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.

Facts:
The petitioners filed a petition for prohibition against Ordinance No. 4760 for being violative of the due process
clause, contending that said ordinance is not only arbitrary, unreasonable or oppressive but also vague, indefinite
and uncertain, and likewise allege the invasion of the right to privacy and the guaranty against self-incrimination.
Ordinance No. 4760 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."
The lower court ruled in favor of the petitioners. Hence, the appeal.

Issue:

Whether or not Ordinance No. 4760 is unconstitutional

Held: No.

Rationale:
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."
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 hurt full to the comfort, safety, and welfare of society.
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.
The Court reversed the judgment of the lower court and lifted the injunction on the Ordinance in question.
*** 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.

G.R. No. L-10572 December 21, 1915

FRANCIS A. CHURCHILL and STEWART TAIT, plaintiffs-appellees,
vs.
JAMES J. RAFFERTY, Collector of Internal Revenue, defendant-appellant.

32 Phil. 580 (1915)

In re: Police power of the State, Lawful Subject of police power

This is an appeal from a judgment of the Court of First Instance of Manila. The case involves a dual question one
involving the power of the court to restrain by injunction the collection of the tax in question and the other relating
to the power of the Collector of Internal Revenue to remove any sign, signboard, or billboard upon the ground that
the same is offensive to the sight or is otherwise a nuisance.
The focus of this digest is to highlight the cases’ latter aspect as correlated to the police power of the State.

Facts
Appellees, Francis A. Churchill and Stewart Tait are involved in the advertising business, particularly in billboard
advertising. Their billboards located upon private lands in the Province of Rizal were removed upon complaints
and by the orders of the defendant Collector of Internal Revenue by virtue of the provisions of subsection (b) of
section 100 of Act No. 2339.
Appellees, in their supplementary complaint challenge the power of the of the Collector of Internal Revenue to
remove any sign, signboard, or billboard upon the ground that the same is offensive to the sight or is otherwise a
nuisance and maintain that the billboards in question “in no sense constitute a nuisance and are not deleterious
to the health, morals, or general welfare of the community, or of any persons.” Defendant Collector of Internal
Revenue avers that after due investigation made upon the complaints of the British and German Consuls, the
defendant “decided that the billboard complained of was and still offensive to the sight and is otherwise a
nuisance.”

Issue
1. Was the enactment assailed by the plaintiffs was a legitimate exercise of the police power of the Government?

Held
The High Court is of the opinion that unsightly advertisements or signs, signboards, or billboards which are
offensive to the sight, are not disassociated from the general welfare of the public. This is not establishing a new
principle, but carrying a well- recognized principle to further application. Moreover, if the police power may be
exercised to encourage a healthy social and economic condition in the country, and if the comfort and convenience
of the people are included within those subjects, everything which encroaches upon such territory is amenable to
the police power. Judgment reversed.
G.R. No. 135962 March 27, 2000

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner,

vs.
BEL-AIR VILLAGE ASSOCIATION, INC., respondent.

Facts:
On December 30, 1995, respondent received from petitioner a notice requesting the former to open its private
road, Neptune Street, to public vehicular traffic starting January 2, 1996. On the same day, respondent was
apprised that the perimeter separating the subdivision from Kalayaan Avenue would be demolished.

Respondent instituted a petition for injunction against petitioner, praying for the issuance of a TRO and preliminary
injunction enjoining the opening of Neptune Street and prohibiting the demolition of the perimeter wall. The trial
court denied issuance of a preliminary injunction. On appeal, the appellate court ruled that the MMDA has no
authority to order the opening of Neptune Street, and cause the demolition of its perimeter walls. It held that the
authority is lodged in the City Council of Makati by ordinance.
MMDA said it has the authority to open Neptune St. because it is an agent of the Government endowed with police
power in the delivery of basic services in Metro Manila. From the premise of police powers, it follow then that it
need not for an ordinance to be enacted first.

Hence this petition.

Issue:
Does MMDA has the mandate to open Neptune Street to public traffic pursuant to its regulatory and police powers?

Ruling:
According to SC, Police power is an inherent attribute of sovereignty. Police power is lodged primarily in the
National Legislature, which the latter can delegate to the President and administrative boards, LGU or other
lawmaking bodies.

