequately on any matter for any
reason that in his judgment requires immediate action, he may, in order to meet the exigency, issue the
necessary decrees, orders, or letters of instructions, which shall form part of the law of the land."
In refutation, the Intervenors and the Solicitor General's Office aver that the 8th "whereas" clause sufficiently
summarizes the justification in that grave emergencies corroding the moral values of the people and betraying
the national economic recovery program necessitated bold emergency measures to be adopted with dispatch.
Whatever the reasons "in the judgment" of the then President, considering that the issue of the validity of the
exercise of legislative power under the said Amendment still pends resolution in several other cases, we reserve
resolution of the question raised at the proper time.
4. Neither can it be successfully argued that the DECREE contains an undue delegation of legislative power. The
grant in Section 11 of the DECREE of authority to the BOARD to "solicit the direct assistance of other agencies
and units of the government and deputize, for a fixed and limited period, the heads or personnel of such agencies
and units to perform enforcement functions for the Board" is not a delegation of the power to legislate but merely
a conferment of authority or discretion as to its execution, enforcement, and implementation. "The true distinction
is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be,
and conferring authority or discretion as to its execution to be exercised under and in pursuance of the law. The
first cannot be done; to the latter, no valid objection can be made." 14 Besides, in the very language of the decree,
the authority of the BOARD to solicit such assistance is for a "fixed and limited period" with the deputized
agencies concerned being "subject to the direction and control of the BOARD." That the grant of such authority
might be the source of graft and corruption would not stigmatize the DECREE as unconstitutional. Should the
eventuality occur, the aggrieved parties will not be without adequate remedy in law.
5. The DECREE is not violative of the ex post facto principle. An ex post facto law is, among other categories,
one which "alters the legal rules of evidence, and authorizes conviction upon less or different testimony than the
law required at the time of the commission of the offense." It is petitioner's position that Section 15 of the
DECREE in providing that:
All videogram establishments in the Philippines are hereby given a period of forty-five (45) days after the
effectivity of this Decree within which to register with and secure a permit from the BOARD to engage in the
videogram business and to register with the BOARD all their inventories of videograms, including
videotapes, discs, cassettes or other technical improvements or variations thereof, before they could be
sold, leased, or otherwise disposed of. Thereafter any videogram found in the possession of any person
engaged in the videogram business without the required proof of registration by the BOARD, shall be prima
facie evidence of violation of the Decree, whether the possession of such videogram be for private showing
and/or public exhibition.
raises immediately a prima facie evidence of violation of the DECREE when the required proof of registration of
any videogram cannot be presented and thus partakes of the nature of an ex post facto law.
The argument is untenable. As this Court held in the recent case of Vallarta vs. Court of Appeals, et al. 15
... it is now well settled that "there is no constitutional objection to the passage of a law providing that the
presumption of innocence may be overcome by a contrary presumption founded upon the experience of
human conduct, and enacting what evidence shall be sufficient to overcome such presumption of
innocence" (People vs. Mingoa 92 Phil. 856 [1953] at 858-59, citing 1 COOLEY, A TREATISE ON THE
CONSTITUTIONAL LIMITATIONS, 639-641). And the "legislature may enact that when certain facts have
been proved that they shall be prima facie evidence of the existence of the guilt of the accused and shift
the burden of proof provided there be a rational connection between the facts proved and the ultimate facts
presumed so that the inference of the one from proof of the others is not unreasonable and arbitrary
because of lack of connection between the two in common experience". 16
Applied to the challenged provision, there is no question that there is a rational connection between the fact
proved, which is non-registration, and the ultimate fact presumed which is violation of the DECREE, besides the
fact that the prima facie presumption of violation of the DECREE attaches only after a forty-five-day period
counted from its effectivity and is, therefore, neither retrospective in character.
6. We do not share petitioner's fears that the video industry is being over-regulated and being eased out of
existence as if it were a nuisance. Being a relatively new industry, the need for its regulation was apparent. While
the underlying objective of the DECREE is to protect the moribund movie industry, there is no question that
public welfare is at bottom of its enactment, considering "the unfair competition posed by rampant film piracy; the
erosion of the moral fiber of the viewing public brought about by the availability of unclassified and unreviewed
video tapes containing pornographic films and films with brutally violent sequences; and losses in government
revenues due to the drop in theatrical attendance, not to mention the fact that the activities of video
establishments are virtually untaxed since mere payment of Mayor's permit and municipal license fees are
required to engage in business. 17
The enactment of the Decree since April 10, 1986 has not brought about the "demise" of the video industry. On
the contrary, video establishments are seen to have proliferated in many places notwithstanding the 30% tax
imposed.
In the last analysis, what petitioner basically questions is the necessity, wisdom and expediency of the DECREE.
These considerations, however, are primarily and exclusively a matter of legislative concern.
Only congressional power or competence, not the wisdom of the action taken, may be the basis for
declaring a statute invalid. This is as it ought to be. The principle of separation of powers has in the main
wisely allocated the respective authority of each department and confined its jurisdiction to such a sphere.
There would then be intrusion not allowable under the Constitution if on a matter left to the discretion of a
coordinate branch, the judiciary would substitute its own. If there be adherence to the rule of law, as there
ought to be, the last offender should be courts of justice, to which rightly litigants submit their controversy
precisely to maintain unimpaired the supremacy of legal norms and prescriptions. The attack on the validity
of the challenged provision likewise insofar as there may be objections, even if valid and cogent on its
wisdom cannot be sustained. 18
In fine, petitioner has not overcome the presumption of validity which attaches to a challenged statute. We find no
clear violation of the Constitution which would justify us in pronouncing Presidential Decree No. 1987 as
unconstitutional and void.
WHEREFORE, the instant Petition is hereby dismissed.
No costs.
SO ORDERED.
 G.R. No. L-77194 March 15, 1988
VIRGILIO GASTON, HORTENCIA STARKE, ROMEO GUANZON, OSCAR VILLANUEVA, JOSE ABELLO,
REMO RAMOS, CAROLINA LOPEZ, JESUS ISASI, MANUEL LACSON, JAVIER LACSON, TITO TAGARAO,
EDUARDO SUATENGCO, AUGUSTO LLAMAS, RODOLFO SIASON, PACIFICO MAGHARI, JR., JOSE
JAMANDRE, AURELIO GAMBOA, ET AL., petitioners,
vs.
REPUBLIC PLANTERS BANK, PHILIPPINE SUGAR COMMISSION, and SUGAR REGULATORY
ADMINISTRATION, respondents, ANGEL H. SEVERINO, JR., GLICERIO JAVELLANA, GLORIA P. DE LA
PAZ, JOEY P. DE LA PAZ, ET AL., and NATIONAL FEDERATION OF SUGARCANE PLANTERS, intervenors
MELENCIO-HERRERA, J.:
Petitioners are sugar producers, sugarcane planters and millers, who have come to this Court in their individual
capacities and in representation of other sugar producers, planters and millers, said to be so numerous that it is
impracticable to bring them all before the Court although the subject matter of the present controversy is of
common interest to all sugar producers, whether parties in this action or not.
Respondent Philippine Sugar Commission (PHILSUCOM, for short) was formerly the government office tasked
with the function of regulating and supervising the sugar industry until it was superseded by its co-respondent
Sugar Regulatory Administration (SRA, for brevity) under Executive Order No. 18 on May 28, 1986. Although
said Executive Order abolished the PHILSUCOM, its existence as a juridical entity was mandated to continue for
three (3) more years "for the purpose of prosecuting and defending suits by or against it and enables it to settle
and close its affairs, to dispose of and convey its property and to distribute its assets."
Respondent Republic Planters Bank (briefly, the Bank) is a commercial banking corporation.
Angel H. Severino, Jr., et al., who are sugarcane planters planting and milling their sugarcane in different mill
districts of Negros Occidental, were allowed to intervene by the Court, since they have common cause with
petitioners and respondents having interposed no objection to their intervention. Subsequently, on January
14,1988, the National Federation of Sugar Planters (NFSP) also moved to intervene, which the Court allowed on
February 16,1988.
Petitioners and Intervenors have come to this Court praying for a Writ of mandamus commanding respondents:
TO IMPLEMENT AND ACCOMPLISH THE PRIVATIZATION OF REPUBLIC PLANTERS BANK BY THE
TRANSFER AND DISTRIBUTION OF THE SHARES OF STOCK IN THE SAID BANK; NOW HELD BY
AND STILL CARRIED IN THE NAME OF THE PHILIPPINE SUGAR COMMISSION, TO THE SUGAR
PRODUCERS, PLANTERS AND MILLERS, WHO ARE THE TRUE BENEFICIAL OWNERS OF THE
761,416 COMMON SHARES VALUED AT P36,548.000.00, AND 53,005,045 PREFERRED SHARES (A, B
& C) WITH A TOTAL PAR VALUE OF P254,424,224.72, OR A TOTAL INVESTMENT OF
P290,972,224.72, THE SAID INVESTMENT HAVING BEEN FUNDED BY THE DEDUCTION OF Pl.00
PER PICUL FROM SUGAR PROCEEDS OF THE SUGAR PRODUCERS COMMENCING THE YEAR
1978-79 UNTIL THE PRESENT AS STABILIZATION FUND PURSUANT TO P.D. # 388.
Respondent Bank does not take issue with either petitioners or its correspondents as it has no beneficial or
equitable interest that may be affected by the ruling in this Petition, but welcomes the filing of the Petition since it
will settle finally the issue of legal ownership of the questioned shares of stock.
Respondents PHILSUCOM and SRA, for their part, squarely traverse the petition arguing that no trust results
from Section 7 of P.D. No. 388; that the stabilization fees collected are considered government funds under the
Government Auditing Code; that the transfer of shares of stock from PHILSUCOM to the sugar producers would
be irregular, if not illegal; and that this suit is barred by laches.
The Solicitor General aptly summarizes the basic issues thus: (1) whether the stabilization fees collected from
sugar planters and millers pursuant to Section 7 of P.D. No. 388 are funds in trust for them, or public funds; and
(2) whether shares of stock in respondent Bank paid for with said stabilization fees belong to the PHILSUCOM or
to the different sugar planters and millers from whom the fees were collected or levied.
P. D. No. 388, promulgated on February 2,1974, which created the PHILSUCOM, provided for the collection of a
Stabilization Fund as follows:
SEC. 7. Capitalization, Special Fund of the Commission, Development and Stabilization Fund. — There is
hereby established a fund for the commission for the purpose of financing the growth and development of
the sugar industry and all its components, stabilization of the domestic market including the foreign
market to be administered in trust by the Commission and deposited in the Philippine National Bank
derived in the manner herein below cited from the following sources:
a. Stabilization fund shall be collected as provided for in the various provisions of this Decree.
b. Stabilization fees shall be collected from planters and millers in the amount of Two (P2.00) Pesos for
every picul produced and milled for a period of five years from the approval of this Decree and One (Pl.00)
Peso for every picul produced and milled every year thereafter.
Provided: That fifty (P0.50) centavos per picul of the amount levied on planters, millers and traders under
Section 4(c) of this Decree will be used for the payment of salaries and wages of personnel, fringe benefits
and allowances of officers and employees for the purpose of accomplishing and employees for the purpose
of accomplishing the efficient performance of the duties of the Commission.
Provided, further: That said amount shall constitute a lien on the sugar quedan and/or warehouse receipts
and shall be paid immediately by the planters and mill companies, sugar centrals and refineries to the
Commission. (paragraphing and bold supplied).
Section 7 of P.D. No. 388 does provide that the stabilization fees collected "shall be administered in trust by the
Commission." However, while the element of an intent to create a trust is present, a resulting trust in favor of the
sugar producers, millers and planters cannot be said to have ensued because the presumptive intention of the
parties is not reasonably ascertainable from the language of the statute itself.
The doctrine of resulting trusts is founded on the presumed intention of the parties; and as a general rule, it
arises where, and only where such may be reasonably presumed to be the intention of the parties, as
determined from the facts and circumstances existing at the time of the transaction out of which it is sought
to be established (89 C.J.S. 947).
No implied trust in favor of the sugar producers either can be deduced from the imposition of the levy. "The
essential Idea of an implied trust involves a certain antagonism between the cestui que trust and the trustee even
when the trust has not arisen out of fraud nor out of any transaction of a fraudulent or immoral character (65 CJ
222). It is not clearly shown from the statute itself that the PHILSUCOM imposed on itself the obligation of
holding the stabilization fund for the benefit of the sugar producers. It must be categorically demonstrated that the
very administrative agency which is the source of such regulation would place a burden on itself (Batchelder v.
Central Bank of the Philippines, L-25071, July 29,1972,46 SCRA 102, citing People v. Que Po Lay, 94 Phil. 640
[1954]).
Neither can petitioners place reliance on the history of respondents Bank. They recite that at the beginning, the
Bank was owned by the Roman-Rojas Group. Because it underwent difficulties early in the year 1978, Mr.
Roberto S. Benedicto, then Chairman of the PHILSUCOM, submitted a proposal to the Central Bank for the
rehabilitation of the Bank. The Central Bank acted favorably on the proposal at the meeting of the Monetary
Board on March 31, 1978 subject to the infusion of fresh capital by the Benedicto Group. Petitioners maintain that
this infusion of fresh capital was accomplished, not by any capital investment by Mr. Benedicto, but by
PHILSUCOM, which set aside the proceeds of the P1.00 per picul stabilization fund to pay for its subscription in
shares of stock of respondent Bank. It is petitioners' submission that all shares were placed in PHILSUCOM's
name only out of convenience and necessity and that they are the true and beneficial owners thereof.
In point of fact, we cannot see our way clear to upholding petitioners' position that the investment of the proceeds
from the stabilization fund in subscriptions to the capital stock of the Bank were being made for and on their
behalf. That could have been clarified by the Trust Agreement, dated May 28, 1986, entered into between
PHILSUCOM, as "Trustor" acting through Mr. Fred J. Elizalde as Officer-in-Charge, and respondent RPB- Trust
Department' as "Trustee," acknowledging that PHILSUCOM holds said shares for and in behalf of the sugar
producers," the latter "being the true and beneficial owners thereof." The Agreement, however, did not get off the
ground because it failed to receive the approval of the PHILSUCOM Board of Commissioners as required in the
Agreement itself.
The SRA, which succeeded PHILSUCOM, neither approved the Agreement because of the adverse opinion of
the SRA, Resident Auditor, dated June 25,1986, which was aimed by the Chairman of the Commission on Audit,
on January 26,1987.
On February 19, 1987, the SRA, resolved to revoke the Trust Agreement "in the light of the ruling of the
Commission on Audit that the aforementioned Agreement is of doubtful validity."
From the legal standpoint, we find basis for the opinion of the Commission on Audit reading:
That the government, PHILSUCOM or its successor-in-interest, Sugar Regulatory Administration, in
particular, owns and stocks. While it is true that the collected stabilization fees were set aside by
PHILSUCOM to pay its subscription to RPB, it did not collect said fees for the account of the sugar
producers. That stabilization fees are charges/levies on sugar produced and milled which accrued to
PHILSUCOM under PD 338, as amended. ...
The stabilization fees collected are in the nature of a tax, which is within the power of the State to impose for the
promotion of the sugar industry (Lutz vs. Araneta, 98 Phil. 148). They constitute sugar liens (Sec. 7[b], P.D. No.
388). The collections made accrue to a "Special Fund," a "Development and Stabilization Fund," almost Identical
to the "Sugar Adjustment and Stabilization Fund" created under Section 6 of Commonwealth Act 567. 1 The tax
collected is not in a pure exercise of the taxing power. It is levied with a regulatory purpose, to provide means for
the stabilization of the sugar industry. The levy is primarily in the exercise of the police power of the State (Lutz
vs. Araneta, supra.).
The protection of a large industry constituting one of the great sources of the state's wealth and therefore
directly or indirectly affecting the welfare of so great a portion of the population of the State is affected to
such an extent by public interests as to be within the police power of the sovereign. (Johnson vs. State ex
rel. Marey, 128 So. 857, cited in Lutz vs. Araneta, supra).
The stabilization fees in question are levied by the State upon sugar millers, planters and producers for a special
purpose — that of "financing the growth and development of the sugar industry and all its components,
stabilization of the domestic market including the foreign market the fact that the State has taken possession of
moneys pursuant to law is sufficient to constitute them state funds, even though they are held for a special
purpose (Lawrence vs. American Surety Co., 263 Mich 586, 249 ALR 535, cited in 42 Am. Jur. Sec. 2, p. 718).
Having been levied for a special purpose, the revenues collected are to be treated as a special fund, to be, in the
language of the statute, "administered in trust' for the purpose intended. Once the purpose has been fulfilled or
abandoned, the balance, if any, is to be transferred to the general funds of the Government. That is the essence
of the trust intended (See 1987 Constitution, Article VI, Sec. 29(3), lifted from the 1935 Constitution, Article VI,
Sec. 23(l]). 2
The character of the Stabilization Fund as a special fund is emphasized by the fact that the funds are deposited
in the Philippine National Bank and not in the Philippine Treasury, moneys from which may be paid out only in
pursuance of an appropriation made by law (1987) Constitution, Article VI, Sec. 29[1],1973 Constitution, Article
VIII, Sec. 18[l]).
That the fees were collected from sugar producers, planters and millers, and that the funds were channeled to
the purchase of shares of stock in respondent Bank do not convert the funds into a trust fired for their benefit nor
make them the beneficial owners of the shares so purchased. It is but rational that the fees be collected from
them since it is also they who are to be benefited from the expenditure of the funds derived from it. The
investment in shares of respondent Bank is not alien to the purpose intended because of the Bank's character as
a commodity bank for sugar conceived for the industry's growth and development. Furthermore, of note is the
fact that one-half, (1/2) or PO.50 per picul, of the amount levied under P.D. No. 388 is to be utilized for the
"payment of salaries and wages of personnel, fringe benefits and allowances of officers and employees of
PHILSUCOM" thereby immediately negating the claim that the entire amount levied is in trust for sugar,
producers, planters and millers.

To rule in petitioners' favor would contravene the general principle that revenues derived from taxes cannot be
used for purely private purposes or for the exclusive benefit of private persons. The Stabilization Fund is to be
utilized for the benefit of the entire sugar industry, "and all its components, stabilization of the domestic market,"
including the foreign market the industry being of vital importance to the country's economy and to national
interest.

WHEREFORE, the Writ of mandamus is denied and the Petition hereby dismissed. No costs.

This Decision is immediately executory.

SO ORDERED.

Teehankee, C.J., Yap, Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento,
Cortes and Griño-Aquino, JJ., concur.

Fernan, J., took no part.

Footnotes

1 Sec. 6. All collections made under this Act shall accrue to a special fund in the Philippine Treasury, to be
known as the 'Sugar Adjustment and Stabilization Fund and shall be paid out only for any or all of the
following purposes or to attain any or all of the following objectives, as may be provided by law.

xxx xxx xxx

2 (5) All money collected on any tax levied for a special purpose shall be treated as a special fund and paid
out for such purpose only. If the purpose for which a special fund was created has been fulfilled or
abandoned, the balance, if any, shall be transferred to the general funds of the Government." (1987
Constitution, Art. VI, Sec. 28[3]).
 G.R. No. 99886 March 31, 1993
JOHN H. OSMEÑA, petitioner,
vs.
OSCAR ORBOS, in his capacity as Executive Secretary; JESUS ESTANISLAO, in his capacity as
Secretary of Finance; WENCESLAO DELA PAZ, in his capacity as Head of the Office of Energy Affairs;
REX V. TANTIONGCO, and the ENERGY REGULATORY BOARD, respondents.
Nachura & Sarmiento for petitioner.
The Solicitor General for public respondents.
NARVASA, C.J.:
The petitioner seeks the corrective,1 prohibitive and coercive remedies provided by Rule 65 of the Rules of
Court,2upon the following posited grounds, viz.:3
1) the invalidity of the "TRUST ACCOUNT" in the books of account of the Ministry of Energy (now, the Office of
Energy Affairs), created pursuant to § 8, paragraph 1, of P.D. No. 1956, as amended, "said creation of a trust
fund being contrary to Section 29 (3), Article VI of the . . Constitution;4
2) the unconstitutionality of § 8, paragraph 1 (c) of P.D. No. 1956, as amended by Executive Order No. 137, for
"being an undue and invalid delegation of legislative power . . to the Energy Regulatory Board;"5
3) the illegality of the reimbursements to oil companies, paid out of the Oil Price Stabilization Fund,6 because it
contravenes § 8, paragraph 2 (2) of
P. D. 1956, as amended; and
4) the consequent nullity of the Order dated December 10, 1990 and the necessity of a rollback of the pump
prices and petroleum products to the levels prevailing prior to the said Order.
It will be recalled that on October 10, 1984, President Ferdinand Marcos issued P.D. 1956 creating a Special
Account in the General Fund, designated as the Oil Price Stabilization Fund (OPSF). The OPSF was designed to
reimburse oil companies for cost increases in crude oil and imported petroleum products resulting from exchange
rate adjustments and from increases in the world market prices of crude oil.
Subsequently, the OPSF was reclassified into a "trust liability account," in virtue of E.O. 1024,7 and ordered
released from the National Treasury to the Ministry of Energy. The same Executive Order also authorized the
investment of the fund in government securities, with the earnings from such placements accruing to the fund.
President Corazon C. Aquino, amended P.D. 1956. She promulgated Executive Order No. 137 on February 27,
1987, expanding the grounds for reimbursement to oil companies for possible cost underrecovery incurred as a
result of the reduction of domestic prices of petroleum products, the amount of the underrecovery being left for
determination by the Ministry of Finance.
Now, the petition alleges that the status of the OPSF as of March 31, 1991 showed a "Terminal Fund Balance
deficit" of some P12.877 billion;8 that to abate the worsening deficit, "the Energy Regulatory Board . . issued an
Order on December 10, 1990, approving the increase in pump prices of petroleum products," and at the rate of
recoupment, the OPSF deficit should have been fully covered in a span of six (6) months, but this
notwithstanding, the respondents — Oscar Orbos, in his capacity as Executive Secretary; Jesus Estanislao, in
his capacity as Secretary of Finance; Wenceslao de la Paz, in his capacity as Head of the Office of Energy
Affairs; Chairman Rex V. Tantiongco and the Energy Regulatory Board — "are poised to accept, process and
pay claims not authorized under P.D. 1956."9
The petition further avers that the creation of the trust fund violates §
29(3), Article VI of the Constitution, reading as follows:
(3) All money collected on any tax levied for a special purpose shall be treated as a special fund and paid
out for such purposes only. If the purpose for which a special fund was created has been fulfilled or
abandoned, the balance, if any, shall be transferred to the general funds of the Government.
The petitioner argues that "the monies collected pursuant to . . P.D. 1956, as amended, must be treated as a
'SPECIAL FUND,' not as a 'trust account' or a 'trust fund,' and that "if a special tax is collected for a specific
purpose, the revenue generated therefrom shall 'be treated as a special fund' to be used only for the purpose
indicated, and not channeled to another government objective." 10 Petitioner further points out that since "a
'special fund' consists of monies collected through the taxing power of a State, such amounts belong to the State,
although the use thereof is limited to the special purpose/objective for which it was created." 11
He also contends that the "delegation of legislative authority" to the ERB violates § 28 (2). Article VI of the
Constitution, viz.:
(2) The Congress may, by law, authorize the President to fix, within specified limits, and subject to such
limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage
dues, and other duties or imposts within the framework of the national development program of the
Government;
and, inasmuch as the delegation relates to the exercise of the power of taxation, "the limits, limitations and
restrictions must be quantitative, that is, the law must not only specify how to tax, who (shall) be taxed (and)
what the tax is for, but also impose a specific limit on how much to tax." 12
The petitioner does not suggest that a "trust account" is illegal per se, but maintains that the monies collected,
which form part of the OPSF, should be maintained in a special account of the general fund for the reason that
the Constitution so provides, and because they are, supposedly, taxes levied for a special purpose. He assumes
that the Fund is formed from a tax undoubtedly because a portion thereof is taken from collections of ad
valorem taxes and the increases thereon.
It thus appears that the challenge posed by the petitioner is premised primarily on the view that the powers
granted to the ERB under P.D. 1956, as amended, partake of the nature of the taxation power of the State. The
Solicitor General observes that the "argument rests on the assumption that the OPSF is a form of revenue
measure drawing from a special tax to be expended for a special purpose." 13 The petitioner's perceptions are, in
the Court's view, not quite correct.
To address this critical misgiving in the position of the petitioner on these issues, the Court recalls its holding
in Valmonte v. Energy Regulatory Board, et al. 14 —
The foregoing arguments suggest the presence of misconceptions about the nature and functions of the
OPSF. The OPSF is a "Trust Account" which was established "for the purpose of minimizing the frequent
price changes brought about by exchange rate adjustment and/or changes in world market prices of crude oil
and imported petroleum products." 15 Under P.D. No. 1956, as amended by Executive Order No. 137 dated
27 February 1987, this Trust Account may be funded from any of the following sources:
a) Any increase in the tax collection from ad valorem tax or customs duty imposed on petroleum
products subject to tax under this Decree arising from exchange rate adjustment, as may be determined by
the Minister of Finance in consultation with the Board of Energy;
b) Any increase in the tax collection as a result of the lifting of tax exemptions of government corporations,
as may be determined by the Minister of Finance in consultation with the Board of Energy:
c) Any additional amount to be imposed on petroleum products to augment the resources of the Fund
through an appropriate Order that may be issued by the Board of Energy requiring payment of persons or
companies engaged in the business of importing, manufacturing and/or marketing petroleum products;
d) Any resulting peso cost differentials in case the actual peso costs paid by oil companies in the
importation of crude oil and petroleum products is less than the peso costs computed using the reference
foreign exchange rate as fixed by the Board of Energy.
The fact that the world market prices of oil, measured by the spot market in Rotterdam, vary from day to day
is of judicial notice. Freight rates for hauling crude oil and petroleum products from sources of supply to the
Philippines may also vary from time to time. The exchange rate of the peso vis-a-vis the U.S. dollar and other
convertible foreign currencies also changes from day to day. These fluctuations in world market prices and in
tanker rates and foreign exchange rates would in a completely free market translate into corresponding
adjustments in domestic prices of oil and petroleum products with sympathetic frequency. But domestic
prices which vary from day to day or even only from week to week would result in a chaotic market with
unpredictable effects upon the country's economy in general. The OPSF was established precisely to protect
local consumers from the adverse consequences that such frequent oil price adjustments may have upon the
economy. Thus, the OPSF serves as a pocket, as it were, into which a portion of the purchase price of oil and
petroleum products paid by consumers as well as some tax revenues are inputted and from which amounts
are drawn from time to time to reimburse oil companies, when appropriate situations arise, for increases in,
as well as underrecovery of, costs of crude importation. The OPSF is thus a buffer mechanism through which
the domestic consumer prices of oil and petroleum products are stabilized, instead of fluctuating every so
often, and oil companies are allowed to recover those portions of their costs which they would not otherwise
recover given the level of domestic prices existing at any given time. To the extent that some tax revenues
are also put into it, the OPSF is in effect a device through which the domestic prices of petroleum products
are subsidized in part. It appears to the Court that the establishment and maintenance of the OPSF is well
within that pervasive and non-waivable power and responsibility of the government to secure the physical
and economic survival and well-being of the community, that comprehensive sovereign authority we
designate as the police power of the State. The stabilization, and subsidy of domestic prices of petroleum
products and fuel oil — clearly critical in importance considering, among other things, the continuing high
level of dependence of the country on imported crude oil — are appropriately regarded as public purposes.
Also of relevance is this Court's ruling in relation to the sugar stabilization fund the nature of which is not far
different from the OPSF. In Gaston v. Republic Planters Bank, 16 this Court upheld the legality of the sugar
stabilization fees and explained their nature and character, viz.:
The stabilization fees collected are in the nature of a tax, which is within the power of the State to impose
for the promotion of the sugar industry (Lutz v. Araneta, 98 Phil. 148). . . . The tax collected is not in a pure
exercise of the taxing power. It is levied with a regulatory purpose, to provide a means for the stabilization
of the sugar industry. The levy is primarily in the exercise of the police power of the State (Lutz v.
Araneta, supra).
The stabilization fees in question are levied by the State upon sugar millers, planters and producers for a
special purpose — that of "financing the growth and development of the sugar industry and all its
components, stabilization of the domestic market including the foreign market." The fact that the State has
taken possession of moneys pursuant to law is sufficient to constitute them state funds, even though they are
held for a special purpose (Lawrence v. American Surety Co. 263 Mich. 586, 249 ALR 535, cited in 42 Am
Jur Sec. 2, p. 718). Having been levied for a special purpose, the revenues collected are to be treated as a
special fund, to be, in the language of the statute, "administered in trust" for the purpose intended. Once the
purpose has been fulfilled or abandoned, the balance if any, is to be transferred to the general funds of the
Government. That is the essence of the trust intended (SEE 1987 Constitution, Article VI, Sec. 29(3), lifted
from the 1935 Constitution, Article VI, Sec. 23(1). 17
The character of the Stabilization Fund as a special kind of fund is emphasized by the fact that the funds are
deposited in the Philippine National Bank and not in the Philippine Treasury, moneys from which may be paid
out only in pursuance of an appropriation made by law (1987) Constitution, Article VI, Sec. 29 (3), lifted from
the 1935 Constitution, Article VI, Sec. 23(1). (Emphasis supplied).
Hence, it seems clear that while the funds collected may be referred to as taxes, they are exacted in the exercise
of the police power of the State. Moreover, that the OPSF is a special fund is plain from the special treatment
given it by E.O. 137. It is segregated from the general fund; and while it is placed in what the law refers to as a
"trust liability account," the fund nonetheless remains subject to the scrutiny and review of the COA. The Court is
satisfied that these measures comply with the constitutional description of a "special fund." Indeed, the practice is
not without precedent.
With regard to the alleged undue delegation of legislative power, the Court finds that the provision conferring the
authority upon the ERB to impose additional amounts on petroleum products provides a sufficient standard by
which the authority must be exercised. In addition to the general policy of the law to protect the local consumer
by stabilizing and subsidizing domestic pump rates, § 8(c) of P.D. 1956 18 expressly authorizes the ERB to
impose additional amounts to augment the resources of the Fund.
What petitioner would wish is the fixing of some definite, quantitative restriction, or "a specific limit on how much
to tax." 19 The Court is cited to this requirement by the petitioner on the premise that what is involved here is the
power of taxation; but as already discussed, this is not the case. What is here involved is not so much the power
of taxation as police power. Although the provision authorizing the ERB to impose additional amounts could be
construed to refer to the power of taxation, it cannot be overlooked that the overriding consideration is to enable
the delegate to act with expediency in carrying out the objectives of the law which are embraced by the police
power of the State.
The interplay and constant fluctuation of the various factors involved in the determination of the price of oil and
petroleum products, and the frequently shifting need to either augment or exhaust the Fund, do not conveniently
permit the setting of fixed or rigid parameters in the law as proposed by the petitioner. To do so would render the
ERB unable to respond effectively so as to mitigate or avoid the undesirable consequences of such fluidity. As
such, the standard as it is expressed, suffices to guide the delegate in the exercise of the delegated power,
taking account of the circumstances under which it is to be exercised.
For a valid delegation of power, it is essential that the law delegating the power must be (1) complete in itself,
that is it must set forth the policy to be executed by the delegate and (2) it must fix a standard — limits of which
are sufficiently determinate or determinable — to which the delegate must conform. 20
. . . As pointed out in Edu v. Ericta: "To avoid the taint of unlawful delegation, there must be a standard,
which implies at the very least that the legislature itself determines matters of principle and lays down
fundamental policy. Otherwise, the charge of complete abdication may be hard to repel. A standard thus
defines legislative policy, marks its limits, maps out its boundaries and specifies the public agency to apply
it. It indicates the circumstances under which the legislative command is to be effected. It is the criterion by
which the legislative purpose may be carried out. Thereafter, the executive or administrative office
designated may in pursuance of the above guidelines promulgate supplemental rules and regulations. The
standard may either be express or implied. If the former, the non-delegation objection is easily met. The
standard though does not have to be spelled out specifically. It could be implied from the policy and
purpose of the act considered as a whole. 21
It would seem that from the above-quoted ruling, the petition for prohibition should fail.
The standard, as the Court has already stated, may even be implied. In that light, there can be no ground upon
which to sustain the petition, inasmuch as the challenged law sets forth a determinable standard which guides
the exercise of the power granted to the ERB. By the same token, the proper exercise of the delegated power
may be tested with ease. It seems obvious that what the law intended was to permit the additional imposts for as
long as there exists a need to protect the general public and the petroleum industry from the adverse
consequences of pump rate fluctuations. "Where the standards set up for the guidance of an administrative
officer and the action taken are in fact recorded in the orders of such officer, so that Congress, the courts and the
public are assured that the orders in the judgment of such officer conform to the legislative standard, there is no
failure in the performance of the legislative functions." 22
This Court thus finds no serious impediment to sustaining the validity of the legislation; the express purpose for
which the imposts are permitted and the general objectives and purposes of the fund are readily discernible, and
they constitute a sufficient standard upon which the delegation of power may be justified.
In relation to the third question — respecting the illegality of the reimbursements to oil companies, paid out of the
Oil Price Stabilization Fund, because allegedly in contravention of § 8, paragraph 2 (2) of P.D. 1956,
amended 23 — the Court finds for the petitioner.
The petition assails the payment of certain items or accounts in favor of the petroleum companies (i.e., inventory
losses, financing charges, fuel oil sales to the National Power Corporation, etc.) because not authorized by law.
Petitioner contends that "these claims are not embraced in the enumeration in § 8 of P.D. 1956 . . since none of
them was incurred 'as a result of the reduction of domestic prices of petroleum products,'" 24 and since these
items are reimbursements for which the OPSF should not have responded, the amount of the P12.877 billion
deficit "should be reduced by P5,277.2 million." 25 It is argued "that under the principle of ejusdem generis . . . the
term 'other factors' (as used in § 8 of P.D. 1956) . . can only include such 'other factors' which necessarily result
in the reduction of domestic prices of petroleum products." 26
The Solicitor General, for his part, contends that "(t)o place said (term) within the restrictive confines of the rule
of ejusdem generis would reduce (E.O. 137) to a meaningless provision."
This Court, in Caltex Philippines, Inc. v. The Honorable Commissioner on Audit, et al., 27 passed upon the
application of ejusdem generis to paragraph 2 of § 8 of P.D. 1956, viz.:
The rule of ejusdem generis states that "[w]here words follow an enumeration of persons or things, by
words of a particular and specific meaning, such general words are not to be construed in their widest
extent, but are held to be as applying only to persons or things of the same kind or class as those
specifically mentioned." 28 A reading of subparagraphs (i) and (ii) easily discloses that they do not have a
common characteristic. The first relates to price reduction as directed by the Board of Energy while the
second refers to reduction in internal ad valorem taxes. Therefore, subparagraph (iii) cannot be limited by
the enumeration in these subparagraphs. What should be considered for purposes of determining the
"other factors" in subparagraph (iii) is the first sentence of paragraph (2) of the Section which explicitly
allows the cost underrecovery only if such were incurred as a result of the reduction of domestic prices of
petroleum products.
The Court thus holds, that the reimbursement of financing charges is not authorized by paragraph 2 of § 8 of P.D.
1956, for the reason that they were not incurred as a result of the reduction of domestic prices of petroleum
products. Under the same provision, however, the payment of inventory losses is upheld as valid, being clearly a
result of domestic price reduction, when oil companies incur a cost underrecovery for yet unsold stocks of oil in
inventory acquired at a higher price.
Reimbursement for cost underrecovery from the sales of oil to the National Power Corporation is equally
permissible, not as coming within the provisions of P.D. 1956, but in virtue of other laws and regulations as held
in Caltex 29 and which have been pointed to by the Solicitor General. At any rate, doubts about the propriety of
such reimbursements have been dispelled by the enactment of R.A. 6952, establishing the Petroleum Price
Standby Fund, § 2 of which specifically authorizes the reimbursement of "cost underrecovery incurred as a result
of fuel oil sales to the National Power Corporation."
Anent the overpayment refunds mentioned by the petitioner, no substantive discussion has been presented to
show how this is prohibited by P.D. 1956. Nor has the Solicitor General taken any effort to defend the propriety of
this refund. In fine, neither of the parties, beyond the mere mention of overpayment refunds, has at all bothered
to discuss the arguments for or against the legality of the so-called overpayment refunds. To be sure, the
absence of any argument for or against the validity of the refund cannot result in its disallowance by the Court.
Unless the impropriety or illegality of the overpayment refund has been clearly and specifically shown, there can
be no basis upon which to nullify the same.
Finally, the Court finds no necessity to rule on the remaining issue, the same having been rendered moot and
academic. As of date hereof, the pump rates of gasoline have been reduced to levels below even those prayed
for in the petition.
WHEREFORE, the petition is GRANTED insofar as it prays for the nullification of the reimbursement of financing
charges, paid pursuant to E.O. 137, and DISMISSED in all other respects.
SO ORDERED.
Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon, Bellosillo, Melo, Campos,
Jr., and Quiason, JJ., concur.
Gutierrez, Jr., J., is on leave.
# Footnotes
1 The writ of certiorari is, of course, available only as against tribunals, boards or officers
exercising judicial or quasi-judicial functions.
2 The petition alleges separate causes or grounds for each extraordinary writ sought.
3 Rollo, pp. 1 to 4.
4 Rollo, p. 2.
5 Id.
6 When this petition was filed, the amount involved was P5,277.4 million.
7 Issued on 9 May 1985.
8 Rollo, pp. 8-9.
9 Rollo, p. 11; emphasis supplied.
10 Id., pp. 13-4.
11 Id., p. 15.
12 Rollo, p. 17.
13 Comment of the Respondents; Rollo, p. 63.
14 G.R. Nos. L-79501-03 [23 June 1988] 162 SCRA 521; Decided jointly with Citizen's
Alliance for Consumer Protection v. Energy Regulatory Board et al., G.R. Nos. L-78888-90,
and Kilusang Mayo Uno Labor Center v. Energy Regulatory Board, et al., G.R. Nos. L-79590-
92; emphasis supplied.
15 Citing E.O. No. 137, Sec. 1 (amending § 8 of P.D. 1956).
16 158 SCRA 626, emphasis supplied.
17 "(3) All money collected on any tax levied for a special purpose shall be treated as a
special fund and paid out for such purpose only. If the purpose for which a special fund was
created has been fulfilled or abandoned, the balance, if any, shall be transferred to the
general funds of the government." (1987 Constitution, Art. VI, Sec. 28[3]).
18 Supra; see footnote 14 and related text.
19 Rollo, p. 17.
20 SEE Vigan Electric Light Co., Inc. v. Public Service Commission, G.R. No.
L-19850, 30 January 1964 and Pelaez v. Auditor General, G.R. No. L-23825, 24 December
1965; see also Gonzales, N. Administrative Law — A Text, (1979) at 29.
21 De La Llana v. Alba, 112 SCRA 294, citing Edu v. Ericta, 35 SCRA 481: Cf. Agustin v. Edu,
88 SCRA 195.
22 Hirabayashi v. U.S., 390 U.S. 99.
23 When this petition was filed, the amount involved was P5,277.4 million.
24 Rollo, p. 20.
25 Id., p. 21.
26 Id., p. 20.
27 Caltex Philippines, Inc. v. The Honorable Commissioner on Audit, et al., G.R. No. 92585, 8
May 1992, En Banc. N.B. — The Solicitor General seems to have taken a different position in
this case, with respect to the application of ejusdem generis.
28 Smith Bell and Co., Ltd. v. Register of Deeds of Davao, 96 Phil. 53 [1954], citing BLACK on
Interpretation of Law, 2nd ed. at 203: see also Republic v. Migriño 189 SCRA 289 [1990].
29 Supra at note 25; SEE also Maceda v. Hon. Catalino Macaraig, Jr., et al., G.R. No. 88291,
197 SCRA 771 (1991).
G.R. No. 78742 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC., JUANITO D. GOMEZ, GERARDO B.
ALARCIO, FELIPE A. GUICO, JR., BERNARDO M. ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T.
GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G. ESTRADA, FELISA C. BAUTISTA,
ESMENIA J. CABE, TEODORO B. MADRIAGA, AUREA J. PRESTOSA, EMERENCIANA J. ISLA,
FELICISIMA C. ARRESTO, CONSUELO M. MORALES, BENJAMIN R. SEGISMUNDO, CIRILA A. JOSE &
NAPOLEON S. FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS, DENNIS JEREZA, HERMINIGILDO
GUSTILO, PAULINO D. TOLENTINO and PLANTERS' COMMITTEE, INC., Victorias Mill District, Victorias,
Negros Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN REFORM COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, HON. JOKER
ARROYO, EXECUTIVE SECRETARY OF THE OFFICE OF THE PRESIDENT, and Messrs. SALVADOR
TALENTO, JAIME ABOGADO, CONRADO AVANCENA and ROBERTO TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND BANK OF THE
PHILIPPINES, respondents.
CRUZ, J.
In ancient mythology, Antaeus was a terrible giant who blocked and challenged Hercules for his life on his way to
Mycenae after performing his eleventh labor. The two wrestled mightily and Hercules flung his adversary to the
ground thinking him dead, but Antaeus rose even stronger to resume their struggle. This happened several times
to Hercules' increasing amazement. Finally, as they continued grappling, it dawned on Hercules that Antaeus
was the son of Gaea and could never die as long as any part of his body was touching his Mother Earth. Thus
forewarned, Hercules then held Antaeus up in the air, beyond the reach of the sustaining soil, and crushed him to
death.
Mother Earth. The sustaining soil. The giver of life, without whose invigorating touch even the powerful Antaeus
weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also tell of the elemental forces of life and
death, of men and women who, like Antaeus need the sustaining strength of the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in the distribution of this precious
resource among our people. But it is more than a slogan. Through the brooding centuries, it has become a battle-
cry dramatizing the increasingly urgent demand of the dispossessed among us for a plot of earth as their place in
the sun.
Recognizing this need, the Constitution in 1935 mandated the policy of social justice to "insure the well-being and
economic security of all the people," 1 especially the less privileged. In 1973, the new Constitution affirmed this
goal adding specifically that "the State shall regulate the acquisition, ownership, use, enjoyment and disposition
of private property and equitably diffuse property ownership and profits." 2 Significantly, there was also the
specific injunction to "formulate and implement an agrarian reform program aimed at emancipating the tenant
from the bondage of the soil." 3
The Constitution of 1987 was not to be outdone. Besides echoing these sentiments, it also adopted one whole
and separate Article XIII on Social Justice and Human Rights, containing grandiose but undoubtedly sincere
provisions for the uplift of the common people. These include a call in the following words for the adoption by the
State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers and
regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of
other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and
undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention
limits as the Congress may prescribe, taking into account ecological, developmental, or equity
considerations and subject to the payment of just compensation. In determining retention limits, the State
shall respect the right of small landowners. The State shall further provide incentives for voluntary land-
sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had already been enacted
by the Congress of the Philippines on August 8, 1963, in line with the above-stated principles. This was
substantially superseded almost a decade later by P.D. No. 27, which was promulgated on October 21, 1972,
along with martial law, to provide for the compulsory acquisition of private lands for distribution among tenant-
farmers and to specify maximum retention limits for landowners.
The people power revolution of 1986 did not change and indeed even energized the thrust for agrarian reform.
Thus, on July 17, 1987, President Corazon C. Aquino issued E.O. No. 228, declaring full land ownership in favor
of the beneficiaries of P.D. No. 27 and providing for the valuation of still unvalued lands covered by the decree as
well as the manner of their payment. This was followed on July 22, 1987 by Presidential Proclamation No. 131,
instituting a comprehensive agrarian reform program (CARP), and E.O. No. 229, providing the mechanics for its
implementation.
Subsequently, with its formal organization, the revived Congress of the Philippines took over legislative power
from the President and started its own deliberations, including extensive public hearings, on the improvement of
the interests of farmers. The result, after almost a year of spirited debate, was the enactment of R.A. No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law of 1988, which President Aquino signed on June
10, 1988. This law, while considerably changing the earlier mentioned enactments, nevertheless gives them
suppletory effect insofar as they are not inconsistent with its provisions. 4
The above-captioned cases have been consolidated because they involve common legal questions, including
serious challenges to the constitutionality of the several measures mentioned above. They will be the subject of
one common discussion and resolution, The different antecedents of each case will require separate treatment,
however, and will first be explained hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228 and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by petitioner Nicolas
Manaay and his wife and a 5-hectare riceland worked by four tenants and owned by petitioner Augustin
Hermano, Jr. The tenants were declared full owners of these lands by E.O. No. 228 as qualified farmers under
P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of separation of
powers, due process, equal protection and the constitutional limitation that no private property shall be taken for
public use without just compensation.
They contend that President Aquino usurped legislative power when she promulgated E.O. No. 228. The said
measure is invalid also for violation of Article XIII, Section 4, of the Constitution, for failure to provide for retention
limits for small landowners. Moreover, it does not conform to Article VI, Section 25(4) and the other requisites of
a valid appropriation.
In connection with the determination of just compensation, the petitioners argue that the same may be made only
by a court of justice and not by the President of the Philippines. They invoke the recent cases of EPZA v.
Dulay 5 andManotok v. National Food Authority. 6 Moreover, the just compensation contemplated by the Bill of
Rights is payable in money or in cash and not in the form of bonds or other things of value.
In considering the rentals as advance payment on the land, the executive order also deprives the petitioners of
their property rights as protected by due process. The equal protection clause is also violated because the order
places the burden of solving the agrarian problems on the owners only of agricultural lands. No similar obligation
is imposed on the owners of other properties.
The petitioners also maintain that in declaring the beneficiaries under P.D. No. 27 to be the owners of the lands
occupied by them, E.O. No. 228 ignored judicial prerogatives and so violated due process. Worse, the measure
would not solve the agrarian problem because even the small farmers are deprived of their lands and the
retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already been upheld in the earlier cases
ofChavez v. Zobel, 7 Gonzales v. Estrella, 8 and Association of Rice and Corn Producers of the Philippines, Inc.
v. The National Land Reform Council. 9 The determination of just compensation by the executive authorities
conformably to the formula prescribed under the questioned order is at best initial or preliminary only. It does not
foreclose judicial intervention whenever sought or warranted. At any rate, the challenge to the order is premature
because no valuation of their property has as yet been made by the Department of Agrarian Reform. The
petitioners are also not proper parties because the lands owned by them do not exceed the maximum retention
limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27 does not provide for retention limits
on tenanted lands and that in any event their petition is a class suit brought in behalf of landowners with
landholdings below 24 hectares. They maintain that the determination of just compensation by the administrative
authorities is a final ascertainment. As for the cases invoked by the public respondent, the constitutionality of
P.D. No. 27 was merely assumed in Chavez, while what was decided in Gonzales was the validity of the
imposition of martial law.
In the amended petition dated November 22, 1588, it is contended that P.D. No. 27, E.O. Nos. 228 and 229
(except Sections 20 and 21) have been impliedly repealed by R.A. No. 6657. Nevertheless, this statute should
itself also be declared unconstitutional because it suffers from substantially the same infirmities as the earlier
measures.
A petition for intervention was filed with leave of court on June 1, 1988 by Vicente Cruz, owner of a 1. 83- hectare
land, who complained that the DAR was insisting on the implementation of P.D. No. 27 and E.O. No. 228 despite
a compromise agreement he had reached with his tenant on the payment of rentals. In a subsequent motion
dated April 10, 1989, he adopted the allegations in the basic amended petition that the above- mentioned
enactments have been impliedly repealed by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill District, Victorias, Negros
Occidental. Co-petitioner Planters' Committee, Inc. is an organization composed of 1,400 planter-members. This
petition seeks to prohibit the implementation of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive Agrarian Reform Program as decreed by the
Constitution belongs to Congress and not the President. Although they agree that the President could exercise
legislative power until the Congress was convened, she could do so only to enact emergency measures during
the transition period. At that, even assuming that the interim legislative power of the President was properly
exercised, Proc. No. 131 and E.O. No. 229 would still have to be annulled for violating the constitutional
provisions on just compensation, due process, and equal protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be known as the Agrarian Reform Fund, an
initial amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the estimated cost of the
Comprehensive Agrarian Reform Program from 1987 to 1992 which shall be sourced from the receipts of the
sale of the assets of the Asset Privatization Trust and Receipts of sale of ill-gotten wealth received through the
Presidential Commission on Good Government and such other sources as government may deem appropriate.
The amounts collected and accruing to this special fund shall be considered automatically appropriated for the
purpose authorized in this Proclamation the amount appropriated is in futuro, not in esse. The money needed to
cover the cost of the contemplated expropriation has yet to be raised and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with payment of just compensation as it is
traditionally understood, i.e., with money and in full, but no such payment is contemplated in Section 5 of the E.O.
No. 229. On the contrary, Section 6, thereof provides that the Land Bank of the Philippines "shall compensate the
landowner in an amount to be established by the government, which shall be based on the owner's declaration of
current fair market value as provided in Section 4 hereof, but subject to certain controls to be defined and
promulgated by the Presidential Agrarian Reform Council." This compensation may not be paid fully in money but
in any of several modes that may consist of part cash and part bond, with interest, maturing periodically, or direct
payment in cash or bond as may be mutually agreed upon by the beneficiary and the landowner or as may be
prescribed or approved by the PARC.
The petitioners also argue that in the issuance of the two measures, no effort was made to make a careful study
of the sugar planters' situation. There is no tenancy problem in the sugar areas that can justify the application of
the CARP to them. To the extent that the sugar planters have been lumped in the same legislation with other
farmers, although they are a separate group with problems exclusively their own, their right to equal protection
has been violated.
A motion for intervention was filed on August 27,1987 by the National Federation of Sugarcane Planters (NASP)
which claims a membership of at least 20,000 individual sugar planters all over the country. On September 10,
1987, another motion for intervention was filed, this time by Manuel Barcelona, et al., representing coconut and
riceland owners. Both motions were granted by the Court.
NASP alleges that President Aquino had no authority to fund the Agrarian Reform Program and that, in any
event, the appropriation is invalid because of uncertainty in the amount appropriated. Section 2 of Proc. No. 131
and Sections 20 and 21 of E.O. No. 229 provide for an initial appropriation of fifty billion pesos and thus specifies
the minimum rather than the maximum authorized amount. This is not allowed. Furthermore, the stated initial
amount has not been certified to by the National Treasurer as actually available.
Two additional arguments are made by Barcelona, to wit, the failure to establish by clear and convincing
evidence the necessity for the exercise of the powers of eminent domain, and the violation of the fundamental
right to own property.
The petitioners also decry the penalty for non-registration of the lands, which is the expropriation of the said land
for an amount equal to the government assessor's valuation of the land for tax purposes. On the other hand, if
the landowner declares his own valuation he is unjustly required to immediately pay the corresponding taxes on
the land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the presumption of constitutionality in favor of
Proc. No. 131 and E.O. No. 229. He also justifies the necessity for the expropriation as explained in the
"whereas" clauses of the Proclamation and submits that, contrary to the petitioner's contention, a pilot project to
determine the feasibility of CARP and a general survey on the people's opinion thereon are not indispensable
prerequisites to its promulgation.
On the alleged violation of the equal protection clause, the sugar planters have failed to show that they belong to
a different class and should be differently treated. The Comment also suggests the possibility of Congress first
distributing public agricultural lands and scheduling the expropriation of private agricultural lands later. From this
viewpoint, the petition for prohibition would be premature.
The public respondent also points out that the constitutional prohibition is against the payment of public money
without the corresponding appropriation. There is no rule that only money already in existence can be the subject
of an appropriation law. Finally, the earmarking of fifty billion pesos as Agrarian Reform Fund, although
denominated as an initial amount, is actually the maximum sum appropriated. The word "initial" simply means
that additional amounts may be appropriated later when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on his own behalf, assailing the
constitutionality of E.O. No. 229. In addition to the arguments already raised, Serrano contends that the measure
is unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is not expressed in the title;
(3) The power of the President to legislate was terminated on July 2, 1987; and
(4) The appropriation of a P50 billion special fund from the National Treasury did not originate from the
House of Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian Reform, in violation of due process and
the requirement for just compensation, placed his landholding under the coverage of Operation Land Transfer.
Certificates of Land Transfer were subsequently issued to the private respondents, who then refused payment of
lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his small landholding under Operation
Land transfer and asked for the recall and cancellation of the Certificates of Land Transfer in the name of the
private respondents. He claims that on December 24, 1986, his petition was denied without hearing. On February
17, 1987, he filed a motion for reconsideration, which had not been acted upon when E.O. Nos. 228 and 229
were issued. These orders rendered his motion moot and academic because they directly effected the transfer of
his land to the private respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the President of the Philippines.
(2) The said executive orders are violative of the constitutional provision that no private property shall be
taken without due process or just compensation.
(3) The petitioner is denied the right of maximum retention provided for under the 1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly before Congress convened is
anomalous and arbitrary, besides violating the doctrine of separation of powers. The legislative power granted to
the President under the Transitory Provisions refers only to emergency measures that may be promulgated in the
proper exercise of the police power.
The petitioner also invokes his rights not to be deprived of his property without due process of law and to the
retention of his small parcels of riceholding as guaranteed under Article XIII, Section 4 of the Constitution. He
likewise argues that, besides denying him just compensation for his land, the provisions of E.O. No. 228
declaring that:
Lease rentals paid to the landowner by the farmer-beneficiary after October 21, 1972 shall be considered
as advance payment for the land.
is an unconstitutional taking of a vested property right. It is also his contention that the inclusion of even small
landowners in the program along with other landowners with lands consisting of seven hectares or more is
undemocratic.
In his Comment, the Solicitor General submits that the petition is premature because the motion for
reconsideration filed with the Minister of Agrarian Reform is still unresolved. As for the validity of the issuance of
E.O. Nos. 228 and 229, he argues that they were enacted pursuant to Section 6, Article XVIII of the Transitory
Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers until the first Congress is convened.
On the issue of just compensation, his position is that when P.D. No. 27 was promulgated on October 21. 1972,
the tenant-farmer of agricultural land was deemed the owner of the land he was tilling. The leasehold rentals paid
after that date should therefore be considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that the motion he filed was resolved on
December 14, 1987. An appeal to the Office of the President would be useless with the promulgation of E.O.
Nos. 228 and 229, which in effect sanctioned the validity of the public respondent's acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No. 27 to owners of rice and corn lands
not exceeding seven hectares as long as they are cultivating or intend to cultivate the same. Their respective
lands do not exceed the statutory limit but are occupied by tenants who are actually cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D. No. 27:
No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be ejected or removed from
his farmholding until such time as the respective rights of the tenant- farmers and the landowner shall have
been determined in accordance with the rules and regulations implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to enjoy their right of retention because
the Department of Agrarian Reform has so far not issued the implementing rules required under the above-
quoted decree. They therefore ask the Court for a writ of mandamus to compel the respondent to issue the said
rules.
In his Comment, the public respondent argues that P.D. No. 27 has been amended by LOI 474 removing any
right of retention from persons who own other agricultural lands of more than 7 hectares in aggregate area or
lands used for residential, commercial, industrial or other purposes from which they derive adequate income for
their family. And even assuming that the petitioners do not fall under its terms, the regulations implementing P.D.
No. 27 have already been issued, to wit, the Memorandum dated July 10, 1975 (Interim Guidelines on Retention
by Small Landowners, with an accompanying Retention Guide Table), Memorandum Circular No. 11 dated April
21, 1978, (Implementation Guidelines of LOI No. 474), Memorandum Circular No. 18-81 dated December
29,1981 (Clarificatory Guidelines on Coverage of P.D. No. 27 and Retention by Small Landowners), and DAR
Administrative Order No. 1, series of 1985 (Providing for a Cut-off Date for Landowners to Apply for Retention
and/or to Protest the Coverage of their Landholdings under Operation Land Transfer pursuant to P.D. No. 27).
For failure to file the corresponding applications for retention under these measures, the petitioners are now
barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely initiated this case notwithstanding the
pendency of their appeal to the President of the Philippines. Moreover, the issuance of the implementing rules,
assuming this has not yet been done, involves the exercise of discretion which cannot be controlled through the
writ of mandamus. This is especially true if this function is entrusted, as in this case, to a separate department of
the government.
In their Reply, the petitioners insist that the above-cited measures are not applicable to them because they do not
own more than seven hectares of agricultural land. Moreover, assuming arguendo that the rules were intended to
cover them also, the said measures are nevertheless not in force because they have not been published as
required by law and the ruling of this Court in Tanada v. Tuvera.10 As for LOI 474, the same is ineffective for the
additional reason that a mere letter of instruction could not have repealed the presidential decree.
I fall, and heavily," to use Justice Laurel's pithy language, where the acts of these departments, or of any public
Although holding neither purse nor sword and so regarded as the weakest of the three departments of the
government, the judiciary is nonetheless vested with the power to annul the acts of either the legislative or the
executive or of both when not conformable to the fundamental law. This is the reason for what some quarters call
the doctrine of judicial supremacy. Even so, this power is not lightly assumed or readily exercised. The doctrine
of separation of powers imposes upon the courts a proper restraint, born of the nature of their functions and of
their respect for the other departments, in striking down the acts of the legislative and the executive as
unconstitutional. The policy, indeed, is a blend of courtesy and caution. To doubt is to sustain. The theory is that
before the act was done or the law was enacted, earnest studies were made by Congress or the President, or
both, to insure that the Constitution would not be breached.
In addition, the Constitution itself lays down stringent conditions for a declaration of unconstitutionality, requiring
therefor the concurrence of a majority of the members of the Supreme Court who took part in the deliberations
and voted on the issue during their session en banc.11 And as established by judge made doctrine, the Court will
assume jurisdiction over a constitutional question only if it is shown that the essential requisites of a judicial
inquiry into such a question are first satisfied. Thus, there must be an actual case or controversy involving a
conflict of legal rights susceptible of judicial determination, the constitutional question must have been
opportunely raised by the proper party, and the resolution of the question is unavoidably necessary to the
decision of the case itself. 12
With particular regard to the requirement of proper party as applied in the cases before us, we hold that the same
is satisfied by the petitioners and intervenors because each of them has sustained or is in danger of sustaining
an immediate injury as a result of the acts or measures complained of. 13 And even if, strictly speaking, they are
not covered by the definition, it is still within the wide discretion of the Court to waive the requirement and so
remove the impediment to its addressing and resolving the serious constitutional questions raised.
In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers were allowed to question the
constitutionality of several executive orders issued by President Quirino although they were invoking only an
indirect and general interest shared in common with the public. The Court dismissed the objection that they were
not proper parties and ruled that "the transcendental importance to the public of these cases demands that they
be settled promptly and definitely, brushing aside, if we must, technicalities of procedure." We have since then
applied this exception in many other cases. 15
The other above-mentioned requisites have also been met in the present petitions.
In must be stressed that despite the inhibitions pressing upon the Court when confronted with constitutional
issues like the ones now before it, it will not hesitate to declare a law or act invalid when it is convinced that this
must be done. In arriving at this conclusion, its only criterion will be the Constitution as God and its conscience
give it the light to probe its meaning and discover its purpose. Personal motives and political considerations are
irrelevancies that cannot influence its decision. Blandishment is as ineffectual as intimidation.
For all the awesome power of the Congress and the Executive, the Court will not hesitate to "make the hammer
official, betray the people's will as expressed in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that —
... when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over
the other departments; it does not in reality nullify or invalidate an act of the Legislature, but only asserts
the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of
authority under the Constitution and to establish for the parties in an actual controversy the rights which
that instrument secures and guarantees to them. This is in truth all that is involved in what is termed
"judicial supremacy" which properly is the power of judicial review under the Constitution. 16
The cases before us categorically raise constitutional questions that this Court must categorically resolve. And so
we shall.
II
We proceed first to the examination of the preliminary issues before resolving the more serious challenges to the
constitutionality of the several measures involved in these petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise of his powers under martial law has already
been sustained in Gonzales v. Estrella and we find no reason to modify or reverse it on that issue. As for the
power of President Aquino to promulgate Proc. No. 131 and E.O. Nos. 228 and 229, the same was authorized
under Section 6 of the Transitory Provisions of the 1987 Constitution, quoted above.
The said measures were issued by President Aquino before July 27, 1987, when the Congress of the Philippines
was formally convened and took over legislative power from her. They are not "midnight" enactments intended to
pre-empt the legislature because E.O. No. 228 was issued on July 17, 1987, and the other measures, i.e., Proc.
No. 131 and E.O. No. 229, were both issued on July 22, 1987. Neither is it correct to say that these measures
ceased to be valid when she lost her legislative power for, like any statute, they continue to be in force unless
modified or repealed by subsequent law or declared invalid by the courts. A statute does not ipso facto become
inoperative simply because of the dissolution of the legislature that enacted it. By the same token, President
Aquino's loss of legislative power did not have the effect of invalidating all the measures enacted by her when
and as long as she possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected but in fact substantially affirmed the
challenged measures and has specifically provided that they shall be suppletory to R.A. No. 6657 whenever not
inconsistent with its provisions. 17 Indeed, some portions of the said measures, like the creation of the P50 billion
fund in Section 2 of Proc. No. 131, and Sections 20 and 21 of E.O. No. 229, have been incorporated by reference
in the CARP Law. 18
That fund, as earlier noted, is itself being questioned on the ground that it does not conform to the requirements
of a valid appropriation as specified in the Constitution. Clearly, however, Proc. No. 131 is not an appropriation
measure even if it does provide for the creation of said fund, for that is not its principal purpose. An appropriation
law is one the primary and specific purpose of which is to authorize the release of public funds from the
treasury. 19 The creation of the fund is only incidental to the main objective of the proclamation, which is agrarian
reform.
It should follow that the specific constitutional provisions invoked, to wit, Section 24 and Section 25(4) of Article
VI, are not applicable. With particular reference to Section 24, this obviously could not have been complied with
for the simple reason that the House of Representatives, which now has the exclusive power to initiate
appropriation measures, had not yet been convened when the proclamation was issued. The legislative power
was then solely vested in the President of the Philippines, who embodied, as it were, both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229 should be invalidated because they
do not provide for retention limits as required by Article XIII, Section 4 of the Constitution is no longer tenable.
R.A. No. 6657 does provide for such limits now in Section 6 of the law, which in fact is one of its most
controversial provisions. This section declares:
Retention Limits. — Except as otherwise provided in this Act, no person may own or retain, directly or
indirectly, any public or private agricultural land, the size of which shall vary according to factors governing
a viable family-sized farm, such as commodity produced, terrain, infrastructure, and soil fertility as
determined by the Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall
retention by the landowner exceed five (5) hectares. Three (3) hectares may be awarded to each child of
the landowner, subject to the following qualifications: (1) that he is at least fifteen (15) years of age; and (2)
that he is actually tilling the land or directly managing the farm; Provided, That landowners whose lands
have been covered by Presidential Decree No. 27 shall be allowed to keep the area originally retained by
them thereunder, further, That original homestead grantees or direct compulsory heirs who still own the
original homestead at the time of the approval of this Act shall retain the same areas as long as they
continue to cultivate said homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a bill shall have only one subject, to
be expressed in its title, deserves only short attention. It is settled that the title of the bill does not have to be a
catalogue of its contents and will suffice if the matters embodied in the text are relevant to each other and may be
inferred from the title. 20
The Court wryly observes that during the past dictatorship, every presidential issuance, by whatever name it was
called, had the force and effect of law because it came from President Marcos. Such are the ways of despots.
Hence, it is futile to argue, as the petitioners do in G.R. No. 79744, that LOI 474 could not have repealed P.D.
No. 27 because the former was only a letter of instruction. The important thing is that it was issued by President
Marcos, whose word was law during that time.
But for all their peremptoriness, these issuances from the President Marcos still had to comply with the
requirement for publication as this Court held in Tanada v. Tuvera. 21 Hence, unless published in the Official
Gazette in accordance with Article 2 of the Civil Code, they could not have any force and effect if they were
among those enactments successfully challenged in that case. LOI 474 was published, though, in the Official
Gazette dated November 29,1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742 that the writ of mandamus cannot
issue to compel the performance of a discretionary act, especially by a specific department of the government.
That is true as a general proposition but is subject to one important qualification. Correctly and categorically
stated, the rule is that mandamus will lie to compel the discharge of the discretionary duty itself but not to control
the discretion to be exercised. In other words, mandamus can issue to require action only but not specific action.
Whenever a duty is imposed upon a public official and an unnecessary and unreasonable delay in the
exercise of such duty occurs, if it is a clear duty imposed by law, the courts will intervene by the
extraordinary legal remedy of mandamus to compel action. If the duty is purely ministerial, the courts will
require specific action. If the duty is purely discretionary, the courts by mandamus will require action only.
For example, if an inferior court, public official, or board should, for an unreasonable length of time, fail to
decide a particular question to the great detriment of all parties concerned, or a court should refuse to take
jurisdiction of a cause when the law clearly gave it jurisdiction mandamus will issue, in the first case to
require a decision, and in the second to require that jurisdiction be taken of the cause. 22
And while it is true that as a rule the writ will not be proper as long as there is still a plain, speedy and adequate
remedy available from the administrative authorities, resort to the courts may still be permitted if the issue raised
is a question of law. 23
III
There are traditional distinctions between the police power and the power of eminent domain that logically
preclude the application of both powers at the same time on the same subject. In the case of City of Baguio v.
NAWASA, 24for example, where a law required the transfer of all municipal waterworks systems to the NAWASA
in exchange for its assets of equivalent value, the Court held that the power being exercised was eminent domain
because the property involved was wholesome and intended for a public use. Property condemned under the
police power is noxious or intended for a noxious purpose, such as a building on the verge of collapse, which
should be demolished for the public safety, or obscene materials, which should be destroyed in the interest of
public morals. The confiscation of such property is not compensable, unlike the taking of property under the
power of expropriation, which requires the payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down the limits of the police power in a
famous aphorism: "The general rule at least is that while property may be regulated to a certain extent, if
regulation goes too far it will be recognized as a taking." The regulation that went "too far" was a law prohibiting
mining which might cause the subsidence of structures for human habitation constructed on the land surface.
This was resisted by a coal company which had earlier granted a deed to the land over its mine but reserved all
mining rights thereunder, with the grantee assuming all risks and waiving any damage claim. The Court held the
law could not be sustained without compensating the grantor. Justice Brandeis filed a lone dissent in which he
argued that there was a valid exercise of the police power. He said:
Every restriction upon the use of property imposed in the exercise of the police power deprives the owner
of some right theretofore enjoyed, and is, in that sense, an abridgment by the State of rights in property
without making compensation. But restriction imposed to protect the public health, safety or morals from
dangers threatened is not a taking. The restriction here in question is merely the prohibition of a noxious
use. The property so restricted remains in the possession of its owner. The state does not appropriate it or
make any use of it. The state merely prevents the owner from making a use which interferes with
paramount rights of the public. Whenever the use prohibited ceases to be noxious — as it may because of
further changes in local or social conditions — the restriction will have to be removed and the owner will
again be free to enjoy his property as heretofore.
Recent trends, however, would indicate not a polarization but a mingling of the police power and the power of
eminent domain, with the latter being used as an implement of the former like the power of taxation. The
employment of the taxing power to achieve a police purpose has long been accepted. 26 As for the power of
expropriation, Prof. John J. Costonis of the University of Illinois College of Law (referring to the earlier case of
Euclid v. Ambler Realty Co., 272 US 365, which sustained a zoning law under the police power) makes the
following significant remarks:
Euclid, moreover, was decided in an era when judges located the Police and eminent domain powers on
different planets. Generally speaking, they viewed eminent domain as encompassing public acquisition of
private property for improvements that would be available for public use," literally construed. To the police
power, on the other hand, they assigned the less intrusive task of preventing harmful externalities a point
reflected in the Euclid opinion's reliance on an analogy to nuisance law to bolster its support of zoning. So
long as suppression of a privately authored harm bore a plausible relation to some legitimate "public
purpose," the pertinent measure need have afforded no compensation whatever. With the progressive
growth of government's involvement in land use, the distance between the two powers has contracted
considerably. Today government often employs eminent domain interchangeably with or as a useful
complement to the police power-- a trend expressly approved in the Supreme Court's 1954 decision in
Berman v. Parker, which broadened the reach of eminent domain's "public use" test to match that of the
police power's standard of "public purpose." 27
The Berman case sustained a redevelopment project and the improvement of blighted areas in the District of
Columbia as a proper exercise of the police power. On the role of eminent domain in the attainment of this
purpose, Justice Douglas declared:
If those who govern the District of Columbia decide that the Nation's Capital should be beautiful as well as
sanitary, there is nothing in the Fifth Amendment that stands in the way.
Once the object is within the authority of Congress, the right to realize it through the exercise of eminent
domain is clear.
For the power of eminent domain is merely the means to the end. 28
In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3 vote in 1978, the U.S Supreme Court
sustained the respondent's Landmarks Preservation Law under which the owners of the Grand Central Terminal
had not been allowed to construct a multi-story office building over the Terminal, which had been designated a
historic landmark. Preservation of the landmark was held to be a valid objective of the police power. The
problem, however, was that the owners of the Terminal would be deprived of the right to use the airspace above
it although other landowners in the area could do so over their respective properties. While insisting that there
was here no taking, the Court nonetheless recognized certain compensatory rights accruing to Grand Central
Terminal which it said would "undoubtedly mitigate" the loss caused by the regulation. This "fair compensation,"
as he called it, was explained by Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark status, Penn Central was authorized to transfer to
neighboring properties the authorized but unused rights accruing to the site prior to the Terminal's designation as
a landmark — the rights which would have been exhausted by the 59-story building that the city refused to
countenance atop the Terminal. Prevailing bulk restrictions on neighboring sites were proportionately relaxed,
theoretically enabling Penn Central to recoup its losses at the Terminal site by constructing or selling to others
the right to construct larger, hence more profitable buildings on the transferee sites. 30
The cases before us present no knotty complication insofar as the question of compensable taking is concerned.
To the extent that the measures under challenge merely prescribe retention limits for landowners, there is an
exercise of the police power for the regulation of private property in accordance with the Constitution. But where,
to carry out such regulation, it becomes necessary to deprive such owners of whatever lands they may own in
excess of the maximum area allowed, there is definitely a taking under the power of eminent domain for which
payment of just compensation is imperative. The taking contemplated is not a mere limitation of the use of the
land. What is required is the surrender of the title to and the physical possession of the said excess and all
beneficial rights accruing to the owner in favor of the farmer-beneficiary. This is definitely an exercise not of the
police power but of the power of eminent domain.
Whether as an exercise of the police power or of the power of eminent domain, the several measures before us
are challenged as violative of the due process and equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground that no retention limits are prescribed
has already been discussed and dismissed. It is noted that although they excited many bitter exchanges during
the deliberation of the CARP Law in Congress, the retention limits finally agreed upon are, curiously enough, not
being questioned in these petitions. We therefore do not discuss them here. The Court will come to the other
claimed violations of due process in connection with our examination of the adequacy of just compensation as
required under the power of expropriation.
The argument of the small farmers that they have been denied equal protection because of the absence of
retention limits has also become academic under Section 6 of R.A. No. 6657. Significantly, they too have not
questioned the area of such limits. There is also the complaint that they should not be made to share the burden
of agrarian reform, an objection also made by the sugar planters on the ground that they belong to a particular
class with particular interests of their own. However, no evidence has been submitted to the Court that the
requisites of a valid classification have been violated.
Classification has been defined as the grouping of persons or things similar to each other in certain particulars
and different from each other in these same particulars. 31 To be valid, it must conform to the following
requirements: (1) it must be based on substantial distinctions; (2) it must be germane to the purposes of the law;
(3) it must not be limited to existing conditions only; and (4) it must apply equally to all the members of the
class. 32 The Court finds that all these requisites have been met by the measures here challenged as arbitrary
and discriminatory.
Equal protection simply means that all persons or things similarly situated must be treated alike both as to the
rights conferred and the liabilities imposed. 33 The petitioners have not shown that they belong to a different class
and entitled to a different treatment. The argument that not only landowners but also owners of other properties
must be made to share the burden of implementing land reform must be rejected. There is a substantial
distinction between these two classes of owners that is clearly visible except to those who will not see. There is
no need to elaborate on this matter. In any event, the Congress is allowed a wide leeway in providing for a valid
classification. Its decision is accorded recognition and respect by the courts of justice except only where its
discretion is abused to the detriment of the Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained under the police power only if there is a
concurrence of the lawful subject and the lawful method. Put otherwise, the interests of the public generally as
distinguished from those of a particular class require the interference of the State and, no less important, the
means employed are reasonably necessary for the attainment of the purpose sought to be achieved and not
unduly oppressive upon individuals. 34 As the subject and purpose of agrarian reform have been laid down by the
Constitution itself, we may say that the first requirement has been satisfied. What remains to be examined is the
validity of the method employed to achieve the constitutional goal.
One of the basic principles of the democratic system is that where the rights of the individual are concerned, the
end does not justify the means. It is not enough that there be a valid objective; it is also necessary that the
means employed to pursue it be in keeping with the Constitution. Mere expediency will not excuse constitutional
shortcuts. There is no question that not even the strongest moral conviction or the most urgent public need,
subject only to a few notable exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration
to say that a, person invoking a right guaranteed under Article III of the Constitution is a majority of one even as
against the rest of the nation who would deny him that right.
That right covers the person's life, his liberty and his property under Section 1 of Article III of the Constitution.
With regard to his property, the owner enjoys the added protection of Section 9, which reaffirms the familiar rule
that private property shall not be taken for public use without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands intended
for public use upon payment of just compensation to the owner. Obviously, there is no need to expropriate
where the owner is willing to sell under terms also acceptable to the purchaser, in which case an ordinary
deed of sale may be agreed upon by the parties. 35 It is only where the owner is unwilling to sell, or cannot
accept the price or other conditions offered by the vendee, that the power of eminent domain will come into
play to assert the paramount authority of the State over the interests of the property owner. Private rights
must then yield to the irresistible demands of the public interest on the time-honored justification, as in the
case of the police power, that the welfare of the people is the supreme law.
But for all its primacy and urgency, the power of expropriation is by no means absolute (as indeed no power is
absolute). The limitation is found in the constitutional injunction that "private property shall not be taken for public
use without just compensation" and in the abundant jurisprudence that has evolved from the interpretation of this
principle. Basically, the requirements for a proper exercise of the power are: (1) public use and (2) just
compensation.
Let us dispose first of the argument raised by the petitioners in G.R. No. 79310 that the State should first
distribute public agricultural lands in the pursuit of agrarian reform instead of immediately disturbing property
rights by forcibly acquiring private agricultural lands. Parenthetically, it is not correct to say that only public
agricultural lands may be covered by the CARP as the Constitution calls for "the just distribution of all agricultural
lands." In any event, the decision to redistribute private agricultural lands in the manner prescribed by the CARP
was made by the legislative and executive departments in the exercise of their discretion. We are not justified in
reviewing that discretion in the absence of a clear showing that it has been abused.
A becoming courtesy admonishes us to respect the decisions of the political departments when they decide what
is known as the political question. As explained by Chief Justice Concepcion in the case of Tañada v. Cuenco: 36
The term "political question" connotes what it means in ordinary parlance, namely, a question of policy. It
refers to "those questions which, under the Constitution, are to be decided by the people in their sovereign
capacity; or in regard to which full discretionary authority has been delegated to the legislative or executive
branch of the government." It is concerned with issues dependent upon the wisdom, not legality, of a
particular measure.
It is true that the concept of the political question has been constricted with the enlargement of judicial power,
which now includes the authority of the courts "to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government." 37 Even so, this should not be construed as a license for us to reverse the other departments
simply because their views may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to include in the CARP the redistribution of
private landholdings (even as the distribution of public agricultural lands is first provided for, while also continuing
apace under the Public Land Act and other cognate laws). The Court sees no justification to interpose its
authority, which we may assert only if we believe that the political decision is not unwise, but illegal. We do not
find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company,38 it was held:
Congress having determined, as it did by the Act of March 3,1909 that the entire St. Mary's river between
the American bank and the international line, as well as all of the upland north of the present ship canal,
throughout its entire length, was "necessary for the purpose of navigation of said waters, and the waters
connected therewith," that determination is conclusive in condemnation proceedings instituted by the
United States under that Act, and there is no room for judicial review of the judgment of Congress ... .
As earlier observed, the requirement for public use has already been settled for us by the Constitution itself No
less than the 1987 Charter calls for agrarian reform, which is the reason why private agricultural lands are to be
taken from their owners, subject to the prescribed maximum retention limits. The purposes specified in P.D. No.
27, Proc. No. 131 and R.A. No. 6657 are only an elaboration of the constitutional injunction that the State adopt
the necessary measures "to encourage and undertake the just distribution of all agricultural lands to enable
farmers who are landless to own directly or collectively the lands they till." That public use, as pronounced by the
fundamental law itself, must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a longer and more thoughtful
examination.
Just compensation is defined as the full and fair equivalent of the property taken from its owner by the
expropriator. 39 It has been repeatedly stressed by this Court that the measure is not the taker's gain but the
owner's loss. 40 The word "just" is used to intensify the meaning of the word "compensation" to convey the idea
that the equivalent to be rendered for the property to be taken shall be real, substantial, full, ample. 41
It bears repeating that the measures challenged in these petitions contemplate more than a mere regulation of
the use of private lands under the police power. We deal here with an actual taking of private agricultural lands
that has dispossessed the owners of their property and deprived them of all its beneficial use and enjoyment, to
entitle them to the just compensation mandated by the Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is compensable taking when the following conditions
concur: (1) the expropriator must enter a private property; (2) the entry must be for more than a momentary
period; (3) the entry must be under warrant or color of legal authority; (4) the property must be devoted to public
use or otherwise informally appropriated or injuriously affected; and (5) the utilization of the property for public
use must be in such a way as to oust the owner and deprive him of beneficial enjoyment of the property. All these
requisites are envisioned in the measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a deposit upon its taking possession of
the condemned property, as "the compensation is a public charge, the good faith of the public is pledged for its
payment, and all the resources of taxation may be employed in raising the amount." 43 Nevertheless, Section
16(e) of the CARP Law provides that:
Upon receipt by the landowner of the corresponding payment or, in case of rejection or no response from
the landowner, upon the deposit with an accessible bank designated by the DAR of the compensation in
cash or in LBP bonds in accordance with this Act, the DAR shall take immediate possession of the land
and shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of
the Republic of the Philippines. The DAR shall thereafter proceed with the redistribution of the land to the
qualified beneficiaries.
Objection is raised, however, to the manner of fixing the just compensation, which it is claimed is entrusted to the
administrative authorities in violation of judicial prerogatives. Specific reference is made to Section 16(d), which
provides that in case of the rejection or disregard by the owner of the offer of the government to buy his land-
... the DAR shall conduct summary administrative proceedings to determine the compensation for the land
by requiring the landowner, the LBP and other interested parties to submit evidence as to the just
compensation for the land, within fifteen (15) days from the receipt of the notice. After the expiration of the
above period, the matter is deemed submitted for decision. The DAR shall decide the case within thirty (30)
days after it is submitted for decision.
To be sure, the determination of just compensation is a function addressed to the courts of justice and may not
be usurped by any other branch or official of the government. EPZA v. Dulay 44 resolved a challenge to several
decrees promulgated by President Marcos providing that the just compensation for property under expropriation
should be either the assessment of the property by the government or the sworn valuation thereof by the owner,
whichever was lower. In declaring these decrees unconstitutional, the Court held through Mr. Justice Hugo E.
Gutierrez, Jr.:
The method of ascertaining just compensation under the aforecited decrees constitutes impermissible
encroachment on judicial prerogatives. It tends to render this Court inutile in a matter which under this
Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically would still have the power to determine
the just compensation for the property, following the applicable decrees, its task would be relegated to
simply stating the lower value of the property as declared either by the owner or the assessor. As a
necessary consequence, it would be useless for the court to appoint commissioners under Rule 67 of the
Rules of Court. Moreover, the need to satisfy the due process clause in the taking of private property is
seemingly fulfilled since it cannot be said that a judicial proceeding was not had before the actual taking.
However, the strict application of the decrees during the proceedings would be nothing short of a mere
formality or charade as the court has only to choose between the valuation of the owner and that of the
assessor, and its choice is always limited to the lower of the two. The court cannot exercise its discretion or
 independence in determining what is just or fair. Even a grade school pupil could substitute for the judge
insofar as the determination of constitutional just compensation is concerned.
In the present petition, we are once again confronted with the same question of whether the courts under
P.D. No. 1533, which contains the same provision on just compensation as its predecessor decrees, still
have the power and authority to determine just compensation, independent of what is stated by the decree
and to this effect, to appoint commissioners for such purpose.
This time, we answer in the affirmative.
It is violative of due process to deny the owner the opportunity to prove that the valuation in the tax
documents is unfair or wrong. And it is repulsive to the basic concepts of justice and fairness to allow the
haphazard work of a minor bureaucrat or clerk to absolutely prevail over the judgment of a court
promulgated only after expert commissioners have actually viewed the property, after evidence and
arguments pro and con have been presented, and after all factors and considerations essential to a fair and
just determination have been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not suffer from the arbitrariness that
rendered the challenged decrees constitutionally objectionable. Although the proceedings are described as
summary, the landowner and other interested parties are nevertheless allowed an opportunity to submit evidence
on the real value of the property. But more importantly, the determination of the just compensation by the DAR is
not by any means final and conclusive upon the landowner or any other interested party, for Section 16(f) clearly
provides:
Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final
determination of just compensation.
The determination made by the DAR is only preliminary unless accepted by all parties concerned. Otherwise, the
courts of justice will still have the right to review with finality the said determination in the exercise of what is
admittedly a judicial function.
The second and more serious objection to the provisions on just compensation is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 18. Valuation and Mode of Compensation. — The LBP shall compensate the landowner in such
amount as may be agreed upon by the landowner and the DAR and the LBP, in accordance with the
criteria provided for in Sections 16 and 17, and other pertinent provisions hereof, or as may be finally
determined by the court, as the just compensation for the land.
The compensation shall be paid in one of the following modes, at the option of the landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50) hectares, insofar as the excess hectarage is concerned — Twenty-five
percent (25%) cash, the balance to be paid in government financial instruments negotiable at any
time.
(b) For lands above twenty-four (24) hectares and up to fifty (50) hectares — Thirty percent (30%)
cash, the balance to be paid in government financial instruments negotiable at any time.
(c) For lands twenty-four (24) hectares and below — Thirty-five percent (35%) cash, the balance to
be paid in government financial instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled corporations, LBP preferred shares, physical assets
or other qualified investments in accordance with guidelines set by the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury bill rates. Ten percent (10%) of the face value of
the bonds shall mature every year from the date of issuance until the tenth (10th) year: Provided, That
should the landowner choose to forego the cash portion, whether in full or in part, he shall be paid
correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be used by the landowner, his successors-in-
interest or his assigns, up to the amount of their face value, for any of the following:
(i) Acquisition of land or other real properties of the government, including assets under the Asset
Privatization Program and other assets foreclosed by government financial institutions in the same
province or region where the lands for which the bonds were paid are situated;
(ii) Acquisition of shares of stock of government-owned or controlled corporations or shares of stock
owned by the government in private corporations;
(iii) Substitution for surety or bail bonds for the provisional release of accused persons, or for
performance bonds;
(iv) Security for loans with any government financial institution, provided the proceeds of the loans shall
be invested in an economic enterprise, preferably in a small and medium- scale industry, in the same
province or region as the land for which the bonds are paid;
 (v) Payment for various taxes and fees to government: Provided, That the use of these bonds for these
purposes will be limited to a certain percentage of the outstanding balance of the financial instruments;
Provided, further, That the PARC shall determine the percentages mentioned above;
(vi) Payment for tuition fees of the immediate family of the original bondholder in government
universities, colleges, trade schools, and other institutions;
(vii) Payment for fees of the immediate family of the original bondholder in government hospitals; and
(viii) Such other uses as the PARC may from time to time allow.
The contention of the petitioners in G.R. No. 79777 is that the above provision is unconstitutional insofar as it
requires the owners of the expropriated properties to accept just compensation therefor in less than money,
which is the only medium of payment allowed. In support of this contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the owner of the property expropriated is entitled to a
just compensation, which should be neither more nor less, whenever it is possible to make the assessment,
than the money equivalent of said property. Just compensation has always been understood to be the just
and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the
expropriation . 45 (Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court held:
It is well-settled that just compensation means the equivalent for the value of the property at the time of its
taking. Anything beyond that is more, and anything short of that is less, than just compensation. It means a
fair and full equivalent for the loss sustained, which is the measure of the indemnity, not whatever gain
would accrue to the expropriating entity. The market value of the land taken is the just compensation to
which the owner of condemned property is entitled, the market value being that sum of money which a
person desirous, but not compelled to buy, and an owner, willing, but not compelled to sell, would agree on
as a price to be given and received for such property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject has been derived, the weight of authority is
also to the effect that just compensation for property expropriated is payable only in money and not otherwise.
Thus —
The medium of payment of compensation is ready money or cash. The condemnor cannot compel the
owner to accept anything but money, nor can the owner compel or require the condemnor to pay him on
any other basis than the value of the property in money at the time and in the manner prescribed by the
Constitution and the statutes. When the power of eminent domain is resorted to, there must be a standard
medium of payment, binding upon both parties, and the law has fixed that standard as money in
cash. 47 (Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the nature of things, be regarded as a reliable and
constant standard of compensation. 48
"Just compensation" for property taken by condemnation means a fair equivalent in money, which must be
paid at least within a reasonable time after the taking, and it is not within the power of the Legislature to
substitute for such payment future obligations, bonds, or other valuable advantage. 49(Emphasis supplied.)
It cannot be denied from these cases that the traditional medium for the payment of just compensation is money
and no other. And so, conformably, has just compensation been paid in the past solely in that medium. However,
we do not deal here with the traditional excercise of the power of eminent domain. This is not an ordinary
expropriation where only a specific property of relatively limited area is sought to be taken by the State from its
owner for a specific and perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands whenever found and of whatever kind as long as
they are in excess of the maximum retention limits allowed their owners. This kind of expropriation is intended for
the benefit not only of a particular community or of a small segment of the population but of the entire Filipino
nation, from all levels of our society, from the impoverished farmer to the land-glutted owner. Its purpose does
not cover only the whole territory of this country but goes beyond in time to the foreseeable future, which it hopes
to secure and edify with the vision and the sacrifice of the present generation of Filipinos. Generations yet to
come are as involved in this program as we are today, although hopefully only as beneficiaries of a richer and
more fulfilling life we will guarantee to them tomorrow through our thoughtfulness today. And, finally, let it not be
forgotten that it is no less than the Constitution itself that has ordained this revolution in the farms, calling for "a
just distribution" among the farmers of lands that have heretofore been the prison of their dreams but can now
become the key at least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will be tremendous. Considering the vast areas
of land subject to expropriation under the laws before us, we estimate that hundreds of billions of pesos will be
needed, far more indeed than the amount of P50 billion initially appropriated, which is already staggering as it is
by our present standards. Such amount is in fact not even fully available at this time.
We assume that the framers of the Constitution were aware of this difficulty when they called for agrarian reform
as a top priority project of the government. It is a part of this assumption that when they envisioned the
expropriation that would be needed, they also intended that the just compensation would have to be paid not in
the orthodox way but a less conventional if more practical method. There can be no doubt that they were aware
of the financial limitations of the government and had no illusions that there would be enough money to pay in
cash and in full for the lands they wanted to be distributed among the farmers. We may therefore assume that
their intention was to allow such manner of payment as is now provided for by the CARP Law, particularly the
payment of the balance (if the owner cannot be paid fully with money), or indeed of the entire amount of the just
compensation, with other things of value. We may also suppose that what they had in mind was a similar scheme
of payment as that prescribed in P.D. No. 27, which was the law in force at the time they deliberated on the new
Charter and with which they presumably agreed in principle.
The Court has not found in the records of the Constitutional Commission any categorical agreement among the
members regarding the meaning to be given the concept of just compensation as applied to the comprehensive
agrarian reform program being contemplated. There was the suggestion to "fine tune" the requirement to suit the
demands of the project even as it was also felt that they should "leave it to Congress" to determine how payment
should be made to the landowner and reimbursement required from the farmer-beneficiaries. Such innovations
as "progressive compensation" and "State-subsidized compensation" were also proposed. In the end, however,
no special definition of the just compensation for the lands to be expropriated was reached by the Commission. 50
On the other hand, there is nothing in the records either that militates against the assumptions we are making of
the general sentiments and intention of the members on the content and manner of the payment to be made to
the landowner in the light of the magnitude of the expenditure and the limitations of the expropriator.
With these assumptions, the Court hereby declares that the content and manner of the just compensation
provided for in the afore- quoted Section 18 of the CARP Law is not violative of the Constitution. We do not mind
admitting that a certain degree of pragmatism has influenced our decision on this issue, but after all this Court is
not a cloistered institution removed from the realities and demands of society or oblivious to the need for its
enhancement. The Court is as acutely anxious as the rest of our people to see the goal of agrarian reform
achieved at last after the frustrations and deprivations of our peasant masses during all these disappointing
decades. We are aware that invalidation of the said section will result in the nullification of the entire program,
killing the farmer's hopes even as they approach realization and resurrecting the spectre of discontent and
dissent in the restless countryside. That is not in our view the intention of the Constitution, and that is not what
we shall decree today.
Accepting the theory that payment of the just compensation is not always required to be made fully in money, we
find further that the proportion of cash payment to the other things of value constituting the total payment, as
determined on the basis of the areas of the lands expropriated, is not unduly oppressive upon the landowner. It is
noted that the smaller the land, the bigger the payment in money, primarily because the small landowner will be
needing it more than the big landowners, who can afford a bigger balance in bonds and other things of value. No
less importantly, the government financial instruments making up the balance of the payment are "negotiable at
any time." The other modes, which are likewise available to the landowner at his option, are also not
unreasonable because payment is made in shares of stock, LBP bonds, other properties or assets, tax credits,
and other things of value equivalent to the amount of just compensation.
Admittedly, the compensation contemplated in the law will cause the landowners, big and small, not a little
inconvenience. As already remarked, this cannot be avoided. Nevertheless, it is devoutly hoped that these
countrymen of ours, conscious as we know they are of the need for their forebearance and even sacrifice, will not
begrudge us their indispensable share in the attainment of the ideal of agrarian reform. Otherwise, our pursuit of
this elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land under E.O. No. 229 does not seem to be viable
any more as it appears that Section 4 of the said Order has been superseded by Section 14 of the CARP Law.
This repeats the requisites of registration as embodied in the earlier measure but does not provide, as the latter
did, that in case of failure or refusal to register the land, the valuation thereof shall be that given by the provincial
or city assessor for tax purposes. On the contrary, the CARP Law says that the just compensation shall be
ascertained on the basis of the factors mentioned in its Section 17 and in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is divested of his property even before actual payment to
him in full of just compensation, in contravention of a well- accepted principle of eminent domain.
The recognized rule, indeed, is that title to the property expropriated shall pass from the owner to the expropriator
only upon full payment of the just compensation. Jurisprudence on this settled principle is consistent both here
and in other democratic jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings does not vest the condemnor until the
judgment fixing just compensation is entered and paid, but the condemnor's title relates back to the date on
which the petition under the Eminent Domain Act, or the commissioner's report under the Local Improvement Act,
is filed. 51
... although the right to appropriate and use land taken for a canal is complete at the time of entry, title to the
property taken remains in the owner until payment is actually made. 52 (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases holding that title to property does not
pass to the condemnor until just compensation had actually been made. In fact, the decisions appear to be
uniformly to this effect. As early as 1838, in Rubottom v. McLure, 54 it was held that "actual payment to the owner
of the condemned property was a condition precedent to the investment of the title to the property in the State"
albeit "not to the appropriation of it to public use." In Rexford v. Knight, 55 the Court of Appeals of New York said
that the construction upon the statutes was that the fee did not vest in the State until the payment of the
compensation although the authority to enter upon and appropriate the land was complete prior to the payment.
Kennedy further said that "both on principle and authority the rule is ... that the right to enter on and use the
property is complete, as soon as the property is actually appropriated under the authority of law for a public
use, but that the title does not pass from the owner without his consent, until just compensation has been made
to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, 56 that:
If the laws which we have exhibited or cited in the preceding discussion are attentively examined it will be
apparent that the method of expropriation adopted in this jurisdiction is such as to afford absolute
reassurance that no piece of land can be finally and irrevocably taken from an unwilling owner until
compensation is paid ... . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972 and declared
that he shall "be deemed the owner" of a portion of land consisting of a family-sized farm except that "no title to
the land owned by him was to be actually issued to him unless and until he had become a full-fledged member of
a duly recognized farmers' cooperative." It was understood, however, that full payment of the just compensation
also had to be made first, conformably to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972 of the land they
acquired by virtue of Presidential Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the said decree, after proof of full-fledged
membership in the farmers' cooperatives and full payment of just compensation. Hence, it was also perfectly
proper for the Order to also provide in its Section 2 that the "lease rentals paid to the landowner by the farmer-
beneficiary after October 21, 1972 (pending transfer of ownership after full payment of just compensation), shall
be considered as advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession and ownership of the land to the government
on receipt by the landowner of the corresponding payment or the deposit by the DAR of the compensation in
cash or LBP bonds with an accessible bank. Until then, title also remains with the landowner. 57 No outright
change of ownership is contemplated either.
the pursuit of agrarian reform, we do not tread on familiar ground but grope on terrain fraught with pitfalls and
expected difficulties. This is inevitable. The CARP Law is not a tried and tested project. On the contrary, to use
Justice Holmes's words, "it is an experiment, as all life is an experiment," and so we learn as we venture forward,
and, if necessary, by our own mistakes. We cannot expect perfection although we should strive for it by all
means. Meantime, we struggle as best we can in freeing the farmer from the iron shackles that have
unconscionably, and for so long, fettered his soul to the soil.
By the decision we reach today, all major legal obstacles to the comprehensive agrarian reform program are
removed, to clear the way for the true freedom of the farmer. We may now glimpse the day he will be released
not only from want but also from the exploitation and disdain of the past and from his own feelings of inadequacy
and helplessness. At last his servitude will be ended forever. At last the farm on which he toils will be his farm. It
will be his portion of the Mother Earth that will give him not only the staff of life but also the joy of living. And
where once it bred for him only deep despair, now can he see in it the fruition of his hopes for a more fulfilling
future. Now at last can he banish from his small plot of earth his insecurities and dark resentments and "rebuild in
it the music and the dream."

WHEREFORE, the Court holds as follows:

Hence, the argument that the assailed measures violate due process by arbitrarily transferring title before the
land is fully paid for must also be rejected.
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are SUSTAINED against all the
constitutional objections raised in the herein petitions.
It is worth stressing at this point that all rights acquired by the tenant-farmer under P.D. No. 27, as recognized
under E.O. No. 228, are retained by him even now under R.A. No. 6657. This should counter-balance the
express provision in Section 6 of the said law that "the landowners whose lands have been covered by 2. Title to all expropriated properties shall be transferred to the State only upon full payment of
Presidential Decree No. 27 shall be allowed to keep the area originally retained by them thereunder, further, That compensation to their respective owners.
original homestead grantees or direct compulsory heirs who still own the original homestead at the time of the
approval of this Act shall retain the same areas as long as they continue to cultivate said homestead." 3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are retained and recognized.

In connection with these retained rights, it does not appear in G.R. No. 78742 that the appeal filed by the
petitioners with the Office of the President has already been resolved. Although we have said that the doctrine of
exhaustion of administrative remedies need not preclude immediate resort to judicial action, there are factual
issues that have yet to be examined on the administrative level, especially the claim that the petitioners are not
covered by LOI 474 because they do not own other agricultural lands than the subjects of their petition.
4. Landowners who were unable to exercise their rights of retention under P.D. No. 27 shall enjoy the
retention rights granted by R.A. No. 6657 under the conditions therein prescribed.
5. Subject to the above-mentioned rulings all the petitions are DISMISSED, without pronouncement as to
costs.

Obviously, the Court cannot resolve these issues. In any event, assuming that the petitioners have not yet SO ORDERED.
exercised their retention rights, if any, under P.D. No. 27, the Court holds that they are entitled to the new
retention rights provided for by R.A. No. 6657, which in fact are on the whole more liberal than those granted by
Fernan, (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento,
the decree.
Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.

The CARP Law and the other enactments also involved in these cases have been the subject of bitter attack
from those who point to the shortcomings of these measures and ask that they be scrapped entirely. To be sure,
these enactments are less than perfect; indeed, they should be continuously re-examined and rehoned, that they
may be sharper instruments for the better protection of the farmer's rights. But we have to start somewhere. In
 [G.R. No. 126102. December 4, 2000]
ORTIGAS & CO. LTD., petitioner, vs. THE COURT OF APPEALS and ISMAEL G. MATHAY III, respondents.
DECISION
QUISUMBING, J.:
This petition seeks to reverse the decision of the Court of Appeals, dated March 25, 1996, in CA-G.R. SP No.
39193, which nullified the writ of preliminary injunction issued by the Regional Trial Court of Pasig City, Branch 261, in
Civil Case No. 64931. It also assails the resolution of the appellate court, dated August 13, 1996, denying petitioners
motion for reconsideration.
The facts of this case, as culled from the records, are as follows:
On August 25, 1976, petitioner Ortigas & Company sold to Emilia Hermoso, a parcel of land known as Lot 1, Block
21, Psd-66759, with an area of 1,508 square meters, located in Greenhills Subdivision IV, San Juan, Metro Manila, and
covered by Transfer Certificate of Title No. 0737. The contract of sale provided that the lot:
1. (1) be used exclusivelyfor residential purposes only, and not more than one single-family residential building
will be constructed thereon,
xxx
6. The BUYER shall not erectany sign or billboard on the rooffor advertising purposes
xxx
11. No single-family residential building shall be erecteduntil the building plans, specificationhave been
approved by the SELLER
xxx
14....restrictions shall run with the land and shall be construed as real covenants until December 31, 2025
when they shall cease and terminate[1]
These and the other conditions were duly annotated on the certificate of title issued to Emilia.
In 1981, the Metropolitan Manila Commission (now Metropolitan Manila Development Authority) enacted MMC
Ordinance No. 81-01, also known as the Comprehensive Zoning Area for the National Capital Region. The ordinance
reclassified as a commercial area a portion of Ortigas Avenue from Madison to Roosevelt Streets of Greenhills
Subdivision where the lot is located.
On June 8, 1984, private respondent Ismael Mathay III leased the lot from Emilia Hermoso and J.P. Hermoso
Realty Corp.. The lease contract did not specify the purposes of the lease. Thereupon, private respondent constructed a
single story commercial building for Greenhills Autohaus, Inc., a car sales company.
On January 18, 1995, petitioner filed a complaint against Emilia Hermoso with the Regional Trial Court of Pasig,
Branch 261. Docketed as Civil Case No. 64931, the complaint sought the demolition of the said commercial structure for
having violated the terms and conditions of the Deed of Sale. Complainant prayed for the issuance of a temporary
restraining order and a writ of preliminary injunction to prohibit petitioner from constructing the commercial building and/or
engaging in commercial activity on the lot. The complaint was later amended to implead Ismael G. Mathay III and J.P.
Hermoso Realty Corp., which has a ten percent (10%) interest in the lot.
In his answer, Mathay III denied any knowledge of the restrictions on the use of the lot and filed a cross-claim
against the Hermosos.
On June 16, 1995, the trial court issued the writ of preliminary injunction. On June 29, 1995, Mathay III moved to
set aside the injunctive order, but the trial court denied the motion.
Mathay III then filed with the Court of Appeals a special civil action for certiorari, docketed as CA-G.R. SP No.
39193, ascribing to the trial court grave abuse of discretion in issuing the writ of preliminary injunction. He claimed that
MMC Ordinance No. 81-01 classified the area where the lot was located as commercial area and said ordinance must
be read into the August 25, 1976 Deed of Sale as a concrete exercise of police power.
Ortigas and Company averred that inasmuch as the restrictions on the use of the lot were duly annotated on the
title it issued to Emilia Hermoso, said restrictions must prevail over the ordinance, specially since these restrictions were
agreed upon before the passage of MMC Ordinance No. 81-01.
On March 25, 1996, the appellate court disposed of the case as follows:
WHEREFORE, in light of the foregoing, the petition is hereby GRANTED. The assailed orders are hereby nullified and
set aside.
SO ORDERED.[2]
In finding for Mathay III, the Court of Appeals held that the MMC Ordinance No. 81-01 effectively nullified the
restrictions allowing only residential use of the property in question.
Ortigas seasonably moved for reconsideration, but the appellate court denied it on August 13, 1996.
Hence, the instant petition.
In its Memorandum, petitioner now submits that the principal issue in this case is whether respondent Court of
Appeals correctly set aside the Order dated June 16, 1995 of the trial court which issued the writ of preliminary injunction
on the sole ground that MMC Ordinance No. 81-01 nullified the building restriction imposing exclusive residential use on
the property in question.[3] It also asserts that Mathay III lacks legal capacity to question the validity of conditions of the
deed of sale; and he is barred by estoppel or waiver to raise the same question like his principals, the owners. [4] Lastly,
it avers that the appellate court unaccountably failed to address several questions of fact.
Principally, we must resolve the issue of whether the Court of Appeals erred in holding that the trial court committed
grave abuse of discretion when it refused to apply MMC Ordinance No.81-01 to Civil Case No. 64931.
But first, we must address petitioners allegation that the Court of Appeals unaccountably failed to address
questions of fact. For basic is the rule that factual issues may not be raised before this Court in a petition for review and
this Court is not duty-bound to consider said questions.[5] CA-G.R. SP No. 39193 was a special civil action for certiorari,
and the appellate court only had to determine if the trial court committed grave abuse of discretion amounting to want or
excess of jurisdiction in issuing the writ of preliminary injunction. Thus, unless vital to our determination of the issue at
hand, we shall refrain from further consideration of factual questions.
 Petitioner contends that the appellate court erred in limiting its decision to the cited zoning ordinance. It avers that
a contractual right is not automatically discarded once a claim is made that it conflicts with police power. Petitioner
submits that the restrictive clauses in the questioned contract is not in conflict with the zoning ordinance. For one,
according to petitioner, the MMC Ordinance No. 81-01 did not prohibit the construction of residential buildings. Petitioner
argues that even with the zoning ordinance, the seller and buyer of the re-classified lot can voluntarily agree to an
exclusive residential use thereof. Hence, petitioner concludes that the Court of Appeals erred in holding that the condition
imposing exclusive residential use was effectively nullified by the zoning ordinance.
In its turn, private respondent argues that the appellate court correctly ruled that the trial court had acted with grave
abuse of discretion in refusing to subject the contract to the MMC Ordinance No. 81-01. He avers that the appellate court
properly held the police power superior to the non-impairment of contract clause in the Constitution. He concludes that
the appellate court did not err in dissolving the writ of preliminary injunction issued by the trial court in excess of its
jurisdiction.
We note that in issuing the disputed writ of preliminary injunction, the trial court observed that the contract of sale
was entered into in August 1976, while the zoning ordinance was enacted only in March 1981. The trial court reasoned
that since private respondent had failed to show that MMC Ordinance No. 81-01 had retroactive effect, said ordinance
should be given prospective application only,[6] citing Co vs. Intermediate Appellate Court, 162 SCRA 390 (1988).
In general, we agree that laws are to be construed as having only prospective operation. Lex prospicit, non
respicit. Equally settled, only laws existing at the time of the execution of a contract are applicable thereto and not later
statutes, unless the latter are specifically intended to have retroactive effect.[7] A later law which enlarges, abridges, or in
any manner changes the intent of the parties to the contract necessarily impairs the contract itself[8] and cannot be given
retroactive effect without violating the constitutional prohibition against impairment of contracts.[9]
But, the foregoing principles do admit of certain exceptions. One involves police power. A law enacted in the
exercise of police power to regulate or govern certain activities or transactions could be given retroactive effect and may
reasonably impair vested rights or contracts. Police power legislation is applicable not only to future contracts, but equally
to those already in existence.[10] Nonimpairment of contracts or vested rights clauses will have to yield to the superior
and legitimate exercise by the State of police power to promote the health, morals, peace, education, good order, safety,
and general welfare of the people.[11] Moreover, statutes in exercise of valid police power must be read into every
contract.[12] Noteworthy, in Sangalang vs. Intermediate Appellate Court,[13] we already upheld MMC Ordinance No. 81-
01 as a legitimate police power measure.
The trial courts reliance on the Co vs. IAC,[14] is misplaced. In Co, the disputed area was agricultural and Ordinance
No. 81-01 did not specifically provide that it shall have retroactive effect so as to discontinue all rights previously acquired
over lands located within the zone which are neither residential nor light industrial in nature,[15] and stated with respect to
agricultural areas covered that the zoning ordinance should be given prospective operation only.[16] The area in this case
involves not agricultural but urban residential land. Ordinance No. 81-01 retroactively affected the operation of the zoning
ordinance in Greenhills by reclassifying certain locations therein as commercial.
Following our ruling in Ortigas & Co., Ltd. vs. Feati Bank & Trust Co., 94 SCRA 533 (1979), the contractual
stipulations annotated on the Torrens Title, on which Ortigas relies, must yield to the ordinance. When that stretch of
Ortigas Avenue from Roosevelt Street to Madison Street was reclassified as a commercial zone by the Metropolitan
Manila Commission in March 1981, the restrictions in the contract of sale between Ortigas and Hermoso, limiting all
construction on the disputed lot to single-family residential buildings, were deemed extinguished by the retroactive
operation of the zoning ordinance and could no longer be enforced. While our legal system upholds the sanctity of
contract so that a contract is deemed law between the contracting parties,[17] nonetheless, stipulations in a contract
cannot contravene law, morals, good customs, public order, or public policy. [18] Otherwise such stipulations would be
deemed null and void. Respondent court correctly found that the trial court committed in this case a grave abuse of
discretion amounting to want of or excess of jurisdiction in refusing to treat Ordinance No. 81-01 as applicable to Civil
Case No. 64931. In resolving matters in litigation, judges are not only duty-bound to ascertain the facts and the applicable
laws,[19] they are also bound by their oath of office to apply the applicable law. [20]
As a secondary issue, petitioner contends that respondent Mathay III, as a mere lessee of the lot in question, is a
total stranger to the deed of sale and is thus barred from questioning the conditions of said deed. Petitioner points out
that the owners of the lot voluntarily agreed to the restrictions on the use of the lot and do not question the validity of
these restrictions.Petitioner argues that Mathay III as a lessee is merely an agent of the owners, and could not override
and rise above the status of his principals. Petitioner submits that he could not have a higher interest than those of the
owners, the Hermosos, and thus had no locus standi to file CA-G.R. SP No. 39193 to dissolve the injunctive writ issued
by the RTC of Pasig City.
For his part, private respondent argues that as the lessee who built the commercial structure, it is he and he alone
who stands to be either benefited or injured by the results of the judgment in Civil Case No. 64931. He avers he is the
party with real interest in the subject matter of the action, as it would be his business, not the Hermosos, which would
suffer had not the respondent court dissolved the writ of preliminary injunction.
A real party in interest is defined as the party who stands to be benefited or injured by the judgment or the party
entitled to the avails of the suit. Interest within the meaning of the rule means material interest, an interest in issue and
to be affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental
interest.[21] By real interest is meant a present substantial interest, as distinguished from a mere expectancy or a future,
contingent, subordinate, or consequential interest.[22]
Tested by the foregoing definition, private respondent in this case is clearly a real party in interest. It is not disputed
that he is in possession of the lot pursuant to a valid lease. He is a possessor in the concept of a holder of the thing under
Article 525 of the Civil Code.[23] He was impleaded as a defendant in the amended complaint in Civil Case No.
64931. Further, what petitioner seeks to enjoin is the building by respondent of a commercial structure on the lot. Clearly,
it is private respondents acts which are in issue, and his interest in said issue cannot be a mere incidental interest. In its
amended complaint, petitioner prayed for, among others, judgment ordering the demolition of all improvements illegally
built on the lot in question.[24] These show that it is petitioner Mathay III, doing business as Greenhills Autohaus, Inc., and
not only the Hermosos, who will be adversely affected by the courts decree.
Petitioner also cites the rule that a stranger to a contract has no rights or obligations under it,[25] and thus has no
standing to challenge its validity.[26] But in seeking to enforce the stipulations in the deed of sale, petitioner impleaded
private respondent as a defendant. Thus petitioner must recognize that where a plaintiff has impleaded a party as a
defendant, he cannot subsequently question the latters standing in court.[27]
WHEREFORE, the instant petition is DENIED. The challenged decision of the Court of Appeals dated March 25,
1996, as well as the assailed resolution of August 13, 1996, in CA-G.R. SP No. 39193 is AFFIRMED. Costs against
petitioner.
SO ORDERED.
 [G.R. No. 104528. January 18, 1996]
PHILIPPINE NATIONAL BANK, petitioner, vs. OFFICE OF THE PRESIDENT, HOUSING AND LAND USE
REGULATORY BOARD, ALFONSO MAGLAYA, ANGELINA MAGLAYA P. REYES, JORGE C. BERNARDINO,
CORAZON DE LEON, VICTORIANO ACAYA, FLORENCIA CULTURA, MARIA CAMPOS, ERNESTO
SARMIENTO, SANTIAGO TAMONAN, APOLONIA TADIAQUE, SIMEON DE LEON, NATIVIDAD J. CRUZ,
NATIVIDAD B. LORESCO, FELICIDAD GARCIA, ANA ANITA TAN, LUCAS SERVILLION, JOSE NARAWAL,
represented by their duly authorized Attorney-in-Fact, CORAZONDE LEON AND SPOUSES LEOPOLDO AND
CARMEN SEBASTIAN, respondents.
RESOLUTION
PANGANIBAN, J.:
May a buyer of a property at a foreclosure sale dispossess prior purchasers on installment of individual lots
therein, or compel them to pay again for the lots which they previously bought from the defaulting mortgagor-
subdivision developer, on the theory that P.D. 957, The Subdivision and Condominium Buyers Protective Decree,
is not applicable to the mortgage contract in question, the same having been executed prior to the enactment of
P.D. 957? This is the question confronting the Court in this Petition challenging the Decision dated March 10,
1992 of the Office of the President of the Philippines in O.P. Case No. 4249, signed by. the Executive Secretary,
Franklin M. Drilon, by authority of the President.
Private respondents were buyers on installment of subdivision lots from Marikina Village, Inc. (represented
by spouses Antonio and Susana Astudillo). Notwithstanding the land purchase agreements it executed over said
lots, the subdivision developer mortgaged the lots in favor of the petitioner, Philippine National Bank. Unaware of
this mortgage, private respondents duly complied with their obligations as lot buyers and constructed their houses
on the lots in question.
Subsequently, the subdivision developer defaulted and PNB foreclosed on the mortgage. As highest bidder
at the foreclosure sale, the bank became owner of the lots.
Acting on suits brought by private respondents (which were later consolidated), the HLURB Office of Appeals,
Adjudication and Legal Affairs (OAALA) in a decision rendered on October 28, 1988 ruled that PNB -- without
prejudice to seeking relief against Marikina Village, -- Inc. may collect from private respondents only the remaining
amortizations, in accordance with the land purchase agreements they had previously entered into with Marikina
Village, Inc., and cannot compel private respondents to pay all over again for the lots they had already bought from
said subdivision developer. On May 2, 1989, the Housing and Land Use Regulatory Board affirmed this decision.
On March 10, 1992, the Office of the President, invoking P.D. 957, likewise concurred with the HLURB. Hence, the
present recourse to this Court.
Under Revised Administrative Circular No. 1-95, appeals from judgments or final orders of the x x x Office of
the President x x x may be taken to the Court of Appeals x x x. However, in order to hasten the resolution of this
case, which was deemed submitted for decision three years ago, the Court resolved to make an exception to the
said Circular in the interest of speedy justice.
Petitioner bank raised the following issues:
1 .The Office of the President erred in applying P.D. 957 because said law was enacted only on July 12, 1976,
while the subject mortgage was executed on December 18, 1975; and
2. Petitioner Bank is not privy to the contracts between private respondents and mortgagor-subdivision
developer, hence, the Office of the President erred in ordering petitioner Bank to accept private respondents
remaining amortizations and issue the corresponding titles after payment thereof.
Normally, pursuant to Article 4 of the Civil Code, (1)aws shall have no retroactive effect, unless the contrary is
provided. However, it is obvious and indubitable that P.D. 957 was intended to cover even those real estate
mortgages, like the one at issue here, executed prior to its enactment, and such intent (as succinctly captured in
the preamble quoted below) must be given effect if the laudable purpose of protecting innocent purchasers is to
be achieved:
WHEREAS, it is the policy of the State to afford its inhabitants the requirements of decent human settlement and
to provide them with ample opportunities for improving their quality of life;
WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators, and/or
sellers have reneged on their representations and obligations to provide and maintain properly subdivision roads,
drainage, sewerage, water systems, lighting systems, and other similar basic requirements, thus endangering the
health and safety of home and lot buyers;
WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent manipulations
perpetrated by unscrupulous subdivision and condominium sellers and operators, such as failure to deliver titles
to the buyers or titles free from liens and encumbrances, and to pay real estate taxes, and fraudulent sales of the
same subdivision lots to different innocent purchasers for value; (Italics supplied).
While P.D. 957 did not expressly provide for retroactivity in its entirety, yet the same can be plainly inferred
from the, unmistakable intent of the law to protect innocent lot buyers from scheming subdivision developers. As
between these small lot buyers and the gigantic financial institutions which the developers deal with, it is obvious
that the law -- as an instrument of social justice -- must favor the weak. Indeed, the petitioner Bank had at its
disposal vast resources with which it could adequately protect its loan activities, and therefore is presumed to have
conducted the usual due diligence checking and ascertained (whether thru ocular inspection or other modes of
investigation) the actual status, condition, utilization and occupancy of the property offered as collateral. It could
not have been unaware that the property had been built on by small lot buyers. On the other hand, private
respondents obviously were powerless to discover the attempt of the land developer to hypothecate the property
being sold to them. It was precisely in order to deal with this kind of situation that P.D. 957 was enacted, its very
essence and intendment being to provide a protective mantle over helpless citizens who may fall prey to the
razzmatazz of what P.D. 957 termed unscrupulous subdivision and condominium sellers.1
The intent of the law, as culled from its preamble and from the situation, circumstances and condition it
sought to remedy, must be enforced. Sutherland, in his well-known treatise on Statutory Construction (quoted with
approval by this Court in an old case of consequence, Ongsiako vs. Gamboa2), says:
The intent of a statute is the law. If a statute is valid it is to have effect according to the purpose and intent of the
lawmaker. The intent is the vital part, the essence of the law, and the primary rule of construction is to ascertain
and give effect to the intent. The intention of the legislature in enacting a law is the law itself, and must be
enforced when ascertained, although it may not be consistent with the strict letter of the statute. Courts will not
follow the letter of a statute when it leads away- from the true intent and purpose of the legislature and to
conclusions inconsistent with the general purpose of the act. Intent is the spirit which gives life to a legislative
enactment. In construing statutes the proper course is to start out and follow the true intent of the legislature and
to adopt that sense which harmonizes best with the context and promotes in the fullest manner the apparent
policy and, objects of the legislature.3
Truly, this Court cannot allow the injustice that will be wrought by a strictly prospective application of the law.
Little people who have toiled for years through blood and tears would be deprived of their homes through no fault
of their own. As the Solicitor General, in his comment, argues:
Verily, if P.D. 957 were to exclude from its coverage the aforecited mortgage contract, the vigorous regulation
which PD. 957 seeks to impose on unconscientious subdivision sellers will be translated into a feeble exercise of
police power just because the iron hand of the State cannot particularly touch mortgage contracts badged with
the fortunate accident of having been constituted prior to the enactment of P.D. 957. Indeed, it would be illogical
in the extreme if P.D. 957 is to be given full force and effect and yet, the fraudulent practices and manipulations it
seeks to curb in the first instance can nevertheless be liberally perpetrated precisely because PD. 957 cannot be
applied to existing antecedent mortgage contracts. The legislative intent could not have conceivably permitted a
loophole which all along works to the prejudice of subdivision lot buyers (private respondents).4
Likewise noteworthy are certain provisions of P.D. 957, which themselves constitute strong arguments in
favor of the retroactivity of PD. 957 as a whole. These are Sections 20, 21 and 23 thereof, which by their very terms
have retroactive effect and will impact upon even those contracts and transactions entered into prior to PD.
9575 enactment:
SEC. 20. Time of Completion. - Every owner or developer shall construct and provide the facilities,
improvements, infrastructures and other forms of development, including water supply and lighting facilities,
which are offered and indicated in the approved subdivision or condominium plans, brochures, prospectus,
printed matters, letters or in any form of advertisement, within one year from the date of the issuance of the
license for the subdivision or condominium project or such other period of time as may be fixed by the Authority.
SEC. 21. Sales Prior to Decree. - In cases of subdivision lots or condominium units sold or disposed of prior to
the effectivity of this Decree, it shall be incumbent upon the owner or developer of the subdivision or
condominium project to complete compliance with his or its obligations as provided in the preceding section
within two years from the date of this Decree unless otherwise extended by the Authority or unless an adequate
performance bond is filed in accordance with Section 6 hereof.
Failure of the owner or developer to comply with the obligations under this and the preceding provisions shall
constitute a violation punishable under Section 38 and 39 of this Decree.
SEC. 23. Non-Forfeiture of Payments. -No installment payment made by a buyer in a subdivision or
condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer
when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the
owner or developer to develop the subdivision or condominium project according to the approved plans and
within the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount
paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate.
(Italics supplied)
As for objections about a possible violation of the impairment clause, we find the following statements of
Justice Isagani Cruz enlightening and pertinent to the case at bench:
Despite the impairment clause, a contract valid at the time of its execution may be legally modified or even
completely invalidated by a subsequent law. If the law is a proper exercise of the police power, it will prevail over
the contract.
Into each contract are read the provisions of existing law and, always, a reservation of the police power as long
as the agreement deals with a matter affecting the public welfare. Such a contract, it has been held, suffers a
congenital infirmity, and this is its susceptibility to change by the legislature as a postulate of the legal order.
This Court ruled along similar lines in Juarez vs. Court of Appeals6:
The petitioner complains that the retroactive application of the law would violate the impairment clause. The
argument does not impress. The impairment clause is now no longer inviolate; in fact, there are many who now
believe it is an anachronism in the present-day society. It was quite useful before in protecting the integrity of
private agreements from government meddling, but that was when such agreements did not affect the community
in general. They were indeed purely private agreements then. Any interference with them at that time was really
an unwarranted intrusion that could properly struck down.
But things are different now. More and more, the interests of the public have become involved in what are
supposed to be still private agreements, which have as a result been removed from the protection of the
impairment clause. These agreements have come within the embrace of the police power, that obtrusive
protector of the public interest. It is a ubiquitous policeman indeed. As long as the contract affects the public
welfare one way or another so as to require the interference of the State, then must the police power be
asserted, and prevail, over the impairment clausq.
The decision of the Court of Appeals in Breta and Hamor vs. Lao, et al.7, penned by then Court of Appeals
Associate Justice Jose A. R. Melo, now a respected member of this Court, is persuasive, the. factual circumstances
therein being of great similarity to the antecedent facts of the case at bench:
Protection must be afforded small homeowners who toil and save if only to purchase on installment a tiny home
lot they can call their own. The consuming dream of every Filipino is to be able to buy a lot, no matter how small,
so that he may somehow build a house. It has, however, been seen of late that these honest, hard-living
individuals are taken advantage of, with the delivery of titles delayed, the subdivision facilities, including the most
essential such as water installations not completed, or worse yet, as in the instant case, after almost completing
the payments for the property and after constructing a house, the buyer is suddenly confronted by the stark
reality, contrived or otherwise, in which another person would now appear to be owner.
We cannot over emphasize the fact that the BANK cannot barefacedly argue that simply because the title or titles
offered as security were clean of any encumbrance or lien, that it was thereby relieved of taking any other step to
verify the over-reaching implications should the subdivision be auctioned on foreclosure. The BANK could not
have closed its eyes that it was dealing over a subdivision where there were already houses constructed. Did it
not enter the mind of the responsible officers of the BANK that there may even be subdivision residents who
have almost completed their installment payments? (Id., pp. 7 & 9).
instrument for the implementation of state policies so cherished in our fundamental law. These consideration are
obviously far more weighty than the winning of any particular suit or the acquisition of any specific property. Thus,
as the country strives to move ahead towards economic self-sufficiency and to achieve dreams of NIC-hood and
social well-being for the majority of our countrymen, we hold that petitioner Bank, the premier bank in the country,
which has in recent years made record earnings and acquired an enviable international stature, with branches and
subsidiaries in key financial centers around the world, should be equally as happy with the disposition of this case
as the private respondents, who were almost deprived and dispossessed of their very homes purchased through
their hard work and with their meager savings.
WHEREFORE, in view of the foregoing considerations, the petition is hereby DENIED, petitioner having
failed to show any REVERSIBLE ERROR or GRAVE ABUSE OF DISCRETION in the assailed decision. No costs.

By the foregoing citation, this Court thus adopts by reference the foregoing as part of this Decision. SO ORDERED.

The real estate mortgage in the above cited case, although constituted in 1975 and outside the beneficial Narvasa, C.J. (Chairman), Davide Jr., Melo, and Francisco, JJ., concur.
aegis of P.D. 957, was struck down by the Court of Appeals which found in favor of subdivision lot buyers when
the rights of the latter clashed with the mortgagee banks right to foreclose the property. The Court of Appeals in
that case upheld the decision of the trial court declaring the real estate mortgage as null and void. 1 Preamble, Presidential Decree No. 957.
2 2 86 Phil. 50 (April 8, 1950).
As to the second issue of non-privity, petitioner avers that, in view of the provisions of Article 13 11 of the 3 Vol. II,Sutherland, Statutory Construction, pp. 693-695.
Civil Code, PNB, being a total stranger to the land purchase agreement, cannot be made to take the developers 4 Comment filed by the Solicitor General on behalf of the public -respondent, p. 9;
place. 5 Rollo, p. 78.
6 6 214 SCRA 475,480 (October 7, 1992).
We disagree. P.D. 957 being applicable, Section 18 of said law obliges petitioner Bank to accept the payment 7 CA-G.R. No. 58728-R, promulgated on November 11, 1981.
of the remaining unpaid amortizations tendered by private respondents.

SEC. 18. Mortgages. - No mortgage on any unit or lot shall be made by the owner or developer without prior
written approval of the Authority. Such approval shall not be granted unless it is shown that the proceeds of the
mortgage loan shall be used for the development of the condominium or subdivision project and effective
measures have been provided to ensure such utilization. The loan value of each lot or unit covered by the
mortgage shall be determined and the buyer thereof, if any, shall be notified before the release of the loan. The
buyer may, at his option, pay his installment for the lot or unit directly to the mortgagee who shall apply the
payments to the corresponding mortgage indebtedness secured by the particular lot or unit being paid for, with a
view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereof. (Italics supplied)

Privity of contracts as a defense does not apply in this case for the law explicitly grants to the buyer the option
to pay the installment payment for his lot or unit directly to the mortgagee (petitioner), which is required to apply
such payments to reduce the corresponding portion of the mortgage indebtedness secured by the particular lot or
unit being paid for. And, as stated earlier, this is without prejudice to petitioner Banks seeking relief against the
subdivision developer.
Finally, before closing this Resolution, we enjoin petitioner Bank to focus not only on the strictly legal issues
involved in this case but also to take another look at the larger issues including social justice and the protection of
human rights as enshrined in the Constitution; firstly, because legal issues are raised and decided not in a vacuum
but within the context of existing social, economic and political conditions, law being merely a brick in the up-
building of the social edifice; and secondly, petitioner, being THE state bank, is for all intents and purposes an
 [G.R. No. 144681. June 21, 2004]
PROFESSIONAL REGULATION COMMISSION (PRC), CHAIRMAN HERMOGENES P. POBRE, ASSOCIATE
COMMISSIONER ARMANDO PASCUAL, BOARD OF MEDICINE, CHAIRMAN RODOLFO P. DE GUZMAN,
JOSE S. RAMIREZ, JUANITO B. BILLOTE, RUBEN R. POLICARPIO, EDGARDO T. FERNANDO and
RICARDO D. FULGENCIO II, petitioners, vs. ARLENE V. DE GUZMAN, VIOLETA V. MENESES, CELERINA S.
NAVARRO, JOSE RAMONCITO P. NAVARRO, ARNEL V. HERRERA and GERALDINE ELIZABETH M.
PAGILAGAN, ELNORA R. RAQUENO, MARISSA A. REGODON, LAURA M. SANTOS, KARANGALAN D.
SERRANO, DANILO A. VILLAVER, MARIA ROSARIO L. LEONOR, ALICIA S. LIZANO, MARITEL M.
ECHIVERRI, BERNADETTE T. MENDOZA, FERNANDO F. MANDAPAT, ALELI A. GOLLAYAN, ELCIN C.
ARRIOLA, HERMINIGILDA E. CONEJOS, SALLY B. BUNAGAN, ROGELIO B. ANCHETA, OSCAR H. PADUA,
JR., EVELYN D. GRAJO, EVELYN S. ACOSTA, MARGARITA BELINDA L. VICENCIO, VALENTINO P.
ARBOLEDA, EVELYN O. RAMOS, ACHILLES J. PERALTA, CORAZON M. CRUZ, LEUVINA P. CHICO,
JOSEPH A. JAO, MA. LUISA S. GUTIERREZ, LYDIA C. CHAN, OPHELIA C. HIDALGO, FERNANDO T. CRUZ,
MELVIN M. USITA, RAFAEL I. TOLENTINO, GRACE E. UY, CHERYL R. TRIGUERO, MICHAEL L. SERRANO,
FEDERICO L. CASTILLO, MELITA J. CAEDO, SAMUEL B. BANGOY, BERNARDITA B. SY, GLORIA T.
JULARBAL, FREDERICK D. FRANCISCO, CARLOS M. BERNARDO, JR., HUBERT S. NAZARENO, CLARISSA
B. BACLIG, DAYMINDA G. BONTUYAN, BERNADETTE H. CABUHAT, NANCY J. CHAVEZ, MARIO D.
CUARESMA, ERNESTO L. CUE, EVELYN C. CUNDANGAN, RHONEIL R. DEVERATURDA, DERILEEN D.
DORADO, SAIBZUR N. EDDING, VIOLETA C. FELIPE, HERMINIO V. FERNANDEZ, JR., MARIA VICTORIA M.
LACSAMANA, NORMA G. LAFAVILLA, RUBY B. LANTIN, MA. ELOISA Q. MALLARI, CLARISA SJ. NICOLAS,
PERCIVAL H. PANGILINAN, ARNULFO A. SALVADOR, ROBERT B. SANCHEZ, MERLY D. STA. ANA and
YOLANDA P. UNICA, respondents.
DECISION
TINGA, J.:
This petition for review under Rule 45 of the 1997 Rules of Civil Procedure seeks to nullify
the Decision,[1] dated May 16, 2000, of the Court of Appeals in CA-G.R. SP No. 37283. The appellate court affirmed
the judgment[2] dated December 19, 1994, of the Regional Trial Court (RTC) of Manila, Branch 52, in Civil Case
No. 93-66530. The trial court allowed the respondents to take their physicians oath and to register as duly licensed
physicians. Equally challenged is the Resolution[3] promulgated on August 25, 2000 of the Court of Appeals,
denying petitioners Motion for Reconsideration.
The facts of this case are as follows:
The respondents are all graduates of the Fatima College of Medicine, Valenzuela City, Metro Manila. They
passed the Physician Licensure Examination conducted in February 1993 by the Board of Medicine (Board).
Petitioner Professional Regulation Commission (PRC) then released their names as successful examinees in the
medical licensure examination.
Shortly thereafter, the Board observed that the grades of the seventy-nine successful examinees
from Fatima College in the two most difficult subjects in the medical licensure exam, Biochemistry (Bio-Chem) and
Obstetrics and Gynecology (OB-Gyne), were unusually and exceptionally high. Eleven Fatima examinees scored
100% in Bio-Chem and ten got 100% in OB-Gyne, another eleven got 99% in Bio-Chem, and twenty-one scored
99% in OB-Gyne. The Board also observed that many of those who passed from Fatima got marks of 95% or better
in both subjects, and no one got a mark lower than 90%. A comparison of the performances of the candidates from
other schools was made. The Board observed that strangely, the unusually high ratings were true only
for Fatima College examinees. It was a record-breaking phenomenon in the history of the Physician Licensure
Examination.
On June 7, 1993, the Board issued Resolution No. 19, withholding the registration as physicians of all the
examinees from the Fatima College of Medicine.[4] The PRC asked the National Bureau of Investigation (NBI) to
investigate whether any anomaly or irregularity marred the February 1993 Physician Licensure Examination.
Prior to the NBI investigation, the Board requested Fr. Bienvenido F. Nebres, S.J., an expert mathematician
and authority in statistics, and later president of the Ateneo de Manila University, to conduct a statistical analysis
of the results in Bio-Chem and Ob-Gyne of the said examination.
On June 10, 1993, Fr. Nebres submitted his report. He reported that a comparison of the scores in Bio-Chem
and Ob-Gyne, of the Fatima College examinees with those of examinees from De La Salle University and Perpetual
Help College of Medicine showed that the scores of Fatima College examinees were not only incredibly high but
unusually clustered close to each other. He concluded that there must be some unusual reason creating the
clustering of scores in the two subjects. It must be a cause strong enough to eliminate the normal variations that
one should expect from the examinees [of Fatima College] in terms of talent, effort, energy, etc.[5]
For its part, the NBI found that the questionable passing rate of Fatima examinees in the [1993] Physician
Examination leads to the conclusion that the Fatima examinees gained early access to the test questions.[6]
On July 5, 1993, respondents Arlene V. De Guzman, Violeta V. Meneses, Celerina S. Navarro, Jose
Ramoncito P. Navarro, Arnel V. Herrera, and Geraldine Elizabeth M. Pagilagan (Arlene V. De Guzman et al., for
brevity) filed a special civil action for mandamus, with prayer for preliminary mandatory injunction docketed as Civil
Case No. 93-66530 with the Regional Trial Court (RTC) of Manila, Branch 52. Their petition was adopted by the
other respondents as intervenors.
Meanwhile, the Board issued Resolution No. 26, dated July 21, 1993, charging respondents with immorality,
dishonest conduct, fraud, and deceit in connection with the Bio-Chem and Ob-Gyne examinations. It recommended
that the test results of the Fatima examinees be nullified. The case was docketed as Adm. Case No. 1687 by the
PRC.
On July 28, 1993, the RTC issued an Order in Civil Case No. 93-66530 granting the preliminary mandatory
injunction sought by the respondents. It ordered the petitioners to administer the physicians oath to Arlene V. De
Guzman et al., and enter their names in the rolls of the PRC.
The petitioners then filed a special civil action for certiorari with the Court of Appeals to set aside the
mandatory injunctive writ, docketed as CA-G.R. SP No. 31701.
On October 21, 1993, the appellate court decided CA-G.R. SP No. 31701, with the dispositive portion of
the Decision ordaining as follows:
WHEREFORE, this petition is GRANTED. Accordingly, the writ of preliminary mandatory injunction issued by the
lower court against petitioners is hereby nullified and set aside.
SO ORDERED.[7]
Arlene V. de Guzman, et al., then elevated the foregoing Decision to this Court in G.R. No. 112315. In
our Resolution dated May 23, 1994, we denied the petition for failure to show reversible error on the part of the
appellate court.
Meanwhile, on November 22, 1993, during the pendency of the instant petition, the pre-trial conference in
Civil Case No. 93-66530 was held. Then, the parties, agreed to reduce the testimonies of their respective witnesses
to sworn questions-and-answers. This was without prejudice to cross-examination by the opposing counsel.
On December 13, 1993, petitioners counsel failed to appear at the trial in the mistaken belief that the trial
was set for December 15. The trial court then ruled that petitioners waived their right to cross-examine the
witnesses.
On January 27, 1994, counsel for petitioners filed a Manifestation and Motion stating the reasons for her non-
appearance and praying that the cross-examination of the witnesses for the opposing parties be reset. The trial
court denied the motion for lack of notice to adverse counsel. It also denied the Motion for Reconsideration that
followed on the ground that adverse counsel was notified less than three (3) days prior to the hearing.
Meanwhile, to prevent the PRC and the Board from proceeding with Adm. Case No. 1687, the respondents
herein moved for the issuance of a restraining order, which the lower court granted in its Order dated April 4, 1994.
The petitioners then filed with this Court a petition for certiorari docketed as G.R. No. 115704, to annul
the Orders of the trial court dated November 13, 1993, February 28, 1994, and April 4, 1994. We referred the
petition to the Court of Appeals where it was docketed as CA-G.R. SP No. 34506.
On August 31, 1994, the appellate court decided CA-G.R. SP No. 34506 as follows:
WHEREFORE, the present petition for certiorari with prayer for temporary restraining order/preliminary injunction
is GRANTED and the Orders of December 13, 1993, February 7, 1994, February 28, 1994, and April 4, 1994 of
the RTC-Manila, Branch 52, and all further proceedings taken by it in Special Civil Action No. 93-66530 are
hereby DECLARED NULL and VOID. The said RTC-Manila is ordered to allow petitioners counsel to cross-
examine the respondents witnesses, to allow petitioners to present their evidence in due course of trial, and
thereafter to decide the case on the merits on the basis of the evidence of the parties. Costs against
respondents.
IT IS SO ORDERED.[8]
The trial was then set and notices were sent to the parties.
A day before the first hearing, on September 22, 1994, the petitioners filed an Urgent Ex-Parte Manifestation
and Motion praying for the partial reconsideration of the appellate courts decision in CA-G.R. SP No. 34506, and
for the outright dismissal of Civil Case No. 93-66530. The petitioners asked for the suspension of the proceedings.
In its Order dated September 23, 1994, the trial court granted the aforesaid motion, cancelled the scheduled
hearing dates, and reset the proceedings to October 21 and 28, 1994.
Meanwhile, on October 25, 1994, the Court of Appeals denied the partial motion for reconsideration in CA-
G.R. SP No. 34506. Thus, petitioners filed with the Supreme Court a petition for review docketed as G.R. No.
117817, entitled Professional Regulation Commission, et al. v. Court of Appeals, et al.
On November 11, 1994, counsel for the petitioners failed to appear at the trial of Civil Case No. 93-66530.
Upon motion of the respondents herein, the trial court ruled that herein petitioners waived their right to cross-
examine the herein respondents. Trial was reset to November 28, 1994.
On November 25, 1994, petitioners counsel moved for the inhibition of the trial court judge for alleged
partiality. On November 28, 1994, the day the Motion to Inhibit was to be heard, petitioners failed to appear. Thus,
the trial court denied the Motion to Inhibit and declared Civil Case No. 93-66530 deemed submitted for decision.
On December 19, 1994, the trial court handed down its judgment in Civil Case No. 93-66530, the fallo of
which reads:
WHEREFORE, judgment is rendered ordering the respondents to allow the petitioners and intervenors (except
those with asterisks and footnotes in pages 1 & 2 of this decision) [sic],[9] to take the physicians oath and to
register them as physicians.
It should be made clear that this decision is without prejudice to any administrative disciplinary action which may
be taken against any of the petitioners for such causes and in the manner provided by law and consistent with
the requirements of the Constitution as any other professionals.
No costs.
SO ORDERED.[10]
As a result of these developments, petitioners filed with this Court a petition for review on certiorari docketed
as G.R. No. 118437, entitled Professional Regulation Commission v. Hon. David G. Nitafan, praying inter alia, that
(1) G.R. No. 118437 be consolidated with G.R. No. 117817; (2) the decision of the Court of Appeals dated August
31, 1994 in CA-G.R. SP No. 34506 be nullified for its failure to decree the dismissal of Civil Case No. 93-66530,
and in the alternative, to set aside the decision of the trial court in Civil Case No. 93-66530, order the trial court
judge to inhibit himself, and Civil Case No. 93-66530 be re-raffled to another branch.
On December 26, 1994, the petitioners herein filed their Notice of Appeal[11] in Civil Case No. 93-66530,
thereby elevating the case to the Court of Appeals, where it was docketed as CA-G.R. SP No. 37283.
In our Resolution of June 7, 1995, G.R. No. 118437 was consolidated with G.R. No. 117817.
On July 9, 1998, we disposed of G.R. Nos. 117817 and 118437 in this wise:
WHEREFORE, the petition in G.R. No. 117817 is DISMISSED for being moot. The petition in G.R. No. 118437 is
likewise DISMISSED on the ground that there is a pending appeal before the Court of Appeals. Assistant
Solicitor General Amparo M. Cabotaje-Tang is advised to be more circumspect in her dealings with the courts as
a repetition of the same or similar acts will be dealt with accordingly.
SO ORDERED.[12]
While CA-G.R. SP No. 37283 was awaiting disposition by the appellate court, Arnel V. Herrera, one of the
original petitioners in Civil Case No. 93-66530, joined by twenty-seven intervenors, to wit: Fernando F. Mandapat,
Ophelia C. Hidalgo, Bernadette T. Mendoza, Ruby B. Lantin-Tan, Fernando T. Cruz, Marissa A. Regodon, Ma.
Eloisa Q. Mallari-Largoza, Cheryl R. Triguero, Joseph A. Jao, Bernadette H. Cabuhat, Evelyn S. Acosta-Cabanes,
Laura M. Santos, Maritel M. Echiverri, Bernadette C. Escusa, Carlosito C. Domingo, Alicia S. Lizano, Elnora R.
Raqueno-Rabaino, Saibzur N. Edding, Derileen D. Dorado-Edding, Robert B. Sanchez, Maria Rosario L. Leonor-
Lacandula, Geraldine Elizabeth M. Pagilagan-Palma, Margarita Belinda L. Vicencio-Gamilla, Herminigilda E.
Conejos, Leuvina P. Chico-Paguio, Elcin C. Arriola-Ocampo, and Jose Ramoncito P. Navarro, manifested that they
were no longer interested in proceeding with the case and moved for its dismissal. A similar manifestation and
motion was later filed by intervenors Mary Jean I. Yeban-Merlan, Michael L. Serrano, Norma G. Lafavilla, Arnulfo
A. Salvador, Belinda C. Rabara, Yolanda P. Unica, Dayminda G. Bontuyan, Clarissa B. Baclig, Ma. Luisa S.
Gutierrez, Rhoneil R. Deveraturda, Aleli A. Gollayan, Evelyn C. Cundangan, Frederick D. Francisco, Violeta V.
Meneses, Melita J. Caedo, Clarisa SJ. Nicolas, Federico L. Castillo, Karangalan D. Serrano, Danilo A. Villaver,
Grace E. Uy, Lydia C. Chan, and Melvin M. Usita. The Court of Appeals ruled that its decision in CA-G.R. SP No.
37283 would not apply to them.
On May 16, 2000, the Court of Appeals decided CA-G.R. SP No. 37283, with the following fallo, to wit:
WHEREFORE, finding no reversible error in the decision appealed from, We hereby AFFIRM the same and
DISMISS the instant appeal.
No pronouncement as to costs.
SO ORDERED.[13]
In sustaining the trial courts decision, the appellate court ratiocinated that the respondents complied with all
the statutory requirements for admission into the licensure examination for physicians in February 1993. They all
passed the said examination. Having fulfilled the requirements of Republic Act No. 2382,[14] they should be allowed
to take their oaths as physicians and be registered in the rolls of the PRC.
Hence, this petition raising the following issues:
I We shall discuss the issues successively.
WHETHER OR NOT RESPONDENTS HAVE A VALID CAUSE OF ACTION FOR MANDAMUS AGAINST
PETITIONERS IN THE LIGHT OF THE RESOLUTION OF THIS HONORABLE COURT IN G.R. NO. 112315
AFFIRMING THE COURT OF APPEALS DECISION DECLARING THAT IF EVER THERE IS SOME DOUBT AS
TO THE MORAL FITNESS OF EXAMINEES, THE ISSUANCE OF LICENSE TO PRACTICE MEDICINE IS NOT
AUTOMATICALLY GRANTED TO THE SUCCESSFUL EXAMINEES.
II
WHETHER OR NOT THE PETITION FOR MANDAMUS COULD PROCEED DESPITE THE PENDENCY OF
ADMINISTRATIVE CASE NO. 1687, WHICH WAS PRECISELY LODGED TO DETERMINE THE MORAL
FITNESS OF RESPONDENTS TO BECOME DOCTORS.[15]
To our mind, the only issue is: Did the Court of Appeals commit a reversible error of law in sustaining the
judgment of the trial court that respondents are entitled to a writ of mandamus?
The petitioners submit that a writ of mandamus will not lie in this case. They point out that for a writ of
mandamus to issue, the applicant must have a well-defined, clear and certain legal right to the thing demanded
and it is the duty of the respondent to perform the act required. Thus, mandamus may be availed of only when the
duty sought to be performed is a ministerial and not a discretionary one. The petitioners argue that the appellate
courts decision in CA-G.R. SP No. 37283 upholding the decision of the trial court in Civil Case No. 93-66530
overlooked its own pronouncement in CA-G.R. SP No. 31701. The Court of Appeals held in CA-G.R. SP No. 31701
that the issuance of a license to engage in the practice of medicine becomes discretionary on the PRC if there
exists some doubt that the successful examinee has not fully met the requirements of the law. The petitioners
stress that this Courts Resolution dated May 24, 1994 in G.R. No. 112315 held that there was no showing that the
Court of Appeals had committed any reversible error in rendering the questioned judgment in CA-G.R. SP No.
31701. The petitioners point out that our Resolution in G.R. No. 112315 has long become final and executory.
Respondents counter that having passed the 1993 licensure examinations for physicians, the petitioners
have the obligation to administer to them the oath as physicians and to issue their certificates of registration as
physicians pursuant to Section 20[16] of Rep. Act No. 2382. The Court of Appeals in CA-G.R. SP No. 37283, found
that respondents complied with all the requirements of Rep. Act No. 2382. Furthermore, respondents were admitted
by the Medical Board to the licensure examinations and had passed the same. Hence, pursuant to Section 20 of
Rep. Act No. 2382, the petitioners had the obligation to administer their oaths as physicians and register them.
Mandamus is a command issuing from a court of competent jurisdiction, in the name of the state or the
sovereign, directed to some inferior court, tribunal, or board, or to some corporation or person requiring the
performance of a particular duty therein specified, which duty results from the official station of the party to whom
the writ is directed, or from operation of law.[17] Section 3 of Rule 65[18] of the 1997 Rules of Civil Procedure outlines
two situations when a writ of mandamus may issue, when any tribunal, corporation, board, officer or person
unlawfully (1) neglects the performance of an act which the law specifically enjoins as a duty resulting from an
office, trust, or station; or (2) excludes another from the use and enjoyment of a right or office to which the other is
entitled.
1. On The Existence of a Duty of the Board of Medicine To Issue Certificates of Registration as Physicians
under Rep. Act No. 2382.
For mandamus to prosper, there must be a showing that the officer, board, or official concerned, has a clear
legal duty, not involving discretion.[19] Moreover, there must be statutory authority for the performance of the
act,[20] and the performance of the duty has been refused.[21] Thus, it must be pertinently asked now: Did petitioners
have the duty to administer the Hippocratic Oath and register respondents as physicians under the Medical Act of
1959?
As found by the Court of Appeals, on which we agree on the basis of the records:
It bears emphasizing herein that petitioner-appellees and intervenor-appellees have fully complied with all the
statutory requirements for admission into the licensure examinations for physicians conducted and administered
by the respondent-appellants on February 12, 14, 20 and 21, 1993. Stress, too, must be made of the fact that all
of them successfully passed the same examinations.[22]
The crucial query now is whether the Court of Appeals erred in concluding that petitioners should allow the
respondents to take their oaths as physicians and register them, steps which would enable respondents to practice
the medical profession[23] pursuant to Section 20 of the Medical Act of 1959?
The appellate court relied on a single provision, Section 20 of Rep. Act No. 2382, in concluding that the
petitioners had the ministerial obligation to administer the Hippocratic Oath to respondents and register them as
physicians. But it is a basic rule in statutory construction that each part of a statute should be construed in
connection with every other part to produce a harmonious whole, not confining construction to only one
section.[24] The intent or meaning of the statute should be ascertained from the statute taken as a whole, not from
an isolated part of the provision. Accordingly, Section 20 of Rep. Act No. 2382, as amended should be read in
conjunction with the other provisions of the Act. Thus, to determine whether the petitioners had the ministerial
obligation to administer the Hippocratic Oath to respondents and register them as physicians, recourse must be
had to the entirety of the Medical Act of 1959.
A careful reading of Section 20 of the Medical Act of 1959 discloses that the law uses the word shall with
respect to the issuance of certificates of registration. Thus, the petitioners shallsign and issue certificates of
registration to those who have satisfactorily complied with the requirements of the Board. In statutory construction
the term shall is a word of command. It is given imperative meaning. Thus, when an examinee satisfies the
requirements for the grant of his physicians license, the Board is obliged to administer to him his oath and register
him as a physician, pursuant to Section 20 and par. (1) of Section 22[25] of the Medical Act of 1959.
However, the surrounding circumstances in this case call for serious inquiry concerning the satisfactory
compliance with the Board requirements by the respondents. The unusually high scores in the two most difficult
subjects was phenomenal, according to Fr. Nebres, the consultant of PRC on the matter, and raised grave doubts
about the integrity, if not validity, of the tests. These doubts have to be appropriately resolved.
Under the second paragraph of Section 22, the Board is vested with the power to conduct administrative
investigations and disapprove applications for examination or registration, pursuant to the objectives of Rep. Act
No. 2382 as outlined in Section 1[26] thereof. In this case, after the investigation, the Board filed before the PRC,
Adm. Case No. 1687 against the respondents to ascertain their moral and mental fitness to practice medicine, as
required by Section 9[27] of Rep. Act No. 2382. In its Decision dated July 1, 1997, the Board ruled:
WHEREFORE, the BOARD hereby CANCELS the respondents[] examination papers in the Physician Licensure
Examinations given in February 1993 and further DEBARS them from taking any licensure examination for a
period of ONE (1) YEAR from the date of the promulgation of this DECISION. They may, if they so desire, apply
for the scheduled examinations for physicians after the lapse of the period imposed by the BOARD.
SO ORDERED.[28]
Until the moral and mental fitness of the respondents could be ascertained, according to petitioners, the
Board has discretion to hold in abeyance the administration of the Hippocratic Oath and the issuance of the
certificates to them. The writ of mandamus does not lie to compel performance of an act which is not duly
authorized.
The respondents nevertheless argue that under Section 20, the Board shall not issue a certificate of
registration only in the following instances: (1) to any candidate who has been convicted by a court of competent
jurisdiction of any criminal offense involving moral turpitude; (2) or has been found guilty of immoral or dishonorable
conduct after the investigation by the Board; or (3) has been declared to be of unsound mind. They aver that none
of these circumstances are present in their case.
Petitioners reject respondents argument. We are informed that in Board Resolution No. 26,[29] dated July 21,
1993, the Board resolved to file charges against the examinees from Fatima College of Medicine for immorality,
dishonesty, fraud, and deceit in the Obstetrics-Gynecology and Biochemistry examinations. It likewise sought to
cancel the examination results obtained by the examinees from the Fatima College.
Section 8[30] of Rep. Act No. 2382 prescribes, among others, that a person who aspires to practice medicine
in the Philippines, must have satisfactorily passed the corresponding Board Examination. Section 22, in turn,
provides that the oath may only be administered to physicians who qualified in the examinations. The operative
word here is satisfactorily, defined as sufficient to meet a condition or obligation or capable of dispelling doubt or
ignorance.[31] Gleaned from Board Resolution No. 26, the licensing authority apparently did not find that the
respondents satisfactorily passed the licensure examinations. The Board instead sought to nullify the examination
results obtained by the respondents.
2. On the Right Of The Respondents To Be Registered As Physicians
The function of mandamus is not to establish a right but to enforce one that has been established by law. If
no legal right has been violated, there can be no application of a legal remedy, and the writ of mandamus is a legal
remedy for a legal right.[32] There must be a well-defined, clear and certain legal right to the thing demanded.[33] It
is long established rule that a license to practice medicine is a privilege or franchise granted by the government.[34]
It is true that this Court has upheld the constitutional right [35] of every citizen to select a profession or course
of study subject to a fair, reasonable, and equitable admission and academic requirements. [36] But like all rights
and freedoms guaranteed by the Charter, their exercise may be so regulated pursuant to the police power of the
State to safeguard health, morals, peace, education, order, safety, and general welfare of the people. [37] Thus,
persons who desire to engage in the learned professions requiring scientific or technical knowledge may be
required to take an examination as a prerequisite to engaging in their chosen careers. This regulation takes
particular pertinence in the field of medicine, to protect the public from the potentially deadly effects of
incompetence and ignorance among those who would practice medicine. In a previous case, it may be recalled,
this Court has ordered the Board of Medical Examiners to annul both its resolution and certificate authorizing a
Spanish subject, with the degree of Licentiate in Medicine and Surgery from the University of Barcelona, Spain, to
practice medicine in the Philippines, without first passing the examination required by the Philippine Medical
Act.[38] In another case worth noting, we upheld the power of the State to upgrade the selection of applicants into
medical schools through admission tests.[39]
It must be stressed, nevertheless, that the power to regulate the exercise of a profession or pursuit of an
occupation cannot be exercised by the State or its agents in an arbitrary, despotic, or oppressive manner. A political
body that regulates the exercise of a particular privilege has the authority to both forbid and grant such privilege in
accordance with certain conditions. Such conditions may not, however, require giving up ones constitutional rights
as a condition to acquiring the license.[40] Under the view that the legislature cannot validly bestow an arbitrary
power to grant or refuse a license on a public agency or officer, courts will generally strike down license legislation
that vests in public officials discretion to grant or refuse a license to carry on some ordinarily lawful business,
profession, or activity without prescribing definite rules and conditions for the guidance of said officials in the
exercise of their power.[41]
In the present case, the aforementioned guidelines are provided for in Rep. Act No. 2382, as amended, which
prescribes the requirements for admission to the practice of medicine, the qualifications of candidates for the board
examinations, the scope and conduct of the examinations, the grounds for denying the issuance of a physicians
license, or revoking a license that has been issued. Verily, to be granted the privilege to practice medicine, the
applicant must show that he possesses all the qualifications and none of the disqualifications. Furthermore, it must
appear that he has fully complied with all the conditions and requirements imposed by the law and the licensing
authority. Should doubt taint or mar the compliance as being less than satisfactory, then the privilege will not issue.
For said privilege is distinguishable from a matter of right, which may be demanded if denied. Thus, without a
definite showing that the aforesaid requirements and conditions have been satisfactorily met, the courts may not
grant the writ of mandamus to secure said privilege without thwarting the legislative will.
3. On the Ripeness of the Petition for Mandamus
Lastly, the petitioners herein contend that the Court of Appeals should have dismissed the petition for
mandamus below for being premature. They argue that the administrative remedies had not been exhausted. The
records show that this is not the first time that petitioners have sought the dismissal of Civil Case No. 93-66530.
This issue was raised in G.R. No. 115704, which petition we referred to the Court of Appeals, where it was docketed
as CA-G.R. SP No. 34506. On motion for reconsideration in CA-G.R. SP No. 34506, the appellate court denied the
motion to dismiss on the ground that the prayers for the nullification of the order of the trial court and the dismissal
of Civil Case No. 93-66530 were inconsistent reliefs. In G.R. No. 118437, the petitioners sought to nullify the
decision of the Court of Appeals in CA-G.R. SP No. 34506 insofar as it did not order the dismissal of Civil Case
No. 93-66530. In our consolidated decision, dated July 9, 1998, in G.R. Nos. 117817 & 118437, this Court speaking
through Justice Bellosillo opined that:
Indeed, the issue as to whether the Court of Appeals erred in not ordering the dismissal of Civil Case No. 93-
66530 sought to be resolved in the instant petition has been rendered meaningless by an event taking place prior
to the filing of this petition and denial thereof should follow as a logical consequence.[42] There is no longer any
justiciable controversy so that any declaration thereon would be of no practical use or value.[43] It should be
recalled that in its decision of 19 December 1994 the trial court granted the writ of mandamus prayed for by
private respondents, which decision was received by petitioners on 20 December 1994. Three (3) days after, or
on 23 December 1994, petitioners filed the instant petition. By then, the remedy available to them was to appeal
the decision to the Court of Appeals, which they in fact did, by filing a notice of appeal on 26 December 1994.[44]
The petitioners have shown no cogent reason for us to reverse the aforecited ruling. Nor will their reliance
upon the doctrine of the exhaustion of administrative remedies in the instant case advance their cause any.
Section 26[45] of the Medical Act of 1959 provides for the administrative and judicial remedies that
respondents herein can avail to question Resolution No. 26 of the Board of Medicine, namely: (a) appeal the
unfavorable judgment to the PRC; (b) should the PRC ruling still be unfavorable, to elevate the matter on appeal
to the Office of the President; and (c) should they still be unsatisfied, to ask for a review of the case or to bring the
case to court via a special civil action of certiorari. Thus, as a rule, mandamus will not lie when administrative
remedies are still available.[46] However, the doctrine of exhaustion of administrative remedies does not apply
where, as in this case, a pure question of law is raised.[47] On this issue, no reversible error may, thus, be laid at
the door of the appellate court in CA-G.R. SP No. 37283, when it refused to dismiss Civil Case No. 93-66530.
As we earlier pointed out, herein respondents Arnel V. Herrera, Fernando F. Mandapat, Ophelia C. Hidalgo,
Bernadette T. Mendoza, Ruby B. Lantin-Tan, Fernando T. Cruz, Marissa A. Regodon, Ma. Eloisa Q. Mallari-
Largoza, Cheryl R. Triguero, Joseph A. Jao, Bernadette H. Cabuhat, Evelyn S. Acosta-Cabanes, Laura M. Santos,
Maritel M. Echiverri, Bernadette C. Escusa, Carlosito C. Domingo, Alicia S. Lizano, Elnora R. Raqueno-Rabaino,
Saibzur N. Edding, Derileen D. Dorado-Edding, Robert B. Sanchez, Maria Rosario Leonor-Lacandula, Geraldine
Elizabeth M. Pagilagan-Palma, Margarita Belinda L. Vicencio-Gamilla, Herminigilda E. Conejos, Leuvina P. Chico-
Paguio, Elcin C. Arriola-Ocampo, and Jose Ramoncito P. Navarro manifested to the Court of Appeals during the
pendency of CA-G.R. SP No. 37283, that they were no longer interested in proceeding with the case and moved
for its dismissal insofar as they were concerned. A similar manifestation and motion were later filed by intervenors
Mary Jean I. Yeban-Merlan, Michael L. Serrano, Norma G. Lafavilla, Arnulfo A. Salvador, Belinda C. Rabarra,
Yolanda P. Unica, Dayminda G. Bontuyan, Clarissa B. Baclig, Ma. Luisa S. Gutierrez, Rhoneil R. Deveraturda,
Aleli A. Gollayan, Evelyn C. Cundangan, Frederick D. Francisco, Violeta V. Meneses, Melita J. Caedo, Clarisa SJ.
Nicolas, Federico L. Castillo, Karangalan D. Serrano, Danilo A. Villaver, Grace E. Uy, Lydia C. Chan, and Melvin
M. Usita. Following these manifestations and motions, the appellate court in CA-G.R. SP No. 37283 decreed that
its ruling would not apply to them. Thus, inasmuch as the instant case is a petition for review of the appellate courts
ruling in CA-G.R. SP No. 37283, a decision which is inapplicable to the aforementioned respondents will similarly
not apply to them.
As to Achilles J. Peralta, Evelyn O. Ramos, Sally B. Bunagan, Rogelio B. Ancheta, Oscar H. Padua, Jr.,
Evelyn D. Grajo, Valentino P. Arboleda, Carlos M. Bernardo, Jr., Mario D. Cuaresma, Violeta C. Felipe, Percival
H. Pangilinan, Corazon M. Cruz and Samuel B. Bangoy, herein decision shall not apply pursuant to the Orders of
the trial court in Civil Case No. 93-66530, dropping their names from the suit.
Consequently, this Decision is binding only on the remaining respondents, namely: Arlene V. de Guzman,
Celerina S. Navarro, Rafael I. Tolentino, Bernardita B. Sy, Gloria T. Jularbal, Hubert S. Nazareno, Nancy J. Chavez,
Ernesto L. Cue, Herminio V. Fernandez, Jr., Maria Victoria M. Lacsamana and Merly D. Sta. Ana, as well as the
petitioners.
WHEREFORE, the instant petition is GRANTED. Accordingly, (1) the assailed decision dated May 16, 2000,
of the Court of Appeals, in CA-G.R. SP No. 37283, which affirmed the judgment dated December 19, 1994, of the
Regional Trial Court of Manila, Branch 52, in Civil Case No. 93-66530, ordering petitioners to administer the
physicians oath to herein respondents as well as the resolution dated August 25, 2000, of the appellate court,
denying the petitioners motion for reconsideration, are REVERSED and SET ASIDE; and (2) the writ of mandamus,
issued in Civil Case No. 93-66530, and affirmed by the appellate court in CA-G.R. SP No. 37283 is NULLIFIED
AND SET ASIDE.
SO ORDERED.
Puno, (Chairman), and Callejo, Sr., JJ., concur.
Quisumbing, J., no part.
 Austria-Martinez, J., no part - on leave.
[1] Rollo, pp. 44-67. Penned by Associate Justice Cancio C. Garcia, with Associate Justices B.A. Adefuin-De la Cruz, and Renato C. Dacudao
concurring.
[2] CA Rollo, pp. 140-175.
[3] Supra, note 1 at 408. Penned by Associate Justice Cancio C. Garcia, with Associate Justices B.A. Adefuin-De la Cruz, and Renato C.
Dacudao, concurring.
[4] Id. at 69.
[5] Id. at 96.
[6] Id. at 92.
[7] Id. at 175. Penned by Associate Justice Alfredo L. Benipayo and concurred in by Presiding Justice Santiago M. Kapunan (later a member
of the Supreme Court and now retired) and Associate Justice Ma. Alicia Austria-Martinez (now a member of the Second Division of the
Supreme Court).
[8] Rollo, pp. 199-200. Penned by Associate Justice Jaime M. Lantin, with Associate Justices Angelina S. Gutierrez (now a member of the
Supreme Court), and Conchita Carpio Morales (likewise a present member of the Supreme Court) concurring.
[9] Of the intervenors in Civil Case No. 93-66530, Achilles Peralta and Evelyn Ramos were dropped as parties per Order of the trial court
dated August 24, 1993. The case was dismissed as to Sally Bunagan, Reogelio Ancheta, Oscar Padua, Evelyn Grajo, Valentino Arboleda,
Carlos Bernardo, Jr., Mario Cuaresma, Violeta Felipe, and Percival Pangilinan as per Order dated November 25, 1994. Corazon Cruz and
Samuel Bangoy were deemed by the trial court no longer entitled to the avails of the suit for seeking extrajudicial relief from the Board of
Medicine, as per its Order dated November 25, 1994. See CA Rollo, pp. 140-141.
[10] CA Rollo, pp. 174-175.
[11] Id. at 205.
[12] G.R. Nos. 117817 and 118437, 9 July 1998, 292 SCRA 155, 167. Penned by Associate Justice Josue N. Bellosillo, with Associate Justices
Hilario G. Davide, Jr., Jose C. Vitug, Artemio V. Panganiban, and Leonardo A. Quisumbing concurring.
[13] Rollo, p. 67.
[14] The Medical Act of 1959.
[15] Rollo, pp. 28-29.
[16] SEC. 20. Issuance of Certificates of Registration, grounds for refusal of [the] same. The Commissioner of Civil Service (now Professional
Regulation Commission) the chairman, the members and the Secretary of the Board of Medical Examiners (now Medical Board) shall sign
and issue certificates of registration to those who have satisfactorily complied with the requirements of the Board. They shall not issue a
certificate of registration to any candidate who has been convicted by a court of competent jurisdiction of any criminal offense involving moral
turpitude, or has been found guilty of immoral or dishonorable conduct after the investigation by the Board of Medical Examiners (now
Medical Board), or has been declared to be of unsound mind. (As amended by Rep. Act No. 4224, which took effect June 19, 1965).
[17] See United States v. Boutwell, 17 Wall (US) 604, 21 L. Ed 721; Laizure v. Baker, 11 P. 2d 560; State ex rel Lyons v. McDowell, 57 A. 2d
94; Rader v. Burton, 122 N.E. 2d 856; Board of Managers v. City of Wilmington, 70 S.E. 2d 833.
[18] SEC. 3. Petition for mandamus. When any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act
which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use and
enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course
of law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment
be rendered commanding the respondent, immediately or at some other time to be specified by the court, to do the act required to be done to
protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the respondent.
The petition shall also contain a sworn certification of non-forum shopping as provided in the third paragraph of section 3, Rule 46.
[19] See Potter v. Anderson, 392 P. 2d 650; State ex rel Jester v. Paige, 213 P. 2d 441; State ex rel. Sharp v. Cross, 211 P. 2d 760; St.
George v. Hanson, et al., 78 S.E. 2d 885; State ex rel Vander v. Board of County Comrs. et al., 135 N.E. 2d 701.
[20] See State ex rel Jester v. Paige, supra; Pedroso v. De Walt, et al., 340 S.W. 2d 566.
[21] See State Board of Barber Examiners v. Walker, 192 P. 2d 723; State ex rel Sharp v. Cross, supra; State ex rel Hacharedi v. Baxter, 74
N.E. 2d 242, 332 US 827, 92 L. Ed 402, 68 S. Ct 209.
[22] Rollo, p. 58.
[23] Id. at 59.
[24] Sotto v. Sotto, No. 17768, 1 September 1922, 43 Phil. 688, 694. See also Araneta v. Concepcion and Araneta, No. L-9667, 31 July 1956,
99 Phil. 709, 712.
[25] SEC. 22. Administrative investigations. In addition to the functions provided for in the preceding sections, the Board of Medical Examiners
(now Medical Board) shall perform the following duties: (1) to administer oath to physicians who qualified in the examinations (stress
supplied); (2) to study the conditions affecting the practice of medicine in all parts of the Philippines; (3) to exercise the powers conferred
upon it by this article with the view of maintaining the ethical and professional standards of the medical profession; (4)
to subpoena or subpoena duces tecum witnesses for all purposes required in the discharge of its duties; and (5) to promulgate, with the
approval of the Commissioner of Civil Service (now Professional Regulation Commission), such rules and regulations as it may deem
necessary for the performance of its duties in harmony with the provisions of this Act and necessary for the proper practice of medicine in the
Philippines.
Administrative investigations shall be conducted by at least two members of the Medical Board with one legal officer sitting during the
investigation, otherwise the proceedings shall be considered void. The existing rules of evidence shall be observed during all administrative
investigations. The Board may disapprove applications for examination or registration, reprimand erring physicians, or suspend or revoke
registration certificates, if the respondents are found guilty after due investigation. (As amended by Rep. Act No. 4224, effective June 19,
1965.)
[26] SEC. 1. Objectives. This Act provides for and shall govern (a) the standardization and regulation of medical education; (b) the examination
for registration of physicians; and (c) the supervision, control, and regulation of the practice of medicine in the Philippines.
[27] SEC. 9. Candidates for board examinations. Candidates for Board examinations shall have the following qualifications:
(1) He shall be a citizen of the Philippines or a citizen of any foreign country who has submitted competent and conclusive documentary
evidence, confirmed by the Department of Foreign Affairs, showing that his countrys existing laws permit citizens of the Philippines to practice
medicine under the same rules and regulations governing citizens thereof;
(2) He shall be of good moral character;
(3) He shall be of sound mind;
(4) He shall not have been convicted by a court of competent jurisdiction of any offense involving moral turpitude;
(5) He shall be a holder of the Degree of Doctor of Medicine or its equivalent conferred by a college of medicine duly recognized by the
Government; and
(6) He must have completed a calendar year of technical training known as internship the nature of which shall be prescribed by the Board of
Medical Education undertaken in hospitals and health centers approved by the Board. (As amended by Rep. Act No. 5946, approved June
21, 1969).
[28] Rollo, p. 419.
[29] Id. at 99.
[30] SEC. 8. Prerequisite to the practice of medicine. No person shall engage in the practice of medicine in the Philippines unless he is at least
twenty-one years of age, has satisfactorily passed the corresponding Board Examination, and is a holder of a valid Certificate of Registration
duly issued to him by the Board of Medical Examiners (now Medical Board).
[31] WEBSTERS NEW INTERNATIONAL DICTIONARY 2017 (1993 ed.).
[32] See Fosdick v. Terry, 117 So. 2d 397, 398; Puritan Coal Corp. v. Davis, 42 S.E. 2d 807, 813.
[33] Lemi v. Valencia, No. L-20768, 29 November 1968, 26 SCRA 203, 210; Ocampo v. Subido, No. L-28344, 27 August 1976, 72 SCRA 443,
452-453.
[34] See Morse v. State Board of Medical Examiners, 122 S.W. 446, 448 (1909).
[35] CONST. Art. XIV, Sec. 5 (3).
[36] Reyes v. Court of Appeals, G.R. Nos. 94961 and 96491, 25 February 1991, 194 SCRA 402, 409-410.
[37] Primicias v. Fugoso, No. L-1800, 27 January 1948, 80 Phil. 71, 75.
[38] Philippine Medical Association v. Board of Medical Examiners, No. L-25135, 21 September 1968, 25 SCRA 29.
[39] Tablarin v. Judge Angelina S. Gutierrez, No. L-78164, 31 July 1987, 152 SCRA 730, 743.
[40] See Manchester Press Club v. State Liquor Commission, 200 A. 407, 116 ALR 1093.
[41] See Yick Wo v. Hopkins, 118 US 356, 30 L.Ed. 220, 6 S. Ct. 1064; City Council of Montgomery v. West, 42 So. 1000; In Re Porterfield,
168 P. 2d 706, 167 ALR 675; Anderson v. City of Wellington, 19 P. 719; State v. Harris, 6 S.E. 2d 854.
[42] Citing Bautista v. Board of Energy, G.R. No. 75016, 13 January 1989, 169 SCRA 167.
[43] Citing Gancho-on v. Secretary of Labor and Employment, G.R. No. 108033, 14 April 1997, 271 SCRA 204, 208.
[44] Rollo, pp. 340-341.
[45] SEC. 26. Appeal from judgment. The decision of the Board of Medical Examiners (now Medical Board) shall automatically become final
thirty days after the date of its promulgation unless the respondent, during the same period, has appealed to the Commissioner of the Civil
Service (now Professional Regulation Commission) and later to the Office of the President of the Philippines. If the final decision is not
satisfactory, the respondent may ask for a review of the case, or may file in court a petition for certiorari.
[46] Ang Tuan Kai & Co. v. Import Control Commission, No. L-4427, 21 April 1952, 91 Phil. 143, 145; Peralta v. Salcedo, etc., No. L-10771, 30
April 1957, 101 Phil. 452, 454.
[47] See Madrigal v. Lecaroz, G.R. No. 46218, 23 October 1990, 191 SCRA 20, 26.
[G.R. No. 157036. June 9, 2004]
FRANCISCO I. CHAVEZ, petitioner, vs. HON. ALBERTO G. ROMULO, IN HIS CAPACITY AS EXECUTIVE
SECRETARY; DIRECTOR GENERAL HERMOGENES E. EBDANE, JR., IN HIS CAPACITY AS THE CHIEF
OF THE PNP, et al., respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
The right of individuals to bear arms is not absolute, but is subject to regulation. The maintenance of peace
and order[1] and the protection of the people against violence are constitutional duties of the State, and the right to
bear arms is to be construed in connection and in harmony with these constitutional duties.
Before us is a petition for prohibition and injunction seeking to enjoin the implementation of the Guidelines in
the Implementation of the Ban on the Carrying of Firearms Outside of Residence[2] (Guidelines) issued on January
31, 2003, by respondent Hermogenes E. Ebdane, Jr., Chief of the Philippine National Police (PNP).
The facts are undisputed:
In January 2003, President Gloria Macapagal-Arroyo delivered a speech before the members of the PNP
stressing the need for a nationwide gun ban in all public places to avert the rising crime incidents. She directed the
then PNP Chief, respondent Ebdane, to suspend the issuance of Permits to Carry Firearms Outside of Residence
(PTCFOR), thus:
THERE IS ALSO NEED TO FOCUS ON THE HIGH PROFILE CRIMES THAT TEND TO DISTURB THE
PSYCHOLOGICAL PERIMETERS OF THE COMMUNITY THE LATEST BEING THE KILLING OF FORMER
NPA LEADER ROLLY KINTANAR. I UNDERSTAND WE ALREADY HAVE THE IDENTITY OF THE
CULPRIT. LET US BRING THEM TO THE BAR OF JUSTICE.
THE NPA WILL FIND IT MORE DIFFICULT TO CARRY OUT THEIR PLOTS IF OUR LAW ENFORCEMENT
AGENCIES CAN RID THEMSELVES OF RASCALS IN UNIFORM, AND ALSO IF WE ENFORCE A GUN BAN
IN PUBLIC PLACES.
THUS, I AM DIRECTING THE PNP CHIEF TO SUSPEND INDEFINITELY THE ISSUANCE OF PERMIT TO
CARRY FIREARMS IN PUBLIC PLACES. THE ISSUANCE OF PERMITS WILL NOW BE LIMITED ONLY TO
OWNERSHIP AND POSSESSION OF GUNS AND NOT TO CARRYING THEM IN PUBLIC PLACES. FROM
NOW ON, ONLY THE UNIFORMED MEN IN THE MILITARY AND AUTHORIZED LAW ENFORCEMENT
OFFICERS CAN CARRY FIREARMS IN PUBLIC PLACES, AND ONLY PURSUANT TO EXISTING
LAW.CIVILIAN OWNERS MAY NO LONGER BRING THEIR FIREARMS OUTSIDE THEIR
RESIDENCES. THOSE WHO WANT TO USE THEIR GUNS FOR TARGET PRACTICE WILL BE GIVEN
SPECIAL AND TEMPORARY PERMITS FROM TIME TO TIME ONLY FOR THAT PURPOSE. AND THEY MAY
NOT LOAD THEIR GUNS WITH BULLETS UNTIL THEY ARE IN THE PREMISES OF THE FIRING RANGE.
WE CANNOT DISREGARD THE PARAMOUNT NEED FOR LAW AND ORDER. JUST AS WE CANNOT BE
HEEDLESS OF OUR PEOPLES ASPIRATIONS FOR PEACE.
Acting on President Arroyos directive, respondent Ebdane issued the assailed Guidelines quoted as follows:
TO : All Concerned
FROM : Chief, PNP
SUBJECT : Guidelines in the Implementation of the Ban on the Carrying of Firearms Outside
of Residence.
DATE : January 31, 2003
1. Reference: PD 1866 dated June 29, 1983 and its Implementing Rules and Regulations.
2. General:
The possession and carrying of firearms outside of residence is a privilege granted by the State to its
citizens for their individual protection against all threats of lawlessness and security.
As a rule, persons who are lawful holders of firearms (regular license, special permit, certificate of
registration or MR) are prohibited from carrying their firearms outside of residence. However, the Chief,
Philippine National Police may, in meritorious cases as determined by him and under conditions as he may
impose, authorize such person or persons to carry firearms outside of residence.
3. Purposes:
This Memorandum prescribes the guidelines in the implementation of the ban on the carrying of firearms
outside of residence as provided for in the Implementing Rules and Regulations, Presidential Decree
No. 1866, dated June 29, 1983 and as directed by PGMA. It also prescribes the conditions, requirements
and procedures under which exemption from the ban may be granted.
4. Specific Instructions on the Ban on the Carrying of Firearms:
a. All PTCFOR are hereby revoked. Authorized holders of licensed firearms covered with valid
PTCFOR may re-apply for a new PTCFOR in accordance with the conditions hereinafter
prescribed.
b. All holders of licensed or government firearms are hereby prohibited from carrying their firearms
outside their residence except those covered with mission/letter orders and duty detail orders
 issued by competent authority pursuant to Section 5, IRR, PD 1866, provided, that the said
exception shall pertain only to organic and regular employees.
5. The following persons may be authorized to carry firearms outside of residence.
a. All persons whose application for a new PTCFOR has been approved, provided, that the persons and
security of those so authorized are under actual threat, or by the nature of their position, occupation
and profession are under imminent danger.
b. All organic and regular employees with Mission/Letter Orders granted by their respective agencies so
authorized pursuant to Section 5, IRR, PD 1866, provided, that such Mission/Letter Orders is valid only
for the duration of the official mission which in no case shall be more than ten (10) days.
c. All guards covered with Duty Detail Orders granted by their respective security agencies so authorized
pursuant to Section 4, IRR, PD 1866, provided, that such DDO shall in no case exceed 24-hour
duration.
d. Members of duly recognized Gun Clubs issued Permit to Transport (PTT) by the PNP for purposes of
practice and competition, provided, that such firearms while in transit must not be loaded with
ammunition and secured in an appropriate box or case detached from the person.
e. Authorized members of the Diplomatic Corps.
6. Requirements for issuance of new PTCFOR:
a. Written request by the applicant addressed to Chief, PNP stating his qualification to possess firearm and
the reasons why he needs to carry firearm outside of residence.
b. Xerox copy of current firearm license duly authenticated by Records Branch, FED;
c. Proof of actual threat, the details of which should be issued by the Chief of Police/Provincial or City
Directors and duly validated by C, RIID;
d. Copy of Drug Test Clearance, duly authenticated by the Drug Testing Center, if photocopied;
e. Copy of DI/ RIID clearance, duly authenticated by ODI/RIID, if photocopied;
f. Copy of Neuro-Psychiatric Clearance duly authenticated by NP Testing Center, if photocopied;
g. Copy of Certificate of Attendance to a Gun Safety Seminar, duly validated by Chief, Operations Branch,
FED;
h. NBI Clearance;
i. Two (2) ID pictures (2 x 2) taken not earlier than one (1) year from date of filing of application; and
j. Proof of Payment
7. Procedures:
a. Applications may be filed directly to the Office of the PTCFOR Secretariat in Camp Crame. In the
provinces, the applications may also be submitted to the Police Regional Offices (PROs) and
Provincial/City Police Offices (P/CPOs) for initial processing before they are forwarded to the office of
the PTCFOR Secretariat. The processors, after ascertaining that the documentary requirements are in
order, shall issue the Order of Payment (OP) indicating the amount of fees payable by the applicant,
who in turn shall pay the fees to the Land Bank.
b. Applications, which are duly processed and prepared in accordance with existing rules and regulations,
shall be forwarded to the OCPNP for approval.
c. Upon approval of the application, OCPNP will issue PTCFOR valid for one (1) year from date of issue.
d. Applications for renewal of PTCFOR shall be processed in accordance with the provisions of par. 6
above.
e. Application for possession and carrying of firearms by diplomats in the Philippines shall be processed in
accordance with NHQ PNP Memo dated September 25, 2000, with Subj: Possession and Carrying of
Firearms by Diplomats in the Philippines.
8. Restrictions in the Carrying of Firearms:
a. The firearm must not be displayed or exposed to public view, except those authorized in uniform and in
the performance of their official duties.
b. The firearm shall not be brought inside public drinking and amusement places, and all other commercial
or public establishments.
Petitioner Francisco I. Chavez, a licensed gun owner to whom a PTCFOR has been issued, requested the
Department of Interior and Local Government (DILG) to reconsider the implementation of the assailed
Guidelines. However, his request was denied. Thus, he filed the present petition impleading public respondents
Ebdane, as Chief of PNP; Alberto G. Romulo, as Executive Secretary; and Gerry L. Barias, as Chief of the PNP-
Firearms and Explosives Division. He anchored his petition on the following grounds:
I
THE PRESIDENT HAS NO POWER OR AUTHORITY MUCH LESS BY A MERE SPEECH TO ALTER, MODIFY
OR AMEND THE LAW ON FIREARMS BY IMPOSING A GUN BAN AND CANCELING EXISTING PERMITS
FOR GUNS TO BE CARRIED OUTSIDE RESIDENCES.
II
OFFICIALLY, THERE IS NO PRESIDENTIAL ISSUANCE ON THE GUN BAN; THE PRESIDENTIAL SPEECH
NEVER INVOKED POLICE POWER TO JUSTIFY THE GUN BAN; THE PRESIDENTS VERBAL
DECLARATION ON GUN BAN VIOLATED THE PEOPLES RIGHT TO PROTECT LIFE AND THEIR PROPERTY
RIGHT TO CARRY FIREARMS.
III
THE PNP CHIEF HAS NO POWER OR AUTHORITY TO ISSUE THE QUESTIONED GUIDELINES BECAUSE:
1) THERE IS NO LAW, STATUTE OR EXECUTIVE ORDER WHICH GRANTS THE PNP CHIEF THE
AUTHORITY TO PROMULGATE THE PNP GUIDELINES.
2) THE IMPLEMENTING RULES AND REGULATIONS OF PD 1866 CANNOT BE THE SUBJECT OF
ANOTHER SET OF IMPLEMENTING GUIDELINES.
3) THE PRESIDENTS SPEECH CANNOT BE A BASIS FOR THE PROMULGATION OF IMPLEMENTNG
GUIDELINES ON THE GUN BAN.
IV
ASSUMING ARGUENDO, THAT THE PNP GUIDELINES IMPLEMENT PD 1866, AND THE AMENDMENTS
THERETO, THE PNP CHIEF STILL HAS NO POWER OR AUTHORITY TO ISSUE THE SAME BECAUSE
1) PER SEC 6, RA 8294, WHICH AMENDS PD 1866, THE IRR SHALL BE PROMULGATED JOINTLY BY THE
DOJ AND THE DILG.
2) SEC. 8, PD 1866 STATES THAT THE IRR SHALL BE PROMULGATED BY THE CHIEF OF THE PHILIPPINE
CONSTABULARY.
V
THE PNP GUIDELINES VIOLATE THE DUE PROCESS CLAUSE OF THE CONSTITUTION BECAUSE:
1) THE RIGHT TO OWN AND CARRY A FIREARM IS NECESSARILY INTERTWINED WITH THE PEOPLES
INHERENT RIGHT TO LIFE AND TO PROTECT LIFE. THUS, THE PNP GUIDELINES DEPRIVE PETITIONER
OF THIS RIGHT WITHOUT DUE PROCESS OF LAW FOR:
A) THE PNP GUIDELINES DEPRIVE PETITIONER OF HIS MOST POTENT, IF NOT HIS ONLY, MEANS TO
DEFEND HIMSELF.
B) THE QUESTIONED GUIDELINES STRIPPED PETITIONER OF HIS MEANS OF PROTECTION AGAINST
CRIME DESPITE THE FACT THAT THE STATE COULD NOT POSSIBLY PROTECT ITS CITIZENS DUE TO
THE INADEQUACY AND INEFFICIENCY OF THE POLICE FORCE.
2) THE OWNESHIP AND CARRYING OF FIREARMS ARE CONSTITUTIONALLY PROTECTED PROPERTY
RIGHTS WHICH CANNOT BE TAKEN AWAY WITHOUT DUE PROCESS OF LAW AND WITHOUT JUST
CAUSE.
VI
ASSUMING ARGUENDO, THAT THE PNP GUIDELINES WERE ISSUED IN THE EXERCISE OF POLICE
POWER, THE SAME IS AN INVALID EXERCISE THEREOF SINCE THE MEANS USED THEREFOR ARE
UNREASONABLE AND UNNCESSARY FOR THE ACCOMPLISHMENT OF ITS PURPOSE TO DETER AND
PREVENT CRIME THEREBY BECOMING UNDULY OPPRESSIVE TO LAW-ABIDING GUN-OWNERS.
VII
THE PNP GUIDELINES ARE UNJUST, OPPRESSIVE AND CONFISCATORY SINCE IT REVOKED ALL
EXISTING PERMITS TO CARRY WITHOUT, HOWEVER, REFUNDING THE PAYMENT THE PNP RECEIVED
FROM THOSE WHO ALREADY PAID THEREFOR.
VIII
THE PNP GUIDELINES VIOLATE THE EQUAL PROTECTION CLAUSE OF THE CONSTITUTION BECAUSE
THEY ARE DIRECTED AT AND OPPRESSIVE ONLY TO LAW-ABIDING GUN OWNERS WHILE LEAVING
OTHER GUN-OWNERS THE LAWBREAKERS (KIDNAPPERS, ROBBERS, HOLD-UPPERS, MNLF, MILF, ABU
SAYYAF COLLECTIVELY, AND NPA) UNTOUCHED.
IX
THE PNP GUIDELINES ARE UNJUST, OPPRESSIVE AND UNFAIR BECAUSE THEY WERE IMPLEMENTED
LONG BEFORE THEY WERE PUBLISHED.
X
THE PNP GUIDELINES ARE EFFECTIVELY AN EX POST FACTO LAW SINCE THEY APPLY
RETROACTIVELY AND PUNISH ALL THOSE WHO WERE ALREADY GRANTED PERMITS TO CARRY
OUTSIDE OF RESIDENCE LONG BEFORE THEIR PROMULGATION.
Petitioners submissions may be synthesized into five (5) major issues:
First, whether respondent Ebdane is authorized to issue the assailed Guidelines;
Second, whether the citizens right to bear arms is a constitutional right?;
Third, whether the revocation of petitioners PTCFOR pursuant to the assailed Guidelines is a violation of his right
to property?;
Fourth, whether the issuance of the assailed Guidelines is a valid exercise of police power?; and
Fifth, whether the assailed Guidelines constitute an ex post facto law?
The Solicitor General seeks the dismissal of the petition pursuant to the doctrine of hierarchy of
courts. Nonetheless, in refutation of petitioners arguments, he contends that: (1) the PNP Chief is authorized to
issue the assailed Guidelines; (2) petitioner does not have a constitutional right to own and carry firearms; (3) the
assailed Guidelines do not violate the due process clause of the Constitution; and (4) the assailed Guidelines do
not constitute an ex post facto law.
Initially, we must resolve the procedural barrier.
On the alleged breach of the doctrine of hierarchy of courts, suffice it to say that the doctrine is not an iron-
clad dictum. In several instances where this Court was confronted with cases of national interest and of serious
implications, it never hesitated to set aside the rule and proceed with the judicial determination of the cases.[3] The
case at bar is of similar import as it involves the citizens right to bear arms.
I pursuant to the general power granted by P.D. No. 1866 empowering him to promulgate rules and regulations
Authority of the PNP Chief
Relying on the principle of separation of powers, petitioner argues that only Congress can withhold his right
to bear arms. In revoking all existing PTCFOR, President Arroyo and respondent Ebdane transgressed the settled
principle and arrogated upon themselves a power they do not possess the legislative power.
We are not persuaded.
It is true that under our constitutional system, the powers of government are distributed among three
coordinate and substantially independent departments: the legislative, the executive and the judiciary. Each has
exclusive cognizance of the matters within its jurisdiction and is supreme within its own sphere.[4]
Pertinently, the power to make laws the legislative power is vested in Congress.[5] Congress may not escape
its duties and responsibilities by delegating that power to any other body or authority. Any attempt to abdicate the
power is unconstitutional and void, on the principle that delegata potestas non potest delegari delegated power
may not be delegated.[6]
The rule which forbids the delegation of legislative power, however, is not absolute and inflexible. It
admits of exceptions. An exception sanctioned by immemorial practice permits the legislative body to delegate its
licensing power to certain persons, municipal corporations, towns, boards, councils, commissions, commissioners,
auditors, bureaus and directors.[7] Such licensing power includes the power to promulgate necessary rules and
regulations.[8]
The evolution of our laws on firearms shows that since the early days of our Republic, the legislatures
tendency was always towards the delegation of power. Act No. 1780,[9] delegated upon the Governor-General (now
the President) the authority (1) to approve or disapprove applications of any person for a license to deal in firearms
or to possess the same for personal protection, hunting and other lawful purposes; and (2) to revoke such license
any time.[10] Further, it authorized him to issue regulations which he may deem necessary for the proper
enforcement of the Act. [11] With the enactment of Act No. 2711, the Revised Administrative Code of 1917, the laws
on firearms were integrated.[12] The Act retained the authority of the Governor General provided in Act No.
1780. Subsequently, the growing complexity in the Office of the Governor-General resulted in the delegation of his
authority to the Chief of the Constabulary. On January 21, 1919, Acting Governor-General Charles E. Yeater issued
Executive Order No. 8[13] authorizing and directing the Chief of Constabulary to act on his behalf in approving and
disapproving applications for personal, special and hunting licenses. This was followed by Executive Order
No. 61[14] designating the Philippine Constabulary (PC) as the government custodian of all firearms, ammunitions
and explosives. Executive Order No. 215,[15] issued by President Diosdado Macapagal on December 3, 1965,
granted the Chief of the Constabulary, not only the authority to approve or disapprove applications for personal,
special and hunting license, but also the authority to revoke the same. With the foregoing developments, it is
accurate to say that the Chief of the Constabulary had exercised the authority for a long time. In fact, subsequent
issuances such as Sections 2 and 3 of the Implementing Rules and Regulations of Presidential Decree No.
1866[16] perpetuate such authority of the Chief of the Constabulary. Section 2 specifically provides that any person
or entity desiring to possess any firearm shall first secure the necessary permit/license/authority from the
Chief of the Constabulary. With regard to the issuance of PTCFOR, Section 3 imparts: The Chief of
Constabulary may, in meritorious cases as determined by him and under such conditions as he may
impose, authorize lawful holders of firearms to carry them outside of residence. These provisions are issued
for the effective implementation of the decree.[17] At this juncture, it bears emphasis that P.D. No. 1866 is the
chief law governing possession of firearms in the Philippines and that it was issued by President Ferdinand E.
Marcos in the exercise of his legislative power.[18]
In an attempt to evade the application of the above-mentioned laws and regulations, petitioner argues that
the Chief of the PNP is not the same as the Chief of the Constabulary, the PC being a mere unit or component of
the newly established PNP. He contends further that Republic Act No. 8294[19] amended P.D. No. 1866 such that
the authority to issue rules and regulations regarding firearms is now jointly vested in the Department of Justice
and the DILG, not the Chief of the Constabulary.[20]
Petitioners submission is bereft of merit.
By virtue of Republic Act No. 6975,[21] the Philippine National Police (PNP) absorbed the Philippine
Constabulary (PC). Consequently, the PNP Chief succeeded the Chief of the Constabulary and, therefore,
assumed the latters licensing authority. Section 24 thereof specifies, as one of PNPs powers, the issuance of
licenses for the possession of firearms and explosives in accordance with law.[22] This is in conjunction with
the PNP Chiefs power to issue detailed implementing policies and instructions on such matters as may be
necessary to effectively carry out the functions, powers and duties of the PNP.[23]
Contrary to petitioners contention, R.A. No. 8294 does not divest the Chief of the Constabulary (now the PNP
Chief) of his authority to promulgate rules and regulations for the effective implementation of P.D. No. 1866. For
one, R.A. No. 8294 did not repeal entirely P.D. No. 1866. It merely provides for the reduction of penalties for illegal
possession of firearms. Thus, the provision of P.D. No. 1866 granting to the Chief of the Constabulary the authority
to issue rules and regulations regarding firearms remains effective. Correspondingly, the Implementing Rules and
Regulations dated September 15, 1997 jointly issued by the Department of Justice and the DILG pursuant to
Section 6 of R.A. No. 8294 deal only with the automatic review, by the Director of the Bureau of Corrections or the
Warden of a provincial or city jail, of the records of convicts for violations of P.D. No. 1866. The Rules seek to give
effect to the beneficent provisions of R.A. No. 8294, thereby ensuring the early release and reintegration of the
convicts into the community.
Clearly, both P.D. No. 1866 and R.A. No. 6975 authorize the PNP Chief to issue the assailed guidelines.
Corollarily, petitioner disputes President Arroyos declaration of a nationwide gun ban, arguing that she has
no authority to alter, modify, or amend the law on firearms through a mere speech.
First, it must be emphasized that President Arroyos speech was just an expression of her policy and a
directive to her subordinate. It cannot, therefore, be argued that President Arroyo enacted a law through a mere
speech.
Second, at the apex of the entire executive officialdom is the President. Section 17, Article VII of the
Constitution specifies his power as Chief Executive, thus: The President shall have control of all the executive
departments, bureaus and offices. He shall ensure that the laws be faithfully executed. As Chief Executive,
President Arroyo holds the steering wheel that controls the course of her government. She lays down policies in
the execution of her plans and programs. Whatever policy she chooses, she has her subordinates to implement
them. In short, she has the power of control. Whenever a specific function is entrusted by law or regulation to
her subordinate, she may act directly or merely direct the performance of a duty.[24] Thus, when President
Arroyo directed respondent Ebdane to suspend the issuance of PTCFOR, she was just directing a subordinate to
perform an assigned duty. Such act is well within the prerogative of her office.
II
Right to bear arms: Constitutional or Statutory?
Petitioner earnestly contends that his right to bear arms is a constitutionally-protected right. This, he mainly
anchors on various American authorities. We therefore find it imperative to determine the nature of the right in light
of American jurisprudence.
The bearing of arms is a tradition deeply rooted in the English and American society. It antedates not only
the American Constitution but also the discovery of firearms.[25]
A provision commonly invoked by the American people to justify their possession of firearms is the Second
Amendment of the Constitution of the United States of America, which reads:
A well regulated militia, being necessary for the security of free state, the right of the people to keep and bear
Arms, shall not be infringed.
An examination of the historical background of the foregoing provision shows that it pertains to the
citizens collective right to take arms in defense of the State, not to the citizens individual right to own and possess
arms. The setting under which the right was contemplated has a profound connection with the keeping and
maintenance of a militia or an armed citizenry. That this is how the right was construed is evident in early American
cases.
The first case involving the interpretation of the Second Amendment that reached the United States Supreme
Court is United States vs. Miller.[26] Here, the indictment charged the defendants with transporting an unregistered
Stevens shotgun without the required stamped written order, contrary to the National Firearms Act. The defendants
filed a demurrer challenging the facial validity of the indictment on the ground that the National Firearms Act offends
the inhibition of the Second Amendment. The District Court sustained the demurrer and quashed the
indictment. On appeal, the Supreme Court interpreted the right to bear arms under the Second Amendment
as referring to the collective right of those comprising the Militia a body of citizens enrolled for military
discipline. It does not pertain to the individual right of citizen to bear arm. Miller expresses its holding as
follows:
In the absence of any evidence tending to show that possession or use of a shotgun having a barrel of less than
eighteen inches in length at this time has some reasonable relationship to the preservation or efficiency of a
well regulated militia, we cannot say that the Second Amendment guarantees the right to keep and bear
such an instrument. Certainly it is not within judicial notice that this weapon is any part of the ordinary military
equipment or that its use could contribute to the common defense.
The same doctrine was re-echoed in Cases vs. United States.[27] Here, the Circuit Court of Appeals held that
the Federal Firearms Act, as applied to appellant, does not conflict with the Second Amendment. It ruled that:
While [appellants] weapon may be capable of military use, or while at least familiarity with it might be regarded as
of value in training a person to use a comparable weapon of military type and caliber, still there is no evidence
that the appellant was or ever had been a member of any military organization or that his use of the
weapon under the circumstances disclosed was in preparation for a military career. In fact, the only
inference possible is that the appellant at the time charged in the indictment was in possession of,
transporting, and using the firearm and ammunition purely and simply on a frolic of his own and without
any thought or intention of contributing to the efficiency of the well regulated militia which the Second
amendment was designed to foster as necessary to the security of a free state.
With the foregoing jurisprudence, it is erroneous to assume that the US Constitution grants upon the
American people the right to bear arms. In a more explicit language, the United States vs.
Cruikshank[28] decreed: The right of the people to keep and bear arms is not a right granted by the
Constitution. Neither is it in any way dependent upon that instrument. Likewise, in People vs. Persce,[29] the
Court of Appeals said: Neither is there any constitutional provision securing the right to bear arms which prohibits
legislation with reference to such weapons as are specifically before us for consideration. The provision in the
Constitution of the United States that the right of the people to keep and bear arms shall not be infringed
is not designed to control legislation by the state.
With more reason, the right to bear arms cannot be classified as fundamental under the 1987 Philippine
Constitution. Our Constitution contains no provision similar to the Second Amendment, as we aptly observed in the
early case of United States vs. Villareal:[30]
The only contention of counsel which would appear to necessitate comment is the claim that the statute
penalizing the carrying of concealed weapons and prohibiting the keeping and the use of firearms without a
license, is in violation of the provisions of section 5 of the Philippine Bill of Rights.
Counsel does not expressly rely upon the prohibition in the United States Constitution against the
infringement of the right of the people of the United States to keep and bear arms (U. S. Constitution,
amendment 2), which is not included in the Philippine Bill. But it may be well, in passing, to point out that
in no event could this constitutional guaranty have any bearing on the case at bar, not only because it
has not been expressly extended to the Philippine Islands, but also because it has been uniformly held
that both this and similar provisions in State constitutions apply only to arms used in civilized warfare
(see cases cited in 40 Cyc., 853, note 18); x x x.
Evidently, possession of firearms by the citizens in the Philippines is the exception, not the rule. The
right to bear arms is a mere statutory privilege, not a constitutional right. It is a mere statutory creation. What then
are the laws that grant such right to the Filipinos? The first real firearm law is Act No. 1780 enacted by the
Philippine Commission on October 12, 1907. It was passed to regulate the importation, acquisition, possession,
use and transfer of firearms. Section 9 thereof provides:
SECTION 9. Any person desiring to possess one or more firearms for personal protection, or for use in
hunting or other lawful purposes only, and ammunition therefor, shall make application for a license to
possess such firearm or firearms or ammunition as hereinafter provided. Upon making such application,
and before receiving the license, the applicant shall make a cash deposit in the postal savings bank in the sum of
one hundred pesos for each firearm for which the license is to be issued, or in lieu thereof he may give a bond in
such form as the Governor-General may prescribe, payable to the Government of the Philippine Islands, in the
sum of two hundred pesos for each such firearm: PROVIDED, HOWEVER, That persons who are actually
members of gun clubs, duly formed and organized at the time of the passage of this Act, who at such time have a
license to possess firearms, shall not be required to make the deposit or give the bond prescribed by this section,
and the bond duly executed by such person in accordance with existing law shall continue to be security for the
safekeeping of such arms.
The foregoing provision was restated in Section 887[31] of Act No. 2711 that integrated the firearm
laws. Thereafter, President Ferdinand E. Marcos issued P.D. No. 1866. It codified the laws on illegal possession,
manufacture, dealing in, acquisition of firearms, ammunitions or explosives and imposed stiffer penalties for their
violation. R.A. No. 8294 amended some of the provisions of P.D. No. 1866 by reducing the imposable
penalties. Being a mere statutory creation, the right to bear arms cannot be considered an inalienable or absolute
right.
III
Vested Property Right
Section 1, Article III of the Constitution provides that no person shall be deprived of life, liberty or property
without due process of law. Petitioner invokes this provision, asserting that the revocation of his PTCFOR pursuant
to the assailed Guidelines deprived him of his vested property right without due process of law and in violation of
the equal protection of law.
Petitioner cannot find solace to the above-quoted Constitutional provision.
In evaluating a due process claim, the first and foremost consideration must be whether life, liberty or property
interest exists.[32] The bulk of jurisprudence is that a license authorizing a person to enjoy a certain privilege is
neither a property nor property right. In Tan vs. The Director of Forestry,[33] we ruled that a license is merely a
permit or privilege to do what otherwise would be unlawful, and is not a contract between the authority granting it
and the person to whom it is granted; neither is it property or a property right, nor does it create a vested
right. In a more emphatic pronouncement, we held in Oposa vs. Factoran, Jr.[34] that:
Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not a contract,
property or a property right protected by the due process clause of the Constitution.
Petitioner, in arguing that his PTCFOR is a constitutionally protected property right, relied heavily on Bell vs.
Burson[35] wherein the U.S. Supreme Court ruled that once a license is issued, continued possession may become
essential in the pursuit of livelihood. Suspension of issued licenses thus involves state action that adjudicates
important interest of the licensees.
Petitioners reliance on Bell is misplaced. This case involves a drivers license, not a license to bear arms. The
catena of American jurisprudence involving license to bear arms is perfectly in accord with our ruling that a
PTCFOR is neither a property nor a property right. In Erdelyi vs. OBrien,[36] the plaintiff who was denied a license
to carry a firearm brought suit against the defendant who was the Chief of Police of the City of Manhattan Beach,
on the ground that the denial violated her constitutional rights to due process and equal protection of the laws. The
United States Court of Appeals Ninth Circuit ruled that Erdelyi did not have a property interest in obtaining a license
to carry a firearm, ratiocinating as follows:
Property interests protected by the Due Process Clause of the Fourteenth Amendment do not arise
whenever a person has only an abstract need or desire for, or unilateral expectation of a benefit.x x x
Rather, they arise from legitimate claims of entitlement defined by existing rules or understanding that
stem from an independent source, such as state law. x x x
Concealed weapons are closely regulated by the State of California. x x x Whether the statute creates a
property interest in concealed weapons licenses depends largely upon the extent to which the statute
contains mandatory language that restricts the discretion of the [issuing authority] to deny licenses to
applicants who claim to meet the minimum eligibility requirements. x x x Where state law gives the
issuing authority broad discretion to grant or deny license application in a closely regulated field, initial
applicants do not have a property right in such licenses protected by the Fourteenth Amendment. See
Jacobson, supra, 627 F.2d at 180 (gaming license under Nevada law);
 Similar doctrine was announced in Potts vs. City of Philadelphia,[37] Conway vs. King,[38] Nichols vs. County
of Sta. Clara,[39] and Gross vs. Norton.[40] These cases enunciated that the test whether the statute creates a
property right or interest depends largely on the extent of discretion granted to the issuing authority.
In our jurisdiction, the PNP Chief is granted broad discretion in the issuance of PTCFOR. This is evident from
the tenor of the Implementing Rules and Regulations of P.D. No. 1866 which state that the Chief of Constabulary
may, in meritorious cases as determined by him and under such conditions as he may impose, authorize
lawful holders of firearms to carry them outside of residence. Following the American doctrine, it is indeed logical
to say that a PTCFOR does not constitute a property right protected under our Constitution.
Consequently, a PTCFOR, just like ordinary licenses in other regulated fields, may be revoked any time. It
does not confer an absolute right, but only a personal privilege to be exercised under existing restrictions, and such
as may thereafter be reasonably imposed.[41] A licensee takes his license subject to such conditions as the
Legislature sees fit to impose, and one of the statutory conditions of this license is that it might be revoked by
the selectmen at their pleasure. Such a license is not a contract, and a revocation of it does not deprive the
defendant of any property, immunity, or privilege within the meaning of these words in the Declaration of
Rights.[42] The US Supreme Court, in Doyle vs. Continental Ins. Co,[43]held: The correlative power to revoke or
recall a permission is a necessary consequence of the main power. A mere license by the State is always
revocable.
The foregoing jurisprudence has been resonating in the Philippines as early as 1908. Thus, in The
Government of the Philippine Islands vs. Amechazurra[44] we ruled:
x x x no private person is bound to keep arms. Whether he does or not is entirely optional with himself, but if, for
his own convenience or pleasure, he desires to possess arms, he must do so upon such terms as the
Government sees fit to impose, for the right to keep and bear arms is not secured to him by law. The
Government can impose upon him such terms as it pleases. If he is not satisfied with the terms imposed, he
should decline to accept them, but, if for the purpose of securing possession of the arms he does agree to such
conditions, he must fulfill them.
IV
Police Power
At any rate, assuming that petitioners PTCFOR constitutes a property right protected by the Constitution, the
same cannot be considered as absolute as to be placed beyond the reach of the States police power. All property
in the state is held subject to its general regulations, necessary to the common good and general welfare.
In a number of cases, we laid down the test to determine the validity of a police measure, thus:
(1) The interests of the public generally, as distinguished from those of a particular class, require the exercise of
the police power; and
(2) The means employed are reasonably necessary for the accomplishment of the purpose and not unduly
oppressive upon individuals.
Deeper reflection will reveal that the test merely reiterates the essence of the constitutional guarantees of
substantive due process, equal protection, and non-impairment of property rights.
It is apparent from the assailed Guidelines that the basis for its issuance was the need for peace and order
in the society. Owing to the proliferation of crimes, particularly those committed by the New Peoples Army (NPA),
which tends to disturb the peace of the community, President Arroyo deemed it best to impose a nationwide gun
ban. Undeniably, the motivating factor in the issuance of the assailed Guidelines is the interest of the public in
general.
The only question that can then arise is whether the means employed are appropriate and reasonably
necessary for the accomplishment of the purpose and are not unduly oppressive.In the instant case, the assailed
Guidelines do not entirely prohibit possession of firearms. What they proscribe is merely the carrying of firearms
outside of residence. However, those who wish to carry their firearms outside of their residences may re-apply for
a new PTCFOR. This we believe is a reasonable regulation. If the carrying of firearms is regulated, necessarily,
crime incidents will be curtailed. Criminals carry their weapon to hunt for their victims; they do not wait in the comfort
of their homes. With the revocation of all PTCFOR, it would be difficult for criminals to roam around with their
guns. On the other hand, it would be easier for the PNP to apprehend them.
Notably, laws regulating the acquisition or possession of guns have frequently been upheld as reasonable
exercise of the police power.[45] In State vs. Reams,[46] it was held that the legislature may regulate the right to bear
arms in a manner conducive to the public peace. With the promotion of public peace as its objective and the
revocation of all PTCFOR as the means, we are convinced that the issuance of the assailed Guidelines constitutes
a reasonable exercise of police power. The ruling in United States vs. Villareal,[47] is relevant, thus:
We think there can be no question as to the reasonableness of a statutory regulation prohibiting the carrying of
concealed weapons as a police measure well calculated to restrict the too frequent resort to such weapons in
moments of anger and excitement. We do not doubt that the strict enforcement of such a regulation would tend to
increase the security of life and limb, and to suppress crime and lawlessness, in any community wherein the
practice of carrying concealed weapons prevails, and this without being unduly oppressive upon the individual
owners of these weapons. It follows that its enactment by the legislature is a proper and legitimate exercise of the
police power of the state.
V
Ex post facto law
In Mekin vs. Wolfe,[48] an ex post facto law has been defined as one (a) which makes an action done before
the passing of the law and which was innocent when done criminal, and punishes such action; or (b) which
aggravates a crime or makes it greater than it was when committed; or (c) which changes the punishment and
inflicts a greater punishment than the law annexed to the crime when it was committed; or (d) which alters the legal
rules of evidence and receives less or different testimony than the law required at the time of the commission of
the offense in order to convict the defendant.
We see no reason to devote much discussion on the matter. Ex post facto law prohibits retrospectivity of
penal laws.[49] The assailed Guidelines cannot be considered as an ex post facto law because it is prospective in
its application. Contrary to petitioners argument, it would not result in the punishment of acts previously committed.
 WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
Davide, Jr., C.J., Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez, Corona,
Carpio-Morales, Callejo, Sr., Azcuna, and Tinga, JJ., concur.
[1] Section 5, Article II of the 1987 Philippine Constitution.
[2] Annex A of the Petition, Rollo at 60-62.
[3] See Buklod ng Kawaning EIIB vs. Zamora, G.R. Nos. 142801-802, July 10, 2001, 360 SCRA 718; Fortich vs.
Corona, G.R. No. 131457, April 24, 1998, 289 SCRA 624; Dario vs. Mison, G.R. No. 81954, August 8, 1989, 176
SCRA 84.
[4] People vs. Vera, 65 Phil. 56 (1937).
[5] Section 1, Article VI of the 1987 Constitution.
[6] Freund, Sutherland, Howe, Brown, Constitutional Law Cases and Other Problems, Fourth Edition, 1977, at
653.
[7] 51 Am. Jur. 2d 51.
[8]51 Am Jur 2d 52.
[9] AN ACT TO REGULATE THE IMPORTATION, ACQUISITION, POSSESSION, USE, AND TRANSFER OF
FIREARMS, AND TO PROHIBIT THE POSSESSION OF SAME EXCEPT IN COMPLIANCE WITH THE
PROVISIONS OF THIS ACT.
[10] SECTION 11. An application for a personal license to possess firearms and ammunition, as herein provided
for, made by a resident of the city of Manila, shall be directed to the chief of police of said city, and it shall be the
duty of the chief of the police to forward the application to the Governor-General with his recommendations. Any
such application made by a resident of a province shall be directed to the governor of the province who shall
make his recommendations thereon and forward the application to the senior inspector of the Constabulary of the
province, who in turn shall make his recommendations thereon and forward the application, through official
channels, to the Governor-General. The Governor-General may approve or disapprove any such
application, and, in the event of the approval, the papers shall be transmitted to the Director of
Constabulary with instructions to issue the license as hereinbefore provided. The Director of Constabulary,
upon receiving and approving the bond, or receiving the certificate of deposit duly endorsed to the order of the
Insular Treasurer, shall issue the license for the time fixed for such license as hereinafter provided, and the
Director of Constabulary shall transmit the license direct to the applicant, and shall notify the chief of police of the
city of Manila if the applicant resides in Manila, otherwise the senior inspector of Constabulary of the province in
which the applicant resides. The Director of Constabulary shall file the certificate of deposit in his office. It shall
be the duty of all officers through whom applications for licenses to possess firearms are transmitted to expedite
the same.
[11] SECTION 30. The Governor-General is hereby authorized to issue executive orders prescribing the forms and
regulations which he may deem necessary for the proper enforcement of the provisions of this Act.
[12] SEC. 882. Issuance of special hunting permits. The Department Head may authorize the Chief of
Constabulary to issue special hunting permits to persons temporarily visiting the Philippine Islands, without
requiring a bond or deposit as a guarantee of security for their arms and ammunition. Such special hunting permit
shall be valid only during the temporary sojourn of the holder in the Islands, shall be nontransferable, and shall
be revocable at the pleasure of the Department Head.
SEC. 887. License required for individual keeping arms for personal use. Security to be given. Any person
desiring to possess one or more firearms for personal protection or for use in hunting or other lawful purposes
only, and ammunition thereof, shall make application for a license to possess such firearm or firearms or
ammunition as hereinafter provided. Upon making such application, and before receiving the license, the
applicant shall, for the purpose of security, make a cash deposit in the postal savings bank in the sum of one
hundred pesos for each firearm for which the license is to be issued, and shall indorse the certificated of deposit
therefor to the Insular Treasurer; or in lieu thereof he may give a bond in such form as the Governor-General may
prescribed, payable to the Government of the Philippine Islands, in the sum of two hundred pesos for each such
firearms.
SEC. 888. Mode of making application and acting upon the same. An application for a personal license to
possess firearms and ammunition, as herein provided, made by a resident of the City of Manila, shall be directed
to the Mayor of said city, whose duty it shall be to forward the application to the Governor-General, with his
recommendation. Applications made by residents of a province shall be directed to the governor of the same,
who shall make his recommendation thereon and forward them to the Governor-General, who may approve or
disapprove any such application.
SEC. 889. Duration of personal license. A personal firearms license shall continue in force until the death or legal
disability of the licensee, unless, prior thereto, the license shall be surrendered by him or revoked by authority of
the Governor-General.
SEC. 899. Revocation of firearms license by Governor-General. Any firearms license may be revoked at any time
by order of the Governor-General.
SEC. 905. Forms and regulations to be prescribed by Governor-General. The Governor-General shall prescribe
such forms and promulgate such regulations as he shall deem necessary for the proper enforcement of this law.
[13] (Delegating the CPC to Approve/Disapprove Applications)
15. In carrying out the provisions of Sections eight hundred and eighty-one, eight hundred and eighty-two, eighty
hundred and eighty-eight, as amended by Section two of Act two thousand seven hundred and seventy-four,
eight hundred and ninety-one and eight hundred and ninety-two of the Administrative Code, empowering the
Governor-General to approve and disapprove applications for personal, special, and hunting licenses to possess
firearms and ammunition, the Chief of Constabulary is authorized and directed to act for the Governor-General.
[14] Issued on December 5, 1924 by Governor-General Leonard Wood.
[15] Pursuant to the provisions of Section 905, Administrative Code, as amended, empowering the President of
the Philippines to prescribe regulations for the enforcement of the provisions of the law relating to the
possession, use of firearms, etc., the following regulations are hereby promulgated.
SECTION 1. In carrying out the provision of Sections 881, 882 and 888 of the Revised Administrative Code,
empowering the President of the Philippines to approve or disapprove applications for personal, special and
hunting license to possess firearms and ammunition, the Chief of Constabulary or his representative is
authorized and directed to act for the President.
SECTION 2. In carrying out the provisions of Section 899 of the Revised Administrative Code, empowering the
President of the Philippines to revoke any firearm license anytime, the Chief of Constabulary is authorized and
directed to act for the President.
[16]CODIFYING THE LAWS ON ILLEGAL/UNLAWFUL POSSESSION, MANUFACTURE, DEALING IN,
ACQUISITION OR DISPOSITION, OF FIREARMS, AMMUNITION OR EXPLOSIVES OR INSTRUMENTS USED
IN THE MANUFACTURE OF FIREARMS, AMMUNITION OR EXPLOSIVES, AND IMPOSING STIFFER
PENALTIES FOR CERTAIN VIOLATIONS THEREOF AND FOR RELEVANT PURPOSES.
[17] Section 8 of P.D. No. 1866.
[18] Baylosis vs. Chavez, Jr., G.R. No. 95136, October 3, 1991, 202 SCRA 405.
[19] AN ACT AMENDING THE PROVISIONS OF PRESIDENTIAL DECREE NO. 1866, AS AMENDED,
ENTITLED CODIFYING THE LAWS ON ILLEGAL/UNLAWFUL POSSESSION, MANUFACTURE, DEALING IN,
ACQUISITION OR DISPOSITION OF FIREARMS, AMMUNITION OR EXPLOSIVES OR INSTRUMENTS USED
IN THE MANUFACTURE OF FIREARMS, AMMUNITION OR EXPLOSIVES, AND IMPOSING STIFFER
PENALTIES FOR EXPLOSIVES, AND IMPOSING STIFFER PENALTIES FOR CERTAIN VIOLATIONS
THEREOF, AND FOR RELEVANT PURPOSES. Issued on June 29, 1983.
[20] Section 6 of R.A. No. 8294 provides:
SECTION 6. Rules and Regulations. The Department of Justice and the Department of the Interior and
Local Government shall jointly issue, within ninety (90) days after the approval of this Act, the necessary
rules and regulations pertaining to the administrative aspect of the provisions hereof, furnishing the
Committee on Public Order and Security and the Committee on Justice and Human Rights of both Houses of
Congress copies of such rules and regulations within thirty (30) days from the promulgation hereof.
[21] AN ACT ESTABLISHING THE PHILIPPINE NATIONAL POLICE UNDER A REORGANIZED DEPARMENT
OF THE INTERIOR AND LOCAL GOVERNMENT, AND FOR OTHER PURPOSES. Approved December 13,
1990.
[22] Under Section 2 (11), Chapter 1, Book 7 of Executive Order No. 292, the Administrative Code of 1987, the
term licensing includes agency process involving the grant, renewal, denial, revocation, suspension,
annulment, withdrawal, limitation, amendment, modification or conditioning of a license.
[23] Section 26 of R.A. No. 6975.
[24] Chapter 7, Book IV of E.O. No. 292.
[25]Under the laws of Alfred the Great, whose reign began in 872 A.D., all English citizens, from the nobility to the
peasants, were obliged to privately purchase weapons and be available for military duty.[25] This body of armed
citizens was known as the fyrd.
Following the Norman conquest, many of the Saxon rights were abridged, however, the right and duty of arms
possession was retained. Under the Assize of Arms of 1181, the whole community of freemen is required to
possess arms and to demonstrate to the Royal officials that each of them is appropriately armed.
The Tudor monarchs continued the system of arm ownership and Queen Elizabeth added to it by creating what
came to be known as train bands that is, the selected portions of the citizenry chosen for special
training. These trained bands were distinguished from the militia which term was first used during the Spanish
Armada crisis to designate the entire of the armed citizenry.
The militia played a pivotal role in the English political system. When civil war broke out in 1642, the critical issue
was whether the King or Parliament had the right to control the militia. After the war, England, which was then
under the control of a military government, ordered its officers to search for and seize all arms owned by
Catholics, opponents of the government, or any other person whom the commissioners had judged dangerous to
the peace of the Commonwealth.
The restoration of Charles II ended the military government. Charles II opened his reign with a variety of
repressive legislation. In 1662, a Militia Act was enacted empowering officials to search and to seize all arms in
the custody or possession of any person or persons whom the said lieutenants or any two or more of their
deputies shall judge dangerous to the peace of the kingdom. Such seizures of arms continued under James I,
who directed them particularly against the Irish population.
In 1668, the government of James was overturned in a peaceful uprising which came to be known as The
Glorious Revolution. Parliament promulgated a Declaration of Rights, later enacted as the Bill of Rights. Before
coronation, James successor, William of Orange, was required to swear to respect these rights. The Bill of
Rights, as drafted in the House of Commons, simply provided that the acts concerning the militia are grievous to
the subject and it is necessary for the public safety that the subjects, which are protestants, should provide and
keep arms for the common defense; And that the arms which have been seized, and taken from them, be
restored. The House of Lords changed this to a more concise statement: That the subjects which are Protestant
may have arms for their defense suitable to their conditions and as allowed by law.
In the colonies, the prevalence of hunting as means of livelihood and the need for defense led to armament
statutes comparable to those of the early Saxon times. When the British government began to increase its
military presence therein in the mid-eighteenth century, Massachusetts responded by calling upon its citizens to
arm themselves in defense. In September 1774, an incorrect rumor that British troops killed colonists prompted
60,000 citizens to take arms. A few months later, when Patrick Henry delivered his famed Give me liberty or give
me death speech, he spoke in support of a proposition that a well regulated militia, composed of gentlemen and
freemen, is the natural strength and only security of a free government
When the first Congress convened for the purpose of drafting a Bill of Rights, it delegated the task to James
Madison. Madison did not write upon a blank tablet. Instead, he obtained a pamphlet listing the States proposals
for a Bill of Rights and sought to produce a briefer version incorporating all the vital proposals of such
States. Madison proposed among other rights: The right of the people to keep and bear arms shall not be
infringed; a well armed and regulated militia being the best security of a free country; but no person religiously
scrupulous of bearing arms shall be compelled to render military service. In the House, this was initially modified
so that the militia clause came before the proposal recognizing the right. The proposal finally passed the House
in its present form: A well regulated militia, being necessary for the security of free state, the right of the people to
keep and bear arms, shall not be infringed. In this form it was submitted to the Senate, which passed it the
following day.
[26] 307 U.S. 174 (1939).
[27] 131 Federal Reporter, 2d Series, 916.
[28] 92 U.S. 542, 23 L. Ed. 588.
[29] 204 N.Y. 397, 97 N.E. 877.
[30] 28 Phil. 390 (1914).
[31] Supra.
[32] Bzdzuich vs. U.S. Drug Enforcement Admin., 76 F 3d 738, 1996 FED App. 59P (6th Cir. 1996).
[33] G.R. No. L-24548, October 27, 1983, 125 SCRA 302. See also Pedro vs. Provincial Board of Rizal, 56 Phil. 123 (1931).
[34] G.R. No. 101083, July 30, 1993, 224 SCRA 792, penned by Chief Justice Hilario G. Davide, Jr.
[35] 402 U.S. 535 (1971).
[36] 680 F 2d 61 (1982).
[37] 01-CV-3247, August 2002.
[38] 718 F. Supp. 1059 (1989).
[39] 223 Cal. App. 3d 1236, 273 Cal. Rptr. 84 (1990).
[40] 120 F. 3d 877 (1997).
[41] Stone vs. Fritts, 82 NE 792 (1907) citing Calder vs. Kurby, 5 Gray [Mass.] 597; Freleigh vs. State, 8 Mo. 606; People vs.
New York Tax, etc., Comrs, 47 N.Y. 501; State vs. Burgoyne, 75 Tenn. 173, 40 Am. Rep. 60.
[42] Commonwealth vs. Kinsley, 133 Mass. 578.
[43] 94 U.S. 535, 540 24 L.Ed.148.
[44] 10 Phil. 637 (1908).
[45] Calvan vs. Superior Court of San Francisco, 70 Cal 2d 851, 76 Cal Rptr 642, 452 P2d 930; State vs. Robinson (Del Sup)
251 A2d 552; People vs. Brown, 253 Mich 537, 235 NW 245, 82 ALR 341.
[46] 121 N.C. 556, 557, 27 S.E. 1004, 1005 (1897).
[47] 28 Phil. 390 (1914).
[48] 2 Phil. 74 (1903).
[49] Lacson vs. The Executive Secretary G.R. No. 128096, January 20, 1999, 301 SCRA 298.
[G.R. No. 135190. April 3, 2002]
SOUTHEAST MINDANAO GOLD MINING CORPORATION, petitioner, vs. BALITE PORTAL MINING
COOPERATIVE and others similarly situated; and THE HONORABLE ANTONIO CERILLES, in his capacity as
Secretary of the Department of Environment and Natural Resources (DENR), PROVINCIAL MINING
REGULATORY BOARD OF DAVAO (PMRB-Davao), respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review of the March 19, 1998 decision of the Court of Appeals in CA-G.R. SP No. 44693,
dismissing the special civil action for certiorari, prohibition and mandamus, and the resolution dated August 19,
1998 denying petitioners motion for reconsideration.
The instant case involves a rich tract of mineral land situated in the Agusan-Davao-Surigao Forest Reserve
known as the Diwalwal Gold Rush Area. Located at Mt. Diwata in the municipalities of Monkayo and Cateel in
Davao Del Norte, the land has been embroiled in controversy since the mid-80s due to the scramble over gold
deposits found within its bowels.
From 1985 to 1991, thousands of people flocked to Diwalwal to stake their respective claims. Peace and
order deteriorated rapidly, with hundreds of people perishing in mine accidents, man-made or otherwise, brought
about by unregulated mining activities. The multifarious problems spawned by the gold rush assumed gargantuan
proportions, such that finding a win-win solution became a veritable needle in a haystack.
On March 10, 1988, Marcopper Mining Corporation (Marcopper) was granted Exploration Permit No. 133
(EP No. 133) over 4,491 hectares of land, which included the hotly-contested Diwalwal area.[1]Marcoppers
acquisition of mining rights over Diwalwal under its EP No. 133 was subsequently challenged before this Court
in Apex Mining Co., Inc., et al. v. Hon. Cancio C. Garcia, et al.,[2] where Marcoppers claim was sustained over that
of another mining firm, Apex Mining Corporation (Apex). The Court found that Apex did not comply with the
procedural requisites for acquiring mining rights within forest reserves.
Not long thereafter, Congress enacted on June 27, 1991 Republic Act No. 7076, or the Peoples Small-Scale
Mining Act. The law established a Peoples Small-Scale Mining Program to be implemented by the Secretary of the
DENR[3] and created the Provincial Mining Regulatory Board (PMRB) under the DENR Secretarys direct
supervision and control.[4] The statute also authorized the PMRB to declare and set aside small-scale mining areas
subject to review by the DENR Secretary[5] and award mining contracts to small-scale miners under certain
conditions.[6]
On December 21, 1991, DENR Secretary Fulgencio S. Factoran issued Department Administrative Order
(DAO) No. 66, declaring 729 hectares of the Diwalwal area as non-forest land open to small-scale mining.[7] The
issuance was made pursuant to the powers vested in the DENR Secretary by Proclamation No. 369, which
established the Agusan-Davao-Surigao Forest Reserve.
Subsequently, a petition for the cancellation of EP No. 133 and the admission of a Mineral Production Sharing
Arrangement (MPSA) proposal over Diwalwal was filed before the DENR Regional Executive Director, docketed
as RED Mines Case No. 8-8-94 entitled, Rosendo Villaflor, et al. v. Marcopper Mining Corporation.
On February 16, 1994, while the RED Mines case was pending, Marcopper assigned its EP No. 133 to
petitioner Southeast Mindanao Gold Mining Corporation (SEM),[8] which in turn applied for an integrated MPSA
over the land covered by the permit.
In due time, the Mines and Geosciences Bureau Regional Office No. XI in Davao City (MGB-XI) accepted
and registered the integrated MPSA application of petitioner. After publication of the application, the following filed
their oppositions:
a) MAC Case No. 004(XI) - JB Management Mining Corporation;
b) MAC Case No. 005(XI) - Davao United Miners Cooperative;
c) MAC Case No. 006(XI) - Balite Integrated Small Scale Miners Cooperative;
d) MAC Case No. 007(XI) - Monkayo Integrated Small Scale Miners Association, Inc.;
e) MAC Case No. 008(XI) - Paper Industries Corporation of the Philippines;
f) MAC Case No. 009(XI) - Rosendo Villaflor, et al.;
g) MAC Case No. 010(XI) - Antonio Dacudao;
h) MAC Case No. 011(XI) - Atty. Jose T. Amacio;
i) MAC Case No. 012(XI) - Puting-Bato Gold Miners Cooperative;
j) MAC Case No. 016(XI) - Balite Communal Portal Mining Cooperative; and
k) MAC Case No. 97-01(XI) - Romeo Altamera, et al.
In the meantime, on March 3, 1995, Republic Act No. 7942, the Philippine Mining Act, was enacted. Pursuant
to this statute, the above-enumerated MAC cases were referred to a Regional Panel of Arbitrators (RPA) tasked
to resolve disputes involving conflicting mining rights. The RPA subsequently took cognizance of the RED Mines
case, which was consolidated with the MAC cases.
On April 1, 1997, Provincial Mining Regulatory Board of Davao passed Resolution No. 26, Series of 1997,
authorizing the issuance of ore transport permits (OTPs) to small-scale miners operating in the Diwalwal mines.
Thus, on May 30, 1997, petitioner filed a complaint for damages before the Regional Trial Court of Makati
City, Branch 61, against the DENR Secretary and PMRB-Davao. SEM alleged that the illegal issuance of the OTPs
allowed the extraction and hauling of P60,000.00 worth of gold ore per truckload from SEMs mining claim.
Meanwhile, on June 13, 1997, the RPA resolved the Consolidated Mines cases and decreed in an Omnibus
Resolution as follows:
VIEWED IN THE LIGHT OF THE FOREGOING, the validity of Exploration Permit No. 133 is hereby reiterated
and all the adverse claims against MPSAA No. 128 are DISMISSED.[9]
On June 24, 1997, the DENR Secretary issued Memorandum Order No. 97-03[10] which provided, among
others, that:
1. The DENR shall study thoroughly and exhaustively the option of direct state utilization of the mineral resources
in the Diwalwal Gold-Rush Area. Such study shall include, but shall not be limited to, studying and weighing the
feasibility of entering into management agreements or operating agreements, or both, with the appropriate
government instrumentalities or private entities, or both, in carrying out the declared policy of rationalizing the
mining operations in the Diwalwal Gold Rush Area; such agreements shall include provisions for profit-
sharing between the state and the said parties, including profit-sharing arrangements with small-scale miners, as
well as the payment of royalties to indigenous cultural communities, among others. The Undersecretary for Field
Operations, as well as the Undersecretary for Legal and Legislative Affairs and Attached Agencies, and the
Director of the Mines and Geo-sciences Bureau are hereby ordered to undertake such studies. x x x[11]
On July 16, 1997, petitioner filed a special civil action for certiorari, prohibition and mandamus before the
Court of Appeals against PMRB-Davao, the DENR Secretary and Balite Communal Portal Mining Cooperative
(BCPMC), which represented all the OTP grantees. It prayed for the nullification of the above-quoted Memorandum
Order No. 97-03 on the ground that the direct state utilization espoused therein would effectively impair its vested
rights under EP No. 133; that the DENR Secretary unduly usurped and interfered with the jurisdiction of the RPA
which had dismissed all adverse claims against SEM in the Consolidated Mines cases; and that the memorandum
order arbitrarily imposed the unwarranted condition that certain studies be conducted before mining and
environmental laws are enforced by the DENR.
Meanwhile, on January 6, 1998, the MAB rendered a decision in the Consolidated Mines cases, setting aside
the judgment of the RPA.[12] This MAB decision was then elevated to this Court by way of a consolidated petition,
docketed as G.R. Nos. 132475 and 132528.
On March 19, 1998, the Court of Appeals, through a division of five members voting 3-2,[13] dismissed the
petition in CA-G.R. SP No. 44693. It ruled that the DENR Secretary did not abuse his discretion in issuing
Memorandum Order No. 97-03 since the same was merely a directive to conduct studies on the various options
available to the government for solving the Diwalwal conflict. The assailed memorandum did not conclusively adopt
direct state utilization as official government policy on the matter, but was simply a manifestation of the DENRs
intent to consider it as one of its options, after determining its feasibility through studies. MO 97-03 was only the
initial step in the ladder of administrative process and did not, as yet, fix any obligation, legal relationship or right. It
was thus premature for petitioner to claim that its constitutionally-protected rights under EP No. 133 have been
encroached upon, much less, violated by its issuance.
Additionally, the appellate court pointed out that petitioners rights under EP No. 133 are not inviolable,
sacrosanct or immutable. Being in the nature of a privilege granted by the State, the permit can be revoked,
amended or modified by the Chief Executive when the national interest so requires. The Court of Appeals, however,
declined to rule on the validity of the OTPs, reasoning that said issue was within the exclusive jurisdiction of the
RPA.
Petitioner filed a motion for reconsideration of the above decision, which was denied for lack of merit on
August 19, 1998.[14]
Hence this petition, raising the following errors:
I. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR, AND HAS
DECIDED A QUESTION OF SUBSTANCE NOT THERETOFORE DETERMINED BY THIS
HONORABLE SUPREME COURT, OR HAS DECIDED IT IN A WAY PROBABLY NOT IN
ACCORD WITH LAW OR WITH APPLICABLE DECISIONS OF THIS HONORABLE COURT IN
UPHOLDING THE QUESTIONED ACTS OF RESPONDENT DENR SECRETARY WHICH ARE
IN VIOLATION OF MINING LAWS AND IN DEROGATION OF PETITIONERS VESTED RIGHTS
OVER THE AREA COVERED BY ITS EP NO. 133;
II. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR IN HOLDING THAT
AN ACTION ON THE VALIDITY OF ORE TRANSPORT PERMIT (OTP) IS VESTED IN THE
REGIONAL PANEL OF ARBITRATORS.[15]
In a resolution dated September 11, 2000, the appealed Consolidated Mines cases, docketed as G.R. Nos.
132475 and 132528, were referred to the Court of Appeals for proper disposition pursuant to Rule 43 of the 1997
Rules of Civil Procedure.[16] These cases, which were docketed as CA-G.R. SP Nos. 61215 and 61216, are still
pending before the Court of Appeals.
In the first assigned error, petitioner insists that the Court of Appeals erred when it concluded that the assailed
memorandum order did not adopt the direct state utilization scheme in resolving the Diwalwal dispute. On the
contrary, petitioner submits, said memorandum order dictated the said recourse and, in effect, granted
management or operating agreements as well as provided for profit sharing arrangements to illegal small-scale
miners.
According to petitioner, MO 97-03 was issued to preempt the resolution of the Consolidated Mines cases. The
direct state utilization scheme espoused in the challenged memorandum is nothing but a legal shortcut, designed
to divest petitioner of its vested right to the gold rush area under its EP No. 133.
We are not persuaded.
We agree with the Court of Appeals ruling that the challenged MO 97-03 did not conclusively adopt direct
state utilization as a policy in resolving the Diwalwal dispute. The terms of the memorandum clearly indicate that
what was directed thereunder was merely a study of this option and nothing else. Contrary to petitioners contention,
it did not grant any management/operating or profit-sharing agreement to small-scale miners or to any party, for
that matter, but simply instructed the DENR officials concerned to undertake studies to determine its feasibility. As
the Court of Appeals extensively discussed in its decision:
x x x under the Memorandum Order, the State still had to study prudently and exhaustively the various options
available to it in rationalizing the explosive and ever perilous situation in the area, the debilitating adverse effects
of mining in the community and at the same time, preserve and enhance the safety of the mining operations and
ensure revenues due to the government from the development of the mineral resources and the exploitation
thereof. The government was still in earnest search of better options that would be fair and just to all parties
concerned, including, notably, the Petitioner. The direct state utilization of the mineral resources in the area was
only one of the options of the State. Indeed, it is too plain to see, x x x that before the State will settle on an
option, x x x an extensive and intensive study of all the facets of a direct state exploitation was directed by the
Public Respondent DENR Secretary. And even if direct state exploitation was opted by the government, the
DENR still had to promulgate rules and regulations to implement the same x x x, in coordination with the other
concerned agencies of the government.[17]
Consequently, the petition was premature. The said memorandum order did not impose any obligation on
the claimants or fix any legal relation whatsoever between and among the parties to the dispute.At this stage,
petitioner can show no more than a mere apprehension that the State, through the DENR, would directly take over
the mines after studies point to its viability. But until the DENR actually does so and petitioners fears turn into
reality, no valid objection can be entertained against MO 97-03 on grounds which are purely speculative and
anticipatory.[18]
 With respect to the alleged vested rights claimed by petitioner, it is well to note that the same is invariably
based on EP No. 133, whose validity is still being disputed in the Consolidated Mines cases. A reading of the
appealed MAB decision reveals that the continued efficacy of EP No. 133 is one of the issues raised in said cases,
with respondents therein asserting that Marcopper cannot legally assign the permit which purportedly had
expired. In other words, whether or not petitioner actually has a vested right over Diwalwal under EP No. 133 is
still an indefinite and unsettled matter. And until a positive pronouncement is made by the appellate court in the
Consolidated Mines cases, EP No. 133 cannot be deemed as a source of any conclusive rights that can be impaired
by the issuance of MO 97-03.
Similarly, there is no merit in petitioners assertion that MO 97-03 sanctions violation of mining laws by
allowing illegal miners to enter into mining agreements with the State. Again, whether or not respondent BCMC
and the other mining entities it represents are conducting illegal mining activities is a factual matter that has yet to
be finally determined in the Consolidated Mines cases. We cannot rightfully conclude at this point that respondent
BCMC and the other mining firms are illegitimate mining operators. Otherwise, we would be preempting the
resolution of the cases which are still pending before the Court of Appeals.[19]
Petitioners reliance on the Apex Mining case to justify its rights under E.P. No. 133 is misplaced. For one,
the said case was litigated solely between Marcopper and Apex Mining Corporation and cannot thus be deemed
binding and conclusive on respondent BCMC and the other mining entities presently involved. While petitioner may
be regarded as Marcoppers successor to EP No. 133 and therefore bound by the judgment rendered in the Apex
Mining case, the same cannot be said of respondent BCMC and the other oppositor mining firms, who were not
impleaded as parties therein.
Neither can the Apex Mining case foreclose any question pertaining to the continuing validity of EP No. 133
on grounds which arose after the judgment in said case was promulgated. While it is true that the Apex Mining case
settled the issue of who between Apex and Marcopper validly acquired mining rights over the disputed area by
availing of the proper procedural requisites mandated by law, it certainly did not deal with the question raised by
the oppositors in the Consolidated Mines cases, i.e. whether EP No. 133 had already expired and remained
valid subsequent to its transfer by Marcopper to petitioner.Besides, as clarified in our decision in the Apex
Mining case:
x x x is conclusive only between the parties with respect to the particular issue herein raised and under the set of
circumstances herein prevailing. In no case should the decision be considered as a precedent to resolve or settle
claims of persons/entities not parties hereto. Neither is it intended to unsettle rights of persons/entities which
have been acquired or which may have accrued upon reliance on laws passed by appropriate agencies.[20]
Clearly then, the Apex Mining case did not invest petitioner with any definite right to the Diwalwal mines which
it could now set up against respondent BCMC and the other mining groups.
Incidentally, it must likewise be pointed out that under no circumstances may petitioners rights under EP No.
133 be regarded as total and absolute. As correctly held by the Court of Appeals in its challenged decision, EP No.
133 merely evidences a privilege granted by the State, which may be amended, modified or rescinded when the
national interest so requires. This is necessarily so since the exploration, development and utilization of the
countrys natural mineral resources are matters impressed with great public interest. Like timber permits, mining
exploration permits do not vest in the grantee any permanent or irrevocable right within the purview of the non-
impairment of contract and due process clauses of the Constitution,[21] since the State, under its all-encompassing
police power, may alter, modify or amend the same, in accordance with the demands of the general welfare.[22]
Additionally, there can be no valid opposition raised against a mere study of an alternative which the State,
through the DENR, is authorized to undertake in the first place. Worth noting is Article XII, Section 2, of the 1987
Constitution, which specifically provides:
SEC. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by
the State. With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural resources shall be under the full control and
supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint
venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-
five years, renewable for not more than twenty-five years, and under such terms and conditions as may be
provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the grant. (Underscoring ours)
Likewise, Section 4, Chapter II of the Philippine Mining Act of 1995 states:
SEC. 4. Ownership of Mineral Resources. - Mineral Resources are owned by the State and the exploration,
development, utilization, and processing thereof shall be under its full control and supervision. The State may
directly undertake such activities or it may enter into mineral agreements with contractors. (Underscoring ours)
Thus, the State may pursue the constitutional policy of full control and supervision of the exploration,
development and utilization of the countrys natural mineral resources, by either directly undertaking the same or
by entering into agreements with qualified entities. The DENR Secretary acted within his authority when he ordered
a study of the first option, which may be undertaken consistently in accordance with the constitutional policy
enunciated above. Obviously, the State may not be precluded from considering a direct takeover of the mines, if it
is the only plausible remedy in sight to the gnawing complexities generated by the gold rush. As implied earlier, the
State need be guided only by the demands of public interest in settling for this option, as well as its material and
logistic feasibility.
In this regard, petitioners imputation of bad faith on the part of the DENR Secretary when the latter issued
MO 97-03 is not well-taken. The avowed rationale of the memorandum order is clearly and plainly stated in its
whereas clauses.[23] In the absence of any concrete evidence that the DENR Secretary violated the law or abused
his discretion, as in this case, he is presumed to have regularly issued the memorandum with a lawful intent and
pursuant to his official functions.
Given these considerations, petitioners first assigned error is baseless and premised on tentative
assumptions. Petitioner cannot claim any absolute right to the Diwalwal mines pending resolution of the
Consolidated Mines cases, much less ask us to assume, at this point, that respondent BCMC and the other mining
firms are illegal miners. These factual issues are to be properly threshed out in CA G.R. SP Nos. 61215 and 61216,
which have yet to be decided by the Court of Appeals. Any objection raised against MO 97-03 is likewise premature
at this point, inasmuch as it merely ordered a study of an option which the State is authorized by law to undertake.
 We see no need to rule on the matter of the OTPs, considering that the grounds invoked by petitioner for WHEREAS, the adverse environmental, safety, health, and sanitation conditions in the area resulting from the
invalidating the same are inextricably linked to the issues raised in the Consolidated Mines cases. mining operations are major concerns that need to be addressed immediately;
WHEREAS, tenurial and mining rights in the area have been characterized by conflicting claims which have to be
WHEREFORE, in view of the foregoing, the instant petition is DENIED. The decision of the Court of Appeals addressed in an atmosphere of peaceful coexistence among the various stakeholders, and within the framework
in CA-G.R. SP No. 44693 is AFFIRMED. of the law, so that a comprehensive development of the area can be carried out;
SO ORDERED. WHEREAS, a rationalized gold-mining operation in the area offers the opportunity of putting in place viable
measures that would ensure the sustained livelihood of the stakeholders therein, and would optimize the benefits
Davide, Jr., C.J., (Chairman), and Kapunan, J., concur. which may be derived from the irreplaceable mineral resources, in accordance with the sustainable development
Puno, J., on official leave. strategy of the government;
WHEREAS, appropriate measures have to be set in place so that the necessary sanctions and penalties can be
[1] Rollo, pp. 131-132. imposed, and the appropriate compensation schemes may be applied in cases involving environmental
[2] G.R. No. 92605, 199 SCRA 278 (1991). degradation and also for the purpose of preventing its further occurrence;
[3] R.A. No. 7076, Section 4.
WHEREAS, the government must take adequate measures within the framework of the law to protect the
[4] Ibid., at Section 24.
livelihood of the people; minimize, if not eliminate, the adverse effects of mining in the community; enhance
[5] Id., at Section 5.
safety in mining operations, and ensure that revenues due the government from the development of mineral
[6] Id., at Section 9.
resources are properly paid and collected;
[7] CA Rollo, p. 187.
WHEREAS, the government still has to study prudently and exhaustively the various options available to it in
[8] Rollo, p. 128.
rationalizing the Diwalwal Gold Rush Area situation, as well as seek better options, if any, in coming out with a
[9] Ibid., p.174.
rationalization plan that would be just and fair to all concerned parties in the Diwalwal Gold Rush Area; x x x.
[10] Id., pp. 177-179.
[11] Id., p.178.
[12] Id., pp. 232-257.
[13] Mr. Justice Romeo J. Callejo, Sr., ponente; Messrs. Justices Quirino D. Abad-Santos, Jr. and Eduardo G.

Montenegro, concurring; Mr. Justice Omar U. Amin and Mme. Justice Angelina Sandoval-Gutierrez, dissenting.
[14] Rollo, p. 122.
[15] Id., pp. 27-28.
[16] Per Resolution of the Second Division of the Supreme Court dated September 11, 2000.
[17] Rollo, pp. 85-86.
[18] See Mariano v. Commission on Elections, 242 SCRA 211, 221 (1995) and Board of Optometry v. Colet, 260

SCRA 88, 104 (1996), citing Garcia v. Executive Secretary, 204 SCRA 516 (1991).
[19] See Sta. Rosa Mining Co., Inc. v. Leido, Jr., 156 SCRA 1 (1987). In this analogous case, the Court refused to

recognize the continuing validity of petitioners mining claim, due to the pendency of an appeal to the Office of the
President from a decision of the Secretary of Natural Resources, upholding the Director of Mines ruling that said
mining claim was cancelled and abandoned for failure to comply with legal requirements under applicable laws.
[20] Minutes of the Court En Banc, November 26, 1992.
[21] See Sta. Ines Melale Forest Products Corporation v. Macaraig, Jr., 299 SCRA 491, 514-515 (1998), citing

Tan v. Director of Forestry, 125 SCRA 302, 325-326 (1983); Oposa v. Factoran, 224 SCRA 792, 811-812 (1993).
[22] See Ysmael, Jr. & Co., Inc. v. Deputy Executive Secretary, 190 SCRA 673, 684 (1990), citing Tan v. Director

of Forestry, supra; Miners Association of the Philippines, Inc. v. Factoran, 240 SCRA 100, 118-120 (1995) and
cases cited therein.
[23] WHEREAS, tens of thousands of miners, local entrepreneurs, and service providers are earning their

livelihood from the mining operations in the Diwalwal Gold Rush Area in Mt. Diwata, Monkayo, Davao Del Norte;
WHEREAS, the advent of gold mining in the area contributed substantially in arresting the insurgency problem in
the province, and in improving the local and regional economy;

[G.R. No. 130230. April 15, 2005]
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner, vs. DANTE O. GARIN, respondent.
DECISION
CHICO-NAZARIO, J.:
At issue in this case is the validity of Section 5(f) of Republic Act No. 7924 creating the Metropolitan Manila
Development Authority (MMDA), which authorizes it to confiscate and suspend or revoke drivers licenses in the
enforcement of traffic laws and regulations.
The issue arose from an incident involving the respondent Dante O. Garin, a lawyer, who was issued a traffic
violation receipt (TVR) and his drivers license confiscated for parking illegally along Gandara Street, Binondo,
Manila, on 05 August 1995. The following statements were printed on the TVR:
YOU ARE HEREBY DIRECTED TO REPORT TO THE MMDA TRAFFIC OPERATIONS CENTER PORT AREA
MANILA AFTER 48 HOURS FROM DATE OF APPREHENSION FOR DISPOSITION/APPROPRIATE ACTION
THEREON. CRIMINAL CASE SHALL BE FILED FOR FAILURE TO REDEEM LICENSE AFTER 30 DAYS.
VALID AS TEMPORARY DRIVERS LICENSE FOR SEVEN DAYS FROM DATE OF APPREHENSION.[1]
Shortly before the expiration of the TVRs validity, the respondent addressed a letter[2] to then MMDA
Chairman Prospero Oreta requesting the return of his drivers license, and expressing his preference for his case
to be filed in court.
Receiving no immediate reply, Garin filed the original complaint [3] with application for preliminary injunction
in Branch 260 of the Regional Trial Court (RTC) of Paraaque, on 12 September 1995, contending that, in the
absence of any implementing rules and regulations, Sec. 5(f) of Rep. Act No. 7924 grants the MMDA unbridled
discretion to deprive erring motorists of their licenses, pre-empting a judicial determination of the validity of the
deprivation, thereby violating the due process clause of the Constitution. The respondent further contended that
the provision violates the constitutional prohibition against undue delegation of legislative authority, allowing as it
does the MMDA to fix and impose unspecified and therefore unlimited - fines and other penalties on erring
motorists.
In support of his application for a writ of preliminary injunction, Garin alleged that he suffered and continues
to suffer great and irreparable damage because of the deprivation of his license and that, absent any implementing
rules from the Metro Manila Council, the TVR and the confiscation of his license have no legal basis.
For its part, the MMDA, represented by the Office of the Solicitor General, pointed out that the powers granted
to it by Sec. 5(f) of Rep. Act No. 7924 are limited to the fixing, collection and imposition of fines and penalties for
traffic violations, which powers are legislative and executive in nature; the judiciary retains the right to determine
the validity of the penalty imposed. It further argued that the doctrine of separation of powers does not preclude
admixture of the three powers of government in administrative agencies.[4]
The MMDA also refuted Garins allegation that the Metro Manila Council, the governing board and policy
making body of the petitioner, has as yet to formulate the implementing rules for Sec. 5(f) of Rep. Act No. 7924
and directed the courts attention to MMDA Memorandum Circular No. TT-95-001 dated 15 April 1995. Respondent
Garin, however, questioned the validity of MMDA Memorandum Circular No. TT-95-001, as he claims that it was
passed by the Metro Manila Council in the absence of a quorum.
Judge Helen Bautista-Ricafort issued a temporary restraining order on 26 September 1995, extending the
validity of the TVR as a temporary drivers license for twenty more days. A preliminary mandatory injunction was
granted on 23 October 1995, and the MMDA was directed to return the respondents drivers license.
On 14 August 1997, the trial court rendered the assailed decision [5] in favor of the herein respondent and
held that:
a. There was indeed no quorum in that First Regular Meeting of the MMDA Council held on March 23, 1995,
hence MMDA Memorandum Circular No. TT-95-001, authorizing confiscation of drivers licenses upon issuance
of a TVR, is void ab initio.
b. The summary confiscation of a drivers license without first giving the driver an opportunity to be heard;
depriving him of a property right (drivers license) without DUE PROCESS; not filling (sic) in Court the complaint
of supposed traffic infraction, cannot be justified by any legislation (and is) hence unconstitutional.
WHEREFORE, the temporary writ of preliminary injunction is hereby made permanent; th(e) MMDA is directed to
return to plaintiff his drivers license; th(e) MMDA is likewise ordered to desist from confiscating drivers license
without first giving the driver the opportunity to be heard in an appropriate proceeding.
In filing this petition,[6] the MMDA reiterates and reinforces its argument in the court below and contends that
a license to operate a motor vehicle is neither a contract nor a property right, but is a privilege subject to reasonable
regulation under the police power in the interest of the public safety and welfare. The petitioner further argues that
revocation or suspension of this privilege does not constitute a taking without due process as long as the licensee
is given the right to appeal the revocation.
To buttress its argument that a licensee may indeed appeal the taking and the judiciary retains the power to
determine the validity of the confiscation, suspension or revocation of the license, the petitioner points out that
under the terms of the confiscation, the licensee has three options:
1. To voluntarily pay the imposable fine,
2. To protest the apprehension by filing a protest with the MMDA Adjudication Committee, or
3. To request the referral of the TVR to the Public Prosecutors Office.
The MMDA likewise argues that Memorandum Circular No. TT-95-001 was validly passed in the presence
of a quorum, and that the lower courts finding that it had not was based on a misapprehension of facts, which the
petitioner would have us review. Moreover, it asserts that though the circular is the basis for the issuance of TVRs,
the basis for the summary confiscation of licenses is Sec. 5(f) of Rep. Act No. 7924 itself, and that such power is
self-executory and does not require the issuance of any implementing regulation or circular.
 Meanwhile, on 12 August 2004, the MMDA, through its Chairman Bayani Fernando, implemented
Memorandum Circular No. 04, Series of 2004, outlining the procedures for the use of the Metropolitan Traffic Ticket
(MTT) scheme. Under the circular, erring motorists are issued an MTT, which can be paid at any Metrobank branch.
Traffic enforcers may no longer confiscate drivers licenses as a matter of course in cases of traffic violations. All
motorists with unredeemed TVRs were given seven days from the date of implementation of the new system to
pay their fines and redeem their license or vehicle plates. [7]
It would seem, therefore, that insofar as the absence of a prima facie case to enjoin the petitioner from
confiscating drivers licenses is concerned, recent events have overtaken the Courts need to decide this case,
which has been rendered moot and academic by the implementation of Memorandum Circular No. 04, Series of
2004.
The petitioner, however, is not precluded from re-implementing Memorandum Circular No. TT-95-001, or any
other scheme, for that matter, that would entail confiscating drivers licenses. For the proper implementation,
therefore, of the petitioners future programs, this Court deems it appropriate to make the following observations:
1. A license to operate a motor vehicle is a privilege that the state may withhold in the exercise of its police power.
The petitioner correctly points out that a license to operate a motor vehicle is not a property right, but a
privilege granted by the state, which may be suspended or revoked by the state in the exercise of its police power,
in the interest of the public safety and welfare, subject to the procedural due process requirements. This is
consistent with our rulings in Pedro v. Provincial Board of Rizal[8] on the license to operate a cockpit, Tan v. Director
of Forestry[9] and Oposa v. Factoran[10] on timber licensing agreements, and Surigao Electric Co., Inc. v.
Municipality of Surigao[11] on a legislative franchise to operate an electric plant.
Petitioner cites a long list of American cases to prove this point, such as State ex. Rel. Sullivan,[12] which
states in part that, the legislative power to regulate travel over the highways and thoroughfares of the state for the
general welfare is extensive. It may be exercised in any reasonable manner to conserve the safety of travelers and
pedestrians. Since motor vehicles are instruments of potential danger, their registration and the licensing of their
operators have been required almost from their first appearance. The right to operate them in public places is not
a natural and unrestrained right, but a privilege subject to reasonable regulation, under the police power, in the
interest of the public safety and welfare. The power to license imports further power to withhold or to revoke such
license upon noncompliance with prescribed conditions.
Likewise, the petitioner quotes the Pennsylvania Supreme Court in Commonwealth v. Funk,[13] to the effect
that: Automobiles are vehicles of great speed and power. The use of them constitutes an element of danger to
persons and property upon the highways. Carefully operated, an automobile is still a dangerous instrumentality,
but, when operated by careless or incompetent persons, it becomes an engine of destruction. The Legislature, in
the exercise of the police power of the commonwealth, not only may, but must, prescribe how and by whom motor
vehicles shall be operated on the highways. One of the primary purposes of a system of general regulation of the
subject matter, as here by the Vehicle Code, is to insure the competency of the operator of motor vehicles. Such
a general law is manifestly directed to the promotion of public safety and is well within the police power.
The common thread running through the cited cases is that it is the legislature, in the exercise of police
power, which has the power and responsibility to regulate how and by whom motor vehicles may be operated on
the state highways.
2. The MMDA is not vested with police power.
In Metro Manila Development Authority v. Bel-Air Village Association, Inc.,[14] we categorically stated that
Rep. Act No. 7924 does not grant the MMDA with police power, let alone legislative power, and that all its functions
are administrative in nature.
The said case also involved the herein petitioner MMDA which claimed that it had the authority to open a
subdivision street owned by the Bel-Air Village Association, Inc. to public traffic because it is an agent of the state
endowed with police power in the delivery of basic services in Metro Manila. From this premise, the MMDA argued
that there was no need for the City of Makati to enact an ordinance opening Neptune Street to the public.
Tracing the legislative history of Rep. Act No. 7924 creating the MMDA, we concluded that the MMDA is not
a local government unit or a public corporation endowed with legislative power, and, unlike its predecessor, the
Metro Manila Commission, it has no power to enact ordinances for the welfare of the community. Thus, in the
absence of an ordinance from the City of Makati, its own order to open the street was invalid.
We restate here the doctrine in the said decision as it applies to the case at bar: police power, as an inherent
attribute of sovereignty, is the power vested by the Constitution in the legislature to make, ordain, and establish all
manner of wholesome and reasonable laws, statutes and ordinances, either with penalties or without, not
repugnant to the Constitution, as they shall judge to be for the good and welfare of the commonwealth, and for the
subjects of the same.
Having been lodged primarily in the National Legislature, it cannot be exercised by any group or body of
individuals not possessing legislative power. The National Legislature, however, may delegate this power to the
president and administrative boards as well as the lawmaking bodies of municipal corporations or local government
units (LGUs). Once delegated, the agents can exercise only such legislative powers as are conferred on them by
the national lawmaking body.
Our Congress delegated police power to the LGUs in the Local Government Code of 1991. [15] A local
government is a political subdivision of a nation or state which is constituted by law and has substantial control of
local affairs.[16] Local government units are the provinces, cities, municipalities and barangays, which exercise
police power through their respective legislative bodies.
Metropolitan or Metro Manila is a body composed of several local government units. With the passage of
Rep. Act No. 7924 in 1995, Metropolitan Manila was declared as a "special development and administrative region"
and the administration of "metro-wide" basic services affecting the region placed under "a development authority"
referred to as the MMDA. Thus:
. . . [T]he powers of the MMDA are limited to the following acts: formulation, coordination, regulation,
implementation, preparation, management, monitoring, setting of policies, installation of a system and
administration. There is no syllable in R. A. No. 7924 that grants the MMDA police power, let alone
legislative power. Even the Metro Manila Council has not been delegated any legislative power. Unlike the
legislative bodies of the local government units, there is no provision in R. A. No. 7924 that empowers the
MMDA or its Council to "enact ordinances, approve resolutions and appropriate funds for the general
welfare" of the inhabitants of Metro Manila. The MMDA is, as termed in the charter itself, a "development
authority." It is an agency created for the purpose of laying down policies and coordinating with the
various national government agencies, people's organizations, non-governmental organizations and the
private sector for the efficient and expeditious delivery of basic services in the vast metropolitan area. All
its functions are administrative in nature and these are actually summed up in the charter itself, viz:
Sec. 2. Creation of the Metropolitan Manila Development Authority. -- -x x x.
The MMDA shall perform planning, monitoring and coordinative functions, and in the process exercise
regulatory and supervisory authority over the delivery of metro-wide services within Metro Manila, without
diminution of the autonomy of the local government units concerning purely local matters.
Clearly, the MMDA is not a political unit of government. The power delegated to the MMDA is that given to the
Metro Manila Council to promulgate administrative rules and regulations in the implementation of the MMDAs
functions. There is no grant of authority to enact ordinances and regulations for the general welfare of the
inhabitants of the metropolis. [17] (footnotes omitted, emphasis supplied)
Therefore, insofar as Sec. 5(f) of Rep. Act No. 7924 is understood by the lower court and by the petitioner to
grant the MMDA the power to confiscate and suspend or revoke drivers licenses without need of any other
legislative enactment, such is an unauthorized exercise of police power.
3. Sec. 5(f) grants the MMDA with the duty to enforce existing traffic rules and regulations.
Section 5 of Rep. Act No. 7924 enumerates the Functions and Powers of the Metro Manila Development
Authority. The contested clause in Sec. 5(f) states that the petitioner shall install and administer a single ticketing
system, fix, impose and collect fines and penalties for all kinds of violations of traffic rules and regulations, whether
moving or nonmoving in nature, and confiscate and suspend or revoke drivers licenses in the enforcement of such
traffic laws and regulations, the provisions of Rep. Act No. 4136[18] and P.D. No. 1605[19] to the contrary
notwithstanding, and that (f)or this purpose, the Authority shall enforce all traffic laws and regulations in Metro
Manila, through its traffic operation center, and may deputize members of the PNP, traffic enforcers of local
government units, duly licensed security guards, or members of non-governmental organizations to whom may be
delegated certain authority, subject to such conditions and requirements as the Authority may impose.
Thus, where there is a traffic law or regulation validly enacted by the legislature or those agencies to whom
legislative powers have been delegated (the City of Manila in this case), the petitioner is not precluded and in fact
is duty-bound to confiscate and suspend or revoke drivers licenses in the exercise of its mandate of transport and
traffic management, as well as the administration and implementation of all traffic enforcement operations, traffic
engineering services and traffic education programs.[20]
This is consistent with our ruling in Bel-Air that the MMDA is a development authority created for the purpose
of laying down policies and coordinating with the various national government agencies, peoples organizations,
non-governmental organizations and the private sector, which may enforce, but not enact, ordinances.
This is also consistent with the fundamental rule of statutory construction that a statute is to be read in a
manner that would breathe life into it, rather than defeat it,[21] and is supported by the criteria in cases of this nature
that all reasonable doubts should be resolved in favor of the constitutionality of a statute. [22]
A last word. The MMDA was intended to coordinate services with metro-wide impact that transcend local
political boundaries or would entail huge expenditures if provided by the individual LGUs, especially with regard to
transport and traffic management,[23] and we are aware of the valiant efforts of the petitioner to untangle the
increasingly traffic-snarled roads of Metro Manila. But these laudable intentions are limited by the MMDAs enabling
law, which we can but interpret, and petitioner must be reminded that its efforts in this respect must be authorized
by a valid law, or ordinance, or regulation arising from a legitimate source.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
[1] Records, p. 10.
[2] Id., p. 11.
[3] Id., p. 1.
[4] Memorandum for Defendants, Records, pp. 178 -185.
[5] Id., pp. 187-190, penned by Hon. Helen Bautista-Ricafort.
[6] Records, pp. 197-225.
[7] Sec. 7, Mem. Circ. No. 04, Series of 2004.
[8] 56 Phil 123 (1931).
[9] G.R. No. L-24548, 27 October 1983, 125 SCRA 302.
[10] G.R. No. 101083, 30 July 1993, 224 SCRA 792.
[11] G.R. No. L-22766, 30 August 1968, 24 SCRA 898.
[12] 63 P. 2d 653, 108 ALR 1156, 1159.
[13] 323 Pa. 390, 186 A. 65 (108 ALR 1161).
[14] G.R. No. 135962, 27 March 2000, 328 SCRA 836, penned by Justice Reynato S. Puno.
[15] Sec. 16 of Book I of the Local Government Code of 1991 states:
General Welfare.-Every local government unit shall exercise the powers expressly granted, those necessarily
implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general welfare. Within their respective
territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology,
encourage and support the development of appropriate and self-reliant scientific and technological capabilities,
improve public morals, enhance economic prosperity and social justice, promote full employment among their
residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants.
[16] Supra, Note 18, p. 844, citing Bernas, The 1987 Constitution of the Philippines, A Commentary, pp. 95-98
[1996], citing UP Law Center Revision Project, Part II, 712 [1970] citing Sady, Improvement of Local Government
Administration for Development Purpose, Journal of Local Administration Overseas 135 [July 1962].
[17] Ibid., pp. 849-860.
[18] Entitled An Act to Compile the Laws Relative to Land Transportation and Traffic Rules, to Create a Land
Transportation Commission and for Other Purposes, approved on 20 June 1964. Sec. 29 thereof states:
Confiscation of drivers license.- Law enforcement and peace officers duly designated by the Commissioner shall,
in apprehending any driver for violations of this Act or of any regulations issued pursuant thereto, or of local traffic
rules and regulations, confiscate the license of the driver concerned and issue a receipt prescribed and issued by
the Commission therefore which shall authorize the driver to operate a motor vehicle for a period not exceeding
seventy-two hours from the time and date of issue of said receipt. The period so fixed in the receipt shall not be
extended, and shall become invalid thereafter. Failure of the driver to settle his case within fifteen days from the July 1987 152 SCRA 540; Peralta v. COMELEC, G.R. No. L-47791, 11 March 1978, 82 SCRA 55; People v.
date of apprehension will cause suspension and revocation of his license. (emphasis supplied) Vera, GR No. 45685, 65 Phil 56 [1937].)
[19] Entitled Granting the Metropolitan Manila Commission Certain Powers Related to Traffic Management and [23] Section 3(b), Republic Act No. 7924.

Control in Metropolitan Manila, Providing Penalties, and for Other Purposes, dated 21 November 1978.
SEC. 5.- In case of traffic violations, the drivers license shall not be confiscated but the erring driver shall be
immediately issued a traffic citation ticket prescribed by the Metropolitan Manila Commission which shall state
the violation committed, the amount of fine imposed for the violation and an advice that he can make payment to
the city or municipal treasurer where the violation was committed or to the Philippine National Bank or Philippine
Veterans Bank or their branches within seven days from the date of issuance of the citation ticket. (emphasis
supplied)
[20] Section 3(b), Rep. Act No. 7924.
[21] Thus, in Briad Agro Development Corporation v. dela Serna, (G.R. No. 82805, 29 June 1989, 174 SCRA 524)

we upheld the grant of concurrent jurisdiction between the Secretary of Labor or its Regional Directors and the
Labor Arbiters to pass upon money claims, among other cases, the provisions of Article 217 of this Code to the
contrary notwithstanding, as enunciated in Executive Order No. 111. Holding that E.O. 111 was a curative law
intended to widen workers access to the Government for redress of grievances, we held,the Executive Order
vests in Regional Directors jurisdiction, [t]he provisions of Article 217 of this Code to the contrary notwithstanding,
it would have rendered such a proviso - and the amendment itself - useless to say that they (Regional Directors)
retained the self-same restricted powers, despite such an amendment. It is fundamental that a statute is to be
read in a manner that would breathe life into it, rather than defeat it. (See also Philtread Workers Union v.
Confessor, G.R. No. 117169, 12 March 1997, 269 SCRA 393.)
[22] In Heirs of Ardona v. Reyes, (G.R. No. 60549, 26 October 1983, 125 SCRA 221) we upheld the

constitutionality of Presidential Decree No. 564, the Revised Charter of the Philippine Tourism Authority, and
Proclamation No. 2052 declaring certain municipalities in the province of Cebu as tourist zones. The law granted
the Philippine Tourism authority the right to expropriate 282 hectares of land to establish a resort complex
notwithstanding the claim that certificates of land transfer and emancipation patents had already been issued to
them thereby making the lands expropriated within the coverage of the land reform area under Presidential
Decree No. 2, and that the agrarian reform program occupies a higher level in the order of priorities than other
State policies like those relating to the health and physical well-being of the people, and that property already
taken for public use may not be taken for another public use. We held that, (t)he petitioners have failed to
overcome the burden of anyone trying to strike down a statute or decree whose avowed purpose is the legislative
perception of the public good. A statute has in its favor the presumption of validity. All reasonable doubts should
be resolved in favor of the constitutionality of a law. The courts will not set aside a law as violative of the
Constitution except in a clear case (People v. Vera, 65 Phil. 56). And in the absence of factual findings or
evidence to rebut the presumption of validity, the presumption prevails (Ermita-Malate Hotel, etc. v. Mayor of
Manila, 20 SCRA 849; Morfe v. Mutuc, 22 SCRA 424).
In the same manner, we upheld in Dumlao v. COMELEC (G.R. No. L-52245, 22 January 1980, 95 SCRA 392)
the first paragraph of Section 4 of Batas Pambansa Bilang 52 providing that any retired elective provincial, city or
municipal official, who has received payment of the retirement benefits and who shall have been 65 years of age
at the commencement of the term of office to which he seeks to be elected is disqualified to run for the same
elective local office from which he has retired. Invoking the need for the emergence of younger blood in local
politics, we affirmed that the constitutional guarantee is not violated by a reasonable classification based upon
substantial distinctions, where the classification is germane to the purpose of the law and applies to all those
belonging to the same class. (See also Tropical Homes, Inc, v. National Housing Authority, G.R. No. L-48672, 31
 EN BANC
drugstores compliance with the law; promulgate the implementing rules and regulations for the effective
CARLOS SUPERDRUG CORP., G.R. No. 166494 implementation of the law; and prosecute and revoke the licenses of erring drugstore establishments.
doing business under the name
and style Carlos Superdrug, Present: The antecedents are as follows:
ELSIE M. CANO, doing business On February 26, 2004, R.A. No. 9257, amending R.A. No. 7432, [3] was signed into law by President
under the name and style Advance PUNO, C.J.,
Drug, Dr. SIMPLICIO L. YAP, JR., QUISUMBING,* Gloria Macapagal-Arroyo and it became effective on March 21, 2004. Section 4(a) of the Act states:
doing business under the name and YNARES-SANTIAGO,
style City Pharmacy, MELVIN S. SANDOVAL-GUTIERREZ,** SEC. 4. Privileges for the Senior Citizens. The senior citizens shall be entitled to the following:
DELA SERNA, doing business under CARPIO,
the name and style Botica dela Serna, AUSTRIA-MARTINEZ, (a) the grant of twenty percent (20%) discount from all establishments relative to the
and LEYTE SERV-WELL CORP., CORONA, utilization of services in hotels and similar lodging establishments, restaurants and recreation
doing business under the name and CARPIO MORALES, centers, and purchase of medicines in all establishments for the exclusive use or enjoyment of
style Leyte Serv-Well Drugstore, AZCUNA, senior citizens, including funeral and burial services for the death of senior citizens;
Petitioners, TINGA,
CHICO-NAZARIO, ...
- versus - GARCIA,
VELASCO, JR., and The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax
DEPARTMENT OF SOCIAL NACHURA, JJ. deduction based on the net cost of the goods sold or services rendered: Provided, That the cost
WELFARE and DEVELOPMENT of the discount shall be allowed as deduction from gross income for the same taxable year that the
(DSWD), DEPARTMENT OF Promulgated: discount is granted. Provided, further, That the total amount of the claimed tax deduction net of
HEALTH (DOH), DEPARTMENT value added tax if applicable, shall be included in their gross sales receipts for tax purposes and
OF FINANCE (DOF), DEPARTMENT June 29, 2007 shall be subject to proper documentation and to the provisions of the National Internal Revenue
OF JUSTICE (DOJ), and Code, as amended.[4]
DEPARTMENT OF INTERIOR and
LOCAL GOVERNMENT (DILG),
Respondents. On May 28, 2004, the DSWD approved and adopted the Implementing Rules and Regulations of R.A.
x ---------------------------------------------------------------------------------------- x
No. 9257, Rule VI, Article 8 of which states:
DECISION
Article 8. Tax Deduction of Establishments. The establishment may claim the discounts
granted under Rule V, Section 4 Discounts for Establishments;[5] Section 9, Medical and Dental
AZCUNA, J.: Services in Private Facilities[,][6] and Sections 10[7] and 11[8] Air, Sea and Land Transportation as
tax deduction based on the net cost of the goods sold or services rendered. Provided, That the
This is a petition[1] for Prohibition with Prayer for Preliminary Injunction assailing the constitutionality of cost of the discount shall be allowed as deduction from gross income for the same taxable year
Section 4(a) of Republic Act (R.A.) No. 9257,[2] otherwise known as the Expanded Senior Citizens Act of 2003. that the discount is granted; Provided, further, That the total amount of the claimed tax deduction
net of value added tax if applicable, shall be included in their gross sales receipts for tax purposes
and shall be subject to proper documentation and to the provisions of the National Internal Revenue
Petitioners are domestic corporations and proprietors operating drugstores in the Philippines. Code, as amended; Provided, finally, that the implementation of the tax deduction shall be subject
to the Revenue Regulations to be issued by the Bureau of Internal Revenue (BIR) and approved
Public respondents, on the other hand, include the Department of Social Welfare and Development (DSWD), the by the Department of Finance (DOF).[9]
Department of Health (DOH), the Department of Finance (DOF), the Department of Justice (DOJ), and the
Department of Interior and Local Government (DILG) which have been specifically tasked to monitor the
 A simple illustration might help amplify the points discussed above, as follows:
On July 10, 2004, in reference to the query of the Drug Stores Association of the Philippines (DSAP)
concerning the meaning of a tax deduction under the Expanded Senior Citizens Act, the DOF, through Tax Deduction Tax Credit
Director IV Ma. Lourdes B. Recente, clarified as follows:
Gross Sales x x x x x x x x x x x x
1) The difference between the Tax Credit (under the Old Senior Citizens Act) and
Less : Cost of goods sold x x x x x x x x x x
Tax Deduction (under the Expanded Senior Citizens Act).
Net Sales x x x x x x x x x x x x
1.1. The provision of Section 4 of R.A. No. 7432 (the old Senior Citizens Act) grants twenty
percent (20%) discount from all establishments relative to the utilization of transportation services, Less: Operating Expenses:
hotels and similar lodging establishment, restaurants and recreation centers and purchase of Tax Deduction on Discounts x x x x --
medicines anywhere in the country, the costs of which may be claimed by the private
establishments concerned as tax credit. Other deductions: x x x x x x x x
Net Taxable Income x x x x x x x x x x
Effectively, a tax credit is a peso-for-peso deduction from a taxpayers tax liability due to the
government of the amount of discounts such establishment has granted to a senior citizen. The Tax Due x x x x x x
establishment recovers the full amount of discount given to a senior citizen and hence, the Less: Tax Credit -- ______x x
government shoulders 100% of the discounts granted.
Net Tax Due -- x x
It must be noted, however, that conceptually, a tax credit scheme under the Philippine tax
system, necessitates that prior payments of taxes have been made and the taxpayer is attempting
As shown above, under a tax deduction scheme, the tax deduction on
to recover this tax payment from his/her income tax due. The tax credit scheme under R.A. No.
discounts was subtracted from Net Sales together with other deductions which are considered
7432 is, therefore, inapplicable since no tax payments have previously occurred.
as operating expenses before the Tax Due was computed based on the Net Taxable Income.
On the other hand, under a tax credit scheme, the amount of discounts which is the tax
1.2. The provision under R.A. No. 9257, on the other hand, provides that the
credit item, was deducted directly from the tax due amount.[10]
establishment concerned may claim the discounts under Section 4(a), (f), (g) and (h) as tax
deduction from gross income, based on the net cost of goods sold or services rendered.
Meanwhile, on October 1, 2004, Administrative Order (A.O.) No. 171 or the Policies and Guidelines to
Under this scheme, the establishment concerned is allowed to deduct from gross income, in
computing for its tax liability, the amount of discounts granted to senior citizens. Effectively, the Implement the Relevant Provisions of Republic Act 9257, otherwise known as the Expanded Senior Citizens Act
government loses in terms of foregone revenues an amount equivalent to the marginal tax rate the of 2003[11] was issued by the DOH, providing the grant of twenty percent (20%) discount in the purchase of
said establishment is liable to pay the government. This will be an amount equivalent to 32% of the
twenty percent (20%) discounts so granted. The establishment shoulders the remaining portion of unbranded generic medicines from all establishments dispensing medicines for the exclusive use of the senior
the granted discounts. citizens.
It may be necessary to note that while the burden on [the] government is slightly diminished On November 12, 2004, the DOH issued Administrative Order No 177[12] amending A.O. No. 171. Under A.O. No.
in terms of its percentage share on the discounts granted to senior citizens, the number of potential
177, the twenty percent discount shall not be limited to the purchase of unbranded generic medicines only, but
establishments that may claim tax deductions, have however, been broadened. Aside from the
establishments that may claim tax credits under the old law, more establishments were added shall extend to both prescription and non-prescription medicines whether branded or generic. Thus, it stated that
under the new law such as: establishments providing medical and dental services, diagnostic and
laboratory services, including professional fees of attending doctors in all private hospitals and [t]he grant of twenty percent (20%) discount shall be provided in the purchase of medicines from all establishments
medical facilities, operators of domestic air and sea transport services, public railways and skyways dispensing medicines for the exclusive use of the senior citizens.
and bus transport services.
Petitioners assail the constitutionality of Section 4(a) of the Expanded Senior Citizens Act based on the following
grounds:[13]
1) The law is confiscatory because it infringes Art. III, Sec. 9 of the Constitution
which provides that private property shall not be taken for public use without just compensation;
2) It violates the equal protection clause (Art. III, Sec. 1) enshrined in our
Constitution which states that no person shall be deprived of life, liberty or property without due
process of law, nor shall any person be denied of the equal protection of the laws; and
3) The 20% discount on medicines violates the constitutional guarantee in Article
XIII, Section 11 that makes essential goods, health and other social services available to all people
at affordable cost.[14]
Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes deprivation of private
property. Compelling drugstore owners and establishments to grant the discount will result in a loss of profit and
capital because 1) drugstores impose a mark-up of only 5% to 10% on branded medicines; and 2) the law failed to
provide a scheme whereby drugstores will be justly compensated for the discount.
Examining petitioners arguments, it is apparent that what petitioners are ultimately questioning is the
validity of the tax deduction scheme as a reimbursement mechanism for the twenty percent (20%) discount that
they extend to senior citizens.
Based on the afore-stated DOF Opinion, the tax deduction scheme does not fully reimburse petitioners
for the discount privilege accorded to senior citizens. This is because the discount is treated as a deduction, a tax-
deductible expense that is subtracted from the gross income and results in a lower taxable income. Stated
otherwise, it is an amount that is allowed by law[15] to reduce the income prior to the application of the tax rate to
compute the amount of tax which is due.[16] Being a tax deduction, the discount does not reduce taxes owed on a
peso for peso basis but merely offers a fractional reduction in taxes owed.
Theoretically, the treatment of the discount as a deduction reduces the net income of the private
establishments concerned. The discounts given would have entered the coffers and formed part of the gross sales
of the private establishments, were it not for R.A. No. 9257.
The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private
property for public use or benefit.[17] This constitutes compensable taking for which petitioners would ordinarily
become entitled to a just compensation.
Just compensation is defined as the full and fair equivalent of the property taken from its owner by the
expropriator. The measure is not the takers gain but the owners loss. The word just is used to intensify the meaning
of the word compensation, and to convey the idea that the equivalent to be rendered for the property to be taken
shall be real, substantial, full and ample.[18]
A tax deduction does not offer full reimbursement of the senior citizen discount. As such, it would not
meet the definition of just compensation.[19]
Having said that, this raises the question of whether the State, in promoting the health and welfare of a
special group of citizens, can impose upon private establishments the burden of partly subsidizing a government
program.
The Court believes so.
The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to nation-
building, and to grant benefits and privileges to them for their improvement and well-being as the State considers
them an integral part of our society.[20]
The priority given to senior citizens finds its basis in the Constitution as set forth in the law itself. Thus,
the Act provides:
SEC. 2. Republic Act No. 7432 is hereby amended to read as follows:
SECTION 1. Declaration of Policies and Objectives. Pursuant to Article XV, Section 4 of
the Constitution, it is the duty of the family to take care of its elderly members while the State may
design programs of social security for them. In addition to this, Section 10 in the Declaration of
Principles and State Policies provides: The State shall provide social justice in all phases of national
development. Further, Article XIII, Section 11, provides: The State shall adopt an integrated and
comprehensive approach to health development which shall endeavor to make essential goods,
health and other social services available to all the people at affordable cost. There shall be priority
for the needs of the underprivileged sick, elderly, disabled, women and children. Consonant with
these constitutional principles the following are the declared policies of this Act:
 (f) To recognize the important role of the private sector in the improvement of the
welfare of senior citizens and to actively seek their partnership.[21]
To implement the above policy, the law grants a twenty percent discount to senior citizens for medical and dental
services, and diagnostic and laboratory fees; admission fees charged by theaters, concert halls, circuses, carnivals,
and other similar places of culture, leisure and amusement; fares for domestic land, air and sea travel; utilization
of services in hotels and similar lodging establishments, restaurants and recreation centers; and purchases of
medicines for the exclusive use or enjoyment of senior citizens. As a form of reimbursement, the law provides that
business establishments extending the twenty percent discount to senior citizens may claim the discount as a tax
deduction.
The law is a legitimate exercise of police power which, similar to the power of eminent domain, has general welfare
for its object. Police power is not capable of an exact definition, but has been purposely veiled in general terms to
underscore its comprehensiveness to meet all exigencies and provide enough room for an efficient and flexible
response to conditions and circumstances, thus assuring the greatest benefits. [22] Accordingly, it has been
described as the most essential, insistent and the least limitable of powers, extending as it does to all the great
public needs.[23] It is [t]he power vested in the legislature by the constitution to make, ordain, and establish all
manner of wholesome and reasonable laws, statutes, and ordinances, either with penalties or without, not
repugnant to the constitution, as they shall judge to be for the good and welfare of the commonwealth, and of the
subjects of the same.[24]
For this reason, when the conditions so demand as determined by the legislature, property rights must
bow to the primacy of police power because property rights, though sheltered by due process, must yield to general
welfare.[25]
Police power as an attribute to promote the common good would be diluted considerably if on the mere
plea of petitioners that they will suffer loss of earnings and capital, the questioned provision is invalidated.
Moreover, in the absence of evidence demonstrating the alleged confiscatory effect of the provision in question,
there is no basis for its nullification in view of the presumption of validity which every law has in its favor.[26]
Given these, it is incorrect for petitioners to insist that the grant of the senior citizen discount is unduly
oppressive to their business, because petitioners have not taken time to calculate correctly and come up with a
financial report, so that they have not been able to show properly whether or not the tax deduction scheme really
works greatly to their disadvantage.[27]
In treating the discount as a tax deduction, petitioners insist that they will incur losses because, referring
to the DOF Opinion, for every P1.00 senior citizen discount that petitioners would give, P0.68 will be shouldered
by them as only P0.32 will be refunded by the government by way of a tax deduction.
To illustrate this point, petitioner Carlos Super Drug cited the anti-hypertensive maintenance
drug Norvasc as an example. According to the latter, it acquires Norvasc from the distributors at P37.57 per tablet,
and retails it at P39.60 (or at a margin of 5%). If it grants a 20% discount to senior citizens or an amount equivalent
to P7.92, then it would have to sell Norvasc at P31.68 which translates to a loss from capital of P5.89 per tablet.
Even if the government will allow a tax deduction, only P2.53 per tablet will be refunded and not the full amount of
the discount which is P7.92. In short, only 32% of the 20% discount will be reimbursed to the drugstores.[28]
Petitioners computation is flawed. For purposes of reimbursement, the law states that the cost of the
discount shall be deducted from gross income,[29] the amount of income derived from all sources before deducting
allowable expenses, which will result in net income. Here, petitioners tried to show a loss on a per transaction
basis, which should not be the case. An income statement, showing an accounting of petitioners sales, expenses,
and net profit (or loss) for a given period could have accurately reflected the effect of the discount on their income.
Absent any financial statement, petitioners cannot substantiate their claim that they will be operating at a loss
should they give the discount. In addition, the computation was erroneously based on the assumption that their
customers consisted wholly of senior citizens. Lastly, the 32% tax rate is to be imposed on income, not on the
amount of the discount.
Furthermore, it is unfair for petitioners to criticize the law because they cannot raise the prices of their
medicines given the cutthroat nature of the players in the industry. It is a business decision on the part of petitioners
to peg the mark-up at 5%. Selling the medicines below acquisition cost, as alleged by petitioners, is merely a result
of this decision. Inasmuch as pricing is a property right, petitioners cannot reproach the law for being oppressive,
simply because they cannot afford to raise their prices for fear of losing their customers to competition.
 (On Official Leave)
The Court is not oblivious of the retail side of the pharmaceutical industry and the competitive pricing LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO
Associate Justice Associate Justice
component of the business. While the Constitution protects property rights, petitioners must accept the realities of
business and the State, in the exercise of police power, can intervene in the operations of a business which may
(On Leave)
result in an impairment of property rights in the process.
Moreover, the right to property has a social dimension. While Article XIII of the Constitution provides the
ANGELINA SANDOVAL-GUTIERREZ ANTONIO T. CARPIO
precept for the protection of property, various laws and jurisprudence, particularly on agrarian reform and the Associate Justice Associate Justice

regulation of contracts and public utilities, continuously serve as a reminder that the right to property can be
relinquished upon the command of the State for the promotion of public good.[30]
Undeniably, the success of the senior citizens program rests largely on the support imparted by
petitioners and the other private establishments concerned. This being the case, the means employed in invoking MA. ALICIA AUSTRIA-MARTINEZ RENATO C. CORONA
Associate Justice Associate Justice
the active participation of the private sector, in order to achieve the purpose or objective of the law, is reasonably
and directly related. Without sufficient proof that Section 4(a) of R.A. No. 9257 is arbitrary, and that the continued
implementation of the same would be unconscionably detrimental to petitioners, the Court will refrain from quashing
a legislative act.[31]
WHEREFORE, the petition is DISMISSED for lack of merit. CONCHITA CARPIO MORALES DANTE O. TINGA
Associate Justice Associate Justice
No costs.

SO ORDERED.

ADOLFO S. AZCUNA MINITA V. CHICO-NAZARIO CANCIO C. GARCIA

Associate Justice Associate Justice Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice PRESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURA
Associate Justice Associate Justice

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the
above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.
 [16] Commissioner of Internal Revenue v. Central Luzon Drug Corporation, G.R. No. 159647, April 15, 2005, 456 SCRA 414,
428-429 citing Smith, Wests Tax Law Dictionary (1993), pp. 177-178, 196.
[17] The concept of public use is no longer confined to the traditional notion of use by the public, but held synonymous with public
REYNATO S. PUNO
Chief Justice interest, public benefit, public welfare, and public convenience. The discount privilege to which senior citizens are
entitled is actually a benefit enjoyed by the general public to which these citizens belong (Commissioner of Internal
Revenue v. Central Luzon Drug Corporation, supra note 14, at 444; Land Bank of the Philippines v. De Leon, 437
* On Official Leave.
Phil. 347, 359 [2002] citing Estate of Salud Jimenez v. Philippine Export Processing Zone, G.R. No. 137285, January
** On Leave.
[1] Under Rule 65 of the Rules of Court.
16, 2001, 349 SCRA 240, 264).
[18] National Power Corporation v. Manubay Agro-Industrial Development Corporation, G.R. No. 150936, August 18, 2004, 437
[2] An Act Granting Additional Benefits and Privileges to Senior Citizens Amending for the Purpose Republic Act No. 7432,
SCRA 60, 68 citing Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, G.R.
otherwise known as An Act to Maximize the Contribution of Senior Citizens to Nation Building, Grant Benefits and
No. 78742, July 14, 1989, 175 SCRA 343.
Special Privileges and for other Purposes. [19] In the case of Commissioner of Internal Revenue v. Central Luzon Drug Corporation, supra note 14, the Court held that just
[3] Otherwise known as the Senior Citizens Act.
[4] Emphasis supplied.
compensation confers the right to receive an equivalent amount for the discount given and the prompt payment of
[5] Section 4. Discounts from Establishments The grant of twenty percent (20%) discount on all prices of goods and services
such amount. The advantage of a tax deduction is that the cost of the discount can immediately be refunded, though
not fully, by declaring it as a deductible expense in computing for taxable income. In a tax credit, one has to await
offered to the general public regardless of the amount purchased from all establishments, irrespective of
the issuance of a tax credit certificate indicating the correct amount of the discounts given before the latter can be
classification, relative to the utilization of services for the exclusive use of senior citizen in the following:
refunded. Thus, the availment of a tax credit necessitates prior payment of income tax.
... [20] Article XV of the Constitution states: Section 1. The State recognizes the Filipino family as the foundation of the
d) DRUG STORES, HOSPITAL PHARMACIES, MEDICAL AND OPTICAL CLINICS AND SIMILAR
nation. Accordingly, it shall strengthen its solidarity and actively promote its total development.
ESTABLISHMENTS DISPENSING MEDICINES The discount for purchases of drugs/medicines shall be [21] Emphasis supplied.
subject to the Guidelines to be issued by the Bureau of Food and Drugs, Department of Health (BFAD- [22] Sangalang v. IAC, G.R. No. 71169, August 25, 1989, 176 SCRA 719.
DOH), in coordination with the Philippine Health Insurance Corporation (PHILHEALTH). [23] Ermita-Malate Hotel and Motel Operators Association , Inc. v. City Mayor of Manila, L-24693, July 31, 1967, 20 SCRA 849
[6] Section 9. Medical and Dental Services in Private Facilities. - The senior citizen shall be granted twenty percent (20%)
citing Noble State Bank v. Haskell, 219 U.S. 412 (1911).
discount on medical and dental services and diagnostic and laboratory fees such as but not limited to x-ray, [24] U.S. v. Toribio, 15 Phil.85 (1910) citing Commonwealth v. Alger, 7 Cush., 53 (Mass. 1851); U.S. v. Pompeya, 31 Phil. 245,
computerized tomography scans and blood tests, including professional fees of attending doctors in all private
253-254 (1915).
hospitals and medical facilities, in accordance with the rules and regulations to be issued by the Department of [25] Alalayan v. National Power Corporation, 24 Phil. 172 (1968).
Health, in coordination with the Philippine Health Insurance Corporation. [26] Id.
[7] Section 10. Air and Transportation Privileges. At least twenty percent (20%) discount in fare for domestic air, and sea travel
[27] The person who impugns the validity of a statute must have personal interest in the case such that he has sustained, or will
based on the actual fare, including the promotional fare, advance booking and similar discounted fare shall be
sustain, direct injury as a result of its enforcement (People v. Vera, 65 Phil. 56 [1937]).
granted for the exclusive use and enjoyment of senior citizens. [28] Rollo, p. 11.
[8] Section 11. Public Land Transportation Privileges. - Twenty percent (20%) discount in public railways, including LRT, MRT,
[29] Section 27(E)(4) of the National Internal Revenue Code (NIRC) provides that for purposes of applying the minimum corporate
PNR, Skyways and fares in buses (PUB), jeepneys (PUJ), taxi and shuttle services (AUV) shall be granted for the
income tax on domestic corporations, the term gross income shall mean gross sales less sales returns, discounts
exclusive use and enjoyment of senior citizens.
[9] Rollo, p. 57.
and allowances and cost of goods sold. For a trading or merchandising concern, cost of goods sold shall include the
[10] Id. at 67-69; emphasis supplied.
invoice cost of the goods sold, plus import duties, freight in transporting the goods to the place where the goods are
[11] The A.O. became effective on October 9, 2004, after its publication in two national newspapers of general circulation.
actually sold including insurance while the goods are in transit.
[30] By the general police power of the State, persons and property are subjected to all kinds of restraints and burdens, in order
[12] Amendment to Administrative Order No. 171, s. 2004 on the Policies and Guidelines to Implement the Relevant Provisions
to secure the general comfort, health, and prosperity of the State; of the perfect right in the legislature to do which,
of Republic Act 9257, otherwise known as the Expanded Senior Citizens Act of 2003.
[13] Rollo, pp. 17-24.
no question ever was, or, upon acknowledged and general principles, ever can be made, so far as natural persons
[14] According to petitioners, of the five (5) million Filipinos who are 60 years old and above, only 500,000 are in Metro Manila
are concerned. (U.S. v. Toribio, supra note 24, at 98-99, citing Thorpe v. Rutland & Burlington R.R. Co. (27 Vt., 140,
149).
and thus, have access to Mercury Drug which, because of the bulk discounts it gets from pharmaceutical companies [31] Subject to the determination of the courts as to what is a proper exercise of police power using the due process clause and
and suppliers, can afford to give the 20% discount. Unlike Mercury Drug, small- to medium-scale drugstores similar
the equal protection clause as yardsticks, the State may interfere wherever the public interests demand it, and in
to those of petitioners, however, can only impose minimal mark-ups for competitive pricing but are constrained to
this particular a large discretion is necessarily vested in the legislature to determine, not only what interests of the
raise the prices of their medicines so that they would be able to recoup the 20% discount that they extend to senior
public require, but what measures are necessary for the protection of such interests (U.S. v. Toribio, supra note 24,
citizens. In the end, roughly 4.5 million senior citizens in the provinces or in the areas where Mercury Drug is not
at 98, citingLawton v. Steele, 152 U.S. 133,136; Barbier v. Connoly, 113 U.S. 27; Kidd v. Pearson, 128 U.S. 1).
present will not be able to benefit fully from the discount that the law provides.

[15] Under Section 34 of the Tax Code, the itemized deductions considered as allowable deductions from gross income include
ordinary and necessary expenses, interest, taxes, losses, bad debts, depreciation, depletion of oil and gas wells and
mines, charitable and other contributions, research and development expenditures, and pension trust contributions.
[G.R. No. 127249. February 27, 1998]
CAMARINES NORTE ELECTRIC COOPERATIVE, INC. (CANORE-CO); RUBEN N. BARRAMEDA; ELVIS L.
ESPIRITU; MERARDO G. ENERO, JR.; MARCELITO B. ABAS; and REYNALDO V. ABUNDO, petitioners,
vs. HON. RUBEN D. TORRES, in his capacity as Executive Secretary; REX TANTIONGCO; HONESTO DE
JESUS; ANDRES IBASCO; TEODULO M. MEA; and VICENTE LUKBAN, respondent.
DECISION
DAVIDE, JR., J.:
May the Office of the President validly constitute an ad hoc committee to take over and manage the affairs
of an electric cooperative?
This is the key issue in this original action for certiorari and prohibition under Rule 65 of the Rules of Court
wherein the petitioners seek to (a) annul and set aside Memorandum Order No. 409 of the Office of the President
dated 3 December 1996 constituting an Ad Hoc Committee to take over and manage the affairs of the Camarines
Norte Electric Cooperative, Inc., (hereafter CANORECO) until such time as a general membership meeting can be
called to decide the serious issues affecting the said cooperative and normalcy in operations is restored"; and (b)
prohibit the respondents from performing acts or continuing proceedings pursuant to the Memorandum Order.
The factual backdrop of this case is not complicated.
Petitioner CANORECO is an electric cooperative organized under the provisions of P.D. No. 269, otherwise
known as the National Electrification Administration Decree, as amended by P.D. No. 1645.
On 10 March 1990, then President Corazon C. Aquino signed into law R.A. No. 6938 and R.A. No. 6939. The
former is the Cooperative Code of the Philippines, while the latter created the Cooperative Development Authority
(CDA) and vested solely upon the CDA the power to register cooperatives.
Article 122 of the Cooperative Code expressly provides that electric cooperatives shall be covered by the
Code. Article 128 of the said Code and Section 17 of R.A. No. 6939 similarly provide that cooperatives created
under P.D. No. 269, as amended by P.D. No. 1645, shall have three years within which to qualify and register with
the CDA and that after they shall have so qualified and registered, the provisions of Sections 3 and 5 of P.D. No.
1645 shall no longer be applicable to them. These Sections 3 and 5 read as follows:
SEC. 3. Section 5(a), Chapter II of Presidential Decree No. 269 is hereby amended by adding sub-paragraph (6)
to read as follows:
(6) To authorize the NEA Administrator to designate, subject to the confirmation of the Board Administrators, an
Acting General Manager and/or Project Supervisor for a Cooperative where vacancies in the said positions occur
and/or when the interest of the Cooperative and the program so requires, and to prescribe the functions of said
Acting General Manager and/or Project Supervisor, which powers shall not be nullified, altered or diminished by
any policy or resolution of the Board of Directors of the Cooperative concerned.
SEC. 5. Section 10, Chapter II of Presidential Decree No. 269 is hereby amended to read as follows:
Section 10. Enforcement Powers and Remedies. -- In the exercise of its power of supervision and control over
electric cooperatives and other borrower, supervised or controlled entities, the NEA is empowered to issue
orders, rules and regulations and motu proprio or upon petition of third parties, to conduct investigations,
referenda and other similar actions in all matters affecting said electric cooperatives and other borrower, or
supervised or controlled entities.
Finally, the repealing clause (Article 127) of the Cooperative Code provides:
Provided, however, That nothing in this Code shall be interpreted to mean the amendment or repeal of any
provision of Presidential Decree No. 269: Provided, further, That the electric cooperatives which qualify as such
under this Code shall fall under the coverage thereof.
CANORECO registered with the CDA pursuant to R.A. No. 6938 and R.A. No. 6939. On 8 March 1993, the
CDA issued a Certificate of Provisional Registration (T-003-93) to CANORECO effective for two years.[1] On 1
March 1995, the CDA extended this provisional registration until 4 May 1997.[2] However, on 10 July 1996,
CANORECO filed with the CDA its approved amendments to its Articles of Cooperation converting itself from a
non-stock to a stock cooperative pursuant to the provisions of R.A. No. 6938 and the Omnibus Implementing Rules
and Regulations on Electric Cooperatives. On the same date the CDA issued a Certificate of Registration[3] of the
amendments to CANORECO Articles of Cooperation certifying that CANORECO is registered as a full-[f]ledged
cooperative under and by virtue of R.A. 6938.
Previously, on 11 March 1995, the Board of Directors of CANORECO[4] approved Resolution No. 22
appointing petitioner Reynaldo V. Abundo as permanent General Manager. The Board was composed of
Ruben N. Barrameda – President
Elvis L. Espiritu -- Vice president
Merardo G. Enero, Jr. -- Secretary
Marcelito B. Abas -- Treasurer
Antonio R. Obias -- Director
Luis A. Pascua -- Director
Norberto Z. Ochoa -- Director
Leonida Z. Manalo -- OIC GM/Ex-Officio
On 28 May 1995, Antonio Obias, Norberto Ochoa, Luis Pascua, and Felicito Ilan held a special meeting of
the Board of Directors of CANORECO. The minutes of the meeting[5] showed that President Ruben Barrameda,
Vice-President Elvis Espiritu, and Treasurer Marcelito Abas were absent; that Obias acted as temporary chairman;
that the latter informed those present that it was the responsibility of the Board after the annual meeting to meet
and elect the new set of officers, but that despite the fact that he had called the attention of President Barrameda
and Directors Abas and Espiritu for the holding thereof, the three chose not to appear; and that those present in
the special meeting declared all positions in the board vacant and thereafter proceeded to hold elections by secret
balloting with all the directors present considered candidates for the positions. The following won and were declared
as the newly elected officers of the CANORECO:
President . . . . . . . . Norberto Ochoa
Vice President . . . . Antonio Obias
Secretary . . . . . . . . Felicito Ilan
Treasurer. . . . . . . . Luis Pascua
Thereupon, these newly elected officers approved the following resolutions:
1) Resolution No. 27, c.s. -- confirming the election of the new set of officers of the Board of Directors
of CANORECO
2) Resolution No. 28, c.s. -- recalling Resolution No. 22, c.s. appointing Mr. Reynaldo V. Abundo as
permanent General Manager in view of the fact that such appointment was in violation of the provisions of
R.A. 6713; declaring the position of General Manager as vacant; and designating Mr. Oscar Acobera as
Officer-in-Charge
3) Resolution No. 29, c.s. -- authorizing the Board President, or in his absence, the Vice-
President, countersigned by the Treasurer, or in his absence, the Secretary, to be the only officers who can
transfer funds from savings to current accounts; and authorizing the Officer-in-Charge, Mr. Acobera, to
issue checks without countersignature in an amount not to exceed P3,000.00 and in excess thereof, to be
countersigned by the President and/or the Treasurer
4) Resolution No. 30, c.s. -- hiring the services of Atty. Juanito Subia as retainer-lawyer for
CANORECO.[6]
The petitioners challenged the above resolutions and the election of officers by filing with the CDA a Petition
for Declaration of Nullity of Board Resolutions and Election of Officers with Prayer for Issuance of
Injunction/Temporary Restraining Order, which the CDA docketed as CDA-CO Case No. 95-010.
In its Resolution of 15 February 1996,[7] the CDA resolved the petition in favor of the petitioners and decreed
as follows:
WHEREFORE, premises considered, the Board Meeting of May 28, 1995, participated by the respondents, and
all the Resolutions issued on such occasion, are hereby declared NULL AND VOID AB INITIO.
Likewise, the election of respondents Norberto Ochoa, Antonio Obias, Felicito Ilan, and Luis Pascua, as
President, Vice-President, Secretary, and Treasurer, respectively, of CANORECO is hereby declared NULL AND
VOID AB INITIO.
Hence, respondents Norberto Ochoa, Antonio Obias, Felicito Ilan, and Luis Pascua are hereby ordered to refrain
from representing themselves as President, Vice-President, Secretary, and Treasurer, respectively, of
CANORECO. The same respondents are further ordered to refrain from acting as authorized signatories to the
bank accounts of CANORECO.
Further respondent Felicito Ilan is hereby ordered to refrain from exercising the duties and functions of a member
of the Board of CANORECO until the election protest is resolved with finality by the proper forum. In the
meantime, the incumbency of petitioner Merardo Enero, Jr. as Director of the CANORECO Board is hereby
recognized.
A status quo is hereby ordered as regards the position of General Manager, being held by Mr. Reynaldo Abundo,
considering that the recall of his appointment was done under a void Resolution, and that the designation of Mr.
Oscar Acodera as Officer-in-Charge, under the same void Resolution, has no force and effect.
Finally, respondents Antonio Obias, Norberto Ochoa, Luisito Pascua, and petitioners Ruben Barrameda, Elvis
Espiritu, Marcelito Abas and Merardo Enero, Jr. are hereby ordered to work together, as Board of Directors, for
the common good of CANORECO and its consumer-members, and to maintain an atmosphere of sincere
cooperation among the officers and members of CANORECO.
On 28 June 1996, in defiance of the abovementioned Resolution of the CDA and with the active participation
of some officials of the National Electrification Administration (NEA), the group of Norberto Ochoa, Antonio Obias,
Felicito Ilan, and Luis Pascua forcibly took possession of the offices of CANORECO and assumed the duties as
officers thereof.[8]
On 26 September 1996, pursuant to the writ of execution and order to vacate issued by the CDA, the
petitioners were able to reassume control of the CANORECO and to perform their respective functions. [9]
On 3 December 1996, the President of the Philippines issued Memorandum Order No. 409 [10] onstituting
an Ad Hoc Committee to temporarily take over and manage the affairs of CANORECO. It reads as follows:
To efficiently and effectively address the worsening problem of the Camarines Norte Electric Cooperative, Inc.
(CANORECO) and in order not to prejudice and endanger the interest of the people who rely on the said
cooperative for their supply of electricity, an AD HOC Committee is hereby constituted to take over and manage
the affairs of CANORECO until such time as a general membership meeting can be called to decide the serious
issues affecting the said cooperative and normalcy in operations is restored. Further, if and when warranted, the
present Board of Directors may be called upon by the Committee for advisory services without prejudice to the
receipt of their per diems as may be authorized by existing rules and regulations.
The AD HOC Committee shall be composed of the following:
REX TANTIONGCO -- Chairman On 11 December 1996, the petitioners filed this petition wherein they claim that

Presidential Assistant on Energy Affairs

I. THE PRESIDENT HAS NO POWER TO TAKE OVER AND MANAGE OR TO ORDER THE TAKE-
OVER OR MANAGEMENT OF CANORECO.
HONESTO DE JESUS -- Member II. [THE] TAKE-OVER OF CANORECO BY THE AD HOC COMMITTEE IS UNLAWFUL DESPITE
DESIGNATION OF CANORECO CONSUMERS AS MEMBERS OF AD HOC COMMITTEE.
Cooperative Development Authority Nominee
III. [THE] RELEGATION OF PETITIONERS AS MERE ADVISERS TO THE AD HOC COMMITTEE
AMOUNTS TO REMOVAL FROM OFFICE WHICH THE PRESIDENT HAS NO POWER TO
ANDRES IBASCO -- Member
DO.MOREOVER, PETITIONERS REMOVAL VIOLATES PETITIONERS RIGHT TO DUE
PROCESS OF LAW.
Cooperative Development Authority Nominee
IV. THE PRESIDENT IS LIKEWISE WITHOUT POWER TO DESIGNATE OR ORDER THE
TEODULO M. MEA -- Member DESIGNATION OF AN ACTING GENERAL MANAGER FOR CANORECO AND TO CONSIDER
THE INCUMBENT REYNALDO V. ABUNDO TO BE ON LEAVE.
National Electrification Administration Nominee The petitioners assert that there is no provision in the Constitution or in a statute expressly, or even impliedly,
authorizing the President or his representatives to take over or order the take-over of electric
VICENTE LUKBAN -- Member cooperatives. Although conceding that while the State, through its police power, has the right to interfere with
private business or commerce, they maintain that the exercise thereof is generally limited to the regulation of the
National Electrification Administration Nominee business or commerce and that the power to regulate does not include the power to take over, control, manage,
or direct the operation of the business. Accordingly, the creation of the Ad Hoc Committee for the purpose of take-
The said Committee shall have the following functions: over was illegal and void.
The petitioners further claim that Memorandum Order No. 409 removed them from their positions as
1. Designate the following upon the recommendation of the Chairman: members of the Board of Directors of CANORECO. The President does not have the authority to appoint, much
less to remove, members of the board of directors of a private enterprise including electric cooperatives. He cannot
1.1 an Acting General Manager who shall handle the day-to-day operations of the Cooperative. In the rely on his power of supervision over the NEA to justify the designation of an acting general manager for
meantime, the General Manager shall be deemed to be on leave without prejudice to the payment of his CANORECO under P.D. No. 269 as amended by P.D. No. 1645, for CANORECO had already registered with the
salaries legally due him; and CDA pursuant to R.A. No. 6938 and R.A. No. 6939; hence, the latter laws now govern the internal affairs of
CANORECO.
1.2 a Comptroller who shall handle the financial affairs of the Cooperative.
On 3 January 1997, the petitioners filed an Urgent Motion for Issuance of a Temporary Restraining Order.

2. Ensure that:
The AD HOC Committee shall submit a written report to the President, through the Office of the Executive
Secretary, every two (2) weeks from the effectivity of this Order.
A General Membership Meeting shall be called by the AD HOC Committee to determine whether or not there is a
need to change the composition of the membership of the Cooperatives Board of Directors. If the need exists, the
AD HOC Committee shall call for elections. Once the composition of the Board of Directors is finally settled, it
shall decide on the appointment of a General Manager in accordance with prescribed laws, rules and
regulations. Upon the appointment of a General Manager, the Committee shall become functus officio.
This Memorandum Order shall take effect immediately.
On 9 January 1997, the petitioners filed a Manifestation and Motion informing the Court that on 8 January
1997 respondent Rex Tantiongco notified the petitioners that the Ad HocCommittee was taking over the affairs and
management of CANORECO effective as of that date.[11] They reiterated their plea for the issuance of a temporary
restraining order because the Ad Hoc Committee has taken control of CANORECO and usurped the functions of
the individual petitioners.
In the Resolution dated 13 January 1997, we required respondents to comment on the petition.
Despite four extensions granted it, the Office of the Solicitor General (OSG) failed to file its Comment. Hence,
in the resolution of 16 July 1997 we deemed the OSG to have waived the filing of its Comment and declared this
case submitted for decision. The OSGs motion to admit its Comment, as well as the attached Comment, belatedly
filed on 24 July 1997 was merely noted without action in the resolution of 13 August 1997. We also subsequently
denied for lack of merit its motion for reconsideration.
 We find the instant petition impressed with merit.
Having registered itself with the CDA pursuant to Section 128 of R.A. No. 6938 and Section 17 of R.A. No.
6939, CANORECO was brought under the coverage of said laws. Article 38 of R.A. No. 6938 vests upon the board
of directors the conduct and management of the affairs of cooperatives, and Article 39 provides for the powers of
the board of directors. These sections read:
Article 38. Composition of the Board of Directors. -- The conduct and management of the affairs of a cooperative
shall be vested in a board of directors which shall be composed of not less than five (5) nor more than fifteen (15)
members elected by the general assembly for a term fixed in the by-laws but not exceeding a term of two (2)
years and shall hold office until their successors are duly elected and qualified, or until duly removed. However,
no director shall serve for more than three (3) consecutive terms.
Article 39. Powers of the Board of Directors. -- The board of directors shall direct and supervise the business,
manage the property of the cooperative and may, by resolution, exercise all such powers of the cooperative as
are not reserved for the general assembly under this Code and the by-laws.
As to the officers of cooperatives, Article 43 of the Code provides:
ART. 43. Officers of the Cooperatives. The board of directors shall elect from among themselves only the
chairman and vice-chairman, and elect or appoint other officers of the cooperative from outside of the board in
accordance with their by-laws. All officers shall serve during good behavior and shall not be removed except for
cause and after due hearing. Loss of confidence shall not be a valid ground for removal unless evidenced by acts
or omissions causing loss of confidence in the honesty and integrity of such officer. No two (2) or more persons
with relationship up to the third degree of consanguinity or affinity shall serve as elective or appointive officers in
the same board.[12]
Under Article 34 of the Code, the general assembly of cooperatives has the exclusive power, which cannot be
delegated, to elect or appoint the members of the board of directors and to remove them for cause. Article 51
thereof provides for removal of directors and officers as follows:
ART. 51. Removal. -- An elective officer, director, or committee member may be removed by a vote of two-thirds
(2/3) of the voting members present and constituting a quorum, in a regular or special general assembly meeting
called for the purpose. The person involved shall be given an opportunity to be heard at said assembly.
Memorandum Order No. 409 clearly removed from the Board of Directors of CANORECO the power to
manage the affairs of CANORECO and transferred such power to the Ad HocCommittee, albeit
temporarily. Considering that (1) the take-over will be until such time that a general membership meeting can be
called to decide the serious issues affecting the said cooperative and normalcy in operations is restored, and (2)
the date such meeting shall be called and the determination of whether there is a need to change the composition
of the membership of CANORECOs Board of Directors are exclusively left to the Ad Hoc Committee, it necessarily
follows that the incumbent directors were, for all intents and purposes, suspended at the least, and removed, at
the most, from their office. The said Memorandum did no less to the lawfully appointed General Manager by
directing that upon the settlement of the issue concerning the composition of the board of directors the Committee
shall decide on the appointment of a general manager. In the meantime, it authorized the Committee to designate
upon the recommendation of the Chairman an Acting Manager, with the lawfully appointed Manager considered
on leave, but who is, however, entitled to the payment of his salaries.
Nothing in law supported the take-over of the management of the affairs of CANORECO, and the suspension,
if not removal, of the Board of Directors and the officers thereof.
It must be pointed out that the controversy which resulted in the issuance of the Memorandum Order
stemmed from a struggle between two groups vying for control of the management of CANORECO. One faction
was led by the group of Norberto Ochoa, while the other was petitioners group whose members were, at that time,
the incumbent directors and officers. It was the action of Ochoa and his cohorts in holding a special meeting on 28
May 1995 and then declaring vacant the positions of cooperative officers and thereafter electing themselves to the
positions of president, vice-president, treasurer, and secretary of CANORECO which compelled the petitioners to
file a petition with the CDA. The CDA thereafter came out with a decision favorable to the petitioners.
Obviously there was a clear case of intra-cooperative dispute. Article 121 of the Cooperative Code is explicit
on how the dispute should be resolved; thus:
ART. 121. Settlement of Disputes. -- Disputes among members, officers, directors, and committee members, and
intra-cooperative disputes shall, as far as practicable, be settled amicably in accordance with the conciliation or
mediation mechanisms embodied in the by-laws of the cooperative, and in applicable laws.
Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of competent
jurisdiction.
Complementing this Article is Section 8 of R.A. No. 6939, which provides:
SEC. 8. Mediation and Conciliation. Upon request of either or both or both parties, the [CDA] shall mediate and
conciliate disputes with the cooperative or between cooperatives: Provided, That if no mediation or conciliation
succeeds within three (3) months from request thereof, a certificate of non-resolution shall be issued by the
commission prior to the filing of appropriate action before the proper courts.
Even granting for the sake of argument that the party aggrieved by a decision of the CDA could pursue an
administrative appeal to the Office of the President on the theory that the CDA is an agency under its direct
supervision and control, still the Office of the President could not in this case, motu proprio or upon request of a
party, supplant or overturn the decision of the CDA. The record does not disclose that the group of Norberto Ochoa
appealed from the decision of the CDA in CDA-CO Case No. 95-010 to the Office of the President as the head of
the Executive Department exercising supervision and control over said agency. In fact the CDA had already issued
a Cease and Desist Order dated 14 August 1996 ordering Antonio Obias, Norberto Ochoa, Luis Pascua, Felicito
Ilan and their followers to cease and desist from acting as the Board of Directors and Officers of Camarines Norte
Electric Cooperative (CANORECO) and to refrain from implementing their Resolution calling for the District V
Election on August 17 and 24, 1996.[13] Consequently, the said decision of the CDA had long become final and
executory when Memorandum Order No. 409 was issued on 3 December 1996. That Memorandum cannot then
be considered as one reversing the decision of the CDA which had attained finality.
 Under Section 15, Chapter III of Book VII of the Administrative Code of 1987 (Executive Order No. 292),
decisions of administrative agencies become final and executory fifteen days after receipt of a copy thereof by the
party adversely affected unless within that period an administrative appeal or judicial review, if proper, has been
perfected. One motion for reconsideration is allowed. A final resolution or decision of an administrative agency also [1] Annex B of Petition, Rollo, 34.
binds the Office of the President even if such agency is under the administrative supervision and control of the
latter. [2] Annex C of Petition, Id., 35.
We have stated before, and reiterate it now, that administrative decisions must end sometime, as fully as [3] Annex D of Petition, Id., 36-37.
public policy demands that finality be written on judicial controversies. Public interest requires that proceedings [4] Annex E of Petition, Id., 38-39.
already terminated should not be altered at every step, for the rule of non quieta movere prescribes that what had
already been terminated should not be disturbed. A disregard of this principle does not commend itself to sound [5] Annex F of Petition, Id., 40-43.
public policy.[14]
[6] Rollo, 41-43.
Neither can police power be invoked to clothe with validity the assailed Memorandum Order No. 409. Police
power is the power inherent in a government to enact laws, within constitutional limits, to promote the order, safety,
[7] Annex G of Petition, Rollo, 44-52.
health, morals, and general welfare of society.[15] It is lodged primarily in the legislature. By virtue of a valid [8] Rollo, 8.
delegation of legislative power, it may also be exercised by the President and administrative boards, as well as the
lawmaking bodies on all municipal levels, including the barangay.[16] Delegation of legislative powers to the [9] Ibid.
President is permitted in Sections 23(2) and 28(2) of Article VI of the Constitution.[17] The pertinent laws on [10] Id., 31.
cooperatives, namely, R.A. No. 6938, R.A. No. 6939, and P.D. No. 269 as amended by P.D. No. 1645 do not
provide for the President or any other administrative body to take over the internal management of a [11] Rollo, 96.
cooperative. Article 98 of R.A. 6938 instead provides:
This is a substantial departure from Section 26 of P.D. No. 269 which provided that the officers of a
[12]

cooperative shall consist of a president, vice-president, secretary and treasurer, who shall be elected annually by
ART. 98. Regulation of Public Service Cooperatives. -- (1) The internal affairs of public service cooperatives such and from the board; that when a person holding such office ceases to be a director, he shall ipso facto cease to
as the rights and privileges of members, the rules and procedures for meetings of the general assembly, board of hold such office; that the offices of secretary and of treasurer may be held by the same person; that the board
directors and committees; for the election and qualification of officers, directors, and committee members; may also elect or appoint such other officers, agents, or employees as it deems necessary or advisable; and that
allocation and distribution of surpluses, and all other matters relating to their internal affairs shall be governed by any officer may be removed from said office and his successor elected in the manner prescribed in the by-laws.
this Code. [13] Rollo, 142.
We do not then hesitate to rule that Memorandum Order No. 409 has no constitutional and statutory basis. It [14] Antique Sawmills, Inc. v. Zayco, 17 SCRA 316, 320-321 [1966].
violates the basic underlying principle enshrined in Article 4(2) of R.A. No. 6938 that cooperatives are democratic [15] 16 C.J.S. Constitutional Law 195 (1956).
organizations and that their affairs shall be administered by persons elected or appointed in a manner agreed upon
by the members. Likewise, it runs counter to the policy set forth in Section 1 of R.A. No. 6939 that the State shall, [16] Isagani A. Cruz, Constitutional Law 44 (1995).
except as provided in said Act, maintain a policy of non-interference in the management and operation of
cooperatives.
[17] These sections read as follows:

WHEREFORE, the instant petition is GRANTED and Memorandum Order No. 409 of the President is hereby Sec. 23.
declared INVALID. (2) times of war or other national emergency, the Congress may, by law, authorize the President, for a limited period
and subject to such restrictions as it may prescribe, to exercise powers necessary and proper to carry out a declared
SO ORDERED. national policy. Unless sooner withdrawn by resolution of the Congress, such powers shall cease upon the next
adjournment thereof.
Narvasa, Regalado, Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban,and Martinez,
JJ., concur. Sec. 28.
Quisumbing, No part. Involve in O.P. matter.
Purisima, No part. Did not take in the deliberation. (2) The Congress may, by law, authorize the president to fix within specified limits, and subject to such limitations and
restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or
imposts within the framework of the national development program of the Government.
 [G.R. No. 135962. March 27, 2000]
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner, vs. BEL-AIR VILLAGE ASSOCIATION,
INC., respondent.
DECISION
PUNO, J.:
Not infrequently, the government is tempted to take legal shortcuts to solve urgent problems of the people. But even
when government is armed with the best of intention, we cannot allow it to run roughshod over the rule of law. Again,
we let the hammer fall and fall hard on the illegal attempt of the MMDA to open for public use a private road in a private
subdivision. While we hold that the general welfare should be promoted, we stress that it should not be achieved at the
expense of the rule of law. h Y
Petitioner MMDA is a government agency tasked with the delivery of basic services in Metro Manila. Respondent Bel-
Air Village Association, Inc. (BAVA) is a non-stock, non-profit corporation whose members are homeowners in Bel-Air
Village, a private subdivision in Makati City. Respondent BAVA is the registered owner of Neptune Street, a road inside
Bel-Air Village.
On December 30, 1995, respondent received from petitioner, through its Chairman, a notice dated December 22, 1995
requesting respondent to open Neptune Street to public vehicular traffic starting January 2, 1996. The notice
reads: Court
"SUBJECT: NOTICE of the Opening of Neptune Street to Traffic
"Dear President Lindo,
"Please be informed that pursuant to the mandate of the MMDA law or Republic Act No. 7924 which requires the
Authority to rationalize the use of roads and/or thoroughfares for the safe and convenient movement of persons,
Neptune Street shall be opened to vehicular traffic effective January 2, 1996.
"In view whereof, the undersigned requests you to voluntarily open the points of entry and exit on said street.
"Thank you for your cooperation and whatever assistance that may be extended by your association to the
MMDA personnel who will be directing traffic in the area.
"Finally, we are furnishing you with a copy of the handwritten instruction of the President on the matter.
"Very truly yours,
PROSPERO I. ORETA
Chairman"[1]
On the same day, respondent was apprised that the perimeter wall separating the subdivision from the adjacent
Kalayaan Avenue would be demolished. Sppedsc
On January 2, 1996, respondent instituted against petitioner before the Regional Trial Court, Branch 136, Makati City,
Civil Case No. 96-001 for injunction. Respondent prayed for the issuance of a temporary restraining order and
preliminary injunction enjoining the opening of Neptune Street and prohibiting the demolition of the perimeter wall. The
trial court issued a temporary restraining order the following day.
On January 23, 1996, after due hearing, the trial court denied issuance of a preliminary injunction. [2] Respondent
questioned the denial before the Court of Appeals in CA-G.R. SP No. 39549. The appellate court conducted an ocular
inspection of Neptune Street[3] and on February 13, 1996, it issued a writ of preliminary injunction enjoining the
implementation of the MMDAs proposed action.[4]
On January 28, 1997, the appellate court rendered a Decision on the merits of the case finding that the MMDA has no
authority to order the opening of Neptune Street, a private subdivision road and cause the demolition of its perimeter
walls. It held that the authority is lodged in the City Council of Makati by ordinance. The decision disposed of as
follows: Jurissc
"WHEREFORE, the Petition is GRANTED; the challenged Order dated January 23, 1995, in Civil Case No. 96-
001, is SET ASIDE and the Writ of Preliminary Injunction issued on February 13, 1996 is hereby made
permanent.
"For want of sustainable substantiation, the Motion to Cite Roberto L. del Rosario in contempt is denied. [5]
"No pronouncement as to costs.
"SO ORDERED."[6]
The Motion for Reconsideration of the decision was denied on September 28, 1998. Hence, this recourse. Jksm
Petitioner MMDA raises the following questions:
"I
HAS THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY (MMDA) THE MANDATE TO OPEN
NEPTUNE STREET TO PUBLIC TRAFFIC PURSUANT TO ITS REGULATORY AND POLICE POWERS?
II
IS THE PASSAGE OF AN ORDINANCE A CONDITION PRECEDENT BEFORE THE MMDA MAY ORDER THE
OPENING OF SUBDIVISION ROADS TO PUBLIC TRAFFIC?
 III
IS RESPONDENT BEL-AIR VILLAGE ASSOCIATION, INC. ESTOPPED FROM DENYING OR ASSAILING THE
AUTHORITY OF THE MMDA TO OPEN THE SUBJECT STREET? Jlexj
V
WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE THE SEVERAL MEETINGS HELD BETWEEN
MMDA AND THE AFFECTED BEL-AIR RESIDENTS AND BAVA OFFICERS?
V ecology, encourage and support the development of appropriate and self-reliant scientific and technological
HAS RESPONDENT COME TO COURT WITH UNCLEAN HANDS?"[7]
Neptune Street is owned by respondent BAVA. It is a private road inside Bel-Air Village, a private residential
subdivision in the heart of the financial and commercial district of Makati City. It runs parallel to Kalayaan Avenue, a
national road open to the general public. Dividing the two (2) streets is a concrete perimeter wall approximately fifteen
(15) feet high. The western end of Neptune Street intersects Nicanor Garcia, formerly Reposo Street, a subdivision
road open to public vehicular traffic, while its eastern end intersects Makati Avenue, a national road. Both ends of
Neptune Street are guarded by iron gates. Edp mis
Petitioner MMDA claims that it has the authority to open Neptune Street to public traffic because it is an agent of the
state endowed with police power in the delivery of basic services in Metro Manila. One of these basic services is traffic
management which involves the regulation of the use of thoroughfares to insure the safety, convenience and welfare of
the general public. It is alleged that the police power of MMDA was affirmed by this Court in the consolidated cases of
Sangalang v. Intermediate Appellate Court.[8] From the premise that it has police power, it is now urged that there is no
need for the City of Makati to enact an ordinance opening Neptune street to the public.[9]
Police power is an inherent attribute of sovereignty. It has been defined as the power vested by the Constitution in the
legislature to make, ordain, and establish all manner of wholesome and reasonable laws, statutes and ordinances,
either with penalties or without, not repugnant to the Constitution, as they shall judge to be for the good and welfare of
the commonwealth, and for the subjects of the same.[10] The power is plenary and its scope is vast and pervasive,
reaching and justifying measures for public health, public safety, public morals, and the general welfare.[11]
It bears stressing that police power is lodged primarily in the National Legislature.[12] It cannot be exercised by any
group or body of individuals not possessing legislative power.[13] The National Legislature, however, may delegate this
power to the President and administrative boards as well as the lawmaking bodies of municipal corporations or local
government units.[14]Once delegated, the agents can exercise only such legislative powers as are conferred on them by
the national lawmaking body.[15]
A local government is a "political subdivision of a nation or state which is constituted by law and has substantial control
of local affairs."[16] The Local Government Code of 1991 defines a local government unit as a "body politic and
corporate"[17]-- one endowed with powers as a political subdivision of the National Government and as a corporate
entity representing the inhabitants of its territory.[18] Local government units are the provinces, cities, municipalities and
barangays.[19] They are also the territorial and political subdivisions of the state. [20]
Our Congress delegated police power to the local government units in the Local Government Code of 1991.
This delegation is found in Section 16 of the same Code, known as the general welfare clause, viz: Chief
"Sec. 16. General Welfare.Every local government unit shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and
effective governance, and those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced
capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment
among their residents, maintain peace and order, and preserve the comfort and convenience of their
inhabitants."[21]
Local government units exercise police power through their respective legislative bodies. The legislative body
of the provincial government is the sangguniang panlalawigan, that of the city government is the sangguniang
panlungsod, that of the municipal government is the sangguniang bayan, and that of the barangay is
the sangguniang barangay. The Local Government Code of 1991 empowers the sangguniang panlalawigan,
sangguniang panlungsod and sangguniang bayan to "enact ordinances, approve resolutions and appropriate funds
for the general welfare of the [province, city or municipality, as the case may be], and its inhabitants pursuant to
Section 16 of the Code and in the proper exercise of the corporate powers of the [province, city municipality] provided
under the Code x x x."[22] The same Code gives the sangguniang barangay the power to "enact ordinances as may be
necessary to discharge the responsibilities conferred upon it by law or ordinance and to promote the general welfare of
the inhabitants thereon."[23]
Metropolitan or Metro Manila is a body composed of several local government units - i.e., twelve (12) cities and
five (5) municipalities, namely, the cities of Caloocan, Manila, Mandaluyong, Makati, Pasay, Pasig, Quezon,
Muntinlupa, Las Pinas, Marikina, Paranaque and Valenzuela, and the municipalities of Malabon, , Navotas, , Pateros,
San Juan and Taguig. With the passage of Republic Act (R. A.) No. 7924[24] in 1995, Metropolitan Manila was
declared as a "special development and administrative region" and the Administration of "metro-wide" basic
services affecting the region placed under "a development authority" referred to as the MMDA.[25]
"Metro-wide services" are those "services which have metro-wide impact and transcend local political boundaries or
entail huge expenditures such that it would not be viable for said services to be provided by the individual local
government units comprising Metro Manila."[26] There are seven (7) basic metro-wide services and the scope of these
services cover the following: (1) development planning; (2) transport and traffic management; (3) solid waste disposal
and management; (4) flood control and sewerage management; (5) urban renewal, zoning and land use planning, and
shelter services; (6) health and sanitation, urban protection and pollution control; and (7) public safety. The basic
service of transport and traffic management includes the following: Lexjuris
"(b) Transport and traffic management which include the formulation, coordination, and monitoring of
policies, standards, programs and projects to rationalize the existing transport operations, infrastructure
requirements, the use of thoroughfares, and promotion of safe and convenient movement of persons
 and goods; provision for the mass transport system and the institution of a system to regulate road
users; administration and implementation of all traffic enforcement operations, traffic engineering
services and traffic education programs, including the institution of a single ticketing system in
Metropolitan Manila;"[27]
In the delivery of the seven (7) basic services, the MMDA has the following powers and functions: Esm
"Sec. 5. Functions and powers of the Metro Manila Development Authority.The MMDA shall:
(a) Formulate, coordinate and regulate the implementation of medium and long-term plans and programs for the
delivery of metro-wide services, land use and physical development within Metropolitan Manila, consistent with
national development objectives and priorities;
(b) Prepare, coordinate and regulate the implementation of medium-term investment programs for metro-wide
services which shall indicate sources and uses of funds for priority programs and projects, and which shall
include the packaging of projects and presentation to funding institutions; Esmsc
(c) Undertake and manage on its own metro-wide programs and projects for the delivery of specific services
under its jurisdiction, subject to the approval of the Council. For this purpose, MMDA can create appropriate
project management offices;
(d) Coordinate and monitor the implementation of such plans, programs and projects in Metro Manila; identify
bottlenecks and adopt solutions to problems of implementation;
(e) The MMDA shall set the policies concerning traffic in Metro Manila, and shall coordinate and regulate
the implementation of all programs and projects concerning traffic management, specifically pertaining
to enforcement, engineering and education. Upon request, it shall be extended assistance and
cooperation, including but not limited to, assignment of personnel, by all other government agencies and
offices concerned;
(f) Install and administer a single ticketing system, fix, impose and collect fines and penalties for all
kinds of violations of traffic rules and regulations, whether moving or non-moving in nature, and
confiscate and suspend or revoke drivers licenses in the enforcement of such traffic laws and
regulations, the provisions of RA 4136 and PD 1605 to the contrary notwithstanding. For this purpose,
the Authority shall impose all traffic laws and regulations in Metro Manila, through its traffic operation
center, and may deputize members of the PNP, traffic enforcers of local government units, duly licensed
security guards, or members of non-governmental organizations to whom may be delegated certain
authority, subject to such conditions and requirements as the Authority may impose; and
(g) Perform other related functions required to achieve the objectives of the MMDA, including the undertaking of
delivery of basic services to the local government units, when deemed necessary subject to prior coordination
with and consent of the local government unit concerned." Jurismis
The implementation of the MMDAs plans, programs and projects is undertaken by the local government units,
national government agencies, accredited peoples organizations, non-governmental organizations, and the private
sector as well as by the MMDA itself. For this purpose, the MMDA has the power to enter into contracts, memoranda of
agreement and other cooperative arrangements with these bodies for the delivery of the required services within Metro
Manila.[28]
The governing board of the MMDA is the Metro Manila Council. The Council is composed of the mayors of the
component 12 cities and 5 municipalities, the president of the Metro Manila Vice-Mayors League and the president of
the Metro Manila Councilors League.[29] The Council is headed by a Chairman who is appointed by the President and
vested with the rank of cabinet member. As the policy-making body of the MMDA, the Metro Manila Council approves
metro-wide plans, programs and projects, and issues the necessary rules and regulations for the implementation of
said plans; it approves the annual budget of the MMDA and promulgates the rules and regulations for the delivery of
basic services, collection of service and regulatory fees, fines and penalties. These functions are particularly
enumerated as follows: LEX
"Sec. 6. Functions of the Metro Manila Council. -
(a) The Council shall be the policy-making body of the MMDA;
(b) It shall approve metro-wide plans, programs and projects and issue rules and regulations deemed necessary
by the MMDA to carry out the purposes of this Act;
(c) It may increase the rate of allowances and per diems of the members of the Council to be effective during the
term of the succeeding Council. It shall fix the compensation of the officers and personnel of the MMDA, and
approve the annual budget thereof for submission to the Department of Budget and Management (DBM);
(d) It shall promulgate rules and regulations and set policies and standards for metro-wide application governing
the delivery of basic services, prescribe and collect service and regulatory fees, and impose and collect fines and
penalties." Jj sc
Clearly, the scope of the MMDAs function is limited to the delivery of the seven (7) basic services. One of these is
transport and traffic management which includes the formulation and monitoring of policies, standards and projects to
rationalize the existing transport operations, infrastructure requirements, the use of thoroughfares and promotion of the
safe movement of persons and goods. It also covers the mass transport system and the institution of a system of road
regulation, the administration of all traffic enforcement operations, traffic engineering services and traffic education
programs, including the institution of a single ticketing system in Metro Manila for traffic violations. Under this service,
the MMDA is expressly authorized "to set the policies concerning traffic" and "coordinate and regulate the
implementation of all traffic management programs." In addition, the MMDA may "install and administer a single
ticketing system," fix, impose and collect fines and penalties for all traffic violations. Ca-lrsc
It will be noted that the powers of the MMDA are limited to the following acts: formulation, coordination, regulation,
implementation, preparation, management, monitoring, setting of policies, installation of a system and
administration. There is no syllable in R. A. No. 7924 that grants the MMDA police power, let alone legislative
power. Even the Metro Manila Council has not been delegated any legislative power. Unlike the legislative bodies of
the local government units, there is no provision in R. A. No. 7924 that empowers the MMDA or its Council to "enact
ordinances, approve resolutions and appropriate funds for the general welfare" of the inhabitants of Metro Manila. The
MMDA is, as termed in the charter itself, a "development authority."[30] It is an agency created for the purpose of laying
down policies and coordinating with the various national government agencies, peoples organizations, non-
governmental organizations and the private sector for the efficient and expeditious delivery of basic services in the vast
metropolitan area. All its functions are administrative in nature and these are actually summed up in the charter
itself, viz:
"Sec. 2. Creation of the Metropolitan Manila Development Authority. -- x x x.
The MMDA shall perform planning, monitoring and coordinative functions, and in the process
exercise regulatory and supervisory authority over the delivery of metro-wide services within Metro Manila,
without diminution of the autonomy of the local government units concerning purely local matters."[31]
Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate Appellate Court[32] where we upheld a
zoning ordinance issued by the Metro Manila Commission (MMC), the predecessor of the MMDA, as an exercise of
police power. The first Sangalang decision was on the merits of the petition,[33] while the second decision denied
reconsideration of the first case and in addition discussed the case of Yabut v. Court of Appeals.[34]
Sangalang v. IAC involved five (5) consolidated petitions filed by respondent BAVA and three residents of Bel-Air
Village against other residents of the Village and the Ayala Corporation, formerly the Makati Development Corporation,
as the developer of the subdivision. The petitioners sought to enforce certain restrictive easements in the deeds of sale
over their respective lots in the subdivision. These were the prohibition on the setting up of commercial and advertising
signs on the lots, and the condition that the lots be used only for residential purposes. Petitioners alleged that
respondents, who were residents along Jupiter Street of the subdivision, converted their residences into commercial
establishments in violation of the "deed restrictions," and that respondent Ayala Corporation ushered in the full
commercialization" of Jupiter Street by tearing down the perimeter wall that separated the commercial from the
residential section of the village.[35]
The petitions were dismissed based on Ordinance No. 81 of the Municipal Council of Makati and Ordinance No. 81-01
of the Metro Manila Commission (MMC). Municipal Ordinance No. 81 classified Bel-Air Village as a Class A Residential
Zone, with its boundary in the south extending to the center line of Jupiter Street. The Municipal Ordinance was
adopted by the MMC under the Comprehensive Zoning Ordinance for the National Capital Region and promulgated as
MMC Ordinance No. 81-01. Bel-Air Village was indicated therein as bounded by Jupiter Street and the block adjacent
thereto was classified as a High Intensity Commercial Zone.[36]
We ruled that since both Ordinances recognized Jupiter Street as the boundary between Bel-Air Village and the
commercial district, Jupiter Street was not for the exclusive benefit of Bel-Air residents. We also held that the perimeter
wall on said street was constructed not to separate the residential from the commercial blocks but simply for security
reasons, hence, in tearing down said wall, Ayala Corporation did not violate the "deed restrictions" in the deeds of
sale. Scc-alr
We upheld the ordinances, specifically MMC Ordinance No. 81-01, as a legitimate exercise of police power.[37] The
power of the MMC and the Makati Municipal Council to enact zoning ordinances for the general welfare prevailed over
the "deed restrictions".
In the second Sangalang/Yabut decision, we held that the opening of Jupiter Street was warranted by the demands of
the common good in terms of "traffic decongestion and public convenience." Jupiter was opened by the Municipal
Mayor to alleviate traffic congestion along the public streets adjacent to the Village. [38] The same reason was given for
the opening to public vehicular traffic of Orbit Street, a road inside the same village. The destruction of the gate in Orbit
Street was also made under the police power of the municipal government. The gate, like the perimeter wall along
Jupiter, was a public nuisance because it hindered and impaired the use of property, hence, its summary abatement by
the mayor was proper and legal.[39]
Contrary to petitioners claim, the two Sangalang cases do not apply to the case at bar. Firstly, both involved
zoning ordinances passed by the municipal council of Makati and the MMC. In the instant case, the basis for the
proposed opening of Neptune Street is contained in the notice of December 22, 1995 sent by petitioner to respondent
BAVA, through its president. The notice does not cite any ordinance or law, either by the Sangguniang Panlungsod of
Makati City or by the MMDA, as the legal basis for the proposed opening of Neptune Street. Petitioner MMDA simply
relied on its authority under its charter "to rationalize the use of roads and/or thoroughfares for the safe and convenient
movement of persons." Rationalizing the use of roads and thoroughfares is one of the acts that fall within the scope of
transport and traffic management. By no stretch of the imagination, however, can this be interpreted as an express or
implied grant of ordinance-making power, much less police power. Misjuris
Secondly, the MMDA is not the same entity as the MMC in Sangalang. Although the MMC is the forerunner of
the present MMDA, an examination of Presidential Decree (P. D.) No. 824, the charter of the MMC, shows that
the latter possessed greater powers which were not bestowed on the present MMDA. Jjlex
Metropolitan Manila was first created in 1975 by Presidential Decree (P.D.) No. 824. It comprised the Greater Manila
Area composed of the contiguous four (4) cities of Manila, Quezon, Pasay and Caloocan, and the thirteen (13)
municipalities of Makati, Mandaluyong, San Juan, Las Pinas, Malabon, Navotas, Pasig, Pateros, Paranaque, Marikina,
Muntinlupa and Taguig in the province of Rizal, and Valenzuela in the province of Bulacan.[40] Metropolitan Manila was
created as a response to the finding that the rapid growth of population and the increase of social and economic
requirements in these areas demand a call for simultaneous and unified development; that the public services rendered
by the respective local governments could be administered more efficiently and economically if integrated under a
system of central planning; and this coordination, "especially in the maintenance of peace and order and the
eradication of social and economic ills that fanned the flames of rebellion and discontent [were] part of reform
measures under Martial Law essential to the safety and security of the State."[41]
Metropolitan Manila was established as a "public corporation" with the following powers: Calrs-pped
"Section 1. Creation of the Metropolitan Manila.There is hereby created a public corporation, to be known as
the Metropolitan Manila, vested with powers and attributes of a corporation including the power to make
contracts, sue and be sued, acquire, purchase, expropriate, hold, transfer and dispose of property and
such other powers as are necessary to carry out its purposes. The Corporation shall be administered by a
Commission created under this Decree."[42]
The administration of Metropolitan Manila was placed under the Metro Manila Commission (MMC) vested with the
following powers:
"Sec. 4. Powers and Functions of the Commission. - The Commission shall have the following powers and
functions:
1. To act as a central government to establish and administer programs and provide services common to
the area;
2. To levy and collect taxes and special assessments, borrow and expend money and issue bonds, revenue
certificates, and other obligations of indebtedness. Existing tax measures should, however, continue to be
operative until otherwise modified or repealed by the Commission;
3. To charge and collect fees for the use of public service facilities;
4. To appropriate money for the operation of the metropolitan government and review appropriations for the city
and municipal units within its jurisdiction with authority to disapprove the same if found to be not in accordance
with the established policies of the Commission, without prejudice to any contractual obligation of the local
government units involved existing at the time of approval of this Decree;
5. To review, amend, revise or repeal all ordinances, resolutions and acts of cities and municipalities
within Metropolitan Manila;
6. To enact or approve ordinances, resolutions and to fix penalties for any violation thereof which shall
not exceed a fine of P10,000.00 or imprisonment of six years or both such fine and imprisonment for a
single offense;
7. To perform general administrative, executive and policy-making functions;
8. To establish a fire control operation center, which shall direct the fire services of the city and municipal
governments in the metropolitan area;
9. To establish a garbage disposal operation center, which shall direct garbage collection and disposal in the
metropolitan area;
10. To establish and operate a transport and traffic center, which shall direct traffic activities; Jjjuris
11. To coordinate and monitor governmental and private activities pertaining to essential services such as
transportation, flood control and drainage, water supply and sewerage, social, health and environmental
services, housing, park development, and others;
12. To insure and monitor the undertaking of a comprehensive social, economic and physical planning and
development of the area;
13. To study the feasibility of increasing barangay participation in the affairs of their respective local governments
and to propose to the President of the Philippines definite programs and policies for implementation;
14. To submit within thirty (30) days after the close of each fiscal year an annual report to the President of the
Philippines and to submit a periodic report whenever deemed necessary; and
15. To perform such other tasks as may be assigned or directed by the President of the Philippines." Sc jj
The MMC was the "central government" of Metro Manila for the purpose of establishing and administering programs
providing services common to the area. As a "central government" it had the power to levy and collect taxes and
special assessments, the power to charge and collect fees; the power to appropriate money for its operation, and at the
same time, review appropriations for the city and municipal units within its jurisdiction. It was bestowed the power to
enact or approve ordinances, resolutions and fix penalties for violation of such ordinances and resolutions. It also had
the power to review, amend, revise or repeal all ordinances, resolutions and acts of any of the four (4) cities and
thirteen (13) municipalities comprising Metro Manila.
P. D. No. 824 further provided:
"Sec. 9. Until otherwise provided, the governments of the four cities and thirteen municipalities in the
Metropolitan Manila shall continue to exist in their present form except as may be inconsistent with this
Decree. The members of the existing city and municipal councils in Metropolitan Manila shall, upon
promulgation of this Decree, and until December 31, 1975, become members of the Sangguniang Bayan
which is hereby created for every city and municipality of Metropolitan Manila.
In addition, the Sangguniang Bayan shall be composed of as many barangay captains as may be determined
and chosen by the Commission, and such number of representatives from other sectors of the society as may be
appointed by the President upon recommendation of the Commission.
x x x.
The Sangguniang Bayan may recommend to the Commission ordinances, resolutions or such measures
as it may adopt; Provided, that no such ordinance, resolution or measure shall become effective, until
after its approval by the Commission; and Provided further, that the power to impose taxes and other
levies, the power to appropriate money and the power to pass ordinances or resolutions with penal
sanctions shall be vested exclusively in the Commission."
The creation of the MMC also carried with it the creation of the Sangguniang Bayan. This was composed of the
members of the component city and municipal councils, barangay captains chosen by the MMC and sectoral
representatives appointed by the President. The Sangguniang Bayan had the power to recommend to the MMC the
adoption of ordinances, resolutions or measures. It was the MMC itself, however, that possessed legislative
powers. All ordinances, resolutions and measures recommended by the Sangguniang Bayan were subject to the
MMCs approval. Moreover, the power to impose taxes and other levies, the power to appropriate money, and the
power to pass ordinances or resolutions with penal sanctions were vested exclusively in the MMC. Sce-dp
Thus, Metropolitan Manila had a "central government," i.e., the MMC which fully possessed legislative and
police powers. Whatever legislative powers the component cities and municipalities had were all subject to
review and approval by the MMC.
After President Corazon Aquino assumed power, there was a clamor to restore the autonomy of the local
government units in Metro Manila. Hence, Sections 1 and 2 of Article X of the 1987 Constitution provided: Sj cj
"Section 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities,
municipalities and barangays. There shall be autonomous regions in Muslim Mindanao and the Cordilleras as
herein provided.
Section 2. The territorial and political subdivisions shall enjoy local autonomy."
The Constitution, however, recognized the necessity of creating metropolitan regions not only in the existing National
Capital Region but also in potential equivalents in the Visayas and Mindanao.[43] Section 11 of the same Article X thus
provided:
"Section 11. The Congress may, by law, create special metropolitan political subdivisions, subject to a plebiscite
as set forth in Section 10 hereof. The component cities and municipalities shall retain their basic autonomy and
shall be entitled to their own local executives and legislative assemblies. The jurisdiction of the metropolitan
authority that will thereby be created shall be limited to basic services requiring coordination."
The Constitution itself expressly provides that Congress may, by law, create "special metropolitan political
subdivisions" which shall be subject to approval by a majority of the votes cast in a plebiscite in the political units
directly affected; the jurisdiction of this subdivision shall be limited to basic services requiring coordination; and the
cities and municipalities comprising this subdivision shall retain their basic autonomy and their own local executive and
legislative assemblies.[44] Pending enactment of this law, the Transitory Provisions of the Constitution gave the
President of the Philippines the power to constitute the Metropolitan Authority, viz:
"Section 8. Until otherwise provided by Congress, the President may constitute the Metropolitan Authority to be
composed of the heads of all local government units comprising the Metropolitan Manila area."[45]
In 1990, President Aquino issued Executive Order (E. O.) No. 392 and constituted the Metropolitan Manila
Authority (MMA). The powers and functions of the MMC were devolved to the MMA. [46] It ought to be stressed,
however, that not all powers and functions of the MMC were passed to the MMA. The MMAs power was limited
to the "delivery of basic urban services requiring coordination in Metropolitan Manila." [47] The MMAs governing
body, the Metropolitan Manila Council, although composed of the mayors of the component cities and
municipalities, was merely given the power of: (1) formulation of policies on the delivery of basic services
requiring coordination and consolidation; and (2) promulgation of resolutions and other issuances, approval
of a code of basic services and the exercise of its rule-making power.[48]
Under the 1987 Constitution, the local government units became primarily responsible for the governance of their
respective political subdivisions. The MMAs jurisdiction was limited to addressing common problems involving basic
services that transcended local boundaries. It did not have legislative power. Its power was merely to provide the
local government units technical assistance in the preparation of local development plans. Any semblance of legislative
power it had was confined to a "review [of] legislation proposed by the local legislative assemblies to ensure
consistency among local governments and with the comprehensive development plan of Metro Manila," and to "advise
the local governments accordingly."[49]
When R.A. No. 7924 took effect, Metropolitan Manila became a "special development and administrative
region" and the MMDA a "special development authority" whose functions were "without prejudice to the
autonomy of the affected local government units." The character of the MMDA was clearly defined in the
legislative debates enacting its charter.
R. A. No. 7924 originated as House Bill No. 14170/ 11116 and was introduced by several legislators led by Dante
Tinga, Roilo Golez and Feliciano Belmonte. It was presented to the House of Representatives by the Committee on
Local Governments chaired by Congressman Ciriaco R. Alfelor. The bill was a product of Committee consultations with
the local government units in the National Capital Region (NCR), with former Chairmen of the MMC and MMA,[50] and
career officials of said agencies. When the bill was first taken up by the Committee on Local Governments, the
following debate took place:
"THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay, Let me explain. This has been debated a long time ago, you
know. Its a special we can create a special metropolitan political subdivision. Supreme
Actually, there are only six (6) political subdivisions provided for in the Constitution: barangay, municipality, city,
province, and we have the Autonomous Region of Mindanao and we have the Cordillera. So we have 6. Now.
HON. [Elias] LOPEZ: May I interrupt, Mr. Chairman. In the case of the Autonomous Region, that is also
specifically mandated by the Constitution.
THE CHAIRMAN: Thats correct. But it is considered to be a political subdivision. What is the meaning of a
political subdivision? Meaning to say, that it has its own government, it has its own political personality,
it has the power to tax, and all governmental powers: police power and everything. All right. Authority is
different; because it does not have its own government. It is only a council, it is an organization of
political subdivision, powers, no, which is not imbued with any political power. Esmmis
If you go over Section 6, where the powers and functions of the Metro Manila Development Authority, it
is purely coordinative. And it provides here that the council is policy-making. All right.
Under the Constitution is a Metropolitan Authority with coordinative power. Meaning to say, it coordinates all of
the different basic services which have to be delivered to the constituency. All right.
There is now a problem. Each local government unit is given its respective as a political subdivision. Kalookan has its
powers, as provided for and protected and guaranteed by the Constitution. All right, the exercise. However, in the
exercise of that power, it might be deleterious and disadvantageous to other local government units. So, we are
forming an authority where all of these will be members and then set up a policy in order that the basic services can be
effectively coordinated. All right. justice
Of course, we cannot deny that the MMDA has to survive. We have to provide some funds, resources.
But it does not possess any political power. We do not elect the Governor. We do not have the power to
tax. As a matter of fact, I was trying to intimate to the author that it must have the power to sue and be sued
because it coordinates. All right. It coordinates practically all these basic services so that the flow and the
distribution of the basic services will be continuous. Like traffic, we cannot deny that. Its before our eyes.
Sewerage, flood control, water system, peace and order, we cannot deny these. Its right on our face. We have to
 look for a solution. What would be the right solution? All right, we envision that there should be a coordinating
agency and it is called an authority. All right, if you do not want to call it an authority, its alright. We may call it a
council or maybe a management agency.
Clearly, the MMDA is not a political unit of government. The power delegated to the MMDA is that given to the
Metro Manila Council to promulgate administrative rules and regulations in the implementation of the MMDAs
functions. There is no grant of authority to enact ordinances and regulations for the general welfare of the
inhabitants of the metropolis. This was explicitly stated in the last Committee deliberations prior to the bills
presentation to Congress. Thus: Ed-p
"THE CHAIRMAN: Yeah, but we have to go over the suggested revision. I think this was already approved
before, but it was reconsidered in view of the proposals, set-up, to make the MMDA stronger. Okay, so if there is
no objection to paragraph "f" And then next is paragraph "b," under Section 6. "It shall approve metro-wide
plans, programs and projects and issue ordinances or resolutions deemed necessary by the MMDA to
carry out the purposes of this Act." Do you have the powers? Does the MMDA because that takes the
form of a local government unit, a political subdivision.
HON. [Feliciano] BELMONTE: Yes, I believe so, your Honor. When we say that it has the policies, its very clear
that those policies must be followed. Otherwise, whats the use of empowering it to come out with policies. Now,
the policies may be in the form of a resolution or it may be in the form of a ordinance. The term "ordinance" in
this case really gives it more teeth, your honor. Otherwise, we are going to see a situation where you have the
power to adopt the policy but you cannot really make it stick as in the case now, and I think here is Chairman
Bunye. I think he will agree that that is the case now. Youve got the power to set a policy, the body wants to
follow your policy, then we say lets call it an ordinance and see if they will not follow it.
THE CHAIRMAN: Thats very nice. I like that. However, there is a constitutional impediment. You are making
this MMDA a political subdivision. The creation of the MMDA would be subject to a plebiscite. That is
what Im trying to avoid. Ive been trying to avoid this kind of predicament. Under the Constitution it
states: if it is a political subdivision, once it is created it has to be subject to a plebiscite. Im trying to
make this as administrative. Thats why we place the Chairman as a cabinet rank.
HON. BELMONTE: All right, Mr. Chairman, okay, what you are saying there is .
THE CHAIRMAN: In setting up ordinances, it is a political exercise. Believe me.
HON. [Elias] LOPEZ: Mr. Chairman, it can be changed into issuances of rules and regulations. That
would be it shall also be enforced. Jksm
HON. BELMONTE: Okay, I will .
HON. LOPEZ: And you can also say that violation of such rule, you impose a sanction. But you know,
ordinance has a different legal connotation.
HON. BELMONTE: All right. I defer to that opinion, your Honor. sc
THE CHAIRMAN: So instead of ordinances, say rules and regulations.
HON. BELMONTE: Or resolutions. Actually, they are actually considering resolutions now.
THE CHAIRMAN: Rules and resolutions.
HON. BELMONTE: Rules, regulations and resolutions."[52]
The draft of H. B. No. 14170/ 11116 was presented by the Committee to the House of Representatives. The
explanatory note to the bill stated that the proposed MMDA is a "development authority" which is a "national agency,
not a political government unit."[53] The explanatory note was adopted as the sponsorship speech of the Committee on
Local Governments. No interpellations or debates were made on the floor and no amendments introduced. The bill was
approved on second reading on the same day it was presented.[54]
When the bill was forwarded to the Senate, several amendments were made. These amendments, however, did not
affect the nature of the MMDA as originally conceived in the House of Representatives.[55]
It is thus beyond doubt that the MMDA is not a local government unit or a public corporation endowed with
legislative power. It is not even a "special metropolitan political subdivision" as contemplated in Section 11, Article X
of the Constitution. The creation of a "special metropolitan political subdivision" requires the approval by a majority of
the votes cast in a plebiscite in the political units directly affected.[56] R. A. No. 7924 was not submitted to the
inhabitants of Metro Manila in a plebiscite. The Chairman of the MMDA is not an official elected by the people, but
appointed by the President with the rank and privileges of a cabinet member. In fact, part of his function is to perform
such other duties as may be assigned to him by the President,[57] whereas in local government units, the President
merely exercises supervisory authority. This emphasizes the administrative character of the MMDA. Newmiso
Clearly then, the MMC under P. D. No. 824 is not the same entity as the MMDA under R. A. No. 7924. Unlike the
MMC, the MMDA has no power to enact ordinances for the welfare of the community. It is the local government
units, acting through their respective legislative councils, that possess legislative power and police power. In the case
at bar, the Sangguniang Panlungsod of Makati City did not pass any ordinance or resolution ordering the opening of
Neptune Street, hence, its proposed opening by petitioner MMDA is illegal and the respondent Court of Appeals did not
err in so ruling. We desist from ruling on the other issues as they are unnecessary. Esmso
We stress that this decision does not make light of the MMDAs noble efforts to solve the chaotic traffic condition in Metro
Manila. Everyday, traffic jams and traffic bottlenecks plague the metropolis. Even our once sprawling boulevards and avenues
are now crammed with cars while city streets are clogged with motorists and pedestrians. Traffic has become a social malaise
affecting our peoples productivity and the efficient delivery of goods and services in the country. The MMDA was created to
put some order in the metropolitan transportation system but unfortunately the powers granted by its charter are limited. Its
good intentions cannot justify the opening for public use of a private street in a private subdivision without any legal warrant.
The promotion of the general welfare is not antithetical to the preservation of the rule of law. Sdjad
IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 39549
are affirmed. Sppedsc
SO ORDERED.
ERNESTO B. FRANCISCO, JR., G.R. No. 166501
Petitioner,
Present:
PANGANIBAN, C.J., PUNO, QUISUMBING, YNARES-SANTIAGO, SANDOVAL-GUTIERREZ,
- versus - CARPIO,
AUSTRIA-MARTINEZ, CORONA, CARPIO MORALES, CALLEJO, SR., AZCUNA, TINGA, CHICO-NAZARIO,
GARCIA, and VELASCO, JJ. HON. BAYANI F. FERNANDO, in his capacity as Chairman of the
Metropolitan Manila Development Authority, and METROPOLITAN MANILA DEVELOPMENT Promulgated:
AUTHORITY,
Respondents. November 16, 2006
x--------------------------------------------------x
RESOLUTION
CARPIO, J.:
Petitioner Ernesto B. Francisco, Jr. (petitioner), as member of the Integrated Bar of the Philippines and taxpayer, filed
this original action for the issuance of the writs of Prohibition and Mandamus. Petitioner prays for the Prohibition writ to
enjoin respondents Bayani F. Fernando, Chairman of the Metropolitan Manila Development Authority (MMDA) and the
MMDA (respondents) from further implementing its wet flag scheme (Flag Scheme).[1] The Mandamus writ is to compel
respondents to respect and uphold the x x x rights of pedestrians to due process x x x and equal protection of the laws
x x x.
Petitioner contends that the Flag Scheme: (1) has no legal basis because the MMDAs governing body, the
Metro Manila Council, did not authorize it; (2) violates the Due Process Clause because it is a summary punishment for
jaywalking; (3) disregards the Constitutional protection against cruel, degrading, and inhuman punishment; and (4)
violates pedestrian rights as it exposes pedestrians to various potential hazards.[2]
In their Comment, respondents sought the dismissal of the petition for petitioners lack of standing to litigate and for
violation of the doctrine of hierarchy of courts. Alternatively, respondents contended that the Flag Scheme is a valid
preventive measure against jaywalking.
Petitioner filed a Reply, claiming that the Court should take cognizance of the case as it raises issues of paramount and
transcendental importance. Petitioner also contended that he filed this petition directly with the Court because the issues
raised in the petition deserve the direct x x x intervention of the x x x [C]ourt x x x.
We dismiss the petition.
A citizen can raise a constitutional question only when (1) he can show that he has personally suffered some actual or
threatened injury because of the allegedly illegal conduct of the government; (2) the injury is fairly traceable to the
challenged action; and (3) a favorable action will likely redress the injury.[3] On the other hand, a party suing as a taxpayer
must specifically show that he has a sufficient interest in preventing the illegal expenditure of money raised by taxation
and that he will sustain a direct injury as a result of the enforcement of the questioned statute. [4] Petitioner meets none
of the requirements under either category.
Nor is there merit to petitioners claim that the Court should relax the standing requirement because of the transcendental
importance of the issues the petition raises. As an exception to the standing requirement, the transcendental importance
of the issues raised relates to the merits of the petition.[5] Thus, the party invoking it must show, among others, the
presence of a clear disregard of a constitutional or statutory prohibition.[6] Petitioner has not shown such clear
constitutional or statutory violation.
On the Flag Schemes alleged lack of legal basis, we note that all the cities and municipalities within the MMDAs
jurisdiction,[7] except Valenzuela City, have each enacted anti-jaywalking ordinances or traffic management codes with
provisions for pedestrian regulation. Such fact serves as sufficient basis for respondents implementation of schemes, or
ways and means, to enforce the anti-jaywalking ordinances and similar regulations. After all, the MMDA is an
administrative agency tasked with the implementation of rules and regulations enacted by proper authorities. [8] The
absence of an anti-jaywalking ordinance in Valenzuela City does not detract from this conclusion absent any proof that
respondents implemented the Flag Scheme in that city.
Further, the petition ultimately calls for a factual determination of whether the Flag Scheme is a reasonable enforcement
of anti-jaywalking ordinances and similar enactments.This Court is not a trier of facts. [9] The petition proffers mere
surmises and speculations on the potential hazards of the Flag Scheme. This Court cannot determine the
reasonableness of the Flag Scheme based on mere surmises and speculations.
Lastly, petitioner violated the doctrine of hierarchy of courts when he filed this petition directly with us. This Courts
jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, and habeas corpus, while concurrent with
the Regional Trial Courts and the Court of Appeals, does not give litigants unrestrained freedom of choice of forum from
 Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Resolution were reached in consultation before
which to seek such relief.[10] We relax this rule only in exceptional and compelling circumstances.[11] This is not the case the case was assigned to the writer of the opinion of the Court.

here. ARTEMIO V. PANGANIBAN

Chief Justice

WHEREFORE, we DISMISS the petition.

[1] As first implemented on 17 January 2005, respondents describe the Flag Scheme as follows: [F]ifteen mobile units bearing wet white flags,
measuring seven (7) by five (5) feet with the words MAGLAKAD AT MAG-ABANG SA BANGKETA, were deployed along major
SO ORDERED. Metro Manila thoroughfares. Specifically, the wet flags are hung on the right side of the MMDA mobile units, perpendicular to the
sidewalks and in full view of pedestrians and commuters awaiting for a ride, which move slowly along the street. (Rollo, pp. 74-75)
[2] Petitioner listed the following as the hazards likely to result from the Flag Schemes implementation (rollo, pp. 34-35):
ANTONIO T. CARPIO
a) Pedestrians walking ahead of a [sic] MMDA moving vehicle with their backs towards the latter are likely
to be hit by the wet flag even before they will come to know that the wet flag is behind them;
Associate Justice b) The scheme is likely to cause accident and injuries in case of a sudden scampering of pedestrians to
avoid getting hit by the wet flag;
c) Employees going to work are likely to miss a days work or be late for work because either they have to
WE CONCUR:
change clothes or wait for the clothes they are wearing to dry;
ARTEMIO V. PANGANIBAN
d) Students going to school are likely to miss school or be late for school because either they have to
Chief Justice
change clothes or wait for their wet clothes to dry;
e) Women are subjected to indignities because if drenched, sensitive parts of their bodies may be
exposed, or they might end up using just any place wherein to change clothes or to dry their clothes;
REYNATO S. PUNO LEONARDO A. QUISUMBING
f) As a matter of fact, anyone hit by the wet flag or wet [sic] or drenched with water is likely to get sick if
Associate Justice Associate Justice
he or she does not change clothes;
g) Employees coming back from strenuous work are likely to have health problems if hit by the wet flag or
wet or drenched with water;
h) Old men and women and children are most likely to be hit and drenched by the wet flag because they
CONSUELO YNARES-SANTIAGO ANGELINA SANDOVAL-GUTIERREZ
do not have the speed and agility to avoid the wet flag on board a moving MMDA vehicle;
Associate Justice Associate Justice
i) As observed, the manner of throwing water into the wet flag is so crude and primitive that other
pedestrians and bystanders on the sidewalk are likely to get wet by spilled water as water is being thrown
by a [sic] MMDA personnel into the wet flag; and,
MA. ALICIA AUSTRIA-MARTINEZ RENATO C. CORONA
j) Likewise, as observed, the wet flag itself is already so dirty after just a day or two of use that using it to
Associate Justice Associate Justice
wet or drench pedestrians is so unsanitary and exposes pedestrians to possible health problems.
[3] Telecommunications & Broadcast Attorneys of the Philippines, Inc. v. COMELEC, 352 Phil. 153 (1998).
[4] Id.
CONCHITA CARPIO MORALES ROMEO J. CALLEJO, SR. [5] Id.
Associate Justice Associate Justice [6] Senate of the Philippines v. Ermita, G.R. No. 169777, 20 April 2006.
[7] MMDA has jurisdiction over the cities of Caloocan, Las Pias, Makati, Malabon, Mandaluyong, Manila, Marikina, Muntinlupa,

Paraaque, Pasay, Pasig, Quezon, San Juan, Taguig, and Valenzuela and the municipalities of Navotas and Pateros.
[8] Metropolitan Manila Development Authority v. Bel-Air Village Association, 385 Phil. 586 (2000); Metropolitan Manila Development Authority

v. Garin, G.R. No. 130230, 15 April 2005, 456 SCRA 176.