LGU is a political subdivision for local affairs. Which has a legislative body empowered to enact ordinances,
approved resolutions and appropriate funds for the general welfare of the province/city/municipality.
The MMDA is, as termed in the charter itself, "development authority." All its functions are administrative in nature.
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
In sum, the MMDA has no power to enact ordinances for the welfare of the community. It is the LGUs, acting
through their respective legislative councils, that possess legislative power and police power.
The Sangguniang Panlungsod of Makati City did not pass any ordinance or resolution ordering the opening of
Neptune Street, hence, its proposed opening by the MMDA is illegal.
Wherefore, the petition is denied.
G.R. No. 122846 January 20, 2009

WHITE LIGHT CORPORATION, TITANIUM CORPORATION and STA. MESA TOURIST & DEVELOPMENT
CORPORATION, Petitioners,
vs.
CITY OF MANILA, represented by DE CASTRO, MAYOR ALFREDO S. LIM, Respondent.

Facts:

On December 3, 1992, City Mayor Alfredo S. Lim signed into law Manila City Ordinance No. 7774 entitled “An
Ordinance Prohibiting Short-Time Admission, Short-Time Admission Rates, and Wash-Up Rate Schemes in
Hotels, Motels, Inns, Lodging Houses, Pension Houses, and Similar Establishments in the City of Manila” (the
Ordinance).” The ordinance sanctions any person or corporation who will allow the admission and charging of
room rates for less than 12 hours or the renting of rooms more than twice a day.
The petitioners White Light Corporation (WLC), Titanium Corporation (TC), and Sta. Mesa Tourist and
Development Corporation (STDC), who own and operate several hotels and motels in Metro Manila, filed a motion
to intervene and to admit attached complaint-in-intervention on the ground that the ordinance will affect their
business interests as operators. The respondents, in turn, alleged that the ordinance is a legitimate exercise of
police power.
RTC declared Ordinance No. 7774 null and void as it “strikes at the personal liberty of the individual guaranteed
and jealously guarded by the Constitution.” Reference was made to the provisions of the Constitution encouraging
private enterprises and the incentive to needed investment, as well as the right to operate economic enterprises.
Finally, from the observation that the illicit relationships the Ordinance sought to dissuade could nonetheless be
consummated by simply paying for a 12-hour stay,
When elevated to CA, the respondents asserted that the ordinance is a valid exercise of police power pursuant to
Section 458 (4)(iv) of the Local Government Code which confers on cities the power to 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. Also, they contended that under
Art III Sec 18 of Revised Manila Charter, they have the power 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 to fix penalties for the
violation of ordinances.
Petitioners argued that the ordinance is unconstitutional and void since it violates the right to privacy and freedom
of movement; it is an invalid exercise of police power; and it is unreasonable and oppressive interference in their
business.
CA, in turn, reversed the decision of RTC and affirmed the constitutionality of the ordinance. First, it held that the
ordinance did not violate the right to privacy or the freedom of movement, as it only penalizes the owners or
operators of establishments that admit individuals for short time stays. Second, the virtually limitless reach of police
power is only constrained by having a lawful object obtained through a lawful method. The lawful objective of the
ordinance is satisfied since it aims to curb immoral activities. There is a lawful method since the establishments
are still allowed to operate. Third, the adverse effect on the establishments is justified by the well-being of its
constituents in general.
Hence, the petitioners appeared before the SC.

Issue:
Whether Ordinance No. 7774 is a valid exercise of police power of the State.
Held:
No. Ordinance No. 7774 cannot be considered as a valid exercise of police power, and as such, it is
unconstitutional.
The facts of this case will recall to mind not only the recent City of Manila v Laguio Jr ruling, but the 1967 decision
in Ermita-Malate Hotel and Motel Operations Association, Inc., v. Hon. City Mayor of Manila. The common thread
that runs through those decisions and the case at bar goes beyond the singularity of the localities covered under
the respective ordinances. All three ordinances were enacted with a view of regulating public morals including
particular illicit activity in transient lodging establishments. This could be described as the middle case, wherein
there is no wholesale ban on motels and hotels but the services offered by these establishments have been
severely restricted. At its core, this is another case about the extent to which the State can intrude into and regulate
the lives of its citizens
The test of a valid ordinance is well established. A long line of decisions including City of Manila 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
pass 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.
The ordinance in this case prohibits two specific and distinct business practices, namely wash rate admissions
and renting out a room more than twice a day. The ban is evidently sought to be rooted in the police power as
conferred on local government units by the Local Government Code through such implements as the general
welfare clause.