ADOLFO S. AZCUNA DANTE O. TINGA [9] Chavez v. Public Estates Authority, 433 Phil. 506 (2002).
Associate Justice Associate Justice [10] People v. Cuaresma, G.R. No. 67787, 18 April 1989, 172 SCRA 415.
[11] Santiago v. Vasquez, G.R. Nos. 99289-90, 27 January 1993, 217 SCRA 633.

MINITA V. CHICO-NAZARIO CANCIO C. GARCIA

Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

CERTIFICATION
 THE METROPOLITAN MANILADEVELOPMENT G.R. No. 170656
AUTHORITY and BAYANI FERNANDO as Chairman of the have remained unchecked and have reverberated to this day. Traffic jams continue to clog the streets of Metro Manila,
Metropolitan Manila Development Authority, Present: bringing vehicles to a standstill at main road arteries during rush hour traffic and sapping peoples energies and patience
Petitioners,
PUNO, C.J., in the process.
QUISUMBING,
- versus - YNARES-SANTIAGO, The present petition for review on certiorari, rooted in the traffic congestion problem, questions the authority
SANDOVAL-GUTIERREZ, of the Metropolitan Manila Development Authority (MMDA) to order the closure of provincial bus terminals along Epifanio
CARPIO,
AUSTRIA-MARTINEZ, de los Santos Avenue (EDSA) and major thoroughfares of Metro Manila.
VIRON TRANSPORTATION CO., INC., CORONA,
Respondent. CARPIO MORALES, Specifically challenged are two Orders issued by Judge Silvino T. Pampilo, Jr. of the Regional Trial Court
AZCUNA, (RTC) of Manila, Branch 26 in Civil Case Nos. 03-105850 and 03-106224.
TINGA,
CHICO-NAZARIO, The first assailed Order of September 8, 2005,[2] which resolved a motion for reconsideration filed by herein
GARCIA,
respondents, declared Executive Order (E.O.) No. 179, hereafter referred to as the E.O., unconstitutional as it constitutes
VELASCO, JR.,
NACHURA, and an unreasonable exercise of police power. The second assailed Order of November 23, 2005[3] denied petitioners motion
REYES, JJ.
x --------------------------------------------- x for reconsideration.
HON. ALBERTO G. ROMULO, Executive Secretary, the G.R. No. 170657
The following facts are not disputed:
METROPOLITAN MANILADEVELOPMENT AUTHORITY
and BAYANI FERNANDO as Chairman of the President Gloria Macapagal Arroyo issued the E.O. on February 10, 2003, PROVIDING FOR THE ESTABLISHMENT
Metropolitan Manila Development Authority,
Petitioners, OF GREATER MANILA MASS TRANSPORT SYSTEM, the pertinent portions of which read:
WHEREAS, Metro Manila continues to be the center of employment opportunities, trade and commerce of the
- versus - Greater Metro Manila area;

MENCORP TRANSPORTATION SYSTEM, INC., WHEREAS, the traffic situation in Metro Manila has affected the adjacent provinces of Bulacan, Cavite,
Respondent. Promulgated: Laguna, and Rizal, owing to the continued movement of residents and industries to more affordable
and economically viable locations in these provinces;
August 15, 2007
x-----------------------------------------------------------------------------------------x WHEREAS, the Metropolitan Manila Development Authority (MMDA) is tasked to undertake measures to ease
traffic congestion in Metro Manila and ensure the convenient and efficient travel of commuters within
its jurisdiction;
DECISION
WHEREAS, a primary cause of traffic congestion in Metro Manila has been the numerous buses plying the
CARPIO MORALES, J.:
streets that impedes [sic] the flow of vehicles and commuters due to the inefficient connectivity of
the different transport modes;
The following conditions in 1969, as observed by this Court:
WHEREAS, the MMDA has recommended a plan to decongest traffic by eliminating the bus terminals now
located along major Metro Manila thoroughfares and providing more convenient access to the mass
Vehicles have increased in number. Traffic congestion has moved from bad to worse, from tolerable
transport system to the commuting public through the provision of mass transport terminal
to critical. The number of people who use the thoroughfares has multiplied x x x,[1]
facilities that would integrate the existing transport modes, namely the buses, the rail-based
systems of the LRT, MRT and PNR and to facilitate and ensure efficient travel through the improved
connectivity of the different transport modes;
WHEREAS, the national government must provide the necessary funding requirements to immediately
implement and render operational these projects; and extent to MMDA such other assistance as
may be warranted to ensure their expeditious prosecution.
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Philippines, by virtue of the
powers vested in me by law, do hereby order:
Manila thoroughfares and providing more and convenient access to the mass transport system to the commuting public
through the provision of mass transport terminal facilities[6] which plan is referred to under the E.O. as the Greater Manila
Mass Transport System Project (the Project).

Section 1. THE PROJECT. The project shall be identified as GREATER MANILA TRANSPORT SYSTEM The E.O. thus designated the MMDA as the implementing agency for the Project.
Project.

Section 2. PROJECT OBJECTIVES. In accordance with the plan proposed by MMDA, the project aims to
develop four (4) interim intermodal mass transport terminals to integrate the different transport Pursuant to the E.O., the Metro Manila Council (MMC), the governing board and policymaking body of the
modes, as well as those that shall hereafter be developed, to serve the commuting public in the MMDA, issued Resolution No. 03-07 series of 2003[7]expressing full support of the Project. Recognizing the imperative
northwest, north, east, south, and southwest of Metro Manila. Initially, the project shall concentrate
on immediately establishing the mass transport terminals for the north and south Metro Manila to integrate the different transport modes via the establishment of common bus parking terminal areas, the MMC cited
commuters as hereinafter described.
the need to remove the bus terminals located along major thoroughfares of Metro Manila. [8]
Section 3. PROJECT IMPLEMENTING AGENCY. The Metropolitan Manila Development Authority
(MMDA), is hereby designated as the implementing Agency for the project. For this purpose, MMDA
is directed to undertake such infrastructure development work as may be necessary and, thereafter, On February 24, 2003, Viron Transport Co., Inc. (Viron), a domestic corporation engaged in the business of public
manage the project until it may be turned-over to more appropriate agencies, if found suitable and
transportation with a provincial bus operation,[9] filed a petition for declaratory relief[10] before the RTC[11] of Manila.
convenient. Specifically, MMDA shall have the following functions and responsibilities:
In its petition which was docketed as Civil Case No. 03-105850, Viron alleged that the MMDA, through
a) Cause the preparation of the Master Plan for the projects, including the designs and
costing; Chairman Fernando, was poised to issue a Circular, Memorandum or Order closing, or tantamount to closing, all
b) Coordinate the use of the land and/or properties needed for the project with the provincial bus terminals along EDSA and in the whole of the Metropolis under the pretext of traffic regulation. [12] This
respective agencies and/or entities owning them;
c) Supervise and manage the construction of the necessary structures and facilities; impending move, it stressed, would mean the closure of its bus terminal in Sampaloc, Manila and two others in Quezon
d) Execute such contracts or agreements as may be necessary, with the appropriate
government agencies, entities, and/or private persons, in accordance with existing City.
laws and pertinent regulations, to facilitate the implementation of the project; Alleging that the MMDAs authority does not include the power to direct provincial bus operators to abandon
e) Accept, manage and disburse such funds as may be necessary for the construction
and/or implementation of the projects, in accordance with prevailing accounting and their existing bus terminals to thus deprive them of the use of their property, Viron asked the court to construe the scope,
audit polices and practice in government.
f) Enlist the assistance of any national government agency, office or department, extent and limitation of the power of the MMDA to regulate traffic under R.A. No. 7924, AN ACT CREATING THE
including local government units, government-owned or controlled corporations, as METROPOLITAN MANILA DEVELOPMENT AUTHORITY, DEFINING ITS POWERS AND FUNCTIONS, PROVIDING
may be necessary;
g) Assign or hire the necessary personnel for the above purposes; and FUNDS THEREFOR AND FOR OTHER PURPOSES.
h) Perform such other related functions as may be necessary to enable it to
accomplish the objectives and purposes of this Executive Order.[4] (Emphasis in the Viron also asked for a ruling on whether the planned closure of provincial bus terminals would contravene the
original; underscoring supplied) Public Service Act and related laws which mandate public utilities to provide and maintain their own terminals as a
requisite for the privilege of operating as common carriers. [13]
As the above-quoted portions of the E.O. noted, the primary cause of traffic congestion in Metro Manila has
Mencorp Transportation System, Inc. (Mencorp), another provincial bus operator, later filed a similar petition
been the numerous buses plying the streets and the inefficient connectivity of the different transport modes;[5] and the
for declaratory relief[14] against Executive Secretary Alberto G. Romulo and MMDA Chairman Fernando.
MMDA had recommended a plan to decongest traffic by eliminating the bus terminals now located along major Metro
 Mencorp asked the court to declare the E.O. unconstitutional and illegal for transgressing the possessory rights
of owners and operators of public land transportation units over their respective terminals.
Averring that MMDA Chairman Fernando had begun to implement a plan to close and eliminate all provincial
bus terminals along EDSA and in the whole of the metropolis and to transfer their operations to common bus
terminals,[15] Mencorp prayed for the issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction
to restrain the impending closure of its bus terminals which it was leasing at the corner of EDSA and New York Street in
Cubao and at the intersection of Blumentritt, Laon Laan and Halcon Streets in Quezon City. The petition was docketed
as Civil Case No. 03-106224 and was raffled to Branch 47 of the RTC of Manila.
Mencorps petition was consolidated on June 19, 2003 with Virons petition which was raffled to Branch 26 of
the RTC, Manila.
Mencorps prayer for a TRO and/or writ of injunction was denied as was its application for the issuance of a
preliminary injunction.[16]
In the Pre-Trial Order[17] issued by the trial court, the issues were narrowed down to whether 1) the MMDAs
power to regulate traffic in Metro Manila included the power to direct provincial bus operators to abandon and close their
duly established and existing bus terminals in order to conduct business in a common terminal; (2) the E.O. is consistent
with the Public Service Act and the Constitution; and (3) provincial bus operators would be deprived of their real properties
without due process of law should they be required to use the common bus terminals.
Upon the agreement of the parties, they filed their respective position papers in lieu of hearings.
By Decision[18] of January 24, 2005, the trial court sustained the constitutionality and legality of the E.O.
pursuant to R.A. No. 7924, which empowered the MMDA to administer Metro Manilas basic services including those of
transport and traffic management.
The trial court held that the E.O. was a valid exercise of the police power of the State as it satisfied the two
tests of lawful subject matter and lawful means, hence, Virons and Mencorps property rights must yield to police power.
On the separate motions for reconsideration of Viron and Mencorp, the trial court, by Order of September 8,
2005, reversed its Decision, this time holding that the E.O. was an unreasonable exercise of police power; that the
authority of the MMDA under Section (5)(e) of R.A. No. 7924 does not include the power to order the closure of Virons
and Mencorps existing bus terminals; and that the E.O. is inconsistent with the provisions of the Public Service Act.
Petitioners motion for reconsideration was denied by Resolution of November 23, 2005.
Hence, this petition, which faults the trial court for failing to rule that: (1) the requisites of declaratory relief are
not present, there being no justiciable controversy in Civil Case Nos. 03-105850 and 03-106224; and (2) the President
has the authority to undertake or cause the implementation of the Project.[19]
Petitioners contend that there is no justiciable controversy in the cases for declaratory relief as nothing in the
body of the E.O. mentions or orders the closure and elimination of bus terminals along the major thoroughfares of Metro
Manila. Viron and Mencorp, they argue, failed to produce any letter or communication from the Executive Department
apprising them of an immediate plan to close down their bus terminals.
And petitioners maintain that the E.O. is only an administrative directive to government agencies to coordinate
with the MMDA and to make available for use government property along EDSA and South Expressway corridors. They
add that the only relation created by the E.O. is that between the Chief Executive and the implementing officials, but not
between third persons.
The petition fails.
It is true, as respondents have pointed out, that the alleged deficiency of the consolidated petitions to meet the
requirement of justiciability was not among the issues defined for resolution in the Pre-Trial Order of January 12, 2004. It
is equally true, however, that the question was repeatedly raised by petitioners in their Answer to Virons petition, [20] their
Comment of April 29, 2003 opposing Mencorps prayer for the issuance of a TRO, [21] and their Position Paper of August
23, 2004.[22]
In bringing their petitions before the trial court, both respondents pleaded the existence of the essential
requisites for their respective petitions for declaratory relief,[23] and refuted petitioners contention that a justiciable
controversy was lacking.[24] There can be no denying, therefore, that the issue was raised and discussed by the parties
before the trial court.
The following are the essential requisites for a declaratory relief petition: (a) there must be a justiciable
controversy; (b) the controversy must be between persons whose interests are adverse; (c) the party seeking declaratory
relief must have a legal interest in the controversy; and (d) the issue invoked must be ripe for judicial determination.[25]
The requirement of the presence of a justiciable controversy is satisfied when an actual controversy or
the ripening seeds thereof exist between the parties, all of whom are sui juris and before the court, and the declaration
sought will help in ending the controversy.[26] A question becomes justiciable when it is translated into a claim of right
which is actually contested.[27]
 In the present cases, respondents resort to court was prompted by the issuance of the E.O. The 4th Whereas
clause of the E.O. sets out in clear strokes the MMDAs plan to decongest traffic by eliminating the bus terminals now
located along major Metro Manila thoroughfares and providing more convenient access to the mass transport system to
the commuting public through the provision of mass transport terminal facilities x x x. (Emphasis supplied)
Section 2 of the E.O. thereafter lays down the immediate establishment of common bus terminals for north-
and south-bound commuters. For this purpose, Section 8 directs the Department of Budget and Management to allocate
funds of not more than one hundred million pesos (P100,000,000) to cover the cost of the construction of the north and
south terminals. And the E.O. was made effective immediately.
The MMDAs resolve to immediately implement the Project, its denials to the contrary notwithstanding, is also
evident from telltale circumstances, foremost of which was the passage by the MMC of Resolution No. 03-07, Series of
2003 expressing its full support of the immediate implementation of the Project.
Notable from the 5th Whereas clause of the MMC Resolution is the plan to remove the bus terminals located
along major thoroughfares of Metro Manila and an urgent need to integrate the different transport modes. The
7th Whereas clause proceeds to mention the establishment of the North and South terminals.
As alleged in Virons petition, a diagram of the GMA-MTS North Bus/Rail Terminal had been drawn up, and
construction of the terminal is already in progress. The MMDA, in its Answer[28] and Position Paper,[29] in fact affirmed
that the government had begun to implement the Project.
It thus appears that the issue has already transcended the boundaries of what is merely conjectural or
anticipatory.
Under the circumstances, for respondents to wait for the actual issuance by the MMDA of an order for the
closure of respondents bus terminals would be foolhardy for, by then, the proper action to bring would no longer be for
declaratory relief which, under Section 1, Rule 63[30] of the Rules of Court, must be brought before there is a breach or
violation of rights.
As for petitioners contention that the E.O. is a mere administrative issuance which creates no relation with
third persons, it does not persuade. Suffice it to stress that to ensure the success of the Project for which the concerned
government agencies are directed to coordinate their activities and resources, the existing bus terminals owned, operated
or leased by third persons like respondents would have to be eliminated; and respondents would be forced to operate
from the common bus terminals.
It cannot be gainsaid that the E.O. would have an adverse effect on respondents. The closure of their bus
terminals would mean, among other things, the loss of income from the operation and/or rentals of stalls
thereat. Precisely, respondents claim a deprivation of their constitutional right to property without due process of law.
Respondents have thus amply demonstrated a personal and substantial interest in the case such that [they
have] sustained, or will sustain, direct injury as a result of [the E.O.s] enforcement.[31] Consequently, the established rule
that the constitutionality of a law or administrative issuance can be challenged by one who will sustain a direct injury as
a result of its enforcement has been satisfied by respondents.
On to the merits of the case.
Respondents posit that the MMDA is devoid of authority to order the elimination of their bus terminals under
the E.O. which, they argue, is unconstitutional because it violates both the Constitution and the Public Service Act; and
that neither is the MMDA clothed with such authority under R.A. No. 7924.
Petitioners submit, however, that the real issue concerns the Presidents authority to undertake or to cause the
implementation of the Project. They assert that the authority of the President is derived from E.O. No.
125, REORGANIZING THE MINISTRY OF TRANSPORTATION AND COMMUNICATIONS DEFINING ITS POWERS
AND FUNCTIONS AND FOR OTHER PURPOSES, her residual power and/or E.O. No. 292, otherwise known as the
Administrative Code of 1987. They add that the E.O. is also a valid exercise of the police power.
E.O. No. 125,[32] which former President Corazon Aquino issued in the exercise of legislative powers,
reorganized the then Ministry (now Department) of Transportation and Communications. Sections 4, 5, 6 and 22 of E.O.
125, as amended by E.O. 125-A,[33] read:
SECTION 4. Mandate. The Ministry shall be the primary policy, planning, programming,
coordinating, implementing, regulating and administrative entity of the Executive Branch of the
government in the promotion, development and regulation of dependable and coordinated
networks of transportation and communication systems as well as in the fast, safe, efficient and
reliable postal, transportation and communications services.
To accomplish such mandate, the Ministry shall have the following objectives:
(a) Promote the development of dependable and coordinated networks of transportation and
communications systems;
 (b) Guide government and private investment in the development of the countrys
intermodal transportation and communications systems in a most practical, expeditious, and
orderly fashion for maximum safety, service, and cost effectiveness; (Emphasis and underscoring
supplied)
SECTION 5. Powers and Functions. To accomplish its mandate, the Ministry shall have the
following powers and functions:
(a) Formulate and recommend national policies and guidelines for the preparation and
implementation of integrated and comprehensive transportation and communications systems at the
national, regional and local levels;
(b) Establish and administer comprehensive and integrated programs for transportation
and communications, and for this purpose, may call on any agency, corporation, or organization,
whether public or private, whose development programs include transportation and communications as
an integral part thereof, to participate and assist in the preparation and implementation of such program;
(c) Assess, review and provide direction to transportation and communications research and
development programs of the government in coordination with other institutions concerned;
(d) Administer all laws, rules and regulations in the field of transportation and
communications; (Emphasis and underscoring supplied)
SECTION 6. Authority and Responsibility. The authority and responsibility for the exercise of
the mandate of the Ministry and for the discharge of its powers and functions shall be vested in
the Minister of Transportation and Communications, hereinafter referred to as the Minister, who
shall have supervision and control over the Ministry and shall be appointed by the President. (Emphasis
and underscoring supplied)
SECTION 22. Implementing Authority of Minister. The Minister shall issue such orders, rules,
regulations and other issuances as may be necessary to ensure the effective implementation of
the provisions of this Executive Order. (Emphasis and underscoring supplied)
It is readily apparent from the abovequoted provisions of E.O. No. 125, as amended, that the President, then
possessed of and exercising legislative powers, mandated the DOTC to be the primary policy, planning, programming,
coordinating, implementing, regulating and administrative entity to promote, develop and regulate networks of
transportation and communications. The grant of authority to the DOTC includes the power
to establish and administer comprehensive and integrated programs for transportation and communications.
As may be seen further, the Minister (now Secretary) of the DOTC is vested with the authority and responsibility
to exercise the mandate given to the department. Accordingly, the DOTC Secretary is authorized to issue such orders,
rules, regulations and other issuances as may be necessary to ensure the effective implementation of the law.
Since, under the law, the DOTC is authorized to establish and administer programs and projects for
transportation, it follows that the President may exercise the same power and authority to order the implementation of
the Project, which admittedly is one for transportation.
Such authority springs from the Presidents power of control over all executive departments as well as the
obligation for the faithful execution of the laws under Article VII, Section 17 of the Constitution which provides:
SECTION 17. The President shall have control of all the executive departments, bureaus
and offices. He shall ensure that the laws be faithfully executed.
This constitutional provision is echoed in Section 1, Book III of the Administrative Code of 1987. Notably, Section 38,
Chapter 37, Book IV of the same Code defines the Presidents power of supervision and control over the executive
departments, viz:
SECTION 38. Definition of Administrative Relationships. Unless otherwise expressly
stated in the Code or in other laws defining the special relationships of particular agencies,
administrative relationships shall be categorized and defined as follows:
(1) Supervision and Control. Supervision and control shall include authority to
act directly whenever a specific function is entrusted by law or regulation to a subordinate;
direct the performance of duty; restrain the commission of acts; review, approve, reverse or modify
acts and decisions of subordinate officials or units; determine priorities in the execution of plans and
programs. Unless a different meaning is explicitly provided in the specific law governing the
relationship of particular agencies the word "control" shall encompass supervision and control as
defined in this paragraph. x x x (Emphasis and underscoring supplied)
Thus, whenever a specific function is entrusted by law or regulation to a subordinate, the President may act
directly or merely direct the performance of a duty.[34]
Respecting the Presidents authority to order the implementation of the Project in the exercise of the police
power of the State, suffice it to stress that the powers vested in the DOTC Secretary to establish and administer
comprehensive and integrated programs for transportation and communications and to issue orders, rules and
regulations to implement such mandate (which, as previously discussed, may also be exercised by the President) have
been so delegated for the good and welfare of the people. Hence, these powers partake of the nature of police power.
Police power is the plenary power vested in the legislature to make, ordain, and establish wholesome and
reasonable laws, statutes and ordinances, not repugnant to the Constitution, for the good and welfare of the
people.[35] This power to prescribe regulations to promote the health, morals, education, good order or safety, and general

welfare of the people flows from the recognition that salus populi est suprema lex ─ the welfare of the people is the
supreme law.
While police power rests primarily with the legislature, such power may be delegated, as it is in fact increasingly
being delegated.[36] By virtue of a valid delegation, the power may be exercised by the President and administrative
boards[37] as well as by the lawmaking bodies of municipal corporations or local governments under an express delegation
by the Local Government Code of 1991.[38]
The authority of the President to order the implementation of the Project notwithstanding, the designation of
the MMDA as the implementing agency for the Project may not be sustained. It is ultra vires, there being no legal basis
therefor.
It bears stressing that under the provisions of E.O. No. 125, as amended, it is the DOTC, and not the MMDA, which is
authorized to establish and implement a project such as the one subject of the cases at bar. Thus, the President, although
authorized to establish or cause the implementation of the Project, must exercise the authority through the instrumentality
of the DOTC which, by law, is the primary implementing and administrative entity in the promotion, development and
regulation of networks of transportation, and the one so authorized to establish and implement a project such as the
Project in question.
By designating the MMDA as the implementing agency of the Project, the President clearly overstepped the
limits of the authority conferred by law, rendering E.O. No. 179 ultra vires.
In another vein, the validity of the designation of MMDA flies in the absence of a specific grant of authority to
it under R.A. No. 7924.
To recall, R.A. No. 7924 declared the Metropolitan Manila area [39] as a special development and administrative region
and placed the administration of metro-wide basic services affecting the region under the MMDA.
Section 2 of R.A. No. 7924 specifically authorizes the MMDA to perform planning, monitoring and coordinative
functions, and in the process exercise regulatory and supervisory authority over the delivery of metro-wide services,
including transport and traffic management.[40] Section 5 of the same law enumerates the powers and functions of the
MMDA as follows:
(a) Formulate, coordinate and regulate the implementation of medium and long-term plans and
programs for the delivery of metro-wide services, land use and physical development within Metropolitan
Manila, consistent with national development objectives and priorities;
(b) Prepare, coordinate and regulate the implementation of medium-term investment programs for
metro-wide services which shall indicate sources and uses of funds for priority programs and projects,
and which shall include the packaging of projects and presentation to funding institutions;
(c) Undertake and manage on its own metro-wide programs and projects for the delivery of
specific services under its jurisdiction, subject to the approval of the Council. For this purpose, MMDA
can create appropriate project management offices;
(d) Coordinate and monitor the implementation of such plans, programs and projects in Metro
Manila; identify bottlenecks and adopt solutions to problems of implementation;
(e) The MMDA shall set the policies concerning traffic in Metro Manila, and shall coordinate
and regulate the implementation of all programs and projects concerning traffic management,
specifically pertaining to enforcement, engineering and education. Upon request, it shall be
extended assistance and cooperation, including but not limited to, assignment of personnel, by all other
government agencies and offices concerned;
(f) Install and administer a single ticketing system, fix, impose and collect fines and
penalties for all kinds of violations of traffic rules and regulations, whether moving or non-moving
in nature, and confiscate and suspend or revoke drivers licenses in the enforcement of such traffic laws
and regulations, the provisions of RA 4136 and PD 1605 to the contrary notwithstanding. For this
purpose, the Authority shall impose all traffic laws and regulations in Metro Manila, through its traffic
operation center, and may deputize members of the PNP, traffic enforcers of local government units,
duly licensed security guards, or members of non-governmental organizations to whom may be
delegated certain authority, subject to such conditions and requirements as the Authority may impose;
and
(g) Perform other related functions required to achieve the objectives of the MMDA, including the
undertaking of delivery of basic services to the local government units, when deemed necessary subject
to prior coordination with and consent of the local government unit concerned. (Emphasis and
underscoring supplied)
The scope of the function of MMDA as an administrative, coordinating and policy-setting body has been settled
in Metropolitan Manila Development Authority (MMDA) v. Bel-Air Village Association, Inc.[41] In that case, the Court
stressed:
Clearly, the scope of the MMDAs function is limited to the delivery of the seven (7) basic
services. One of these is transport and traffic management which includes the formulation and
monitoring of policies, standards and projects to rationalize the existing transport operations,
infrastructure requirements, the use of thoroughfares and promotion of the safe movement of persons
and goods. It also covers the mass transport system and the institution of a system of road regulation,
the administration of all traffic enforcement operations, traffic engineering services and traffic education
programs, including the institution of a single ticketing system in Metro Manila for traffic violations. Under
this service, the MMDA is expressly authorized to to set the policies concerning traffic and coordinate
and regulate the implementation of all traffic management programs. In addition, the MMDA may install
and administer a single ticketing system, fix, impose and collect fines and penalties for all traffic
violations.
 It will be noted that the powers of the MMDA are limited to the following acts: formulation,
coordination, regulation, implementation, preparation, management, monitoring, setting of policies,
installation of a system and administration. There is no syllable in R.A. No. 7924 that grants the MMDA
police power, let alone legislative power. Even the Metro Manila Council has not been delegated any
legislative power. Unlike the legislative bodies of the local government units, there is no provision
in R.A. No. 7924 that empowers the MMDA or its Council to enact ordinances, approve
resolutions and appropriate funds for the general welfare of the inhabitants of Metro Manila. The
MMDA is, as termed in the charter itself, a development authority. It is an agency created for the
purpose of laying down policies and coordinating with the various national government
agencies, peoples organizations, non-governmental organizations and the private sector for the
efficient and expeditious delivery of basic services in the vast metropolitan area. All its functions
are administrative in nature and these are actually summed up in the charter itself, viz:
Likewise, in Luque v. Villegas,[46] this Court emphasized that public welfare lies at the bottom of any regulatory
measure designed to relieve congestion of traffic, which is, to say the least, a menace to public safety. [47] As such,
measures calculated to promote the safety and convenience of the people using the thoroughfares by the regulation of
vehicular traffic present a proper subject for the exercise of police power.
Notably, the parties herein concede that traffic congestion is a public concern that needs to be addressed
immediately. Indeed, the E.O. was issued due to the felt need to address the worsening traffic congestion in Metro Manila
which, the MMDA so determined, is caused by the increasing volume of buses plying the major thoroughfares and the
inefficient connectivity of existing transport systems. It is thus beyond cavil that the motivating force behind the issuance

SECTION 2. Creation of the Metropolitan Manila Development Authority. . . . of the E.O. is the interest of the public in general.
Are the means employed appropriate and reasonably necessary for the accomplishment of the purpose. Are
The MMDA shall perform planning, monitoring and coordinative functions, and in the
process exercise regulatory and supervisory authority over the delivery of metro-wide they not duly oppressive?
services within Metro Manila, without diminution of the autonomy of the local government units
concerning purely local matters.[42] (Emphasis and underscoring supplied) With the avowed objective of decongesting traffic in Metro Manila, the E.O. seeks to eliminate[e] the bus
terminals now located along major Metro Manila thoroughfares and provid[e] more convenient access to the mass
transport system to the commuting public through the provision of mass transport terminal facilities x x x. [48] Common
In light of the administrative nature of its powers and functions, the MMDA is devoid of authority to implement
carriers with terminals along the major thoroughfares of Metro Manila would thus be compelled to close down their
the Project as envisioned by the E.O; hence, it could not have been validly designated by the President to undertake the
existing bus terminals and use the MMDA-designated common parking areas.
Project. It follows that the MMDA cannot validly order the elimination of respondents terminals.
In Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc.,[49] two city ordinances were passed by
Even the MMDAs claimed authority under the police power must necessarily fail in consonance with the above-
the Sangguniang Panlungsod of Lucena, directing public utility vehicles to unload and load passengers at the Lucena
quoted ruling in MMDA v. Bel-Air Village Association, Inc. and this Courts subsequent ruling in Metropolitan Manila
Grand Central Terminal, which was given the exclusive franchise to operate a single common terminal. Declaring that
Development Authority v. Garin[43] that the MMDA is not vested with police power.
no other terminals shall be situated, constructed, maintained or established inside or within the city of Lucena,
Even assuming arguendo that police power was delegated to the MMDA, its exercise of such power does not
the sanggunian declared as inoperable all temporary terminals therein.
satisfy the two tests of a valid police power measure, viz: (1) the interest of the public generally, as distinguished from
The ordinances were challenged before this Court for being unconstitutional on the ground that, inter alia, the
that of a particular class, requires its exercise; and (2) the means employed are reasonably necessary for the
measures constituted an invalid exercise of police power, an undue taking of private property, and a violation of the
accomplishment of the purpose and not unduly oppressive upon individuals.[44] Stated differently, the police power
constitutional prohibition against monopolies.
legislation must be firmly grounded on public interest and welfare and a reasonable relation must exist between the
Citing De la Cruz v. Paras[50] and Lupangco v. Court of Appeals,[51] this Court held that the assailed ordinances
purposes and the means.
were characterized by overbreadth, as they went beyond what was reasonably necessary to solve the traffic problem in
As early as Calalang v. Williams,[45] this Court recognized that traffic congestion is a public, not merely a
the city. And it found that the compulsory use of the Lucena Grand Terminal was unduly oppressive because it would
private, concern. The Court therein held that public welfare underlies the contested statute authorizing the Director of
subject its users to fees, rentals and charges.
Public Works to promulgate rules and regulations to regulate and control traffic on national roads.
 The true role of Constitutional Law is to effect an equilibrium between authority and liberty so that
rights are exercised within the framework of the law and the laws are enacted with due deference to
rights.
A due deference to the rights of the individual thus requires a more careful formulation of solutions
to societal problems.
From the memorandum filed before this Court by petitioner, it is gathered that the Sangguniang
Panlungsod had identified the cause of traffic congestion to be the indiscriminate loading and unloading
of passengers by buses on the streets of the city proper, hence, the conclusion that the terminals
contributed to the proliferation of buses obstructing traffic on the city streets.
Bus terminals per se do not, however, impede or help impede the flow of traffic. How the outright
proscription against the existence of all terminals, apart from that franchised to petitioner, can
be considered as reasonably necessary to solve the traffic problem, this Court has not been
enlightened. If terminals lack adequate space such that bus drivers are compelled to load and unload
passengers on the streets instead of inside the terminals, then reasonable specifications for the size of
terminals could be instituted, with permits to operate the same denied those which are unable to meet
the specifications.
In the subject ordinances, however, the scope of the proscription against the maintenance
of terminals is so broad that even entities which might be able to provide facilities better than
the franchised terminal are barred from operating at all. (Emphasis and underscoring supplied)
As in Lucena, this Court fails to see how the prohibition against the existence of respondents terminals can be
considered a reasonable necessity to ease traffic congestion in the metropolis. On the contrary, the elimination of
respondents bus terminals brings forth the distinct possibility and the equally harrowing reality of traffic congestion in the
common parking areas, a case of transference from one site to another.
Less intrusive measures such as curbing the proliferation of colorum buses, vans and taxis entering Metro
Manila and using the streets for parking and passenger pick-up points, as respondents suggest, might even be more
effective in easing the traffic situation. So would the strict enforcement of traffic rules and the removal of obstructions
from major thoroughfares.
As to the alleged confiscatory character of the E.O., it need only to be stated that respondents certificates of
public convenience confer no property right, and are mere licenses or privileges. [52] As such, these must yield to
legislation safeguarding the interest of the people.
Even then, for reasons which bear reiteration, the MMDA cannot order the closure of respondents terminals
not only because no authority to implement the Project has been granted nor legislative or police power been delegated
to it, but also because the elimination of the terminals does not satisfy the standards of a valid police power measure.
Finally, an order for the closure of respondents terminals is not in line with the provisions of the Public Service
Act.
Paragraph (a), Section 13 of Chapter II of the Public Service Act (now Section 5 of Executive Order No. 202,
creating the Land Transportation Franchising and Regulatory Board or LFTRB) vested the Public Service Commission
(PSC, now the LTFRB) with x x x jurisdiction, supervision and control over all public services and their franchises,
equipment and other properties x x x.
Consonant with such grant of authority, the PSC was empowered to impose such conditions as to
construction, equipment, maintenance, service, or operation as the public interests and convenience may reasonably
require[53] in approving any franchise or privilege.
Further, Section 16 (g) and (h) of the Public Service Act [54] provided that the Commission shall have the
power, upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the limitations
and exceptions mentioned and saving provisions to the contrary:
(g) To compel any public service to furnish safe, adequate, and proper service as regards the
manner of furnishing the same as well as the maintenance of the necessary material and equipment.
(h) To require any public service to establish, construct, maintain, and operate any
reasonable extension of its existing facilities, where in the judgment of said Commission, such
extension is reasonable and practicable and will furnish sufficient business to justify the construction
and maintenance of the same and when the financial condition of the said public service reasonably
warrants the original expenditure required in making and operating such extension.(Emphasis and
underscoring supplied)
The establishment, as well as the maintenance of vehicle parking areas or passenger terminals, is generally
considered a necessary service to be provided by provincial bus operators like respondents, hence, the investments they
have poured into the acquisition or lease of suitable terminal sites. Eliminating the terminals would thus run counter to
the provisions of the Public Service Act.
This Court commiserates with the MMDA for the roadblocks thrown in the way of its efforts at solving the
pestering problem of traffic congestion in Metro Manila. These efforts are commendable, to say the least, in the face of
the abominable traffic situation of our roads day in and day out. This Court can only interpret, not change, the law,
however. It needs only to be reiterated that it is the DOTC ─ as the primary policy, planning, programming, coordinating,
implementing, regulating and administrative entity to promote, develop and regulate networks of transportation and
 communications ─ which has the power to establish and administer a transportation project like the Project RUBEN T. REYES
Associate Justice
subject of the case at bar.

CERTIFICATION
No matter how noble the intentions of the MMDA may be then, any plan, strategy or project which it is not
authorized to implement cannot pass muster. Pursuant to Section 13, Article VIII of the Constitution, I hereby certify that the conclusions in the above decision had been reached in

consultation before the case was assigned to the writer of the opinion of the Court.
WHEREFORE, the Petition is, in light of the foregoing disquisition, DENIED. E.O. No. 179 is declared
NULL and VOID for being ultra vires. REYNATO S. PUNO
Chief Justice

SO ORDERED. [1] Luque v. Villegas, G.R. No. L-22545, November 28, 1969, 30 SCRA 408, 422.
[2] Rollo, pp. 8-12.
[3] Id. at 13.
CONCHITA CARPIO MORALES [4] Rollo, pp. 60-61.
Associate Justice [5] 4th Whereas Clause.
[6] 5th Whereas clause.
[7] Rollo, pp. 194-195.
WE CONCUR: [8] 5th and 6th Whereas Clauses of MMDA Resolution No. 03-07, series of 2003. These clauses read:

WHEREAS, there is a need to remove the bus terminals located along major thoroughfares of Metro Manila and an
urgent need to integrate the different transport modes namely the buses, the rail-based systems of the LRT, MRT and PNR
REYNATO S. PUNO
in order to decongest traffic and ensure efficient travel and comfort to the commuters;
Chief Justice
WHEREAS, the Greater Manila Mass Transport System Project aims to develop five (5) interim intermodal mass
transport terminals to integrate the different transport modes to serve the commuting public in the northwest, north, east,
south and southwest of Metro Manila.
LEONARDO A. QUISUMBING CONSUELO YNARES- SANTIAGO [9] Virons authorized routes are from Metro Manila to Pangasinan, Nueva Ecija, Ilocos Sur and Abra and vice versa.
Associate Justice Associate Justice [10] Rollo, pp. 64-75.
[11] Branch 26.
[12] Rollo, pp. 67-68; pp. 4-5 of Virons Petition.
[13] Rollo, p. 30.
[14] Id. at 149-162.
GELINA SANDOVAL-GUTIERREZ ANTONIO T. CARPIO [15] Id. at 153; page 5 of Mencorps Petition.
Associate Justice Associate Justice [16] Id. at 205-207.
[17] Id. at 219-221.
[18] Id. at 317-323.
[19] Id. at 35.
RENATO C. CORONA [20] Id. at 125-130; dated May 15, 2003.
MA. ALICIA AUSTRIA-MARTINEZ Associate Justice [21] Id. at 200-204.
Associate Justice [22] Id. at 309-316.
[23] Id. at 64-75 and 149-162; Virons petition dated February 21, 2003 and Mencorps petition dated March 25, 2003.
[24] Id. at 135-148 and 222-249; Virons Reply dated June 17, 2003 and Virons Position Paper of March 16, 2004.
ADOLFO S. AZCUNA DANTE O. TINGA [25] Republic v. Orbecido III, G.R. No. 154380, October 5, 2005, 472 SCRA 114, 118; Board of Optometry v. Colet, 328 Phil. 1187, 1205
Associate Justice Associate Justice
(1996); Macasiano v. National Housing Authority, G.R. No. 107921, July 1, 1993, 224 SCRA 236, 243.
[26] International Hardwood and Veneer Company of the Philippines v. University of the Philippines, G.R. No. 521518, August 13, 1991, 200

SCRA 554, 569.

CANCIO C. GARCIA [27] International Hardwood and Veneer Company of the P hilippines v. University of the Philippines, supra.
MINITA V. CHICO-NAZARIO [28] Supra note 20 at 126; paragraph 11 thereof.
Associate Justice Associate Justice
[29] Supra note 22 at 312.
[30] Section 1 of Rule 63 of the Rules of Court provides:
ESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURA
Associate Justice Associate Justice
 SECTION 1. Who may file petition. Any person interested under a deed, will, contract, or other written instrument,
whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation
may, before breach or violation thereof, bring an action in the appropriate Regional Trial Court to determine any question of
construction or validity arising, and for a declaration of his rights or duties, thereunder. (Emphasis supplied)
[31] People v. Vera, 65 Phil. 56, 89 (1937).
[32] Dated January 30, 1987.
[33] AMENDING EXECUTIVE ORDER NO. 125, ENTITLED REORGANIZING THE MINISTRY OF TRANSPORTATION AND
COMMUNICATIONS, DEFINING ITS POWERS AND FUNCTIONS, AND FOR OTHER PURPOSES, dated April 13, 1987.
[34] Chavez v. Romulo, G.R. No. 157036, June 9, 2004, 431 SCRA 534, 555.
[35] Binay v. Domingo, G.R. No. 92389, September 11, 1991, 201 SCRA508, 514; Presidential Commission on Good Government v. Pea, G.R.
No. L-77663, April 12, 1988, 159 SCRA 556, 574; Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 708.
[36] In the early case of Pangasinan Transportation Co., Inc. v. The Public Service Commission (70 Phil. 221,229 [1940]), this Court observed
that with the growing complexity of modern life, the multiplication of the subjects of governmental regulation, and the increased difficulty
of administering the laws, there is a constantly growing tendency toward the delegation of greater power by the legislature, and toward
the approval of the practice by the courts. (Underscoring supplied)Vide also Eastern Shipping Lines, Inc. v. Philippine Overseas
Employment Administration, G.R. No. L-76633, October 18, 1988, 166 SCRA 533, 544.
[37] Abakada Guro Party List v. Ermita, G.R. No. 168056, September 1, 2005, 469 SCRA 1, 117; Metropolitan Manila Development Authority
(MMDA) v. Bel-Air Village Association, 385 Phil. 586, 601.
[38] SEC. 16. General Welfare. ─ Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom,
as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the
promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among
other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology,
encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals,
enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants.
[39] Metropolitan or Metro Manila is a body composed of the local government units of Caloocan, Manila, Mandaluyong, Makati, Pasay, Pasig,
Quezon, Muntinlupa, Las Pias, Marikina, Paraaque, Valenzuela, Malabon, Navotas, Pateros, San Juan and Taguig. (Sec. 1 of R.A. 7924)
[40] Section 3 of R.A. No. 7924 provides the scope of MMDA services :
SECTION 3. Scope of MMDA Services. Metro-wide services under the jurisdiction of the MMDA are those
services which have metro-wide impact and transcend local political boundaries or entail huge expenditures such that
it would not be viable for said services to be provided by the individual local government units (LGUs) comprising
Metropolitan Manila. These services shall include:
(a) Development planning which includes the preparation of medium and long-term development plans;
the development, evaluation and packaging of projects; investments programming; and coordination and monitoring
of plan, program and project implementation.
(b) Transport and traffic management which include the formulation, coordination, and monitoring
of policies, standards, programs and projects to rationalize the existing transport operations, infrastructure
requirements, the use of thoroughfares, and promotion of safe and convenient movement of persons and goods;
provision for the mass transport system and the institution of a system to regulate road users; administration and
implementation of all traffic enforcement operations, traffic engineering services and traffic education programs,
including the institution of a single ticketing system in Metropolitan Manila.
(c) Solid waste disposal and management which include formulation and implementation of policies,
standards, programs and projects for proper and sanitary waste disposal. It shall likewise include the establishment
and operation of sanitary land fill and related facilities and the implementation of other alternative programs intended
to reduce, reuse and recycle solid waste.
(d) Flood control and sewerage management which include the formulation and implementation of
policies, standards, programs and projects for an integrated flood control, drainage and sewerage system.
(e) Urban renewal, zoning, and land use planning, and shelter services which include the formulation,
adoption and implementation of policies, standards, rules and regulations, programs and projects to rationalize and
optimize urban land use and provide direction to urban growth and expansion, the rehabilitation and development of
slum and blighted areas, the development of shelter and housing facilities and the provision of necessary social
services thereof.
(f) Health and sanitation, urban protection and pollution control which include the formulation and
implementation of policies, rules and regulations, standards, programs and projects for the promotion and safeguarding
of the health and sanitation of the region and for the enhancement of ecological balance and the prevention, control
and abatement of environmental pollution.
(g) Public safety which includes the formulation and implementation of programs and policies and
procedures to achieve public safety, especially preparedness for preventive or rescue operations during times of
calamities and disasters such as conflagrations, earthquakes, flood and tidal waves, and coordination and mobilization
of resources and the implementation of contingency plans for the rehabilitation and relief operations in coordination
with national agencies concerned.
[41] Metropolitan Manila Development Authority (MMDA) v. Bel-Air Village Association, supra note 37.
[42] Supra at 607-608.
[43] G.R. No. 130230, April 15, 2005, 456 SCRA 176, 185.
[44] Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc., G.R. No. 148339, February 23, 2005, 452 SCRA 174, 185; Chavez v. Romulo, supra
note 34 at 563; Balacuit v. CFI of Agusan del Norte, G.R. No. L-38429, June 30, 1988, 163 SCRA 182, 191.
[45] 70 Phil. 726, 733 (1940).
[46] Supra note 1.
[47] Supra at 423.
[48] 5th Whereas Clause.
[49] Supra note 44.
[50] G.R. No. L-42571-72, July 25, 1983, 123 SCRA 569. In this case, the Court declared as unconstitutional an ordinance passed by
the Municipality of Bocaue, Bulacan, which prohibited the operation of all night clubs, cabarets and dance halls within its jurisdiction for
the protection of public morals. Stating that the ordinance on its face was overbroad, the Court held that the purpose sought to be achieved
could have been attained by reasonable restrictions rather than an absolute prohibition.
[51] G.R. No. L-77372, April 29, 1988, 160 SCRA 848. The case involved a resolution issued by the Professional Regulation Commission, which
prohibited examinees from attending review classes and receiving handout materials, tips, and the like three days before the date of
examination in order to preserve the integrity and purity of the licensure examinations in accountancy. The measure was declared by this
Court not only to be unreasonable and violative of academic freedom, but also to be more sweeping than what was necessary.
[52] Luque v. Villegas, supra note 1 at 418.
[53] COMMONWEALTH ACT NO. 146, Chapter II, Section 16 (b).
[54] The present provision of Section 5(k) of E.O. No. 202 reads:
k. To formulate, promulgate, administer, implement and enforce rules and regulations on land
transportation public utilities, standards of measurements and/or design, and rules and regulations requiring operators
of any public land transportation service to equip, install and provide in their utilities and in their stations such devices,
equipment facilities and operating procedures and techniques as may promote safety, protection, comfort and
convenience to persons and property in their charges as well as the safety of persons and property within their areas
of operations;
G.R. No. 88265 December 21, 1989 Section 4. Violative Erroneous, and Impossible Prescriptions.

SANTIAGO A. DEL ROSARIO, GEORGE G. GACULA, EDGARDO G. SANTOS, ALBANO S. SIBAL, ALBERTO C. 4.1. Violative Prescriptions:
REYES, NONITO P. ARROYO, EMMANUEL F. TERENCIO, DOMINGO S. DE LEON, MODESTO O. LLAMAS,
FARIDA U. ALONTO, ZENAIDA A. FLOIRENDO, ISABEL A. MEJIA, LUZ P. MABANAG, RAMON H. RABAGO, 4.1.1 Where the generic name is not written;
JR., SAMUEL D. TROCIO and OSCAR M. BRION, petitioners,
vs.
HON. ALFREDO R. BENGZON, in his capacity as Secretary of the Department of Health, respondent. 4.1.2 Where the generic name is not legible and a brand name which is legible is written;

Facundo T. Bautista for petitioners.
GRIÑO-AQUINO, J.:
This is a class suit filed by officers of the Philippine Medical Association, the national organization of medical doctors in
the Philippines, on behalf of their professional brethren who are of kindred persuasion, wherein this Court is asked to
declare as unconstitutional, hence, null and void, some provisions of the Generics Act of 1988 (Rep. Act No. 6675),
and of the implementing Administrative Order No. 62 issued pursuant thereto, specifically:
4.1.3 Where the brand name is indicated and instructions added, such as the phase 'No Substitution' which tend
to obstruct, hinder or prevent proper generic dispensing.
4.2 What to do with Violative Prescriptions.
Violative prescriptions shall not be filled. They shall be kept and reported by the pharmacist of the drug outlet or
any other interested party to the nearest DOH Officer for appropriate action. The pharmacist shall advise the
prescriber of the problem and/or instruct the customer to get the proper prescription.

(a) Section 6, Pars. (a) and (b) of the Generics Act which provide: 4.3 Erroneous Prescriptions:

a) All government health agencies and their personnel as well as other government agencies shall use generic 4.3.1 When the brand name precedes the generic name.
terminology or generic names in all transactions related to purchasing, prescribing, dispensing and administering
of drugs and medicines. 4.3.2 Where the generic name is the one in parenthesis.

b) All medical, dental and veterinary practitioners, including private practitioners, shall write prescriptions using 4.3.3 Where the brand name in (sic) not in parenthesis.
the generic name. The brand name may be included if so desired. (p. 6, Rollo.)
4.3.4 Where more than one drug product is prescribed in one prescription form.
(b) Section 12, Pars. (b), (c) and (d) of the same law which provide:
4.4 What to do with erroneous prescriptions.
b) For the second conviction, the penalty of file in the amount of not less than two thousand pesos (P2,000.00)
but not exceeding five thousand pesos (P5,000.00) at the discretion of the court. Erroneous prescriptions shall be filled. Such prescriptions shall also be kept and reported by the pharmacist of
the drug outlet or any other interested party to the nearest DOH Office for appropriate action.
c) For the third conviction, the penalty of fine in the amount of not less than five thousand pesos (P5,000.00) but
not exceeding ten thousand pesos (P10,000.00) and suspension of his license to practice his profession for thirty xxx xxx xxx
(30) days at the discretion of the court.
Section 7. Timetable of Implementation.
d) For the fourth and subsequent convictions, the penalty of fine of not less than ten thousand pesos
(P10,000.00) and suspension of his license to practice his profession for one year or longer at the discretion of In order to give all affected parties adequate time for learning and adjustment, the implementation of these Rules
the court. (pp. 6-7, Rollo.) and and Regulations shall be in three phases, as follows:

(c) Sections 4 and 7, Phase 3 of Administrative Order No. 62, Series of 1989 dated March 9, 1989, of the respondent Phase 1 Education Drive ...
Secretary of Health, which read as follows:
Phase 2 Monitoring of Compliance
 xxx xxx xxx
Phase 3 Implementation.
Beginning September 1, 1989 the DOH and the other relevant agencies of government shall monitor compliance
with these Rules and Regulations and all violations shall be subject to the appropriate sanctions and penalties
provided for under these Rules and Regulations and the Generics Act of 1988. (pp. 7-9, Rollo.)
On March 15, 1989, the full text of Republic Act No. 6675 was published in two newspapers of general circulation in the
Philippines. The law took effect on March 30, 1989, fifteen (15) days after its publication, as provided in Section 15
thereof.
Section 7, Phase 3 of Administrative Order No. 62 was amended by Administrative Order No. 76 dated August 28,
1989 by postponing to January 1, 1990 the effectivity of the sanctions and penalties for violations of the law, provided
in Sections 6 and 12 of the Generics Act and Sections 4 and 7 of the Administrative Order.
The petitioners allege that "as of this date, there is no breach or violation yet" of the law (p. 9, Rollo), which took effect
on March 30, 1989. However, as the penal provisions will only take effect on January 1, 1990, it would have been more
accurate to state that "as of this date, no breaches or violations of the law have been punished yet" (p. 9, Rollo).
The petition is captioned as an action for declaratory relief, over which this Court does not exercise jurisdiction.
Nevertheless, in view of the public interest involved, we decided to treat it as a petition for prohibition instead.
The petitioner's main argument against paragraphs (a) and (b), Section 6 of the law, is the alleged unequal treatment of
government physicians, dentists, and veterinarians, on one hand, and those in private practice on the other hand, in the
manner of prescribing generic drugs, for, while the former are allegedly required to use only generic terminology in their
prescriptions, the latter may write the brand name of the drug in parenthesis below the generic name. The favored
treatment of private doctors, dentists and veterinarians under the law is allegedly a specie of invalid class legislation.
There is no merit in that argument for it proceeds from a misreading and misinterpretation of the letter and intent of
paragraphs (a) and (b), Section 6 of the Generics Act. Indeed, as explained by the public respondent:
... while paragraph (a) enumerates the government transactions ('Purchasing, prescribing, dispensing and
administering of drugs and medicines') where the sole use of generic terminology has been required, the
'prescription' of drugs is further governed by paragraph (b). And the use of the word 'all' in the latter provision
emphasizes the absence of any distinction between government and private physicians. In other words, in
prescribing drugs, physicians, whether in government service or in private practice, are both governed by exactly
the same rules, and thus, are both authorized to include the brand name in their respective prescriptions. (p. 44,
Rollo.)
Furthermore, it may be observed that while paragraph (a) refers to "all government health agencies, and their
personnel as well as other government agencies" (not necessarily physicians, dentists and veterinarians), paragraph
(b) refers to "all medical, dental and veterinary practitioners, including private practitioners."
Petitioners concede that the requirement for doctors, dentists, and veterinarians to use the generic terminology in
writing their prescriptions, followed by the brand name in parenthesis, is "well and good" (p. 12, Rollo). However, they
complain that under paragraph (d) of the law which reads:
(d) Drug outlets, including drugstores, hospital and non-hospital pharmacies and non-traditional outlets such as
supermarkets and stores, shall inform any buyer about any and all other drug products having the same generic
name, together with their corresponding prices so that the buyer may adequately exercise his option. Within one
(1) year after approval of this Act, the drug outlets referred to herein, shall post in conspicuous places in their
establishments, a list of drug products with the same generic name and their corresponding prices. (Annex A, p.
23, Rollo.)
the salesgirl at the drugstore counter is authorized to "substitute the prescribed medicine with another medicine
belonging to the same generic group." Since doctors are not allowed to instruct the druggist not to substitute the
prescription, or to "Dispense only as Prescribed" (per Sec. 4, Adm. Order No. 62), the petitioners argue that "the act of
prescribing the correct medicine for the patient becomes the act of the salesgirl at the drugstore counter, no longer the
act of the physician, dentist, or veterinarian" (p. 12, Rollo).
Here again, the petitioners have distorted the clear provisions of the law and the implementing administrative order. For
it is plain to see that neither paragraph (d) of Section 6 of the Generics Act, nor Section 4 of Administrative Order No.
62, gives the salesgirl and/or druggist the discretion to substitute the doctor's prescription.
On the contrary, Section 4, par. 4.1, of Administrative Order No. 62 directs the pharmacist not to fill "violative
prescriptions" (where the generic name is not written, or illegibly written, and the prescription of a brand name is
accompanied by the doctor's instruction not to substitute it), as well as "impossible prescriptions" (par. 4.5). Even a
doctor's "erroneous" prescriptions "shall be filled," not substituted (par. 4.3, Adm. Order No. 62). And, Sections 3 and 5
of Adm. Order No. 63 enjoin the drug outlets not (to) favor or suggest" or "impose" a particular brand or product on the
customer. The administrative older provides:
In order to ensure the informed choice and use of drugs by the patient/ buyer, the drug outlet is required to:
3.1.1 Inform the patient/buyer of all available drug products generically equivalent to the one prescribed with their
corresponding prices. In so doing, the drug outlet shall not favor or suggest any particular product so that the
patient/buyer may fully and adequately exercise his option to choose (Sec. 3, Adm. Order No. 63 s. 1989).
The following acts or omissions are considered violations of these rules and regulations:
5.1 Imposing a particular brand or product on the buyer. ... (pp. 46-47, Rollo.)
The salesgirl at the drugstore counter, merely informs the customer, but does not determine (for she is incompetent to
do so) all the other drug products or brands that have the same generic name, and their corresponding prices. That
information she may obtain from the list of drug products determined by the Bureau of Food and Drugs to have the
same generic name, or which are the chemical, biological, and therapeutic equivalent of the generic drug. All
drugstores or drug outlets are required by the law to post such list in a conspicuous place in their premises for the
information of the customers, for the choice of whether to buy the expensive brand name drug, or the less expensive
generic, should be exercised by the customer alone.
The purpose of the Generics Act is to carry out the policy of the State:
To promote, encourage and require the use of generic terminology in the importation, manufacture, distribution,
marketing, advertising and promotion, prescription and dispensing of drugs;
To ensure the adequate supply of drugs with generic names at the lowest possible cost and endeavor to make
them available for free to indigent patients;
To encourage the extensive use of drugs with generic names through a rational system of procurement and
distribution;
To emphasize the scientific basis for the use of drugs, in order that health professionals may become more
aware and cognizant of their therapeutic effectiveness; and
To promote drug safety by minimizing duplication in medications and/or use of drugs with potentially adverse
drug interactions. (pp. 3839, Rollo.)
or, as stated by the public respondent, "to promote and require the use of generic drug products that are therapeutically
equivalent to their brand-name counter-parts" (p. 39, Rollo) for "the therapeutic effect of a drug does not depend on its
'brand' but on the 'active ingredients' which it contains." The medicine that cures is the "active ingredient" of the drug,
and not the brand name by which it has been baptized by the manufacturer.
The public respondent points out that the institution of generics in the Philippines will compel physicians to prescribe
drugs based on their therapeutic or "active ingredient," instead of their well-known brand names. Multiple medications
which may produce potentially adverse, even lethal, chemical reactions in the patient will thereby be avoided. Patients
with limited means will be able to buy generic drugs that cost less but possess the same active ingredients, dosage
form, and strength as brand names, many of which are priced beyond the reach of the common tao because the high
costs of advertising, packaging, royalties, and other inputs of production determine their pricing for the market.
The Court has been unable to find any constitutional infirmity in the Generics Act. It, on the contrary, implements the
constitutional mandate for the State "to protect and promote the right to health of the people" and "to make essential
goods, health and other social services available to all the people at affordable cost" (Section 15, Art. II and Section 11,
Art. XIII, 1987 Constitution).
The prohibition against the use by doctors of "no substitution" and/or words of similar import in their prescription, is a
valid regulation to prevent the circumvention of the law. It secures to the patient the right to choose between the brand
name and its generic equivalent since his doctor is allowed to write both the generic and the brand name in his
prescription form. If a doctor is allowed to prescribe a brand-name drug with "no substitution," the patient's option to
buy a lower-priced, but equally effective, generic equivalent would thereby be curtailed. The law aims to benefit the
impoverished (and often sickly) majority of the population in a still developing country like ours, not the affluent and
generally healthy minority.
There is no merit in the petitioners' theory that the Generics Act impairs the obligation of contract between a physician
and his patient, for no contract ever results from a consultation between patient and physician. A doctor may take in or
refuse a patient, just as the patient may take or refuse the doctor's advice or prescription. As aptly observed by the
public respondent, no doctor has ever filed an action for breach of contract against a patient who refused to take
prescribed medication, undergo surgery, or follow a recommended course treatment by his doctor ( p. 53, Rollo). In any
event, no private contract between doctor and patient may be allowed to override the power of the State to enact laws
that are reasonably necessary to secure the health, safety, good order, comfort, or general welfare of the community.
This power can neither be abdicated nor bargained away. All contractual and property rights are held subject to its fair
exercise (Anglo-Fil Trading Corporation vs. Lazaro, 124 SCRA 495.)
Petitioners have also assailed Section 12, paragraphs b, c and d, of the Generics Act prescribing graduated penalties
(ranging from a reprimand to a fine of not less that P10,000 and the suspension of the physician's license to practice
his profession for one [1]) year or longer, at the discretion of the court) for violations of its provisions. Petitioners'
allegation that these penalties violate the constitutional guarantee against excessive fines and cruel and degrading
punishment, has no merit. Penal sanctions are indispensable if the law is to be obeyed. They are the "teeth" of the law.
Without them, the law would be toothless, not worth the paper it is printed on, for physicians, dentists and veterinarians
may freely ignore its prescriptions and prohibitions. The penalty of suspension or cancellation of the physician's license
is neither cruel, inhuman, or degrading. It is no different from the penalty of suspension or disbarment that this Court
inflicts on lawyers and judges who misbehave or violate the laws and the Codes of Professional and Judicial Conduct.
We hold that the Generics Act and the implementing administrative orders of the Secretary of Health are constitutional.
In light of its beneficial provisions, we cannot heed the petitioners' plea to kill it aborning, i.e., before it has had a
chance to prove its value to our people as envisioned by its makers.
WHEREFORE, the petition is dismissed for lack of merit. Costs against the petitioners.
SO ORDERED.
Fernan, C.J., Narvasa, Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes, Medialdea and Regalado,
JJ., concur.
Melencio-Herrera, J., concurs in the result.
Separate Opinions
Gutierrez, Jr., J., concurring:
I concur in the result only because of the failure to overcome the presumption of constitutionality and not because the
respondent's arguments are valid.
Separate Opinions
Gutierrez, Jr., J., concurring:
I concur in the result only because of the failure to overcome the presumption of constitutionality and not because the
respondent's arguments are valid.
[G.R. No. 110249. August 21, 1997] Courts[1] and Municipal Circuit Trial Courts in Palawan from assuming jurisdiction over and hearing cases
concerning the violation of the Ordinances and of the Office Order.
ALFREDO TANO, BALDOMERO TANO, DANILO TANO, ROMUALDO TANO, TEOCENES MIDELLO, ANGEL
DE MESA, EULOGIO TREMOCHA, FELIPE ONGONION, JR., ANDRES LINIJAN, ROBERT LIM, VIRGINIA More appropriately, the petition is, and shall be treated as, a special civil action for certiorari and prohibition.
LIM, FELIMON DE MESA, GENEROSO ARAGON, TEODORICO ANDRE, ROMULO DEL ROSARIO, The following is petitioners summary of the factual antecedents giving rise to the petition:
CHOLITO ANDRE, ERICK MONTANO, ANDRES OLIVA, VITTORIO SALVADOR, LEOPOLDO ARAGON,
RAFAEL RIBA, ALEJANDRO LEONILA, JOSE DAMACINTO, RAMIRO MANAEG, RUBEN MARGATE,
1. On December 15, 1992, the Sangguniang Panlungsod ng Puerto Princesa City enacted Ordinance No. 15-92
ROBERTO REYES, DANILO PANGARUTAN, NOE GOLPAN,ESTANISLAO ROMERO, NICANOR DOMINGO,
which took effect on January 1, 1993 entitled: AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH
ROLDAN TABANG, PANGANIBAN, ADRIANO TABANG, FREDDIE SACAMAY, MIGUEL TRIMOCHA,
AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998 AND
PACENCIO LABABIT, PABLO H. OMPAD, CELESTINO A. ABANO, ALLAN ALMODAL, BILLY D.
PROVIDING EXEMPTIONS, PENALTIES AND FOR OTHER PURPOSES THEREOF, the full text of which reads
BARTOLAY, ALBINO D. LIQUE, MELCHOR J. LAYSON, MELANI AMANTE, CLARO E. YATOC, MERGELDO
as follows:
B. BALDEO, EDGAR M. ALMASET A., JOSELITO MANAEG, LIBERATO ANDRADA, JR., ROBERTO
BERRY, RONALD VILLANUEVA, EDUARDO VALMORIA, WILDREDO MENDOZA, NAPOLEON BABANGA,
ROBERTO TADEPA, RUBEN ASINGUA, SILVERIO GABO, JERRY ROMERO, DAVID PANGAGARUTAN, Section 1. Title of the Ordinance. - This Ordinance is entitled: AN ORDINANCE BANNING THE SHIPMENT OF
DANIEL PANGGARUTAN, ROMEO AGAWIN, FERNANDO EQUIZ, DITO LEQUIZ, RONILO ODERABLE, ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY
BENEDICTO TORRES, ROSITO A. VALDEZ, CRESENCIO A. SAYANG, NICOMEDES S. ACOSTA, ERENEO 1, 1998 AND PROVIDING EXEMPTIONS, PENALTIES AND FOR OTHER PURPOSES THEREOF.
A. SEGARINO, JR., WILDREDO A. RAUTO, DIOSDADO A. ACOSTA, BONIFACIO G. SISMO, TACIO
ALUBA, DANIEL B. BATERZAL, ELISEO YBAEZ, DIOSDADO E. HANCHIC, EDDIE ESCALICAS, ELEAZAR Section 2. Purpose, Scope and Coverage. - To effectively free our City Sea Waters from Cyanide and other
B. BATERZAL, DOMINADOR HALICHIC, ROOSEVELT RISMO-AN, ROBERT C. MERCADER, TIRSO Obnoxious substance, and shall cover all persons and/or entities operating within and outside the City of Puerto
ARESGADO, DANIEL CHAVEZ, DANILO CHAVEZ, VICTOR VILLAROEL, ERNESTO C. YABANEZ, Princesa who is are [sic] directly or indirectly in the business or shipment of live fish and lobster outside the City.
ARMANDO T. SANTILLAN, RUDY S. SANTILLAN, JODJEN ILUSTRISIMO, NESTOR SALANGRON,
ALBERTO SALANGRON, ROGER L. ROXAS, FRANCISCO T. ANTICANO, PASTOR SALANGRON, Section 3. Definition of terms. - For purpose of this Ordinance the following are hereby defined:
BIENVENIDO SANTILLAN, GILBUENA LADDY, FIDEL BENJAMIN JOVELITO BELGANO, HONEY PARIOL,
ANTONIO SALANGRON, NICASIO SALANGRON, & AIRLINE SHIPPERS ASSOCIATION OF A. SEA BASS - A kind of fish under the family of Centropomidae, better known as APAHAP;
PALAWAN, petitioners, vs. GOV. SALVADOR P. SOCRATES, MEMBERS OF SANGGUNIAN
PANLALAWIGAN OF PALAWAN, namely, VICE-GOVERNOR JOEL T. REYES, JOSE D. ZABALA,
ROSALINO R. ACOSTA, JOSELITO A. CADLAON, ANDRES R. BAACO, NELSON P. PENEYRA, CIPRIANO B. CATFISH - A kind of fish under the family of Plotosidae, better known as HITO-HITO;
C. BARROMA, CLARO E. ORDINARIO, ERNESTO A. LLACUN, RODOLFO C. FLORDELIZA, GILBERT S.
BAACO, WINSTON G. ARZAGA, NAPOLEON F. ORDONEZ and GIL P. ACOSTA, CITY MAYOR EDWARD C. MUDFISH - A kind of fish under the family of Orphicaphalisae better known as DALAG
HAGEDORN, MEMBERS OF SANGGUNIANG PANLUNGSOD NG PUERTO PRINCESA, ALL MEMBERS OF
BANTAY DAGAT, MEMBERS OF PHILIPPINE NATIONAL POLICE OF PALAWAN, PROVINCIAL AND CITY D. ALL LIVE FISH - All alive, breathing not necessarily moving of all specie[s] use for food and for aquarium
PROSECUTORS OF PALAWAN and PUERTO PRINCESA CITY, and ALL JUDGES OF PALAWAN, purposes.
REGIONAL, MUNICIPAL AND METROPOLITAN, respondents.
E. LIVE LOBSTER - Several relatively, large marine crustaceans of the genus Homarus that are alive and
DECISION breathing not necessarily moving.
DAVIDE, JR., J.:
Section 4. It shall be unlawful [for] any person or any business enterprise or company to ship out from Puerto
Princesa City to any point of destination either via aircraft or seacraft of any live fish and lobster except SEA
Petitioners caption their petition as one for Certiorari, Injunction With Preliminary Mandatory Injunction,with BASS, CATFISH, MUDFISH, AND MILKFISH FRIES.
Prayer for Temporary Restraining Order and pray that this Court: (1) declare as unconstitutional: (a) Ordinance No.
15-92, dated 15 December 1992, of the Sangguniang Panlungsod of Puerto Princesa; (b) Office Order No. 23,
Section 5. Penalty Clause. - Any person/s and or business entity violating this Ordinance shall be penalized with
Series of 1993, dated 22 January 1993, issued by Acting City Mayor Amado L. Lucero of Puerto Princesa City; and
a fine of not more than P5,000.00 or imprisonment of not more than twelve (12) months, cancellation of their
(c) Resolution No. 33, Ordinance No. 2, Series of 1993, dated 19 February 1993, of the Sangguniang
permit to do business in the City of Puerto Princesa or all of the herein stated penalties, upon the discretion of the
Panlalawigan of Palawan; (2) enjoin the enforcement thereof; and (3) restrain respondents Provincial and City
court.
Prosecutors of Palawan and Puerto Princesa City and Judges of Regional Trial Courts, Metropolitan Trial
Section 6. If the owner and/or operator of the establishment found vilating the provisions of this ordinance is a
corporation or a partnership, the penalty prescribed in Section 5 hereof shall be imposed upon its president
and/or General Manager or Managing Partner and/or Manager, as the case maybe [sic].
Section 7. Any existing ordinance or any provision of any ordinance inconsistent to [sic] this ordinance is deemed
repealed.
Section 8. This Ordinance shall take effect on January 1, 1993.
SO ORDAINED.
2. To implement said city ordinance, then Acting City Mayor Amado L. Lucero issued Office Order No. 23, Series
of 1993 dated January 22, 1993 which reads as follows:
In the interest of public service and for purposes of City Ordinance No. PD426-14-74, otherwise known as AN
ORDINANCE REQUIRING ANY PERSON ENGAGED OR INTENDING TO ENGAGE IN ANY BUSINESS,
TRADE, OCCUPATION, CALLING OR PROFESSION OR HAVING IN HIS POSSESSION ANY OF THE
ARTICLES FOR WHICH A PERMIT IS REQUIRED TO BE HAD, TO OBTAIN FIRST A MAYORS PERMIT and
City Ordinance No. 15-92, AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER
OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998, you are hereby
authorized and directed to check or conduct necessary inspections on cargoes containing live fish and lobster
being shipped out from the Puerto Princesa Airport, Puerto Princesa Wharf or at any port within the jurisdiction
of the City to any point of destinations [sic] either via aircraft or seacraft.
The purpose of the inspection is to ascertain whether the shipper possessed the required Mayors Permit issued
by this Office and the shipment is covered by invoice or clearance issued by the local office of the Bureau of
Fisheries and Aquatic Resources and as to compliance with all other existing rules and regulations on the matter.
Any cargo containing live fish and lobster without the required documents as stated herein must be held for
proper disposition.
In the pursuit of this Order, you are hereby authorized to coordinate with the PAL Manager, the PPA Manager,
the local PNP Station and other offices concerned for the needed support and cooperation.Further, that the usual
courtesy and diplomacy must be observed at all times in the conduct of the inspection.
Please be guided accordingly.
3. On February 19, 1993, the Sangguniang Panlalawigan, Provincial Government of Palawan enacted Resolution
No. 33 entitled: A RESOLUTION PROHIBITING THE CATCHING, GATHERING, POSSESSING, BUYING,
SELLING AND SHIPMENT OF LIVE MARINE CORAL DWELLING AQUATIC ORGANISMS, TO WIT:
FAMILY: SCARIDAE (MAMENG), EPINE PHELUS FASCIATUS(SUNO). CROMILEPTES
ALTIVELIS (PANTHER OR SENORITA), LOBSTER BELOW 200 GRAMS AND SPAWNING, TRADACNA
GIGAS (TAKLOBO), PINCTADA MARGARITEFERA(MOTHER PEARL, OYSTERS, GIANT CLAMS AND
OTHER SPECIES), PENAEUS MONODON (TIGER PRAWN-BREEDER SIZE OR MOTHER), EPINEPHELUS
SUILLUS (LOBA OR GREEN GROUPER) AND FAMILY: BALISTIDAE (TROPICAL AQUARIUM FISHES) FOR
A PERIOD FIVE (5) YEARS IN AND COMING FROM PALAWAN WATERS, the full text of which reads as
follows:
WHEREAS, scientific and factual researches [sic] and studies disclose that only five (5) percent of the corals of
our province remain to be in excellent condition as [a] habitat of marine coral dwelling aquatic organisms;
WHEREAS, it cannot be gainsaid that the destruction and devastation of the corals of our province were
principally due to illegal fishing activities like dynamite fishing, sodium cyanide fishing, use of other obnoxious
substances and other related activities;
WHEREAS, there is an imperative and urgent need to protect and preserve the existence of the remaining
excellent corals and allow the devastated ones to reinvigorate and regenerate themselves into vitality within the
span of five (5) years;
WHEREAS, Sec. 468, Par. 1, Sub-Par. VI of the [sic] R.A. 7160 otherwise known as the Local Government Code
of 1991 empowers the Sangguniang Panlalawigan to protect the environment and impose appropriate penalties
[upon] acts which endanger the environment such as dynamite fishing and other forms of destructive fishing,
among others.
NOW, THEREFORE, on motion by Kagawad Nelson P. Peneyra and upon unanimous decision of all the
members present;
Be it resolved as it is hereby resolved, to approve Resolution No. 33, Series of 1993 of the Sangguniang
Panlalawigan and to enact Ordinance No. 2 for the purpose, to wit:
ORDINANCE NO. 2
Series of 1993
BE IT ORDAINED BY THE SANGGUNIANG PANLALAWIGAN IN SESSION ASSEMBLED:
Section 1. TITLE - This Ordinance shall be known as an Ordinance Prohibiting the catching, gathering,
possessing, buying, selling and shipment of live marine coral dwelling aquatic organisms, to wit: 1.Family:
Scaridae (Mameng), 2. Epinephelus Fasciatus (Suno), 3. Cromileptes altivelis (Panther or Senorita), lobster
below 200 grams and spawning), 4. Tridacna Gigas (Taklobo), 5. Pinctada Margaretefera (Mother Pearl, Oysters,
Giant Clams and other species), 6. Penaeus Monodon (Tiger Prawn-breeder size or mother), 7. Epinephelus
Suillus (Loba or Green Grouper) and 8. Family: Balistidae (Topical Aquarium Fishes) for a period of five (5) years
in and coming from Palawan Waters.
Section II. PRELIMINARY CONSIDERATIONS
1. Sec. 2-A (Rep. Act 7160). It is hereby declared, the policy of the state that the territorial and political
subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable them to attain their fullest
development as self reliant communities and make them more effective partners in the attainment of national
goals. Toward this end, the State shall provide for [a] more responsive and accountable local government
structure instituted through a system of decentralization whereby local government units shall be given more
powers, authority, responsibilities and resources.
2. Sec. 5-A (R.A. 7160). Any provision on a power of [a] local Government Unit shall be liberaly interpreted in its
favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the
lower government units. Any fair and reasonable doubts as to the existence of the power shall be interpreted in
favor of the Local Government Unit concerned.
3. Sec. 5-C (R.A. 7160). The general welfare provisions in this Code shall be liberally interpreted to give more
powers to local government units in accelerating economic development and upgrading the quality of life for the
people in the community.
4. Sec. 16 (R.A. 7160). General Welfare. - Every local government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance; and those which are essential to the promotion of the general welfare.
Section III. DECLARATION OF POLICY. - It is hereby declared to be the policy of the Province of Palawan to
protect and conserve the marine resources of Palawan not only for the greatest good of the majority of the
present generation but with [the] proper perspective and consideration of [sic] their prosperity, and to attain this
end, the Sangguniang Panlalawigan henceforth declares that is [sic] shall be unlawful for any person or any
business entity to engage in catching, gathering, possessing, buying, selling and shipment of live marine coral
dwelling aquatic organisms as enumerated in Section 1 hereof in and coming out of Palawan Waters for a period
of five (5) years;
Section IV. PENALTY CLAUSE. - Any person and/or business entity violating this Ordinance shall be penalized
with a fine of not more than Five Thousand Pesos (P5,000.00), Philippine Currency, and/or imprisonment of six
(6) months to twelve (12) months and confiscation and forfeiture of paraphernalias [sic] and equipment in favor of
the government at the discretion of the Court;
Section V. SEPARABILITY CLAUSE. - If for any reason, a Section or provision of this Ordinance shall be held as
unconditional [sic] or invalid, it shall not affect the other provisions hereof.
Section VI. REPEALING CLAUSE. - Any existing Ordinance or a provision of any ordinance inconsistent
herewith is deemed modified, amended or repealed.
Section VII. EFFECTIVITY. - This Ordinance shall take effect ten (10) days after its publication.
SO ORDAINED.
4. The respondents implemented the said ordinances, Annexes A and C hereof thereby depriving all the
fishermen of the whole province of Palawan and the City of Puerto Princesa of their only means of livelihood and
the petitioners Airline Shippers Association of Palawan and other marine merchants from performing their lawful
occupation and trade;
5. Petitioners Alfredo Tano, Baldomero Tano, Teocenes Midello, Angel de Mesa, Eulogio Tremocha, and Felipe
Ongonion, Jr. were even charged criminally under criminal case no. 93-05-C in the 1st Municipal Circuit Trial
Court of Cuyo-Agutaya-Magsaysay, an original carbon copy of the criminal complaint dated April 12, 1993 is
hereto attached as Annex D; while xerox copies are attached as Annex D to the copies of the petition;
6. Petitioners Robert Lim and Virginia Lim, on the other hand, were charged by the respondent PNP with the
respondent City Prosecutor of Puerto Princesa City, a xerox copy of the complaint is hereto attached as Annex E;
Without seeking redress from the concerned local government units, prosecutors office and courts,
petitioners directly invoked our original jurisdiction by filing this petition on 4 June 1993. In sum, petitioners contend
that:
First, the Ordinances deprived them of due process of law, their livelihood, and unduly restricted them from
the practice of their trade, in violation of Section 2, Article XII and Sections 2 and 7 of Article XIII of the 1987
Constitution.
Second, Office Order No. 23 contained no regulation nor condition under which the Mayors permit could be
granted or denied; in other words, the Mayor had the absolute authority to determine whether or not to issue permit.
Third, as Ordinance No. 2 of the Province of Palawan altogether prohibited the catching, gathering,
possession, buying, selling and shipping of live marine coral dwelling organisms, without any distinction whether it
was caught or gathered through lawful fishing method, the Ordinance took away the right of petitioners-fishermen
to earn their livelihood in lawful ways; and insofar as petitioners-members of Airline Shippers Association are
concerned, they were unduly prevented from pursuing their vocation and entering into contracts which are proper,
necessary, and essential to carry out their business endeavors to a successful conclusion.
Finally, as Ordinance No. 2 of the Sangguniang Panlalawigan is null and void, the criminal cases based
thereon against petitioners Tano and the others have to be dismissed.
In the Resolution of 15 June 1993 we required respondents to comment on the petition, and furnished the
Office of the Solicitor General with a copy thereof.
In their comment filed on 13 August 1993, public respondents Governor Socrates and Members of the
Sangguniang Panlalawigan of Palawan defended the validity of Ordinance No.2, Series of 1993, as a valid exercise
of the Provincial Governments power under the general welfare clause (Section 16 of the Local Government Code
of 1991 [hereafter, LGC]), and its specific power to protect the environment and impose appropriate penalties for
acts which endanger the environment, such as dynamite fishing and other forms of destructive fishing under
Section 447 (a) (1) (vi), Section 458 (a) (1) (vi), and Section 468 (a) (1) (vi), of the LGC. They claimed that in the
exercise of such powers, the Province of Palawan had the right and responsibilty to insure that the remaining coral
reefs, where fish dwells [sic], within its territory remain healthy for the future generation. The Ordinance, they further
asserted, covered only live marine coral dwelling aquatic organisms which were enumerated in the ordinance and
excluded other kinds of live marine aquatic organisms not dwelling in coral reefs; besides the prohibition was for
only five (5) years to protect and preserve the pristine coral and allow those damaged to regenerate.
Aforementioned respondents likewise maintained that there was no violation of due process and equal
protection clauses of the Constitution. As to the former, public hearings were conducted before the enactment of
the Ordinance which, undoubtedly, had a lawful purpose and employed reasonable means; while as to the latter,
a substantial distinction existed between a fisherman who catches live fish with the intention of selling it live, and
a fisherman who catches live fish with no intention at all of selling it live, i.e., the former uses sodium cyanide while
the latter does not. Further, the Ordinance applied equally to all those belonging to one class.
On 25 October 1993 petitioners filed an Urgent Plea for the Immediate Issuance of a Temporary Restraining
Order claiming that despite the pendency of this case, Branch 50 of the Regional Trial Court of Palawan was bent
on proceeding with Criminal Case No. 11223 against petitioners Danilo Tano, Alfredo Tano, Eulogio Tremocha,
Romualdo Tano, Baldomero Tano, Andres Lemihan and Angel de Mesa for violation of Ordinance No. 2 of the
Sangguniang Panlalawigan of Palawan. Acting on said plea, we issued on 11 November 1993 a temporary
restraining order directing Judge Angel Miclat of said court to cease and desist from proceeding with the
arraignment and pre-trial of Criminal Case No. 11223.
On 12 July 1994, we excused the Office of the Solicitor General from filing a comment, considering that as
claimed by said office in its Manifestation of 28 June 1994, respondents were already represented by counsel.
The rest of the respondents did not file any comment on the petition.
In the resolution of 15 September 1994, we resolved to consider the comment on the petition as the Answer,
gave due course to the petition and required the parties to submit their respective memoranda. [2]
On 22 April 1997 we ordered impleaded as party respondents the Department of Agriculture and the Bureau
of Fisheries and Aquatic Resources and required the Office of the Solicitor General to comment on their behalf.
But in light of the latters motion of 9 July 1997 for an extension of time to file the comment which would only result
in further delay, we dispensed with said comment.
After due deliberation on the pleadings filed, we resolved to dismiss this petition for want of merit, on 22 July
1997, and assigned it to the ponente for the writing of the opinion of the Court.
I
There are actually two sets of petitioners in this case. The first is composed of Alfredo Tano, Baldomero
Tano, Danilo Tano, Romualdo Tano, Teocenes Midello, Angel de Mesa, Eulogio Tremocha, Felipe Ongonion, Jr.,
Andres Linijan, and Felimon de Mesa, who were criminally charged with violating Sangguniang
Panlalawigan Resolution No. 33 and Ordinance No. 2, Series of 1993, of the Province of Palawan, in Criminal Case
No. 93-05-C of the 1st Municipal Circuit Trial Court (MCTC) of Palawan;[3] and Robert Lim and Virginia Lim who
were charged with violating City Ordinance No. 15-92 of Puerto Princesa City and Ordinance No. 2, Series of 1993,
of the Province of Palawan before the Office of the City Prosecutor of Puerto Princesa. [4] All of them, with the
exception of Teocenes Midello, Felipe Ongonion, Jr., Felimon de Mesa, Robert Lim and Virginia Lim, are likewise
the accused in Criminal Case No. 11223 for the violation of Ordinance No. 2 of the Sangguniang Panlalawigan of
Palawan, pending before Branch 50 of the Regional Trial Court of Palawan.[5]
The second set of petitioners is composed of the rest of the petitioners numbering seventy-seven (77), all of
whom, except the Airline Shippers Association of Palawan -- an alleged private association of several marine
merchants -- are natural persons who claim to be fishermen.
The primary interest of the first set of petitioners is, of course, to prevent the prosecution, trial and
determination of the criminal cases until the constitutionality or legality of the Ordinances they allegedly violated
shall have been resolved. The second set of petitioners merely claim that they being fishermen or marine
merchants, they would be adversely affected by the ordinances.
As to the first set of petitioners, this special civil for certiorari must fail on the ground of prematurity amounting
to a lack of cause of action. There is no showing that the said petitioners, as the accused in the criminal cases,
have filed motions to quash the informations therein and that the same were denied. The ground available for such
motions is that the facts charged therein do not constitute an offense because the ordinances in question are
unconstitutional.[6] It cannot then be said that the lower courts acted without or in excess of jurisdiction or with grave
abuse of discretion to justify recourse to the extraordinary remedy of certiorari or prohibition. It must further be
stressed that even if the petitioners did file motions to quash, the denial thereof would not forthwith give rise to a
cause of action under Rule 65 of the Rules of Court. The general rule is that where a motion to quash is denied,
the remedy therefrom is not certiorari, but for the party aggrieved thereby to go to trial without prejudice to
reiterating special defenses involved in said motion, and if, after trial on the merits of adverse decision is rendered,
to appeal therefrom in the manner authorized by law.[7] And , even where in an exceptional circumstance such
denial may be the subject of a special civil action for certiorari, a motion for reconsideration must have to be filed
to allow the court concerned an opportunity to correct its errors, unless such motion may be dispensed with because
of existing exceptional circumstances.[8] Finally, even if a motion for reconsideration has been filed and denied, the
remedy under Rule 65 is still unavailable absent any showing of the grounds provided for in Section 1 thereof.[9] For
obvious reasons, the petition at bar does not, and could not have , alleged any of such grounds.
As to the second set of petitioners, the instant petition is obviously one for DECLARATORY RELIEF, i.e., for
a declaration that the Ordinances in question are a nullity ... for being unconstitutional. [10] As such, their petition
must likewise fail, as this Court is not possessed of original jurisdiction over petitions for declaratory relief even if
only questions of law are involved,[11] it being settled that the Court merely exercises appellate jurisdiction over
such petitions.[12]
II
Even granting arguendo that the first set of petitioners have a cause of action ripe for the extraordinary writ
of certiorari, there is here a clear disregard of the hierarchy of courts, and no special and important reason or
exceptional or compelling circumstance has been adduced why direct recourse to us should be allowed. While we
have concurrent jurisdiction with Regional Trial courts and with the Court of Appeals to issue writs of certiorari,
prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence gives petitioners no
unrestricted freedom of choice of court forum, so we held in People v. Cuaresma:[13]
This concurrence of jurisdiction is not to be taken as according to parties seeking any of the writs an absolute
unrestrained freedom of choice of the court to which application therefor will be directed. There is after all
hierarchy of courts. That hierarchy is determinative of the venue of appeals, and should also serve as a general
determinant of the appropriate forum for petitions for the extraordinary writs. A becoming regard for that judicial
hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level (inferior)
courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A
direct invocation of the Supreme Courts original jurisdiction to issue these writs should be allowed only when
there are special and important reasons therefor, clearly and specifically set out in the petition. This is
established policy. It is a policy necessary to prevent inordinate demands upon the Courts time and attention
which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of
the Courts docket.
The Court feels the need to reaffirm that policy at this time, and to enjoin strict adherence thereto in the light of
what it perceives to be a growing tendency on the part of litigants and lawyers to have their applications for the
so-called extraordinary writs, and sometimes even their appeals, passed upon and adjudicated directly and
immediately by the highest tribunal of the land.
In Santiago v. Vasquez,[14] this Court forcefully expressed that the propensity of litigants and lawyers to
disregard the hierarchy of courts must be put to a halt, not only because of the imposition upon the precious time
of this Court, but also because of the inevitable and resultant delay, intended or otherwise, in the adjudication of
the case which often has to be remanded or referred to the lower court, the proper forum under the rules of
procedure, or as better equipped to resolve the issues since this Court is not a trier of facts. We reiterated the
judicial policy that this Court will not entertain direct resort to it unless the redress desired cannot be obtained in
the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and
calling for the exercise of [its] primary jurisdiction.
III
Notwithstanding the foregoing procedural obstacles against the first set of petitioners, we opt to resolve this
case on its merits considering that the lifetime of the challenged Ordinances is about to end. Ordinance No. 15-92
of the City of Puerto Princesa is effective only up to 1 January 1998, while Ordinance No. 2 of the Province of
Palawan, enacted on 19 February 1993, is effective for only five (5) years. Besides, these Ordinances were
undoubtedly enacted in the exercise of powers under the new LGC relative to the protection and preservation of
the environment and are thus novel and of paramount importance. No further delay then may be allowed in the
resolution of the issues raised.
It is of course settled that laws (including ordinances enacted by local government units) enjoy the
presumption of constitutionality.[15] To overthrow this presumption, there must be a clear and unequivocal breach
of the Constitution, not merely a doubtful or argumentative contradiction. In short, the conflict with the Constitution
must be shown beyond reasonable doubt.[16] Where doubt exists, even if well founded, there can be no finding of
unconstitutionality. To doubt is to sustain.[17]
After a scrunity of the challenged Ordinances and the provisions of the Constitution petitioners claim to have
been violated, we find petitioners contentions baseless and so hold that the former do not suffer from any infirmity,
both under the Constitution and applicable laws.
Petitioners specifically point to Section 2, Article XII and Sections 2 and 7, Article XIII of the Constitution as
having been transgressed by the Ordinances.
The pertinent portion of Section 2 of Article XII reads:
SEC. 2. x x x
The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive
economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as
cooperative fish farming, with priority to subsistence fishermen and fishworkers in rivers, lakes, bays, and
lagoons.
Sections 2 and 7 of Article XIII provide:
Sec. 2. The promotion of social justice shall include the commitment to create economic opportunities based on
freedom of initiative and self-reliance.
SEC. 7. The State shall protect the rights of subsistence fishermen, especially of local communities, to the
preferential use of the communal marine and fishing resources, both inland and offshore. It shall provide support
to such fishermen through appropriate technology and research, adequate financial, production, and marketing
assistance, and other services. The State shall also protect, develop, and conserve such resources. The
protection shall extend to offshore fishing grounds of subsistence fishermen against foreign
intrusion. Fishworkers shall receive a just share from their labor in the utilization of marine and fishing resources.
There is absolutely no showing that any of the petitioners qualifies as a subsistence or marginal fisherman. In
their petition, petitioner Airline Shippers Association of Palawan is described as a private association composed of
Marine Merchants; petitioners Robert Lim and Virginia Lim, as merchants; while the rest of the petitioners claim to
be fishermen, without any qualification, however, as to their status.
Since the Constitution does not specifically provide a definition of the terms subsistence or marginal
fishermen,[18] they should be construed in their general and ordinary sense. A marginal fisherman is an individual
engaged in fishing whose margin of return or reward in his harvest of fish as measured by existing price levels is
barely sufficient to yield a profit or cover the cost of gathering the fish, [19] while a subsistence fisherman is one
whose catch yields but the irreducible minimum for his livelihood.[20] Section 131(p) of the LGC (R.A. No. 7160)
defines a marginal farmer or fisherman as an individual engaged in subsistence farming or fishing which shall be
limited to the sale, barter or exchange of agricultural or marine products produced by himself and his immediate
family. It bears repeating that nothing in the record supports a finding that any petitioner falls within these definitions.
Besides, Section 2 of Article XII aims primarily not to bestow any right to subsistence fishermen, but to lay
stress on the duty of the State to protect the nations marine wealth. What the provision merely recognizes is that
the State may allow, by law, cooperative fish farming, with priority to subsistence fishermen and fishworkers in
rivers, lakes, bays, and lagoons. Our survey of the statute books reveals that the only provision of law which speaks
of the preferential right of marginal fishermen is Section 149 of the LGC of 1991 which pertinently provides:
SEC. 149. Fishery Rentals, Fees and Charges. -- x x x
(b) The sangguniang bayan may:
(1) Grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic beds or bangus fry areas, within
a definite zone of the municipal waters, as determined by it: Provided, however, That duly registered
organizations and cooperatives of marginal fishermen shall have preferential right to such fishery privileges ....
In a Joint Administrative Order No. 3, dated 25 April 1996, the Secretary of the Department of Agriculture and the
Secretary of the Department of Interior and Local Government prescribed the guidelines on the preferential
treatment of small fisherfolk relative to the fishery right mentioned in Section 149. This case, however, does not
involve such fishery right.
Anent Section 7 of Article XIII, it speaks not only of the use of communal marine and fishing resources, but
of their protection, development, and conservation. As hereafter shown, the ordinances in question are meant
precisely to protect and conserve our marine resources to the end that their enjoyment by the people may be
guaranteed not only for the present generation, but also for the generations to come.
The so-called preferential right of subsistence or marginal fishermen to the use of marine resources is not at
all absolute. In accordance with the Regalian Doctrine, marine resources belong to the State, and, pursuant to the
first paragraph of Section 2, Article XII of the Constitution, their exploration, development and utilization ... shall be
under the full control and supervision of the State. Moreover, their mandated protection, development, and
conservation as necessarily recognized by the framers of the Constitution, imply certain restrictions on whatever
right of enjoyment there may be in favor of anyone. Thus, as to the curtailment of the preferential treatment of
marginal fisherman, the following exchange between Commissioner Francisco Rodrigo and Commissioner Jose
F.S. Bengzon, Jr., took place at the plenary session of the Constitutional Commission:
MR. RODRIGO:
Let us discuss the implementation of this because I would not raise the hopes of our people, and afterwards
fail in the implementation. How will this be implemented? Will there be a licensing or giving of permits so
that government officials will know that one is really a marginal fisherman? Or if policeman say that a
person is not a marginal fisherman, he can show his permit, to prove that indeed he is one.
MR. BENGZON:
Certainly, there will be some mode of licensing insofar as this is concerned and this particular question
could be tackled when we discuss the Article on Local Governments -- whether we will leave to the local
governments or to Congress on how these things will be implemented. But certainly, I think our
Congressmen and our local officials will not be bereft of ideas on how to implement this mandate.
MR. RODRIGO:
So, once one is licensed as a marginal fisherman, he can go anywhere in the Philippines and fish in
any fishing grounds.
MR. BENGZON:
Subject to whatever rules and regulations and local laws that may be passed, may be existing or will be
passed.[21] (underscoring supplied for emphasis).
What must likewise be borne in mind is the state policy enshrined in the Constitution regarding the duty of
the State to protect and advance the right of the people to a balanced and healthful ecology in accord with the
rhythm and harmony of nature.[22] On this score, in Oposa v. Factoran,[23] this Court declared:
While the right to balanced and healthful ecology is to be found under the Declaration of Principles the State
Policies and not under the Bill of Rights, it does not follow that it is less important than any of the civil and political
rights enumerated in the latter. Such a right belongs to a different category of rights altogether for it concerns
nothing less than self-preservation and self-perpetuation - aptly and fittingly stressed by the petitioners - the
advancement of which may even be said to predate all governments and constitutions. As a matter of fact, these
basic rights need not even be written in the Constitution for they are assumed to exist from the inception of
humankind. If they are now explicitly mentioned in the fundamental charter, it is because of the well-founded fear
of its framers that unless the rights to a balanced and healthful ecology and to health are mandated as state
policies by the Constitution itself, thereby highlighting their continuing importance and imposing upon the state a
solemn obligation to preserve the first and protect and advance the second , the day would not be too far when
all else would be lost not only for the present generation, but also for those to come - generations which stand to
inherit nothing but parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it a correlative duty to refrain from impairing the
environment ...
The LGC provisions invoked by private respondents merely seek to give flesh and blood to the right of the
people to a balanced and healthful ecology. In fact, the General Welfare Clause, expressly mentions this right:
SEC. 16. General Welfare.-- Every local government unit shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and
effective governance, and those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced
ecology, encourage and support the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment
among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants.
(underscoring supplied).
Moreover, Section 5(c) of the LGC explicitly mandates that the general welfare provisions of the LGC shall be
liberally interpreted to give more powers to the local government units in accelerating economic development and
upgrading the quality of life for the people of the community.
The LGC vests municipalities with the power to grant fishery privileges in municipal waters and to impose
rentals, fees or charges therefor; to penalize, by appropriate ordinances, the use of explosives, noxious or
poisonous substances, electricity, muro-ami, and other deleterious methods of fishing; and to prosecute any
violation of the provisions of applicable fishery laws.[24] Further, the sangguniang bayan, the sangguniang
panlungsod and the sangguniang panlalawigan are directed to enact ordinances for the general welfare of the
municipality and its inhabitants, which shall include, inter alia, ordinances that [p]rotect the environment and impose
appropriate penalties for acts which endanger the environment such as dynamite fishing and other forms of
destructive fishing ... and such other activities which result in pollution, acceleration of eutrophication of rivers and
lakes or of ecological imbalance.[25]
Finally, the centerpiece of LGC is the system of decentralization[26] as expressly mandated by the
Constitution.[27] Indispensable thereto is devolution and the LGC expressly provides that [a]ny provision on a power
of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any question thereon shall
be resolved in favor of devolution of powers and of the lower local government unit. Any fair and reasonable doubt
as to the existence of the power shall be interpreted in favor of the local government unit concerned, [28]Devolution
refers to the act by which the National Government confers power and authority upon the various local government
units to perform specific functions and responsibilities.[29]
One of the devolved powers enumerated in the section of the LGC on devolution is the enforcement of fishery
laws in municipal waters including the conservation of mangroves.[30] This necessarily includes enactment of
ordinances to effectively carry out such fishery laws within the municipal waters.
The term municipal waters, in turn, include not only streams, lakes, and tidal waters within the municipality,
not being the subject of private ownership and not comprised within the national parks, public forest, timber lands,
forest reserves, or fishery reserves, but also marine waters included between two lines drawn perpendicularly to
the general coastline from points where the boundary lines of the municipality or city touch the sea at low tide and
a third line parallel with the general coastline and fifteen kilometers from it. [31] Under P.D. No. 704, the marine
waters included in municipal waters is limited to three nautical miles from the general coastline using the above
perpendicular lines and a third parallel line.
These fishery laws which local government units may enforce under Section 17(b), (2), (i) in municipal waters
include: (1) P.D. No. 704; (2) P.D. No. 1015 which, inter alia, authorizes the establishment of a closed season in
any Philippine water if necessary for conservation or ecological purposes; (3) P.D. No. 1219 which provides for the
exploration, exploitation, utilization, and conservation of coral resources; (4) R.A. No. 5474, as amended by B.P.
Blg. 58, which makes it unlawful for any person, association, or corporation to catch or cause to be caught, sell,
offer to sell, purchase, or have in possession any of the fish specie called gobiidae or ipon during closed season;
and (5) R.A. No. 6451 which prohibits and punishes electrofishing, as well as various issuances of the BFAR.
To those specifically devolved insofar as the control and regulation of fishing in municipal waters and the
protection of its marine environment are concerned, must be added the following:
1. Issuance of permits to construct fish cages within municipal waters;
2. Issuance of permits to gather aquarium fishes within municipal waters;
3. Issuance of permits to gather kapis shells within municipal waters;
4. Issuance of permits to gather/culture shelled mollusks within municipal waters;
5. Issuance of licenses to establish seaweed farms within municipal waters;
6. Issuance of licenses to establish culture pearls within municipal waters;
7. Issuance of auxiliary invoice to transport fish and fishery products; and
8. Establishment of closed season in municipal waters.
These functions are covered in the Memorandum of Agreement of 5 April 1994 between the Department of
Agriculture and the Department of Interior and Local Government.
In light then of the principles of decentralization and devolution enshrined in the LGC and the powers granted
to local government units under Section 16 (the General Welfare Clause), and under Sections 149, 447 (a) (1) (vi),
458 (a) (1) (vi) and 468 (a) (1) (vi), which unquestionably involve the exercise of police power, the validity of the
questioned Ordinances cannot be doubted.
Parenthetically, we wish to add that these Ordinances find full support under R.A. No. 7611, otherwise known
as the Strategic Environmental Plan (SEP) for Palawan Act, approved on 19 July 1992. This statute adopts a
comprehensive framework for the sustainable development of Palawan compatible with protecting and enhancing
the natural resources and endangered environment of the province, which shall serve to guide the local government
of Palawan and the government agencies concerned in the formulation and implementation of plans, programs
and projects affecting said province.[32]
At this time then, it would be appropriate to determine the relation between the assailed Ordinances and the
aforesaid powers of the Sangguniang Panlungsod of the City of Puerto Princesa and the Sangguniang
Panlalawigan of the Province of Palawan to protect the environment. To begin, we ascertain the purpose of the
Ordinances as set forth in the statement of purposes or declaration of policies quoted earlier.
It is clear to the Court that both Ordinances have two principal objectives or purposes: (1) to establish a
closed season for the species of fish or aquatic animals covered therein for a period of five years, and (2) to protect
the corals of the marine waters of the City of Puerto Princesa and the Province of Palawan from further destruction
due to illegal fishing activities.
The accomplishment of the first objective is well within the devolved power to enforce fishery laws in
municipal waters, such as P.D. No. 1015, which allows the establishment of closed seasons. The devolution of
such power has been expressly confirmed in the Memorandum of Agreement of 5 April 1994 between the
Department of Agriculture and the Department of Interior and Local Government.
The realization of the second objective falls within both the general welfare clause of the LGC and the express
mandate thereunder to cities and provinces to protect the environment and impose appropriate penalties for acts
which endanger the environment.[33]
The destruction of the coral reefs results in serious, if not irreparable, ecological imbalance, for coral reefs
are among the natures life-support systems.[34] They collect, retain, and recycle nutrients for adjacent nearshore
areas such as mangroves, seagrass beds, and reef flats; provide food for marine plants and animals; and serve
as a protective shelter for aquatic organisms.[35] It is said that [e]cologically, the reefs are to the oceans what forests
are to continents: they are shelter and breeding grounds for fish and plant species that will disappear without
them.[36]
The prohibition against catching live fish stems, in part, from the modern phenomenon of live-fish trade which
entails the catching of so-called exotic tropical species of fish not only for aquarium use in the West, but also for
the market for live banquet fish [which] is virtually insatiable in ever more affluent Asia. [37] These exotic species are
coral-dwellers, and fishermen catch them by diving in shallow water with corraline habitats and squirting sodium
cyanide poison at passing fish directly or onto coral crevices; once affected the fish are immobilized [merely
stunned] and then scooped by hand.[38] The diver then surfaces and dumps his catch into a submerged net attached
to the skiff . Twenty minutes later, the fish can swim normally.Back on shore, they are placed in holding pens, and
within a few weeks, they expel the cyanide from their system and are ready to be hauled. Then they are placed in
saltwater tanks or packaged in plastic bags filled with seawater for shipment by air freight to major markets for live
food fish.[39] While the fish are meant to survive, the opposite holds true for their former home as [a]fter the
fisherman squirts the cyanide, the first thing to perish is the reef algae, on which fish feed. Days later, the living
coral starts to expire. Soon the reef loses its function as habitat for the fish, which eat both the algae and
invertebrates that cling to the coral. The reef becomes an underwater graveyard, its skeletal remains brittle,
bleached of all color and vulnerable to erosion from the pounding of the waves.[40] It has been found that cyanide
fishing kills most hard and soft corals within three months of repeated application.[41]
The nexus then between the activities barred by Ordinance No. 15-92 of the City of Puerto Princesa and the
prohibited acts provided in Ordinance No. 2, Series of 1993 of the Province of Palawan, on one hand, and the use
of sodium cyanide, on the other, is painfully obvious. In sum, the public purpose and reasonableness of the
Ordinances may not then be controverted.
As to Office Order No. 23, Series of 1993, issued by Acting City Mayor Amado L. Lucero of the City of Puerto
Princesa, we find nothing therein violative of any constitutional or statutory provision. The Order refers to the
implementation of the challenged ordinance and is not the Mayors Permit.
The dissenting opinion of Mr. Justice Josue N. Bellosillo relies upon the lack of authority on the part of
the Sangguniang Panlungsod of Puerto Princesa to enact Ordinance No. 15, Series of 1992, on the theory that the
subject thereof is within the jurisdiction and responsibility of the Bureau of Fisheries and Aquatic Resources (BFAR)
under P.D. No. 704, otherwise known as the Fisheries Decree of 1975; and that, in any event, the Ordinance is
unenforceable for lack of approval by the Secretary of the Department of Natural Resources (DNR), likewise in
accordance with P.D. No. 704.
The majority is unable to accommodate this view. The jurisdiction and responsibility of the BFAR under P. D.
no. 704, over the management, conservation, development, protection, utilization and disposition of all fishery and
aquatic resources of the country is not all-encompassing. First, Section 4 thereof excludes from such jurisdiction
and responsibility municipal waters, which shall be under the municipal or city government concerned, except
insofar as fishpens and seaweed culture in municipal in municipal centers are concerned. This section provides,
however, that all municipal or city ordinances and resolutions affecting fishing and fisheries and any disposition
thereunder shall be submitted to the Secretary of the Department of Natural Resources for appropriate action and
shall have full force and effect only upon his approval.[42]
Second, it must at once be pointed out that the BFAR is no longer under the Department of Natural Resources
(now Department of Environment and Natural Resources). Executive Order No. 967 of 30 June 1984 transferred
the BFAR from the control and supervision of the Minister (formerly Secretary) of Natural Resources to the Ministry
of Agriculture and Food (MAF) and converted it into a mere staff agency thereof, integrating its functions with the
regional offices of the MAF.
In Executive Order No. 116 of 30 January 1987, which reorganized the MAF, the BFAR was retained as an
attached agency of the MAF. And under the Administrative Code of 1987, [43]the BFAR is placed under the Title
concerning the Department of Agriculture.[44]
Therefore, it is incorrect to say that the challenged Ordinance of the City of Puerto Princesa is invalid or
unenforceable because it was not approved by the Secretary of the DENR. If at all, the approval that should be
sought would be that of the Secretary of the Department of Agriculture (not DENR) of municipal ordinances
affecting fishing and fisheries in municipal waters has been dispensed with in view of the following reasons:
(1) Section 534 (Repealing Clause) of the LGC expressly repeals or amends Section 16 and 29 of P.D. No.
704[45] insofar that they are inconsistent with the provisions of the LGC.
(2) As discussed earlier, under the general welfare clause of the LGC, local government units have the
power, inter alia, to enact ordinances to enhance the right of the people to a balanced ecology. It likewise
specifically vests municipalities with the power to grant fishery privileges in municipal waters, and impose rentals,
fees or charges therefor; to penalize, by appropriate ordinances, the use of explosives, noxious or poisonous
substances, electricity, muro-ami, and other deleterious methods of fishing; and to prosecute other methods of
fishing; and to prosecute any violation of the provisions of applicable fishing laws. [46] Finally, it imposes upon
the sangguniang bayan, the sangguniang panlungsod, and the sangguniang panlalawigan the duty to enact
ordinances to [p]rotect the environment and impose appropriate penalties for acts which endanger the environment
such as dynamite fishing and other forms of destructive fishing and such other activities which result in pollution,
acceleration of eutrophication of rivers and lakes or of ecological imbalance.[47]
In closing, we commend the Sangguniang Panlungsod of the City of Puerto Princesa and Sangguniang
Panlalawigan of the Province of Palawan for exercising the requisite political will to enact urgently needed
legislation to protect and enhance the marine environment, thereby sharing in the herculean task of arresting the
tide of ecological destruction. We hope that other local government units shall now be roused from their lethargy
and adopt a more vigilant stand in the battle against the decimation of our legacy to future generations. At this time,
the repercussions of any further delay in their response may prove disastrous, if not, irreversible.
WHEREFORE, the instant petition is DISMISSED for lack of merit and the temporary restraining order issued
on 11 November 1993 is LIFTED.
No pronouncement as to costs.
SO ORDERED.
Narvasa, C.J., Padilla, Vitug, Panganiban, and Torres, Jr., JJ., concur.
Romero, Melo, Puno, and Francisco, JJ., joined the ponencias of Justices Davide and Mendoza.
Bellosillo, J., see dissenting opinion.
Kapunan and Hermosisima, Jr., JJ., join Justice Bellosillo in his dissenting opinion.
Mendoza, see concurring opinion.
Regalado, J., on official leave.
[1] None, however, exists in Puerto Princesa City.
[2] Petitioners filed their Memorandum on 24 October 1994. Respondents City Mayor Hagedorn and Members of the
Sangguniang Panlungsod of the City of Puerto Princesa filed their Memorandum on 25 January 1995, while respondents
Governor Socrates and Members of the Sangguniang Panlalawigan of Palawan filed their Memorandum on 31 January 1995.
[3] Annex D of Petition, Rollo, 35.
[4] Annex E of Petition; id, 36.
[5] Annex A to A-5 inclusive of Urgent Plea for the Immediate Issuance of Temporary Restraining Order, Rollo, 86 et seq.
[6] VICENTE J. FRANCISCO, THE REVISED RULES OF COURT IN THE PHILIPPINES, CRIMINAL PROCEDURE, 582 (2nd ed. 1969), citing affecting fishing and fisheries and any disposition thereunder shall be submitted to the Secretary for appropriate action and
U.S. v. Pompeya, 31 Phil. 245 [1915]. shall have full force and effect only upon his approval. The Bureau shall also have authority to regulate and supervise the
[7] Acharon v. Purisima, 13 SCRA 309, 311 [1965]; Cruz v. Court of Appeals, 194 SCRA 145, 152-153 production, capture and gathering of fish and fishery/aquatic products.
[1991]; Yap v. Intermediate Appellate Court, 220 SCRA 245, 253 [1993]; People v. Bans, supra note 7. The Bureau shall prepare and implement, upon approval of the Fishery Industry Development Council, a Fishery Industry
[8] Liberty Insurance Corporation v. Court of Appeals, 222 SCRA 37 [1993]; Lasco v. United Nations Revolving Fund for Development Program.
Natural Resources Exploration, 241 SCRA 681, 684 [1995]. [43] Executive Order No. 292.
[9] See Mendoza v. Court of Appeals, 201 SCRA 343 [1991]; People v. Bans, supra note 7. [44] Section 20, Chapter 4, Title IV, Book IV.
[10] Rollo, 25. [45] These sections read as follows:
[11] Macasiano v. National Housing Authority, 224 SCRA 236, 243 [1993], citing Remotigue v. Osmea, 21 SCRA 837 [1967]; SEC. 16. License, lease, and permit.--- No person shall exploit, occupy, produce, culture, capture or gather fish, or fry or
Rural Bank of Olongapo v. Commissioner of Land Registration, 102 SCRA 794 [1981]; and Allied Broadcasting Center v. fingerling of any species of fish or fishery/aquatic products, or engage in any fishery activity in Philippine or municipal waters
Republic of the Philippines, 190 SCRA 782 [1990]. without a license, lease or permit: Provided, That when due to destruction wrought upon fishponds, fishpens or fish nurseries,
[12] Philnabank Employees Association v. Hon. Estanislao, 227 SCRA 804, 811 [1993]. by typhoon, floods and other fortuitous events, or due to speculation, monopolistic and other pernicious practices which tend
[13] 172 SCRA 415, 423-424 [1989], reiterated in Manalo v. Gloria, 236 SCRA 130, 138-139 [1994]. to create an artificial shortage of fry and/or fingerling, the supply of fish and fishery/aquatic products can reasonably be
[14] 217 SCRA 633, 652 [1993]. expected to fall below the usual demand therefor and the price thereof, to increase, the Secretary, upon recommendation of
[15] La Union Electric Cooperative Inc. v. Yaranon, 179 SCRA 828, 836 [1989]; Francisco v. Permskul, 173 SCRA 324, 333 the Director, is hereby authorized to fix a fair and reasonable price for fry and fingerling of any species of fish, and in so doing
[1989]. and when necessary , fix different price levels for various areas or regions taking into account such variable factors as
[16] See Peralta v. Commission on Elections, 82 SCRA 30, 55 [1978]. availability, accessibility to transportation facilities, packing and crating, and to regulate the movement, shipment and
[17] Paredes v. Executive Secretary, 128 SCRA 6, 11 [1984], citing Yu Cong Eng v. Trinidad, 47 Phil. 385 [1925]. See also transporting of such fry and fingerling: Provided, Further, That the price so fixed shall guarantee the gatherers of fry a just and
Aris(Phil.) Inc. v. NLRC, 200 SCRA 246, 255-256 [1991]. equitable return for their labor: Provided, Finally, That any administrative order issued by the Secretary to implement the
[18] Although the intent of the framers was to have the terms refer to those who lived a hand-to-mouth existence., JOAQUIN G. foregoing shall take effect immediately, the provisions of Section 7 hereof to the contrary notwithstanding.
BERNAS, THE INTENT OF THE 1986 CONSITUTION WRITERS 964 (1995). xxx
[19] Webster's Third New International Dictionary 1381 [1993]. C. MUNICIPAL FISHERIES
[20] Websters, supra., 2279. SEC. 29. Grant of fishery priviliges.--- A municipal or city council, conformably with an ordinance duly approved by the
[21] III Record of the Constitutional Commission, 50. Secretary pursuant to Section 4 hereof may:
[22] Section 16, Article II. a. grant to the highest qualified bidder the exclusive privilege of constructing and operating fish corrals, oyster culture beds, or
[23] 224 SCRA 792, 804-805 [1993]. of gathering of bangus fry, or the fry of other species, in municipal waters for a period not exceeding five (5)
[24] Section 149. years: Provided, That in the zoning and classification of municipal waters for purposes of awarding, through public bidding ,
[25] Section 447 [a] [1] [vi]; Section 458 [a] [1] [vi]; Section 468 [a] [1] [vi]. areas for the construction or operation of fish corrals, oyster culture bed, or the gathering of fry, the municipal or city council
[26] Section 2(a). shall set aside not more than one-fifth (1/5) of the area, earmarked for the gathering of fry, as may be designated by the
[27] Section 3, Article X. Bureau, as government bangus fry reservation: Provided, Further, That no fish corral shall be constructed within two hundred
[28] Section 5(a). (200) meters of another fish corral in marine fisheries, or one hundred (100) meters in freshwater fisheries, unless they belong
[29] Section 17 (e). to the same licensee, but in no case shall the distance be less than sixty (60) meters, except in waters less than two (2)
[30] Section 17 [b] [2] [I]. meters deep at low tide, or unless previously approved by the Secretary;
[31] Section 131 [r], LGC. b. authorize the issuance to qualified persons of license for the operation of fishing boats three (3) gross tons or less, or for
[32] Sec. 4, R.A. No. 7611. the privilege of fishing in municipal waters with nets, traps or other fishing gear: Provided, That it shall be beyond the power of
[33] Section 458 [a] [1] [vi]; Section 468 [a] [1] [vi]. the municipal or city council to impose a license for the privilege of gathering marine mollusca or the shells thereof, for
[34] Section 3[3], R.A. No. 7611. pearling boats and pearl divers, or for prospecting, collecting or gathering spongers or other aquatic products, or for the
[35] Jay Batongbacal, The Coastal Environment and the Small-Scale Fisherfolk: Advocacy for Community-Based Coastal Zone culture of fishery/aquatic products: Provided, Further, That a licensee under this paragraph shall not operate within two
Management, 66 Philippine Law Journal [December 1991]. hundred (200) meters of any fish corral licensed by the municipality except when the licensee is the owner or operator of the
[36] Anthony Spaeth, Reef Killers, TIME Magazine, 3 June 1996, 49,50. fish corral but in no case within sixty (60) meters of said corral. The municipal or city council shall furnish the Bureau, for
[37] Anthony Spaeth, Reef Killers, TIME Magazine, 3 June 1996, 49,50. statistical purposes, on forms which shall be furnished by the Bureau, such information and data on fishery matters as are
[38] Batongbacal, 168. reflected in such forms.
[39] Spaeth, 51. [46] Section 149.
[40] Id. [47] Section 447 [a] [1] [vi]; Section 458 [a] [1] [vi]; Section 468 [a] [1] [vi].
[41] Batongbacal, 168.
[42] Said section reads:

SEC. 4. Jurisdiction of the Bureau.--- The Bureau shall have jurisdiction and responsibility in the management, conservation,
development, protection, utilization and disposition of all fishery and aquatic resources of the country except municipal waters
which shall be under the municipal or city government concerned: Provided, That fishpens and seaweed culture in municipal
centers shall be under the jurisdiction of the Bureau: Provided, further That all municipal or city ordinances and resolutions
 EN BANC
[G.R. Nos. 84132-33 : December 10, 1990.]
192 SCRA 257
NATIONAL DEVELOPMENT COMPANY AND NEW AGRIX, INC., Petitioners, vs. PHILIPPINE VETERANS BANK,
THE EX-OFFICIO SHERIFF and GODOFREDO QUILING, in his capacity as Deputy Sheriff of Calamba, Laguna,
Respondents.
DECISION
CRUZ, J.:
This case involves the constitutionality of a presidential decree which, like all other issuances of President Marcos during
his regime, was at that time regarded as sacrosanct. It is only now, in a freer atmosphere, that his acts are being tested
by the touchstone of the fundamental law that even then was supposed to limit presidential action.: rd
The particular enactment in question is Pres. Decree No. 1717, which ordered the rehabilitation of the Agrix Group of
Companies to be administered mainly by the National Development Company. The law outlined the procedure for filing
claims against the Agrix companies and created a Claims Committee to process these claims. Especially relevant to this
case, and noted at the outset, is Sec. 4(1) thereof providing that "all mortgages and other liens presently attaching to any
of the assets of the dissolved corporations are hereby extinguished."
Earlier, the Agrix Marketing, Inc. (AGRIX) had executed in favor of private respondent Philippine Veterans Bank a real
estate mortgage dated July 7, 1978, over three (3) parcels of land situated in Los Baños, Laguna. During the existence
of the mortgage, AGRIX went bankrupt. It was for the expressed purpose of salvaging this and the other Agrix companies
that the aforementioned decree was issued by President Marcos.
Pursuant thereto, the private respondent filed a claim with the AGRIX Claims Committee for the payment of its loan
credit. In the meantime, the New Agrix, Inc. and the National Development Company, petitioners herein, invoking Sec. 4
(1) of the decree, filed a petition with the Regional Trial Court of Calamba, Laguna, for the cancellation of the mortgage
lien in favor of the private respondent. For its part, the private respondent took steps to extrajudicially foreclose the
mortgage, prompting the petitioners to file a second case with the same court to stop the foreclosure. The two cases
were consolidated.
After the submission by the parties of their respective pleadings, the trial court rendered the impugned decision. Judge
Francisco Ma. Guerrero annulled not only the challenged provision, viz., Sec. 4 (1), but the entire Pres. Decree No. 1717
on the grounds that: (1) the presidential exercise of legislative power was a violation of the principle of separation of
powers; (2) the law impaired the obligation of contracts; and (3) the decree violated the equal protection clause. The
motion for reconsideration of this decision having been denied, the present petition was filed.: rd
The petition was originally assigned to the Third Division of this Court but because of the constitutional questions involved
it was transferred to the Court en banc. On August 30, 1988, the Court granted the petitioner's prayer for a temporary
restraining order and instructed the respondents to cease and desist from conducting a public auction sale of the lands
in question. After the Solicitor General and the private respondent had filed their comments and the petitioners their reply,
the Court gave due course to the petition and ordered the parties to file simultaneous memoranda. Upon compliance by
the parties, the case was deemed submitted.
The petitioners contend that the private respondent is now estopped from contesting the validity of the decree. In support
of this contention, it cites the recent case of Mendoza v. Agrix Marketing, Inc., 1 where the constitutionality of Pres.
Decree No. 1717 was also raised but not resolved. The Court, after noting that the petitioners had already filed their
claims with the AGRIX Claims Committee created by the decree, had simply dismissed the petition on the ground of
estoppel.
The petitioners stress that in the case at bar the private respondent also invoked the provisions of Pres. Decree No. 1717
by filing a claim with the AGRIX Claims Committee. Failing to get results, it sought to foreclose the real estate mortgage
executed by AGRIX in its favor, which had been extinguished by the decree. It was only when the petitioners challenged
the foreclosure on the basis of Sec. 4 (1) of the decree, that the private respondent attacked the validity of the provision.
At that stage, however, consistent with Mendoza, the private respondent was already estopped from questioning the
constitutionality of the decree.
The Court does not agree that the principle of estoppel is applicable.
It is not denied that the private respondent did file a claim with the AGRIX Claims Committee pursuant to this decree. It
must be noted, however, that this was done in 1980, when President Marcos was the absolute ruler of this country and
his decrees were the absolute law. Any judicial challenge to them would have been futile, not to say foolhardy. The
private respondent, no less than the rest of the nation, was aware of that reality and knew it had no choice under the
circumstances but to conform.: nad
It is true that there were a few venturesome souls who dared to question the dictator's decisions before the courts of
justice then. The record will show, however, that not a single act or issuance of President Marcos was ever declared
unconstitutional, not even by the highest court, as long as he was in power. To rule now that the private respondent is
estopped for having abided with the decree instead of boldly assailing it is to close our eyes to a cynical fact of life during
that repressive time.
This case must be distinguished from Mendoza, where the petitioners, after filing their claims with the AGRIX Claims
Committee, received in settlement thereof shares of stock valued at P40,000.00 without protest or reservation. The herein
private respondent has not been paid a single centavo on its claim, which was kept pending for more than seven years
for alleged lack of supporting papers. Significantly, the validity of that claim was not questioned by the petitioner when it
sought to restrain the extrajudicial foreclosure of the mortgage by the private respondent. The petitioner limited itself to
the argument that the private respondent was estopped from questioning the decree because of its earlier compliance
with its provisions.
Independently of these observations, there is the consideration that an affront to the Constitution cannot be allowed to
continue existing simply because of procedural inhibitions that exalt form over substance.
The Court is especially disturbed by Section 4(1) of the decree, quoted above, extinguishing all mortgages and other
liens attaching to the assets of AGRIX. It also notes, with equal concern, the restriction in Subsection (ii) thereof that all
"unsecured obligations shall not bear interest" and in Subsection (iii) that "all accrued interests, penalties or charges as
of date hereof pertaining to the obligations, whether secured or unsecured, shall not be recognized."
These provisions must be read with the Bill of Rights, where it is clearly provided in Section 1 that "no person shall be
deprived of life, liberty or property without due course of law nor shall any person be denied the equal protection of the
law" and in Section 10 that "no law impairing the obligation of contracts shall be passed."
In defending the decree, the petitioners argue that property rights, like all rights, are subject to regulation under the police
power for the promotion of the common welfare. The contention is that this inherent power of the state may be exercised
at any time for this purpose so long as the taking of the property right, even if based on contract, is done with due process
of law.
This argument is an over-simplification of the problem before us. The police power is not a panacea for all constitutional
maladies. Neither does its mere invocation conjure an instant and automatic justification for every act of the government
depriving a person of his life, liberty or property.
A legislative act based on the police power requires the concurrence of a lawful subject and a lawful method. In more
familiar words, a) the interests of the public generally, as distinguished from those of a particular class, should justify the
interference of the state; and b) the means employed are reasonably necessary for the accomplishment of the purpose
and not unduly oppressive upon individuals. 2
Applying these criteria to the case at bar, the Court finds first of all that the interests of the public are not sufficiently
involved to warrant the interference of the government with the private contracts of AGRIX. The decree speaks vaguely
of the "public, particularly the small investors," who would be prejudiced if the corporation were not to be assisted.
However, the record does not state how many there are of such investors, and who they are, and why they are being
preferred to the private respondent and other creditors of AGRIX with vested property rights.:-cralaw
The public interest supposedly involved is not identified or explained. It has not been shown that by the creation of the
New Agrix, Inc. and the extinction of the property rights of the creditors of AGRIX, the interests of the public as a whole,
as distinguished from those of a particular class, would be promoted or protected. The indispensable link to the welfare
of the greater number has not been established. On the contrary, it would appear that the decree was issued only to
favor a special group of investors who, for reasons not given, have been preferred to the legitimate creditors of AGRIX.
Assuming there is a valid public interest involved, the Court still finds that the means employed to rehabilitate AGRIX fall
far short of the requirement that they shall not be unduly oppressive. The oppressiveness is patent on the face of the
decree. The right to property in all mortgages, liens, interests, penalties and charges owing to the creditors of AGRIX is
arbitrarily destroyed. No consideration is paid for the extinction of the mortgage rights. The accrued interests and other
charges are simply rejected by the decree. The right to property is dissolved by legislative fiat without regard to the private
interest violated and, worse, in favor of another private interest.
A mortgage lien is a property right derived from contract and so comes under the protection of the Bill of Rights. So do
interests on loans, as well as penalties and charges, which are also vested rights once they accrue. Private property
cannot simply be taken by law from one person and given to another without compensation and any known public
purpose. This is plain arbitrariness and is not permitted under the Constitution.
And not only is there arbitrary taking, there is discrimination as well. In extinguishing the mortgage and other liens, the
decree lumps the secured creditors with the unsecured creditors and places them on the same level in the prosecution
of their respective claims. In this respect, all of them are considered unsecured creditors. The only concession given to
the secured creditors is that their loans are allowed to earn interest from the date of the decree, but that still does not
justify the cancellation of the interests earned before that date. Such interests, whether due to the secured or the
unsecured creditors, are all extinguished by the decree. Even assuming such cancellation to be valid, we still cannot see
why all kinds of creditors, regardless of security, are treated alike.
Under the equal protection clause, all persons or things similarly situated must be treated alike, both in the privileges
conferred and the obligations imposed. Conversely, all persons or things differently situated should be treated differently.
In the case at bar, persons differently situated are similarly treated, in disregard of the principle that there should be
equality only among equals.- nad
One may also well wonder why AGRIX was singled out for government help, among other corporations where the
stockholders or investors were also swindled. It is not clear why other companies entitled to similar concern were not
similarly treated. And surely, the stockholders of the private respondent, whose mortgage lien had been cancelled and
legitimate claims to accrued interests rejected, were no less deserving of protection, which they did not get. The decree
operated, to use the words of a celebrated case, 3 "with an evil eye and an uneven hand."
On top of all this, New Agrix, Inc. was created by special decree notwithstanding the provision of Article XIV, Section 4
of the 1973 Constitution, then in force, that:
SEC. 4. The Batasang Pambansa shall not, except by general law, provide for the formation, organization, or regulation
of private corporations, unless such corporations are owned or controlled by the Government or any subdivision or
instrumentality thereof. 4
The new corporation is neither owned nor controlled by the government. The National Development Corporation was
merely required to extend a loan of not more than P10,000,000.00 to New Agrix, Inc. Pending payment thereof, NDC
would undertake the management of the corporation, but with the obligation of making periodic reports to the Agrix board
of directors. After payment of the loan, the said board can then appoint its own management. The stocks of the new
corporation are to be issued to the old investors and stockholders of AGRIX upon proof of their claims against the
abolished corporation. They shall then be the owners of the new corporation. New Agrix, Inc. is entirely private and so
should have been organized under the Corporation Law in accordance with the above-cited constitutional provision.
The Court also feels that the decree impairs the obligation of the contract between AGRIX and the private respondent
without justification. While it is true that the police power is superior to the impairment clause, the principle will apply only
where the contract is so related to the public welfare that it will be considered congenitally susceptible to change by the
legislature in the interest of the greater number. 5 Most present-day contracts are of that nature. But as already observed,
the contracts of loan and mortgage executed by AGRIX are purely private transactions and have not been shown to be
affected with public interest. There was therefore no warrant to amend their provisions and deprive the private respondent
of its vested property rights.
It is worth noting that only recently in the case of the Development Bank of the Philippines v. NLRC, 6 we sustained the
preference in payment of a mortgage creditor as against the argument that the claims of laborers should take precedence
over all other claims, including those of the government. In arriving at this ruling, the Court recognized the mortgage lien
as a property right protected by the due process and contract clauses notwithstanding the argument that the amendment
in Section 110 of the Labor Code was a proper exercise of the police power.: nad
The Court reaffirms and applies that ruling in the case at bar.
Our finding, in sum, is that Pres. Decree No. 1717 is an invalid exercise of the police power, not being in conformity with
the traditional requirements of a lawful subject and a lawful method. The extinction of the mortgage and other liens and
of the interest and other charges pertaining to the legitimate creditors of AGRIX constitutes taking without due process
of law, and this is compounded by the reduction of the secured creditors to the category of unsecured creditors in violation
of the equal protection clause. Moreover, the new corporation, being neither owned nor controlled by the Government,
should have been created only by general and not special law. And insofar as the decree also interferes with purely
private agreements without any demonstrated connection with the public interest, there is likewise an impairment of the
obligation of the contract.
With the above pronouncements, we feel there is no more need to rule on the authority of President Marcos to promulgate
Pres. Decree No. 1717 under Amendment No. 6 of the 1973 Constitution. Even if he had such authority, the decree must
fall just the same because of its violation of the Bill of Rights.
WHEREFORE, the petition is DISMISSED. Pres. Decree No. 1717 is declared UNCONSTITUTIONAL. The temporary
restraining order dated August 30, 1988, is LIFTED. Costs against the petitioners.- nad
SO ORDERED.

[G.R. No. L-24153. February 14, 1983.]
TOMAS VELASCO, LOURDES RAMIREZ, SY PIN, EDMUNDO UNSON, APOLONIA RAMIREZ and
LOURDES LOMIBAO, as component members of the STA. CRUZ BARBERSHOP ASSOCIATION, in their
own behalf and in representation of the other owners of barbershops in the City of Manila, Petitioners-
Appellants, v. HON. ANTONIO J. VILLEGAS, City Mayor of Manila, HON. HERMINIO A. ASTORGA, Vice-
Mayor and Presiding Officer of the Municipal Board in relation to Republic Act 4065, THE MUNICIPAL
BOARD OF THE CITY OF MANILA and EDUARDO QUINTOS SR., Chief of Police of the City of
Manila, Respondents-Appellees.
Joaquin P. Yuseco, Jr. for Petitioners-Appellants.
Leonardo L. Arguelles for Respondent-Appellant.
SYLLABUS
CONSTITUTIONAL LAW: POLICE POWER OF THE STATE; CONSTITUTIONALITY OF ORDINANCES BASED
ON THE GENERAL WELFARE CLAUSE SUSTAINED BY THE COURTS; ATTACK AGAINST THE VALIDITY
OF ORDINANCE 4964 CANNOT SUCCEED. — The objectives behind the enactment of Ordinance 4964 are:"
(1) To be able to impose payment of the license fee for engaging in the business of massage clinic under
Ordinance No. 3659 as amended by Ordinance 4767, an entirely different measure than the ordinance regulating
the business of barbershops and, (2) in order to forestall possible immorality which might grow out of the
construction of separate rooms for massage of customers." This Court has been most liberal in sustaining
ordinances based on the general welfare clause. As far back as U.S. v. Salaveria, 39 Phil. 102, a 1918 decision,
this Court through Justice Malcolm made clear the significance and scope of such a clause, which "delegates in
statutory form the police power to a municipality. This clause has been given wide application by municipal
authorities and has in its relation to the particular circumstances of the case been liberally construed by the
courts. Such, it is well to recall, is the progressive view of the Philippine Jurisprudence." As it was then, so it has
continued to be. There is no showing, therefore, of the unconstitutionality of such ordinance.
DECISION
FERNANDO, J.:
This is an appeal from an order of the lower court dismissing a suit for declaratory relief challenging the
constitutionality based on Ordinance No. 4964 of the City of Manila, the contention being that it amounts to a
deprivation of property of petitioners-appellants of their means of livelihood without due process of law. The
assailed ordinance is worded thus: "It shall be prohibited for any operator of any barber shop to conduct the
business of massaging customers or other persons in any adjacent room or rooms of said barber shop, or in any
room or rooms within the same building where the barber shop is located as long as the operator of the barber
shop and the rooms where massaging is conducted is the same person." 1 As noted in the appealed order,
petitioners-appellants admitted that criminal cases for the violation of this ordinance had been previously filed
and decided. The lower court, therefore, held that a petition for declaratory relief did not lie, its availability being
dependent on there being as yet no case involving such issue having been filed. 2
Even if such were not the case, the attack against the validity cannot succeed. As pointed out in the brief of
respondents-appellees, it is a police power measure. The objectives behind its enactment are:" (1) To be able to
impose payment of the license fee for engaging in the business of massage clinic under Ordinance No. 3659 as
amended by Ordinance 4767, an entirely different measure than the ordinance regulating the business of
barbershops and, (2) in order to forestall possible immorality which might grow out of the construction of separate
rooms for massage of customers." 3 This Court has been most liberal in sustaining ordinances based on the
general welfare clause. As far back as U.S. v. Salaveria, 4 a 1918 decision, this Court through Justice Malcolm
made clear the significance and scope of such a clause, which "delegates in statutory form the police power to a
municipality. As above stated, this clause has been given wide application by municipal authorities and has in its
relation to the particular circumstances of the case been liberally construed by the courts. Such, it is well to recall,
is the progressive view of Philippine jurisprudence." 5 As it was then, so it has continued to be. 6 There is no
showing, therefore, of the unconstitutionality of such ordinance.cralawnad
WHEREFORE, the appealed order of the lower court is affirmed. No costs.
Makasiar, Concepcion, Jr., Guerrero, Abad Santos, De Castro, Melencio-Herrera, Plana, Escolin, Vasquez,
Relova and Gutierrez, Jr., JJ., concur.
Teehankee, J., reserves his vote.
Aquino, J., did not take part.
Endnotes:
1. Ordinance No. 4964, Section 1.
2. Record on Appeal, 26.
3. Brief for the Respondents-Appellees, 7.
4. 39 Phil. 102.
5. Ibid, 109.
6. Cf. Agustin v. Edu, L-49112, February 2, 1979, 88 SCRA 195. The opinion of the law cited Calalang v.
Williams, 70 Phil. 726 (1940): Ermita-Malate Hotel and Motel Operators Asso. v. City Mayor of Manila, L-24693,
July 31, 1967, 20 SCRA 849: Morfe v. Mutuc, L-20387, January 31, 1968, 22 SCRA 424; Edu v. Ericta, L-32096,
October 24, 1970, 35 SCRA 481.
G.R. No. L-50908 January 31, 1984
MARY CONCEPCION BAUTISTA and ENRIQUE D. BAUTISTA, petitioners,
vs.
ALFREDO L. JUINIO, ROMEO F. EDU and FIDEL V. RAMOS, respondents.
Mary Concepcion Bautista for and in his own behalf.
The Solicitor General for respondents.
FERNANDO, C.J.:
The validity of an energy conservation measure, Letter of Instruction No. 869, issued on May 31, 1979 — the
response to the protracted oil crisis that dates back to 1974 — is put in issue in this prohibition proceeding filed
by petitioners, spouses Mary Concepcion Bautista and Enrique D. Bautista, for being allegedly violative of the
due process and equal protection guarantees 1 of the Constitution. The use of private motor vehicles with H and
EH plates on week-ends and holidays was banned from "[12:00] a.m. Saturday morning to 5:00 a.m. Monday
morning, or 1:00 a.m. of the holiday to 5:00 a.m. of the day after the holiday." 2 Motor vehicles of the following
classifications are exempted: (a) S (Service); (b) T (Truck); (e) DPL (Diplomatic); (d) CC (Consular Corps); (e) TC
(Tourist Cars). 3Pursuant thereto, respondent Alfredo L. Juinio, then Minister of Public Works, Transportation and
Communications and respondent Romeo P. Edu, then Commissioner of Land Transportation Commission issued
on June 11, 1979, Memorandum Circular No. 39, which imposed "the penalties of fine, confiscation of vehicle
and cancellation of registration on owners of the above-specified vehicles" found violating such Letter of
Instruction. 4 It was then alleged by petitioners that "while the purpose for the issuance of the LOI 869 is laudable,
to wit, energy conservation, the provision banning the use of H and EH [vehicles] is unfair, discriminatory,
[amounting to an] arbitrary classification" and thus in contravention of the equal protection clause. 5 Moreover, for
them, such Letter of Instruction is a denial of due process, more specifically, "of their right to use and enjoy their
private property and of their freedom to travel and hold family gatherings, reunions and outings on week-ends
and holidays," inviting attention to the fact that others not included in the ban enjoying "unrestricted freedom." 6 It
would follow, so they contend that Memorandum Circular No. 39 imposing penalties of fine, confiscation of the
vehicle and cancellation of license is likewise unconstitutional, for being violative of the doctrine of "undue
delegation of legislative power." 7 It is to be noted that such Memorandum Circular does not impose the penalty
of confiscation but merely that of impounding, fine, and for the third offense that of cancellation of certificate of
registration and for the rest of the year or for ninety days whichever is longer.
This Court gave due course to the petition requiring respondent to answer. There was admission of the facts as
substantially alleged except, as previously noted, that the ban starts at 12:00 a.m. rather than 1:00 a.m. of a
Saturday or of a holiday and as to the mention of a Willy's Kaiser jeep being registered in the name of a certain
Teresita Urbina, about which respondents had no knowledge. There was a denial of the allegations that the
classification of vehicles into heavy H and extra heavy (EH) on the other hand and light and bantam on the other
hand was violative of equal protection and the regulation as to the use of the former cars on the dates specified a
transgression of due process. The answer likewise denied that there was an undue delegation of legislative
power, reference being made to the Land Transportation and Traffic Code. 8 There was also a procedural
objection raised, namely, that what is sought amounts at most to an advisory opinion rather than an ajudication of
a case or controversy.
Petitioners filed a motion to be allowed to reply to the answer. It was granted. The reply, considering its
exhaustive character serving as its memorandum, stressed anew what it emphasized as the arbitrary,
unreasonable, and oppressive aspects of the challenged Letter of Instruction and Memorandum Circular No. 39.
It disputed what it characterized as an "erroneous and arbitrary presumption that heavy car owners unnecessarily
use and therefore waste gasoline whenever they drive their cars on week-ends and holidays;" 9 it stigmatized the
ban as defeating its "avowed purpose in the case of the affluent who own not only heavy limousines but also
many small cars [as] they may be compelled to use at least two small cars;" 10 referred to the high cost of taxis
or other public transports for those "not able to afford expensive small cars [possibly] only one heavy and
possible old model;" 11 cited the case of "many eight cylinder vehicles which because of their weight have been
registered as light but in fact consume more or as much gasoline as the banned vehicles." 12 Their conclusion is
that "the ban imposed, in result and effect is class legislation." 13
The parties were required to submit memoranda. Respondents did so but not petitioners. They relied on their
reply to the answer — as noted, a rather comprehensive pleading. For reasons to be set forth, this Court holds
that the petition cannot prosper.
1. First as to the procedural objection. In the memorandum for respondents, one of the issues raised was
whether "the power of judicial review may be invoked considering the inadequacy of the record and the highly
abstract and academic questions raised by the petitioners." 14 It is inaccurate to say that the record is
inadequate. It does not admit of doubt that the ban applies to petitioners who are "the registered owners of an
eight cylinder 1969 Buick, and the vendees of a six cylinder Willy's kaiser jeep, which are both classified as
heavy or H." 15 To that extent, therefore, the enforcement of the assailed Letter of Instruction will amount to a
deprivation of what otherwise would be a valid exercise of a property right. Thus they fall squarely within "the
unchallenged rule" as to who may raise a constitutional question, namely, to quote the language of Justice Laurel
in the leading case of People v. Vera, 16 "that the person who impugns the validity of a statute must have a
personal and substantial interest in the case such that he has sustained, or will sustain direct injury as a result of
its enforcement. 17 Moreover, that rule has been considerably relaxed. 18 The question then is neither abstract
nor academic as contended by respondents.
2. There is, however, this formidable obstacle that confronts petitioners. What they seek is for this Court to hold
that a Letter of Instruction, a regulatory measure precisely enacted to cope with the serious and grave problem of
energy conservation, is void on its face. Such a task is rendered unusually difficult by what has been referred to
by Justice Laurel in the leading case of Angara v. Electoral Commission 19 as the "presumption of
constitutionality" and by the same jurist in the case of People v. Vera 20 in slightly different words "a presumption
that such an act falls within constitutional limitations." There is need then for a factual foundation of invalidity. In
the language of Ermita-Malate Hotel & Motel Operations Association, Inc. v. City Mayor or Manila: "It admits of no
doubt therefore that there being a presumption of validity, the necessity for evidence to rebut it is unavoidable,
unless the statute or ordinance is void on its face, which is not the case here. The principle has been nowhere
better expressed than in the leading case of O'Gorman & Young v. Hartford Fire Insurance Co., where the
American Supreme Court through Justice Brandeis tersely and succinctly summed up the matter thus: 'The
statute here questioned deals with a subject clearly within the scope of the police power. We are asked to
declare it void on the ground that the specific method of regulation prescribed is unreasonable and hence
deprives the plaintiff of due process of law. As underlying questions of fact may condition the constitutionality of
legislation of this character, the presumption of constitutionality must prevail in the absence of some factual
foundation of record for overthrowing the statute.' " 21
3. It is true, of course, that there may be instances where a police power measure may, because of its arbitrary,
oppressive or unjust character, be held offensive to the due process clause and, therefore, may, when
challenged in an appropriate legal proceeding, be declared void on its face. This is not one of them. A recital of
the whereas clauses of the Letter of Instruction makes it clear. Thus: "[Whereas], developments in the
international petroleum supply situation continue to follow a trend of limited production and spiralling prices
thereby precluding the possibility of immediate relief in supplies within the foreseeable future; [Whereas], the
uncertainty of fuel supply availability underscores a compelling need for the adoption of positive measures
designed to insure the viability of the country's economy and sustain its developmental growth; [Whereas], to
cushion the effect of increasing oil prices and avoid fuel supply disruptions, it is imperative to adopt a program
directed towards the judicious use of our energy resources complemented with intensified conservation efforts
and efficient utilization thereof; * * *." 22 That is undeniable is that the action taken is an appropriate response to a
problem that presses urgently for solution. It may not be the only alternative, but its reasonableness is
immediately apparent. Thus, to repeat, substantive due process, which is the epitome of reasonableness and fair
play, is not ignored, much less infringed.
4. In the interplay between such a fundamental right and police power, especially so where the assailed
governmental action deals with the use of one's property, the latter is accorded much leeway. That is settled law.
What is more, it is good law. Due process, therefore, cannot be validly invoked. As stressed in the cited Ermita-
Malate Hotel decision: "To hold otherwise would be to unduly restrict and narrow the scope of police power which
has been properly characterized as the most essential, insistent and the least limitable of powers, extending as it
does 'to all the great public needs.' It would be, to paraphrase another leading decision, to destroy the very
purpose of the state if it could be deprived or allowed itself to be deprived of its competence to promote public
health, public morals, public safety and the general welfare. Negatively put, police power is 'that inherent and
plenary power in the State which enables it to prohibit all that is hurtful to the comfort, safety, and welfare of
society.' " 23
5. The due process question having been disposed of, there is still the objection based on the equal protection
clause to be considered. A governmental act may not be offensive to the due process clause, but may run
counter to such a guarantee. Such is the case when there is no rational basis for the classification followed. That
is the point raised by petitioners. For them, there is no rational justification for the ban being imposed on vehicles
classified as heavy (H) and extra-heavy (EH), for precisely those owned by them fall within such category. Tested
by the applicable standard that must be satisfied to avoid the charge of a denial of equal protection, the objection
of petitioners is shown to be lacking in merit. Such a classification on its face cannot be characterized as an
affront to reason. A legal norm according to J.M. Tuason & Co., Inc. vs. Land Tenure Administration, 24 "whether
embodied in a rule, principle, or standard, constitutes a defense against anarchy at one extreme and tyranny at
the other. Thereby, people living together in a community with its myriad and complex problems can minimize the
friction and reduce the conflicts, to assure, at the very least, a peaceful ordering of existence. The Ideal situation
is for the law's benefits to be available to all, that none be placed outside the sphere of its coverage. Only thus
could chance and favor be excluded and the affairs of men governed by that serene and impartial uniformity,
which is of the very essence of the Idea of law. The actual, given things as they are and likely to continue to be,
cannot approximate the Ideal. Nor is the law susceptible to the reproach that it does not take into account the
realties of the situation. * * * To assure that the general welfare be promoted, which is the end of law, a regulatory
measure may cut into the rights to liberty and property. Those adversely affected may under such circumstances
invoke the equal protection clause only if they can show that the governmental act assailed, far from being
inspired by the attainment of the common weal was prompted by the spirit of hostility, or at the very least,
discrimination that finds no support in reason. It suffices then that the laws operate equally and uniformly on all
persons under similar circumstances or that all persons must be treated in the same manner, the conditions not
being different, both in the privileges conferred and the liabilities imposed. Favoritism and undue preference
cannot be allowed. For the principle is that equal protection and security shall be given to every person under
circumstances, which if not Identical are analogous. If law be looked upon in terms of burden or charges, those
that fall within a class should be treated in the same fashion, whatever restrictions cast on some in the group
equally binding on the rest." 25
6. Nor does it militate against the validity of the Letter of Instruction just because the ban imposed does not go as
far as it could have and therefore could be less efficacious in character. That was the solution which for the
President expressing a power validly lodged in him, recommended itself. There was a situation that called for a
corrective measure. He decided that what was issued by him would do just that or, at the very least, help in
easing the situation. That it did not cover other matters which could very well have been regulated does not call
for a declaration of nullity. The President, to paraphrase Lutz v. Araneta, 26 "is not required by the Constitution to
adhere to the policy of all or none." 27 It is quite obvious then that no equal protection question arises.
7. It may not be amiss to refer to a 1981 American Supreme Court decision, Minnesota v. Clover Leaf Creamery
Company. 28 Respondent along with several other business corporations adversely affected involved in the
manufacture and utilization of plastic milk containers filed suit in a Minnesota district court seeking to enjoin
enforcement of a Minnesota statute banning the retail sale of milk in plastic nonreturnable, nonrefillable
containers, but permitting such sale in other nonreturnable, nonrefillable containers, such as paperboard, milk
cartons. After conducting extensive evidentiary hearings, the Minnesota court enjoined enforcement of the
statute, finding that it violated among others the equal protection clause of the Fourteenth Amendment to the
Federal Constitution. The Minnesota Supreme Court affirmed. On certiorari, the United States Supreme Court
reversed, with only Justice Stevens dissenting. The opinion by Justice Brennan noted that "proponents of the
legislation argued that it would promote resource conservation, ease solid waste disposal problems, and
conserve energy." 29 That sufficed for the Court to conclude "that the ban on plastic nonreturnable milk containers
bears a rational relation to the State's objectives, and must be sustained under the Equal Protection Clause." 30 It
does show that notwithstanding the "new equal protection approach" with its emphasis on "suspect classification"
and "fundamental rights and interests standard," a concept so ably expounded by professor Gunther, the
"rational relation test" 31 still retains its validity. Not that there could be any objection to the classification here
followed as being in any way susceptible to such a pejorative expression as "suspect" or that the assailed Letter
of Instruction does not qualify under "the fundamental rights and interests" standard
8. There was set forth in the petition what were referred to as "other reasonable measures which the authorities
concerned with energy conservation can take immediately, which are in fact acceptable and obviously called for
and should have been done long ago, to wit: 1. require and establish taxi stands equipped with efficient
telephone and communication systems; 2. strict implementation and observance of cargo truck hours on main
arteries; 3. strict observance of traffic rules; 4. effective solution of traffic problems and decongestion of traffic
through rerouting and quick repair of roads and efficient operation of double decker buses; 5. rationing of
gasoline to avoid panic buying and give the private car owner the option and responsibility of deciding on the use
of his allocation; 6. allow neon and electrically devised advertising signs only from five o'clock p.m. to nine o'clock
p.m. 7. prohibit immediately the importation of heavy and luxury cars and seriously re-examine the car
manufacturing program." 32 Admittedly, such measures are conducive to energy conservation. The question
before us however is limited to whether or not Letter of Instruction 869 as implemented by Memorandum Circular
No. 39 is violative of certain constitutional rights. It goes no further than that. The determination of the mode and
manner through which the objective of minimizing the consumption of oil products may be attained is left to the
discretion of the political branches. 33 Absent therefore the alleged infringement of constitutional rights, more
precisely the due process and equal protection guarantees, this Court cannot adjudge Letter of Instruction No.
869 as tainted by unconstitutionality.
9. It was likewise contended that Memorandum Circular No. 39, issued by the then respondent Minister of Public
Works, Transportation and Communications, and then respondent Land Transportation Commissioner, imposing
the penalties "of fine, confiscation of vehicle and cancellation of license is likewise unconstitutional," petitioners
invoking the principle of non-delegation of legislative power. 34 To that extent that a Letter of Instruction may be
viewed as an exercise of the decree-making power of the President, then such an argument is futile. If, however,
viewed as a compliance with the duty to take care that the laws be faithfully executed, as a consequence of
which subordinate executive officials may in turn issue implementing rules and regulations, then the objection
would properly be considered as an ultra vires allegation. There is this relevant excerpt from Teoxon v. Member
of the Board of Administrators: 35 "1. The recognition of the power of administrative officials to promulgate rules in
the implementation of the statute, necessarily limited to what is provided for in the legislative enactment, may be
found in the early case of United States v. Barrias decided in 1908. Then came, in a 1914 decision, United States
v. Tupasi Molina, a delineation of the scope of such competence. Thus: 'Of course the regulations adopted under
legislative authority by a particular department must be in harmony with the provisions of the law, and for the sole
purpose of carrying into effect its general provisions. By such regulations, of course, the law itself can not be
extended. So long, however, as the regulations relate solely to carrying into effect the provisions of the law, they
are valid.' In 1936, in People v. Santos, this Court expressed its disapproval of an administrative order that would
amount to an excess of the regulatory power vested in an administrative official. We reaffirmed such a doctrine in
a 1951 decision, where we again made clear that where an administrative order betrays inconsistency or
repugnancy to the provisions of the Act, 'the mandate of the Act must prevail and must be followed.' Justice
Barrera, speaking for the Court in Victorias Milling Company, Inc. v. Social Security Commission, citing Parker as
well as Davis did tersely sum up the matter thus: 'A rule is binding on tile courts so long as the procedure fixed for
its promulgation is followed and its scope is within the statutory granted by the legislature, even if the courts are
not in agreement with the policy stated therein or its innate wisdom * * *. On the other hand, administrative
interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means.' It
cannot be otherwise as the Constitution limits the authority of the President, in whom all executive power resides,
to take care that the laws be faithfully executed. No lesser administrative executive office or agency then can,
contrary to the express language of the Constitution, assert for itself a more extensive prerogative." 36 It was
alleged in the Answer of Solicitor General Estelito P. Mendoza that Letter of Instruction 869 and Memorandum
Circular No. 39 were adopted pursuant to the Land Transportation and Traffic Code. 37 It contains a specific
provision as to penalties. 38 Thus: "For violation of any provisions of this Act or regulations promulgated pursuant
hereto, not hereinbefore specifically punished, a fine of not less than ten nor more than fifty pesos shall be
imposed." 39 Memorandum Circular No. 39 cannot be held to be ultra vires as long as the fine imposed is not less
than ten nor more than fifty pesos. As to suspension of registration, 40 the Code, insofar as applicable, provides:
"Whenever it shall appear from the records of the Commission that during any twelve-month period more than
three warnings for violations of this Act have been given to the owner of a motor vehicle, or that the said owner
has been convicted by a competent court more than once for violation of such laws, the Commissioner may, in
his discretion, suspend the certificate of registration for a period not exceeding ninety days and, thereupon, shall
require the immediate surrender of the number plates * * *." 41 It follows that while the imposition of a fine or the
suspension of registration under the conditions therein set forth is valid under the Land Transportation and Traffic
Code, the impounding of a vehicle finds no statutory justification. To apply that portion of Memorandum Circular
No. 39 would be ultra vires. It must likewise be made clear that a penalty even if warranted can only be imposed
in accordance with the procedure required by law. 42
WHEREFORE, the petition is dismissed.
Aquino, Guerrero, De Castro, Melencio-Herrera, Escolin, Relova and Gutierrez, Jr., JJ., concur.
Makasiar and Concepcion J., took no part.
Separate Opinions
ABAD SANTOS, J., dissenting:
The power of the State to restrict the use of certain motor vehicles during stated days and hours as a fuel-saving
measure is to me indubitable. It is anchored on the police power of the State. For this reason LOI No. 869 cannot
be assailed successfully as violative of due process and equal protection guarantees of the Constitution.
There is also no question as to the power of the Commissioner of Land Transportation and the Minister of Public
Works, Transportation and Communication to issue Memorandum Circular No. 39 on June 11, 1979. The circular
was necessary to implement the LOI. But it does not follow that the circular is completely immune from the taint
of infirmity.
I refer to paragraph 4 of the circular which provides, inter alia, for penalties consisting of fine and suspension or
cancellation of the certificate of registration for owners of motor vehicles violating the LOI. This portion of the
circular is clearly illegal for the LOI is absolutely and completely devoid of legal sanctions and consequently the
implementing circular cannot prescribe them. It is elementary that only the legislature (or the President in the
exercise of his legislative power) can prescribe penalties. Executive officials whose task is to enforce the law can
prescribe penalties only if they are authorized to do so within specified limits by the legislature.
It is contended by the respondents that the LOI and the implementing circular were adopted pursuant to the Land
Transportation and Traffic Code — Republic Act No. 4136. This contention is utterly baseless.
LOI No. 869 can be compared to a multiple independently targeted ballistic missile. It tasks various agencies of
the government as follows:
1. The Ministry of Energy shall during the period of tight supply, limit as necessary, sales of fuel products by oil
companies and other outlets to all consumers including the government and the Armed Forces of the Philippines.
Initially sales shall be limited to 1978 levels. This may be adjusted upward or downward as required to balance
supply with demand and to equitably distribute available supplies. Moreover, the Ministry of Energy is hereby
authorized to set supply priorities and to establish supply allocations accordingly.
2. The Ministry of Local Government and Community Development in cooperation with the Ministry of Energy
shall formulate energy conservation plans and implement the same through the Bay brigades; moreover, it shall
assist in the implementation of other conservation measures to be instituted by other government agencies.
3. The Metro Manila Commission, in coordination with the appropriate government agencies, shall develop,
implement and supervise a program for the implementation of the Executive Order on the staggering of office
hours of both government and private sectors to achieve optimum use of transportation facilities, as well as to
improve traffic flow.
4. All Ministries, agencies and corporations of the government shall discontinue the use of airconditioning
facilities in offices whom adequate ventilation is available. Any use of airconditioning facilities by government
offices shall be only with prior approval of the respective ministers and, where allowed temperature shall be kept
at a minimum of 78 o F.
5. The Ministry of Public Works, Transportation and Communications shall prohibit the use of private motor
vehicles under the "H" and "EH" classifications of the LTC on weekends and holidays starting 0001 hours,
Saturday morning, (or the day of the holiday) until 0500 hours, Monday morning (or the day after the holiday).
Exempted from this prohibition are motor vehicles of the following classifications:
(a) S (Service)
(b) T (Truck)
(c) DPL (Diplomatic)
(d) CC (Consular Corps)
(e) TC (Tourist Cars)
6. The Metro Manila Traffic Management Authority shall, in coordination with the appropriate ministries, institute
traffic flow improvement measures to ensure better traffic flow. These agencies moreover, shall review the traffic
citation system in order to simplify the application of sanctions for traffic violations.
7. The Ministry of Public Works, Transportation and Communication shall review the registration requirements of
vehicles with a view to weeding out inefficient motor vehicles.
8. The Ministry of National Defense shall prohibit sports activities involving mainly the use of motor vehicles,
watercraft and aircraft, including but not limited to car and motorcycle rallies, racing and similar events.
9. All government Ministries, agencies and corporations shall limit the use of government vehicles to essential
activities and shall review travel program and schedules to unnecessary trips.
10. The Metro Manila Commission, in coordination with the appropriate agencies, shall study the feasibility of
designating pedestrian mails and bicycle lanes.
11. The Ministry of National Defense shall intensify the drive against hoarding or black marketing of fuel
especially of kerosene and diesel and other petroleum products which from time to time may be short of supply.
12. The Ministry of Energy shall monitor and report on the implementation of the foregoing measures.
How can it be claimed with a straight face that the LOI was adopted pursuant to R.A. No. 4136 when nowhere in the
LOI is the law mentioned aside from the fact that the Ministry of Public Works, Transportation and Communication
which is entrusted with the enforcement of R.A. No. 4136 is only one of the many agencies involved in conserving
energy resources? It is obvious for any one willing to see that R.A. No. 4136 has no relevance to the LOI. Such being
the case, the circular which is merely an accessory to the LOI cannot also be related to R.A. No. 4136.
LOI No. 869 is constitutional but its application pursuant to Memorandum Circular No. 39 is not. For this reason, I vote
to grant the petition.
I close this dissent with the following observation: the prohibition against the use of certain vehicles during certain times
has not been uniformly and consistently enforced. We are a nation surrounded by rules but many of which are not
enforced or enforced indifferently. This situation breeds contempt instead of respect for the law. A few rules that are
consistently enforced are better than many which are violated with impunity.
Teehankee, J., concurs.
Plana, J., dissent.
Separate Opinions
ABAD SANTOS, J., dissenting:
The power of the State to restrict the use of certain motor vehicles during stated days and hours as a fuel-saving
measure is to me indubitable. It is anchored on the police power of the State. For this reason LOI No. 869 cannot be
assailed successfully as violative of due process and equal protection guarantees of the Constitution.
There is also no question as to the power of the Commissioner of Land Transportation and the Minister of Public
Works, Transportation and Communication to issue Memorandum Circular No. 39 on June 11, 1979. The circular was
necessary to implement the LOI. But it does not follow that the circular is completely immune from the taint of infirmity.
I refer to paragraph 4 of the circular which provides, inter alia, for penalties consisting of fine and suspension or
cancellation of the certificate of registration for owners of motor vehicles violating the LOI. This portion of the circular is
clearly illegal for the LOI is absolutely and completely devoid of legal sanctions and consequently the implementing
circular cannot prescribe them. It is elementary that only the legislature (or the President in the exercise of his
legislative power) can prescribe penalties. Executive officials whose task is to enforce the law can prescribe penalties
only if they are authorized to do so within specified limits by the legislature.
It is contended by the respondents that the LOI and the implementing circular were adopted pursuant to the Land
Transportation and Traffic Code — Republic Act No. 4136. This contention is utterly baseless.
LOI No. 869 can be compared to a multiple independently targeted ballistic missile. It tasks various agencies of the
government as follows:
1. The Ministry of Energy shall during the period of tight supply, limit as necessary, sales of fuel products by oil
companies and other outlets to all consumers including the government and the Armed Forces of the Philippines.
Initially sales shall be limited to 1978 levels. This may be adjusted upward or downward as required to balance
supply with demand and to equitably distribute available supplies. Moreover, the Ministry of Energy is hereby
authorized to set supply priorities and to establish supply allocations accordingly.
2. The Ministry of Local Government and Community Development in cooperation with the Ministry of Energy
shall formulate energy conservation plans and implement the same through the Bay brigades; moreover, it shall
assist in the implementation of other conservation measures to be instituted by other government agencies.
3. The Metro Manila Commission, in coordination with the appropriate government agencies, shall develop,
implement and supervise a program for the implementation of the Executive Order on the staggering of office
hours of both government and private sectors to achieve optimum use of transportation facilities, as well as to
improve traffic flow.
4. All Ministries, agencies and corporations of the government shall discontinue the use of airconditioning
facilities in offices whom adequate ventilation is available. Any use of airconditioning facilities by government
offices shall be only with prior approval of the respective ministers and, where allowed temperature shall be kept
at a minimum of 78 o F.
5. The Ministry of Public Works, Transportation and Communications shall prohibit the use of private motor
vehicles under the "H" and "EH" classifications of the LTC on weekends and holidays starting 0001 hours,
Saturday morning, (or the day of the holiday) until 0500 hours, Monday morning (or the day after the holiday).
Exempted from this prohibition are motor vehicles of the following classifications:
(a) S (Service)
(b) T (Truck)
(d) CC (Consular Corps)
(e) TC (Tourist Cars)
6. The Metro Manila Traffic Management Authority shall, in coordination with the appropriate ministries, institute
traffic flow improvement measures to ensure better traffic flow. These agencies moreover, shall review the traffic
citation system in order to simplify the application of sanctions for traffic violations.
7. The Ministry of Public Works, Transportation and Communication shall review the registration requirements of
vehicles with a view to weeding out inefficient motor vehicles.
8. The Ministry of National Defense shall prohibit sports activities involving mainly the use of motor vehicles,
watercraft and aircraft, including but not limited to car and motorcycle rallies, racing and similar events.
9. All government Ministries, agencies and corporations shall limit the use of government vehicles to essential
activities and shall review travel program and schedules to unnecessary trips.
10. The Metro Manila Commission, in coordination with the appropriate agencies, shall study the feasibility of
designating pedestrian mails and bicycle lanes.
11. The Ministry of National Defense shall intensify the drive against hoarding or black marketing of fuel
especially of kerosene and diesel and other petroleum products which from time to time may be short of supply.
12. The Ministry of Energy shall monitor and report on the implementation of the foregoing measures.
How can it be claimed with a straight face that the LOI was adopted pursuant to R.A. No. 4136 when nowhere in the
LOI is the law mentioned aside from the fact that the Ministry of Public Works, Transportation and Communication
which is entrusted with the enforcement of R.A. No. 4136 is only one of the many agencies involved in conserving
energy resources? It is obvious for any one willing to see that R.A. No. 4136 has no relevance to the LOI. Such being
the case, the circular which is merely an accessory to the LOI cannot also be related to R.A. No. 4136.
LOI No. 869 is constitutional but its application pursuant to Memorandum Circular No. 39 is not. For this reason, I vote
to grant the petition.
I close this dissent with the following observation: the prohibition against the use of certain vehicles during certain times
has not been uniformly and consistently enforced. We are a nation surrounded by rules but many of which are not
enforced or enforced indifferently. This situation breeds contempt instead of respect for the law. A few rules that are
consistently enforced are better than many which are violated with impunity.
Teehankee, J., concur

(c) DPL (Diplomatic)

G.R. No. L-63419 December 18, 1986 HONORABLE PRESIDING JUDGE OF BRANCH 154, now vacant but temporarily presided by
HONORABLE ASAALI S. ISNANI Branch 153, Court of First Instance of Pasig, Metro Manila, respondent.
FLORENTINA A. LOZANO, petitioner,
vs. G.R No. 75765-67 December 18, 1986
THE HONORABLE ANTONIO M. MARTINEZ, in his capacity as Presiding Judge, Regional Trial Court,
National Capital Judicial Region, Branch XX, Manila, and the HONORABLE JOSE B. FLAMINIANO, in his LUIS M. HOJAS, petitioner,
capacity as City Fiscal of Manila, respondents. vs.
HON. JUDGE SENEN PENARANDA, Presiding Judge, Regional Trial Court of Cagayan de Oro City,
G.R. No. L-66839-42 December 18, 1986 Branch XX, HONORABLE JUDGE ALFREDO LAGAMON, Presiding Judge, Regional Trial Court of
Cagayan de Oro City, Branch XXII, HONORABLE CITY FISCAL NOLI T. CATHI, City Fiscal of Cagayan de
LUZVIMINDA F. LOBATON petitioner, Oro City, respondents.
vs.
HONORABLE GLICERIO L. CRUZ, in his capacity as Presiding Executive Judge, Branch V, Region IV, G.R. No. 75789 December 18, 1986
Regional Trial Court, sitting at Lemery, Batangas, THE PROVINCIAL FISCAL OF BATANGAS, and MARIA
LUISA TORDECILLA, respondents. THE PEOPLE OF THE PHILIPPINES, petitioner,
vs.
G.R No. 71654 December 18, 1986 HON. DAVID G. NITAFAN, Presiding Judge, Regional Trial Court, National Capital Judicial Region, Branch
52, Manila and THELMA SARMIENTO, respondents.
ANTONIO DATUIN and SUSAN DATUIN, petitioners,
vs. R.R. Nogales Law Office for petitioner in G.R. No. 63419, G.R. Nos. 74524-25, G.R. Nos. 75812-13, G.R. Nos.
HONORABLE JUDGE ERNANI C. PANO, Regional Trial Court, Quezon City, Branch LXXXVIII, 75765-67 and counsel for respondent in G.R. No. 75789.
HONORABLE ClTY FISCAL OF QUEZON CITY, respondents.
Pio S. Canta for petitioner in G.R. Nos. 66839-42.
G.R. No. 74524-25 December 18, 1986
Hermogenes Datuin, Jr. for petitioner in G.R. No. 71654.
OSCAR VIOLAGO, petitioner,
vs. Abinoja, Tabalingcos, Villalon & Associates for petitioner in G.R. Nos. 75122-49.
HONORABLE JUDGE ERNANI C. PAÑ;O Regional Trial Court, Quezon City, Branch LXXXVIII,
HONORABLE CITY FISCAL OF QUEZON CITY, respondents.
The Solicitor General for respondent in G.R. No. 63419, G.R. Nos. 66839-42, G.R. No. 71654, G.R. Nos. 74524-
25, G.R. Nos. 75122-49, G.R. Nos. 75812-13, G.R. Nos. 75765-67 and counsel for petitioner in G.R. No. 75789.
G.R. No. 75122-49 December 18, 1986
YAP, J.:
ELINOR ABAD, petitioner,
vs.
The constitutionality of Batas Pambansa Bilang 22 (BP 22 for short), popularly known as the Bouncing Check
THE HONORABLE NICOLAS A. GEROCHI, JR., in his capacity as Presiding Judge, Regional Trial Court,
Law, which was approved on April 3, 1979, is the sole issue presented by these petitions for decision. The
National Capital Judicial Region, Branch 139, Makati and FEDERICO L. MELOCOTTON JR., in his
question is definitely one of first impression in our jurisdiction.
capacity as Trial Fiscal Regional Trial Court, Branch 139, Makati, respondents.
These petitions arose from cases involving prosecution of offenses under the statute. The defendants in those
G.R No. 75812-13 December 18, 1986
cases moved seasonably to quash the informations on the ground that the acts charged did not constitute an
offense, the statute being unconstitutional. The motions were denied by the respondent trial courts, except in one
AMABLE R. AGUILUZ VII and SYLVIA V. AGUILUZ, spouses, petitioners, case, which is the subject of G. R. No. 75789, wherein the trial court declared the law unconstitutional and
vs. dismissed the case. The parties adversely affected have come to us for relief.
As a threshold issue the former Solicitor General in his comment on the petitions, maintained the posture that it check, and the due presentment to the drawee for payment and the dishonor thereof ... for the reason written,
was premature for the accused to elevate to this Court the orders denying their motions to quash, these orders stamped or attached by the drawee on such dishonored check." 6
being interlocutory. While this is correct as a general rule, we have in justifiable cases intervened to review the
lower court's denial of a motion to quash. 1 In view of the importance of the issue involved here, there is no doubt The presumptions being merely prima facie, it is open to the accused of course to present proof to the contrary to
in our mind that the instant petitions should be entertained and the constitutional challenge to BP 22 resolved overcome the said presumptions.
promptly, one way or the other, in order to put to rest the doubts and uncertainty that exist in legal and judicial
circles and the general public which have unnecessarily caused a delay in the disposition of cases involving the
II
enforcement of the statute.
BP 22 is aimed at putting a stop to or curbing the practice of issuing checks that are worthless, i.e. checks that
For the purpose of resolving the constitutional issue presented here, we do not find it necessary to delve into the
end up being rejected or dishonored for payment. The practice, as discussed later, is proscribed by the state
specifics of the informations involved in the cases which are the subject of the petitions before us. 2 The language
because of the injury it causes to t public interests.
of BP 22 is broad enough to cover all kinds of checks, whether present dated or postdated, or whether issued in
payment of pre-existing obligations or given in mutual or simultaneous exchange for something of value.
Before the enactment of BP 22, provisions already existed in our statute books which penalize the issuance of
bouncing or rubber checks. Criminal law has dealth with the problem within the context of crimes against property
I
punished as "estafa" or crimes involving fraud and deceit. The focus of these penal provisions is on the damage
caused to the property rights of the victim.
BP 22 punishes a person "who makes or draws and issues any check on account or for value, knowing at the
time of issue that he does not have sufficient funds in or credit with the drawee bank for the payment of said
The Penal Code of Spain, which was in force in the Philippines from 1887 until it was replaced by the Revised
check in full upon presentment, which check is subsequently dishonored by the drawee bank for insufficiency of
Penal Code in 1932, contained provisions penalizing, among others, the act of defrauding another through false
funds or credit or would have been dishonored for the same reason had not the drawer, without any valid reason,
pretenses. Art. 335 punished a person who defrauded another "by falsely pretending to possess any power,
ordered the bank to stop payment." The penalty prescribed for the offense is imprisonment of not less than 30
influence, qualification, property, credit, agency or business, or by means of similar deceit." Although no explicit
days nor more than one year or a fine or not less than the amount of the check nor more than double said
mention was made therein regarding checks, this provision was deemed to cover within its ambit the issuance of
amount, but in no case to exceed P200,000.00, or both such fine and imprisonment at the discretion of the
worthless or bogus checks in exchange for money. 7
court. 3
In 1926, an amendment was introduced by the Philippine Legislature, which added a new clause (paragraph 10)
The statute likewise imposes the same penalty on "any person who, having sufficient funds in or credit with the
to Article 335 of the old Penal Code, this time referring in explicit terms to the issuance of worthless checks. The
drawee bank when he makes or draws and issues a check, shall fail to keep sufficient funds or to maintain a
amendment penalized any person who 1) issues a check in payment of a debt or for other valuable
credit to cover the full amount of the check if presented within a period of ninety (90) days from the date
consideration, knowing at the time of its issuance that he does not have sufficient funds in the bank to cover its
appearing thereon, for which reason it is dishonored by the drawee bank. 4
amount, or 2) maliciously signs the check differently from his authentic signature as registered at the bank in
order that the latter would refuse to honor it; or 3) issues a postdated check and, at the date set for its payment,
An essential element of the offense is "knowledge" on the part of the maker or drawer of the check of the does not have sufficient deposit to cover the same.8
insufficiency of his funds in or credit with the bank to cover the check upon its presentment. Since this involves a
state of mind difficult to establish, the statute itself creates a prima facie presumption of such knowledge where
In 1932, as already adverted to, the old Penal Code was superseded by the Revised Penal Code. 9 The above
payment of the check "is refused by the drawee because of insufficient funds in or credit with such bank when
provisions, in amended form, were incorporated in Article 315 of the Revised Penal Code defining the crime of
presented within ninety (90) days from the date of the check. 5 To mitigate the harshness of the law in its
estafa. The revised text of the provision read as follows:
application, the statute provides that such presumption shall not arise if within five (5) banking days from receipt
of the notice of dishonor, the maker or drawer makes arrangements for payment of the check by the bank or pays
the holder the amount of the check. Art. 315. Swindling (estafa).—Any person who shall defraud another by any of the means mentioned
hereinbelow shall be punished by:
Another provision of the statute, also in the nature of a rule of evidence, provides that the introduction in evidence
of the unpaid and dishonored check with the drawee bank's refusal to pay "stamped or written thereon or 2. By means of any of the following false pretenses or fraudulent acts executed prior to or simultaneously
attached thereto, giving the reason therefor, "shall constitute prima facie proof of "the making or issuance of said with the commis sion of the fraud:
 (a) By using fictitious name, or falsely pretending to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions, or by means of other similar deceits;
(d) By postdating a check, or issuing a check in payment of an obligation the offender knowing that
at the time he had no funds in the bank, or the funds deposited by him were not sufficient to cover the
amount of the cheek without informing the payee of such circumstances.
The scope of paragraph 2 (d), however, was deemed to exclude checks issued in payment of pre-existing
obligations. 10 The rationale of this interpretation is that in estafa, the deceit causing the defraudation must
be prior to or simultaneous with the commission of the fraud. In issuing a check as payment for a pre-existing
debt, the drawer does not derive any material benefit in return or as consideration for its issuance. On the part of
the payee, he had already parted with his money or property before the check is issued to him hence, he is not
defrauded by means of any "prior" or "simultaneous" deceit perpetrated on him by the drawer of the check.
With the intention of remedying the situation and solving the problem of how to bring checks issued in payment of
pre-existing debts within the ambit of Art. 315, an amendment was introduced by the Congress of the Philippines
in 1967, 11 which was enacted into law as Republic Act No. 4885, revising the aforesaid proviso to read as
follows:
(d) By postdating a check, or issuing a check in payment of an obligation when the offender had no funds in
the bank, or his funds deposited therein were not sufficient to cover the amount of the check. The failure of
the drawer of the check to deposit the amount necessary to cover his check within three (3) days from
receipt of notice from the bank and/or the payee or holder that said check has been dishonored for lack or
insufficiency of funds shall be puma facie evidence of deceit constituting false pretense or fraudulent act.
However, the adoption of the amendment did not alter the situation materially. A divided Court held in People vs.
Sabio, Jr. 12 that Article 315, as amended by Republic Act 4885, does not cover checks issued in payment of pre-
existing obligations, again relying on the concept underlying the crime of estafa through false pretenses or
deceit—which is, that the deceit or false pretense must be prior to or simultaneous with the commission of the
fraud.
Since statistically it had been shown that the greater bulk of dishonored checks consisted of those issued in
payment of pre-existing debts, 13 the amended provision evidently failed to cope with the real problem and to deal
effectively with the evil that it was intended to eliminate or minimize.
With the foregoing factual and legal antecedents as a backdrop, the then Interim Batasan confronted the problem
squarely. It opted to take a bold step and decided to enact a law dealing with the problem of bouncing or
worthless checks, without attaching the law's umbilical cord to the existing penal provisions on estafa. BP 22
addresses the problem directly and frontally and makes the act of issuing a worthless check malum prohibitum. 14
The question now arises: Is B P 22 a valid law?
Previous efforts to deal with the problem of bouncing checks within the ambit of the law on estafa did not evoke
any constitutional challenge. In contrast, BP 22 was challenged promptly.
Those who question the constitutionality of BP 22 insist that: (1) it offends the constitutional provision forbidding
imprisonment for debt; (2) it impairs freedom of contract; (3) it contravenes the equal protection clause; (4) it
unduly delegates legislative and executive powers; and (5) its enactment is flawed in that during its passage the
Interim Batasan violated the constitutional provision prohibiting amendments to a bill on Third Reading.
The constitutional challenge to BP 22 posed by petitioners deserves a searching and thorough scrutiny and the
most deliberate consideration by the Court, involving as it does the exercise of what has been described as "the
highest and most delicate function which belongs to the judicial department of the government." 15
As we enter upon the task of passing on the validity of an act of a co-equal and coordinate branch of the
government, we need not be reminded of the time-honored principle, deeply ingrained in our jurisprudence, that a
statute is presumed to be valid. Every presumption must be indulged in favor of its constitutionality. This is not to
say that we approach our task with diffidence or timidity. Where it is clear that the legislature has overstepped the
limits of its authority under the constitution we should not hesitate to wield the axe and let it fall heavily, as fall it
must, on the offending statute.
III
Among the constitutional objections raised against BP 22, the most serious is the alleged conflict between the
statute and the constitutional provision forbidding imprisonment for debt. It is contended that the statute runs
counter to the inhibition in the Bill of Rights which states, "No person shall be imprisoned for debt or non-payment
of a poll tax." 16 Petitioners insist that, since the offense under BP 22 is consummated only upon the dishonor or
non-payment of the check when it is presented to the drawee bank, the statute is really a "bad debt law" rather
than a "bad check law." What it punishes is the non-payment of the check, not the act of issuing it. The statute, it
is claimed, is nothing more than a veiled device to coerce payment of a debt under the threat of penal sanction.
First of all it is essential to grasp the essence and scope of the constitutional inhibition invoked by petitioners.
Viewed in its historical context, the constitutional prohibition against imprisonment for debt is a safeguard that
evolved gradually during the early part of the nineteenth century in the various states of the American Union as a
result of the people's revulsion at the cruel and inhumane practice, sanctioned by common law, which permitted
creditors to cause the incarceration of debtors who could not pay their debts. At common law, money judgments
arising from actions for the recovery of a debt or for damages from breach of a contract could be enforced
against the person or body of the debtor by writ of capias ad satisfaciendum. By means of this writ, a debtor
could be seized and imprisoned at the instance of the creditor until he makes the satisfaction awarded. As a
consequence of the popular ground swell against such a barbarous practice, provisions forbidding imprisonment
for debt came to be generally enshrined in the constitutions of various states of the Union. 17
This humanitarian provision was transported to our shores by the Americans at the turn of t0he century and
embodied in our organic laws. 18 Later, our fundamental law outlawed not only imprisonment for debt, but also
the infamous practice, native to our shore, of throwing people in jail for non-payment of the cedula or poll tax. 19
The reach and scope of this constitutional safeguard have been the subject of judicial definition, both by our
Supreme Court 20 and by American State courts.21 Mr. Justice Malcolm speaking for the Supreme Court in
Ganaway vs. Queen, 22 stated: "The 'debt' intended to be covered by the constitutional guaranty has a well-
defined meaning. Organic provisions relieving from imprisonment for debt, were intended to prevent commitment
of debtors to prison for liabilities arising from actions ex contractu The inhibition was never meant to include
damages arising in actions ex delicto, for the reason that damages recoverable therein do not arise from any
contract entered into between the parties but are imposed upon the defendant for the wrong he has done and are
considered as punishment, nor to fines and penalties imposed by the courts in criminal proceedings as
punishments for crime."
The law involved in Ganaway was not a criminal statute but the Code of Procedure in Civil Actions (1909) which
authorized the arrest of the defendant in a civil case on grounds akin to those which justify the issuance of a writ
of attachment under our present Rules of Court, such as imminent departure of the defendant from the
Philippines with intent to defraud his creditors, or concealment, removal or disposition of properties in fraud of
creditors, etc. The Court, in that case, declared the detention of the defendant unlawful, being violative of the
constitutional inhibition against imprisonment for debt, and ordered his release. The Court, however, refrained
from declaring the statutory provision in question unconstitutional.
Closer to the case at bar is People v. Vera Reyes,23 wherein a statutory provision which made illegal and
punishable the refusal of an employer to pay, when he can do so, the salaries of his employees or laborers on
the fifteenth or last day of every month or on Saturday every week, was challenged for being violative of the
constitutional prohibition against imprisonment for debt. The constitutionality of the law in question was upheld by
the Court, it being within the authority of the legislature to enact such a law in the exercise of the police power. It
was held that "one of the purposes of the law is to suppress possible abuses on the part of the employers who
hire laborers or employees without paying them the salaries agreed upon for their services, thus causing them
financial difficulties. "The law was viewed not as a measure to coerce payment of an obligation, although
obviously such could be its effect, but to banish a practice considered harmful to public welfare.
IV
Has BP 22 transgressed the constitutional inhibition against imprisonment for debt? To answer the question, it is
necessary to examine what the statute prohibits and punishes as an offense. Is it the failure of the maker of the
check to pay a debt? Or is it the making and issuance of a worthless check in payment of a debt? What is the
gravamen of the offense? This question lies at the heart of the issue before us.
The gravamen of the offense punished by BP 22 is the act of making and issuing a worthless check or a check
that is dishonored upon its presentation for payment. It is not the non-payment of an obligation which the law
punishes. The law is not intended or designed to coerce a debtor to pay his debt. The thrust of the law is to
prohibit, under pain of penal sanctions, the making of worthless checks and putting them in circulation. Because
of its deleterious effects on the public interest, the practice is proscribed by the law. The law punishes the act not
as an offense against property, but an offense against public order.
Admittedly, the distinction may seem at first blush to appear elusive and difficult to conceptualize. But precisely in
the failure to perceive the vital distinction lies the error of those who challenge the validity of BP 22.
It may be constitutionally impermissible for the legislature to penalize a person for non-payment of a debt ex
contractu But certainly it is within the prerogative of the lawmaking body to proscribe certain acts deemed
pernicious and inimical to public welfare. Acts mala in se are not the only acts which the law can punish. An act
may not be considered by society as inherently wrong, hence, not malum in se but because of the harm that it
inflicts on the community, it can be outlawed and criminally punished as malum prohibitum. The state can do this
in the exercise of its police power.
The police power of the state has been described as "the most essential, insistent and illimitable of powers"
which enables it to prohibit all things hurtful to the comfort, safety and welfare of society. 24 It is a power not
emanating from or conferred by the constitution, but inherent in the state, plenary, "suitably vague and far from
precisely defined, rooted in the conception that man in organizing the state and imposing upon the government
limitations to safeguard constitutional rights did not intend thereby to enable individual citizens or group of
citizens to obstruct unreasonably the enactment of such salutary measures to ensure communal peace, safety,
good order and welfare." 25
The enactment of BP 22 is a declaration by the legislature that, as a matter of public policy, the making and
issuance of a worthless check is deemed public nuisance to be abated by the imposition of penal sanctions.
It is not for us to question the wisdom or impolicy of the statute. It is sufficient that a reasonable nexus exists
between means and end. Considering the factual and legal antecedents that led to the adoption of the statute, it
is not difficult to understand the public concern which prompted its enactment. It had been reported that the
approximate value of bouncing checks per day was close to 200 million pesos, and thereafter when overdrafts
were banned by the Central Bank, it averaged between 50 minion to 80 million pesos a day. 26
By definition, a check is a bill of exchange drawn on a bank and payable on demand. 27 It is a written order on a bank,
purporting to be drawn against a deposit of funds for the payment of all events, of a sum of money to a certain person
therein named or to his order or to cash and payable on demand. 28 Unlike a promissory note, a check is not a mere
undertaking to pay an amount of money. It is an order addressed to a bank and partakes of a representation that the
drawer has funds on deposit against which the check is drawn, sufficient to ensure payment upon its presentation to
the bank. There is therefore an element of certainty or assurance that the instrument wig be paid upon presentation.
For this reason, checks have become widely accepted as a medium of payment in trade and commerce. Although not
legal tender, checks have come to be perceived as convenient substitutes for currency in commercial and financial
transactions. The basis or foundation of such perception is confidence. If such confidence is shakes the usefulness of
checks as currency substitutes would be greatly diminished or may become nit Any practice therefore tending to
destroy that confidence should be deterred for the proliferation of worthless checks can only create havoc in trade
circles and the banking community.
Recent statistics of the Central Bank show that one-third of the entire money supply of the country, roughly totalling
P32.3 billion, consists of peso demand deposits; the remaining two. 29 These de deposit thirds consists of currency in
circulation. ma deposits in the banks constitute the funds against which among others, commercial papers like checks,
are drawn. The magnitude of the amount involved amply justifies the legitimate concern of the state in preserving the
integrity of the banking system. Flooding the system with worthless checks is like pouring garbage into the bloodstream
of the nation's economy.
The effects of the issuance of a worthless check transcends the private interests of the parties directly involved in the
transaction and touches the interests of the community at large. The mischief it creates is not only a wrong to the
payee or holder, but also an injury to the public. The harmful practice of putting valueless commercial papers in
circulation, multiplied a thousand fold, can very wen pollute the channels of trade and commerce, injure the banking
system and eventually hurt the welfare of society and the public interest. As aptly stated — 30
The 'check flasher' does a great deal more than contract a debt; he shakes the pillars of business; and to my
mind, it is a mistaken charity of judgment to place him in the same category with the honest man who is
unable to pay his debts, and for whom the constitutional inhibition against' imprisonment for debt, except in
cases of fraud was intended as a shield and not a sword.
In sum, we find the enactment of BP 22 a valid exercise of the police power and is not repugnant to the constitutional
inhibition against imprisonment for debt.
This Court is not unaware of the conflicting jurisprudence obtaining in the various states of the United States on the
constitutionality of the "worthless check" acts. 31 It is needless to warn that foreign jurisprudence must be taken with
abundant caution. A caveat to be observed is that substantial differences exist between our statute and the worthless
check acts of those states where the jurisprudence have evolved. One thing to remember is that BP 22 was not lifted
bodily from any existing statute. Furthermore, we have to consider that judicial decisions must be read in the context of
the facts and the law involved and, in a broader sense, of the social economic and political environment—in short, the
milieu—under which they were made. We recognize the wisdom of the old saying that what is sauce for the goose may
not be sauce for the gander.
As stated elsewhere, police power is a dynamic force that enables the state to meet the exigencies of changing times.
There are occasions when the police power of the state may even override a constitutional guaranty. For example,
there have been cases wherein we held that the constitutional provision on non-impairment of contracts must yield to
the police power of the state. 32 Whether the police power may override the constitutional inhibition against
imprisonment for debt is an issue we do not have to address. This bridge has not been reached, so there is no
occasion to cross it.
We hold that BP 22 does not conflict with the constitutional inhibition against imprisonment for debt.
V 9 (2) of Article VIII of the 1973 Constitution were violated.
We need not detain ourselves lengthily in the examination of the other constitutional objections raised by petitioners,
some of which are rather flimsy.
We find no valid ground to sustain the contention that BP 22 impairs freedom of contract. The freedom of contract
which is constitutionally protected is freedom to enter into "lawful" contracts. Contracts which contravene public policy
are not lawful. 33 Besides, we must bear in mind that checks can not be categorized as mere contracts. It is a
commercial instrument which, in this modem day and age, has become a convenient substitute for money; it forms part
of the banking system and therefore not entirely free from the regulatory power of the state.
Neither do we find substance in the claim that the statute in question denies equal protection of the laws or is
discriminatory, since it penalizes the drawer of the check, but not the payee. It is contended that the payee is just as
responsible for the crime as the drawer of the check, since without the indispensable participation of the payee by his
acceptance of the check there would be no crime. This argument is tantamount to saying that, to give equal protection,
the law should punish both the swindler and the swindled. The petitioners' posture ignores the well-accepted meaning
of the clause "equal protection of the laws." The clause does not preclude classification of individuals, who may be
accorded different treatment under the law as long as the classification is no unreasonable or arbitrary. 34
It is also suggested that BP 22 constitutes undue or improper delegation of legislative powers, on the theory that the
offense is not completed by the sole act of the maker or drawer but is made to depend on the will of the payee. If the
payee does not present the check to the bank for payment but instead keeps it, there would be no crime. The logic of
the argument stretches to absurdity the meaning of "delegation of legislative power." What cannot be delegated is the
power to legislate, or the power to make laws. 35 which means, as applied to the present case, the power to define the
offense sought to be punished and to prescribe the penalty. By no stretch of logic or imagination can it be said that the
power to define the crime and prescribe the penalty therefor has been in any manner delegated to the payee. Neither is
there any provision in the statute that can be construed, no matter how remotely, as undue delegation of executive
power. The suggestion that the statute unlawfully delegates its enforcement to the offended party is farfetched.
Lastly, the objection has been raised that Section 9 (2) of Article VII of the 1973 Constitution was violated by the
legislative body when it enacted BP 22 into law. This constitutional provision prohibits the introduction of amendments
to a bill during the Third Reading. It is claimed that during its Third Reading, the bill which eventually became BP 22
was amended in that the text of the second paragraph of Section 1 of the bill as adopted on Second Reading was
altered or changed in the printed text of the bill submitted for approval on Third Reading.
A careful review of the record of the proceedings of the Interim Batasan on this matter shows that, indeed, there was
some confusion among Batasan Members on what was the exact text of the paragraph in question which the body
approved on Second Reading. 36 Part of the confusion was due apparently to the fact that during the deliberations on
Second Reading (the amendment period), amendments were proposed orally and approved by the body or accepted
by the sponsor, hence, some members might not have gotten the complete text of the provisions of the bill as amended
and approved on Second Reading. However, it is clear from the records that the text of the second paragraph of
Section 1 of BP 22 is the text which was actually approved by the body on Second Reading on February 7, 1979, as
reflected in the approved Minutes for that day. In any event, before the bin was submitted for final approval on Third
Reading, the Interim Batasan created a Special Committee to investigate the matter, and the Committee in its report,
which was approved by the entire body on March 22, 1979, stated that "the clause in question was ... an authorized
amendment of the bill and the printed copy thereof reflects accurately the provision in question as approved on Second
Reading. 37 We therefore, find no merit in the petitioners' claim that in the enactment of BP 22 the provisions of Section
WHEREFORE, judgment is rendered granting the petition in G.R. No. 75789 and setting aside the order of the
respondent Judge dated August 19, 1986. The petitions in G.R. Nos. 63419, 66839-42, 71654, 74524-25, 75122-49,
75812-13 and 75765-67 are hereby dismissed and the temporary restraining order issued in G.R. Nos. 74524-25 is
lifted. With costs against private petitioners.
SO ORDERED.
G.R. No. 71169 December 22, 1988 Sergio L. Guadiz for private respondents.

JOSE D. SANGALANG and LUTGARDA D. SANGALANG, petitioners, FELIX C. GASTON and DOLORES R. G.R. No. L-76394:
GASTON, JOSE V. BRIONES and ALICIA R. BRIONES, and BEL-AIR VILLAGE ASSOCIATION,
INC., intervenors-petitioners, Raul S. Sison Law Offices for petitioner.
vs.
INTERMEDIATE APPELLATE COURT, and AYALA CORPORATION, respondents.
Gruba, Tanlimco Lamso and Apuhin Law Offices for respondents.

G.R. No. 74376 December 22, 1988

G.R. No. L-78182:

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,

Funk & Associates for petitioners.
vs.
THE INTERMEDIATE APPELLATE COURT, ROSARIO DE JESUS TENORIO, and CECILIA
GONZALVEZ, respondents. Tee Tomas & Associates for respondents.

G.R. No. 76394 December 22,1988 G.R. No. L-82281:

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner, Funk & Associates for petitioner.
vs.
THE COURT OF APPEALS, and EDUARDO and BUENA ROMUALDEZ respondents. Castillo, Laman, Tan & Associates for private respondents.

G.R. No. 78182 December 22, 1988 SARMIENTO, J.:

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner, Before the Court are five consolidated petitions, 1 docketed as G.R. Nos. 71169, 74376, 76394, 78182, and
vs. 82281 hereof, in the nature of appeals (by certiorari under Rule 45 of the Rules of Court) from five decisions of
COURT OF APPEALS, DOLORES FILLEY, and J. ROMERO & ASSOCIATES, respondents. the Court of Appeals, denying specific performance and damages.

G.R. No. 82281 December 22, 1988 The proceedings were commenced at the first instance by Jose Sangalang, joined by his wife Lutgarda
Sangalang, both residents of No. 110 Jupiter Street, Makati, Metro Manila (G.R. No. 71169) to enforce by
BEL-AIR VILLAGE ASSOCIATION, INC, petitioner, specific performance restrictive easement upon property, specifically the Bel- Air Village subdivision in Makati,
vs. Metro Manila, pursuant to stipulations embodied in the deeds of sale covering the subdivision, and for damages.
COURT OF APPEALS, VIOLETA MONCAL, and MAJAL DEVELOPMENT CORPORATION, respondents. Later, the Sangalangs were joined by Felix Gaston, a resident of No. 64 Jupiter Street of the same municipality,
and by Mr. and Mrs. Jose and Alicia Briones, both of No. 66 Jupiter Street. Pending further proceedings, the Bel-
Air Village Association, Inc. (BAVA), an incorporated homeowners' association, entered its appearance as
Sangco, Anastacio, Castaneda & Duran Law Office for petitioners & private intervenors- petitioners.
plaintiff-in-intervention.

Raul S. Sison Law Offices for intervenor-petitioner Bel-Air Village Association, Inc. Renato L. Dela Fuente for
BAVA itself had brought its own complaints, four in number, likewise for specific performance and damages to
respondent Ayala Corporation.
enforce the same 'deed restrictions.' (See G.R. Nos. 74376, 76394, 78182, and 82281.)

G.R. No. L-74376:

ANTECEDENTS FACTS

Raul S. Sison Law Offices for petitioner.

I. G.R. No. 71169
The facts are stated in the decision appealed from. We quote:
xxxxxxxxx
(1) Bel-Air Village is located north of Buendia Avenue extension (now Sen. Gil J. Puyat Ave.) across a stretch
of commercial block from Reposo Street in the west up to Zodiac Street in the east, When Bel-Air Village was
planned, this block between Reposo and Zodiac Streets adjoining Buendia Avenue in front of the village was
designated as a commercial block. (Copuyoc TSN, p. 10, Feb. 12, 1982).
(2) Bel-Air Village was owned and developed into a residential subdivision in the 1950s by Makati
Development Corporation (hereinafter referred to as MDC), which in 1968 was merged with appellant Ayala
Corporation.
(3) Appellees-spouses Sangalang reside at No. 11O Jupiter Street between Makati Avenue and Reposo
Street; appellees-spouses Gaston reside at No. 64 Jupiter Street between Makati Avenue and Zodiac Street;
appellees-spouses Briones reside at No. 66 Jupiter Street also between Makati Avenue and Zodiac Street;
while appellee Bel-Air Village Association, Inc. (hereinafter referred to as BAVA) is the homeowners'
association in Bel-Air Village which takes care of the sanitation, security, traffic regulations and general
welfare of the village.
(4) The lots which were acquired by appellees Sangalang and spouse Gaston and spouse and Briones and
spouse in 1960, 1957 and 1958, respectively, were all sold by MDC subject to certain conditions and
easements contained in Deed Restrictions which formed a part of each deed of sale. The pertinent provisions
in said Deed Restrictions, which are common to all lot owners in Bel-Air Village, are as follows:
I-BEL-AIR ASSOCIATION
The owner of this lot/s or his successors in interest is required to be and is automatically a member of the
Bel-Air Association and must abide by such rules and regulations laid down by the Association in the interest
of the sanitation, security and the general welfare of the community.
The association will also provide for and collect assessments, which will constitute as a lien on the property
junior only to liens of the government for taxes and to voluntary mortgages for sufficient consideration
entered into in good faith.
II-USE OF LOTS
Subject to such amendments and additional restrictions, reservations, servitudes, etc., as the Bel- Air
Association may from time to time adopt and prescribe, this lot is subject to the following restrictions:
a. This lot/s shall not be subdivided. However, three or more lots may be consolidated and subdivided into a
lesser number of lots provided that none of the resulting lots be smaller in area than the smallest lot before
the consolidation and that the consolidation and subdivision plan be duly approved by the governing body of
the Bel-Air Association.
b. This lot/s shall only be used for residential purposes.
c. Only one single family house may be constructed on a single lot, although separate servants' quarters or
garage may be built.
d. Commercial or advertising signs shall not be placed, constructed, or erected on this lot. Name plates and
professional signs of homeowners are permitted so long as they do not exceed 80 x 40 centimeters in size.
e. No cattle, pigs, sheep, goats, ducks, geese, roosters or rabbits shall be maintained in the lot, except that
pets may be maintained but must be controlled in accordance with the rulings of the Association. The term
"pets' includes chickens not in commercial quantities.
f. The property is subject to an easement of two (2) meters within the lot and adjacent to the rear and sides
thereof not fronting a street for the purpose of drainage, sewage, water and other public facilities as may be
necessary and desirable; and the owner, lessee or his representative shall permit access thereto by
authorized representatives of the Bel-Air Association or public utility entities for the purposes for which the
easement is created.
g. This lot shall not be used for any immoral or illegal trade or activity.
h. The owner and/or lessee of this lot/s shall at all times keep the grass cut and trimmed to reduce the fire
hazard of the property.
xxx xxx xxx
VI-TERM OF RESTRICTIONS
The foregoing restrictions shall remain in force for fifty years from January 15, 1957, unless sooner cancelled
in its entirety by two thirds vote of members in good standing of the Bel-Air Association. However, the
Association may, from time to time, add new ones, amend or abolish particular restrictions or parts thereof by
majority rule.
VII--ENFORCEMENT OF RESTRICTIONS
The foregoing restrictions may be enjoined and/or enforced by court action by the Bel-Air Association, or by
the Makati Development Corporation or its assigns, or by any registered owner of land within the boundaries
of the Bel-Air Subdivision (Sub-division plan PSD-49226 and Lot 7-B, Psd-47848) or by any member in good
standing of the Bel-Air association." (Exh. 1 -b; Exh. 22, Annex "B"). (Appellant's Brief, pp. 4- 6)
(5) When MDC sold the above-mentioned lots to appellees' predecessors-in-interest, the whole stretch of the
commercial block between Buendia Avenue and Jupiter Street, from Reposo Street in the west to Zodiac
Street in the east, was still undeveloped. Access, therefore, to Bel-Air Village was opened to all kinds of
people and even animals. So in 1966, although it was not part of the original plan, MDC constructed a fence
or wall on the commercial block along Jupiter Street. In 1970, the fence or wall was partly destroyed by
typhoon "Yoling." The destroyed portions were subsequently rebuilt by the appellant. (Copuyoc TSN, pp. 31-
34, Feb. 12, 1982). When Jupiter Street was widened in 1972 by 3.5 meters, the fence or wall had to be
destroyed. Upon request of BAVA, the wall was rebuilt inside the boundary of the commercial block.
(Copuyoc TSN, pp. 4447, Feb. 12,1982).
(6) When the appellant finally decided to subdivide and sell the lots in the commercial block between Buendia
and Jupiter, BAVA wrote the appellant on May 9, 1972, requesting for confirmation on the use of the
commercial lots. The appellant replied on May 16, 1972, informing BAVA of the restrictions intended to be
imposed in the sale and use of the lots. Among these restrictions are: that the building shall have a set back
of 19 meters; and that with respect to vehicular traffic along Buendia Avenue, entrance only will be allowed,
and along Jupiter Street and side streets, both entrance and exit will be allowed.
(7) On June 30, 1972, appellant informed BAVA that in a few months it shall subdivide and sell the
commercial lots bordering the north side of Buendia Avenue Extension from Reposo Street up to Zodiac
Street. Appellant also informed BAVA that it had taken all precautions and will impose upon the commercial
lot owners deed restrictions which will harmonize and blend with the development and welfare of Bel-Air
Village. Appellant further applied for special membership in BAVA of the commercial lot owners. A copy of
the deed restrictions for the commercial lots was also enclosed. The proposed deed restrictions shall include
the 19 meter set back of buildings from Jupiter Street, the requirement for parking space within the lot of one
(1) parking slot for every seventy five (75) meters of office space in the building and the limitation of vehicular
traffic along Buendia to entrance only, but allowing both vehicular entrance and vehicular exit through Jupiter
Street and any side street.
In its letter of July 10, 1972, BAVA acknowledged the above letter of appellant and informed the latter that the
application for special membership of the commercial lot owners in BAVA would be submitted to BAVA's
board of governors for decision.
(8) On September 25, 1972, appellant notified BAVA that, after a careful study, it was finally decided that the
height limitation of buildings on the commercial lots shall be increased from 12.5 meters to 15 meters.
Appellant further informed BAVA that Jupiter Street shall be widened by 3.5 meters to improve traffic flow in
said street. BAVA did not reply to said letter, but on January 22, 1973, BAVA wrote a letter to the appellant
informing the latter that the Association had assessed the appellant, as special member of the association,
the amount of P40,795.00 (based on 81,590 square meters at P.50 per square meter) representing the
membership dues to the commercial lot owners for the year 1973, and requested the appellant to remit the
amount which its board of governors had already included in its current budget. In reply, appellant on January
31, 1973 informed BAVA that due to the widening of Jupiter Street, the area of the lots which were accepted
by the Association as members was reduced to 76,726 square meters. Thus, the corresponding dues at P.50
per square meter should be reduced to P38,363.00. This amount, therefore, was remitted by the appellant to
BAVA. Since then, the latter has been collecting membership dues from the owners of the commercial lots as
special members of the Association. As a matter of fact, the dues were increased several times. In 1980, the
commercial lot owners were already being charged dues at the rate of P3.00 per square meter. (Domingo,
TSN, p. 36, March 19, 1980). At this rate, the total membership dues of the commercial lot owners amount to
P230,178. 00 annually based on the total area of 76,726 square meters of the commercial lots.
(9) Meantime, on April 4, 1975, the municipal council of Makati enacted its ordinance No. 81, providing for the
zonification of Makati (Exh. 18). Under this Ordinance, Bel-Air Village was classified as a Class A Residential
Zone, with its boundary in the south extending to the center line of Jupiter Street (Exh. 18-A).
Thus, Chapter III, Article 1, Section 3.03, par. F. of the Ordinance provides:
F. Bel-Air Village area, as bounded on the N by Polaris and Mercedes streets and on the NE by Estrella
Street; on the SE by Epifanio de los Santos Avenue and on the SW by the center line of Jupiter Street. Then
bounded on the N by the abandoned MRR Pasig Line; on the E by Makati Avenue; on the S by the center
line of Jupiter Street and on the W by the center line of Reposo Street." (Exh. 18-A)
Similarly, the Buendia Avenue Extension area was classified as Administrative Office Zone with its boundary
in the North-North East Extending also up to the center line of Jupiter Street (Exh. 18b).
Thus, Chapter III, Article I, Section 3.05, par. C. of the Ordinance provides:
C. The Buendia Avenue Extension areas, as bounded on the N-NE by the center line of Jupiter Street, on
the SE by Epifanio de los Santos Avenue; on the SW by Buendia Avenue and on the NW by the center line
of Reposo Street, then on the NE by Malugay Street; on the SE by Buendia Avenue and on the W by Ayala
Avenue Extension." (Exh. 18-B)
The Residential Zone and the Administrative Office Zone, therefore, have a common boundary along the
center line of Jupiter Street.
The above zoning under Ordinance No. 81 of Makati was later followed under the Comprehensive Zoning
Ordinance for the National Capital Region adopted by the Metro Manila Commission as Ordinance 81 -01
on March 14, 1981 (Exh. 19). However, under this ordinance, Bel-Air Village is simply bounded in the
South-Southeast by Jupiter Street-not anymore up to the center line of Jupiter Street (Exh. B). Likewise,
the blockdeep strip along the northwest side of Buendia Avenue Extension from Reposo to EDSA was
classified as a High Intensity Commercial Zone (Exh. 19-c).
Thus, the Zoning District Boundaries -Makati, in Annex B of the Ordinance provides:
R-I-Low Intensity Residential
xxxxxxxxx
4. Bel-Air 1, 3, 4 Amapola Street - from Estrella Street to Mercedes Street

Bounded on the North -- J.P. Rizal and Amapola St. Amapola Street -junction of Palma Street gate going to J. Villena Street

South - Rockwell Mercedes Street -- from EDSA to Imelda Avenue and Amapola junction

Northwest - P. Burgos Zodiac Street - from Mercedes Street to Buendia Avenue

Southeast - Jupiter Jupiter Street -- from Zodiac Street to Reposo Street connecting Metropolitan Avenue to Pasong Tamo and
V. Cruz Extension intersection
Southwest - Epifanio de los Santos Ave. (EDSA)
Neptune Street - from Makati Avenue to Reposo Street Orbit Street - from F. Zobel-Candelaria intersection
5. Bel-Air 2 to Jupiter Street

Bounded on the Northwest - J.P. Rizal Paseo de Roxas - from Mercedes Street to Buendia Avenue (Exh. 17, Annex A, BAVA Petition)

Southwest - Makati Avenue On February 10, 1977, BAVA wrote the Mayor of Makati, expressing the concern of the residents about the
opening of the streets to the general public, and requesting specifically the indefinite postponement of the
South --- Jupiter plan to open Jupiter Street to public vehicles. (Exh. 17, Annex B, BAVA Petition).

Southeast -- Pasig Line However, BAVA voluntarily opened to the public Amapola, Mercedes, Zodiac, Neptune and Paseo de
Roxas streets. (Exh. 17-A, Answer of Makati par. 3-7).
East - South Avenue" (Exh. 19-b)
Later, on June 17,1977, the Barangay Captain of Bel-Air Village was advised by the Office of the Mayor
xxxxxxxxx that, in accordance with the agreement entered into during the meeting on January 28, 1 977, the Municipal
Engineer and the Station Commander of the Makati Police were ordered to open for public use Jupiter
C-3-High Intensity Commercial Zone Street from Makati Avenue to Reposo Street. Accordingly, he was requested to advise the village residents
of the necessity of the opening of the street in the interest of public welfare. (Exh. 17, Annex E, BAVA
2. A block deep strip along the northwest side of Buendia Ave. Ext. from Reposo to EDSA." (Exh, 19-c) Petition).

Under the above zoning classifications, Jupiter Street, therefore, is a common boundary of Bel-Air Village
and the commercial zone.
(10) Meanwhile, in 1972, BAVA had installed gates at strategic locations across Jupiter Street which were
manned and operated by its own security guards who were employed to maintain, supervise and enforce
traffic regulations in the roads and streets of the village. (Villavicencio, TSN, pp, 22-25, Oct. 30, 1980;
BAVA Petition, par. 11, Exh. 17).
Then, on January 17, 1977, the Office of the Mayor of Makati wrote BAVA directing that, in the interest of
public welfare and for the purpose of easing traffic congestion, the following streets in Bel-Air Village should
be opened for public use:
Then, on June 10, 1977, the Municipal Engineer of Makati in a letter addressed to BAVA advised the latter
to open for vehicular and pedestrian traffic the entire portion of Jupiter Street from Makati Avenue to
Reposo Street (Exh. 17, BAVA Petition, par. 14).
Finally, on August 12, 1977, the municipal officials of Makati concerned allegedly opened, destroyed and
removed the gates constructed/located at the corner of Reposo Street and Jupiter Street as well as the
gates/fences located/constructed at Jupiter Street and Makati Avenue forcibly, and then opened the entire
length of Jupiter Street to public traffic. (Exh. 17, BAVA Petition, pars. 16 and 17).
(11) Before the gates were-removed, there was no parking problem or traffic problem in Jupiter Street,
because Jupiter Street was not allowed to be used by the general public (Villavicencio, TSN, pp. 24-25,
Oct. 30, 1980). However, with the opening of Zodiac Street from Estrella Street to Jupiter Street and also
the opening to the public of the entire length of Jupiter Street, there was a tremendous increase in the (15) After trial on the merits, the then Court of First Instance of Rizal, Pasig, Metro Manila, rendered a
volume of traffic passing along Jupiter Street coming from EDSA to Estrella Street, then to Zodiac Street to decision in favor of the appellees the dispositive portion of which is as follows:
Jupiter Street, and along the entire length of Jupiter Street to its other end at Reposo Street. (Villavicencio,
TSN, pp. 30-32, Oct. 30, 1980). WHEREFORE, judgment is hereby accordingly rendered as follows:

In the meantime, the purchasers of the commercial lots between Jupiter Street and Buendia Avenue ON PLAINTIFFS' COMPLAINT:
extension had started constructing their respective buildings in 1974-1975. They demolished the portions of
the fence or wall standing within the boundary of their lots. Many of the owners constructed their own
Defendant is ordered to pay to the plaintiffs-spouses Sangalang the following damages:
fences or walls in lieu of the wall and they employed their own security guards. (TSN, p. 83, Feb. 20,1981;
TSN, pp. 53-54; 72-74, March 20,1981; TSN, pp. 54-55, July 23, 1981).
1. The sum of P500,000.00 as actual and consequential damages;
(12) Then, on January 27, 1978, appellant donated the entire Jupiter Street from Metropolitan Avenue to
2. The sum of P2,000,000.00 as moral damages;
Zodiac Street to BAVA (Exh. 7)- However, even before 1978, the Makati Police and the security force of
BAVA were already the ones regulating the traffic along Jupiter Street after the gates were opened in 1977.
Sancianco TSN, pp. 26-30, Oct. 2,1981). 3. The sum of P500,000.00 as exemplary damages;

In October, 1979, the fence at the corner of Orbit and Neptune Streets was opened and removed (BAVA 4. The sum of P100,000.00 as attorney's fees; and
Petition, par. 22, Exh. 17). The opening of the whole stretch of Orbit Street from J.P. Rizal Avenue up to
Imelda Avenue and later to Jupiter Street was agreed to at the conference attended by the President of 5. The costs of suit.
BAVA in the office of the Station Commander of Makati, subject to certain conditions, to wit:
ON INTERVENORS FELIX and DOLORES GASTON'S COMPLAINT:
That, maintenance of Orbit St. up to Jupiter St. shall be shouldered by the Municipality of Makati.
Defendant is ordered to pay to the spouses Felix and Dolores Gaston, the following damages:
That, street lights will be installed and maintenance of the same along Orbit St. from J.P. Rizal Ave. up to
Jupiter St. shall be undertaken by the Municipality. 1 . The sum of P400,000.00 as consequential damages;

That for the security of the residents of San Miguel Village and Bel-Air Village, as a result of the opening of 2 The sum of P500,000.00 as moral damages;
Orbit Street, police outposts shall be constructed by the Municipality of Makati to be headed by personnel
of Station No. 4, in close coordination with the Security Guards of San Miguel Village and Bel-Air Village." 3 The sum of P500,000.00 as exemplary damages:
(CF. Exh. 3 to Counter-Affidavit, of Station Commander, Ruperto Acle p. 253, records)" (Order, Civil Case
No. 34948, Exh. 17-c). 4 The sum of P50,000.00 as attorney's fees; and

(13) Thus, with the opening of the entire length of Jupiter Street to public traffic, the different residential lots 5 The costs of suit.
located in the northern side of Jupiter Street ceased to be used for purely residential purposes. They
became, for all purposes, commercial in character. ON INTERVENORS JOSE and ALICIA BRIONES' COMPLAINT:

(14) Subsequently, on October 29, 1979, the plaintiffs-appellees Jose D. Sangalang and Lutgarda D. Defendant is ordered to pay to the spouses Jose and Alicia Briones, the following damages:
Sangalang brought the present action for damages against the defendant-appellant Ayala Corporation
predicated on both breach of contract and on tort or quasi-delict A supplemental complaint was later filed
1 . The sum of P400,000.00 as consequential damages;
by said appellees seeking to augment the reliefs prayed for in the original complaint because of alleged
supervening events which occurred during the trial of the case. Claiming to be similarly situated as the
plaintiffs-appellees, the spouses Felix C. Gaston and Dolores R. Gaston, Jose V. Briones and Alicia R. 2 The sum of P500,000.00 as moral damages;
Briones, and the homeowners' association (BAVA) intervened in the case.
3 The sum of P500,000.00 as exemplary damages; This petition was similarly brought by BAVA to enforce the aforesaid restrictions stipulated in the deeds of sale
executed by the Ayala Corporation. The petitioner originally brought the complaint in the Regional Trial Court of
4 The sum of P50,000.00 as attorney's fees; and Makati, 5 principally for specific performance, plaintiff [now, petitioner] alleging that the defendant [now, private
respondent] Tenorio allowed defendant [Tenorio's co-private respondent] Gonzalves to occupy and convert the
5 The costs of suit. house at 50 Jupiter Street, Bel-Air Village, Makati, Metro Manila, into a restaurant, without its knowledge and
consent, and in violation of the deed restrictions which provide that the lot and building thereon must be used
only for residential purposes upon which the prayed for main relief was for 'the defendants to permanently refrain
ON INTERVENOR BAVA'S COMPLAINT:
from using the premises as commercial and to comply with the terms of the Deed Restrictions." 6 The trial court
dismissed the complaint on a procedural ground, i.e., pendency of an Identical action, Civil Case No. 32346,
Defendant is ordered to pay intervenor BAVA, the following damages: entitled "Bel-Air Village Association, Inc. v. Jesus Tenorio." The Court of Appeals 7 affirmed, and held, in addition,
that Jupiter Street "is classified as High density commercial (C-3) zone as per Comprehensive Zoning Ordinance
1. The sum of P400,000.00 as consequential damages; No. 81-01 for National Capital Region," 8 following its own ruling in AC-G.R. No. 66649, entitled "Bel-Air Village
Association, Inc. vs. Hy-Land Realty & Development Corporation, et al."
2. The sum of P500,000.00 as exemplary damages;
III. G.R. No. 76394
3. The sum of P50,000.00 as attorney's fees; and
xxxxxxxxx
4. The costs of suit.
Defendants-spouses Eduardo V. Romualdez, Jr. and Buena Tioseco are the owners of a house and lot
The above damages awarded to the plaintiffs and intervenors shall bear legal interest from the filing of the located at 108 Jupiter St., Makati, Metro Manila as evidenced by Transfer Certificate of Title No. 332394 of
complaint. the Registry of Deeds of Rizal. The fact is undisputed that at the time the defendants acquired the subject
house and lot, several restrictions were already annotated on the reverse side of their title; however, for
Defendant is further ordered to restore/reconstruct the perimeter wall at its original position in 1966 from purposes of this appeal we shall quote hereunder only the pertinent ones, to wit:
Reposo Street in the west to Zodiac Street in the east, at its own expense, within SIX (6) MONTHS from
finality of judgment. (b,) This lot/shall be used only for residential purposes.

SO ORDERED. xxxxxxxxx

(Record on Appeal, pp. 400-401) 2 IV. Term of Restriction

xxxxxxxxx The foregoing restriction(s) shall remain in force for fifty years from January 15, 1957, unless sooner
cancelled in its entirety by two-thirds vote of the members in good standing of the Bel-Air Association.
On appeal, the Court of Appeals 3 rendered a reversal, and disposed as follows: However, the Association may from time to time, add new ones, amend or abolish particular restrictions or
parts thereof by majority rule.
ACCORDINGLY, finding the decision appealed from as not supported by the facts and the law on the
matter, the same is hereby SET ASIDE and another one entered dismissing the case for lack of a cause of During the early part of 1979, plaintiff noted that certain renovations and constructions were being made by
action. Without pronouncement as to costs. the defendants on the subject premises, for which reason the defendants were advised to inform the
plaintiff of the kind of construction that was going on. Because the defendants failed to comply with the
SO ORDERED. 4 request of the plaintiff, the latter's chief security officer visited the subject premises on March 23, 1979 and
found out that the defendants were putting up a bake and coffee shop, which fact was confirmed by
defendant Mrs. Romualdez herself. Thereafter, the plaintiff reminded defendants that they were violating
II. G.R. No. 74376
the deed restriction. Despite said reminder, the defendants proceeded with the construction of the bake
shop. Consequently, plaintiff sent defendants a letter dated April 30, 1979 warning them that if they will not
 desist from using the premises in question for commercial purposes, they will be sued for violations of the
deed restrictions.
Despite the warning, the defendants proceeded with the construction of their bake shop. 9
xxxxxxxxx
The trial court 10 adjudged in favor of BAVA. On appeal, the Court of Appeals 11 reversed, on the strength of its
holding in AC-G.R. No. 66649 earlier referred to.
BAVA then elevated the matter to the Court by a petition for review on certiorari. The Court 12 initially denied the
petition "for lack of merit, it appearing that the conclusions of the respondent Court of Appeals that private
respondents' bake and coffee shop lies within a commercial zone and that said private respondents are released
from their obligations to maintain the lot known as 108 Jupiter Street for residential purposes by virtue of
Ordinance No. 81 of the Municipality of Makati and Comprehensive Zoning Ordinance No. 81-01 of the
Metropolitan Manila Commission, are in accord with law and jurisprudence," 13 for which BAVA sought a
reconsideration. Pending resolution, the case was referred to the Second Division of this Court, 14 and thereafter,
to the Court En Banc en consulta. 15 Per our Resolution, dated April 29, 1988, we consolidated this case with
G.R. Nos. 74376 and 82281. 16
IV. G.R. No. 78182.
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The case stemmed from the leasing by defendant Dolores Filley of her building and lot situated at No. 205
Reposo Street, Bel-Air Village Makati, Metro Manila to her co-defendant, the advertising firm J. Romero
and Associates, in alleged violation of deed restrictions which stipulated that Filley's lot could only be used
for residential purposes. Plaintiff sought judgment from the lower court ordering the defendants to
"permanently refrain" from using the premises in question "as commercial" and to comply with the terms of
the deed restrictions.
After the proper proceedings, the court granted the plaintiff the sought for relief with the additional
imposition of exemplary damages of P50,000.00 and attorney's fees of P10,000.00. The trial court gave
emphasis to the restrictive clauses contained in Filley's deed of sale from the plaintiff, which made the
conversion of the building into a commercial one a violation.
Defendants now seek review and reversal on three (3) assignments of errors, namely:
I.
THE TRIAL COURT ERRED IN NOT FINDING THAT THE REGULATIONS PROMULGATED BY THE
MUNICIPAL AUTHORITIES IN MAKATI AND THE MINISTRY OF HUMAN SETTLEMENT'S CHANGING
THE CHARACTER OF THE AREAS IN QUESTION HAD RENDERED THE RESTRICTIVE EASEMENT
ON THE TITLE OF THE APPELLANTS VACATED.
II.
THE COURT ERRED IN NOT RULING THAT BECAUSE THE APPELLEE(S) HAD ALLOWED THE USE
OF THE PROPERTY WITHIN THE VILLAGE FOR NON- RESIDENTIAL PURPOSES, IT IS NOW
ESTOPPED FROM ENFORCING THE RESTRICTIVE PROHIBITIONS SUBJECT MATTER OF THIS
CASE.
III.
THE COURT ERRED IN NOT FINDING THAT THERE EXISTED A BILATERAL CONTRACT BETWEEN
THE PARTIES AND THAT SINCE APPELLEE HAD NOT PERFORMED ITS OBLIGATIONS UNDER THIS
ARRANGEMENT THE APPELLANT IN TURN WAS UNDER NO OBLIGATION TO ANNOTATE THE
RESTRICTIVE PROHIBITIONS ON THE BACK OF THE TITLE.
Appellants anchor their appeal on the proposition that the Bel-Air Village area, contrary to plaintiff-
appellee's pretension of being a strictly residential zone, is in fact commercial and characterize the
restrictions contained in appellant Filley's deed of sale from the appellee as completely outmoded, which
have lost all relevance to the present-day realities in Makati, now the premier business hub of the nation,
where there is a proliferation of numerous commercial enterprises established through the years, in fact
even within the heart of so-called "residential" villages. Thus, it may be said that appellants base their
position on the inexorable march of progress which has rendered at naught the continued efficacy of the
restrictions. Appellant on the other hand, relies on a rigid interpretation of the contractual stipulations
agreed upon with appellant Filley, in effect arguing that the restrictions are valid ad infinitum.
The lower court quite properly found that other commercial establishments exist in the same area (in fact,
on the same street) but ignored it just the same and said-
The fact that defendants were able to prove the existence of several commercial establishments inside the
village does not exempt them from liability for violating some of the restrictions evidently choosing to accord
primacy to contractual stipulation. 17
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The Court of Appeals 18 overturned the lower court, 19 likewise based on AC-G.R. No. 66649. The respondent
Court observed also that J. Romero & Associates had been given authority to open a commercial office by the
Human Settlements Regulatory Commission.
V. G.R. No. 82281
The facts of this case have been based on stipulation. We quote:
COMES NOW, the Parties, assisted by their respective counsel and to this Honorable Court, respectfully
enter into the following stipulations of facts, to wit:
1. The parties admit the personal circumstances of each other as well as their capacities to sue and be
sued.
2. The parties admit that plaintiff BAVA for short) is the legally constituted homeowners' association in Bel-
Air Subdivision, Makati, Metro Manila.
3. The parties admit that defendant Violets Moncal is the registered owner of a parcel of land with a
residential house constructed thereon situated at No. 104 Jupiter Street, Bel-Air Village, Makati, Metro
Manila; that as such lot owner, she is a member of the plaintiff association.
4. The parties admit that defendant Majal Development Corporation (Majal for short) is the lessee of
defendant Moncal's house and lot located at No. 104 Jupiter Street.
5. The parties admit that a deed restrictions is annotated on the title of defendant Moncal, which provides,
among others, that the lot in question must be used only for residential purposes;' that at time Moncal
purchased her aforesaid lot in 1959 said deed restrictions was already annotated in the said title.
6. The parties admit that when Moncal leased her subject property to Majal, she did not secure the consent
of BAVA to lease the said house and lot to the present lessee.
7. The parties admit that along Jupiter Street and on the same side where Moncal's property is located,
there are restaurants, clinics placement or employment agencies and other commercial or business
establishments. These establishments, however, were sued by BAVA in the proper court.
8. The parties admit that at the time Moncal purchased the subject property from the Makati Development
Corporation, there was a perimeter wall, running along Jupiter Street, which wall was constructed by the
subdivision owner; that at that time the gates of the entrances to Jupiter Street were closed to public traffic.
In short, the entire length of Jupiter which was inside the perimeter wall was not then open to public traffic
9. The parties admit that subsequent thereto, Ayala tore down the perimeter wall to give way to the
commercial building fronting Buendia Avenue (now Gil J. Puyat Avenue).
10. The parties admit that on August 12, 1977, the Mayor of Makati forcibly opened and removed the street
gates constructed on Jupiter Street and Reposo Street, thereby opening said streets to the public.
11. The parties admit plaintiffs letters of October 10, 23 and 31, 1984; as well as defendants' letters-reply
dated October 17 and 29, 1984. 20
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The trial court 21 dismissed the petitioner's complaint, a dismissal affirmed on appeal, 22 According to the
appellate court, the opening of Jupiter Street to human and vehicular traffic, and the commercialization of the
Municipality of Makati in general, were circumstances that had made compliance by Moncal with the aforesaid
"deed restrictions" "extremely difficult and unreasonable," 23 a development that had excused compliance
altogether under Article 1267 of the Civil Code.
VI. The cases before the Court; the Court's decision.
In brief, G.R. Nos. 74376, 76394, 78182, and 82281 are efforts to enforce the "deed restrictions" in question
against specific residents (private respondents in the petitions) of Jupiter Street and with respect to G.R. No.
78182, Reposo Street. The private respondents are alleged to have converted their residences into commercial
establishments (a restaurant in G.R. No. 74376, a bakery and coffee shop in G.R. No. 76394, an advertising firm
in G.R. No. 78182; and a construction company, apparently, in G.R. No. 82281) in violation of the said
restrictions. 24
Their mother case, G. R. No. 71169 is, on the other hand, a petition to hold the vendor itself, Ayala Corporation
(formerly Makati Development Corporation), liable for tearing down the perimeter wall along Jupiter Street that
had therefore closed its commercial section from the residences of Bel-Air Village and ushering in, as a
consequence, the full "commercialization" of Jupiter Street, in violation of the very restrictions it had authored.
As We indicated, the Court of Appeals dismissed all five appeals on the basis primarily of its ruling in AC-G.R.
No. 66649, "Bel-Air Village, Inc. v. Hy-Land Realty Development Corporation, et al.," in which the appellate court
explicitly rejected claims under the same 'deed restrictions" as a result of Ordinance No. 81 enacted by the
Government of the Municipality of Makati, as well as Comprehensive Zoning Ordinance No. 8101 promulgated by
the Metropolitan Manila Commission, which two ordinances allegedly allowed the use of Jupiter Street both for
residential and commercial purposes. It was likewise held that these twin measures were valid as a legitimate
exercise of police power.
The Court of Appeals' reliance on Ordinance Nos. 81. and 8101 is now assailed in these petitions, particularly the
Sangalang, et al. petition.
Aside from this fundamental issue, the petitioners likewise raise procedural questions. G.R. No. 71169, the
mother case, begins with one.
1. G.R. No. 71169
In this petition, the following questions are specifically put to the Court:
May the Honorable Intermediate Appellate Court reverse the decision of the trial court on issues which
were neither raised by AYALA in its Answers either to the Complaint or Supplemental Complaint nor
specifically assigned as one of the alleged errors on appeal? 25
 May the Honorable Intermediate Appellate Court arbitrarily ignore the decisive findings of fact of the trial
court, even if uncontradicted and/or documented, and premised mainly on its own unsupported conclusions
totally reverse the trial court's decision? 26
May the Honorable Intermediate Appellate Court disregard the trial court's documented findings that
respondent Ayala for its own self-interest and commercial purposes contrived in bad faith to do away with
the Jupiter Street perimeter wall it put up three times which wall was really intended to separate the
residential from the commercial areas and thereby insure the privacy and security of Bel Air Village
pursuant to respondent Ayala's express continuing representation and/or covenant to do so? 27
a.
The first question represents an attack on the appellate court's reliance on Ordinances Nos. 81 and 81-01, a
matter not supposedly taken up at the trial or assigned as an error on appeal. As a rule, the Court of Appeals
(then the Intermediate Appellate Court) may determine only such questions as have been properly raised to it,
yet, this is not an inflexible rule of procedure. In Hernandez v. Andal, 28 it was stated that "an unassigned error
closely related to an error properly assigned, or upon which the determination of the question raised by the error
properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it
as error." 29
In Baquiran v. Court of Appeals, 30 we referred to the " modern trend of procedure . . . according] the courts broad
discretionary power" 31 and in which we allowed consideration of matters "having some bearing on the issue
submitted which the parties failed to raise or the lower court ignore[d]. 32 And in Vda. de Javellana v. Court of
Appeals, 33 we permitted the consideration of a 'patent error' of the trial court by the Court of Appeals under
Section 7, of Rule 51, of the Rules of Court, 34 although such an error had not been raised in the brief. But what
we note is the fact that the Ayala Corporation did raise the zoning measures as affirmative defenses, first in its
answers 35 and second, in its brief, 36 and submitted at the trial as exhibits. 37 There is accordingly no cause for
complaint on the part of the petitioners for Ayala's violation of the Rules. But while there was reason for the
consideration, on appeal, of the said zoning ordinances in question, this Court nevertheless finds as inaccurate
the Court of Appeals' holding that such measures, had "in effect, [made] Jupiter Street ... a street which could be
used not only for residential purposes," 38 and that "[It lost its character as a street for the exclusive benefit of
those residing in Bel-Air Village completely." 39
Among other things, there is a recognition under both Ordinances Nos. 81 and 8 1-01 that Jupiter Street lies as
the boundary between Bel-Air Village and Ayala Corporation's commercial section. And since 1957, it had been
considered as a boundary not as a part of either the residential or commercial zones of Ayala Corporation's real
estate development projects. Thus, the Bel-Air Village Association's articles of incorporation state that Bel-Air
Village is 'bounded on the NE., from Amapola St., to de los Santos Ave., by Estrella St., on the SE from Extrella
St., to Pedestrian Lane by E. De los Santos Ave., on the SW., from Pedestrian Lane to Reposo St., by Jupiter
Street
. . . . 40 Hence, it cannot be said to have been "for the exclusive benefit" of Bel-Air Village residents.
We come to the perimeter wall then standing on the commercial side of Jupiter Street the destruction of which
opened the street to the public. The petitioners contend that the opening of the thoroughfare had opened, in turn,
the floodgates to the commercialization of Bel-Air Village. The wall, so they allege, was designed precisely to
protect the peace and privacy of Bel-Air Village residents from the din and uproar of mercantile pursuits, and that
the Ayala Corporation had committed itself to maintain it. It was the opinion of the Court of Appeals, as we said,
that Ayala's liability therefor, if one existed, had been overtaken by the passage of Ordinances Nos. 81 and 82-
01, opening Jupiter Street to commerce.
It is our ruling, we reiterate, that Jupiter Street lies as a mere boundary, a fact acknowledged by the authorities of
Makati and the National Government and, as a scrutiny of the records themselves reveals, by the petitioners
themselves, as the articles of incorporation of Bel-Air Village Association itself would confirm. As a consequence,
Jupiter Street was intended for the use by both -the commercial and residential blocks. It was not originally
constructed, therefore, for the exclusive use of either block, least of all the residents of Bel-Air Village, but, we
repeat, in favor of both, as distinguished from the general public.
When the wall was erected in 1966 and rebuilt twice, in 1970 and 1972, it was not for the purpose of physically
separating the two blocks. According to Ayala Corporation, it was put up to enable the Bel-Air Village Association
"better control of the security in the area, 41 and as the Ayala Corporation's "show of goodwill " 42 a view we find
acceptable in the premises. For it cannot be denied that at that time, the commercial area was vacant, "open for
[sic] animals and people to have access to Bel-Air Village." 43 There was hence a necessity for a wall.
In any case, we find the petitioners' theory, that maintaining the wall was a matter of a contractual obligation on
the part of Ayala, to be pure conjecture. The records do not establish the existence of such a purported
commitment. For one, the subdivision plans submitted did not mention anything about it. For another, there is
nothing in the "deed restrictions" that would point to any covenant regarding the construction of a wall. There is
no representation or promise whatsoever therein to that effect.
With the construction of the commercial buildings in 1974, the reason for which the wall was built- to secure Bel-
Air Village from interlopers had naturally ceased to exist. The buildings themselves had provided formidable
curtains of security for the residents. It should be noted that the commercial lot buyers themselves were forced to
demolish parts of the wall to gain access to Jupiter Street, which they had after all equal right to use.
In fine, we cannot hold the Ayala Corporation liable for damages for a commitment it did not make, much less for
alleged resort to machinations in evading it. The records, on the contrary, will show that the Bel-Air Village
Association had been informed, at the very outset, about the impending use of Jupiter Street by commercial lot
buyers. We quote:
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1. Exh. I of appellee, the memorandum of Mr. Carmelo Caluag, President of BAVA, dated May 10, 1972,
informing the BAVA Board of Governors and Barrio Council members about the future use of Jupiter Street
by the lot owners fronting Buendia Avenue. The use of Jupiter Street by the owners of the commercial lots
would necessarily require the demolition of the wall along the commercial block adjoining Jupiter Street.
 2. Exh. J of appellee, the minutes of the joint meeting of BAVA Board of Governors and the Bel-Air Barrio
Council where the matter that "Buendia lot owners will have equal rights to use Jupiter Street," and that
Ayala's "plans about the sale of lots and use of Jupiter Street" were precisely taken up. This confirms that
from the start BAVA was informed that the commercial lot owners will use Jupiter Street and that
necessarily the wall along Jupiter Street would be demolished.
3. Exh. 10, the letter of Mr. Demetrio Copuyoc to the President of BAVA, dated May 16, 1972, expressly
stating that vehicular entrance and exit to the commercial lots would be allowed along Jupiter and side
streets.
4. Exhs. 27, 27-A, 27-B, the letter of Atty. Salvador J. Lorayes dated June 30, 1972, with enclosed copy of
proposed restriction for the commercial lots to BAVA. He proposed restriction again expressly stated that
"Vehicular entrances and exits are allowed thru Jupiter and any side streets."
5. Exh. L of appellee, the minutes of the meeting of the members of BAVA, dated August 26, 1972, where it
is stated "Recently, Ayala Corporation informed the Board that the lots fronting Buendia Avenue will soon
be offered for sale, and that future lot owners will be given equal rights to use Jupiter Street as well as
members of the Association."
6. Exh. 25, the letter of Atty. Lorayes dated September 25, 1972, informing BAVA of the widening of Jupiter
Street by 3.5 meters to improve traffic flow in said street to benefit both the residents of Bel-Air and the
future owners of the commercial lots. 44
The petitioners cannot successfully rely on the alleged promise by Demetrio Copuyoc, Ayala's manager, to build
a "[f]ence along Jupiter with gate for entrance and/or exit 45 as evidence of Ayala's alleged continuing obligation
to maintain a wall between the residential and commercial sections. It should be observed that the fence referred
to included a "gate for entrance and or exit" which would have defeated the purpose of a wall, in the sense the
petitioners would put in one, that is to say, an impenetrable barrier. But as Ayala would point out subsequently,
the proposed fence was not constructed because it had become unnecessary when the commercial lot owners
commenced constructions thereon.
Be that as it may, the Court cannot visualize any purported obligation by Ayala Corporation to keep the wall on
the strength of this supposed promise alone. If truly Ayala promised anything assuming that Capuyoc was
authorized to bind the corporation with a promise it would have been with respect to the fence. It would not have
established the pre-existing obligation alleged with respect to the wall.
Obligations arise, among other things, from contract. 46 If Ayala, then, were bound by an obligation, it would have
been pursuant to a contract. A contract, however, is characterized by a "meeting of minds between two persons
. 47As a consensual relation, it must be shown to exist as a fact, clearly and convincingly. But it cannot be inferred
from a mishmash of circumstances alone disclosing some kind of an "understanding," when especially, those
disparate circumstances are not themselves incompatible with contentions that no accord had existed or had
been reached. 48
The petitioners cannot simply assume that the wall was there for the purpose with which they now give it, by the
bare coincidence that it had divided the residential block from the commercial section of Bel-Air. The burden of
proof rests with them to show that it had indeed been built precisely for that objective, a proof that must satisfy
the requirements of our rules of evidence. It cannot be made to stand on the strength of plain inferences.
b.
This likewise answers the petitioners' second query, whether or not the Court of Appeals had "arbitrarily ignore(d)
the decisive findings of the trial court."49 i.e., findings pointing to alleged acts performed by the Ayala Corporation
proving its commitment to maintain the wall abovesaid. Specifically, the petitioners refer to, among other things:
(1) Ayala's alleged announcement to Bel- Air Village Association members that "[the perimeter wall along Jupiter
Street will not be demolished," 50 (2) Ayala's alleged commitment "during the pendency of the case in the trial
court" to restore the wall; (3) alleged assurances by Copuyoc that the wall will not be removed; (4) alleged
contrivances by the corporation to make the association admit as members the commercial lot buyers which
provided them equal access to Jupiter Street; and (5) Ayala's donation to the association of Jupiter Street for
"private use" of Bel-Air residents. 51
682 (1903), where it was held that "whether the plaintiffs services were solicited or whether they were offered to
the defendant for his assistance, inasmuch as these services were accepted and made use of by the latter, we
must consider that there was a tacit and mutual consent as to the rendition of services." (At 686.) In that case,
the defendant had enormously benefitted from the services that entitled the plaintiff to compensation on the
theory that no one may unjustly enrich himself at the expense of another (Solutio indebiti) The facts of this case
differ.
As we stated, the Ayala Corporation's alleged conduct prior to or during the proceedings below are not
necessarily at war with claims that no commitment had been in fact made.
With respect to Ayala's alleged announcement before the association, the Court does not agree that Ayala had
categorically assumed as an obligation to maintain the wall "perpetually," i.e., until the year 2007 (the expiration
date under the "deed restrictions.") There is nothing in its statement that would bare any commitment. In
connection with the conference between the parties "during the pendency" of the trial, it is to be noted that the
Ayala Corporation denies having warranted the restoration of the said wall therein. What, on the other hand,
appears in the records is the fact that Ayala did make that promise, but provided that the Mayor allowed it. It
turned out, however, that the Mayor balked at the Idea. 52 But assuming that Ayala did promise to rebuild the wall
(in that conference), it does not seem to us that it did consequently promise to maintain it in perpetuity.
It is unfair to say, as the trial court did, that the Ayala had "contrived to make future commercial lot owners
special members of BAVA and thereby acquire equal right with the regular members thereof to use Jupiter
Street 53 since, as we stated, the commercial lot buyers have the right, in any event, to make use of Jupiter
Street, whether or not they are members of the association. It is not their memberships that give them the right to
use it. They share that right with Bel-Air residents from the outset.
The objective of making the commercial lot owners special members of the Bel-Air Village Association was not to
accord them equal access to Jupiter Street and inferentially, to give them the right to knock down the perimeter
wall. It was, rather, to regulate the use of the street owing precisely to the "planned" nature of Ayala's
development project, and real estate development in general, and this could best be done by placing the
commercial lot owners under the association's jurisdiction.
Moreover, Ayala's overtures with the association concerning the membership of commercial lot buyers therein
have been shown to be neither perfidious nor unethical nor devious (paraphrasing the lower court). We quote
anew:
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(7) On June 30, 1972, appellant informed BAVA that in a few months it shall subdivide and sell the
commercial lots bordering the north side of Buendia Avenue Extension from Reposo Street up to Zodiac
Street. Appellant also informed BAVA that it had taken all precautions and will impose upon the commercial
lot owners deed restrictions which will harmonize and blend with the development and welfare of Bel-Air
Village. Appellant further applied for special membership in BAVA of the commercial lot owners. A copy of
the deed restrictions for the commercial lots was also enclosed. The proposed deed restrictions shall
include the 19 meter set back of buildings from Jupiter Street, the requirement for parking space within the
lot of one (1) parking slot for every seventy five (75) meters of office space in the building and the limitation
of vehicular traffic along Buendia to entrance only, but allowing both vehicular entrance and vehicular exit
through Jupiter Street and any side street.
In its letter of July 10, 1972, BAVA acknowledged the above letter of appellant and informed the latter that the
application for special membership of the commercial lot owners in BAVA would be submitted to BAVA's board of
governors for decision.
(8) On September 25,1972, appellant notified BAVA that, after a careful study, it was finally decided that
the height limitation of buildings on the commercial lots shall be increased from 12.5 meters to 15 meters.
Appellant further informed BAVA that Jupiter Street shall be widened by 3.5 meters to improve traffic flow in
said street. BAVA did not reply to said letter, but on January 22, 1973, BAVA wrote a letter to the appellant
informing the latter that the Association had assessed the appellant, as special member of the association,
the amount of P40,795.00 (based on 81,590 square meters at P.50 per square meter) representing the
membership dues of the commercial lot owners for the year 1973, and requested the appellant to remit the
amount which its board of governors had already included in its current budget. In reply, appellant on
January 31, 1973 informed BAVA that due to the widening of Jupiter Street, the area of the lots which were
accepted by the Association as members was reduced to 76,726 square meters. Thus, the corresponding
due at P.50 per square meter should be reduced to P38,363.00. This amount, therefore, was remitted by
the appellant to BAVA. Since then, the latter has been collecting membership dues from the owners of the
commercial lots as special members of the Association. As a matter of fact, the dues were increased
several times. In 1980, the commercial lot owners were already being charged dues at the rate of P3.00
per square meter. (Domingo, TSN, p. 36, March 19, 1980). At this rate, the total membership dues of the
commercial lot owners amount to P230,178.00 annually based on the total area of 76,726 square meters of
the commercial lots. 54
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The alleged undertaking, finally, by Ayala in the deed of donation (over Jupiter Street) to leave Jupiter Street for
the private use of Bel-Air residents is belied by the very provisions of the deed. We quote:
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IV. That the offer made by the DONOR had been accepted by the DONEE subject to the condition that the
property will be used as a street for the use of the members of the DONEE, their families, personnel,
guests, domestic help and, under certain reasonable conditions and restrictions, by the general public, and
in the event that said lots or parts thereof cease to be used as such, ownership thereof shall automatically
revert to the DONOR. The DONEE shall always have Reposo Street, Makati Avenue, and Paseo de Roxas
open for the use of the general public. It is also understood that the DONOR shall continue the
maintenance of the street at its expense for a period of three years from date hereof." (Deed of Donation, p.
6, Exh. 7) 55
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The donation, on the contrary, gave the general public equal right to it.
The Court cannot then say, accepting the veracity of the petitioners' facts" enumerated above, that the Ayala
Corporation may be held liable for specific performance of a demandable obligation, let alone damages.
The Court adds that Ayala can hardly be held responsible for the alleged deterioration of "living and
environmental conditions" 56 of the Bel-Air area, as a consequence of "Ayala's authorized demolition of the
Jupiter perimeter wall in 1974-1975. " 57 We agree with Ayala that until 1976, "there was peace and quiet" at
Jupiter Street, as the petitioners' (Sangalang, Gaston, and Briones) complaints admit. Hence, the degeneration of
peace and order in Bel-Air cannot be ascribed to the destruction of the wall in 1974 and 1975.
What Ayala submits as the real cause was the opening of Jupiter Street to vehicular traffic in 1977., 58 But this
was upon orders of the Mayor, and for which the homeowners' association had precisely filed suit (Civil Case No.
34998) 59 to contest the act of the Mayor.
c.
This likewise disposes of the third question presented. The petitioners' reliance on Ayala's alleged conduct
(proving its alleged commitment), so we have ruled, is not well-taken. Ayala's alleged acts do not, by themselves,
reflect a commitment to maintain the wall in dispute. It cannot be therefore said that the Court of Appeals
"arbitrarily ignore(d]" 60 the lower court's findings. Precisely, it is the duty of the appellate court to review the
findings of the trial judge, be they of fact or law. 61 It is not bound by the conclusions of the judge, for which
reason it makes its own findings and arrives at its own conclusions. Unless a grave abuse of discretion may be
imputed to it, it may accept or reject the lower tribunal's determinations and rely solely on the records.
Accordingly, the Court affirms the Court of Appeals' holding that the Ayala Corporation, in its dealings with the
petitioners, the Bel-Air Village Association in particular, had "acted with justice, gave the appellees [petitioners]
their due and observed honesty and good faith." 62 "Therefore, under both Articles 19 and 21 of the Civil Code,
the appellant [Ayala] cannot be held liable for damages." 63
2. G.R. Nos. 74376, 76394, 78182, & 82281
Our decision also resolves, quite anticlimactically, these companion cases. But we do so for various other
reasons. In the Sangalang case, we absolve the Ayala Corporation primarily owing to our finding that it is not
liable for the opening of Jupiter Street to the general public. Insofar as these petitions are concerned, we likewise
exculpate the private respondents, not only because of the fact that Jupiter Street is not covered by the restrictive
easements based on the "deed restrictions" but chiefly because the National Government itself, through the
Metro Manila Commission (MMC), had reclassified Jupiter Street into high density commercial (C-3)
zone, 64 pursuant to its Ordinance No. 81-01. Hence, the petitioners have no cause of action on the strength
alone of the said "deed restrictions.
In view thereof, we find no need in resolving the questions raised as to procedure, since this disposition is
sufficient to resolve these cases.
It is not that we are saying that restrictive easements, especially the easements herein in question, are invalid or
ineffective. As far as the Bel-Air subdivision itself is concerned, certainly, they are valid and enforceable. But they
are, like all contracts, subject to the overriding demands, needs, and interests of the greater number as the State
may determine in the legitimate exercise of police power. Our jurisdiction guarantees sanctity of contract and is
said to be the "law between the contracting parties, 65 but while it is so, it cannot contravene 'law, morals, good
customs, public order, or public policy. 66 Above all, it cannot be raised as a deterrent to police power, designed
precisely to promote health, safety, peace, and enhance the common good, at the expense of contractual rights,
whenever necessary. In Ortigas & Co., Limited Partnership v. Feati Bank and Trust Co., 67 we are told:
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2. With regard to the contention that said resolution cannot nullify the contractual obligations assumed by
the defendant-appellee referring to the restrictions incorporated in the deeds of sale and later in the
corresponding Transfer Certificates of Title issued to defendant-appellee it should be stressed, that while
non-impairment of contracts is constitutionally guaranteed, the rule is not absolute, since it has to be
reconciled with the legitimate exercise of police power, i.e., "the power to prescribe regulations to promote
the health, morals, peace, education, good order or safety and general welfare of the people.' Invariably
described as "the most essential, insistent, and illimitable of powers" and "in a sense, the greatest and
most powerful attribute of government," the exercise of the power may be judicially inquired into and
corrected only if it is capricious, whimsical, unjust or unreasonable, there having been a denial of due
process or a violation of any other applicable constitutional guarantee. As this Court held through Justice
Jose P. Bengson in Philippine Long Distance Company vs. City of Davao, et al. police power 'is elastic and
must be responsive to various social conditions; it is not confined within narrow circumscriptions of
precedents resting on past conditions; it must follow the legal progress of a democratic way of life.' We
were even more emphatic in Vda. de Genuino vs. The Court of agrarian Relations, et al., when We
declared: "We do not see why public welfare when clashing with the individual right to property should not
be made to prevail through the state's exercise of its police power."
Resolution No. 27, 1960 declaring the western part of High way 54, now E. de los Santos Avenue (EDSA,
for short) from Shaw Boulevard to the Pasig River as an industrial and commercial zone, was obviously
passed by the Municipal Council of Mandaluyong, Rizal in the exercise of police power to safeguard or
promote the health, safety, peace, good order and general welfare of the people in the locality. Judicial
notice may be taken of the conditions prevailing in the area, especially where Lots Nos. 5 and 6 are
located. The lots themselves not only front the highway; industrial and commercial complexes have
flourished about the place. EDSA, a main traffic artery which runs through several cities and municipalities
in the Metro Manila area, supports an endless stream of traffic and the resulting activity, noise and pollution
are hardly conducive to the health, safety or welfare of the residents in its route. Having been expressly
granted the power to adopt zoning and subdivision ordinances or regulations, the municipality of
Mandaluyong, through its Municipal Council, was reasonably, if not perfectly, justified under the
circumstances, in passing the subject resolution. 68
xxxxxxxxx
Undoubtedly, the MMC Ordinance represents a legitimate exercise of police power. The petitioners have not
shown why we should hold otherwise other than for the supposed "non-impairment" guaranty of the Constitution,
which, as we have declared, is secondary to the more compelling interests of general welfare. The Ordinance
has not been shown to be capricious or arbitrary or unreasonable to warrant the reversal of the judgments so
appealed. In that connection, we find no reversible error to have been committed by the Court of Appeals.
WHEREFORE, premises considered, these petitions are DENIED No pronouncement as to costs.
IT IS SO ORDERED.
Fernan, (C.J.), Melencio-Herrera, Gutierrez, Jr., Cruz, Gancayco, Bidin, Cortes, Griño-Aquino, Medialdea and
Regalado, JJ., concur.
Narvasa, J., on leave.
Paras, J., Took no part;
Feliciano, J., Took no part;
Padilla, J., Took no part;
Footnotes 10. That in 1975, the Municipal Government of Makati enacted a zoning ordinance and classified the blocks
between Buendia Avenue Extension and Jupiter Street as an administrative office zone with the north-northeast
1 Consolidated pursuant to our Resolution dated July 18, 1988. boundary of the zone extending up to the center line of Jupiter street. Under the said ordinance, Bel-Air Village
2 ollo, G.R. No. 71169, 102-113. The decision of the Court of Appeals makes mention of specified areas in has likewise been called into a residential zone, with its boundary at the southwest being delimited only up to the
Makati having been converted into a "High Intensity Commercial Zone" as well as "Low Intensity Residential" center line of the Jupiter Street. Similarly, under Ordinance No. 81-01 of the Metro Manila Commission, Jupiter
(see page 9 of this Decision). This should be either "high" or "low" density. Street has been made a common boundary of the commercial blocks along the north side of the Buendia Avenue
3 Jurado Desiderio, J.; Campos, Jr., Jose and Camilon, Serafin, JJ., Concurring. Pascual, Crisolito J., Dissenting. Extension and the Bel-Air Village Subdivision, so that the said street is subject to the common use of the owners
The decision set aside, dated October 1, 1982, was penned by Hon. Gregorio Pineda, Presiding Judge, Court of of both the commercial blocks as well as the residential areas.
First Instance of Rizal, Seventh Judicial District, Pasig, Metro Manila, Branch XXI. 11. That the restoration reconstruction of the wall on the blocks along the southern side of Jupiter Street will
4 Rollo, Id., 128. come the entire southside portion of Jupiter Street and will illegally deprive the abutting lot owners on the
5 Civil Case No. 49217, Hon. Rafael T. Mendoza, Presiding Judge; rollo, G.R. No. 74376, 82. commercial blocks of their rights to have the street kept open and to have access to the street, in violation of Act
6 Rollo. Id. 496, as amended by Republic Act 440.
7 Camilon, Serafin, J.; Pascual. Crisolito Campos Jr., Jose, and Jurado, Desiderio, JJ. Concurring. 36 See Id., 169.
8 Rollo, Id., 34; emphasis in original. 37 Exhibits Nos. "18" and "19"; see Id., 168.
9 Rollo, G.R. No. 76394, 24-25. 38 Id., 116.
10 Civil Case No. 33112; see Id., 8, 10. 39 Id.
11 Jurado, Desiderio, J.; Campos, J., Jose and Camilon, Serafin JJ. Concurring; Pascual, Crisolito J., Chairman, 40 Id., 66.
on leave. 41 Rollo, G.R. No. 71169, Id., 124.
12 First Division. 42 Id.
13 Rollo, Id., 81. 43 Id.
14 Per Resolution, dated February 22, 1988. 44 Id., 124-126; emphasis in original.
15 Per Resolution, dated April 4, 1988. 45 Id., 52.
16 See fn. 1, supra. 46 CIVIL CODE, art. 1157, par. (2).
17 Rollo, G.R, No. 78182, 36-38. 47 Supra, art. 1305.
18 Camilon, Serafin, J.; Pronove, Ricardo and Cacdac, Bonifacio, JJ., Concurring. 48 This case should be distinguished from Perez v. Pomar, 2 Phil.
19 Civil Case No. 27719, Regional Trial Court, Makati, Branch 145. 49 Rollo, Id., 38.
20 Rollo, G.R. No. 82281, 33-35. 50 Id., 40.
21 Civil Case No. 8936, Regional Trial Court of Makati, Branch CXL, Hon. Ansberto P. Paredes, presiding, see 51 Id., 47.
Id., 32. 52 Id., 183-185.
22 Bengzon, Eduardo, J.; Kapunan, Santiago and Buena, Arturo, JJ., Concurring. 53 Id., 92.
23 Rollo, Id., 38. 54 Id., 105-106.
24 See supra, 103-108. 55 Id., 193; emphasis in original.
25 Id., 32. 56 Id., 45.
26 Id., 38. 57 Id.
27 Id., 50-51. 58 Id., 108-110.
28 78 Phil. 196 (1947). 59 Id., 193.
29 Supra, 209; emphasis supplied. 60 Id., 38.
30 No. L-14551, July 31, 1961, 2 SCRA 873. 61 RULES OF COURT, Rule 46, sec. 18.
31 Supra 877. 62 Rollo, G.R. No. 71169, Id., 126.
32 Supra. 63 Id.
33 No. L-60129, July 29, 1983, 123 SCRA 799. 64 See rollo, G.R. No. 71169, Id., 117.
34 The rule states: Questions that may be decided. No which does not affect the jurisdiction over the subject 65 CIVIL CODE, supra, art. 1159.
matter will be considered unless stated in the assignment of errors and properly argued in the brief, save as the 66 Supra, art. 1306.
court, as its option, may notice plain errors See rollo, G.R. No. 71169, Id., 168. The pertinent paragraph of the 67 No. L-24670, December 14, 1979, 94 SCRA 533.
answer states: 68 Supra, 545-547.
G.R. No. 115044 January 27, 1995 1. Whether P.D. 771 which revoked all existing Jai-Alai franchisers issued by local governments as of 20
August 1975 is unconstitutional.
HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and the City of Manila, petitioners,
vs. 2. Assuming that the City of Manila had the power on 7 September 1971 to issue a Jai-Alai franchise to
HON. FELIPE G. PACQUING, as Judge, branch 40, Regional Trial Court of Manila and ASSOCIATED Associated Development Corporation, whether the franchise granted is valied considering that the
CORPORATION, respondents. franchise has no duration, and appears to be granted in perpetuity.

G.R. No. 117263 January 27, 1995 3. Whether the City of Manila had the power to issue a Jai-Alai franchise to Associated Development
Corporation on 7 September 1971 in view of executive Order No. 392 dated 1 January 1951 which
TEOFISTO GUINGONA, JR. and DOMINADOR R. CEPEDA, petitioners, transferred from local governments to the Games and Amusements Board the power to regulate Jai-Alai.1
vs.
HON. VETINO REYES and ASSOCIATED DEVELOPMENT CORPORATION, respondents. On 15 September 1994, respondent Associated Development Corporation (ADC) filed a petition for
prohibition, mandamus, injunction and damages with prayer for temporary restraining order and/or writ of
PADILLA, J.: preliminary injunction in the Regional Trial Court of Manila against petitioner Guingona and then GAB chairman
Sumulong, docketed as Civil Case No. 94-71656, seeking to prevent GAB from withdrawing the provisional
authority that had earlier been granted to ADC. On the same day, the RTC of Manila, Branch 4, through presiding
These two (2) cases which are inter-related actually involve simple issues. if these issues have apparently
Judge Vetino Reyes, issued a temporary restraining order enjoining the GAB from withdrawing ADC's provisional
become complicated, it is not by reason of their nature because of the events and dramatis personae involved.
authority. This temporary restraining order was converted into a writ of preliminary injunction upon ADC's posting
of a bond in the amount of P2,000,000.00.2
The petition in G.R. No. 115044 was dismissed by the First Division of this Court on 01 September 1994 based
on a finding that there was "no abuse of discretion, much less lack of or excess of jurisdiction, on the part of
Subsequently, also in G.R. No. 115044, the Republic of the Philippines, through the Games and Amusements
respondent judge [Pacquing]", in issuing the questioned orders. Judge Pacquing had earlier issued in Civil Case
Board, filed a "Motion for Intervention; for Leave to File a Motion for reconsideration in Intervention; and to Refer
No. 88-45660, RTC of Manila, Branch 40, the following orders which were assailed by the Mayor of the City of
the case to the Court En Banc" and later a "Motion for Leave to File Supplemental Motion for Reconsideration-in-
Manila, Hon. Alfredo S. Lim, in said G.R. No. 115044:
Intervention and to Admit Attached Supplemental Motion for Reconsideration-in-Intervention".
a. order dated 28 March 1994 directing Manila mayor Alfredo S. Lim to issue the permit/license to operate
In an En Banc Resolution dated 20 September 1994, this Court referred G.R. No. 115044 to the Court En
the jai-alai in favor of Associated Development Corporation (ADC).
Banc and required the respondents therein to comment on the aforementioned motions.
b. order dated 11 April 1994 directing mayor Lim to explain why he should not be cited for contempt for
Meanwhile, Judge Reyes on 19 October 1994 issued another order, this time, granting ADC a writ of
non-compliance with the order dated 28 March 1994.
preliminary mandatory injunction against Guingona and GAB to compel them to issue in favor of ADC the
authority to operate jai-alai.
c. order dated 20 April 1994 reiterating the previous order directing Mayor Lim to immediately issue
thepermit/license to Associated Development Corporation (ADC).
Guingona, as executive secretary, and Dominador Cepeda, Jr. as the new GAB chairman, then filed the petition
in G.R. No. 117263 assailing the abovementioned orders of respondent Judge Vetino Reyes.
The order dated 28 march 1994 was in turn issued upon motion by ADC for execution of a final judgment
rendered on 9 September 1988 which ordered the Manila Mayor to immediately issue to ADC
On 25 October 1994, in G.R. No. 117263, this Court granted petitioner's motion for leave to file supplemental
the permit/license to operate the jai-alai in Manila, under Manila Ordinance No. 7065.
petition and to admit attached supplemental petition with urgent prayer for restraining order. The Court further
required respondents to file their comment on the petition and supplemental petition with urgent prayer for
On 13 September 1994, petitioner Guingona (as executive secretary) issued a directive to then chairman of the restraining order. The Court likewise set the case and all incidents thereof for hearing on 10 November 1994.
Games and Amusements Board (GAB) Francisco R. Sumulong, jr. to hold in abeyance the grant of authority, or if
any had been issued, to withdraw such grant of authority, to Associated Development Corporation to operate the
At the hearing on 10 November 1994, the issues to be resolved were formulated by the Court as follows:
jai-alai in the City of Manila, until the following legal questions are properly resolved:

1. whether or not intervention by the Republic of the Philippines at this stage of the proceedings is proper;
 2. assuming such intervention is proper, whether or not the Associated Development Corporation has a
valid and subsisting franchise to maintain and operate the jai-alai;
3. whether or not there was grave abuse of discretion committed by respondent Judge Reyes in issuing the
aforementioned temporary restraining order (later writ of preliminary injunction); and
4. whether or not there was grave abuse of discretion committed by respondent Judge Reyes in issuing the
aforementioned writ of preliminary mandatory injunction.
On the issue of the propriety of the intervention by the Republic of the Philippines, a question was raised during
the hearing on 10 November 1994 as to whether intervention in G.R. No. 115044 was the proper remedy for the
national government to take in questioning the existence of a valid ADC franchise to operate the jai-alai or
whether a separate action for quo warranto under Section 2, Rule 66 of the Rules of Court was the proper
remedy.
We need not belabor this issue since counsel for respondent ADC agreed to the suggestion that this Court once
and for all settle all substantive issues raised by the parties in these cases. Moreover, this Court can consider the
petition filed in G.R. No. 117263 as one for quo warranto which is within the original jurisdiction of the Court
under section 5(1), Article VIII of the Constitution. 3
On the propriety of intervention by the Republic, however, it will be recalled that this Court in Director of Lands v.
Court of Appeals (93 SCRA 238) allowed intervention even beyond the period prescribed in Section 2 Rule 12 of
the Rules of Court. The Court ruled in said case that a denial of the motions for intervention would "lead the Court
to commit an act of injustice to the movants, to their successor-in-interest and to all purchasers for value and in
good faith and thereby open the door to fraud, falsehood and misrepresentation, should intervenors' claim be
proven to be true."
In the present case, the resulting injustice and injury, should the national government's allegations be proven
correct, are manifest, since the latter has squarely questioned the very existence of a valid franchise to maintain
and operate the jai-alai (which is a gambling operation) in favor of ADC. As will be more extensively discussed
later, the national government contends that Manila Ordinance No. 7065 which purported to grant to ADC a
franchise to conduct jai-alai operations is void and ultra vires since Republic Act No. 954, approved on 20 June
1953, or very much earlier than said Ordinance No. 7065, the latter approved 7 September 1971, in Section 4
thereof, requires a legislative franchise, not a municipal franchise, for the operation of jai-alai. Additionally, the
national government argues that even assuming, arguendo, that the abovementioned ordinance is valid, ADC's
franchise was nonetheless effectively revoked by Presidential decree No. 771, issued on 20 August 1975, Sec. 3
of which expressly revoked all existing franchises and permits to operate all forms of gambling facilities (including
the jai-alai) issued by local governments.
On the other hand, ADC's position is that Ordinance No. 7065 was validly enacted by the City of Manila pursuant
to its delegated powers under it charter, Republic Act No. 409. ADC also squarely assails the constitutionality of
PD No. 771 as violative of the equal protection and non-impairment clauses of the Constitution. In this
connection, counsel for ADC contends that this Court should really rule on the validity of PD No. 771 to be able to
determine whether ADC continues to possess a valid franchise.
It will undoubtedly be a grave injustice to both parties in this case if this Court were to shirk from ruling on the
issue of constitutionality of PD No. 771. Such issue has, in our view, become the very lis mota in resolving the
present controversy, in view of ADC's insistence that it was granted a valid and legal franchise by Ordinance No.
7065 to operate the jai-alai.
The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid and constitutional until or
unless otherwise ruled by this Court. Not only this; Article XVIII Section 3 of the Constitution states:
Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of instructions and other
executive issuances not inconsistent with this Constitution shall remain operative until amended, repealed
or revoked.
There is nothing on record to show or even suggest that PD No. 771 has been repealed, altered or amended by
any subsequent law or presidential issuance (when the executive still exercised legislative powers).
Neither can it be tenably stated that the issue of the continued existence of ADC's franchise by reason of the
unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision of the Court's First Division in
said case, aside from not being final, cannot have the effect of nullifying PD No. 771 as unconstitutional, since
only the Court En Banc has that power under Article VIII, Section 4(2) of the Constitution.4
And on the question of whether or not the government is estopped from contesting ADC's possession of a valid
franchise, the well-settled rule is that the State cannot be put in estoppel by the mistakes or errors, if any, of its
officials or agents (Republic v. Intermediate Appellate Court, 209 SCRA 90)
Consequently, in the light of the foregoing expostulation, we conclude that the republic (in contra distinction to the
City of Manila) may be allowed to intervene in G.R. No. 115044. The Republic is intervening in G.R. No. 115044
in the exercise, not of its business or proprietary functions, but in the exercise of its governmental functions to
protect public morals and promote the general welfare.
II
Anent the question of whether ADC has a valid franchise to operate the Jai-Alai de Manila, a statement of the
pertinent laws is in order.
1. The Charter of the City of Manila was enacted by Congress on 18 June 1949. Section 18 thereof provides:
Sec. 18. Legislative Powers. — The Municipal Board shall have the following legislative powers:
xxx xxx xxx
 (jj) To tax, license, permit and regulate wagers or betting by the public on boxing, sipa, bowling, billiards,
pools, horse and dog races, cockpits, jai-alai, roller or ice-skating on any sporting or athletic contests, as
well as grant exclusive rights to establishments for this purpose, notwithstanding any existing law to the
contrary.
2. On 1 January 1951, Executive Order No. 392 was issued transferring the authority to regulate jai-alais from
local government to the Games and Amusements Board (GAB).
3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An Act to Prohibit With Horse Races and
Basque Pelota Games (Jai-Alai), And To Prescribe Penalties For Its Violation". The provisions of Republic Act
No. 954 relating to jai-alai are as follows:
Sec. 4. No person, or group of persons other than the operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games (Jai-alai), shall offer, to take or arrange bets on any basque
pelota game or event, or maintain or use a totalizator or other device, method or system to bet or gamble
on any basque pelota game or event. (emphasis supplied).
Sec. 5. No person, operator or maintainer of a fronton with legislative franchise to conduct basque pelota
games shall offer, take, or arrange bets on any basque pelota game or event, or maintain or use a
totalizator or other device, method or system to bet or gamble on any basque pelota game or event outside
the place, enclosure, or fronton where the basque pelota game is held. (emphasis supplied).
4. On 07 September 1971, however, the Municipal Board of Manila nonetheless passed Ordinance No. 7065
entitled "An Ordinance Authorizing the Mayor To Allow And Permit The Associated Development Corporation To
Establish, Maintain And Operate A Jai-Alai In The City Of Manila, Under Certain Terms And Conditions And For
Other Purposes."
5. On 20 August 1975, Presidential Decree No. 771 was issued by then President Marcos. The decree, entitled
"Revoking All Powers and Authority of Local Government(s) To Grant Franchise, License or Permit And Regulate
Wagers Or Betting By The Public On Horse And Dog Races, Jai-Alai Or Basque Pelota, And Other Forms Of
Gambling", in Section 3 thereof, expressly revoked all existing franchises and permits issued by local
governments.
6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act granting The Philippine Jai-Alai And
Amusement Corporation A Franchise To Operate, Construct And Maintain A Fronton For Basque Pelota And
Similar Games of Skill In THE Greater Manila Area," was promulgated.
7 On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section 6, of the Constitution, which allowed
the incumbent legislative powers until the first Congress was convened, issued Executive Order No. 169
expressly repealing PD 810 and revoking and cancelling the franchise granted to the Philippine Jai-Alai and
Amusement Corporation.
Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively removed the power of the Municipal
Board of Manila to grant franchises for gambling operations. It is argued that the term "legislative franchise" in
Rep. Act No. 954 is used to refer to franchises issued by Congress.
On the other hand, ADC contends that Republic Act N. 409 (Manila Chapter) gives legislative powers to the
Municipal Board to grant franchises, and since Republic Act No. 954 does not specifically qualify the word
"legislative" as referring exclusively to Congress, then Rep. Act No. 954 did not remove the power of the
Municipal Board under Section 18(jj) of Republic Act No. 409 and consequently it was within the power of the
City of Manila to allow ADC to operate the jai-alai in the City of Manila.
On this point, the government counter-argues that the term "legislative powers" is used in Rep. Act No. 409
merely to distinguish the powers under Section 18 of the law from the other powers of the Municipal Board, but
that the term "legislative franchise" in Rep. Act No. 954 refers to a franchise granted solely by Congress.
Further, the government argues that Executive Order No. 392 dated 01 January 1951 transferred even the power
to regulate Jai-Alai from the local governments to the Games and Amusements Board (GAB), a national
government agency.
It is worthy of note that neither of the authorities relied upon by ADC to support its alleged possession of a valid
franchise, namely the Charter of the City of Manila (Rep. Act No. 409) and Manila Ordinance No. 7065 uses the
word "franchise". Rep. Act No. 409 empowers the Municipal Board of Manila to "tax, license,
permit and regulatewagers or betting" and to "grant exclusive rights to establishments", while Ordinance No.
7065 authorized the Manila City Mayor to "allow and permit" ADC to operate jai-alai facilities in the City of Manila.
It is clear from the foregoing that Congress did not delegate to the City of Manila the power "to franchise" wagers
or betting, including the jai-alai, but retained for itself such power "to franchise". What Congress delegated to the
City of Manila in Rep. Act No. 409, with respect to wagers or betting, was the power to "license, permit, or
regulate" which therefore means that a license or permit issued by the City of Manila to operate a wager or
betting activity, such as the jai-alai where bets are accepted, would not amount to something meaningful
UNLESS the holder of the permit or license was also FRANCHISED by the national government to so operate.
Moreover, even this power to license, permit, or regulate wagers or betting on jai-alai was removed from local
governments, including the City of Manila, and transferred to the GAB on 1 January 1951 by Executive Order No.
392. The net result is that the authority to grant franchises for the operation of jai-alai frontons is in Congress,
while the regulatory function is vested in the GAB.
In relation, therefore, to the facts of this case, since ADC has no franchise from Congress to operate the jai-alai,
it may not so operate even if its has a license or permit from the City Mayor to operate the jai-alai in the City of
Manila.
It cannot be overlooked, in this connection, that the Revised Penal Code punishes gambling and betting under
Articles 195 to 199 thereof. Gambling is thus generally prohibited by law, unless another law is enacted
by Congress expressly exempting or excluding certain forms of gambling from the reach of criminal law. Among
these form the reach of criminal law. Among these forms of gambling allowed by special law are the horse races
authorized by Republic Acts Nos. 309 and 983 and gambling casinos authorized under Presidential Decree No.
1869.
While jai-alai as a sport is not illegal per se, the accepting of bets or wagers on the results of jai-alai games is
undoubtedly gambling and, therefore, a criminal offense punishable under Articles 195-199 of the Revised Penal
Code, unless it is shown that a later or special law had been passed allowing it. ADC has not shown any such
special law.
Republic Act No. 409 (the Revised Charter of the City of Manila) which was enacted by Congress on 18 June
1949 gave the Municipal Board certain delegated legislative powers under Section 18. A perusal of the powers
enumerated under Section 18 shows that these powers are basically regulatory in nature.5 The regulatory nature
of these powers finds support not only in the plain words of the enumerations under Section 28 but also in this
Court's ruling in People v. Vera (65 Phil. 56).
In Vera, this Court declared that a law which gives the Provincial Board the discretion to determine whether or
not a law of general application (such as, the Probation law-Act No. 4221) would or would not be operative within
the province, is unconstitutional for being an undue delegation of legislative power.
From the ruling in Vera, it would be logical to conclude that, if ADC's arguments were to prevail, this Court would
likewise declare Section 18(jj) of the Revised Charter of Manila unconstitutional for the power it would delegate to
the Municipal Board of Manila would give the latter the absolute and unlimited discretion to render the penal code
provisions on gambling inapplicable or inoperative to persons or entities issued permits to operate gambling
establishments in the City of Manila.
We need not go to this extent, however, since the rule is that laws must be presumed valid, constitutional and in
harmony with other laws. Thus, the relevant provisions of Rep. Acts Nos. 409 and 954 and Ordinance No. 7065
should be taken together and it should then be clear that the legislative powers of the Municipal Board should be
understood to be regulatory in nature and that Republic Act No. 954 should be understood to refer
to congressional franchises, as a necessity for the operation of jai-alai.
We need not, however, again belabor this issue further since the task at hand which will ultimately, and with
finality, decide the issues in this case is to determine whether PD No. 771 validly revoked ADC's franchise to
operate the jai-alai, assuming (without conceding) that it indeed possessed such franchise under Ordinance No.
7065.
ADC argues that PD No. 771 is unconstitutional for being violative of the equal protection and non-impairment
provisions of the Constitution. On the other hand, the government contends that PD No. 771 is a valid exercise of
the inherent police power of the State.
The police power has been described as the least limitable of the inherent powers of the State. It is based on the
ancient doctrine — salus populi est suprema lex (the welfare of the people is the supreme law.) In the early case
of Rubi v. Provincial Board of Mindoro (39 Phil. 660), this Court through Mr. Justice George A. Malcolm stated
thus:
The police power of the State . . . is a power co-extensive with self-protection, and is not inaptly termed the
"law of overruling necessity." It may be said to be that inherent and plenary power in the State which
enables it to prohibit all things hurtful to the comfort, safety and welfare of society. Carried onward by the
current of legislation, the judiciary rarely attempts to dam the onrushing power of legislative discretion,
provided the purposes of the law do not go beyond the great principles that mean security for the public
welfare or do not arbitrarily interfere with the right of the individual.
In the matter of PD No. 771, the purpose of the law is clearly stated in the "whereas clause" as follows:
WHEREAS, it has been reported that in spite of the current drive of our law enforcement agencies against
vices and illegal gambling, these social ills are still prevalent in many areas of the country;
WHEREAS, there is need to consolidate all the efforts of the government to eradicate and minimize vices
and other forms of social ills in pursuance of the social and economic development program under the new
society;
WHEREAS, in order to effectively control and regulate wagers or betting by the public on horse and dog
races, jai-alai and other forms of gambling there is a necessity to transfer the issuance of permit and/or
franchise from local government to the National Government.
It cannot be argued that the control and regulation of gambling do not promote public morals and welfare.
Gambling is essentially antagonistic and self-reliance. It breeds indolence and erodes the value of good, honest
and hard work. It is, as very aptly stated by PD No. 771, a vice and a social ill which government must minimize
(if not eradicate) in pursuit of social and economic development.
In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No. 111097), this Court stated thru Mr. Justice
Isagani A. Cruz:
In the exercise of its own discretion, the legislative power may prohibit gambling altogether or allow it
without limitation or it may prohibit some forms of gambling and allow others for whatever reasons it may
consider sufficient. Thus, it has prohibited jueteng and monte but permits lotteries, cockfighting and horse-
racing. In making such choices, Congress has consulted its own wisdom, which this Court has no authority
to review, much less reverse. Well has it been said that courts do not sit to resolve the merits of conflicting
theories. That is the prerogative of the political departments. It is settled that questions regarding wisdom,
morality and practicability of statutes are not addressed to the judiciary but may be resolved only by the
executive and legislative departments, to which the function belongs in our scheme of government.
(Emphasis supplied)
Talks regarding the supposed vanishing line between right and privilege in American constitutional law has no
relevance in the context of these cases since the reference there is to economic regulations. On the other hand,
jai-alai is not a mere economic activity which the law seeks to regulate. It is essentially gambling and whether it
should be permitted and, if so, under what conditions are questions primarily for the lawmaking authority to
determine, talking into account national and local interests. Here, it is the police power of the State that is
paramount.
ADC questions the motive for the issuance of PD Nos. 771. Clearly, however, this Court cannot look into
allegations that PD No. 771 was enacted to benefit a select group which was later given authority to operate the
jai-alai under PD No. 810. The examination of legislative motivation is generally prohibited. (Palmer v.
Thompson, 403 U.S. 217, 29 L. Ed. 2d 438 [1971] per Black, J.) There is, the first place, absolute lack of
evidence to support ADC's allegation of improper motivation in the issuance of PD No. 771. In the second place,
as already averred, this Court cannot go behind the expressed and proclaimed purposes of PD No. 771, which
are reasonable and even laudable.
It should also be remembered that PD No. 771 provides that the national government can subsequently grant
franchises "upon proper application and verification of the qualifications of the applicant." ADC has not alleged
that it filed an application for a franchise with the national government subsequent to the enactment of PD No.
771; thus, the allegations abovementioned (of preference to a select group) are based on conjectures,
speculations and imagined biases which do not warrant the consideration of this Court.
On the other hand, it is noteworthy that while then president Aquino issued Executive Order No. 169 revoking PD
No. 810 (which granted a franchise to a Marcos-crony to operate the jai-alai), she did not scrap or repeal PD No.
771 which had revoked all franchises to operate jai-alais issued by local governments, thereby re-affirming the
government policy that franchises to operate jai-alais are for the national government (not local governments) to
consider and approve.
On the alleged violation of the non-impairment and equal protection clauses of the Constitution, it should be
remembered that a franchise is not in the strict sense a simple contract but rather it is more importantly, a mere
privilege specially in matters which are within the government's power to regulate and even prohibit through the
exercise of the police power. Thus, a gambling franchise is always subject to the exercise of police power for the
public welfare.
In RCPI v. NTC (150 SCRA 450), we held that:
A franchise started out as a "royal privilege or (a) branch of the King's prerogative, subsisting in the hands
of a subject." This definition was given by Finch, adopted by Blackstone, and accepted by every authority
since . . . Today, a franchise being merely a privilege emanating from the sovereign power of the state and
owing its existence to a grant, is subject to regulation by the state itself by virtue of its police power through
its administrative agencies.
There is a stronger reason for holding ADC's permit to be a mere privilege because jai-alai, when played for bets,
is pure and simple gambling. To analogize a gambling franchise for the operation of a public utility, such as public
transportation company, is to trivialize the great historic origin of this branch of royal privilege.
As earlier noted, ADC has not alleged ever applying for a franchise under the provisions of PD No. 771. and yet,
the purpose of PD No. 771 is quite clear from its provisions, i.e., to give to the national government the exclusive
power to grant gambling franchises. Thus, all franchises then existing were revoked but were made subject to
reissuance by the national government upon compliance by the applicant with government-set qualifications and
requirements.
There was no violation by PD No. 771 of the equal protection clause since the decree revoked all franchises
issued by local governments without qualification or exception. ADC cannot allege violation of the equal
protection clause simply because it was the only one affected by the decree, for as correctly pointed out by the
government, ADC was not singled out when all jai-alai franchises were revoked. Besides, it is too late in the day
for ADC to seek redress for alleged violation of its constitutional rights for it could have raised these issues as
early as 1975, almost twenty 920) years ago.
Finally, we do not agree that Section 3 of PD No. 771 and the requirement of a legislative franchise in Republic
Act No. 954 are "riders" to the two 92) laws and are violative of the rule that laws should embrace one subject
which shall be expressed in the title, as argued by ADC. In Cordero v. Cabatuando (6 SCRA 418), this Court
ruled that the requirement under the constitution that all laws should embrace only one subject which shall be
expressed in the title is sufficiently met if the title is comprehensive enough reasonably to include the general
object which the statute seeks to effect, without expressing each and every end and means necessary or
convenient for the accomplishing of the objective.
III
On the issue of whether or not there was grave abuse of discretion committed by respondent Judge Reyes in
issuing the temporary restraining order (later converted to a writ of preliminary injunction) and the writ of
preliminary mandatory injunction, we hold and rule there was.
Section 3, Rule 58 of the rules of Court provides for the grounds for the issuance of a preliminary injunction.
While ADC could allege these grounds, respondent judge should have taken judicial notice of Republic Act No.
954 and PD 771, under Section 1 rule 129 of the Rules of court. These laws negate the existence of any legal
right on the part of ADC to the reliefs it sought so as to justify the issuance of a writ of preliminary injunction.
since PD No. 771 and Republic Act No. 954 are presumed valid and constitutional until ruled otherwise by the
Supreme Court after due hearing, ADC was not entitled to the writs issued and consequently there was grave
abuse of discretion in issuing them.
WHEREFORE, for the foregoing reasons, judgment is hereby rendered:
1. allowing the Republic of the Philippines to intervene in G.R. No. 115044.
2. declaring Presidential Decree No. 771 valid and constitutional.
3. declaring that respondent Associated Development corporation (ADC) does not possess the required
congressional franchise to operate and conduct the jai-alai under Republic Act No. 954 and Presidential
Decree No. 771.
 4. setting aside the writs of preliminary injunction and preliminary mandatory injunction issued by the city of Manila to issue a jai-alai franchise in view of Executive Order 392 which transferred from local
respondent Judge Vetino Reyes in civil Case No. 94-71656. governments to the GAB the power to regulate jai-alai.

SO ORDERED.
Feliciano, Bidin, Regalado, Romero, Bellosillo and Mendoza, JJ., concur.
Narvasa, C.J. and Francisco, JJ., took no part.
Separate Opinions
KAPUNAN, J., concurring:
Government encroachments on private property however, valid, are always subject to limitations imposed by the
due process and impairment of contracts clauses of the Constitution. The government challenge in the case at
bench, ostensibly involving a franchise granted pursuant to legitimate local legislative authority, on the surface
appears to be an easy one, clothed, as it were in the State's inherent and almost illimitable prerogative to
promote the general welfare and the common good. As the challenge involves a facile conflict between good and
evil, between a universally recognized vice and the State's virtuous posture, the instant case lends itself to easy
adjudication.
Not necessarily. Economic realities have blurred distinctions. The State itself, though in virtuous garb, has at
various times allowed a relaxation of existing rules proscribing gambling and devised a system of regulations,
local and national, through which gambling and otherwise illicit gaming operations may be maintained by those
licensed to do so. As the system has never been perfect, conflict, such as that which existed in the case at
bench, occasionally arises.
Reacting to the cancellation of its provisional authority to maintain jai-alai operations, ADC, on September 15,
1994 filed a petition for prohibition, mandamus, injunction and damages with prayer for temporary restraining
order and writ of preliminary injunction in the Manila Regional Trial Court of against Executive Secretary
Guingona and Chairman Sumulong. The Regional Trial court of manila, Branch 4, through Judge Vetino Reyes
on the same day issued an order enjoining the Executive Secretary and the GAB Chairman from implementing
their directive and memorandum, respectively.
On September 16, 1994 GAB, representing the Republic of the Philippines, filed a motion for intervention, for
leave to file a motion for reconsideration-in-intervention and for reference of the case to the Court en banc in
G.R. No. 115044. Acting on this motion, the First Division referred the case to the Court en banc, which, in a
resolution dated 20 September 1994, accepted the same and required the respondents therein to comment.
On October 11, 1994 the Executive Secretary and the new GAB Chairman Domingo Cepeda, Jr. filed with this
Court a petition for certiorari, prohibition and mandamus assailing Judge Vetino Reyes' earlier order.
On October 19. 1994, Judge Reyes issued another order granting the ADB's motion for a writ of
preliminary mandatory injunction against the Executive Secretary and the GAB Chairman and to compel them to
issue the necessary authority, licenses and working permits to the ADC, its personnel and players.
The government sought leave to file a supplemental petition (and to admit attached supplemental petition) with
urgent prayer for a restraining order assailing the October 19, 1994 Order of Judge Reyes. We granted leave to
file said supplemental petition and to admit supplemental petition and required respondents therein to file their
comment on October 25, 1994.

The ADC maintains it original position that Ordinance No. 7065, enacted pursuant to the Charter of the City of
The constitutionality of P.D. 771 was not in issue in Lim vs. Pacquing, promulgated by the court's first Division
Manila under Republic Act No. 409 granted a valid and subsisting municipal franchise for the operation of the
last September, 1994, where this court sustained an order by Judge Pacquing issued in Civil Case No. 88-45660
Basque pelota game jai alai. In response to the government's vehement objections against ADC's operation of its
compelling Manila Mayor Alfredo S. Lim to issue a permit to operate a jail fronton in favor of the Associated
gambling operations2 the ADC for the first time challenged the constitutional validity of P.D. No. 771 insofar as it
Development Corporation (ADC) pursuant to Manila City Ordinance No. 7065.
revoked the authority granted to it by Ordinance No. 7065 as violative of the non-impairment of contracts and
equal protection clauses of the constitution. Ordinance 7065 reads:
After the City of Manila subsequently granted ADC a permit to operate the jai-alai fronton, Chairman Francisco
Sumulong, Jr. of the Games and Amusements Board issued on September 9, 1994 a provisional authority to
Sec. 1. The Mayor is authorized, as he is hereby authorized to allow and permit the Associated
open the fronton subject to certain conditions imposed therein. In relation to this, the GAB likewise issued to the
Development Corporation to establish, maintain and operate a jai-alai in the City of Manila under the
ADC, on 12 September 1994, License No. 94-008 upon payment of the corresponding fees.
following terms and conditions and such other terms and conditions as he (the Mayor) may prescribe for
good reasons of general interest:
On September 13, 1994, Executive Secretary Teofisto Guingona directed GAB Chairman Sumulong "to hold in
abeyance the grant of authority or if any has been issued, to withdraw such grant of authority"1 to the ADC.
a. That the construction, establishment, and maintenance of the jai-alai shall be at a place permissible
Consequently, on September 14, 1994, the GAB Chairman revoked the provisional authority issued by his office,
under existing zoning ordinances of Manila;
until the legal issues raised in the September 13 directive of the Executive Secretary are resolved in the proper
court. Said directive identified the legal issues as centering on 1) the constitutionality of P.D. 771; 2) the validity
of the apparent grant in perpetuity of a municipal franchise to maintain jai-alai operations; and, 3) the power of b. That the games to be played daily shall commence not earlier than 5:00 o'clock (sic) in the afternoon;
 c. That the City of Manila will receive a share of 21/2% of the annual gross receipts of all wagers or bets
½% of which will accrue to the Games and Amusements Board as now provided by law;
d. That the corporation will in addition pay to the city an annual license fee of P3,000.00 and a daily permit
fee of P200.00;
e. That the corporation will to insure its faithful compliance of all the terms and conditions under this
ordinance, put up a performance bond from a surety acceptable to the City, in the amount of at least
P30,000.00.
xxx xxx xxx
Sec. 3 This ordinance shall take effect upon its approval.
The above-quoted ordinance is notable in two respects: 1) the absence of a period of expiration suggests that the
grant of authority to operate the Basque pelota game jai-alai seems to have been granted in perpetuity and 2)
while the grant of authority under the Ordinance was made pursuant to R.A. 409, the City Charter of Manila, the
authority granted could best be viewed as a grant of license or permit, not a franchise. Nowhere is it pretended
that Ordinance 7065 is a franchise enacted pursuant to the legislative powers of the Municipal Board of the City
of Manila under Section 18 (jj) thereof.
The absence of authority of the Manila Municipal Board to issue a franchise, notwithstanding its legislative
powers, is furthermore evident in the above-cited Charter provision regulating gambling and other gaming
establishments which enumerates the following powers:
(jj) To tax, license, permit and regulate wagers of betting by the public on boxing . . . cockpits, jai-alai . . . as
well as this purpose, notwithstanding any existing law to the contrary.
Clearly the, if Ordinance 7065 merely grants a permit or a license to operate the jai-alai fronton, I see no conflict
with a national law, duly enacted pursuant to legitime franchise to operate certain gambling and gaming
operations, generally viewed as deleterious to the public welfare and morals, for the purpose of regulating the
same and raising revenue. In other words, the national government may well validly require operators of such
establishments to first secure a legislative franchise before starting their operations. After securing the proper
legislative franchise, they may take then exercise whatever authority granted to them by local legislative bodies
pursuant to the permits or licenses granted by these bodies. This is essentially the spirit ordained by at least two
legislative issuances relating to jai-alai and other gambling operations passed before and after the Manila City
Council issued the ADC's permit to operate.
In June of 1952, Congress enacted R.A. 392 which forbade the taking or arranging of bets on any basque pelota
game by any person or entity other than one with a legislative franchise.3 After the ADC was issued its permit by
the City of Manila in 1971, President Marcos issued P.D. 771 pursuant to his legislative powers during martial
Law, which revoked local authority to grant franchise to certain gambling operations including jai-alai. Section 3
thereof expressly revoked existing gambling franchise issued by the local governments. When President Corazon
Aquino cancelled the franchise granted to the Philippine Jai-alai and Amusement Corporation in 1987, she kept
P.D. 771, which revoked all authority by local governments to issue franchises for gambling and gaming
establishments on one hand, and the municipal ordinance of the City of Manila, granting a permit or license to
operate subject to compliance with the provisions found therein, on the other hand, a legislative franchise may be
required by the government as a condition for certain gambling operations. After obtaining such franchise, the
franchisee may establish operations in any city or municipality allowed under the terms of the legislative
franchise, subject to local licensing requirements. While the City of Manila granted a permit to operate under
Ordinance No. 7065, this permit or authority was at best only a local permit to operate and could be exercised by
the ADC only after it shall have obtained a legislative franchise.
This skirts the constitutional issue. Both P.D. 771 and Ordinance 7065 can stand alongside each other if one
looks at the authority granted by the charter of the City of Manila together with Ordinance No. 7065 merely as an
authority to "allow" and "permit" the operation of jai-alai facilities within the City of Manila. While the constitutional
issue was raised by the respondent corporation in the case at bench, I see no valid reason why we should jump
into the fray of constitutional adjudication in this case, or on every other opportunity where a constitutional issue
is raised by parties before us. It is a settled rule of avoidance, judiciously framed by the United States Supreme
Court in Ashwander v. TVA 4 that where a controversy may be settled on a platform other than one involving
constitutional adjudication, the court should exercise becoming modesty and avoid the constitutional question.
The State has every legitimate right, under the police power, to regulate gambling operations5 by requiring
legislative franchises for such operations. Gambling, in all its forms, unless specifically authorized by law and
carefully regulated pursuant to such law, is generally proscribed as offensive to the public morals and the public
good. In maintaining a "state policy" on various forms of gambling, the political branches of government are best
equipped to regulate and control such activities and therefore assume full responsibility to the people for such
policy.6 Parenthetically, gambling in all its forms, is generally immoral.
The disturbing implications of a grant of a "franchise," in perpetuity, to the ADC militates against its posture that
the government's insistence that the ADC first obtain a legislative franchise violates the equal protection and
impairment of Contracts clauses of the Constitution. By their very nature, franchise are subject to amendment,
alteration or revocation by the State whenever appropriate. Under the exercise of its police power, the State
through its requirement for permits, licenses and franchises to operate, undertakes to regulate what would
otherwise be an illegal activity punished by existing penal laws. The police power to establish all manner of
regulation of otherwise illicit, immoral and illegal activities is full, virtually illimitable and plenary.7
In Edu v Ericta8 we defined the police power as "the state authority to enact legislation that may interfere with
personal liberty or property in order to promote the general welfare." In its exercise, the State may impose
appropriate impositions or restraints upon liberty or property in order to foster the common good. 9 Such
imposition or restraint neither violates the impairment of contracts nor the equal protection clauses of the
Constitution if the purpose is ultimately the public good.10
Restraints on property are not examined with the same microscopic scrutiny as restrictions on liberty. 11 Such
restraints, sometimes bordering on outright violations of the impairments of contract principle have been made by
this Court for the general welfare of the people. Justice Holmes in Noble State Bank v. Haskel 12 once
expansively described the police power as "extending to all public needs." Franchise and licensing regulations
aimed at protecting the public from the pernicious effects of gambling are extensions of the police power
addressed to a legitimate public need.
In Lim vs. Pacquing, I voted to sustain the ADC's position on issues almost purely procedural. A thorough
analysis of the new issues raised this time, compels a different result since it is plainly obvious that the ADC,
while possessing a permit to operate pursuant to Ordinance 7065 of the City of Manila, still has to obtain a
legislative franchise, P.D. 771 being valid and constitutional.
On the question of the propriety of the Republic of the Philippine's intervention late in the proceedings in G.R. No.
117263, the ADC counsel's agreeing to have all the issues raised by the parties in the case at bench paves the
way for us to consider the petition filed in G.R. No. 117263 as one for quo warranto.
WHEREFORE, on the basis of the foregoing premises, judgment is hereby rendered:
1. Allowing the republic to intervene in G.R. No. 115044.
2. Declaring that P.D. 771 is a valid and subsisting law.
3. Declaring that the ADC does not possess the required legislative franchise to operate the jai-alai under
R.A. 954 and P.D. 771.
4. Setting aside the writs of preliminary injunction and preliminary mandatory injunction issued by Judge
Vetino Reyes.
DAVIDE, JR., J., concurring:
The core issues submitted for the Court's resolution are: (1) in G.R. No. 115044, whether intervention by the
republic of the Philippines is proper, and (2) in G.R. No. 117263, whether public respondent Judge Vetino Reyes
acted with grave abuse of discretion in issuing the temporary restraining order and subsequently the writ of
preliminary mandatory injunction in Civil case No. 94-71656.
I after the First Division had promulgated the decision, and after petitioner Mayor Alfredo Lim complied with or
As to the first issue, I submit that unless we either amend the rule on intervention or suspend it, the motion to
intervene must be denied. Under Section 2, Rule 12 of the Rules of Court, such motion may be allowed
only before or during a trial. Said section reads:
Sec. 2. Intervention. — A person may, before or during a trial, be permitted by the court, in its discretion, to
intervene in an action, if he has legal interest in the matter in litigation, or in the success of either of the
parties, or an interest against both, or when he is so situated as to be adversely affected by a distribution or
other disposition of property in the custody of the court or of an officer thereof.
This provision was taken from Section 1, Rule 13 of the old Rules of Court with the modification that the phrase
"at any period of a trial" in the latter was changed to "before or during a trial."1
Section 1, Rule 13 of the old Rules of Court was based on Section 121 of the Code of Civil Procedure which, in
turn, was taken from Section 387 of the Code of Civil procedure of California.2
The phrase "at any period of a trial" in Section 1, Rule 13 of the old Rules of Court has been construed to mean
the period for the representation of evidence by both parties.3 And the phrase "before or during the trial" in
Section 2, Rule 12 of the present Rules of Court "simply means anytime before the rendition of the final
judgment."4Accordingly, intervention could not be allowed after the trial had been concluded5 or after the trial and
decision of the original case.6
Fundamentally then, intervention is never an independent action but is ancillary and supplemental to an existing
litigation. Its purpose is not to obstruct nor unnecessarily delay the placid operation of the machinery of trial, but
merely to afford one not an original party, yet having a certain right or interest in the pending case, the
opportunity to appear and be joined so he could assert or protect such right or interest. 7
The grant of an intervention is left to the discretion of the court. Paragraph (b), Section 2, Rule 12 of the Rules of
Court provides:
(b) Discretion of court. — In allowing or disallowing a motion for intervention, the court, in the exercise of
discretion, shall consider whether or not the intervention will unduly delay or prejudice the adjudication of
the rights of the original parties and whether or not the intervenor's rights may be fully protected in a
separate proceeding.
It is thus clear that, by its very nature, intervention presupposes an existing litigation or a pending case,8 and by
the opening paragraph of Section 2, Rule 12 of the Rules the Rules of Court, it may be properly filed only before
or during the trial of the said case. Even if it is filed before or during the trial, it should be denied if it will unduly
delay or prejudice the adjudication of the rights of the original parties and if the intervenor's rights may be fully
protected in a separate proceeding.9
It is not disputed that the motion to intervene was filed only on 16 September 1994, or on the fifteenth (15th) day
voluntarily satisfied the judgment. The latter act brought to a definite end or effectively terminated G.R. No.
115044. Consequently, intervention herein is impermissible under the rules. To grant it would be a capricious
exercise of discretion. The decision of this Court in Director of Lands vs. Court of
Appeals 10 cannot be used to sanction such capriciousness for such decision cannot be expanded further to
justify a new doctrine on intervention. In the first place, the motions to intervene in the said case were filed before
the rendition by this Court of its decision therein. In the second place, there were unusual and peculiar
circumstances in the said case which this Court took into account. Of paramount importance was the fact that the
prospective intervenors were indispensable parties, and so this Court stated therein:
 But over and above these considerations and circumstances which We have pointed out, there is the basic
and fundamental requirement under the Rules of Court, Section 7, Rule 3, that "Parties in interest without
whom no final determination can be had of an action shall be joined either as plaintiff or defendants." The
joinder of indispensable parties is compulsory under any and all conditions, their presence being a sine qua
non of the exercise of judicial power. [Borlasa vs. Polistico, 47 Phil. 345, 348].
The herein movants, Greenfield Development Corporation, Alabang Development Corporation, Ramon D.
Bagatsing, and all buyers from them, at least those with ostensible proprietary interests as the MERALCO,
Alabang Hills Subdivision, Cielito Homes Subdivision, Tahanan Village, the Ministry of Highways insofar as
the South Super Highway is affected, are indispensable parties to these proceedings as it has been shown
affirmatively that they have such an interest in the controversy or subject matter that a final adjudication
cannot be made, in their absence, without injuring or affecting such interest. The joinder must be ordered in
order to prevent multiplicity of suits, so that the whole matter in dispute may be determined once and for all
in one litigation.
And, squarely on the aspect of intervention, it found that the denial thereof
will lead the Court to commit an act of injustice to the movants, to their successors-in-interest and to all
purchasers for value and in good faith and thereby open the door to fraud, falsehood and
misrepresentation, should intervenors' claims be proven to be true. For it cannot be gainsaid that if the
petition for reconstitution is finally granted, the chaos and confusion arising from a situation where the
certificates of title of the movants covering large areas of land overlap or encroach on properties the title to
which is being sought to be reconstituted by private respondent, who herself indicates in her Opposition
that, according to the Director of Lands, the overlapping embraces some 87 hectares only, is certain and
inevitable.
Then too, it may be stressed that said case originated from a proceeding to reconstitute a certificate of title filed
by private respondent. After trial, the Court of First Instance issued an order denying the petition for insufficiency
of evidence. After a motion for new trial was granted and a hearing to receive the newly discovered evidence was
completed, the court issued an order again denying the reconstitution sought for as it still doubted the authenticity
and genuineness of the Transfer of Certificate of Title sought to be reconstituted. The private respondent
appealed the order to the Court of Appeals which thereafter promulgated a decision reversing the aforesaid
orders of the trial court. The Director of Land, which was the remaining oppositor, filed a motion for a new period
to file a motion for reconsideration of the decision alleging excusable negligence. Private respondent filed an
opposition thereto. Without waiting for the resolution of the motion, the Director filed a motion to admit the motion
for reconsideration attaching thereto said motion for reconsideration. The Court of Appeals issued a resolution
denying both motions on the ground that the decision had already become final. This was the resolution which
the Director assailed in his petition for review filed with this Court.
Considering then that the intervention in the case at bar was commenced only after the decision had been
executed, a suspension of the Rules to accommodate the motion for intervention and the intervention itself would
be arbitrary. The Government is not without any other recourse to protect any right or interest which the decision
might have impaired.
May the motion to intervene and intervention proper be, nevertheless, treated as a petition for quo warranto? The
majority opinion answers it in the affirmative because all the essential requisites for a petition for quo
warranto are present in said pleadings. I am almost tempted to agree with that opinion if not for the fact that there
is pending before the Regional Trial Court of Manila Civil Case No. 94-71656 which is a petition for
prohibition, mandamus, injunction, and damages filed by the Associated Development Corporation against
Executive Secretary Guingona and then Games and Amusement Board (GAB) Chairman Sumulong. That is the
more appropriate forum where the Government and petitioner Guingona may challenge the validity of ADC's
franchise. Its filing was provoked by the withdrawal by the GAB of the provisional authority it granted to ADC in
view of the 13 September 1994 directive of Executive Secretary Guingona informing the GAB of sufficient bases
to hold in abeyance the operation of the jai-alai until the legal questions into the validity of the franchise issued to
ADC. Consequently, it is to be logically presumed that for its affirmative defenses in Civil Case No. 94-71656 the
Government would raise the same issues raised in the intervention in G.R. No. 117263.
Accordingly, I vote to deny the motion for intervention in G.R. No. 115044.
II
However, I vote to partially grant the petition in G.R. No. 117263 insofar as wagering or betting on the results
order and the preliminary mandatory injunction issued by respondent Judge cannot legally and validly allow such
wagering and betting. It was precisely for this reason that I earlier voted to grant a temporary restraining order in
G.R. No. 115044 and G.R. No. 117263 to restrain wagering or betting. I wish to reiterate here what I stated in my
supplemental concurring opinion in G.R. No. 115044:
Secondly, to make my position clear that the dismissal of the petition should not be construed as
compelling the City of Manila to authorize gambling by allowing betting on the results of jai-alai. The
decision merely dismissed the petition because the Court found " no abuse of discretion, much less lack of
excess of jurisdiction, on the part of the respondent judge" in issuing the challenged order directing the
petitioner to issue a permit or license in favor of the private respondent pursuant to Ordinance No. 7065.
That order was to enforce the final and executory decision of the Regional Trial Court of 9 September 1988
in Civil Case No. 88-45660, the appeal therefrom to the Court of Appeals by the City of Manila having been
withdrawn by it on 9 February 1989. That decision ordered the City of Manila to immediately issue to the
private respondent "the permit/license required under Ordinance No. 7065." The City of Manila did in fact
issue the required permit or license to the private respondent for the operation of the jai-alai in Manila for
the years 1988 to 1992. Nevertheless, when the jai-alai complex was almost completed, the City Mayor
refused to renew the Mayor's Permit.
There is a clear distinction between the initial duty of the City Mayor under Ordinance No. 7065 to issue the
necessary license or permit to establish the jai-alai fronton and to maintain and operate the jai-alai, and his
subsequent discretion to impose other terms and conditions for the final contract relative to such operation.
The trial court specifically said so in its decision of 9 September 1989. Thus:
 A suggestion has been made in the Answer that a writ of mandamus will not lie against respondents,
particularly the Mayor, because "the availment of the franchise . . . is subject to the terms and
conditions which the respondent Mayor may impose."
A careful reading however, of Ordinances 7065 will readily show that the discretion, if any, allowed
respondent Mayor, under the ordinance, will be exercisable only after the permit, which he is
mandated to issue, had been issued and the jai-alai fronton is already operational. The ordinance
stipulates that the Mayor is authorized "to allow and permit petitioner to establish, maintain and
operate a jai-alai in the City of Manila," under the five conditions enumerated in subparagraphs "a" to
"e" of Section 1 of the Ordinance. By a simple reading of these "terms and conditions" patently shows
that subparagraphs "b" to "e" are clearly conditions that will only come into play after the jai-alai has
been put up or established; while the condition under subparagraph "a" appears to have been
complied with satisfactorily by the petitioner, since no objection at all has been made by respondents
to the proposed site for jai-alai fronton, that is, the 25,000 sq. m. land area behind the present
Harrison Plaza Complex located at Ermita, Manila.
Consequently, the Mayor's Permit sough to be renewed or the motion before the lower court to compel the
Mayor to renew it, has reference only to subparagraph (a), Section 1 of Ordinance No. 7065. The renewal
of the permit can by no stretch of the imagination be taken as a final contract between the private
respondent and the City of Manila for otherwise it would remove the power and authority of the Mayor
under the ordinance to impose "other terms and conditions as he may prescribe for good reasons of
general interest."
It follows then that the Mayor's Permit ordered by the trial court to be issued to the private respondent is not
a license or authority to allow betting or wagering on the results of the jai-alai games. Jai-alai is a sport
based on skill. Under Article 197 of the Revised Penal Code, before it was amended by P.D. No. 1602,
betting upon the result of any boxing or other sports contests was penalized with arresto menoror a fine not
exceeding P200.00, or both. Article 2019 of the Civil Code provides that "[b]etting on the results of sports,
athletic competitions, or games of skill may be prohibited by local ordinances."
P.D. No. 483, enacted on 13 June 1974, penalizes betting, game fixing or point shaving and machinations
in sports contests, including jai-alai. Section 2 thereof expressly provides:
Sec. 2. Betting, game fixing, point shaving or game machinations unlawful. — Game fixing, point
shaving, machination, as defined in the preceding Section, in connection with the games of
basketball, volleyball, softball, baseball; chess; boxing bouts, "jai-alai," "sipa," "pelota" and all other
sports contests, games; as well as betting therein except as may be authorized by law, is hereby
declared unlawful.
The succeeding Section 3 provides for the penalties.
On 11 June 1978, P.D. No. 1602 (75 O.G. No. 15, 3270), Prescribing Stiffer Penalties on Illegal Gambling,
was enacted to increase the penalties provided in various "Philippine Gambling Laws such as Articles 195-
199 of the Revised Penal Code (Forms of Gambling and Betting), R.A. No. 3063 (Horse Racing Bookies),
P.D. No. 449 (Cockfighting), P.D. No. 483 (Game Fixing), P.D. No. 510 (Slot Machines) in relation to
Opinion Nos. 33 and 97 of the Ministry of Justice, P.D. No. 1306 (Jai-alai Bookies), and other City and
Municipal Ordinances on gambling all over the country." Section 1 thereof reads:
xxx xxx xxx
Both P.D. No. 483 and P.D. No. 1602 were promulgated in the exercise of the police power of the State.
Pursuant to Section 2 of P.D. No. 483, which was not repealed by P.D. No. 1602 since the former is not
inconsistent with the latter in that respect, betting in
jai-alai is illegal unless allowed by law. There was such a law. P.D. No. 810, which authorized the
Philippine Jai-Alai and Amusement Corporation as follows:
Sec. 2. The grantee or its duly authorized agent may offer, take or arrange bets within or outside the
place, enclosure or court where the Basque pelota games are held: Provided, That bets offered,
taken or arranged outside the place, enclosure or court where the games are held, shall be offered,
taken or arranged only in places duly licensed by the corporation, Provided, however, That the same
shall be subject to the supervision of the Board. No person other than the grantee or its duly
authorized agents shall take or arrange bets on any pelotari or on the game, or maintain or use a
totalizator or other device, method or system to bet on any pelotari or on the game within or without
the place, enclosure or court where the games are held by the grantee. Any violation of this section
shall be punished by a fine of not more than two thousand pesos or by imprisonment of not more than
six months, or both in the discretion of the Court. If the offender is a partnership, corporation or
association, the criminal liability shall devolve upon its president, directors or any officials responsible
for the violation.
However, as stated in the ponencia, P.D. No. 810 was repealed by E.O. No. 169 issued by then President
Corazon C. Aquino. I am not aware of any other law which authorizes betting in jai-alai. It follows then that
while the private respondent may operate the jai-alai fronton and conduct jai-alai games, it can do so solely
as a sports contest. Betting on the results thereof, whether within or off-fronton, is illegal and the City of
Manila cannot, under the present state of the law, license such betting. The dismissal of the petition in this
case sustaining the challenged orders of the trial court does not legalize betting, for this Court is not the
legislature under our system of government.
Accordingly, I vote to grant the petition in G.R. No. 117263 and to set aside the questioned temporary restraining
order and the writ of preliminary mandatory injunction but only to the extent that they allow wagering or betting on
the results of jai-alai.
QUIASON, J., dissenting:
I vote: (1) to deny the motion to intervene and motion for reconsideration qua petition for quo warranto in G.R.
No. 115044, and (2) to dismiss the petition for certiorari in G.R. No. 117263. I shall set forth the reason why.
I 5. By accepting this provisional authority, Associated Development Corporation (ADC) is deemed to have
Following the decision of the First Division of this Court on September 1, 1994 in G.R. No. 115044, the City of
Manila issued on September 7, 1994 the Mayor's permit and Municipal license to Associate Development
Corporation (ADC) upon the latter's payment of the required fees (G.R. No. 115044, Rollo, pp. 253-254, 301).
In his letter dated September 8, 1994 to President Fidel V. Ramos, Chairman Francisco Sumulong, Jr. of the
Games and Amusement Board (GAB) said that he would not authorize the opening of ADC's jai-alai unless he
was given a clearance from the President and until after ADC had complied with "all the requirements of the law,
such as, the distribution of wager funds, [and] licensing of Pelotaris and other personnel" (Exh. F, Civil Case No.
94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, p. 304).
In the position paper annexed to the letter, the GAB Chairman recommended the reopening and operation of the
jai-alai, stating in pertinent part:
There are several reasons to justify the operation of Jai-Alai, first and foremost of which is the generation of
much needed revenues for the national and local governments. Other significant justifications are its
tourism potential, the provision for employment, and the development of Basque pelota as an amateur and
professional sport.
Specifically, the establishment, maintenance and operation of a Jai-Alai fronton in Metro-Manila shall be
by virtue of the original and still legally existing franchise granted to the Associated Development
Corporation (ADC) by the City Government of Manila in 1971 (G.R. No. 115044, Rollo, p. 350; Emphasis
supplied).
On September 9, 1994, Chairman Sumulong granted ADC provisional authority to open, subject to the following
conditions:
1. We prohibit you from offering to the public "Pick 6" and "winner Take All" betting events until such time
as this Board shall have approved the rules and regulations prepared by management governing the
mechanics of these events.
2. Licensing of officials and employees whose duties are connected directly or indirectly with the
supervision and operation of jai-alai games, as mandated by Executive Order 141 dated February 25,
1965, shall be fully complied with by you within thirty 930) days from date hereof.
3. Any other deficiencies we may discover will be accordingly rectified by management as directed by the
Board.
4. Failure to comply with any of the rules and regulations prescribed by existing laws and lawful orders of
the Board, may justify withdrawal/revocation of this provisional authority without prejudice to such
administrative sanctions that the Board may deem proper to impose under the circumstances.
agreed to the conditions above provided (G.R. No. 117263, Rollo, pp. 8-9, 49, 238, 288).
On September 12, 1994, the GAB issued to ADC jai-alai License No. 94-008 upon payment of the corresponding
permit fee. The license reads as follows:
Under and by virtue of the provisions of Section 7 of Executive Order No. 392, series of 1950, in
conjunction with Executive order No. 824, series of 1982, this Board has this date granted ADC
Represented by Gen. Alfredo B. Yson permit to hold or conduct a [sic] jai-alai contests/exhibition on
September 12 to 14, 1994, at the harrison Plaza Complex, located in Harrison Plaza, Malate, Manila.
This permit is issued subject to the condition that the promoter shall comply with the provisions of
Executive order No. 824, S. 1982, the rules and regulations, orders and/or policies adopted or which may
hereafter be adopted by the Board, and with the conditions set forth in the application for which this permit
has been granted; and failure on the part of the promoter to comply with any of which shall be deemed
sufficient cause for the revocation thereof (G.R. No. 117263, Rollo, pp. 50, 238, 289).
In compliance with GAB Rules and Regulations, ADC submitted its programs of jai-alai events for approval
(Exhs. O, P and Q, civil Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 290-292).
It appears that as early as may 23, 1994, Jai-Alai de Manila (the business name of ADC's fronton) had inquired
from GAB about the laws and rules governing its jai-alai operation. In reply, chairman Sumulong furnished Jai-
Alai de Manila with copies of E.O. Nos. 392 and 824 and the Revised rules and Regulations for basque pelota
Games (Exhs. K and L, Civil Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 301-302).
On September 13, 1994, Executive Secretary Teofisto Guingona, jr. issued the following Directive to GAB
Chairman Sumulong:
In reply to your letter dated 9 September 1994 requesting for the President's approval to re-open the Jai-
Alai in Manila, please be informed that after a review and study of existing laws, there is sufficient basis to
hold in abeyance the operation of the Jai-Alai until the following legal questions are properly resolved:
1. Whether P.D. 771 which revoked all existing Jai-Alai franchises issued by local government as of
20 August 1975 is unconstitutional.
2. Assuming that the City of Manila had the power on 7 September 1971 to issue a Jai-Alai franchise
to Associated Development Corporation, whether the franchise granted is valid considering that the
franchise has no duration, and appears to be granted in perpetuity.
3. Whether the City of Manila had the power to issue a Jai-Alai franchise to Associated Development
Corporation on 7 September 1971 in view of Executive order No. 392 dated 1 January 1951 which
transferred from local governments to the Games and Amusements Board the power to regulate Jai-
Alai.
 This Office has directed the solicitor General to bring before the proper court the foregoing issues for
resolution. Pending such resolution, you are directed to hold in abeyance the grant of authority, or if any
has been issued, to withdraw such grant of authority, to Associated Development corporation to operate he
Jai-Alai in the city of Manila (G.R. No. 117263, Rollo, pp. 7-8, 48, 1939; Emphasis supplied).
On September 14, 1994, Chairman Sumulong issued a Memorandum to ADC that:
In view of the directive from the Office of the President dated 13 September 1994, Associated Development
Corporation is hereby ordered to cease and desist issues raised in the said directive are resolved by the
proper court. The provisional authority issued pending further scrutiny and evaluation to ADC on 9
September 1994 is hereby withdrawn (G.R. No. 117263, Rollo, pp. 51, 194; Emphasis supplied).
On September 15, 1994, ADC filed with the Regional Trial Court, Branch 4, Manila a petition for
prohibition, mandamus, injunction and damages with prayer for temporary restraining order or writ of preliminary
injunction (Case No. 94-71656) against Executive Secretary Guingona and Chairman Sumulong assailing the
former's Directive and the latter's Memorandum (G.R. No. 117263, Rollo, pp. 3, 20-21, 53-75, 167-168).
On the same day, Judge Vetino Reyes issued a temporary restraining order enjoining Executive Secretary
Guingona and Chairman Sumulong from implementing their respective Directive and memorandum (G.R. No.
117263, Rollo, pp. 2, 10, 44).
On September 16, 1994, Executive Secretary Guingona and Chairman Sumulong filed an urgent motion to recall
the temporary restraining order, with opposition to the motion for issuance of a writ of preliminary injunction. The
said motion was reiterated in the supplemental motion filed on September 20, 1994 (G.R. No. 117263, Rollo, pp.
66-75, 76-86).
Meanwhile, on September 16, 1994, the Republic of the Philippines, represented by GAB, filed in G.R. No.
115044 a motion for intervention; for leave to file a motion for reconsideration-in-intervention; to admit the
attached motion for reconsideration-in-intervention; and to refer the case to the Court en banc (Rollo, pp. 219-
249).
Subsequently, and on the different dates, the Republic filed in G.R. No. 115044 the following pleadings: "Motion
for Leave to File Supplemental Motion for Reconsideration-In-Intervention" (Rollo, pp. 262-265); "Supplemental
Motion for Reconsideration-In-Intervention" (Rollo, pp. 266-280); "Motion for Leave to File Second Supplemental
Motion for Reconsideration-In-Intervention and to Admit attached Second Supplemental Motion For
Reconsideration-In-intervention" (Rollo, pp. 380-382); and "Second Supplemental Motion for Reconsideration-In-
Intervention" (Rollo, pp. 383-400).
Acting on the motion of the Republic dated September 16, 1994, the First Division referred, in its Resolution
dated September 19, 1994, Case G.R. No. 115044 to the Court en banc, and the latter accepted the same in its
Resolution dated September 20, 1994 (Rollo, p. 255).
In the meantime, Chairman Sumulong resigned and Dominador R. Cepeda, jr. was appointed as his successor.
On September 30, 1994, Judge Reyes issued a writ of preliminary injunction (G.R. No. 117263, Rollo, pp. 2, 47).
On October 11, 1994, Executive Secretary Guingona and GAB Chairman Cepeda, Jr. filed with this Court a
petition for certiorari, prohibition and mandamus (G.R. No. 117263, Rollo, pp. 1-151) and on October 24, 1994, a
supplemental petition (G.R. No. 117263, Rollo, pp. 161-165, 166-306). Petitioners assailed the following
issuances of Judge Reyes Civil Case No. 94-71656:
(1.) Temporary Restraining Order dated September 15, 1994 directing Executive Secretary Guingona and
chairman Sumulong to desist from enforcing the Directive dated September 13, 1994 and the
memorandum dated September 15, 1994 (Rollo, p. 44);
(2.) Order dated September 25, 1994 denying the Urgent Motion to Recall Temporary Restraining Order
and the Urgent Supplemental Motion to Recall Temporary Restraining Order (Rollo, p. 46);
(3.) Order dated September 30, 1994 directing the issuance of a Writ of preliminary Injunction directed
against the aforesaid Directive and Memorandum (Rollo, p. 47);
(4.) order dated October 19, 1994 granting ADC's Motion to Amend the petition to Conform to the Evidence
and directing the issuance of a writ of preliminary mandatory injunction "directing (Executive Secretary and
the GAB Chairman), their successors, representatives and any government office/agency acting for an in
their behalf or in implementation of their orders earlier enjoined by a writ of preliminary injunction issued by
this court on September 30, 1994, to issue the necessary authority, licenses and working permits to . . .
Associated Development Corporation, and its personnel and players (Rollo, pp. 216-217).
They prayed that the trial court be enjoined from conducting further proceedings in Civil Case No. 94-71656 and
that said case be dismissed. they also filed a motion for consolidation of G.R. No. 117263 with G.R. No. 115044
(G.R. No. 117263, Rollo, pp. 152-160). As prayed for, we considered the two cases together.
In their petition in G.R. No. 117263, Executive Secretary Guingona and Chairman Cepeda claimed that ADC had
no clear right to the issuance of the preliminary mandatory injunction because:
(1) ADC had no legislative franchise;
(2) ADC admitted in G.R. No. 115044 that GAB had no authority to issue the license or permit subject of
the order in question; and
(3) Mandamus was not available to compel the performance of a discretionary function (G.R. No.
117263, Rollo, pp. 182-189).
On November 2, 1994, ADC and Judge Reyes filed their consolidated Comment to the petition and supplemental
petition (G.R. No. 117263, Rollo, pp. 230-305).
On November 25, 1994, the Republic, Executive Secretary Guingona and GAB Chairman Cepeda moved for the
issuance of a restraining order enjoining Judge Pacquing and Judge Reyes from enforcing their questioned
orders and ADC from operating the jai-alai fronton (G.R. No. 17263, Rollo, pp. 629-635). Action on the motion
deferred.
II
G.R. No. 115044
Motion for Intervention
The Republic of the Philippines (Republic) represented by GAB justifies its belated intervention in G.R. No.
115044 on the grounds that "it has an interest involved in this case and will be affected by the Decision dated
September 1, 1994" (G.R. No. 115044, Rollo, p. 225).
The purpose of its intervention is to nullify the decision of Judge Augusto E. Villarin of the Regional Trial Court,
Branch 40, Manila, dated September 1, 1994" (G.R. No. 115044, Rollo, p. 225).
The purpose of its intervention is to nullify the decision of Judge Augusto E. Villarin of the Regional Trial Court,
Branch 40, Manila, dated September 9, 1989 in Civil Case No. 88-45660, which upheld the validity of Ordinance
No. 7065 of the City of Manila granting ADC a franchise to operate a jai-alai fronton. Mayor Gemiliano Lopez
appealed said decision to the Court of Appeals, but on February 9, 1989, he filed a Withdrawal of Appeal. The
Court of Appeals approved the withdrawal in a resolution dated May 5, 1989. An entry of judgment was made by
the court of Appeals on May 26, 1989 and by the Regional Trial Court, branch 40, Manila, on October 27, 1992.
In 1991, the City of Manila filed an action to annul the franchise of ADC with the Regional Trial Court, Branch 23,
Manila (Civil Case No. 91-58913). The complaint was dismissed on December 21, 1991. No appeal was taken
from said dismissal of the case.
The City of Manila filed with this Court a petition for declaratory judgment to nullify the franchise of ADC (G.R.
No. 101768). The petition was dismissed in a resolution dated October 3, 1991 "for lack of jurisdiction."
Three members of the Sangguniang Panglunsod of Manila also filed with the Regional Trial Court, Branch 37,
Manila, a petition to compel Mayor Lopez to cancel the permit and license he issued in favor of ADC pursuant to
ordinance No. 7065 (Civil Case No. 91-58930). The petition was dismissed on June 4, 1992. No appeal was
taken from said dismissal of the case.
In the Motion for Reconsideration-In-Intervention, Supplemental Motion for Reconsideration-in-Intervention and
Second Supplemental Motion for Reconsideration-in-Intervention, the Republic merely claimed that Ordinance
No. 7065 had been repealed by P.D. No. 771 (Rollo, pp. 228-248), that the authority to issue permits and
licenses for the operation of jai-alai had been transferred to GAB by E.O. No. 392 of President Quirino effective
July 1, 1951 and that ADC was never issued a franchise by Congress (Rollo, pp. 383-390). Nowhere in its
pleadings did the Republic point out where the first Division erred in resolving the two grounds of the petition
for certiorari in G.R. No. 115044,
which were:
(1) The decision of Judge Villarin dated September 9, 1988 in Civil Case No. 88-45660 is null and void for
failure to rule that P.D. No. 771 had revoked Ordinance No. 7065; and
(2) The decision of Judge Villarin could not be executed by a mere motion filed on March 14, 1994, or more
than five years and six months after its promulgation.
In resolving the first issue, the First Division of this court explained that there was no way to declare
the Villarin decision null and void because the trial court had jurisdiction over the subject matter of the action and
if it failed to rule that ordinance No. 7065 was nullified by P.D. No. 771, that was only an error of judgment. The
First Division noted the distinction between a void and an erroneous judgment and between jurisdiction and the
exercise of jurisdiction.
In Tan v. Intermediate Appellate Court, 163 SCRA 752 (1988), the Court held:
It is settled jurisprudence that except in the case of judgments which are void ab initio or null and voidper
se for lack of jurisdiction which can be questioned at any time — and the decision here is not of this
character — once a decision becomes final, even the court which has rendered it can no longer alter or
modify it, except to correct clerical errors or mistakes. otherwise, there would be no end to litigation, thus
setting to naught the main role of courts of justice, which is, to assist in the enforcement of the rule of law
and the maintenance of peace and order, by settling justifiable controversies with finality. (See also Fabular
v. Court of Appeals, 119 SCRA 329 [1982]; Fariscal Vda. de Emnas v. Emnas, 95 SCRA 470 [1980];
Ocampo v. Caluag, 19 SCRA 917 [1967]).
As to the second issue, the First Division held that the five-year period for executing a judgment by simple motion
under Section 6 of Rule 39 of the Revised Rules of Court should be counted from the finality of the judgment and
not from the date of its promulgation as was done by Mayor Lim and the City of Manila. Inasmuch as
the Villarin decision was appealed to the Court of Appeals and the authority to withdraw the appeal was approved
by the Court of Appeals only on may 26, 1989, the five-year period should be counted, at the earliest, from May
26, 1989. Reckoning the five-year period from said date, the motion for execution of the Villarin decision was filed
timely on March 14, 1994.
Intervention as contemplated by Section 9, Rule 12 of the Revised Rules of Court is a proceeding whereby a
third person is permitted by the court "before or during a trial" to make himself a party by joining plaintiff or uniting
with defendant or taking a position adverse to both of them Gutierrez v. Villegas, 5 SCRA 313 [1962]). the term
"trial" is used in its restrictive sense and means the period for the introduction of evidence by both parties (Bool v.
Mendoza, 92 Phil. 892 [1953]; Provincial Government of Sorsogon v. Stamatelaky, 65 Phil. 206 [1937]). The
period of trial terminates when the period of judgment begins (El Hogar Filipino v. Philippine National Bank, 64
Phil. 582 [1937]).
Intervention as an action is not compulsory. As deduced from the permissive word "may" in the rule, the
availment of the remedy is discretionary on the courts (Garcia v. David, 67 Phil. 279 [1939]). an important factor
taken into consideration by the courts in exercising their discretion is whether the intervenor's rights may be fully
protected in a separate proceeding (Peyer v. Martines, 88 Phil. 72 [1951]).
The case of Director of Lands v. Court of Appeals, 93 SCRA 238 (1979), can not, serve as authority in support of
the Republic's intervention at this late stage. while said case involved an intervention for the first time in the
Supreme court, the motion to be allowed to intervene was filed before the appeal could be decided on the merits.
The intervention allowed in Republic v. Sandiganbayan, G.R. No. 96073, Resolution, March 3, 1992, was also
made before the decision on the merits by this Court. In contrast, the intervention of the Republic was sought
after this Court had decided the petition in G.R. No. 115044 and petitioners had complied with and satisfied the
judgment. While the intervention in Director of Lands was in a case that was timely appealed from the Regional
Trial Court to the Court of Appeals and from the Court of Appeals to the Supreme Court, the intervention of the
Republic was in a case that had become final and executory more than five years prior to the filing of the motion
to intervene.
As of September 16, 1994, therefore, when the republic moved to intervene, there was no longer any pending
litigation between the parties in G.R. no. 115044. Intervention is an auxiliary and supplemental remedy to an
existing, not a settled litigation (cf. Clareza v. Rosales, 2 SCRA 455 [1961]). An intervention was disallowed in a
case which has becomes final and executory (Trazo v. Manila Pencil Co., 77 SCRA 181 [1977])
The case of Suson v. Court of Appeals, 172 SCRA 70 (1989) invoked by the Republic (G.R. No. 117263, Rollo,
pp. 517-518) is inappropriate because the intervention therein was before the trial court, not in this Court.
In its Reply, the Republic admitted that the First Division only ruled on the procedural issues raised in the petition
and not on the constitutionality of P.D. No. 771. It even urged that GAB was not a party to the case and therefore
was not bound by the Villarin decision because under Section 49 of Rule 39, a judgment is conclusive only
"between the parties and their successor-in-interest by title subsequent to the commencement of the action or
special proceeding, litigating for the same thing and under the same title and in the same capacity" (Rollo, pp.
228-234, 431).
With more reason then that the Republic should have ventilated its claim against ADC in a separate proceeding.
Lastly, an intervenor should not be permitted to just sit idly and watch the passing scene as an uninterested
overlooker before he wakes up to seek judicial relief (Pacursa v. Del Rosario, 24 SCRA 125 [1968]).
The Office of the President was aware of the plans of ADC to start operation as early as 1988. On May 5, 1988,
ADC informed said Office of its intention to operate under Ordinance No. 7065. The said Office perfuntorily
referred the letter of ADC to the Manila mayor, implying that the matter was not the concern of the National
Government.
Motion qua Quo Warranto petition
Be that as it may, the Court may consider the motion to intervene, motion for reconsideration-in-intervention,
supplemental motion for reconsideration-in-intervention and second supplemental motion-in-intervention as a
petition for quo warranto under Rule 66 of the revised Rules of Court. In the liberal construction of the Rules in
order to attain substantial justice, the Court has treated petitions filed under one Rule as petitions filed under the
more appropriate Rule (Davao Fruits Corporation v. Associated Labor Union, 225 SCRA [1993]).
In quo warranto, the government can require a corporation to show cause by what right it exercises a privilege,
which ordinarily can not legally be exercised except by virtue of a grant from the state. It is a proceeding to
determine the right to the use of a franchise or exercise of an office and to oust the holder from its enjoyment if
his claim is not well-founded (Castro v. Del Rosario, 19 SCRA 196 [1967]).
All the essential requisites for a petition for quo warranto are compresent. The motions were filed by the Solicitor
General for the Republic of the Philippines, represented by GAB, to question the right of ADC to operate and
maintain the jai-alai.
The motions qua petition for quo warranto assert that the authority of the City of Manila to issue to ADC a jai-alai
franchise in 1971 had been withdrawn by E.O. No. 392 in 1951 and by R.A. No. 954 in 1954 and that assuming
the issuance of the franchise to ADC in 1971 under Ordinance No. 7065 was valid, such franchise, together with
whatever authority of the City of Manila to grant the same, was voided by P.D. No. 771 in 1975.
In the case of Stone v. State of Mississippi, 101 U.S. 814, cited by the Republic, the State Attorney General
resorted to a quo warranto proceeding to question the authority of petitioner therein to operate and maintain a
gambling establishment.
The franchise of ADC granted by the City of Manila under Ordinance No. 7065 reads as follows:
AN ORDINANCE AUTHORIZING THE MAYOR TO ALLOW AND PERMIT THE ASSOCIATED
DEVELOPMENT CORPORATION TO ESTABLISH, MAINTAIN AND OPERATE A JAI-ALAI IN THE CITY
OF MANILA, UNDER CERTAIN TERMS AND CONDITIONS AND FOR OTHER PURPOSES.
Be it ordained by the Municipal Board of the City of Manila, that:
Sec. 1. The Mayor is authorized, as he is hereby authorized to allow and permit the Associated
Development Corporation to establish, maintain and operate a jai-alai in the City of Manila, under the
following terms and conditions and such other terms and conditions as he (the Mayor) may prescribe for
good reasons of general interest:
a. That the construction, establishment and maintenance of the jai-alai shall be at a place permissible
under existing zoning ordinances of Manila;
b. That the games to be played daily shall commence not earlier than 5:00 o'clock (sic) in the
afternoon;
 c. That the City of Manila will received a share of 2 ½% on the annual gross receipts on all wagers or
bets, ½% of which will accrue to the Games and Amusements Board as now provided by law;
d. That the corporation will, in addition, pay to the city an annual license fee of P3,000.00 and a daily
permit fee of P200.00;
e. That the corporation will, to insure its faithful compliance of all the terms and conditions under this
ordinance, put up a performance bond from a surety acceptable to the city, in the amount of at least
P30,000.00.
Sec. 2. The Mayor and the City Treasurer of their duly authorized representatives are hereby
empowered to inspect at all times during regular business hours the books, records and accounts of
the establishment, as well as to prescribe the manner in which the books and financial statement of
the entrepreneur shall be kept.
Sec. 3. This ordinance shall take effect upon its approval.
Enacted originally by the Municipal Board on September 7, 1971; vetoed by the Mayor on September 27,
1971; modified and amended by the Municipal Board at its regular session today, October 12, 1971.
Approved by His Honor, the Mayor on 13 November 1971.
The said Ordinance was enacted pursuant to Section 18 (jj), the Charter of the City of Manila (R.A. No. 409),
which took effect in 1949. The charters of two other cities — Quezon City and Cebu City — contained a similar
delegation of authority to grant jai-alai franchises.
Said Section 18(jj) provides:
Legislative powers. — The Municipal Board shall have the following legislative powers:
xxx xxx xxx
(jj) To tax, license, permit and regulate wagers or betting by the public on boxing, billiards, pools, horse or
dog races, cockpits, jai-alai, roller of ice-skating or any sporting or athletic contests, as well as grant
exclusive rights to establishments for this purpose, notwithstanding any existing law to the contrary.
A. It is the posture of the Republic that the power of local governments to issue franchisers for the operation of
jai-alai was "consolidated and transferred" to the GAB under E.O. No. 392. In its Supplemental Motion for
reconsideration-In-Intervention filed on September 27, 1994, the Republic averred:
12. As early as 1951, the power of the local governments to issue licenses and permits for the operation of
jai-alai was "consolidated and transferred" to the Games and Amusements Board under E.O. No. 392
issued by then President Elpidio Quirino (sic) took effect on January 1, 1951. Thus, in 1971, the City of
Manila was without authority to enact an ordinance authorizing the City Mayor to issue a license/permit to
private respondent for the operation of jai-alai in Manila (Rollo, pp. 271-272).
Furthermore, the republic alleged:
13. Such consolidation and transfer of power manifest the policy of the Government to centralize the
regulation, through appropriate institutions, of all games of chance authorized by existing franchises of
permitted by law. . . . (Rollo, p. 272).
There is no need to dwell upon this argument for suprisingly it was the Republic itself that repudiated it albeit
after wrongfully attributing the argument to ADC.
In its Reply filed on November 9, 1994, the Republic stated that: "Contrary to respondent ADC's claim, it is not
the position of the GAB that it is the body which grants franchisers for the jai-alai either under E.O. No. 392 or
under P.D. No. 771 . . ." (Rollo, pp. 420).
For certain, E.O. No. 392 merely reorganized the different departments, bureaus, offices and agencies of the
government. There is absolutely nothing in the executive issuances which vests on GAB the power to grant,
much less revoke, franchisers to operate jai-alais.
B. After its volte-face, the Republic next claims that R.A. No. 954 had repealed Section 18 (jj) and that after the
effectivity of said law, only Congress could grant franchise to operate jai-alais.
Section 4 of R.A. No. 954 provides:
No person, or group of persons, other than the operator or maintainer of a fronton with legislative franchise
to conduct basque pelota (jai-alai), shall offer, take or arrange bets on any basque pelota game or event, or
maintain or use a totalizer or other device, method or system to bet or gamble or any basque pelota game
or event.
Republic Act No. 954 did not expressly repeal Section 18 (jj). In such a case, if there is any repeal of the prior law
by the latter law, it can only be by implication. Such kind of repeals is not favored. There is even a presumption
against repeal by implication (The Philippine American Management Co. Inc. v. The Philippine American
Management employees Association, 49 SCRA 194 [1973]).
In the same absence of an express repeal, a subsequent law cannot be construed as repealing a prior law unless
an irreconcilable inconsistency and repugnancy exist in the terms of the new and old law (Iloilo Palay and Corn
Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]).
But more importantly, the rule in legal hermeneutics is that a special law, like the Charter of the City of Manila, is
not deemed repealed by a general law, like R.A. No. 954 (Commissioner of Internal Revenue v. Court of
Appeals, 207 SCRA 487 [1992]).
In a way also, Ordinance No. 7065 can be considered a "legislative franchise" within the purview of R.A. No. 954,
having been enacted by the Municipal Board of the City of Manila pursuant to the powers delegated to it by the
legislature. A grant, under a delegated authority, binds the public and is considered the act of the state. "The
franchise [granted by the delegate] is a legislative grant, whether made directly by the legislature itself or by any
one of its properly constituted instrumentalities" (36 Am Jur 2d. 734).
As held in Wright v. Nagle, 101 U.S. 921, the grant of a franchise by the legislature may be done in two ways:
It may exercise this authority by direct legislation, or through agencies duly established having power for
that purpose. This grant when made binds the public, and is, directly or indirectly, the Act of the State. The
easement is a legislative grant, whether made directly by the legislature itself, or by any one of its properly
constituted instrumentalities (Justice of Pike Co. v. Plank road, 11 Ga. 246; Emphasis supplied).
If the intention of Congress in enacting R.A. No. 954 was to repeal Section 18 (jj), it could have used explicit
language to that effect in order not to leave room for interpretation.
If R.A. No. 954 repealed Section 18 (jj), why did President Marcos still issue P.D. No. 771, expressly revoking the
authority of the local governments to issue jai-alai franchises? It can never be presumed that the President
deliberately performed useless acts.
C. The claim of the Republic that P.D. No. 771 had removed the power of local governments to grant franchises
for the maintenance and operation of jai-alai is a non-issue. The issue raised by ADC is whether Section 3 of
P.D. No. 771 validly cancelled Ordinance No. 7065, an issue entirely different from the claim of the Republic that
P.D. No. 771 had revoked the power of the City of Manila to grant jai-alai franchisers.
Insofar as it is applied to Ordinance No. 7065, Section 3 of P.D. No. 771 suffers from constitutional infirmities and
transgresses several constitutional provisions. Said Section 3 provides:
All existing franchisers and permits issued by local governments are hereby revoked and may be renewed
only in accordance with third decree.
Section 3 violated the equal protection clause (Section 1 of Article IV) of the 1973 Constitution, which provided:
No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be
denied the equal protection of the laws.
Less than two months after the promulgation of P.D. no. 771, President Marcos issued P.D. No. 810, granting the
Philippine Jai-Alai and Amusement Corporation (PJAC) a franchise to operate jai-alai within the Greater Manila
Area. It is obvious that P.D. No. 771 was decreed to cancel the franchise of ADC so that the same could be given
to another entity under P.D. No. 810.
A facially neutral statute (P.D. No. 771) may become discriminatory by the enactment of another statute (P.D.
No. 810) which allocates to a favored individual benefits withdrawn under the first statute (Ordinance No. 7065),
and when there is no valid basis for classification of the first and second grantees. The only basis for distinction
we can think of is that the second grantee was Benjamin Romualdez, a brother-in-law of President Marcos.
Section 3 violated the due process clause of the Constitution, both in its procedural and substantive aspects. The
right to due process is guaranteed by the same Section 1 of Article IV of the 1973 Constitution.
Ordinance No. 7065, like any franchise, is a valuable property by itself. The concept of "property" protected by
the due process clause has been expanded to include economic interests and investments. The rudiments of fair
play under the "procedural due process" doctrine require that ADC should at least have been given an
opportunity to be heard in its behalf before its franchise was cancelled, more so when the same franchise was
given to another company.
Under the "substantive due process" doctrine, a law may be voided when it does not relate to a legitimate end
and when it unreasonably infringes on contractual and property rights. The doctrine as enunciated in Allgeyer v.
Louisiana, 165 U.S. 578 (1897) can be easily stated, thus: the government has to employ means (legislation)
which bear some reasonable relation to a legitimate end (Nowak, Rotunda and Young, Constitutional Law 436,
443 [2d ed]).
When President Marcos issued P.D. No. 771, he did not have public interest in mind; otherwise, he would have
simply outlawed jai-alai as something pernicious to the public. Rather, all what he wanted to accomplish was to
monopolize the grant of jai-alai franchisers.
The motivation behind its issuance notwithstanding, there can be no constitutional objection to P.D. No. 771
insofar as it removed the power to grant jai-alai franchisers from the local governments. We said so in Basco v.
Pagcor, 197 SCRA 52 (1991). The constitutional objection arises, however, when P.D. No. 771 cancelled al the
existing franchises. We search in vain to find any reasonable relation between Section 3 of P.D. No. 771 and any
legitimate ends of government intended to be achieved by its issuances. Besides, the grant of a franchise to
PJAC exposed P.D. No. 771 as an exercise of arbitrary power to divest ADC of its property rights.
Section 3 also violated Section 1 of Article VIII of the 1973 Constitution, which provided:
Every bill shall embrace only one subject which shall be expressed in the title thereof.
The title of P.D. No. 771 reads as follows:
REVOKING ALL POWERS AND AUTHORITY OF LOCAL GOVERNMENT TO GRANT FRANCHISE,
LICENSE OR PERMIT AND REGULATE WAGERS OR BETTING BY THE PUBLIC ON HORSE AND
DOG RACES, JAI-ALAI OR BASQUE PELOTA, AND OTHER FORMS OF GAMING.
The title of P.D. No. 771 refers only to the revocation of the power of local governments to grant jai-alai
franchises. It does not embrace nor even intimate the revocation of existing franchises.
Lastly, Section 3 impaired the obligation of contracts prohibited by Section 11 of Article IV of the 1973
Constitution.
As authorized by Section 18(jj), Ordinance No. 7065 grants ADC a permit "to establish, maintain and operate a
jai-alai in the City of Manila, under the following terms and conditions and such other terms and conditions as he
[the Mayor] may prescribe for good reasons of general interest." (Rollo, p. 24).
Section 11 of Article IV of the 1973 Constitution provided:
No law impairing the obligation of contracts shall be passed.
Any law which enlarges, abridges, or in any manner changes the intention of the parties, necessarily impairs the
contract itself (U.S. v. Conde, 42 Phil. 766 [1922]; Clemens v. Nolting, 42 Phil. 702 [1922]). A franchise
constitutes a contract between the grantor and the grantee. Once granted, it may not be invoked unless there are
valid reasons for doing so. (Papa v. Santiago, 105 Phil. 253 [1959]). A franchise is not revocable at the will of the
grantor after contractual or property rights thereunder have become vested in the grantee, in the absence of any
provision therefor in the grant or in the general law (Grand Trunk Western R. Co. v. South Bend, 227 U.S. 544).
D. The Republic hypothesized that the said Constitutional guarantees presuppose the existence of a contract or
property right in favor of ADC. It claims that Ordinance No. 7065 is not a franchise nor is it a contract but merely
a privilege for the purpose of regulation.
Ordinance No. 7065 is not merely a personal privilege that can be withdrawn at any time. It is a franchise that is
protected by the Constitution.
The distinction between the two is that a privilege is bestowed out of pure beneficence on the part of the
government. There is no obligation or burden imposed on the grantee except maybe to pay the ordinary license
and permit fees. In a franchise, there are certain obligations assumed by the grantee which make up the valuable
consideration for the contract. That is why the grantee is first required to signify his acceptance of the terms and
conditions of the grant. Once the grantee accepts the terms and conditions thereof, the grant becomes a binding
contract between the grantor and the grantee.
Another test used to distinguish a franchise from a privilege is the big investment risked by the grantee. In Papa
v. Santiago, supra, we held that this factor should be considered in favor of the grantee. A franchise in which
money has been expended assumes the character of a vested right (Brazosport Savings and Loan Association v.
American Savings and Loan Association, 161 Tex. 543, 342 S.W. 2d. 747).
The cases cited by the Republic to the effect that gambling permits or license issued by municipalities can be
revoked when public interest so requires, have never addressed this issue, obviously because there were no
significant financial investments involved in the operation of the permits or licenses.
But assuming that Ordinance No. 7065 is a mere privilege, still over the years, the concept of a privilege has
changed. Under the traditional form a property ownership, recipients of privileges, benefits or largesse from the
government may be said to have no property rights because they have no traditionally recognized proprietary
interest therein. The case of Vinco v. Municipality of Hinigaran, 41 Phil. 790 (1917) and Pedro v. Provincial Board
of Rizal, 56 Phil 123 (1931), holding that a license to operate cockpits is a mere privilege, belong to this vintage.
However, the right-privilege dichotomy has come to an end when the courts have realized that individuals should
not be subjected to the unfettered whims of government officials to withhold privileges previously given them
(Van Alstyne, The Demise of the Right — Privilege Distinction in Constitutional Law, 81 Harvard L. R. 1439
[1968]). To perpetuate such distinction would leave many individuals at the mercy of government officials and
threaten the liberties protected by the Bill of Rights (Nowak, Rotunda and Young, Constitutional Law 546 [2nd
ed]).
That a franchise is subject to regulation by the state by virtue of its police power is conceded. What is not
acceptable is the Republic's proposition that the power to regulate and supervise includes the power to cancel
the franchise altogether.
The stance of the Republic that the gambling franchises it issues are not covered by the constitutional mantle
protecting property rights is ill-advised considering that it is planning to operate gambling establishments
involving substantial foreign investments in putting up the facilities thereof.
The belabored arguments of the Republic on the evils of gambling fall to the ground upon a showing that ADC is
operating under an existing and valid franchise (Rollo, pp. 422-423).
E. The Republic questioned the siting of the ADC's fronton as violative of E.O. No. 135 of President Quirino.
Under said executive issuance, no pelota fronton can be maintained and operated "within a radius of 200 lineal
meters from any city hall or municipal building, provincial capital building, national capital building, public plaza or
park, public school, church, hospital, athletic stadium, or any institution of learning or charity."
According to the certificate issued by the National Mapping Information Authority, the ADC fronton is within the
proscribed radius from the Central Bank of the Philippines, the Rizal Stadium, the Manila Zoo, the public park or
plaza in front of the zoo, the Ospital ng Maynila, a police precinct and a church (G.R. No. 115044, Rollo, pp. 424-
427).
On the other hand, a certificate issued by the Officer-in-charge of the Office of the City Engineer of the City of
Manila attests to the fact that not one of the buildings or places mentioned in the certificate submitted by the
Republic is within the 200-meter radial distance, "center to center" from the ADC's jai-alai building (Rollo, p. 260).
How this variance in measurement came about is a matter that should have been submitted before the trial court
for determination.
However, the operative law on the siting of jai-alai establishments is no longer E.O. No. 135 of President Quirino
but R.A. No. 938 as amended by R.A. No. 1224.
Under said law only night clubs, cabarets, pavillions, or other similar places are covered by the 200-lineal meter
radius. In the case of all other places of amusements except cockpits, the proscribed radial distance has been
reduced to 50 meters. With respect to cockpits, the determination of the radial distance is left to the discretion of
the municipal council or city board (Sec. 1).
F. The Republic also questions the lack of the period of the grant under Ordinance No. 7065, thus making it
indeterminate (G.R. No. 117263, Rollo, pp. 500-505). The ordinance leaves it to the Mayor of the City of Manila
to lay down other terms and conditions of the grant in addition to those specified therein. It is up to the parties to
agree on the life or term of the grant. In case the parties fail to reach an agreement on the term, the same can be
fixed by the courts under Article 1197 of the Civil Code of the Philippines, which provides as follows:
If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a
period was intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the debtor.
In every case, the courts shall determine such period as may under the circumstances have been probably
contemplated by the parties. Once fixed by the courts, the period cannot be changed by them.
III
G.R. No. 117263
The petition in G.R. No. 117263 seeks to nullify the following orders of respondent Judge Reyes:
(1) the Temporary Restraining Order dated September 15, 1994;
(2) the Order dated September 25, 1994; and
(3) the Writ of Preliminary Injunction dated September 30, 1994 (Rollo, pp. 1-2).
The supplemental petition in said case seeks to nullify the Order dated October 19, 1994 (Rollo, pp. 166-225).
According to Executive Secretary Guingona and GAB Chairman Cepeda, respondent Judge Reyes acted without
jurisdiction and with grave abuse of discretion in issuing said orders and writ of preliminary injunction because:
(1) Civil Case No.
94-71656 was not properly assigned to him in accordance with Section 7, Rule 22 of the Revised Rules of Court;
(2) the enforcement of the Directive and Memorandum sought to be enjoined had already been performed or
were already fait accompli; and (3) respondent judge pre-empted this Court in resolving the basic issues raised in
G.R. No. 115044 when he took cognizance of Civil Case No. 94-71656.
A. At the outset, it should be made clear that Section 7 of Rule 22 of the Revised Rules of Court does not require
that the assignment of cases to the different branches of a trial court should always be by raffle. The Rule talks of
assignment "whether by raffle or otherwise." What it requires is the giving of written notice to counsel or the
parties "so that they may be present therein if they so desire."
Section 7 of Rule 22 provides:
Assignment of cases. In the assignment of cases to the different branches of a Court of First Instance, or
their transfer from one branch to another whether by raffle or otherwise, the parties or their counsel shall be
given written notice sufficiently in advance so that they may be present therein if they so desire.
However, there may be cases necessitating the issuance of a temporary restraining order to prevent irreparable
injury on the petitioner.
To await the regular raffle before the court can act on the motion for temporary restraining order may render the
case moot and academic. Hence, Administrative Circular No. 1 dated January 28, 1988 was issued by this Court
allowing a special raffle. Said Circular provides:
8.3. Special raffles should not be permitted except on verified application of the interested party who seeks
issuance of a provisional remedy and only upon a finding by the Executive Judge that unless a special
raffle is conducted irreparable damage shall be suffered by the applicant. The special raffle shall be
conducted by at least two judges in a multiple-sala station.
In a case where a verified application for special raffle is filed, the notice to the adverse parties may be dispensed
with but the raffle has to "be conducted by at least two judges in a multiple-sala station."
The Republic does not claim that Administrative Circular No. 1 has been violated in the assignment of the case to
respondent Judge. The presumption of regularity of official acts therefore prevails.
Going back to Section 7 of Rule 22, this Court has rules in Commissioner of Immigration v. Reyes, 12 SCRA 728
(12964) that the purpose of the notice is to afford the parties a chance to be heard in the assignment of their
cases and this purpose is deemed accomplished if the parties were subsequently heard. In the instant case,
Executive Secretary Guingona and GAB Chairman Cepeda were given a hearing on the matter of the lack of
notice to them of the raffle when the court heard on September 23, 1994 their Motion to Recall Temporary
Restraining Order, Urgent Supplemental Motion to Recall Temporary Restraining Order and Opposition to
Issuance of a Writ of Preliminary Issuance of a Writ of Preliminary Injunction (G.R. No. 117263, Rollo p. 434).
Petitioners in G.R. No. 117263 failed to shown any irregularity attendant to the raffle or any prejudice which befell
them as a result of the lack of notice of the raffle of Civil Case No. 94-71656.
On the other hand, petitioners never asked for a re-raffle of the case or for any affirmative relief from the trial
court and proceeded with the presentation of evidence of ADC in connection with the motion for preliminary
injunction.
B. The purpose of a temporary restraining order or preliminary injunction, whether preventive or mandatory, is
merely to prevent a threatened wrong and to protect the property or rights involved from further injury, until the
issues can be determined after the hearing on the merits (Ohio Oil Co. v. Conway, 279 U.S. 813, 73 L. Ed. 972,
49 S. Ct. 256; Gobbi v. Dilao, 58 Or. 14, 111 p. 49, 113, p. 57). What is intended to be preserved is the status
quo ante litem motam or the last actual, peaceable, noncontested status (Annotation, 15 ALR 2d 237).
In the case at bench, the status quo which the questioned orders of Judge Reyes sought to maintain was that
ADC was operating the jai-alai pursuant to Ordinance No. 7065 of the City of Manila, the various decisions of the
different courts, including the Supreme Court, and the licenses, permits and provisional authority issued by GAB
itself.
At times, it may be necessary for the courts to take some affirmative act essential to restore the status quo (Iowa
Natural Resources Council v. Van See [Iowa] 158 N.W. 2d. 111).
The right to conduct a business or to pursue one's business or trade without wrongful interference by others is a
property right which equity will, in proper cases, protect by injunction, provided of course, that such occupation or
vocation is legal and not prohibited by law (Rance v. Sperry & Hutchinson Co., 410 P. 2d 859).
Had not the Directive to close the operation of ADC's jai-alai and the implementing Memorandum been issued,
there would have been no need for the issuance of the orders of the Regional Trial Court. The need for said
equitable reliefs becomes more evident if we consider that the Executive Secretary himself had entertained
doubts as to the legality of his action because in the same Directive he instructed the Solicitor General to obtain a
judicial ruling on the legal issues raised.
C. Respondent Judge Reyes did not pre-empt this Court in deciding the basic issues raised in G.R. No. 115044
when it assumed jurisdiction over Civil Case No. 94-71656 and issued the orders questioned in G.R. No. 117263.
The orders of Judge Reyes are provisional in nature and do not touch on the merits of the case. The issues
raised in Civil Case No. 94-71656 are the validity of the Directive and Memorandum, which were issued after the
decision of this Court in G.R. No. 115044. The respondent in the civil case before the trial court are not even
parties in G.R. No. 115044.
PUNO, J., dissenting:
The petitions at bench involve great principles of law in tension. On balance at one end is the high prerogative of
the State to promote the general welfare of the people thru the use of police power; on the opposite end is the
right of an entity to have its property protected against unreasonable impairment by the State. courts accord the
State wide latitude in the exercise of its police power to bring about the greatest good of the greatest number. But
when its purpose is putrefied by private interest, the use of police power becomes a farce and must be struck
down just as every arbitrary exercise of government power should be stamped out.
I will confine myself to the jugular issue of whether or not Associated Development Corporation (ADC) still
possesses a valid franchise to operate jai-alai in manila. The issue is multi-dimensional considering its
constitutional complexion.
First, the matrix of facts. On June 18, 1949, congress enacted Republic Act No. 409, otherwise known as the
Charter of Manila. Section 18 (jj) gave to the Municipal Board (now City Council) the following power:
(jj) To tax, license, permit and regulate wagers or betting by the public on boxing, sipa, bowling, billiards,
pools, horse or dog races, cockpits, jai-alai, roller or ice skating or any porting or athletic contest, as well as
grant exclusive rights to establishments for this purpose, notwithstanding any existing law to the contrary.
On June 20, 1953, congress passed Republic Act No. 954 entitled "An Act to Prohibit Certain Activities in
Connection with Horse Races and Basque pelota Games (Jai-Alai) and to Prescribe penalties for its Violation."
Sections 4 and 5 of the law provide:
xxx xxx xxx
Sec. 4. No person, or group of persons, other than the operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games (Jai-Alai), shall offer, take or arrange bets on any basque pelota
game or event, or maintain or use a totalizer or other device, method or system to bet or gamble on any
basque pelota game or event.
Sec. 5. No person, operator, or maintainer of a fronton with legislative franchise to conduct basque pelota
games shall offer, take, or arrange bets on any basque pelota game or event, or maintain or use a
totalizator or to her device, method or system to bet or gamble on any basque pelota game or event
outside the place, enclosure, or fronton where the basque pelota game is held.
On September 7, 1971, the Municipal Board of Manila approved Ordinance No. 7065 "authorizing the Mayor to
Allow and Permit the Associated Development Corporation to Establish, Maintain and Operate a Jai-Alai in the
city of Manila, Under Certain Terms and Conditions And For Other Purposes."
On September 21, 1972, martial law was declared by then president Ferdinand E. Marcos. The 1971
Constitution, as amended, authorized the former President to exercise legislative powers. Among the laws he
decreed is P.D. No. 771, "Revoking All Powers And Authority Of Local Government(s) to Grant Franchise,
License Or Permit And Regulate Wagers Or Betting By The Public On Horse And Dog Races, Jai-Alai, Or
Basque pelota And Other Forms of Gambling." its Text states:
xxx xxx xxx
Sec. 1. Any provision of law to the contrary notwithstanding, the authority of Chartered Cities and other
local governments to issue license, permit or any form of franchise to operate, maintain and establish horse
and dog race tracks, jai-alai or other forms of gambling is hereby revoked.
 Sec. 2. Hereafter all permit or franchise to operate, maintain and establish horse and dog race tracks, jai-
alai and other forms of gambling shall be issued by the national government upon proper application and
verification of the qualifications of the applicant: Provided, That local governments may, upon clearance
from the chief of constabulary and during town fiestas and holidays, continue to issue permits for minor
games which are usually enjoyed by the people during such celebrations.
Sec. 3. All existing franchises and permits issued by local government are hereby revoked and may be
renewed only in accordance with this Decree.
P.D. No. 771 was enacted on August 20, 1975 and purportedly revoked the permit of ADC to operate. Before two
(2) months could elapse or on October 16, 1975, then President Marcos issued P.D. No. 810 granting a franchise
to Philippine Jai-Alai and Amusements corporation to conduct jai-alai games in Manila. it is not disputed that his
brother-in-law, Mr. Alfredo "Berjo" Romualdez, held the controlling interest in Philippine Jai-alai and Amusements
Corporation. apparently, the favored treatment given to Mr. Romualdez and company did not sit well with former
President Corazon C. Aquino. On May 8, 1987, she issued Executive Order No. 169 repealing P.D. No. 810.
Nevertheless, she allowed P.D. No. 771 to stay in our statutes book.
ADC thought it could resume its jai-alai operation. On May 5, 1988, it sought from then mayor Gemiliano C.
Lopez, Jr., of Manila a permit to operate on the strength of Ordinance No. 7065. The request was refused and
this Spawned suits1 all won by ADC. In Civil Case No. 88-45660, filed in Br. 40, RTC, Manila, Judge Augusto E.
Villarin ruled that Ordinance No. 7065 created a binding contract between the city of Manila and ADC, and
hence, the City Mayor had no discretion to deny ADC's permit. The ruling was appealed to the Court of Appeals
where it was docketed as CA-G.R. SP No. 16477. On February 9, 1989, however, Mayor Lopez withdrew the
city's appeal. Still, the legal problems of ADC did not disappear. Manila Mayor Alfredo Lim who succeeded Mayor
Lopez again refused to issue ADC's permit despite orders of Judge Felipe G. Pacquing. 2 Threatened with
contempt, Mayor Lim filed with this Court G.R. No. 115044, a petition for certiorari. He alleged that he could not
be compelled to enforce the Decision in Civil Case No. 88-45660 as the same is null and void for want of
jurisdiction of the court that rendered it. He likewise contended that Ordinance No. 7065 had been revoked by
P.D. No. 771. On September 1, 1994, the First division of this court, speaking thru Mr. Justice Camilo Quiason,
dismissed Mayor Lim's petition. It held:
xxx xxx xxx
Petitioners failed to appreciate the distinction between a void and an erroneous judgment and between
jurisdiction and the exercise of jurisdiction.
Having jurisdiction over the civil case, whatever error may be attributed to the trial court, is simply one of
judgment, not of jurisdiction. an error of judgment cannot be corrected by certiorari but by appeal (Robles v.
House of Representatives Electoral Tribunal, 181 SCRA 780 [1990]; De Castro v. Delta Motor Sales
Corporation, 57 SCRA 344 [1978]; Galang v. Endencia, 73 Phil. 391 [1941].
The issue on the cancellation of Ordinance No. 7065 by president Marcos could have been raised as a
special defense in Civil Case No. 88-54660 but was not . . .
The City of Manila should have pursued in the appellate courts its appeal questioning the dismissal of Civil
Case No. 91-58913, where the trial court ruled that Mayor Lopez and the city could no longer claim that
Ordinance No. 7065 had been cancelled by president Marcos because they failed to raise this issue in Civil
Case No. 88-54660.
At any rate, the unilateral cancellation of the franchise, which has the status of a contract, without notice,
hearing and justifiable cause is intolerable in any system where the rule of Law prevails (Poses v. Toledo
Transportation Co., 62 Phil. 297 [1935]; Manila electric Co., v. Public utility commissioners, 30 Phil. 387
[1915].
Upon its receipt, Mayor Lim manifested he would comply with the Decision. He did not file a motion for
reconsideration. it was then that the Republic started its own legal battle against ADC. it intervened in G.R. No.
115044, raising several issues, especially ADC's lack of a valid legislative franchise to operate jai-alai. No less
than Executive Secretary Teofisto Guingona directed the Games and Amusement Board, then headed by Mr.
Francisco R. Sumulong, jr., to hold in abeyance the grant of authority, or if any had been issued, to withdraw
such grant of authority in favor of ADC. The GAB dutifully ordered ADC to cease and desist from operating the
Manila jai-alai. ADC again rushed to the RTC of Manila and filed Civil Case No. 94-71656 which was raffled to Br.
14, presided by respondent Judge Vetino Reyes. Acting with dispatch, respondent judge temporarily restrained
the GAB from withdrawing the provisional authority of ADC to operate. After hearing, the temporary restraining
order was converted into writs of preliminary injunction and preliminary mandatory injunction upon posting by
ADC of a P2 million bond. these writs are challenged in these consolidated petitions as having been issued in
grave abuse of discretion amounting to lack of jurisdiction.
While the petitions at bench are checkered with significant substantive and procedural issues, I will only address
the contention that ADC has no existing legislative franchise. The contention is anchored on two (2) submissions:
first, ADC has no legislative franchise as required by R.A. No. 954, and second, even if the city of Manila
licensed ADC to operate jai-alai, its authority was nevertheless revoked by section 3 of P.D. No. 771.
I find as completely baseless petitioners' submission that R.A. No. 954 requires a legislative franchise to operate
a jai-alai, in effect, revoking the power of the City of Manila to issue permits for the same purpose as granted by
its Charter. A 20-20 visual reading of R.A. No. 954 will not yield the suggested interpretation by petitioners. the
titles of R.A. No. 954 will immediately reveal that the law was enacted to achieve a special purpose. It states: "An
Act To Prohibit Certain Activities In Connection With Horse Races And Basque pelota Games (Jai-Alai), And To
Prescribe Penalties For its Violation." The prohibited activities related to jai-alai games are specified in sections 4
to 6, viz:
Sec. 4. No person, or group of persons, other than the operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games (Jai-Alai), shall offer, take or arrange bets on any basque
pelota game or event, or maintain or use a totalizator or other device, method or system to bet or gamble
on any basque pelota game or event.
Sec. 5. No person, operator, or maintainer of fronton with legislative franchise to conduct basque
pelota games shall offer, take or arrange bets on any basque pelota game or event, or maintain or use a
 totalizator or other device, method or system to bet or gamble on any basque pelota game or event outside
the place, enclosure, or fronton where the basque pelota game is held.
Sec. 6. No person or group of persons shall fix a basque pelota game for the purpose of insuring the
winning of certain determined pelotari or pelotaris.
The Title of R.A. No. 954 does not show that it seeks to limit the operation of jai-alai only to entities with franchise
given by Congress. what the title trumpets as the sole subject of the law is the criminalization of certain practices
relating to jai-alai games. The title of a law is a valuable intrinsic aid in determining legislative intent.3
The Explanatory Note4 of House Bill 3204, the precursor of R.A. No. 954, also reveals that the intent of the law is
only to criminalize the practice of illegal bookies and game-fixing in jai-alai. It states:
This bill seeks to prohibit certain anomalous practice of "bookies" in connection with the holding of horse
races or "basque pelota" games. The term "bookie" as commonly understood refers to a person, who
without any license therefor, operates outside the compounds of racing clubs and accepts bets from the
public. They pay dividends to winners minus a commission, which is usually 10%. Prosecutions of said
persons have been instituted under Act No. 4240 which was enacted in 1935. However, in a recent opinion
released by the City Fiscal of Manila he maintains that Act No. 4240 has already been repealed, so that the
present law regulating ordinary horse races permits "bookies" to ply their trade, but not on sweepstakes
races and other races held for charitable purposes. With the operation of "booking" places in the City of
Manila, the Government has been losing no less than P600,000.00 a year, which amount represents the
tax that should have been collected from bets made in such places. for these reasons, the approval of the
bill is earnestly recommended.
As said Explanatory Note is expressive of the purpose of the bill, it gives a reliable keyhole on the scope and
coverage of R.A. No. 954.5 Nothing from the Explanatory Note remotely suggests any intent of the law to revoke
the power of the City of Manila to issue permits to operate jai-alai games within its territorial jurisdiction.
The Debates6 in Congress likewise reject the reading of R.A. No. 954 by petitioners, thus:
xxx xxx xxx
RESUMPTION OF SESSION
THE SPEAKER. The session is resumed
MR. CINCO. Mr. Speaker, I withdraw my motion for postponement.
MR. CALO. Mr. Speaker, will the gentleman may yield, if he so desires.
MR. ZOSA. Willingly.
MR. CALO. What is the national import of this bill?
MR. ZOSA. Mr. Speaker, this bill prohibits certain activities in connection with horse races and jai-Alai
games which are
licensed by the government. At present, there are many
practices in connection with the holding of these games
which deprive the government of income that should
legally go into the government coffers as taxes.
MR. CALO. Is not this matter of national importance because Jai-Alai
games and horse races are held only in Manila?
MR. ZOSA. Precisely, Mr. Speaker, they are played on a big scale, and
there are many practices which deprive the government of
income to which it is entitled. I think the gentleman from
Agusan is a member of the Committee on Appropriations.
The governments will have more revenues, if we shall
approve this bill.
Again, legislative debate is a good source to determine the intent of a
law.7
To top it all, the text of R.A. no. 954 itself does not intimate that it is repealing any existing law, especially section
18 (jj) of R.A. no. 409, otherwise known as the Charter of Manila. Indeed, R.A. No. 954 has no repealing
provision. The reason is obvious — it simply prohibited certain practices in jai-alai then still unregulated by the
laws of the land. It did not regulate aspects of jai-alai already regulated by existing laws, like the matter of
whether it is the national government alone that should issue franchises to operate jai-alai games.
The subsequent enactment of P.D. No. 771 on August 20, 1975 further demolished the submission of petitioners.
In clear and certain language, P.D. no. 771 recalled the owner of local governments to issue jai-alai franchises
and permits. It also revoked existing franchises and permits issued by local governments. If R.A. no. 954 had
already disauthorized local governments from granting franchisers and permits, there would be no need to enact
P.D. no. 771. No rule of statutory construction will be considered any law a meaningless redundancy.
The passage of P.D. No. 771, also negates petitioners' insistence that for ADC to continue operating, it must
show it has a franchise from Congress, not just a permit from the City of Manila. The suggested dichotomy
between a legislative franchise and city permit does not impress. If the City of Manila is empowered to license the
ADC it is because the power was delegated to it by Congress. The acts of the City of Manila in the exercise of its
delegated power bind Congress as well. Stated otherwise, the permit given by the City to ADC is not any whit
legally inferior to a regular franchise. Through the years, the permit given by the City endows the
grantee complete right to operate. Not once, except in these cases, has the national government questioned the
completeness of his right. For this reason, P.D. No. 771 has to take revoke all existing franchises and permits
without making any distinction. It treated permits in the same class as franchises.
Petitioners' second line of argument urges that in any event, Section 3 of P.D. No. 771 expressly
revoked all existing franchises and permits to operate jai-alai games granted by local governments, including the
permit issued to ADC by the City of Manila through Ordinance No. 7065. For its resolution, petitioners' argument
requires a re-statement of the requirements for the valid exercise of police power.
It was the legendary Chief Justice Marshall who first used the phrase police power in 1824. 8 Early attempts to fix
the metes and bounds of police power were unsuccessful.9 For of all the inherent powers of the State, police
power is indubitably the most pervasive, 10 the most insistent and the least limitable. 11 Rooted on the latin
maxims, salus populi suprema est lex (the welfare of the people if the supreme law) and sic utere tuo ut alienum
non laedas (so use your property as not to injure the property of others), it was not without reason for Justice
Holmes to stress that its reach extends "to all the great public needs." 12 A similar sentiment was echoed by our
own Justice Laurel in Alalang v. Williams 13 who defined police power as the "state authority to enact legislation
that may interfere with personal liberty or property in order to promote the general welfare." Over the years,
courts recognized the power of legislature to enact police regulations on broad areas of state concern: (a) the
preservation of the state itself and the unhindered execution of its legitimate functions; (b) the prevention and
punishment of crime; (c) the preservation of the public peace and order; (d) the preservation of the public safety;
(e) the purity and preservation of the public morals; (f) the protection and promotion of the public health (g) the
regulation of business, trades, or professions the conduct of which may affect one or other of the objects just
enumerated; (h) the regulation of property and rights of property so far as to prevent its being used in a manner
dangerous or detrimental to others; (i) the prevention of fraud, extortion, and oppression; (j) roads and streets,
and their preservation and repair; and (k) the preservation of game and fish. 14
But while the State is bestowed near boundless authority to promote public welfare, still the exercise of police
power cannot be allowed to run riot in a republic ruled by reason. Thus, our courts have laid down the test to
determine the validity of a police measure as follows: (1) the interest of the public generally, as distinguished
from those of particular class, requires its exercise; and (2) the means employed are reasonably necessary for
the accomplishment of the purpose and not unduly oppresive upon individuals. 15 Deeper relexion will reveal that
the test reiterates the essence of our constitutional guarantees of substantive due process, equal protection, and
non-impairment of property rights.
We now apply this lucidly-lined test to the petitions at bench. To reiterate, P.D. No. 771 utilized two methods to
regulate jai-alai: First, it reverted the power to issue franchise and permit to the national government, second, it
revoked all existing franchise and permit issued by local governments.
I concede that the first method is invulnerable even to the strongest of constitutional attack. Part of the plenary
power of Congress to make laws is the right ot grant franchise and permits allowing the exercise of certain
privileges. Congress can delegate the exercise of this innate power to grant franchises as it did to the City of
Manila when it granted its charter on June 18, 1949 thru R.A. no. 409. Congress can also revoke the delegated
power and choose to wield the power itself as it did thru then President Marcos who exercised legislative powers
by enacting P.D. No. 771. In the petitions at bench, Congress revoked the power of local government to issue
franchises and permits which it had priorly delegated. In doing so and in deciding to wield the power itself to meet
the perceived problems of the time, the legislature exercised its distinct judgment and the other branches of
government, including this Court, cannot supplant this judgment without running afoul of the principle of
separation powers. To be sure, this particular legislative method to regulate the problem of mushrooming
applications for jai-alai franchise cannot be faulted as bereft of rationality. In the hearing of the petitions at bench,
Executive Secretary Guingona established the fact that at the time of the enactment of P.D. No. 771, there were
numerous applications to run jai-alai games in various cities and municipalities of the archipelago. To prevent the
proliferation of these applications and minimize their ill effects, the law centralized their screening by the national
government alone. The law excluded local governments in the process. The revocation of the delegated power to
local governments does not impair any right. Applicants to franchises have no right to insist that their applications
be acted upon by local governments. Their right to a franchise is only in purpose.
The second method adopted by Section 3 of P.D. No. 771 which revoked all existing franchises and permits is,
however, constitutionally impermissible. On its face, section 3 purports to revoke all existing franchises and
permits. During the oral argument of the petitions at bench, however, it was admitted
that at the time P.D. No. 771 was enacted, only ADC is actually operating a jai-alai. 16 The purported revocation
of all franchises and permits when there was only one existing permit at that time is an unmistakeable attempt to
mask the law with impartiality. No other permit was affected by said sec. 3 except ADC.
Truth, however, has its own time of sprouting out. The truth behind the revocation of ADC's franchise revealed
itself when former President Marcos transferred ADC's franchise to the Philippine Jai-Alai and Amusements
Corporation then under the control of his brother-in-law, Mr. Alfredo "Bejo" Romualdez. The favored treatment
was extended hardly two (2) months after the revocation of ADC's franchise and it left Philippine Jai-Alai and
Amusements Corporation the sole jai-alai operator in the Philippines. The Court is not informed of any distinction
of PJAC that will justify its different treatment. The evidence is thus clear and the conclusion is irresistable that
section 3 of P.D. No. 771 was designed with a malignant eye against ADC.
In light of the established facts in field, section 3 of P.D. No. 771 must be struck down as constitutionally infirmed.
despite its cosmetics, section 3 cannot be unblushingly foisted as a measure that will promote the public welfare.
There is no way to treat the self-interest of a favored entity as identical with the general interest of a favored
entity as identical with the general interest of the Filipino people. It will also be repulsive to reason to entertain the
thesis that the revocation of the franchise of ADC is reasonably necessary to enable the State to grapple to the
ground the evil of jai-alai as a form of gambling. Petitioners have not demonstrated that government
lacks alternative options to succeed in its effort except to cancel the lone franchise of ADC. Well to stress, it is
not the lofty aim of P.D. No. 771 to completely eradicate jai-alai games; it merely seeks to control its
multiplication by restoring the monopoly of the national government in the dispensation of franchises.
Prescinding from these premises, I share the scholarly view of Mr. Justice Quiason that sec. 3 of P.D. No. 771
offends the Constitution which demands faithful compliance with the requirements of substantive due process,
equal protection of the law, and non-impairment of contracts. capsulizing their essence, substantive due process
exacts fairness; equal protection disallows distinction to the distinctless; and the guaranty of non-impairment of
contract protects its integrity unless demanded otherwise by the public good. Constitutionalism eschews the
exercise of unchecked power for history demonstrates that a meandering, aimless power ultimately tears apart
the social fabric of society. Thus, the grant of police power to promote public welfare cannot carry with it the
privilege to be oppressive. The Constitution ordained the State not just to achieve order or liberty but to
attain ordered liberty, however elusive the balance may be. Cognizant of the truism that in life the only constant is
change, the Constitution did not design that the point that can strike the balance between order and liberty should
be static for precisely, the process of adjusting the moving point of the balance gives government greater
elasticity to meet the needs of the time.
It is also my respectful submission that the unconstitutionality of section 3 of P.D. No. 771 was not cured when
former President Aquino used it in revoking P.D. No. 810 which granted Philippine Jai-Alai and Amusements
Corporation a franchise to operate jai-alai in Manila. The subsequent use of said section should not obfuscate the
fact that the law was enacted in the wrongful exercise of the police power of the State. There is no sidestepping
the truth that its enactment inflicted undue injury on the right s of ADC and there can be no reparation of these
rights until and unless its permit to continue operating jai-alai in Manila is restored. Cancelling the franchise of
Philippine Jai-Alai and Amusements Corporation is an act of Justice to ADC if its franchise would be left
unrecognized. Since the unconstitutionality of section 3 is congenital, it is beyond redemption.
But while I wholeheartedly subscribe to the many impeccable theses of Mr. Justice Quiason, it is with regret that I
cannot join his submittal that sec. 3 of P.D. No. 771 violates procedural due process. We are dealing with the
plenary power of the legislature to make and amend laws. Congress has previously delegated to the City of
Manila the power to grant permits to operate jai-alai within its territorial jurisdiction and ADC's permit could have
been validly revoked by law if it were demonstrated that its revocation was called for by the public good and is
not capricious. In ascertaining the public good for the purpose of enacting a remedial law, it is not indispensable,
albeit sometimes desirable, to give notice and hearing to an affected party. The data the legislature seeks when
engaged in lawmaking does not focus on the liability of a person or entity which would require fair hearing of the
latter's side. In fine, the legislature while making laws is not involved in establishing evidence that will convict, but
in unearthing neutral data that will direct its discretion in determining the general good.
The suggested notice and hearing before a franchise can be cancelled has another undesirable dimension. It
does not only unduly cramp the legislature in its method of data-gathering, it also burdens the legislature with too
much encumbrance in the exercise of its police power to regulate gambling. However heavily laden with property
rights a franchise to operate jai-alai maybe, it is still a contract which under appropriate circumstances can be
revoked to enhance public interest. Jai-alai may be a game of a thousand thrills but its true thrill comes from the
gambling on its indeterminate result. Beyond debate, gambling is an evil even if its advocates bleach its
nefariousness by upgrading it as a necessary evil. In a country where it is a policy to promote the youth's
physical, moral, spiritual, intellectual, and social well-being, 17 there is no right to gamble, neither a right to
promote gambling for gambling is contra bonos mores. To require the legislature to strictly observe procedural
before it can revoke a gambling due process before it can revoke a gambling franchise is to put too much
primacy on property rights. We then stand in danger of reviving the long lamented 1905 ruling in Lochner v. New
York 18 which unwisely struck down government interference in contractual liberty. The spirit of liberalism which
provides the main driving force of social justice rebels against the resuscitation of the ruling Lochner from its
sarcophagus. We should not be seduced by any judicial activism unduly favoring private economic interest 19 at
the expense of the public good.
I also support the stance of Mr. Justice Quiason which resisted the stance that the Court should close its eyes to
allegations that section 3 of P.D. No. 771 was conceived and effected to give naked preference to a favored
entity due to pedigree. I reiterate the view that section 1, Article VIII of the Constitution expanding the jurisdiction
of this Court to determine whether or not there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or agency of government is not a pointless postulate. Without the grant of
this new power, it would be difficult, if not impossible, to pierce through the pretentious purposes of P.D. No. 771.
P.D. No. 771 has no right to a reverential treatment for it is not a real law as it is not the product of an authentic
deliberative legislature. Rather, it is the dictate of a public official who then had a monopoly of executive and
legislative powers. As it was not infrequently done at that time, the whereas clauses of laws used to camouflage
a private purpose by the invocation of public welfare. The tragedy is that the bogus invocation of public welfare
succeeded partly due to the indefensible deference given to official acts of government. The new Constitution
now calls for a heightened judicial scrutiny of official acts. For this purpose, it has extirpated even the colonial
roots of our impotence. It is time to respond to this call with neither a pause nor a half-pause.
I therefore vote to declare section 3 of P.D. No. 771 unconstitutional and to dismiss the petitions.
Separate Opinions
KAPUNAN, J., concurring:
Government encroachments on private property however, valid, are always subject to limitations imposed by the
due process and impairment of contracts clauses of the Constitution. The government challenge in the case at
bench, ostensibly involving a franchise granted pursuant to legitimate local legislative authority, on the surface
appears to be an easy one, clothed, as it were in the State's inherent and almost illimitable prerogative to
promote the general welfare and the common good. As the challenge involves a facile conflict between good and
evil, between a universally recognized vice and the State's virtuous posture, the instant case lends itself to easy
adjudication.
Not necessarily. Economic realities have blurred distinctions. The State itself, though in virtuous garb, has at
various times allowed a relaxation of existing rules proscribing gambling and devised a system of regulations,
local and national, through which gambling and otherwise illicit gaming operations may be maintained by those
licensed to do so. As the system has never been perfect, conflict, such as that which existed in the case at
bench, occasionally arises.
The constitutionality of P.D. 771 was not in issue in Lim vs. Pacquing, promulgated by the court's first Division
last September, 1994, where this court sustained an order by Judge Pacquing issued in Civil Case No. 88-45660
compelling Manila Mayor Alfredo S. Lim to issue a permit to operate a jail fronton in favor of the Associated
Development Corporation (ADC) pursuant to Manila City Ordinance No. 7065.
After the City of Manila subsequently granted ADC a permit to operate the jai-alai fronton, Chairman Francisco
Sumulong, Jr. of the Games and Amusements Board issued on September 9, 1994 a provisional authority to
open the fronton subject to certain conditions imposed therein. In relation to this, the GAB likewise issued to the
ADC, on 12 September 1994, License No. 94-008 upon payment of the corresponding fees.
On September 13, 1994, Executive Secretary Teofisto Guingona directed GAB Chairman Sumulong "to hold in
abeyance the grant of authority or if any has been issued, to withdraw such grant of authority"1 to the ADC.
Consequently, on September 14, 1994, the GAB Chairman revoked the provisional authority issued by his office,
until the legal issues raised in the September 13 directive of the Executive Secretary are resolved in the proper
court. Said directive identified the legal issues as centering on 1) the constitutionality of P.D. 771; 2) the validity b. That the games to be played daily shall commence not earlier than 5:00 o'clock (sic) in the afternoon;
of the apparent grant in perpetuity of a municipal franchise to maintain jai-alai operations; and, 3) the power of
the city of Manila to issue a jai-alai franchise in view of Executive Order 392 which transferred from local c. That the City of Manila will receive a share of 21/2% of the annual gross receipts of all wagers or bets
governments to the GAB the power to regulate jai-alai. ½% of which will accrue to the Games and Amusements Board as now provided by law;

Reacting to the cancellation of its provisional authority to maintain jai-alai operations, ADC, on September 15, d. That the corporation will in addition pay to the city an annual license fee of P3,000.00 and a daily permit
1994 filed a petition for prohibition, mandamus, injunction and damages with prayer for temporary restraining fee of P200.00;
order and writ of preliminary injunction in the Manila Regional Trial Court of against Executive Secretary
Guingona and Chairman Sumulong. The Regional Trial court of manila, Branch 4, through Judge Vetino Reyes
e. That the corporation will to insure its faithful compliance of all the terms and conditions under this
on the same day issued an order enjoining the Executive Secretary and the GAB Chairman from implementing
ordinance, put up a performance bond from a surety acceptable to the City, in the amount of at least
their directive and memorandum, respectively.
P30,000.00.