Police power is based upon the concept of necessity of the State and its corresponding right to protect itself and
its people. Police power has been used as justification for numerous and varied actions by the State.
The apparent goal of the ordinance is to minimize if not eliminate the use of the covered establishments for illicit
sex, prostitution, drug use and alike. These goals, by themselves, are unimpeachable and certainly fall within the
ambit of the police power of the State. Yet the desirability of these ends do not sanctify any and all means for their
achievement. Those means must align with the Constitution.
SC contended that if they were to take the myopic view that an ordinance should be analyzed strictly as to its
effect only on the petitioners at bar, then it would seem that the only restraint imposed by the law that they were
capacitated to act upon is the injury to property sustained by the petitioners. Yet, they also recognized the capacity
of the petitioners to invoke as well the constitutional rights of their patrons – those persons who would be deprived
of availing short time access or wash-up rates to the lodging establishments in question. The rights at stake herein
fell within the same fundamental rights to liberty. 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,
Indeed, the right to privacy as a constitutional right must be recognized and the invasion of it should be justified
by a compelling state interest. Jurisprudence 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.
An ordinance which prevents the lawful uses of a wash rate depriving patrons of a product and the petitioners of
lucrative business ties in with another constitutional requisite for the legitimacy of the ordinance as a police power
measure. It must appear that the interests of the public generally, as distinguished from those of a particular class,
require an interference with private rights and the means must be reasonably necessary for the accomplishment
of the purpose and not unduly oppressive of private rights. It must also be evident that no other alternative for the
accomplishment of the purpose less intrusive of private rights can work. More importantly, a reasonable relation
must exist between the purposes of the 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.
Lacking a concurrence of these requisites, the police measure shall be struck down as an arbitrary intrusion into
private rights.
The behavior which the ordinance seeks to curtail is in fact already prohibited and could in fact be diminished
simply by applying existing laws. Less intrusive measures such as curbing the proliferation of prostitutes and drug
dealers through active police work would be more effective in easing the situation. So would the strict enforcement
of existing laws and regulations penalizing prostitution and drug use. These measures would have minimal
intrusion on the businesses of the petitioners and other legitimate merchants. Further, it is apparent that the
ordinance can easily be circumvented by merely paying the whole day rate without any hindrance to those
engaged in illicit activities. Moreover, drug dealers and prostitutes can in fact collect “wash rates” from their
clientele by charging their customers a portion of the rent for motel rooms and even apartments.
SC reiterated that individual rights may be adversely affected only to the extent that may fairly be required by the
legitimate demands of public interest or public welfare. The State is a leviathan that must be restrained from
needlessly intruding into the lives of its citizens. However well¬-intentioned the ordinance may be, it is in effect an
arbitrary and whimsical intrusion into the rights of the establishments as well as their patrons. The ordinance
needlessly restrains the operation of the businesses of the petitioners as well as restricting the rights of their
patrons without sufficient justification. The ordinance rashly equates wash rates and renting out a room more than
twice a day with immorality without accommodating innocuous intentions.
WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals is REVERSED, and the Decision
of the Regional Trial Court of Manila, Branch 9, is REINSTATED. Ordinance No. 7774 is hereby declared
UNCONSTITUTIONAL. No pronouncement as to costs.
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.

Facts:

PAGCOR decided to expand its operations to Cagayan de Oro City. It leased a portion of a building belonging to
Pryce Properties Corporations, Inc., renovated & equipped the same, and prepared to inaugurate its casino during
the Christmas season.
Civil organizations angrily denounced the project. Petitioners opposed the casino’s opening and enacted
Ordinance No. 3353, prohibiting the issuance of business permit and canceling existing business permit to the
establishment for the operation of the casino, and Ordinance No. 3375-93, prohibiting the operation of the casino
and providing a penalty for its violation.
Respondents assailed the validity of the ordinances on the ground that they both violated Presidential Decree No.
1869. Petitioners contend that, pursuant to the Local Government Code, they have the police power authority to
prohibit the operation of casino for the general welfare.

Issue:
Whether the Ordinances are valid.

Ruling:

No. 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.
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 tests of a valid ordinance are well established. A long line of decisions 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.
The rationale of the requirement that the ordinances should not contravene a statute is obvious.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. 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.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.
G.R. No. L-63419 December 18, 1986

FLORENTINA A. LOZANO, petitioner,

vs.
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
capacity as City Fiscal of Manila, respondents.