On September 16, 1994 GAB, representing the Republic of the Philippines, filed a motion for intervention, for
xxx xxx xxx
leave to file a motion for reconsideration-in-intervention and for reference of the case to the Court en banc in
G.R. No. 115044. Acting on this motion, the First Division referred the case to the Court en banc, which, in a
resolution dated 20 September 1994, accepted the same and required the respondents therein to comment. Sec. 3 This ordinance shall take effect upon its approval.

On October 11, 1994 the Executive Secretary and the new GAB Chairman Domingo Cepeda, Jr. filed with this
Court a petition for certiorari, prohibition and mandamus assailing Judge Vetino Reyes' earlier order.
On October 19. 1994, Judge Reyes issued another order granting the ADB's motion for a writ of
preliminary mandatory injunction against the Executive Secretary and the GAB Chairman and to compel them to
issue the necessary authority, licenses and working permits to the ADC, its personnel and players.
The government sought leave to file a supplemental petition (and to admit attached supplemental petition) with
urgent prayer for a restraining order assailing the October 19, 1994 Order of Judge Reyes. We granted leave to
file said supplemental petition and to admit supplemental petition and required respondents therein to file their
comment on October 25, 1994.
The ADC maintains it original position that Ordinance No. 7065, enacted pursuant to the Charter of the City of
Manila under Republic Act No. 409 granted a valid and subsisting municipal franchise for the operation of the
Basque pelota game jai alai. In response to the government's vehement objections against ADC's operation of its
gambling operations2 the ADC for the first time challenged the constitutional validity of P.D. No. 771 insofar as it
revoked the authority granted to it by Ordinance No. 7065 as violative of the non-impairment of contracts and
equal protection clauses of the constitution. Ordinance 7065 reads:
Sec. 1. The Mayor is authorized, as he is hereby authorized to allow and permit the Associated
Development Corporation to establish, maintain and operate a jai-alai in the City of Manila under the
following terms and conditions and such other terms and conditions as he (the Mayor) may prescribe for
good reasons of general interest:
a. That the construction, establishment, and maintenance of the jai-alai shall be at a place permissible
under existing zoning ordinances of Manila;
The above-quoted ordinance is notable in two respects: 1) the absence of a period of expiration suggests that the
grant of authority to operate the Basque pelota game jai-alai seems to have been granted in perpetuity and 2)
while the grant of authority under the Ordinance was made pursuant to R.A. 409, the City Charter of Manila, the
authority granted could best be viewed as a grant of license or permit, not a franchise. Nowhere is it pretended
that Ordinance 7065 is a franchise enacted pursuant to the legislative powers of the Municipal Board of the City
of Manila under Section 18 (jj) thereof.
The absence of authority of the Manila Municipal Board to issue a franchise, notwithstanding its legislative
powers, is furthermore evident in the above-cited Charter provision regulating gambling and other gaming
establishments which enumerates the following powers:
(jj) To tax, license, permit and regulate wagers of betting by the public on boxing . . . cockpits, jai-alai . . . as
well as this purpose, notwithstanding any existing law to the contrary.
Clearly the, if Ordinance 7065 merely grants a permit or a license to operate the jai-alai fronton, I see no conflict
with a national law, duly enacted pursuant to legitime franchise to operate certain gambling and gaming
operations, generally viewed as deleterious to the public welfare and morals, for the purpose of regulating the
same and raising revenue. In other words, the national government may well validly require operators of such
establishments to first secure a legislative franchise before starting their operations. After securing the proper
legislative franchise, they may take then exercise whatever authority granted to them by local legislative bodies
pursuant to the permits or licenses granted by these bodies. This is essentially the spirit ordained by at least two
legislative issuances relating to jai-alai and other gambling operations passed before and after the Manila City
Council issued the ADC's permit to operate.
In June of 1952, Congress enacted R.A. 392 which forbade the taking or arranging of bets on any basque pelota
game by any person or entity other than one with a legislative franchise.3 After the ADC was issued its permit by
the City of Manila in 1971, President Marcos issued P.D. 771 pursuant to his legislative powers during martial
Law, which revoked local authority to grant franchise to certain gambling operations including jai-alai. Section 3
thereof expressly revoked existing gambling franchise issued by the local governments. When President Corazon
Aquino cancelled the franchise granted to the Philippine Jai-alai and Amusement Corporation in 1987, she kept
P.D. 771, which revoked all authority by local governments to issue franchises for gambling and gaming
establishments on one hand, and the municipal ordinance of the City of Manila, granting a permit or license to
operate subject to compliance with the provisions found therein, on the other hand, a legislative franchise may be
required by the government as a condition for certain gambling operations. After obtaining such franchise, the
franchisee may establish operations in any city or municipality allowed under the terms of the legislative
franchise, subject to local licensing requirements. While the City of Manila granted a permit to operate under
Ordinance No. 7065, this permit or authority was at best only a local permit to operate and could be exercised by
the ADC only after it shall have obtained a legislative franchise.
This skirts the constitutional issue. Both P.D. 771 and Ordinance 7065 can stand alongside each other if one
looks at the authority granted by the charter of the City of Manila together with Ordinance No. 7065 merely as an
authority to "allow" and "permit" the operation of jai-alai facilities within the City of Manila. While the constitutional
issue was raised by the respondent corporation in the case at bench, I see no valid reason why we should jump
into the fray of constitutional adjudication in this case, or on every other opportunity where a constitutional issue
is raised by parties before us. It is a settled rule of avoidance, judiciously framed by the United States Supreme
Court in Ashwander v. TVA 4 that where a controversy may be settled on a platform other than one involving
constitutional adjudication, the court should exercise becoming modesty and avoid the constitutional question.
this Court for the general welfare of the people. Justice Holmes in Noble State Bank v. Haskel 12 once
expansively described the police power as "extending to all public needs." Franchise and licensing regulations
aimed at protecting the public from the pernicious effects of gambling are extensions of the police power
addressed to a legitimate public need.
In Lim vs. Pacquing, I voted to sustain the ADC's position on issues almost purely procedural. A thorough
analysis of the new issues raised this time, compels a different result since it is plainly obvious that the ADC,
while possessing a permit to operate pursuant to Ordinance 7065 of the City of Manila, still has to obtain a
legislative franchise, P.D. 771 being valid and constitutional.
On the question of the propriety of the Republic of the Philippine's intervention late in the proceedings in G.R. No.
117263, the ADC counsel's agreeing to have all the issues raised by the parties in the case at bench paves the
way for us to consider the petition filed in G.R. No. 117263 as one for quo warranto.
WHEREFORE, on the basis of the foregoing premises, judgment is hereby rendered:
1. Allowing the republic to intervene in G.R. No. 115044.
2. Declaring that P.D. 771 is a valid and subsisting law.

The State has every legitimate right, under the police power, to regulate gambling operations5 by requiring 3. Declaring that the ADC does not possess the required legislative franchise to operate the jai-alai under
legislative franchises for such operations. Gambling, in all its forms, unless specifically authorized by law and R.A. 954 and P.D. 771.
carefully regulated pursuant to such law, is generally proscribed as offensive to the public morals and the public
good. In maintaining a "state policy" on various forms of gambling, the political branches of government are best 4. Setting aside the writs of preliminary injunction and preliminary mandatory injunction issued by Judge
equipped to regulate and control such activities and therefore assume full responsibility to the people for such Vetino Reyes.
policy.6 Parenthetically, gambling in all its forms, is generally immoral.
DAVIDE, JR., J., concurring:
The disturbing implications of a grant of a "franchise," in perpetuity, to the ADC militates against its posture that
the government's insistence that the ADC first obtain a legislative franchise violates the equal protection and The core issues submitted for the Court's resolution are: (1) in G.R. No. 115044, whether intervention by the
impairment of Contracts clauses of the Constitution. By their very nature, franchise are subject to amendment, republic of the Philippines is proper, and (2) in G.R. No. 117263, whether public respondent Judge Vetino Reyes
alteration or revocation by the State whenever appropriate. Under the exercise of its police power, the State acted with grave abuse of discretion in issuing the temporary restraining order and subsequently the writ of
through its requirement for permits, licenses and franchises to operate, undertakes to regulate what would preliminary mandatory injunction in Civil case No. 94-71656.
otherwise be an illegal activity punished by existing penal laws. The police power to establish all manner of
regulation of otherwise illicit, immoral and illegal activities is full, virtually illimitable and plenary.7
I
In Edu v Ericta8 we defined the police power as "the state authority to enact legislation that may interfere with
As to the first issue, I submit that unless we either amend the rule on intervention or suspend it, the motion to
personal liberty or property in order to promote the general welfare." In its exercise, the State may impose
intervene must be denied. Under Section 2, Rule 12 of the Rules of Court, such motion may be allowed
appropriate impositions or restraints upon liberty or property in order to foster the common good. 9 Such
only before or during a trial. Said section reads:
imposition or restraint neither violates the impairment of contracts nor the equal protection clauses of the
Constitution if the purpose is ultimately the public good.10
Sec. 2. Intervention. — A person may, before or during a trial, be permitted by the court, in its discretion, to
intervene in an action, if he has legal interest in the matter in litigation, or in the success of either of the
Restraints on property are not examined with the same microscopic scrutiny as restrictions on liberty. Such 11

restraints, sometimes bordering on outright violations of the impairments of contract principle have been made by
 parties, or an interest against both, or when he is so situated as to be adversely affected by a distribution or
other disposition of property in the custody of the court or of an officer thereof.
This provision was taken from Section 1, Rule 13 of the old Rules of Court with the modification that the phrase
"at any period of a trial" in the latter was changed to "before or during a trial."1
Section 1, Rule 13 of the old Rules of Court was based on Section 121 of the Code of Civil Procedure which, in
turn, was taken from Section 387 of the Code of Civil procedure of California.2
The phrase "at any period of a trial" in Section 1, Rule 13 of the old Rules of Court has been construed to mean
the period for the representation of evidence by both parties.3 And the phrase "before or during the trial" in
Section 2, Rule 12 of the present Rules of Court "simply means anytime before the rendition of the final
judgment."4Accordingly, intervention could not be allowed after the trial had been concluded 5 or after the trial and
decision of the original case.6
Fundamentally then, intervention is never an independent action but is ancillary and supplemental to an existing
litigation. Its purpose is not to obstruct nor unnecessarily delay the placid operation of the machinery of trial, but
merely to afford one not an original party, yet having a certain right or interest in the pending case, the
opportunity to appear and be joined so he could assert or protect such right or interest.7
The grant of an intervention is left to the discretion of the court. Paragraph (b), Section 2, Rule 12 of the Rules of
Court provides:
(b) Discretion of court. — In allowing or disallowing a motion for intervention, the court, in the exercise of
discretion, shall consider whether or not the intervention will unduly delay or prejudice the adjudication of
the rights of the original parties and whether or not the intervenor's rights may be fully protected in a
separate proceeding.
It is thus clear that, by its very nature, intervention presupposes an existing litigation or a pending case,8 and by
the opening paragraph of Section 2, Rule 12 of the Rules the Rules of Court, it may be properly filed only before
or during the trial of the said case. Even if it is filed before or during the trial, it should be denied if it will unduly
delay or prejudice the adjudication of the rights of the original parties and if the intervenor's rights may be fully
protected in a separate proceeding.9
It is not disputed that the motion to intervene was filed only on 16 September 1994, or on the fifteenth (15th) day
after the First Division had promulgated the decision, and after petitioner Mayor Alfredo Lim complied with or
voluntarily satisfied the judgment. The latter act brought to a definite end or effectively terminated G.R. No.
115044. Consequently, intervention herein is impermissible under the rules. To grant it would be a capricious
exercise of discretion. The decision of this Court in Director of Lands vs. Court of
Appeals 10 cannot be used to sanction such capriciousness for such decision cannot be expanded further to
justify a new doctrine on intervention. In the first place, the motions to intervene in the said case were filed before
the rendition by this Court of its decision therein. In the second place, there were unusual and peculiar
circumstances in the said case which this Court took into account. Of paramount importance was the fact that the
prospective intervenors were indispensable parties, and so this Court stated therein:
But over and above these considerations and circumstances which We have pointed out, there is the basic
and fundamental requirement under the Rules of Court, Section 7, Rule 3, that "Parties in interest without
whom no final determination can be had of an action shall be joined either as plaintiff or defendants." The
joinder of indispensable parties is compulsory under any and all conditions, their presence being a sine qua
non of the exercise of judicial power. [Borlasa vs. Polistico, 47 Phil. 345, 348].
The herein movants, Greenfield Development Corporation, Alabang Development Corporation, Ramon D.
Bagatsing, and all buyers from them, at least those with ostensible proprietary interests as the MERALCO,
Alabang Hills Subdivision, Cielito Homes Subdivision, Tahanan Village, the Ministry of Highways insofar as
the South Super Highway is affected, are indispensable parties to these proceedings as it has been shown
affirmatively that they have such an interest in the controversy or subject matter that a final adjudication
cannot be made, in their absence, without injuring or affecting such interest. The joinder must be ordered in
order to prevent multiplicity of suits, so that the whole matter in dispute may be determined once and for all
in one litigation.
And, squarely on the aspect of intervention, it found that the denial thereof
will lead the Court to commit an act of injustice to the movants, to their successors-in-interest and to all
purchasers for value and in good faith and thereby open the door to fraud, falsehood and
misrepresentation, should intervenors' claims be proven to be true. For it cannot be gainsaid that if the
petition for reconstitution is finally granted, the chaos and confusion arising from a situation where the
certificates of title of the movants covering large areas of land overlap or encroach on properties the title to
which is being sought to be reconstituted by private respondent, who herself indicates in her Opposition
that, according to the Director of Lands, the overlapping embraces some 87 hectares only, is certain and
inevitable.
Then too, it may be stressed that said case originated from a proceeding to reconstitute a certificate of title filed
by private respondent. After trial, the Court of First Instance issued an order denying the petition for insufficiency
of evidence. After a motion for new trial was granted and a hearing to receive the newly discovered evidence was
completed, the court issued an order again denying the reconstitution sought for as it still doubted the authenticity
and genuineness of the Transfer of Certificate of Title sought to be reconstituted. The private respondent
appealed the order to the Court of Appeals which thereafter promulgated a decision reversing the aforesaid
orders of the trial court. The Director of Land, which was the remaining oppositor, filed a motion for a new period
to file a motion for reconsideration of the decision alleging excusable negligence. Private respondent filed an
opposition thereto. Without waiting for the resolution of the motion, the Director filed a motion to admit the motion
for reconsideration attaching thereto said motion for reconsideration. The Court of Appeals issued a resolution
denying both motions on the ground that the decision had already become final. This was the resolution which
the Director assailed in his petition for review filed with this Court.
Considering then that the intervention in the case at bar was commenced only after the decision had been
executed, a suspension of the Rules to accommodate the motion for intervention and the intervention itself would
be arbitrary. The Government is not without any other recourse to protect any right or interest which the decision
might have impaired.
May the motion to intervene and intervention proper be, nevertheless, treated as a petition for quo warranto? The
majority opinion answers it in the affirmative because all the essential requisites for a petition for quo
warranto are present in said pleadings. I am almost tempted to agree with that opinion if not for the fact that there
is pending before the Regional Trial Court of Manila Civil Case No. 94-71656 which is a petition for
prohibition, mandamus, injunction, and damages filed by the Associated Development Corporation against
Executive Secretary Guingona and then Games and Amusement Board (GAB) Chairman Sumulong. That is the
more appropriate forum where the Government and petitioner Guingona may challenge the validity of ADC's
franchise. Its filing was provoked by the withdrawal by the GAB of the provisional authority it granted to ADC in
view of the 13 September 1994 directive of Executive Secretary Guingona informing the GAB of sufficient bases
to hold in abeyance the operation of the jai-alai until the legal questions into the validity of the franchise issued to
ADC. Consequently, it is to be logically presumed that for its affirmative defenses in Civil Case No. 94-71656 the
Government would raise the same issues raised in the intervention in G.R. No. 117263.
Accordingly, I vote to deny the motion for intervention in G.R. No. 115044.
II
However, I vote to partially grant the petition in G.R. No. 117263 insofar as wagering or betting on the results
order and the preliminary mandatory injunction issued by respondent Judge cannot legally and validly allow such
wagering and betting. It was precisely for this reason that I earlier voted to grant a temporary restraining order in
G.R. No. 115044 and G.R. No. 117263 to restrain wagering or betting. I wish to reiterate here what I stated in my
supplemental concurring opinion in G.R. No. 115044:
Secondly, to make my position clear that the dismissal of the petition should not be construed as
compelling the City of Manila to authorize gambling by allowing betting on the results of jai-alai. The
decision merely dismissed the petition because the Court found " no abuse of discretion, much less lack of
excess of jurisdiction, on the part of the respondent judge" in issuing the challenged order directing the
petitioner to issue a permit or license in favor of the private respondent pursuant to Ordinance No. 7065.
That order was to enforce the final and executory decision of the Regional Trial Court of 9 September 1988
in Civil Case No. 88-45660, the appeal therefrom to the Court of Appeals by the City of Manila having been
withdrawn by it on 9 February 1989. That decision ordered the City of Manila to immediately issue to the
private respondent "the permit/license required under Ordinance No. 7065." The City of Manila did in fact
issue the required permit or license to the private respondent for the operation of the jai-alai in Manila for
the years 1988 to 1992. Nevertheless, when the jai-alai complex was almost completed, the City Mayor
refused to renew the Mayor's Permit.
There is a clear distinction between the initial duty of the City Mayor under Ordinance No. 7065 to issue the
necessary license or permit to establish the jai-alai fronton and to maintain and operate the jai-alai, and his
subsequent discretion to impose other terms and conditions for the final contract relative to such operation.
The trial court specifically said so in its decision of 9 September 1989. Thus:
A suggestion has been made in the Answer that a writ of mandamus will not lie against respondents,
particularly the Mayor, because "the availment of the franchise . . . is subject to the terms and
conditions which the respondent Mayor may impose."
A careful reading however, of Ordinances 7065 will readily show that the discretion, if any, allowed
respondent Mayor, under the ordinance, will be exercisable only after the permit, which he is mandated
to issue, had been issued and the jai-alai fronton is already operational. The ordinance stipulates that
the Mayor is authorized "to allow and permit petitioner to establish, maintain and operate a jai-alai in
the City of Manila," under the five conditions enumerated in subparagraphs "a" to "e" of Section 1 of the
Ordinance. By a simple reading of these "terms and conditions" patently shows that subparagraphs "b"
to "e" are clearly conditions that will only come into play after the jai-alai has been put up or
established; while the condition under subparagraph "a" appears to have been complied with
satisfactorily by the petitioner, since no objection at all has been made by respondents to the proposed
site for jai-alai fronton, that is, the 25,000 sq. m. land area behind the present Harrison Plaza Complex
located at Ermita, Manila.
Consequently, the Mayor's Permit sough to be renewed or the motion before the lower court to compel the
Mayor to renew it, has reference only to subparagraph (a), Section 1 of Ordinance No. 7065. The renewal
of the permit can by no stretch of the imagination be taken as a final contract between the private
respondent and the City of Manila for otherwise it would remove the power and authority of the Mayor
under the ordinance to impose "other terms and conditions as he may prescribe for good reasons of
general interest."
It follows then that the Mayor's Permit ordered by the trial court to be issued to the private respondent is not
a license or authority to allow betting or wagering on the results of the jai-alai games. Jai-alai is a sport
based on skill. Under Article 197 of the Revised Penal Code, before it was amended by P.D. No. 1602,
betting upon the result of any boxing or other sports contests was penalized with arresto menoror a fine not
exceeding P200.00, or both. Article 2019 of the Civil Code provides that "[b]etting on the results of sports,
athletic competitions, or games of skill may be prohibited by local ordinances."
P.D. No. 483, enacted on 13 June 1974, penalizes betting, game fixing or point shaving and machinations
in sports contests, including jai-alai. Section 2 thereof expressly provides:
Sec. 2. Betting, game fixing, point shaving or game machinations unlawful. — Game fixing, point
shaving, machination, as defined in the preceding Section, in connection with the games of
basketball, volleyball, softball, baseball; chess; boxing bouts, "jai-alai," "sipa," "pelota" and all other
sports contests, games; as well as betting therein except as may be authorized by law, is hereby
declared unlawful.
The succeeding Section 3 provides for the penalties.
 On 11 June 1978, P.D. No. 1602 (75 O.G. No. 15, 3270), Prescribing Stiffer Penalties on Illegal Gambling,
was enacted to increase the penalties provided in various "Philippine Gambling Laws such as Articles 195-
199 of the Revised Penal Code (Forms of Gambling and Betting), R.A. No. 3063 (Horse Racing Bookies),
P.D. No. 449 (Cockfighting), P.D. No. 483 (Game Fixing), P.D. No. 510 (Slot Machines) in relation to
Opinion Nos. 33 and 97 of the Ministry of Justice, P.D. No. 1306 (Jai-alai Bookies), and other City and
Municipal Ordinances on gambling all over the country." Section 1 thereof reads:
xxx xxx xxx
Both P.D. No. 483 and P.D. No. 1602 were promulgated in the exercise of the police power of the State.
Pursuant to Section 2 of P.D. No. 483, which was not repealed by P.D. No. 1602 since the former is not
inconsistent with the latter in that respect, betting in
jai-alai is illegal unless allowed by law. There was such a law. P.D. No. 810, which authorized the
Philippine Jai-Alai and Amusement Corporation as follows:
Sec. 2. The grantee or its duly authorized agent may offer, take or arrange bets within or outside the
place, enclosure or court where the Basque pelota games are held: Provided, That bets offered,
taken or arranged outside the place, enclosure or court where the games are held, shall be offered,
taken or arranged only in places duly licensed by the corporation, Provided, however, That the same
shall be subject to the supervision of the Board. No person other than the grantee or its duly
authorized agents shall take or arrange bets on any pelotari or on the game, or maintain or use a
totalizator or other device, method or system to bet on any pelotari or on the game within or without
the place, enclosure or court where the games are held by the grantee. Any violation of this section
shall be punished by a fine of not more than two thousand pesos or by imprisonment of not more than
six months, or both in the discretion of the Court. If the offender is a partnership, corporation or
association, the criminal liability shall devolve upon its president, directors or any officials responsible
for the violation.
However, as stated in the ponencia, P.D. No. 810 was repealed by E.O. No. 169 issued by then President
Corazon C. Aquino. I am not aware of any other law which authorizes betting in jai-alai. It follows then that
while the private respondent may operate the jai-alai fronton and conduct jai-alai games, it can do so solely
as a sports contest. Betting on the results thereof, whether within or off-fronton, is illegal and the City of
Manila cannot, under the present state of the law, license such betting. The dismissal of the petition in this
case sustaining the challenged orders of the trial court does not legalize betting, for this Court is not the
legislature under our system of government.
Accordingly, I vote to grant the petition in G.R. No. 117263 and to set aside the questioned temporary restraining
order and the writ of preliminary mandatory injunction but only to the extent that they allow wagering or betting on
the results of jai-alai.
QUIASON, J., dissenting:
I vote: (1) to deny the motion to intervene and motion for reconsideration qua petition for quo warranto in G.R.
No. 115044, and (2) to dismiss the petition for certiorari in G.R. No. 117263. I shall set forth the reason why.
I
Following the decision of the First Division of this Court on September 1, 1994 in G.R. No. 115044, the City of
Manila issued on September 7, 1994 the Mayor's permit and Municipal license to Associate Development
Corporation (ADC) upon the latter's payment of the required fees (G.R. No. 115044, Rollo, pp. 253-254, 301).
In his letter dated September 8, 1994 to President Fidel V. Ramos, Chairman Francisco Sumulong, Jr. of the
Games and Amusement Board (GAB) said that he would not authorize the opening of ADC's jai-alai unless he
was given a clearance from the President and until after ADC had complied with "all the requirements of the law,
such as, the distribution of wager funds, [and] licensing of Pelotaris and other personnel" (Exh. F, Civil Case No.
94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, p. 304).
In the position paper annexed to the letter, the GAB Chairman recommended the reopening and operation of the
jai-alai, stating in pertinent part:
There are several reasons to justify the operation of Jai-Alai, first and foremost of which is the generation of
much needed revenues for the national and local governments. Other significant justifications are its
tourism potential, the provision for employment, and the development of Basque pelota as an amateur and
professional sport.
Specifically, the establishment, maintenance and operation of a Jai-Alai fronton in Metro-Manila shall be
by virtue of the original and still legally existing franchise granted to the Associated Development
Corporation (ADC) by the City Government of Manila in 1971 (G.R. No. 115044, Rollo, p. 350; Emphasis
supplied).
On September 9, 1994, Chairman Sumulong granted ADC provisional authority to open, subject to the following
conditions:
1. We prohibit you from offering to the public "Pick 6" and "winner Take All" betting events until such time
as this Board shall have approved the rules and regulations prepared by management governing the
mechanics of these events.
2. Licensing of officials and employees whose duties are connected directly or indirectly with the
supervision and operation of jai-alai games, as mandated by Executive Order 141 dated February 25,
1965, shall be fully complied with by you within thirty 930) days from date hereof.
3. Any other deficiencies we may discover will be accordingly rectified by management as directed by the
Board.
 4. Failure to comply with any of the rules and regulations prescribed by existing laws and lawful orders of
the Board, may justify withdrawal/revocation of this provisional authority without prejudice to such
administrative sanctions that the Board may deem proper to impose under the circumstances.
5. By accepting this provisional authority, Associated Development Corporation (ADC) is deemed to have
agreed to the conditions above provided (G.R. No. 117263, Rollo, pp. 8-9, 49, 238, 288).
On September 12, 1994, the GAB issued to ADC jai-alai License No. 94-008 upon payment of the corresponding
permit fee. The license reads as follows:
Under and by virtue of the provisions of Section 7 of Executive Order No. 392, series of 1950, in
conjunction with Executive order No. 824, series of 1982, this Board has this date granted ADC
Represented by Gen. Alfredo B. Yson permit to hold or conduct a [sic] jai-alai contests/exhibition on
September 12 to 14, 1994, at the harrison Plaza Complex, located in Harrison Plaza, Malate, Manila.
This permit is issued subject to the condition that the promoter shall comply with the provisions of
Executive order No. 824, S. 1982, the rules and regulations, orders and/or policies adopted or which may
hereafter be adopted by the Board, and with the conditions set forth in the application for which this permit
has been granted; and failure on the part of the promoter to comply with any of which shall be deemed
sufficient cause for the revocation thereof (G.R. No. 117263, Rollo, pp. 50, 238, 289).
In compliance with GAB Rules and Regulations, ADC submitted its programs of jai-alai events for approval
(Exhs. O, P and Q, civil Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 290-292).
It appears that as early as may 23, 1994, Jai-Alai de Manila (the business name of ADC's fronton) had inquired
from GAB about the laws and rules governing its jai-alai operation. In reply, chairman Sumulong furnished Jai-
Alai de Manila with copies of E.O. Nos. 392 and 824 and the Revised rules and Regulations for basque pelota
Games (Exhs. K and L, Civil Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 301-302).
On September 13, 1994, Executive Secretary Teofisto Guingona, jr. issued the following Directive to GAB
Chairman Sumulong:
In reply to your letter dated 9 September 1994 requesting for the President's approval to re-open the Jai-
Alai in Manila, please be informed that after a review and study of existing laws, there is sufficient basis to
hold in abeyance the operation of the Jai-Alai until the following legal questions are properly resolved:
1. Whether P.D. 771 which revoked all existing Jai-Alai franchises issued by local government as of
20 August 1975 is unconstitutional.
2. Assuming that the City of Manila had the power on 7 September 1971 to issue a Jai-Alai franchise
to Associated Development Corporation, whether the franchise granted is valid considering that the
franchise has no duration, and appears to be granted in perpetuity.
3. Whether the City of Manila had the power to issue a Jai-Alai franchise to Associated Development
Corporation on 7 September 1971 in view of Executive order No. 392 dated 1 January 1951 which
transferred from local governments to the Games and Amusements Board the power to regulate Jai-
Alai.
This Office has directed the solicitor General to bring before the proper court the foregoing issues for
resolution. Pending such resolution, you are directed to hold in abeyance the grant of authority, or if any
has been issued, to withdraw such grant of authority, to Associated Development corporation to operate he
Jai-Alai in the city of Manila (G.R. No. 117263, Rollo, pp. 7-8, 48, 1939; Emphasis supplied).
On September 14, 1994, Chairman Sumulong issued a Memorandum to ADC that:
In view of the directive from the Office of the President dated 13 September 1994, Associated Development
Corporation is hereby ordered to cease and desist issues raised in the said directive are resolved by the
proper court. The provisional authority issued pending further scrutiny and evaluation to ADC on 9
September 1994 is hereby withdrawn (G.R. No. 117263, Rollo, pp. 51, 194; Emphasis supplied).
On September 15, 1994, ADC filed with the Regional Trial Court, Branch 4, Manila a petition for
prohibition, mandamus, injunction and damages with prayer for temporary restraining order or writ of preliminary
injunction (Case No. 94-71656) against Executive Secretary Guingona and Chairman Sumulong assailing the
former's Directive and the latter's Memorandum (G.R. No. 117263, Rollo, pp. 3, 20-21, 53-75, 167-168).
On the same day, Judge Vetino Reyes issued a temporary restraining order enjoining Executive Secretary
Guingona and Chairman Sumulong from implementing their respective Directive and memorandum (G.R. No.
117263, Rollo, pp. 2, 10, 44).
On September 16, 1994, Executive Secretary Guingona and Chairman Sumulong filed an urgent motion to recall
the temporary restraining order, with opposition to the motion for issuance of a writ of preliminary injunction. The
said motion was reiterated in the supplemental motion filed on September 20, 1994 (G.R. No. 117263, Rollo, pp.
66-75, 76-86).
Meanwhile, on September 16, 1994, the Republic of the Philippines, represented by GAB, filed in G.R. No.
115044 a motion for intervention; for leave to file a motion for reconsideration-in-intervention; to admit the
attached motion for reconsideration-in-intervention; and to refer the case to the Court en banc (Rollo, pp. 219-
249).
Subsequently, and on the different dates, the Republic filed in G.R. No. 115044 the following pleadings: "Motion
for Leave to File Supplemental Motion for Reconsideration-In-Intervention" (Rollo, pp. 262-265); "Supplemental
Motion for Reconsideration-In-Intervention" (Rollo, pp. 266-280); "Motion for Leave to File Second Supplemental
Motion for Reconsideration-In-Intervention and to Admit attached Second Supplemental Motion For
Reconsideration-In-intervention" (Rollo, pp. 380-382); and "Second Supplemental Motion for Reconsideration-In-
Intervention" (Rollo, pp. 383-400).
Acting on the motion of the Republic dated September 16, 1994, the First Division referred, in its Resolution
dated September 19, 1994, Case G.R. No. 115044 to the Court en banc, and the latter accepted the same in its
Resolution dated September 20, 1994 (Rollo, p. 255).
In the meantime, Chairman Sumulong resigned and Dominador R. Cepeda, jr. was appointed as his successor.
On September 30, 1994, Judge Reyes issued a writ of preliminary injunction (G.R. No. 117263, Rollo, pp. 2, 47).
On October 11, 1994, Executive Secretary Guingona and GAB Chairman Cepeda, Jr. filed with this Court a
petition for certiorari, prohibition and mandamus (G.R. No. 117263, Rollo, pp. 1-151) and on October 24, 1994, a
supplemental petition (G.R. No. 117263, Rollo, pp. 161-165, 166-306). Petitioners assailed the following
issuances of Judge Reyes Civil Case No. 94-71656:
(1.) Temporary Restraining Order dated September 15, 1994 directing Executive Secretary Guingona and
chairman Sumulong to desist from enforcing the Directive dated September 13, 1994 and the
memorandum dated September 15, 1994 (Rollo, p. 44);
(2.) Order dated September 25, 1994 denying the Urgent Motion to Recall Temporary Restraining Order
and the Urgent Supplemental Motion to Recall Temporary Restraining Order (Rollo, p. 46);
(3.) Order dated September 30, 1994 directing the issuance of a Writ of preliminary Injunction directed
against the aforesaid Directive and Memorandum (Rollo, p. 47);
(4.) order dated October 19, 1994 granting ADC's Motion to Amend the petition to Conform to the Evidence
and directing the issuance of a writ of preliminary mandatory injunction "directing (Executive Secretary and
the GAB Chairman), their successors, representatives and any government office/agency acting for an in
their behalf or in implementation of their orders earlier enjoined by a writ of preliminary injunction issued by
this court on September 30, 1994, to issue the necessary authority, licenses and working permits to . . .
Associated Development Corporation, and its personnel and players (Rollo, pp. 216-217).
They prayed that the trial court be enjoined from conducting further proceedings in Civil Case No. 94-71656 and
that said case be dismissed. they also filed a motion for consolidation of G.R. No. 117263 with G.R. No. 115044
(G.R. No. 117263, Rollo, pp. 152-160). As prayed for, we considered the two cases together.
In their petition in G.R. No. 117263, Executive Secretary Guingona and Chairman Cepeda claimed that ADC had
no clear right to the issuance of the preliminary mandatory injunction because:
(1) ADC had no legislative franchise;
(2) ADC admitted in G.R. No. 115044 that GAB had no authority to issue the license or permit subject of
the order in question; and
(3) Mandamus was not available to compel the performance of a discretionary function (G.R. No.
117263, Rollo, pp. 182-189).
On November 2, 1994, ADC and Judge Reyes filed their consolidated Comment to the petition and supplemental
petition (G.R. No. 117263, Rollo, pp. 230-305).
On November 25, 1994, the Republic, Executive Secretary Guingona and GAB Chairman Cepeda moved for the
issuance of a restraining order enjoining Judge Pacquing and Judge Reyes from enforcing their questioned
orders and ADC from operating the jai-alai fronton (G.R. No. 17263, Rollo, pp. 629-635). Action on the motion
deferred.
II
G.R. No. 115044
Motion for Intervention
The Republic of the Philippines (Republic) represented by GAB justifies its belated intervention in G.R. No.
115044 on the grounds that "it has an interest involved in this case and will be affected by the Decision dated
September 1, 1994" (G.R. No. 115044, Rollo, p. 225).
The purpose of its intervention is to nullify the decision of Judge Augusto E. Villarin of the Regional Trial Court,
Branch 40, Manila, dated September 1, 1994" (G.R. No. 115044, Rollo, p. 225).
The purpose of its intervention is to nullify the decision of Judge Augusto E. Villarin of the Regional Trial Court,
Branch 40, Manila, dated September 9, 1989 in Civil Case No. 88-45660, which upheld the validity of Ordinance
No. 7065 of the City of Manila granting ADC a franchise to operate a jai-alai fronton. Mayor Gemiliano Lopez
appealed said decision to the Court of Appeals, but on February 9, 1989, he filed a Withdrawal of Appeal. The
Court of Appeals approved the withdrawal in a resolution dated May 5, 1989. An entry of judgment was made by
the court of Appeals on May 26, 1989 and by the Regional Trial Court, branch 40, Manila, on October 27, 1992.
In 1991, the City of Manila filed an action to annul the franchise of ADC with the Regional Trial Court, Branch 23,
Manila (Civil Case No. 91-58913). The complaint was dismissed on December 21, 1991. No appeal was taken
from said dismissal of the case.
The City of Manila filed with this Court a petition for declaratory judgment to nullify the franchise of ADC (G.R.
No. 101768). The petition was dismissed in a resolution dated October 3, 1991 "for lack of jurisdiction."
Three members of the Sangguniang Panglunsod of Manila also filed with the Regional Trial Court, Branch 37,
Manila, a petition to compel Mayor Lopez to cancel the permit and license he issued in favor of ADC pursuant to
ordinance No. 7065 (Civil Case No. 91-58930). The petition was dismissed on June 4, 1992. No appeal was
taken from said dismissal of the case.
In the Motion for Reconsideration-In-Intervention, Supplemental Motion for Reconsideration-in-Intervention and
Second Supplemental Motion for Reconsideration-in-Intervention, the Republic merely claimed that Ordinance
No. 7065 had been repealed by P.D. No. 771 (Rollo, pp. 228-248), that the authority to issue permits and
licenses for the operation of jai-alai had been transferred to GAB by E.O. No. 392 of President Quirino effective
July 1, 1951 and that ADC was never issued a franchise by Congress (Rollo, pp. 383-390). Nowhere in its
pleadings did the Republic point out where the first Division erred in resolving the two grounds of the petition
for certiorari in G.R. No. 115044,
which were:
(1) The decision of Judge Villarin dated September 9, 1988 in Civil Case No. 88-45660 is null and void for
failure to rule that P.D. No. 771 had revoked Ordinance No. 7065; and
(2) The decision of Judge Villarin could not be executed by a mere motion filed on March 14, 1994, or more
than five years and six months after its promulgation.
In resolving the first issue, the First Division of this court explained that there was no way to declare
the Villarin decision null and void because the trial court had jurisdiction over the subject matter of the action and
if it failed to rule that ordinance No. 7065 was nullified by P.D. No. 771, that was only an error of judgment. The
First Division noted the distinction between a void and an erroneous judgment and between jurisdiction and the
exercise of jurisdiction.
In Tan v. Intermediate Appellate Court, 163 SCRA 752 (1988), the Court held:
It is settled jurisprudence that except in the case of judgments which are void ab initio or null and voidper
se for lack of jurisdiction which can be questioned at any time — and the decision here is not of this
character — once a decision becomes final, even the court which has rendered it can no longer alter or
modify it, except to correct clerical errors or mistakes. otherwise, there would be no end to litigation, thus
setting to naught the main role of courts of justice, which is, to assist in the enforcement of the rule of law
and the maintenance of peace and order, by settling justifiable controversies with finality. (See also Fabular
v. Court of Appeals, 119 SCRA 329 [1982]; Fariscal Vda. de Emnas v. Emnas, 95 SCRA 470 [1980];
Ocampo v. Caluag, 19 SCRA 917 [1967]).
As to the second issue, the First Division held that the five-year period for executing a judgment by simple motion
under Section 6 of Rule 39 of the Revised Rules of Court should be counted from the finality of the judgment and
not from the date of its promulgation as was done by Mayor Lim and the City of Manila. Inasmuch as
the Villarin decision was appealed to the Court of Appeals and the authority to withdraw the appeal was approved
by the Court of Appeals only on may 26, 1989, the five-year period should be counted, at the earliest, from May
26, 1989. Reckoning the five-year period from said date, the motion for execution of the Villarin decision was filed
timely on March 14, 1994.
Intervention as contemplated by Section 9, Rule 12 of the Revised Rules of Court is a proceeding whereby a
third person is permitted by the court "before or during a trial" to make himself a party by joining plaintiff or uniting
with defendant or taking a position adverse to both of them Gutierrez v. Villegas, 5 SCRA 313 [1962]). the term
"trial" is used in its restrictive sense and means the period for the introduction of evidence by both parties (Bool v.
Mendoza, 92 Phil. 892 [1953]; Provincial Government of Sorsogon v. Stamatelaky, 65 Phil. 206 [1937]). The
period of trial terminates when the period of judgment begins (El Hogar Filipino v. Philippine National Bank, 64
Phil. 582 [1937]).
Intervention as an action is not compulsory. As deduced from the permissive word "may" in the rule, the
availment of the remedy is discretionary on the courts (Garcia v. David, 67 Phil. 279 [1939]). an important factor
taken into consideration by the courts in exercising their discretion is whether the intervenor's rights may be fully
protected in a separate proceeding (Peyer v. Martines, 88 Phil. 72 [1951]).
The case of Director of Lands v. Court of Appeals, 93 SCRA 238 (1979), can not, serve as authority in support of
the Republic's intervention at this late stage. while said case involved an intervention for the first time in the
Supreme court, the motion to be allowed to intervene was filed before the appeal could be decided on the merits.
The intervention allowed in Republic v. Sandiganbayan, G.R. No. 96073, Resolution, March 3, 1992, was also
made before the decision on the merits by this Court. In contrast, the intervention of the Republic was sought
after this Court had decided the petition in G.R. No. 115044 and petitioners had complied with and satisfied the
judgment. While the intervention in Director of Lands was in a case that was timely appealed from the Regional
Trial Court to the Court of Appeals and from the Court of Appeals to the Supreme Court, the intervention of the
Republic was in a case that had become final and executory more than five years prior to the filing of the motion
to intervene.
As of September 16, 1994, therefore, when the republic moved to intervene, there was no longer any pending
litigation between the parties in G.R. no. 115044. Intervention is an auxiliary and supplemental remedy to an
existing, not a settled litigation (cf. Clareza v. Rosales, 2 SCRA 455 [1961]). An intervention was disallowed in a
case which has becomes final and executory (Trazo v. Manila Pencil Co., 77 SCRA 181 [1977])
The case of Suson v. Court of Appeals, 172 SCRA 70 (1989) invoked by the Republic (G.R. No. 117263, Rollo,
pp. 517-518) is inappropriate because the intervention therein was before the trial court, not in this Court.
In its Reply, the Republic admitted that the First Division only ruled on the procedural issues raised in the petition
and not on the constitutionality of P.D. No. 771. It even urged that GAB was not a party to the case and therefore
was not bound by the Villarin decision because under Section 49 of Rule 39, a judgment is conclusive only
"between the parties and their successor-in-interest by title subsequent to the commencement of the action or
special proceeding, litigating for the same thing and under the same title and in the same capacity" (Rollo, pp.
228-234, 431).
With more reason then that the Republic should have ventilated its claim against ADC in a separate proceeding.
Lastly, an intervenor should not be permitted to just sit idly and watch the passing scene as an uninterested
overlooker before he wakes up to seek judicial relief (Pacursa v. Del Rosario, 24 SCRA 125 [1968]).
The Office of the President was aware of the plans of ADC to start operation as early as 1988. On May 5, 1988,
ADC informed said Office of its intention to operate under Ordinance No. 7065. The said Office perfuntorily
referred the letter of ADC to the Manila mayor, implying that the matter was not the concern of the National a. That the construction, establishment and maintenance of the jai-alai shall be at a place permissible
Government. under existing zoning ordinances of Manila;

Motion qua b. That the games to be played daily shall commence not earlier than 5:00 o'clock (sic) in the
Quo Warranto petition afternoon;

Be that as it may, the Court may consider the motion to intervene, motion for reconsideration-in-intervention,
supplemental motion for reconsideration-in-intervention and second supplemental motion-in-intervention as a
petition for quo warranto under Rule 66 of the revised Rules of Court. In the liberal construction of the Rules in
order to attain substantial justice, the Court has treated petitions filed under one Rule as petitions filed under the
more appropriate Rule (Davao Fruits Corporation v. Associated Labor Union, 225 SCRA [1993]).
c. That the City of Manila will received a share of 2 ½% on the annual gross receipts on all wagers or
bets, ½% of which will accrue to the Games and Amusements Board as now provided by law;
d. That the corporation will, in addition, pay to the city an annual license fee of P3,000.00 and a daily
permit fee of P200.00;

In quo warranto, the government can require a corporation to show cause by what right it exercises a privilege,
which ordinarily can not legally be exercised except by virtue of a grant from the state. It is a proceeding to
determine the right to the use of a franchise or exercise of an office and to oust the holder from its enjoyment if
his claim is not well-founded (Castro v. Del Rosario, 19 SCRA 196 [1967]).
All the essential requisites for a petition for quo warranto are compresent. The motions were filed by the Solicitor
General for the Republic of the Philippines, represented by GAB, to question the right of ADC to operate and
maintain the jai-alai.
e. That the corporation will, to insure its faithful compliance of all the terms and conditions under this
ordinance, put up a performance bond from a surety acceptable to the city, in the amount of at least
P30,000.00.
Sec. 2. The Mayor and the City Treasurer of their duly authorized representatives are hereby empowered
to inspect at all times during regular business hours the books, records and accounts of the establishment,
as well as to prescribe the manner in which the books and financial statement of the entrepreneur shall be
kept.

The motions qua petition for quo warranto assert that the authority of the City of Manila to issue to ADC a jai-alai Sec. 3. This ordinance shall take effect upon its approval.
franchise in 1971 had been withdrawn by E.O. No. 392 in 1951 and by R.A. No. 954 in 1954 and that assuming
the issuance of the franchise to ADC in 1971 under Ordinance No. 7065 was valid, such franchise, together with
Enacted originally by the Municipal Board on September 7, 1971; vetoed by the Mayor on September 27,
whatever authority of the City of Manila to grant the same, was voided by P.D. No. 771 in 1975.
1971; modified and amended by the Municipal Board at its regular session today, October 12, 1971.

In the case of Stone v. State of Mississippi, 101 U.S. 814, cited by the Republic, the State Attorney General
Approved by His Honor, the Mayor on 13 November 1971.
resorted to a quo warranto proceeding to question the authority of petitioner therein to operate and maintain a
gambling establishment.
The said Ordinance was enacted pursuant to Section 18 (jj), the Charter of the City of Manila (R.A. No. 409),
which took effect in 1949. The charters of two other cities — Quezon City and Cebu City — contained a similar
The franchise of ADC granted by the City of Manila under Ordinance No. 7065 reads as follows:
delegation of authority to grant jai-alai franchises.

AN ORDINANCE AUTHORIZING THE MAYOR TO ALLOW AND PERMIT THE ASSOCIATED

Said Section 18(jj) provides:
DEVELOPMENT CORPORATION TO ESTABLISH, MAINTAIN AND OPERATE A JAI-ALAI IN THE CITY
OF MANILA, UNDER CERTAIN TERMS AND CONDITIONS AND FOR OTHER PURPOSES.
Legislative powers. — The Municipal Board shall have the following legislative powers:
Be it ordained by the Municipal Board of the City of Manila, that:
xxx xxx xxx
Sec. 1. The Mayor is authorized, as he is hereby authorized to allow and permit the Associated
Development Corporation to establish, maintain and operate a jai-alai in the City of Manila, under the (jj) To tax, license, permit and regulate wagers or betting by the public on boxing, billiards, pools, horse or
following terms and conditions and such other terms and conditions as he (the Mayor) may prescribe for dog races, cockpits, jai-alai, roller of ice-skating or any sporting or athletic contests, as well as grant
good reasons of general interest: exclusive rights to establishments for this purpose, notwithstanding any existing law to the contrary.
A. It is the posture of the Republic that the power of local governments to issue franchisers for the operation of
jai-alai was "consolidated and transferred" to the GAB under E.O. No. 392. In its Supplemental Motion for
reconsideration-In-Intervention filed on September 27, 1994, the Republic averred:
12. As early as 1951, the power of the local governments to issue licenses and permits for the operation of
jai-alai was "consolidated and transferred" to the Games and Amusements Board under E.O. No. 392
issued by then President Elpidio Quirino (sic) took effect on January 1, 1951. Thus, in 1971, the City of
Manila was without authority to enact an ordinance authorizing the City Mayor to issue a license/permit to
private respondent for the operation of jai-alai in Manila (Rollo, pp. 271-272).
Furthermore, the republic alleged:
13. Such consolidation and transfer of power manifest the policy of the Government to centralize the
regulation, through appropriate institutions, of all games of chance authorized by existing franchises of
permitted by law. . . . (Rollo, p. 272).
There is no need to dwell upon this argument for suprisingly it was the Republic itself that repudiated it albeit
after wrongfully attributing the argument to ADC.
In its Reply filed on November 9, 1994, the Republic stated that: "Contrary to respondent ADC's claim, it is not
the position of the GAB that it is the body which grants franchisers for the jai-alai either under E.O. No. 392 or
under P.D. No. 771 . . ." (Rollo, pp. 420).
For certain, E.O. No. 392 merely reorganized the different departments, bureaus, offices and agencies of the
government. There is absolutely nothing in the executive issuances which vests on GAB the power to grant,
much less revoke, franchisers to operate jai-alais.
B. After its volte-face, the Republic next claims that R.A. No. 954 had repealed Section 18 (jj) and that after the
effectivity of said law, only Congress could grant franchise to operate jai-alais.
Section 4 of R.A. No. 954 provides:
No person, or group of persons, other than the operator or maintainer of a fronton with legislative franchise
to conduct basque pelota (jai-alai), shall offer, take or arrange bets on any basque pelota game or event, or
maintain or use a totalizer or other device, method or system to bet or gamble or any basque pelota game
or event.
Republic Act No. 954 did not expressly repeal Section 18 (jj). In such a case, if there is any repeal of the prior law
by the latter law, it can only be by implication. Such kind of repeals is not favored. There is even a presumption
against repeal by implication (The Philippine American Management Co. Inc. v. The Philippine American
Management employees Association, 49 SCRA 194 [1973]).
In the same absence of an express repeal, a subsequent law cannot be construed as repealing a prior law unless
an irreconcilable inconsistency and repugnancy exist in the terms of the new and old law (Iloilo Palay and Corn
Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]).
But more importantly, the rule in legal hermeneutics is that a special law, like the Charter of the City of Manila, is
not deemed repealed by a general law, like R.A. No. 954 (Commissioner of Internal Revenue v. Court of
Appeals, 207 SCRA 487 [1992]).
In a way also, Ordinance No. 7065 can be considered a "legislative franchise" within the purview of R.A. No. 954,
having been enacted by the Municipal Board of the City of Manila pursuant to the powers delegated to it by the
legislature. A grant, under a delegated authority, binds the public and is considered the act of the state. "The
franchise [granted by the delegate] is a legislative grant, whether made directly by the legislature itself or by any
one of its properly constituted instrumentalities" (36 Am Jur 2d. 734).
As held in Wright v. Nagle, 101 U.S. 921, the grant of a franchise by the legislature may be done in two ways:
It may exercise this authority by direct legislation, or through agencies duly established having power for
that purpose. This grant when made binds the public, and is, directly or indirectly, the Act of the State. The
easement is a legislative grant, whether made directly by the legislature itself, or by any one of its properly
constituted instrumentalities (Justice of Pike Co. v. Plank road, 11 Ga. 246; Emphasis supplied).
If the intention of Congress in enacting R.A. No. 954 was to repeal Section 18 (jj), it could have used explicit
language to that effect in order not to leave room for interpretation.
If R.A. No. 954 repealed Section 18 (jj), why did President Marcos still issue P.D. No. 771, expressly revoking the
authority of the local governments to issue jai-alai franchises? It can never be presumed that the President
deliberately performed useless acts.
C. The claim of the Republic that P.D. No. 771 had removed the power of local governments to grant franchises
for the maintenance and operation of jai-alai is a non-issue. The issue raised by ADC is whether Section 3 of
P.D. No. 771 validly cancelled Ordinance No. 7065, an issue entirely different from the claim of the Republic that
P.D. No. 771 had revoked the power of the City of Manila to grant jai-alai franchisers.
Insofar as it is applied to Ordinance No. 7065, Section 3 of P.D. No. 771 suffers from constitutional infirmities and
transgresses several constitutional provisions. Said Section 3 provides:
All existing franchisers and permits issued by local governments are hereby revoked and may be renewed
only in accordance with third decree.
Section 3 violated the equal protection clause (Section 1 of Article IV) of the 1973 Constitution, which provided:
 No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be
denied the equal protection of the laws.
Less than two months after the promulgation of P.D. no. 771, President Marcos issued P.D. No. 810, granting the
Philippine Jai-Alai and Amusement Corporation (PJAC) a franchise to operate jai-alai within the Greater Manila
Area. It is obvious that P.D. No. 771 was decreed to cancel the franchise of ADC so that the same could be given
to another entity under P.D. No. 810.
A facially neutral statute (P.D. No. 771) may become discriminatory by the enactment of another statute (P.D.
No. 810) which allocates to a favored individual benefits withdrawn under the first statute (Ordinance No. 7065),
and when there is no valid basis for classification of the first and second grantees. The only basis for distinction
we can think of is that the second grantee was Benjamin Romualdez, a brother-in-law of President Marcos.
Section 3 violated the due process clause of the Constitution, both in its procedural and substantive aspects. The
right to due process is guaranteed by the same Section 1 of Article IV of the 1973 Constitution.
The title of P.D. No. 771 reads as follows:
REVOKING ALL POWERS AND AUTHORITY OF LOCAL GOVERNMENT TO GRANT FRANCHISE,
LICENSE OR PERMIT AND REGULATE WAGERS OR BETTING BY THE PUBLIC ON HORSE AND
DOG RACES, JAI-ALAI OR BASQUE PELOTA, AND OTHER FORMS OF GAMING.
The title of P.D. No. 771 refers only to the revocation of the power of local governments to grant jai-alai
franchises. It does not embrace nor even intimate the revocation of existing franchises.
Lastly, Section 3 impaired the obligation of contracts prohibited by Section 11 of Article IV of the 1973
Constitution.
As authorized by Section 18(jj), Ordinance No. 7065 grants ADC a permit "to establish, maintain and operate a
jai-alai in the City of Manila, under the following terms and conditions and such other terms and conditions as he
[the Mayor] may prescribe for good reasons of general interest." (Rollo, p. 24).

Ordinance No. 7065, like any franchise, is a valuable property by itself. The concept of "property" protected by Section 11 of Article IV of the 1973 Constitution provided:
the due process clause has been expanded to include economic interests and investments. The rudiments of fair
play under the "procedural due process" doctrine require that ADC should at least have been given an
No law impairing the obligation of contracts shall be passed.
opportunity to be heard in its behalf before its franchise was cancelled, more so when the same franchise was
given to another company.
Any law which enlarges, abridges, or in any manner changes the intention of the parties, necessarily impairs the
contract itself (U.S. v. Conde, 42 Phil. 766 [1922]; Clemens v. Nolting, 42 Phil. 702 [1922]). A franchise
Under the "substantive due process" doctrine, a law may be voided when it does not relate to a legitimate end
constitutes a contract between the grantor and the grantee. Once granted, it may not be invoked unless there are
and when it unreasonably infringes on contractual and property rights. The doctrine as enunciated in Allgeyer v.
valid reasons for doing so. (Papa v. Santiago, 105 Phil. 253 [1959]). A franchise is not revocable at the will of the
Louisiana, 165 U.S. 578 (1897) can be easily stated, thus: the government has to employ means (legislation)
grantor after contractual or property rights thereunder have become vested in the grantee, in the absence of any
which bear some reasonable relation to a legitimate end (Nowak, Rotunda and Young, Constitutional Law 436,
provision therefor in the grant or in the general law (Grand Trunk Western R. Co. v. South Bend, 227 U.S. 544).
443 [2d ed]).
D. The Republic hypothesized that the said Constitutional guarantees presuppose the existence of a contract or
When President Marcos issued P.D. No. 771, he did not have public interest in mind; otherwise, he would have
property right in favor of ADC. It claims that Ordinance No. 7065 is not a franchise nor is it a contract but merely
simply outlawed jai-alai as something pernicious to the public. Rather, all what he wanted to accomplish was to
a privilege for the purpose of regulation.
monopolize the grant of jai-alai franchisers.
Ordinance No. 7065 is not merely a personal privilege that can be withdrawn at any time. It is a franchise that is
The motivation behind its issuance notwithstanding, there can be no constitutional objection to P.D. No. 771
protected by the Constitution.
insofar as it removed the power to grant jai-alai franchisers from the local governments. We said so in Basco v.
Pagcor, 197 SCRA 52 (1991). The constitutional objection arises, however, when P.D. No. 771 cancelled al the
existing franchises. We search in vain to find any reasonable relation between Section 3 of P.D. No. 771 and any The distinction between the two is that a privilege is bestowed out of pure beneficence on the part of the
legitimate ends of government intended to be achieved by its issuances. Besides, the grant of a franchise to government. There is no obligation or burden imposed on the grantee except maybe to pay the ordinary license
PJAC exposed P.D. No. 771 as an exercise of arbitrary power to divest ADC of its property rights. and permit fees. In a franchise, there are certain obligations assumed by the grantee which make up the valuable
consideration for the contract. That is why the grantee is first required to signify his acceptance of the terms and
conditions of the grant. Once the grantee accepts the terms and conditions thereof, the grant becomes a binding
Section 3 also violated Section 1 of Article VIII of the 1973 Constitution, which provided:
contract between the grantor and the grantee.

Every bill shall embrace only one subject which shall be expressed in the title thereof.
Another test used to distinguish a franchise from a privilege is the big investment risked by the grantee. In Papa
v. Santiago, supra, we held that this factor should be considered in favor of the grantee. A franchise in which
money has been expended assumes the character of a vested right (Brazosport Savings and Loan Association v.
American Savings and Loan Association, 161 Tex. 543, 342 S.W. 2d. 747).
The cases cited by the Republic to the effect that gambling permits or license issued by municipalities can be
revoked when public interest so requires, have never addressed this issue, obviously because there were no
significant financial investments involved in the operation of the permits or licenses.
But assuming that Ordinance No. 7065 is a mere privilege, still over the years, the concept of a privilege has
changed. Under the traditional form a property ownership, recipients of privileges, benefits or largesse from the
government may be said to have no property rights because they have no traditionally recognized proprietary
interest therein. The case of Vinco v. Municipality of Hinigaran, 41 Phil. 790 (1917) and Pedro v. Provincial Board
of Rizal, 56 Phil 123 (1931), holding that a license to operate cockpits is a mere privilege, belong to this vintage.
However, the right-privilege dichotomy has come to an end when the courts have realized that individuals should
not be subjected to the unfettered whims of government officials to withhold privileges previously given them
(Van Alstyne, The Demise of the Right — Privilege Distinction in Constitutional Law, 81 Harvard L. R. 1439
[1968]). To perpetuate such distinction would leave many individuals at the mercy of government officials and
threaten the liberties protected by the Bill of Rights (Nowak, Rotunda and Young, Constitutional Law 546 [2nd
ed]).
That a franchise is subject to regulation by the state by virtue of its police power is conceded. What is not
acceptable is the Republic's proposition that the power to regulate and supervise includes the power to cancel
the franchise altogether.
The stance of the Republic that the gambling franchises it issues are not covered by the constitutional mantle
protecting property rights is ill-advised considering that it is planning to operate gambling establishments
involving substantial foreign investments in putting up the facilities thereof.
The belabored arguments of the Republic on the evils of gambling fall to the ground upon a showing that ADC is
operating under an existing and valid franchise (Rollo, pp. 422-423).
E. The Republic questioned the siting of the ADC's fronton as violative of E.O. No. 135 of President Quirino.
Under said executive issuance, no pelota fronton can be maintained and operated "within a radius of 200 lineal
meters from any city hall or municipal building, provincial capital building, national capital building, public plaza or
park, public school, church, hospital, athletic stadium, or any institution of learning or charity."
According to the certificate issued by the National Mapping Information Authority, the ADC fronton is within the
proscribed radius from the Central Bank of the Philippines, the Rizal Stadium, the Manila Zoo, the public park or
plaza in front of the zoo, the Ospital ng Maynila, a police precinct and a church (G.R. No. 115044, Rollo, pp. 424-
427).
On the other hand, a certificate issued by the Officer-in-charge of the Office of the City Engineer of the City of
Manila attests to the fact that not one of the buildings or places mentioned in the certificate submitted by the
Republic is within the 200-meter radial distance, "center to center" from the ADC's jai-alai building (Rollo, p. 260).
How this variance in measurement came about is a matter that should have been submitted before the trial court
for determination.
However, the operative law on the siting of jai-alai establishments is no longer E.O. No. 135 of President Quirino
but R.A. No. 938 as amended by R.A. No. 1224.
Under said law only night clubs, cabarets, pavillions, or other similar places are covered by the 200-lineal meter
radius. In the case of all other places of amusements except cockpits, the proscribed radial distance has been
reduced to 50 meters. With respect to cockpits, the determination of the radial distance is left to the discretion of
the municipal council or city board (Sec. 1).
F. The Republic also questions the lack of the period of the grant under Ordinance No. 7065, thus making it
indeterminate (G.R. No. 117263, Rollo, pp. 500-505). The ordinance leaves it to the Mayor of the City of Manila
to lay down other terms and conditions of the grant in addition to those specified therein. It is up to the parties to
agree on the life or term of the grant. In case the parties fail to reach an agreement on the term, the same can be
fixed by the courts under Article 1197 of the Civil Code of the Philippines, which provides as follows:
If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a
period was intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the debtor.
In every case, the courts shall determine such period as may under the circumstances have been probably
contemplated by the parties. Once fixed by the courts, the period cannot be changed by them.
III
G.R. No. 117263
The petition in G.R. No. 117263 seeks to nullify the following orders of respondent Judge Reyes:
(1) the Temporary Restraining Order dated September 15, 1994;
(2) the Order dated September 25, 1994; and
(3) the Writ of Preliminary Injunction dated September 30, 1994 (Rollo, pp. 1-2).
The supplemental petition in said case seeks to nullify the Order dated October 19, 1994 (Rollo, pp. 166-225).
According to Executive Secretary Guingona and GAB Chairman Cepeda, respondent Judge Reyes acted without
jurisdiction and with grave abuse of discretion in issuing said orders and writ of preliminary injunction because:
(1) Civil Case No.
94-71656 was not properly assigned to him in accordance with Section 7, Rule 22 of the Revised Rules of Court;
(2) the enforcement of the Directive and Memorandum sought to be enjoined had already been performed or
were already fait accompli; and (3) respondent judge pre-empted this Court in resolving the basic issues raised in
G.R. No. 115044 when he took cognizance of Civil Case No. 94-71656.
A. At the outset, it should be made clear that Section 7 of Rule 22 of the Revised Rules of Court does not require
that the assignment of cases to the different branches of a trial court should always be by raffle. The Rule talks of
assignment "whether by raffle or otherwise." What it requires is the giving of written notice to counsel or the
parties "so that they may be present therein if they so desire."
Section 7 of Rule 22 provides:
Assignment of cases. In the assignment of cases to the different branches of a Court of First Instance, or
their transfer from one branch to another whether by raffle or otherwise, the parties or their counsel shall be
given written notice sufficiently in advance so that they may be present therein if they so desire.
However, there may be cases necessitating the issuance of a temporary restraining order to prevent irreparable
injury on the petitioner.
To await the regular raffle before the court can act on the motion for temporary restraining order may render the
case moot and academic. Hence, Administrative Circular No. 1 dated January 28, 1988 was issued by this Court
allowing a special raffle. Said Circular provides:
8.3. Special raffles should not be permitted except on verified application of the interested party who seeks
issuance of a provisional remedy and only upon a finding by the Executive Judge that unless a special
raffle is conducted irreparable damage shall be suffered by the applicant. The special raffle shall be
conducted by at least two judges in a multiple-sala station.
In a case where a verified application for special raffle is filed, the notice to the adverse parties may be dispensed
with but the raffle has to "be conducted by at least two judges in a multiple-sala station."
The Republic does not claim that Administrative Circular No. 1 has been violated in the assignment of the case to
respondent Judge. The presumption of regularity of official acts therefore prevails.
Going back to Section 7 of Rule 22, this Court has rules in Commissioner of Immigration v. Reyes, 12 SCRA 728
(12964) that the purpose of the notice is to afford the parties a chance to be heard in the assignment of their
cases and this purpose is deemed accomplished if the parties were subsequently heard. In the instant case,
Executive Secretary Guingona and GAB Chairman Cepeda were given a hearing on the matter of the lack of
notice to them of the raffle when the court heard on September 23, 1994 their Motion to Recall Temporary
Restraining Order, Urgent Supplemental Motion to Recall Temporary Restraining Order and Opposition to
Issuance of a Writ of Preliminary Issuance of a Writ of Preliminary Injunction (G.R. No. 117263, Rollo p. 434).
Petitioners in G.R. No. 117263 failed to shown any irregularity attendant to the raffle or any prejudice which befell
them as a result of the lack of notice of the raffle of Civil Case No. 94-71656.
On the other hand, petitioners never asked for a re-raffle of the case or for any affirmative relief from the trial
court and proceeded with the presentation of evidence of ADC in connection with the motion for preliminary
injunction.
B. The purpose of a temporary restraining order or preliminary injunction, whether preventive or mandatory, is
merely to prevent a threatened wrong and to protect the property or rights involved from further injury, until the
issues can be determined after the hearing on the merits (Ohio Oil Co. v. Conway, 279 U.S. 813, 73 L. Ed. 972,
49 S. Ct. 256; Gobbi v. Dilao, 58 Or. 14, 111 p. 49, 113, p. 57). What is intended to be preserved is the status
quo ante litem motam or the last actual, peaceable, noncontested status (Annotation, 15 ALR 2d 237).
In the case at bench, the status quo which the questioned orders of Judge Reyes sought to maintain was that
ADC was operating the jai-alai pursuant to Ordinance No. 7065 of the City of Manila, the various decisions of the
different courts, including the Supreme Court, and the licenses, permits and provisional authority issued by GAB
itself.
At times, it may be necessary for the courts to take some affirmative act essential to restore the status quo (Iowa
Natural Resources Council v. Van See [Iowa] 158 N.W. 2d. 111).
The right to conduct a business or to pursue one's business or trade without wrongful interference by others is a
property right which equity will, in proper cases, protect by injunction, provided of course, that such occupation or
vocation is legal and not prohibited by law (Rance v. Sperry & Hutchinson Co., 410 P. 2d 859).
Had not the Directive to close the operation of ADC's jai-alai and the implementing Memorandum been issued,
there would have been no need for the issuance of the orders of the Regional Trial Court. The need for said
equitable reliefs becomes more evident if we consider that the Executive Secretary himself had entertained
doubts as to the legality of his action because in the same Directive he instructed the Solicitor General to obtain a
judicial ruling on the legal issues raised.
C. Respondent Judge Reyes did not pre-empt this Court in deciding the basic issues raised in G.R. No. 115044
when it assumed jurisdiction over Civil Case No. 94-71656 and issued the orders questioned in G.R. No. 117263.
The orders of Judge Reyes are provisional in nature and do not touch on the merits of the case. The issues
raised in Civil Case No. 94-71656 are the validity of the Directive and Memorandum, which were issued after the
decision of this Court in G.R. No. 115044. The respondent in the civil case before the trial court are not even
parties in G.R. No. 115044.
PUNO, J., dissenting:
The petitions at bench involve great principles of law in tension. On balance at one end is the high prerogative of
the State to promote the general welfare of the people thru the use of police power; on the opposite end is the
right of an entity to have its property protected against unreasonable impairment by the State. courts accord the
State wide latitude in the exercise of its police power to bring about the greatest good of the greatest number. But
when its purpose is putrefied by private interest, the use of police power becomes a farce and must be struck
down just as every arbitrary exercise of government power should be stamped out.
I will confine myself to the jugular issue of whether or not Associated Development Corporation (ADC) still
possesses a valid franchise to operate jai-alai in manila. The issue is multi-dimensional considering its
constitutional complexion.
First, the matrix of facts. On June 18, 1949, congress enacted Republic Act No. 409, otherwise known as the
Charter of Manila. Section 18 (jj) gave to the Municipal Board (now City Council) the following power:
(jj) To tax, license, permit and regulate wagers or betting by the public on boxing, sipa, bowling, billiards,
pools, horse or dog races, cockpits, jai-alai, roller or ice skating or any porting or athletic contest, as well as
grant exclusive rights to establishments for this purpose, notwithstanding any existing law to the contrary.
On June 20, 1953, congress passed Republic Act No. 954 entitled "An Act to Prohibit Certain Activities in
Connection with Horse Races and Basque pelota Games (Jai-Alai) and to Prescribe penalties for its Violation."
Sections 4 and 5 of the law provide:
Sec. 4. No person, or group of persons, other than the operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games (Jai-Alai), shall offer, take or arrange bets on any basque pelota
game or event, or maintain or use a totalizer or other device, method or system to bet or gamble on any
basque pelota game or event.
Sec. 5. No person, operator, or maintainer of a fronton with legislative franchise to conduct basque pelota
games shall offer, take, or arrange bets on any basque pelota game or event, or maintain or use a
totalizator or to her device, method or system to bet or gamble on any basque pelota game or event
outside the place, enclosure, or fronton where the basque pelota game is held.
On September 7, 1971, the Municipal Board of Manila approved Ordinance No. 7065 "authorizing the Mayor to
Allow and Permit the Associated Development Corporation to Establish, Maintain and Operate a Jai-Alai in the
city of Manila, Under Certain Terms and Conditions And For Other Purposes."
On September 21, 1972, martial law was declared by then president Ferdinand E. Marcos. The 1971
Constitution, as amended, authorized the former President to exercise legislative powers. Among the laws he
decreed is P.D. No. 771, "Revoking All Powers And Authority Of Local Government(s) to Grant Franchise,
License Or Permit And Regulate Wagers Or Betting By The Public On Horse And Dog Races, Jai-Alai, Or
Basque pelota And Other Forms of Gambling." its Text states:
Sec. 1. Any provision of law to the contrary notwithstanding, the authority of Chartered Cities and other
local governments to issue license, permit or any form of franchise to operate, maintain and establish horse
and dog race tracks, jai-alai or other forms of gambling is hereby revoked.
Sec. 2. Hereafter all permit or franchise to operate, maintain and establish horse and dog race tracks, jai-
alai and other forms of gambling shall be issued by the national government upon proper application and
verification of the qualifications of the applicant: Provided, That local governments may, upon clearance
from the chief of constabulary and during town fiestas and holidays, continue to issue permits for minor
games which are usually enjoyed by the people during such celebrations.
Sec. 3. All existing franchises and permits issued by local government are hereby revoked and may be
renewed only in accordance with this Decree.
P.D. No. 771 was enacted on August 20, 1975 and purportedly revoked the permit of ADC to operate. Before two
(2) months could elapse or on October 16, 1975, then President Marcos issued P.D. No. 810 granting a franchise
to Philippine Jai-Alai and Amusements corporation to conduct jai-alai games in Manila. it is not disputed that his
brother-in-law, Mr. Alfredo "Berjo" Romualdez, held the controlling interest in Philippine Jai-alai and Amusements
Corporation. apparently, the favored treatment given to Mr. Romualdez and company did not sit well with former
President Corazon C. Aquino. On May 8, 1987, she issued Executive Order No. 169 repealing P.D. No. 810.
Nevertheless, she allowed P.D. No. 771 to stay in our statutes book.
ADC thought it could resume its jai-alai operation. On May 5, 1988, it sought from then mayor Gemiliano C.
Lopez, Jr., of Manila a permit to operate on the strength of Ordinance No. 7065. The request was refused and
this Spawned suits1 all won by ADC. In Civil Case No. 88-45660, filed in Br. 40, RTC, Manila, Judge Augusto E.
Villarin ruled that Ordinance No. 7065 created a binding contract between the city of Manila and ADC, and
hence, the City Mayor had no discretion to deny ADC's permit. The ruling was appealed to the Court of Appeals
where it was docketed as CA-G.R. SP No. 16477. On February 9, 1989, however, Mayor Lopez withdrew the
city's appeal. Still, the legal problems of ADC did not disappear. Manila Mayor Alfredo Lim who succeeded Mayor
Lopez again refused to issue ADC's permit despite orders of Judge Felipe G. Pacquing.2 Threatened with
contempt, Mayor Lim filed with this Court G.R. No. 115044, a petition for certiorari. He alleged that he could not
be compelled to enforce the Decision in Civil Case No. 88-45660 as the same is null and void for want of
jurisdiction of the court that rendered it. He likewise contended that Ordinance No. 7065 had been revoked by
P.D. No. 771. On September 1, 1994, the First division of this court, speaking thru Mr. Justice Camilo Quiason,
dismissed Mayor Lim's petition. It held:
Petitioners failed to appreciate the distinction between a void and an erroneous judgment and between
jurisdiction and the exercise of jurisdiction.
Having jurisdiction over the civil case, whatever error may be attributed to the trial court, is simply one of
judgment, not of jurisdiction. an error of judgment cannot be corrected by certiorari but by appeal (Robles v.
House of Representatives Electoral Tribunal, 181 SCRA 780 [1990]; De Castro v. Delta Motor Sales
Corporation, 57 SCRA 344 [1978]; Galang v. Endencia, 73 Phil. 391 [1941].
 The issue on the cancellation of Ordinance No. 7065 by president Marcos could have been raised as a
special defense in Civil Case No. 88-54660 but was not . . .
The City of Manila should have pursued in the appellate courts its appeal questioning the dismissal of Civil
Case No. 91-58913, where the trial court ruled that Mayor Lopez and the city could no longer claim that
Ordinance No. 7065 had been cancelled by president Marcos because they failed to raise this issue in Civil
Case No. 88-54660.
At any rate, the unilateral cancellation of the franchise, which has the status of a contract, without notice,
hearing and justifiable cause is intolerable in any system where the rule of Law prevails (Poses v. Toledo
Transportation Co., 62 Phil. 297 [1935]; Manila electric Co., v. Public utility commissioners, 30 Phil. 387
[1915].
Upon its receipt, Mayor Lim manifested he would comply with the Decision. He did not file a motion for
reconsideration. it was then that the Republic started its own legal battle against ADC. it intervened in G.R. No.
115044, raising several issues, especially ADC's lack of a valid legislative franchise to operate jai-alai. No less
than Executive Secretary Teofisto Guingona directed the Games and Amusement Board, then headed by Mr.
Francisco R. Sumulong, jr., to hold in abeyance the grant of authority, or if any had been issued, to withdraw
such grant of authority in favor of ADC. The GAB dutifully ordered ADC to cease and desist from operating the
Manila jai-alai. ADC again rushed to the RTC of Manila and filed Civil Case No. 94-71656 which was raffled to Br.
14, presided by respondent Judge Vetino Reyes. Acting with dispatch, respondent judge temporarily restrained
the GAB from withdrawing the provisional authority of ADC to operate. After hearing, the temporary restraining
order was converted into writs of preliminary injunction and preliminary mandatory injunction upon posting by
ADC of a P2 million bond. these writs are challenged in these consolidated petitions as having been issued in
grave abuse of discretion amounting to lack of jurisdiction.
While the petitions at bench are checkered with significant substantive and procedural issues, I will only address
the contention that ADC has no existing legislative franchise. The contention is anchored on two (2) submissions:
first, ADC has no legislative franchise as required by R.A. No. 954, and second, even if the city of Manila
licensed ADC to operate jai-alai, its authority was nevertheless revoked by section 3 of P.D. No. 771.
I find as completely baseless petitioners' submission that R.A. No. 954 requires a legislative franchise to operate
a jai-alai, in effect, revoking the power of the City of Manila to issue permits for the same purpose as granted by
its Charter. A 20-20 visual reading of R.A. No. 954 will not yield the suggested interpretation by petitioners. the
titles of R.A. No. 954 will immediately reveal that the law was enacted to achieve a special purpose. It states: "An
Act To Prohibit Certain Activities In Connection With Horse Races And Basque pelota Games (Jai-Alai), And To
Prescribe Penalties For its Violation." The prohibited activities related to jai-alai games are specified in sections 4
to 6, viz:
Sec. 4. No person, or group of persons, other than the operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games (Jai-Alai), shall offer, take or arrange bets on any basque
pelota game or event, or maintain or use a totalizator or other device, method or system to bet or gamble
on any basque pelota game or event.
Sec. 5. No person, operator, or maintainer of fronton with legislative franchise to conduct basque
pelota games shall offer, take or arrange bets on any basque pelota game or event, or maintain or use a
totalizator or other device, method or system to bet or gamble on any basque pelota game or event outside
the place, enclosure, or fronton where the basque pelota game is held.
Sec. 6. No person or group of persons shall fix a basque pelota game for the purpose of insuring the
winning of certain determined pelotari or pelotaris.
The Title of R.A. No. 954 does not show that it seeks to limit the operation of jai-alai only to entities with franchise
given by Congress. what the title trumpets as the sole subject of the law is the criminalization of certain practices
relating to jai-alai games. The title of a law is a valuable intrinsic aid in determining legislative intent.3
The Explanatory Note4 of House Bill 3204, the precursor of R.A. No. 954, also reveals that the intent of the law is
only to criminalize the practice of illegal bookies and game-fixing in jai-alai. It states:
This bill seeks to prohibit certain anomalous practice of "bookies" in connection with the holding of horse
races or "basque pelota" games. The term "bookie" as commonly understood refers to a person, who
without any license therefor, operates outside the compounds of racing clubs and accepts bets from the
public. They pay dividends to winners minus a commission, which is usually 10%. Prosecutions of said
persons have been instituted under Act No. 4240 which was enacted in 1935. However, in a recent opinion
released by the City Fiscal of Manila he maintains that Act No. 4240 has already been repealed, so that the
present law regulating ordinary horse races permits "bookies" to ply their trade, but not on sweepstakes
races and other races held for charitable purposes. With the operation of "booking" places in the City of
Manila, the Government has been losing no less than P600,000.00 a year, which amount represents the
tax that should have been collected from bets made in such places. for these reasons, the approval of the
bill is earnestly recommended.
As said Explanatory Note is expressive of the purpose of the bill, it gives a reliable keyhole on the scope and
coverage of R.A. No. 954.5 Nothing from the Explanatory Note remotely suggests any intent of the law to revoke
the power of the City of Manila to issue permits to operate jai-alai games within its territorial jurisdiction.
The Debates6 in Congress likewise reject the reading of R.A. No. 954 by petitioners, thus:
RESUMPTION OF SESSION
THE SPEAKER. The session is resumed
MR. CINCO. Mr. Speaker, I withdraw my motion for postponement.
MR. CALO. Mr. Speaker, will the gentleman may yield, if he so desires.
MR. ZOSA. Willingly.
 MR. CALO. What is the national import of this bill?
MR. ZOSA. Mr. Speaker, this bill prohibits certain activities in connection with horse races and jai-Alai
games which are
licensed by the government. At present, there are many
practices in connection with the holding of these games
which deprive the government of income that should
legally go into the government coffers as taxes.
MR. CALO. Is not this matter of national importance because Jai-Alai
games and horse races are held only in Manila?
MR. ZOSA. Precisely, Mr. Speaker, they are played on a big scale, and
there are many practices which deprive the government of
income to which it is entitled. I think the gentleman from
Agusan is a member of the Committee on Appropriations.
The governments will have more revenues, if we shall
approve this bill.
Again, legislative debate is a good source to determine the intent of a
law.7
To top it all, the text of R.A. no. 954 itself does not intimate that it is repealing any existing law, especially section
18 (jj) of R.A. no. 409, otherwise known as the Charter of Manila. Indeed, R.A. No. 954 has no repealing
provision. The reason is obvious — it simply prohibited certain practices in jai-alai then still unregulated by the
laws of the land. It did not regulate aspects of jai-alai already regulated by existing laws, like the matter of
whether it is the national government alone that should issue franchises to operate jai-alai games.
The subsequent enactment of P.D. No. 771 on August 20, 1975 further demolished the submission of petitioners.
In clear and certain language, P.D. no. 771 recalled the owner of local governments to issue jai-alai franchises
and permits. It also revoked existing franchises and permits issued by local governments. If R.A. no. 954 had
already disauthorized local governments from granting franchisers and permits, there would be no need to enact
P.D. no. 771. No rule of statutory construction will be considered any law a meaningless redundancy.
The passage of P.D. No. 771, also negates petitioners' insistence that for ADC to continue operating, it must
show it has a franchise from Congress, not just a permit from the City of Manila. The suggested dichotomy
between a legislative franchise and city permit does not impress. If the City of Manila is empowered to license the
ADC it is because the power was delegated to it by Congress. The acts of the City of Manila in the exercise of its
delegated power bind Congress as well. Stated otherwise, the permit given by the City to ADC is not any whit
legally inferior to a regular franchise. Through the years, the permit given by the City endows the
grantee complete right to operate. Not once, except in these cases, has the national government questioned the
completeness of his right. For this reason, P.D. No. 771 has to take revoke all existing franchises and permits
without making any distinction. It treated permits in the same class as franchises.
Petitioners' second line of argument urges that in any event, Section 3 of P.D. No. 771 expressly
revoked all existing franchises and permits to operate jai-alai games granted by local governments, including the
permit issued to ADC by the City of Manila through Ordinance No. 7065. For its resolution, petitioners' argument
requires a re-statement of the requirements for the valid exercise of police power.
It was the legendary Chief Justice Marshall who first used the phrase police power in 1824.8 Early attempts to fix
the metes and bounds of police power were unsuccessful.9 For of all the inherent powers of the State, police
power is indubitably the most pervasive, 10 the most insistent and the least limitable. 11 Rooted on the latin
maxims, salus populi suprema est lex (the welfare of the people if the supreme law) and sic utere tuo ut alienum
non laedas (so use your property as not to injure the property of others), it was not without reason for Justice
Holmes to stress that its reach extends "to all the great public needs." 12 A similar sentiment was echoed by our
own Justice Laurel in Alalang v. Williams 13 who defined police power as the "state authority to enact legislation
that may interfere with personal liberty or property in order to promote the general welfare." Over the years,
courts recognized the power of legislature to enact police regulations on broad areas of state concern: (a) the
preservation of the state itself and the unhindered execution of its legitimate functions; (b) the prevention and
punishment of crime; (c) the preservation of the public peace and order; (d) the preservation of the public safety;
(e) the purity and preservation of the public morals; (f) the protection and promotion of the public health (g) the
regulation of business, trades, or professions the conduct of which may affect one or other of the objects just
enumerated; (h) the regulation of property and rights of property so far as to prevent its being used in a manner
dangerous or detrimental to others; (i) the prevention of fraud, extortion, and oppression; (j) roads and streets,
and their preservation and repair; and (k) the preservation of game and fish. 14
But while the State is bestowed near boundless authority to promote public welfare, still the exercise of police
power cannot be allowed to run riot in a republic ruled by reason. Thus, our courts have laid down the test to
determine the validity of a police measure as follows: (1) the interest of the public generally, as distinguished
from those of particular class, requires its exercise; and (2) the means employed are reasonably necessary for
the accomplishment of the purpose and not unduly oppresive upon individuals. 15 Deeper relexion will reveal that
the test reiterates the essence of our constitutional guarantees of substantive due process, equal protection, and
non-impairment of property rights.
We now apply this lucidly-lined test to the petitions at bench. To reiterate, P.D. No. 771 utilized two methods to
regulate jai-alai: First, it reverted the power to issue franchise and permit to the national government, second, it
revoked all existing franchise and permit issued by local governments.
I concede that the first method is invulnerable even to the strongest of constitutional attack. Part of the plenary
power of Congress to make laws is the right ot grant franchise and permits allowing the exercise of certain
privileges. Congress can delegate the exercise of this innate power to grant franchises as it did to the City of
Manila when it granted its charter on June 18, 1949 thru R.A. no. 409. Congress can also revoke the delegated
power and choose to wield the power itself as it did thru then President Marcos who exercised legislative powers
by enacting P.D. No. 771. In the petitions at bench, Congress revoked the power of local government to issue
franchises and permits which it had priorly delegated. In doing so and in deciding to wield the power itself to meet
the perceived problems of the time, the legislature exercised its distinct judgment and the other branches of
government, including this Court, cannot supplant this judgment without running afoul of the principle of
separation powers. To be sure, this particular legislative method to regulate the problem of mushrooming
applications for jai-alai franchise cannot be faulted as bereft of rationality. In the hearing of the petitions at bench,
Executive Secretary Guingona established the fact that at the time of the enactment of P.D. No. 771, there were
numerous applications to run jai-alai games in various cities and municipalities of the archipelago. To prevent the
proliferation of these applications and minimize their ill effects, the law centralized their screening by the national
government alone. The law excluded local governments in the process. The revocation of the delegated power to
local governments does not impair any right. Applicants to franchises have no right to insist that their applications
be acted upon by local governments. Their right to a franchise is only in purpose.
The second method adopted by Section 3 of P.D. No. 771 which revoked all existing franchises and permits is,
however, constitutionally impermissible. On its face, section 3 purports to revoke all existing franchises and
permits. During the oral argument of the petitions at bench, however, it was admitted
that at the time P.D. No. 771 was enacted, only ADC is actually operating a jai-alai. 16 The purported revocation
of all franchises and permits when there was only one existing permit at that time is an unmistakeable attempt to
mask the law with impartiality. No other permit was affected by said sec. 3 except ADC.
Truth, however, has its own time of sprouting out. The truth behind the revocation of ADC's franchise revealed
itself when former President Marcos transferred ADC's franchise to the Philippine Jai-Alai and Amusements
Corporation then under the control of his brother-in-law, Mr. Alfredo "Bejo" Romualdez. The favored treatment
was extended hardly two (2) months after the revocation of ADC's franchise and it left Philippine Jai-Alai and
Amusements Corporation the sole jai-alai operator in the Philippines. The Court is not informed of any distinction
of PJAC that will justify its different treatment. The evidence is thus clear and the conclusion is irresistable that
section 3 of P.D. No. 771 was designed with a malignant eye against ADC.
In light of the established facts in field, section 3 of P.D. No. 771 must be struck down as constitutionally infirmed.
despite its cosmetics, section 3 cannot be unblushingly foisted as a measure that will promote the public welfare.
There is no way to treat the self-interest of a favored entity as identical with the general interest of a favored
entity as identical with the general interest of the Filipino people. It will also be repulsive to reason to entertain the
thesis that the revocation of the franchise of ADC is reasonably necessary to enable the State to grapple to the
ground the evil of jai-alai as a form of gambling. Petitioners have not demonstrated that government
lacks alternative options to succeed in its effort except to cancel the lone franchise of ADC. Well to stress, it is
not the lofty aim of P.D. No. 771 to completely eradicate jai-alai games; it merely seeks to control its
multiplication by restoring the monopoly of the national government in the dispensation of franchises.
Prescinding from these premises, I share the scholarly view of Mr. Justice Quiason that sec. 3 of P.D. No. 771
offends the Constitution which demands faithful compliance with the requirements of substantive due process,
equal protection of the law, and non-impairment of contracts. capsulizing their essence, substantive due process
exacts fairness; equal protection disallows distinction to the distinctless; and the guaranty of non-impairment of
contract protects its integrity unless demanded otherwise by the public good. Constitutionalism eschews the
exercise of unchecked power for history demonstrates that a meandering, aimless power ultimately tears apart
the social fabric of society. Thus, the grant of police power to promote public welfare cannot carry with it the
privilege to be oppressive. The Constitution ordained the State not just to achieve order or liberty but to
attain ordered liberty, however elusive the balance may be. Cognizant of the truism that in life the only constant is
change, the Constitution did not design that the point that can strike the balance between order and liberty should
be static for precisely, the process of adjusting the moving point of the balance gives government greater
elasticity to meet the needs of the time.
It is also my respectful submission that the unconstitutionality of section 3 of P.D. No. 771 was not cured when
former President Aquino used it in revoking P.D. No. 810 which granted Philippine Jai-Alai and Amusements
Corporation a franchise to operate jai-alai in Manila. The subsequent use of said section should not obfuscate the
fact that the law was enacted in the wrongful exercise of the police power of the State. There is no sidestepping
the truth that its enactment inflicted undue injury on the right s of ADC and there can be no reparation of these
rights until and unless its permit to continue operating jai-alai in Manila is restored. Cancelling the franchise of
Philippine Jai-Alai and Amusements Corporation is an act of Justice to ADC if its franchise would be left
unrecognized. Since the unconstitutionality of section 3 is congenital, it is beyond redemption.
But while I wholeheartedly subscribe to the many impeccable theses of Mr. Justice Quiason, it is with regret that I
cannot join his submittal that sec. 3 of P.D. No. 771 violates procedural due process. We are dealing with the
plenary power of the legislature to make and amend laws. Congress has previously delegated to the City of
Manila the power to grant permits to operate jai-alai within its territorial jurisdiction and ADC's permit could have
been validly revoked by law if it were demonstrated that its revocation was called for by the public good and is
not capricious. In ascertaining the public good for the purpose of enacting a remedial law, it is not indispensable,
albeit sometimes desirable, to give notice and hearing to an affected party. The data the legislature seeks when
engaged in lawmaking does not focus on the liability of a person or entity which would require fair hearing of the
latter's side. In fine, the legislature while making laws is not involved in establishing evidence that will convict, but
in unearthing neutral data that will direct its discretion in determining the general good.
The suggested notice and hearing before a franchise can be cancelled has another undesirable dimension. It
does not only unduly cramp the legislature in its method of data-gathering, it also burdens the legislature with too
much encumbrance in the exercise of its police power to regulate gambling. However heavily laden with property
rights a franchise to operate jai-alai maybe, it is still a contract which under appropriate circumstances can be
revoked to enhance public interest. Jai-alai may be a game of a thousand thrills but its true thrill comes from the
gambling on its indeterminate result. Beyond debate, gambling is an evil even if its advocates bleach its
nefariousness by upgrading it as a necessary evil. In a country where it is a policy to promote the youth's
physical, moral, spiritual, intellectual, and social well-being, 17 there is no right to gamble, neither a right to
promote gambling for gambling is contra bonos mores. To require the legislature to strictly observe procedural
before it can revoke a gambling due process before it can revoke a gambling franchise is to put too much
primacy on property rights. We then stand in danger of reviving the long lamented 1905 ruling in Lochner v. New
York 18 which unwisely struck down government interference in contractual liberty. The spirit of liberalism which
provides the main driving force of social justice rebels against the resuscitation of the ruling Lochner from its
sarcophagus. We should not be seduced by any judicial activism unduly favoring private economic interest 19 at
the expense of the public good.
I also support the stance of Mr. Justice Quiason which resisted the stance that the Court should close its eyes to
allegations that section 3 of P.D. No. 771 was conceived and effected to give naked preference to a favored
entity due to pedigree. I reiterate the view that section 1, Article VIII of the Constitution expanding the jurisdiction
of this Court to determine whether or not there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or agency of government is not a pointless postulate. Without the grant of
this new power, it would be difficult, if not impossible, to pierce through the pretentious purposes of P.D. No. 771. 3 Trazo vs. Manila Pencil Co., 1 SCRA 403 [1961], citing Felismino vs. Gloria, supra note 2; Bool vs. Mendoza, G.R. No.
P.D. No. 771 has no right to a reverential treatment for it is not a real law as it is not the product of an authentic 5339, 17 April 1953.
deliberative legislature. Rather, it is the dictate of a public official who then had a monopoly of executive and 4 Lichauco vs. Court of Appeals, 63 SCRA 123 [1975].
legislative powers. As it was not infrequently done at that time, the whereas clauses of laws used to camouflage 5 Trazo vs. Manila Pencil Co., supra note 3, citing Lim Tek Goan vs. Azores, 76 Phil. 363 [1946]; El Hogar Filipino vs.
National Bank , 64 Phil. 582 [1937].
a private purpose by the invocation of public welfare. The tragedy is that the bogus invocation of public welfare
6 Rizal Surety and Insurance Co. vs. Tan, 83 Phil. 732 [1949].
succeeded partly due to the indefensible deference given to official acts of government. The new Constitution 7 Garcia vs. David, supra note 2 at 282; 59 Am Jur 2d 575; 67 C.J.S. 975; Clareza vs. Rosales, G.R. No. L-15364, 31 May
now calls for a heightened judicial scrutiny of official acts. For this purpose, it has extirpated even the colonial 1961, 59 O.G. No. 23, 3605.
roots of our impotence. It is time to respond to this call with neither a pause nor a half-pause. 8 Garcia vs. David, supra note 2.
9 Batama Farmers' Cooperative Marketing Association, Inc. vs. Rosal, 42 SCRA 408 [1971].
I therefore vote to declare section 3 of P.D. No. 771 unconstitutional and to dismiss the petitions. 10 93 SCRA 238 [1979].
PUNO, J., dissenting:
1 Civil Case No. 88-45660; Civil Case No. 91-58913; Civil Case No. 91-58930; G.R. No. 101763.
Footnotes 2 He succeeded Judge Villarin as Presiding Judge of Br. 40, RTC, Manila.
PADILLA, J., concurring: 3 Agpalo, Statutory Construction, 1986 ed., p. 12 citing Government v. Municipality of Binalonan, 32 Phil. 634 [1915].
1 Annex "D", Petition in G.R. No. 117263. 4 See Memorandum of Respondents, p. 15.
2 Annex "C", Petition in G.R. No. 117263. 5 Agpalo, op cit., pp. 70-71 citing Baga v. PNB, 99 Phil. 889 [1956]; Nepomuceno v. Ocampo, 95 Phil. 292 [1954].
3 Sec. 5. The Supreme Court shall have the following powers: 6 Congressional Record, Proceedings and Debates, Vol. III, Part II, No. 8, July 1, 1952 cited in Reply Memorandum of
(1) Exercise original jurisdiction . . . petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus. . . . Respondents, p. 7.
4 Sec. 4 . . . 7 Agpalo, op cit, pp. 71-72 citing Arenas v. City of San Carloos, 82 SCRA 318 [1978]; People v. Olarte, 108 Phil. 750 [1960].
(2) All cases involving the constitutionality of a treaty, international or executive agreement, or law, which shall be heard by 8 Tribe, American Constitutional law, Foundation Press, Inc., 1978 ed., p. 323; Gibbons v. Ogden, 22 UF (9 Wheat) 1, 208
the Supreme Court en banc . . . shall be decided with the concurrence of a majority of the Members who actually took part in [1824].
the deliberations on the issues in the case and voted thereon. 9 Stone v. Mississippi, 101 US 814.
5 It will be noted that under Executive Order No. 392, issued on 1 January 1951, even the power to regulate jai-alais was 10 Cruz, Isagani, Constitutional Law, 1991 ed., p. 39.
transferred from the local governments to the Games and Amusement Board (GAB). 11 Smith Bell and Co. v. Natividad, 40 Phil. 136 [1919].
KAPUNAN, J., concurring: 12 Noble State Bank v. Haskell, 219 US 112 [1911].
1 G.R. No. 117263, Rollo, pp. 7-8. 13 70 Phil. 726 [1940].
2 The government contends that 1) Republic Act No. 954 approved on June 20, 1953 requires a legislative not a municipal 14 Black, Henry Campbell, Handbook on Constitutional Law, 2nd ed., 1985 ed., p. 342.
franchise and that 2) Sec. 3 of P.D. 771 issued on 20 August 1975 expressly revoked all existing franchises and permits 15 Cruz, op cit p. 48 citing US v. Toribio, 15 Phil. 85 [1910]; Fabie v. City of Manila, 21 Phil. 486 [1912]; Case v. Board of
issued by local governments to operate all forms of gambling facilities. In G.R. No. 117263 the government contends that the Health, 24 Phil. 256 [1913].
ADC has no right to the issuance of a preliminary mandatory injunction because the ADC had no legislative franchise and 16 Hearing on November 10, 1994, TSN, pp. 8-9.
that mandamus was not available to compel performance of a discretionary function. 17 Article II, section 13 on State Policies.
3 R.A. No. 954, sec. 4 and 5. 18 198 US 25 SCT 539, 49 L ed 937 [1905], where Justice Holmes vigorously dissented, stating among others that "the
4 It is a cardinal principle that this court will first ascertain whether a construction of a statute is fairly possible by which the Fourteenth Amendment does not enact Mr. Herbert Spencer's Social Statistics . . ." and "general propositions do not decide
constitutional question may be avoided. 297 SA 288 (1936). concrete cases."
5 Basco vs. Pagcor 197 SCRA 52 (1991). 19 The Lochner ruling was junked in 1937 but recent writings on possible revival of economic activism include: Esptein,
6 Id. Richard, Takings. Private Property and the Power of Emminent Domain [1985]; Sunstein, Class Interest Groups in American
7 "It has almost become impossible to limit its sweep." Barbier vs. Connoly, 113 U.S. 27 (1884) "It may be said to be that Public Law, 38 Stan L. Reo. 29, 68-85 [1985]; Mashaw, Jerry, Constitutional Deregulation: Notes Toward a Public, Public
inherent and plenary power in the State which enables it to prohibit all things hurtful to the comfort, safety and welfare of Law, 54 Tnl. L. Rev. 848 [1980].
society." Lake View vs Rose Hill Cemetery Co. 70 Ill. 191 (1873) See also, U.S. v. Toribio, 15 Phil. 85; U.S. vs. Gomez Jesus
31 Phil. 218; U.S. vs. Pompeya 31 Phil. 245; Rubi vs. Provincial Board 39 Phil. 600, and Edu v. Ericta, infra, note 6.
8 35 SCRA 481, 487.
9 ENRIQUE M. FERNANDO, THE CONSTITUTION OF THE PHILIPPINES, 515 (1987).
10 Supra, note 5.
11 Supra, note 7, at 518.
12 219 U.S. 104 (1911).
DAVIDE, JR., J., concurring:
1 1 VICENTE J. FRANCISCO, The Revised Rules of Court in the Philippines 718 (1973 ed.)
2 Garcia vs. David, 67 Phil. 279, 283 [1939].
G.R. No. 98332 January 16, 1995
MINERS ASSOCIATION OF THE PHILIPPINES, INC., petitioner,
vs.
HON. FULGENCIO S. FACTORAN, JR., Secretary of Environment and Natural Resources, and JOEL D.
MUYCO, Director of Mines and Geosciences Bureau, respondents.
ROMERO, J.:
The instant petition seeks a ruling from this Court on the validity of two Administrative Orders issued by the
Secretary of the Department of Environment and Natural Resources to carry out the provisions of certain
Executive Orders promulgated by the President in the lawful exercise of legislative powers.
Herein controversy was precipitated by the change introduced by Article XII, Section 2 of the 1987 Constitution
on the system of exploration, development and utilization of the country's natural resources. No longer is the
utilization of inalienable lands of public domain through "license, concession or lease" under the 1935 and 1973
Constitutions1allowed under the 1987 Constitution.
The adoption of the concept of jura regalia2that all natural resources are owned by the State embodied in the
1935, 1973 and 1987 Constitutions, as well as the recognition of the importance of the country's natural
resources, not only for national economic development, but also for its security and national
defense,3 ushered in the adoption of the constitutional policy of "full control and supervision by the State" in the
exploration, development and utilization of the country's natural resources. The options open to the State are
through direct undertaking or by entering into co-production, joint venture; or production-sharing agreements, or
by entering into agreement with foreign-owned corporations for large-scale exploration, development and
utilization.
Article XII, Section 2 of the 1987 Constitution provides:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural resources shall be under the full control
and supervision of the State. The State may directly undertake such activities, or it may enter into co-
production, joint venture, or product-sharing agreements with Filipino citizens, or corporations or
associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may
be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under
such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power, beneficial use may be the measure
and limit of the grant.
xxx xxx xxx
The President may enter into agreements with foreign-owned corporations involving either technical or
financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and
other mineral oils according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In such agreements, the State
shall promote the development and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance with this provision,
within thirty days from its execution. (Emphasis supplied)
Pursuant to the mandate of the above-quoted provision, legislative acts4 were successively issued by the
President in the exercise of her legislative
power.5
To implement said legislative acts, the Secretary of the Department of Environment and Natural Resources
(DENR) in turn promulgated Administrative Order Nos. 57 and 82, the validity and constitutionality of which are
being challenged in this petition.
On July 10, 1987, President Corazon C. Aquino, in the exercise of her then legislative powers under Article II,
Section 1 of the Provisional Constitution and Article XIII, Section 6 of the 1987 Constitution, promulgated
Executive Order No. 211 prescribing the interim procedures in the processing and approval of applications for the
exploration, development and utilization of minerals pursuant to the 1987 Constitution in order to ensure the
continuity of mining operations and activities and to hasten the development of mineral resources. The pertinent
provisions read as follows:
Sec. 1. Existing mining permits, licenses, leases and other mining grants issued by the Department of
Environment and Natural Resources and Bureau of Mines and Geo-Sciences, including existing operating
agreements and mining service contracts, shall continue and remain in full force and effect, subject to the
same terms and conditions as originally granted and/or approved.
Sec. 2. Applications for the exploration, development and utilization of mineral resources, including renewal
applications for approval of operating agreements and mining service contracts, shall be accepted and
processed and may be approved; concomitantly thereto, declarations of locations and all other kinds of
mining applications shall be accepted and registered by the Bureau of Mines and Geo-Sciences.
Sec. 3. The processing, evaluation and approval of all mining applications, declarations of locations,
operating agreements and service contracts as provided for in Section 2 above, shall be governed by
Presidential Decree No. 463, as amended, other existing mining laws and their implementing rules and
regulations: Provided, however, that the privileges granted, as well as the terms and conditions thereof
shall be subject to any and all modifications or alterations which Congress may adopt pursuant to Section
2, Article XII of the 1987 Constitution.
On July 25, 1987, President Aquino likewise promulgated Executive Order No. 279 authorizing the DENR
Secretary to negotiate and conclude joint venture, co-production, or production-sharing agreements for the
exploration, development and utilization of mineral resources, and prescribing the guidelines for such
agreements and those agreements involving technical or financial assistance by foreign-owned corporations for
large-scale exploration, development, and utilization of minerals. The pertinent provisions relevant to this petition
are as follows:
Sec. 1. The Secretary of the Department of Environment and Natural Resources (hereinafter referred to as
"the Secretary") is hereby authorized to negotiate and enter into, for and in behalf of the Government, joint
venture, co-production, or production-sharing agreements for the exploration, development, and utilization
of mineral resources with any Filipino citizens, or corporation or association at least sixty percent (60%) of
whose capital is owned by Filipino citizens. Such joint venture, co-production, or production-sharing
agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five
years, and shall include the minimum terms and conditions prescribed in Section 2 hereof. In the execution
of a joint venture, co-production or production agreements, the contracting parties, including the
Government, may consolidate two or more contiguous or geologically — related mining claims or leases
and consider them as one contract area for purposes of determining the subject of the joint venture, co-
production, or production-sharing agreement.
xxx xxx xxx
Sec. 6. The Secretary shall promulgate such supplementary rules and regulations as may be necessary to
effectively implement the provisions of this Executive Order.
Sec. 7. All provisions of Presidential Decree No. 463, as amended, other existing mining laws, and their
implementing rules and regulations, or parts thereof, which are not inconsistent with the provisions of this
Executive Order, shall continue in force and effect.
Pursuant to Section 6 of Executive Order No. 279, the DENR Secretary issued on June 23, 1989 DENR
Administrative Order No. 57, series of 1989, captioned "Guidelines of Mineral Production Sharing Agreement
under Executive Order No. 279."6 Under the transitory provision of said DENR Administrative Order No. 57,
embodied in its Article 9, all existing mining leases or agreements which were granted after the effectivity of the
1987 Constitution pursuant to Executive Order No. 211, except small scale mining leases and those pertaining to
sand and gravel and quarry resources covering an area of twenty (20) hectares or less, shall be converted into
production-sharing agreements within one (1) year from the effectivity of these guidelines.
On November 20, 1980, the Secretary of the DENR Administrative Order No. 82, series of 1990, laying down the
"Procedural Guidelines on the Award of Mineral Production Sharing Agreement (MPSA) through Negotiation."7
Section 3 of the aforementioned DENR Administrative Order No. 82 enumerates the persons or entities required
to submit Letter of Intent (LOIs) and Mineral Production Sharing Agreement (MPSAs) within two (2) years from
the effectivity of DENR Administrative Order No. 57 or until July 17, 1991. Failure to do so within the prescribed
period shall cause the abandonment of mining, quarry and sand and gravel claims. Section 3 of DENR
Administrative Order No. 82 provides:
Sec. 3. Submission of Letter of Intent (LOIs) and MPSAs). The following shall submit their LOIs and MPSAs
within two (2) years from the effectivity of DENR A.O. 57 or until July 17, 1991.
i. Declaration of Location (DOL) holders, mining lease applicants, exploration permitees, quarry applicants
and other mining applicants whose mining/quarry applications have not been perfected prior to the
effectivity of DENR Administrative Order No. 57.
ii. All holders of DOL acquired after the effectivity of DENR A.O. No. 57.
iii. Holders of mining leases or similar agreements which were granted after (the) effectivity of 1987
Constitution.
Failure to submit letters of intent and MPSA applications/proposals within the prescribed period shall cause
the abandonment of mining, quarry and sand and gravel claims.
The issuance and the impeding implementation by the DENR of Administrative Order Nos. 57 and 82 after their
respective effectivity dates compelled the Miners Association of the Philippines, Inc.8 to file the instant petition
assailing their validity and constitutionality before this Court.
In this petition for certiorari, petitioner Miners Association of the Philippines, Inc. mainly contends that respondent
Secretary of DENR issued both Administrative Order Nos. 57 and 82 in excess of his rule-making power under
Section 6 of Executive Order No. 279. On the assumption that the questioned administrative orders do not
conform with Executive Order Nos. 211 and 279, petitioner contends that both orders violate the
non-impairment of contract provision under Article III, Section 10 of the 1987 Constitution on the ground that
Administrative Order No. 57 unduly pre-terminates existing mining agreements and automatically converts them
into production-sharing agreements within one (1) year from its effectivity date. On the other hand, Administrative
Order No. 82 declares that failure to submit Letters of Intent and Mineral Production-Sharing Agreements within
two (2) years from the date of effectivity of said guideline or on July 17, 1991 shall cause the abandonment of
their mining, quarry and sand gravel permits.
On July 2, 1991, the Court, acting on petitioner's urgent ex-parte petition for issuance of a restraining
order/preliminary injunction, issued a Temporary Restraining Order, upon posting of a P500,000.00 bond,
enjoining the enforcement and implementation of DENR Administrative Order Nos. 57 and 82, as amended,
Series of 1989 and 1990, respectively.9
On November 13, 1991, Continental Marble Corporation, 10 thru its President, Felipe A. David, sought to
intervene 11in this case alleging that because of the temporary order issued by the Court , the DENR, Regional
Office No. 3 in San Fernando, Pampanga refused to renew its Mines Temporary Permit after it expired on July
31, 1991. Claiming that its rights and interests are prejudicially affected by the implementation of DENR
Administrative Order Nos. 57 and 82, it joined petitioner herein in seeking to annul Administrative Order Nos. 57
and 82 and prayed that the DENR, Regional Office No. 3 be ordered to issue a Mines Temporary Permit in its
favor to enable it to operate during the pendency of the suit.
Public respondents were acquired to comment on the Continental Marble Corporation's petition for intervention in
the resolution of November 28, 1991.12
Now to the main petition. If its argued that Administrative Order Nos. 57 and 82 have the effect of repealing or
abrogating existing mining laws 13 which are not inconsistent with the provisions of Executive Order No. 279.
Invoking Section 7 of said Executive Order No. 279, 14 petitioner maintains that respondent DENR Secretary
cannot provide guidelines such as Administrative Order Nos. 57 and 82 which are inconsistent with the
provisions of Executive Order No. 279 because both Executive Order Nos. 211 and 279 merely reiterated the
acceptance and registration of declarations of location and all other kinds of mining applications by the Bureau of
Mines and Geo-Sciences under the provisions of Presidential Decree No. 463, as amended, until Congress opts
to modify or alter the same.
In other words, petitioner would have us rule that DENR Administrative Order Nos. 57 and 82 issued by the
DENR Secretary in the exercise of his rule-making power are tainted with invalidity inasmuch as both contravene
or subvert the provisions of Executive Order Nos. 211 and 279 or embrace matters not covered, nor intended to
be covered, by the aforesaid laws.
We disagree.
We reiterate the principle that the power of administrative officials to promulgate rules and regulations in the
implementation of a statute is necessarily limited only to carrying into effect what is provided in the legislative
enactment. The principle was enunciated as early as 1908 in the case of United States v. Barrias. 15 The scope
of the exercise of such rule-making power was clearly expressed in the case of United States v. Tupasi
Molina, 16decided in 1914, thus: "Of course, the regulations adopted under legislative authority by a particular
department must be in harmony with the provisions of the law, and for the sole purpose of carrying into effect its
general provisions. By such regulations, of course, the law itself can not be extended. So long, however, as the
regulations relate solely to carrying into effect its general provisions. By such regulations, of course, the law itself
can not be extended. So long, however, as the regulations relate solely to carrying into effect the provision of the
law, they are valid."
Recently, the case of People v. Maceren 17 gave a brief delienation of the scope of said power of administrative
officials:
Administrative regulations adopted under legislative authority by a particular department must be in
harmony with the provisions of the law, and should be for the sole purpose of carrying into effect its general
provision. By such regulations, of course, the law itself cannot be extended (U.S. v. Tupasi Molina, supra).
An administrative agency cannot amend an act of Congress (Santos vs. Estenzo, 109 Phil. 419, 422;
Teoxon vs. Members of the Board of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel vs.
General Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao v. Casteel, L-21906, August
29, 1969, 29 SCRA 350).
The rule-making power must be confined to details for regulating the mode or proceeding to carry into
effect the law as it has been enacted. The power cannot be extended to amending or expanding the
statutory requirements or to embrace matters not covered by the statute. Rules that subvert the statute
cannot be sanctioned (University of Santo Tomas v. Board of Tax Appeals, 93 Phil. 376, 382, citing 12 C.J.
845-46. As to invalid regulations, see Collector of Internal Revenue v. Villaflor, 69 Phil. 319; Wise & Co. v.
Meer, 78 Phil. 655, 676; Del Mar v. Phil. Veterans Administration, L-27299, June 27, 1973, 51 SCRA 340,
349).
xxx xxx xxx
. . . The rule or regulation should be within the scope of the statutory authority granted by the legislature to
the administrative agency (Davis, Administrative Law, p. 194, 197, cited in Victorias Milling Co., Inc. v.
Social Security Commission, 114 Phil. 555, 558).
In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the
basic prevails because said rule or regulations cannot go beyond the terms and provisions of the basic law
(People v. Lim, 108 Phil. 1091).
Considering that administrative rules draw life from the statute which they seek to implement, it is obvious that
the spring cannot rise higher than its source. We now examine petitioner's argument that DENR Administrative
Order Nos. 57 and 82 contravene Executive Order Nos. 211 and 279 as both operate to repeal or abrogate
Presidential Decree No. 463, as amended, and other mining laws allegedly acknowledged as the principal law
under Executive Order Nos. 211 and 279.
Petitioner's insistence on the application of Presidential Decree No. 463, as amended, as the governing law on
the acceptance and approval of declarations of location and all other kinds of applications for the exploration,
development, and utilization of mineral resources pursuant to Executive Order No. 211, is erroneous. Presidential
Decree No. 463, as amended, pertains to the old system of exploration, development and utilization of natural
resources through "license, concession or lease" which, however, has been disallowed by Article XII, Section 2 of
the 1987 Constitution. By virtue of the said constitutional mandate and its implementing law, Executive Order No.
279 which superseded Executive Order No. 211, the provisions dealing on "license, concession or lease" of
mineral resources under Presidential Decree No. 463, as amended, and other existing mining laws are deemed
repealed and, therefore, ceased to operate as the governing law. In other words, in all other areas of
administration and management of mineral lands, the provisions of Presidential Decree No. 463, as amended,
and other existing mining laws, still govern. Section 7 of Executive Order No. 279 provides, thus:
Sec. 7. All provisions of Presidential Decree No. 463, as amended, other existing mining laws, and their
implementing rules and regulations, or parts thereof, which are not inconsistent with the provisions of this
Executive Order, shall continue in force and effect.
Specifically, the provisions of Presidential Decree No. 463, as amended, on lease of mining claims under
Chapter VIII, quarry permits on privately-owned lands of quarry license on public lands under Chapter XIII and
other related provisions on lease, license and permits are not only inconsistent with the raison d'etre for which
Executive Order No. 279 was passed, but contravene the express mandate of Article XII, Section 2 of the 1987
Constitution. It force and effectivity is thus foreclosed.
Upon the effectivity of the 1987 Constitution on February 2, 1987, 18 the State assumed a more dynamic role in domain, private corporations with the required ownership by Filipino citizens can only lease the same.
the exploration, development and utilization of the natural resources of the country. Article XII, Section 2 of the Necessarily, insofar as other natural resources are concerned, it would only be the State which can
said Charter explicitly ordains that the exploration, development and utilization of natural resources shall be exploit, develop, explore and utilize the same. However, the State may enter into a joint venture, co-
under the full control and supervision of the State. Consonant therewith, the exploration, development and production or production-sharing. Is that not correct?
utilization of natural resources may be undertaken by means of direct act of the State, or it may opt to enter into
co-production, joint venture, or production-sharing agreements, or it may enter into agreements with foreign- MR. VILLEGAS: Yes.
owned corporations involving either technical or financial assistance for large-scale exploration, development,
and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions
MR. DAVIDE: Consequently, henceforth upon, the approval of this Constitution, no timber or forest
provided by law, based on real contributions to the economic growth and general welfare of the country.
concession, permits or authorization can be exclusively granted to any citizen of the Philippines nor to
any corporation qualified to acquire lands of the public domain?
Given these considerations, there is no clear showing that respondent DENR Secretary has transcended the
bounds demarcated by Executive Order No. 279 for the exercise of his rule-making power tantamount to a grave
MR. VILLEGAS: Would Commissioner Monsod like to comment on that? I think his answer is "yes."
abuse of discretion. Section 6 of Executive Order No. 279 specifically authorizes said official to promulgate such
supplementary rules and regulations as may be necessary to effectively implement the provisions thereof.
Moreover, the subject sought to be governed and regulated by the questioned orders is germane to the objects MR. DAVIDE: So, what will happen now license or concessions earlier granted by the Philippine
and purposes of Executive Order No. 279 specifically issued to carry out the mandate of Article XII, Section 2 of government to private corporations or to Filipino citizens? Would they be deemed repealed?
the 1987 Constitution.
MR. VILLEGAS: This is not applied retroactively. They will be respected.
Petitioner likewise maintains that Administrative Order No. 57, in relation to Administrative Order No. 82, impairs
vested rights as to violate the non-impairment of contract doctrine guaranteed under Article III, Section 10 of the MR. DAVIDE: In effect, they will be deemed repealed?
1987 Constitution because Article 9 of Administrative Order No. 57 unduly pre-terminates and automatically
converts mining leases and other mining agreements into production-sharing agreements within one (1) year MR. VILLEGAS: No. (Emphasis supplied)
from effectivity of said guideline, while Section 3 of Administrative Order No. 82, declares that failure to submit
Letters of Intent (LOIs) and MPSAs within two (2) years from the effectivity of Administrative Order No. 57 or until During the transition period or after the effectivity of the 1987 Constitution on February 2, 1987 until the first
July 17, 1991 shall cause the abandonment of mining, quarry, and sand gravel permits. Congress under said Constitution was convened on July 27, 1987, two (2) successive laws, Executive Order
Nos. 211 and 279, were promulgated to govern the processing and approval of applications for the exploration,
In Support of the above contention, it is argued by petitioner that Executive Order No. 279 does not contemplate development and utilization of minerals. To carry out the purposes of said laws, the questioned Administrative
automatic conversion of mining lease agreements into mining production-sharing agreement as provided under Order Nos. 57 and 82, now being assailed, were issued by the DENR Secretary.
Article 9, Administrative Order No. 57 and/or the consequent abandonment of mining claims for failure to submit
LOIs and MPSAs under Section 3, Administrative Order No. 82 because Section 1 of said Executive Order No. Article 9 of Administrative Order No. 57 provides:
279 empowers the DENR Secretary to negotiate and enter into voluntary agreements which must set forth the
minimum terms and conditions provided under Section 2 thereof. Moreover, petitioner contends that the power to
ARTICLE 9
regulate and enter into mining agreements does not include the power to preterminate existing mining lease
agreements.
TRANSITORY PROVISION
To begin with, we dispel the impression created by petitioner's argument that the questioned administrative
orders unduly preterminate existing mining leases in general. A distinction which spells a real difference must be 9.1. All existing mining leases or agreements which were granted after the effectivity of the 1987
drawn. Article XII, Section 2 of the 1987 Constitution does not apply retroactively to "license, concession or Constitution pursuant to Executive Order No. 211, except small scale mining leases and those pertaining to
lease" granted by the government under the 1973 Constitution or before the effectivity of the 1987 Constitution sand and gravel and quarry resources covering an area of twenty (20) hectares or less shall be subject to
on February 2, 1987. The intent to apply prospectively said constitutional provision was stressed during the these guidelines. All such leases or agreements shall be converted into production sharing agreement
deliberations in the Constitutional Commission, 19 thus: within one (1) year from the effectivity of these guidelines. However, any minimum firm which has
established mining rights under Presidential Decree 463 or other laws may avail of the provisions of EO
279 by following the procedures set down in this document.
MR. DAVIDE: Under the proposal, I notice that except for the [inalienable] lands of the public domain,
all other natural resources cannot be alienated and in respect to [alienable] lands of the public
It is clear from the aforestated provision that Administrative Order No. 57 applies only to all existing mining leases
or agreements which were granted after the effectivity of the 1987 Constitution pursuant to Executive Order No.
211. It bears mention that under the text of Executive Order No. 211, there is a reservation clause which provides
that the privileges as well as the terms and conditions of all existing mining leases or agreements granted after
the effectivity of the 1987 Constitution pursuant to Executive Order No. 211, shall be subject to any and all
modifications or alterations which Congress may adopt pursuant to Article XII, Section 2 of the 1987 Constitution.
Hence, the strictures of the
non-impairment of contract clause under Article III, Section 10 of the 1987 Constitution 20 do not apply to the
aforesaid leases or agreements granted after the effectivity of the 1987 Constitution, pursuant to Executive Order
No. 211. They can be amended, modified or altered by a statute passed by Congress to achieve the purposes of
Article XII, Section 2 of the 1987 Constitution.
Clearly, Executive Order No. 279 issued on July 25, 1987 by President Corazon C. Aquino in the exercise of her
legislative power has the force and effect of a statute or law passed by Congress. As such, it validly modified or
altered the privileges granted, as well as the terms and conditions of mining leases and agreements under
Executive Order No. 211 after the effectivity of the 1987 Constitution by authorizing the DENR Secretary to
negotiate and conclude joint venture, co-production, or production-sharing agreements for the exploration,
development and utilization of mineral resources and prescribing the guidelines for such agreements and those
agreements involving technical or financial assistance by foreign-owned corporations for large-scale exploration,
development, and utilization of minerals.
Well -settled is the rule, however, that regardless of the reservation clause, mining leases or agreements granted
by the State, such as those granted pursuant to Executive Order No. 211 referred to this petition, are subject to
alterations through a reasonable exercise of the police power of the State. In the 1950 case of Ongsiako v.
Gamboa, 21 where the constitutionality of Republic Act No. 34 changing the 50-50 sharecropping system in
existing agricultural tenancy contracts to 55-45 in favor of tenants was challenged, the Court, upholding the
constitutionality of the law, emphasized the superiority of the police power of the State over the sanctity of this
contract:
The prohibition contained in constitutional provisions against: impairing the obligation of contracts is not an
absolute one and it is not to be read with literal exactness like a mathematical formula. Such provisions are
restricted to contracts which respect property, or some object or value, and confer rights which may be asserted
in a court of justice, and have no application to statute relating to public subjects within the domain of the general
legislative powers of the State, and involving the public rights and public welfare of the entire community affected
by it. They do not prevent a proper exercise by the State of its police powers. By enacting regulations reasonably
necessary to secure the health, safety, morals, comfort, or general welfare of the community, even the contracts
may thereby be affected; for such matter can not be placed by contract beyond the power of the State shall
regulates and control them. 22
In Ramas v. CAR and Ramos 23 where the constitutionality of Section 14 of Republic Act No. 1199 authorizing
the tenants to charge from share to leasehold tenancy was challenged on the ground that it impairs the obligation
of contracts, the Court ruled that obligations of contracts must yield to a proper exercise of the police power when
such power is exercised to preserve the security of the State and the means adopted are reasonably adapted to
the accomplishment of that end and are, therefore, not arbitrary or oppressive.
The economic policy on the exploration, development and utilization of the country's natural resources under
Article XII, Section 2 of the 1987 Constitution could not be any clearer. As enunciated in Article XII, Section 1 of
the 1987 Constitution, the exploration, development and utilization of natural resources under the new system
mandated in Section 2, is geared towards a more equitable distribution of opportunities, income, and wealth; a
sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and
an expanding productivity as the key to raising the quality of life for all, especially the underprivileged.
The exploration, development and utilization of the country's natural resources are matters vital to the public
interest and the general welfare of the people. The recognition of the importance of the country's natural
resources was expressed as early as the 1984 Constitutional Convention. In connection therewith, the 1986 U.P.
Constitution Project observed: "The 1984 Constitutional Convention recognized the importance of our natural
resources not only for its security and national defense. Our natural resources which constitute the exclusive
heritage of the Filipino nation, should be preserved for those under the sovereign authority of that nation and for
their prosperity. This will ensure the country's survival as a viable and sovereign republic."
Accordingly, the State, in the exercise of its police power in this regard, may not be precluded by the
constitutional restriction on non-impairment of contract from altering, modifying and amending the mining leases
or agreements granted under Presidential Decree No. 463, as amended, pursuant to Executive Order No. 211.
Police Power, being co-extensive with the necessities of the case and the demands of public interest; extends to
all the vital public needs. The passage of Executive Order No. 279 which superseded Executive Order No. 211
provided legal basis for the DENR Secretary to carry into effect the mandate of Article XII, Section 2 of the 1987
Constitution.
Nowhere in Administrative Order No. 57 is there any provision which would lead us to conclude that the
questioned order authorizes the automatic conversion of mining leases and agreements granted after the
effectivity of the 1987 Constitution, pursuant to Executive Order No. 211, to production-sharing agreements. The
provision in Article 9 of Administrative Order No. 57 that "all such leases or agreements shall be converted into
production sharing agreements within one (1) year from the effectivity of these guidelines" could not possibility
contemplate a unilateral declaration on the part of the Government that all existing mining leases and
agreements are automatically converted into
production-sharing agreements. On the contrary, the use of the term "production-sharing agreement" if they are
so minded. Negotiation negates compulsion or automatic conversion as suggested by petitioner in the instant
petition. A mineral production-sharing agreement (MPSA) requires a meeting of the minds of the parties after
negotiations arrived at in good faith and in accordance with the procedure laid down in the subsequent
Administrative Order No. 82.
We, therefore, rule that the questioned administrative orders are reasonably directed to the accomplishment of
the purposes of the law under which they were issued and were intended to secure the paramount interest of the
public, their economic growth and welfare. The validity and constitutionality of Administrative Order Nos. 57 and
82 must be sustained, and their force and effect upheld.
We now, proceed to the petition-in-intervention. Under Section 2, Rule 12 of the Revised Rules of Court, an
intervention in a case is proper when the intervenor has a "legal interest in the matter in litigation, or in the
success of either of the parties, or an interest against both, or when he is so situated as to be adversely affected
by a distribution or other disposition of property in the custody of the court or of an officer thereof. "Continental 6 Published in the July 3, 1989 issue of the Philippine Daily Inquirer, a newspaper of general circulation, and
Marble Corporation has not sufficiently shown that it falls under any of the categories mentioned above. The became effective on July 18, 1989.
refusal of the DENR, Regional Office No. 3, San Fernando, Pampanga to renew its Mines Temporary Permit 7 Published in the December 21, 1990 issue of the Philippine Daily Inquirer, a newspaper of general circulation,
does not justify such an intervention by Continental Marble Corporation for the purpose of obtaining a directive and became effective on January 5, 1991.
from this Court for the issuance of said permit. Whether or not Continental Marble matter best addressed to the 8 A non-stock and non-profit organization duly formed and existing under and by virtue of the laws of the
appropriate government body but certainly, not through this Court. Intervention is hereby DENIED. Philippines with principal office at Suite 609 Don Santiago Building whose members include mining prospectors
and claimowners or claimholders.
WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining Order issued on July 2, 9 Rollo, pp. 46-48.
1991 is hereby LIFTED. 10 A domestic corporation engaged in the business of marble mining with factory processing plant at 24 General
Luis St., Novaliches, Quezon City. It has filed a Declaration of Location dated November 13, 1973 for a placer
mine known as "MARGEL" located at Matitic, Norzagaray, Bulacan. It has been operating as a mining entity and
SO ORDERED.
exporting its finished products (marble tiles) by virtue of a Mines Temporary Permit issued by the DENR.
11 Rollo, pp. 99-104.
Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan 12 Rollo, p. 114.
and Mendoza, JJ., concur. 13 Presidential Decree No. 463, as amended, otherwise known as "The Mineral Resources Development Decree
of 1974" promulgated on May 17, 1974.
Footnotes 14 Section 7, Executive Order No. 279 provides:
All provisions of Presidential Decree No. 463, as amended, other existing mining laws, and their implementing
1 Article XIII, Section 1 of the 1935 Constitution provides: rules and regulations, or parts thereof, which are not inconsistent with the provisions of this Executive Order,
Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum and shall continue in force and effect.
other mineral oils, all forces of potential energy, and other natural resources of the Philippines belong to the 15 11 Phil. 327, 330 (1908).
State, and their disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines, 16 29 Phil. 120, 124 (1914).
or to corporation or associations at least sixty per centum of the capital of which is owned by such citizens, 17 No. L-32166, October 18, 1977, 79 SCRA 450.
subject to any existing right, grant, lease or concession at the time of the inauguration of the Government 18 De Leon v. Esguerra, G.R. No. 78058, August 31, 187, 153 SCRA 602.
established under this Constitution. Natural resources, with the exception of public agricultural land, shall not be 19 Record of the Constitutional Commission, Proceedings and Debate, Vol. III, p. 260.
alienated, and no license, concession, or lease for the exploitation, development, or utilization of any of the 20 Article III, Section 10 of the 1987 Constitutions provides:
natural resources shall be granted for a period exceeding twenty-five years, renewable for another twenty-five No law impairing the obligation of contracts shall be passed.
years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the 21 86 Phil. 50 (1950).
development of water power, in which cases beneficial use may be the measure and the limit of the grant. 22 86 Phil. at 54-55.
xxx xxx xxx 23 120 Phil. 168 (1964).
Article XIV, Section 8 of the 1973 Constitution provides:
Section 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of
potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State. With the
exception of agricultural, industrial or commercial, residential, and resettlement lands of the public domain,
natural resources shall not be alienated, and no license, concession, or lease for the exploration, development,
exploitation, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five
years, renewable for not more than twenty-five years, except as to water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power, in which cases, beneficial use may be the
measure and the limit of the grant.
2 Cariño v. Insular Government, 212 US 449 (1909); Valenton v. Mariano, 3 Phil. 537 (1904); Lee Hung Hok v.
David, G.R. No. L-30389, December 27, 1972, 48 SCRA 372, 377.
3 1986 U.P. Law Constitution Project, Vol. I, pp. 8-11.
4 Executive Order No. 211 (July 10, 1987) and Executive Order No. 279 (July 25, 1987).
5 Article II, Section 1, 1987 Provisional Constitution; Article XIII, Section 6, 1987 Constitution; Tan v. Marquez,
G.R. No. 93288, October 25, 1990, Minute Resolution, En Banc.
G.R. No. 93891 March 11, 1991
POLLUTION ADJUDICATION BOARD, petitioner
vs.
COURT OF APPEALS and SOLAR TEXTILE FINISHING CORPORATION, respondents.
Oscar A. Pascua and Charemon Clio L. Borre for petitioner.
Leonardo A. Aurelio for respondent Solar Textile Finishing Corp.
RESOLUTION
FELICIANO, J.:
Petitioner Pollution Adjudication Board ("Board") asks us to review the Decision and Resolution promulgated on 7
February 1990 and 10 May 1990, respectively, by the Court of Appeals in C.A.-G R. No. SP 18821 entitled "Solar
Textile Finishing Corporation v. Pollution Adjudication Board." In that Decision and Resolution, the Court of
Appeals reversed an order of the Regional Trial Court, Quezon City, Branch 77, in Civil Case No. Q-89-2287
dismissing private respondent Solar Textile Finishing Corporation's ("Solar") petition for certiorari and remanded
the case to the trial court for further proceedings.
On 22 September 1988, petitioner Board issued an ex parte Order directing Solar immediately to cease and
desist from utilizing its wastewater pollution source installations which were discharging untreated wastewater
directly into a canal leading to the adjacent Tullahan-Tinejeros River. The Order signed by Hon. Fulgencio
Factoran, Jr., as Board Chairman, reads in full as follows:
Respondent, Solar Textile Finishing Corporation with plant and place of business at 999 General Pascual
Avenue, Malabon, Metro Manila is involved in bleaching, rinsing and dyeing textiles with wastewater of
about 30 gpm. being directly discharged untreated into the sewer. Based on findings in the Inspections
conducted on 05 November 1986 and 15 November 1986, the volume of untreated wastewater discharged
in the final out fall outside of the plant's compound was even greater. The result of inspection conducted on
06 September 1988 showed that respondent's Wastewater Treatment Plant was noted unoperational and
the combined wastewater generated from its operation was about 30 gallons per minute and 80% of the
wastewater was being directly discharged into a drainage canal leading to the Tullahan-Tinejeros River by
means of a by-pass and the remaining 20% was channelled into the plant's existing Wastewater Treatment
Plant (WTP). Result of the analyses of the sample taken from the by-pass showed that the wastewater is
highly pollutive in terms of Color units, BOD and Suspended Solids, among others. These acts of
respondent in spite of directives to comply with the requirements are clearly in violation of Section 8 of
Presidential Decree No. 984 and Section 103 of its Implementing Rules and Regulations and the 1982
Effluent Regulations.
WHEREFORE, pursuant to Section 7 of P.D. 984 and Section 38 of its Implementing Rules and
Regulations, respondent is hereby ordered to cease and desist from utilizing its wastewater pollution
source installation and discharging its untreated wastewater directly into the canal leading to the Tullahan-
Tinejeros River effective immediately upon receipt hereof and until such time when it has fully complied
with all the requirements and until further orders from this Board.
SO ORDERED.1
We note that the above Order was based on findings of several inspections of Solar's plant:
a. inspections conducted on 5 November 1986 and 12 November 1986 by the National Pollution Control
Commission ("NPCC"), the predecessor of the Board ;2 and
b. the inspection conducted on 6 September 1988 by the Department of Environment and Natural
Resources ("DENR").
The findings of these two (2) inspections were that Solar's wastewater treatment plant was non-operational and
that its plant generated about 30 gallons per minute of wastewater, 80% of which was being directly discharged
into a drainage canal leading to the Tullahan-Tinejeros River. The remaining 20% of the wastewater was being
channeled through Solar's non-operational wastewater treatment plant. Chemical analysis of samples of Solar's
effluents showed the presence of pollutants on a level in excess of what was permissible under P.D. No. 984 and
its Implementing Regulations.
A copy of the above Order was received by Solar on 26 September 1988. A Writ of Execution issued by the
Board was received by Solar on 31 March 1989.
Meantime, Solar filed a motion for reconsideration/appeal with prayer for stay of execution of the Order dated 22
September 1988. Acting on this motion, the Board issued an Order dated 24 April 1989 allowing Solar to operate
temporarily, to enable the Board to conduct another inspection and evaluation of Solar's wastewater treatment
facilities. In the same Order, the Board directed the Regional Executive Director of the DENR/ NCR to conduct
the inspection and evaluation within thirty (30) days.
On 21 April 1989, however, Solar went to the Regional Trial Court of Quezon City, Branch 77, on petition for
certiorari with preliminary injunction against the Board, the petition being docketed as Civil Case No. Q-89-2287.
On 21 July 1989, the Regional Trial Court dismissed Solar's petition upon two (2) grounds, i.e., that appeal and
not certiorari from the questioned Order of the Board as well as the Writ of Execution was the proper remedy,
and that the Board's subsequent Order allowing Solar to operate temporarily had rendered Solar's petition moot
and academic.
Dissatisfied, Solar went on appeal to the Court of Appeals which, in the Decision here assailed, reversed the
Order of dismissal of the trial court and remanded the case to that court for further proceedings. In addition, the
Court of Appeals declared the Writ of Execution null and void. At the same time, the Court of Appeals said in the
dispositive portion of its Decision that:
 . . .. Still and all, this decision is without prejudice to whatever action the appellee [Board] may take relative
to the projected 'inspection and evaluation' of appellant's [Solar's] water treatment facilities.3
The Court of Appeals, in so ruling, held that certiorari was a proper remedy since the Orders of petitioner Board
may result in great and irreparable injury to Solar; and that while the case might be moot and academic, "larger
issues" demanded that the question of due process be settled. Petitioner Board moved for reconsideration,
without success.
The Board is now before us on a Petition for Review basically arguing that:
1. its ex parte Order dated 22 September 1988 and the Writ of Execution were issued in accordance with
law and were not violative of the requirements of due process; and
2. the ex parte Order and the Writ of Execution are not the proper subjects of a petition for certiorari.
The only issue before us at this time is whether or not the Court of Appeals erred in reversing the trial court on
the ground that Solar had been denied due process by the Board.
Petitioner Board claims that under P.D. No. 984, Section 7(a), it has legal authority to issue ex parte orders to
suspend the operations of an establishment when there is prima facie evidence that such establishment is
discharging effluents or wastewater, the pollution level of which exceeds the maximum permissible standards set
by the NPCC (now, the Board). Petitioner Board contends that the reports before it concerning the effluent
discharges of Solar into the Tullahan-Tinejeros River provided prima facie evidence of violation by Solar of
Section 5 of the 1982 Effluent Code.
Solar, on the other hand, contends that under the Board's own rules and regulations, an ex parte order may issue
only if the effluents discharged pose an "immediate threat to life, public health, safety or welfare, or to animal and
plant life." In the instant case, according to Solar, the inspection reports before the Board made no finding that
Solar's wastewater discharged posed such a threat.
The Court is not persuaded by Solar's contention. Section 7(a) of P.D. No. 984 authorized petitioner Board to
issue ex parte cease and desist orders under the following circumstances:
P.D. 984, Section 7, paragraph (a), provides:
(a) Public Hearing. . . . Provided, That whenever the Commission finds prima facie evidence that the
discharged sewage or wastes are of immediate threat to life, public health, safety or welfare, or to animal or
plant life, or exceeds the allowable standards set by the Commission, the Commissioner may issue an ex-
parte order directing the discontinuance of the same or the temporary suspension or cessation of operation
of the establishment or person generating such sewage or wastes without the necessity of a prior public
hearing. The said ex-parte order shall be immediately executory and shall remain in force until said
establishment or person prevents or abates the said pollution within the allowable standards or modified or
nullified by a competent court. (Emphasis supplied)
We note that under the above-quoted portion of Section 7(a) of P.D. No. 984, an ex parte cease and desist order
may be issued by the Board (a) whenever the wastes discharged by an establishment pose an "immediate threat
to life, public health, safety or welfare, or to animal or plant life," or (b) whenever such discharges or wastes
exceed "the allowable standards set by the [NPCC]." On the one hand, it is not essential that the Board prove
that an "immediate threat to life, public health, safety or welfare, or to animal or plant life" exists before an ex
parte cease and desist order may be issued. It is enough if the Board finds that the wastes discharged do exceed
"the allowable standards set by the [NPCC]." In respect of discharges of wastes as to which allowable standards
have been set by the Commission, the Board may issue an ex parte cease and desist order when there is prima
facie evidence of an establishment exceeding such allowable standards. Where, however, the effluents or
discharges have not yet been the subject matter of allowable standards set by the Commission, then the Board
may act on an ex parte basis when it finds at least prima facie proof that the wastewater or material involved
presents an "immediate threat to life, public health, safety or welfare or to animal or plant life." Since the
applicable standards set by the Commission existing at any given time may well not cover every possible or
imaginable kind of effluent or waste discharge, the general standard of an "immediate threat to life, public health,
safety or welfare, or to animal and plant life" remains necessary.
Upon the other hand, the Court must assume that the extant allowable standards have been set by the
Commission or Board precisely in order to avoid or neutralize an "immediate threat to life, public health, safety or
welfare, or to animal or plant life.''
Section 5 of the Effluent Regulations of 19824 sets out the maximum permissible levels of physical and chemical
substances which effluents from domestic wastewater treatment plants and industrial plants" must not exceed
"when discharged into bodies of water classified as Class A, B, C, D, SB and SC in accordance with the 1978
NPCC Rules and Regulations." The waters of Tullahan-Tinejeros River are classified as inland waters Class D
under Section 68 of the 1978 NPCC Rules and Regulations5 which in part provides that:
Sec. 68. Water Usage and Classification. — The quality of Philippine waters shall be maintained in a safe
and satisfactory condition according to their best usages. For this purpose, all water shall be classified
according to the following beneficial usages:
(a) Fresh Surface Water
Classification Best usage
xxx xxx xxx
Class D For agriculture, irrigation, livestock watering
and industrial cooling and processing.
xxx xxx xxx
(Emphases supplied)
The reports on the inspections carried on Solar's wastewater treatment facilities on 5 and 12 November 1986 and
6 September 1988 set forth the following Identical finding:
 a. For legal action in [view of] implementing rules and regulations of P.D. No. 984 and Section 5 of the operational. The new owner Solar Textile Corporation informed the Commission of the plant acquisition thru
Effluent Regulations of 1982.6 its letter dated March 1986 (sic).

Placing the maximum allowable standards set in Section 5 of the Effluent Regulations of 1982 alongside the The new owner was summoned to a hearing held on 13 October 1986 based on the adverse findings
findings of the November 1986 and September 1988 inspection reports, we get the following results: during the inspection/water sampling test conducted on 08 August 1986. As per instruction of the Legal
Division a re- inspection/sampling text should be conducted first before an appropriate legal action is
instituted; hence, this inspection.

"Inland November September Based on the above findings, it is clear that the new owner continuously violates the directive of the
Waters 1986 1988 Commission by undertaking dyeing operation without completing first and operating its existing WTP. The
(Class C & D7 Report8 Report9 analysis of results on water samples taken showed that the untreated wastewater from the firm pollutes our
Station 1 Station 1
water resources. In this connection, it is recommended that appropriate legal action be instituted
a) Color in 100 a) Color units 250 125
platinum (Apparent immediately against the firm. . . .10
cobalt Color)
units The September 1988 inspection report's conclusions were:
b) pH 6-8.5 b) pH 9.3 8.7
c) Tempera- 40 c) Temperature
ture in °C (°C)
1. The plant was undertaking dyeing, bleaching and rinsing operations during the inspection. The combined
wastewater generated from the said operations was estimated at about 30 gallons per minute. About 80%
d) Phenols in 0.1 d) Phenols in
mg.1 mg./1. of the wastewater was traced directly discharged into a drainage canal leading to the Tullahan-Tinejeros
e) Suspended 75 e) Suspended 340 80 river by means of a bypass. The remaining 20% was channeled into the plant's existing wastewater
solids in solids in treatment plant (WTP).
mg./1. mg./1.
f) BOD in 80 f) BOD (5-day) 1,100 152 2. The WTP was noted not yet fully operational- some accessories were not yet installed.1âwphi1 Only the
mg./1. mg./1
sump pit and the holding/collecting tank are functional but appeared seldom used. The wastewater
g) oil/Grease 10 g) Oil/Grease
in mg./1. mg./1.
mentioned channeled was noted held indefinitely into the collection tank for primary treatment. There was
no effluent discharge [from such collection tank].
h) Detergents 5 h) Detergents 2.93
mg./1." mg./1. MBAS
i) Dissolved 0 3. A sample from the bypass wastewater was collected for laboratory analyses. Result of the analyses
oxygen, mg./1. show that the bypass wastewater is polluted in terms of color units, BOD and suspended solids, among
j) Settleable 0.4 1.5 others. (Please see attached laboratory resul .)11
Matter, mg./1.
k) Total Dis 800 610
From the foregoing reports, it is clear to this Court that there was at least prima facie evidence before the Board
solved Solids
mg./1. that the effluents emanating from Solar's plant exceeded the maximum allowable levels of physical and chemical
l) Total Solids 1,400 690 substances set by the NPCC and that accordingly there was adequate basis supporting the ex parte cease and
m) Turbidity NTU / ppm, SiO3 70
desist order issued by the Board. It is also well to note that the previous owner of the plant facility Fine Touch
Finishing Corporation had been issued a Notice of Violation on 20 December 1985 directing it to cease and
refrain from carrying out dyeing operations until the water treatment plant was completed and operational. Solar,
The November 1986 inspections report concluded that: the new owner, informed the NPCC of the acquisition of the plant on March 1986. Solar was summoned by the
NPCC to a hearing on 13 October 1986 based on the results of the sampling test conducted by the NPCC on 8
Records of the Commission show that the plant under its previous owner, Fine Touch Finishing August 1986. Petitioner Board refrained from issuing an ex parte cease and desist order until after the November
Corporation, was issued a Notice of Violation on 20 December 1985 directing same to cease and desist 1986 and September 1988 re-inspections were conducted and the violation of applicable standards was
from conducting dyeing operation until such time the waste treatment plant is already completed and confirmed. In other words, petitioner Board appears to have been remarkably forbearing in its efforts to enforce
the applicable standards vis-a-vis Solar. Solar, on the other hand, seemed very casual about its continued
discharge of untreated, pollutive effluents into the Tullahan- Tinerejos River, presumably loath to spend the
money necessary to put its Wastewater Treatment Plant ("WTP") in an operating condition.
In this connection, we note that in Technology Developers, Inc. v. Court of appeals, et al.,12 the Court very
recently upheld the summary closure ordered by the Acting Mayor of Sta. Maria, Bulacan, of a pollution-causing
establishment, after finding that the records showed that:
1. No mayor's permit had been secured. While it is true that the matter of determining whether there is a
pollution of the environment that requires control if not prohibition of the operation of a business is
essentially addressed to the then National Pollution Control Commission of the Ministry of Human
Settlements, now the Environmental Management Bureau of the Department of Environment and Natural
Resources, it must be recognized that the mayor of a town has as much responsibility to protect its
inhabitants from pollution, and by virtue of his police power, he may deny the application for a permit to
operate a business or otherwise close the same unless appropriate measures are taken to control and/or
avoid injury to the health of the residents of the community from the emission in the operation of the
business.
2. The Acting Mayor, in a letter of February l6, 1989, called the attention of petitioner to the pollution
emitted by the fumes of its plant whose offensive odor "not only pollute the air in the locality but also affect
the health of the residents in the area," so that petitioner was ordered to stop its operation until further
orders and it was required to bring the following:
(3) Region III-Department of Environment and Natural Resources Anti-Pollution permit. (Annex A-2,
petition)
3. This action of the Acting Mayor was in response to the complaint of the residents of Barangay Guyong,
Sta. Maria, Bulacan, directed to the Provincial Governor through channels (Annex A-B, petition).. . .
4. The closure order of the Acting Mayor was issued only after an investigation was made by Marivic Guina
who in her report of December 8, 1988 observed that the fumes emitted by the plant of petitioner goes
directly to the surrounding houses and that no proper air pollution device has been installed. (Annex A-9,
petition)
6. While petitioner was able to present a temporary permit to operate by the then National Pollution Control
Commission on December 15,1987, the permit was good only up to May 25,1988 (Annex A-12, petition).
Petitioner had not exerted any effort to extend or validate its permit much less to install any device to
control the pollution and prevent any hazard to the health of the residents of the community."
In the instant case, the ex parte cease and desist Order was issued not by a local government official but by the
Pollution Adjudication Board, the very agency of the Government charged with the task of determining whether
the effluents of a particular industrial establishment comply with or violate applicable anti-pollution statutory and
regulatory provisions.
Ex parte cease and desist orders are permitted by law and regulations in situations like that here presented precisely
because stopping the continuous discharge of pollutive and untreated effluents into the rivers and other inland waters
of the Philippines cannot be made to wait until protracted litigation over the ultimate correctness or propriety of such
orders has run its full course, including multiple and sequential appeals such as those which Solar has taken, which of
course may take several years. The relevant pollution control statute and implementing regulations were enacted and
promulgated in the exercise of that pervasive, sovereign power to protect the safety, health, and general welfare and
comfort of the public, as well as the protection of plant and animal life, commonly designated as the police power. It is a
constitutional commonplace that the ordinary requirements of procedural due process yield to the necessities of
protecting vital public interests like those here involved, through the exercise of police power. The Board's ex
parte Order and Writ of Execution would, of course, have compelled Solar temporarily to stop its plant operations, a
state of affairs Solar could in any case have avoided by simply absorbing the bother and burden of putting its WTP on
an operational basis. Industrial establishments are not constitutionally entitled to reduce their capitals costs and
operating expenses and to increase their profits by imposing upon the public threats and risks to its safety, health,
general welfare and comfort, by disregarding the requirements of anti- pollution statutes and their implementing
regulations.
It should perhaps be made clear the Court is not here saying that the correctness of the ex parte Order and Writ of
Execution may not be contested by Solar in a hearing before the Board itself. Where the establishment affected by
an ex parte cease and desist order contests the correctness of the prima facie findings of the Board, the Board must
hold a public hearing where such establishment would have an opportunity to controvert the basis of such ex
parteorder. That such an opportunity is subsequently available is really all that is required by the due process clause of
the Constitution in situations like that we have here. The Board's decision rendered after the public hearing may then
be tested judicially by an appeal to the Court of Appeals in accordance with Section 7(c) of P.D. No. 984 and Section
42 of the Implementing Rules and Regulations. A subsequent public hearing is precisely what Solar should have
sought instead of going to court to seek nullification of the Board's Order and Writ of Execution and instead of
appealing to the Court of Appeals. It will be recalled the at the Board in fact gave Solar authority temporarily to continue
operations until still another inspection of its wastewater treatment facilities and then another analysis of effluent
samples could be taken and evaluated.
Solar claims finally that the petition for certiorari was the proper remedy as the questioned Order and Writ of Execution
issued by the Board were patent nullities. Since we have concluded that the Order and Writ of Execution were entirely
within the lawful authority of petitioner Board, the trial court did not err when it dismissed Solar's petition for certiorari. It
follows that the proper remedy was an appeal from the trial court to the Court of Appeals, as Solar did in fact appeal.
ACCORDINGLY, the Petition for Review is given DUE COURSE and the Decision of the Court of Appeals dated 7
February 1990 and its Resolution dated 10 May 1990 in A.C.-G.R. No. SP 18821 are hereby SET ASIDE. The Order of
petitioner Board dated 22 September 1988 and the Writ of Execution, as well as the decision of the trial court dated 21
July 1989, are hereby REINSTATED, without prejudice to the right of Solar to contest the correctness of the basis of
the Board's Order and Writ of Execution at a public hearing before the Board.
Fernan, C.J., Gutierrez, Jr., Bidin and Davide, Jr., JJ., concur.
G.R. No. 74457 March 20, 1987
RESTITUTO YNOT, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, THE STATION COMMANDER, INTEGRATED NATIONAL POLICE,
BAROTAC NUEVO, ILOILO and THE REGIONAL DIRECTOR, BUREAU OF ANIMAL INDUSTRY, REGION
IV, ILOILO CITY, respondents.
Ramon A. Gonzales for petitioner.
CRUZ, J.
The essence of due process is distilled in the immortal cry of Themistocles to Alcibiades "Strike — but hear me
first!" It is this cry that the petitioner in effect repeats here as he challenges the constitutionality of Executive
Order No. 626-A.
The said executive order reads in full as follows:
WHEREAS, the President has given orders prohibiting the interprovincial movement of carabaos and the
slaughtering of carabaos not complying with the requirements of Executive Order No. 626 particularly with
respect to age;
WHEREAS, it has been observed that despite such orders the violators still manage to circumvent the
prohibition against inter-provincial movement of carabaos by transporting carabeef instead; and
WHEREAS, in order to achieve the purposes and objectives of Executive Order No. 626 and the prohibition
against interprovincial movement of carabaos, it is necessary to strengthen the said Executive Order and
provide for the disposition of the carabaos and carabeef subject of the violation;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers
vested in me by the Constitution, do hereby promulgate the following:
SECTION 1. Executive Order No. 626 is hereby amended such that henceforth, no carabao regardless of
age, sex, physical condition or purpose and no carabeef shall be transported from one province to another.
The carabao or carabeef transported in violation of this Executive Order as amended shall be subject to
confiscation and forfeiture by the government, to be distributed to charitable institutions and other similar
institutions as the Chairman of the National Meat Inspection Commission may ay see fit, in the case of
carabeef, and to deserving farmers through dispersal as the Director of Animal Industry may see fit, in the
case of carabaos.
SECTION 2. This Executive Order shall take effect immediately.
Done in the City of Manila, this 25th day of October, in the year of Our Lord, nineteen hundred and eighty.
(SGD.) FERDINAND E. MARCOS
President
Republic of the Philippines
The petitioner had transported six carabaos in a pump boat from Masbate to Iloilo on January 13, 1984, when
they were confiscated by the police station commander of Barotac Nuevo, Iloilo, for violation of the above
measure. 1 The petitioner sued for recovery, and the Regional Trial Court of Iloilo City issued a writ
of replevin upon his filing of a supersedeas bond of P12,000.00. After considering the merits of the case, the
court sustained the confiscation of the carabaos and, since they could no longer be produced, ordered the
confiscation of the bond. The court also declined to rule on the constitutionality of the executive order, as raise by
the petitioner, for lack of authority and also for its presumed validity. 2
The petitioner appealed the decision to the Intermediate Appellate Court,* 3 which upheld the trial court, ** and he
has now come before us in this petition for review on certiorari.
The thrust of his petition is that the executive order is unconstitutional insofar as it authorizes outright confiscation
of the carabao or carabeef being transported across provincial boundaries. His claim is that the penalty is invalid
because it is imposed without according the owner a right to be heard before a competent and impartial court as
guaranteed by due process. He complains that the measure should not have been presumed, and so sustained,
as constitutional. There is also a challenge to the improper exercise of the legislative power by the former
President under Amendment No. 6 of the 1973 Constitution. 4
While also involving the same executive order, the case of Pesigan v. Angeles 5 is not applicable here. The
question raised there was the necessity of the previous publication of the measure in the Official Gazette before it
could be considered enforceable. We imposed the requirement then on the basis of due process of law. In doing
so, however, this Court did not, as contended by the Solicitor General, impliedly affirm the constitutionality of
Executive Order No. 626-A. That is an entirely different matter.
This Court has declared that while lower courts should observe a becoming modesty in examining constitutional
questions, they are nonetheless not prevented from resolving the same whenever warranted, subject only to
review by the highest tribunal. 6 We have jurisdiction under the Constitution to "review, revise, reverse, modify or
affirm on appeal or certiorari, as the law or rules of court may provide," final judgments and orders of lower courts
in, among others, all cases involving the constitutionality of certain measures. 7 This simply means that the
resolution of such cases may be made in the first instance by these lower courts.
And while it is true that laws are presumed to be constitutional, that presumption is not by any means conclusive
and in fact may be rebutted. Indeed, if there be a clear showing of their invalidity, and of the need to declare them
so, then "will be the time to make the hammer fall, and heavily," 8 to recall Justice Laurel's trenchant warning.
Stated otherwise, courts should not follow the path of least resistance by simply presuming the constitutionality of
a law when it is questioned. On the contrary, they should probe the issue more deeply, to relieve the abscess,
paraphrasing another distinguished jurist, 9 and so heal the wound or excise the affliction.
Judicial power authorizes this; and when the exercise is demanded, there should be no shirking of the task for
fear of retaliation, or loss of favor, or popular censure, or any other similar inhibition unworthy of the bench,
especially this Court.
The challenged measure is denominated an executive order but it is really presidential decree, promulgating a
new rule instead of merely implementing an existing law. It was issued by President Marcos not for the purpose
of taking care that the laws were faithfully executed but in the exercise of his legislative authority under
Amendment No. 6. It was provided thereunder that whenever in his judgment there existed a grave emergency or
a threat or imminence thereof or whenever the legislature failed or was unable to act adequately on any matter
that in his judgment required immediate action, he could, in order to meet the exigency, issue decrees, orders or
letters of instruction that were to have the force and effect of law. As there is no showing of any exigency to
justify the exercise of that extraordinary power then, the petitioner has reason, indeed, to question the validity of
the executive order. Nevertheless, since the determination of the grounds was supposed to have been made by
the President "in his judgment, " a phrase that will lead to protracted discussion not really necessary at this time,
we reserve resolution of this matter until a more appropriate occasion. For the nonce, we confine ourselves to the
more fundamental question of due process.
It is part of the art of constitution-making that the provisions of the charter be cast in precise and unmistakable
language to avoid controversies that might arise on their correct interpretation. That is the Ideal. In the case of
the due process clause, however, this rule was deliberately not followed and the wording was purposely kept
ambiguous. In fact, a proposal to delineate it more clearly was submitted in the Constitutional Convention of
1934, but it was rejected by Delegate Jose P. Laurel, Chairman of the Committee on the Bill of Rights, who
forcefully argued against it. He was sustained by the body. 10
The due process clause was kept intentionally vague so it would remain also conveniently resilient. This was felt
necessary because due process is not, like some provisions of the fundamental law, an "iron rule" laying down
an implacable and immutable command for all seasons and all persons. Flexibility must be the best virtue of the
guaranty. The very elasticity of the due process clause was meant to make it adapt easily to every situation,
enlarging or constricting its protection as the changing times and circumstances may require.
Aware of this, the courts have also hesitated to adopt their own specific description of due process lest they
confine themselves in a legal straitjacket that will deprive them of the elbow room they may need to vary the
meaning of the clause whenever indicated. Instead, they have preferred to leave the import of the protection
open-ended, as it were, to be "gradually ascertained by the process of inclusion and exclusion in the course of
the decision of cases as they arise." 11 Thus, Justice Felix Frankfurter of the U.S. Supreme Court, for example,
would go no farther than to define due process — and in so doing sums it all up — as nothing more and nothing
less than "the embodiment of the sporting Idea of fair play." 12
When the barons of England extracted from their sovereign liege the reluctant promise that that Crown would
thenceforth not proceed against the life liberty or property of any of its subjects except by the lawful judgment of
his peers or the law of the land, they thereby won for themselves and their progeny that splendid guaranty of
fairness that is now the hallmark of the free society. The solemn vow that King John made at Runnymede in 1215
has since then resounded through the ages, as a ringing reminder to all rulers, benevolent or base, that every
person, when confronted by the stern visage of the law, is entitled to have his say in a fair and open hearing of
his cause.
The closed mind has no place in the open society. It is part of the sporting Idea of fair play to hear "the other
side" before an opinion is formed or a decision is made by those who sit in judgment. Obviously, one side is only
one-half of the question; the other half must also be considered if an impartial verdict is to be reached based on
an informed appreciation of the issues in contention. It is indispensable that the two sides complement each
other, as unto the bow the arrow, in leading to the correct ruling after examination of the problem not from one or
the other perspective only but in its totality. A judgment based on less that this full appraisal, on the pretext that a
hearing is unnecessary or useless, is tainted with the vice of bias or intolerance or ignorance, or worst of all, in
repressive regimes, the insolence of power.
The minimum requirements of due process are notice and hearing 13 which, generally speaking, may not be
dispensed with because they are intended as a safeguard against official arbitrariness. It is a gratifying
commentary on our judicial system that the jurisprudence of this country is rich with applications of this guaranty
as proof of our fealty to the rule of law and the ancient rudiments of fair play. We have consistently declared that
every person, faced by the awesome power of the State, is entitled to "the law of the land," which Daniel Webster
described almost two hundred years ago in the famous Dartmouth College Case, 14 as "the law which hears
before it condemns, which proceeds upon inquiry and renders judgment only after trial." It has to be so if the
rights of every person are to be secured beyond the reach of officials who, out of mistaken zeal or plain
arrogance, would degrade the due process clause into a worn and empty catchword.
This is not to say that notice and hearing are imperative in every case for, to be sure, there are a number of
admitted exceptions. The conclusive presumption, for example, bars the admission of contrary evidence as long
as such presumption is based on human experience or there is a rational connection between the fact proved
and the fact ultimately presumed therefrom. 15 There are instances when the need for expeditions action will
justify omission of these requisites, as in the summary abatement of a nuisance per se, like a mad dog on the
loose, which may be killed on sight because of the immediate danger it poses to the safety and lives of the
people. Pornographic materials, contaminated meat and narcotic drugs are inherently pernicious and may be
summarily destroyed. The passport of a person sought for a criminal offense may be cancelled without hearing,
to compel his return to the country he has fled. 16 Filthy restaurants may be summarily padlocked in the interest
of the public health and bawdy houses to protect the public morals. 17 In such instances, previous judicial
hearing may be omitted without violation of due process in view of the nature of the property involved or the
urgency of the need to protect the general welfare from a clear and present danger.
The protection of the general welfare is the particular function of the police power which both restraints and is
restrained by due process. The police power is simply defined as the power inherent in the State to regulate
liberty and property for the promotion of the general welfare. 18 By reason of its function, it extends to all the
great public needs and is described as the most pervasive, the least limitable and the most demanding of the
three inherent powers of the State, far outpacing taxation and eminent domain. The individual, as a member of
society, is hemmed in by the police power, which affects him even before he is born and follows him still after he
is dead — from the womb to beyond the tomb — in practically everything he does or owns. Its reach is virtually
limitless. It is a ubiquitous and often unwelcome intrusion. Even so, as long as the activity or the property has
some relevance to the public welfare, its regulation under the police power is not only proper but necessary. And
the justification is found in the venerable Latin maxims, Salus populi est suprema lex and Sic utere tuo ut alienum
non laedas, which call for the subordination of individual interests to the benefit of the greater number.
It is this power that is now invoked by the government to justify Executive Order No. 626-A, amending the basic
rule in Executive Order No. 626, prohibiting the slaughter of carabaos except under certain conditions. The
original measure was issued for the reason, as expressed in one of its Whereases, that "present conditions
demand that the carabaos and the buffaloes be conserved for the benefit of the small farmers who rely on them
for energy needs." We affirm at the outset the need for such a measure. In the face of the worsening energy
crisis and the increased dependence of our farms on these traditional beasts of burden, the government would
have been remiss, indeed, if it had not taken steps to protect and preserve them.
A similar prohibition was challenged in United States v. Toribio, 19 where a law regulating the registration,
branding and slaughter of large cattle was claimed to be a deprivation of property without due process of law.
The defendant had been convicted thereunder for having slaughtered his own carabao without the required
permit, and he appealed to the Supreme Court. The conviction was affirmed. The law was sustained as a valid
police measure to prevent the indiscriminate killing of carabaos, which were then badly needed by farmers. An
epidemic had stricken many of these animals and the reduction of their number had resulted in an acute decline
in agricultural output, which in turn had caused an incipient famine. Furthermore, because of the scarcity of the
animals and the consequent increase in their price, cattle-rustling had spread alarmingly, necessitating more
effective measures for the registration and branding of these animals. The Court held that the questioned statute
was a valid exercise of the police power and declared in part as follows:
To justify the State in thus interposing its authority in behalf of the public, it must appear, first, that the
interests of the public generally, as distinguished from those of a particular class, require such interference;
and second, that the means are reasonably necessary for the accomplishment of the purpose, and not
unduly oppressive upon individuals. ...
From what has been said, we think it is clear that the enactment of the provisions of the statute under
consideration was required by "the interests of the public generally, as distinguished from those of a
particular class" and that the prohibition of the slaughter of carabaos for human consumption, so long as
these animals are fit for agricultural work or draft purposes was a "reasonably necessary" limitation on
private ownership, to protect the community from the loss of the services of such animals by their slaughter
by improvident owners, tempted either by greed of momentary gain, or by a desire to enjoy the luxury of
animal food, even when by so doing the productive power of the community may be measurably and
dangerously affected.
In the light of the tests mentioned above, we hold with the Toribio Case that the carabao, as the poor man's
tractor, so to speak, has a direct relevance to the public welfare and so is a lawful subject of Executive Order No.
626. The method chosen in the basic measure is also reasonably necessary for the purpose sought to be
achieved and not unduly oppressive upon individuals, again following the above-cited doctrine. There is no doubt
that by banning the slaughter of these animals except where they are at least seven years old if male and eleven
years old if female upon issuance of the necessary permit, the executive order will be conserving those still fit for
farm work or breeding and preventing their improvident depletion.
But while conceding that the amendatory measure has the same lawful subject as the original executive order,
we cannot say with equal certainty that it complies with the second requirement, viz., that there be a lawful
method. We note that to strengthen the original measure, Executive Order No. 626-A imposes an absolute ban
not on the slaughter of the carabaos but on their movement, providing that "no carabao regardless of age, sex,
physical condition or purpose (sic) and no carabeef shall be transported from one province to another." The
object of the prohibition escapes us. The reasonable connection between the means employed and the purpose
sought to be achieved by the questioned measure is missing
We do not see how the prohibition of the inter-provincial transport of carabaos can prevent their indiscriminate
slaughter, considering that they can be killed anywhere, with no less difficulty in one province than in another.
Obviously, retaining the carabaos in one province will not prevent their slaughter there, any more than moving
them to another province will make it easier to kill them there. As for the carabeef, the prohibition is made to
apply to it as otherwise, so says executive order, it could be easily circumvented by simply killing the animal.
Perhaps so. However, if the movement of the live animals for the purpose of preventing their slaughter cannot be
prohibited, it should follow that there is no reason either to prohibit their transfer as, not to be flippant dead meat.
Even if a reasonable relation between the means and the end were to be assumed, we would still have to reckon
with the sanction that the measure applies for violation of the prohibition. The penalty is outright confiscation of
the carabao or carabeef being transported, to be meted out by the executive authorities, usually the police only.
In the Toribio Case, the statute was sustained because the penalty prescribed was fine and imprisonment, to be
imposed by the court after trial and conviction of the accused. Under the challenged measure, significantly, no
such trial is prescribed, and the property being transported is immediately impounded by the police and declared,
by the measure itself, as forfeited to the government.
In the instant case, the carabaos were arbitrarily confiscated by the police station commander, were returned to
the petitioner only after he had filed a complaint for recovery and given a supersedeas bond of P12,000.00,
which was ordered confiscated upon his failure to produce the carabaos when ordered by the trial court. The
executive order defined the prohibition, convicted the petitioner and immediately imposed punishment, which was
carried out forthright. The measure struck at once and pounced upon the petitioner without giving him a chance
to be heard, thus denying him the centuries-old guaranty of elementary fair play.
It has already been remarked that there are occasions when notice and hearing may be validly dispensed with
notwithstanding the usual requirement for these minimum guarantees of due process. It is also conceded that
summary action may be validly taken in administrative proceedings as procedural due process is not necessarily
judicial only. 20 In the exceptional cases accepted, however. there is a justification for the omission of the right to
a previous hearing, to wit, the immediacy of the problem sought to be corrected and the urgency of the need to
correct it.
In the case before us, there was no such pressure of time or action calling for the petitioner's peremptory
treatment. The properties involved were not even inimical per se as to require their instant destruction. There
certainly was no reason why the offense prohibited by the executive order should not have been proved first in a
court of justice, with the accused being accorded all the rights safeguarded to him under the Constitution.
Considering that, as we held in Pesigan v. Angeles, 21 Executive Order No. 626-A is penal in nature, the violation
thereof should have been pronounced not by the police only but by a court of justice, which alone would have
had the authority to impose the prescribed penalty, and only after trial and conviction of the accused.
The strength of democracy lies not in the rights it guarantees but in the courage of the people to invoke them
whenever they are ignored or violated. Rights are but weapons on the wall if, like expensive tapestry, all they do
is embellish and impress. Rights, as weapons, must be a promise of protection. They become truly meaningful,
and fulfill the role assigned to them in the free society, if they are kept bright and sharp with use by those who are
not afraid to assert them.