FACTS:
Petitioners were charged with violation of Batas Pambansa Bilang 22 (Bouncing Check Law). They 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 case, wherein the
trial court declared the law unconstitutional and dismissed the case. The parties adversely affected thus appealed.

ISSUES:

1. Does BP 22 is violate the constitutional provision on non-imprisonment due to debt?

2. Does it impair freedom of contract?

3. Does it contravene the equal protection clause?

HELD:

1. The enactment of BP 22 is a valid exercise of the police power and is not repugnant to the constitutional inhibition
against imprisonment for debt. 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.

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 will 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 shaken, the usefulness of checks as currency substitutes
would be greatly diminished or may become nil. 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.

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.
2. The freedom of contract which is constitutionally protected is freedom to enter into “lawful” contracts. Contracts
which contravene public policy are not lawful. 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.

3. There is no 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 not
unreasonable or arbitrary.
G.R. No. 189999 June 27, 2012

ANGELES UNIVERSITY FOUNDATION, Petitioner,

vs.
CITY OF ANGELES, JULIET G. QUINSAAT, in her capacity as Treasurer of Angeles City and ENGR.
DONATO N. DIZON, in his capacity as Acting Angeles City Building Official, Respondents.

Facts:

Petitioner Angeles University Foundation (AUF) is an educational institution established on May 25, 1962 and was
converted into a non-stock, non-profit education foundation under the provisions of Republic Act (RA) No. 6055
on December 4, 1975.
On August 2005, petitioner filed with the Office of the City Building Official in the City of Angeles Pampanga an
application for a building permit for the construction of an 11-storey building in its main Campus. A Building Permit
Fee Assessment and an order of payment for Locational Clearance Fees was issued by the said office.

Petitioner claimed, through a letter addressed to respondents City Treasurer and Acting City Building Official, that
it is exempted from the payment of the building permit and locational clearance fees and cited legal opinions
rendered by the Department of Justice (DOJ).
Respondents referred the matter to the Bureau of Local Government Finance (BLGF) of the Department of
Finance, which in turn endorsed the query to the DOJ. DOJ replied and affirmed the claim of the petitioner.
Despite the petitioner’s plea, however, respondents refused to issue the building permit. Petitioner then appealed
the matter to the City Mayor but received no written response. Consequently, petitioner paid under protest a total
of P826,662.99 and the Building Permit and other documents were issued afterwards.
Petitioner formally requested the respondents to refund the fees it paid under protest through letters dated June
15, 2006 and August 7, 2006. But the respondents denied the claim for refund.
On August 31, 2006, petitioner filed a Complaint before the trial court seeking for the refund of P826,662.99 plus
interest at a rate of 12% per annum, and for attorney’s fee in the amount of P300,000.00 and litigation expenses.
On September 21, 2007, the trial court rendered judgment in favor of the petitioner. Respondents appeal to the
CA which reversed the trial court’s decision. Petitioner filed a motion for reconsideration but was denied.
So, the petitioner filed a petition for review on certiorari before the Supreme Court.

Issue:
Whether or not the building permit fee is a tax from which petitioner is exempt.

Discussion:
The building permit fee is neither a tax nor a charge on property. Based on Sections 102, 103 and 104, the building
permit fee is a regulatory imposition on certain activities the owner may conduct either to build such structures or
to repair, alter, renovate or demolish the same. Since building permit fees are not charges on property, they are
not impositions from which petitioner is exempt.
As to petitioner’s argument that the building permit fees collected by respondents are in reality taxes because the
primary purpose is to raise revenues for the local government unit, the same does not hold water.
A charge of a fixed sum which bears no relation at all to the cost of inspection and regulation may be held to be a
tax rather than an exercise of the police power. In this case, the Secretary of Public Works and Highways who is
mandated to prescribe and fix the amount of fees and other charges that the Building Official shall collect in
connection with the performance of regulatory functions, has promulgated and issued the Implementing Rules and
Regulations which provide for the bases of assessment of such fees.
The court cited the case of CHEVRON PHILIPPINES, INC. VS. BASES CONVERSION DEVELOPMENT
AUTHORITY and explained the difference between tax and regulation:
IN DISTINGUISHING TAX AND REGULATION AS A FORM OF POLICE POWER, THE DETERMINING
FACTOR IS THE PURPOSE OF THE IMPLEMENTED MEASURE. IF THE PURPOSE IS PRIMARILY TO
RAISE REVENUE, THEN IT WILL BE DEEMED A TAX EVEN THOUGH THE MEASURE RESULTS IN
SOME FORM OF REGULATION. ON THE OTHER HAND, IF THE PURPOSE IS PRIMARILY TO
REGULATE, THEN IT IS DEEMED A REGULATION AND AN EXERCISE OF THE POLICE POWER OF
THE STATE, EVEN THOUGH INCIDENTALLY, REVENUE IS GENERATED.
In GEROCHI V. DEPARTMENT OF ENERGY, the Court stated:
THE CONSERVATIVE AND PIVOTAL DISTINCTION BETWEEN THESE TWO (2) POWERS RESTS IN
THE PURPOSE FOR WHICH THE CHARGE IS MADE. IF GENERATION OF REVENUE IS THE
PRIMARY PURPOSE AND REGULATION IS MERELY INCIDENTAL, THE IMPOSITION IS A TAX; BUT
IF REGULATION IS THE PRIMARY PURPOSE, THE FACT THAT REVENUE IS INCIDENTALLY
RAISED DOES NOT MAKE THE IMPOSITION A TAX.