We also mark, on top of all this, the questionable manner of the disposition of the confiscated property as WHEREFORE, Executive Order No. 626-A is hereby declared unconstitutional. Except as affirmed above, the
prescribed in the questioned executive order. It is there authorized that the seized property shall "be distributed to decision of the Court of Appeals is reversed. The supersedeas bond is cancelled and the amount thereof is
charitable institutions and other similar institutions as the Chairman of the National Meat Inspection ordered restored to the petitioner. No costs.
Commission may see fit, in the case of carabeef, and to deserving farmers through dispersal as the Director of
Animal Industry may see fit, in the case of carabaos." (Emphasis supplied.) The phrase "may see fit" is an SO ORDERED.
extremely generous and dangerous condition, if condition it is. It is laden with perilous opportunities for partiality
and abuse, and even corruption. One searches in vain for the usual standard and the reasonable guidelines, or
Teehankee, C.J., Yap, Fernan, Narvasa, Gutierrez, Jr., Paras, Gancayco, Padilla Bidin Sarmiento and Cortes,
better still, the limitations that the said officers must observe when they make their distribution. There is none.
JJ., concur.
Their options are apparently boundless. Who shall be the fortunate beneficiaries of their generosity and by what
criteria shall they be chosen? Only the officers named can supply the answer, they and they alone may choose
the grantee as they see fit, and in their own exclusive discretion. Definitely, there is here a "roving commission," a Melencio-Herrera and Feliciano, JJ., are on leave.
wide and sweeping authority that is not "canalized within banks that keep it from overflowing," in short, a clearly
profligate and therefore invalid delegation of legislative powers. Footnotes

To sum up then, we find that the challenged measure is an invalid exercise of the police power because the 1 Rollo, pp. 7, 28, 29, 34.
method employed to conserve the carabaos is not reasonably necessary to the purpose of the law and, worse, is 2 Ibid, pp. 6-7; Annex B.
* Justices Coquia, Bartolome and Ejercito.
unduly oppressive. Due process is violated because the owner of the property confiscated is denied the right to 3 Rollo, pp. 6, 27, 33.
be heard in his defense and is immediately condemned and punished. The conferment on the administrative ** Judge Bethel Katalbas-Moscardon.
authorities of the power to adjudge the guilt of the supposed offender is a clear encroachment on judicial 4 Ibid., pp. 10; 11, 14-16, 76.
functions and militates against the doctrine of separation of powers. There is, finally, also an invalid delegation of 5 129 SCRA 174.
legislative powers to the officers mentioned therein who are granted unlimited discretion in the distribution of the 6 Espiritu vs. Fugoso, 81 Phil. 637.
properties arbitrarily taken. For these reasons, we hereby declare Executive Order No. 626-A unconstitutional. 7 Sec. 5[2(a)], Art. X, 1973 Constitution; Sec. 5[2(a)], Art.VIII, 1987 Constitution.
8 J. Laurel, concurring opinion, Zandueta v. dela Costa, 66 Phil. 615, 627.
9 US v. Bustos, 37 Phil. 731.
We agree with the respondent court, however, that the police station commander who confiscated the petitioner's 10 I Aruego, The Framing of the Constitution (1936), pp. 153-159.
carabaos is not liable in damages for enforcing the executive order in accordance with its mandate. The law was 11 Twinning vs. New Jersey, 211 U.S. 78.
at that time presumptively valid, and it was his obligation, as a member of the police, to enforce it. It would have 12 Frankfurter, Mr. Justice Holmes and the Supreme Court, pp. 32-33.
been impertinent of him, being a mere subordinate of the President, to declare the executive order 13 David vs. Aquilizan, 94 SCRA 707; Montemayor vs. Araneta Univ. Foundation, 77 SCRA 321; Lentelera vs. Amores, 70
unconstitutional and, on his own responsibility alone, refuse to execute it. Even the trial court, in fact, and the SCRA 37; Flores vs. Buencamino, 74 SCRA 332; DBP vs. Bautista, 26 SCRA 366; Ong Su Han vs. Gutierrez David, 76 Phil.
Court of Appeals itself did not feel they had the competence, for all their superior authority, to question the order 546; Banco-Espanol Filipino vs. Palanca, 37 Phil. 921.
we now annul. 14 Dartmouth College vs. Woodward, 4 Wheaton 518.
15 Manley v. Georgia, 279 U.S. 1; 1 Cooley 639.
16 Suntay vs. People, 101 Phil. 833.
The Court notes that if the petitioner had not seen fit to assert and protect his rights as he saw them, this case 17 12 C.J. 1224.
would never have reached us and the taking of his property under the challenged measure would have become 18 People v. Vera Reyes, 67 Phil. 190; Ermita-Malate Hotel & Motel Operators Ass. v. City Mayor, 20 SCRA 849; Primicias v.
a faitaccompli despite its invalidity. We commend him for his spirit. Without the present challenge, the matter Fugoso 80 Phil. 75; U.S. v. Ling Su Tan, 10 Phil. 114; Collins v. Wolfe 5 Phil. 297; U.S. v. Gomez Jesus, 31 Phil. 225;
would have ended in that pump boat in Masbate and another violation of the Constitution, for all its obviousness, Churchill v. Rafferty 32 Phil. 603.
would have been perpetrated, allowed without protest, and soon forgotten in the limbo of relinquished rights. 19 15 Phil. 85.
20 New Filipino Maritime Agencies, Inc. vs. Rivera, 83 SCRA 602; Gas Corp. of the Phil. vs. Inciong 93 SCRA 653.
21 supra.
G.R. No. 78164 July 31, 1987
TERESITA TABLARIN, MA, LUZ CIRIACO, MA NIMFA B. ROVIRA, EVANGELINA S. LABAO, in their behalf
and in behalf of applicants for admission into the Medical Colleges during the school year 1987-88 and
future years who have not taken or successfully hurdled tile National Medical Admission Test
(NMAT).petitioners,
vs.
THE HONORABLE JUDGE ANGELINA S. GUTIERREZ, Presiding Judge of Branch XXXVII of the Regional
Trial Court of the National Capital Judicial Region with seat at Manila, THE HONORABLE SECRETARY
LOURDES QUISUMBING, in her capacity as Chairman of the BOARD OF MEDICAL EDUCATION, and THE
CENTER FOR EDUCATIONAL MEASUREMENT (CEM), respondents.
FELICIANO, J.:
The petitioners sought admission into colleges or schools of medicine for the school year 1987-1988. However,
the petitioners either did not take or did not successfully take the National Medical Admission Test (NMAT)
required by the Board of Medical Education, one of the public respondents, and administered by the private
respondent, the Center for Educational Measurement (CEM).
On 5 March 1987, the petitioners filed with the Regional Trial Court, National Capital Judicial Region, a Petition
for Declaratory Judgment and Prohibition with a prayer for Temporary Restraining Order and Preliminary
Injunction. The petitioners sought to enjoin the Secretary of Education, Culture and Sports, the Board of Medical
Education and the Center for Educational Measurement from enforcing Section 5 (a) and (f) of Republic Act No.
2382, as amended, and MECS Order No. 52, series of 1985, dated 23 August 1985 and from requiring the taking
and passing of the NMAT as a condition for securing certificates of eligibility for admission, from proceeding with
accepting applications for taking the NMAT and from administering the NMAT as scheduled on 26 April 1987 and
in the future. After hearing on the petition for issuance of preliminary injunction, the trial court denied said petition
on 20 April 1987. The NMAT was conducted and administered as previously scheduled.
Petitioners accordingly filed this Special Civil Action for certiorari with this Court to set aside the Order of the
respondent judge denying the petition for issuance of a writ of preliminary injunction.
Republic Act 2382, as amended by Republic Acts Nos. 4224 and 5946, known as the "Medical Act of 1959"
defines its basic objectives in the following manner:
Section 1. Objectives. — This Act provides for and shall govern (a) the standardization and regulation of
medical education (b) the examination for registration of physicians; and (c) the supervision, control and
regulation of the practice of medicine in the Philippines. (Underscoring supplied)
The statute, among other things, created a Board of Medical Education which is composed of (a) the Secretary of
Education, Culture and Sports or his duly authorized representative, as Chairman; (b) the Secretary of Health or
his duly authorized representative; (c) the Director of Higher Education or his duly authorized representative; (d)
the Chairman of the Medical Board or his duly authorized representative; (e) a representative of the Philippine
Medical Association; (f) the Dean of the College of Medicine, University of the Philippines; (g) a representative of
the Council of Deans of Philippine Medical Schools; and (h) a representative of the Association of Philippine
Medical Colleges, as members. The functions of the Board of Medical Education specified in Section 5 of the
statute include the following:
(a) To determine and prescribe equirements for admission into a recognized college of medicine;
(b) To determine and prescribe requirements for minimum physical facilities of colleges of medicine, to wit:
buildings, including hospitals, equipment and supplies, apparatus, instruments, appliances, laboratories,
bed capacity for instruction purposes, operating and delivery rooms, facilities for outpatient services, and
others, used for didactic and practical instruction in accordance with modern trends;
(c) To determine and prescribe the minimum number and minimum qualifications of teaching personnel,
including student-teachers ratio;
(d) To determine and prescribe the minimum required curriculum leading to the degree of Doctor of
Medicine;
(e) To authorize the implementation of experimental medical curriculum in a medical school that has
exceptional faculty and instrumental facilities. Such an experimental curriculum may prescribe admission
and graduation requirements other than those prescribed in this Act; Provided, That only exceptional
students shall be enrolled in the experimental curriculum;
(f) To accept applications for certification for admission to a medical school and keep a register of those
issued said certificate; and to collect from said applicants the amount of twenty-five pesos each which shall
accrue to the operating fund of the Board of Medical Education;
(g) To select, determine and approve hospitals or some departments of the hospitals for training which
comply with the minimum specific physical facilities as provided in subparagraph (b) hereof; and
(h) To promulgate and prescribe and enforce the necessary rules and regulations for the proper
implementation of the foregoing functions. (Emphasis supplied)
Section 7 prescribes certain minimum requirements for applicants to medical schools:
Admission requirements. — The medical college may admit any student who has not been convicted by
any court of competent jurisdiction of any offense involving moral turpitude and who presents (a) a record
of completion of a bachelor's degree in science or arts; (b) a certificate of eligibility for entrance to a
medical school from the Board of Medical Education; (c) a certificate of good moral character issued by two
former professors in the college of liberal arts; and (d) birth certificate. Nothing in this act shall be construed
to inhibit any college of medicine from establishing, in addition to the preceding, other entrance
requirements that may be deemed admissible.
MECS Order No. 52, s. 1985, issued by the then Minister of Education, Culture and Sports and dated 23 August
1985, established a uniform admission test called the National Medical Admission Test (NMAT) as an additional
requirement for issuance of a certificate of eligibility for admission into medical schools of the Philippines,
beginning with the school year 1986-1987. This Order goes on to state that:
2. The NMAT, an aptitude test, is considered as an instrument toward upgrading the selection of applicants
for admission into the medical schools and its calculated to improve the quality of medical education in the
country. The cutoff score for the successful applicants, based on the scores on the NMAT, shall be
determined every year by the Board of Medical Education after consultation with the Association of
Philippine Medical Colleges. The NMAT rating of each applicant, together with the other admission
requirements as presently called for under existing rules, shall serve as a basis for the issuance of the
prescribed certificate of elegibility for admission into the medical colleges.
3. Subject to the prior approval of the Board of Medical Education, each medical college may give other
tests for applicants who have been issued a corresponding certificate of eligibility for admission that will
yield information on other aspects of the applicant's personality to complement the information derived from
the NMAT.
8. No applicant shall be issued the requisite Certificate of Eligibility for Admission (CEA), or admitted for
enrollment as first year student in any medical college, beginning the school year, 1986-87, without the
required NMAT qualification as called for under this Order. (Underscoring supplied)
Pursuant to MECS Order No. 52, s. 1985, the private respondent Center conducted NMATs for entrance to
medical colleges during the school year 1986-1987. In December 1986 and in April 1987, respondent Center
conducted the NMATs for admission to medical colleges during the school year 1987.1988.1avvphi1
Petitioners raise the question of whether or not a writ of preliminary injunction may be issued to enjoin the
enforcement of Section 5 (a) and (f) of Republic Act No. 2382, as amended, and MECS Order No. 52, s. 1985,
pending resolution of the issue of constitutionality of the assailed statute and administrative order. We regard this
issue as entirely peripheral in nature. It scarcely needs documentation that a court would issue a writ of
preliminary injunction only when the petitioner assailing a statute or administrative order has made out a case of
unconstitutionality strong enough to overcome, in the mind of the judge, the presumption of constitutionality,
aside from showing a clear legal right to the remedy sought. The fundamental issue is of course the
constitutionality of the statute or order assailed.
1. The petitioners invoke a number of provisions of the 1987 Constitution which are, in their assertion, violated by
the continued implementation of Section 5 (a) and (f) of Republic Act 2381, as amended, and MECS Order No.
52, s. 1985. The provisions invoked read as follows:
(a) Article 11, Section 11: "The state values the dignity of every human person and guarantees full respect
of human rights. "
(b) ArticleII, Section l3: "The State recognizes the vital role of the youth in nation building and shall promote
and protect their physical, moral, spiritual, intellectual and social well being. It shall inculcate in the youth
patriotism and nationalism, and encourage their involvement in public and civic affairs."
(c) Article II, Section 17: "The State shall give priority to education, science and technology, arts, culture
and sports to foster patriotism and nationalism, accelerate social progress and to promote total human
liberation and development. "
(d) Article XIV, Section l: "The State shall protect and promote the right of all citizens to quality education at
all levels and take appropriate steps to make such education accessible to all. "
(e) Article XIV, Section 5 (3): "Every citizen has a right to select a profession or course of study, subject to
fair, reasonable and equitable admission and academic requirements."
Article II of the 1987 Constitution sets forth in its second half certain "State policies" which the government is
enjoined to pursue and promote. The petitioners here have not seriously undertaken to demonstrate to what
extent or in what manner the statute and the administrative order they assail collide with the State policies
embodied in Sections 11, 13 and 17. They have not, in other words, discharged the burden of proof which lies
upon them. This burden is heavy enough where the constitutional provision invoked is relatively specific, rather
than abstract, in character and cast in behavioral or operational terms. That burden of proof becomes of
necessity heavier where the constitutional provision invoked is cast, as the second portion of Article II is cast, in
language descriptive of basic policies, or more precisely, of basic objectives of State policy and therefore highly
generalized in tenor. The petitioners have not made their case, even a prima facie case, and we are not
compelled to speculate and to imagine how the legislation and regulation impugned as unconstitutional could
possibly offend the constitutional provisions pointed to by the petitioners.
Turning to Article XIV, Section 1, of the 1987 Constitution, we note that once more petitioners have failed to
demonstrate that the statute and regulation they assail in fact clash with that provision. On the contrary we may
note-in anticipation of discussion infra — that the statute and the regulation which petitioners attack are in fact
designed to promote "quality education" at the level of professional schools. When one reads Section 1 in
relation to Section 5 (3) of Article XIV as one must one cannot but note that the latter phrase of Section 1 is not to
be read with absolute literalness. The State is not really enjoined to take appropriate steps to make quality
education " accessible to all who might for any number of reasons wish to enroll in a professional school but
rather merely to make such education accessible to all who qualify under "fair, reasonable and equitable
admission and academic requirements. "
2. In the trial court, petitioners had made the argument that Section 5 (a) and (f) of Republic Act No. 2382, as
amended, offend against the constitutional principle which forbids the undue delegation of legislative power, by
failing to establish the necessary standard to be followed by the delegate, the Board of Medical Education. The
general principle of non-delegation of legislative power, which both flows from the reinforces the more
fundamental rule of the separation and allocation of powers among the three great departments of
government,1 must be applied with circumspection in respect of statutes which like the Medical Act of 1959, deal
with subjects as obviously complex and technical as medical education and the practice of medicine in our
present day world. Mr. Justice Laurel stressed this point 47 years ago in Pangasinan Transportation Co., Inc. vs.
The Public Service Commission:2
One thing, however, is apparent in the development of the principle of separation of powers and that is that
the maxim of delegatus non potest delegare or delegate potestas non potest delegare, adopted this
practice (Delegibus et Consuetudiniis Anglia edited by G.E. Woodbine, Yale University Press, 1922, Vol. 2,
p. 167) but which is also recognized in principle in the Roman Law (d. 17.18.3) has been made to adapt
itself to the complexities of modern government, giving rise to the adoption, within certain limits of the
principle of "subordinate legislation," not only in the United States and England but in practically all modern
governments. (People vs. Rosenthal and Osmena [68 Phil. 318, 1939]. Accordingly, with the growing
complexity of modern life, the multiplication of the subjects of governmental regulation and the increased
difficulty of administering the laws, there is a constantly growing tendency toward the delegation of greater
power by the legislature, and toward the approval of the practice by the courts." 3
The standards set for subordinate legislation in the exercise of rule making authority by an administrative agency
like the Board of Medical Education are necessarily broad and highly abstract. As explained by then Mr. Justice
Fernando in Edu v. Ericta4 —
The standard may be either expressed or implied. If the former, the non-delegation objection is easily
met. The standard though does not have to be spelled out specifically. It could be implied from the policy
and purpose of the act considered as a whole. In the Reflector Law, clearly the legislative objective is
public safety. What is sought to be attained as in Calalang v. Williams is "safe transit upon the roads. 5
We believe and so hold that the necessary standards are set forth in Section 1 of the 1959 Medical Act: "the
standardization and regulation of medical education" and in Section 5 (a) and 7 of the same Act, the body of the
statute itself, and that these considered together are sufficient compliance with the requirements of the non-
delegation principle.
3. The petitioners also urge that the NMAT prescribed in MECS Order No. 52, s. 1985, is an "unfair,
unreasonable and inequitable requirement," which results in a denial of due process. Again, petitioners have
failed to specify just what factors or features of the NMAT render it "unfair" and "unreasonable" or "inequitable."
They appear to suggest that passing the NMAT is an unnecessary requirement when added on top of the
admission requirements set out in Section 7 of the Medical Act of 1959, and other admission requirements
established by internal regulations of the various medical schools, public or private. Petitioners arguments thus
appear to relate to utility and wisdom or desirability of the NMAT requirement. But constitutionality is essentially a
question of power or authority: this Court has neither commission or competence to pass upon questions of the
desirability or wisdom or utility of legislation or administrative regulation. Those questions must be address to the
political departments of the government not to the courts.
There is another reason why the petitioners' arguments must fail: the legislative and administrative provisions
impugned by them constitute, to the mind of the Court, a valid exercise of the police power of the state. The
police power, it is commonplace learning, is the pervasive and non-waivable power and authority of the sovereign
to secure and promote an the important interests and needs — in a word, the public order — of the general
community.6 An important component of that public order is the health and physical safety and well being of the
population, the securing of which no one can deny is a legitimate objective of governmental effort and regulation. 7
Perhaps the only issue that needs some consideration is whether there is some reasonable relation between the
prescribing of passing the NMAT as a condition for admission to medical school on the one hand, and the
securing of the health and safety of the general community, on the other hand. This question is perhaps most
usefully approached by recalling that the regulation of the practice of medicine in all its branches has long been
recognized as a reasonable method of protecting the health and safety of the public.8 That the power to regulate
and control the practice of medicine includes the power to regulate admission to the ranks of those authorized to
practice medicine, is also well recognized. thus, legislation and administrative regulations requiring those who
wish to practice medicine first to take and pass medical board examinations have long ago been recognized as
valid exercises of governmental power.9 Similarly, the establishment of minimum medical educational
requirements — i.e., the completion of prescribed courses in a recognized medical school — for admission to the
medical profession, has also been sustained as a legitimate exercise of the regulatory authority of the
state.10 What we have before us in the instant case is closely related: the regulation of access to medical schools.
MECS Order No. 52, s. 1985, as noted earlier, articulates the rationale of regulation of this type: the improvement
of the professional and technical quality of the graduates of medical schools, by upgrading the quality of those
admitted to the student body of the medical schools. That upgrading is sought by selectivity in the process of
admission, selectivity consisting, among other things, of limiting admission to those who exhibit in the required
degree the aptitude for medical studies and eventually for medical practice. The need to maintain, and the
difficulties of maintaining, high standards in our professional schools in general, and medical schools in
particular, in the current stage of our social and economic development, are widely known.
We believe that the government is entitled to prescribe an admission test like the NMAT as a means for
achieving its stated objective of "upgrading the selection of applicants into [our] medical schools" and of
"improv[ing] the quality of medical education in the country." Given the widespread use today of such admission
tests in, for instance, medical schools in the United States of America (the Medical College Admission Test
[MCAT]11 and quite probably in other countries with far more developed educational resources than our own, and
taking into account the failure or inability of the petitioners to even attempt to prove otherwise, we are entitled to
hold that the NMAT is reasonably related to the securing of the ultimate end of legislation and regulation in this
area. That end, it is useful to recall, is the protection of the public from the potentially deadly effects of
incompetence and ignorance in those who would undertake to treat our bodies and minds for disease or trauma.
4. Petitioners have contended, finally, that MECS Order No. 52, s. 1985, is in conflict with the equal protection
clause of the Constitution. More specifically, petitioners assert that that portion of the MECS Order which
provides that
the cutoff score for the successful applicants, based on the scores on the NMAT, shall be determined
every-year by the Board of Medical 11 Education after consultation with the Association of Philippine
Medical Colleges. (Emphasis supplied)
infringes the requirements of equal protection. They assert, in other words, that students seeking admission
during a given school year, e.g., 1987-1988, when subjected to a different cutoff score than that established for
an, e.g., earlier school year, are discriminated against and that this renders the MECS Order "arbitrary and
capricious." The force of this argument is more apparent than real. Different cutoff scores for different school
years may be dictated by differing conditions obtaining during those years. Thus, the appropriate cutoff score for
a given year may be a function of such factors as the number of students who have reached the cutoff score
established the preceding year; the number of places available in medical schools during the current year; the
average score attained during the current year; the level of difficulty of the test given during the current year, and
so forth. To establish a permanent and immutable cutoff score regardless of changes in circumstances from year
to year, may wen result in an unreasonable rigidity. The above language in MECS Order No. 52, far from being
arbitrary or capricious, leaves the Board of Medical Education with the measure of flexibility needed to meet
circumstances as they change.
We conclude that prescribing the NMAT and requiring certain minimum scores therein as a condition for
admission to medical schools in the Philippines, do not constitute an unconstitutional imposition.
WHEREFORE, the Petition for certiorari is DISMISSED and the Order of the respondent trial court denying the
petition for a writ of preliminary injunction is AFFIRMED. Costs against petitioners.
SO ORDERED.
Teehankee, C.J., Yap, Fernan, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Gancayco, Padilla, Bidin,
Sarmiento and Cortes, JJ., concur.
Footnotes
1 See
People v. Vera, 65 Phil. 56 (1937) and Pelaez v. Auditor general, 15 SCRA 569 (1965).
2 70 Phil. 221 (1940).
3 70 Phil., at 229; underscoring supplied.
4 35 SCRA 481 (1970).
5 35SCRA, at 497; underscoring supplied. At this point, Mr. Justice Fernando dropped a useful
footnote of the following tenor:
"This Court has considered as sufficient standards, "public welfare," Municipality of Cardona
v. Binangonan, 36 Phil. 547 (I 917); "necessary in the interest of law and order," Rubi v.
Provincial Board, 39 Phil. 660 (1919); "public interest," People v. Rosenthal, 68 Phil. 328
(1939); and "justice and equity and substantial merits of the case," International Hardwood v.
Pangil Federation of Labor, 70 Phil. 602 (1940). "
In People v. Exconde, 101 Phil. 1125 (1957), Mr. Justice J.B. L. Reyes said:
"It is well established in this jurisdiction that, while the making of laws is a non-delegable
activity that corresponds exclusively to Congress, nevertheless, the latter may constitutionally
delegate authority and promulgate rules and regulations to implement a given legislation and
effectuate its policies, for the reason that the legislature often finds it imprac ticable (if not
impossible) to anticipate and provide for the multifarious and complex situations that may be
met in carrying the law into effect. All that is required is that the regulation should be germane
to the objects and purposes of the law," that the regulation be not in contradiction with it, but
conform to the standards that the law prescribes-." (101 Phil. at 1129; underscoring
supplied).
6 E.G.,
U.S. v. Toribio, 15 Phil. 85 (1910); Ermita-Malate Hotel and Motel Operators Association, Inc. v.
Mayor of Manila, 20 SCRA 849 (1967) and Morfe v. Mutuc, 22 SCRA 424 (1968).
7 E.G.,Case v. Board of Health, 24 Phil. 256 (1913); People vs. Witte, 146 NE 178 (1925) and Lorenzo
v. Director of Health, 50 Phil. 595 (1927).
8 Barskyv. Board of Regents, 347 US 442, 98 L.Ed. 829, 74 SCT. 650 (1954); Louisiana State Board of
Medical Examiners v. Beatty, 220 La. 1, 55 So2d. 761 (1951) and Reisinger v. Com., State Board of
Medical Education and Licensure, et al., 399 A2d 1160 (1979).
9 Dent
v. West Virginia, 129 US 114, 32 L.Ed. 623, 9 SCt. 231 (1889); State v. Bair, 112 Jowa 466,84
NW 532 (1900).
10 Peoplev. Love, 298 Ill 304, 131 NE 809, 16 ALR 703 (1921); Collins v. Texas, 223 US 288, 56 L.Ed.
439, 32 SCt. 286 (1912).
11 See, e.g., McDonald v. Hogness, et al., 92 Wash. 431, 598 P. 2d. 707 (1979).
G.R. No. L-38429 June 30, 1988
CARLOS BALACUIT, LAMBERTO TAN and SERGIO YU CARCEL, petitioners-appellants,
vs.
COURT OF FIRST INSTANCE OF AGUSAN DEL NORTE AND BUTUAN CITY, Branch 11, and the CITY OF
BUTUAN, respondents-appellees.
Romeo B. Sanchez, Eduardo Deza Mercado and Wilfred D. Asis for petitioners.
The City Legal Officer for respondents-appeliees.
GANCAYCO, J.
At issue in the petition for review before Us is the validity and constitutionality of Ordinance No. 640 passed by
the Municipal Board of the City of Butuan on April 21, 1969, the title and text of which are reproduced below:
ORDINANCE--640
ORDINANCE PENALIZING ANY PERSON, GROUP OF PERSONS, ENTITY OR CORPORATION
ENGAGED IN THE BUSINESS OF SELLING ADMISSION TICKETS TO ANY MOVIE OR OTHER
PUBLIC EXHIBITIONS, GAMES, CONTESTS OR OTHER PERFORMANCES TO REQUIRE CHILDREN
BETWEEN SEVEN (7) AND TWELVE (12) YEARS OF AGE TO PAY FULL PAYMENT FOR TICKETS
INTENDED FOR ADULTS BUT SHOULD CHARGE ONLY ONE-HALF OF THE SAID TICKET
xxx xxx xxx
Be it ordained by the Municipal Board of the City of Butuan in session assembled, that:
SECTION 1—It shall be unlawful for any person, group of persons, entity, or corporation engaged in the
business of selling admission tickets to any movie or other public exhibitions, games, contests, or other
performances to require children between seven (7) and twelve (12) years of age to pay full payment for
admission tickets intended for adults but should charge only one-half of the value of the said tickets.
SECTION 2—Any person violating the provisions of this Ordinance shall upon conviction be punished by
a fine of not less than TWO HUNDRED PESOS (P200.00) but not more than SIX HUNDRED PESOS
(P600.00) or an imprisonment of not less than TWO (2) MONTHS or not more than SIX (6) MONTHS or
both such firm and imprisonment in the discretion of the Court.
If the violator be a firm or corporation the penalty shall be imposed upon the Manager, Agent or
Representative of such firm or corporation.
SECTION 3—This ordinance shall take effect upon its approval.
Petitioners are Carlos Balacuit Lamberto Tan, and Sergio Yu Carcel managers of the Maya and Dalisay
Theaters, the Crown Theater, and the Diamond Theater, respectively. Aggrieved by the effect of Ordinance No.
640, they filed a complaint before the Court of First Instance of Agusan del Norte and Butuan City docketed as
Special Civil Case No. 237 on June 30, 1969 praying, inter alia, that the subject ordinance be declared
unconstitutional and, therefore, void and unenforceable. 1
Upon motion of the petitioners, 2 a temporary restraining order was issued on July 14, 1969 by the court a quo
enjoining the respondent City of Butuan and its officials from enforcing Ordinance No. 640. 3 On July 29, 1969,
respondents filed their answer sustaining the validity of the ordinance.4
On January 30, 1973, the litigants filed their stipulation of facts. 5 On June 4, 1973, the respondent court
rendered its decision, 6 the dispositive part of which reads:
IN THE LIGHT OF ALL THE FOREGOING, the Court hereby adjudges in favor of the respondents and
against the petitioners, as follows:
1. Declaring Ordinance No. 640 of the City of Butuan constitutional and valid: Provided, however, that the
fine for a single offense shall not exceed TWO HUNDRED PESOS, as prescribed in the aforequoted
Section 15 (nn) of Rep. Act No. 523;
2. Dissolving the restraining order issued by this Court; and;
3. Dismissing the complaint, with costs against the petitioners.
4. SO ORDERED. 7
Petitioners filed their motion for reconsideration 8 of the decision of the court a quo which was denied in a
resolution of the said court dated November 10, 1973.9
Hence, this petition.
Petitioners attack the validity and constitutionality of Ordinance No. 640 on the grounds that it is ultra vires and
an invalid exercise of police power.
Petitioners contend that Ordinance No. 640 is not within the power of' the Municipal Board to enact as provided
for in Section 15(n) of Republic Act No. 523, the Charter of the City of Butuan, which states:
Sec. 15. General powers and duties of the Board — Except as otherwise provided by law, and subject to
the conditions and limitations thereof, the Municipal Board shall have the following legislative powers:
xxx xxx xxx
 (n) To regulate and fix the amount of the license fees for the following; . . . theaters, theatrical
performances, cinematographs, public exhibitions and all other performances and places of amusements ...
xxx xxx xxx
Respondent City of Butuan, on the other hand, attempts to justify the enactment of the ordinance by invoking the
general welfare clause embodied in Section 15 (nn) of the cited law, which provides:
(nn) To enact all ordinances it may deem necessary and proper for the sanitation and safety, the
furtherance of the prosperity, and the promotion of the morality, peace, good order, comfort, convenience,
and general welfare of the city and its inhabitants, and such others as may be necessary to carry into effect
and discharge the powers and duties conferred by this Act, and to fix the penalties for the violation of the
ordinances, which shall not exceed a two hundred peso fine or six months imprisonment, or both such fine
and imprisonment, for a single offense.
We can see from the aforecited Section 15(n) that the power to regulate and fix the amount of license fees for
theaters, theatrical performances, cinematographs, public exhibitions and other places of amusement has been
expressly granted to the City of Butuan under its charter. But the question which needs to be resolved is this:
does this power to regulate include the authority to interfere in the fixing of prices of admission to these places of
exhibition and amusement whether under its general grant of power or under the general welfare clause as
invoked by the City?
This is the first time this Court is confronted with the question of direct interference by the local government with
the operation of theaters, cinematographs and the like to the extent of fixing the prices of admission to these
places. Previous decisions of this Court involved the power to impose license fees upon businesses of this nature
as a corollary to the power of the local government to regulate them. Ordinances which required moviehouses or
theaters to increase the price of their admission tickets supposedly to cover the license fees have been held to
be invalid for these impositions were considered as not merely license fees but taxes for purposes of revenue
and not regulation which the cities have no power to exact, 10 unless expressly granted by its charter. 11
Applying the ruling in Kwong Sing v. City of Manila, 12 where the word "regulate" was interpreted to include the
power to control, to govern and to restrain, it would seem that under its power to regulate places of exhibitions
and amusement, the Municipal Board of the City of Butuan could make proper police regulations as to the mode
in which the business shall be exercised.
While in a New York case, 13 an ordinance which regulates the business of selling admission tickets to public
exhibitions or performances by virtue of the power of cities under the General City Law "to maintain order,
enforce the laws, protect property and preserve and care for the safety, health, comfort and general welfare of
the inhabitants of the city and visitors thereto; and for any of said purposes, to regulate and license occupations"
was considered not to be within the scope of any duty or power implied in the charter. It was held therein that the
power of regulation of public exhibitions and places of amusement within the city granted by the charter does not
carry with it any authority to interfere with the price of admission to such places or the resale of tickets or tokens
of admission.
In this jurisdiction, it is already settled that the operation of theaters, cinematographs and other places of public
exhibition are subject to regulation by the municipal council in the exercise of delegated police power by the local
government. 14 Thus, in People v. Chan, 15 an ordinance of the City of Manila prohibiting first run cinematographs
from selling tickets beyond their seating capacity was upheld as constitutional for being a valid exercise of police
power. Still in another case, 16 the validity of an ordinance of the City of Bacolod prohibiting admission of two or
more persons in moviehouses and other amusement places with the use of only one ticket was sustained as a
valid regulatory police measure not only in the interest of preventing fraud in so far as municipal taxes are
concerned but also in accordance with public health, public safety, and the general welfare.
The City of Butuan, apparently realizing that it has no authority to enact the ordinance in question under its power
to regulate embodied in Section 15(n), now invokes the police power as delegated to it under the general welfare
clause to justify the enactment of said ordinance.
To invoke the exercise of police power, not only must it appear that the interest of the public generally requires
an interference with private rights, but the means adopted must be reasonably necessary for the accomplishment
of the purpose and not unduly oppressive upon individuals. 17 The legislature may not, under the guise of
protecting the public interest, arbitrarily interfere with private business, or impose unusual and unnecessary
restrictions upon lawful occupations. In other words, the determination as to what is a proper exercise of its police
power is not final or conclusive, but is subject to the supervision of the courts. 18
Petitioners maintain that Ordinance No. 640 violates the due process clause of the Constitution for being
oppressive, unfair, unjust, confiscatory, and an undue restraint of trade, and violative of the right of persons to
enter into contracts, considering that the theater owners are bound under a contract with the film owners for just
admission prices for general admission, balcony and lodge.
In Homeowners' Association of the Philippines, Inc. v. Municipal Board of the City of Manila, 19 this Court held:
The authority of municipal corporations to regulate is essentially police power, Inasmuch as the same
generally entails a curtailment of the liberty, the rights and/or the property of persons, which are protected
and even guaranteed by the Constitution, the exercise of police power is necessarily subject to a
qualification, limitation or restriction demanded by the regard, the respect and the obedience due to the
prescriptions of the fundamental law, particularly those forming part of the Constitution of Liberty, otherwise
known as the Bill of Rights — the police power measure must be reasonable. In other words, individual
rights may be adversely affected by the exercise of police power to the extent only — and only to the
extent--that may be fairly required by the legitimate demands of public interest or public welfare.
What is the reason behind the enactment of Ordinance No. 640?
A reading of the minutes of the regular session of the Municipal Board when the ordinance in question was
passed shows that a certain Councilor Calo, the proponent of the measure, had taken into account the
complaints of parents that for them to pay the full price of admission for their children is too financially
burdensome.
The trial court advances the view that "even if the subject ordinance does not spell out its raison d'etre in all
probability the respondents were impelled by the awareness that children are entitled to share in the joys of their
elders, but that considering that, apart from size, children between the ages of seven and twelve cannot fully
grasp the nuance of movies or other public exhibitions, games, contests or other performances, the admission
prices with respect to them ought to be reduced. 19a
We must bear in mind that there must be public necessity which demands the adoption of proper measures to
secure the ends sought to be attained by the enactment of the ordinance, and the large discretion is necessarily
vested in the legislative authority to determine not only what the interests of the public require, but what
measures are necessary for the protection of such interests. 20 The methods or means used to protect the public
health, morals, safety or welfare, must have some relation to the end in view, for under the guise of the police
power, personal rights and those pertaining to private property will not be permitted to be arbitralily invaded by
the legislative department. 21
We agree with petitioners that the ordinance is not justified by any necessity for the public interest. The police
power legislation must be firmly grounded on public interest and welfare, and a reasonable relation must exist
between purposes and means.22 The evident purpose of the ordinance is to help ease the burden of cost on the
part of parents who have to shell out the same amount of money for the admission of their children, as they
would for themselves, A reduction in the price of admission would mean corresponding savings for the parents;
however, the petitioners are the ones made to bear the cost of these savings. The ordinance does not only make
the petitioners suffer the loss of earnings but it likewise penalizes them for failure to comply with it. Furthermore,
as petitioners point out, there will be difficulty in its implementation because as already experienced by
petitioners since the effectivity of the ordinance, children over 12 years of age tried to pass off their age as below
12 years in order to avail of the benefit of the ordinance. The ordinance does not provide a safeguard against this
undesirable practice and as such, the respondent City of Butuan now suggests that birth certificates be exhibited
by movie house patrons to prove the age of children. This is, however, not at all practicable. We can see that the
ordinance is clearly unreasonable if not unduly oppressive upon the business of petitioners. Moreover, there is no
discernible relation between the ordinance and the promotion of public health, safety, morals and the general
welfare.
Respondent City of Butuan claims that it was impelled to protect the youth from the pernicious practice of movie
operators and other public exhibitions promoters or the like of demanding equal price for their admission tickets
along with the adults. This practice is allegedly repugnant and unconscionable to the interest of the City in the
furtherance of the prosperity, peace, good order, comfort, convenience and the general well-being of its
inhabitants.
There is nothing pernicious in demanding equal price for both children and adults. The petitioners are merely
conducting their legitimate businesses. The object of every business entrepreneur is to make a profit out of his
venture. There is nothing immoral or injurious in charging the same price for both children and adults. In fact, no
person is under compulsion to purchase a ticket. It is a totally voluntary act on the part of the purchaser if he buys
a ticket to such performances.
Respondent City of Butuan claims that Ordinance No. 640 is reasonable and necessary to lessen the economic
burden of parents whose minor children are lured by the attractive nuisance being maintained by the petitioners.
Respondent further alleges that by charging the full price, the children are being exploited by movie house
operators. We fail to see how the children are exploited if they pay the full price of admission. They are treated
with the same quality of entertainment as the adults. The supposition of the trial court that because of their age
children cannot fully grasp the nuances of such entertainment as adults do fails to convince Us that the reduction
in admission ticket price is justifiable. In fact, by the very claim of respondent that movies and the like are
attractive nuisances, it is difficult to comprehend why the municipal board passed the subject ordinance. How can
the municipal authorities consider the movies an attractive nuisance and yet encourage parents and children to
patronize them by lowering the price of admission for children? Perhaps, there is some ,truth to the argument of
petitioners that Ordinance No. 640 is detrimental to the public good and the general welfare of society for it
encourages children of tender age to frequent the movies, rather than attend to their studies in school or be in
their homes.
Moreover, as a logical consequence of the ordinance, movie house and theater operators will be discouraged
from exhibiting wholesome movies for general patronage, much less children's pictures if only to avoid
compliance with the ordinance and still earn profits for themselves. For after all, these movie house and theater
operators cannot be compelled to exhibit any particular kind of film except those films which may be dictated by
public demand and those which are restricted by censorship laws. So instead of children being able to share in
the joys of their elders as envisioned by the trial court, there will be a dearth of wholesome and educational
movies for them to enjoy.
There are a number of cases decided by the Supreme Court and the various state courts of the United States
which upheld the right of the proprietor of a theater to fix the price of an admission ticket as against the right of
the state to interfere in this regard and which We consider applicable to the case at bar.
A theater ticket has been described to be either a mere license, revocable at the will of the proprietor of the
theater or it may be evidence of a contract whereby, for a valuable consideration, the purchaser has acquired the
right to enter the theater and observe the performance on condition that he behaves properly. 23 Such ticket,
therefore, represents a right, Positive or conditional, as the case may be, according to the terms of the original
contract of sale. This right is clearly a right of property. The ticket which represents that right is also, necessarily,
a species of property. As such, the owner thereof, in the absence of any condition to the contrary in the contract
by which he obtained it, has the clear right to dispose of it, to sell it to whom he pleases and at such price as he
can obtain. 24 So that an act prohibiting the sale of tickets to theaters or other places of amusement at more than
the regular price was held invalid as conflicting with the state constitution securing the right of property. 25
In Collister vs. Hayman, 26 it was held:
The defendants were conducting a private business, which, even if clothed with a public interest, was
without a franchise to accommodate the public, and they had the right to control it, the same as the
proprietors of any other business, subject to such obligations as were placed upon them by statute. Unlike
a carrier of passengers, for instance, with a franchise from the state, and hence under obligation to
transport anyone who applies and to continue the business year in and year out, the proprietors of a
theater can open and close their place at will, and no one can make a lawful complaint. They can charge
what they choose for admission to their theater. They can limit the number admitted. They can refuse to
sell tickets and collect the price of admission at the door. They can preserve order and enforce quiet while
 the performance is going on. They can make it a part of the contract and condition of admission, by giving
due notice and printing the condition in the ticket that no one shall be admitted under 21 years of age, or
that men only or women only shall be admitted, or that a woman cannot enter unless she is accompanied
by a male escort, and the like. The proprietors, in the control of their business, may regulate the terms of
admission in any reasonable way. If those terms are not satisfactory, no one is obliged to buy a ticket or
make the contract. If the terms are satisfactory, and the contract is made, the minds of the parties meet
upon the condition, and the purchaser impliedly promises to perform it.
In Tyson and Bro. — United Theater Ticket Officers, Inc. vs. Banton, 27 the United States Supreme Court held:
... And certainly a place of entertainment is in no legal sense a public utility; and quite as certainly, its
activities are not such that their enjoyment can be regarded under any conditions from the point of view of
an emergency.
The interest of the public in theaters and other places of entertainment may be more nearly, and with better
reason, assimilated to the like interest in provision stores and markets and in the rental of houses and
apartments for residence purposes; although in importance it fails below such an interest in the proportion
that food and shelter are of more moment than amusement or instruction. As we have shown there is no
legislative power to fix the prices of provisions or clothing, or the rental charges for houses and apartments,
in the absence of some controlling emergency; and we are unable to perceive any dissimilarities of such
quality or degree as to justify a different rule in respect of amusements and entertainment ...
We are in consonance with the foregoing observations and conclusions of American courts. In this jurisdiction,
legislation had been passed controlling the prices of goods commodities and drugs during periods of
emergency, 28limiting the net profits of public utility 29 as well as regulating rentals of residential apartments for a
limited period, 30as a matter of national policy in the interest of public health and safety, economic security and
the general welfare of the people. And these laws cannot be impugned as unconstitutional for being violative of
the due process clause.
However, the same could not be said of theaters, cinematographs and other exhibitions. In no sense could these
businesses be considered public utilities. The State has not found it appropriate as a national policy to interfere
with the admission prices to these performances. This does not mean however, that theaters and exhibitions are
not affected with public interest even to a certain degree. Motion pictures have been considered important both
as a medium for the communication of Ideas and expression of the artistic impulse. Their effects on the
perceptions by our people of issues and public officials or public figures as well as the prevailing cultural traits are
considerable. 31People of all ages flock to movie houses, games and other public exhibitions for recreation and
relaxation. The government realizing their importance has seen it fit to enact censorship laws to regulate the
movie industry. 32 Their aesthetic entertainment and even educational values cannot be underestimated. Even
police measures regulating the operation of these businesses have been upheld in order to safeguard public
health and safety.
Nonetheless, as to the question of the subject ordinance being a valid exercise of police power, the same must
be resolved in the negative. While it is true that a business may be regulated, it is equally true that such
regulation must be within the bounds of reason, that is, the regulatory ordinance must be reasonable, and its
provisions cannot be oppressive amounting to an arbitrary interference with the business or calling subject of
regulation. A lawful business or calling may not, under the guise of regulation, be unreasonably interfered with
even by the exercise of police power.33 A police measure for the regulation of the conduct, control and operation
of a business should not encroach upon the legitimate and lawful exercise by the citizens of their property
rights.34 The right of the owner to fix a price at which his property shall be sold or used is an inherent attribute of
the property itself and, as such, within the protection of the due process clause."" Hence, the proprietors of a
theater have a right to manage their property in their own way, to fix what prices of admission they think most for
their own advantage, and that any person who did not approve could stay away. 36
Respondent City of Butuan argues that the presumption is always in favor of the validity of the ordinance. This
maybe the rule but it has already been held that although the presumption is always in favor of the validity or
reasonableness of the ordinance, such presumption must nevertheless be set aside when the invalidity or
unreasonableness appears on the face of the ordinance itself or is established by proper evidence.37 The
exercise of police power by the local government is valid unless it contravenes the fundamental law of the land,
or an act of the legislature, or unless it is against public policy or is unreasonable, oppressive, partial,
discriminating or in derogation of a common right.38
Ordinance No. 640 clearly invades the personal and property rights of petitioners for even if We could assume
that, on its face, the interference was reasonable, from the foregoing considerations, it has been fully shown that
it is an unwarranted and unlawful curtailment of the property and personal rights of citizens. For being
unreasonable and an undue restraint of trade, it cannot, under the guise of exercising police power, be upheld as
valid.
WHEREFORE, the decision of the trial court in Special Civil Case No. 237 is hereby REVERSED and SET
ASIDE and a new judgment is hereby rendered declaring Ordinance No. 640 unconstitutional and, therefore, null
and void. This decision is immediately executory.
SO ORDERED.
Yap, C.J., Narvasa, Cruz, Paras, Padilla, Bidin, Sarmiento and Griño-Aquino, JJ., concur.
Separate Opinions
GUTIERREZ, JR., J., Separate opinion
The issue before the Court is a simple one. Does Butuan City have the power to compel theatre owners to
charge only half fares for children below twelve even as they charge all other moviegoers full prices for admission
into moviehouses?
Instead of nullifying the municipal ordinance through a broad and sweeping justification of property rights, I
believe, however, that we should do so on a more limited ground directly bearing on the issue.
I find no rational basis for classifying children as a distinct group insofar as paying for admission into a
moviehouse is concerned. There is absolutely no pretense that the municipal ordinance is intended to protect
children, enhance their morals, promote their health, safeguard their safety, improve their education, or otherwise
promote the general welfare. In fact, the effect of the ordinance may be the opposite.
With the price of movie tickets suddenly within the reach of many children, they may neglect their studies or use
money intended for food or school supplies to enter moviehouses. Movie owners who are compelled to accept
half prices for a newly increased group of young patrons will be tempted to allow them to enter moviehouses
indiscriminately, including those where scenes of violence, crime, or even sex are portrayed. Addiction of the
young to movie going is definitely injurious to their health.
The avowed purpose of the ordinance--to ease the burden of costs for parents who have to shell out the same
amount of money for the admission of their children as they would for themselves — is not covered by police
power. If the city cannot compel refreshment parlors to charge half-prices for hamburgers, soft drinks, pizzas, or
cakes consumed by children by what authority can it impose the obligation of similarly easing parents' burdens
upon the owners of moviehouses?
As discussed by the minority opinion, the legislature may not., under the guise of protecting the public interest,
arbitrarily interfere with private business, or impose unusual and unnecessary restrictions upon lawful
occupations. The imposition enacted by the municipal board of Butuan City has not been justified by its
proponents as a restriction necessary for public health or public welfare. No reasonable relationship has been
shown between a valid purpose and the proper means to accomplish it.
I hesitate, however, to make a brief for owners of theatres and expound a laissez faire approach insofar as their
businesses are concerned. Movie houses may not be public utilities but as places of entertainment affected with
a certain degree of public interest, they are subject to reasonable regulation. That regulation is stronger and more
restrictive than that of regular or ordinary businesses.
The following citation for instance, is pure obiter insofar as half-prices for minors are concerned:
... [T]he proprietors of a theater can open and close their place at will, and no one can make lawful
complaint. They can charge what they choose for admission to their theater. They can limit the number
admitted. They can refuse to sell tickets and collect the price of admission at the door. They can preserve
order and enforce quiet while the performance is going on. They can make it a part of the contract and a
condition of admission, by giving due notice and printing the condition in the ticket that no one shall be
admitted under 21 years of age, or that men only or women only shall be admitted, or that a woman cannot
enter unless she is accompanied by a male escort, and the like. The proprietors, in the control of their
business, may regulate the terms of admission in any reasonable way. If those terms are not satisfactory,
no one is obliged to buy a ticket or make the contract. If the terms are satisfactory, and the contract is
made, the minds of the parties meet upon the condition, and the purchaser impliedly promises to perform it.
(Collister v. Hayman, 76 N.E. 20,183 N.Y. 250, 253, 1 L.R.A. [N.S.] 1188, 11 Am. St. Rep. 740, An Cas.
344).
I see no reason at this time why we should pass upon situations that are not before us or warn municipal
governments beforehand to avoid enacting certain regulations when nobody knows exactly what circumstances
may call for those regulations.
For instance,
A theater ticket has been described to be either a mere license, revocable at the will of the proprietor of the
theater or it may be evidence of a contract whereby, for a valuable consideration, the purchaser has
acquired the right to enter the theater and observe the performance on condition that he behaves properly
(Law of the State.
Screen and Radio by Marchetti, 1939, ec., page 268). Such ticket, therefore, represents a right, positive or
conditional, as the case may be, according to the terms of the original contract of sale. This right is clearly a
right of property. The ticket which represents that right is also, necessarily, a species of property. As such,
the owner thereof, in the absence of any condition to the contrary y in the contract by which he obtained it,
has the clear right to dispose of it, to sell it to whom he pleases and at such price as he can obtain Ibids,
citing Ex-parte Quarg, 84 Pac., 766,149 Cal. 79, 80, 5 L.R.A. [N.S], 183, 117 Am. St. Rep. 11 5, 9 Ann. Ca.
747; Also People v. Steele, 231, III. 340, 344, 14 R.A. [N.S.] 361, 121 Am. St. Rep. 321, 83 N.E. 236). ....
xxx xxx xxx
.... A lawful business or calling may not, under the guise of regulation, be unreasonably interfered with even
by the exercise of police power. (Ogden City v. Leo, 54 Utah 556, 182 P. 530) A police measure for the
regulation of the conduct, control and operation of a business should not encroach upon the legitimate and
lawful exercise by the citizens of their property rights (Pampanga Bus Co., Inc. v. Municipality of Tarlac, 3
SCRA 816). The right of the owner to fix a price at which his property shall be sold or used is an inherent
attribute of the property itself and, as such, within the protection of the due process clause (Tyson and Bro.-
-United Theater Ticket Officers, Inc. v. Banton, supra). Hence the proprietors of a theater have a right to
manage their property in their own way, to fix what prices of admission they think most for their own
advantage, and that ally person who did not approve could stay away (Ibid, citing v. Clifford v. Brandon, 2
Campb. 358, 368.).
may be interpreted as carte blanche for movie owners to practically ignore municipal regulation and do as they
please.
More appropriate to my maid is to state that while tile Butuan City ordinance is invalid, it does not necessarily
follow that all forms of regulation are proscribed.
We have ruled in People v. Chan (65 Phil. 612):
In the first place, it must be noted that there can be no doubt that the City of Manila exercises police power,
by delegation and that in the exercise of that power it is authorized to enact ordinances for, the regulation
 of the operation of theatres and cinematographs (sec. 2444(m) and (ee) of the Revised Administrative
Code: U.S. v. Gomez Jesus, 31 Phil. 218; U.S. v. Pompeya, 31 Phil. 245).
On April 17, 1935, Ordinance No. 2347 was approved. In section 1 it provides that all first run theatres or
cinematographs should register their seating capacity with the City Treasurer, and in section 1 it prohibits
the sale of tickets in said theatres or cinematographs in excess of their registered seating capacity.
Before the approval of Ordinance No. 2347, Ordinance No. 2188, approved on July 22, 1933, was in force,
section 1 of which divides cinematographs into three different classes: first, second and third. The first
class includes those located on certain and specified streets like Rosario, Escolta, etc., which exhibit films
for the first time; those belonging to the second class are those which, not being located on said streets,
also exhibit films for the first time, and those which, being located on said streets, regularly show films for
the second time or which have the exclusive right to show secondhand films; and the third class
comprehends all those which are not included in the first and second classes.
xxx xxx xxx
To the foregoing must be added, and this is of common knowledge, that the films which are shown for the
first time attract a large attendance, and the theatre or cinematograph, whether it is first or second class,
presenting shows for the first time, would be suffocatingly overcrowded if the number of tickets were not
limited. This is the reason for the prohibition of the sale of tickets in excess of the seating capacity. The
prohibition applies with equal force wherever the same reason exists, that is, to first and second class
theatres which show films for the first time. (at pp. 612- 613)
There being a rational basis for the restriction of sales of tickets beyond seating capacity, the ordinance is
perfectly valid.
The same is true for the situation found in Samson v. Mayor of Bacolod City (60 SCRA 274):
When it is further remembered that insofar as movie houses and other places of amusement are
concerned. (According to Section 17[1] of the City Charter of Bacolod, Commonwealth Act No. 326
119381: 'To regulate and fix the amount of the fees for the following: ... theatres, theatrical performances,
cinematographs, public exhibitions, circuses and all other performances and places of amusements ....")
the least doubt cannot be entertained as to the validity of a measure prohibiting a proprietor, lessee or
operator of an amusement place to admit two or more persons with only one admission ticket, not only in
the interest of preventing fraud insofar as municipal taxes are concerned but also in accordance with public
health, public safety and the general welfare. (Cf. People v. Chan, 65 Phil. 611 [1938]). An American
Supreme Court decision, Western Turf Association v. Greenberg, (204 US 359 [1907] the opinion being
penned by Justice Harlan is equally illuminating: 'The statute is only a regulation of places of public
entertainment and amusement upon terms of equal and exact justice to everyone holding a ticket of
admission, and who is not, at the time, under the influence of liquor, or boisterous in conduct, or of lewd
and immoral character. .... Such a regulation, in itself just, is likewise promotive of peace and good order
among those who attend places of public entertainment and amusement. It is neither an arbitrary exertion
of the state's inherent or governmental power, nor a violation of any right secured by the constitution of the
United States. (at pp. 363-364).
The City of Butuan tries to justify the challenged ordinance by invoking police power. The invocation is
improper. The definitions of police power, including its exercise based on the general welfare clause, are
emphasized to show that the respondents' arguments have no merit —
Police power is inherent in the State but not in municipal corporations. For a municipal corporation to
exercise police power, there must be a legislative grant which necessarily also sets the limits for the
exercise of the power.
In the Philippines, the grant of authority to the municipality to exercise police power is embodied in Section
2238 of the Revised Administrative Code, otherwise known as the General Welfare Clause. Chartered
cities are granted similar authority in their respective charters
The general welfare clause has two branches. The first authorizes the municipal council to enact such
ordinances and make such regulations not repugnant to law, as may be necessary to carry into effect and
discharge the powers and duties conferred upon the municipal council by law. The second branch
authorizes the municipality to enact such ordinances as may be necessary and proper for the health and
safety, promote the prosperity, improve the morals, peace, good order, comfort, and convenience of the
municipality and inhabitants thereof, and for the protection of property therein. (U.S. v. Salaveria 39 Phil.
103).
This Court has generally been liberal in sustaining municipal action based on the general welfare clause. In the
case before us, however, there appears to be no basis for sustaining the ordinance even on a generous
interpretation of the general welfare clause.
Separate Opinions
GUTIERREZ, JR., J., Separate opinion
The issue before the Court is a simple one. Does Butuan City have the power to compel theatre owners to
charge only half fares for children below twelve even as they charge all other moviegoers full prices for admission
into moviehouses?
Instead of nullifying the municipal ordinance through a broad and sweeping justification of property rights, I
believe, however, that we should do so on a more limited ground directly bearing on the issue.
I find no rational basis for classifying children as a distinct group insofar as paying for admission into a
moviehouse is concerned. There is absolutely no pretense that the municipal ordinance is intended to protect
children, enhance their morals, promote their health, safeguard their safety, improve their education, or otherwise
promote the general welfare. In fact, the effect of the ordinance may be the opposite.
With the price of movie tickets suddenly within the reach of many children, they may neglect their studies or use
money intended for food or school supplies to enter moviehouses. Movie owners who are compelled to accept
half prices for a newly increased group of young patrons will be tempted to allow them to enter moviehouses
indiscriminately, including those where scenes of violence, crime, or even sex are portrayed. Addiction of the
young to movie going is definitely injurious to their health.
The avowed purpose of the ordinance--to ease the burden of costs for parents who have to shell out the same
amount of money for the admission of their children as they would for themselves — is not covered by police
power. If the city cannot compel refreshment parlors to charge half-prices for hamburgers, soft drinks, pizzas, or
cakes consumed by children by what authority can it impose the obligation of similarly easing parents' burdens
upon the owners of moviehouses?
As discussed by the minority opinion, the legislature may not., under the guise of protecting the public interest,
arbitrarily interfere with private business, or impose unusual and unnecessary restrictions upon lawful
occupations. The imposition enacted by the municipal board of Butuan City has not been justified by its
proponents as a restriction necessary for public health or public welfare. No reasonable relationship has been
shown between a valid purpose and the proper means to accomplish it.
I hesitate, however, to make a brief for owners of theatres and expound a laissez faire approach insofar as their
businesses are concerned. Movie houses may not be public utilities but as places of entertainment affected with
a certain degree of public interest, they are subject to reasonable regulation. That regulation is stronger and more
restrictive than that of regular or ordinary businesses.
The following citation for instance, is pure obiter insofar as half-prices for minors are concerned:
... [T]he proprietors of a theater can open and close their place at will, and no one can make lawful
complaint. They can charge what they choose for admission to their theater. They can limit the number
admitted. They can refuse to sell tickets and collect the price of admission at the door. They can preserve
order and enforce quiet while the performance is going on. They can make it a part of the contract and a
condition of admission, by giving due notice and printing the condition in the ticket that no one shall be
admitted under 21 years of age, or that men only or women only shall be admitted, or that a woman cannot
enter unless she is accompanied by a male escort, and the like. The proprietors, in the control of their
business, may regulate the terms of admission in any reasonable way. If those terms are not satisfactory,
no one is obliged to buy a ticket or make the contract. If the terms are satisfactory, and the contract is
made, the minds of the parties meet upon the condition, and the purchaser impliedly promises to perform it.
(Collister v. Hayman, 76 N.E. 20,183 N.Y. 250, 253, 1 L.R.A. [N.S.] 1188, 11 Am. St. Rep. 740, An Cas.
344).
I see no reason at this time why we should pass upon situations that are not before us or warn municipal
governments beforehand to avoid enacting certain regulations when nobody knows exactly what circumstances
may call for those regulations.
For instance,
A theater ticket has been described to be either a mere license, revocable at the will of the proprietor of the
theater or it may be evidence of a contract whereby, for a valuable consideration, the purchaser has
acquired the right to enter the theater and observe the performance on condition that he behaves properly
(Law of the State.
Screen and Radio by Marchetti, 1939, ec., page 268). Such ticket, therefore, represents a right, positive or
conditional, as the case may be, according to the terms of the original contract of sale. This right is clearly a
right of property. The ticket which represents that right is also, necessarily, a species of property. As such,
the owner thereof, in the absence of any condition to the contrary y in the contract by which he obtained it,
has the clear right to dispose of it, to sell it to whom he pleases and at such price as he can obtain Ibids,
citing Ex-parte Quarg, 84 Pac., 766,149 Cal. 79, 80, 5 L.R.A. [N.S], 183, 117 Am. St. Rep. 11 5, 9 Ann. Ca.
747; Also People v. Steele, 231, III. 340, 344, 14 R.A. [N.S.] 361, 121 Am. St. Rep. 321, 83 N.E. 236). ....
xxx xxx xxx
.... A lawful business or calling may not, under the guise of regulation, be unreasonably interfered with even
by the exercise of police power. (Ogden City v. Leo, 54 Utah 556, 182 P. 530) A police measure for the
regulation of the conduct, control and operation of a business should not encroach upon the legitimate and
lawful exercise by the citizens of their property rights (Pampanga Bus Co., Inc. v. Municipality of Tarlac, 3
SCRA 816). The right of the owner to fix a price at which his property shall be sold or used is an inherent
attribute of the property itself and, as such, within the protection of the due process clause (Tyson and Bro.-
-United Theater Ticket Officers, Inc. v. Banton, supra). Hence the proprietors of a theater have a right to
manage their property in their own way, to fix what prices of admission they think most for their own
advantage, and that ally person who did not approve could stay away (Ibid, citing v. Clifford v. Brandon, 2
Campb. 358, 368.).
may be interpreted as carte blanche for movie owners to practically ignore municipal regulation and do as they
please.
More appropriate to my maid is to state that while tile Butuan City ordinance is invalid, it does not necessarily
follow that all forms of regulation are proscribed.
We have ruled in People v. Chan (65 Phil. 612):
In the first place, it must be noted that there can be no doubt that the City of Manila exercises police power,
by delegation and that in the exercise of that power it is authorized to enact ordinances for, the regulation
of the operation of theatres and cinematographs (sec. 2444(m) and (ee) of the Revised Administrative
Code: U.S. v. Gomez Jesus, 31 Phil. 218; U.S. v. Pompeya, 31 Phil. 245).
On April 17, 1935, Ordinance No. 2347 was approved. In section 1 it provides that all first run theatres or
cinematographs should register their seating capacity with the City Treasurer, and in section 1 it prohibits
the sale of tickets in said theatres or cinematographs in excess of their registered seating capacity.
 Before the approval of Ordinance No. 2347, Ordinance No. 2188, approved on July 22, 1933, was in force,
section 1 of which divides cinematographs into three different classes: first, second and third. The first
class includes those located on certain and specified streets like Rosario, Escolta, etc., which exhibit films
for the first time; those belonging to the second class are those which, not being located on said streets,
also exhibit films for the first time, and those which, being located on said streets, regularly show films for
the second time or which have the exclusive right to show secondhand films; and the third class
comprehends all those which are not included in the first and second classes.
Police power is inherent in the State but not in municipal corporations. For a municipal corporation to
exercise police power, there must be a legislative grant which necessarily also sets the limits for the
exercise of the power.
In the Philippines, the grant of authority to the municipality to exercise police power is embodied in Section
2238 of the Revised Administrative Code, otherwise known as the General Welfare Clause. Chartered
cities are granted similar authority in their respective charters

xxx xxx xxx
To the foregoing must be added, and this is of common knowledge, that the films which are shown for the
first time attract a large attendance, and the theatre or cinematograph, whether it is first or second class,
presenting shows for the first time, would be suffocatingly overcrowded if the number of tickets were not
limited. This is the reason for the prohibition of the sale of tickets in excess of the seating capacity. The
prohibition applies with equal force wherever the same reason exists, that is, to first and second class
theatres which show films for the first time. (at pp. 612- 613)
There being a rational basis for the restriction of sales of tickets beyond seating capacity, the ordinance is
perfectly valid.
The general welfare clause has two branches. The first authorizes the municipal council to enact such
ordinances and make such regulations not repugnant to law, as may be necessary to carry into effect and
discharge the powers and duties conferred upon the municipal council by law. The second branch
authorizes the municipality to enact such ordinances as may be necessary and proper for the health and
safety, promote the prosperity, improve the morals, peace, good order, comfort, and convenience of the
municipality and inhabitants thereof, and for the protection of property therein. (U.S. v. Salaveria 39 Phil.
103).
This Court has generally been liberal in sustaining municipal action based on the general welfare clause. In the
case before us, however, there appears to be no basis for sustaining the ordinance even on a generous
interpretation of the general welfare clause.

The same is true for the situation found in Samson v. Mayor of Bacolod City (60 SCRA 274):

When it is further remembered that insofar as movie houses and other places of amusement are
concerned. (According to Section 17[1] of the City Charter of Bacolod, Commonwealth Act No. 326
119381: 'To regulate and fix the amount of the fees for the following: ... theatres, theatrical performances,
cinematographs, public exhibitions, circuses and all other performances and places of amusements ....")
the least doubt cannot be entertained as to the validity of a measure prohibiting a proprietor, lessee or
operator of an amusement place to admit two or more persons with only one admission ticket, not only in
the interest of preventing fraud insofar as municipal taxes are concerned but also in accordance with public
health, public safety and the general welfare. (Cf. People v. Chan, 65 Phil. 611 [1938]). An American
Supreme Court decision, Western Turf Association v. Greenberg, (204 US 359 [1907] the opinion being
penned by Justice Harlan is equally illuminating: 'The statute is only a regulation of places of public
entertainment and amusement upon terms of equal and exact justice to everyone holding a ticket of
admission, and who is not, at the time, under the influence of liquor, or boisterous in conduct, or of lewd
and immoral character. .... Such a regulation, in itself just, is likewise promotive of peace and good order
among those who attend places of public entertainment and amusement. It is neither an arbitrary exertion
of the state's inherent or governmental power, nor a violation of any right secured by the constitution of the
United States. (at pp. 363-364).

The City of Butuan tries to justify the challenged ordinance by invoking police power. The invocation is improper.
The definitions of police power, including its exercise based on the general welfare clause, are emphasized to
show that the respondents' arguments have no merit —
[G.R. No. 120095. August 5, 1996]
JMM PROMOTION AND MANAGEMENT, INC., and KARY INTERNATIONAL, INC., petitioner, vs. HON.
COURT OF APPEALS, HON. MA. NIEVES CONFESSOR, then Secretary of the Department of the Labor and
Employment, HON. JOSE BRILLANTES, in his capacity as acting Secretary of the Department of Labor and
Employment and HON. FELICISIMO JOSON, in his capacity as Administrator of the Philippine Overseas
Employment Administration, respondents.
DECISION
KAPUNAN, J.:
The limits of government regulation under the State's Police Power are once again at the vortex of the instant
controversy. Assailed is the government's power to control deployment of female entertainers to Japan by requiring
an Artist Record Book (ARB) as a precondition to the processing by the POEA of any contract for overseas
employment. By contending that the right to overseas employment, is a property right within the meaning of the
Constitution, petitioners vigorously aver that deprivation thereof allegedly through the onerous requirement of an
ARB violates the due process clause and constitutes an invalid exercise of the police power.
The factual antecedents are undisputed.
Following the much-publicized death of Maricris Sioson in 1991, former President Corazon C. Aquino ordered
a total ban against the deployment of performing artists to Japan and other foreign destinations. The ban was,
however, rescinded after leaders of the overseas employment industry promised to extend full support for a
program aimed at removing kinks in the system of deployment. In its place, the government, through the Secretary
of Labor and Employment, subsequently issued Department Order No. 28, creating the Entertainment Industry
Advisory Council (EIAC), which was tasked with issuing guidelines on the training, testing certification and
deployment of performing artists abroad.
Pursuant to the EIAC's recommendations,[1] the Secretary of Labor, on January 6, 1994, issued Department
Order No. 3 establishing various procedures and requirements for screening performing artists under a new system
of training, testing, certification and deployment of the former. Performing artists successfully hurdling the test,
training and certification requirement were to be issued an Artist's Record Book (ARB), a necessary prerequisite
to processing of any contract of employment by the POEA. Upon request of the industry, implementation of the
process, originally scheduled for April 1, 1994, was moved to October 1, 1994.
Thereafter, the Department of Labor, following the EIAC's recommendation, issued a series of orders fine-
tuning and implementing the new system. Prominent among these orders were the following issuances:
1. Department Order No. 3-A, providing for additional guidelines on the training, testing, certification and
deployment of performing artists.
2. Department Order No. 3-B, pertaining to the Artist Record Book (ARB) requirement, which could be processed
only after the artist could show proof of academic and skills training and has passed the required tests.
3. Department Order No. 3-E, providing the minimum salary a performing artist ought to receive (not less than
US$600.00 for those bound for Japan) and the authorized deductions therefrom.
4. Department Order No. 3-F, providing for the guidelines on the issuance and use of the ARB by returning
performing artists who, unlike new artists, shall only undergo a Special Orientation Program (shorter than the
basic program) although they must pass the academic test.
In Civil Case No. 95-72750, the Federation of Entertainment Talent Managers of the Philippines (FETMOP),
on January 27, 1995 filed a class suit assailing these department orders, principally contending that said orders 1)
violated the constitutional right to travel; 2) abridged existing contracts for employment; and 3) deprived individual
artists of their licenses without due process of law. FETMOP, likewise, averred that the issuance of the Artist
Record Book (ARB) was discriminatory and illegal and "in gross violation of the constitutional right... to life liberty
and property." Said Federation consequently prayed for the issuance of a writ of preliminary injunction against the
aforestated orders.
On February 2, 1992, JMM Promotion and Management, Inc. and Kary International, Inc., herein petitioners,
filed a Motion for Intervention in said civil case, which was granted by the trial court in an Order dated 15 February,
1995.
However, on February 21, 1995, the trial court issued an Order denying petitioners' prayer for a writ of
preliminary injunction and dismissed the complaint.
On appeal from the trial court's Order, respondent court, in CA G.R. SP No. 36713 dismissed the
same. Tracing the circumstances which led to the issuance of the ARB requirement and the assailed Department
Order, respondent court concluded that the issuances constituted a valid exercise by the state of the police power.
We agree.
The latin maxim salus populi est suprema lex embodies the character of the entire spectrum of public laws
aimed at promoting the general welfare of the people under the State's police power. As an inherent attribute of
sovereignty which virtually "extends to all public needs,"[2] this "least limitable"[3] of governmental powers grants a
wide panoply of instruments through which the state, as parens patriae gives effect to a host of its regulatory
powers.
Describing the nature and scope of the police power, Justice Malcolm, in the early case of Rubi v. Provincial
Board of Mindoro[4] wrote:
"The police power of the State," one court has said...'is a power coextensive with self-protection, and is not
inaptly termed 'the law of overruling necessity.' It may be said to be that inherent and plenary power in the state
which enables it to prohibit all things hurtful to the comfort, safety and welfare of society.' Carried onward by the
current of legislature, the judiciary rarely attempts to dam the onrushing power of legislative discretion, provided
the purposes of the law do not go beyond the great principles that mean security for the public welfare or do not
arbitrarily interfere with the right of the individual."[5]
Thus, police power concerns government enactments which precisely interfere with personal liberty or
property in order to promote the general welfare or the common good. As the assailed Department Order enjoys a
presumed validity, it follows that the burden rests upon petitioners to demonstrate that the said order, particularly,
its ARB requirement, does not enhance the public welfare or was exercised arbitrarily or unreasonably.
A thorough review of the facts and circumstances leading to the issuance of the assailed orders compels us
to rule that the Artist Record Book requirement and the questioned Department Order related to its issuance were
issued by the Secretary of Labor pursuant to a valid exercise of the police power.
In 1984, the Philippines emerged as the largest labor sending country in Asia dwarfing the labor export of
countries with mammoth populations such as India and China. According to the National Statistics Office,
this diaspora was augmented annually by over 450,000 documented and clandestine or illegal (undocumented)
workers who left the country for various destinations abroad, lured by higher salaries, better work opportunities and
sometimes better living conditions.
Of the hundreds of thousands of workers who left the country for greener pastures in the last few years,
women composed slightly close to half of those deployed, constituting 47% between 1987-1991, exceeding this
proportion (58%) by the end of 1991,[6] the year former President Aquino instituted the ban on deployment of
performing artists to Japan and other countries as a result of the gruesome death of Filipino entertainer Maricris
Sioson.
It was during the same period that this Court took judicial notice not only of the trend, but also of the fact that
most of our women, a large number employed as domestic helpers and entertainers, worked under exploitative
conditions "marked by physical and personal abuse."[7] Even then, we noted that "[t]he sordid tales of maltreatment
suffered by migrant Filipina workers, even rape and various forms of torture, confirmed by testimonies of returning
workers" compelled "urgent government action."[8]
Pursuant to the alarming number of reports that a significant number of Filipina performing artists ended up
as prostitutes abroad (many of whom were beaten, drugged and forced into prostitution), and following the deaths
of a number of these women, the government began instituting measures aimed at deploying only those individuals
who met set standards which would qualify them as legitimate performing artists. In spite of these measures,
however, a number of our countrymen have nonetheless fallen victim to unscrupulous recruiters, ending up as
virtual slaves controlled by foreign crime syndicates and forced into jobs other than those indicated in their
employment contracts. Worse, some of our women have been forced into prostitution.
Thus, after a number of inadequate and failed accreditation schemes, the Secretary of Labor issued on
August 16, 1993, D.O. No. 28, establishing the Entertainment Industry Advisory Council (EIAC), the policy advisory
body of DOLE on entertainment industry matters.[9] Acting on the recommendations of the said body, the Secretary
of Labor, on January 6, 1994, issued the assailed orders. These orders embodied EIAC's Resolution No. 1, which
called for guidelines on screening, testing and accrediting performing overseas Filipino artists. Significantly, as the
respondent court noted, petitioners were duly represented in the EIAC, [10] which gave the recommendations on
which the ARB and other requirements were based.
Clearly, the welfare of Filipino performing artists, particularly the women was paramount in the issuance of
Department Order No. 3. Short of a total and absolute ban against the deployment of performing artists to "high
risk" destinations, a measure which would only drive recruitment further underground, the new scheme at the very
least rationalizes the method of screening performing artists by requiring reasonable educational and artistic skills
from them and limits deployment to only those individuals adequately prepared for the unpredictable demands of
employment as artists abroad. It cannot be gainsaid that this scheme at least lessens the room for exploitation by
unscrupulous individuals and agencies.
Moreover, here or abroad, selection of performing artists is usually accomplished by auditions, where those
deemed unfit are usually weeded out through a process which is inherently subjective and vulnerable to bias and
differences in taste. The ARB requirement goes one step further, however, attempting to minimize the subjectivity
of the process by defining the minimum skills required from entertainers and performing artists. As the Solicitor
General observed, this should be easily met by experienced artists possessing merely basic skills. The tests are
aimed at segregating real artists or performers from those passing themselves off as such, eager to accept any
available job and therefore exposing themselves to possible exploitation.
As to the other provisions of Department Order No. 3 questioned by petitioners, we see nothing wrong with
the requirement for document and booking confirmation (D.O. 3-C), a minimum salary scale (D.O. 3-E), or the
requirement for registration of returning performers. The requirement for a venue certificate or other documents
evidencing the place and nature of work allows the government closer monitoring of foreign employers and helps
keep our entertainers away from prostitution fronts and other worksites associated with unsavory, immoral, illegal
or exploitative practices. Parenthetically, none of these issuances appear to us, by any stretch of the imagination,
even remotely unreasonable or arbitrary. They address a felt need of according greater protection for an oft-
exploited segment of our OCW's. They respond to the industry's demand for clearer and more practicable rules
and guidelines. Many of these provisions were fleshed out following recommendations by, and after consultations
with, the affected sectors and non-government organizations. On the whole, they are aimed at enhancing the safety
and security of entertainers and artists bound for Japan and other destinations, without stifling the industry's
concerns for expansion and growth.
In any event, apart from the State's police power, the Constitution itself mandates government to extend the
fullest protection to our overseas workers. The basic constitutional statement on labor, embodied in Section 18 of
Article II of the Constitution provides:
Sec. 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and
promote their welfare.
More emphatically, the social justice provision on labor of the 1987 Constitution in its first paragraph states:
The State shall afford full protection to labor, local and overseas, organized and unorganized and promote
full employment and equality of employment opportunities for all.
Obviously, protection to labor does not indicate promotion of employment alone. Under the welfare and social
justice provisions of the Constitution, the promotion of full employment, while desirable, cannot take a backseat to
the government's constitutional duty to provide mechanisms for the protection of our workforce, local or
overseas. As this Court explained in Philippine Association of Service Exporters (PASEI) v. Drilon,[11] in reference
to the recurring problems faced by our overseas workers:
What concerns the Constitution more paramountly is that such an employment be above all, decent, just, and
humane. It is bad enough that the country has to send its sons and daughters to strange lands because it cannot
satisfy their employment needs at home. Under these circumstances, the Government is duty-bound to insure
that our toiling expatriates have adequate protection, personally and economically, while away from home.
 We now go to petitioners' assertion that the police power cannot, nevertheless, abridge the right of our
performing workers to return to work abroad after having earlier qualified under the old process, because, having
previously been accredited, their accreditation became a property right," protected by the due process clause. We
find this contention untenable.
A profession, trade or calling is a property right within the meaning of our constitutional guarantees. One
cannot be deprived of the right to work and the right to make a living because these rights are property rights, the
arbitrary and unwarranted deprivation of which normally constitutes an actionable wrong.[12]
Nevertheless, no right is absolute, and the proper regulation of a profession, calling, business or trade has
always been upheld as a legitimate subject of a valid exercise of the police power by the state particularly when
their conduct affects either the execution of legitimate governmental functions, the preservation of the State, the
public health and welfare and public morals. According to the maxim, sic utere tuo ut alienum non laedas, it must
of course be within the legitimate range of legislative action to define the mode and manner in which every one
may so use his own property so as not to pose injury to himself or others.[13]
In any case, where the liberty curtailed affects at most the rights of property, the permissible scope of
regulatory measures is certainly much wider.[14] To pretend that licensing or accreditation requirements violates the
due process clause is to ignore the settled practice, under the mantle of the police power, of regulating entry to the
practice of various trades or professions. Professionals leaving for abroad are required to pass rigid written and
practical exams before they are deemed fit to practice their trade. Seamen are required to take tests determining
their seamanship. Locally, the Professional Regulation Commission has began to require previously licensed
doctors and other professionals to furnish documentary proof that they had either re-trained or had undertaken
continuing education courses as a requirement for renewal of their licenses. It is not claimed that these
requirements pose an unwarranted deprivation of a property right under the due process clause. So long as
Professionals and other workers meet reasonable regulatory standards no such deprivation exists.
Finally, it is a futile gesture on the part of petitioners to invoke the non-impairment clause of the Constitution
to support their argument that the government cannot enact the assailed regulatory measures because they
abridge the freedom to contract. In Philippine Association of Service Exporters, Inc. vs. Drilon, we held that "[t]he
non-impairment clause of the Constitution... must yield to the loftier purposes targeted by the
government."[15] Equally important, into every contract is read provisions of existing law, and always, a reservation
of the police power for so long as the agreement deals with a subject impressed with the public welfare.
A last point. Petitioners suggest that the singling out of entertainers and performing artists under the assailed
department orders constitutes class legislation which violates the equal protection clause of the Constitution. We
do not agree.
The equal protection clause is directed principally against undue favor and individual or class privilege. It is
not intended to prohibit legislation which is limited to the object to which it is directed or by the territory in which it
is to operate. It does not require absolute equality, but merely that all persons be treated alike under like conditions
both as to privileges conferred and liabilities imposed.[16] We have held, time and again, that the equal protection
clause of the Constitution does not forbid classification for so long as such classification is based on real and
substantial differences having a reasonable relation to the subject of the particular legislation.[17] If classification is
germane to the purpose of the law, concerns all members of the class, and applies equally to present and future
conditions, the classification does not violate the equal protection guarantee.
In the case at bar, the challenged Department Order clearly applies to all performing artists and entertainers
destined for jobs abroad. These orders, we stressed hereinbefore, further the Constitutional mandate requiring
Government to protect our workforce, particularly those who may be prone to abuse and exploitation as they are
beyond the physical reach of government regulatory agencies. The tragic incidents must somehow stop, but short
of absolutely curtailing the right of these performers and entertainers to work abroad, the assailed measures enable
our government to assume a measure of control.
WHEREFORE, finding no reversible error in the decision sought to be reviewed, petition is hereby DENIED.
SO ORDERED.
Padilla (Chairman), Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.
[1] EIAC, Res. No. 1.
[2] Noble State Bank v. Haskel, 219 US 112 (1911).
[3] Smith, Bell and Co. v. Natividad, 40 Phil. 136 (1919).
[4] 39 Phil 660, 708 (1919).
[5] Id., at 708-709.
[6] Source: National Statistics Office, 1992.
[7] Philippine Association of Service Exporters, Inc. v. Drilon 163 SCRA 386, 392 (1988).
[8] Id.
[9] Department Order No. 28 vests the EIAC with the following principal functions:
a) recommend to the DOLE policies, plans and programs for the development of the entertainment industry, local and
overseas, including but not limited to talents training and upgrading, employment standards and other internationally
acceptable trade practices;
b) promote ethical business standards and dignified workplaces;
c) act as the coordinating body for all training programs and technical assistance to the entertainment industry;
d) advise the DOLE on the institutionalization of an internationally acceptable system of manpower development, talent
protection and welfare;
e) assist the appropriate agencies, private or public in the implementation of a trainors and training and upgrading program;
f) review existing issuances on the industry including the system of training, testing and accreditation of performing
artists/talents and recommend to the Secretary such measures or schemes as are deemed necessary for its proper
compliance xxx xxx.
[10] The EIAC is chaired by an Undersecretary of Labor and is composed of 3 representatives from the government, 2
representatives from the employers' sector, one representative from the talent developers, 2 representatives from the workers'
sector and one representative from the Non-government Organizations.
[11] Id.
[12] Phil. Movie Workers' Assn. v. Premier Productions, Inc., 92 Phil. 8423 (1953); National Labor Union vs. Court of Industrial
Relations, 68 Phil. 732 (1939).
[13] Case vs. Board of Helath, 24 Phil. 250, 280 (1913).
[14] Ermita Malate Hotel and Motel Operators vs. City of Manila, 20 SCRA 849 (1967).
[15] Supra, note 6, at 397.
[16] Itchong, etc., et al. vs. Hernandez, 101 Phil. 1155 (1957).
[17] Villegas vs. Hiu Chiong Tsai Pao Ho, 86 SCRA 272 (1978).
G.R. No. L-119694 May 22, 1995
PHILIPPINE PRESS INSTITUTE, INC., for and in behalf of 139 members, represented by its President,
Amado P. Macasaet and its Executive Director Ermin F. Garcia, Jr., petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.
RESOLUTION
FELICIANO, J.:
The Philippine Press Institute, Inc. ("PPI") is before this Court assailing the constitutional validity of Resolution
No. 2772 issued by respondent Commission on Elections ("Comelec") and its corresponding Comelec directive
dated 22 March 1995, through a Petition for Certiorari and Prohibition. Petitioner PPI is a non-stock, non-profit
organization of newspaper and magazine publishers.
On 2 March 1995, Comelec promulgated Resolution No. 2772, which reads in part:
xxx xxx xxx
Sec. 2. Comelec Space. — The Commission shall procure free print space of not less than one half (1/2)
page in at least one newspaper of general circulation in every province or city for use as "Comelec
Space" from March 6, 1995 in the case of candidates for senator and from March 21, 1995 until May 12,
1995. In the absence of said newspaper, "Comelec Space" shall be obtained from any magazine or
periodical of said province or city.
Sec. 3. Uses of Comelec Space. — "Comelec Space" shall be allocated by the Commission, free of charge,
among all candidates within the area in which the newspaper, magazine or periodical is circulated to
enable the candidates to make known their qualifications, their stand on public issues and their platforms
and programs of government.
"Comelec Space" shall also be used by the Commission for dissemination of vital election information.
Sec. 4. Allocation of Comelec Space. — (a) "Comelec Space" shall also be available to
all candidates during the periods stated in Section 2 hereof. Its allocation shall be equal and impartial
among all candidates for the same office. All candidates concerned shall be furnished a copy of the
allocation of "Comelec Space" for their information, guidance and compliance.
(b) Any candidate desiring to avail himself of "Comelec Space" from newspapers or publications based in
the Metropolitan Manila Area shall submit an application therefor, in writing, to the Committee on Mass
Media of the Commission. Any candidate desiring to avail himself of "Comelec Space" in newspapers or
publications based in the provinces shall submit his application therefor, in writing, to the Provincial Election
Supervisor concerned. Applications for availment of "Comelec Space" maybe filed at any time from the
date of effectivity of this Resolution.
(c) The Committee on Mass Media and the Provincial Election Supervisors shall allocate
available "Comelec Space" among the candidates concerned by lottery of which said candidates shall be
notified in advance, in writing, to be present personally or by representative to witness the lottery at the
date, time and place specified in the notice. Any party objecting to the result of the lottery may appeal to the
Commission.
(d) The candidates concerned shall be notified by the Committee on Mass Media or the Provincial Election
Supervisor, as the case maybe, sufficiently in advance and in writing of the date of issue and the
newspaper or publication allocated to him, and the time within which he must submit the written material for
publication in the "Comelec Space".
xxx xxx xxx
Sec. 8. Undue Reference to Candidates/Political Parties in Newspapers. — No newspaper or publication
shall allow to be printed or published in the news, opinion, features, or other sections of the newspaper or
publication accounts or comments which manifestly favor or oppose any candidate or political party by
unduly or repeatedly referring to or including therein said candidate or political party. However, unless the
facts and circumstances clearly indicate otherwise, the Commission will respect the determination by the
publisher and/or editors of the newspapers or publications that the accounts or views published are
significant, newsworthy and of public interest. (Emphasis supplied)
Apparently in implementation of this Resolution, Comelec through Commissioner Regalado E. Maambong sent
identical letters, dated 22 March 1995, to various publishers of newspapers like the Business World,
the Philippine Star, the Malaya and the Philippine Times Journal, all members of PPI. These letters read as
follows:
This is to advise you that pursuant to Resolution No. 2772 of the Commission on Elections, you
are directed to provide free print space of not less than one half (1/2) page for use as "Comelec Space" or
similar to the print support which you have extended during the May 11, 1992 synchronized elections which
was 2 full pages for each political party fielding senatorial candidates, from March 6, 1995 to May 6, 1995,
to make known their qualifications, their stand on public issues and their platforms and programs of
government.
We shall be informing the political parties and candidates to submit directly to you their pictures,
biographical data, stand on key public issues and platforms of government either as raw data or in the form
of positives or camera-ready materials.
Please be reminded that the political parties/candidates may be accommodated in your publication any day
upon receipt of their materials until May 6, 1995 which is the last day for campaigning.
 We trust you to extend your full support and cooperation in this regard. (Emphasis supplied)
In this Petition for Certiorari and Prohibition with prayer for the issuance of a Temporary Restraining Order, PPI
asks us to declare Comelec Resolution No. 2772 unconstitutional and void on the ground that it violates the
prohibition imposed by the Constitution upon the government, and any of its agencies, against the taking of
private property for public use without just compensation. Petitioner also contends that the 22 March 1995 letter
directives of Comelec requiring publishers to give free "Comelec Space" and at the same time process raw data
to make it camera-ready, constitute impositions of involuntary servitude, contrary to the provisions of Section 18
(2), Article III of the 1987 Constitution. Finally, PPI argues that Section 8 of Comelec Resolution No. 2772 is
violative of the constitutionally guaranteed freedom of speech, of the press and of expression.1
On 20 April 1995, this Court issued a Temporary Restraining Order enjoining Comelec from enforcing and
implementing Section 2 of Resolution No. 2772, as well as the Comelec directives addressed to various print
media enterprises all dated 22 March 1995. The Court also required the respondent to file a Comment on the
Petition.
The Office of the Solicitor General filed its Comment on behalf of respondent Comelec alleging that Comelec
Resolution No. 2772 does not impose upon the publishers any obligation to provide free print space in the
newspapers as it does not provide any criminal or administrative sanction for non-compliance with that
Resolution. According to the Solicitor General, the questioned Resolution merely established guidelines to be
followed in connection with the procurement of "Comelec space," the procedure for and mode of allocation of
such space to candidates and the conditions or requirements for the candidate's utilization of the "Comelec
space" procured. At the same time, however, the Solicitor General argues that even if the questioned Resolution
and its implementing letter directives are viewed as mandatory, the same would nevertheless be valid as an
exercise of the police power of the State. The Solicitor General also maintains that Section 8 of Resolution No.
2772 is a permissible exercise of the power of supervision or regulation of the Comelec over the communication
and information operations of print media enterprises during the election period to safeguard and ensure a fair,
impartial and credible election.2
At the oral hearing of this case held on 28 April 1995, respondent Comelec through its Chairman, Hon. Bernardo
Pardo, in response to inquiries from the Chief Justice and other Members of the Court, stated that Resolution No.
2772, particularly Section 2 thereof and the 22 March 1995 letters dispatched to various members of petitioner
PPI, were not intended to compel those members to supply Comelec with free print space. Chairman Pardo
represented to the Court that Resolution and the related letter-directives were merely designed to solicit from the
publishers the same free print space which many publishers had voluntarily given to Comelec during the election
period relating to the 11 May 1992 elections. Indeed, the Chairman stated that the Comelec would, that very
afternoon, meet and adopt an appropriate amending or clarifying resolution, a certified true copy of which would
forthwith be filed with the Court.
On 5 May 1995, the Court received from the Office of the Solicitor General a manifestation which attached a copy
of Comelec Resolution No. 2772-A dated 4 May 1995. The operative portion of this Resolution follows:
NOW THEREFORE, pursuant to the powers vested in it by the Constitution, the Omnibus Election Code,
Republic Acts No. 6646 and 7166 and other election laws, the Commission on Elections RESOLVED to
clarify Sections 2 and 8 of Res. No. 2772 as follows:
1. Section 2 of Res. No. 2772 shall not be construed to mean as requiring publishers of the different
mass media print publications to provide print space under pain of prosecution, whether
administrative, civil or criminal, there being no sanction or penalty for violation of said Section
provided for either in said Resolution or in Section 90 of Batas Pambansa Blg. 881, otherwise known
as the Omnibus Election Code, on the grant of "Comelec space."
2. Section 8 of Res. No. 2772 shall not be construed to mean as constituting prior restraint on the part
of publishers with respect to the printing or publication of materials in the news, opinion, features or
other sections of their respective publications or other accounts or comments, it being clear from the
last sentence of said Section 8 that the Commission shall, "unless the facts and circumstances
clearly indicate otherwise . . . respect the determination by the publisher and/or editors of the
newspapers or publications that the accounts or views published are significant, newsworthy and of
public interest."
This Resolution shall take effect upon approval. (Emphasis in the original)
While, at this point, the Court could perhaps simply dismiss the Petition for Certiorari and Prohibition as having
become moot and academic, we consider it not inappropriate to pass upon the first constitutional issue raised in
this case. Our hope is to put this issue to rest and prevent its resurrection.
Section 2 of Resolution No. 2772 is not a model of clarity in expression. Section 1 of Resolution No. 2772-A did
not try to redraft Section 2; accordingly, Section 2 of Resolution No. 2772 persists in its original form. Thus, we
must point out that, as presently worded, and in particular as interpreted and applied by the Comelec itself in its
22 March 1995 letter-directives to newspaper publishers, Section 2 of Resolution No. 2772 is clearly susceptible
of the reading that petitioner PPI has given it. That Resolution No. 2772 does not, in express terms, threaten
publishers who would disregard it or its implementing letters with some criminal or other sanction, does not by
itself demonstrate that the Comelec's original intention was simply to solicit or request voluntary donations of print
space from publishers. A written communication officially directing a print media company to supply free print
space, dispatched by a government (here a constitutional) agency and signed by a member of the Commission
presumably legally authorized to do so, is bound to produce a coercive effect upon the company so addressed.
That the agency may not be legally authorized to impose, or cause the imposition of, criminal or other sanctions
for disregard of such directions, only aggravates the constitutional difficulties inhearing in the present situation.
The enactment or addition of such sanctions by the legislative authority itself would be open to serious
constitutional objection.
To compel print media companies to donate "Comelec-space" of the dimensions specified in Section 2 of
Resolution No. 2772 (not less than one-half page), amounts to "taking" of private personal property for public use
or purposes. Section 2 failed to specify the intended frequency of such compulsory "donation:" only once during
the period from 6 March 1995 (or 21 March 1995) until 12 May 1995? or everyday or once a week? or as often as
Comelec may direct during the same period? The extent of the taking or deprivation is not insubstantial; this is
not a case of a de minimistemporary limitation or restraint upon the use of private property. The monetary value
of the compulsory "donation," measured by the advertising rates ordinarily charged by newspaper publishers
whether in cities or in non-urban areas, may be very substantial indeed.
The taking of print space here sought to be effected may first be appraised under the rubric of expropriation of
private personal property for public use. The threshold requisites for a lawful taking of private property for public
use need to be examined here: one is the necessity for the taking; another is the legal authority to effect the
taking. The element of necessity for the taking has not been shown by respondent Comelec. It has not been
suggested that the members of PPI are unwilling to sell print space at their normal rates to Comelec for election
purposes. Indeed, the unwillingness or reluctance of Comelec to buy print space lies at the heart of the
problem. 3 Similarly, it has not been suggested, let alone demonstrated, that Comelec has been granted the
power of eminent domain either by the Constitution or by the legislative authority. A reasonable relationship
between that power and the enforcement and administration of election laws by Comelec must be shown; it is not
casually to be assumed.
That the taking is designed to subserve "public use" is not contested by petitioner PPI. We note only that, under
Section 3 of Resolution No. 2772, the free "Comelec space" sought by the respondent Commission would be
used not only for informing the public about the identities, qualifications and programs of government of
candidates for elective office but also for "dissemination of vital election information" (including, presumably,
circulars, regulations, notices, directives, etc. issued by Comelec). It seems to the Court a matter of judicial notice
that government offices and agencies (including the Supreme Court) simply purchase print space, in the ordinary
course of events, when their rules and regulations, circulars, notices and so forth need officially to be brought to
the attention of the general public.
The taking of private property for public use is, of course, authorized by the Constitution, but not without payment
of "just compensation" (Article III, Section 9). And apparently the necessity of paying compensation for "Comelec
space" is precisely what is sought to be avoided by respondent Commission, whether Section 2 of Resolution No.
2772 is read as petitioner PPI reads it, as an assertion of authority to require newspaper publishers to "donate"
free print space for Comelec purposes, or as an exhortation, or perhaps an appeal, to publishers to donate free
print space, as Section 1 of Resolution No. 2772-A attempts to suggest. There is nothing at all to prevent
newspaper and magazine publishers from voluntarily giving free print space to Comelec for the purposes
contemplated in Resolution No. 2772. Section 2 of Resolution No. 2772 does not, however, provide a
constitutional basis for compelling publishers, against their will, in the kind of factual context here present, to
provide free print space for Comelec purposes. Section 2 does not constitute a valid exercise of the power of
eminent domain.
We would note that the ruling here laid down by the Court is entirely in line with the theory of democratic
representative government. The economic costs of informing the general public about the qualifications and
programs of those seeking elective office are most appropriately distributed as widely as possible throughout our
society by the utilization of public funds, especially funds raised by taxation, rather than cast solely on one small
sector of society, i.e., print media enterprises. The benefits which flow from a heightened level of information on
and the awareness of the electoral process are commonly thought to be community-wide; the burdens should be
allocated on the same basis.
As earlier noted, the Solicitor General also contended that Section 2 of Resolution No. 2772, even if read as
compelling publishers to "donate" "Comelec space, " may be sustained as a valid exercise of the police power of
the state. This argument was, however, made too casually to require prolonged consideration on our part. Firstly,
there was no effort (and apparently no inclination on the part of Comelec) to show that the police power —
essentially a power of legislation — has been constitutionally delegated to respondent Commission.4 Secondly,
while private property may indeed be validly taken in the legitimate exercise of the police power of the state,
there was no attempt to show compliance in the instant case with the requisites of a lawful taking under the
police power. 5
Section 2 of Resolution No. 2772 is a blunt and heavy instrument that purports, without a showing of existence of
a national emergency or other imperious public necessity, indiscriminately and without regard to the individual
business condition of particular newspapers or magazines located in differing parts of the country, to take private
property of newspaper or magazine publishers. No attempt was made to demonstrate that a real and palpable or
urgent necessity for the taking of print space confronted the Comelec and that Section 2 of Resolution No. 2772
was itself the only reasonable and calibrated response to such necessity available to the Comelec. Section 2
does not constitute a valid exercise of the police power of the State.
We turn to Section 8 of Resolution No. 2772, which needs to be quoted in full again:
Sec. 8. Undue Reference to Candidates/Political Parties in Newspapers. — No newspaper or publication
shall allow to be printed or published in the news, opinion, features, or other sections of the newspaper or
publication accounts or comments which manifestly favor or oppose any candidate or political party by
unduly or repeatedly referring to or including therein said candidate or political party. However, unless the
facts and circumstances clearly indicate otherwise, the Commission will respect the determination by the
publisher and/or editors of the newspapers or publications that the accounts or views published are
significant, newsworthy and of public interest.
It is not easy to understand why Section 8 was included at all in Resolution No. 2772. In any case, Section 8
should be viewed in the context of our decision in National Press Club v. Commission on Elections. 6 There the
Court sustained the constitutionality of Section 11 (b) of R.A. No. 6646, known as the Electoral Reforms Law of
1987, which prohibits the sale or donation of print space and airtime for campaign or other political purposes,
except to the Comelec. In doing so, the Court carefully distinguished (a) paid political advertisements which are
reached by the prohibition of Section 11 (b), from (b) the reporting of news, commentaries and expressions of
belief or opinion by reporters, broadcasters, editors, commentators or columnists which fall outside the scope of
Section 11 (b) and which are protected by the constitutional guarantees of freedom of speech and of the press:
Secondly, and more importantly, Section 11 (b) is limited in its scope of application. Analysis of Section 11
(b) shows that it purports to apply only to the purchase and sale, including purchase and sale disguised as
a donation, of print space and air time for campaign or other political purposes. Section 11 (b) does not
purport in any way to restrict the reporting by newspapers or radio or television stations of news or news-
worthy events relating to candidates, their qualifications, political parties and programs of government.
Moreover, Section 11 (b) does not reach commentaries and expressions of belief or opinion by reporters or
broadcaster or editors or commentators or columnists in respect of candidates, their qualifications, and
programs and so forth, so long at least as such comments, opinions and beliefs are not in fact
 advertisements for particular candidates covertly paid for. In sum, Section 11 (b) is not to be read as
reaching any report or commentary or other coverage that, in responsible media, is not paid for by
candidates for political office. We read Section 11 (b) as designed to cover only paid political
advertisements of particular candidates.
The above limitation in scope of application of Section 11 (b) — that it does not restrict either the reporting
of or the expression of belief or opinion or comment upon the qualifications and programs and activities of
any and all candidates for office — constitutes the critical distinction which must be made between the
instant case and that of Sanidad v. Commission on Elections. . . . 7 (Citations omitted; emphasis supplied)
Section 8 of Resolution No. 2772 appears to represent the effort of the Comelec to establish a guideline for
implementation of the above-quoted distinction and doctrine in National Press Club an effort not blessed with
evident success. Section 2 of Resolution No. 2772-A while possibly helpful, does not add substantially to the
utility of Section 8 of Resolution No. 2772. The distinction between paid political advertisements on the one hand
and news reports, commentaries and expressions of belief or opinion by reporters, broadcasters, editors, etc. on
the other hand, can realistically be given operative meaning only in actual cases or controversies, on a case-to-
case basis, in terms of very specific sets of facts.
At all events, the Court is bound to note that PPI has failed to allege any specific affirmative action on the part of
Comelec designed to enforce or implement Section 8. PPI has not claimed that it or any of its members has
sustained actual or imminent injury by reason of Comelec action under Section 8. Put a little differently, the Court
considers that the precise constitutional issue here sought to be raised — whether or not Section 8 of Resolution
No. 2772 constitutes a permissible exercise of the Comelec's power under Article IX, Section 4 of the
Constitution to
supervise or regulate the enjoyment or utilization of all franchise or permits for the operation of — media of
communication or information — [for the purpose of ensuring] equal opportunity, time and space, and the
right of reply, including reasonable, equal rates therefore, for public information campaigns and forums
among candidates in connection with the objective of holding free, orderly honest, peaceful and credible
elections —
is not ripe for judicial review for lack of an actual case or controversy involving, as the very lis mota thereof, the
constitutionality of Section 8.
Summarizing our conclusions:
1. Section 2 of Resolution No. 2772, in its present form and as interpreted by Comelec in its 22 March 1995 letter
directives, purports to require print media enterprises to "donate" free print space to Comelec. As such, Section 2
suffers from a fatal constitutional vice and must be set aside and nullified.
2. To the extent it pertains to Section 8 of Resolution No. 2772, the Petition for Certiorari and Prohibition must be
dismissed for lack of an actual, justiciable case or controversy.
WHEREFORE, for all the foregoing, the Petition for Certiorari and Prohibition is GRANTED in part and Section 2
of Resolution No. 2772 in its present form and the related letter-directives dated 22 March 1995 are hereby SET
ASIDE as null and void, and the Temporary Restraining Order is hereby MADE PERMANENT. The Petition is
DISMISSED in part, to the extent it relates to Section 8 of Resolution No. 2772. No pronouncement as to costs.
Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza and
Francisco, JJ., concur.
Quiason, J., is on leave.
Footnotes
1 Petition, pp. 6-11; Rollo, pp. 7-12.
2 Comment, pp. 5-15; Rollo, pp. 70-80.
3 As I.A. Cruz, Constitutional Law, p. 59 (1991 ed.), citing Noble v. City of Manila, 67 Phil. 1 (1938), stressed:
[w]here private properties needed for conversion to some public use, the first thing obviously that the
government should do is to offer to buy it. If the owner is willing to sell and the parties can agree on the price
and the other conditions of the sale, a voluntary transaction can then be concluded and the transfer effected
without the necessity of judicial action.
But if the owner of the private property is unwilling to part with it, or, being willing, cannot agree to the
conditions of the transfer, then it will be necessary for the government to use its coercive authority. By its power
of eminent domain, it can then, upon payment of just compensation, forcibly acquire the needed property in
order to devote it to the intended public use. (Emphases supplied)
4 See, in this connection, Cruz, surpra note 3 at pp. 44-45. The police power may be delegated by the
legislative authority to local governments under the general welfare clause (Section 16, R.A. No. 7160, "Local
Government Code of 1991"), to the President and administrative agencies. See also Binay v. Domingo, 201
SCRA 508 (1991); Philippine Association of Service Exporters, Inc. v. Drilon, 163 SCRA 386 (1988); Villacosta
v. Bernardo, 143 SCRA 480 (1986).
5 See National Development Company v. Philippine Veterans Bank, 192 SCRA 257 (1990); Association of
Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, 175 SCRA 343 (1989).
6 207 SCRA 1 (1992).
7 207 SCRA at 10-11.
G.R. No. L-34915 June 24, 1983
CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON CITY, petitioners,
vs.
HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Instance of Rizal, Quezon City, Branch
XVIII; HIMLAYANG PILIPINO, INC., respondents.
City Fiscal for petitioners.
Manuel Villaruel, Jr. and Feliciano Tumale for respondents.
GUTIERREZ, JR., J.:
This is a petition for review which seeks the reversal of the decision of the Court of First Instance of Rizal, Branch
XVIII declaring Section 9 of Ordinance No. 6118, S-64, of the Quezon City Council null and void.
Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING THE ESTABLISHMENT,
MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL GROUND
WITHIN THE JURISDICTION OF QUEZON CITY AND PROVIDING PENALTIES FOR THE VIOLATION
THEREOF" provides:
Sec. 9. At least six (6) percent of the total area of the memorial park cemetery shall be set aside for charity
burial of deceased persons who are paupers and have been residents of Quezon City for at least 5 years
prior to their death, to be determined by competent City Authorities. The area so designated shall
immediately be developed and should be open for operation not later than six months from the date of
approval of the application.
For several years, the aforequoted section of the Ordinance was not enforced by city authorities but seven years
after the enactment of the ordinance, the Quezon City Council passed the following resolution:
RESOLVED by the council of Quezon assembled, to request, as it does hereby request the City Engineer,
Quezon City, to stop any further selling and/or transaction of memorial park lots in Quezon City where the
owners thereof have failed to donate the required 6% space intended for paupers burial.
Pursuant to this petition, the Quezon City Engineer notified respondent Himlayang Pilipino, Inc. in writing that
Section 9 of Ordinance No. 6118, S-64 would be enforced
Respondent Himlayang Pilipino reacted by filing with the Court of First Instance of Rizal Branch XVIII at Quezon
City, a petition for declaratory relief, prohibition and mandamus with preliminary injunction (Sp. Proc. No. Q-
16002) seeking to annul Section 9 of the Ordinance in question The respondent alleged that the same is contrary
to the Constitution, the Quezon City Charter, the Local Autonomy Act, and the Revised Administrative Code.
There being no issue of fact and the questions raised being purely legal both petitioners and respondent agreed
to the rendition of a judgment on the pleadings. The respondent court, therefore, rendered the decision declaring
Section 9 of Ordinance No. 6118, S-64 null and void.
A motion for reconsideration having been denied, the City Government and City Council filed the instant petition.
Petitioners argue that the taking of the respondent's property is a valid and reasonable exercise of police power
and that the land is taken for a public use as it is intended for the burial ground of paupers. They further argue
that the Quezon City Council is authorized under its charter, in the exercise of local police power, " to make such
further ordinances and resolutions not repugnant to law as may be necessary to carry into effect and discharge
the powers and duties conferred by this Act and such as it shall deem necessary and proper to provide for the
health and safety, promote the prosperity, improve the morals, peace, good order, comfort and convenience of
the city and the inhabitants thereof, and for the protection of property therein."
On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking or confiscation of property is
obvious because the questioned ordinance permanently restricts the use of the property such that it cannot be
used for any reasonable purpose and deprives the owner of all beneficial use of his property.
The respondent also stresses that the general welfare clause is not available as a source of power for the taking
of the property in this case because it refers to "the power of promoting the public welfare by restraining and
regulating the use of liberty and property." The respondent points out that if an owner is deprived of his property
outright under the State's police power, the property is generally not taken for public use but is urgently and
summarily destroyed in order to promote the general welfare. The respondent cites the case of a nuisance per se
or the destruction of a house to prevent the spread of a conflagration.
We find the stand of the private respondent as well as the decision of the respondent Judge to be well-founded.
We quote with approval the lower court's ruling which declared null and void Section 9 of the questioned city
ordinance:
The issue is: Is Section 9 of the ordinance in question a valid exercise of the police power?
An examination of the Charter of Quezon City (Rep. Act No. 537), does not reveal any provision that would
justify the ordinance in question except the provision granting police power to the City. Section 9 cannot be
justified under the power granted to Quezon City to tax, fix the license fee, and regulate such other
business, trades, and occupation as may be established or practised in the City.' (Subsections 'C', Sec. 12,
R.A. 537).
The power to regulate does not include the power to prohibit (People vs. Esguerra, 81 PhiL 33, Vega vs.
Municipal Board of Iloilo, L-6765, May 12, 1954; 39 N.J. Law, 70, Mich. 396). A fortiori, the power to
regulate does not include the power to confiscate. The ordinance in question not only confiscates but also
prohibits the operation of a memorial park cemetery, because under Section 13 of said ordinance, 'Violation
of the provision thereof is punishable with a fine and/or imprisonment and that upon conviction thereof the
permit to operate and maintain a private cemetery shall be revoked or cancelled.' The confiscatory clause
 and the penal provision in effect deter one from operating a memorial park cemetery. Neither can the
ordinance in question be justified under sub- section "t", Section 12 of Republic Act 537 which authorizes
the City Council to-
'prohibit the burial of the dead within the center of population of the city and provide for their burial in
such proper place and in such manner as the council may determine, subject to the provisions of the
general law regulating burial grounds and cemeteries and governing funerals and disposal of the
dead.' (Sub-sec. (t), Sec. 12, Rep. Act No. 537).
There is nothing in the above provision which authorizes confiscation or as euphemistically termed by the
respondents, 'donation'
We now come to the question whether or not Section 9 of the ordinance in question is a valid exercise of
police power. The police power of Quezon City is defined in sub-section 00, Sec. 12, Rep. Act 537 which
reads as follows:
(00) To make such further ordinance and regulations not repugnant to law as may be necessary to
carry into effect and discharge the powers and duties conferred by this act and such as it shall deem
necessary and proper to provide for the health and safety, promote, the prosperity, improve the
morals, peace, good order, comfort and convenience of the city and the inhabitants thereof, and for
the protection of property therein; and enforce obedience thereto with such lawful fines or penalties
as the City Council may prescribe under the provisions of subsection (jj) of this section.
We start the discussion with a restatement of certain basic principles. Occupying the forefront in the bill of rights
is the provision which states that 'no person shall be deprived of life, liberty or property without due process of
law' (Art. Ill, Section 1 subparagraph 1, Constitution).
On the other hand, there are three inherent powers of government by which the state interferes with the property
rights, namely-. (1) police power, (2) eminent domain, (3) taxation. These are said to exist independently of the
Constitution as necessary attributes of sovereignty.
Police power is defined by Freund as 'the power of promoting the public welfare by restraining and
regulating the use of liberty and property' (Quoted in Political Law by Tanada and Carreon, V-11, p. 50). It
is usually exerted in order to merely regulate the use and enjoyment of property of the owner. If he is
deprived of his property outright, it is not taken for public use but rather to destroy in order to promote the
general welfare. In police power, the owner does not recover from the government for injury sustained in
consequence thereof (12 C.J. 623). It has been said that police power is the most essential of government
powers, at times the most insistent, and always one of the least limitable of the powers of government
(Ruby vs. Provincial Board, 39 PhiL 660; Ichong vs. Hernandez, 1,7995, May 31, 1957). This power
embraces the whole system of public regulation (U.S. vs. Linsuya Fan, 10 PhiL 104). The Supreme Court
has said that police power is so far-reaching in scope that it has almost become impossible to limit its
sweep. As it derives its existence from the very existence of the state itself, it does not need to be
expressed or defined in its scope. Being coextensive with self-preservation and survival itself, it is the most
positive and active of all governmental processes, the most essential insistent and illimitable Especially it is
so under the modern democratic framework where the demands of society and nations have multiplied to
almost unimaginable proportions. The field and scope of police power have become almost boundless, just
as the fields of public interest and public welfare have become almost all embracing and have transcended
human foresight. Since the Courts cannot foresee the needs and demands of public interest and welfare,
they cannot delimit beforehand the extent or scope of the police power by which and through which the
state seeks to attain or achieve public interest and welfare. (Ichong vs. Hernandez, L-7995, May 31, 1957).
The police power being the most active power of the government and the due process clause being the broadest
station on governmental power, the conflict between this power of government and the due process clause of the
Constitution is oftentimes inevitable.
It will be seen from the foregoing authorities that police power is usually exercised in the form of mere regulation
or restriction in the use of liberty or property for the promotion of the general welfare. It does not involve the
taking or confiscation of property with the exception of a few cases where there is a necessity to confiscate
private property in order to destroy it for the purpose of protecting the peace and order and of promoting the
general welfare as for instance, the confiscation of an illegally possessed article, such as opium and firearms.
It seems to the court that Section 9 of Ordinance No. 6118, Series of 1964 of Quezon City is not a mere
police regulation but an outright confiscation. It deprives a person of his private property without due
process of law, nay, even without compensation.
In sustaining the decision of the respondent court, we are not unmindful of the heavy burden shouldered by
whoever challenges the validity of duly enacted legislation whether national or local As early as 1913, this Court
ruled in Case v. Board of Health (24 PhiL 250) that the courts resolve every presumption in favor of validity and,
more so, where the ma corporation asserts that the ordinance was enacted to promote the common good and
general welfare.
In the leading case of Ermita-Malate Hotel and Motel Operators Association Inc. v. City Mayor of Manila (20
SCRA 849) the Court speaking through the then Associate Justice and now Chief Justice Enrique M. Fernando
stated
Primarily what calls for a reversal of such a decision is the a of any evidence to offset the presumption of
validity that attaches to a statute or ordinance. As was expressed categorically by Justice Malcolm 'The
presumption is all in favor of validity. ... The action of the elected representatives of the people cannot be
lightly set aside. The councilors must, in the very nature of things, be familiar with the necessities of their
particular ... municipality and with all the facts and lances which surround the subject and necessitate
action. The local legislative body, by enacting the ordinance, has in effect given notice that the regulations
are essential to the well-being of the people. ... The Judiciary should not lightly set aside legislative action
when there is not a clear invasion of personal or property rights under the guise of police regulation. (U.S.
v. Salaveria (1918], 39 Phil. 102, at p. 111. There was an affirmation of the presumption of validity of
municipal ordinance as announced in the leading Salaveria decision in Ebona v. Daet, [1950]85 Phil. 369.)
 We have likewise considered the principles earlier stated in Case v. Board of Health supra : the questioned ordinance was passed after Himlayang Pilipino, Inc. had incorporated. received necessary
licenses and permits and commenced operating. The sequestration of six percent of the cemetery cannot even
... Under the provisions of municipal charters which are known as the general welfare clauses, a city, by be considered as having been impliedly acknowledged by the private respondent when it accepted the permits to
virtue of its police power, may adopt ordinances to the peace, safety, health, morals and the best and commence operations.
highest interests of the municipality. It is a well-settled principle, growing out of the nature of well-ordered
and society, that every holder of property, however absolute and may be his title, holds it under the implied WHEREFORE, the petition for review is hereby DISMISSED. The decision of the respondent court is affirmed.
liability that his use of it shall not be injurious to the equal enjoyment of others having an equal right to the
enjoyment of their property, nor injurious to the rights of the community. An property in the state is held SO ORDERED.
subject to its general regulations, which are necessary to the common good and general welfare. Rights of
property, like all other social and conventional rights, are subject to such reasonable limitations in their
Teehankee (Chairman), Melencio-Herrera, Plana, Vasquez and Relova, JJ., concur.
enjoyment as shall prevent them from being injurious, and to such reasonable restraints and regulations,
established by law, as the legislature, under the governing and controlling power vested in them by the
constitution, may think necessary and expedient. The state, under the police power, is possessed with
plenary power to deal with all matters relating to the general health, morals, and safety of the people, so
long as it does not contravene any positive inhibition of the organic law and providing that such power is
not exercised in such a manner as to justify the interference of the courts to prevent positive wrong and
oppression.

but find them not applicable to the facts of this case.

There is no reasonable relation between the setting aside of at least six (6) percent of the total area of an private
cemeteries for charity burial grounds of deceased paupers and the promotion of health, morals, good order,
safety, or the general welfare of the people. The ordinance is actually a taking without compensation of a certain
area from a private cemetery to benefit paupers who are charges of the municipal corporation. Instead of building
or maintaining a public cemetery for this purpose, the city passes the burden to private cemeteries.

The expropriation without compensation of a portion of private cemeteries is not covered by Section 12(t) of
Republic Act 537, the Revised Charter of Quezon City which empowers the city council to prohibit the burial of
the dead within the center of population of the city and to provide for their burial in a proper place subject to the
provisions of general law regulating burial grounds and cemeteries. When the Local Government Code, Batas
Pambansa Blg. 337 provides in Section 177 (q) that a Sangguniang panlungsod may "provide for the burial of the
dead in such place and in such manner as prescribed by law or ordinance" it simply authorizes the city to provide
its own city owned land or to buy or expropriate private properties to construct public cemeteries. This has been
the law and practise in the past. It continues to the present. Expropriation, however, requires payment of just
compensation. The questioned ordinance is different from laws and regulations requiring owners of subdivisions
to set aside certain areas for streets, parks, playgrounds, and other public facilities from the land they sell to
buyers of subdivision lots. The necessities of public safety, health, and convenience are very clear from said
requirements which are intended to insure the development of communities with salubrious and wholesome
environments. The beneficiaries of the regulation, in turn, are made to pay by the subdivision developer when
individual lots are sold to home-owners.

As a matter of fact, the petitioners rely solely on the general welfare clause or on implied powers of the municipal
corporation, not on any express provision of law as statutory basis of their exercise of power. The clause has
always received broad and liberal interpretation but we cannot stretch it to cover this particular taking. Moreover,
[G.R. No. 148339. February 23, 2005]
LUCENA GRAND CENTRAL TERMINAL, INC., petitioner, vs. JAC LINER, INC., respondent.
DECISION
CARPIO MORALES, J.:
Respondent, JAC Liner, Inc., a common carrier operating buses which ply various routes to and from Lucena
City, assailed, via a petition for prohibition and injunction[1] against the City of Lucena, its Mayor, and the
Sangguniang Panlungsod of Lucena before the Regional Trial Court (RTC) of Lucena City, City Ordinance Nos.
1631 and 1778 as unconstitutional on the ground that, inter alia, the same constituted an invalid exercise of police
power, an undue taking of private property, and a violation of the constitutional prohibition against monopolies. The
salient provisions of the ordinances are:
Ordinance No. 1631[2]
AN ORDINANCE GRANTING THE LUCENA GRAND CENTRAL TERMINAL, INC., A FRANCHISE TO
CONSTRUCT, FINANCE, ESTABLISH, OPERATE AND MAINTAIN A COMMON BUS-JEEPNEY TERMINAL
FACILITY IN THE CITY OF LUCENA
SECTION 1. There is hereby granted to the Lucena Grand Central Terminal, Inc., its successors or assigns,
hereinafter referred to as the grantee, a franchise to construct, finance, establish, operate, and maintain a
common bus-jeepney terminal facility in the City of Lucena.
SECTION 2. This franchise shall continue for a period of twenty-five years, counted from the approval of this
Ordinance, and renewable at the option of the grantee for another period of twenty-five (25) years upon such
expiration.
SECTION 4. Responsibilities and Obligations of the City Government of Lucena. During the existence of the
franchise, the City Government of Lucena shall have the following responsibilities and obligations:
(c) It shall not grant any third party any privilege and/or concession to operate a bus, mini-bus and/or jeepney
terminal.
Ordinance No. 1778[3]
AN ORDINANCE REGULATING THE ENTRANCE TO THE CITY OF LUCENA OF ALL BUSES, MINI-BUSES
AND OUT-OF-TOWN PASSENGER JEEPNEYS AND FOR THIS PURPOSE, AMENDING ORDINACE NO.
1420, SERIES OF 1993, AND ORDINANCE NO. 1557, SERIES OF 1995
SECTION 1. The entrance to the City of Lucena of all buses, mini-buses and out-of-town passenger jeepneys is
hereby regulated as follows:
(a) All buses, mini-buses and out-of-town passenger jeepneys shall be prohibited from entering the city and
are hereby directed to proceed to the common terminal, for picking-up and/or dropping of their passengers.
(b) All temporary terminals in the City of Lucena are hereby declared inoperable starting from the effectivity of
this ordinance.
SECTION 3. a) Section 1 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:
Buses, mini-buses, and jeepney type mini-buses from other municipalities and/or local government units going to
Lucena City are directed to proceed to the Common Terminal located at Diversion Road, Brgy. Ilayang Dupay, to
unload and load passengers.
c) Section 3 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:
Passenger buses, mini-buses, and jeepney type mini-buses coming from other municipalities and/or local
government units shall utilize the facilities of the Lucena Grand Central Terminal at Diversion Road, Brgy. Ilayang
Dupay, this City, and no other terminals shall be situated inside or within the City of Lucena;
d) Section 4 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:
Passenger buses, mini-buses, and jeepney type mini-buses coming from other municipalities and/or local
government units shall avail of the facilities of the Lucena Grand Central Terminal which is hereby designated as
the officially sanctioned common terminal for the City of Lucena;
e) Section 5 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:
The Lucena Grand Central Terminal is the permanent common terminal as this is the entity which was gi
ven the exclusive franchise by the Sangguniang Panglungsod under Ordinance No. 1631;(Emphasis and
underscoring supplied)
These ordinances, by granting an exclusive franchise for twenty five years, renewable for another twenty five
years, to one entity for the construction and operation of one common bus and jeepney terminal facility in Lucena
City, to be located outside the city proper, were professedly aimed towards alleviating the traffic congestion alleged
to have been caused by the existence of various bus and jeepney terminals within the city, as the Explanatory
Note-Whereas Clause adopting Ordinance No. 1778 states:
WHEREAS, in line with the worsening traffic condition of the City of Lucena, and with the purpose of easing and
regulating the flow of the same, it is imperative that the Buses, Mini-Buses and out-of-town jeepneys be
prohibited from maintaining terminals within the City, but instead directing to proceed to the Lucena Grand
Central Terminal for purposes of picking-up and/or dropping off their passengers;[4]
Respondent, who had maintained a terminal within the city, was one of those affected by the ordinances.
 Petitioner, Lucena Grand Central Terminal, Inc., claiming legal interest as the grantee of the exclusive
franchise for the operation of the common terminal,[5] was allowed to intervene in the petition before the trial court.
In the hearing conducted on November 25, 1998, all the parties agreed to dispense with the presentation of
evidence and to submit the case for resolution solely on the basis of the pleadings filed.[6]
By Order of March 31, 1999,[7] Branch 54 of the Lucena RTC rendered judgment, the dispositive portion of
which reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered, as follows:
1. Declaring City Ordinance No. 1631 as valid, having been issued in the exercise of the police power of the City
Government of Lucena insofar as the grant of franchise to the Lucena Grand Central Terminal, Inc., to construct,
finance, establish, operate and maintain common bus-jeepney terminal facility in the City of Lucena;
2. But however, declaring the provision of Sec. 4(c) of Ordinance No. 1631 to the effect that the City Government
shall not grant any third party any privilege and/or concession to operate a bus, mini-bus and/or jeepney terminal,
as illegal and ultra vires because it contravenes the provisions of Republic Act No. 7160, otherwise known as
The Local Government Code;
3. Declaring City Ordinance No. 1778 as null and void, the same being also an ultra vires act of the City
Government of Lucena arising from an invalid, oppressive and unreasonable exercise of the police power, more
specifically, declaring illegal [sections 1(b), 3(c) and 3(e)];
4. Ordering the issuance of a Writ of Prohibition and/or Injunction directing the respondents public officials, the
City Mayor and the Sangguniang Panglungsod of Lucena, to cease and desist from implementing Ordinance
No. 1778 insofar as said ordinance prohibits or curtails petitioner from maintaining and operating its own
bus terminal subject to the conditions provided for in Ordinance No. 1557, Sec. 3, which authorizes the
construction of terminal outside the poblacion of Lucena City; and likewise, insofar as said ordinance directs
and compels the petitioner to use the Lucena Grand Central Terminal Inc., and furthermore, insofar as it
declares that no other terminals shall be situated, constructed, maintained or established inside or within
the City of Lucena; and furthermore,
5. The Motion to Dismiss filed by the Intervenor, Lucena Grand Central Terminal Inc., dated October 19, 1998, is
hereby DENIED for lack of merit.
SO ORDERED. (Emphasis and underscoring supplied)[8]
Petitioners Motion for Reconsideration[9] of the trial courts order having been denied by Order of August 6,
1999,[10]it elevated it via petition for review under Rule 45 before this Court.[11] This Court, by Resolution of
November 24, 1999,[12] referred the petition to the Court of Appeals with which it has concurrent jurisdiction, no
special and important reason having been cited for it to take cognizance thereof in the first instance.
By Decision of December 15, 2000,[13] the appellate court dismissed the petition and affirmed the challenged
orders of the trial court. Its motion for reconsideration[14] having been denied by the appellate court by Resolution
dated June 5, 2001,[15] petitioner once again comes to this Court via petition for review,[16] this time assailing the
Decision and Resolution of the Court of Appeals.
Decision on the petition hinges on two issues, to wit: (1) whether the trial court has jurisdiction over the case,
it not having furnished the Office of the Solicitor General copy of the orders it issued therein, and (2) whether the
City of Lucena properly exercised its police power when it enacted the subject ordinances.
Petitioner argues that since the trial court failed to serve a copy of its assailed orders upon the Office of the
Solicitor General, it never acquired jurisdiction over the case, it citing Section 22, Rule 3 of the Rules which
provides:
SEC. 22. Notice to the Solicitor General.In any action involving the validity of any treaty, law, ordinance,
executive order, presidential decree, rules or regulations, the court in its discretion, may require the appearance
of the Solicitor General who may be heard in person or through representative duly designated by him.
(Emphasis and underscoring supplied)
Furthermore, petitioner invokes Sections 3 and 4 of Rule 63 which respectively provide:
SEC. 3. Notice on Solicitor General. In any action which involves the validity of a statute, executive order or
regulation, or any other governmental regulation, the Solicitor General shall be notified by the party assailing the
same and shall be entitled to be heard upon such question.
SEC. 4. Local government ordinances. In any action involving the validity of a local government ordinance, the
corresponding prosecutor or attorney of the local government unit involved shall be similarly notified and entitled
to be heard. If such ordinance is alleged to be unconstitutional, the Solicitor General shall also be notified and
entitled to be heard. (Emphasis and underscoring supplied)
Nowhere, however, is it stated in the above-quoted rules that failure to notify the Solicitor General about the
action is a jurisdictional defect.
In fact, Rule 3, Section 22 gives the courts in any action involving the validity of any ordinance, inter
alia, discretion to notify the Solicitor General.
Section 4 of Rule 63, which more specifically deals with cases assailing the constitutionality, not just the
validity, of a local government ordinance, directs that the Solicitor General shall also be notified and entitled to be
heard. Who will notify him, Sec. 3 of the same rule provides it is the party which is assailing the local governments
ordinance.
More importantly, however, this Court finds that no procedural defect, fatal or otherwise, attended the
disposition of the case. For respondent actually served a copy of its petition upon the Office of the Solicitor General
on October 1, 1998, two days after it was filed. The Solicitor General has issued a Certification to that
effect.[17] There was thus compliance with above-quoted rules.
 Respecting the issue of whether police power was properly exercised when the subject ordinances were
enacted: As with the State, the local government may be considered as having properly exercised its police power
only if the following requisites are met: (1) the interests of the public generally, as distinguished from those of a
particular class, require the interference of the State, and (2) the means employed are reasonably necessary for
the attainment of the object sought to be accomplished and not unduly oppressive upon individuals. Otherwise
stated, there must be a concurrence of a lawful subject and lawful method.[18]
That traffic congestion is a public, not merely a private, concern, cannot be gainsaid. In Calalang v.
Williams[19] which involved a statute authorizing the Director of Public Works to promulgate rules and regulations
to regulate and control traffic on national roads, this Court held:
In enacting said law, therefore, the National Assembly was prompted by considerations of public convenience
and welfare. It was inspired by a desire to relieve congestion of traffic, which is, to say the least, a menace to
public safety. Public welfare, then, lies at the bottom of the enactment of said law, and the state in order to
promote the general welfare may interfere with personal liberty, with property, and with business and
occupations.[20] (Emphasis supplied)
The questioned ordinances having been enacted with the objective of relieving traffic congestion in the City
of Lucena, they involve public interest warranting the interference of the State. The first requisite for the proper
exercise of police power is thus present.
Respondents suggestion to have this Court look behind the explicit objective of the ordinances which, to it,
was actually to benefit the private interest of petitioner by coercing all bus operators to patronize its terminal does
not lie.[21] Lim v. Pacquing[22] instructs:
. . . [T]his Court cannot look into allegations that PD No. 771 was enacted to benefit a select group which was
later given authority to operate the jai-alai under PD No. 810. The examination of legislative motivation is
generally prohibited. (Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438 [1971] per Black, J.) There is, in the
first place, absolute lack of evidence to support ADCs allegation of improper motivation in the issuance of PD No.
771. In the second place, as already averred, this Court cannot go behind the expressed and proclaimed
purposes of PD No. 771, which are reasonable and even laudable. (Underscoring supplied) [23]
This leaves for determination the issue of whether the means employed by the Lucena Sangguniang
Panlungsod to attain its professed objective were reasonably necessary and not unduly oppressive upon
individuals.
With the aim of localizing the source of traffic congestion in the city to a single location, [24] the subject
ordinances prohibit the operation of all bus and jeepney terminals within Lucena, including those already existing,
and allow the operation of only one common terminal located outside the city proper, the franchise for which was
granted to petitioner. The common carriers plying routes to and from Lucena City are thus compelled to close down
their existing terminals and use the facilities of petitioner.
In De la Cruz v. Paras,[25] this Court declared unconstitutional an ordinance characterized by overbreadth. In
that case, the Municipality of Bocaue, Bulacan prohibited the operation of all night clubs, cabarets and dance halls
within its jurisdiction for the protection of public morals. Held the Court:
It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could qualify under the term re
asonable. The objective of fostering public morals, a worthy and desirable end can be attainedby a measure that
does not encompass too wide a field. Certainly the ordinance on its face is characterized by overbreadth. The pur
pose sought to be achieved could have been attained by reasonablerestrictions rather than by an absolute prohib
ition. The admonition in Salaveria should be heeded: The Judiciary should not lightly set aside legislative action
when there is not a clear invasion of personal or property rights under the guise of police regulation. It is clear
that in the guise of a police regulation, there was in this instance a clear invasion of personal or property rights,
personal in the case of those individuals desirous of patronizing those night clubs and property in terms of the
investments made and salaries to be earned by those therein employed. (Underscoring supplied) [26]
In Lupangco v. Court of Appeals,[27] this Court, in declaring unconstitutional the resolution subject thereof,
advanced a similar consideration. That case involved a resolution issued by the Professional Regulation
Commission which prohibited examinees from attending review classes and receiving handout materials, tips, and
the like three days before the date of examination in order to preserve the integrity and purity of the licensure
examinations in accountancy. Besides being unreasonable on its face and violative of academic freedom, the
measure was found to be more sweeping than what was necessary, viz:
Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged leakages in the
licensure examinations will be eradicated or at least minimized. Making the examinees suffer by depriving them
of legitimate means of review or preparation on those last three precious days when they should be refreshing
themselves with all that they have learned in the review classes and preparing their mental and psychological
make-up for the examination day itself would be like uprooting the tree to get rid of a rotten branch. What is
needed to be done by the respondent is to find out the source of such leakages and stop it right there. If
corrupt officials or personnel should be terminated from their loss, then so be it. Fixers or swindlers should be
flushed out. Strict guidelines to be observed by examiners should be set up and if violations are committed, then
licenses should be suspended or revoked. x x x (Emphasis and underscoring supplied) [28]
As in De la Cruz[29] and Lupangco,[30] the ordinances assailed herein are characterized by overbreadth. They
go beyond what is reasonably necessary to solve the traffic problem. Additionally, since the compulsory use of the
terminal operated by petitioner would subject the users thereof to fees, rentals and charges, such measure is
unduly oppressive, as correctly found by the appellate court. [31] What should have been done was to determine
exactly where the problem lies and then to stop it right there.
The true role of Constitutional Law is to effect an equilibrium between authority and liberty so that rights are
exercised within the framework of the law and the laws are enacted with due deference to rights. (Underscoring
supplied)[32]
A due deference to the rights of the individual thus requires a more careful formulation of solutions to societal
problems.
From the memorandum[33] filed before this Court by petitioner, it is gathered that the Sangguniang
Panlungsod had identified the cause of traffic congestion to be the indiscriminate loading and unloading of
passengers by buses on the streets of the city proper, hence, the conclusion that the terminals contributed to the
proliferation of buses obstructing traffic on the city streets.
 Bus terminals per se do not, however, impede or help impede the flow of traffic. How the outright proscription In Pampanga Bus Co., Inc. v. Municipality of Tarlac[39] where the appellant-municipality similarly argued that
against the existence of all terminals, apart from that franchised to petitioner, can be considered as reasonably the terminal involved therein is a nuisance that may be abated by the Municipal Council via an ordinance, this Court
necessary to solve the traffic problem, this Court has not been enlightened. If terminals lack adequate space such held: Suffice it to say that in the abatement of nuisances the provisions of the Civil Code (Articles 694-707) must
that bus drivers are compelled to load and unload passengers on the streets instead of inside the terminals, then be observed and followed. This appellant failed to do.
reasonable specifications for the size of terminals could be instituted, with permits to operate the same denied
those which are unable to meet the specifications. As for petitioners claim that the challenged ordinances have actually been proven effective in easing traffic
congestion: Whether an ordinance is effective is an issue different from whether it is reasonably necessary. It is
In the subject ordinances, however, the scope of the proscription against the maintenance of terminals is so its reasonableness, not its effectiveness, which bears upon its constitutionality. If the constitutionality of a law were
broad that even entities which might be able to provide facilities better than the franchised terminal are barred from measured by its effectiveness, then even tyrannical laws may be justified whenever they happen to be effective.
operating at all.
The Court is not unaware of the resolutions of various barangays in Lucena City supporting the establishment
Petitioner argues, however, that other solutions for the traffic problem have already been tried but proven of a common terminal, and similar expressions of support from the private sector, copies of which were submitted
ineffective. But the grant of an exclusive franchise to petitioner has not been shown to be the only solution to the to this Court by petitioner. The weight of popular opinion, however, must be balanced with that of an individuals
problem. rights.
While the Sangguniang Panlungsod, via Ordinance No. 1557,[34] previously directed bus owners and
operators to put up their terminals outside the poblacion of Lucena City, petitioner informs that said ordinance only There is no question that not even the strongest moral conviction or the most urgent public need, subject only to
resulted in the relocation of terminals to other well-populated barangays, thereby giving rise to traffic congestion in a few notable exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration to say that a
those areas.[35] Assuming that information to be true, the Sangguniang Panlungsod was not without remedy. It person invoking a right guaranteed under Article III of the Constitution is a majority of one even as against the
could have defined, among other considerations, in a more precise manner, the area of relocation to avoid such rest of the nation who would deny him that right.[40]
consequences.
WHEREFORE, the petition is hereby DENIED.
As for petitioners argument that the challenged ordinances were enacted pursuant to the power of the
Sangguniang Panlungsod to [r]egulate traffic on all streets and bridges; prohibitencroachments or obstacles SO ORDERED.
thereon and, when necessary in the interest of public welfare, authorize the removal of encroachments and illegal
Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-
constructions in public places:[36] Absent any showing, nay allegation, that the terminals are encroaching upon
Martinez, Corona, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, and Garcia, JJ., concur.
public roads, they are not obstacles. The buses which indiscriminately load and unload passengers on the city
streets are. The power then of the Sangguniang Panlungsod to prohibit encroachments and obstacles does not
extend to terminals.
Neither are terminals public nuisances as petitioner argues. For their operation is a legitimate business which,
by itself, cannot be said to be injurious to the rights of property, health, or comfort of the community.
But even assuming that terminals are nuisances due to their alleged indirect effects upon the flow of traffic,
at most they are nuisance per accidens, not per se.
Unless a thing is nuisance per se, however, it may not be abated via an ordinance, without judicial
proceedings, as was done in the case at bar.
In Estate of Gregoria Francisco v. Court of Appeals,[37] this Court held:

Respondents can not seek cover under the general welfare clause authorizing the abatement of nuisances
without judicial proceedings. That tenet applies to a nuisance per se, or one which affects the immediate safety of
persons and property and may be summarily abated under the undefined law of necessity (Monteverde v.
Generoso, 52 Phil. 123 [1982]). The storage of copra in the quonset building is a legitimate business. By its
nature, it can not be said to be injurious to rights of property, of health or of comfort of the community. If it be a
nuisance per accidens it may be so proven in a hearing conducted for that purpose. It is not per se a nuisance
warranting its summary abatement without judicial intervention. (Underscoring supplied) [38]
AMELIA CABRERA, G.R. No. 129098
Petitioner, commenced in August 1995. A month later, petitioner learned from newspaper reports of the impending demolition
Present: of her fishpond as it was purportedly illegal and blocked the flow of the Pasak River. Thus, petitioner sent the
QUISUMBING, J., fishpond administrator to dissuade respondents from destroying her property.[4]
- versus - Chairperson,
CARPIO,
CARPIO MORALES, Despite pleas from petitioner, respondents ordered the destruction of petitioners fishpond. The property
TINGA, and
was demolished on 10 October 1995 by dynamite blasting. Petitioner alleged that the demolition was purposely
MANUEL LAPID, FERNANDO VELASCO, JR., JJ.
BALTAZAR, REYNALDO F. carried out in the presence of media representatives and other government officials to gain media mileage.
CABRERA and DIONY VENTURA,
Respondents. Promulgated: Petitioner imputed evident bad faith on respondents Mayor Baltazar and Vice-Mayor Cabrera in allowing the
December 6, 2006
destruction of the fishpond despite their prior knowledge of the existence of the lease agreement. She also charged
x-------------------------------------------------------------------x respondents Governor Lapid and Senior Superintendent Ventura with gross inexcusable negligence for ordering
DECISION the destruction of the fishpond without first verifying its legality.[5]

TINGA, J.:
At the preliminary investigation, respondents, except Senior Superintendent Ventura, submitted counter-

The instant petition for review on certiorari seeks the reversal of the Resolution [1] dated 13 May 1996 and the affidavits, denying the accusations against them. In the counter-affidavit jointly filed by Mayor Baltazar and Vice-

Order[2] dated 21 March 1997, both issued by the Office of the Ombudsman. The Resolution dismissed the Mayor Cabrera, they insisted that contrary to petitioners claim, the fishpond was an illegal structure because it was

complaint-affidavit filed by petitioner against respondents and the Order denied her motion for reconsideration. erected on the seashore, at the mouth of the Pasak River, and sat on an inalienable land. They claimed that the
demolition was done by the Task Force Bilis Daloy upon the directive of then President Fidel V. Ramos.[6]
The instant petition originated from a Complaint-Affidavit[3] filed in November 1995 by petitioner Amelia
M. Cabrera with the Office of the Ombudsman (Ombudsman). Named respondents were Manuel Lapid, Fernando In his Counter-Affidavit,[7] Governor Lapid averred that the contract of lease between petitioner and

Baltazar, Reynaldo F. Cabrera and Superintendent Diony Ventura, respectively, in their capacities as Governor of the Municipality of Sasmuan, represented by then Mayor Abelardo Panlaqui, was executed two weeks before

Pampanga, Mayor of Sasmuan, Pampanga, Vice-Mayor of Sasmuan, Pampanga and Superintendent of the respondent Mayor Baltazar took his oath of office in 1995. Governor Lapid also argued that under the law, the

Philippine National Police (PNP)-Region 3, Pampanga. In her three(3)-page affidavit, petitioner accused Department of Agriculture (DA) is the government agency authorized to enter into licensing agreements for

respondents of violating Section 3(e) of the Anti-Graft and Corrupt Practices Act and Article 324 of the Revised fishpond operations, and as per certification by the DA Regional Director, petitioners fishpond operation was not

Penal Code.
In her Complaint-Affidavit, petitioner stated that she entered into a lease agreement with
the Municipality of Sasmuan over a tract of land for the purpose of devoting it to fishpond operations. According to
petitioner, she had spent approximately P5,000,000.00 for its construction before the fishpond operations
covered by a fishpond lease agreement or application. Governor Lapid also referred to the certification by the
Municipal Health Officer of Sasmuan issued before the actual demolition of the fishpond, describing it as a
nuisance per se and recommending its abatement.[8]
 On 13 May 1996, the Ombudsman issued the assailed Resolution, dismissing petitioners complaint. The
dismissal was based on the declaration that the fishpond was a nuisance per se and, thus, may be abated by
respondents in the exercise of the police power of the State.[9]
Petitioner sought reconsideration of the Resolution, arguing that under Sec. 149 of Republic Act (R.A.)
No. 7160, otherwise known as the Local Government Code of 1991, the exclusive authority to grant fishery
privileges is vested in the municipalities. Petitioner also questioned the certification by the Municipal Health Officer,
alleging that the same was issued before the ocular inspection of the property which took place only on the day of
the demolition. Petitioner also contended that a judicial proceeding was necessary to determine whether the
property indeed had caused the flooding.[10] Respondents filed separate oppositions to petitioners motion for
reconsideration.[11] Petitioner filed a reply to the opposition[12] and respondent Governor Lapid filed a rejoinder to
the reply.[13]
In the Order dated 21 March 1997, the Ombudsman affirmed its 13 May 1996 Resolution. It ruled that
the repealing clause of R.A. No. 7160 expressly repealed only Sec. 2, 6 and 29 of Presidential Decree (P.D.) No.
704 so that in harmonizing the remaining provisions of P.D. No. 704 and the provisions of R.A. No. 7160 applicable
to the grant of fishery privileges, the Bureau of Fisheries and Aquatic Resources (BFAR) is the government agency
authorized to grant fishpond license or permit in areas not identified as municipal waters or not declared as
alienable or disposable by the Department of Environment and Natural Resources (DENR). Since it appears from
DENR records that the subject property has not been declared disposable or included in areas devoted for fishpond
development, the Ombudsman concluded that the lease agreement entered into by petitioner was void ab initio. In
view of the illegality of the lease agreement, the Ombudsman ruled that its demolition was justified. The
Ombudsman described the demolition as a valid exercise of police power and in accordance with the provision of
Sec. 28 of P.D. No. 704 directing the removal of any fishpen or fishpond that obstructed the free navigation of a
stream or lake. It also upheld the authority of the district health officer to determine the abatement of a nuisance
without need of judicial proceedings.[14]
Petitioner elevated the matter to this Court via a petition for review on certiorari under Rule 45 of the
Rules of Court to assail the 13 May 1996 Resolution and 21 March 1997 Order of the Ombudsman. Petitioner
subsequently filed an amended petition for review on certiorari to implead the Ombudsman as respondent, although
in a petition for review on certiorari, the tribunal whose issuance is assailed need not be impleaded as respondent.
The petition imputes the following errors on the Ombudsman:
I.
THE OFFICE OF THE OMBUDSMAN ERRED AND EXCEEDED ITS AUTHORITY IN RULING
THAT THE LEASE CONTRACT BETWEEN THE MUNICIPALITY OFSASMUAN AND PETITIONER
IS NULL AND VOID.
II.
THE OFFICE OF THE OMBUDSMAN ERRED IN RULING THAT THE DEMOLITION OF THE
FISHPOND WAS VALIDLY MADE BY VIRTUE OF THE DECLARATION BY THE HEALTH
OFFICER THAT IT WAS A NUISANCE PER SE.
III.
THE OFFICE OF THE OMBUDSMAN ERRED IN RULING THAT THE DEMOLITION IS PART
OF THE PROPER EXERCISE OF THE POLICE POWER OF THE STATE.
IV.
THE OFFICE OF THE OMBUDSMAN ERRED IN RULING THAT PETITIONER WAS GIVEN
DUE NOTICE AND HEARING BEFORE THE FISHPOND WAS BLASTED.
V.
THE OFFICE OF THE OMBUDSMAN ERRED IN RULING THAT PROBABLE CAUSE DOES
NOT EXIST TO INDICT RESPONDENTS FOR VIOLATION OF THE SUBJECT OFFENSES.[15]
Clearly, this is an appeal from the questioned issuances of the Ombudsman. However, such direct resort to this
Court from a resolution or order of the Ombudsman is not sanctioned by any rule of procedure.
 Neither can petitioner avail of Sec. 27[16] of R.A. No. 6770, otherwise known as The Ombudsman Act of
1989. The provision allowed direct appeals in administrative disciplinary cases from the Office of the Ombudsman
to the Supreme Court. The right to appeal is granted only in respect to orders or decisions of the Ombudsman in
administrative cases.[17] The provision does not cover resolutions of the Ombudsman in criminal cases. More
importantly, Sec. 27 of R.A. No. 6770 insofar as it allowed a direct appeal to this Court was declared
unconstitutional in Fabian v. Hon. Desierto.[18]
However, an aggrieved party in criminal actions is not without any recourse. Where grave abuse of
discretion amounting to lack or excess of jurisdiction taints the findings of the Ombudsman on the existence of
probable cause, the aggrieved party may file a petition for certiorari under Rule 65.[19] The remedy from resolutions
of the Ombudsman in preliminary investigations of criminal cases is a petition for certiorari under Rule 65, not a
petition for review on certiorari under Rule 45.[20]
But in this case, petitioner has taken the position that the Ombudsman has decided questions of
substance contrary to law and the applicable decisions of the Supreme Court. That is a ground under a Rule 45
petition. Indeed, from a reading of the assignment of errors, it is clear that petitioner does not impute grave abuse
of discretion to the Ombudsman in issuing the assailed Resolution and Order. Rather, she merely questions his
findings and conclusions. As stated earlier, direct appeal to the Supreme Court via a petition for review on certiorari
is not sanctioned by any rule of procedure. By availing of a wrong remedy, the petition should be dismissed outright.
Even if the Court treats the instant appeal as a petition for certiorari under Rule 65, its dismissal is
nevertheless warranted because petitioner failed to present, much more substantiate, any grave abuse of discretion
on the part of the Ombudsman.
A careful reading of the questioned Resolution reveals that the Ombudsman dismissed petitioners
criminal complaint because respondents had validly resorted to the police power of the State when they effected
the demolition of the illegal fishpond in question following the declaration thereof as a nuisance per se. Thus, the
Ombudsman was of the opinion that no violation of Section 3(e)[21] of the Anti-Graft and Corrupt Practices Act or of
Article 324[22] of the Revised Penal Code was committed by respondents. In the words of the Ombudsman, those
who participated in the blasting of the subject fishpond were only impelled by their desire to serve the best interest
of the general public; for the good and the highest good.[23]
By grave abuse of discretion is meant capricious and whimsical exercise of judgment as is equivalent to
lack of jurisdiction. Mere abuse of discretion is not enough. It must be grave abuse of discretion as when the power
is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent
and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to
act at all in contemplation of law.[24]
Grave abuse of discretion should be differentiated from an error in judgment. An error of judgment is one
which the court may commit in the exercise of its jurisdiction, and which error is reversible only by an appeal. As
long as the court acts within its jurisdiction, any alleged errors committed in the exercise of its discretion will amount
to nothing more than mere errors of judgment, correctible by an appeal or a petition for review under Rule 45 of
the Rules of Court. An error of jurisdiction is one where the act complained of was issued by the court without or in
excess of jurisdiction and which error is correctible only by the extraordinary writ of certiorari.[25]
The other errors raised by petitioner pertain to the Ombudsmans opinion on the lack of probable cause
to indict respondents. These are purported errors in judgment which can be corrected by an appeal, although not
via a direct appeal to this Court. Direct resort to this Court may be had only through the extraordinary writ of
certiorari and upon showing that the Ombudsman committed grave abuse of discretion, which petitioner failed to
demonstrate.
Absent any grave abuse of discretion tainting it, the courts will not interfere with the Ombudsmans
supervision and control over the preliminary investigation conducted by him.[26] It is beyond the ambit of this Court
to review the exercise of discretion of the Ombudsman in prosecuting or dismissing a complaint filed before
it.[27] The rule is based not only upon respect for the investigatory and prosecutory powers granted by the
Constitution to the Office of the Ombudsman but upon practicality as well. Otherwise, the functions of the courts
will be grievously hampered by innumerable petitions assailing the dismissal of investigatory proceedings Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby

conducted by the Office of the Ombudsman with regard to complaints filed before it, in much the same way that certified that the conclusions in the above Decision had been reached in consultation before the case was assigned

the courts would be extremely swamped if they would be compelled to review the exercise of discretion on the part to the writer of the opinion of the Courts Division.

of the fiscals or prosecuting attorneys each time they decide to file an information in court or dismiss a complaint
by a private complainant.[28]
ARTEMIO V. PANGANIBAN
Chief Justice
WHEREFORE, the instant petition for review on certiorari is DENIED. No costs.

[1]Rollo, pp. 22-26.

SO ORDERED.
DANTE O. TINGA
[2]Id. at 27-35; 125-138; Likewise dated 5 March 1997.
Associate Justice
[3]Id. at 36-38.
WE CONCUR:
[4]Id. at 36-37.
LEONARDO A. QUISUMBING
[5]Id. at 37.
Associate Justice
Chairperson
[6]Id. at 45-47.
ANTONIO T. CARPIO CONCHITA CARPIO MORALES
[7]Id. at 48-50.
Associate Justice Associate Justice
[8]Id. at 48-49.
PRESBITERO J. VELASCO, JR.
Associate Justice
[9]Id. at 22.
ATTESTATION
[10]Id. at 76.

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned [11]Id. at 85-90, 91-95.
to the writer of the opinion of the Courts Division.
[12]Id. at 96-100.

[13]Id. at 101-103.
LEONARDO A. QUISUMBING
[14]Supra note 2.
Associate Justice
Chairperson, Third Division
[15]Rollo, pp. 113-114.
CERTIFICATION
[16]R.A. No. 6770 (1989), Sect. 27 provides: Effectivity and Finality of Decisions.(1) All provisionary orders
of the Office of the Ombudsman are immediately effective and executory.
A motion for reconsideration of any order, directive or decision of the Office of the Ombudsman must be
filed within five (5) days after receipt of written notice and shall be entertained only on any of the following grounds:
 [23]Rollo, p. 25.
(1) New evidence has been discovered which materially affects the order, directive or decision;
(2) Errors of law or irregularities have been committed prejudicial to the interest of the movant. The [24]Solvic Industrial Corporation. v. NLRC, 357 Phil. 430, 438 (1998).
motion for reconsideration shall be resolved within three (3) days from filing: Provided, That only one motion for
reconsideration shall be entertained. [25]Corpuz v. Sandiganbayan, G.R. No. 162214, November 11, 2004, 442 SCRA 294, 307-308.

Findings of fact by the Officer of the Ombudsman when supported by substantial evidence are [26]Mamburao, Inc. v. Office of the Ombudsman, G.R. Nos. 139141-42, November 15, 2000, 344 SCRA

conclusive. Any order, directive or decision imposing the penalty of public censure or reprimand, suspension of not 805, 817-818
more than one (1) month's salary shall be final and unappealable.
In all administrative disciplinary cases, orders, directives, or decisions of the Office of the Ombudsman [27]Id. at 819.
may be appealed to the Supreme Court by filing a petition for certiorari within ten (10) days from receipt of the
written notice of the order, directive or decision or denial of the motion for reconsideration in accordance with Rule [28]Id.

45 of the Rules of Court.

The above rules may be amended or modified by the Office of the Ombudsman as the interest of justice
may require.

[17]Kara-an v. Office of the Ombudsman, G.R. No. 119990, June 21, 2004, 432 SCRA 457, 463-464.

[18]356 Phil. 787 (1998).

[19]Kara-an v. Office of the Ombudsman, supra at 464.

[20]Id. at 462-463.

[21]Republic Act No. 3019 (1960), Sec. 3(e) provides:

SEC. 3. Corrupt practices of public officials.

xxxx

(e) Causing any undue injury to any party, including the Government, or giving any private
party any unwarranted benefits, advantage or preference in the discharge of his official administrative or
judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence. This
provision shall apply to officers and employees of offices or government corporations charged with the
grant of licenses or permits or other concessions.

[22]REVISED PENAL CODE, Art. 324. Crimes involving destruction.Any person who shall cause

destruction by means of explosion, discharge of electric current, inundation, sinking or stranding of a vessel,
intentional damaging of the engine of said vessel, taking up the rails from a railway track, maliciously changing
railway signals for the safety of moving trains, destroying telegraph wires and telegraph posts, or those of any other
system, and, in general, by using any other agency or means of destruction as effective as those above
enumerated, shall be punished by reclusion temporal if the commission has endangered the safety of any person;
otherwise, the penalty of prision mayor shall be imposed.
G.R. No. L-42571-72 July 25, 1983
VICENTE DE LA CRUZ, RENATO ALIPIO, JOSE TORRES III, LEONCIO CORPUZ, TERESITA CALOT,
ROSALIA FERNANDEZ, ELIZABETH VELASCO, NANETTE VILLANUEVA, HONORATO BUENAVENTURA,
RUBEN DE CASTRO, VICENTE ROXAS, RICARDO DAMIAN, DOMDINO ROMDINA, ANGELINA
OBLIGACION, CONRADO GREGORIO, TEODORO REYES, LYDIA ATRACTIVO, NAPOLEON MENDOZA,
PERFECTO GUMATAY, ANDRES SABANGAN, ROSITA DURAN, SOCORRO BERNARDEZ, and PEDRO
GABRIEL, petitioners,
vs.
THE HONORABLE EDGARDO L. PARAS, MATIAS RAMIREZ as the Municipal Mayor, MARIO MENDOZA
as the Municipal Vice-Mayor, and THE MUNICIPAL COUNCIL OF BOCAUE, BULACAN, respondents.
Federico N. Alday for petitioners.
Dakila F. Castro for respondents.
FERNANDO, C.J.:
The crucial question posed by this certiorari proceeding is whether or not a municipal corporation, Bocaue,
Bulacan, represented by respondents, 1 can, prohibit the exercise of a lawful trade, the operation of night clubs,
and the pursuit of a lawful occupation, such clubs employing hostesses. It is contended that the ordinance
assailed as invalid is tainted with nullity, the municipality being devoid of power to prohibit a lawful business,
occupation or calling, petitioners at the same time alleging that their rights to due process and equal protection of
the laws were violated as the licenses previously given to them was in effect withdrawn without judicial hearing. 2
The assailed ordinance 3 is worded as follows: "Section 1.— Title of Ordinance.— This Ordinance shall be known
and may be cited as the [Prohibition and Closure Ordinance] of Bocaue, Bulacan. Section 2. — Definitions of
Terms — (a) 'Night Club' shall include any place or establishment selling to the public food or drinks where
customers are allowed to dance. (b) 'Cabaret' or 'Dance Hall' shall include any place or establishment where
dancing is permitted to the public and where professional hostesses or hospitality girls and professional dancers
are employed. (c) 'Professional hostesses' or 'hospitality girls' shall include any woman employed by any of the
establishments herein defined to entertain guests and customers at their table or to dance with them. (d)
'Professional dancer' shall include any woman who dances at any of the establishments herein defined for a fee
or remuneration paid directly or indirectly by the operator or by the persons she dances with. (e) 'Operator' shall
include the owner, manager, administrator or any person who operates and is responsible for the operation of
any night club, cabaret or dance hall. Section 3. — Prohibition in the Issuance and Renewal of Licenses, Permits.
— Being the principal cause in the decadence of morality and because of their other adverse effects on this
community as explained above, no operator of night clubs, cabarets or dance halls shall henceforth be issued
permits/licenses to operate within the jurisdiction of the municipality and no license/permit shall be issued to any
professional hostess, hospitality girls and professional dancer for employment in any of the aforementioned
establishments. The prohibition in the issuance of licenses/permits to said persons and operators of said
establishments shall include prohibition in the renewal thereof. Section 4.— Revocation of Permits and
Licenses.— The licenses and permits issued to operators of night clubs, cabarets or dance halls which are now
in operation including permits issued to professional hostesses, hospitality girls and professional dancers are
hereby revoked upon the expiration of the thirty-day period given them as provided in Section 8 hereof and
thenceforth, the operation of these establishments within the jurisdiction of the municipality shall be illegal.
Section 5.— Penalty in case of violation. — Violation of any of the provisions of this Ordinance shall be
punishable by imprisonment not exceeding three (3) months or a fine not exceeding P200.00 or both at the
discretion of the Court. If the offense is committed by a juridical entity, the person charged with the management
and/or operation thereof shall be liable for the penalty provided herein. Section 6. — Separability Clause.— If, for
any reason, any section or provision of this Ordinance is held unconstitutional or invalid, no other section or
provision hereof shall be affected thereby. Section 7.— Repealing Clause.— All ordinance, resolutions, circulars,
memoranda or parts thereof that are inconsistent with the provisions of this Ordinance are hereby repealed.
Section 8.— Effectivity.— This Ordinance shall take effect immediately upon its approval; provided, however, that
operators of night clubs, cabarets and dance halls now in operation including professional hostesses, hospitality
girls and professional dancers are given a period of thirty days from the approval hereof within which to wind up
their businesses and comply with the provisions of this Ordinance." 4
On November 5, 1975, two cases for prohibition with preliminary injunction were filed with the Court of First
Instance of Bulacan. 5 The grounds alleged follow:
1. Ordinance No. 84 is null and void as a municipality has no authority to prohibit a lawful business, occupation or
calling.
2. Ordinance No. 84 is violative of the petitioners' right to due process and the equal protection of the law, as the
license previously given to petitioners was in effect withdrawn without judicial hearing. 3. That under Presidential
Decree No. 189, as amended, by Presidential Decree No. 259, the power to license and regulate tourist-oriented
businesses including night clubs, has been transferred to the Department of Tourism." 6 The cases were
assigned to respondent Judge, now Associate Justice Paras of the Intermediate Appellate Court, who issued a
restraining order on November 7, 1975. The answers were thereafter filed. It was therein alleged: " 1. That the
Municipal Council is authorized by law not only to regulate but to prohibit the establishment, maintenance and
operation of night clubs invoking Section 2243 of the RAC, CA 601, Republic Acts Nos. 938, 978 and 1224. 2.
The Ordinance No. 84 is not violative of petitioners' right to due process and the equal protection of the law, since
property rights are subordinate to public interests. 3. That Presidential Decree No. 189, as amended, did not
deprive Municipal Councils of their jurisdiction to regulate or prohibit night clubs." 7 There was the admission of
the following facts as having been established: "l. That petitioners Vicente de la Cruz, et al. in Civil Case No.
4755-M had been previously issued licenses by the Municipal Mayor of Bocaue-petitioner Jose Torres III, since
1958; petitioner Vicente de la Cruz, since 1960; petitioner Renato Alipio, since 1961 and petitioner Leoncio
Corpuz, since 1972; 2. That petitioners had invested large sums of money in their businesses; 3. That the night
clubs are well-lighted and have no partitions, the tables being near each other; 4. That the petitioners
owners/operators of these clubs do not allow the hospitality girls therein to engage in immoral acts and to go out
with customers; 5. That these hospitality girls are made to go through periodic medical check-ups and not one of
them is suffering from any venereal disease and that those who fail to submit to a medical check-up or those who
are found to be infected with venereal disease are not allowed to work; 6. That the crime rate there is better than
in other parts of Bocaue or in other towns of Bulacan." 8 Then came on January 15, 1976 the decision upholding
the constitutionality and validity of Ordinance No. 84 and dismissing the cases. Hence this petition for certiorari
by way of appeal.
In an exhaustive as well as scholarly opinion, the lower court dismissed the petitions. Its rationale is set forth in
the opening paragraph thus: "Those who lust cannot last. This in essence is why the Municipality of Bocaue,
Province of Bulacan, stigmatized as it has been by innuendos of sexual titillation and fearful of what the
awesome future holds for it, had no alternative except to order thru its legislative machinery, and even at the risk
of partial economic dislocation, the closure of its night clubs and/or cabarets. This in essence is also why this
Court, obedient to the mandates of good government, and cognizant of the categorical imperatives of the current
legal and social revolution, hereby [upholds] in the name of police power the validity and constitutionality of
Ordinance No. 84, Series of 1975, of the Municipal Council of Bocaue, Bulacan. The restraining orders
heretofore issued in these two cases are therefore hereby rifted, effective the first day of February, 1976, the
purpose of the grace period being to enable the petitioners herein to apply to the proper appellate tribunals for
any contemplated redress."9 This Court is, however, unable to agree with such a conclusion and for reasons
herein set forth, holds that reliance on the police power is insufficient to justify the enactment of the assailed
ordinance. It must be declared null and void.
1. Police power is granted to municipal corporations in general terms as follows: "General power of council to
enact ordinances and make regulations. - The municipal council shall enact such ordinances and make such
regulations, not repugnant to law, as may be necessary to carry into effect and discharge the powers and duties
conferred upon it by law and such as shall seem necessary and proper to provide for the health and safety,
promote the prosperity, improve the morals, peace, good order, comfort, and convenience of the municipality and
the inhabitants thereof, and for the protection of property therein." 10 It is practically a reproduction of the former
Section 39 of Municipal Code.11 An ordinance enacted by virtue thereof, according to Justice Moreland, speaking
for the Court in the leading case of United States v. Abendan 12 "is valid, unless it contravenes the fundamental
law of the Philippine Islands, or an Act of the Philippine Legislature, or unless it is against public policy, or is
unreasonable, oppressive, partial, discriminating, or in derogation of common right. Where the power to legislate
upon a given subject, and the mode of its exercise and the details of such legislation are not prescribed, the
ordinance passed pursuant thereto must be a reasonable exercise of the power, or it will be pronounced
invalid." 13 In another leading case, United States v. Salaveria, 14 the ponente this time being Justice Malcolm,
where the present Administrative Code provision was applied, it was stated by this Court: "The general welfare
clause has two branches: One branch attaches itself to the main trunk of municipal authority, and relates to such
ordinances and regulations as may be necessary to carry into effect and discharge the powers and duties
conferred upon the municipal council by law. With this class we are not here directly concerned. The second
branch of the clause is much more independent of the specific functions of the council which are enumerated by
law. It authorizes such ordinances as shall seem necessary and proper to provide for the health and safety,
promote the prosperity, improve the morals, peace, good order, comfort, and convenience of the municipality and
the inhabitants thereof, and for the protection of property therein.' It is a general rule that ordinances passed by
virtue of the implied power found in the general welfare clause must be reasonable, consonant with the general
powersand purposes of the corporation, and not inconsistent with the laws or policy of the State." 15 If night clubs
were merely then regulated and not prohibited, certainly the assailed ordinance would pass the test of validity. In
the two leading cases above set forth, this Court had stressed reasonableness, consonant with the general
powers and purposes of municipal corporations, as well as consistency with the laws or policy of the State. It
cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could qualify under the term
reasonable. The objective of fostering public morals, a worthy and desirable end can be attained by a measure
that does not encompass too wide a field. Certainly the ordinance on its face is characterized by overbreadth.
The purpose sought to be achieved could have been attained by reasonable restrictions rather than by an
absolute prohibition. The admonition in Salaveria should be heeded: "The Judiciary should not lightly set aside
legislative action when there is not a clear invasion of personal or property rights under the guise of police
regulation." 16 It is clear that in the guise of a police regulation, there was in this instance a clear invasion of
personal or property rights, personal in the case of those individuals desirous of patronizing those night clubs and
property in terms of the investments made and salaries to be earned by those therein employed.
2. The decision now under review refers to Republic Act No. 938 as amended. 17 It was originally enacted on
June 20, 1953. It is entitled: "AN ACT GRANTING MUNICIPAL OR CITY BOARDS AND COUNCILS THE
POWER TO REGULATE THE ESTABLISHMENT, MAINTENANCE AND OPERATION OF CERTAIN PLACES
OF AMUSEMENT WITHIN THEIR RESPECTIVE TERRITORIAL JURISDICTIONS.' 18 Its first section insofar as
pertinent reads: "The municipal or city board or council of each chartered city shall have the power to regulate by
ordinance the establishment, maintenance and operation of night clubs, cabarets, dancing schools, pavilions,
cockpits, bars, saloons, bowling alleys, billiard pools, and other similar places of amusement within its territorial
jurisdiction: ... " 19Then on May 21, 1954, the first section was amended to include not merely "the power to
regulate, but likewise "Prohibit ... " 20 The title, however, remained the same. It is worded exactly as Republic Act
No. 938. It is to be admitted that as thus amended, if only the above portion of the Act were considered, a
municipal council may go as far as to prohibit the operation of night clubs. If that were all, then the appealed
decision is not devoid of support in law. That is not all, however. The title was not in any way altered. It was not
changed one whit. The exact wording was followed. The power granted remains that of regulation,
not prohibition. There is thus support for the view advanced by petitioners that to construe Republic Act No. 938
as allowing the prohibition of the operation of night clubs would give rise to a constitutional question. The
Constitution mandates: "Every bill shall embrace only one subject which shall be expressed in the title thereof.
" 21 Since there is no dispute as the title limits the power to regulating, not prohibiting, it would result in the statute
being invalid if, as was done by the Municipality of Bocaue, the operation of a night club was prohibited. There is
a wide gap between the exercise of a regulatory power "to provide for the health and safety, promote the
prosperity, improve the morals, 22 in the language of the Administrative Code, such competence extending to all
"the great public needs, 23 to quote from Holmes, and to interdict any calling, occupation, or enterprise. In
accordance with the well-settled principle of constitutional construction that between two possible interpretations
by one of which it will be free from constitutional infirmity and by the other tainted by such grave defect, the
former is to be preferred. A construction that would save rather than one that would affix the seal of doom
certainly commends itself. We have done so before We do so again. 24
3. There is reinforcement to the conclusion reached by virtue of a specific provision of the recently-enacted Local
Government Code. 25 The general welfare clause, a reiteration of the Administrative Code provision, is set forth in
the first paragraph of Section 149 defining the powers and duties of the sangguniang bayan. It read as follows:
"(a) Enact such ordinances and issue such regulations as may be necessary to carry out and discharge the
responsibilities conferred upon it by law, and such as shall be necessary and proper to provide for the health,
safety, comfort and convenience, maintain peace and order, improve public morals, promote the prosperity and
general welfare of the municipality and the inhabitants thereof, and insure the protection of property therein;
..." 26 There are in addition provisions that may have a bearing on the question now before this Court. Thus
the sangguniang bayanshall "(rr) Regulate cafes, restaurants, beer-houses, hotels, motels, inns, pension houses
and lodging houses, except travel agencies, tourist guides, tourist transports, hotels, resorts, de luxe restaurants,
and tourist inns of international standards which shall remain under the licensing and regulatory power of the
Ministry of Tourism which shall exercise such authority without infringing on the taxing or regulatory powers of the
municipality; (ss) Regulate public dancing schools, public dance halls, and sauna baths or massage parlors; (tt)
Regulate the establishment and operation of billiard pools, theatrical performances, circuses and other forms of Footnotes
entertainment; ..." 27 It is clear that municipal corporations cannot prohibit the operation of night clubs. They may
be regulated, but not prevented from carrying on their business. It would be, therefore, an exercise in futility if the 1 Municipal Mayor Matias Ramirez and Municipal Vice-Mayor Mario Mendoza.
decision under review were sustained. All that petitioners would have to do is to apply once more for licenses to 2 Petition, 7. The other question raised was the jurisdiction of a municipal council to prohibit the operation of nightclubs, it
operate night clubs. A refusal to grant licenses, because no such businesses could legally open, would be being alleged that the power of regulating tourist-oriented businesses being granted to the then Department, now Ministry, of
subject to judicial correction. That is to comply with the legislative will to allow the operation and continued Tourism.
existence of night clubs subject to appropriate regulations. In the meanwhile, to compel petitioners to close their 3 Ordinance No. 84, Series of 1975.
establishments, the necessary result of an affirmance, would amount to no more than a temporary termination of 4 Ibid.
5 Vicente de la Cruz, et al. v. Matias Ramirez, et al., and Teresita Calot, et al. v. The Municipal Mayor, docketed as Civil
their business. During such time, their employees would undergo a period of deprivation. Certainly, if such an
Cases Nos. 4755-M and 4756-M, respectively. On November 21, 1975, the petition in one of the above cases was amended
undesirable outcome can be avoided, it should be. The law should not be susceptible to the reproach that it to raise the further issue of lack of authority of respondent Municipal Officials to pass the ordinance in question, since the
displays less than sympathetic concern for the plight of those who, under a mistaken appreciation of a municipal power to license, supervise and regulate night clubs has been transferred to the Department of Tourism by virtue of
power, were thus left without employment. Such a deplorable consequence is to be avoided. If it were not thus, Presidential Decree No. 189, as amended.
then the element of arbitrariness enters the picture. That is to pay less, very much less, than full deference to the 6 Petition, 7.
due process clause with its mandate of fairness and reasonableness. 7 Ibid, 8.
8 Ibid, 8-9.
9 Decision, Annex A to Petition 1.
4. The conclusion reached by this Court is not to be interpreted as a retreat from its resolute stand sustaining
10 Section 2238, Revised Administrative Code of the Philippines (1917).
police power legislation to promote public morals. The commitment to such an Ideal forbids such a backward 11 Act No. 82 (1901).
step. Legislation of that character is deserving of the fullest sympathy from the judiciary. Accordingly, the judiciary 12 24 Phil. 165 (1913). Abendan is followed in United States v. Tamparong, 31 Phil. 321 (1915); United States v. Gaspay, 33
has not been hesitant to lend the weight of its support to measures that can be characterized as falling within that Phil. 96 (1915) and Sarmiento v. Balderol, 112 Phil. 394 (1961).
aspect of the police power. Reference is made by respondents to Ermita-Malate Hotel and Motel Operators 13 Ibid, 168. Cf. United States v. Ten Yu, 24 Phil. 1 (1912); Case v. Board of Health, 24 Phil. 250 (1913).
Association, Inc. v. City Mayor of Manila. 28 There is a misapprehension as to what was decided by this Court. 14 39 Phil. 102 (1918).
That was a regulatory measure. Necessarily, there was no valid objection on due process or equal protection 15 Ibid, 109-110.
grounds. It did not prohibit motels. It merely regulated the mode in which it may conduct business in order 16 Ibid, 111. In Salaveria though the ordinance penalizing the playing of panguingue on days not Sundays or legal holidays
precisely to put an end to practices which could encourage vice and immorality. This is an entirely different case. was declared as valid.
17 It was amended by Republic Act No. 979 and Republic Act No. 1224.
What was involved is a measure not embraced within the regulatory power but an exercise of an assumed power
18 Title of Republic Act No. 938 as amended.
to prohibit. Moreover, while it was pointed out in the aforesaid Ermita-Malate Hotel and Motel Operators 19 Republic Act No. 938, Section 1.
Association, Inc. decision that there must be a factual foundation of invalidity, it was likewise made clear that 20 Republic Act No. 979, Section 1.
there is no need to satisfy such a requirement if a statute were void on its face. That it certainly is if the power to 21 Article VIII, Section 19, par. 1 of the Constitution.
enact such ordinance is at the most dubious and under the present Local Government Code non-existent. 22 Section 2238.
23 Otis v. Parker, 187 US 606 (1902).
WHEREFORE, the writ of certiorari is granted and the decision of the lower court dated January 15, 1976 24 Cf. Nuñez v. Sandiganbayan, G.R. Nos. 50581-50617, January 30, 1982, 111 SCRA 433. Separate opinion of Justice
Makasiar. De la Llana v. Alba, G.R. No. 57883, March 12,1982,112 SCRA 294.
reversed, set aside, and nullied. Ordinance No. 84, Series of 1975 of the Municipality of Bocaue is declared void 25 Batas Pambansa Blg. 337 (1983). Under Section 234 of the Code it took effect one month after its publication in the
and unconstitutional. The temporary restraining order issued by this Court is hereby made permanent. No costs. Official Gazette. It was published in the issue of February 14,1983.
26 Ibid, Section 149 (1) (a).
Teehankee, Aquino, Concepcion Jr., Guerrero, Abad Santos, Plana, Escolin Relova and Gutierrez, Jr., JJ., 27 Ibid, Section 149 (1) (rr, ss and tt ).
concur. 28 L-24693, 20 SCRA 849, July 31, 1967.

Makasiar, J, reserves his right to file a dissent.

De Castro, Melencio-Herrera and Vasquez, JJ., are on leave.

[G.R. No. L-31249. August 19, 1986.]
SALVADOR VILLACORTA as City Engineer of Dagupan City, and JUAN S. CAGUIOA as Register of Deeds of
Dagupan City, Petitioners, v. GREGORIO BERNARDO and HON. MACARIO OFILADA as Judge of Court of
First Instance of Pangasinan, Respondents.
Victor T. Llamas, Jr. for Respondents.
SYLLABUS
1. ADMINISTRATIVE LAW; DELEGATION OF POWERS; MUNICIPAL BOARD; ORDINANCE NO. 22, NOT
VALID FOR IMPOSING ADDITIONAL REQUIREMENTS OTHER THAN THAT PROVIDED FOR BY THE
NATIONAL LAW. — To sustain the ordinance No. 22, "An Ordinance Regulating Subdivision Plans over Parcels
of Land in Dagupan City" would be to open the floodgates to other ordinances amending and so violating national
laws in the guise of implementing them. Thus, ordinances could be passed imposing additional requirements for
the issuance of marriage licenses, to prevent bigamy; the registration of vehicles, to minimize carnapping; the
execution of contracts, to forestall fraud; the validation of passports, to deter imposture; the exercise of freedom
of speech, to reduce disorder; and so on. The list is endless, but the means, even if the end be valid, would be
ultra vires. Ordinance No. 22 suffers from the additional defect of violating this authority for legislating in
contravention of the national law by adding to its requirements.
2. CONSTITUTIONAL LAW; POLICE POWER; PROTECTION OF RIGHTS OF INDIVIDUAL, IMPORTANT AS
PROTECTION OF RIGHT OF PUBLIC. — We urge that proper care attend the exercise of the police power lest
it deteriorate into an unreasonable intrusion into the purely private affairs of the individual. The so-called "general
welfare" is too amorphous and convenient an excuse for official arbitrariness. Let it always be remembered that
in the truly democratic state, protecting the rights of the individual is as important as, if not more so than,
protecting the rights of the public. This advice is especially addressed to the local governments which exercise
the police power only by virtue of a valid delegation from the national legislature under the general welfare
clause.
DECISION
CRUZ, J.:
This is a petition for certiorari against a decision of the Court of First Instance of Pangasinan annulling an
ordinance adopted by the municipal board of Dagupan City.
The ordinance reads in full as follows:jgc:chanrobles.com.ph
"ORDINANCE 22
"AN ORDINANCE REGULATING SUBDIVISION PLANS OVER PARCELS OF LAND IN THE CITY OF
DAGUPAN.
"Be it ordained by the Municipal Board of Dagupan City in session assembled:jgc:chanrobles.com.ph
"Section 1. Every proposed subdivision plan over any lot in the City of Dagupan, shall, before the same is
submitted for approval and/or verification by the Bureau of Lands and/or the Land Registration Commission, be
previously submitted to the City Engineer of the City who shall see to it that no encroachment is made on any
portion of the public domain, that the zoning ordinance and all other pertinent rules and regulations are observed.
"Section 2. As service fee thereof, an amount equivalent to P0.30 per square meter of every lot resulting or will
result from such subdivision shall be charged by the City Engineer’s Office.
"Section 3. It shall be unlawful for the Register of Deeds of Dagupan City to allow the registration of a subdivision
plan unless there is prior written certification issued by the City Engineer that such plan has already been
submitted to his office and that the same is in order.
"Section 4. Any violation of this ordinance shall be punished by a fine not exceeding two hundred (P200.00)
pesos or imprisonment not exceeding six (6) months or both in the discretion of the judge.
"Section 5. This ordinance shall take effect immediately upon approval."cralaw virtua1aw library
In declaring the said ordinance null and void, the court a quo declared:jgc:chanrobles.com.ph
"From the above-recited requirements, there is no showing that would justify the enactment of the questioned
ordinance. Section 1 of said ordinance clearly conflicts with Section 44 of Act 496, because the latter law does
not require subdivision plans to be submitted to the City Engineer before the same is submitted for approval to
and verification by the General Land Registration Office or by the Director of Lands as provided for in Section 58
of said Act. Section 2 of the same ordinance also contravenes the provisions of Section 44 of Act 496, the latter
being silent on a service fee of P0.03 per square meter of every lot subject of such subdivision application;
Section 3 of the ordinance in question also conflicts with Section 44 of Act 496, because the latter law does not
mention of a certification to be made by the City Engineer before the Register of Deeds allows registration of the
subdivision plan; and the last section of said ordinance imposes a penalty for its violation, which Section 44 of
Act 496 does not impose. In other words, Ordinance 22 of the City of Dagupan imposes upon a subdivision
owner additional conditions.
"The Court takes note of the laudable purpose of the ordinance in bringing to a halt the surreptitious registration
of lands belonging to the government. But as already intimidated above, the powers of the board in enacting such
a laudable ordinance cannot be held valid when it shall impede the exercise of rights granted in a general law
and/or make a general law subordinated to a local ordinance."cralaw virtua1aw library
We affirm.
To sustain the ordinance would be to open the floodgates to other ordinances amending and so violating national
laws in the guise of implementing them. Thus, ordinances could be passed imposing additional requirements for
the issuance of marriage licenses, to prevent bigamy; the registration of vehicles, to minimize carnaping; the
execution of contracts, to forestall fraud; the validation of passports, to deter imposture; the exercise of freedom
of speech, to reduce disorder; and so on. The list is endless, but the means, even if the end be valid, would be
ultra vires.
So many excesses are attempted in the name of the police power that it is time, we feel, for a brief admonition.

Regulation is a fact of life in any well-ordered community. As society becomes more and more complex, the
police power becomes correspondingly ubiquitous. This has to be so for the individual must subordinate his
interests to the common good, on the time-honored justification of Salus populi est suprema lex.

In this prolix age, practically everything a person does and owns affects the public interest directly or at least
vicariously, unavoidably drawing him within the embrace of the police power. Increasingly, he is hemmed in by all
manner of statutory, administrative and municipal requirements and restrictions that he may find officious and
even oppressive.

It is necessary to stress that unless the creeping interference of the government in essentially private matters is
moderated, it is likely to destroy that prized and peculiar virtue of the free society: individualism.

Every member of society, while paying proper deference to the general welfare, must not be deprived of the right
to be left alone or, in the idiom of the day, "to do his thing." As long as he does not prejudice others, his freedom
as an individual must not be unduly curtailed.

We therefore urge that proper care attend the exercise of the police power lest it deteriorate into an unreasonable
intrusion into the purely private affairs of the individual. The so-called "general welfare" is too amorphous and
convenient an excuse for official arbitrariness.

Let it always be remembered that in the truly democratic state, protecting the rights of the individual is as
important as, if not more so than, protecting the rights of the public.

This advice is especially addressed to the local governments which exercise the police power only by virtue of a
valid delegation from the national legislature under the general welfare clause. In the instant case, Ordinance No.
22 suffers from the additional defect of violating this authority for legislation in contravention of the national law by
adding to its requirements.

WHEREFORE, the decision of the lower court annulling the challenged ordinance is AFFIRMED, without any
pronouncement as to costs.

SO ORDERED.

Yap (Chairman), Narvasa, Melencio-Herrera and Paras, JJ., concur.

G.R. No. 102782 December 11, 1991
THE SOLICITOR GENERAL, RODOLFO A. MALAPIRA, STEPHEN A. MONSANTO, DAN R. CALDERON,
and GRANDY N. TRIESTE, petitioners
vs.
THE METROPOLITAN MANILA AUTHORITY and the MUNICIPALITY OF MANDALUYONG, respondents.
CRUZ, J.:
In Metropolitan Traffic Command, West Traffic District vs. Hon. Arsenio M. Gonong, G.R. No. 91023,
promulgated on July 13, 1990, 1 the Court held that the confiscation of the license plates of motor vehicles for
traffic violations was not among the sanctions that could be imposed by the Metro Manila Commission under PD
1605 and was permitted only under the conditions laid dowm by LOI 43 in the case of stalled vehicles obstructing
the public streets. It was there also observed that even the confiscation of driver's licenses for traffic violations
was not directly prescribed by the decree nor was it allowed by the decree to be imposed by the Commission. No
motion for reconsideration of that decision was submitted. The judgment became final and executory on August
6, 1990, and it was duly entered in the Book of Entries of Judgments on July 13, 1990.
Subsequently, the following developments transpired:
In a letter dated October 17, 1990, Rodolfo A. Malapira complained to the Court that when he was stopped for an
alleged traffic violation, his driver's license was confiscated by Traffic Enforcer Angel de los Reyes in Quezon
City.
On December 18,1990, the Caloocan-Manila Drivers and Operators Association sent a letter to the Court asking
who should enforce the decision in the above-mentioned case, whether they could seek damages for
confiscation of their driver's licenses, and where they should file their complaints.
Another letter was received by the Court on February 14, 1991, from Stephen L. Monsanto, complaining against
the confiscation of his driver's license by Traffic Enforcer A.D. Martinez for an alleged traffic violation in
Mandaluyong.
This was followed by a letter-complaint filed on March 7, 1991, from Dan R. Calderon, a lawyer, also for
confiscation of his driver's license by Pat. R.J. Tano-an of the Makati Police Force.
Still another complaint was received by the Court dated April 29, 1991, this time from Grandy N. Trieste, another
lawyer, who also protested the removal of his front license plate by E. Ramos of the Metropolitan Manila
Authority-Traffic Operations Center and the confiscation of his driver's license by Pat. A.V. Emmanuel of the
Metropolitan Police Command-Western Police District.
Required to submit a Comment on the complaint against him, Allan D. Martinez invoked Ordinance No. 7, Series
of 1988, of Mandaluyong, authorizing the confiscation of driver's licenses and the removal of license plates of
motor vehicles for traffic violations.
For his part, A.V. Emmanuel said he confiscated Trieste's driver's license pursuant to a memorandum dated
February 27, 1991, from the District Commander of the Western Traffic District of the Philippine National Police,
authorizing such sanction under certain conditions.
Director General Cesar P. Nazareno of the Philippine National Police assured the Court in his own Comment that
his office had never authorized the removal of the license plates of illegally parked vehicles and that he had in
fact directed full compliance with the above-mentioned decision in a memorandum, copy of which he attached,
entitled Removal of Motor Vehicle License Plates and dated February 28, 1991.
Pat. R.J. Tano-an, on the other hand, argued that the Gonong decision prohibited only the removal of license
plates and not the confiscation of driver's licenses.
On May 24, 1990, the Metropolitan Manila Authority issued Ordinance No. 11, Series of 1991, authorizing itself
"to detach the license plate/tow and impound attended/ unattended/ abandoned motor vehicles illegally parked or
obstructing the flow of traffic in Metro Manila."
On July 2, 1991, the Court issued the following resolution:
The attention ofthe Court has been called to the enactment by the Metropolitan Manila Authority of
Ordinance No. 11, Series of 1991, providing inter alia that:
Section 2. Authority to Detach Plate/Tow and Impound. The Metropolitan Manila Authority, thru the
Traffic Operatiom Center, is authorized to detach the license plate/tow and impound
attended/unattended/abandoned motor vehicles illegally parked or obstructing the flow of traffic in
Metro Manila.
The provision appears to be in conflict with the decision of the Court in the case at bar (as reported in 187
SCRA 432), where it was held that the license plates of motor vehicles may not be detached except only
under the conditions prescribed in LOI 43. Additionally, the Court has received several complaints against
the confiscation by police authorities of driver's licenses for alleged traffic violations, which sanction is,
according to the said decision, not among those that may be imposed under PD 1605.
To clarify these matters for the proper guidance of law-enforcement officers and motorists, the Court
resolved to require the Metropolitan Manila Authority and the Solicitor General to submit, within ten (10)
days from notice hereof, separate COMMENTS on such sanctions in light of the said decision.
In its Comment, the Metropolitan Manila Authority defended the said ordinance on the ground that it was adopted
pursuant to the powers conferred upon it by EO 392. It particularly cited Section 2 thereof vesting in the Council
(its governing body) the responsibility among others of:
1. Formulation of policies on the delivery of basic services requiring coordination or consolidation for the
Authority; and
 2. Promulgation of resolutions and other issuances of metropolitan wide application, approval of a code of
basic services requiring coordination, and exercise of its rule-making powers. (Emphasis supplied)
The Authority argued that there was no conflict between the decision and the ordinance because the latter was
meant to supplement and not supplant the latter. It stressed that the decision itself said that the confiscation of
license plates was invalid in the absence of a valid law or ordinance, which was why Ordinance No. 11 was
enacted. The Authority also pointed out that the ordinance could not be attacked collaterally but only in a direct
action challenging its validity.
For his part, the Solicitor General expressed the view that the ordinance was null and void because it
represented an invalid exercise of a delegated legislative power. The flaw in the measure was that it violated
existing law, specifically PD 1605, which does not permit, and so impliedly prohibits, the removal of license plates
and the confiscation of driver's licenses for traffic violations in Metropolitan Manila. He made no mention,
however, of the alleged impropriety of examining the said ordinance in the absence of a formal challenge to its
validity.
On October 24, 1991, the Office of the Solicitor General submitted a motion for the early resolution of the
questioned sanctions, to remove once and for all the uncertainty of their vahdity. A similar motion was filed by the
Metropolitan Manila Authority, which reiterated its contention that the incidents in question should be dismissed
because there was no actual case or controversy before the Court.
The Metropolitan Manila Authority is correct in invoking the doctrine that the validity of a law or act can be
challenged only in a direct action and not collaterally. That is indeed the settled principle. However, that rule is
not inflexible and may be relaxed by the Court under exceptional circumstances, such as those in the present
controversy.
The Solicitor General notes that the practices complained of have created a great deal of confusion among
motorists about the state of the law on the questioned sanctions. More importantly, he maintains that these
sanctions are illegal, being violative of law and the Gonong decision, and should therefore be stopped. We also
note the disturbing report that one policeman who confiscated a driver's license dismissed the Gonong decision
as "wrong" and said the police would not stop their "habit" unless they received orders "from the top."
Regrettably, not one of the complainants has filed a formal challenge to the ordinances, including Monsanto and
Trieste, who are lawyers and could have been more assertive of their rights.
Given these considerations, the Court feels it must address the problem squarely presented to it and decide it as
categorically rather than dismiss the complaints on the basis of the technical objection raised and thus, through
its inaction, allow them to fester.
The step we now take is not without legal authority or judicial precedent. Unquestionably, the Court has the
power to suspend procedural rules in the exercise of its inherent power, as expressly recognized in the
Constitution, to promulgate rules concerning "pleading, practice and procedure in all courts." 2 In proper cases,
procedural rules may be relaxed or suspended in the interest of substantial justice, which otherwise may be
miscarried because of a rigid and formalistic adherence to such rules.
The Court has taken this step in a number of such cases, notably Araneta vs. Dinglasan, 3 where Justice Tuason
justified the deviation on the ground that "the transcendental importance to the public of these cases demands
that they be settled promptly and definitely, brushing aside, if we must, technicalities of procedure."
We have made similar rulings in other cases, thus:
Be it remembered that rules of procedure are but mere tools designed to facilitate the attainment ofjustice.
Their strict and rigid application, which would result in technicalities that tend to frustrate rather than
promote substantial justice, must always be avoided. (Aznar III vs. Bernad, G.R. No. 81190, May 9, 1988,
161 SCRA 276.) Time and again, this Court has suspended its own rules and excepted a particular case
from their operation whenever the higher interests of justice so require. In the instant petition, we forego a
lengthy disquisition of the proper procedure that should have been taken by the parties involved and
proceed directly to the merits of the case. (Piczon vs. Court of Appeals, 190 SCRA 31).
Three of the cases were consolidated for argument and the other two were argued separately on other
dates. Inasmuch as all of them present the same fundamental question which, in our view, is decisive, they
will be disposed of jointly. For the same reason we will pass up the objection to the personality or
sufficiency of interest of the petitioners in case G.R. No. L-3054 and case G.R. No. L-3056 and the
question whether prohibition lies in cases G.R. Nos. L-2044 and L2756. No practical benefit can be gained
from a discussion of these procedural matters, since the decision in the cases wherein the
petitioners'cause of action or the propriety of the procedure followed is not in dispute, will be controlling
authority on the others. Above all, the transcendental importance to the public of these cases demands that
they be settled promptly and definitely, brushing aside, if we must, technicalities of procedure. (Avelino vs.
Cuenco, G.R. No. L-2821 cited in Araneta vs. Dinglasan, 84 Phil. 368.)
Accordingly, the Court will consider the motion to resolve filed by the Solicitor General a petition for prohibition
against the enforcement of Ordinance No. 11, Series of 1991, of the Metropohtan Manila Authority, and
Ordinance No. 7, Series of 1988, of the Municipality of Mandaluyong. Stephen A. Monsanto, Rodolfo A. Malapira,
Dan R. Calderon, and Grandy N. Trieste are considered co-petitioners and the Metropolitan Manila Authority and
the Municipality of Mandaluyong are hereby impleaded as respondents. This petition is docketed as G.R. No.
102782. The comments already submitted are duly noted and shall be taken into account by the Court in the
resolution of the substantive issues raised.
It is stressed that this action is not intended to disparage procedural rules, which the Court has recognized often
enough as necessary to the orderly administration of justice. If we are relaxing them in this particular case, it is
because of the failure of the proper parties to file the appropriate proceeding against the acts complained of, and
the necessity of resolving, in the interest of the public, the important substantive issues raised.
Now to the merits.
The Metro Manila Authority sustains Ordinance No. 11, Series of 1991, under the specific authority conferred
upon it by EO 392, while Ordinance No. 7, Series of 1988, is justified on the basis of the General Welfare Clause
embodied in the Local Government Code. 4 It is not disputed that both measures were enacted to promote the
comfort and convenience of the public and to alleviate the worsening traffic problems in Metropolitan Manila due
in large part to violations of traffic rules.
The Court holds that there is a valid delegation of legislative power to promulgate such measures, it appearing
that the requisites of such delegation are present. These requisites are. 1) the completeness of the statute
making the delegation; and 2) the presence of a sufficient standard. 5
Under the first requirement, the statute must leave the legislature complete in all its terms and provisions such
that all the delegate will have to do when the statute reaches it is to implement it. What only can be delegated is
not the discretion to determine what the law shall be but the discretion to determine how the law shall be
enforced. This has been done in the case at bar.
As a second requirement, the enforcement may be effected only in accordance with a sufficient standard, the
function of which is to map out the boundaries of the delegate's authority and thus "prevent the delegation from
running riot." This requirement has also been met. It is settled that the "convenience and welfare" of the public,
particularly the motorists and passengers in the case at bar, is an acceptable sufficient standard to delimit the
delegate's authority. 6
But the problem before us is not the validity of the delegation of legislative power. The question we must resolve
is the validity of the exercise of such delegated power.
The measures in question are enactments of local governments acting only as agents of the national legislature.
Necessarily, the acts of these agents must reflect and conform to the will of their principal. To test the validity of
such acts in the specific case now before us, we apply the particular requisites of a valid ordinance as laid down
by the accepted principles governing municipal corporations.
According to Elliot, a municipal ordinance, to be valid: 1) must not contravene the Constitution or any statute; 2)
must not be unfair or oppressive; 3) must not be partial or discriminatory; 4) must not prohibit but may regulate
trade; 5) must not be unreasonable; and 6) must be general and consistent with public policy. 7
A careful study of the Gonong decision will show that the measures under consideration do not pass the first
criterion because they do not conform to existing law. The pertinent law is PD 1605. PD 1605 does not allow
either the removal of license plates or the confiscation of driver's licenses for traffic violations committed in
Metropolitan Manila. There is nothing in the following provisions of the decree authorizing the Metropolitan Manila
Commission (and now the Metropolitan Manila Authority) to impose such sanctions:
Section 1. The Metropolitan Manila Commission shall have the power to impose fines and otherwise
discipline drivers and operators of motor vehicles for violations of traffic laws, ordinances, rules and
regulations in Metropolitan Manila in such amounts and under such penalties as are herein prescribed. For
this purpose, the powers of the Land Transportation Commission and the Board of Transportation under
existing laws over such violations and punishment thereof are hereby transferred to the Metropolitan Manila
Commission. When the proper penalty to be imposed is suspension or revocation of driver's license or
certificate of public convenience, the Metropolitan Manila Commission or its representatives shall suspend
or revoke such license or certificate. The suspended or revoked driver's license or the report of suspension
or revocation of the certificate of public convenience shall be sent to the Land Transportation Commission
or the Board of Transportation, as the case may be, for their records update.
Section 3.` Violations of traffic laws, ordinances, rules and regulations, committed within a twelve-month
period, reckoned from the date of birth of the licensee, shall subject the violator to graduated fines as
follows: P10.00 for the first offense, P20.00 for the and offense, P50.00 for the third offense, a one-year
suspension of driver's license for the fourth offense, and a revocation of the driver's license for the fifth
offense: Provided, That the Metropolitan Manila Commission may impose higher penalties as it may deem
proper for violations of its ordinances prohibiting or regulating the use of certain public roads, streets and
thoroughfares in Metropolitan Manila.
Section 5. In case of traffic violations, the driver's license shall not be confiscated but the erring driver shall
be immediately issued a traffic citation ticket prescribed by the Metropolitan Manila Commission which shall
state the violation committed, the amount of fine imposed for the violation and an advice that he can make
payment to the city or municipal treasurer where the violation was committed or to the Philippine National
Bank or Philippine Veterans Bank or their branches within seven days from the date of issuance of the
citation ticket.
If the offender fails to pay the fine imposed within the period herein prescribed, the Metropolitan Manila
Commission or the law-enforcement agency concerned shall endorse the case to the proper fiscal for
appropriate proceedings preparatory to the filing of the case with the competent traffic court, city or
municipal court.
If at the time a driver renews his driver's license and records show that he has an unpaid fine, his driver's
license shall not be renewed until he has paid the fine and corresponding surcharges.
Section 8. Insofar as the Metropolitan Manila area is concerned, all laws, decrees, orders, ordinances,
rules and regulations, or parts thereof inconsistent herewith are hereby repealed or modified accordingly.
(Emphasis supplied).
In fact, the above provisions prohibit the imposition of such sanctions in Metropolitan Manila. The Commission
was allowed to "impose fines and otherwise discipline" traffic violators only "in such amounts and under such
penalties as are herein prescribed," that is, by the decree itself. Nowhere is the removal of license plates directly
imposed by the decree or at least allowed by it to be imposed by the Commission. Notably, Section 5 thereof
expressly provides that "in case of traffic violations, the driver's license shall not be confiscated." These
restrictions are applicable to the Metropolitan Manila Authority and all other local political subdivisions comprising
Metropolitan Manila, including the Municipality of Mandaluyong.
The requirement that the municipal enactment must not violate existing law explains itself. Local political
subdivisions are able to legislate only by virtue of a valid delegation of legislative power from the national
legislature (except only that the power to create their own sources of revenue and to levy taxes is conferred by
the Constitution itself). 8 They are mere agents vested with what is called the power of subordinate legislation. As
delegates of the Congress, the local government unit cannot contravene but must obey at all times the will of
their principal. In the case before us, the enactments in question, which are merely local in origin, cannot prevail
against the decree, which has the force and effect of a statute.
The self-serving language of Section 2 of the challenged ordinance is worth noting. Curiously, it is the measure
itself, which was enacted by the Metropolitan Manila Authority, that authorizes the Metropolitan Manila Authority
to impose the questioned sanction.
In Villacorta vs, Bemardo, 9 the Court nullified an ordinance enacted by the Municipal Board of Dagupan City for
being violative of the Land Registration Act. The decision held in part:
In declaring the said ordinance null and void, the court a quo declared:
From the above-recited requirements, there is no showing that would justify the enactment of the
questioned ordinance. Section 1 of said ordinance clearly conflicts with Section 44 of Act 496, because the
latter law does not require subdivision plans to be submitted to the City Engineer before the same is
submitted for approval to and verification by the General Land Registration Office or by the Director of
Lands as provided for in Section 58 of said Act. Section 2 of the same ordinance also contravenes the
provisions of Section 44 of Act 496, the latter being silent on a service fee of P0.03 per square meter of
every lot subject of such subdivision application; Section 3 of the ordinance in question also conflicts with
Section 44 of Act 496, because the latter law does not mention of a certification to be made by the City
Engineer before the Register of Deeds allows registration of the subdivision plan; and the last section of
said ordinance impose a penalty for its violation, which Section 44 of Act 496 does not impose. In other
words, Ordinance 22 of the City of Dagupan imposes upon a subdivision owner additional conditions.
The Court takes note of the laudable purpose of the ordinance in bringing to a halt the surreptitious
registration of lands belonging to the government. But as already intimated above, the powers of the board
in enacting such a laudable ordinance cannot be held valid when it shall impede the exercise of rights
granted in a general law and/or make a general law subordinated to a local ordinance.
We affirm.
To sustain the ordinance would be to open the floodgates to other ordinances amending and so
violating national laws in the guise of implementing them. Thus, ordinances could be passed imposing
additional requirements for the issuance of marriage licenses, to prevent bigamy; the registration of
vehicles, to minimize carnapping; the execution of contracts, to forestall fraud; the validation of parts, to
deter imposture; the exercise of freedom of speech, to reduce disorder; and so on. The list is endless,
but the means, even if the end be valid, would be ultra vires.
The measures in question do not merely add to the requirement of PD 1605 but, worse, impose sanctions the
decree does not allow and in fact actually prohibits. In so doing, the ordinances disregard and violate and in
effect partially repeal the law.
We here emphasize the ruling in the Gonong case that PD 1605 applies only to the Metropolitan Manila area. It is
an exception to the general authority conferred by R.A. No. 413 on the Commissioner of Land Transportation to
punish violations of traffic rules elsewhere in the country with the sanction therein prescribed, including those
here questioned.
The Court agrees that the challenged ordinances were enacted with the best of motives and shares the concern
of the rest of the public for the effective reduction of traffic problems in Metropolitan Manila through the imposition
and enforcement of more deterrent penalties upon traffic violators. At the same time, it must also reiterate the
public misgivings over the abuses that may attend the enforcement of such sanction in eluding the illicit practices
described in detail in the Gonong decision. At any rate, the fact is that there is no statutory authority for — and
indeed there is a statutory prohibition against — the imposition of such penalties in the Metropolitan Manila area.
Hence, regardless of their merits, they cannot be impose by the challenged enactments by virtue only of the
delegated legislative powers.
It is for Congress to determine, in the exercise of its own discretion, whether or not to impose such sanctions,
either directly through a statute or by simply delegating authority to this effect to the local governments in
Metropolitan Manila. Without such action, PD 1605 remains effective and continues prohibit the confiscation of
license plates of motor vehicles (except under the conditions prescribed in LOI 43) and of driver licenses as well
for traffic violations in Metropolitan Manila.
WHEREFORE, judgment is hereby rendered:
(1) declaring Ordinance No.11, Seriesof l991,of theMetropolitan Manila Authority and Ordinance No. 7, Series of
1988 of the Municipality of Mandaluyong, NULL and VOID; and
(2) enjoining all law enforcement authorities in Metropolitan Manila from removing the license plates of motor
vehicles (except when authorized under LOI 43) and confiscating driver licenses for traffic violations within the
said area.
SO ORDERED.
Narvasa, C.J., Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Padilla, Bidin, Griño-Aquino, Medialdea,
Regalado, Davide, Jr. and Romero, JJ., concur.
Nocon, J., took no part.
G.R. No. 40243 March 11, 1992
CELESTINO TATEL, petitioner,
vs.
MUNICIPALITY OF VIRAC, SALVADOR A. SURTIDA, in his capacity as Mayor of Virac, Catanduanes;
GAVINO V. GUERRERO, in his capacity as Vice-Mayor of Virac, Catanduanes; JOSE T. BUEBOS, in his
capacity as Councilor of Virac, Catanduanes; ANGELES TABLIZO, in his capacity as Councilor of Virac,
Catanduanes; ELPIDIO T. ZAFE, in his capacity as Councilor of Virac, Catanduanes; MARIANO
ALBERTO, in his capacity as Councilor of Virac, Catanduanes; JULIA A. GARCIA, in her capacity as
Councilor of Virac, Catanduanes; and PEDRO A. GUERRERO, in his capacity as Councilor of Virac,
Catanduanes, respondents.
NOCON, J.
This is a Petition for Prohibition with Preliminary Injunction with the Court of First Instance of Catanduanes filed
by appellant, Celestino Tatel, a businessman engaged in the import and export of abaca and other products
against the Municipal Council of Virac, Catanduanes and its municipal officials enjoining them from enforcing
Resolution No 29 1of the Council, declaring the warehouse of petitioner in barrio Sta. Elena of the said
municipality a public nuisance within the purview of Article 694 of the Civil Code of the Philippines and directing
the petitioner to remove and transfer said warehouse to a more suitable place within two (2) months from receipt
of the said resolution.
It appears from the records that on the basis of complaints received from the residents of barrio Sta. Elena on
March 18, 1966 against the disturbance caused by the operation of the abaca bailing machine inside the
warehouse of petitioner which affected the peace and tranquility of the neighborhood due to the smoke,
obnoxious odor and dust emitted by the machine, a committee was appointed by the municipal council of Virac to
investigate the matter. The committee noted the crowded nature of the neighborhood with narrow roads and the
surrounding residential houses, so much so that an accidental fire within the warehouse of the petitioner
occasioned by the continuance of the activity inside the warehouse and the storing of inflammable materials
created a danger to the lives and properties of the people within the neighborhood.
Resultantly, Resolution No. 29 was passed by the Municipal Council of Virac on April 22, 1966 declaring the
warehouse owned and operated by petitioner a public nuisance within the purview of Article 694 of the New Civil
Code. 2
His motion for reconsideration having been denied by the Municipal Council of Virac, petitioner instituted the
present petition for prohibition with preliminary injunction.
Respondent municipal officials contend that petitioner's warehouse was constructed in violation of Ordinance No.
13, series of 1952, prohibiting the construction of warehouses near a block of houses either in the poblacion or
barrios without maintaining the necessary distance of 200 meters from said block of houses to avoid loss of lives
and properties by accidental fire.
On the other hand, petitioner contends that said ordinance is unconstitutional, contrary to the due process and
equal protection clause of the Constitution and null and void for not having been passed in accordance with law.
The issue then boils down on whether petitioner's warehouse is a nuisance within the meaning of Article 694 of
the Civil Code and whether Ordinance No. 13, S. 1952 of the Municipality of Virac is unconstitutional and void.
In a decision dated September 18, 1969, the court a quo ruled as follows:
1. The warehouse in question was legally constructed under a valid permit issued by the municipality of
Virac in accordance with existing regulations and may not be destroyed or removed from its present
location;
2. Ordinance No. 13, series of 1952, is a legitimate and valid exercise of police power by the Municipal
Council of Virac is not (sic) unconstitutional and void as claimed by the petitioner;
3. The storage by the petitioner of abaca and copra in the warehouse is not only in violation of the
provisions of the ordinance but poses a grave danger to the safety of the lives and properties of the
residents of the neighborhood due to accidental fire and constitutes a public nuisance under the provisions
of Article 694 of the New Civil code of the Philippines and may be abated;
4. Accordingly, the petitioner is hereby directed to remove from the said warehouse all abaca and copra
and other inflammable articles stored therein which are prohibited under the provisions of Ordinance No.
13, within a period of two (2) months from the time this decision becomes final and that henceforth, the
petitioner is enjoined from storing such prohibited articles in the warehouse. With costs against petitioner.
Seeking appellate review, petitioner raised as errors of the court a quo:
1. In holding that Ordinance No. 13, series of 1952, of the Municipality of Virac, Catanduanes, is a
legitimate and valid exercise of police power of the Municipal Council, and therefore, constitutional;
2. In giving the ordinance a meaning other than and different from what it provided by declaring that
petitioner violated the same by using the warehouse for storage of abaca and copra when what is
prohibited and penalized by the ordinance is the construction of warehouses.
3. In refusing to take judicial notice of the fact that in the municipality, there are numerous establishments
similarly situated as appellants' warehouses but which are not prosecuted.
We find no merit in the Petition.
Ordinance No. 13, series of 1952, was passed by the Municipal Council of Virac in the exercise of its police
power. It is a settled principle of law that municipal corporations are agencies of the State for the promotion and
maintenance of local self-government and as such are endowed with the police powers in order to effectively
accomplish and carry out the declared objects of their creation. 3 Its authority emanates from the general welfare
clause under the Administrative Code, which reads:
The municipal council shall enact such ordinances and make such regulations, not repugnant to law, as
may be necessary to carry into effect and discharge the powers and duties conferred upon it by law and
such as shall seem necessary and proper to provide for the health and safety, promote the prosperity,
improve the morals, peace, good order, comfort and convenience of the municipality and the inhabitants
thereof, and for the protection of property therein. 4
For an ordinance to be valid, it must not only be within the corporate powers of the municipality to enact but must
also be passed according to the procedure prescribed by law, and must be in consonance with certain well
established and basic principles of a substantive nature. These principles require that a municipal ordinance (1)
must not contravene the Constitution or any statute (2) must not be unfair or oppressive (3) must not be partial or
discriminatory (4) must not prohibit but may regulate trade (5) must be general and consistent with public policy,
and (6) must not be unreasonable. 5 Ordinance No. 13, Series of 1952, meets these criteria.
As to the petitioner's second assignment of error, the trial court did not give the ordinance in question a meaning other
than what it says. Ordinance No. 13 passed by the Municipal Council of Virac on December 29, 1952, 6 reads:
AN ORDINANCE STRICTLY PROHIBITING THE CONSTRUCTION OF WAREHOUSE IN ANY FORM NEAR A
BLOCK OF HOUSES EITHER IN POBLACION OR BARRIO WITH NECESSARY DISTANCE TO AVOID
GREAT LOSSES OF PROPERTY AND LIVES BY FIRE ACCIDENT.
Section 1 provides:
It is strictly prohibited to construct warehouses in any form to any person, persons, entity, corporation or
merchants, wherein to keep or store copra, hemp, gasoline, petroleum, alcohol, crude oil, oil of turpentine and
the like products or materials if not within the distance of 200 meters from a block of houses either in the
poblacion or barrios to avoid great losses of properties inclusive lives by fire accident.
Section 2 provides: 7
Owners of warehouses in any form, are hereby given advice to remove their said warehouses this ordinance by
the Municipal Council, provided however, that if those warehouses now in existence should no longer be utilized
as such warehouse for the above-described products in Section 1 of this ordinance after a lapse of the time
given for the removal of the said warehouses now in existence, same warehouses shall be exempted from the
spirit of the provision of section 1 of this ordinance,provided further, that these warehouses now in existence,
shall in the future be converted into non-inflammable products and materials warehouses.
In spite of its fractured syntax, basically, what is regulated by the ordinance is the construction of warehouses wherein
inflammable materials are stored where such warehouses are located at a distance of 200 meters from a block of
houses and not the construction per se of a warehouse. The purpose is to avoid the loss of life and property in case of
fire which is one of the primordial obligation of the government.
This was also the observation of the trial court:
A casual glance of the ordinance at once reveals a manifest disregard of the elemental rules of syntax.
Experience, however, will show that this is not uncommon in law making bodies in small towns where local
authorities and in particular the persons charged with the drafting and preparation of municipal resolutions and
ordinances lack sufficient education and training and are not well grounded even on the basic and fundamental
elements of the English language commonly used throughout the country in such matters. Nevertheless, if one
scrutinizes the terms of the ordinance, it is clear that what is prohibited is the construction of warehouses by any
person, entity or corporation wherein copra, hemp, gasoline and other inflammable products mentioned in
Section 1 may be stored unless at a distance of not less than 200 meters from a block of houses either in the
poblacion or barrios in order to avoid loss of property and life due to fire. Under Section 2, existing warehouses
for the storage of the prohibited articles were given one year after the approval of the ordinance within which to
remove them but were allowed to remain in operation if they had ceased to store such prohibited articles.
The ambiguity therefore is more apparent than real and springs from simple error in grammatical construction but
otherwise, the meaning and intent is clear that what is prohibited is the construction or maintenance of
warehouses for the storage of inflammable articles at a distance within 200 meters from a block of houses either
in the poblacion or in the barrios. And the purpose of the ordinance is to avoid loss of life and property in case of
accidental fire which is one of the primordial and basic obligation of any government. 8
Clearly, the lower court did NOT add meaning other than or differrent from what was provided in the ordinance in
question. It merely stated the purpose of the ordinance and what it intends to prohibit to accomplish its purpose.
As to the third assignment of error, that warehouses similarly situated as that of the petitioner were not prosecuted,
suffice it to say that the mere fact that the municipal authorities of Virac have not proceeded against other warehouses
in the municipality allegedly violating Ordinance No. 13 is no reason to claim that the ordinance is discriminatory. A
distinction must be made between the law itself and the manner in which said law is implemented by the agencies in
charge with its administration and enforcement. There is no valid reason for the petitioner to complain, in the absence
of proof that the other bodegas mentioned by him are operating in violation of the ordinance and that the complaints
have been lodged against the bodegas concerned without the municipal authorities doing anything about it.
The objections interposed by the petitioner to the validity of the ordinance have not been substantiated. Its purpose is
well within the objectives of sound government. No undue restraint is placed upon the petitioner or for anybody to
engage in trade but merely a prohibition from storing inflammable products in the warehouse because of the danger of
fire to the lives and properties of the people residing in the vicinity. As far as public policy is concerned, there can be no
better policy than what has been conceived by the municipal government.
As to petitioner's contention of want of jurisdiction by the lower court we find no merit in the same. The case is a simple
civil suit for abatement of a nuisance, the original jurisdiction of which falls under the then Court of First Instance.
WHEREFORE, for lack of merit, the petition is hereby DISMISSED. Costs against petitioner.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.
G.R. No. 111097 July 20, 1994
MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners,
vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING
CORPORATION, respondents.
Aquilino G. Pimentel, Jr. and Associates for petitioners.
R.R. Torralba & Associates for private respondent.
CRUZ, J.:
There was instant opposition when PAGCOR announced the opening of a casino in Cagayan de Oro City. Civic
organizations angrily denounced the project. The religious elements echoed the objection and so did the
women's groups and the youth. Demonstrations were led by the mayor and the city legislators. The media
trumpeted the protest, describing the casino as an affront to the welfare of the city.
The trouble arose when in 1992, flush with its tremendous success in several cities, PAGCOR decided to expand
its operations to Cagayan de Oro City. To this end, it leased a portion of a building belonging to Pryce Properties
Corporation, Inc., one of the herein private respondents, renovated and equipped the same, and prepared to
inaugurate its casino there during the Christmas season.
The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile. On December 7,
1992, it enacted Ordinance No. 3353 reading as follows:
ORDINANCE NO. 3353
AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT AND CANCELLING EXISTING
BUSINESS PERMIT TO ANY ESTABLISHMENT FOR THE USING AND ALLOWING TO BE USED ITS
PREMISES OR PORTION THEREOF FOR THE OPERATION OF CASINO.
BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de Oro, in session assembled
that:
Sec. 1. — That pursuant to the policy of the city banning the operation of casino within its territorial
jurisdiction, no business permit shall be issued to any person, partnership or corporation for the operation
of casino within the city limits.
Sec. 2. — That it shall be a violation of existing business permit by any persons, partnership or corporation
to use its business establishment or portion thereof, or allow the use thereof by others for casino operation
and other gambling activities.
Sec. 3. — PENALTIES. — Any violation of such existing business permit as defined in the preceding
section shall suffer the following penalties, to wit:
a) Suspension of the business permit for sixty (60) days for the first offense and a fine of
P1,000.00/day
b) Suspension of the business permit for Six (6) months for the second offense, and a fine of
P3,000.00/day
c) Permanent revocation of the business permit and imprisonment of One (1) year, for the third and
subsequent offenses.
Sec. 4. — This Ordinance shall take effect ten (10) days from publication thereof.
Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93 reading as follows:
ORDINANCE NO. 3375-93
AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND PROVIDING PENALTY FOR
VIOLATION THEREFOR.
WHEREAS, the City Council established a policy as early as 1990 against CASINO under its Resolution
No. 2295;
WHEREAS, on October 14, 1992, the City Council passed another Resolution No. 2673, reiterating its
policy against the establishment of CASINO;
WHEREAS, subsequently, thereafter, it likewise passed Ordinance No. 3353, prohibiting the issuance of
Business Permit and to cancel existing Business Permit to any establishment for the using and allowing to
be used its premises or portion thereof for the operation of CASINO;
WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of the Local Government Code of 1991
(Rep. Act 7160) and under Art. 99, No. (4), Paragraph VI of the implementing rules of the Local
Government Code, the City Council as the Legislative Body shall enact measure to suppress any activity
inimical to public morals and general welfare of the people and/or regulate or prohibit such activity
pertaining to amusement or entertainment in order to protect social and moral welfare of the community;
NOW THEREFORE,
BE IT ORDAINED by the City Council in session duly assembled that:
Sec. 1. — The operation of gambling CASINO in the City of Cagayan de Oro is hereby prohibited.
 Sec. 2. — Any violation of this Ordinance shall be subject to the following penalties:
a) Administrative fine of P5,000.00 shall be imposed against the proprietor, partnership or corporation
undertaking the operation, conduct, maintenance of gambling CASINO in the City and closure thereof;
b) Imprisonment of not less than six (6) months nor more than one (1) year or a fine in the amount of
P5,000.00 or both at the discretion of the court against the manager, supervisor, and/or any person
responsible in the establishment, conduct and maintenance of gambling CASINO.
Sec. 3. — This Ordinance shall take effect ten (10) days after its publication in a local newspaper of
general circulation.
Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as intervenor and
supplemental petitioner. Their challenge succeeded. On March 31, 1993, the Court of Appeals declared the
ordinances invalid and issued the writ prayed for to prohibit their enforcement. 1 Reconsideration of this decision
was denied on July 13, 1993. 2
Cagayan de Oro City and its mayor are now before us in this petition for review under Rule 45 of the Rules of
Court. 3 They aver that the respondent Court of Appeals erred in holding that:
1. Under existing laws, the Sangguniang Panlungsod of the City of Cagayan de Oro does not have the
power and authority to prohibit the establishment and operation of a PAGCOR gambling casino within the
City's territorial limits.
2. The phrase "gambling and other prohibited games of chance" found in Sec. 458, par. (a), sub-par. (1) —
(v) of R.A. 7160 could only mean "illegal gambling."
3. The questioned Ordinances in effect annul P.D. 1869 and are therefore invalid on that point.
4. The questioned Ordinances are discriminatory to casino and partial to cockfighting and are therefore
invalid on that point.
5. The questioned Ordinances are not reasonable, not consonant with the general powers and purposes of
the instrumentality concerned and inconsistent with the laws or policy of the State.
6. It had no option but to follow the ruling in the case of Basco, et al. v. PAGCOR, G.R. No. 91649, May 14,
1991, 197 SCRA 53 in disposing of the issues presented in this present case.
PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all games of chance,
including casinos on land and sea within the territorial jurisdiction of the Philippines. In Basco v. Philippine
Amusements and Gaming Corporation, 4 this Court sustained the constitutionality of the decree and even cited
the benefits of the entity to the national economy as the third highest revenue-earner in the government, next
only to the BIR and the Bureau of Customs.
Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances for the purposes
indicated in the Local Government Code. It is expressly vested with the police power under what is known as the
General Welfare Clause now embodied in Section 16 as follows:
Sec. 16. — General Welfare. — Every local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient
and effective governance, and those which are essential to the promotion of the general welfare. Within
their respective territorial jurisdictions, local government units shall ensure and support, among other
things, the preservation and enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of appropriate and self-reliant
scientific and technological capabilities, improve public morals, enhance economic prosperity and social
justice, promote full employment among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants.
In addition, Section 458 of the said Code specifically declares that:
Sec. 458. — Powers, Duties, Functions and Compensation. — (a) The Sangguniang Panlungsod, as the
legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper
exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective city government,
and in this connection, shall:
xxx xxx xxx
(v) Enact ordinances intended to prevent, suppress and impose appropriate penalties for habitual
drunkenness in public places, vagrancy, mendicancy, prostitution, establishment and maintenance of
houses of ill repute, gamblingand other prohibited games of chance, fraudulent devices and ways to
obtain money or property, drug addiction, maintenance of drug dens, drug pushing, juvenile
delinquency, the printing, distribution or exhibition of obscene or pornographic materials or
publications, and such other activities inimical to the welfare and morals of the inhabitants of the city;
This section also authorizes the local government units to regulate properties and businesses within their
territorial limits in the interest of the general welfare. 5
The petitioners argue that by virtue of these provisions, the Sangguniang Panlungsod may prohibit the operation
of casinos because they involve games of chance, which are detrimental to the people. Gambling is not allowed
by general law and even by the Constitution itself. The legislative power conferred upon local government units
may be exercised over all kinds of gambling and not only over "illegal gambling" as the respondents erroneously
argue. Even if the operation of casinos may have been permitted under P.D. 1869, the government of Cagayan
de Oro City has the authority to prohibit them within its territory pursuant to the authority entrusted to it by the
Local Government Code.
It is submitted that this interpretation is consonant with the policy of local autonomy as mandated in Article II,
Section 25, and Article X of the Constitution, as well as various other provisions therein seeking to strengthen the
character of the nation. In giving the local government units the power to prevent or suppress gambling and other
social problems, the Local Government Code has recognized the competence of such communities to determine
and adopt the measures best expected to promote the general welfare of their inhabitants in line with the policies
of the State.
The petitioners also stress that when the Code expressly authorized the local government units to prevent and
suppress gambling and other prohibited games of chance, like craps, baccarat, blackjack and roulette, it
meant allforms of gambling without distinction. Ubi lex non distinguit, nec nos distinguere debemos. 6 Otherwise,
it would have expressly excluded from the scope of their power casinos and other forms of gambling authorized
by special law, as it could have easily done. The fact that it did not do so simply means that the local government
units are permitted to prohibit all kinds of gambling within their territories, including the operation of casinos.
The adoption of the Local Government Code, it is pointed out, had the effect of modifying the charter of the
PAGCOR. The Code is not only a later enactment than P.D. 1869 and so is deemed to prevail in case of
inconsistencies between them. More than this, the powers of the PAGCOR under the decree are expressly
discontinued by the Code insofar as they do not conform to its philosophy and provisions, pursuant to Par. (f) of
its repealing clause reading as follows:
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this
Code are hereby repealed or modified accordingly.
It is also maintained that assuming there is doubt regarding the effect of the Local Government Code on P.D.
1869, the doubt must be resolved in favor of the petitioners, in accordance with the direction in the Code calling
for its liberal interpretation in favor of the local government units. Section 5 of the Code specifically provides:
Sec. 5. Rules of Interpretation. — In the interpretation of the provisions of this Code, the following rules
shall apply:
(a) Any provision on a power of a local government unit shall be liberally interpreted in its favor, and in case
of doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower local
government unit. Any fair and reasonable doubt as to the existence of the power shall be interpreted in
favor of the local government unit concerned;
xxx xxx xxx
(c) The general welfare provisions in this Code shall be liberally interpreted to give more powers to local
government units in accelerating economic development and upgrading the quality of life for the people in
the community; . . . (Emphasis supplied.)
Finally, the petitioners also attack gambling as intrinsically harmful and cite various provisions of the Constitution
and several decisions of this Court expressive of the general and official disapprobation of the vice. They invoke
the State policies on the family and the proper upbringing of the youth and, as might be expected, call attention to
the old case of U.S. v. Salaveria,7 which sustained a municipal ordinance prohibiting the playing of panguingue.
The petitioners decry the immorality of gambling. They also impugn the wisdom of P.D. 1869 (which they
describe as "a martial law instrument") in creating PAGCOR and authorizing it to operate casinos "on land and
sea within the territorial jurisdiction of the Philippines."
This is the opportune time to stress an important point.
The morality of gambling is not a justiciable issue. Gambling is not illegal per se. While it is generally considered
inimical to the interests of the people, there is nothing in the Constitution categorically proscribing or penalizing
gambling or, for that matter, even mentioning it at all. It is left to Congress to deal with the activity as it sees fit. In
the exercise of its own discretion, the legislature may prohibit gambling altogether or allow it without limitation or
it may prohibit some forms of gambling and allow others for whatever reasons it may consider sufficient. Thus, it
has prohibited jueteng and monte but permits lotteries, cockfighting and horse-racing. In making such choices,
Congress has consulted its own wisdom, which this Court has no authority to review, much less reverse. Well
has it been said that courts do not sit to resolve the merits of conflicting theories. 8 That is the prerogative of the
political departments. It is settled that questions regarding the wisdom, morality, or practicibility of statutes are not
addressed to the judiciary but may be resolved only by the legislative and executive departments, to which the
function belongs in our scheme of government. That function is exclusive. Whichever way these branches
decide, they are answerable only to their own conscience and the constituents who will ultimately judge their
acts, and not to the courts of justice.
The only question we can and shall resolve in this petition is the validity of Ordinance No. 3355 and Ordinance
No. 3375-93 as enacted by the Sangguniang Panlungsod of Cagayan de Oro City. And we shall do so only by
the criteria laid down by law and not by our own convictions on the propriety of gambling.
The tests of a valid ordinance are well established. A long line of decisions 9 has held that to be valid, an
ordinance must conform to the following substantive requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.
4) It must not prohibit but may regulate trade.
 5) It must be general and consistent with public policy.
6) It must not be unreasonable.
We begin by observing that under Sec. 458 of the Local Government Code, local government units are
authorized to prevent or suppress, among others, "gambling and other prohibited games of chance." Obviously,
this provision excludes games of chance which are not prohibited but are in fact permitted by law. The petitioners
are less than accurate in claiming that the Code could have excluded such games of chance but did not. In fact it
does. The language of the section is clear and unmistakable. Under the rule of noscitur a sociis, a word or phrase
should be interpreted in relation to, or given the same meaning of, words with which it is associated. Accordingly,
we conclude that since the word "gambling" is associated with "and other prohibited games of chance," the word
should be read as referring to only illegal gambling which, like the other prohibited games of chance, must be
prevented or suppressed.
We could stop here as this interpretation should settle the problem quite conclusively. But we will not. The
vigorous efforts of the petitioners on behalf of the inhabitants of Cagayan de Oro City, and the earnestness of
their advocacy, deserve more than short shrift from this Court.
The apparent flaw in the ordinances in question is that they contravene P.D. 1869 and the public policy embodied
therein insofar as they prevent PAGCOR from exercising the power conferred on it to operate a casino in
Cagayan de Oro City. The petitioners have an ingenious answer to this misgiving. They deny that it is the
ordinances that have changed P.D. 1869 for an ordinance admittedly cannot prevail against a statute. Their
theory is that the change has been made by the Local Government Code itself, which was also enacted by the
national lawmaking authority. In their view, the decree has been, not really repealed by the Code, but merely
"modified pro tanto" in the sense that PAGCOR cannot now operate a casino over the objection of the local
government unit concerned. This modification of P.D. 1869 by the Local Government Code is permissible
because one law can change or repeal another law.
It seems to us that the petitioners are playing with words. While insisting that the decree has only been
"modifiedpro tanto," they are actually arguing that it is already dead, repealed and useless for all intents and
purposes because the Code has shorn PAGCOR of all power to centralize and regulate casinos. Strictly
speaking, its operations may now be not only prohibited by the local government unit; in fact, the prohibition is
not only discretionary but mandated by Section 458 of the Code if the word "shall" as used therein is to be given
its accepted meaning. Local government units have now no choice but to prevent and suppress gambling, which
in the petitioners' view includes both legal and illegal gambling. Under this construction, PAGCOR will have no
more games of chance to regulate or centralize as they must all be prohibited by the local government units
pursuant to the mandatory duty imposed upon them by the Code. In this situation, PAGCOR cannot continue to
exist except only as a toothless tiger or a white elephant and will no longer be able to exercise its powers as a
prime source of government revenue through the operation of casinos.
It is noteworthy that the petitioners have cited only Par. (f) of the repealing clause, conveniently discarding the
rest of the provision which painstakingly mentions the specific laws or the parts thereof which are repealed (or
modified) by the Code. Significantly, P.D. 1869 is not one of them. A reading of the entire repealing clause, which
is reproduced below, will disclose the omission:
Sec. 534. Repealing Clause. — (a) Batas Pambansa Blg. 337, otherwise known as the "Local Government
Code," Executive Order No. 112 (1987), and Executive Order No. 319 (1988) are hereby repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders, instructions, memoranda
and issuances related to or concerning the barangay are hereby repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund; Section 3, a (3)
and b (2) of Republic Act. No. 5447 regarding the Special Education Fund; Presidential Decree No. 144 as
amended by Presidential Decree Nos. 559 and 1741; Presidential Decree No. 231 as amended;
Presidential Decree No. 436 as amended by Presidential Decree No. 558; and Presidential Decree Nos.
381, 436, 464, 477, 526, 632, 752, and 1136 are hereby repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-funded projects.
(e) The following provisions are hereby repealed or amended insofar as they are inconsistent with the
provisions of this Code: Sections 2, 16, and 29 of Presidential Decree No. 704; Sections 12 of Presidential
Decree No. 87, as amended; Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of Presidential Decree
No. 463, as amended; and Section 16 of Presidential Decree No. 972, as amended, and
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof which are inconsistent with any of the provisions of this
Code are hereby repealed or modified accordingly.
Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the absence of a clear and
unmistakable showing of such intention. In Lichauco & Co. v. Apostol, 10 this Court explained:
The cases relating to the subject of repeal by implication all proceed on the assumption that if the act of
later date clearly reveals an intention on the part of the lawmaking power to abrogate the prior law, this
intention must be given effect; but there must always be a sufficient revelation of this intention, and it has
become an unbending rule of statutory construction that the intention to repeal a former law will not be
imputed to the Legislature when it appears that the two statutes, or provisions, with reference to which the
question arises bear to each other the relation of general to special.
There is no sufficient indication of an implied repeal of P.D. 1869. On the contrary, as the private respondent
points out, PAGCOR is mentioned as the source of funding in two later enactments of Congress, to wit, R.A.
7309, creating a Board of Claims under the Department of Justice for the benefit of victims of unjust punishment
or detention or of violent crimes, and R.A. 7648, providing for measures for the solution of the power crisis.
PAGCOR revenues are tapped by these two statutes. This would show that the PAGCOR charter has not been
repealed by the Local Government Code but has in fact been improved as it were to make the entity more
responsive to the fiscal problems of the government.
It is a canon of legal hermeneutics that instead of pitting one statute against another in an inevitably destructive
confrontation, courts must exert every effort to reconcile them, remembering that both laws deserve a becoming
respect as the handiwork of a coordinate branch of the government. On the assumption of a conflict between
P.D. 1869 and the Code, the proper action is not to uphold one and annul the other but to give effect to both by
harmonizing them if possible. This is possible in the case before us. The proper resolution of the problem at hand
is to hold that under the Local Government Code, local government units may (and indeed must) prevent and
suppress all kinds of gambling within their territories except only those allowed by statutes like P.D. 1869. The
exception reserved in such laws must be read into the Code, to make both the Code and such laws equally
effective and mutually complementary.
This approach would also affirm that there are indeed two kinds of gambling, to wit, the illegal and those
authorized by law. Legalized gambling is not a modern concept; it is probably as old as illegal gambling, if not
indeed more so. The petitioners' suggestion that the Code authorizes them to prohibit all kinds of gambling would
erase the distinction between these two forms of gambling without a clear indication that this is the will of the
legislature. Plausibly, following this theory, the City of Manila could, by mere ordinance, prohibit the Philippine
Charity Sweepstakes Office from conducting a lottery as authorized by R.A. 1169 and B.P. 42 or stop the races
at the San Lazaro Hippodrome as authorized by R.A. 309 and R.A. 983.
In light of all the above considerations, we see no way of arriving at the conclusion urged on us by the petitioners
that the ordinances in question are valid. On the contrary, we find that the ordinances violate P.D. 1869, which
has the character and force of a statute, as well as the public policy expressed in the decree allowing the playing
of certain games of chance despite the prohibition of gambling in general.
The rationale of the requirement that the ordinances should not contravene a statute is obvious. Municipal
governments are only agents of the national government. Local councils exercise only delegated legislative
powers conferred on them by Congress as the national lawmaking body. The delegate cannot be superior to the
principal or exercise powers higher than those of the latter. It is a heresy to suggest that the local government
units can undo the acts of Congress, from which they have derived their power in the first place, and negate by
mere ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their powers and rights wholly from the legislature. It
breathes into them the breath of life, without which they cannot exist. As it creates, so it may destroy. As it
may destroy, it may abridge and control. Unless there is some constitutional limitation on the right, the
legislature might, by a single act, and if we can suppose it capable of so great a folly and so great a wrong,
sweep from existence all of the municipal corporations in the State, and the corporation could not prevent
it. We know of no limitation on the right so far as to the corporation themselves are concerned. They are, so
to phrase it, the mere tenants at will of the legislature. 11
This basic relationship between the national legislature and the local government units has not been enfeebled
by the new provisions in the Constitution strengthening the policy of local autonomy. Without meaning to detract
from that policy, we here confirm that Congress retains control of the local government units although in
significantly reduced degree now than under our previous Constitutions. The power to create still includes the
power to destroy. The power to grant still includes the power to withhold or recall. True, there are certain notable
innovations in the Constitution, like the direct conferment on the local government units of the power to
tax, 12 which cannot now be withdrawn by mere statute. By and large, however, the national legislature is still the
principal of the local government units, which cannot defy its will or modify or violate it.
The Court understands and admires the concern of the petitioners for the welfare of their constituents and their
apprehensions that the welfare of Cagayan de Oro City will be endangered by the opening of the casino. We
share the view that "the hope of large or easy gain, obtained without special effort, turns the head of the
workman" 13 and that "habitual gambling is a cause of laziness and ruin." 14 In People v. Gorostiza, 15 we
declared: "The social scourge of gambling must be stamped out. The laws against gambling must be enforced to
the limit." George Washington called gambling "the child of avarice, the brother of iniquity and the father of
mischief." Nevertheless, we must recognize the power of the legislature to decide, in its own wisdom, to legalize
certain forms of gambling, as was done in P.D. 1869 and impliedly affirmed in the Local Government Code. That
decision can be revoked by this Court only if it contravenes the Constitution as the touchstone of all official acts.
We do not find such contravention here.
We hold that the power of PAGCOR to centralize and regulate all games of chance, including casinos on land
and sea within the territorial jurisdiction of the Philippines, remains unimpaired. P.D. 1869 has not been modified
by the Local Government Code, which empowers the local government units to prevent or suppress only those
forms of gambling prohibited by law.
Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot be amended or
nullified by a mere ordinance. Hence, it was not competent for the Sangguniang Panlungsod of Cagayan de Oro
City to enact Ordinance No. 3353 prohibiting the use of buildings for the operation of a casino and Ordinance No.
3375-93 prohibiting the operation of casinos. For all their praiseworthy motives, these ordinances are contrary to
P.D. 1869 and the public policy announced therein and are therefore ultra vires and void.
WHEREFORE, the petition is DENIED and the challenged decision of the respondent Court of Appeals is
AFFIRMED, with costs against the petitioners. It is so ordered.
Narvasa, C.J., Feliciano, Bidin, Regalado, Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan
and Mendoza, JJ., concur.
Separate Opinions
PADILLA, J., concurring:
I concur with the majority holding that the city ordinances in question cannot modify much less repeal PAGCOR's
general authority to establish and maintain gambling casinos anywhere in the Philippines under Presidential
Decree No. 1869.
In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA 52, I stated in a separate
opinion that:
 . . . I agree with the decision insofar as it holds that the prohibition, control, and regulation of the entire
activity known as gambling properly pertain to "state policy". It is, therefore, the political departments of
government, namely, the legislative and the executive that should decide on what government should do in
the entire area of gambling, and assume full responsibility to the people for such policy." (Emphasis
supplied)
However, despite the legality of the opening and operation of a casino in Cagayan de Oro City by respondent
PAGCOR, I wish to reiterate my view that gambling in any form runs counter to the government's own efforts to
re-establish and resurrect the Filipino moral character which is generally perceived to be in a state of continuing
erosion.
It is in the light of this alarming perspective that I call upon government to carefully weigh the advantages and
disadvantages of setting up more gambling facilities in the country.
That the PAGCOR contributes greatly to the coffers of the government is not enough reason for setting up more
gambling casinos because, undoubtedly, this will not help improve, but will cause a further deterioration in the
Filipino moral character.
It is worth remembering in this regard that, 1) what is legal is not always moral and 2) the ends do not always
justify the means.
As in Basco, I can easily visualize prostitution at par with gambling. And yet, legalization of the former will not
render it any less reprehensible even if substantial revenue for the government can be realized from it. The same
is true of gambling.
In the present case, it is my considered view that the national government (through PAGCOR) should re-examine
and re-evaluate its decision of imposing the gambling casino on the residents of Cagayan de Oro City; for it is
abundantly clear that public opinion in the city is very much against it, and again the question must be seriously
deliberated: will the prospects of revenue to be realized from the casino outweigh the further destruction of the
Filipino sense of values?
DAVIDE, JR., J., concurring:
While I concur in part with the majority, I wish, however, to express my views on certain aspects of this case.
I.
It must at once be noted that private respondent Pryce Properties Corporation (PRYCE) directly filed with the
Court of Appeals its so-called petition for prohibition, thereby invoking the said court's original jurisdiction to issue
writs of prohibition under Section 9(1) of B.P. Blg. 129. As I see it, however, the principal cause of action therein
is one for declaratory relief: to declare null and unconstitutional — for, inter alia, having been enacted without or
in excess of jurisdiction, for impairing the obligation of contracts, and for being inconsistent with public policy —
the challenged ordinances enacted by the Sangguniang Panglungsod of the City of Cagayan de Oro. The
intervention therein of public respondent Philippine Amusement and Gaming Corporation (PAGCOR) further
underscores the "declaratory relief" nature of the action. PAGCOR assails the ordinances for being contrary to
the non-impairment and equal protection clauses of the Constitution, violative of the Local Government Code,
and against the State's national policy declared in P.D. No. 1869. Accordingly, the Court of Appeals does not
have jurisdiction over the nature of the action. Even assuming arguendo that the case is one for prohibition, then,
under this Court's established policy relative to the hierarchy of courts, the petition should have been filed with
the Regional Trial Court of Cagayan de Oro City. I find no special or compelling reason why it was not filed with
the said court. I do not wish to entertain the thought that PRYCE doubted a favorable verdict therefrom, in which
case the filing of the petition with the Court of Appeals may have been impelled by tactical considerations. A
dismissal of the petition by the Court of Appeals would have been in order pursuant to our decisions in People vs.
Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs. Vasquez (217 SCRA 633 [1993]). In Cuaresma,
this Court stated:
A last word. This court's original jurisdiction to issue writs of certiorari (as well as
prohibition, mandamus, quo warranto, habeas corpus and injunction) is not exclusive. It is shared by this
Court with Regional Trial Courts (formerly Courts of First Instance), which may issue the writ, enforceable
in any part of their respective regions. It is also shared by this court, and by the Regional Trial Court, with
the Court of Appeals (formerly, Intermediate Appellate Court), although prior to the effectivity of Batas
Pambansa Bilang 129 on August 14, 1981, the latter's competence to issue the extraordinary writs was
restricted by those "in aid of its appellate jurisdiction." This concurrence of jurisdiction is not, however, to be
taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the
court to which application therefor will be directed. There is after all a hierarchy of courts. That hierarchy is
determinative of the revenue of appeals, and should also serve as a general determinant of the appropriate
forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly
indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be
filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct
invocation of the Supreme Court's original jurisdiction to issue these writs should be allowed only when
there are special and important reasons therefor, clearly and specifically set out in the petition. This is
established policy. It is a policy that is necessary to prevent inordinate demands upon the Court's time and
attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further
over-crowding of the Court's docket. Indeed, the removal of the restriction of the jurisdiction of the Court of
Appeals in this regard, supra — resulting from the deletion of the qualifying phrase, "in aid of its appellate
jurisdiction" — was evidently intended precisely to relieve this Court pro tanto of the burden of dealing with
applications for extraordinary writs which, but for the expansion of the Appellate Court's corresponding
jurisdiction, would have had to be filed with it. (citations omitted)
And in Vasquez, this Court said:
One final observation. We discern in the proceedings in this case a propensity on the part of petitioner,
and, for that matter, the same may be said of a number of litigants who initiate recourses before us, to
disregard the hierarchy of courts in our judicial system by seeking relief directly from this Court despite the
fact that the same is available in the lower courts in the exercise of their original or concurrent jurisdiction,
or is even mandated by law to be sought therein. This practice must be stopped, not only because of the
imposition upon the previous time of this Court but also because of the inevitable and resultant delay,
 intended or otherwise, in the adjudication of the case which often has to be remanded or referred to the
lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues
since this Court is not a trier of facts. We, therefore, reiterate the judicial policy that this Court will not
entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts or where
exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise
of our primary jurisdiction.
II.
The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance Prohibiting the Issuance of
Business Permit and Canceling Existing Business Permit To Any Establishment for the Using and Allowing to be
Used Its Premises or Portion Thereof for the Operation of Casino," and (b) Ordinance No. 3375-93 entitled, "An
Ordinance Prohibiting the Operation of Casino and Providing Penalty for Violation Therefor." They were enacted
to implement Resolution No. 2295 entitled, "Resolution Declaring As a Matter of Policy to Prohibit and/or Not to
Allow the Establishment of the Gambling Casino in the City of Cagayan de Oro," which was promulgated on 19
November 1990 — nearly two years before PRYCE and PAGCOR entered into a contract of lease under which
the latter leased a portion of the former's Pryce Plaza Hotel for the operation of a gambling casino — which
resolution was vigorously reiterated in Resolution No. 2673 of 19 October 1992.
The challenged ordinances were enacted pursuant to the Sangguniang Panglungsod's express powers conferred
by Section 458, paragraph (a), subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and (vii), Local Government Code,
and pursuant to its implied power under Section 16 thereof (the general welfare clause) which reads:
Sec. 16. General Welfare. — Every local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient
and effective governance, and those which are essential to the promotion of the general welfare. Within
their respective territorial jurisdictions, local government units shall ensure and support, among other
things, the preservation and enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of appropriate and self-reliant
scientific and technological capabilities, improve public morals, enhance economic prosperity and social
justice, promote full employment among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants.
The issue that necessarily arises is whether in granting local governments (such as the City of Cagayan de Oro)
the above powers and functions, the Local Government Code has, pro tanto, repealed P.D. No. 1869 insofar as
PAGCOR's general authority to establish and maintain gambling casinos anywhere in the Philippines is
concerned.
I join the majority in holding that the ordinances cannot repeal P.D. No. 1869.
III.
The nullification by the Court of Appeals of the challenged ordinances as unconstitutional primarily because it is
in contravention to P.D. No. 1869 is unwarranted. A contravention of a law is not necessarily a contravention of
the constitution. In any case, the ordinances can still stand even if they be conceded as offending P.D. No. 1869.
They can be reconciled, which is not impossible to do. So reconciled, the ordinances should be construed as not
applying to PAGCOR.
IV.
From the pleadings, it is obvious that the government and the people of Cagayan de Oro City are, for obvious
reasons, strongly against the opening of the gambling casino in their city. Gambling, even if legalized, would be
inimical to the general welfare of the inhabitants of the City, or of any place for that matter. The PAGCOR, as a
government-owned corporation, must consider the valid concerns of the people of the City of Cagayan de Oro
and should not impose its will upon them in an arbitrary, if not despotic, manner.
# Separate Opinions
PADILLA, J., concurring:
I concur with the majority holding that the city ordinances in question cannot modify much less repeal PAGCOR's
general authority to establish and maintain gambling casinos anywhere in the Philippines under Presidential
Decree No. 1869.
In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA 52, I stated in a separate
opinion that:
. . . I agree with the decision insofar as it holds that the prohibition, control, and regulation of the entire
activity known as gambling properly pertain to "state policy". It is, therefore, the political departments of
government, namely, the legislative and the executive that should decide on what government should do in
the entire area of gambling, and assume full responsibility to the people for such policy. (emphasis
supplied)
However, despite the legality of the opening and operation of a casino in Cagayan de Oro City by respondent
PAGCOR, I wish to reiterate my view that gambling in any form runs counter to the government's own efforts to
re-establish and resurrect the Filipino moral character which is generally perceived to be in a state of continuing
erosion.
It is in the light of this alarming perspective that I call upon government to carefully weigh the advantages and
disadvantages of setting up more gambling facilities in the country.
That the PAGCOR contributes greatly to the coffers of the government is not enough reason for setting up more
gambling casinos because, undoubtedly, this will not help improve, but will cause a further deterioration in the
Filipino moral character.
It is worth remembering in this regard that, 1) what is legal is not always moral and 2) the ends do not always
justify the means.
As in Basco, I can easily visualize prostitution at par with gambling. And yet, legalization of the former will not
render it any less reprehensible even if substantial revenue for the government can be realized from it. The same
is true of gambling.
In the present case, it is my considered view that the national government (through PAGCOR) should re-examine
and re-evaluate its decision of imposing the gambling casino on the residents of Cagayan de Oro City; for it is
abundantly clear that public opinion in the city is very much against it, and again the question must be seriously
deliberated: will the prospects of revenue to be realized from the casino outweigh the further destruction of the
Filipino sense of values?
DAVIDE, JR., J., concurring:
While I concur in part with the majority, I wish, however, to express my views on certain aspects of this case.
I.
It must at once be noted that private respondent Pryce Properties Corporation (PRYCE) directly filed with the
Court of Appeals its so-called petition for prohibition, thereby invoking the said court's original jurisdiction to issue
writs of prohibition under Section 9(1) of B.P. Blg. 129. As I see it, however, the principal cause of action therein
is one for declaratory relief: to declare null and unconstitutional — for, inter alia, having been enacted without or
in excess of jurisdiction, for impairing the obligation of contracts, and for being inconsistent with public policy —
the challenged ordinances enacted by the Sangguniang Panglungsod of the City of Cagayan de Oro. The
intervention therein of public respondent Philippine Amusement and Gaming Corporation (PAGCOR) further
underscores the "declaratory relief" nature of the action. PAGCOR assails the ordinances for being contrary to
the non-impairment and equal protection clauses of the Constitution, violative of the Local Government Code,
and against the State's national policy declared in P.D. No. 1869. Accordingly, the Court of Appeals does not
have jurisdiction over the nature of the action. Even assuming arguendo that the case is one for prohibition, then,
under this Court's established policy relative to the hierarchy of courts, the petition should have been filed with
the Regional Trial Court of Cagayan de Oro City. I find no special or compelling reason why it was not filed with
the said court. I do not wish to entertain the thought that PRYCE doubted a favorable verdict therefrom, in which
case the filing of the petition with the Court of Appeals may have been impelled by tactical considerations. A
dismissal of the petition by the Court of Appeals would have been in order pursuant to our decisions in People vs.
Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs. Vasquez (217 SCRA 633 [1993]). In Cuaresma,
this Court stated:
A last word. This court's original jurisdiction to issue writs of certiorari (as well as
prohibition, mandamus, quo warranto, habeas corpus and injunction) is not exclusive. It is shared by this
Court with Regional Trial Courts (formerly Courts of First Instance), which may issue the writ, enforceable
in any part of their respective regions. It is also shared by this court, and by the Regional Trial Court, with
the Court of Appeals (formerly, Intermediate Appellate Court), although prior to the effectivity of Batas
Pambansa Bilang 129 on August 14, 1981, the latter's competence to issue the extraordinary writs was
restricted by those "in aid of its appellate jurisdiction." This concurrence of jurisdiction is not, however, to be
taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the
court to which application therefor will be directed. There is after all a hierarchy of courts. That hierarchy is
determinative of the revenue of appeals, and should also serve as a general determinant of the appropriate
forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly
indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be
filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct
invocation of the Supreme Court's original jurisdiction to issue these writs should be allowed only when
there are special and important reasons therefor, clearly and specifically set out in the petition. This is
established policy. It is a policy that is necessary to prevent inordinate demands upon the Court's time and
attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further
over-crowding of the Court's docket. Indeed, the removal of the restriction of the jurisdiction of the Court of
Appeals in this regard, supra — resulting from the deletion of the qualifying phrase, "in aid of its appellate
jurisdiction" — was evidently intended precisely to relieve this Court pro tanto of the burden of dealing with
applications for extraordinary writs which, but for the expansion of the Appellate Court's corresponding
jurisdiction, would have had to be filed with it. (citations omitted)
And in Vasquez, this Court said:
One final observation. We discern in the proceedings in this case a propensity on the part of petitioner,
and, for that matter, the same may be said of a number of litigants who initiate recourses before us, to
disregard the hierarchy of courts in our judicial system by seeking relief directly from this Court despite the
fact that the same is available in the lower courts in the exercise of their original or concurrent jurisdiction,
or is even mandated by law to be sought therein. This practice must be stopped, not only because of the
imposition upon the previous time of this Court but also because of the inevitable and resultant delay,
intended or otherwise, in the adjudication of the case which often has to be remanded or referred to the
lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues
since this Court is not a trier of facts. We, therefore, reiterate the judicial policy that this Court will not
entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts or where
exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise
of our primary jurisdiction.
II.
The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance Prohibiting the Issuance of
Business Permit and Canceling Existing Business Permit To Any Establishment for the Using and Allowing to be
Used Its Premises or Portion Thereof for the Operation of Casino," and (b) Ordinance No. 3375-93 entitled, "An
Ordinance Prohibiting the Operation of Casino and Providing Penalty for Violation Therefor." They were enacted
to implement Resolution No. 2295 entitled, "Resolution Declaring As a Matter of Policy to Prohibit and/or Not to
Allow the Establishment of the Gambling Casino in the City of Cagayan de Oro," which was promulgated on 19
November 1990 — nearly two years before PRYCE and PAGCOR entered into a contract of lease under which
the latter leased a portion of the former's Pryce Plaza Hotel for the operation of a gambling casino — which
resolution was vigorously reiterated in Resolution No. 2673 of 19 October 1992.
The challenged ordinances were enacted pursuant to the Sangguniang Panglungsod's express powers conferred 5 Sec. 458, [2(vi-xv)]; [3(ii-vii)]; [4(i-ix)], Local Government Code, 1991.
by Section 458, paragraph (a), subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and (vii), Local Government Code, 6 Where the law does not distinguish, neither ought we to distinguish.
and pursuant to its implied power under Section 16 thereof (the general welfare clause) which reads: 7 39 Phil. 102.
8 Garcia v. Executive Secretary, 204 SCRA 516, quoting Cooley, Constitutional Limitations, 8th ed., 379-380.
Sec. 16. General Welfare. — Every local government unit shall exercise the powers expressly granted, 9 Tatel v. Municipality of Virac, 207 SCRA 157; Solicitor General v. Metropolitan Manila Authority, 204 SCRA
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient 837; De la Cruz v. Paras, 123 SCRA 569; U.S. v. Abandan, 24 Phil. 165.
and effective governance, and those which are essential to the promotion of the general welfare. Within 10 44 Phil. 138.
their respective territorial jurisdictions, local government units shall ensure and support, among other 11 Clinton v. Ceder Rapids, etc. Railroad Co., 24 Iowa 455.
things, the preservation and enrichment of culture, promote health and safety, enhance the right of the 12 Art. X, Sec. 5, Constitution.
people to a balanced ecology, encourage and support the development of appropriate and self-reliant 13 Planiol, Droit Civil, Vol. 2, No. 2210.
scientific and technological capabilities, improve public morals, enhance economic prosperity and social 14 Ibid.
justice, promote full employment among their residents, maintain peace and order, and preserve the 15 77 Phil. 88.
comfort and convenience of their inhabitants.

The issue that necessarily arises is whether in granting local governments (such as the City of Cagayan de Oro)
the above powers and functions, the Local Government Code has, pro tanto, repealed P.D. No. 1869 insofar as
PAGCOR's general authority to establish and maintain gambling casinos anywhere in the Philippines is
concerned.

I join the majority in holding that the ordinances cannot repeal P.D. No. 1869.

III.

The nullification by the Court of Appeals of the challenged ordinances as unconstitutional primarily because it is
in contravention to P.D. No. 1869 is unwarranted. A contravention of a law is not necessarily a contravention of
the constitution. In any case, the ordinances can still stand even if they be conceded as offending P.D. No. 1869.
They can be reconciled, which is not impossible to do. So reconciled, the ordinances should be construed as not
applying to PAGCOR.

IV.

From the pleadings, it is obvious that the government and the people of Cagayan de Oro City are, for obvious
reasons, strongly against the opening of the gambling casino in their city. Gambling, even if legalized, would be
inimical to the general welfare of the inhabitants of the City, or of any place for that matter. The PAGCOR, as a
government-owned corporation, must consider the valid concerns of the people of the City of Cagayan de Oro
and should not impose its will upon them in an arbitrary, if not despotic, manner.

#Footnotes

1 Rollo, pp. 64-94.

2 Ibid., pp. 53-62.
3 Pryce was dropped as private respondent in the resolution of the Court dated June 13, 1994.
4 197 SCRA 53.
[G.R. No. 118127. April 12, 2005]
CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor of the City of Manila, HON. JOSELITO L. ATIENZA, in
his capacity as Vice-Mayor of the City of Manila and Presiding Officer of the City Council of Manila, HON.
ERNESTO A. NIEVA, HON. GONZALO P. GONZALES, HON. AVELINO S. CAILIAN, HON. ROBERTO C.
OCAMPO, HON. ALBERTO DOMINGO, HON. HONORIO U. LOPEZ, HON. FRANCISCO G. VARONA, JR.,
HON. ROMUALDO S. MARANAN, HON. NESTOR C. PONCE, JR., HON. HUMBERTO B. BASCO, HON.
FLAVIANO F. CONCEPCION, JR., HON. ROMEO G. RIVERA, HON. MANUEL M. ZARCAL, HON. PEDRO S.
DE JESUS, HON. BERNARDITO C. ANG, HON. MANUEL L. QUIN, HON. JHOSEP Y. LOPEZ, HON. CHIKA G.
GO, HON. VICTORIANO A. MELENDEZ, HON. ERNESTO V.P. MACEDA, JR., HON. ROLANDO P. NIETO,
HON. DANILO V. ROLEDA, HON. GERINO A. TOLENTINO, JR., HON. MA. PAZ E. HERRERA, HON. JOEY D.
HIZON, HON. FELIXBERTO D. ESPIRITU, HON. KARLO Q. BUTIONG, HON. ROGELIO P. DELA PAZ, HON.
BERNARDO D. RAGAZA, HON. MA. CORAZON R. CABALLES, HON. CASIMIRO C. SISON, HON.
BIENVINIDO M. ABANTE, JR., HON. MA. LOURDES M. ISIP, HON. ALEXANDER S. RICAFORT, HON.
ERNESTO F. RIVERA, HON. LEONARDO L. ANGAT, and HON. JOCELYN B. DAWIS, in their capacity as
councilors of the City of Manila, petitioners, vs. HON. PERFECTO A.S. LAGUIO, JR., as Presiding Judge, RTC,
Manila and MALATE TOURIST DEVELOPMENT CORPORATION, respondents.
DECISION
TINGA, J.:
I know only that what is moral is what you feel good after and what is immoral is what you feel bad after.
Ernest Hermingway
Death in the Afternoon, Ch. 1
It is a moral and political axiom that any dishonorable act, if performed by oneself, is less immoral than if
performed by someone else, who would be well-intentioned in his dishonesty.
J. Christopher Gerald
Bonaparte in Egypt, Ch. I
The Courts commitment to the protection of morals is secondary to its fealty to the fundamental law of the
land. It is foremost a guardian of the Constitution but not the conscience of individuals. And if it need be, the Court
will not hesitate to make the hammer fall, and heavily in the words of Justice Laurel, and uphold the constitutional
guarantees when faced with laws that, though not lacking in zeal to promote morality, nevertheless fail to pass the
test of constitutionality.
The pivotal issue in this Petition[1] under Rule 45 (then Rule 42) of the Revised Rules on Civil Procedure
seeking the reversal of the Decision[2] in Civil Case No. 93-66511 of the Regional Trial Court (RTC) of Manila,
Branch 18 (lower court),[3] is the validity of Ordinance No. 7783 (the Ordinance) of the City of Manila.[4]
The antecedents are as follows:
Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in the
business of operating hotels, motels, hostels and lodging houses. [5] It built and opened Victoria Court in Malate
which was licensed as a motel although duly accredited with the Department of Tourism as a hotel.[6] On 28 June
1993, MTDC filed a Petition for Declaratory Relief with Prayer for a Writ of Preliminary Injunction and/or Temporary
Restraining Order[7] (RTC Petition) with the lower court impleading as defendants, herein petitioners City of Manila,
Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, and the members of the City Council of Manila (City Council).
MTDC prayed that the Ordinance, insofar as it includes motels and inns as among its prohibited establishments,
be declared invalid and unconstitutional.[8]
Enacted by the City Council[9] on 9 March 1993 and approved by petitioner City Mayor on 30 March 1993,
the said Ordinance is entitled
AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF BUSINESSES PROVIDING
CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-
MALATE AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES.[10]
The Ordinance is reproduced in full, hereunder:
SECTION 1. Any provision of existing laws and ordinances to the contrary notwithstanding, no person,
partnership, corporation or entity shall, in the Ermita-Malate area bounded by Teodoro M. Kalaw Sr. Street
in the North, Taft Avenue in the East, Vito Cruz Street in the South and Roxas Boulevard in the West, pursuant to
P.D. 499 be allowed or authorized to contract and engage in, any business providing certain forms of
amusement, entertainment, services and facilities where women are used as tools in entertainment and
which tend to disturb the community, annoy the inhabitants, and adversely affect the social and moral
welfare of the community, such as but not limited to:
1. Sauna Parlors
2. Massage Parlors
3. Karaoke Bars
4. Beerhouses
5. Night Clubs
6. Day Clubs
7. Super Clubs
8. Discotheques
9. Cabarets
10. Dance Halls
11. Motels
12. Inns
SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf of the said officials are prohibited
from issuing permits, temporary or otherwise, or from granting licenses and accepting payments for the
operation of business enumerated in the preceding section.
SEC. 3. Owners and/or operator of establishments engaged in, or devoted to, the businesses enumerated in
Section 1 hereof are hereby given three (3) months from the date of approval of this ordinance within
which to wind up business operations or to transfer to any place outside of the Ermita-Malate area or
convert said businesses to other kinds of business allowable within the area,such as but not limited to:
1. Curio or antique shop
2. Souvenir Shops
3. Handicrafts display centers
4. Art galleries
5. Records and music shops
6. Restaurants
7. Coffee shops
8. Flower shops
9. Music lounge and sing-along restaurants, with well-defined activities for wholesome family
entertainment that cater to both local and foreign clientele.
10. Theaters engaged in the exhibition, not only of motion pictures but also of cultural shows, stage
and theatrical plays, art exhibitions, concerts and the like.
11. Businesses allowable within the law and medium intensity districts as provided for in the zoning
ordinances for Metropolitan Manila, except new warehouse or open-storage depot, dock or yard, motor
repair shop, gasoline service station, light industry with any machinery, or funeral establishments.
SEC. 4. Any person violating any provisions of this ordinance, shall upon conviction, be punished by
imprisonment of one (1) year or fine of FIVE THOUSAND (P5,000.00) PESOS, or both, at the discretion of
the Court, PROVIDED, that in case of juridical person, the President, the General Manager, or person-in-charge
of operation shall be liable thereof; PROVIDED FURTHER, that in case of subsequent violation and
conviction, the premises of the erring establishment shall be closed and padlocked permanently.
SEC. 5. This ordinance shall take effect upon approval.
Enacted by the City Council of Manila at its regular session today, March 9, 1993.
Approved by His Honor, the Mayor on March 30, 1993. (Emphasis supplied)
In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly included in its
enumeration of prohibited establishments, motels and inns such as MTDCs Victoria Court considering that these
were not establishments for amusement or entertainment and they were not services or facilities for entertainment,
nor did they use women as tools for entertainment, and neither did they disturb the community, annoy the
inhabitants or adversely affect the social and moral welfare of the community.[11]
MTDC further advanced that the Ordinance was invalid and unconstitutional for the following reasons: (1)
The City Council has no power to prohibit the operation of motels as Section 458 (a) 4 (iv) [12] of the Local
Government Code of 1991 (the Code) grants to the City Council only the power to regulate the establishment,
operation and maintenance of hotels, motels, inns, pension houses, lodging houses and other similar
establishments; (2) The Ordinance is void as it is violative of Presidential Decree (P.D.) No. 499 [13] which
specifically declared portions of the Ermita-Malate area as a commercial zone with certain restrictions; (3)
The Ordinance does not constitute a proper exercise of police power as the compulsory closure of the motel
business has no reasonable relation to the legitimate municipal interests sought to be protected; (4)
The Ordinance constitutes an ex post facto law by punishing the operation of Victoria Court which was a legitimate
business prior to its enactment; (5) The Ordinance violates MTDCs constitutional rights in that: (a) it is confiscatory
and constitutes an invasion of plaintiffs property rights; (b) the City Council has no power to find as a fact that a
particular thing is a nuisance per se nor does it have the power to extrajudicially destroy it; and (6)
The Ordinance constitutes a denial of equal protection under the law as no reasonable basis exists for prohibiting
the operation of motels and inns, but not pension houses, hotels, lodging houses or other similar establishments,
and for prohibiting said business in the Ermita-Malate area but not outside of this area.[14]
In their Answer[15] dated 23 July 1993, petitioners City of Manila and Lim maintained that the City Council
had the power to prohibit certain forms of entertainment in order to protect the social and moral welfare of the
community as provided for in Section 458 (a) 4 (vii) of the Local Government Code,[16] which reads, thus:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative
body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the
city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of
the city as provided for under Section 22 of this Code, and shall:
(4) Regulate activities relative to the use of land, buildings and structures within the city in order to promote the
general welfare and for said purpose shall:
(vii) Regulate the establishment, operation, and maintenance of any entertainment or amusement
facilities, including theatrical performances, circuses, billiard pools, public dancing schools, public
dance halls, sauna baths, massage parlors, and other places for entertainment or amusement;
regulate such other events or activities for amusement or entertainment, particularly those which tend
to disturb the community or annoy the inhabitants, or require the suspension or suppression of the
same; or, prohibit certain forms of amusement or entertainment in order to protect the social and
moral welfare of the community.
Citing Kwong Sing v. City of Manila,[17] petitioners insisted that the power of regulation spoken of in the above-
quoted provision included the power to control, to govern and to restrain places of exhibition and amusement. [18]
Petitioners likewise asserted that the Ordinance was enacted by the City Council of Manila to protect the
social and moral welfare of the community in conjunction with its police power as found in Article III, Section 18(kk)
of Republic Act No. 409,[19] otherwise known as the Revised Charter of the City of Manila (Revised Charter of
Manila)[20] which reads, thus:
ARTICLE III
THE MUNICIPAL BOARD
Section 18. Legislative powers. The Municipal Board shall have the following legislative powers:
 (kk) To enact all ordinances it may deem necessary and proper for the sanitation and safety, the
furtherance of the prosperity, and the promotion of the morality, peace, good order, comfort,
convenience, and general welfare of the city and its inhabitants, and such others as may be
necessary to carry into effect and discharge the powers and duties conferred by this chapter; and to
fix penalties for the violation of ordinances which shall not exceed two hundred pesos fine or six
months imprisonment, or both such fine and imprisonment, for a single offense.
Further, the petitioners noted, the Ordinance had the presumption of validity; hence, private respondent had
the burden to prove its illegality or unconstitutionality.[21]
Petitioners also maintained that there was no inconsistency between P.D. 499 and the Ordinance as the
latter simply disauthorized certain forms of businesses and allowed the Ermita-Malate area to remain a commercial
zone.[22] The Ordinance, the petitioners likewise claimed, cannot be assailed as ex post facto as it was prospective
in operation.[23] The Ordinance also did not infringe the equal protection clause and cannot be denounced as class
legislation as there existed substantial and real differences between the Ermita-Malate area and other places in
the City of Manila.[24]
On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge Laguio) issued an ex-parte temporary
restraining order against the enforcement of the Ordinance.[25] And on 16 July 1993, again in an intrepid gesture,
he granted the writ of preliminary injunction prayed for by MTDC.[26]
After trial, on 25 November 1994, Judge Laguio rendered the assailed Decision, enjoining the petitioners
from implementing the Ordinance. The dispositive portion of said Decisionreads:[27]
WHEREFORE, judgment is hereby rendered declaring Ordinance No. 778[3], Series of 1993, of the City of
Manila null and void, and making permanent the writ of preliminary injunction that had been issued by this Court
against the defendant. No costs.
SO ORDERED.[28]
Petitioners filed with the lower court a Notice of Appeal[29] on 12 December 1994, manifesting that they are
elevating the case to this Court under then Rule 42 on pure questions of law.[30]
On 11 January 1995, petitioners filed the present Petition, alleging that the following errors were committed
by the lower court in its ruling: (1) It erred in concluding that the subject ordinance is ultra vires, or otherwise, unfair,
unreasonable and oppressive exercise of police power; (2) It erred in holding that the
questioned Ordinance contravenes P.D. 499[31] which allows operators of all kinds of commercial establishments,
except those specified therein; and (3) It erred in declaring the Ordinance void and unconstitutional.[32]
In the Petition and in its Memorandum,[33] petitioners in essence repeat the assertions they made before the
lower court. They contend that the assailed Ordinance was enacted in the exercise of the inherent and plenary
power of the State and the general welfare clause exercised by local government units provided for in Art. 3, Sec.
18 (kk) of the Revised Charter of Manila and conjunctively, Section 458 (a) 4 (vii) of the Code. [34] They allege that
the Ordinance is a valid exercise of police power; it does not contravene P.D. 499; and that it enjoys the
presumption of validity.[35]
In its Memorandum[36] dated 27 May 1996, private respondent maintains that the Ordinance is ultra vires and
that it is void for being repugnant to the general law. It reiterates that the questioned Ordinance is not a valid
exercise of police power; that it is violative of due process, confiscatory and amounts to an arbitrary interference
with its lawful business; that it is violative of the equal protection clause; and that it confers on petitioner City Mayor
or any officer unregulated discretion in the execution of the Ordinance absent rules to guide and control his actions.
This is an opportune time to express the Courts deep sentiment and tenderness for the Ermita-Malate area
being its home for several decades. A long-time resident, the Court witnessed the areas many turn of events. It
relished its glory days and endured its days of infamy. Much as the Court harks back to the resplendent era of the
Old Manila and yearns to restore its lost grandeur, it believes that the Ordinance is not the fitting means to that
end. The Court is of the opinion, and so holds, that the lower court did not err in declaring the Ordinance, as it
did, ultra vires and therefore null and void.
The Ordinance is so replete with constitutional infirmities that almost every sentence thereof violates a
constitutional provision. The prohibitions and sanctions therein transgress the cardinal rights of persons enshrined
by the Constitution. The Court is called upon to shelter these rights from attempts at rendering them worthless.
The tests of a valid ordinance are well established. A long line of decisions has held that for an ordinance to
be valid, it must not only be within the corporate powers of the local government unit to enact and must be passed
according to the procedure prescribed by law, it must also conform to the following substantive requirements: (1)
must not contravene the Constitution or any statute; (2) must not be unfair or oppressive; (3) must not be partial or
discriminatory; (4) must not prohibit but may regulate trade; (5) must be general and consistent with public policy;
and (6) must not be unreasonable.[37]
Anent the first criterion, ordinances shall only be valid when they are not contrary to the Constitution and to
the laws.[38] The Ordinance must satisfy two requirements: it must pass muster under the test of constitutionality
and the test of consistency with the prevailing laws. That ordinances should be constitutional uphold the principle
of the supremacy of the Constitution. The requirement that the enactment must not violate existing law gives stress
to the precept that local government units are able to legislate only by virtue of their derivative legislative power, a
delegation of legislative power from the national legislature. The delegate cannot be superior to the principal or
exercise powers higher than those of the latter.[39]
This relationship between the national legislature and the local government units has not been enfeebled by
the new provisions in the Constitution strengthening the policy of local autonomy. The national legislature is still
the principal of the local government units, which cannot defy its will or modify or violate it.[40]
The Ordinance was passed by the City Council in the exercise of its police power, an enactment of the City
Council acting as agent of Congress. Local government units, as agencies of the State, are endowed with police
power in order to effectively accomplish and carry out the declared objects of their creation.[41] This delegated police
power is found in Section 16 of the Code, known as the general welfare clause, viz:
SECTION 16. General Welfare.Every local government unit shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and
effective governance, and those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced
ecology, encourage and support the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment
among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants.
Local government units exercise police power through their respective legislative bodies; in this case,
the sangguniang panlungsod or the city council. The Code empowers the legislative bodies to enact ordinances,
approve resolutions and appropriate funds for the general welfare of the province/city/municipality and its
inhabitants pursuant to Section 16 of the Code and in the proper exercise of the corporate powers of the
province/city/ municipality provided under the Code.[42] The inquiry in this Petition is concerned with the validity of
the exercise of such delegated power.
The Ordinance contravenes
the Constitution
The police power of the City Council, however broad and far-reaching, is subordinate to the constitutional
limitations thereon; and is subject to the limitation that its exercise must be reasonable and for the public good.[43] In
the case at bar, the enactment of the Ordinance was an invalid exercise of delegated power as it is unconstitutional
and repugnant to general laws.
The relevant constitutional provisions are the following:
SEC. 5. The maintenance of peace and order, the protection of life, liberty, and property, and the promotion of
the general welfare are essential for the enjoyment by all the people of the blessings of democracy.[44]
SEC. 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality
before the law of women and men.[45]
SEC. 1. No person shall be deprived of life, liberty or property without due process of law, nor shall any person
be denied the equal protection of laws.[46]
Sec. 9. Private property shall not be taken for public use without just compensation.[47]
A. The Ordinance infringes
the Due Process Clause
The constitutional safeguard of due process is embodied in the fiat (N)o person shall be deprived of life,
liberty or property without due process of law. . . .[48]
There is no controlling and precise definition of due process. It furnishes though a standard to which
governmental action should conform in order that deprivation of life, liberty or property, in each appropriate case,
be valid. This standard is aptly described as a responsiveness to the supremacy of reason, obedience to the
dictates of justice,[49] and as such it is a limitation upon the exercise of the police power.[50]
The purpose of the guaranty is to prevent governmental encroachment against the life, liberty and property
of individuals; to secure the individual from the arbitrary exercise of the powers of the government, unrestrained by
the established principles of private rights and distributive justice; to protect property from confiscation by legislative
enactments, from seizure, forfeiture, and destruction without a trial and conviction by the ordinary mode of judicial
procedure; and to secure to all persons equal and impartial justice and the benefit of the general law. [51]
The guaranty serves as a protection against arbitrary regulation, and private corporations and partnerships
are persons within the scope of the guaranty insofar as their property is concerned.[52]
This clause has been interpreted as imposing two separate limits on government, usually called procedural
due process and substantive due process.
Procedural due process, as the phrase implies, refers to the procedures that the government must follow
before it deprives a person of life, liberty, or property. Classic procedural due process issues are concerned with
what kind of notice and what form of hearing the government must provide when it takes a particular action.[53]
Substantive due process, as that phrase connotes, asks whether the government has an adequate reason
for taking away a persons life, liberty, or property. In other words, substantive due process looks to whether there
is a sufficient justification for the governments action.[54] Case law in the United States (U.S.) tells us that whether
there is such a justification depends very much on the level of scrutiny used.[55] For example, if a law is in an area
where only rational basis review is applied, substantive due process is met so long as the law is rationally related
to a legitimate government purpose. But if it is an area where strict scrutiny is used, such as for protecting
fundamental rights, then the government will meet substantive due process only if it can prove that the law is
necessary to achieve a compelling government purpose.[56]
The police power granted to local government units must always be exercised with utmost observance of the
rights of the people to due process and equal protection of the law. Such power cannot be exercised whimsically,
arbitrarily or despotically[57] as its exercise is subject to a qualification, limitation or restriction demanded by the
respect and regard due to the prescription of the fundamental law, particularly those forming part of the Bill of
Rights. Individual rights, it bears emphasis, may be adversely affected only to the extent that may fairly be required
by the legitimate demands of public interest or public welfare.[58] Due process requires the intrinsic validity of the
law in interfering with the rights of the person to his life, liberty and property.[59]
Requisites for the valid exercise
of Police Power are not met
To successfully invoke the exercise of police power as the rationale for the enactment of the Ordinance, and
to free it from the imputation of constitutional infirmity, not only must it appear that the interests of the public
generally, as distinguished from those of a particular class, require an interference with private rights, but the means
adopted must be reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon
individuals.[60] It must be evident that no other alternative for the accomplishment of the purpose less intrusive of
private rights can work. A reasonable relation must exist between the purposes of the police measure and the
means employed for its accomplishment, for even under the guise of protecting the public interest, personal rights
and those pertaining to private property will not be permitted to be arbitrarily invaded.[61]
Lacking a concurrence of these two requisites, the police measure shall be struck down as an arbitrary
intrusion into private rights[62] a violation of the due process clause.
 The Ordinance was enacted to address and arrest the social ills purportedly spawned by the establishments
in the Ermita-Malate area which are allegedly operated under the deceptive veneer of legitimate, licensed and tax-
paying nightclubs, bars, karaoke bars, girlie houses, cocktail lounges, hotels and motels. Petitioners insist that
even the Court in the case of Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of
Manila[63] had already taken judicial notice of the alarming increase in the rate of prostitution, adultery and
fornication in Manila traceable in great part to existence of motels, which provide a necessary atmosphere for
clandestine entry, presence and exit and thus become the ideal haven for prostitutes and thrill-seekers.[64]
The object of the Ordinance was, accordingly, the promotion and protection of the social and moral values
of the community. Granting for the sake of argument that the objectives of the Ordinance are within the scope of
the City Councils police powers, the means employed for the accomplishment thereof were unreasonable and
unduly oppressive.
It is undoubtedly one of the fundamental duties of the City of Manila to make all reasonable regulations
looking to the promotion of the moral and social values of the community. However, the worthy aim of fostering
public morals and the eradication of the communitys social ills can be achieved through means less restrictive of
private rights; it can be attained by reasonable restrictions rather than by an absolute prohibition. The closing down
and transfer of businesses or their conversion into businesses allowed under the Ordinance have no reasonable
relation to the accomplishment of its purposes. Otherwise stated, the prohibition of the enumerated establishments
will not per se protect and promote the social and moral welfare of the community; it will not in itself eradicate the
alluded social ills of prostitution, adultery, fornication nor will it arrest the spread of sexual disease in Manila.
Conceding for the nonce that the Ermita-Malate area teems with houses of ill-repute and establishments of
the like which the City Council may lawfully prohibit,[65] it is baseless and insupportable to bring within that
classification sauna parlors, massage parlors, karaoke bars, night clubs, day clubs, super clubs, discotheques,
cabarets, dance halls, motels and inns. This is not warranted under the accepted definitions of these terms. The
enumerated establishments are lawful pursuits which are not per se offensive to the moral welfare of the
community.
That these are used as arenas to consummate illicit sexual affairs and as venues to further the illegal
prostitution is of no moment. We lay stress on the acrid truth that sexual immorality, being a human frailty, may
take place in the most innocent of places that it may even take place in the substitute establishments enumerated
under Section 3 of the Ordinance. If the flawed logic of the Ordinance were to be followed, in the remote instance
that an immoral sexual act transpires in a church cloister or a court chamber, we would behold the spectacle of the
City of Manila ordering the closure of the church or court concerned. Every house, building, park, curb, street or
even vehicles for that matter will not be exempt from the prohibition. Simply because there are no pure places
where there are impure men. Indeed, even the Scripture and the Tradition of Christians churches continually recall
the presence and universality of sin in mans history.[66]
The problem, it needs to be pointed out, is not the establishment, which by its nature cannot be said to be
injurious to the health or comfort of the community and which in itself is amoral, but the deplorable human activity
that may occur within its premises. While a motel may be used as a venue for immoral sexual activity, it cannot for
that reason alone be punished. It cannot be classified as a house of ill-repute or as a nuisance per se on a mere
likelihood or a naked assumption. If that were so and if that were allowed, then the Ermita-Malate area would not
only be purged of its supposed social ills, it would be extinguished of its soul as well as every human activity,
reprehensible or not, in its every nook and cranny would be laid bare to the estimation of the authorities.
The Ordinance seeks to legislate morality but fails to address the core issues of morality. Try as
the Ordinance may to shape morality, it should not foster the illusion that it can make a moral man out of it because
immorality is not a thing, a building or establishment; it is in the hearts of men. The City Council instead should
regulate human conduct that occurs inside the establishments, but not to the detriment of liberty and privacy which
are covenants, premiums and blessings of democracy.
While petitioners earnestness at curbing clearly objectionable social ills is commendable, they unwittingly
punish even the proprietors and operators of wholesome, innocent establishments. In the instant case, there is a
clear invasion of personal or property rights, personal in the case of those individuals desirous of owning, operating
and patronizing those motels and property in terms of the investments made and the salaries to be paid to those
therein employed. If the City of Manila so desires to put an end to prostitution, fornication and other social ills, it
can instead impose reasonable regulations such as daily inspections of the establishments for any violation of the
conditions of their licenses or permits; it may exercise its authority to suspend or revoke their licenses for these
violations;[67] and it may even impose increased license fees. In other words, there are other means to reasonably
accomplish the desired end.
Means employed are
constitutionally infirm
The Ordinance disallows the operation of sauna parlors, massage parlors, karaoke bars, beerhouses, night
clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns in the Ermita-Malate area. In
Section 3 thereof, owners and/or operators of the enumerated establishments are given three (3) months from the
date of approval of the Ordinancewithin which to wind up business operations or to transfer to any place outside
the Ermita-Malate area or convert said businesses to other kinds of business allowable within the area. Further, it
states in Section 4 that in cases of subsequent violations of the provisions of the Ordinance, the premises of the
erring establishment shall be closed and padlocked permanently.
It is readily apparent that the means employed by the Ordinance for the achievement of its purposes, the
governmental interference itself, infringes on the constitutional guarantees of a persons fundamental right to liberty
and property.
Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include the right to exist and
the right to be free from arbitrary restraint or servitude. The term cannot be dwarfed into mere freedom from physical
restraint of the person of the citizen, but is deemed to embrace the right of man to enjoy the facilities with which he
has been endowed by his Creator, subject only to such restraint as are necessary for the common welfare. [68] In
accordance with this case, the rights of the citizen to be free to use his faculties in all lawful ways; to live and work
where he will; to earn his livelihood by any lawful calling; and to pursue any avocation are all deemed embraced in
the concept of liberty.[69]
The U.S. Supreme Court in the case of Roth v. Board of Regents,[70] sought to clarify the meaning of liberty.
It said:
While the Court has not attempted to define with exactness the liberty. . . guaranteed [by the Fifth and Fourteenth
Amendments], the term denotes not merely freedom from bodily restraint but also the right of the individual to
contract, to engage in any of the common occupations of life, to acquire useful knowledge, to marry, establish a
home and bring up children, to worship God according to the dictates of his own conscience, and generally to
enjoy those privileges long recognizedas essential to the orderly pursuit of happiness by free men. In a
Constitution for a free people, there can be no doubt that the meaning of liberty must be broad indeed.
In another case, it also confirmed that liberty protected by the due process clause includes personal decisions
relating to marriage, procreation, contraception, family relationships, child rearing, and education. In explaining the
respect the Constitution demands for the autonomy of the person in making these choices, the U.S. Supreme Court
explained:
These matters, involving the most intimate and personal choices a person may make in a lifetime, choices central
to personal dignity and autonomy, are central to the liberty protected by the Fourteenth Amendment. At the heart
of liberty is the right to define ones own concept of existence, of meaning, of universe, and of the mystery of
human life. Beliefs about these matters could not define the attributes of personhood where they formed under
compulsion of the State.[71]
Persons desirous to own, operate and patronize the enumerated establishments under Section 1 of
the Ordinance may seek autonomy for these purposes.
Motel patrons who are single and unmarried may invoke this right to autonomy to consummate their bonds
in intimate sexual conduct within the motels premisesbe it stressed that their consensual sexual behavior does not
contravene any fundamental state policy as contained in the Constitution.[72] Adults have a right to choose to forge
such relationships with others in the confines of their own private lives and still retain their dignity as free persons.
The liberty protected by the Constitution allows persons the right to make this choice.[73] Their right to liberty under
the due process clause gives them the full right to engage in their conduct without intervention of the government,
as long as they do not run afoul of the law. Liberty should be the rule and restraint the exception.
Liberty in the constitutional sense not only means freedom from unlawful government restraint; it must include
privacy as well, if it is to be a repository of freedom. The right to be let alone is the beginning of all freedomit is the
most comprehensive of rights and the right most valued by civilized men.[74]
The concept of liberty compels respect for the individual whose claim to privacy and interference demands
respect. As the case of Morfe v. Mutuc,[75] borrowing the words of Laski, so very aptly stated:
Man is one among many, obstinately refusing reduction to unity. His separateness, his isolation, are indefeasible;
indeed, they are so fundamental that they are the basis on which his civic obligations are built. He cannot
abandon the consequences of his isolation, which are, broadly speaking, that his experience is private, and the
will built out of that experience personal to himself. If he surrenders his will to others, he surrenders himself. If his
will is set by the will of others, he ceases to be a master of himself. I cannot believe that a man no longer a
master of himself is in any real sense free.
Indeed, the right to privacy as a constitutional right was recognized in Morfe, the invasion of which should be
justified by a compelling state interest. Morfe accorded recognition to the right to privacy independently of its
identification with liberty; in itself it is fully deserving of constitutional protection. Governmental powers should stop
short of certain intrusions into the personal life of the citizen. [76]
There is a great temptation to have an extended discussion on these civil liberties but the Court chooses to
exercise restraint and restrict itself to the issues presented when it should. The previous pronouncements of the
Court are not to be interpreted as a license for adults to engage in criminal conduct. The reprehensibility of such
conduct is not diminished. The Court only reaffirms and guarantees their right to make this choice. Should they be
prosecuted for their illegal conduct, they should suffer the consequences of the choice they have made. That,
ultimately, is their choice.
Modality employed is
unlawful taking
In addition, the Ordinance is unreasonable and oppressive as it substantially divests the respondent of the
beneficial use of its property.[77] The Ordinance in Section 1 thereof forbids the running of the enumerated
businesses in the Ermita-Malate area and in Section 3 instructs its owners/operators to wind up business
operations or to transfer outside the area or convert said businesses into allowed businesses. An ordinance which
permanently restricts the use of property that it can not be used for any reasonable purpose goes beyond regulation
and must be recognized as a taking of the property without just compensation.[78] It is intrusive and violative of the
private property rights of individuals.
The Constitution expressly provides in Article III, Section 9, that private property shall not be taken for public
use without just compensation. The provision is the most important protection of property rights in the Constitution.
This is a restriction on the general power of the government to take property. The constitutional provision is about
ensuring that the government does not confiscate the property of some to give it to others. In part too, it is about
loss spreading. If the government takes away a persons property to benefit society, then society should pay. The
principal purpose of the guarantee is to bar the Government from forcing some people alone to bear public burdens
which, in all fairness and justice, should be borne by the public as a whole.[79]
There are two different types of taking that can be identified. A possessory taking occurs when the
government confiscates or physically occupies property. A regulatory taking occurs when the governments
regulation leaves no reasonable economically viable use of the property.[80]
In the landmark case of Pennsylvania Coal v. Mahon,[81] it was held that a taking also could be found if
government regulation of the use of property went too far. When regulation reaches a certain magnitude, in most
if not in all cases there must be an exercise of eminent domain and compensation to support the act. While property
may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. [82]
No formula or rule can be devised to answer the questions of what is too far and when regulation becomes
a taking. In Mahon, Justice Holmes recognized that it was a question of degree and therefore cannot be disposed
of by general propositions. On many other occasions as well, the U.S. Supreme Court has said that the issue of
when regulation constitutes a taking is a matter of considering the facts in each case. The Court asks whether
justice and fairness require that the economic loss caused by public action must be compensated by the
government and thus borne by the public as a whole, or whether the loss should remain concentrated on those few
persons subject to the public action.[83]
What is crucial in judicial consideration of regulatory takings is that government regulation is a taking if it
leaves no reasonable economically viable use of property in a manner that interferes with reasonable expectations
for use.[84] A regulation that permanently denies all economically beneficial or productive use of land is, from the
owners point of view, equivalent to a taking unless principles of nuisance or property law that existed when the
owner acquired the land make the use prohibitable.[85] When the owner of real property has been called upon to
sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property
economically idle, he has suffered a taking.[86]
A regulation which denies all economically beneficial or productive use of land will require compensation
under the takings clause. Where a regulation places limitations on land that fall short of eliminating all economically
beneficial use, a taking nonetheless may have occurred, depending on a complex of factors including the
regulations economic effect on the landowner, the extent to which the regulation interferes with reasonable
investment-backed expectations and the character of government action. These inquiries are informed by the
purpose of the takings clause which is to prevent the government from forcing some people alone to bear public
burdens which, in all fairness and justice, should be borne by the public as a whole. [87]
A restriction on use of property may also constitute a taking if not reasonably necessary to the effectuation
of a substantial public purpose or if it has an unduly harsh impact on the distinct investment-backed expectations
of the owner.[88]
The Ordinance gives the owners and operators of the prohibited establishments three (3) months from its
approval within which to wind up business operations or to transfer to any place outside of the Ermita-Malate area
or convert said businesses to other kinds of business allowable within the area. The directive to wind up business
operations amounts to a closure of the establishment, a permanent deprivation of property, and is practically
confiscatory. Unless the owner converts his establishment to accommodate an allowed business, the structure
which housed the previous business will be left empty and gathering dust. Suppose he transfers it to another area,
he will likewise leave the entire establishment idle. Consideration must be given to the substantial amount of money
invested to build the edifices which the owner reasonably expects to be returned within a period of time. It is
apparent that the Ordinance leaves no reasonable economically viable use of property in a manner that interferes
with reasonable expectations for use.
The second and third options to transfer to any place outside of the Ermita-Malate area or to convert into
allowed businessesare confiscatory as well. The penalty of permanent closure in cases of subsequent violations
found in Section 4 of the Ordinance is also equivalent to a taking of private property.
The second option instructs the owners to abandon their property and build another one outside the Ermita-
Malate area. In every sense, it qualifies as a taking without just compensation with an additional burden imposed
on the owner to build another establishment solely from his coffers. The proffered solution does not put an end to
the problem, it merely relocates it. Not only is this impractical, it is unreasonable, onerous and oppressive. The
conversion into allowed enterprises is just as ridiculous. How may the respondent convert a motel into a restaurant
or a coffee shop, art gallery or music lounge without essentially destroying its property? This is a taking of private
property without due process of law, nay, even without compensation.
The penalty of closure likewise constitutes unlawful taking that should be compensated by the government.
The burden on the owner to convert or transfer his business, otherwise it will be closed permanently after a
subsequent violation should be borne by the public as this end benefits them as a whole.
Petitioners cannot take refuge in classifying the measure as a zoning ordinance. A zoning ordinance,
although a valid exercise of police power, which limits a wholesome property to a use which can not reasonably be
made of it constitutes the taking of such property without just compensation. Private property which is not noxious
nor intended for noxious purposes may not, by zoning, be destroyed without compensation. Such principle finds
no support in the principles of justice as we know them. The police powers of local government units which have
always received broad and liberal interpretation cannot be stretched to cover this particular taking.
Distinction should be made between destruction from necessity and eminent domain. It needs restating that
the property taken in the exercise of police power is destroyed because it is noxious or intended for a noxious
purpose while the property taken under the power of eminent domain is intended for a public use or purpose and
is therefore wholesome.[89] If it be of public benefit that a wholesome property remain unused or relegated to a
particular purpose, then certainly the public should bear the cost of reasonable compensation for the condemnation
of private property for public use.[90]
Further, the Ordinance fails to set up any standard to guide or limit the petitioners actions. It in no way
controls or guides the discretion vested in them. It provides no definition of the establishments covered by it and it
fails to set forth the conditions when the establishments come within its ambit of prohibition. The Ordinance confers
upon the mayor arbitrary and unrestricted power to close down establishments. Ordinances such as this, which
make possible abuses in its execution, depending upon no conditions or qualifications whatsoever other than the
unregulated arbitrary will of the city authorities as the touchstone by which its validity is to be tested, are
unreasonable and invalid. The Ordinance should have established a rule by which its impartial enforcement could
be secured.[91]
Ordinances placing restrictions upon the lawful use of property must, in order to be valid and constitutional,
specify the rules and conditions to be observed and conduct to avoid; and must not admit of the exercise, or of an
opportunity for the exercise, of unbridled discretion by the law enforcers in carrying out its provisions.[92]
Thus, in Coates v. City of Cincinnati,[93] as cited in People v. Nazario,[94] the U.S. Supreme Court struck down
an ordinance that had made it illegal for three or more persons to assemble on any sidewalk and there conduct
themselves in a manner annoying to persons passing by. The ordinance was nullified as it imposed no standard at
all because one may never know in advance what annoys some people but does not annoy others.
Similarly, the Ordinance does not specify the standards to ascertain which establishments tend to disturb the
community, annoy the inhabitants, and adversely affect the social and moral welfare of the community. The cited
case supports the nullification of the Ordinance for lack of comprehensible standards to guide the law enforcers in
carrying out its provisions.
Petitioners cannot therefore order the closure of the enumerated establishments without infringing the due
process clause. These lawful establishments may be regulated, but not prevented from carrying on their business.
This is a sweeping exercise of police power that is a result of a lack of imagination on the part of the City Council
and which amounts to an interference into personal and private rights which the Court will not countenance. In this
regard, we take a resolute stand to uphold the constitutional guarantee of the right to liberty and property.
Worthy of note is an example derived from the U.S. of a reasonable regulation which is a far cry from the ill-
considered Ordinance enacted by the City Council.
In FW/PBS, INC. v. Dallas,[95] the city of Dallas adopted a comprehensive ordinance regulating sexually
oriented businesses, which are defined to include adult arcades, bookstores, video stores, cabarets, motels, and
theaters as well as escort agencies, nude model studio and sexual encounter centers. Among other things, the
ordinance required that such businesses be licensed. A group of motel owners were among the three groups of
businesses that filed separate suits challenging the ordinance. The motel owners asserted that the city violated the
due process clause by failing to produce adequate support for its supposition that renting room for fewer than ten
(10) hours resulted in increased crime and other secondary effects. They likewise argued than the ten (10)-hour
limitation on the rental of motel rooms placed an unconstitutional burden on the right to freedom of association.
Anent the first contention, the U.S. Supreme Court held that the reasonableness of the legislative judgment
combined with a study which the city considered, was adequate to support the citys determination that motels
permitting room rentals for fewer than ten (10 ) hours should be included within the licensing scheme. As regards
the second point, the Court held that limiting motel room rentals to ten (10) hours will have no discernible effect on
personal bonds as those bonds that are formed from the use of a motel room for fewer than ten (10) hours are not
those that have played a critical role in the culture and traditions of the nation by cultivating and transmitting shared
ideals and beliefs.
The ordinance challenged in the above-cited case merely regulated the targeted businesses. It imposed
reasonable restrictions; hence, its validity was upheld.
The case of Ermita Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila,[96] it needs
pointing out, is also different from this case in that what was involved therein was a measure which regulated the
mode in which motels may conduct business in order to put an end to practices which could encourage vice and
immorality. Necessarily, there was no valid objection on due process or equal protection grounds as the ordinance
did not prohibit motels. The Ordinance in this case however is not a regulatory measure but is an exercise of an
assumed power to prohibit.[97]
The foregoing premises show that the Ordinance is an unwarranted and unlawful curtailment of property and
personal rights of citizens. For being unreasonable and an undue restraint of trade, it cannot, even under the guise
of exercising police power, be upheld as valid.
B. The Ordinance violates Equal
Protection Clause
Equal protection requires that all persons or things similarly situated should be treated alike, both as to rights
conferred and responsibilities imposed. Similar subjects, in other words, should not be treated differently, so as to
give undue favor to some and unjustly discriminate against others.[98] The guarantee means that no person or class
of persons shall be denied the same protection of laws which is enjoyed by other persons or other classes in like
circumstances.[99] The equal protection of the laws is a pledge of the protection of equal laws.[100] It limits
governmental discrimination. The equal protection clause extends to artificial persons but only insofar as their
property is concerned.[101]
The Court has explained the scope of the equal protection clause in this wise:
What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure Administration: The ideal situation is for
the laws benefits to be available to all, that none be placed outside the sphere of its coverage. Only thus could
chance and favor be excluded and the affairs of men governed by that serene and impartial uniformity, which is
of the very essence of the idea of law. There is recognition, however, in the opinion that what in fact exists cannot
approximate the ideal. Nor is the law susceptible to the reproach that it does not take into account the realities of
the situation. The constitutional guarantee then is not to be given a meaning that disregards what is, what does in
fact exist. To assure that the general welfare be promoted, which is the end of law, a regulatory measure may cut
into the rights to liberty and property. Those adversely affected may under such circumstances invoke the equal
protection clause only if they can show that the governmental act assailed, far from being inspired by the
attainment of the common weal was prompted by the spirit of hostility, or at the very least, discrimination that
finds no support in reason. Classification is thus not ruled out, it being sufficient to quote from the Tuason
decision anew that the laws operate equally and uniformly on all persons under similar circumstances or that all
persons must be treated in the same manner, the conditions not being different, both in the privileges conferred
and the liabilities imposed. Favoritism and undue preference cannot be allowed. For the principle is that equal
protection and security shall be given to every person under circumstances which, if not identical, are analogous.
If law be looked upon in terms of burden or charges, those that fall within a class should be treated in the same
fashion, whatever restrictions cast on some in the group equally binding on the rest.[102]
Legislative bodies are allowed to classify the subjects of legislation. If the classification is reasonable, the
law may operate only on some and not all of the people without violating the equal protection clause. [103] The
classification must, as an indispensable requisite, not be arbitrary. To be valid, it must conform to the following
requirements:
1) It must be based on substantial distinctions.
2) It must be germane to the purposes of the law.
3) It must not be limited to existing conditions only.
4) It must apply equally to all members of the class.[104]
In the Courts view, there are no substantial distinctions between motels, inns, pension houses, hotels, lodging
houses or other similar establishments. By definition, all are commercial establishments providing lodging and
usually meals and other services for the public. No reason exists for prohibiting motels and inns but not pension
houses, hotels, lodging houses or other similar establishments. The classification in the instant case is invalid as
similar subjects are not similarly treated, both as to rights conferred and obligations imposed. It is arbitrary as it
does not rest on substantial distinctions bearing a just and fair relation to the purpose of the Ordinance.
The Court likewise cannot see the logic for prohibiting the business and operation of motels in the Ermita-
Malate area but not outside of this area. A noxious establishment does not become any less noxious if located
outside the area.
The standard where women are used as tools for entertainment is also discriminatory as prostitutionone of
the hinted ills the Ordinance aims to banishis not a profession exclusive to women. Both men and women have an
equal propensity to engage in prostitution. It is not any less grave a sin when men engage in it. And why would the
assumption that there is an ongoing immoral activity apply only when women are employed and be inapposite
when men are in harness? This discrimination based on gender violates equal protection as it is not substantially
related to important government objectives.[105] Thus, the discrimination is invalid.
Failing the test of constitutionality, the Ordinance likewise failed to pass the test of consistency with prevailing
laws.
C. The Ordinance is repugnant
to general laws; it is ultra vires
The Ordinance is in contravention of the Code as the latter merely empowers local government units to
regulate, and not prohibit, the establishments enumerated in Section 1 thereof.
 The power of the City Council to regulate by ordinances the establishment, operation, and maintenance of
motels, hotels and other similar establishments is found in Section 458 (a) 4 (iv), which provides that:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative
body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the
city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of
the city as provided for under Section 22 of this Code, and shall:
(4) Regulate activities relative to the use of land, buildings and structures within the city in order to promote the
general welfare and for said purpose shall:
(iv) Regulate the establishment, operation and maintenance of cafes, restaurants, beerhouses, hotels, motels,
inns, pension houses, lodging houses, and other similar establishments, including tourist guides and transports . .
..
While its power to regulate the establishment, operation and maintenance of any entertainment or
amusement facilities, and to prohibit certain forms of amusement or entertainment is provided under Section 458
(a) 4 (vii) of the Code, which reads as follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative
body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the
city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of
the city as provided for under Section 22 of this Code, and shall:
(4) Regulate activities relative to the use of land, buildings and structures within the city in order to promote the
general welfare and for said purpose shall:
(vii) Regulate the establishment, operation, and maintenance of any entertainment or amusement facilities,
including theatrical performances, circuses, billiard pools, public dancing schools, public dance halls, sauna
baths, massage parlors, and other places for entertainment or amusement; regulate such other events or
activities for amusement or entertainment, particularly those which tend to disturb the community or annoy the
inhabitants, or require the suspension or suppression of the same; or, prohibit certain forms of amusement or
entertainment in order to protect the social and moral welfare of the community.
Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels, inns, pension houses, lodging houses,
and other similar establishments, the only power of the City Council to legislate relative thereto is to regulate them
to promote the general welfare. The Code still withholds from cities the power to suppress and prohibit altogether
the establishment, operation and maintenance of such establishments. It is well to recall the rulings of the Court
in Kwong Sing v. City of Manila[106] that:
The word regulate, as used in subsection (l), section 2444 of the Administrative Code, means and includes the
power to control, to govern, and to restrain; but regulate should not be construed as synonymous with suppress
or prohibit. Consequently, under the power to regulate laundries, the municipal authorities could make proper
police regulations as to the mode in which the employment or business shall be exercised.[107]
And in People v. Esguerra,[108] wherein the Court nullified an ordinance of the Municipality of Tacloban which
prohibited the selling, giving and dispensing of liquor ratiocinating that the municipality is empowered only to
regulate the same and not prohibit. The Court therein declared that:
(A)s a general rule when a municipal corporation is specifically given authority or power to regulate or to license
and regulate the liquor traffic, power to prohibit is impliedly withheld.[109]
These doctrines still hold contrary to petitioners assertion[110] that they were modified by the Code vesting
upon City Councils prohibitory powers.
Similarly, the City Council exercises regulatory powers over public dancing schools, public dance halls, sauna
baths, massage parlors, and other places for entertainment or amusement as found in the first clause of Section
458 (a) 4 (vii). Its powers to regulate, suppress and suspend such other events or activities for amusement or
entertainment, particularly those which tend to disturb the community or annoy the inhabitants and to prohibit
certain forms of amusement or entertainment in order to protect the social and moral welfare of the community are
stated in the second and third clauses, respectively of the same Section. The several powers of the City Council
as provided in Section 458 (a) 4 (vii) of the Code, it is pertinent to emphasize, are separated by semi-colons (;),
the use of which indicates that the clauses in which these powers are set forth are independent of each other albeit
closely related to justify being put together in a single enumeration or paragraph.[111] These powers, therefore,
should not be confused, commingled or consolidated as to create a conglomerated and unified power of regulation,
suppression and prohibition.[112]
The Congress unequivocably specified the establishments and forms of amusement or entertainment subject
to regulation among which are beerhouses, hotels, motels, inns, pension houses, lodging houses, and other similar
establishments (Section 458 (a) 4 (iv)), public dancing schools, public dance halls, sauna baths, massage parlors,
and other places for entertainment or amusement (Section 458 (a) 4 (vii)). This enumeration therefore cannot be
included as among other events or activities for amusement or entertainment, particularly those which tend to
disturb the community or annoy the inhabitants or certain forms of amusement or entertainment which the City
Council may suspend, suppress or prohibit.
The rule is that the City Council has only such powers as are expressly granted to it and those which are
necessarily implied or incidental to the exercise thereof. By reason of its limited powers and the nature thereof,
said powers are to be construed strictissimi juris and any doubt or ambiguity arising out of the terms used in
granting said powers must be construed against the City Council.[113] Moreover, it is a general rule in statutory
construction that the express mention of one person, thing, or consequence is tantamount to an express exclusion
of all others. Expressio unius est exclusio alterium. This maxim is based upon the rules of logic and the natural
workings of human mind. It is particularly applicable in the construction of such statutes as create new rights or
remedies, impose penalties or punishments, or otherwise come under the rule of strict construction.[114]
The argument that the City Council is empowered to enact the Ordinance by virtue of the general welfare
clause of the Code and of Art. 3, Sec. 18 (kk) of the Revised Charter of Manila is likewise without merit. On the first
point, the ruling of the Court in People v. Esguerra,[115] is instructive. It held that:
The powers conferred upon a municipal council in the general welfare clause, or section 2238 of the Revised
Administrative Code, refers to matters not covered by the other provisions of the same Code, and therefore it can
not be applied to intoxicating liquors, for the power to regulate the selling, giving away and dispensing thereof is
granted specifically by section 2242 (g) to municipal councils. To hold that, under the general power granted by
section 2238, a municipal council may enact the ordinance in question, notwithstanding the provision of section
2242 (g), would be to make the latter superfluous and nugatory, because the power to prohibit, includes the
power to regulate, the selling, giving away and dispensing of intoxicating liquors.
On the second point, it suffices to say that the Code being a later expression of the legislative will must
necessarily prevail and override the earlier law, the Revised Charter of Manila. Legis posteriores priores contrarias
abrogant, or later statute repeals prior ones which are repugnant thereto. As between two laws on the same subject
matter, which are irreconcilably inconsistent, that which is passed later prevails, since it is the latest expression of
legislative will.[116] If there is an inconsistency or repugnance between two statutes, both relating to the same
subject matter, which cannot be removed by any fair and reasonable method of interpretation, it is the latest
expression of the legislative will which must prevail and override the earlier.[117]
Implied repeals are those which take place when a subsequently enacted law contains provisions contrary
to those of an existing law but no provisions expressly repealing them. Such repeals have been divided into two
general classes: those which occur where an act is so inconsistent or irreconcilable with an existing prior act that
only one of the two can remain in force and those which occur when an act covers the whole subject of an earlier
act and is intended to be a substitute therefor. The validity of such a repeal is sustained on the ground that the
latest expression of the legislative will should prevail.[118]
In addition, Section 534(f) of the Code states that All general and special laws, acts, city charters, decrees,
executive orders, proclamations and administrative regulations, or part or parts thereof which are inconsistent with
any of the provisions of this Code are hereby repealed or modified accordingly. Thus, submitting to petitioners
interpretation that the Revised Charter of Manila empowers the City Council to prohibit motels, that portion of the
Charter stating such must be considered repealed by the Code as it is at variance with the latters provisions
granting the City Council mere regulatory powers.
It is well to point out that petitioners also cannot seek cover under the general welfare clause authorizing the
abatement of nuisances without judicial proceedings. That tenet applies to a nuisance per se, or one which affects
the immediate safety of persons and property and may be summarily abated under the undefined law of necessity.
It can not be said that motels are injurious to the rights of property, health or comfort of the community. It is a
legitimate business. If it be a nuisance per accidens it may be so proven in a hearing conducted for that purpose.
A motel is not per se a nuisance warranting its summary abatement without judicial intervention.[119]
Notably, the City Council was conferred powers to prevent and prohibit certain activities and establishments
in another section of the Code which is reproduced as follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative
body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the
city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise of the corporate powers of
the city as provided for under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective city government, and in this
connection, shall:
(v) Enact ordinances intended to prevent, suppress and impose appropriate penalties for habitual drunkenness
in public places, vagrancy, mendicancy, prostitution, establishment and maintenance of houses of ill repute,
gambling and other prohibited games of chance, fraudulent devices and ways to obtain money or property, drug
addiction, maintenance of drug dens, drug pushing, juvenile delinquency, the printing, distribution or exhibition of
obscene or pornographic materials or publications, and such other activities inimical to the welfare and morals of
the inhabitants of the city;
If it were the intention of Congress to confer upon the City Council the power to prohibit the establishments
enumerated in Section 1 of the Ordinance, it would have so declared in uncertain terms by adding them to the list
of the matters it may prohibit under the above-quoted Section. The Ordinance now vainly attempts to lump these
establishments with houses of ill-repute and expand the City Councils powers in the second and third clauses of
Section 458 (a) 4 (vii) of the Code in an effort to overreach its prohibitory powers. It is evident that these
establishments may only be regulated in their establishment, operation and maintenance.
It is important to distinguish the punishable activities from the establishments themselves. That these
establishments are recognized legitimate enterprises can be gleaned from another Section of the Code. Section
131 under the Title on Local Government Taxation expressly mentioned proprietors or operators of massage
clinics, sauna, Turkish and Swedish baths, hotels, motels and lodging houses as among the contractors defined in
paragraph (h) thereof. The same Section also defined amusement as a pleasurable diversion and entertainment,
synonymous to relaxation, avocation, pastime or fun; and amusement places to include theaters, cinemas, concert
halls, circuses and other places of amusement where one seeks admission to entertain oneself by seeing or
viewing the show or performances. Thus, it can be inferred that the Code considers these establishments as
legitimate enterprises and activities. It is well to recall the maxim reddendo singula singulis which means that words
in different parts of a statute must be referred to their appropriate connection, giving to each in its place, its proper
force and effect, and, if possible, rendering none of them useless or superfluous, even if strict grammatical
construction demands otherwise. Likewise, where words under consideration appear in different sections or are
widely dispersed throughout an act the same principle applies. [120]
Not only does the Ordinance contravene the Code, it likewise runs counter to the provisions of P.D. 499. As
correctly argued by MTDC, the statute had already converted the residential Ermita-Malate area into a commercial
area. The decree allowed the establishment and operation of all kinds of commercial establishments except
warehouse or open storage depot, dump or yard, motor repair shop, gasoline service station, light industry with
any machinery or funeral establishment. The rule is that for an ordinance to be valid and to have force and effect,
it must not only be within the powers of the council to enact but the same must not be in conflict with or repugnant
to the general law.[121] As succinctly illustrated in Solicitor General v. Metropolitan Manila Authority:[122]
The requirement that the enactment must not violate existing law explains itself. Local political subdivisions are
able to legislate only by virtue of a valid delegation of legislative power from the national legislature (except only
that the power to create their own sources of revenue and to levy taxes is conferred by the Constitution itself).
They are mere agents vested with what is called the power of subordinate legislation. As delegates of the
Congress, the local government units cannot contravene but must obey at all times the will of their principal. In
the case before us, the enactment in question, which are merely local in origin cannot prevail against the decree,
which has the force and effect of a statute.[123]
Petitioners contend that the Ordinance enjoys the presumption of validity. While this may be the rule, it has
already been held that although the presumption is always in favor of the validity or reasonableness of the
ordinance, such presumption must nevertheless be set aside when the invalidity or unreasonableness appears on
the face of the ordinance itself or is established by proper evidence. The exercise of police power by the local
government is valid unless it contravenes the fundamental law of the land, or an act of the legislature, or unless it
is against public policy or is unreasonable, oppressive, partial, discriminating or in derogation of a common right.[124]
Conclusion
All considered, the Ordinance invades fundamental personal and property rights and impairs personal
privileges. It is constitutionally infirm. The Ordinance contravenes statutes; it is discriminatory and unreasonable in
its operation; it is not sufficiently detailed and explicit that abuses may attend the enforcement of its sanctions. And
not to be forgotten, the City Council under the Code had no power to enact the Ordinance and is therefore ultra
vires, null and void.
Concededly, the challenged Ordinance was enacted with the best of motives and shares the concern of the
public for the cleansing of the Ermita-Malate area of its social sins. Police power legislation of such character
deserves the full endorsement of the judiciary we reiterate our support for it. But inspite of its virtuous aims, the
enactment of the Ordinance has no statutory or constitutional authority to stand on. Local legislative bodies, in this
case, the City Council, cannot prohibit the operation of the enumerated establishments under Section 1 thereof or
order their transfer or conversion without infringing the constitutional guarantees of due process and equal
protection of laws not even under the guise of police power.
WHEREFORE, the Petition is hereby DENIED and the decision of the Regional Trial Court declaring
the Ordinance void is AFFIRMED. Costs against petitioners.
SO ORDERED.
Davide, Jr., C.J., Puno, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales,
Callejo, Sr., Azcuna, Chico-Nazario and Garcia, JJ., concur
Panganiban, J., in the result.
Ynares- Santiago, J., concur in the result only.
[1] Dated 11 January 1995; Rollo, pp. 6-73 with annexes.
[2] Id. at 64-72.
[3] The lower court declared the Ordinance to be null and void.
[4] In the case of Cotton Club Corporation, etc. v. Hon. Alfredo S. Lim, etc, et al. before RTC, Branch 55 of Manila, docketed as Civil Case No.
93-66551, Judge Hermogenes R. Liwag declared the Ordinance void and unconstitutional. The defendants elevated the case to the Court of
Appeals which denied their petition on procedural grounds in its Decision dated 21 May 2003. It appears that defendants Hon. Alfredo S. Lim
and the City Council of Manila did not elevate the case before the Court. Entry of Judgment of the CA Decision was made on 22 April 2003.
[5] Rollo, p. 37.
[6] Id. at. 75; It now calls itself Hotel Victoria.
[7] Id. at 35-47.
[8] Id. at 46.
[9] The principal authors of the Ordinance are: Hons. Bienvenido M. Abante, Jr.; Humberto B. Basco; Nestor C. Ponce, Jr.; Ernesto A. Nieva;
Francisco G. Varona, Jr.; Jhosep Y. Lopez; Ma. Paz E. Herrera; Gerino A. Tolentino, Jr; Ma. Lourdes M. Isip; Flaviano F. Concepcion, Jr.;
Ernesto V.P. Maceda, Jr.; Victoriano A. Melendez; Ma. Corazon R. Caballes; Bernardito C. Ang; Roberto C. Ocampo; Rogelio B. dela Paz;
Romeo G. Rivera; Alexander S. Ricafort; Avelino S. Cailian; Bernardo D. Ragasa; Joey D. Hizon; Leonardo L. Angat; and Jocelyn B. Dawis.
[10] Rollo, p. 8.
[11] RTC Records, pp. 10-11.
[12] Paragraph (a) 4 (iv), Section 458, Chapter 3 of the Code reads, thus:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare of the city and its inhabitants pursuant to Section 16 of this
Code and in the proper exercise of the corporate powers of the city as provided for under Section 22 of this Code, and shall:
...
(4) Regulate activities relative to the use of land, buildings and structures within the city in order to promote the general welfare and for said
purpose shall:
....
(iv) Regulate the establishment, operation and maintenance of cafes, restaurants, beerhouses, hotels, motels, inns, pension houses, lodging
houses, and other similar establishments, including tourist guides and transports; . . .
[13] Presidential Decree No. 499; Dated 28 June 1974; Declaring Portions of the Ermita-Malate Area as Commercial Zones with Certain
Restrictions. It reads in full:
WHEREAS, the government is committed to the promotion and development of tourism in the country, particularly in the City of Manila which
is the hub of commercial and cultural activities in Manila Metropolitan Area;
WHEREAS, certain portions of the districts of Ermita and Malate known as the Tourist Belt are still classified as Class A Residential Zones
and Class B Residential Zones where hotels and other business establishments such as curio stores, souvenir shops, handicraft display
centers and the like are not allowed under the existing zoning plan in the City of Manila;
WHEREAS, the presence of such establishments in the area would not only serve as an attraction for tourists but are dollar earning
enterprises as well, which tourist areas all over the world cannot do without;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me under the Constitution
as Commander-in-Chief of all the Armed Forces of the Philippines and pursuant to Proclamation No. 1081, dated September 21, 1972, and
General Order No. 1, dated September 22, 1972, as amended, do hereby order and decree the classification as a Commercial Zone of that
portion of the Ermita-Malate area bounded by Teodoro M. Kalaw, Sr. Street in the north; Taft Avenue in the east; Vito Cruz Street in the south
and Roxas Boulevard in the west. PROVIDED, HOWEVER, That no permit shall be granted for the establishment of any new warehouse or
open storage depot, dump or yard, motor repair shop, gasoline service station, light industry with any machinery or funeral establishment in
these areas, and PROVIDED, FURTHER, That for purposes of realty tax assessment on properties situated therein, lands and buildings used
exclusively for residential purposes by the owners themselves shall remain assessed as residential properties.
All laws, ordinances, orders, rules and regulations which are inconsistent with this Decree are hereby repealed or modified accordingly.
This Decree shall take effect immediately.
Done in the City of Manila this 28th day of June in the year of Our Lord, nineteen hundred and seventy-four.
[14] RTC Records, pp. 11-13.
[15] Id. at 158-171.
[16] Id. at 160.
[17] 41 Phil. 103 (1920); see also Samson v. Mayor of Bacolod City, G.R. No. L-28745, 23 October 1974, 60 SCRA 267.
[18] RTC Records, p. 161.
[19] Approved on 18 June 1949.
[20] RTC Records, p. 160.
[21] Supra note 18.
[22] Id. at 164.
[23] Ibid.
[24] Id. at 165-169.
[25] Id. at 84.
[26] Id. at 453.
[27] Rollo, pp. 6 and 72.
[28] Id. at 6.
[29] Dated 12 December 1994; Id. at 73.
[30] Id. at 2.
[31] Supra note 13.
[32] Rollo, p. 13.
[33] Id. at 190-201. [82] Id. at 413-415.
[34] Id. at 16, 194, 198. [83] See Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978).
[35] Id. at 19, 22, 25-26, 199. [84] CHEMERINSKY , supra note 53 at 623-626.
[36] Id. at 150-180. [85] See Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992).
[37] Tatel v. Municipality of Virac, G.R. No. 40243, 11 March 1992, 207 SCRA 157, 161; Solicitor General v. Metropolitan Manila Authority, [86] Ibid.

G.R. No. 102782, 11 December 1991, 204 SCRA 837, 845; Magtajas v. Pryce Properties Corp., Inc., G.R. No. 111097, 20 July 1994, 234 [87] CHEMERINSKY, supra note 53 at 166.

SCRA 255, 268-267. [88] Supra note 82.

[38] See ART. 7, par. (3) of the Civil Code which reads, thus: [89] CRUZ, Supra note 59 at 38.

... [90] People v. Fajardo, supra note 76 at 443, 448 citing Tews v. Woolhiser (1933) 352 I11. 212, 185 N.E. 827.

Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution. [91] Id. at 446-447.
[39] Magtajas v. Pryce Properties Corp, Inc., G.R. No. 111097, 20 July 1994, 234 SCRA 255, 270-271. [92] Id. at 447, citing Schloss Poster Adv. Co., Inc. v. City of Rock Hill, et al., 2 SE (2d), pp. 394-395; People v. Nazario, No. L-44143, 31
[40] Id. at 273. August 1988, 165 SCRA 186, 195.
[41] Acebedo Optical Company, Inc. v. Court of Appeals, 385 Phil. 956, 968-969 (2000). [93] 402 U.S. 611 (1971).
[42] Metropolitan Manila Devt. Authority v. Bel-Air Village Asso., 385 Phil. 586, 603 (2000), citing Sections 468 (a), 458 (a), and 447 (a), Book [94] No. L-44143, 31 August 1988, 165 SCRA 186, 195.

III, Local Government Code of 1991. [95] 493 U.S. 215 (1990).
[43] 16 C.J.S., pp. 562-565. [96] Supra note 49.
[44] Art. II, DECLARATION OF PRINCIPLES AND STATE POLICIES, 1987 CONST. [97] De la Cruz, et al. v. Hon. Paras, et al., 208 Phil. 490, 503 (1983).
[45] Ibid. [98] See Ichong v. Hernandez, 101 Phil. 1155 (1957).
[46] Art. III, BILL OF RIGHTS, 1987 CONST. [99] 16B Am Jur 2d 779 299 citing State of Missouri ex rel. Gaines v. Canada, 305 U.S. 337, 59 S. Ct. 232, 83 L. Ed. 208 (1938), rehg denied,
[47] Ibid. 305 U.S. 676, 59 S. Ct. 356, 83 L. Ed. 437 (1939) and mandate conformed to, 344 Mo. 1238, 131 S.W. 2d 217 (1939).
[48] Id. at Sec. 9; See also CRUZ, ISAGANI A., CONSTITUTIONAL LAW 97 (1998). [100] 16B Am Jur 2d 779 299 citing Romer v. Evans, 517 U.S. 620, 116 S. Ct. 1620, 134 L. Ed. 2d 855, 109 Ed. Law Rep. 539, 70 Fair Empl.
[49] Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila, 20 Phil. 849, 860 (1967). Prac. Cas. (BNA) 1180, 68 Empl. Prac. Dec. (CCH) 44013 (1996); Walker v. Board of Supervisors of Monroe County, 224 Miss. 801, 81 So.
[50] See In re Lutker, Okl. Cr., 274 P. 2d 786, 789, 790. 2d 225 (1955), cert. denied, 350 U.S. 887, 76 S. Ct. 142, 100 L. Ed. 782 (1955); Preisler v. Calcaterra, 362 Mo. 662, 243 S.W. 2d 62 (1951).
[51] Supra note 43 at 1150-1151. [101] Supra note 52 at 145.
[52] See Smith, Bell & Co. v. Natividad, 40 Phil. 136, 145 (1919). [102] Nuez v. Sandiganbayan, 197 Phil. 407 (1982).
[53] CHEMERINSKY, ERWIN, CONSTITUTIONAL LAW PRINCIPLES AND POLICIES, 2nd Ed. 523 (2002). [103] Cruz, supra note 59 at 125.
[54] Id. at 523-524. [104] See People v. Cayat, 68 Phil. 12 (1939).
[55] See County of Sacramento v. Lewis, 523 U.S. 833, 840 (1998). [105] See Craig v. Boren, 429 U.S. 190 (1976).
[56] CHEMERINSKY, Supra note 53 at 524. [106] Supra note 17.
[57] Lim v. Court of Appeals, 435 Phil. 857, 868 (2002); This is a related case involving the same Ordinance challenged in this case. The Court [107] Id. at 108 (1920).

denied the petition questioning the writ of prohibitory preliminary injunction issued by the RTC, enjoining the closure of a certain [108] 81 Phil. 33 (1948).

establishment pursuant to the Ordinance. [109] Id. at 38.

[58] Homeowners Asso. of the Phil., Inc. v. Municipal Board of the City of Manila, 133 Phil. 903, 907 (1968). [110] Rollo, p. 19.
[59] CRUZ, ISAGANI A., CONSTITUTIONAL LAW 104 (1998). [111] RTC Records, p. 409; The Decision of the Regional Trial Court of Manila, Branch 55 in the case of Cotton Club Corporation, Inc. v. Hon.
[60] See U.S. v. Toribio, 15 Phil. 85 (1910); Fabie v. City of Manila, 21 Phil. 486 (1912); Case v. Board of Health, 24 Phil. 256 (1913). Alfredo S. Lim, etc., et al., Civil Case No. 93-66551; Dated 28 July 1993; Penned by Judge Hermogenes R. Liwag; Citing Shaw, Harry,
[61] Balacuit v. CFI of Agusan del Norte, No. L-38429, 30 June 1988, 163 SCRA 182, 191-193. Punctuate it Right! Everday Handbooks 125-126.
[62] CRUZ, Supra note 59 at 56. [112] Id. at 408.
[63] Ermita-Malate Hotel and Motel Operators Assoc. Inc. v. City Mayor of Manila, supra note 49. [113] City of Ozamis v. Lumapas, No. L-30727, 15 July 1975, 65 SCRA 33, 42.
[64] Id. at 858-859. [114] FRANCISCO, VICENTE J., STATUTORY CONSTRUCTION, Second Edition 172 (1959); See Pepsi-Cola Bottling Company of the
[65] Section 458 (a) 1 (v), the Code. Philippines, Inc. v. Municipality of Tanauan, Leyte, et al., 161 Phil. 591, 605 (1976).
[66] Catechism of the Catholic Church, Definitive Edition, p. 101; ECCE and Word & Life Publications, Don Bosco Compound, Makati. [115] Supra note 107 at 33.
[67] Lim v. Court of Appeals, supra note 57 at 867. [116] AGPALO, RUBEN F., STATUTORY CONSTRUCTION 296 (1986).
[68] Rubi v. Provincial Board 39 Phil. 660 (1919), as cited in Morfe v. Mutuc, 130 Phil. 415 (1968). [117] FRANCISCO, Supra note 113 at 271.
[69] Morfe v. Mutuc, 130 Phil. 415, 440 (1968). [118] CRAWFORD, EARL T., THE CONSTRUCTION OF STATUTES 196-197 (1940); See Mecano v. Commission on Audit, G.R. No. 103982,
[70] 408 U.S. 572. 11 December 1992, 216 SCRA 500, 505.
[71] See Lawrence v. Texas, 539 U.S. 558 (2003). [119] See Estate of Gregoria Francisco v. Court of Appeals, G.R. No. 95279, 25 July 1991, 199 SCRA 595, 601.
[72] Concerned Employee v. Glenda Espiritu Mayor, A.M. No. P-02-1564, 23 November 2004, J. Tinga, ponente. [120] FRANCISCO, Supra note 113 at 178-179; See King, et al. v. Hernaez, etc., et al., 114 Phil. 730, 739 (1962).
[73] Lawrence v. Texas, supra note 70. [121] Chua Lao, etc., et al. v. Raymundo, etc., et al., 104 Phil. 302, 307 (1958).
[74] Morfe v. Mutuc, supra note 68 at 442. [122] G.R. No. 102782, 11 December 1991, 204 SCRA 837.
[75] Id. at 442-443, citing Laski, Liberty in the Modern State, 44 (1944). [123] Id. at 847.
[76] Id. at 444-445, citing Emerson, Nine Justices in Search of a Doctrine, 64 Mich. Law. Rev. 219, 229 (1965). [124] Balacuit v. CFI of Agusan del Norte, supra note 61 at 198-199.
[77] People v. Fajardo, et al., 104 Phil. 443, 447 (1958).
[78] Ibid. citing Arverne Bay Const. Co. v. Thatcher (N.Y.) 117 ALR. 1110, 1116.
[79] CHEMERINSKY, Supra note 53 at 616.
[80] Id. at 617.
[81] 260 U.S. 393, 415 (1922).
[G.R. NO. 142359. May 25, 2004]
PASONG BAYABAS FARMERS ASSOCIATION, INC., represented by DOMINGO BANAAG, JR., President;
BERNARDO POBLETE, Vice-President, and its Members, petitioners, vs. The Honorable COURT OF APPEALS,
CREDITO ASIATIC, INC., ERNESTO TANCHI, SR., GEN. DIONISIO OJEDA (deceased), ELENA P. BIGAY, and
LANRICO MINISTERIO, respondents.
[G.R. No. 142980. May 25, 2004]
DEPARTMENT OF AGRARIAN REFORM (DEPARTMENT OF AGRARIAN REFORM ADJUDICATION
BOARD), petitioners, vs. The Honorable COURT OF APPEALS, CREDITO ASIATIC, INC., ERNESTO TANCHI,
SR., GEN. DIONISIO OJEDA (deceased), ELENA P. BIGAY, and LANRICO MINISTERIO, respondents.
DECISION
CALLEJO, SR., J.:
Before the Court are petitions for review on certiorari of the Decision[1] of the Court of Appeals, in C.A.-G.R.
SP No. 49363, which set aside and reversed the decision of the Department of Agrarian Reform Adjudication Board
(DARAB), in DARAB Case No. 5191, and reinstated the decision of the Provincial Agrarian Reform Adjudication
Board (PARAD) of Trece Martirez City, in DARAB Case No. CA-0285-95 which, in turn, ordered the dismissal of
the complaint for Maintenance for Peaceful Possession and Cultivation with Damages with Prayer for the Issuance
of a Temporary Restraining Order/Preliminary Injunction of petitioner Pasong Bayabas Farmers Association, Inc.
(PBFAI).
The Antecedents
Sometime in 1964, Lakeview Development Corporation (LDC, for brevity) bought a parcel of land with an
area of 753,610 square meters (75.3610 hectares) located at Barrio Kabilang-Baybay, Carmona, Cavite,[2] covered
by Transfer Certificate of Titles (TCT) No. T- 91584 and T-91585. On September 20, 1977, the aforesaid titles were
cancelled by TCT No. T-62972 issued to and in the name of the LDCs successor, the Credito Asiatic, Incorporated
(CAI).[3] The property was subsequently subdivided into two parcels of land, one of which was covered by TCT No.
116658, with an area of 365,753 square meters, and the other covered by TCT No. 116659 with an area of 387,853
square meters.[4]
Meanwhile, the LDC/CAI undertook to develop its 75-hectare property into a residential and industrial estate,
where industrial sites and a low cost housing project inceptually called the Tamanli Housing Project would be
established. The LDC applied with the Municipal Council of Carmona for an ordinance approving the zoning and
the subdivision of the property. The subdivision plan was referred by the council to the National Planning
Commission as mandated by Administrative Order No. 152, Series of 1968. The Commission approved the plan
and on May 30, 1976, the Tanggapan Ng Sangguniang Bayan ng Karmona (Municipal Council of Carmona)
approved Kapasiyahang Bilang 30, granting the application and affirming the project.The resolution reads:
Kapasiyahang Bilang 30
Sapagkat, ang TAMANLI HOUSING PROJECT at LAKEVIEW DEVELOPMENT CORP. ay nagharap ng kanilang
kahilingan dito sa ating Kapulungan, sa pamamagitan ni G. BENJAMIN F. GOMEZ, Chief, Physical
Environmental Planning Service ng DLGCD, upang makapagpatayo sila ng murang pabahay sa may Lote Blg. E-
Psd-11882, na nasa Bo. Cabilang Baybay ng bayang ito at Lote Blg. 4 (LRC) PCS 15453 saklaw ng bayang ito,
ayon sa pagkakasunod-sunod;
SAPAGKAT, ang bagay na ito ay makatutulong ng malaki sa ating mga kababayan, dahil sa ito ay nagbibigay ng
murang pabahay;
SAPAGKAT, DAHIL DITO, sa mungkahi ni G. DOMINADOR ESPIRITU na pinangalawahan ni G. MELQUIADES
MAHABO, ay pinagtibay, tulad nang itoy pinagtitibay, na pagtibayin ang kahilingan ng Tamanli Housing Project at
Lakeview Development Corp. na makapaglagay ng murang pabahay dito sa ating bayan, sa isang pasubaling
ang mga ito ay kailangang pumailalim sa hinihingi ng Administrative Order No. 152, S-1968 ng Pangulo ng
Bansang Pilipinas at sa umiiral ng mga kautusan at patakaran ng ating Pamahalaang Pambansa at
Pamahalaang Pambayan.[5]
Subsequently, after a consolidated survey was approved by the Bureau of Lands, the lots were subdivided
and the aforesaid titles were cancelled. TCT Nos. 144149, 144150 and T-144151 were issued in lieu of the said
titles.[6]
The CAI embarked on the development of the housing project into three phases: First Phase, the Hakone
Subdivision; Second Phase, the Sunshine Village & Casa de Monteverde; and, Third Phase, the Mandarin
Homes.[7] The project was registered with the National Housing Authority (NHA) as required by Presidential Decree
No. 957 which issued, on July 7, 1977, a license in favor of the LDC to sell the subdivision lots.
The property was subdivided into 728 residential lots per the consolidation subdivision plan approved by the
Bureau of Lands, each with an average area of 240 square meters.Separate titles for each of the 728 lots were
issued by the Register of Deeds of Cavite to and in the name of the CAI on September 20, 1977.
Meanwhile, the CAI secured a locational clearance for the project from the Human Settlements Regulatory
Commission (HSRC).[8] Although the Municipal Council of Carmona had already approved the conversion of the
property into a residential area, nevertheless, the CAI filed an application under Republic Act No. 3844 with the
Office of the Minister of Agrarian Reform for the conversion of a portion of the 75-hectare property consisting of
35.80 hectares covered by TCT No. 62972 located in Barrio Kabilang-Baybay, Carmona, Cavite, from agricultural
to residential. The property was to be used for the Hakone Housing Project. The Minister referred the matter to the
Regional Director for investigation and recommendation and to the Ministry of Local Government and Community
Development. On July 3, 1979, then Minister of Agrarian Reform Conrado F. Estrella issued an Order granting the
petition and approved the conversion of the 35.80 hectare portion of TCT-62972 into a residential subdivision,
pursuant to Rep. Act No. 3844, as amended. In so doing, it took into account the resolution of the Municipal Council
of Carmona, the recommendation of the Regional Director of the Ministry of Agrarian Reform, the clearance from
the HSRC as well as the Ministry of Local Government and Community Development. The order in part reads:
Considering the parcel of land to be not covered by P.D. 27, it being untenanted and not devoted to the
production of palay and/or corn as reported by the Agrarian Reform Team Leader concerned and favorably
recommended for conversion by him and further, by the Regional Director for Region IV, Pasig, Metro Manila,
and considering further, that the parcel of land subject hereof was found to be suitable for conversion to
residential subdivision by the Ministry of Local Government and Community Development and considering finally,
that the herein petitioner was issued a locational clearance by the Human Settlements Regulatory Commission,
the instant request of the petitioner is hereby GRANTED pursuant to the provisions of R.A. 3844, as amended,
and P.D. 815.[9]
The grant was, however, subjected to the fulfillment of the following conditions:
1. Physical development shall commence within one (1) year from receipt hereof;
2. A setback of three (3) meters measured from the property lines to the edge of the normal high waterline
of the Pasong Bayabas and Patayod Rivers shall be observed pursuant to the Water Code(P.D.
705);
3. Applicant-proponent shall undertake flood protective measures such as the construction of rip-rap walls
or terracing and cribbing along the river banks to avoid erosion and flood;
4. Clearance from the Laguna Lake Development Authority shall be secured since the proposed project is
within the Laguna Lake Basin; and
5. A permit to operate from the National Pollution Control Commission shall be secured and Anti-Pollution
laws (R.A. 3981, P.D. 984 and others) shall be strictly observed.
Failure, however, to comply with the aforestated terms and conditions, this Ministry shall consider such violations
as sufficient ground for the cancellation of the permit-order and this Ministry by reason thereof may take any or all
course of action mentioned in the Memorandum-Agreement between this Ministry, the Ministry of Local
Government and Community Development and the Human Settlements Regulatory Commission in addition to
the penalties provided for in Presidential Decree 815, if so applicable.[10]
On March 14, 1980, the Sangguniang Panlalawigan ng Cavite (Provincial Board of Cavite) passed Resolution
No. 40 declaring the midland areas composed of Carmona, Dasmarias, parts of Silang and Trece Martirez (where
the subject property is situated) and parts of Imus, as industrial areas.[11] Under Batas Pambansa Blg. 76, approved
on June 13, 1980, the resettlement areas under the administration of the NHA in the barangays of San Gabriel,
San Jose and a portion of Cabilang Baybay, all in the Municipality of Carmona, were separated from the said
municipality and constituted into a new and independent municipality known as General Mariano Alvarez (GMA),
Cavite.[12] In 1983, Asiatic Development Corporation (ADC), a sister company of CAI, started developing the
property located in GMA covered by TCT No. 144150 into a residential housing project, called the Sunshine Village
Phase IV (originally Hakone) with an area of 20.05 hectares. The ADC also secured in 1983[13] a preliminary
approval and locational clearance from the HSRC for Sunshine Village Phase IV. [14]
The CAI also secured the following for its Hakone Housing Project:
1. HLURB License to Sell No. 0613 on November 7, 1983
2. HSRC Development Permit on April 11, 1984
3. HLURB Preliminary Approval and Locational Clearance on November 11, 1985
4. HSRC Preliminary Approval and Locational Clearance on November 17, 1983
5. HSRC Certificate of Registration No. 1069 on February 1, 1985
6. HSRC License to Sell No. 1053 on March 18, 1985.[15]
In 1987, the CAI decided to continue with the development of its Hakone Housing Project and contracted
with E.M. Aragon Enterprises for the bulldozing of the property. However, the project was stymied by a Complaint
for Damages with Prayer for Temporary Restraining Order and Preliminary Injunction filed on May 22, 1987 against
the CAI in the Regional Trial Court of Cavite.[16] The case was docketed as Civil Case No. BCV-87-13 and was
raffled to Branch 19.[17]
The plaintiffs alleged, inter alia, that while the defendant CAI was the owner of the 75.36-hectare land
covered by TCT-62972, they were the actual tillers of the land. The defendant had surreptitiously applied for the
conversion of the 35.8-hectare portion of the aforesaid property from agricultural to residential and the same was
granted by the Ministry of Agrarian Reform, as can be gleaned from the July 3, 1979 Order of Agrarian Reform
Minister Estrella. According to the plaintiffs, they came to know of the conversion only in January
1987. Notwithstanding the issuance of the order of conversion, Ramie Cabusbusan, the representative of the CAI,
allowed them to continue cultivating the aforementioned property. They were, however, required to pay a rental
of P400 a year per hectare. They paid the rental and continued to occupy and till the aforesaid property pursuant
to the agreement. On October 28, 1986 and November 11, 1986, the plaintiffs, together with other tillers of the
land, met Cabusbusan at the Municipal Branch of the then Ministry of Agrarian Reform and reached an agreement
that the plaintiffs would remain in the peaceful possession of their farmholdings. Notwithstanding such agreement,
the defendant ordered the bulldozing of the property, by reason of which the plaintiffs suffered actual
damages. Furthermore, the plaintiffs alleged that the bulldozing was done without any permit from the concerned
public authorities.
The plaintiffs, thus, prayed that a temporary restraining order be issued against the CAI from continuing with
the bulldozing of the property, and that after due hearing, judgment be rendered in their favor, ordering the
defendants to refrain from implementing the July 3, 1979 Order of Agrarian Reform Minister Estrella.[18]
In its answer to the complaint, the CAI admitted its ownership of the 753,610 square meter property covered
and described under TCT No. 62972 and the issuance of the Order of Conversion of the 35.8 hectare portion
thereof. However, it denied that it allowed the plaintiffs to possess and cultivate the landholding with fixed rentals
therefor.[19] The CAI prayed that the prayer for preliminary injunction be denied and that judgment be issued
dismissing the complaint and absolving it from any liability. It counterclaimed for the amount paid by it to E.M.
Aragon Enterprises for expenses for the rent of the bulldozer and moral damages.[20]
Meanwhile, the CAI and six of the fourteen plaintiffs, namely, Medy Vinzon, Luz Alvarez, Godofredo Inciong,
Bernardo Poblete, Estelita Gaut and Victoria Valerio, entered into a compromise agreement whereby the defendant
donated parcels of land in consideration of the execution of deeds of quitclaims and waivers. Conformably to the
said agreement, the plaintiffs executed separate deeds of quitclaim in favor of the CAI over the portion of the
property which they claimed they occupied. The six plaintiffs filed a Motion to Dismiss the complaint on June 19,
1989.[21] On June 20, 1989, the RTC of Cavite issued an Order dismissing the complaint but only insofar as the
plaintiffs Vinzon, Alvarez, Inciong, Poblete, Gaut and Valerio were concerned.[22] With respect to the other eight (8)
plaintiffs, the court proceeded with the scheduled hearing.
The civil case notwithstanding, the CAI decided to proceed with the third phase of its project. It developed its
eleven-hectare property into a residential property called the Mandarin Homes. The CAI applied for and was
granted a separate Order of Conversion on January 2, 1990 by the Department of Agrarian Reform (DAR).[23] In
1991, the CAI started selling the houses in its Mandarin Homes Project.[24]
In the meantime, the remaining plaintiffs in Civil Case No. BCV-87-13 entered into a compromise agreement
in which the CAI executed Deeds of Donation[25] in their favor over parcels of land. The said plaintiffs, in turn,
executed quitclaims[26] and waivers over the portions of the property which they claimed they occupied. Thereafter,
the plaintiffs and the CAI filed a motion to dismiss the complaint. The trial court issued an Order granting the motion
and dismissing the complaint on June 20, 1991.[27] Consequently, all the plaintiffs were issued separate titles over
the parcels of land donated to them by the CAI which were declared, for taxation purposes, in the names of the
latter.[28]
With the settlement of the civil case, the CAI continued with its development of the rest of the Hakone Housing
Project by causing a survey of the property. However, the CAI was stymied anew when, on November 25, 1992, a
Petition for Compulsory Coverage under Rep. Act No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law (CARL) was filed before the DAR by seventeen (17) individuals.[29] They alleged that they were farmers
of Bo. 14, Pasong Bayabas River, Barangay F. De Castro, GMA, Cavite.[30] The petitioners claimed that since 1961,
they had been occupying a parcel of public agricultural land originally owned by General Dionisio Ojeda with an
area of twenty-seven hectares, more or less, adjacent to Pasong Bayabas River. They tilled the said agricultural
lands and planted it with rice, corn, vegetables, root crops, fruit trees and raised small livestock for daily survival.[31]
The petitioners requested that the DAR order an official survey of the aforesaid agricultural lands. Pending
resolution of their petition, the petitioners and twenty (20) others banded together and formed a group called
Pasong Bayabas Farmers Association, Inc. (PBFAI) affiliated with Kalipunan ng Samahan ng Mamamayan, Inc.
(KASAMA).[32]
On June 10, 1994, Domingo Banaag, in his capacity as President of PBFAI, filed a petition for compulsory
coverage of a portion of the CAI property covered by TCT No. 91585, [33] with an area of 47 hectares under Rep.
Act No. 6657. On August 18, 1994, Legal Officer Maria Laarni N. Morallos of the DAR, in her Memorandum to
Regional Director Percival C. Dalugdug, reported that the Municipal Agrarian Reform Office (MARO) had taken
preliminary steps for the compulsory coverage of the property and, in fact, had interviewed its occupants. The
processing was stalled, however, because documents such as the titles and tax declarations covering the property
had not yet been submitted, and the formal application had yet to be made by the petitioners.[34] She recommended
that the petition be indorsed to the MARO Office. Pending the resolution of the petition of the PBFAI, the CAI
decided to continue with its Hakone Housing Project and ordered a survey of the property on October 6, 1995. The
survey was completed on October 9, 1995. On October 14 and 15, 1995, the CAI caused the bulldozing and other
development activities, which resulted in the destruction of plants and trees.
The PBFAI-KASAMA, representing the farmers-tenants, filed a complaint for Maintenance of Peaceful
Possession and Cultivation with Damages with Prayer for the Issuance of a Temporary Restraining Order and
Preliminary Injunction before the Department of Agrarian Reform Adjudication Board (DARAB), Region IV, Trece
Martirez City, Cavite, against the CAI, Tan Chi, Dionisio Ojeda, Elena Bigay, Lanrico Ministerio and Alfredo Espiritu
over a portion of the property of the CAI. The case was docketed as DARAB Case No. CA-0285-95.[35]
The plaintiffs therein alleged that since 1961, its members had been in actual possession, as tenants of
General Dionisio Ojeda, of the 27-hectare property, located in Pasong Bayabas, Cabilang Baybay, Carmona,
Cavite[36] covered by TCT No. T-69813 in the name of Pan Asiatic Commercial Co., Inc.;[37] T-91584[38] and T-
69810 owned by the LDC. They applied for the compulsory coverage of the property under CARL before the DAR
in 1992, and on October 6, 1995, the CAI caused the survey of the property. The CAI commenced the bulldozing
activities on the property on October 14, 1995 without any permit from the Department of Environment and Natural
Resources (DENR) or from the Office of the Barangay Captain. According to the petitioners, the said illegal
bulldozing activities would convert the land from agricultural to non-agricultural land, thereby depriving the
members of the PBFAI of their tenancy rights over the property. For this reason, the petitioners prayed that a
temporary restraining order be issued ex-parte to stop the bulldozing of the property, and that a preliminary
injunction or a status quoorder be later issued to enjoin the same.
The complainants prayed that, after due proceedings, judgment be rendered in their favor, viz:
3. That the Defendants Tan Chi and Dionisio Ojeda, as the most responsible officers of the Defendant
Corporation be ordered to direct persons acting under their authority to respect the peaceful
possession and cultivation of the Plaintiffs, of the subject land;
4. That the Defendants Lanrico Ministerio and Alfredo Espiritu be ordered to respect and maintain the
peaceful tenancy of the Plaintiffs, of the subject land;
5. That the Defendants be ordered jointly and severally to pay to the Plaintiffs:
P500,000.00 as moral damages;
P250,000.00 by way of exemplary damages;
P50,000.00 in reimbursement of litigation expenses.
6. That the Defendants pay for the costs of this suit; and
7. That other reliefs and remedies be afforded to the Plaintiffs as may be just and equitable under the
premises.[39]
On October 27, 1995, Provincial Adjudicator Barbara P. Tan issued a Temporary Restraining Order worded
as follows:
WHEREFORE, premises considered let a TEMPORARY RESTRAINING ORDER hereby issue to take effect for
a period of twenty (20) days from receipt hereof;
1) Enjoining the defendant landowner and any/all persons acting for and in its behalf or under its authority to
cease and desist from further bulldozing the premises in question and committing acts of dispossession or
tending to disturb the peaceful possession and cultivation of the complainants of the landholdings in question.
Meantime, let the hearing of the Preliminary Injunction incident be set on November 9, 1995 at 1:30 P.M. [40]
The defendants filed their Answer with Motion to Lift Restraining Order and Preliminary Injunction.[41] Therein,
they denied the personal circumstances of the plaintiffs and the personal circumstances of the defendants Lanrico
Ministerio and Alfredo Espiritu. The defendants admitted that the CAI was the registered owner of the property, but
specifically denied that the plaintiffs were recognized by the CAI as tenants-occupants of the aforesaid property
since 1961. They asserted that the CAI did not consent to the cultivation of the property nor to the erection of the
plaintiffs houses. They further averred that the CAI had entered into a compromise agreement with the occupants
of the property, the plaintiffs in Civil Case No. BCV-87-13 in the RTC of Cavite. They also alleged that they secured
a permit from the Municipal Planning and Development Offices before bulldozing activities on the property were
ordered.
The defendants raised the following as their special and affirmative defenses: (a) the plaintiffs action is barred
by the dismissal of their complaint in Civil Case No. BCV-87-13, per Order of the RTC of Cavite, Branch 19, dated
June 20, 1991; (b) the plaintiffs had waived their rights and interests over the property when they executed deeds
of waiver and quitclaim in favor of the defendant CAI; (c) then Agrarian Reform Minister Estrella had issued an
Order dated July 3, 1979, converting the property into a residential area and withdrawing the property from the
coverage of the CARL; (d) the defendant partitioned the development of the area into Phase I, II, III and IV, while
the residential property subject of the petition is in Phase IV thereof; (e) before embarking in the development of
the property, the respondent CAI secured the following: (1) preliminary approval and locational clearance for phase
IV; (2) development permit for 844 units; (3) Certificate of Registration No. 1069 issued by the HSRC; and (4)
License to Sell No. 1053.[42] Finally, the defendants contended that the property had an 18% slope and was
undeveloped; as such, it was exempt from the coverage of the CARL, under Section 10 of Rep. Act No. 6657.
As compulsory counterclaim, the defendants alleged that it had entered into an Equipment Rental Requisition
Contract with E.M. Aragon Enterprises for the bulldozing of the property, for which it incurred the following
expenses: an advance payment of P200,000; rental rate of P1,000 per hour for 8 hours a day plus transportation
of P50,000; and, salaries of not less than P5,000 per month for the mechanics and drivers. They prayed that after
due proceedings, judgment be rendered dismissing the plaintiffs complaint and absolving it of any liability. [43]
The plaintiffs, for their part, averred that Civil Case No. BCV-87-13 was not decided on the merits, but was
merely based upon a compromise agreement between the parties. Moreover, there was no identity of parties
between Civil Case No. BCV-87-13 and the present case, as the sole defendant was the CAI, while of the plaintiffs
in DARAB Case No. CA No. 0285-95, only Domingo Banaag and Leoncio Banaag were the plaintiffs in Civil Case
No. BCV-87-13. On the claim of the defendants that the CAI was released and discharged from any and all liabilities
of the plaintiffs by virtue of the Deeds of Waiver and Quitclaim executed by the fourteen plaintiffs in Civil Case No.
BCV-87-13, the plaintiffs averred that only two of the plaintiffs, namely, Domingo Banaag and Leoncio Banaag
were among the thirty-seven (37) complainants-members of PBFAI who filed the petition before the DARAB.
The plaintiffs posited that the conversion orders and other deeds issued by the HSRC and its successor, the
HLURB, were issued before the effectivity of Rep. Act No. 6657 when agricultural land was limited to those planted
with rice and corn crops. But upon the enactment of Rep. Act No. 6657, the reclassification of agricultural lands
included those planted with fruit-bearing trees, such as, the subject property. Hence, Agrarian Reform Minister
Estrella did not have the authority to exempt the property from the coverage of Rep. Act No. 6657. The plaintiffs
averred that the documents procured by the respondents from the HSRC and the HLURB cannot be given probative
weight, as the authority to issue the said clearance/license is vested solely in the DAR.
As to the defense that the property subject of the suit has some parts with an 18% slope, the plaintiffs
contended that what the law exempts are undeveloped parcels of land with an 18% slope. The entire property,
however, was fully developed and planted with fruit-bearing trees of varied kinds, with houses of strong materials
constructed thereon by the members of the PBFAI.
To determine the veracity of the conflicting claims of the parties, the Provincial Agrarian Reform Adjudicator
(PARAD) issued an Order on November 23, 1995, setting an ocular inspection of the property. The parties were
required to submit their respective position papers.[44] The ocular inspection proceeded as scheduled. On
December 12, 1995, the PARAD issued an Order[45] containing the results of the inspection.
The individual tillages of the complainants were not inspected, and, as agreed upon, the physical inventory
thereof was to be undertaken by Brgy. Captain Lanrico Ministerio. The inventory was designed to determine who
among the petitioners were actual tillers, the area of tillage and the crops produced thereon; and to determine the
value of the improvements in connection with a possible pay off, as the landowner had offered to reimburse the
planters the value of their permanent improvements. The PARAD noted that the area over which the respondent
CAI conducted quarrying activities had not been cultivated by any of the members of the PBFAI, and permitted the
grading and leveling activities thereon.
On April 16, 1996, the PARAD issued an order directing the provincial sheriff of Cavite to conduct a physical
inventory of the permanent improvements introduced by each of the complainants consisting of fruits and other
horticultural growths, in substitution of the Barangay Captain.
On July 15, 1996, the DAR Region IV issued a Cease and Desist Order against the respondents. [46] The
defendants, in a Letter dated July 16, 1996, informed the DAR, Region IV Office, that the land subject of the
cease and desist order was also subject of DARAB Case No. 0285-95 and, as such, was under the jurisdiction of
PARAD Barbara Tan. The defendants, likewise, raised the issue of forum shopping, per our ruling in Crisostomo
v. SEC.[47]
After due hearings, PARAD Barbara P. Tan rendered a Decision on August 8, 1996 in DARAB Case No. CA-
0285-95 in favor of the defendants. The dispositive portion of the decision reads:
WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered:
1. Finding Plaintiffs Domingo Banaag, Conrado Banaag, Leoncio Banaag, Herminia Demillo, Myrna Javier,
Elena, Layaban, Maria Layaban and Oscar Layaban to have abandoned and renounced their tenancy rights over
the land in question and barred from instituting the instant complaint on the ground of Res Judicata;
2. Finding the remaining Twenty-Nine (29) other Plaintiffs not bonafide tenants but mere interlopers on the land in
question and consequently not entitled to security of tenure;
3. Ordering the instant complaint DISMISSED for lack of merit.
No pronouncement as to damages, attorneys fees, litigation expenses and cost of suit.[48]
The PARAD held that the plaintiffs were bound by the order of dismissal of the RTC in Civil Case No. BCV-
87-13. It declared that the plaintiffs in Civil Case No. BCV-87-13 were the kins, siblings or spouses of the
complainants in the case before it. Moreover, the complainants had executed deeds of quitclaim or waiver covering
the portions of the property which they purportedly occupied. Thus, the complainants had already waived their
rights of possession and cultivation over the portions of the property which they claimed to be occupying.
As to the remaining complainants, the PARAD ruled that they failed to prove that their cultivation and
possession, were based on a valid agricultural tenancy. It held that the complainants were merely farm helpers of
their relatives. However, the PARAD ruled that it had no jurisdiction to resolve the issues of whether the property
was covered by Rep. Act No. 6657 and exempted from the said coverage, or whether the conversion of the property
to non-agricultural was legal and efficacious; hence, the PARAD declined to resolve the same.
Aggrieved, the plaintiffs interposed an appeal to the Department of Agrarian Reform Adjudication Board on
the following grounds:
1. That errors in the findings of fact and conclusions of law were committed which, if not corrected, would
cause grave and irreparable damage and injury to the plaintiffs/complainants-appellants; and
2. That there is grave abuse of discretion on the part of the Provincial Agrarian Reform Adjudicator of
Cavite. [49]
The appeal was docketed as DARAB Case No. 5191. The defendants, for their part, filed a motion for
reconsideration of the decision, on the ground that it failed to rule that the order of conversion of then Agrarian
Reform Minister Estrella merely confirmed the re-classification of the property, from agricultural to residential, made
by the Municipal Council of Carmona, the HSRC and the HLURB as early as 1976, and that the PARAD failed to
order the eviction of the complainants despite its finding that some had abandoned their tenancy rights by entering
into a compromise settlement and executing quitclaims with the CAI. The respondents, thus, prayed:
a. That the subject property has been reclassified as residential land as early as 30 May 1976;
b. That the Certificate of Registration No. RS-0495, dated 9 July 1977 and License to Sell LS-0449, dated
09 July 1977 were issued in compliance to NHA Circular No. 1, Series of 1976;
c. That the approval of the Consolidation Subdivision Plan and the consequent issuance of individual titles
by the Bureau of Lands were made in compliance of the requirements of NHA Circular No. 1;
d. That the Order of Conversion dated 3 July 1979 was merely a confirmation of a 1976 valid re-
classification of the subject property from agricultural to residential and said Order is still valid and
subsisting;
e. That an Order of ejectment be issued against the complainants.
As a corollary, other reliefs which are just and proper under the premises are likewise prayed.[50]
The PARAD treated the motion as an appeal, and transmitted the same to the DARAB. [51]
On September 26, 1996, the plaintiffs Clarito Sanganbayan, Edgardo Uniforme and Francisco Joven, in
consideration of P40,000, executed quitclaims, waiving their rights from the property in suit. [52] Likewise, plaintiffs
Manuel Layaban, Dante Javier, Ederlinda dela Cruz, Conrado Banaag, Eduardo Sabalsa, Diosdado Canaria,
Herminia Demillo, Elizabeth Cristo, Buena Layaban, Elena Layaban, Maria Layaban, Betty Banaag, Oscar
Layaban, Carmelita Caalete, Manuel Canaria, Alfredo Diaz, Alejandro Sanganbayan, Soledad Alcantara,
Felicisimo Galzote, Vivencio Boral, Edilberto Banaag and Jose Canaria, executed quitclaims in favor of the CAI
after receiving money from it.[53]
On October 16, 1996, the respondents filed a Motion to Lift Status Quo Order and Motion to
Dismiss[54] alleging that the status quo order illegally extended the restraining order issued on September 13,
1996. It was also alleged that the complainants-appellants were not qualified beneficiaries of the CARL. The CAI
asserted that the re-classification of the land use was valid and legal, and concluded that since the property was
not agricultural, it was not covered by the CARL and, thus, beyond the jurisdiction of the DARAB. The CAI, thus,
prayed:
WHEREFORE, premises considered, it is respectfully prayed that the status quo order be immediately lifted and
the writ of preliminary injunction applied for be denied for utter lack of merit by upholding the Decision of the
Honorable Provincial Adjudicator dated 8 August 1996 with a modification which shall include an order of
ejectment. [55]
In the meantime, more members of the PBFAI executed deeds of quitclaims on October 1, 1996, October 9,
1996, November 18, 1996, February 28, 1997 and March 6, 1997, respectively, all in favor of the respondent CAI
over the property subject of their petition. All in all, during the period from September 26 1996 to March 6,
1997,[56] twenty-five complainants (members of PBFAI) executed separate deeds of quitclaims in favor of the
CAI.[57] The foregoing notwithstanding, the DARAB rendered a Decision on September 2, 1997 reversing the
decision of PARAD. The dispositive portion of the decision reads:
WHEREFORE, premises considered the challenged decision is hereby REVERSED and a new judgment is
hereby rendered as follows:
1. Declaring the subject landholding to be within the coverage of Section 4 of R.A. 6657;
2. Ordering the PARO, MARO and all DAR officials concerned to take the necessary steps for the
acquisition of the subject land pursuant to Administrative Order No. 9, Series of 1990; and
3. Ordering the PARO, MARO and all DAR officials concerned to distribute the subject land to qualified
farmer-beneficiaries pursuant to Administrative Order No. 10, series of 1990, giving preference to the
plaintiffs as actual occupants and cultivators of the subject land.[58]
 The respondents-appellees filed a motion for reconsideration[59] of the decision which was denied by the
DARAB in a Resolution dated August 28, 1998.[60]
The Case in the Court of Appeals
Aggrieved, the CAI filed a petition for review in the Court of Appeals under Rule 45 [61] of the Revised Rules
of Court seeking the reversal of the Resolution dated August 28, 1998. The following issues were raised:
1. WHETHER OR NOT THE LAND IN SUIT IS COVERED BY CARP;
2. WHETHER OR NOT THE MEMBERS OF PBFAI NUMBERING 37 ARE LEGITIMATE TENANTS
THEREOF;
3. WHETHER OR NOT THE DARAB APPRECIATED THE FACTS AND LAW OF THE CASE;
4. WHETHER OR NOT THE DARAB IN THE EXERCISE OF ITS POWERS ACTED WITH GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION. [62]
On March 15, 2000, the CA rendered a Decision reversing the decision of the DARAB and reinstating the
decision of the PARAD, to wit:
WHEREFORE, the petition is GIVEN DUE COURSE, the assailed DARAB Decision is hereby REVERSED and
SET ASIDE, while the PARO Decision is REINSTATED and AFFIRMED.[63]
The CA ruled that under Section 10 of Rep. Act No. 6657, all lands with eighteen percent (18%) slope and
over, except those already developed, shall be exempt from the coverage of the said Act. The CA noted that the
exception speaks of 18% in slope and undeveloped land. Per report of the PARAD, the property subject of the suit
has an 18% slope and was still undeveloped; hence, it falls within the exemption.
Further, the CA held that as early as May 30, 1976, the Municipality of Carmona, Cavite, already reclassified
the land as residential in Resolution No. 30, when it allowed the LDC to build low-cost housing projects in the
subject area. According to the Court, the ruling in Fortich v. Corona[64] and reiterated in Province of Camarines Sur,
et al. v. Court of Appeals,[65]settled is the rule that local government units need not obtain the approval of DAR to
convert or reclassify lands from agricultural to non-agricultural use. Thus, the subject land was validly declared
residential since 1976 by competent authority through Kapasiyahang Bilang 30. As such, the DARAB erred in ruling
that the land in suit was still covered by Rep. Act No. 6657.Consequently, since the subject land is not agricultural
and not covered by the CARL, the PBFAI members could not be considered tillers/beneficiaries thereof.[66]
Aggrieved, the PBFAI filed a petition for review under Rule 45 of the Rules of Court on April 11, 2000 before
this Court. For its part, DARAB filed a motion for extension of time to file a petition for the reversal of the decision
in CA-GR SP No. 49363. The same was docketed as G.R. No. 142980. On May 11, 2000, the DARAB manifested
that it was adopting as its own the petition for review filed by PBFAI. In our Resolution dated June 28, 2000, we
granted the motion of the DARAB and ordered the consolidation of G.R. Nos. 142980 and 142359.
The Issues
The core issues for resolution are the following: (1) whether the property subject of the suit is covered by
Rep. Act No. 6657, the Agrarian Reform Law (CARL); (2) whether the DARAB had original and appellate jurisdiction
over the complaint of the petitioner PBFAI against the private respondent; (3) whether the petitioners-members of
the PBFAI have a cause of action against the private respondent for possession and cultivation of the property in
suit; (4) whether the dismissal by the RTC of the complaint in Civil Case No. BCV-87-13 is a bar to the complaint
of the petitioners-members of the PBFAI; and (5) whether the appellate court committed a reversible error in
dismissing the petition for review in CA-G.R. SP No. 49363.
It is well-settled that in a petition for review on certiorari under Rule 45 of the Rules of Court, only questions
of law may be raised.[67] We have time and again ruled that the factual findings of fact by administrative agencies
are generally accorded great respect, if not finality, by the courts[68] because of the special knowledge and expertise
of administrative departments over matters falling under their jurisdiction.[69] However, due to the divergence of the
findings of the PARAD, on the one hand, and the DARAB on the other, and considering the findings of the DARAB
and the Court of Appeals, we are constrained to review the records and resolve the factual and the legal issues
involved.
On the first and second issues, the petitioners contend that the property subject of the suit is agricultural
land; hence, covered by the CARL, more particularly, Rep. Act No. 6657. They assert that the reclassification of
the property made by the Municipal Council of Carmona, Cavite, under Kapasiyahang Blg. 30 on May 30, 1976
was subject to the approval of the HSRC, now the HLURB, as provided for by Section 5 of Executive Order No.
648.[70] Since there was no such approval, the said resolution of the Municipal Council of Carmona was
ineffective.The petitioners aver that, the appellate courts reliance on the ruling of this Court in Province of
Camarines Sur v. Court of Appeals, et al.[71] is misplaced because the said case involves the power of local
government units to initiate condemnation proceedings of properties for public use or purpose. They argue that
under Section 65 of Rep. Act No. 6657, the DAR is vested with exclusive authority to reclassify a landholding from
agricultural to residential. The petitioners submit that the exclusive authority of the DAR is not negated by Section
20 of Rep. Act No. 7160, otherwise known as the Local Government Code of 1991. They also insist that the
conversion of the property under Kapasiyahang Blg. 30 of the Municipal Council of Carmona on May 30, 1976,
was subject to the approval of the DAR, conformably to DOJ Opinion No. 44, Series of 1990. Moreover, the
development of the property had not yet been completed even after Rep. Act No. 6657 took effect. Hence, it was
incumbent upon the respondent to secure an exemption thereto, after complying with DAR Administrative Order
No. 6, Series of 1994.
In its Comment on the petition, the respondent CAI asserts that the property was validly reclassified by the
Municipal Council of Carmona on May 30, 1976, pursuant to its authority under Section 3, Rep. Act No. 2264,
otherwise known as the Local Autonomy Act of 1959. Until revoked, the reclassification made by the council
remained valid. Per DOJ Opinion No. 40, Series of 1990, the private respondent was not required to secure
clearance or approval from the DAR since the reclassification took place on June 15, 1988, when Rep. Act No.
6657 took effect. The respondent asserts that it had complied with all the requirements under P.D. No. 957, as
amended.
The respondent contends that, aside from the Municipal Council of Carmona, the Secretary of Agrarian
Reform and administrative agencies of the government such as the NHA, the Bureau of Lands, the HSRC, and the
HLURB, found the property unsuitable for agricultural purposes. The respondent asserts that the petitioners-
individuals are mere squatters and not tenants on the property of the private respondent. Hence, the PARAD had
no jurisdiction over the petition of the PBFAI, as well as the individual petitioners. Consequently, the DARAB had
no appellate jurisdiction over the appeals from the decision of the PARAD.
The Courts Ruling
The contention of the petitioners has no merit.
Under Section 3(c) of Rep. Act No. 6657, agricultural lands refer to lands devoted to agriculture as conferred
in the said law and not classified as industrial land. Agricultural lands are only those lands which are arable or
suitable lands that do not include commercial, industrial and residential lands. [72] Section 4(e) of the law provides
that it covers all private lands devoted to or suitable for agriculture regardless of the agricultural products raised or
that can be raised thereon. Rep. Act No. 6657 took effect only on June 15, 1988. But long before the law took
effect, the property subject of the suit had already been reclassified and converted from agricultural to non-
agricultural or residential land by the following administrative agencies: (a) the Bureau of Lands, when it approved
the subdivision plan of the property consisting of 728 subdivision lots; (b) the National Planning Commission which
approved the subdivision plan subdivided by the LDC/CAI for the development of the property into a low-cost
housing project; (c) the Municipal Council of Carmona, Cavite, when it approved Kapasiyahang Blg. 30 on May 30,
1976; (d) Agrarian Reform Minister Conrado F. Estrella, on July 3, 1979, when he granted the application of the
respondent for the development of the Hakone Housing Project with an area of 35.80 hectares upon the
recommendation of the Agrarian Reform Team, Regional Director of Region IV, which found, after verification and
investigation, that the property was not covered by P.D. No. 27, it being untenanted and not devoted to the
production of palay/or corn and that the property was suitable for conversion to residential subdivision; (e) by the
Ministry of Local Government and Community Development; (f) the Human Settlements Regulatory Commission
which issued a location clearance, development permit, Certificate of Inspection and License to Sell to the
LDC/private respondent; and, (g) the Housing and Land Use Regulatory Board which also issued to the respondent
CAI/LDC a license to sell the subdivision lots.
In issuing a location clearance, a development permit, a certificate of inspection over the housing project,
and a license to sell the subdivision lots in favor of LDC/CAI pursuant to its charter, the HSRC approved and
confirmed the reclassification and conversion of the land made by the Municipal Council of Carmona and Agrarian
Reform Minister Estrella.
In Natalia Realty Inc. and Estate Developers and Investors Corp. v. Department of Agrarian Reform, et
al.,[73] we held, thus:
We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657 provides that the CARL
shall cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural
lands. As to what constitutes agricultural land it is referred to as land devoted to agricultural activity as defined in
this Act and not classified as mineral, forest, residential, commercial or industrial land. The deliberations of the
Constitutional Commission confirm this limitation. Agricultural lands are only those lands which are arable and
suitable agricultural lands and do not include commercial, industrial and residential lands.
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision cannot in any
language be considered as agricultural lands. These lots were intended for residential use. They ceased to be
agricultural lands upon approval of their inclusion in the Lungsod Silangan Reservation. Even today, the areas in
question continued to be developed as a low-cost housing subdivision, albeit at a snails pace. This can readily be
gleaned from the fact that SAMBA members even instituted an action to restrain petitioners from continuing with
such development. The enormity of the resources needed for developing a subdivision may have delayed its
completion but this does not detract from the fact that these lands are still residential lands and outside the ambit
of the CARL.
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These include lands
previously converted to non-agricultural uses prior to the effectivity of CARL by government agencies
other than respondent DAR. In its Revised Rules and Regulations Governing Conversion of Private Agricultural
Lands to Non-Agricultural Uses, DAR itself defined agricultural land thus
x x x Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657 and not classified as
mineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor
agencies, and not classified in town plans and zoning ordinances as approved by the Housing and Land
Use Regulatory Board (HLURB) and its preceding competent authorities prior to 15 June 1988 for
residential, commercial or industrial use.[74]
Our ruling in Natalia Realty, Inc. v. DAR was reiterated in National Housing Authority v. Allarde,[75] and Sta.
Rosa Realty Development Corporation v. Court of Appeals,[76] where we stated, viz:
The authority of the municipality of Cabuyao, Laguna to issue zoning classification is an exercise of its police
power, not the power of eminent domain. A zoning ordinance is defined as a local city or municipal legislation
which logically arranges, prescribed, defines and apportions a given political subdivision into specific land uses
as present and future projection of needs.
Section 3 of Rep. Act No. 2264,[77] amending the Local Government Code, specifically empowers municipal
and/or city councils to adopt zoning and subdivision ordinances or regulations in consultation with the National
Planning Commission. A zoning ordinance prescribes, defines, and apportions a given political subdivision into
specific land uses as present and future projection of needs.[78] The power of the local government to convert or
reclassify lands to residential lands to non-agricultural lands reclassified is not subject to the approval of the
Department of Agrarian Reform.[79] Section 65 of Rep. Act No. 6657 relied upon by the petitioner applies only to
applications by the landlord or the beneficiary for the conversion of lands previously placed under the agrarian
reform law after the lapse of five years from its award. It does not apply to agricultural lands already converted as
residential lands prior to the passage of Rep. Act No. 6657.[80]
When Agrarian Reform Minister Conrado F. Estrella confirmed the reclassification of the property by the
Municipal Council of Carmona to non-agricultural land when he approved, on July 3, 1979, the application of the
private respondent/LDC for the conversion of 35.80 hectares of the property covered by TCT No. 62972 into non-
agricultural land, he did so pursuant to his authority under Rep. Act No. 3844, as amended, by P.D. No. 815 and
P.D. No. 946.[81]
It bears stressing that in his Order, the Agrarian Reform Minister declared that the property was not tenanted
and not devoted to the production of palay and/or corn, and that the land was suitable for conversion to a residential
subdivision. The order of the Minister was not reversed by the Office of the President; as such, it became final and
executory. By declaring, in its Decision of September 2, 1997, that the property subject of the suit, was agricultural
land, the petitioner DARAB thereby reversed the Order of Agrarian Reform Minister Estrella, issued almost eighteen
(18) years before, and nullified Resolution No. 30 of the Municipal Council of Carmona, approved twenty-one (21)
years earlier, on May 30, 1976, as well as the issuances of the NHA, the HSRC, the HLURB, the Ministry of Local
Government and the National Planning Commission. Thus, the petitioner DARAB acted with grave abuse of its
discretion amounting to excess or lack of jurisdiction.
The failure of the respondent to complete the housing project before June 15, 1988, even if true, did not have
the effect of reverting the property as agricultural land.
The petitioners reliance on DOJ Opinion No. 44, Series of 1990 and DAR Administrative Order No. 6, Series
of 1994 is misplaced. In the said opinion, the Secretary of Justice declared, viz:
Based on the foregoing premises, we reiterate the view that with respect to conversions of agricultural lands
covered by R.A. No. 6657 to non-agricultural uses, the authority of DAR to approve such conversions may be
exercised from the date of the laws effectivity on June 15, 1988. This conclusion is based on a liberal
interpretation of R.A. No. 6657 in the light of DARs mandate and the extensive coverage of the agrarian reform
program.
Following the DOJ opinion, the DAR issued Administrative Order No. 6, Series of 1994, stating that lands
already classified as non-agricultural before the enactment of Rep. Act No. 6657 no longer needed any conversion
clearance:
I. Prefatory Statement
In order to streamline the issuance of exemption clearances, based on DOJ Opinion No. 44, the following
guidelines are being issued for the guidance of the DAR and the public in general.
II. Legal Basis
Sec. 3(c) of RA 6657 states that agricultural lands refers to the land devoted to agricultural activity as defined in
this act and not classified as mineral, forest, residential, commercial or industrial land.
Department of Justice Opinion No. 44, series of 1990 has ruled that, with respect to the conversion of agricultural
lands covered by RA No. 6657 to non-agricultural uses, the authority of DAR to approve such conversion may be
exercised from the date of its effectivity, on June 15, 1988. Thus, all lands that are already classified as
commercial, industrial, or residential before 15 June 1988 no longer need any conversion clearance.
With our finding that the property subject of the suit was classified as residential land since 1976, the DARAB
had no original and appellate jurisdiction over the property subject of the action of the petitioner PBFAI and its
members. Consequently, the DARAB should have ordered the dismissal of the complaint.
The jurisdiction of a tribunal or quasi-judicial body over the subject matter is determined by the averments of
the complaint/petition and the law extant at the time of the commencement of the suit/complaint/petition.[82] All
proceedings before a tribunal or quasi-judicial agency bereft of jurisdiction over the subject matter of the action are
null and void.[83]
Section 1, Rule II of the Revised Rules of Procedure of the DARAB provides that:
SECTION 1. Primary. Original and appellate jurisdiction The Agrarian Reform Adjudication Board shall have
primary jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes, cases,
controversies, and matters or incidents involving the implementation of the Comprehensive Agrarian Reform
Program under Republic Act No. 6657, Executive Order Nos. 229, 228 and 129-A, Republic Act No. 3844 as
amended by Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their implementing
rules and regulations.
Section 3(d) of Rep. Act No. 6657 defines an agrarian dispute as:
Agrarian Dispute refers to any controversy relating to tenurial arrangements, whether leasehold, tenancy,
stewardship or otherwise, over lands devoted to agriculture, including disputes concerning farmworkers
associations or representation of persons negotiating, fixing, maintaining, changing or seeking to arrange terms
or conditions of such tenurial arrangements.
It includes any controversy relating to compensation of lands acquired under this Act and other terms and
conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform
beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner
and tenant, or lessor and lessee.
In Monsanto v. Zerna,[84] we held that for the DARAB to have jurisdiction over a case, there must exist a
tenancy relationship between the parties. In order for a tenancy agreement to take hold over a dispute, it is essential
to establish all the indispensable elements, to wit:
(1) The parties are the landowner and the tenant or agricultural lessee;
(2) The subject matter of the relationship is an agricultural land;
(3) There is consent between the parties to the relationship;
(4) The purpose of the relationship is to bring about agricultural production;
(5) There is personal cultivation on the part of the tenant or agricultural lessee; and
(6) The harvest is shared between the landowner and the tenant or agricultural lessee.[85]
There is no allegation in the complaint of the petitioner PBFAI in DARAB Case No. CA-0285-95 that its
members were tenants of the private respondent CAI. Neither did the petitioner adduce substantial evidence that
the private respondent was the landlord of its members from 1961, nor at any time for that matter. Indeed, as found [6] Id. at 356-361; 442.
by the PARAD: [7] Rollo, p. 93 (G.R. No. 142359).
[8] Exhibit 10; Defendants Folder of Exhibits, pp. 57-58.
[9] Exhibit 10, Defendants Folder of Exhibits, pp. 57-58.
Moreover, their waiver of rights constitutes abandonment of their rights of possession and cultivation which may
[10] Ibid.
yet be borne out of a legitimate tenancy relationship. Their re-entry or continuous possession and cultivation of
[11] Records, Vol. III, pp. 85-86.
the land in question without the landowners knowledge and/or consent negates the existence of tenancy
[12] Exhibit 3-A; Defendants Folder of Exhibits, pp. 33-36.
relationship. Since security of tenure is a right to which only a bona fide tenant farmer is entitled their lack of such
[13] Exhibit 11-B; Id. at 61.
tenurial status denies them of its exercise and enjoyment.
[14] Exhibit 11, Id. at 59.
[15] Rollo, p. 91.
As to the remaining twenty and more other complainants, it is unfortunate that they have not shown that their [16] The plaintiffs in Civil Case No. BCV-87-13 were as follows: Medy Vinzon, Elenita Canaria, Luz Alvarez, Elena
cultivation, possession and enjoyment of the lands they claim to till have been by authority of a valid contract of
Layaban, Leoncio Demillo, Lolita Banaag, Godofredo Inciong, Cresencio Layaban, Bernardo Poblete, Leoncio
agricultural tenancy. On the contrary, as admitted in their complaint a number of them have simply occupied the
Banaag, Estelita Gaut, Jose Sumallo, Victoria Valerio and Casimiro Mabilangan, known as the Pamilya Katorse.
premises in suit without any specific area of tillage being primarily mere farm helpers of their relatives. Banking [17] Exhibit 2; Records, Vol. IV, pp. 205-210.
on their application for CARP coverage still awaiting action and disposition in some DAR operations office, these [18] Records, Vol. IV, pp. 208-209.
complainants have tenaciously held on to their occupied areas in the hope of eventual redemption under the [19] Exhibit 3; Id. at 213-217; In 1987, TCT No. T-62972 was cancelled and TCT No. 156224 was issued.
Comprehensive Agrarian Reform Program. [86] [20] Id. at 217.
[21] Exhibit 6; Records, Vol. IV, p. 221.
Since the members of the petitioner PBFAI were not the tenants of the private respondent CAI, the petitioners [22] Exhibit 5; Id. at 220.
and its members had no cause of action against the private respondent for possession of the landholding to [23] Rollo, p. 19 (G.R. No. 142359).
maintain possession thereof and for damages. Besides, when the complaint was filed, twenty-five (25) of the thirty- [24] Records, Vol. IV, pp. 705-709.
seven (37) members of the petitioners had already executed separate deeds of quitclaim in favor of the private [25] Exhibits 13-A; 13, Defendants Folder of Exhibits, pp. 69-73.
respondent CAI over the portions of the landholding they respectively claimed, after receiving from the private [26] Exhibits 14 to 14-C; Id. at 74-80.
respondent CAI varied sums of money. In executing the said deeds, the members of the petitioner PBFAI thereby [27] Exhibit 12;Id. at 66.
waived their respective claims over the property. Hence, they have no right whatsoever to still remain in possession [28] Exhibits 15, 15-A, 15-B, 15-C, 15-D, 16, 16-A, 16-B, 16-C, Id. at 81-91.
of the same. [29] The said individuals are as follows: Domingo G. Banaag, Vivencia Poblete, Gerardo Banaag, Loreto Banaag,

IN LIGHT OF THE FOREGOING, the petitions are DENIED. The assailed decision of the Court of Appeals Victoriano Banaag, Lucio B. Banaag, Elegio Banaag, Florencio Poblete, Maricel Poblete, Jovencio Calica,
is AFFIRMED WITH MODIFICATIONS. The complaint of the petitioner PBFAI in DARAB Case No. CA-0285-95 is Francisco Villareal, Arcenio L. Cayabyab, Felicisima Garsote, Ma. Christina Banaag, Elena Layaban, Alijandro
DISMISSED. The counterclaim of the private respondent for damages in DARAB Case No. CA-0285-95 is, Sanganbayan and Lolita Garcia.
[30] Exhibit H; Plaintiffs Folder of Exhibits, pp. 17-18.
likewise, DISMISSED. The thirty-seven (37) members of the petitioner PBFAI and all those occupying the property
[31] According to the petitioners, they cultivated a total of 13 hectares, as follows:
subject of the complaint in DARAB Case No. CA-0285-95 in their behalf are ORDERED to vacate the landholding.
AREA
SO ORDERED.
NAME
Quisumbing, (Acting Chairman), Austria-Martinez, and Tinga, JJ., concur.
1. Domingo Banaag 2 hectares
Puno, J., (Chairman), on official leave.
2. Vivencia Poblete 2 hectares
3. Gerardo Banaag 1 hectare
4. Loreto Banaag 1 hectares
5. Victoriano Banaag 1 hectares
[1] Penned by Associate Justice Roberto A. Barrios with Associate Justices Eubulo G. Verzola and Eriberto U.
6. Lucio B. Banaag 1 hectare
Rosario, Jr., concurring.
[2] Now Barangay F. del Rosario, General Mariano Alvarez, Cavite.
7. Elegio Banaag 1 hectare
[3] Records, Vol. IV, p. 300; Exhibit D, Plaintiffs Folder of Exhibits, pp. 8-10.
8. Florencio Poblete 1 hectare
[4] Exhibits 38 and 38-B; Records, Vol. IV, pp. 262-265.
9. Maricel Poblete 1 hectare
[5] Exhibit 2-A, Defendants Folder of Exhibits, p. 32.
10. Jovencio Calica 2,500 square meters
11. Francisco Villareal 5,000 square meters
 12. Arcenio L.Cayabyab 2,500 square meters (Id. at 18). [60] Id. at 736-739.
[61] Treated as a Petition for Review under Rule 43 of the Rules of Court by the Court of Appeals.
[32] Records, Vol. IV, pp. 8 to 8-1. [62] CA Rollo, p. 15.
[33] Cancelled by TCT No. 62972, registered under the name of CAI. [63] Id. at 173.
[34] Exhibit F; Records, Vol. IV, p. 149. [64] 298 SCRA 678 (1998).
[35] Records, Vol. IV, pp. 2-8. [65] 222 SCRA 173 (1993).
[36] Now Barangay F. de Castro, GMA, Cavite. [66] CA Rollo, pp. 172-173.
[37] Exhibit B, Plaintiffs Folder of Exhibits, p. 51. [67] Calvo v. Vergara, 372 SCRA 650 (2001).
[38] TCT Nos. 91584-85 were cancelled and a new one TCT No. T-62972 was issued in the name of Lakeview [68] Ibid.