Held:

The petition was denied and the decision of the Court of Appeals was affirmed.
G.R. No. 173863 September 15, 2010

CHEVRON PHILIPPINES, INC. (Formerly CALTEX PHILIPPINES, INC.), Petitioner,

vs.
BASES CONVERSION DEVELOPMENT AUTHORITY and CLARK DEVELOPMENT CORPORATION,
Respondents.

Facts:
On June 28, 2002, the Board of Directors of respondent Clark Development Corporation (CDC) issued and
approved Policy Guidelines on the Movement of Petroleum Fuel to and from the Clark Special Economic Zone. In
one of its provisions, it levied royalty fees to suppliers delivering Coastal fuel from outside sources for Php0.50 per
liter for those delivering fuel to CSEZ locators not sanctioned by CDC and Php1.00 per litter for those bringing-in
petroleum fuel from outside sources. The policy guidelines were implemented effective July 27, 2002.
The petitioner Chevron Philippines Inc (formerly Caltex Philippines Inc) who is a fuel supplier to Nanox Philippines,
a locator inside the CSEZ, received a Statement of Account from CDC billing them to pay the royalty fees
amounting to Php115,000 for its fuel sales from Coastal depot to Nanox Philippines from August 1 to September
21, 2002.
Petitioner, contending that nothing in the law authorizes CDC to impose royalty fees based on a per unit
measurement of any commodity sold within the special economic zone, protested against the CDC and Bases
Conversion Development Authority (BCDA). They alleged that the royalty fees imposed had no reasonable relation
to the probably expenses of regulation and that the imposition on a per unit measurement of fuel sales was for a
revenue generating purpose, thus, akin to a “tax”.
BCDA denied the protest. The Office of the President dismissed the appeal as well for lack of merit.
Upon appeal, CA dismissed the case. CA held that in imposing the royalty fees, CDC was exercising its right to
regulate the flow of fuel into CSEZ under the vested exclusive right to distribute fuel within CSEZ pursuant to its
Joint Venture Agreement (JVA) with Subic Bay Metropolitan Authority (SBMA) and Coastal Subic Bay Terminal,
Inc. (CSBTI) dated April 11, 1996. The appellate court also found that royalty fees were assessed on fuel delivered,
not on the sale, by petitioner and that the basis of such imposition was petitioner’s delivery receipts to Nanox
Philippines. The fact that revenue is incidentally also obtained does not make the imposition a tax as long as the
primary purpose of such imposition is regulation.
When elevated in SC, petitioner argued that: 1) CDC has no power to impose fees on sale of fuel inside CSEZ on
the basis of income generating functions and its right to market and distribute goods inside the CSEZ as this would
amount to tax which they have no power to impose, and that the imposed fee is not regulatory in nature but rather
a revenue generating measure; 2) even if the fees are regulatory in nature, it is unreasonable and are grossly in
excess of regulation costs.

Respondents contended that the purpose of royalty fees is to regulate the flow of fuel to and from the CSEZ and
revenue (if any) is just an incidental product. They viewed it as a valid exercise of police power since it is aimed
at promoting the general welfare of public; that being the CSEZ administrator, they are responsible for the safe
distribution of fuel products inside the CSEZ.