Development Corporation on September 20, 1977. [69] Palele v. Court of Appeals, 362 SCRA 141 (2001).
[39] Records, Vol. IV, p. 4. [70] E.O. No. 648 was approved on February 7, 1981.
[40] Id. at 53-54. [71] 222 SCRA 173 (1993).
[41] Id. at 56-68. [72] Luz Farms v. Secretary of the Department of Agrarian Reform, 192 SCRA 51 (1990).
[42] Records, Vol. IV, p. 63. [73] 225 SCRA 278 (1993).
[43] Id. at 65. [74] Ibid. (Emphasis ours.)
[44] Id. at 133-134. [75] 318 SCRA 22 (1999).
[45] Id. at 138-140. [76] 367 SCRA 175 (2001).
[46] Id. at 426. [77]Power to adopt zoning and planning ordinances. - Any provision of law to the contrary notwithstanding,
[47] Id. at 426-427; 179 SCRA 146 (1989). Municipal Boards or City Councils in municipalities are hereby authorized to adopt zoning and subdivision
[48] Id. at 447-448. ordinances or regulations for their respective cities and municipalities subject to the approval of the City Mayor or
[49] Id. at 493. Municipal Mayor, as the case may be. Cities and municipalities may, however, consult the National Planning
[50] Id. at 497. Commission on matters pertaining to planning and zoning.
[51] Id. at 499. [78] Section 4(b) of P.D. No. 449.
[52] Exhibit 20 20-B; Defendants Folder of Exhibits, pp. 102-104. [79] Fortich v. Corona, 298 SCRA 678 (1998).
[53] Records, Vol. IV, pp. 714-735. [80] Province of Camarines Sur v. Court of Appeals, 222 SCRA 173 (1993).
[54] Id. at 524-541. [81] Ortigas & Co., Limited Partnership v. Feati Bank and Trust Co., 94 SCRA 533 (1979).
[55] Id. at 541. [82] Mercado v. Judge Ubay, 187 SCRA 719 (1990).
[56] Records, Vol. IV, pp. 711-735. [83] Javelosa v. Court of Appeals, 265 SCRA 493 (1996).
[57] The following complainants-members of PBFAI executed separate deeds of quitclaim in favor of the CAI: [84] 371 SCRA 664 (2001).

1. Edgardo Uniforme 14. Maria Layaban [85] Almuete v. Andres, 369 SCRA 619 (2001).

2. Clarito Sanganbayan 15. Betty Banaag [86] Records, Vol. IV, p. 485.

3. Francisco Joven 16. Oscar Layaban

4. Manuel Layaban 17. Carmelita Caalete
5. Dante Javier 18. Manuel Canaria
6. Ederlinda dela Cruz 19. Alfredo Diaz
7. Conrado Banaag 20. Alejandro Sanganbayan
8. Eduardo Sabalsa 21. Soledad Alcantara
9. Diosdado Canaria 22. Felicisimo Galzote
10. Herminia Demillo 23. Vivencio Boral
11. Elizabeth Cristo 24. Edilberto Banaag
12. Buena Layaban 25. Jose Canaria
13. Elena Layaban

[58] Id. at 677-678.

[59] Id. at 683-704.

G.R. No. L-24693 July 31, 1967
ERMITA-MALATE HOTEL AND MOTEL OPERATORS ASSOCIATION, INC., HOTEL DEL MAR INC. and GO
CHIU, petitioners-appellees,
vs.
THE HONORABLE CITY MAYOR OF MANILA, respondent-appellant.
VICTOR ALABANZA, intervenor-appellee.
Panganiban, Abad and Associates Law Office for respondent-appellant.
J. M. Aruego, Tenchavez and Associates for intervenor-appellee.
FERNANDO, J.:
The principal question in this appeal from a judgment of the lower court in an action for prohibition is whether
Ordinance No. 4760 of the City of Manila is violative of the due process clause. The lower court held that it is and
adjudged it "unconstitutional, and, therefore, null and void." For reasons to be more specifically set forth, such
judgment must be reversed, there being a failure of the requisite showing to sustain an attack against its validity.
The petition for prohibition against Ordinance No. 4760 was filed on July 5, 1963 by the petitioners, Ermita-
Malate Hotel and Motel Operators Association, one of its members, Hotel del Mar Inc., and a certain Go Chiu,
who is "the president and general manager of the second petitioner" against the respondent Mayor of the City of
Manila who was sued in his capacity as such "charged with the general power and duty to enforce ordinances of
the City of Manila and to give the necessary orders for the faithful execution and enforcement of such
ordinances." (par. 1). It was alleged that the petitioner non-stock corporation is dedicated to the promotion and
protection of the interest of its eighteen (18) members "operating hotels and motels, characterized as legitimate
businesses duly licensed by both national and city authorities, regularly paying taxes, employing and giving
livelihood to not less than 2,500 person and representing an investment of more than P3 million."1 (par. 2). It was
then alleged that on June 13, 1963, the Municipal Board of the City of Manila enacted Ordinance No. 4760,
approved on June 14, 1963 by the then Vice-Mayor Herminio Astorga, who was at the time acting as Mayor of
the City of Manila. (par. 3).
After which the alleged grievances against the ordinance were set forth in detail. There was the assertion of its
being beyond the powers of the Municipal Board of the City of Manila to enact insofar as it would regulate motels,
on the ground that in the revised charter of the City of Manila or in any other law, no reference is made to motels;
that Section 1 of the challenged ordinance is unconstitutional and void for being unreasonable and violative of
due process insofar as it would impose P6,000.00 fee per annum for first class motels and P4,500.00 for second
class motels; that the provision in the same section which would require the owner, manager, keeper or duly
authorized representative of a hotel, motel, or lodging house to refrain from entertaining or accepting any guest
or customer or letting any room or other quarter to any person or persons without his filling up the prescribed
form in a lobby open to public view at all times and in his presence, wherein the surname, given name and
middle name, the date of birth, the address, the occupation, the sex, the nationality, the length of stay and the
number of companions in the room, if any, with the name, relationship, age and sex would be specified, with data
furnished as to his residence certificate as well as his passport number, if any, coupled with a certification that a
person signing such form has personally filled it up and affixed his signature in the presence of such owner,
manager, keeper or duly authorized representative, with such registration forms and records kept and bound
together, it also being provided that the premises and facilities of such hotels, motels and lodging houses would
be open for inspection either by the City Mayor, or the Chief of Police, or their duly authorized representatives is
unconstitutional and void again on due process grounds, not only for being arbitrary, unreasonable or oppressive
but also for being vague, indefinite and uncertain, and likewise for the alleged invasion of the right to privacy and
the guaranty against self-incrimination; that Section 2 of the challenged ordinance classifying motels into two
classes and requiring the maintenance of certain minimum facilities in first class motels such as a telephone in
each room, a dining room or, restaurant and laundry similarly offends against the due process clause for being
arbitrary, unreasonable and oppressive, a conclusion which applies to the portion of the ordinance requiring
second class motels to have a dining room; that the provision of Section 2 of the challenged ordinance prohibiting
a person less than 18 years old from being accepted in such hotels, motels, lodging houses, tavern or common
inn unless accompanied by parents or a lawful guardian and making it unlawful for the owner, manager, keeper
or duly authorized representative of such establishments to lease any room or portion thereof more than twice
every 24 hours, runs counter to the due process guaranty for lack of certainty and for its unreasonable, arbitrary
and oppressive character; and that insofar as the penalty provided for in Section 4 of the challenged ordinance
for a subsequent conviction would, cause the automatic cancellation of the license of the offended party, in effect
causing the destruction of the business and loss of its investments, there is once again a transgression of the
due process clause.
There was a plea for the issuance of preliminary injunction and for a final judgment declaring the above
ordinance null and void and unenforceable. The lower court on July 6, 1963 issued a writ of preliminary injunction
ordering respondent Mayor to refrain from enforcing said Ordinance No. 4760 from and after July 8, 1963.
In the a answer filed on August 3, 1963, there was an admission of the personal circumstances regarding the
respondent Mayor and of the fact that petitioners are licensed to engage in the hotel or motel business in the City
of Manila, of the provisions of the cited Ordinance but a denial of its alleged nullity, whether on statutory or
constitutional grounds. After setting forth that the petition did fail to state a cause of action and that the
challenged ordinance bears a reasonable relation, to a proper purpose, which is to curb immorality, a valid and
proper exercise of the police power and that only the guests or customers not before the court could complain of
the alleged invasion of the right to privacy and the guaranty against self incrimination, with the assertion that the
issuance of the preliminary injunction ex parte was contrary to law, respondent Mayor prayed for, its dissolution
and the dismissal of the petition.
Instead of evidence being offered by both parties, there was submitted a stipulation of facts dated September 28,
1964, which reads:
1. That the petitioners Ermita-Malate Hotel and Motel Operators Association, Inc. and Hotel del Mar Inc.
are duly organized and existing under the laws of the Philippines, both with offices in the City of Manila,
 while the petitioner Go Chin is the president and general manager of Hotel del Mar Inc., and the intervenor
Victor Alabanza is a resident of Baguio City, all having the capacity to sue and be sued;
2. That the respondent Mayor is the duly elected and incumbent City Mayor and chief executive of the City
of Manila charged with the general power and duty to enforce ordinances of the City of Manila and to give
the necessary orders for the faithful execution and enforcement of such ordinances;
3. That the petitioners are duly licensed to engage in the business of operating hotels and motels in Malate
and Ermita districts in Manila;
4. That on June 13, 1963, the Municipal Board of the City of Manila enacted Ordinance No. 4760, which
was approved on June 14, 1963, by Vice-Mayor Herminio Astorga, then the acting City Mayor of Manila, in
the absence of the respondent regular City Mayor, amending sections 661, 662, 668-a, 668-b and 669 of
the compilation of the ordinances of the City of Manila besides inserting therein three new sections. This
ordinance is similar to the one vetoed by the respondent Mayor (Annex A) for the reasons stated in its 4th
Indorsement dated February 15, 1963 (Annex B);
5. That the explanatory note signed by then Councilor Herminio Astorga was submitted with the proposed
ordinance (now Ordinance 4760) to the Municipal Board, copy of which is attached hereto as Annex C;
6. That the City of Manila derived in 1963 an annual income of P101,904.05 from license fees paid by the
105 hotels and motels (including herein petitioners) operating in the City of Manila.1äwphï1.ñët
Thereafter came a memorandum for respondent on January 22, 1965, wherein stress was laid on the
presumption of the validity of the challenged ordinance, the burden of showing its lack of conformity to the
Constitution resting on the party who assails it, citing not only U.S. v. Salaveria, but likewise applicable American
authorities. Such a memorandum likewise refuted point by point the arguments advanced by petitioners against
its validity. Then barely two weeks later, on February 4, 1965, the memorandum for petitioners was filed
reiterating in detail what was set forth in the petition, with citations of what they considered to be applicable
American authorities and praying for a judgment declaring the challenged ordinance "null and void and
unenforceable" and making permanent the writ of preliminary injunction issued.
After referring to the motels and hotels, which are members of the petitioners association, and referring to the
alleged constitutional questions raised by the party, the lower court observed: "The only remaining issue here
being purely a question of law, the parties, with the nod of the Court, agreed to file memoranda and thereafter, to
submit the case for decision of the Court." It does appear obvious then that without any evidence submitted by
the parties, the decision passed upon the alleged infirmity on constitutional grounds of the challenged ordinance,
dismissing as is undoubtedly right and proper the untenable objection on the alleged lack of authority of the City
of Manila to regulate motels, and came to the conclusion that "the challenged Ordinance No. 4760 of the City of
Manila, would be unconstitutional and, therefore, null and void." It made permanent the preliminary injunction
issued against respondent Mayor and his agents "to restrain him from enforcing the ordinance in question."
Hence this appeal.
As noted at the outset, the judgment must be reversed. A decent regard for constitutional doctrines of a
fundamental character ought to have admonished the lower court against such a sweeping condemnation of the
challenged ordinance. Its decision cannot be allowed to stand, consistently with what has hitherto been the
accepted standards of constitutional adjudication, in both procedural and substantive aspects.
Primarily what calls for a reversal of such a decision is the absence of any evidence to offset the presumption of
validity that attaches to a challenged statute or ordinance. As was expressed categorically by Justice Malcolm:
"The presumption is all in favor of validity x x x . The action of the elected representatives of the people cannot be
lightly set aside. The councilors must, in the very nature of things, be familiar with the necessities of their
particular municipality and with all the facts and circumstances which surround the subject and necessitate
action. The local legislative body, by enacting the ordinance, has in effect given notice that the regulations are
essential to the well being of the people x x x . The Judiciary should not lightly set aside legislative action when
there is not a clear invasion of personal or property rights under the guise of police regulation. 2
It admits of no doubt therefore that there being a presumption of validity, the necessity for evidence to rebut it is
unavoidable, unless the statute or ordinance is void on its face which is not the case here. The principle has been
nowhere better expressed than in the leading case of O'Gorman & Young v. Hartford Fire Insurance Co.,3 where
the American Supreme Court through Justice Brandeis tersely and succinctly summed up the matter thus: The
statute here questioned deals with a subject clearly within the scope of the police power. We are asked to
declare it void on the ground that the specific method of regulation prescribed is unreasonable and hence
deprives the plaintiff of due process of law. As underlying questions of fact may condition the constitutionality of
legislation of this character, the resumption of constitutionality must prevail in the absence of some factual
foundation of record for overthrowing the statute." No such factual foundation being laid in the present case, the
lower court deciding the matter on the pleadings and the stipulation of facts, the presumption of validity must
prevail and the judgment against the ordinance set aside.
Nor may petitioners assert with plausibility that on its face the ordinance is fatally defective as being repugnant to
the due process clause of the Constitution. The mantle of protection associated with the due process guaranty
does not cover petitioners. This particular manifestation of a police power measure being specifically aimed to
safeguard public morals is immune from such imputation of nullity resting purely on conjecture and unsupported
by anything of substance. To hold otherwise would be to unduly restrict and narrow the scope of police power
which has been properly characterized as the most essential, insistent and the least limitable of
powers,4 extending as it does "to all the great public needs."5 It would be, to paraphrase another leading
decision, to destroy the very purpose of the state if it could be deprived or allowed itself to be deprived of its
competence to promote public health, public morals, public safety and the genera welfare.6 Negatively put, police
power is "that inherent and plenary power in the State which enables it to prohibit all that is hurt full to the
comfort, safety, and welfare of society.7
There is no question but that the challenged ordinance was precisely enacted to minimize certain practices
hurtful to public morals. The explanatory note of the Councilor Herminio Astorga included as annex to the
stipulation of facts, speaks of the alarming increase in the rate of prostitution, adultery and fornication in Manila
traceable in great part to the existence of motels, which "provide a necessary atmosphere for clandestine entry,
presence and exit" and thus become the "ideal haven for prostitutes and thrill-seekers." The challenged
ordinance then proposes to check the clandestine harboring of transients and guests of these establishments by
requiring these transients and guests to fill up a registration form, prepared for the purpose, in a lobby open to
public view at all times, and by introducing several other amendatory provisions calculated to shatter the privacy
that characterizes the registration of transients and guests." Moreover, the increase in the licensed fees was
intended to discourage "establishments of the kind from operating for purpose other than legal" and at the same
time, to increase "the income of the city government." It would appear therefore that the stipulation of facts, far
from sustaining any attack against the validity of the ordinance, argues eloquently for it.
It is a fact worth noting that this Court has invariably stamped with the seal of its approval, ordinances punishing
vagrancy and classifying a pimp or procurer as a vagrant;8 provide a license tax for and regulating the
maintenance or operation of public dance halls;9 prohibiting gambling;10 prohibiting jueteng;11 and
monte;12 prohibiting playing of panguingui on days other than Sundays or legal holidays;13 prohibiting the
operation of pinball machines;14 and prohibiting any person from keeping, conducting or maintaining an opium
joint or visiting a place where opium is smoked or otherwise used, 15 all of which are intended to protect public
morals.
On the legislative organs of the government, whether national or local, primarily rest the exercise of the police
power, which, it cannot be too often emphasized, is the power to prescribe regulations to promote the health,
morals, peace, good order, safety and general welfare of the people. In view of the requirements of due process,
equal protection and other applicable constitutional guaranties however, the exercise of such police power
insofar as it may affect the life, liberty or property of any person is subject to judicial inquiry. Where such exercise
of police power may be considered as either capricious, whimsical, unjust or unreasonable, a denial of due
process or a violation of any other applicable constitutional guaranty may call for correction by the courts.
We are thus led to considering the insistent, almost shrill tone, in which the objection is raised to the question of
due process.16 There is no controlling and precise definition of due process. It furnishes though a standard to
which the governmental action should conform in order that deprivation of life, liberty or property, in each
appropriate case, be valid. What then is the standard of due process which must exist both as a procedural and a
substantive requisite to free the challenged ordinance, or any governmental action for that matter, from the
imputation of legal infirmity sufficient to spell its doom? It is responsiveness to the supremacy of reason,
obedience to the dictates of justice. Negatively put, arbitrariness is ruled out and unfairness avoided. To satisfy
the due process requirement, official action, to paraphrase Cardozo, must not outrun the bounds of reason and
result in sheer oppression. Due process is thus hostile to any official action marred by lack of reasonableness.
Correctly it has been identified as freedom from arbitrariness. It is the embodiment of the sporting idea of fair
play.17 It exacts fealty "to those strivings for justice" and judges the act of officialdom of whatever branch "in the
light of reason drawn from considerations of fairness that reflect [democratic] traditions of legal and political
thought."18 It is not a narrow or "technical conception with fixed content unrelated to time, place and
circumstances,"19 decisions based on such a clause requiring a "close and perceptive inquiry into fundamental
principles of our society."20 Questions of due process are not to be treated narrowly or pedantically in slavery to
form or phrases.21
It would thus be an affront to reason to stigmatize an ordinance enacted precisely to meet what a municipal
lawmaking body considers an evil of rather serious proportion an arbitrary and capricious exercise of authority. It
would seem that what should be deemed unreasonable and what would amount to an abdication of the power to
govern is inaction in the face of an admitted deterioration of the state of public morals. To be more specific, the
Municipal Board of the City of Manila felt the need for a remedial measure. It provided it with the enactment of the
challenged ordinance. A strong case must be found in the records, and, as has been set forth, none is even
attempted here to attach to an ordinance of such character the taint of nullity for an alleged failure to meet the
due process requirement. Nor does it lend any semblance even of deceptive plausibility to petitioners' indictment
of Ordinance No. 4760 on due process grounds to single out such features as the increased fees for motels and
hotels, the curtailment of the area of freedom to contract, and, in certain particulars, its alleged vagueness.
Admittedly there was a decided increase of the annual license fees provided for by the challenged ordinance for
hotels and motels, 150% for the former and over 200% for the latter, first-class motels being required to pay a
P6,000 annual fee and second-class motels, P4,500 yearly. It has been the settled law however, as far back as
1922 that municipal license fees could be classified into those imposed for regulating occupations or regular
enterprises, for the regulation or restriction of non-useful occupations or enterprises and for revenue purposes
only.22 As was explained more in detail in the above Cu Unjieng case: (2) Licenses for non-useful occupations
are also incidental to the police power and the right to exact a fee may be implied from the power to license and
regulate, but in fixing amount of the license fees the municipal corporations are allowed a much wider discretion
in this class of cases than in the former, and aside from applying the well-known legal principle that municipal
ordinances must not be unreasonable, oppressive, or tyrannical, courts have, as a general rule, declined to
interfere with such discretion. The desirability of imposing restraint upon the number of persons who might
otherwise engage in non-useful enterprises is, of course, generally an important factor in the determination of the
amount of this kind of license fee. Hence license fees clearly in the nature of privilege taxes for revenue have
frequently been upheld, especially in of licenses for the sale of liquors. In fact, in the latter cases the fees have
rarely been declared unreasonable.23
Moreover in the equally leading case of Lutz v. Araneta24 this Court affirmed the doctrine earlier announced by
the American Supreme Court that taxation may be made to implement the state's police power. Only the other
day, this Court had occasion to affirm that the broad taxing authority conferred by the Local Autonomy Act of
1959 to cities and municipalities is sufficiently plenary to cover a wide range of subjects with the only limitation
that the tax so levied is for public purposes, just and uniform.25
As a matter of fact, even without reference to the wide latitude enjoyed by the City of Manila in imposing licenses
for revenue, it has been explicitly held in one case that "much discretion is given to municipal corporations in
determining the amount," here the license fee of the operator of a massage clinic, even if it were viewed purely
as a police power measure.26 The discussion of this particular matter may fitly close with this pertinent citation
from another decision of significance: "It is urged on behalf of the plaintiffs-appellees that the enforcement of the
ordinance could deprive them of their lawful occupation and means of livelihood because they can not rent stalls
in the public markets. But it appears that plaintiffs are also dealers in refrigerated or cold storage meat, the sale
of which outside the city markets under certain conditions is permitted x x x . And surely, the mere fact, that some
individuals in the community may be deprived of their present business or a particular mode of earning a living
cannot prevent the exercise of the police power. As was said in a case, persons licensed to pursue occupations
which may in the public need and interest be affected by the exercise of the police power embark in these
occupations subject to the disadvantages which may result from the legal exercise of that power."27
Nor does the restriction on the freedom to contract, insofar as the challenged ordinance makes it unlawful for the
owner, manager, keeper or duly authorized representative of any hotel, motel, lodging house, tavern, common
inn or the like, to lease or rent room or portion thereof more than twice every 24 hours, with a proviso that in all
cases full payment shall be charged, call for a different conclusion. Again, such a limitation cannot be viewed as
a transgression against the command of due process. It is neither unreasonable nor arbitrary. Precisely it was
intended to curb the opportunity for the immoral or illegitimate use to which such premises could be, and,
according to the explanatory note, are being devoted. How could it then be arbitrary or oppressive when there
appears a correspondence between the undeniable existence of an undesirable situation and the legislative
attempt at correction. Moreover, petitioners cannot be unaware that every regulation of conduct amounts to
curtailment of liberty which as pointed out by Justice Malcolm cannot be absolute. Thus: "One thought which runs
through all these different conceptions of liberty is plainly apparent. It is this: 'Liberty' as understood in
democracies, is not license; it is 'liberty regulated by law.' Implied in the term is restraint by law for the good of
the individual and for the greater good of the peace and order of society and the general well-being. No man can
do exactly as he pleases. Every man must renounce unbridled license. The right of the individual is necessarily
subject to reasonable restraint by general law for the common good x x x The liberty of the citizen may be
restrained in the interest of the public health, or of the public order and safety, or otherwise within the proper
scope of the police power."28
A similar observation was made by Justice Laurel: "Public welfare, then, lies at the bottom of the enactment of
said law, and the state in order to promote the general welfare may interfere with personal liberty, with property,
and with business and occupations. Persons and property may be subjected to all kinds of restraints and
burdens, in order to secure the general comfort, health, and prosperity of the state x x x To this fundamental aim
of our Government the rights of the individual are subordinated. Liberty is a blessing without which life is a
misery, but liberty should not be made to prevail over authority because then society will fall into anarchy. Neither
should authority be made to prevail over liberty because then the individual will fall into slavery. The citizen
should achieve the required balance of liberty and authority in his mind through education and personal
discipline, so that there may be established the resultant equilibrium, which means peace and order and
happiness for all.29
It is noteworthy that the only decision of this Court nullifying legislation because of undue deprivation of freedom
to contract, People v. Pomar,30 no longer "retains its virtuality as a living principle. The policy of laissez faire has
to some extent given way to the assumption by the government of the right of intervention even in contractual
relations affected with public interest.31 What may be stressed sufficiently is that if the liberty involved were
freedom of the mind or the person, the standard for the validity of governmental acts is much more rigorous and
exacting, but where the liberty curtailed affects at the most rights of property, the permissible scope of regulatory
measure is wider.32 How justify then the allegation of a denial of due process?
Lastly, there is the attempt to impugn the ordinance on another due process ground by invoking the principles of
vagueness or uncertainty. It would appear from a recital in the petition itself that what seems to be the gravamen
of the alleged grievance is that the provisions are too detailed and specific rather than vague or uncertain.
Petitioners, however, point to the requirement that a guest should give the name, relationship, age and sex of the
companion or companions as indefinite and uncertain in view of the necessity for determining whether the
companion or companions referred to are those arriving with the customer or guest at the time of the registry or
entering the room With him at about the same time or coming at any indefinite time later to join him; a proviso in
one of its sections which cast doubt as to whether the maintenance of a restaurant in a motel is dependent upon
the discretion of its owners or operators; another proviso which from their standpoint would require a guess as to
whether the "full rate of payment" to be charged for every such lease thereof means a full day's or merely a half-
day's rate. It may be asked, do these allegations suffice to render the ordinance void on its face for alleged
vagueness or uncertainty? To ask the question is to answer it. From Connally v. General Construction
Co.33 to Adderley v. Florida,34 the principle has been consistently upheld that what makes a statute susceptible to
such a charge is an enactment either forbidding or requiring the doing of an act that men of common intelligence
must necessarily guess at its meaning and differ as to its application. Is this the situation before us? A citation
from Justice Holmes would prove illuminating: "We agree to all the generalities about not supplying criminal laws
with what they omit but there is no canon against using common sense in construing laws as saying what they
obviously mean."35
That is all then that this case presents. As it stands, with all due allowance for the arguments pressed with such
vigor and determination, the attack against the validity of the challenged ordinance cannot be considered a
success. Far from it. Respect for constitutional law principles so uniformly held and so uninterruptedly adhered to
by this Court compels a reversal of the appealed decision.
Wherefore, the judgment of the lower court is reversed and the injunction issued lifted forthwith. With costs.
Reyes, J.B.L., Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro and Angeles, JJ., concur.
Concepcion, C.J. and Dizon, J., are on leave.
Footnotes
1The eighteen members are Waldorf Hotel, Hotel Monte Carlo, Golden Gate Motel, Miami Hotel, Palm Spring
Hotel, Flamingo Motel, Holiday Motel, Rainbow Motel, Palo Alto Hotel, Paradise Hotel, Mayfair Hotel, Siesta Court,
Sun Valley Hotel, Springfield Hotel, New Palace Hotel, Hotel del Mar Longbeach Hotel and Ritz Motel.
2U.S.V. Salaveria (1918), 39 Phil. 102, at p. 111. There was an affirmation of the presumption of validity of
municipal ordinance as announced in the leading Salaveria decision in Eboña v. Daet, (1950) 85 Phil. 369.
3282 US 251, 328, January 5, 1931.
4Cf. Ichong v. Hernandez, (1957) 101 Phil. 1155, at p. 1163. Also: "To Frankfurter the police power, true to its
etymology is the power to shape policy. It defies legal definition; as a response to the dynamic aspects of society, it
cannot be reduced to a constitutional formula. The law must be sensitive to life; in resolving cases, it must not fall
back upon sterile claims; its judgments are not derived from an abstract duel between liberty and the police power.
Instead, in a world of trusts and unions and large-scale industry, it must meet the challenge of drastic social
change. For him as for Holmes, 'society is more than bargain and business' and the jurist's art rises to no higher
peak than in vindicating interests not represented by the items in a balance-sheet. In a progressive society, new
interests emerge, new attitudes appeal, social consciousness quickens. In the face of the unknown one cannot
choose with certainty. Nor as yet, has the whole of truth been brought up from its bottomless well and how fragile
in scientific proof is the ultimate validity of any particular economic adjustment. Social development is a process of
trial and error; in the making of policy the fullest possible opportunity must be given for the play of the human mind.
If Congress or legislature does not regulate, laissez faire — not the individual — must be the regulator. (Hamilton,
Preview of a Justice (1939) 48 Yale Law Journal, 819).
5Noble state Bank v. Haskell, 219 U.S. 412. 23Citing Swarth v. People, 109 Ill. 621; Dennehy v. City of Chicago, 120 Ill. 627; 12 N.E., 227; United States
Distilling Co. v. City of Chicago, 112 Ill. 19: Drew County v. Bennet, 43 Ark. 364; Merced County v. Fleming, Ill Cal.
6U.S. v. Gomez-Jesus, (1915) 31 Phil. 218. 46; 43 Pac. 392; Williams v. City Council of West Point, 68 Ga. 816; Cheny v. Shellbyville, 19 Ind. 84; Wiley y.
Owens, 39 Ind. 429; Sweet v. City of Wabash, 41 Ind. 7; Jones v. Grady, 25 La. Ann. 586; Goldsmith v. City of
New Orleans, 31 La. Ann. 646; People ex rel., Cramer v. Medberry, 39 N.Y.S. 207; 17 Misc. Rep., 8 ; McGuigan v.
7Rubi v. Provincial Board, (1918) 39 Phil. 660. Town of Belmont, 89 Wis. 637; 62 N.W., 421; Ex parte Burnett 30 Ala. 461; Craig v. Burnett 32 Ala., 728, and
Muhlenbrinck v. Long Branch Commissioner, 42 N.J.L. 364; 36 Am. Rep., 518. At pp. 829-830.
8U.S. vs. Giner Cruz, (1918) 38 Phil. 677.
2498 Phil. 148 (1955), citing Great Atl & Pac. Tea Co. v Grosjean, 301 U.S. 412, 81 L. Ed. 1193; U.S. v. Butler, 297
9U.S.vs. Rodriguez, (1918) 38 Phil. 759. See also Sarmiento v. Belderol, L-15719, May 31, 1961; Lapera v. US 1, 80 L. Ed 477; M'Culloch v. Maryland, 4 Wheat 316, 4 L. Ed 579. The Lutz decision was followed in Republic
Vicente, L-18102, June 30, 1962. v. Bacolod Murcia Milling, L-19824, July 9, 1966.

10U.S. 25Ormoc Sugar Co. v. Municipal Board of Ormoc City, L-24322, July 21, 1967.
v. Pacis, (1915) 31 Phil. 524.

11U.S. 26Physical Therapy Organization v. Municipal Board, (1957) 101 Phil. 1142.
vs. Espiritu-Santo, (1912) 23 Phil. 610; U.S. vs. Joson, (1913) 26 Phil. 1; People vs. Chan Hong, (1938) 65
Phil. 625.
27Co Kian & Lee Ban v. City of Manila, (1955) 96 Phil. 649, 654, citing City of New Orleans v. Stafford, 27 L. Ann.
12U.S. v. Tamparong, (1915) 31 Phil. 321. 417.

13U.S.
v. Salaveria, (1918) 39 Phil. 102.
14Uy Ha v. The City Mayor, L-14149, May 30, 1969; Miranda v. City of Manila, L-17252, May 31, 1961.
15U.S. v. Ten Yu, (1912) 24 Phil. 1.
16There is no occasion to consider even cursorily the alleged invasion of the right of privacy or the prohibition
against self-incrimination. Petitioners obviously are not the proper parties to do so. Nor may such an incurable
defect be remedied by an accommodating intervenor "who has always taken advantage of as he exclusively relies
on, the facilities, services and accommodations offered by petitioner-motels. A general merchant, doing business
not only in Baguio City but in the City of Manila, has no legitimate cause for complaint. At least, not according to
the case as it has been developed.
28Rubiv. Provincial Board, (1919) 39 Phil. 660, at 706, citing Hall v. Geiger-Jones (1916), 242 U.S. 539; Hardie-
Tynes Manufacturing Co. vs. Cruz (1914), 189 Ala. 66.
29Calalang v. Williams (1940), 70 Phil. 726, at 733-734.
3046 Phil. 440 (1924). The Philippines was then under American sovereignty, American Supreme Court decisions
having thus an obligatory effect. No alternative was left to this Court except to follow the then controlling decision in
Adkins v. Children's Hospital (1924), 261 U.S. 525, which subsequently was overruled in West Coast Hotel v.
Parrish (1937), 300 U.S. 379.
31Antamok Goldfields Mining Co. v. Court (1940), 70 Phil. 340, at 360, quoting a concurring opinion of Justice
Laurel in Ang Tibay v. Court, G.R. No. 46496.

17Frankfurter, 32Cf. "In weighing arguments of the parties it is important to distinguish between the due process clause of the
Mr. Justice Holmes and the Supreme Court, (1938) pp. 32- 33.
Fourteenth Amendment as an instrument for transmitting the principles of the First Amendment and those cases in
18Frankfurter, Hannah v. Larche, (1960) 363 U.S. 420, at 487. which it is applied for its own sake. The test of legislation which collides with the Fourteenth Amendment because
it also collides with the principles of the First, is much more definite than the test when only the Fourteen is
involved. Much of the vagueness of the due process clause disappears when the specific prohibition of the First
19Cafeteria Workers v. McElroy, (1961) 367 U.S. 1230. become its standard. The right of a State to regulate, for example, a public utility may well include, so far as the
due process test is concerned, power to impose all of the restrictions which a legislature may have a 'rational
20Bartkus v. Illinois, (1959) 359 U.S. 121. basis' for adopting. But freedoms of speech and of press, of assembly, and of worship may well be infringed on
such slender grounds. They are susceptible of restriction only to prevent an immediate danger to interests which
21Pearson the state may lawfully protect." (West Virginia State Bd. of Edu v. Barnette, (1942), 319 U.S. 624, at 639).
v. McGraw, (1939) 308 U.S. 313.
33269 U.S. 385 (1926).
22Cu Unjieng v. Postpone, (1922) 42 Phil. 818, 828.
3417 L. ed. 2d 149, Nov. 14, 1966.
 35Roschen v. Ward (1929), 279 U. S. 337,339.
This petition for review on certiorari[1] seeks to reverse the Decision dated 10 March 2003 of the Regional
JAMES MIRASOL, G.R. No. 158793 Trial Court, Branch 147, Makati City (RTC) in Civil Case No. 01-034, as well as the RTCs Order dated 16 June
RICHARD SANTIAGO, and
LUZON MOTORCYCLISTS Present: 2003 which denied petitioners Motion for Reconsideration. Petitioners assert that Department of Public Works and
FEDERATION, INC., Highways (DPWH) Department Order No. 74 (DO 74), Department Order No. 215 (DO 215), and the Revised
Petitioners, PANGANIBAN, C.J.,
PUNO, Rules and Regulations on Limited Access Facilities of the Toll Regulatory Board (TRB) violate Republic Act No.
QUISUMBING, 2000 (RA 2000) or the Limited Access Highway Act. Petitioners also seek to declare Department Order No. 123
YNARES-SANTIAGO, (DO 123) and Administrative Order No. 1 (AO 1)[2] unconstitutional.
SANDOVAL-GUTIERREZ,
Antecedent Facts
CARPIO,
AUSTRIA-MARTINEZ, The facts are not in dispute. As summarized by the Solicitor General, the facts are as follows:
- versus - CORONA,
1. On January 10, 2001, petitioners filed before the trial court a Petition for Declaratory Judgment
CARPIO MORALES, with Application for Temporary Restraining Order and Injunction docketed as Civil Case No.
01-034. The petition sought the declaration of nullity of the following administrative issuances
CALLEJO, SR.,
for being inconsistent with the provisions of Republic Act 2000, entitled Limited Access
AZCUNA, Highway Act enacted in 1957:

TINGA, a. DPWH Administrative Order No. 1, Series of 1968;

CHICO-NAZARIO, b. DPWH Department Order No. 74, Series of 1993;

GARCIA, and c. Art. II, Sec. 3(a) of the Revised Rules on Limited Access Facilities promulgated in 199[8] by the
DPWH thru the Toll Regulatory Board (TRB).
VELASCO, JR., JJ.
2. Previously, pursuant to its mandate under R.A. 2000, DPWH issued on June 25,
1998 Department Order (DO) No. 215 declaring the Manila-Cavite (Coastal Road) Toll
DEPARTMENT OF PUBLIC Expressway as limited access facilities.
WORKS AND HIGHWAYS and Promulgated:

TOLL REGULATORY BOARD,

3. Accordingly, petitioners filed an Amended Petition on February 8, 2001 wherein petitioners
Respondents. June 8, 2006 sought the declaration of nullity of the aforesaid administrative issuances. Moreover,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x petitioners prayed for the issuance of a temporary restraining order and/or preliminary
injunction to prevent the enforcement of the total ban on motorcycles along the entire breadth
of North and South Luzon Expressways and the Manila-Cavite (Coastal Road) Toll
DECISION Expressway under DO 215.
CARPIO, J.: 4. On June 28, 2001, the trial court, thru then Presiding Judge Teofilo Guadiz, after due hearing,
issued an order granting petitioners application for preliminary injunction. On July 16, 2001,
 a writ of preliminary injunction was issued by the trial court, conditioned upon petitioners filing
of cash bond in the amount of P100,000.00, which petitioners subsequently complied with. The petition is partly meritorious.
5. On July 18, 2001, the DPWH acting thru the TRB, issued Department Order No. 123 allowing
Whether the RTCs Decision Dismissing
motorcycles with engine displacement of 400 cubic centimeters inside limited access facilities
Petitioners Case is Barred by Res Judicata
(toll ways).

6. Upon the assumption of Honorable Presiding Judge Ma. Cristina Cornejo, both the petitioners
Petitioners rely on the RTCs Order dated 28 June 2001, which granted their prayer for a writ of
and respondents were required to file their respective Memoranda. Petitioners likewise filed
[their] Supplemental Memorandum. Thereafter, the case was deemed submitted for decision. preliminary injunction. Since respondents did not appeal from that Order, petitioners argue that the Order became
7. Consequently, on March 10, 2003, the trial court issued the assailed decision dismissing the a final judgment on the issues. Petitioners conclude that the RTC erred when it subsequently dismissed their
petition but declaring invalid DO 123. Petitioners moved for a reconsideration of the dismissal
of their petition; but it was denied by the trial court in its Order dated June 16, 2003.[3] petition in its Decision dated 10 March 2003.

Hence, this petition. Petitioners are mistaken. As the RTC correctly stated, the Order dated 28 June 2001 was not an
The RTCs Ruling adjudication on the merits of the case that would trigger res judicata. A preliminary injunction does not serve as a

The dispositive portion of the RTCs Decision dated 10 March 2003 reads: final determination of the issues. It is a provisional remedy, which merely serves to preserve the status quo until

WHEREFORE, [t]he Petition is denied/dismissed insofar as petitioners seek to declare null and the court could hear the merits of the case.[6] Thus, Section 9 of Rule 58 of the 1997 Rules of Civil Procedure
void ab initio DPWH Department Order No. 74, Series of 1993, Administrative Order No. 1, and
Art. II, Sec. 3(a) of the Revised Rules on Limited Access Facilities promulgated by the DPWH thru requires the issuance of a final injunction to confirm the preliminary injunction should the court during trial determine
the TRB, the presumed validity thereof not having been overcome; but the petition is granted
that the acts complained of deserve to be permanently enjoined. A preliminary injunction is a mere adjunct, an
insofar as DPWH Department Order No. 123 is concerned, declaring the same to be invalid for
being violative of the equal protection clause of the Constitution. ancillary remedy which exists only as an incident of the main proceeding.[7]

Validity of DO 74, DO 215

SO ORDERED.[4] and the TRB Regulations

Petitioners claim that DO 74,[8] DO 215,[9] and the TRBs Rules and Regulations issued under them violate
The Issues
the provisions of RA 2000. They contend that the two issuances unduly expanded the power of the DPWH in
Petitioners seek a reversal and raise the following issues for resolution:
Section 4 of RA 2000 to regulate toll ways. Petitioners assert that the DPWHs regulatory authority is limited to acts

1. WHETHER THE RTCS DECISION IS ALREADY BARRED BY RES JUDICATA; like redesigning curbings or central dividing sections. They claim that the DPWH is only allowed to re-design the

2. WHETHER DO 74, DO 215 AND THE TRB REGULATIONS CONTRAVENE RA 2000; AND physical structure of toll ways, and not to determine who or what can be qualified as toll way users.[10]

3. WHETHER AO 1 AND DO 123 ARE UNCONSTITUTIONAL. [5]

Section 4 of RA 2000[11] reads:
The Ruling of the Court
SEC. 4. Design of limited access facility. The Department of Public Works and Communications is
authorized to so design any limited access facility and to so regulate, restrict, or prohibit
access as to best serve the traffic for which such facility is intended; and its determination
of such design shall be final. In this connection, it is authorized to divide and separate any
limited access facility into separate roadways by the construction of raised curbings, central
dividing sections, or other physical separations, or by designating such separate roadways by
signs, markers, stripes, and the proper lane for such traffic by appropriate signs, markers,
stripes and other devices. No person, shall have any right of ingress or egress to, from or
across limited access facilities to or from abutting lands, except at such designated points at
which access may be permitted, upon such terms and conditions as may be specified from
time to time. (Emphasis supplied)
On 19 February 1968, Secretary Antonio V. Raquiza of the Department of Public Works and
Communications issued AO 1, which, among others, prohibited motorcycles on limited access highways. The
pertinent provisions of AO 1 read:
SUBJECT: Revised Rules and Regulations
Governing Limited Access
Highways
By virtue of the authority granted the Secretary [of] Public Works and Communications
under Section 3 of R.A. 2000, otherwise known as the Limited Access Highway Act, the following
rules and regulations governing limited access highways are hereby promulgated for the guidance
of all concerned:
Section 3 On limited access highways, it is unlawful for any person or group of persons to:
(h) Drive any bicycle, tricycle, pedicab, motorcycle or any vehicle (not motorized);
On 5 April 1993, Acting Secretary Edmundo V. Mir of the Department of Public Works and
Highways issued DO 74:
SUBJECT: Declaration of the North Luzon Expressway from Balintawak to Tabang and
the South Luzon Expressway from Nichols to Alabang as Limited Access Facilities
Pursuant to Section 2 of Republic Act No. 2000, a limited access facility is defined as a
highway or street especially designed for through traffic, and over, from, or to which owners or
occupants of abutting land or other persons have no right or easement or only a limited right or
easement of access, light, air or view by reason of the fact that their proper[t]y abuts upon such
limited access facility or for any other reason. Such highways or streets may be parkways, from which
trucks, buses, and other commerical [sic] vehicles shall be excluded; or they may be free ways open
to use by all customary forms of street and highway traffic.
Section 3 of the same Act authorizes the Department of Public Works and Communications
(now Department of Public Works and Highways) to plan, designate, establish, regulate, vacate, alter,
improve, maintain, and provide limited access facilities for public use wherever it is of the opinion that
traffic conditions, present or future, will justify such special facilities.
Therefore, by virtue of the authority granted above, the Department of Public Works and
Highways hereby designates and declares the Balintawak to Tabang Sections of the North Luzon
Expressway, and the Nichols to Alabang Sections of the South Luzon Expressways, to be LIMITED
ACCESS HIGHWAYS/FACILITIES subject to such rules and regulations that may be imposed by the
DPWH thru the Toll Regulatory Board (TRB).
In view thereof, the National Capital Region (NCR) of this Department is hereby ordered, after
consultation with the TRB and in coordination with the Philippine National Police (PNP), to close all
illegal openings along the said Limited Access Highways/Facilities. In this connection, the NCR is
instructed to organize its own enforcement and security group for the purpose of assuring the
continued closure of the right-of-way fences and the implementation of the rules and regulations
that may be imposed by the DPWH thru the TRB.
This Order shall take effect immediately.[13]
On 25 June 1998, then DPWH Secretary Gregorio R. Vigilar issued DO 215:
SUBJECT: Declaration of the R-1 Expressway, from Seaside drive to Zapote, C-5
Link Expressway, from Zapote to Noveleta, of the Manila Cavite Toll Expressway as
Limited Access Facility.
Pursuant to Section 2 of Republic Act No. 2000, a limited access facility is defined as a
highway or street especially designed for through traffic, and over, from, or to which owners or
occupants of abutting land or other persons have no right or easement or only a limited right or
easement of access, light, air or view by reason of the fact that their property abuts upon such
limited access facility or for any other reason. Such highways or streets may be parkways, from
which trucks, buses, and other commercial vehicles shall be excluded; or they may be free ways
open to use by all customary forms of street and highway traffic.
Section 3 of the same Act authorizes the Department of Public Works and Communications
(now Department of Public Works and Highways) to plan, designate, establish, regulate, vacate,
alter, improve, maintain, and provide limited access facilities for public use wherever it is of the
opinion that traffic conditions, present or future, will justify such special facilities.
Therefore, by virtue of the authority granted above, the Department of Public Works and
Highways hereby designates and declares the R-1 Expressway, C-5 Link Expressway and the R-
1 Extension Expressway Sections of the Manila Cavite Toll Expressway to be LIMITED ACCESS
 HIGHWAYS/FACILITIES subject to such rules and regulations that may be imposed by the DPWH
thru the Toll Regulatory Board (TRB). the Department of Justice, the Department of Agriculture and Commerce, the Department of Public Works and

In view thereof, the National Capital Region (NCR) of this Department is hereby ordered, Communications, the Department of Public Instruction, and the Department of Labor.[15] On 20 June 1964,
after consultation with the TRB and in coordination with the Philippine National Police (PNP), to
Republic Act No. 4136[16] created the Land Transportation Commission under the Department of Public Works and
close all illegal openings along the said Limited Access Highways/Facilities. In this connection, the
NCR is instructed to organize its own enforcement and security group for the purpose of assuring Communications. Later, the Department of Public Works and Communications was restructured into
the continued closure of the right-of-way fences and the implementation of the rules and regulations
that may be imposed by the DPWH thru the TRB. the Department of Public Works, Transportation and Communications.

This Order shall take effect immediately.[14]

On 16 May 1974, Presidential Decree No. 458 (PD 458) separated the Bureau of Public Highways from
The RTC held that Section 4 of RA 2000 expressly authorized the DPWH to design limited access
the Department of Public Works, Transportation and Communications and created it as a department to be known
facilities and to regulate, restrict, or prohibit access as to serve the traffic for which such facilities are intended.
as Department of Public Highways. Under Section 3 of PD 458, the Department of Public Highways is responsible
According to the RTC, such authority to regulate, restrict, or prohibit logically includes the determination of who
for developing and implementing programs on the construction and maintenance of roads, bridges and airport
and what can and cannot be permitted entry or access into the limited access facilities. Thus, the RTC concluded
runways.
that AO 1, DO 74, and the Revised Rules and Regulations on Limited Access Facilities, which ban motorcycles

entry or access to the limited access facilities, are not inconsistent with RA 2000. With the amendment of the 1973 Philippine Constitution in 1976, resulting in the shift in the form of

government, national agencies were renamed from Departments to Ministries. Thus, the Department of Public
RA 2000, otherwise known as the Limited Access Highway Act, was approved on 22 June 1957. Section
Works, Transportation and Communications became the Ministry of Public Works, Transportation and
4 of RA 2000 provides that [t]he Department of Public Works and Communications is authorized to so design
Communications.
any limited access facility and to so regulate, restrict, or prohibit access as to best serve the traffic for which such

facility is intended. The RTC construed this authorization to regulate, restrict, or prohibit access to limited access On 23 July 1979, then President Ferdinand E. Marcos issued Executive Order No. 546 (EO 546), creating
facilities to apply to the Department of Public Works and Highways (DPWH). a Ministry of Public Works and a Ministry of Transportation and Communications.[17] Under Section 1 of EO

546, the Ministry of Public Works assumed the public works functions of the Ministry of Public Works,
The RTCs ruling is based on a wrong premise. The RTC assumed that the DPWH derived its authority
Transportation and Communications. The functions of the Ministry of Public Works were the construction,
from its predecessor, the Department of Public Works and Communications, which is expressly authorized to
maintenance and repair of port works, harbor facilities, lighthouses, navigational aids, shore protection works,
regulate, restrict, or prohibit access to limited access facilities under Section 4 of RA 2000. However, such
airport buildings and associated facilities, public buildings and school buildings, monuments and other related
assumption fails to consider the evolution of the Department of Public Works and Communications.
structures, as well as undertaking harbor and river dredging works, reclamation of foreshore and swampland areas,

Under Act No. 2711, otherwise known as the Revised Administrative Code, approved on 10 March 1917, water supply, and flood control and drainage works.[18]

there were only seven executive departments, namely: the Department of the Interior, the Department of Finance,
 On the other hand, the Ministry of Transportation and Communications became the primary policy, Upon the ratification of the 1987 Constitution in February 1987, the former Ministry of Public Works and

planning, programming, coordinating, implementing, regulating and administrative entity of the executive branch of Highways became the Department of Public Works and Highways (DPWH) and the former Ministry of

the government in the promotion, development, and regulation of a dependable and coordinated network of Transportation and Communications became the Department of Transportation and Communications (DOTC).

transportation and communication systems. [19] The functions of the Ministry of Transportation and
DPWH issued DO 74 and DO 215 declaring certain expressways as limited access facilities on 5 April
Communications were:
1993 and 25 June 1998, respectively. Later, the TRB, under the DPWH, issued the Revised Rules and Regulations
a. Coordinate and supervise all activities of the Ministry relative to transportation and
communications; on Limited Access Facilities. However, on 23 July 1979, long before these department orders and regulations were

b. Formulate and recommend national policies and guidelines for the preparation and issued, the Ministry of Public Works, Transportation and Communications was divided into two agencies
implementation of an integrated and comprehensive transportation and communications
the Ministry of Public Works and the Ministry of Transportation and Communications by virtue of EO 546.
system at the national, regional and local levels;
The question is, which of these two agencies is now authorized to regulate, restrict, or prohibit access to limited
c. Establish and administer comprehensive and integrated programs for transportation and
communication, and for this purpose, may call on any agency, corporation, or organization, whether access facilities?[23]
government or private, whose development programs include transportation and communications
as an integral part to participate and assist in the preparation and implementation of such programs;
Under Section 1 of EO 546, the Ministry of Public Works (now DPWH) assumed the public
d. Regulate, whenever necessary, activities relative to transportation and
communications and prescribe and collect fees in the exercise of such power; works functions of the Ministry of Public Works, Transportation and Communications. On the other hand,

e. Assess, review and provide direction to transportation and communications research and among the functions of the Ministry of Transportation and Communications (now Department of
development programs of the government in coordination with other institutions concerned; and
Transportation and Communications [DOTC]) were to (1) formulate and recommend national policies and
f. Perform such other functions as may be necessary to carry into effect the provisions of this guidelines for the preparation and implementation of an integrated and comprehensive transportation and
Executive Order.[20] (Emphasis supplied)
communications systems at the national, regional, and local levels; and (2) regulate, whenever necessary, activities
On 27 July 1981, then President Marcos issued Executive Order No. 710 (EO 710), which merged the
relative to transportation and communications and prescribe and collect fees in the exercise of such
Ministry of Public Works and the Ministry of Public Highways for greater simplicity and economy in
power. Clearly, under EO 546, it is the DOTC, not the DPWH, which has authority to regulate, restrict, or
operations.[21] The restructured agency became known as the Ministry of Public Works and Highways. Under
prohibit access to limited access facilities.
Section 1 of EO 710 the functions of the Ministry of Public Works and the Ministry of Public Highways[22] were

transferred to the Ministry of Public Works and Highways. Even under Executive Order No. 125 (EO 125)[24] and Executive Order No. 125-A (EO 125-A),[25] which

further reorganized the DOTC, the authority to administer and enforce all laws, rules and regulations relative to

transportation is clearly with the DOTC.[26]

 Thus, DO 74 and DO 215 are void because the DPWH has no authority to declare certain expressways
as limited access facilities. Under the law, it is the DOTC which is authorized to administer and enforce all laws,
rules and regulations in the field of transportation and to regulate related activities.
Since the DPWH has no authority to regulate activities relative to transportation, the TRB[27] cannot derive its power
from the DPWH to issue regulations governing limited access facilities. The DPWH cannot delegate a power or
function which it does not possess in the first place. Since DO 74 and DO 215 are void, it follows that the rules
implementing them are likewise void.
Whether AO 1 and DO 123
are Unconstitutional
DPWH Secretary Simeon A. Datumanong issued DO 123 on 18 July 2001. DO 123 reads in part:
SUBJECT: Revised Rules and Regulations
Governing Limited Access Highways
By virtue of the authority granted the Secretary of Public Works and Highways under
Section 3 of R.A. 2000, otherwise known as the Limited Access Highway Act, the following
revised rules and regulations governing limited access highways are hereby promulgated for the
guidance of all concerned:
1. Administrative Order No. 1 dated February 19, 1968, issued by the Secretary of the
then Department of Public Works and Communications, is hereby amended by deleting the word
motorcycles mentioned in Section 3(h) thereof. Therefore, motorcycles are hereby allowed to
operate inside the toll roads and limited access highways, subject to the following:
a. Motorcycles shall have an engine displacement of at least 400 cubic centimeters
(cc) provided that:
The RTCs Decision dated 10 March 2003 declared DO 123 unconstitutional on the ground that it violates
the equal protection clause by allowing only motorcycles with at least 400 cubic centimeters engine displacement
to use the toll ways. The RTC reasoned that the creation of a distinction within the class of motorcycles was not
based on real differences.
We need not pass upon the constitutionality of the classification of motorcycles under DO 123. As
previously discussed, the DPWH has no authority to regulate limited access highways since EO 546 has devolved
this function to the DOTC. Thus, DO 123 is void for want of authority of the DPWH to promulgate it.
On the other hand, the assailed portion of AO 1 states:
Section 3. On limited access highways, it is unlawful for any person or group of persons to:
(h) Drive any bicycle, tricycle, pedicab, motorcycle or any vehicle (not motorized);
Petitioners assail the DPWHs failure to provide scientific and objective data on the danger of having
motorcycles plying our highways. They attack this exercise of police power as baseless and unwarranted.
Petitioners belabor the fact that there are studies that provide proof that motorcycles are safe modes of transport.
They also claim that AO 1 introduces an unreasonable classification by singling-out motorcycles from other
motorized modes of transport. Finally, petitioners argue that AO 1 violates their right to travel.
Petitioners arguments do not convince us.
We emphasize that the Secretary of the Department of Public Works and Communications issued
AO 1 on 19 February 1968.
Section 3 of RA 2000[29] authorized the issuance of the guidelines. In contrast, DPWH issued DO 74, DO 215 and
DO 123 after EO 546 devolved to the DOTC the authority to regulate limited access highways.
We now discuss the constitutionality of AO 1. Administrative issuances have the force and effect of
law.[30] They benefit from the same presumption of validity and constitutionality enjoyed by statutes.[31] These two
precepts place a heavy burden upon any party assailing governmental regulations. The burden of proving
unconstitutionality rests on such party.[32] The burden becomes heavier when the police power is at issue.
The use of public highways by motor vehicles is subject to regulation as an exercise of the police power
of the state.[33] The police power is far-reaching in scope and is the most essential, insistent and illimitable of all
government powers.[34] The tendency is to extend rather than to restrict the use of police power. The sole standard
in measuring its exercise is reasonableness.[35] What is reasonable is not subject to exact definition or scientific
formulation. No all-embracing test of reasonableness exists,[36] for its determination rests upon human judgment
applied to the facts and circumstances of each particular case.[37]
We find that AO 1 does not impose unreasonable restrictions. It merely outlines several precautionary
measures, to which toll way users must adhere. These rules were designed to ensure public safety and the
uninhibited flow of traffic within limited access facilities. They cover several subjects, from what lanes should be
used by a certain vehicle, to maximum vehicle height. The prohibition of certain types of vehicles is but one of
these. None of these rules violates reason. The purpose of these rules and the logic behind them are quite evident.
A toll way is not an ordinary road. The special purpose for which a toll way is constructed necessitates the
imposition of guidelines in the manner of its use and operation. Inevitably, such rules will restrict certain rights. But
the mere fact that certain rights are restricted does not invalidate the rules.
Consider Section 3(g) of AO 1, which prohibits the conduct of rallies inside toll ways. [38] The regulation
affects the right to peaceably assemble. The exercise of police power involves restriction, restriction being implicit
in the power itself. Thus, the test of constitutionality of a police power measure is limited to an inquiry on whether
the restriction imposed on constitutional rights is reasonable, and not whether it imposes a restriction on those
rights.
None of the rules outlined in AO 1 strikes us as arbitrary and capricious. The DPWH, through the Solicitor
General, maintains that the toll ways were not designed to accommodate motorcycles and that their presence in
the toll ways will compromise safety and traffic considerations. The DPWH points out that the same study the
petitioners rely on cites that the inability of other drivers to detect motorcycles is the predominant cause of
accidents.[39] Arguably, prohibiting the use of motorcycles in toll ways may not be the best measure to ensure the
safety and comfort of those who ply the toll ways.
However, the means by which the government chooses to act is not judged in terms of what is best,
rather, on simply whether the act is reasonable. The validity of a police power measure does not depend upon the
absolute assurance that the purpose desired can in fact be probably fully accomplished, or upon the certainty that
it will best serve the purpose intended.[40] Reason, not scientific exactitude, is the measure of the validity of the
governmental regulation. Arguments based on what is best are arguments reserved for the Legislatures discussion.
Judicial intervention in such matters will only be warranted if the assailed regulation is patently whimsical. We do
not find the situation in this case to be so.
Neither do we find AO 1 oppressive. Petitioners are not being deprived of their right to use the limited
access facility. They are merely being required, just like the rest of the public, to adhere to the rules on how to use
the facility. AO 1 does not infringe upon petitioners right to travel
but merely bars motorcycles, bicycles, tricycles, pedicabs, andany non-
motorized vehicles as the mode of traveling along limited access highways. [41] Several cheap, accessible and
practical alternative modes of transport are open to petitioners. There is nothing oppressive in being required to
take a bus or drive a car instead of ones scooter, bicycle, calesa, or motorcycle upon using a toll way.
Petitioners reliance on the studies they gathered is misplaced. Police power does not rely upon the existence of
definitive studies to support its use. Indeed, no requirement exists that the exercise of police power must first be
conclusively justified by research. The yardstick has always been simply whether the governments act is
reasonable and not oppressive.[42] The use of reason in this sense is simply meant to guard against arbitrary and
capricious government action. Scientific certainty and conclusiveness, though desirable, may not be demanded in
every situation. Otherwise, no government will be able to act in situations demanding the exercise of its residual
powers because it will be tied up conducting studies.
A police power measure may be assailed upon proof that it unduly violates constitutional limitations like
due process and equal protection of the law.[43] Petitioners attempt to seek redress from the motorcycle ban under
the aegis of equal protection must fail. Petitioners contention that AO 1 unreasonably singles out motorcycles is
specious. To begin with, classification by itself is not prohibited.[44]
A classification can only be assailed if it is deemed invidious, that is, it is not based on real or substantial
differences. As explained by Chief Justice Fernando in Bautista v. Juinio:[45]
x x x To assure that the general welfare be promoted, which is the end of law, a regulatory measure
may cut into the rights to liberty and property. Those adversely affected may under such
circumstances invoked the equal protection clause only if they can show that the governmental act
 assailed, far from being inspired by the attainment of the common weal was prompted by the spirit
of hostility, or at the very least, discrimination that finds no support in reason. It suffices then that
the laws operate equally and uniformly on all persons under similar circumstances or that all
persons must be treated in the same manner, the conditions not being different, both in the
privileges conferred and the liabilities imposed. Favoritism and undue preference cannot be
allowed. For the principle is that equal protection and security shall be given to every person under
circumstances, which if not identical is analogous. If law be looked upon in terms of burden or
charges, those that fall within a class should be treated in the same fashion, whatever restrictions
cast on some in the group equally binding the rest.
We find that it is neither warranted nor reasonable for petitioners to say that the only justifiable
classification among modes of transport is the motorized against the non-motorized. Not all motorized vehicles are
created equal. A 16-wheeler truck is substantially different from other light vehicles. The first may be denied access
to some roads where the latter are free to drive. Old vehicles may be reasonably differentiated from newer
models.[46] We find that real and substantial differences exist between a motorcycle and other forms of transport
sufficient to justify its classification among those prohibited from plying the toll ways. Amongst all types of motorized
A toll way is not an ordinary road. As a facility designed to promote the fastest access to certain
destinations, its use, operation, and maintenance require close regulation. Public interest and safety require the
imposition of certain restrictions on toll ways that do not apply to ordinary roads. As a special kind of road, it is but
reasonable that not all forms of transport could use it.
The right to travel does not mean the right to choose any vehicle in traversing a toll way. The right to
travel refers to the right to move from one place to another. Petitioners can traverse the toll way any time they
choose using private or public four-wheeled vehicles. Petitioners are not denied the right to move from Point A to
Point B along the toll way. Petitioners are free to access the toll way, much as the rest of the public can. The mode
by which petitioners wish to travel pertains to the manner of using the toll way, a subject that can be validly limited
by regulation.
Petitioners themselves admit that alternative routes are available to them. Their complaint is that these

transport, it is obvious, even to a child, that a motorcycle is quite different from a car, a bus or a truck. The most routes are not the safest and most convenient. Even if their claim is true, it hardly qualifies as an undue curtailment
of their freedom of movement and travel. The right to travel does not entitle a person to the best form of transport
obvious and troubling difference would be that a two-wheeled vehicle is less stable and more easily overturned
or to the most convenient route to his destination. The obstructions found in normal streets, which petitioners
than a four-wheeled vehicle.
complain of (i.e., potholes, manholes, construction barriers, etc.), are not suffered by them alone.
A classification based on practical convenience and common knowledge is not unconstitutional simply
Finally, petitioners assert that their possession of a drivers license from the Land Transportation Office
because it may lack purely theoretical or scientific uniformity. Moreover, we take note that the Philippines is home
(LTO) and the fact that their vehicles are registered with that office entitle them to use all kinds of roads in the
to a host of unique motorized modes of transport ranging from modified hand-carts (kuliglig) to bicycle sidecars
country. Again, petitioners are mistaken. There exists no absolute right to drive. On the contrary, this privilege, is
outfitted with a motor. To follow petitioners argument to its logical conclusion would open up toll ways to all these
heavily regulated.Only a qualified group is allowed to drive motor vehicles: those who pass the tests administered
contraptions. Both safety and traffic considerations militate against any ruling that would bring about such a
by the LTO. A drivers license issued by the LTO merely allows one to drive a particular mode of transport. It is not
nightmare.
a license to drive or operate any form of transportation on any type of road. Vehicle registration in the LTO on the
Petitioners complain that the prohibition on the use of motorcycles in toll ways unduly deprive them of
other hand merely signifies the roadworthiness of a vehicle. This does not preclude the government from
their right to travel.
prescribing which roads are accessible to certain vehicles.
We are not persuaded.
 WHEREFORE, we PARTLY GRANT the petition. We MODIFY the Decision dated 10 March 2003 of the

Regional Trial Court, Branch 147, Makati City and its Order dated 16 June 2003 in Civil Case No. 01-034. We
CONCHITA CARPIO MORALES ROMEO J. CALLEJO, SR.
Associate Justice
declare VOID Department Order Nos. 74, 215, and 123 of the Department of Public Works and Highways, and the Associate Justice

Revised Rules and Regulations on Limited Access Facilities of the Toll Regulatory Board. We

declare VALID Administrative Order No. 1 of the Department of Public Works and Communications.

ADOLFO S. AZCUNA DANTE O. TINGA

SO ORDERED. Associate Justice Associate Justice

ANTONIO T. CARPIO
Associate Justice
MINITA V. CHICO-NAZARIO CANCIO C. GARCIA
Associate Justice Associate Justice
WE CONCUR:

PRESBITERO J. VELASCO, JR.

ARTEMIO V. PANGANIBAN
Associate Justice
Chief Justice

REYNATO S. PUNO LEONARDO A. QUISUMBING

Associate Justice CERTIFICATION
Associate Justice
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Court.

ARTEMIO V. PANGANIBAN

Chief Justice

CONSUELO YNARES-SANTIAGO ANGELINA SANDOVAL-GUTIERREZ [1] Under Rule 45 of the 1997 Rules of Civil Procedure.
Associate Justice [2] Revised Rules and Regulations Governing Limited Access Highways, issued on 19 February 1968.
Associate Justice [3] Rollo, pp. 330-333.
[4] Id. at 68.

MA. ALICIA AUSTRIA-MARTINEZ RENATO C. CORONA [5] Id. at 22.

Associate Justice [6] Searth Commodities Corp. v. Court of Appeals, G.R. No. 64220, 31 March 1992, 207 SCRA 622.
Associate Justice [7] Urbanes, Jr. v. Court of Appeals, G.R. No. 117964, 28 March 2001, 355 SCRA 537.
[8] Declaring the North and South Luzon Expressways as Limited Access Facilities. It also authorized the TRB to issue rules and

regulations to be applied to the two highways.

[9] Declaring the R-1 Expressway, the C-5 Link Expressway and the R-1 Extension Expressway as Limited Access Facilities.
[10] Rollo, p. 31.
[11] Limited Access Highway Act, approved on 22 June 1957.
[12] Rollo, pp. 89-90.
[13] Id. at 91.
[14] Id. at 96.
[15] Section 75 of Act No. 2711.
[16] Land Transportation and Traffic Code.
[17] The purpose for the creation of two separate ministries was explained in the WHEREAS clauses of EO 546:
WHEREAS, the accelerated pace of national development requires the effective, purposeful and unified implementation of public
works projects and the effective control and supervision of transportation and communications facilities and services;
WHEREAS, the development, rehabilitation, improvement, construction, maintenance and repairs of ports, flood control and drainage
systems, buildings, water supply systems; and other public works facilities involve the utilization of technologies and manpower
different from those required for the control and supervision of transportation and communications facilities and services;
WHEREAS, a rational distribution of the functions of government pertaining to public works on one hand and control and supervision
of facilities and services related to transportation and communications on the other would enhance the efficiency of government;
WHEREAS, in keeping with the policy of government to effect continuing reforms in the organizational structure to enhance efficiency
and effectiveness, it is necessary to entrust in one ministry all functions pertaining to the construction, repair and maintenance of
public works facilities and restructure the organization for the control and supervision of transportation and communications
facilities and services in the country; and
xxxx
[18] Section 3 of EO 546.
[19] Section 6 of EO 546.
[20] Section 8 of EO 546.
[21] See WHEREAS clauses of EO 710.
[22] Presidential Decree No. 458, creating the Department of Public Highways, provides under Section 3 the function of the
department:
SEC. 3. Relationships between the Department Proper, the Bureaus and the Regional Offices. The Department Proper shall have
direct line supervision over the bureaus and regional offices. It shall be responsible for developing and implementing programs on the
construction and maintenance of roads, bridges and airport runways. The Bureau of Construction and Maintenance shall be
essentially staff in character and as such, shall exercise only functional supervision over the regional offices, while the Bureau of
Equipment shall provide equipment support to the field offices through its equipment depots and area shops. x x x
[23] This authority was expressly granted to the Department of Public Works and Communications under Section 4 of RA 2000.
[24] Reorganization Act of the Ministry of Transportation and Communications, approved on 30 January 1987.
[25] Amending EO 125, approved on 13 April 1987.
[26] Section 5 of EO 125, as amended by EO 125-A, enumerates the powers and functions of the DOTC:
Sec. 5. Powers and Functions. To accomplish its mandate, the Department [DOTC] shall have the following powers and functions:
(a) Formulate and recommend national policies and guidelines for the preparation and implementation of integrated and
comprehensive transportation and communications systems at the national, regional and local levels;
(b) Establish and administer comprehensive and integrated programs for transportation and communications, and for this
purpose, may call on any agency, corporation, or organization, whether public or private, whose development programs
include transportation and communications as an integral part thereof, to participate and assist in the preparation and
implementation of such program;
(c) Assess, review and provide direction to transportation and communication research and development programs of the
government in coordination with other institutions concerned;
(d) Administer and enforce all laws, rules and regulations in the field of transportation and communications;
(e) Coordinate with the Department of Public Works and Highways in the design, location, development, rehabilitation, improvement,
construction, maintenance and repair of all infrastructure projects and facilities of the Department. However, government corporate
entities attached to the Department shall be authorized to undertake specialized telecommunications, ports, airports and railways
projects and facilities as directed by the President of the Philippines or as provided by law;
(f) Establish, operate and maintain a nationwide postal system that shall include mail processing, delivery services, and money order
services and promote the art of philately;
(g) Issue certificates of public convenience for the operation of public land and rail transportation utilities and services;
(h) Accredit foreign aircraft manufacturers and/or international organizations for aircraft certification in accordance with established
procedures and standards;
(i) Establish and prescribe rules and regulations for identification of routes, zones and/or areas of operation of particular operators of
public land services;
(j) Establish and prescribe rules and regulations for the establishment, operation and maintenance of such telecommunications
facilities in areas not adequately served by the private sector in order to render such domestic and overseas services that are
necessary with due consideration for advances in technology;
(k) Establish and prescribe rules and regulations for the operation and maintenance of a nationwide postal system that shall include
mail processing, delivery services, money order services and promotion of philately;
(l) Establish and prescribe rules and regulations for the issuance of certificates of public convenience for public land transportation
utilities, such as motor vehicles, trimobiles and railways;
(m) Establish and prescribe rules and regulations for the inspection and registration of air and land transportation facilities, such as
motor vehicles, trimobiles, railways and aircrafts;
(n) Establish and prescribe rules and regulations for the issuance of licenses to qualified motor vehicle drivers, conductors, and
airmen;
(o) Establish and prescribe the corresponding rules and regulations for the enforcement of laws governing land
transportation, air transportation and postal services, including the penalties for violations thereof, and for the deputation
of appropriate law enforcement agencies in pursuance thereof;
(p) Determine, fix and/or prescribe charges and/or rates pertinent to the operation of public air and land transportation utility facilities
and services, except such rates and/or charges as may prescribed by the Civil Aeronautics Board under its charter, and, in cases
where charges or rates are established by international bodies or associations of which the Philippines is a participating member or
by bodies or associations recognized by the Philippine government as the proper arbiter of such charges or rates;
(q) Establish and prescribe the rules, regulations, procedures and standards for the accreditation of driving schools;
(r) Administer and operate the Civil Aviation Training Center (CATC) and the National Telecommunications Training Institute (NTTI);
and
(s) Perform such other powers and functions as may be prescribed by law, or as may be necessary, incidental, or proper to its
mandate or as may be assigned from time to time by the President of the Republic of the Philippines. (Emphasis supplied). See also
Section 3, Chapter 1, Title XV, Book IV of the Administrative Code of 1987.
[27] The TRB, which was created under Presidential Decree No. 1112, was attached to the DPWH on 9 July 1990 by virtue of
Republic Act No. 6957. Executive Order No. 67, dated 26 January 1999, transferred the TRB to the Office of the President. On 10
October 2002, the TRB was transferred to the DOTC by virtue of Executive Order No. 133.
[28] Rollo, p. 242.
[29] Section 3 of RA 2000 reads:
SEC. 3. Authority to establish limited access facilities. The Department of Public Works and Communications is hereby authorized to
plan, designate, establish, regulate, vacate, alter, improve, maintain, and provide limited access facilities for public use wherever it is
of the opinion that traffic conditions, present or future, will justify such special facilities: Provided, That within provinces, cities and
towns, the establishment of such limited access facilitiesinsofar as they affect provincial, city and municipal streets and plazas shall
have the consent of provincial board, city or municipal council as the case may be.
[30] Eslao v. Commission on Audit, G.R. No. 108310, 1 September 1994, 236 SCRA 161.
[31] Id.
[32] JMM Promotion and Management, Inc. v. Court of Appeals, G.R. No. 120095, 5 August 1996, 260 SCRA 319.
[33] Wall v. King, 109 F. Supp. 198 (1952); Munz v. Harnett, 6 F. Supp. 158 (1933); Schwartzman Service v. Stahl, 60 F.2d 1034
(1932).
[34] Ichong v. Hernandez, 101 Phil. 1155, 1163 (1957).
[35] Department of Education, Culture and Sports v. San Diego, G.R. No. 89572, 21 December 1989, 180 SCRA 533.
[36] City of Raleigh v. Norfolk Southern Railway Co., 165 S.E.2d 745 (1969).
[37] Board of Zoning Appeals of Decatur v. Decatur, Ind. Co. of Jehovahs Witnesses, 117 N.E.2d 115 (1954).
[38] Section 3 On limited access highways, it is unlawful for any person or group of persons to:
xxxx
(g) Jaywalk, loiter, litter, or travel by foot, drive or herd animals, conduct or hold rallies, parades, funeral processions and the like;
xxxx
[39] Rollo, p. 395.
[40] Hunter v. Owens, 80 Fla. 812, 86 So. 839 (1920).
[41] See American Motorcyclist Assn. v. Park Commn. of City of Brockton, 575 N.E.2d 754 (1991). In this case, the plaintiffs sought
declaratory and injunctive relief from a park commission regulation which prohibited motorcycles and mopeds in the city park. The
court held that the regulation did not infringe upon plaintiffs right to travel. The court held that the right to travel does not require the
state to avoid any regulation of methods of transportation. According to the court, the regulation does not prevent any person from
traveling once inside the park but merely bars motorcycles as the mode of transportation.
[42] United States v. Toribio, 15 Phil. 85 (1910).
[43] Ichong v. Hernandez, 101 Phil. 1155 (1957).
[44] Dumlao v. COMELEC, No. L-52245, 22 January 1980, 95 SCRA 392.
[45] 212 Phil. 307, 317-318 (1984).
[46] Taxicab Operators of Metro Manila, Inc. v. Board of Transportation, 202 Phil. 925 (1982).
[G.R. No. 145742. July 14, 2005]
THE PHILIPPINE PORTS AUTHORITY, represented by its GENERAL MANAGER JUAN O. PENA, petitioner,
vs. CIPRES STEVEDORING & ARRASTRE, INC., respondent.
DECISION
CHICO-NAZARIO, J.:
This is a petition for review on certiorari of the Decision[1] of the Court of Appeals in CA-G.R. SP No. 59553
entitled, Cipres Stevedoring and Arrastre, Inc. (CISAI) v. The Honorable Alvin L. Tan in his capacity as Presiding
Judge, Regional Trial Court (RTC), Br. 44, Dumaguete City, Philippine Ports Authority (PPA), Juan Pea [2] &
Benjamin Cecilio. Said decision declared as null and void the Order dated 31 May 2000[3] of Judge Tan and directed
the court a quo to issue a writ of preliminary injunction enjoining petitioner from conducting the scheduled public
bidding of cargo handling operations in the port of Dumaguete City until the termination of the main case.
The facts follow.
Petitioner PPA is a government entity created by virtue of Presidential Decree (P.D.) No. 857 and is tasked
to implement an integrated program for the planning, development, financing, and operation of ports and port
districts in the country.[4]
Respondent CISAI is a domestic corporation primarily engaged in stevedoring, arrastre, and porterage
business, including cargo handling and hauling services, in the province of Negros Oriental and in the cities of
Dumaguete and Bais. Since the commencement of its corporate existence in 1976, respondent had been granted
permits of varied durations to operate the cargo handling operations in Dumaguete City. In 1991, petitioner awarded
an eight-year contract[5] to respondent allowing the latter to pursue its business endeavor in the port of Dumaguete
City. This contract expired on 31 December 1998.
At about the time respondent was awarded an eight-year contract in 1991 or, on 12 June 1990, PPA
Administrative Order No. 03-90 (PPA AO No. 03-90) dated 14 May 1990 took effect.[6] This administrative order
contained the guidelines and procedures in the selection and award of cargo handling contracts in all government
ports as well as cargo handling services that would be turned over by petitioner to the private sector. Section 2 of
said administrative order states:
Section 2. Statement of Policies
As a general rule, cargo handling services in all government ports shall be awarded through the system of public
bidding, except in the following cases:
2.1 Cargo handling contractors in ports with existing or expired contracts whose performance is
satisfactory shall be granted renewal of their contracts.
2.2 Cargo handling operators issued one-year permits and have already been in operation for at
least six (6) months prior to the effectivity of this Order shall be audited, and if found
satisfactory, awarded contracts.
2.3 Cargo handling services in ports with low cargo volume and where handling operations are
primarily manual.[7]
On 29 May 1996, a Memorandum of Understanding (MOU)[8] was entered into among the National Union of
Portworkers of the Philippines/Trade Union Congress of the Philippines,[9]the Department of Transportation and
Communications,[10] the PPA,[11] the Department of Labor and Employment (DOLE),[12] and the Philippine Chamber
of Arrastre and Stevedoring Operators (PCASO) [13] relative to the nationwide protests then being conducted by
port workers. Among the items agreed upon by the parties to the MOU were:
3. The DOTC Secretary shall immediately create a tripartite oversight committee to review, assess and
evaluate current and future issuances pertaining to Cargo Handling contracts, portworkers
contracts with employers, and the like. The oversight committee shall be composed of equal
representatives from the portworkers, the cargo handling operators and the government including
the PPA and the DOTC Undersecretary who shall act as Chairman.
4. Henceforth, all expiring Cargo Handling contracts shall be reviewed by the oversight committee
referred to in paragraph 3 above for recommendation to the PPA Board of Directors as to whether
the same shall be terminated and subjected to public bidding, or as may be authorized upon
consideration of paragraph 2 hereof.[14]
Following the expiration of its contract for cargo handling, respondent was able to continue with its business
by virtue of hold-over permits given by petitioner. The first of these permits expired on 17 January 2000[15] and the
last was valid only until 18 April 2000.[16] While respondents second hold-over permit was still in effect, petitioner,
through its General Manager Juan O. Pea, issued PPA AO No. 03-2000[17] dated 15 February 2000 which amended
by substitution PPA AO No. 03-90. PPA AO No. 03-2000 expressly provides that all contract for cargo handling
services of more than three (3) years shall be awarded through public bidding. With respect to cargo handling
permits for a period of three (3) years and less in ports where the average yearly cargo throughout for the last five
(5) years did not surpass 30,000 metric tons and where the operations are mainly manual, the same shall be
awarded through comparative evaluation.
Pursuant to PPA AO No. 03-2000, petitioner set the deadline for the submission of the technical and financial
bids for the port of Dumaguete City at 12:00 noon of 05 July 2000; the opening of the technical bids on 05 July
2000 at 1:00 p.m.; and the dropping of the financial bids on 28 July 2000 at 1:00 p.m. Contending that this action
on the part of petitioner was in derogation of its vested right over the operation of cargo handling enterprise in
Dumaguete City, respondent initiated an action for specific performance, injunction with application for preliminary
mandatory injunction and temporary restraining order before the RTC of Dumaguete City.[18] This civil action was
filed on 31 March 2000 and was raffled off to Branch 44 of said court wherein it was docketed as Civil Case No.
12688.
Respondent alleged in its complaint that PPA AO No. 03-90 explicitly provides that cargo handling contractors
with existing or expired contracts but were able to obtain a satisfactory performance rating were entitled to a
renewal of their respective cargo handling contracts with petitioner; thus, as respondent was given a rating of very
satisfactory[19] in 1998, it follows that its cargo handling agreement should have been renewed after its expiration.
Respondent likewise claimed that the approval and implementation of PPA AO No. 03-2000 was plainly arbitrary
as said administrative order was:
19.1 Obviously unfair to plaintiff and port operators affected because it is an afterthought. It came
about after PCASO[20] wrote a letter dated 04 February 2000 demanding for the renewal of
the contract of the members with a rating of Satisfactory
19.2 Obviously prejudicial to the right to renew the contract vested upon plaintiff (respondent herein)
by virtue of Administrative Order No. 03-90 which was in force and effect during the period
of contractual relations between defendant PPA and plaintiff.
19.3 Obviously repugnant to the Memorandum of Understanding dated May 29, 1996, which has the
force of law between the contracting parties.
19.4 Obviously designed to justify non-compliance of a legal obligation created under Administrative
Order No. 03-90.
19.5 A scheme to accommodate political pressures.
19.6 Arbitrary because it did not treat all port operators alike. For instance the Asian Terminals, Inc.,
the operator of South Harbor, had a negotiated Contract.[21]
In addition, respondent stated in its complaint that in the event the bidding would take place as scheduled, a
substantial number of workers in the port of Dumaguete City faced the risk of displacement. Moreover, the
possibility existed that the contract for cargo handling in Dumaguete City would be awarded to an incompetent and
inexperienced participant in the bidding process unlike respondent which had already invested substantial capital
in its operations in the port of said city. To further support its claim for a preliminary mandatory injunction,
respondent alleged that a fellow PCASO member, Vitas Port Arrastre Service Corporation, operating at Pier 18,
Vitas, Tondo, Manila, successfully obtained a writ of preliminary injunction from the RTC, Branch 46, Manila.[22]
Immediately after the filing of respondents complaint, the RTC, Branch 44 of Dumaguete City, issued an
order[23] granting respondents prayer for a temporary restraining order. The dispositive portion of the order reads:
WHEREFORE, premises considered, and considering the urgent nature of the plaintiffs complaint, that serious
and irreparable damage or injury would be suffered by the plaintiff unless said acts of the defendants complained
of, is restrained; said defendants Philippine Ports Authority, Manila, Juan O. Pea, Benjamin Cecilio, their agents,
representatives or persons acting in their behalves, are hereby ordered to cease and desist from further
conducting the scheduled public bidding and awards on April 7, 2000, and April 10, 2000, respectively within
twenty (20) days from receipt hereof[24]
Petitioner thereafter filed a manifestation with urgent motion for reconsideration [25] to the aforesaid order of
the trial court. Petitioner argued that the court a quo did not have the requisite jurisdiction to issue the assailed
temporary restraining order; that respondent was estopped from seeking refuge from the court as it had already
expressed its intention to join the bidding process involving the operation of the cargo handling operations in the
port of Dumaguete City; that respondent failed to exhaust administrative remedies by not seeking relief from
petitioner prior to initiating this action before the court; and that it was in the best interest of the public if the bidding
process proceeds as scheduled because of the internal squabbling taking place within respondent corporation
which could affect the quality of its service. This motion was denied in the order of the court a quo dated 24 April
2000.[26]
Petitioner seasonably sought the reconsideration[27] of the trial courts order of 24 April 2000 this time arguing
that:
1. PRESIDENTIAL DECREE NO. 1818 PROHIBITS COURTS FROM ISSUING THE INJUNCTIVE
WRIT IN ANY CASE, DISPUTE OR CONTROVERSY INVOLVING STEVEDORING AND
ARRASTRE CONTRACTS.
2. THE ORDER DATED APRIL 24, 2000 ADJUDICATES THE MERITS OF THE COMPLAINT EVEN
BEFORE THE PARTIES ARE HEARD.
3. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 VIOLATES THE LAW IN CONTRACT
MAKING.
4. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS BEYOND THE JURISDICTION OF
THE HONORABLE COURT.
5. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS AGAINST PUBLIC INTEREST.
6. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS VIOLATION OF THE 1997 RULES
ON CIVIL PROCEDURE.
7. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS VIOLATIVE OF DUE PROCESS.
8. THE ISSUANCE OF THE ORDER DATED APRIL 24, 2000 IS UNSUPPORTED BY THE FACTS
OF THIS CASE.[28]
In its 31 May 2000 Order, the trial court set aside the injunctive writ it previously issued to give way to the
pronouncements of P.D. No. 1818 as the function of the PPA is vested with public interest. [29]
 It was thereafter the turn of respondent to file its motion for reconsideration[30] of the Order of the trial court
but the court a quo stood firm on its Order setting aside the injunctive writ it issued.[31] From this adverse ruling,
respondent filed a petition for certiorari under Rule 65 before the Court of Appeals. In said petition, respondent
maintained that P.D. No. 1818 did not cover the restraining order and preliminary injunction formerly issued by the
RTC, Branch 44, Dumaguete City. According to respondent, as there was no assurance that the would-be winner
of the bidding process possessed the capacity to operate the cargo handling services in Dumaguete City, there
would have been a cessation of the cargo handling operations in the port of said city following the expiration of
respondents second hold-over permit. This, respondent insisted, was not the situation contemplated by P.D. No.
1818 which was precisely issued to ensure that essential government projects such as stevedoring and arrastre
services would not be disrupted by the issuance of a temporary restraining order. In this case, the restraining order
and injunction issued by the trial court ensured the continuity of the cargo handling operations in Dumaguete City.
Respondent further argued that as what is involved in this case is petitioners failure to comply with its obligation
under PPA AO No. 03-90 and the validity of PPA AO No. 03-2000, petitioner could not invoke P.D. No. 1818 which
should only apply to matters involving the exercise of discretion by administrative agencies. [32]
Respondent likewise claimed that the pre-qualification phase of the bidding procedure was attended by the
following irregularities:
1. Respondents (petitioner herein), then defendants (in Civil Case No. 12688), set October 15, 1999 as the
deadline for the submission of the pre-qualification documents of prospective bidders. However, they pre-
qualified DUMAGUETE KING PORTS & ILOILO QUEEN PORTS INC. (DUKIQ), which incidentally tried to
intervene in this case, on April 3, 1999, which was not a juridical entity as of said date. It should be pointed out
that it was only registered with the Securities and Exchange Commission (SEC) on April 4, (2000) This means
that DUKIQ became only (sic) a juridical entity only three days before the scheduled dropping of the bids on April
7, 2000 and seven (7) days before the supposed opening of the bids on April 10, 2000. This is certainly irregular
and only bolsters petitioners (respondent herein) apprehensions that there exists a preferred bidder. Moreover,
DUKIQ was only issued a Mayors Permit on April 18, 2000 This is not also in accordance with the rules of the
bidding.
2. The composition of the Pre-qualification, Bids, Awards Committee (PBAC) as composed by the respondents is
not in conformity with AO 03-90.
3. PPA Administrative Orders 03-90 and 03-2000 emanated from the same PPA Board Resolution No. 912. It
should be pointed out that AO 03-2000 was issued arbitrarily for the purpose of evading the contractual obligation
of respondents to renew the contracts of those cargo handling operators which obtained a satisfactory
performance rating from the PPA. In other words, the most glaring irregularity committed by respondents here is
the issuance of AO 03-2000, which is diametrically opposed to and inconsistent with AO 03-90 and PPA Board
Resolution 912. This is not to mention that said AO 03-2000 will also deprive cargo handling operators in general,
and CISAI, in particular, of their proprietary rights.[33]
Further, respondent insisted that on the basis of the clear language of PPA AO No. 03-90, it was entitled to
the renewal of its cargo handling agreement as it was able to earn a very satisfactory performance rating. The
implementation, therefore, of PPA AO No. 03-2000 transgressed the constitutional guarantee against non-
impairment of contract and ignored respondents vested right to the renewal of its cargo handling pact.
Relying on respondents allegation as regards the purported irregularities which occurred during the pre-
qualification part of the bidding process, the Court of Appeals nullified the 31 May 2000 Order of the trial court. The
decretal portion of the appellate courts decision, now assailed before us, states:
WHEREFORE, premises considered the petition is GRANTED; and the assailed 31 May 2000 Order of the
respondent Judge is hereby declared NULL and VOID. In lieu of the same, the Court orders:
1. Subject to the posting of an injunction bond by herein petitioner in the amount to be determined by
the court a quo, respondent Court is directed to ISSUE a Writ of Preliminary Injunction;
2. Respondent Philippine Ports Authority to (DESIST) from conducting the scheduled public bidding of
cargo handling operations in the port of Dumaguete City, effective until and after the case a
quo shall have been finally decided.[34]
Petitioner is now before us seeking the reversal of the aforementioned decision of the appellate court on the
following grounds:
IT WAS GRAVE ERROR FOR RESPONDENT COURT OF APPEALS [SECOND DIVISION] TO ISSUE ITS
QUESTIONED DECISION CONSIDERING THAT:
(i) P.D. NO. 1818, LATER AMENDED BY R.A. 8975 AND REITERATED IN ADMINISTRATIVE CIRCULAR NO.
11.2000 OF THIS HONORABLE COURT, BANS THE ISSUANCE OF WRITS OF PRELIMINARY
PROHIBITORY INJUNCTIONS IN CASES INVOLVING GOVERNMENT INFRASTRUCTURE PROJECTS AND
SERVICE CONTRACTS, WHICH INCLUDES (SIC) ARRASTRE AND STEVEDORING CONTRACTS.
(ii) CISAI HAS NO CLEAR LEGAL RIGHT TO AN INJUNCTIVE WRIT. IT ACQUIRED NO VESTED RIGHTS TO
ARRASTRE AND STEVEDORING OPERATIONS AT THE PORT OF DUMAGUETE CITY AS ITS HOLD-OVER
CAPACITY COULD BE REVOKED AT ANY GIVEN TIME.
(iii) CISAI CANNOT COMPEL PPA TO RENEW ITS CONTRACT FOR CARGO HANDLING SERVICES. [35]
In our resolution of 12 November 2003, we granted petitioners prayer for a temporary restraining order. [36]
Petitioner insists that the decision of the Court of Appeals failed to take into consideration the unequivocal
language of Republic Act No. 8975 which amended P.D. No. 1818.
The main provision of P.D. No. 1818 provides:
SECTION 1. No court in the Philippines shall have jurisdiction to issue any restraining order, preliminary
injunction, or preliminary mandatory injunction in any case, dispute, or controversy involving an infrastructure
project, or a mining, fishery, forest or other natural resource development project of the government, or any
public utility operated by the government, including among others public utilities for the transport of the goods or
commodities, stevedoring and arrastre contracts, to prohibit any person or persons, entity or government official
from proceeding with, or continuing the execution or implementation of any such project, or the operation of such
public utility, or pursuing any lawful activity necessary for such execution, implementation or operation.
On the other hand, the pertinent portion of Rep. Act No. 8975 states:
SEC. 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions and Preliminary
Mandatory Injunctions. No court, except the Supreme Court, shall issue any temporary restraining order,
preliminary injunction or preliminary mandatory injunction against the government, or any of its subdivision,
officials or any person or entity, whether public or private, acting under the governments direction, to restrain,
prohibit or compel the following acts:
(b) Bidding or awarding of contract/project of the national government as defined under Section 2
hereof; . . .[37]
Concededly, P.D. No. 1818 which was the law in force at the time of the institution of this case, applies to
the operation of arrastre and stevedoring contracts such as the one subject of the present case. Notably, the Court
of Appeals ruling was based solely on the perceived irregularities which occurred during the pre-qualification phase
of the bidding process. The veracity of these claimed irregularities, however, are best left for the consideration of
the trial court which has yet to rule on the merits, if there be any, of the main case.
More than this, as the issue presented before us is whether the appellate court erred in issuing the writ of
preliminary injunction, we hew to the general principles on this subject.
A preliminary injunction is an order granted at any stage of an action prior to judgment of final order, requiring
a party, court, agency, or person to refrain from a particular act or acts.[38]It is a preservative remedy to ensure the
protection of a partys substantive rights or interests pending the final judgment in the principal action. A plea for an
injunctive writ lies upon the existence of a claimed emergency or extraordinary situation which should be avoided
for otherwise, the outcome of a litigation would be useless as far as the party applying for the writ is concerned.
At times referred to as the Strong Arm of Equity,[39] we have consistently ruled that there is no power the
exercise of which is more delicate and which calls for greater circumspection than the issuance of an injunction.[40] It
should only be extended in cases of great injury where courts of law cannot afford an adequate or commensurate
remedy in damages;[41] in cases of extreme urgency; where the right is very clear; where considerations of relative
inconvenience bear strongly in complainants favor; where there is a willful and unlawful invasion of plaintiffs right
against his protest and remonstrance, the injury being a continuing one, and where the effect of the mandatory
injunction is rather to reestablish and maintain a preexisting continuing relation between the parties, recently and
arbitrarily interrupted by the defendant, than to establish a new relation.[42]
For the writ to issue, two requisites must be present, namely, the existence of the right to be protected, and
that the facts against which the injunction is to be directed are violative of said right. [43] It is necessary that one
must show an unquestionable right over the premises.[44]
Petitioner maintains that respondents claim of vested rights or proprietary rights over the cargo handling
services at the port of Dumaguete City is baseless. It insists that the contract for cargo handling operations it
formerly had with respondent did not amount to a property right; instead, it should be considered as a mere privilege
which can be recalled by the granting authority at anytime when public welfare so requires.
On the other hand, respondent anchors its application for preliminary injunction on its alleged vested right
over the cargo handling services in the port of Dumaguete City pursuant to PPA AO No. 03-90. It insists that under
this administrative order, petitioner was bound to renew their cargo handling services agreement as it was able to
meet and, in fact, was able to surpass the satisfactory performance rating requirement contained therein. Further,
respondent posits the argument that PPA AO No. 03-2000 was formulated by petitioner as a device by which it
could avoid its obligation under the superseded administrative order. Respondent, therefore, concludes that PPA
AO No. 03-2000 contravenes the constitutional precept that no law impairing obligations of contracts shall be
passed.[45]
We agree with petitioner and hold that respondent was not able to establish its claimed right over the renewal
of its cargo handling agreement with the former.
To begin with, stevedoring services are imbued with public interest and subject to the states police power as
we have declared in Anglo-Fil Trading Corporation v. Lazaro,[46] to wit:
The Manila South Harbor is public property owned by the State. The operations of this premiere port of the
country, including stevedoring work, are affected with public interest. Stevedoring services are subject to
regulation and control for the public good and in the interest of general welfare. [47]
As police power is so far-reaching in scope, that it has become almost impossible to limit its
sweep,[48] whatever proprietary right that respondent may have acquired must necessarily give way to a valid
exercise of police power, thus:[49]
4. In the interplay between such a fundamental right and police power, especially so where the assailed
governmental action deals with the use of ones property, the latter is accorded much leeway. That is settled
law[50]
In connection with the foregoing, we likewise find no arbitrariness nor irregularity on the part of petitioner as
far as PPA AO No. 03-2000 is concerned. It is worthwhile to remind respondent that petitioner was created for the
purpose of, among other things, promoting the growth of regional port bodies. In furtherance of this objective,
petitioner is empowered, after consultation with relevant government agencies, to make port regulations particularly
to make rules or regulation for the planning, development, construction, maintenance, control, supervision and
management of any port or port district in the country.[51] With this mandate, the decision to bid out the cargo
holding services in the ports around the country is properly within the province and discretion of petitioner which
we cannot simply set aside absent grave abuse of discretion on its part. The discretion to carry out this policy
necessarily required prior study and evaluation and this task is best left to the judgment of petitioner. While there
have been occasions when we have brushed aside actions on the part of administrative agencies for being beyond
the scope of their authority, the situation at the case at bar does not fall within this exception.
As for respondents claim that PPA AO No. 03-2000 violated the constitutional provision of non-impairment
of contract, suffice it to state here that all contracts are subject to the overriding demands, needs, and interests of
the greater number as the State may determine in the legitimate exercise of its police power.[52]
 Finally, it is settled that the sole object of a preliminary injunction, may it be prohibitory or mandatory, is to [2] Named in the title of this case as Juan O. Pena.
preserve the status quo until the merits of the case can be heard and the final judgment rendered. [53] The status [3] Rollo, pp. 229-230.
[4] Anglo-Fil Trading Corporation v. Lazaro, G.R. No. L-54958, 02 September 1983, 124 SCRA 494.
quo is the last actual peaceable uncontested status which preceded the controversy.
[5] Annex D of the Petition; Rollo, pp. 101-107.
In the case at bar, respondent sought the issuance of a writ for preliminary injunction in order to prevent the [6] CA Rollo, pp. 112-138.

cessation of cargo handling services in the port of Dumaguete City to the detriment and prejudice of the public, [7] Id., p. 112.

shipper, consignees and port workers.[54] However, the factual backdrop of this case establishes that respondents [8] Rollo, pp. 211-212.

eight-year contract for cargo handling was already terminated and its continued operation in the port of Dumaguete [9] Represented by Atty. Democrito T. Mendoza.
[10] Represented by then Secretary Amado S. Lagdameo, Jr.
City was merely by virtue of a second hold-over permit granted by petitioner through a letter dated 27 December
[11] Represented by Carlos L. Agustin.
1999,[55] the pertinent portion of which reads:
[12] Represented by Rosalinda D. Baldoz.
[13] Represented by Alberto H. Suansing.
This HOP[56] extension shall be valid from January 18, 2000 up to April 18, 2000, unless sooner withdrawn or [14] Ibid.
cancelled or upon the award of the cargo handling contract thru public bidding.[57] [15] CA Rollo, p. 230.
[16] CA Rollo, p. 231.
By its nature, the hold-over permit was merely temporary in nature and may be revoked by petitioner at [17] CA Rollo, pp. 139-149.

anytime. As we declared in the case of Anglo-Fil Trading Corporation,[58] hold-over permits are merely temporary [18] Rollo, p. 117.

and subject to the policy and guidelines as may be implemented by petitioner. The temporary nature of the hold- [19] Rollo, p. 210.

over permit should have served as adequate notice to respondent that, at any time, its authority to remain within [20] Philippine Chamber of Arrastre and Stevedoring Operators.
[21] Rollo, p. 113.
the premises of the port of Dumaguete City may be terminated. Unlike the contract for cargo handling services
[22] CA Rollo, pp. 107-109.
previously entered into by petitioner and respondent, whose terms and conditions were agreed upon by the parties
[23] Dated 31 March 2000; Rollo, pp. 118-121.
herein and which clearly provided for a specific period of effectivity as well as a stipulation regarding the notice of
[24] Id., p. 121.
violation, the hold-over permit was unilaterally granted by petitioner pursuant to its authority under the law.
[25] Dated 07 April 2000; Rollo, pp. 122-125.

Based on the foregoing, it is clear that at the time of the institution of this suit, respondent no longer possessed [26] Rollo, pp. 227-228.

any contract for its continued operation in Dumaguete City and its stay in the port of said city was by virtue of a [27] Motion for Reconsideration dated 09 May 2000; Rollo, pp. 128-137.

mere permit extended by petitioner revocable at anytime by the latter. Obviously, the writ of preliminary injunction [28] Id., pp. 128-129.
[29] Rollo, p. 151.
issued by the Court of Appeals granted respondent the authority to maintain its cargo handling services despite
[30] Dated 14 June 2000; Rollo, pp. 152-156.
the absence of a valid cargo handling agreement between respondent and petitioner. For this reason, we hold that
[31] Order dated 30 June 2000; Rollo, p. 158.
the Court of Appeals erred in ordering the court a quo to issue the writ of preliminary injunction in favor of
[32] Citing Datiles v. Sucaldito, G.R. No. 42380, 22 June 1990, 186 SCRA 704.
respondent.
[33] Rollo, pp. 73-75.

WHEREFORE, premises considered, the present petition is GRANTED and the Decision of the Court of [34] Rollo, pp. 17-18.

Appeals dated 24 October 2000 is hereby REVERSED and SET ASIDE. The 31 May 2000 Order of the Regional [35] Rollo, p. 33.
[36] Rollo, pp. 359-360.
Trial Court, Branch 44, Dumaguete City, setting aside the injuctive relief it previously issued is hereby
[37] Rollo, pp. 34-35.
REINSTATED and the temporary restraining order We issued in our Resolution dated 12 November 2003,
[38] Rule 58, Section 1, 1997 Civil Procedure.
enjoining, ordering, commanding and directing respondent from implementing the aforesaid decision of the Court
[39] Heirs of Eugenia V. Roxas, Inc. et al. v. Intermediate Appellate Court, et al., G.R. No. 67195, 29 May 1989, 173
of Appeals, is hereby made PERMANENT. No costs.
SCRA 581.
SO ORDERED. [40] Leonor A. Olalia and her husband Jesus G. Olalia v. Lolita O. Hizon, represented by her Atty.-In-Fact, Atty,

Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
Rollo, pp. 46-55; Penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices Cancio C. Garcia (now a
[1]
member of this Court) and Romeo A. Brawner concurring.
Abraham P. Gorospe, G.R. No. 87913, 06 May 1991, 196 SCRA 665, citing Sales v. Securities & Exchange
Commission, G.R. No. 54330, 13 January 1989, 169 SCRA 109 and Buayan Cattle Co., Inc. v. Hon. Jesus Quintillan,
et al., G.R. No. L-26970, 19 March 1984, 128 SCRA 276.
[41] Ibid.
[42] Capitol Medical Center, Inc. v. Court of Appeals, G.R. No. 82499, 13 October 1989, 178 SCRA 493.
[43] Araneta, et al. v. Gatmaitan, et al., G.R. No. L-8895 & No. L-9191, 30 April 1957, 101 Phil. 328.
[44] Atty. Cornelio T. Rivera and Augusto Palomar v. The Honorable Intermediate Appellate Court and La Vista These two petitioners foe certiorari seek to annul the order of the Court of First Instance of Manila issued ex-
Association, Inc., G.R. No. 74249, 20 January 1989, 169 SCRA 307. parte, lifting the restraining orders it had previously issued. The setting aside of the restraining orders enabled the
[45] Article III, Section 10, 1987 Philippine Constitution.
implementation of the Management Contract executed by and between respondents, providing for respondent
[46] Supra, note 4.
Ocean Terminal Services, Inc. as the exclusive stevedoring contractor at the South Harbor, Port of Manila.
[47] Id., p. 519.
[48] Ichong v. Hernandez, et al., G.R. No. L-7995, 31 May 1957, 101 Phil. 1155.
[49] Bautista v. Juinio, G.R. No. L-50908, 31 January 1984, 127 SCRA 329, 338 cited in Pernito Arrastre Services, Involved in these two petitions is the operation of stevedoring work in the South Harbor of the Port of Manila.
Inc. v. Mendoza, G.R. No. 53492, 29 December 1986, 146 SCRA 430. Stevedoring, as the term is understood in the port business, consists of the handling of cargo from the hold of the
[50] Id., p. 338. ship to the dock, in case of pier-side unloading, or to a barge, in case of unloading at sea. The loading on the
[51] Article VIII, Section 26, PD No.857. ship of outgoing cargo is also part of stevedoring work. Stevedoring charges at rates approved by the
[52] Sangalang, et al. v. Intermediate Appellate Court, G.R. No. 71169, 22 December 1988, 168 SCRA 667. Government are assessed and collected for the services.
[53] Capitol Medical Center, Inc. v. Court of Appeals, G.R. No. 82499, 13 October 1989, 178 SCRA 493.
[54] Ibid.
The Philippines Ports Authority (PPA), the government agency charged with the management and control of all
[54] Rollo, p. 182.
ports, was created by Presidential Decree No. 505, promulgated on July 11, 1974, later superseded by
[55] CA Rollo, p. 231.
Presidential Decree No. 857 dated December 23, 1975. The PPA’s function is to carry out an integrated program
[56] Hold-over Permit.
for the planning, development, financing, and operation of ports and port districts throughout the country. Among
[57] Ibid.
other things, the powers, duties, and jurisdiction of the Bureau of Customs concerning arrastre operations were
[58] Supra, note 4 at 520-521.
transferred to and vested in the PPA.

G.R. No. L-54958 September 2, 1983
ANGLO-FIL TRADING CORPORATION, ADUANA STEVEDORING CORPORATION, ANDA STEVEDORING
CORPORATION, BEN PAZ PORT SERVICE, INC., MANILA STEVEDORING CORPORATION,
WATERFRONT STEVEDORING AND ARRASTRE SERVICES, INC., VANGUARD STEVEDORING AND
ARRASTRE SERVICES, INC., and LUVIMIN STEVEDORING/ARRASTRE & DEVELOPMENT
CORPORATION, petitioners,
vs.
HON. ALFREDO LAZARO, in his capacity as Presiding Judge of Branch XXV, of the Court of First
Instance of Manila, PHILIPPINE PORTS AUTHORITY, COL. EUSTAQUIO S. BACLIG, JR., CDR. PRIMITIVO
SOLIS, JR., and OCEAN TERMINAL SERVICES, INC., respondents.
x-----------------------x
G.R. No. L-54966
The Philippine Integrated Port Services, Inc., (PIPSI), petitioner in G.R. No. 54966, is a stevedoring operator at
the Manila South Harbor. Anglo-Fil Trading Corporation, Aduana Stevedoring Corporation, Anda Stevedoring
Corporation, Ben Paz Port Service, Inc., Manila Stevedoring and Arrastre Services, Inc., (Anglo-Fil, et al.,)
petitioners in G.R. No. 54958, are stevedoring and arrastre operators and contractors, likewise at Manila South
Harbor, Port of Manila. Anglo-Fil, et al., are members of the Philippine Association of Stevedoring Operators and
Contractors, Inc. (PASOC).
Prior to the present controversy which arose as a result of the actions of the PPA, twenty-three (23) contractors
competed at the South Harbor for the performance of stevedoring work. The licenses of these contractors had
long expired when the PPA took over the control and management of ports but they continued to operate
afterwards on the strength of temporary permits and hold-over authorities issued by PPA.
On May 4, 1976, the Board of Directors of PPA passed Resolution No. 10, approving and adopting and adopting
a set of policies on Port Administration, Management and Operation. The PPA adopted as its own the own the
Bureau of Customs’ policy of placing on only one organization the responsibility for the operation of arrastre and
stevedoring services in one port.

PHILIPPINE INTEGRATED PORT SERVICES, INC., petitioner, On April 11, 1980, Presidential Ferdinand E. Marcos issued Letter of Instruction No. 1005-A which among other
vs. things, directed PPA;
THE HONORABLE ALFREDO M. LAZARO, Judge of the Court of First Instance of Manila, Branch XXV,
PHILIPPINE PORTS AUTHORITY, COL. EUSTAQUIO S. BACLIG, JR., CDR. PRIMITIVO S. SOLIS, JR., and To expeditiously evaluate all recognized cargo-handling contractors and port-related service operators
OCEAN TERMINAL SERVICES, INC., respondents. doing business in all Port Districts in the country under such criteria as PPA may set and to determine the
qualified contractor or operator under said criteria in order to ensure effective utilization of port facilities,
GUTIERREZ, JR., J.: prevent pilferage and/or pinpoint responsibility for its and provide optimum services to major ports vital to
the country’s trade and economy.
This was followed by the President’s memorandum to respondent Bacling dated April 18, 1980, directing
submission of a report on the integrated of the stevedoring operations in Manila South Harbor and emphasizing
the need for such integration as well as the strengthening of the PPA in order to remedy the problems therein. In
compliance therewith, PPA made a study evaluation of the arrastre and stevedoring industry in the ports where
integration had not yet been achieved. A special committee was created on April 25, 1980 to make a final
evaluation of existing operators in the South Harbor and to select the most qualified among them.
On April 28, 1980, the committee submitted its report recommending the award of an exclusive contract for
stevedoring services in the South Harbor to respondent Ocean Terminal Services, Inc. (OTSI) after finding it the
best qualified among the existing contractors. The committee report and recommendation were indorsed by
respondent Primitivo Solis, Jr., Port Manager of Manila, to respondent Baclig on April 30, 1980. On May 14,
1980, the latter approved the recommendation.
In accordance with the President’s memorandum dated April 18, 1980, PPA submitted the committee report to
him. On May 24, 1980, the President approved the recommendation to award an exclusive management contract
to OTSI.
On June 27, 1980, PPA and OTSI entered into a management contract which provided, among others, for a five-
year exclusive operation by OTSI of stevedoring services in the South Harbor, renewable for another five (5)
years. The contract set the commencement of the exclusive operation by OTSI upon proper determination by
PPA which shall not be earlier that two (2) months from the approval of the contract by the Board of Directors of
the PPA. The latter gave its approval on June 27, 1980.
On July 23, 1980, petitioner PIPSI instituted an action against PPA and OTSI for the nullification of the contract
between the two, the annulment of the 10% of gross stevedoring revenue being collected by PPA, and injunction
with preliminary injunction. The case was docketed as Civil Case No. 133477 in the Court of First Instance of
Manila, provided over by respondent Judge Alfredo Lazaro. On July 29, 1980, the respondent court issued a
restraining order ex-parte, enjoining respondents PPA and OTSI from implementing the exclusive contract of
stevedoring between them.
On August 21, 1980, with leave of court, petitioners, Anglo-Fil, et al., filed their complaint in intervention. The
motion was granted and on August 22, 1980, respondent court issued another ex-parte restraining order in the
case to include the petitioners Anglo-Fil et al., under the benefits of such order.
On August 30, 1980, PPA filed an urgent motion to lift the restraining orders "in view of their long delay in the
resolution of the injunction incident and the countervailing public interest involved." On September 1, 1980,
respondent Judge issued an order, which reads:
"AS PRAYED FOR, the restraining orders issued by the this Court on July 29, 1980 and August 20, 1980, are
hereby dissolved, lifted, and set aside without prejudice to the Court’s resolution on the propriety of issuing the
writ of preliminary injunction prayed for by the petitioners."
On September 5, 1980, PPA sent a letter to the General Manager of PIPSI informing him that due to the lifting of
the temporary restraining order, it was withdrawing PIPSI’s hold-over authority to operate or provide stevedoring
services at South Harbor effective September 7, 1980.
Petitioners Anglo-Fil, et al., and PIPSI, therefore, filed the present petitions for certiorari with preliminary
injunction alleging that the lifting of the retraining orders ex-parte by respondent Judge was clearly affected with
grave abuse of discretion amounting to lack of jurisdiction. They also applied for the issuance in the meantime of
a restraining order.
On September 9, 1980, we ordered the consolidation of the two cases and on August 12, 1980, heard the
petitioners’ motions for a restraining order.
On September 15, 1980, the respondent court issued an order in Civil Case No. 133477 denying the application
of petitioners for a writ of preliminary injunction and affirming its order of September 1, 1980 lifting the temporary
restraining orders issued in the case.
On the same day, the Katipunan ng mga Manggagawa sa Daungan (KAMADA), a labor federation and its
thirteen (13) member labor organizations filed a petition to intervene in the consolidated cases. According to
KAMADA, its members would lose their jobs if the contract was implemented. It also alleged that the collective
bargaining contract between OTSI and PWUP would be prejudicial to workers because KAMADA members
received greater benefits from the ousted contractors;
On September 29, 1980, PIPSI filed a supplemental petition to annul the order of the respondent judge denying
the application for preliminary injunction and affirming the orders issued on July 29 and August 22, 1980.1âwphi1
On October 14, 1980, PPA filed its comment with opposition to preliminary injunction stating that the lifting of the
restraining orders by respondent judge was intended to preserve the status quo pending resolution of the
preliminary injunction; that said orders were issued without hearing or bond, therefore, the dissolution was proper
considering that it had been in force for one month and an early resolution of the motion for injunction was not in
sight, and that in dissolving an injunction already issued, the court cannot be considered as having acted without
jurisdiction or in excess thereof even if dissolution had been made without previous notice to the adverse party
and without a hearing. Furthermore, it argued that when the purpose of an administrative determination is to
decide whether a right or privilege which an applicant does not possess shall be granted to him or withheld in the
exercise of a discretion vested by statute, notice and hearing are not necessary. It also added that the policy of
integration in the award by PPA to OTSI is impressed with public interest while what is involved as far as
petitioners were concerned was merely their alleged right to operate stevedoring services, a property right the
denial of which could easily be restored in the event the respondent court decided that petitioners are entitled to
it.
In their consolidated reply, Anglo-Fil, et al., argued that the temporary order in their favor was not issued ex-parte
for the following reasons: a) it was issued when PIPSI and PPA were already conducting hearings on the petition
for preliminary injunction; b) it was announced in open court; and c) PPA did not object to such issuance.
Likewise, they argued that although a permit to operate is a privilege, its withdrawal must comply with due
process of law just like the practice of law, medicine, or accountancy, and that not only property rights are
involved but their very livelihood, their right to live.
On October 21, 1980, we issued a resolution granting the temporary mandatory restraining order "effective
immediately ordering respondents to allow the workers represented by said petitioner-intervenors to render the
stevedoring services performed by them on foreign vessels in the Manila South Harbor before the execution of
the exclusive stevedoring contract of June 27, 1980 until further orders of the Court, the order of respondent
Judge, dated September 1 and 15, 1980 as well as the implementing letter of Philippine Ports Authority of
September 5, 1980 to the contrary notwithstanding."
On October 24, 1980, PPA issued Memorandum Order No. 23 providing for guidelines in implementing the
temporary mandatory restraining order of the Supreme Court dated October 21, 1980, to wit:
(1.) The Office of the Harbor Master shall determine which union has serviced a particular vessel for the
period from January 1, 1980 to June 26, 1980. The number of services performed by a particular union for
a given vessel shall be quantified for the said period after which each union shall be identified whether they
are affiliated with PWUP or KAMADA.
(2.) The most number of times that a union has serviced a particular vessel with its affiliation properly
considered shall continue to service said vessel for its incoming calls or arrivals.
(3.) If there is a tie in the number of services performed by both PWUP and KAMADA affiliated unions, the
last union that serviced said vessel shall be allowed to continue servicing the same on all its incoming calls
or arrivals.
(4.) Once the union has been properly identified during the berthing meeting, the Harbor Master shall
inform Ocean Terminal Services, Inc. accordingly and shall be authorized to negotiate with the union or the
gang leader concerned on the number of gangs as may be required by the vessel or its agent.
(5.) All unions in this order shall refer only to South Harbor stevedoring union.
(6.) KAMADA shall have the duty and responsibility to certify that the stevedores deployed in any given
vessel allowed for their work are bona fide members of their group and that they were the same stevedores
who serviced assigned vessel prior to the stevedoring services integration.
On November 7 and 10, 1980 OTSI and PPA filed their separate answers to KAMADA’s petition in intervention.
They assured this Court that none of the legitimate stevedores who had joined the KAMADA would be displaced
from work provided he joined PWUP. Written guarantees of this assurance were separately submitted to this
Court by both OTSI and PWUP. OTSI further alleged in its answer that, contrary to the claim of KAMADA, the
CBA signed by OTSI with PWUP represented the best of employment ever offered to the stevedores in the South
Harbor.
On November 13, 1980, Anglo-Fil, et al., filed an urgent motion to cite PPA and OTSI in contempt on the
following grounds: 1) issuance of PPA-POM Memorandum No. 23, series of 1980; 2) letter of October 29, 1980
of PPA to Anglo-Fil, et al., denying a "non-existing" request for permission to operate by the latter; and 3) refusal
of PPA authorities to issue gate passes to KAMADA-affiliated stevedores to be used and employed by Anglo-Fil,
et al., in their resumption of work, pursuant to the Supreme Court order of October 21, 1980.
On November 20, 1980, PPA filed a motion to lift the temporary mandatory restraining order but the same was
denied by this Court.
On November 26, 1980, an urgent motion for clarification of the resolution of October 21, 1980 was filed by
KAMADA seeking clarification as to which company its workers should work for, alleging that after Antranco
Stevedores Union (Antranco) a KAMADA member, had received a letter from OTSI to supply the necessary
stevedores gang to service the S/S "Success", Anglo-Fil Trading Corporation prohibited its employees who are
members of Antranco from working for OTSI in the light of the resolution of this Court and the existing collective
bargaining agreement between said union and Anglo-FilTrading Corporation. As a consequence, the union was
allegedly unable to service S/S "Success" and from October 21, 1980 up to the present, OTSI failed to allow
members of KAMADA to service several vessels.
A joint manifestation was filed by respondents PPA and OTSI alleging compliance with the above resolution to
the effect that KAMADA workers have been and are being employed on the vessels they used to serve prior to
June 27, 1980, and justifying issuance of PPA-POM Memorandum No. 23, as a means to avert possible conflict
among the competing union groups (PWUP and KAMADA) involved, to provide a reasonable and fair system for
determining which group had previously worked on a vessel and should work on its subsequent calls, and to
insure that only the bonafide stevedores contemplated by the order of this Court are allowed to work.
On December 2, 1980, another motion for clarification was filed by KAMADA regarding the phrase "foreign
vessels" which it stated to be inaccurate as KAMADA members also work on vessels of Philippine registry like
those operated by Sweet Lines and Lorenzo Shipping Lines whose vessels also dock at the Manila South
Harbor. It suggested that the basis should not be the foreign vessels but the shipping agents or charterers and
consignees and that the basis for determining and quantifying the vessels given to PWUP or KAMADA should be
from January 1, 1978 to September 7, 1980.
This Court in a resolution dated December 9, 1980, granted the motion of KAMADA to wit:
x x x (3) GRANT the motion for clarification by petitioners-intervenors issuing a resolution previously released,
the pertinent portion of which reads, ‘for while the order of October 21, 1980 is on its face quite definite as to
what it purports to require, this resolution may remove any doubt as to its purpose and intent, thus assuring the
utmost fidelity in its compliance. The order requires and mandates that all workers represented by said
petitioners-invtervenors can continue rendering stevedoring services performed by them on foreign vessels, in
Manila South Harbor before the execution of the exclusive stevedoring contract of June 27, 1980, until further
orders of the Court, without any reference to any particular vessel, the decisive factor being shipping lines
involved and the fact that they were at that time rendering stevedoring services, irrespective of the labor unions
to which they are affiliated. xxx."
Inspite of our clarificatory order, various problems in its implementation appear to have beset the parties.
Repeated motions and manifestations and countermotions and countermanifestations were filed with unbroken
regularity, swelling the records of these petitions to unusual proportions. After requiring the parties to submit their
respective positions, we issued on January 6, 1983, a resolution which modified our earlier orders as follows:
"G.R. No. 54958 (Anglo-Fil Trading Corporation, et al. vs. Hon.Alfredo Lazaro, et al.); and G.R. No. 54966
(Philippine Integrated Port Services, Inc. vs. Hon. Alfredo Lazaro, et al.). – Considering the urgent motion and
manifestation of petitioners-intervenors filed on March 20, 1982, the comment of respondent Ocean Terminal
Services, Inc., filed on June 7, 1982, the comment of respondent Philippine Ports Authority filed on June 8, 1982,
the reply of petitioners-intervenors filed on June 28, 1982, the rejoinder of respondent Ocean Terminal Services,
Inc., filed on July 27, 1982, the rejoinder of respondent Philippine Ports Authority filed on August 6, 1982 and the
supplemental motion and manifestation filed by petitioners-intervenors on September 15, 1982, the Court
Resolved to direct the parties concerned to observe the following guidelines in the allocation of stevedoring
assignments: 1. Any vessel belonging to a shipping line shall be assigned for stevedoring work to the union that
had served that shipping line the greatest number of times as appearing in the PPA records for the six-month
period immediately preceding the execution of the stevedoring contract of OTSI. 2. The above notwithstanding,
whenever a vessel destined to or proceeding from the Port of Manila has been chartered for a particular voyage
by a consignee or any person having interest in the goods carried therein, such vessel shall be assigned for
stevedoring work to the union that served the charterer the greater number of times as appearing in the PPA
records for six-month period immediately preceding the execution of the stevedoring contract of OTSI. In case
there are two or more charterer who pays the highest freight charges shall be the determining fact in the
assignment. 3. Vessels of new shipping lines calling at the Port of Manila for the first time as well as vessels
contracted by new charterers shall be assigned to the union of choice of the new shipping line or charterer as the
case may be."
The main issue in these petitions is whether or not the respondent judge acted with grave abuse of discretion
when he lifted ex-parte the temporary restraining order he had earlier issued also ex-parte.
From the viewpoint of procedure, we see no grave abuse of discretion or want of jurisdiction. Subsequent to the
issuance to the questioned order, the respondent court heard the parties on the petitioners’ application for a writ
of preliminary injunction and, after hearing the parties’ evidence and arguments, denied the application for the
writ. We also agree the with the respondents that it is not grave abuse of discretion when a court dissolves ex-
parte abuse of discretion when a court dissolves ex-parte a restraining order also issued ex-parte. (Calaya v.
Ramos, 79 Phil, 640; Clarke v. Philippine Ready Mix Concrete Co., 88 Phil. 460; Larap Labor Union v. Victoriano,
97 Phil. 435.)
The restraining orders dated July 29, 1980 and August 22, 1980 respectively provide:
"Finding the allegations in the complaint to be sufficient in form and in substance, a temporary restraining order is
hereby issued x x x.
xx
"and to maintain the status quo until further orders from this court.
"It appearing that on July 29, 1980, this Court issued an order granting the prayer of the original plaintiff for a
temporary restraining order, the same order is hereby reiterated and to include Anglo-Fil Trading Corporation. x x
x.
"plaintiffs-intervenors herein and for the parties to serve the status quo until further orders from this
Court." (Italics supplied)
A restraining order is an order to maintain the subject of controversy in status quo until the hearing of an
application for a temporary injunction. Unless extended by the court, a restraining order ceases to be operative at
the expiration of the time fixed by its terms. In cases where it has been granted ex-parte, it may be dissolved
upon motion before answer. (See the Revised Rules of Court, Francisco, pp. 184-186, citing 43 CJS, 28 Am. Jur)
From the aforequoted dispositive portions, it is beyond doubt that the duration of the restraining orders was "until
further orders from the court." In lifting said restraining orders on September 1, 1980, respondent judge merely
exercised the prerogative he earlier reposed upon himself to terminate such orders when circumstances so
warranted. Considering again that the previous grants of the restraining orders in favor of petitioners were made
ex-parte and without bond, the need for a notice and hearing in regard to such lifting was not necessary, much
less mandatory.
The petitioners’ contention that the lifting of the restraining order had rendered moot and academic the injunction
case in the trial court is likewise untenable. A restraining order is distinguished from an injunction in that it is
intended as a restraint on the defendant until the propriety of granting an injunction pendente lite can be
determined, and it goes no further than to preserve the status quo until such determination. Therefore, the grant,
denial, or lifting of a restraining order does not in anyway pre-empt the court’s power to decide the issue in the
main action which in the case at bar, is the injunction suit. In fact, the records will show that the trial court
proceeded with the main suit for injunction after the lifting of the restraining orders.
Petitioner PIPSI also maintains that there were no considerations of public interest which supported the lifting. On
the contrary, the lifting allegedly permitted a situation palpably against public interest, that is, confiscation of
petitioners’ business and those similarly situated. This, again, is untenable.
The streamlining of the stevedoring activities in the various ports of the Philippines was undertaken by PPA to
implement LOI No. 1005-A. The public interest, public welfare, and public policy sought to be subserved by said
LOI are clearly set forth in its whereas clauses. They areas follows:
"WHEREAS, it is a declared national policy to support and accelerate the development of government port
facilities as well as vital port development projects and services;
"WHEREAS, it is a prime concern of government to protect the interests of legitimate port workers and port users
in the country;
"WHEREAS, there is need to rationalize and integrate cargo-handling and other port-related services as may
have been contracted out or authorized by the PPA in the various ports of the country;
"WHEREAS, the procedures of voluntary merger, consolidation and/or bidding for the awarding or contracting of
cargo-handling and other port-related services have heretofore proven ineffective and resulted in prolonged and
unproductive wrangling, all to the detriment of efficient port operations and development; and
"WHEREAS, it now become necessary to revitalize and streamline the PPA to carry out its functions and duties
as a vital link in the governmental machinery and the thrust for national economic development;"
Clearly, there is a reasonable relation between the undeniable existence of an undesirable situation and the
statutory attempt to avoid it. "Public welfare, then, lies at the bottom of the enactment of said law, and the state in
order to promote the general welfare may interfere with personal liberty, with property, and with business and
occupations." (See Alalayan v. National Power Corporation, 24 SCRA 172; Ermita-Malate Hotel and Motel
Owners Association v. City Mayor, 20 SCRA 849) These considerations were considered by the respondent
judge when he issued his questioned order dated September 1, 1980. He stated:
"While in the main this Court is not insensitive to the plight of the petitioners, the overriding considerations of
public interest, as impressed by the Office of the Solicitor General, must be given greater weight and important.
This is compounded by the way and manner by which the parties are now fashioning and shaping their
respective positions. The proceedings, to say the least, have become accented with a myriad of contentious facts
and intercalated with complex legal issues. For the matter is not a simple determination of right and wrong but a
collision of ideas and viewpoints. All these, indeed, militate against an early resolution of the application for a writ
of preliminary injunction.
The above statement are sufficient bases for the lifting of the order. It is clear that not only did the respondent
judge base the lifting on consideration of public interest but also on the fact that the restraining orders were
issued ex-parte without bond and that the resolution of the motion for preliminary injunction was still far from
being decided.
The statement of the respondent judge that "it cannot sit in judgment, without prejudice to public interest, on the
truth and wisdom of the allegation in support of the Urgent Motion" should not be interpreted to mean that courts
cannot pass upon the greater issue of whether or not public interest is served or is prejudiced. The determination
by PPA that the measure sought to be enforced is justified by public interest and the PPA manner of
implementing a Presidential Decree and Letters of Instruction are subject to judicial review.
The Constitution defines the powers of government. Who is to determine the nature, scope, and extent of such
powers? The Constitution has provided for the instrumentality of the judiciary as the rational way. In determining
whether or not the exercise of powers vested by the Constitution truly serves the general welfare or is affected by
public interest, the judiciary does not assert any superiority over the other departments but only fulfills the solemn
and sacred obligation assigned to it by the Constitutions to determine conflicting claims of authority and to
establish for the parties in an actual controversy the rights which that instrument secures and guarantees to
them. This is in truth all that is involved in what is termed "judicial supremacy" which properly is the power of
judicial review under the Constitutions. (See Angara vs. Electoral Commission, 63 Phil. 139) This is why
questions of expropriation of private lands, we have upheld the court’s authority to make inquiry on whether or
not lands were private and whether the purpose was in fact, public. (City of Manila v. Chinese Community of
Manila, 40 Phil. 340). Similarly, in the present cases, the question of whether or not the lifting of the restraining
orders will prejudice public interest and will run counter to the protection to labor provision of the Constitution is
determinable by the judiciary under the power of judicial review.
From the records of these petitions, it is evident that the writ of certiorari cannot be granted. The respondent
judge’s action was not tainted by any capricious or whimsical exercise of judgment amounting to lack of
jurisdiction.
It is settled to the point of being elementary that the only question involved in certiorari is jurisdiction, either want
of jurisdiction or excess thereof, and abuse of discretion shall warrant the issuance of the extra-ordinary remedy
of certiorari only when the same is grave as when the power is exercised in an arbitrary or despotic manner. . . .
(FS. Divinagracia Agro Commercial, Inc. v. Court of Appeals, 104 SCRA 180; Abig v. Constantino, 3 SCRA 299;
Abad Santos v. Province of Tarlac, 67 Phil. 480; Alafriz v. Nable, 72 Phil. 278; Travers Luna, Inc. v. Nable, 72
Phil. 278; and Villa Rey Transit, Inc. v. Bello, 75 SCRA 735).
It is not sufficient, however, to resolve these petitions on whether or not there was grave abuse of discretion
tantamount to lack or exercise of jurisdiction.
The larger issue remains. Behind the maneuvering and skirmishing of the parties lies a question of power. Does
the PPA have the power and authority to award an exclusive stevedoring contract in favor of respondent OTSI?
Is the PPA-OTSI Management Contract executed pursuant to P.D. No. 857 and LOI No. 1005-A, valid?
The facts bearing on this issue are not in dispute and are worth reiterating. They are summarized by the
respondent court as follows:
"Before the advent of Presidential Decree No. 505, as amended by Presidential Decree No. 857, the
administration and management of the South Harbor, Port of Manila, was under the Bureau of Customs. It
appears that the plaintiffs, among others, were engaged in and allowed to operate stevedoring services on the
basis of special permits granted by the Bureau of Customs (Exhibit ‘A’).
"It further developed that the number of stevedoring operators or contractors made it difficult for the Bureau of
Customs to maintain order and discipline among them to the detriment of efficiency and the desired performance
at the South Harbor. This appears to be true with other ports. Thus, an in-depth study and analysis of the
problems attendant to arrastre and stevedoring operations was initiated. The only solution appeared to be the
integration of contractors engaged in stevedoring services with the ultimate objective of having only one
stevedoring contractor to engage in cargo-handling service in a given port. Accordingly, on May 8, 1975, the
Bureau of Customs issued Customs Memorandum Order No. 28-75 providing guidelines for the merger of the
multi-operators in the same ports (Exhibit ‘1’).
"On December 23, 1975, Presidential Decree No. 857 was promulgated superseding Presidential Decree No.
505 whereby the jurisdiction of the Bureau of Customs concerning arrastre operations, among others, were
transferred and vested in the PPA.
"On May 4, 1976, the PPA, pursuant to its avowed objectives, approved the PPA policies on port administration,
management and operation, adopting as a policy the horizontal and vertical integration of existing operators at
each port (Exhibit ‘2’ and ‘3’).
"On January 19, 1977, a memorandum order was issued whereby the different port operators or contractors who
have existing permits, licenses, contracts, and other kinds of memorandum agreement issued by the Bureau of
Customs were Temporarily allowed the continuance of their services on a hold-over capacity until such time
when the PPA implements its own pertinent policy guidelines on the matter (Exhibits ‘5’ and ‘6’).
On May 27, 1977, PPA Memorandum Order No. 21, series of 1977, was passed reiterating the implementation of
the policy on integration to ‘insure efficiency and economic in cargo-handling operation and provide better service
to port users and to amply protect the interest of labor and the government as well.’ It is the declared policy that
there should only be one stevedoring contractor to engage in cargo-handling services in a given port.
"On April 11, 1980, the Presidential issued Letter of Instruction No. 1005-A (Exhibit ‘7’) which directed the PPA to
accelerate the rationalization of all cargo-handling services and to expeditiously evaluate all recognized cargo-
handling contractors and port related service operators under such criteria as the PPA may set and to determine
the qualified contractor or operator in order to insure effective utilization of port facilities, prevent pilferage and/or
pinpoint responsibility for it and provide services major ports vital to the country’s trade and economy. This Letter
of Instruction was dictated by experience where the ‘procedures of voluntary mergers, consolidation and/or
bidding for the awarding or contracting of cargo-handling and other port related services have heretofore proven
ineffective and resulted in prolonged and unproductive wrangling, all to the detriment of efficient port operations
and development.’
"On April 18, 1980, the President issued a memorandum to the PPA (Annex ‘B’ of the Answer and Opposition of
OCEAN) to submit its report on the integration and rationalization of the stevedoring operation in Manila South
Harbor and the submission for his approval of the resolution of the board regarding contracts entered into in
connection therewith. This memorandum was dictated by ‘heavy losses suffered by shippers as well as the
smuggling of textiles in the South Harbor.’
"Pursuant to and in compliance with the Letter of Instruction of April 11, 1980 and the Memorandum of the
President dated April 18, 1980, the PPA created a Special Evaluation Committee composed of Atty. David R.
Simon, member of the Legal Department of PPA and concurrently Assistant to the Port of Manila, as Chairman;
Mr. Leonardo Mejia, Chief of the Commercial Development Division, Port of Manila; and, Capt. Jovito G.
Tamayo, Harbor Master and Chief of the Harbor Operations Division of the Port of Manila, as members. The
respective and individual duties of the members of the Committee taken in their integral entirely could easily sum
up to an almost complete overview of the functions of stevedoring contractors and place them in a vantage
position as to provide proper evaluation and determination of the individual performance, qualification, and
compliance of PPA requirements by each stevedoring operator.
"The Committee took into account certain factors with their corresponding percentage weights in its
determination, who among the existing operators, is most qualified for an award of an exclusive contract. In
connection therewith, OCEAN was rated 95% topping all the rest by a wide margin.
"On April 28, 1980, the Evaluation Committee submitted its report recommending the conclusion of a
management contract with OCEAN being the most qualified (Exhibit ‘8’) which recommendation was adopted by
the PPA.
"On June 27, 1980, a management contract was executed by and between PPA and OCEAN (Exhibit ‘11’).
"On August 19, 1980, the President approved the exclusive management contract between PPA and OCEAN
(Exhibit ‘10’).
"In the meantime, in letters dated July 13, 1980 (Exhibit ‘N’) and July 14, 1980 (Exhibit ‘F’), PIPSI and
INTERVENORS were informed of the management contract with OCEAN as exclusive operator at the South
harbor, Port of Manila, beginning August 27, 1980."
The petitioners are on extremely shaky grounds when they invoke the non-impairment clause to sustain their
charge of invalidity. According to the petitioners, contracts entered into with local and foreign clients or customers
would be impaired.
Even in the United States during the heyday of the laissez faire philosophy, we are informed that the American
Supreme Court’s interpretations have never allowed the contract clause to be an inflexible barrier to public
regulation. According to Gerald Gunther, Professor of Constitutional Law at Stanford University, historians have
probably exaggerated the impact of the early contract clause decisions on American economic and legal
developments, that the protected position of corporations in the 19th century was due less to any shield supplied
by the U.S. Supreme Court than to legislative unwillingness to impose restraints-an unwillingness reflecting the
laissez faire philosophy of the day. After analyzing the leading cases on the contract clause from 1810 (Fletcher
v. Peck, 6 Cranch 87) to 1880 (Stone v. Mississippi, 101 U.S. 814) he cites the 1914 decision in Atlantic Coast
Line R. Co. v. Goldsboro (232 U.S. 548) where the U.S. Court ruled "It is settled that neither the contract clause
nor the due process clause has the effect of overriding the power of the State to establish all regulations that are
reasonably necessary to secure the health, safety, good order, comfort, or general welfare of the community; that
this power can neither be abdicated nor bargained away, and is inalienable even by express grant; and that all
contract and property rights are held subject to its fair exercise" and Manigault v. Springs (199 U.S. 473) where
the same Court stated that "parties by entering itno contract may not stop the legislature from enacting laws
intended for the public good." (See Gunther, Cases and Materials On Constitutional Law, 1980 Edition, pp. 554-
570).
In the Philippines, the subservience of the contract clause to the police power enacting public regulations
intended for the general welfare of the community is even more clearcut.
As pointed out by then Senior Associate, now Chief Justice Enrique M. Fernando, the laissez faire or let alone
philosophy has no place in our scheme of things, not even under the 1935 Constitution. (See Fernando, The
Constitution of the Philippines, Second Edition, pp. 111-114) In his concurring opinion in Agricultural Credit and
Cooperative Financing Administration v. Confederation of Unions (30 SCRA 649, 682-683) Chief Justice
Fernando stated:
"xxx With the decision reached by us today, the Government is freed from the compulsion exerted by the Bacani
doctrine of the ‘constituent-ministrant’ test as a criterion for the type of activity in which it may engage. Its
constricting effect is consigned to oblivion. No doubts or misgivings need assail us that governmental efforts to
promote the public weal, whether through regulatory legislation of vast scope and amplitude or through the
undertaking of business activities, would have to face a searching and rigorous scrutiny. It is clear that their
legitimacy cannot be challenged on the ground alone of their being offensive to the implications of the laissez-
faire concept. Unless there be a repugnancy then to the limitations expressly set forth in the Constitution to
protect individual rights, the government enjoys a much wider latitude of action as to the means it chooses to
cope with grave social and economic problems that urgently press for solution. xxx"
The Manila South Harbor is public property owned by the State. The operations of this premiere port of the
country, including stevedoring work, are affected with public interest. Stevedoring services are subject to
regulation and control for the public good and in the interest of general welfare.
Not only does the PPA, as an agency of the State enjoy the presumption of validity in favor of its official acts
implementing its statutory charter, it has more than adequately proved that the integration of port services-is far
from arbitrary and is related to the stated governmental objective.
A single contractor furnishing the stevedoring requirements of a port has in its favor the economy of scale and
the maximum utilization of equipment and manpower. In turn, effective supervision and control as well as
collection and accounting of the government share of revenues are rendered easier for PPA than where there are
23 contractors for it to oversee. As respondent court found from the evidence, the multiple-contractor system has
bred cut-throat competitions in the port. Understandably, most contractors had been unable to acquire sufficient
modern facilities, observe labor standards for their workers, maintain efficiency in services, and pay PPA dues.
The questioned program would accelerate the rationalization and integration of all cargo-handling activities and
port-related services in major ports and the development of vital port facilities, projects, and services.
The contention of petitioners Anglo-Fil, et al., that due process was violated resulting to a confiscatory effect on
private property is likewise without merit.
In the first place, the petitioners were operating merely on "hold-over" permits. These permits which were based
on PPA memorandum Order No. 1, dated January 19, 1977 provided:
"In view thereof and pending proper evaluation by this Office of all existing permits, licenses, contracts, and other
kinds of memorandum agreements issued by the Bureau of Customs to the different port operators or
contractors, you may temporarily allow the continuance of their services on a hold-over capacity until such time
when the PPA implements its own pertinent policy guidelines on the matter.
Clearly, all hold-over permits were by nature temporary and subject to subsequent policy guidelines as may be
implemented by PPA. Such should have served as sufficient notice to petitioners that, at any time, their
authorities may be terminated.
Petitioners PIPISI would also impress upon this Court that the certification issued to it and its fellow contractors
by PPA, dated August 30, 1979, showed that they were not only kept in the dark as to PPA’s subsequent move
to award OTSI an exclusive contract, but that they were actually lulled into believing that their temporary permits
were being given pending issuance of their PTO or Permit to Operate.
We do not believe so. The second paragraph of the certification states that the hold-over permit was still subject
to the memorandum quoted above. The certification provided that: "In accordance with PPA Memo Circular No. I,
dated January 9, 1977…, the said firm is allowed to continue operating at the South Harbor, Port manila." (italics
supplied.)
Whether or not the petitioners would be issued a PTO depended on the sound discretion of PPA and on the
policies, rules and regulations that the latter may implement in accordance with the statutory grant of power.
Petitioners, therefore, cannot be said to have been deprived of property without due process because, in this
respect, what was given them was not a property right but a mere privilege and they should have taken
cognizance in the South Harbor, their permits can be withdrawn anytime the public welfare deems it best to do
so.
The absence of arbitrariness or bad faith is manifest in the selection procedure adopted. The award in fabvor of
OTSI was the result of an evaluation of performance of existing contractors made by a special committee created
by the PPA. The respondent court found from the evidence that the members of that committee were "in a
vantage position as to provide proper evaluation and determination of the individual performance, qualification,
and compliance of the PPA requirements by each stevedoring operator." The committee rated OTSI with the
highest grade of 95% in its evaluation.
And significantly, since no less than the President of the Philippines approved the award of the management
contract to OTSI presumptively after through consideration of all factors relevant to efficient stevedoring services,
it is difficult for this Court to find a violation of due process in the selection procedure. In the language of the Chief
Justice in Lim v. Secretary (34 SCRA 751) if the task of overturning a decision of a department head is attended
with difficulty, the burden of persuasion becomes much heavier when the challenged action is encased in the
armor of an explicit presidential approval. In the case at bar, there is nothing in the record remotely assailing the
motives of the President in giving his imprimatur to the award.
In seeking the nullification of the management contract, the petitioners also invoke the constitutional provision on
monopolies and combination. Section 2, Article XIV of the Constitution provides:
The state shall regulate or prohibit private monopolies when the public interest so requires.1âwphi1 No
combinations in restraint of trade or unfair competition shall be allowed.
Private monopolies are not necessarily prohibited by the Constitution. They may be allowed to exist but under
State regulation. A determination must first be made whether public interest requires that the State should
regulate or prohibit private monopolies. A distinction prevails as regards combinations in restraint of trade and
unfair competition which are prohibited outright by the Constitution.
By their very nature, certain public services or public utilities such those which supply water, electricity,
transportation, telephone, telegraph, etc. must me given exclusive franchises if public interest is to be served.
Such exclusive franchises are not violative of the law against monopolies. (58 Corpus Juris Segundum 958-964).
Neither is the management contract violative of the Anti-Graft Law. It is a contract executed in pursuance to law
and the instructions of the President to carry out government objectives to promote public interest. The act did
not cause "undue injury" to the petitioners who as explained earlier had no vested property rights entitled to
protection. There is no undue injury to the government nor any unwarranted benefit to OTSI consideration for
PPA which is the payment by OTSI of ten percent (10%) of its gross income, something which petitioner PIPSI is
loathe to pay. The rationalization and effective utilization of port facilities is to the advantage of the Government.
Furthermore, the discretion in choosing the stevedoring contractor for the south Harbor, Port Manila, belongs by
law to PPA. As long as standards are set in determining the contractor and such standards are reasonable and
related to the purpose for which they are used, the courts should not inquire into the wisdom of PPA’s choice.
The criterion used by PPA namely, the identification of a contractor with the highest potential for operating an
exclusive service, appears reasonable. The factors which were taken into account in determining the exclusive
contractor are indicia of reasonableness. They are:
Productivity…………………. 25%
Equipment Requirement
Capability…………………… 25%
Financial Capability………… 15%
Promptness in Paying
Government share…………… 25%
Compliance with other
PPA Requirements…………... 20%
100%
It is settled rule that unless the case justifies it, the judiciary will not interfere in purely administrative matters.
(Monark International, Inc. v. Noriel, 83 SCRA 114) Such discretionary power vested in the proper administrative
body, in the absence of arbitrariness and grave abuse so as to go beyond the statutory authority, is not subject to
the contrary judgment or control of others. (See Meralco Securities Corporation v. Savellano, 117 SCRA 804). In
general, courts have no supervisory power over the proceedings and actions of the administrative departments of
the government. This is particularly true with respect to acts involving the exercise of judgment or discretion, and
to findings of fact. (Pajo v. Ago and Ortiz, 108 Phil.905)
In view of the foregoing, we find the PPA-OTSI Management Contract executed on June 27, 1980, valid and
devoid of any constitutional or legal infirmity. The respondents, however, should maintain the policy of absorption
of bona-fide displaced port workers in the integration scheme as mandated not only by LOI No. 1005-A but by the
policy of the State to assure the rights of workers to security of tenure. (sec. 9, Art. II, Constitution) We note that
both PPA and OTSI have given assurance in their answers that none of the legitimate stevedores would be
displaced from work although they added that their bonafide stevedores should join PWUP. Which union a
worker or various workers should join cannot be ordained by this Court in these petitions where the basic issue is
the validity of the exclusive stevedoring contract given to one operator for one port. This matter will have to be
eventually threshed out by the workers themselves and the Ministry of Labor and Employment before it may be
elevated to us, if ever. However, we reiterate the guidelines earlier issued that no bona fide stevedore or worker
should be deprived of employment he used to enjoy simply because of the execution and implementation of the
disputed Management Contract. This absorption of bona fide workers is an act of social justice. When a person
has no property, his job may possibly be his only possession or means of livelihood. Therefore, he should be
protected against any arbitrary and unjust deprivation of his job. (See Bondoc v. People’s Bank and Trust
Company, 103 SCRA 599)
As to the contempt charges, we note that the Order of this Court dated October 21, 1980 allowed "petitioners-
intervenors" meaning KAMADA workers to work at the South Harbor pending resolution of this case, "the order of
respondent judge xxx as well as the implementing letter of Philippine Ports Authority xxx to the contrary
notwithstanding." It is not clear from said orders that the petitioners who are stevedoring operators and
contactors were also specifically included. There was no mention of them being included and allowed with
KAMADA workers to resume operations at the South Harbor. The petitioners read into the order something which
was not there. The only clear import of the Order was that KAMADA workers must be allowed to work
notwithstanding any contrary provisions in the Management Contract, a situation brought about by the lifting of
the restraining orders, the denial of the petition for preliminary injunction, and the implementing letter of PPA. It is
a settled rule that a party cannot be punished for contempt unless the act which is forbidden or required to be
done is clearly and exactly defined, so that there can be no reasonable doubt or uncertainty as to what specific
act or thing is forbidden or required. (Lee Yick Hon v. Collector of Customs, 41 Phil. 548, citing U.S. v. Achi-son,
etc. R. Co., 146 Fed. 176, 183; 13 CJ 15)
WHEREFORE, the petitions in G.R. No. 54958 and G.R. No. 54966 are hereby DISMISSED for lack of merit.
The respondents are, however, directed to comply with the guidelines in the above decision on the absorption of
bonafide stevedores and as thus modifies, the temporary restraining order dated October 21, 1980 is made
PERMANENT. No costs.
SO ORDERED.
Concepcion, Jr., Guerrero, Abad Santos, Melencio-Herrera, Plana, Escolin and Relova, JJ., concur.
Fernando, C.J., concurs and adds a brief statement on the rights of labor entitled to full respect.
Teehankee, J., files a brief dissent.
Makasiar and Aquino, JJ., in the result.
De Castro, J., on leave. 1 Opinion of the Court, 23.
Vasquez, J., took no part.
2 Ibid, 24.
FERNANDO, C.J.,concurring:
3 Ibid, 8-9.
I concur in full with the learned and exhaustive opinion of Justice Gutierrez, Jr. it is precisely because of its
thoroughness embodied to the full respect that must be accorded the constitutional rights of laborers belonging to 4 Ibid, 9.
other labor organizations, as they could be affected by the contract between the Philippine Ports Authority and
the Ocean Terminal Services, Inc. the Court finds "PPA-OTSI Management Contract executed on June 27, 1980,
TEEHANKEE, J., dissenting:
valid and devoid of any constitutional or legal infirmity." 1
I dissent on the ground that the Court’s majority judgment has prematurely pre-judged in this special civil action
There is in addition, and this I commend, a reiteration of the Court that "the guidelines earlier issued that no bona
of certiorari, the serious and substantive questions raised by petitioners in their nullification of the exclusive
fide stevedore or worker should be deprived of employment he used to enjoy simply because of the execution
stevedoring contract granted by PPA to OTSI which they assert to have been executed not in the public interest
and implementation of the disputed Management Contract. This absorption of bona fide workers is an act of
and in confiscation of the established businesses of petitioners and their right to equal protection of the law.
social justice. When a person had no property, his job may possibly be his only possession or means of
These serious questions involve factual questions which involve presentation and evaluation of evidence and
livelihood. Therefore, he should be protected against any arbitrary and unjust deprivation of his job." 2 That is as it
determination of the facts and figures, which seem to have been preempted and foreclosed by the Court’s
should be. Anything less would be to fail to live up to what the Constitution ordains.
majority judgment-when all that is before us in this special action is whether or not respondent judge acted with
grave abuse of discretion in lifting the temporary restraining order he had previously issued against the
Let me add that in so ruling, we reaffirm our resolution of December 9, 1980, which granted a motion for implementation of the questioned exclusive stevedoring contract. I reserve the right to file an extended dissenting
clarification filed by petitioners-intervenors and which insofar as pertinent reads as follows: "[Grant] the motion for opinion.
clarification by petitioners-intervenors issuing a resolution previously released, the pertinent portion of which
reads, for while the order of October 21, 1980 is on its face quite definite as to what it purports to require, this
Petitions dismissed.
resolution may remove any doubt as to its purpose and intent, thus assuring the utmost fidelity in its compliance.
The order requires and mandates that all workers represented by said petitioners-intervenors can continue
rendering stevedoring services performed by them on foreign vessel, in Manila South Harbor before the
execution of the exclusive stevedoring contract of June 27, 1980, until further orders of the Court, without any
reference to any particular vessel, the decisive factor being the shipping lines involved and the fact that they were
at that time rendering stevedoring services, irrespective of the labor unions to which they are affiliated.’" 3

It bears repeating that such resolution requires and mandates that the rights of the workers represented by
petitioners-intervenors, the Katipunan ng mga Manggagawa sa Daungan (KAMADA), a labor federation and its
thirteen member labor organizations, would not in any way be affected by such contract. They can continue
rendering stevedoring contract on June 27, 1980, "until further orders of the Court, without any reference to any
particular vessel, the decisive factor being the shipping lines involved and the fact that they were at that time
rendering stevedoring services, irrespective of the labor unions to which they are affiliated." 4

So it must be. Only thus may the constitutional rights of labor to state protection and social justice be accorded
full respect.

Let me express anew my full concurrence with the scholarly opinion of Justice Gutierrez, Jr.

Footnotes

U.S. Supreme Court
Stone v. Mississippi, 101 U.S. 814 (1879)
Stone v. Mississippi
101 U.S. 814
Syllabus
1. In 1867, the Legislature of Mississippi granted a charter to a lottery company for twenty-five years in consideration of
a stipulated sum in cash, an annual payment of a further sum, and a percentage of receipts from the sale of tickets. A
provision of the constitution adopted in 1868 declares that
"The legislature shall never authorize any lottery, nor shall the sale of lottery tickets be allowed, nor shall any lottery
heretofore authorized be permitted to be drawn, or tickets therein to be sold."
Held:
1. That this provision is not in conflict with sec. 10, art. 1, of the Constitution of the United States, which prohibits a
State from "passing a law impairing the obligation of contracts."
2. That such a charter is in legal effect nothing more than a license to enjoy the privilege conferred for the time, and on
the terms specified, subject to future legislative or constitutional control or withdrawal.
2. Trustees of Dartmouth College v. Woodward, 4 Wheat. 518, commented upon and explained.
3. The legislature cannot, by chartering a lottery company, defeat the will of the people of the state authoritatively
expressed, in relation to the continuance of such business in their midst.
The Legislature of Mississippi passed an Act, approved Feb. 16, 1867, entitled "An Act incorporating the Mississippi
Agricultural and Manufacturing Aid Society." Its provisions, so far as they bear upon the questions involved, are as
follows:
"The corporation shall have power to receive subscriptions, and sell and dispose of certificates of subscriptions which
shall entitle the holders thereof to any articles that may be awarded to them, and the distribution of the awards shall be
fairly made in public, after advertising, by the casting of lots, or by lot, chance, or otherwise, in such manner as shall be
directed by the bylaws of said corporation; . . . and the said corporation shall have power to offer premiums or prizes in
money, for the best essays on agriculture, manufactures, and education, written by a citizen of Mississippi, or to the
most deserving works of art executed by citizens of Mississippi, or the most useful inventions in mechanics, science, or
art, mane by citizens of Mississippi."
Sec. 7 provides that the articles to be distributed or awarded may consist of lands, books, paintings, statues, antiques,
scientific
Page 101 U. S. 815
instruments or apparatus, or any other property or thing that may be ornamental, valuable, or useful.
Sect. 8 requires the corporation to pay, before the commencement of business, to the treasurer of the state for the use
of the university the sum of $5,000, and to give bond and security for the annual payment of $1,000, together with one-
half percent on the amount of receipts derived from the sale of certificates.
Sect. 9 declares that any neglect or refusal to comply with the provisions of the act shall work a forfeiture of all the
privileges granted, and subject any officer or agent failing to carry out its provisions or committing any fraud in selling
tickets at drawing of lottery to indictment, the penalty being a "fine not less than $1,000, and imprisonment not less
than six months."
Sect. 11 enacts that as soon as the sum of $100,000 is subscribed and the sum of $25,000 paid into the capital stock,
the company shall go into operation under their charter and not before, and the act of incorporation shall continue and
be in force for the space of twenty-five years from its passage, and that all laws and parts of laws in conflict with its
provisions be repealed, and that the act shall take effect from and after its passage.
The constitution of the state, adopted in convention May 15, 1868, and ratified by the people Dec. 1, 1869, declares
that
"The legislature shall never authorize any lottery, nor shall the sale of lottery tickets be allowed, nor shall any lottery
heretofore authorized be permitted to be drawn, or tickets therein to be sold."
The legislature passed an act, approved July 16, 1870, entitled
"An Act enforcing the provisions of the Constitution of the State of Mississippi, prohibiting all kinds of lotteries within
said State, and making it unlawful to conduct one in this state."
The Attorney-General of Mississippi filed, March 17, 1874, in the Circuit Court of Warren County in that state, an
information in the nature of a quo warranto, against John B. Stone and others, alleging that, without authority or warrant
of law, they were then, and for the preceding twelve months had been, carrying on a lottery or gift enterprise within said
county and state under the name of "The Mississippi Agricultural, Educational,
Page 101 U. S. 816

and Manufacturing Aid Society." The information alleges that said society obtained from the legislature a charter, but
sets up the aforesaid constitutional provision and the act of July 16, 1870, and avers that the charter was thereby
virtually and in effect repealed.

By their answer the respondents admit that they were carrying on a lottery enterprise under the name mentioned. They
aver that in so doing they were exercising the rights, privileges, and franchises conferred by their charter, and that they
have in all things complied with its provisions. They further aver that their rights and franchises were not impaired by
the constitutional provision and legislative enactment aforesaid.

The state replied to the answer by admitting that the respondents had in every particular conformed to the provisions of
their charter.

The court, holding that the act of incorporation had been abrogated and annulled by the constitution of 1868 and the
legislation of July 16, 1870, adjudged that the respondents be ousted of and from all the liberties and privileges,
franchises and emoluments, exercised by them under and by virtue of the said act.

The judgment was, on error, affirmed by the supreme court, and Stone and others sued out this writ.