Issue:
Whether the act of CDC in imposing royalty fees can be considered as valid exercise of the police power.

Held:
Yes. SC held that CDC was within the limits of the police power of the State when it imposed royalty fees.
In distinguishing tax and regulation as a form of police power, the determining factor is the purpose of the
implemented measure. If the purpose is primarily to raise revenue, then it will be deemed a tax even though the
measure results in some form of regulation. On the other hand, if the purpose is primarily to regulate, then it is
deemed a regulation and an exercise of the police power of the state, even though incidentally, revenue is
generated.
In this case, SC held that the subject royalty fee was imposed for regulatory purposes and not for generation of
income or profits. The Policy Guidelines was issued to ensure the safety, security, and good condition of the
petroleum fuel industry within the CSEZ. The questioned royalty fees form part of the regulatory framework to
ensure “free flow or movement” of petroleum fuel to and from the CSEZ. The fact that respondents have the
exclusive right to distribute and market petroleum products within CSEZ pursuant to its JVA with SBMA and CSBTI
does not diminish the regulatory purpose of the royalty fee for fuel products supplied by petitioner to its client at
the CSEZ.

However, it was erroneous for petitioner to argue that such exclusive right of respondent CDC to market and
distribute fuel inside CSEZ is the sole basis of the royalty fees imposed under the Policy Guidelines. Being the
administrator of CSEZ, the responsibility of ensuring the safe, efficient and orderly distribution of fuel products
within the Zone falls on CDC. Addressing specific concerns demanded by the nature of goods or products involved
is encompassed in the range of services which respondent CDC is expected to provide under Sec. 2 of E.O. No.
80, in pursuance of its general power of supervision and control over the movement of all supplies and equipment
into the CSEZ.
There can be no doubt that the oil industry is greatly imbued with public interest as it vitally affects the general
welfare. Fuel is a highly combustible product which, if left unchecked, poses a serious threat to life and property.
Also, the reasonable relation between the royalty fees imposed on a “per liter” basis and the regulation sought to
be attained is that the higher the volume of fuel entering CSEZ, the greater the extent and frequency of supervision
and inspection required to ensure safety, security, and order within the Zone.
Respondents submit that the increased administrative costs were triggered by security risks that have recently
emerged, such as terrorist strikes. The need for regulation is more evident in the light of 9/11 tragedy considering
that what is being moved from one location to another are highly combustible fuel products that could cause loss
of lives and damage to properties.
As to the issue of reasonableness of the amount of the fees, SC held that no evidence was adduced by the
petitioner to show that the fees imposed are unreasonable. Administrative issuances have the force and effect of
law. They benefit from the same presumption of validity and constitutionality enjoyed by statutes. These two
precepts place a heavy burden upon any party assailing governmental regulations. Petitioner’s plain allegations
are simply not enough to overcome the presumption of validity and reasonableness of the subject imposition.
WHEREFORE, the petition is DENIED for lack of merit and the Decision of the Court of Appeals dated November
30, 2005 in CA-G.R. SP No. 87117 is hereby AFFIRMED.
G.R. No. 199669 April 25, 2017

SOUTHERN LUZON DRUG CORPORATION, Petitioner,

vs.
THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT, THE NATIONAL COUNCIL FOR THE
WELFARE OF DISABLED PERSONS, THE DEPARTMENT OF FINANCE, and THE BUREAU OF INTERNAL
REVENUE, Respondents

FACTS:
The case at bar is a Petition for Review on Certiorari assailing the Decision of the Court of Appeals which
dismissed the petition for prohibition filed by Southern Luzon Drug Corporation (petitioner) against the Department
of Social Welfare and Development , the National Council for the Welfare of Disabled Persons (now National
Council on Disability Affairs or NCDA), the Department of Finance and the Bureau of Internal Revenue
(collectively, the respondents), which sought to prohibit the implementation of Section 4(a) of Republic Act (R.A.)
No. 9257, otherwise known as the "Expanded Senior Citizens Act of 2003" and Section 32 of R.A. No. 9442, which
amends the "Magna Carta for Disabled Persons," particularly the granting of 20% discount on the purchase of
medicines by senior citizens and persons with disability (PWD), respectively, and treating them as tax deduction.
which dismissed the petition for prohibition filed by Southern Luzon Drug Corporation (petitioner) against the
Department of Social Welfare and Development , the National Council for the Welfare of Disabled Persons (now
National Council on Disability Affairs or NCDA), the Department of Finance and the Bureau of: Internal Revenue
(collectively, the respondents), which sought to prohibit the implementation of Section 4(a) of Republic Act (R.A.)
No. 9257, otherwise known as the "Expanded Senior Citizens Act of 2003" and Section 32 of R.A. No. 9442, which
amends the "Magna Carta for Disabled Persons," particularly the granting of 20% discount on the purchase of
medicines by senior citizens and persons with disability (PWD),: respectively, and treating them as tax deduction
due to the reason that claiming it affects the profitability of their business.
The petitioner is a domestic corporation engaged in the business of drugstore operation in the Philippines while
the respondents are government' agencies, office and bureau tasked to monitor compliance with R.A. Nos. 9257
and 9442, promulgate implementing rules and regulations for their effective implementation, as well as prosecute
and revoke licenses of erring establishments.

ISSUES:
1. Whether or not the Petition for Prohibition may be filed to question the constitutionality of a law;
2. Whether or not the case constitutes stare decisis

3. Whether or not the 20% Sales Discount for Senior Citizens PWDs does not violate the petitioner’s right to equal
protection of the law
4. Whether or not the definitions of Disabilities and PWDs are vague and violates the petitioners right to due
process of law

RULING:
1. Yes. Prohibition may be filed to question the constitutionality of a law. Generally, the office of prohibition is to
prevent the unlawful and oppressive exercise of authority and is directed against proceedings that are done without
or in excess of jurisdiction, or with grave abuse of discretion, there being no appeal or other plain, speedy, and
adequate remedy in the ordinary course of law. It is the remedy to prevent inferior courts, corporations, boards, or
persons from usurping or exercising a jurisdiction or power with which they have not been vested by the law. This
is, however, not the lone office of an action for prohibition. In Diaz, et al. v. The Secretary of Finance, et al.,
prohibition was also recognized as a proper remedy to prohibit or nullify acts of executive officials that amount to
usurpation of legislative authority. And, in a number of jurisprudence, prohibition was allowed as a proper action
to assail the constitutionality of a law or prohibit its implementation.

2. No. The Court agrees that the ruling in Carlos Superdrug does not constitute stare decisis to the instant case,
not because of the petitioner's submission of financial statements which were wanting in the first case, but because
it had the good sense of including questions that had not been raised or deliberated in the former case of Carlos
Superdrug, i.e., validity of the 20% discount granted to PWDs, the supposed vagueness of the provisions of R.A.
No. 9442 and violation of the equal protection clause.

3. Yes. The subject laws do not violate the equal protection clause. The equal protection clause is not infringed
by legislation which applies only to those persons falling within a specified class. If the groupings are characterized
by substantial distinctions that make real differences, one class may be treated and regulated differently from
another." For a classification to be valid, (1) it must be based upon 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
members of the same class.

4. No. The definitions of "disabilities" and "PWDs" are clear and unequivocal. Section 4(a) of R.A. No. 7277, the
precursor of R.A. No. 94421 defines "disabled persons" as follows:
(a) Disabled persons are those suffering from restriction or different abilities, as a result of a mental, physical or
sensory impairment, to perform an activity in the manner or within the range considered normal for a human
being[.]

On the other hand, the term "PWDs" is defined in Section 5.1 of the IRR of R.A. No. 9442 as follows:

5.1. Persons with Disability are those individuals defined under Section 4 of [R.A. No.] 7277 [or] An Act Providing
for the Rehabilitation, Self-Development and Self-Reliance of Persons with Disability as amended and their
integration into the Mainstream of Society and for Other Purposes. This is defined as a person suffering from
restriction or different abilities, as a result of a mental, physical or sensory impairment, to perform an activity in a
manner or within the range considered normal for human being. Disability shall mean (1) a physical 1or mental
impairment that substantially limits one or more psychological, physiological or anatomical function of an individual
or activities of such individual; (2) a record of such an impairment; or (3) being regarded as having such an
impairment.

In view of the foregoing disquisition, Section 4(a) of Republic Act No. 9257 and Section 32 of Republic Act No.
9442 are hereby declared CONSTITUTIONAL.
G.R. No. 110478 October 15, 2007

FERMIN MANAPAT, 1 Petitioner,

vs.
COURT OF APPEALS and NATIONAL HOUSING AUTHORITY, Respondents.